NOTE 3 — Loans

The composition of loans by class is summarized as follows:


	March 31, 2020		December 31, 2019
	(In thousands)
1 – 4 family residential	$	51,738	$	48,140
Commercial		292,343		257,957
Multifamily		147,333		152,633
Commercial real estate		51,126		52,477
Construction		-		6,450
Consumer		47,479		47,322
Total Loans		590,019		564,979

Deferred costs and unearned premiums, net		378		390
Allowance for loan losses		(8,878)		(6,989)
Loans, net	$	581,519	$	558,380

The following tables present the activity in the allowance for loan losses by class for the three months ending March 31, 2020 and 2019:



	1-4 Family						Commercial
	Residential		Commercial		Multifamily		Real Estate		Construction		Consumer		Total
	(In thousands)
March 31, 2020
Allowance for loan losses:
Beginning balance	$	344	$	4,048	$	1,048	$	560	$	161	$	828	$	6,989
Provision (credit) for loan losses		153		1,038		393		257		(161)		220		1,900
Recoveries		—		—		—		—		—		—		—
Loans charged-off		—		—		—		—		—		(11)		(11)

Total ending allowance balance	$	497	$	5,086	$	1,441	$	817	$	—	$	1,037	$	8,878

March 31, 2019
Allowance for loan losses:
Beginning balance	$	407	$	3,110	$	952	$	357	$	149	$	654	$	5,629
Provision (credit) for loan losses		(27)		381		(3)		51		10		13		425
Recoveries		—		—		—		—		—		—		—
Loans charged-off		—		(5)		—		—		—		—		(5)

Total ending allowance balance	$	380	$	3,486	$	949	$	408	$	159	$	667	$	6,049

The following tables present the balance in the allowance for loan losses and the recorded investment in loans by class and based on impairment method as of March 31, 2020 and December 31, 2019:


	1‑4 Family						Commercial
	Residential		Commercial		Multifamily		Real Estate		Construction		Consumer		Total
	(In thousands)
March 31, 2020
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Collectively evaluated for impairment		497		5,086		1,441		817		—		1,037		8,878

Total ending allowance balance	$	497	$	5,086	$	1,441	$	817	$	—	$	1,037	$	8,878

Loans:
Loans individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	750	$	750
Loans collectively evaluated for impairment		51,738		292,343		147,333		51,126		—		46,729		589,269

Total ending loans balance	$	51,738	$	292,343	$	147,333	$	51,126	$	—	$	47,479	$	590,019


	1‑4 Family						Commercial
	Residential		Commercial		Multifamily		Real Estate		Construction		Consumer		Total
	(In thousands)
December 31, 2019
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Collectively evaluated for impairment		344		4,048		1,048		560		161		828		6,989

Total ending allowance balance	$	344	$	4,048	$	1,048	$	560	$	161	$	828	$	6,989

Loans:
Loans individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	1,476	$	1,476
Loans collectively evaluated for impairment		48,140		257,957		152,633		52,477		6,450		45,846		563,503

Total ending loans balance	$	48,140	$	257,957	$	152,633	$	52,477	$	6,450	$	47,322	$	564,979

Recorded investment is not adjusted for accrued interest, deferred fees and costs, and unearned premiums and discounts due to immateriality.

The following table provides an analysis of the impaired loans by segment as of March 31, 2020 and December 31, 2019. There was no related allowance recorded on any impaired loans as of March 31, 2020 and December 31, 2019:


	March 31,				December 31,
	2020				2019
			Unpaid				Unpaid
	Recorded		Principal		Recorded		Principal
	Investment		Balance		Investment		Balance
	(In thousands)
1-4 family residential	$	—	$	—	$	—	$	—
Commercial		—		—		—		—
Multifamily		—		—		—		—
Commercial real estate		—		—		—		—
Construction		—		—		—		—
Consumer		750		750		1,476		1,476
Total	$	750	$	750	$	1,476	$	1,476

The following table provides an analysis of average recorded investment and interest income recognized by segment on impaired loans during the three months ended March 31, 2020. There were no impaired loans as of March 31, 2019 or during the three months ended March 31, 2019:


	For the three months ended March 31,
	2020
	Average		Interest
	Recorded		Income
	Investment		Recognized
	(In thousands)
1-4 family residential	$	—	$	—
Commercial		—		—
Multifamily		—		—
Commercial real estate		—		—
Construction		—		—
Consumer		1,213		—
Total	$	1,213	$	—

Nonperforming Loans

Nonperforming loans include loans 90 days past due and still accruing and nonaccrual loans. At March 31, 2020, the Company had $750 thousand in nonperforming consumer loans. At December 31, 2019, the Company had $1.5 million in nonperforming consumer loans.

The following tables present the aging of the recorded investment in past due loans by class of loans as of March 31, 2020 and December 31, 2019:


									Total Past
	30-59		60-89		Greater than				Due &
	Days		Days		90 Days		Nonaccrual		Nonaccrual		Loans Not
	Past Due		Past Due		Past Due		Loans		Loans		Past Due		Total
	(In thousands)
March 31, 2020
1 – 4 family residential	$	—	$	—	$	—	$	—	$	—	$	51,738	$	51,738
Commercial		—		—		—		—		—		292,343		292,343
Multifamily		—		—		—		—		—		147,333		147,333
Commercial real estate		—		—		—		—		—		51,126		51,126
Construction		—		—		—		—		—		—		—
Consumer		4		—		—		750		754		46,725		47,479
Total	$	4	$	—	$	—	$	750	$	754	$	589,265	$	590,019


									Total Past
	30-59		60-89		Greater than				Due &
	Days		Days		90 Days		Nonaccrual		Nonaccrual		Loans Not
	Past Due		Past Due		Past Due		Loans		Loans		Past Due		Total
	(In thousands)
December 31, 2019
1 – 4 family residential	$	—	$	—	$	—	$	—	$	—	$	48,140	$	48,140
Commercial		—		—		—		—		—		257,957		257,957
Multifamily		—		2,602		—		—		2,602		150,031		152,633
Commercial real estate		—		—		—		—		—		52,477		52,477
Construction		—		—		—		—		—		6,450		6,450
Consumer		—		6		—		1,476		1,482		45,840		47,322
Total	$	—	$	2,608	$	—	$	1,476	$	4,084	$	560,895	$	564,979

Credit Quality Indicators

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis is performed whenever a credit is extended, renewed or modified, or when an observable event occurs indicating a potential decline in credit quality, and no less than annually for large balance loans.

The Company uses the following definitions for risk ratings:

Special Mention - Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

Substandard - Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful - Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans.

Based on the most recent analysis performed, the risk category of loans by class of loans is as follows:


	Pass		Special Mention		Substandard		Doubtful
	(In thousands)
March 31, 2020
1 – 4 family residential	$	51,738	$	—	$	—	$	—
Commercial		292,218		—		125		—
Multifamily		147,333		—		—		—
Commercial real estate		51,126		—		—		—
Construction		—		—		—		—
Consumer		43,314		3,415		750		—
Total	$	585,729	$	3,415	$	875	$	—


	Pass		Special Mention		Substandard		Doubtful
	(In thousands)
December 31, 2019
1 – 4 family residential	$	48,140	$	—	$	—	$	—
Commercial		257,832		—		125		—
Multifamily		152,633		—		—		—
Commercial real estate		52,477		—		—		—
Construction		6,450		—		—		—
Consumer		42,431		3,415		1,476		—
Total	$	559,963	$	3,415	$	1,601	$	—

The Company considers the performance of the loan portfolio and its impact on the allowance for loan losses. For residential and consumer loan classes, the Company evaluates credit quality based on the aging status of the loan, which was previously presented, and by payment activity.

The Company has no loans identified as troubled debt restructurings at March 31, 2020 and December 31, 2019. Furthermore, there were no loans modified during the three months ended March 31, 2020 and 2019 as troubled debt restructurings. In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification.

Pledged Loans

At March 31, 2020, loans totaling $39.6 million were pledged to the Federal Home Loan Bank of New York for borrowing capacity totaling $27.5 million. At December 31, 2019, loans totaling $39.8 million were pledged to the Federal Home Loan Bank of New York for borrowing capacity totaling $27.0 million.