Loans

9 Months Ended

Sep. 30, 2024

Loans:

Loans

NOTE 3 — Loans

The composition of loans by class is summarized as follows:

	September 30,		December 31,
	2024		2023
	(In thousands)
Real estate:
Multifamily	$	350,857	$	348,241
Commercial real estate		87,544		89,498
1 – 4 family		14,749		17,937
Total real estate		453,150		455,676
Commercial		825,439		737,914
Consumer		18,874		14,491
Total loans held for investment		1,297,463		1,208,081
Deferred fees and unearned premiums, net		(20)		(668)
Allowance for credit losses		(19,451)		(16,631)
Loans held for investment, net	$	1,277,992	$	1,190,782

The following tables present the activity in the allowance for credit losses by class for the three months ending September 30, 2024 and September 30, 2023:

			Commercial
	Multifamily		Real Estate		1‑4 Family		Commercial		Consumer		Total
	(In thousands)
September 30, 2024
Allowance for credit losses:
Beginning balance	$	3,403	$	744	$	55	$	13,535	$	784	$	18,521
Provision (credit) for credit losses		(4)		(33)		(1)		1,154		(116)		1,000
Recoveries		—		—		—		—		1		1
Loans charged-off		—		—		—		—		(71)		(71)
Total ending allowance balance	$	3,399	$	711	$	54	$	14,689	$	598	$	19,451
September 30, 2023
Allowance for credit losses:
Beginning balance	$	2,423	$	867	$	65	$	10,566	$	258	$	14,179
Provision (credit) for credit losses		652		(23)		(2)		462		111		1,200
Recoveries		—		—		—		—		12		12
Loans charged-off		—		—		—		—		(63)		(63)
Total ending allowance balance	$	3,075	$	844	$	63	$	11,028	$	318	$	15,328

The following tables present the activity in the allowance for credit losses by class for the nine months ending September 30, 2024 and September 30, 2023:

			Commercial
	Multifamily		Real Estate		1‑4 Family		Commercial		Consumer		Total
	(In thousands)
September 30, 2024
Allowance for credit losses:
Beginning balance	$	3,236	$	823	$	58	$	12,056	$	458	$	16,631
Provision (credit) for credit losses		163		(112)		(4)		2,633		320		3,000
Recoveries		—		—		—		—		25		25
Loans charged-off		—		—		—		—		(205)		(205)
Total ending allowance balance	$	3,399	$	711	$	54	$	14,689	$	598	$	19,451
September 30, 2023
Allowance for credit losses:
Beginning balance, prior to adoption of CECL Standard	$	2,017	$	1,022	$	192	$	8,645	$	347	$	12,223
Impact of adopting CECL Standard		8		(109)		(131)		514		1		283
Provision (credit) for credit losses		1,050		(69)		2		1,874		168		3,025
Recoveries		—		—		—		—		28		28
Loans charged-off		—		—		—		(5)		(226)		(231)
Total ending allowance balance	$	3,075	$	844	$	63	$	11,028	$	318	$	15,328

As of September 30, 2024 and December 31, 2023, there was one multifamily collateral dependent loan secured by real estate totaling $10.9 million with no associated specific reserve on the Consolidated Statements of Financial Condition.

The following tables present the aging of the recorded investment in past due loans by class of loans as of September 30, 2024 and December 31, 2023:

									Total Past
	30-59		60-89		90 Days				Due &
	Days		Days		or More		Nonaccrual		Nonaccrual		Loans Not
	Past Due		Past Due		Past Due		Loans		Loans		Past Due		Total
	(In thousands)
September 30, 2024
Multifamily	$	—	$	—	$	—	$	10,940	$	10,940	$	339,917	$	350,857
Commercial real estate		—		—		—		—		—		87,544		87,544
1 – 4 family		—		—		—		—		—		14,749		14,749
Commercial		—		—		—		—		—		825,439		825,439
Consumer		46		51		88		—		185		18,689		18,874
Total	$	46	$	51	$	88	$	10,940	$	11,125	$	1,286,338	$	1,297,463
									Total Past
	30-59		60-89		90 Days				Due &
	Days		Days		or More		Nonaccrual		Nonaccrual		Loans Not
	Past Due		Past Due		Past Due		Loans		Loans		Past Due		Total
	(In thousands)
December 31, 2023
Multifamily	$	—	$	—	$	—	$	10,940	$	10,940	$	337,301	$	348,241
Commercial real estate		—		—		—		—		—		89,498		89,498
1 – 4 family		—		—		—		—		—		17,937		17,937
Commercial		—		—		—		—		—		737,914		737,914
Consumer		24		41		69		—		134		14,357		14,491
Total	$	24	$	41	$	69	$	10,940	$	11,074	$	1,197,007	$	1,208,081

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.

The following is a summary of the credit risk profile of loans, measured at amortized cost, by internally assigned grade as of the periods indicated, the years represent the year of originations for non-revolving loans:

	September 30, 2024
	2024		2023		2022		2021		2020		2019 and Prior		Revolving		Revolving-Term		Total
	(In thousands)
Multifamily:
Pass	$	18,530	$	104,998	$	26,793	$	108,155	$	23,127	$	58,481	$	—	$	—	$	340,084
Special Mention		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		10,940		—		—		—		10,940
Doubtful		—		—		—		—		—		—		—		—		—
Total		18,530		104,998		26,793		108,155		34,067		58,481		—		—		351,024
Current period gross charge-offs		—		—		—		—		—		—		—		—		—
Commercial real estate:
Pass		—		3,089		57,880		10,378		1,725		14,413		—		—		87,485
Special Mention		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—		—
Total		—		3,089		57,880		10,378		1,725		14,413		—		—		87,485
Current period gross charge-offs		—		—		—		—		—		—		—		—		—
1-4 family:
Pass		—		—		1,832		—		—		12,920		—		—		14,752
Special Mention		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—		—
Total		—		—		1,832		—		—		12,920		—		—		14,752
Current period gross charge-offs		—		—		—		—		—		—		—		—		—
Commercial:
Pass		49,828		41,763		18,588		2,873		310		397		704,258		3,292		821,309
Special Mention		—		—		—		—		—		—		3,987		—		3,987
Substandard		—		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—		—
Total		49,828		41,763		18,588		2,873		310		397		708,245		3,292		825,296
Current period gross charge-offs		—		—		—		—		—		—		—		—		—
Consumer:
Pass		1,614		4,337		3,040		—		296		1,021		8,578		—		18,886
Special Mention		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—		—
Total		1,614		4,337		3,040		—		296		1,021		8,578		—		18,886
Current period gross charge-offs		—		38		167		—		—		—		—		—		205
Total:
Pass		69,972		154,187		108,133		121,406		25,458		87,232		712,836		3,292		1,282,516
Special Mention		—		—		—		—		—		—		3,987		—		3,987
Substandard		—		—		—		—		10,940		—		—		—		10,940
Doubtful		—		—		—		—		—		—		—		—		—
Total loans	$	69,972	$	154,187	$	108,133	$	121,406	$	36,398	$	87,232	$	716,823	$	3,292	$	1,297,443
Total current period gross charge-offs	$	—	$	38	$	167	$	—	$	—	$	—	$	—	$	—	$	205

	December 31, 2023
	2023		2022		2021		2020		2019		2018 and Prior		Revolving		Revolving-Term		Total
	(In thousands)
Multifamily:
Pass	$	105,175	$	29,116	$	109,919	$	23,512	$	22,155	$	47,566	$	—	$	—	$	337,443
Special Mention		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		10,940		—		—		—		—		10,940
Doubtful		—		—		—		—		—		—		—		—		—
Total		105,175		29,116		109,919		34,452		22,155		47,566		—		—		348,383
Current period gross charge-offs		—		—		—		—		—		—		—		—		—
Commercial real estate:
Pass		3,401		58,552		10,560		1,757		5,651		9,515		—		—		89,436
Special Mention		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—		—
Total		3,401		58,552		10,560		1,757		5,651		9,515		—		—		89,436
Current period gross charge-offs		—		—		—		—		—		—		—		—		—
1-4 family:
Pass		—		1,861		—		—		4,296		11,776		—		—		17,933
Special Mention		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—		—
Total		—		1,861		—		—		4,296		11,776		—		—		17,933
Current period gross charge-offs		—		—		—		—		—		—		—		—		—
Commercial:
Pass		43,500		59,203		9,212		489		—		465		615,177		5,024		733,070
Special Mention		—		—		—		—		—		—		3,988		—		3,988
Substandard		—		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—		—
Total		43,500		59,203		9,212		489		—		465		619,165		5,024		737,058
Current period gross charge-offs		—		—		—		—		—		5		—		—		5
Consumer:
Pass		5,414		5,397		56		358		1,106		32		2,240		—		14,603
Special Mention		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—		—
Total		5,414		5,397		56		358		1,106		32		2,240		—		14,603
Current period gross charge-offs		—		324		25		90		—		—		—		—		439
Total:
Pass		157,490		154,129		129,747		26,116		33,208		69,354		617,417		5,024		1,192,485
Special Mention		—		—		—		—		—		—		3,988		—		3,988
Substandard		—		—		—		10,940		—		—		—		—		10,940
Doubtful		—		—		—		—		—		—		—		—		—
Total loans	$	157,490	$	154,129	$	129,747	$	37,056	$	33,208	$	69,354	$	621,405	$	5,024	$	1,207,413
Total current period gross charge-offs	$	—	$	324	$	25	$	90	$	—	$	5	$	—	$	—	$	444

The Company considers the performance of the loan portfolio and its impact on the allowance for credit losses. For smaller dollar commercial 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.

Loan Modifications

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. During the three and nine months ended September 30, 2024 and 2023, the Company did not modify the terms of any loans or commitments to lend to borrowers experiencing financial difficulty in the form of an interest rate reduction, term extension, principal forgiveness or other-than-insignificant payment delay.

Pledged Loans

At September 30, 2024, loans totaling $294.3 million were pledged to the FHLB for borrowing capacity totaling $190.9 million. At December 31, 2023, loans totaling $222.4 million were pledged to the FHLB for borrowing capacity totaling $158.5 million.