Loans Receivable, Net

12 Months Ended

Dec. 31, 2020

Receivables [Abstract]

Loans Receivable, Net

5. LOANS RECEIVABLE, NET

	December 31,
	2020		2019
Mortgage loans:
Residential 1-4 family	$	14,132,314	$	17,894,014
Commercial and multi-family		14,954,657		14,917,754
Home equity lines of credit		193,795		206,281
		29,280,766		33,018,049
Other loans:
Passbook		23,339		-
Student		3,971,838		5,888,955
Commercial		6,420,542		1,190,944
		10,415,719		7,079,899
Total loans		39,696,485		40,097,948
Less:
Deferred loan fees (costs and premiums), net		29,018		(170,842	)
Allowance for loan losses		400,995		428,908
		430,013		258,066
	$	39,266,472	$	39,839,882

As previously mentioned in Note 1 Summary of Significant Accounting Policies, the CARES Act established the PPP, administered directly by the U.S. SBA. The PPP provides loans to small businesses which were affected by economic conditions as a result of COVID-19 to provide cash-flow assistance to employers who maintain their payroll (including healthcare and certain related expenses), mortgage interest, rent, leases, utilities and interest on existing debt during the COVID-19 emergency. As of December 31, 2020, the Company had 73 PPP loans outstanding, with an outstanding principal balance of $5.2 million. The PPP loans are fully guaranteed by the SBA and may be eligible for forgiveness by the SBA to the extent that the proceeds are used to cover eligible payroll costs, interest costs, rent, and utility costs over a period of up to 24 weeks after the loan is made as long as certain conditions are met regarding employee retention and compensation levels. PPP loans deemed eligible for forgiveness by the SBA will be repaid by the SBA to the Company. PPP loans are included in the Commercial Loan class. The entire balance of the PPP loans are pledged to secure advances from the Federal Reserve Bank of New York.

In the ordinary course of business, the Company may make loans to its directors, executive officers, and their associates (related parties) on the same terms as those prevailing at the time of origination for comparable loans with other borrowers. The unpaid principal balances of related party loans were approximately $173,000 and $132,000 at December 31, 2020 and 2019, respectively.

Activity in the allowance for loan losses is summarized as follows:

	Year Ended
	December 31,
	2020			2019
Balance at beginning of year	$	428,908		$	407,832
Provision for loan losses		122,227			93,998
Charge-offs		(150,140	)		(72,922	)
Recoveries		-			-
Balance at end of year	$	400,995		$	428,908

The allowance for loan losses consists of specific, general and unallocated components. The specific component relates to loans that are classified as impaired. For loans that are classified as impaired, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan. There are no specific allowances as of December 31, 2020 and 2019. The general component covers pools of loans by loan class not considered impaired, as well as smaller balance homogeneous loans, such as one-to-four family real estate, home equity lines of credit and other consumer loans. These pools of loans are evaluated for loss exposure based upon historical loss rates for each of these categories of loans, adjusted for qualitative factors. These qualitative risk factors include:

1.	Lending policies and procedures, including underwriting standards and collection, charge-off, and recovery practices.
2.	National, regional, and local economic and business conditions including the value of underlying collateral for collateral dependent loans.
3.	Nature and volume of the portfolio and terms of loans.
4.	Experience, ability, and depth of lending management and staff and the quality of the Association’s loan review system.
5.	Volume and severity of past due, classified and nonaccrual loans.
6.	Existence and effect of any concentrations of credit and changes in the level of such concentrations.
7.	Effect of external factors, such as competition and legal and regulatory requirements.

Each factor is assigned a value to reflect improving, stable or declining conditions based on management’s best judgment using relevant information available at the time of the evaluation. Adjustments to the factors are supported through documentation of changes in conditions in a narrative accompanying the allowance for loan loss calculation.

An unallocated component is maintained to cover uncertainties that could affect management’s estimate of probable losses. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and general losses in the portfolio.

The allowance calculation methodology includes further segregation of loan classes into risk rating categories. The borrower’s overall financial condition, repayment sources, guarantors and value of collateral, if appropriate, are evaluated when credit deficiencies arise, such as delinquent loan payments. Credit quality risk ratings include regulatory classifications of pass, special mention, substandard, doubtful and loss.

Loan classifications are defined as follows:

● Pass — These loans are well protected by the current net worth and paying capacity of the obligor (or guarantors, if any) or by the fair value, less cost to acquire and sell, of any underlying collateral in a timely manner.

● Special Mention — These loans have potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of repayment prospects.

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

● Doubtful — These loans have all the weaknesses inherent in a loan classified substandard with the added characteristic that the weaknesses make the full recovery of our principal balance highly questionable and improbable on the basis of currently known facts, conditions, and values. The likelihood of a loss on an asset or portion of an asset classified as doubtful is high. Its classification as Loss is not appropriate, however, because pending events are expected to materially affect the amount of loss.

● Loss — These loans are considered uncollectible and of such little value that a charge-off is warranted. This classification does not necessarily mean that an asset has no recovery or salvage value; but rather, there is much doubt about whether, how much, or when the recovery will occur.

One of the primary methods the Company uses as an indicator of the credit quality of their portfolio is the regulatory classification system. The following table reflects the credit quality indicators by portfolio segment and class, at the dates indicated:

	December 31, 2020
	Mortgage Loans
			Commercial
	Residential		Real Estate and		Home				Commercial and
	1-4 Family		Multi-Family		Equity		Student		Other		Total
	(In thousands)
Pass	$	14,132	$	13,567	$	194	$	3,939	$	6,444	$	38,276
Special Mention		-		822		-		33		-		855
Substandard		-		565		-		-		-		565
Total	$	14,132	$	14,954	$	194	$	3,972	$	6,444	$	39,696

	December 31, 2019
	Mortgage Loans
			Commercial
	Residential		Real Estate and		Home				Commercial and
	1-4 Family		Multi-Family		Equity		Student		Other		Total
	(In thousands)
Pass	$	17,653	$	14,315	$	206	$	5,889	$	1,191	$	39,254
Special Mention		241		234		-		-		-		475
Substandard		-		369		-		-		-		369
Total	$	17,894	$	14,918	$	206	$	5,889	$	1,191	$	40,098

The following table provides information about loan delinquencies at the dates indicated:

	December 31, 2020
													90 Days
														or More
		30-59		60-89		90 Days								Past Due
		Days		Days		or More		Total		Current		Total		and
		Past Due		Past Due		Past Due		Past Due		Loans		Loans		Accruing
		(In thousands)
Residential 1-4 family	$	-	$	-	$	243	$	243	$	13,889	$	14,132		-
Commercial and multi-family		-		-		256		256		14,698		14,954		-
Home equity lines of credit		-		-		-		-		194		194		-
Student loans		25		18		30		73		3,899		3,972		-
Commercial and other loans		-		-		-		-		6,444		6,444		-
	$	25	$	18	$	529	$	572	$	39,124	$	39,696	$	-

	December 31, 2019
													90 Days
														or More
		30-59		60-89		90 Days								Past Due
		Days		Days		or More		Total		Current		Total		and
		Past Due		Past Due		Past Due		Past Due		Loans		Loans		Accruing
		(In thousands)
Residential 1-4 family	$	3	$	249	$	-	$	252	$	17,642	$	17,894	$	-
Commercial and multi-family		851		54		234		1,139		13,779		14,918		-
Home equity lines of credit		-		-		-		-		206		206		-
Student loans		61		104		-		165		5,724		5,889		-
Commercial and other loans		-		-		-		-		1,191		1,191		-
	$	915	$	407	$	234	$	1,556	$	38,542	$	40,098	$	-

The following is a summary of loans, by loan type, on which the accrual of income has been discontinued and loans that are contractually past due 90 days or more but have not been classified as non-accrual at the dates indicated:

	December 31,
	2020		2019
		(In thousands)
Residential 1-4 family	$	256	$	-
Commercial and multi-family		243		234
Home equity lines of credit		-		-
Student loans		123		-
Commercial and other loans		-		-
Total non-accrual loans		622		234
Accruing loans delinquent 90 days or more		-		-
Total non-performing loans	$	622	$	234

The total amount of interest income on non-accrual loans that would have been recognized if interest on all such loans had been recorded based upon original contract terms amounted to approximately $57,700 and $10,200 for the year ended December 31, 2020 and 2019, respectively. The total amount of interest income recognized on non-accrual loans amounted to approximately $6,000 and $0 during the year ended December 31, 2020 and 2019, respectively.

A loan is defined as impaired when, based on current information and events, it is probable that a creditor will be unable to collect all amounts due under the contractual terms of the loan agreement. The Company considers one-to four-family mortgage loans and consumer installment loans to be homogeneous and, therefore, does not generally evaluate them for impairment, unless they are considered troubled debt restructurings. All other loans are evaluated on an individual basis.

The following table presents loans evaluated for impairment by loan type:

	Year Ended
	December 31, 2020
				Unpaid		Related		Average		Interest
		Recorded		Principal		Specific		Recorded		Income
		Investment		Balance		Allowance		Investment		Recognized
Without an allowance:
1-4 family residential	$	239,107	$	239,107	$	-	$	239,983	$	11,700

	Year Ended
	December 31, 2019
				Unpaid		Related		Average		Interest
		Recorded		Principal		Specific		Recorded		Income
		Investment		Balance		Allowance		Investment		Recognized
Without an allowance:
1-4 family residential	$	240,858	$	240,858	$	-	$	265,113	$	10,900

The recorded investment in the one loan modified in a troubled debt restructuring totaled $239,107 and $240,858 at December 31, 2020 and 2019, respectively. This loan was current at December 31, 2020 and complied with the terms of its restructure agreement. Loans that were modified in a troubled debt restructuring represent concessions made to borrowers experiencing financial difficulties. The Company works with these borrowers to modify existing loan terms usually by extending maturities or reducing interest rates. The Company records an impairment loss, if any, based on the present value of expected future cash flows discounted at the original loan’s effective interest rate or the value of the underlying collateral property. Subsequently, these loans are individually evaluated for impairment.

There were no new troubled debt restructurings in 2019 and 2020.

The Company began offering short-term loan modifications to assist borrowers during the COVID-19 national emergency. These modifications generally involve principal and/or interest payment deferrals for up to six months. Interest continues to legally accrue, and the Company continues to record interest income, during the forbearance period. The Company offers several repayment options such as immediate repayment, repayment over a designated time period, or as a balloon payment at maturity. These modifications generally do not involve forgiveness or interest rate reductions. The CARES Act, along with a joint agency statement issued by banking agencies, provide that short-term modifications made in response to COVID-19 do not need to be accounted for as a TDR. Accordingly, the Company does not account for such loan modifications as TDRs. See Note 1 Summary of Significant Accounting Policies for more information.

As of December 31, 2020, the Company did not have any COVID-19 related deferments. In the second quarter of 2020, the Company made COVID-19 related short-term loan concessions to two residential 1-4 family mortgage loan totaling $438,000 and two commercial and multi-family mortgage loans totaling $1,055,000. As of December 31, 2020, one of these loans has paid off and the remaining three loans have come out of the deferment period.

The following tables present the activity in the allowance for loan losses by loan type for the years indicated:

	Year Ended
	December 31, 2020
		Mortgage Loans
					Commercial
		Residential			and			Home
		1-4 Family			Multi-Family			Equity			Student			Other		Unallocated		Total
		(In thousands)
Beginning balance	$	142		$	134		$	2		$	140		$	11	$	-	$	429
Provision for loan losses		(44	)		(7	)		(1	)		174			-		-		122
Charge offs		-			-			-			(150	)		-		-		(150	)
Ending Balance	$	98		$	127		$	1		$	164		$	11	$	-	$	401

	Year Ended
	December 31, 2019
		Mortgage Loans
					Commercial
		Residential			and		Home
		1-4 Family			Multi-Family		Equity		Student			Other			Unallocated		Total
	(In thousands)
Beginning balance	$	145		$	128	$	1	$	122		$	12		$	-	$	408
Provision for loan losses		(3	)		6		1		91			(1	)		-		94
Charge offs		-			-		-		(73	)		-			-		(73	)
Ending Balance	$	142		$	134	$	2	$	140		$	11		$	-	$	429