NOTE 5 - Loans

Major classifications of loans are as follows:


	March 31,		December 31,
	2020		2019
Commercial
Development	$	15,765	$	18,222
Real estate		75,046		68,621
Commercial and industrial		12,850		13,681
Residential real estate and consumer
One-to-four family owner-occupied		29,852		29,380
One-to-four family investor-owned		30,021		28,077
Multifamily		27,720		29,531
Consumer		4,148		4,230
Subtotal	$	195,402	$	191,742
Deferred loan fees		(179)		(187)
Allowance for loan losses		(2,307)		(2,264)
Net loans	$	192,916	$	189,291

Deposit accounts in an overdraft position and reclassified as loans approximated $2 and $6 at March 31, 2020 and December 31, 2019, respectively.

A summary of the activity in the allowance for loan losses by portfolio segment is as follows:


			Residential real
			estate
Three Months Ended	Commercial		and consumer		Total
March 31, 2020
Beginning balance	$	1,251	$	1,013	$	2,264
Provision for loan losses		50		(10)		40
Loans charged off		—		—		—
Recoveries of loans previously charged off		—		3		3
Total ending allowance balance	$	1,301	$	1,006	$	2,307

March 31, 2019
Beginning balance	$	940	$	1,178	$	2,118
Provision for loan losses		44		26		70
Loans charged off		—		—		—
Recoveries of loans previously charged off		—		—		—
Total ending allowance balance	$	984	$	1,204	$	2,188

Information about how loans were evaluated for impairment and the related allowance for loan losses follows:


			Residential real
			estate and
March 31, 2020	Commercial		consumer		Total
Loans:
Individually evaluated for impairment	$	781	$	1,784	$	2,565
Collectively evaluated for impairment		102,880		89,957		192,837
Total loans	$	103,661	$	91,741	$	195,402

Allowance for loan losses:
Individually evaluated for impairment	$	142	$	77	$	219
Collectively evaluated for impairment		1,159		929		2,088
Total allowance for loan losses	$	1,301	$	1,006	$	2,307


			Residential real
			estate and
December 31, 2019	Commercial		consumer		Total
Loans:
Individually evaluated for impairment	$	798	$	1,457	$	2,255
Collectively evaluated for impairment		99,726		89,761		189,487
Total loans	$	100,524	$	91,218	$	191,742

Allowance for loan losses:
Individually evaluated for impairment	$	158	$	77	$	235
Collectively evaluated for impairment		1,093		936		2,029
Total allowance for loan losses	$	1,251	$	1,013	$	2,264

Information regarding impaired loans follows:


	Principal		Recorded		Related		Average		Interest
As of March 31, 2020	Balance		Investment		Allowance		Investment		Recognized
Loans with related allowance for loan losses:
Commercial
Commercial and industrial	$	717	$	717	$	142	$	723	$	11
Residential real estate and consumer
One-to-four family investor-owned		411		393		77		398		—
Total loans with related allowance for loan losses		1,128		1,110		219		1,121		11
Loans with no related allowance for loan losses:
Commercial
Commercial and industrial		68		64		—		67		1
Residential real estate and consumer
One-to-four family owner-occupied		1,093		1,090		—		1,093		11
One-to-four family investor-owned		242		216		—		218		—
Consumer		98		85		—		87		—
Total loans with no related allowance for loan losses		1,501		1,455		—		1,465		12

Total impaired loans	$	2,629	$	2,565	$	219	$	2,586	$	23


	Principal		Recorded		Related		Average		Interest
As of December 31, 2019	Balance		Investment		Allowance		Investment		Recognized
Loans with related allowance for loan losses:
Commercial
Commercial and industrial	$	729	$	729	$	158	$	740	$	19
Residential real estate and consumer
One-to-four family investor-owned		415		403		77		412		—
Total loans with related allowance for loan losses		1,144		1,132		235		1,152		19
Loans with no related allowance for loan losses:
Commercial
Commercial and industrial		73		69		—		77		5
Residential real estate and consumer
One-to-four family owner-occupied		795		744		—		754		5
One-to-four family investor-owned		243		221		—		231		—
Consumer		114		89		—		98		—
Total loans with no related allowance for loan losses		1,225		1,123		—		1,160		10

Total impaired loans	$	2,369	$	2,255	$	235	$	2,312	$	29

There were no additional funds committed to impaired loans as of March 31, 2020 or December 31, 2019.

The Company regularly evaluates various attributes of loans to determine the appropriateness of the allowance for loan losses. The credit quality indicators monitored differ depending on the class of loan.

Commercial loans and one-to-four family investor-owned and multifamily loans are generally evaluated using the following internally prepared ratings:

“Pass” ratings are assigned to loans with adequate collateral and debt service ability such that collectability of the contractual loan payments is highly probable.

“Special mention” ratings are assigned to loans where management has some concern that the collateral or debt service ability may not be adequate, though the collectability of the contractual loan payments is still probable.

“Substandard” ratings are assigned to loans that do not have adequate collateral and/or debt service ability such that collectability of the contractual loan payments is no longer probable.

“Doubtful” ratings are assigned to loans that do not have adequate collateral and/or debt service ability, and collectability of the contractual loan payments is unlikely.

Information regarding the credit quality indicators most closely monitored for commercial loans by class follows:


			Special
	Pass		Mention		Substandard		Doubtful		Totals
March 31, 2020
Development	$	15,765	$	—	$	—	$	—	$	15,765
Real estate		74,467		579		—		—		75,046
Commercial and industrial		9,985		2,853		12		—		12,850
One-to-four family investor-owned		29,334		—		687		—		30,021
Multifamily		27,720		—		—		—		27,720
Totals	$	157,271	$	3,432	$	699	$	—	$	161,402
December 31, 2019
Development	$	18,222	$	—	$	—	$	—	$	18,222
Real estate		68,036		585		—		—		68,621
Commercial and industrial		10,888		2,779		14		—		13,681
One-to-four family investor-owned		27,453		—		624		—		28,077
Multifamily		29,531		—		—		—		29,531
Totals	$	154,130	$	3,364	$	638	$	—	$	158,132

Residential real estate and consumer loans are generally evaluated based on whether or not the loan is performing according to the contractual terms of the loan.

Information regarding the credit quality indicators most closely monitored for residential real estate and consumer loans by class follows:


	Performing		Non-performing		Totals
March 31, 2020
One-to-four family owner-occupied	$	29,852	$	—	$	29,852
Consumer		4,064		84		4,148
	$	33,916	$	84	$	34,000
December 31, 2019
One-to-four family owner-occupied	$	28,636	$	744	$	29,380
Consumer		4,141		89		4,230
	$	32,777	$	833	$	33,610

Loan aging information follows:


			Loans Past Due		Loans Past Due				Nonaccrual
	Current Loans		30-89 Days		90+ Days		Total Loans		Loans
March 31, 2020
Commercial
Development	$	15,765	$	—	$	—	$	15,765	$	—
Real estate		75,046		—		—		75,046		—
Commercial and industrial		12,850		—		—		12,850		12
Residential real estate and consumer
One-to-four family owner-occupied		29,683		169		—		29,852		—
One-to-four family investor-owned		29,934		87		—		30,021		610
Multifamily		27,720		—		—		27,720		—
Consumer		4,093		55		—		4,148		84
Total	$	195,091	$	311	$	—	$	195,402	$	706


			Loans Past Due		Loans Past Due				Nonaccrual
	Current Loans		30-89 Days		90+ Days		Total Loans		Loans
December 31, 2019
Commercial
Development	$	18,222	$	—	$	—	$	18,222	$	—
Real estate		68,621		—		—		68,621		—
Commercial and industrial		13,681		—		—		13,681		14
Residential real estate and consumer
One-to-four family owner-occupied		29,034		—		346		29,380		346
One-to-four family investor-owned		28,077		—		—		28,077		624
Multifamily		29,531		—		—		29,531		—
Consumer		4,230		—		—		4,230		86
Total	$	191,396	$	—	$	346	$	191,742	$	1,070

There are no loans 90 or more days past due and accruing interest as of March 31, 2020 or December 31, 2019.

When, for economic or legal reasons related to the borrower’s financial difficulties, the Company grants a concession to the borrower that the Company would not otherwise consider, the modified loan is classified as a troubled debt-restructuring. Loan modifications may consist of forgiveness of interest and/or principal, a reduction of the interest rate, allowing interest-only payments for a period of time, and/or extending amortization terms. During the three months ended and as of March 31, 2020, there were no new troubled debt restructurings. No troubled debt restructurings defaulted within 12 months of their modification date during the three months ended March 31, 2020. During the year ended and as of December 31, 2019, there were two commercial and industrial loans totaling $729 and three one-to-four family owner-occupied loans totaling $285 that were restructured. $0 was charged to the allowance for loan losses related to these loans. No troubled debt restructurings defaulted within 12 months of their modifications during the year ended December 31, 2019.

Management regularly monitors impaired loan relationships. In the event facts and circumstances change, an additional provision for loan losses may be necessary.