LOANS

3 Months Ended

Mar. 31, 2023

NOTE 4 – LOANS

In conjunction with the adoption of ASC 326, the Company made certain loan portfolio segment reclassifications to conform to the new allowance for credit losses methodology. Loans and these related reclassifications, are summarized as follows at March 31, 2023 and December 31, 2022:


				Post Adoption						Pre Adoption
	March 31, 2023			December 31, 2022			The effect of adoption			December 31, 2022
Real estate:	(unaudited)
Residential First Mortgage	$	489,079,665		$	495,689,840		$	29,589,213		$	466,100,627
Commercial and Multi-Family Real Estate		—			—			(162,338,669	)		162,338,669
Commercial Real Estate		95,343,455			96,030,721			96,030,721			—
Multi-Family Real Estate		71,414,226			66,400,713			66,400,713			—
Construction		57,379,095			61,825,478			—			61,825,478
Commercial and Industrial		1,523,380			1,684,189			—			1,684,189
Consumer:
Home Equity and Other Consumer		—			—			(29,654,973	)		29,654,973
Consumer		11,475			98,770			98,770			—
Total loans		714,751,296			721,729,711			125,775			721,603,936
Allowance for credit losses		(2,860,949	)		(2,860,949	)		(282,775	)		(2,578,174	)
Net loans	$	711,890,347		$	718,868,762		$	(157,000	)	$	719,025,762

The Bank has granted loans to officers and directors of the Bank. At March 31, 2023 and December 31, 2022, such loans totaled $1,756,594 and $577,143, respectively. At March 31, 2023 and December 31, 2022, deferred loan fees were $2,894,450 and $1,249,233, respectively.


	Residential First Mortgage			Commercial Real Estate			Multi- Family Real Estate		Construction			Commercial and Industrial			Consumer			Total
Three months March 31, 2023
Allowance for credit losses:
Beginning balance	$	1,602,534		$	381,180		$	234,300	$	258,500		$	3,960		$	97,700		$	2,578,174
Impact of ASC 326 adoption		113,969			141,797			25,469		1,500			40			—			282,775
Provision for recovery of credit losses (credit)		198,444			(99,975	)		18,231		(19,000	)		—			(97,700	)		—
Loans charged off		—			—					—			—			—			—
Recoveries		—			—					—			—			—			—
Total ending allowance balance	$	1,914,947		$	423,000		$	278,000	$	195,240		$	4,000		$	—		$	2,860,949

	Residential First Mortgage			Commercial and Multi- Family Real Estate			Construction		Commercial and Industrial			Home Equity & Other			Total
March 31, 2022
Allowance for loan losses:
Beginning balance	$	1,092,474		$	768,600		$	195,000	$	9,400		$	87,700		$	2,153,174
Provision for loan losses (credit)		(17,400	)		11,400			13,000		(100	)		(6,900	)		—
Loans charged off		—			—			—		—			—			—
Recoveries		—			—			—		—			—			—
Total ending allowance balance	$	1,075,074		$	780,000		$	208,000	$	9,300		$	80,800		$	2,153,174

NOTE 4 – LOANS (Continued)

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segments and based on impairment method as of December 31, 2022:


	Residential First Mortgage		Commercial and Multi- Family Real Estate		Construction		Commercial and Industrial		Home Equity & Other consumer		Total
December 31, 2022
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	33,000	$	—	$	—	$	—	$	—	$	33,000
Collectively evaluated for impairment		1,569,534		615,480		258,500		3,960		97,700		2,545,174
Total ending allowance balance	$	1,602,534	$	615,480	$	258,500	$	3,960	$	97,700	$	2,578,174
Loans:
Loans individually evaluated for impairment	$	819,590	$	—	$	—	$	—	$	37,069	$	856,659
Loans collectively evaluated for impairment		462,439,940		160,990,186		61,825,478		1,684,189		29,586,787		716,526,580
Loans acquired with deteriorated credit quality		2,841,097		1,348,483		—		—		31,117		4,220,697
Total ending loan balance	$	466,100,627	$	162,338,669	$	61,825,478	$	1,684,189	$	29,654,973	$	721,603,936

NOTE 4 – LOANS (Continued)

Impaired loans as of the three months ended December 31, 2022 were as follows:


	Loans With no related allowance recorded		Loans with an allowance recorded		Average of individually Impaired loans		Amount of allowance for loan losses allocated
Residential First Mortgage	$	1,199,278	$	171,616	$	1,300,615	$	33,000
Commercial and Multi-Family Real Estate		488,222		—		488,196		—
Construction		—		—		—		—
Commercial and Industrial		—		—		—		—
Home Equity and Other Consumer		37,069		—		26,298		—
	$	1,724,569	$	171,616	$	1,815,109	$	33,000

Collateral - dependent loans individually evaluated with the Allowance for Credit Losses by collateral type were as follows at March 31, 2023:


Portfolio segment	Real estate		Other
Residential First Mortgage	$	—	$	—
Commercial Real Estate		—		—
Multi-Family Real Estate		—		—
Construction		10,922,520		—
Commercial and Industrial		—		—
Other Consumer		—		—
	$	10,922,520	$	—

NOTE 4 – LOANS (Continued)

Interest income recognized on impaired loans for the three months ended March 31, 2022 was nominal.

The following table presents the recorded investment in nonaccrual and loans past due 90 days or more and still on accrual, by class of loans as of December 31, 2022:


	Nonaccrual		Loans Past Due 90 Days or More Still Accruing
December 31, 2022
Residential First Mortgage	$	819,590	$	—
Home Equity and Other Consumer		37,069		—
Total	$	856,659	$	—

No nonaccrual loans have specific reserves as of March 31, 2023 and the Bank had no other real estate owned at either March 31, 2023 or December 31, 2022.


	Nonaccrual loans beginning of period		Nonaccrual loans end of period		Nonaccrual with no Allowance for Credit Loss		Loans Past Due 90 Days or More Still Accruing		Interest recognized on nonaccrual loans
March 31, 2023
Residential First Mortgage	$	819,590	$	1,497,898	$	1,497,898	$	—	$	—
Commercial Real Estate			$	487,755	$	487,755
Construction		—		10,922,520		10,922,520		—	$	—
Consumer		37,069		—		—		—	$	—
Total	$	856,659	$	12,908,173	$	12,908,173	$	—	$	—

NOTE 4 – LOANS (Continued)

The following table presents the aging of the recorded investment in past due loans as of March 31, 2023 and December 31, 2022, by class of loans:


	30-59 Days Past Due		60-89 Days Past Due		Greater than 89 Days Past Due		Total Past Due		Loans Not Past Due		Total
March 31, 2023
Residential First Mortgage	$	—	$	1,117,150	$	783,376	$	1,900,526	$	487,179,139	$	489,079,665
Commercial Real Estate		—		—		455,293		455,293		94,888,162		95,343,455
Multi-Family Real Estate		—		—		—		—		71,414,226		71,414,226
Construction		—		—		10,893,713		10,893,713		46,485,382		57,379,095
Commercial and Industrial		—		—		—		—		1,523,380		1,523,380
Consumer		—		—		—		—		11,475		11,475
Total	$	—	$	1,117,150	$	12,132,382	$	13,249,532	$	701,501,764	$	714,751,296

	30-59 Days Past Due		60-89 Days Past Due		Greater than 89 Days Past Due		Total Past Due		Loans Not Past Due		PCI loans		Total
December 31, 2022
Residential First Mortgage	$	—	$	360,849	$	279,515	$	640,364	$	462,619,166	$	2,841,097	$	466,100,627
Commercial and Multi-Family Real Estate		—		—		—		—		160,990,186		1,348,483		162,338,669
Construction		—		—		—		—		61,825,478		—		61,825,478
Commercial and Industrial		—		—		—		—		1,684,189		—		1,684,189
Home Equity and Other Consumer		92,977		—		19,122		112,099		29,511,757		31,117		29,654,973
Total	$	92,977	$	360,849	$	298,637	$	752,463	$	716,630,776	$	4,220,697	$	721,603,936

Loans greater than 89 days past due and loans on non-accrual are considered to be nonperforming.

Credit Quality Indicators

The Bank 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 Bank analyzes loans individually by classifying the loans as to credit risk. Commercial and multi-family real estate, commercial and industrial and construction loans are graded on an annual basis. Residential and consumer loans are primarily evaluated based on performance. Refer to the immediately preceding table for the aging of the recorded investment of these loan segments. The Bank 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 are considered to be Pass rated loans.

NOTE 4 – LOANS (Continued)

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


	Term Loans by Origination Year
March 31, 2023	2023		2022		2021		2020		2019		Prior		Revolving Loans		Totals
Residential First Mortgage
Pass		1,356,565		116,300,705		40,276,075		29,878,332		28,409,680		129,243,964		141,925,437	$	487,390,758
Special Mention		—		—		—		191,009		171,616		455,299		112,099		930,023
Substandard		—		—		—		—		—		469,749		289,135		758,884
Doubtful		—		—		—		—		—		—		—		—
Total		1,356,565		116,300,705		40,276,075		30,069,341		28,581,296		130,169,012		142,326,671		489,079,665
Gross chargeoffs by vintage		—		—		—		—		—		—		—		—

Commercial Real Estate
Pass		—		3,116,904		—		6,634,424		5,605,765		12,726,031		66,772,576		94,855,700
Special Mention		—		—		—		—		—		—		487,755		487,755
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Total		—		3,116,904		—		6,634,424		5,605,765		12,726,031		67,260,331		95,343,455
Gross chargeoffs by vintage		—		—		—		—		—		—		—		—

Multi-Family Real Estate
Pass		—		2,435,157		—		1,202,368		—		2,177,677		65,599,024		71,414,226
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Total		—		2,435,157		—		1,202,368		—		2,177,677		65,599,024		71,414,226
Gross chargeoffs by vintage		—		—		—		—		—		—		—		—

Construction
Pass		—		—		—		—		—		—		46,456,575		46,456,575
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		10,922,520		10,922,520
Doubtful		—		—		—		—		—		—		—		—
Total		—		—		—		—		—		—		57,379,095		57,379,095
Gross chargeoffs by vintage		—		—		—		—		—		—		—		—

Commercial and Industrial
Pass		—		—		259,355		767,024		348,985		6,494		141,522		1,523,380
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Total		—		—		259,355		767,024		348,985		6,494		141,522		1,523,380
Gross chargeoffs by vintage		—		—		—		—		—		—		—		—

Consumer
Pass		—		—		—		—		—		—		11,475		11,475
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Total		—		—		—		—		—		—		11,475		11,475
Total loans	$	1,356,565	$	121,852,766	$	40,535,430	$	38,673,157	$	34,536,046	$	145,079,214	$	332,718,118	$	714,751,296


	Pass		Special Mention		Substandard		Totals
December 31, 2022
Residential First Mortgage	$	465,089,495	$	555,965	$	455,167	$	466,100,627
Commercial and Multi-Family Real Estate		162,338,669		—		—		162,338,669
Construction		61,825,478		—		—		61,825,478
Commercial and Industrial		1,684,189		—		—		1,684,189
Home Equity and Other Consumer		29,617,904		19,122		17,947		29,654,973
Total	$	720,555,735	$	575,087	$	473,114	$	721,603,936

There have been no loan modifications for the three month period ended March 31, 2023.