LOANS

6 Months Ended

Jun. 30, 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 ACL methodology. Loans and these related reclassifications, are summarized as follows at June 30, 2023 and December 31, 2022:


				Pre Adoption						Post Adoption
	June 30, 2023			December 31, 2022			The effect of adoption			December 31, 2022
Real estate:	(unaudited)
Residential First Mortgage	$	488,571,980		$	495,689,840		$	29,589,213		$	466,100,627
Commercial and Multi-Family Real Estate		—			—			(162,338,669	)		162,338,669
Commercial Real Estate		100,761,175			96,030,721			96,030,721			—
Multi-Family Real Estate		67,007,772			66,400,713			66,400,713			—
Construction		48,678,332			61,825,478			—			61,825,478
Commercial and Industrial		3,692,425			1,684,189			—			1,684,189
Consumer:
Home Equity and Other Consumer		—			—			(29,654,973	)		29,654,973
Consumer		20,350			98,770			98,770			—
Total loans		708,732,034			721,729,711			125,775			721,603,936
Allowance for credit losses		(2,785,949	)		(2,860,949	)		(282,775	)		(2,578,174	)
Net loans	$	705,946,085		$	718,868,762		$	(157,000	)	$	719,025,762

The Bank has granted loans to officers and directors of the Bank. At June 30, 2023 and December 31, 2022, such loans totaled $1,646,122 and $1,739,725, respectively. At June 30, 2023 and December 31, 2022, deferred loan fees were $3,072,824 and $3,078,612, respectively.


	Residential First Mortgage			Commercial Real Estate			Multi- Family Real Estate			Construction			Commercial and Industrial			Consumer		Total
Three months June 30, 2023
Allowance for credit losses:
Beginning balance	$	1,914,947		$	423,002		$	278,000		$	241,000		$	4,000		$	—	$	2,860,949
Provision for (recovery) of credit losses		(103,400	)		116,000			(13,000	)		(82,000	)		7,400			—		(75,000	)
Loans charged off		—			—						—			—			—		—
Recoveries		—			—						—			—			—		—
Total ending allowance balance	$	1,811,547		$	539,002		$	265,000		$	159,000		$	11,400		$	—	$	2,785,949

	Residential First Mortgage			Commercial and Multi- Family Real Estate			Construction			Commercial and Industrial			Home Equity & Other			Total
June 30, 2022
Allowance for loan losses:
Beginning balance	$	1,092,474		$	768,600		$	195,000		$	9,400		$	87,700		$	2,153,174
Provision for (recovery) of loan losses		159,450			(88,600	)		37,000			(2,400	)		(5,450	)		100,000
Loans charged off		—			—			—			—			—			—
Recoveries		—			—			—			—			—			—
Total ending allowance balance	$	1,251,924		$	680,000		$	232,000		$	7,000		$	82,250		$	2,253,174


	Residential First Mortgage		Commercial Real Estate			Multi- Family Real Estate		Construction			Commercial and Industrial			Home Equity & Other			Total
Six months June 30, 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		95,044		16,025			5,231		(101,000	)		7,400			(97,700	)		(75,000	)
Loans charged off		—		—			—		—			—			—			—
Recoveries		—		—			—		—			—			—			—
Total ending allowance balance	$	1,811,547	$	539,002		$	265,000	$	159,000		$	11,400		$	—		$	2,785,949

	Residential First Mortgage		Commercial and Multi- Family Real Estate			Construction		Commercial and Industrial			Home Equity & Other			Total
June 30, 2022
Allowance for loan losses:
Beginning balance	$	1,092,474	$	768,600		$	195,000	$	9,400		$	87,700		$	2,153,174
Provision for (recovery) of loan losses		159,450		(88,600	)		37,000		(2,400	)		(5,450	)		100,000
Loans charged off		—		—			—		—			—			—
Recoveries		—		—			—		—			—			—
Total ending allowance balance	$	1,251,924	$	680,000		$	232,000	$	7,000		$	82,250		$	2,253,174

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 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 ACL by collateral type were as follows at June 30, 2023:


Portfolio segment	Real estate		Other
Residential First Mortgage	$	—	$	—
Commercial Real Estate		—		—
Multi-Family Real Estate		—		—
Construction		10,937,811		—
Commercial and Industrial		—		—
Other Consumer		—		—
	$	10,937,811	$	—

NOTE 4 – LOANS (Continued)

Interest income recognized on impaired loans for the six months ended June 30, 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 June 30, 2023 and the Bank had no other real estate owned at either June 30, 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
June 30, 2023
Residential First Mortgage	$	819,590	$	1,989,985	$	1,989,985	$	—	$	—
Commercial Real Estate				490,267		490,267
Construction		—		10,937,811		10,937,811		—		—
Consumer		37,069		—		—		—		—
Total	$	856,659	$	13,418,063	$	13,418,063	$	—	$	—

NOTE 4 – LOANS (Continued)

The following table presents the aging of the recorded investment in past due loans as of June 30, 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
June 30, 2023
Residential First Mortgage	$	—	$	348,719	$	1,144,015	$	1,492,734	$	487,079,246	$	488,571,980
Commercial Real Estate		—		—		454,076		454,076		100,307,099		100,761,175
Multi-Family Real Estate		—		—		—		—		67,007,772		67,007,772
Construction		—		—		10,893,713		10,893,713		37,784,619		48,678,332
Commercial and Industrial		—		—		—		—		3,692,425		3,692,425
Consumer		—		—		—		—		20,350		20,350
Total	$	—	$	348,719	$	12,491,804	$	12,840,523	$	695,891,511	$	708,732,034

	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
June 30, 2023	2023		2022		2021		2020		2019		Prior		Revolving Loans		Totals
Residential First Mortgage
Pass		3,317,011		114,501,078		39,198,904		29,640,007		27,527,661		124,366,155		148,031,179	$	486,581,995
Special Mention		—		—		—		191,903		171,147		764,034		107,543		1,234,627
Substandard		—		—		—		—		—		466,371		288,987		755,358
Doubtful		—		—		—		—		—		—		—		—
Total		3,317,011		114,501,078		39,198,904		29,831,910		27,698,808		125,596,560		148,427,709		488,571,980
Gross charge-offs by vintage		—		—		—		—		—		—		—		—

Commercial Real Estate
Pass		—		3,100,157		—		6,533,577		5,571,836		12,357,058		72,708,280		100,270,908
Special Mention		—		—		—		—		—		—		490,267		490,267
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Total		—		3,100,157		—		6,533,577		5,571,836		12,357,058		73,198,547		100,761,175
Gross charge-offs by vintage		—		—		—		—		—		—		—		—

Multi-Family Real Estate
Pass		—		2,411,454		—		1,189,211		—		2,070,445		61,336,662		67,007,772
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Total		—		2,411,454		—		1,189,211		—		2,070,445		61,336,662		67,007,772
Gross charge-offs by vintage		—		—		—		—		—		—		—		—

Construction
Pass		—		—		—		—		—		—		37,740,521		37,740,521
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		10,937,811		10,937,811
Doubtful		—		—		—		—		—		—		—		—
Total		—		—		—		—		—		—		48,678,332		48,678,332
Gross charge-offs by vintage		—		—		—		—		—		—		—		—

Commercial and Industrial
Pass		—		—		234,391		677,544		204,808		—		2,575,682		3,692,425
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Total		—		—		234,391		677,544		204,808		—		2,575,682		3,692,425
Gross charge-offs by vintage		—		—		—		—		—		—		—		—

Consumer
Pass		—		—		—		—		—		—		20,350		20,350
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Total		—		—		—		—		—		—		20,350		20,350
Total loans	$	3,317,011	$	120,012,689	$	39,433,295	$	38,232,242	$	33,475,452	$	140,024,063	$	334,237,282	$	708,732,034


	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 were no loan modifications for the six month period ended June 30, 2023.