Loans Receivable

3 Months Ended

Mar. 31, 2022

Loans Receivable

Loans Receivable

5.Loans Receivable

Major classifications of loans are as follows:

	At March 31,		At December 31,
(In thousands)	2022		2021
Originated Loans:
Residential mortgages:
One- to four-family	$	101,613	$	102,766
		101,613		102,766
Commercial loans:
Real estate - nonresidential		19,164		19,734
Multi-family		452		456
Commercial business		12,172		12,366
		31,788		32,556
Consumer:
Home equity and junior liens		9,663		8,840
Manufactured homes		48,116		47,717
Automobile		22,025		22,666
Student		2,102		2,096
Recreational vehicle		28,692		29,463
Other consumer		5,242		5,408
		115,840		116,190
Total originated loans		249,241		251,512
Net deferred loan costs		15,212		15,650
Less allowance for loan losses		(1,974)		(1,841)
Net originated loans	$	262,479	$	265,321

	At March 31,		At December 31,
(In thousands)	2022		2021
Acquired Loans:
Residential mortgages:
One- to four-family	$	9,678	$	10,295
		9,678		10,295
Commercial loans:
Real estate - nonresidential		1,693		1,744
Commercial business		126		162
		1,819		1,906
Consumer:
Home equity and junior liens		770		861
Other consumer		67		84
		837		945
Total acquired loans		12,334		13,146
Net deferred loan costs		(58)		(60)
Fair value credit and yield adjustment		(270)		(287)
Net acquired loans	$	12,006	$	12,799

	At March 31,		At December 31,
(In thousands)	2022		2021
Total Loans:
Residential mortgages:
One- to four-family	$	111,291	$	113,061
		111,291		113,061
Commercial loans:
Real estate - nonresidential		20,857		21,478
Multi-family		452		456
Commercial business		12,298		12,528
		33,607		34,462
Consumer:
Home equity and junior liens		10,433		9,701
Manufactured homes		48,116		47,717
Automobile		22,025		22,666
Student		2,102		2,096
Recreational vehicle		28,692		29,463
Other consumer		5,309		5,492
		116,677		117,135
Total Loans		261,575		264,658
Net deferred loan costs		15,154		15,590
Fair value credit and yield adjustment		(270)		(287)
Less allowance for loan losses		(1,974)		(1,841)
Loans receivable, net	$	274,485	$	278,120

The Company grants residential mortgage, commercial, and consumer loans to customers, principally located in the Finger Lakes Region of New York State and extending north to Orleans County. Although the Company has a diversified loan portfolio, a substantial portion of its debtors’ abilities to honor their contracts is dependent upon the counties’ employment and economic conditions. To further diversify the loan portfolio, the Company also purchases loans that have been originated outside of the region. High quality automobile loans, originated in the Northeastern United States, are purchased regularly from a Connecticut based company. In 2019, the Company also began to purchase modular home loans originated throughout the United States, who then services the loans for the Company. In 2020, the Company began to purchase automobile and recreational vehicle loans originated in New York State.

Loan Origination / Risk Management

The Company has lending policies and procedures in place that are designed to maximize loan income within an acceptable level of risk. Management reviews and approves these policies and procedures on a regular basis. A reporting system supplements the review process by frequently providing management with reports related to loan production, loan quality, loan delinquencies, non-performing, and potential problem loans. Diversification in the loan portfolio is a means of managing risk associated with fluctuations in economic conditions.

The loan portfolio is segregated into risk rating categories based on the borrower’s overall financial condition, repayment sources, guarantors, and value of collateral, if appropriate. The risk ratings are evaluated at least annually for commercial loans. Risk ratings are also reviewed when credit deficiencies arise, such as delinquent loan payments, for commercial, residential mortgage, or consumer loans. Credit quality risk ratings include regulatory classifications of special mention, substandard, doubtful, and loss. Loans classified as loss are considered uncollectible and are charged to the allowance for loan loss. Loans not classified are rated as pass.

The following table presents the classes of the loan portfolio summarized by the pass rating and the classified ratings of special mention, substandard, and doubtful within the Company’s internal risk rating system:

	At March 31, 2022
			Special
(In thousands)	Pass		Mention		Substandard		Doubtful		Total
Originated Loans:
Residential mortgages:
One- to four-family	$	97,862	$	1,640	$	2,111	$	—	$	101,613
		97,862		1,640		2,111		—		101,613
Commercial loans:
Real estate - nonresidential		13,918		3,096		2,150		—		19,164
Multi-family		452		—		—		—		452
Commercial business		8,445		2,806		921		—		12,172
		22,815		5,902		3,071		—		31,788
Consumer:
Home equity and junior liens		9,511		40		112		—		9,663
Manufactured homes		48,072		—		44		—		48,116
Automobile		22,010		—		15		—		22,025
Student		2,007		20		75		—		2,102
Recreational vehicle		28,438		205		49		—		28,692
Other consumer		5,242		—		—		—		5,242
		115,280		265		295		—		115,840
Total originated loans	$	235,957	$	7,807	$	5,477	$	—	$	249,241

	At March 31, 2022
			Special
(In thousands)	Pass		Mention		Substandard		Doubtful		Total
Acquired Loans:
Residential mortgages:
One- to four-family	$	9,422	$	100	$	156	$	—	$	9,678
		9,422		100		156		—		9,678
Commercial loans:
Real estate - nonresidential		1,693		—		—		—		1,693
Commercial business		126		—		—		—		126
		1,819		—		—		—		1,819
Consumer:
Home equity and junior liens		770		—		—		—		770
Other consumer		67		—		—		—		67
		837		—		—		—		837
Total acquired loans	$	12,078	$	100	$	156	$	—	$	12,334

	At March 31, 2022
			Special
(In thousands)	Pass		Mention		Substandard		Doubtful		Total
Total Loans:
Residential mortgages:
One- to four-family	$	107,284	$	1,740	$	2,267	$	—	$	111,291
		107,284		1,740		2,267		—		111,291
Commercial loans:
Real estate - nonresidential		15,611		3,096		2,150		—		20,857
Multi-family		452		—		—		—		452
Commercial business		8,571		2,806		921		—		12,298
		24,634		5,902		3,071		—		33,607
Consumer:
Home equity and junior liens		10,281		40		112		—		10,433
Manufactured homes		48,072		—		44		—		48,116
Automobile		22,010		—		15		—		22,025
Student		2,007		20		75		—		2,102
Recreational vehicle		28,438		205		49		—		28,692
Other consumer		5,309		—		—		—		5,309
		116,117		265		295		—		116,677
Total loans	$	248,035	$	7,907	$	5,633	$	—	$	261,575

	At December 31, 2021
			Special
(In thousands)	Pass		Mention		Substandard		Doubtful		Total
Originated Loans:
Residential mortgages:
One- to four-family	$	99,294	$	1,110	$	2,362	$	—	$	102,766
		99,294		1,110		2,362		—		102,766
Commercial loans:
Real estate - nonresidential		14,464		3,045		2,225		—		19,734
Multi-family		456		—		—		—		456
Commercial business		10,256		1,112		998		—		12,366
		25,176		4,157		3,223		—		32,556
Consumer:
Home equity and junior liens		8,753		41		46		—		8,840
Manufactured homes		47,717		—		—		—		47,717
Automobile		22,558		64		44		—		22,666
Student		2,096		—		—		—		2,096
Recreational vehicle		29,424		39		—		—		29,463
Other consumer		5,376		32		—		—		5,408
		115,924		176		90		—		116,190
Total originated loans	$	240,394	$	5,443	$	5,675	$	—	$	251,512

	At December 31, 2021
			Special
(In thousands)	Pass		Mention		Substandard		Doubtful		Total
Acquired Loans:
Residential mortgages:
One- to four-family	$	10,038	$	42	$	215	$	—	$	10,295
		10,038		42		215		—		10,295
Commercial loans:
Real estate - nonresidential		1,744		—		—		—		1,744
Commercial business		162		—		—		—		162
		1,906		—		—		—		1,906
Consumer:
Home equity and junior liens		841		—		20		—		861
Other consumer		84		—		—		—		84
		925		—		20		—		945
Total acquired loans	$	12,869	$	42	$	235	$	—	$	13,146

	At December 31, 2021
			Special
(In thousands)	Pass		Mention		Substandard		Doubtful		Total
Total Loans:
Residential mortgages:
One- to four-family	$	109,332	$	1,152	$	2,577	$	—	$	113,061
		109,332		1,152		2,577		—		113,061
Commercial loans:
Real estate - nonresidential		16,208		3,045		2,225		—		21,478
Multi-family		456		—		—		—		456
Commercial business		10,418		1,112		998		—		12,528
		27,082		4,157		3,223		—		34,462
Consumer:
Home equity and junior liens		9,594		41		66		—		9,701
Manufactured homes		47,717		—		—		—		47,717
Automobile		22,558		64		44		—		22,666
Student		2,096		—		—		—		2,096
Recreational vehicle		29,424		39		—		—		29,463
Other consumer		5,460		32		—		—		5,492
		116,849		176		110		—		117,135
Total loans	$	253,263	$	5,485	$	5,910	$	—	$	264,658

Management has reviewed its loan portfolio and determined that, to the best of its knowledge, little or no exposure exists to sub-prime or other high-risk residential mortgages. The Company is not in the practice of originating these types of loans.

Non-accrual and Past Due Loans

Loans are considered past due if the required principal and interest payments have not been received within thirty days of the payment due date.

For all classes of loans receivable, the accrual of interest is discontinued when the contractual payment of principal or interest has become 90 days past due or management has serious doubts about further collectability of principal or interest, even though the loan may be currently performing. A loan may remain on accrual status if it is in the process of collection and is either guaranteed or well secured.  When a loan is placed on non-accrual status, unpaid interest is reversed and charged to interest income.  Interest received on non-accrual loans, including impaired loans, generally is either applied against principal or reported as interest income, according to management’s judgment as to the collectability of principal.  Generally, loans are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time, and the ultimate collectability of the total contractual principal and interest is no longer in doubt.  Non-accrual troubled debt restructurings are restored to accrual status if principal and interest payments, under the modified terms, are current for six consecutive months after modification.

When future collectability of the recorded loan balance is expected, interest income may be recognized on a cash basis.  In the case where a non-accrual loan had been partially charged off, recognition of interest on a cash basis is limited to that which would have been recognized on the recorded loan balance at the contractual interest rate.  Cash interest receipts in excess of that amount are recorded as recoveries to allowance for loan losses until prior charge-offs have been fully recovered.    

An age analysis of past due loans, segregated by class of loans, as are as follows:

	At March 31, 2022
					90 Days
	30-59 Days		60-89 Days		or More		Total		Total Loans		Total Loans
(In thousands)	Past Due		Past Due		Past Due		Past Due		Current		Receivable
Originated Loans:
Residential mortgage loans:
One- to four-family	$	3,096	$	—	$	2,111	$	5,207	$	96,406	$	101,613
		3,096		—		2,111		5,207		96,406		101,613
Commercial loans:
Real estate - nonresidential		2,855		—		416		3,271		15,893		19,164
Multi-family		—		—		—		—		452		452
Commercial business		327		—		134		461		11,711		12,172
		3,182		—		550		3,732		28,056		31,788
Consumer loans:
Home equity and junior liens		128		—		112		240		9,423		9,663
Manufactured homes		742		266		44		1,052		47,064		48,116
Automobile		219		—		15		234		21,791		22,025
Student		—		20		75		95		2,007		2,102
Recreational vehicle		780		205		49		1,034		27,658		28,692
Other consumer		78		—		—		78		5,164		5,242
		1,947		491		295		2,733		113,107		115,840
Total originated loans	$	8,225	$	491	$	2,956	$	11,672	$	237,569	$	249,241

	At March 31, 2022
					90 Days
	30-59 Days		60-89 Days		or More		Total		Total Loans		Total Loans
(In thousands)	Past Due		Past Due		Past Due		Past Due		Current		Receivable
Acquired Loans:
Residential mortgage loans:
One- to four-family	$	334	$	—	$	156	$	490	$	9,188	$	9,678
		334		—		156		490		9,188		9,678
Commercial loans:
Real estate - nonresidential		—		—		—		—		1,693		1,693
Commercial business		—		—		—		—		126		126
		—		—		—		—		1,819		1,819
Consumer loans:
Home equity and junior liens		35		—		—		35		735		770
Other consumer		—		—		—		—		67		67
		35		—		—		35		802		837
Total acquired loans	$	369	$	—	$	156	$	525	$	11,809	$	12,334

	At March 31, 2022
					90 Days
	30-59 Days		60-89 Days		or More		Total		Total Loans		Total Loans
(In thousands)	Past Due		Past Due		Past Due		Past Due		Current		Receivable
Total Loans:
Residential mortgage loans:
One- to four-family	$	3,430	$	—	$	2,267	$	5,697	$	105,594	$	111,291
		3,430		—		2,267		5,697		105,594		111,291
Commercial loans:
Real estate - nonresidential		2,855		—		416		3,271		17,586		20,857
Multi-family		—		—		—		—		452		452
Commercial business		327		—		134		461		11,837		12,298
		3,182		—		550		3,732		29,875		33,607
Consumer loans:
Home equity and junior liens		163		—		112		275		10,158		10,433
Manufactured homes		742		266		44		1,052		47,064		48,116
Automobile		219		—		15		234		21,791		22,025
Student		—		20		75		95		2,007		2,102
Recreational vehicle		780		205		49		1,034		27,658		28,692
Other consumer		78		—		—		78		5,231		5,309
		1,982		491		295		2,768		113,909		116,677
Total loans	$	8,594	$	491	$	3,112	$	12,197	$	249,378	$	261,575

	At December 31, 2021
					90 Days
	30-59 Days		60-89 Days		or More		Total		Total Loans		Total Loans
(In thousands)	Past Due		Past Due		Past Due		Past Due		Current		Receivable
Originated Loans:
Residential mortgage loans:
One- to four-family	$	3,137	$	757	$	2,362	$	6,256	$	96,510	$	102,766
		3,137		757		2,362		6,256		96,510		102,766
Commercial loans:
Real estate - nonresidential		389		—		416		805		18,929		19,734
Multi-family		—		—		—		—		456		456
Commercial business		—		8		161		169		12,197		12,366
		389		8		577		974		31,582		32,556
Consumer loans:
Home equity and junior liens		149		31		46		226		8,614		8,840
Manufactured homes		922		615		—		1,537		46,180		47,717
Automobile		168		64		44		276		22,390		22,666
Student		95		—		—		95		2,001		2,096
Recreational vehicle		605		39		—		644		28,819		29,463
Other consumer		75		32		—		107		5,301		5,408
		2,014		781		90		2,885		113,305		116,190
Total originated loans	$	5,540	$	1,546	$	3,029	$	10,115	$	241,397	$	251,512

	At December 31, 2021
					90 Days
	30-59 Days		60-89 Days		or More		Total		Total Loans		Total Loans
(In thousands)	Past Due		Past Due		Past Due		Past Due		Current		Receivable
Acquired Loans:
Residential mortgage loans:
One- to four-family	$	318	$	68	$	215	$	601	$	9,694	$	10,295
		318		68		215		601		9,694		10,295
Commercial loans:
Real estate - nonresidential		—		—		—		—		1,744		1,744
Commercial business		27		—		—		27		135		162
Other commercial and industrial		27		—		—		27		1,879		1,906
Consumer loans:		—		—		20		20		841		861
Home equity and junior liens		—		—		—		—		84		84
Other consumer		—		—		20		20		925		945
	$	345	$	68	$	235	$	648	$	12,498	$	13,146

	At December 31, 2021
					90 Days
	30-59 Days		60-89 Days		or More		Total		Total Loans		Total Loans
(In thousands)	Past Due		Past Due		Past Due		Past Due		Current		Receivable
Total Loans:
Residential mortgage loans:
One- to four-family	$	3,455	$	825	$	2,577	$	6,857	$	106,204	$	113,061
		3,455		825		2,577		6,857		106,204		113,061
Commercial loans:
Real estate - nonresidential		389		—		416		805		20,673		21,478
Multi-family		—		—		—		—		456		456
Commercial business		27		8		161		196		12,332		12,528
		416		8		577		1,001		33,461		34,462
Consumer loans:
Home equity and junior liens		149		31		66		246		9,455		9,701
Manufactured homes		922		615		—		1,537		46,180		47,717
Automobile		168		64		44		276		22,390		22,666
Student		95		—		—		95		2,001		2,096
Recreational vehicle		605		39		—		644		28,819		29,463
Other consumer		75		32		—		107		5,385		5,492
		2,014		781		110		2,905		114,230		117,135
Total loans	$	5,885	$	1,614	$	3,264	$	10,763	$	253,895	$	264,658

Non-accrual loans, segregated by class of loan, were as follows:

	At March 31,		At December 31,
(In thousands)	2022		2021
Residential mortgage loans:
One- to four-family	$	2,267	$	2,577
		2,267		2,577
Commercial loans:
Real estate - nonresidential		416		416
Commercial business		134		161
		550		577
Consumer loans:
Home equity and junior liens		112		66
Manufactured homes		44		—
Automobile		15		44
Student		75		—
Recreational vehicle		49		—
		295		110
Total non-accrual loans	$	3,112	$	3,264

There were no loans past due more than ninety days and still accruing interest at March 31, 2022 and December 31, 2021.

Troubled Debt Restructurings

The Company is required to disclose certain activities related to Troubled Debt Restructurings (“TDR”) in accordance with accounting guidance. Certain loans have been modified in a TDR where economic concessions have been granted to a borrower who is experiencing, or is expected to experience, financial difficulties. These economic concessions could include a reduction in the loan interest rate, extension of payment terms, reduction of principal amortization, or other actions that the Company would not otherwise consider for a new loan with similar risk characteristics. The recorded investment for each TDR loan is determined by the outstanding balance less the allowance associated with the loan.

There were no loans that had been modified as a TDR during the three months ended March 31, 2022. There were seven loans that had been modified as a TDR during the three months ended March 31, 2021.  During the three months ended March 31, 2022 and 2021, there were no defaults on TDRs that were modified within the twelve months prior to the default date.  A default for these purposes is defined as a loan that reaches 90 days past due.

The table below details loans that have been modified as a troubled debt restructuring for the three months ended March 31, 2021:

					Post-
			Pre-Modification		Modification		Current
			Outstanding		Outstanding		Outstanding
	Number of		Recorded		Recorded		Recorded
For the three months ended March 31, 2021	Contracts		Investment		Investment		Investment
One- to four-family residential mortgages	4	$	336	$	336	$	250
Commercial business	3		46		46		34

At March 31, 2022, there were 15 TDR loans, with an outstanding balance of $2.9 million, in the portfolio that had been modified by making concessions to maturity dates and, in some cases, lowering the interest rate from the original contract. Each modification was done to alleviate the borrowers’ financial difficulties and keep the collateral from repossession when the borrower met the eligibility criteria. There were no TDRs in non-accrual status due to delinquency greater than 90 days. All of the TDR loans continue to accrue interest.

At December 31, 2021, the Company had 15 TDR loans with an outstanding balance of $3.0 million in the portfolio.

Impaired Loans

A loan is considered impaired when based on current information and events it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement.  Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due.  Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower including the length of the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed.  Impairment is measured on a loan-by-loan basis for commercial loans by either the present value of expected future cash flows discounted at the loan’s effective interest rate or the fair value of the collateral if the loan is collateral dependent.  

The following table summarizes impaired loans information by portfolio class:

	At March 31, 2022
			Unpaid
	Recorded		Principal		Related
(In thousands)	Investment		Balance		Allowance
With no related allowance recorded:
One- to four-family residential mortgages	$	2,158	$	2,239	$	—
Commercial real estate - nonresidential		416		516		—
Commercial business		73		73		—
Home equity and junior liens		112		112		—
With an allowance recorded:
Commercial business		55		55		12
Total:
One- to four-family residential mortgages		2,158		2,239		—
Commercial real estate - nonresidential		416		516		—
Commercial business		128		128		12
Home equity and junior liens		112		112		—
	$	2,814	$	2,995	$	12

	At December 31, 2021
			Unpaid
	Recorded		Principal		Related
(In thousands)	Investment		Balance		Allowance
With no related allowance recorded:
One- to four-family residential mortgages	$	2,352	$	2,423	$	—
Commercial real estate - nonresidential		416		516		—
Commercial business		73		73		—
Home equity and junior liens		67		67		—
With an allowance recorded:
One- to four-family residential mortgages		224		224		7
Commercial business		55		55		12
Total:
One- to four-family residential mortgages		2,576		2,647		7
Commercial real estate - nonresidential		416		516		—
Commercial business		128		128		12
Home equity and junior liens		67		67		—
	$	3,187	$	3,358	$	19

The following table presents the average recorded investment in impaired loans:

	Three Months Ended March 31,
(In thousands)	2022		2021
One- to four-family residential mortgages	$	2,166	$	2,175
Commercial real estate - nonresidential		416		1,285
Commercial business		128		2,228
Home equity and junior liens		112		104
Other consumer		—		5
		2,822	$	5,797

The following table presents interest income recognized on impaired loans:

	Three Months Ended March 31,
(In thousands)	2022		2021
One- to four-family residential mortgages	$	6	$	17
Commercial real estate - nonresidential		—		16
Multi-family		—		15
Home equity and junior liens		—		1
	$	6	$	49

Income recognized on a cash basis was not materially different than interest income recognized on an accrual basis.