Loans

6 Months Ended

Jun. 30, 2022

NOTE 3 – LOANS

Loans at June 30, 2022 and December 31, 2021 were as follows:


	2022			2021

Real Estate Loans:
One-to-four family	$	152,780		$	127,755
Multi-family		3,059			3,729
Commercial		91,432			76,967
Construction		20,172			15,518
Total real estate loans		267,443			223,969

Commercial loans		33,644			24,212

Consumer loans:
Home equity loans and lines of credit		5,528			3,717
Other consumer		3,723			2,714
Total consumer loans		9,251			6,431

Total loans		310,338			254,612

Net deferred loans fees		(11	)		(46	)

Allowance for loan losses		(2,562	)		(2,406	)

Loans, net	$	307,765		$	252,160

NOTE 3 – LOANS (Continued)

The following tables present the activity in the allowance for loan losses for the periods ending, June 30, 2022, December 31, 2021 and June 30, 2021. The recorded investment in loans in any of the following tables does not include accrued and unpaid interest or any deferred loan fees or costs, as amounts are not significant.


	Real Estate
Three Months Ended June 30, 2022	One-to-Four Family		Multi-Family			Commercial			Construction			Commercial			Consumer			Total
Beginning balance April 1, 2022	$	1,332	$	16		$	732		$	116		$	166		$	84		$	2,446
Charge offs		—		—			—			(5	)		—			—			(5	)
Recoveries		6		—			—			—			—			—			6
Provisions		166		(2	)		(140	)		31			45			15			115
Total ending balance June 30, 2022	$	1,504	$	14		$	592		$	142		$	211		$	99		$	2,562
Six Months Ended June 30, 2022
Beginning balance January 1, 2022	$	1,355	$	19		$	712		$	109		$	145		$	66		$	2,406
Charge offs		—		—			—			(5	)		—			—			(5	)
Recoveries		6		—			—			—			—			—			6
Provisions		143		(5	)		(120	)		38			66			33			155
Total ending balance June 30, 2022	$	1,504	$	14		$	592		$	142		$	211		$	99		$	2,562

	Real Estate
Three Months Ended June 30, 2021	One-to-Four Family		Multi-Family			Commercial			Construction			Commercial			Consumer			Total
Beginning balance April 1, 2021	$	1,279	$	26		$	739		$	68		$	181		$	66		$	2,359
Charge offs		—		—			—			—			—			—			—
Recoveries		—		—			—			—			—			3			3
Provisions		35		(6	)		(12	)		16			(13	)		5			25
Total ending balance June 30, 2021	$	1,314	$	20		$	727		$	84		$	168		$	74		$	2,387
Six Months Ended June 30, 2021
Beginning balance January 1, 2021	$	1,300	$	27		$	746		$	37		$	187		$	64		$	2,361
Charge offs		—		—			—			—			—			(2	)		(2	)
Recoveries		—		—			—			—			—			3			3
Provisions		14		(7	)		(19	)		47			(19	)		9			25
Total ending balance June 30, 2021	$	1,314	$	20		$	727		$	84		$	168		$	74		$	2,387

The following tables provides the amount of the allowance for credit losses by class of financing receivable for loans individually evaluated for impairment, loans collectively evaluated for impairment and loans acquired with deteriorated credit quality for the periods ending June 30, 2022 and December 31, 2021.


	Real Estate
	One-to-Four Family		Multi-Family		Commercial		Construction		Commercial		Consumer		Total
Ending balance attributed to loans:
Individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Collectively evaluated for impairment		1,504		14		592		142		211		99		2,562
Total ending allowance balance June 30, 2022:	$	1,504	$	14	$	592	$	142	$	211	$	99	$	2,562

Ending balance attributed to loans:
Individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Collectively evaluated for impairment		1,355		19		712		109		145		66		2,406
Total ending allowance balance December 31, 2021:	$	1,355	$	19	$	712	$	109	$	145	$	66	$	2,406

NOTE 3 – LOANS (Continued)

The following table provides the amount of loans by class of financing receivable for loans individually evaluated for impairment, loans collectively evaluated for impairment and loans acquired with deteriorated credit quality for the periods ending June 30, 2022 and December 31, 2021.


	Real Estate
	One-to-Four Family		Multi-Family		Commercial		Construction		Commercial		Consumer		Total
Loans:
Loans individually evaluated for impairment	$	120	$	—	$	3,157	$	—	$	—	$	—	$	3,277
Loans collectively evaluated for impairment		152,660		3,059		88,275		20,172		33,644		9,251		307,061
Total ending loans balance June 30, 2022	$	152,780	$	3,059	$	91,432	$	20,172	$	33,644	$	9,251	$	310,338

Loans:
Loans individually evaluated for impairment	$	14	$	—	$	3,189	$	—	$	237	$	—	$	3,440
Loans collectively evaluated for impairment		127,740		3,730		73,778		15,518		23,975		6,431		251,172
Total ending loans balance December 31, 2021	$	127,754	$	3,730	$	76,967	$	15,518	$	24,212	$	6,431	$	254,612

The following tables presents loans individually evaluated for impairment by portfolio class at June 30, 2022 and December 31, 2021 and the respective average balances of impaired loans and interest income recognized for the three and six months ended June 30, 2022 and 2021:


	June 30, 2022						December 31, 2021
	Unpaid principal balance		Recorded Investment		Related Allowance		Unpaid principal balance		Recorded Investment		Related Allowance
With no recorded allowance:
Real estate loans:
One-to-four family	$	46	$	120	$	—	$	46	$	14	$	—
Multi-family		—		—		—		—		—		—
Commercial		3,190		3,157		—		3,189		3,189		—
Construction		—		—		—		—		—		—
Commercial		—		—		—		243		237		—
Consumer:		—		—		—		—		—		—
Total	$	3,236	$	3,277	$	—	$	3,478	$	3,440	$	—

NOTE 3 – LOANS (Continued)


	Three Months ended June 30, 2022				Six Months ended June 30, 2022
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no recorded allowance:
Real estate loans:
One-to-four family	$	120	$	1	$	85	$	2
Multi-family		—		—		—		—
Commercial		3,166		38		3,173		67
Commercial loans:		115		2		126		4
Consumer loans:		—		—		—		—
Total	$	3,401	$	41	$	3,384	$	73

	Three Months ended June 30, 2021				Six Months ended June 30, 2021
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no recorded allowance:
Real estate loans:
One-to-four family	$	492	$	6	$	492	$	11
Multi-family		—		—		—		—
Commercial		5,257		69		5,803		163
Commercial loans:		1,253		17		1,223		35
Consumer loans:		—		—		—		—
Total	$	7,002	$	92	$	7,518	$	209

There were no loans individually evaluated for impairment with recorded allowance for the three or six months ending June 30, 2022 and 2021. The difference between interest income recognized and cash basis interest income recognized was not material.

NOTE 3 – LOANS (Continued)

The following tables present the aging of the recorded investment in past due loans at June 30, 2022 and December 31, 2021 by portfolio class of loans:


June 30, 2022	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		Current		Total Loans
Real estate loans:
One-to-four family	$	—	$	900	$	153	$	1,053	$	151,727	$	152,780
Multi-family		—		—		—		—		3,059		3,059
Commercial		33		—		—		33		91,399		91,432
Construction		—		—		—		—		20,172		20,172
Total real estate loans		33		900		153		1,086		266,357		267,443

Commercial		71		—		—		71		33,573		33,644

Consumer loans:
Home equity loans and lines of credit		—		—		—		—		5,528		5,528
Other consumer loans		4		—		—		4		3,719		3,723

Total	$	108	$	900	$	153	$	1,161	$	309,177	$	310,338


December 31, 2021	30-59 Days Past due		60-89 Days Past due		90 Days or More Past Due		Total Past Due		Current		Total Loans
Real estate loans:
One-to-four family	$	1,553	$	698	$	193	$	2,444	$	125,310	$	127,754
Multi-family		—		—		—		—		3,730		3,730
Commercial		292		36		—		328		76,639		76,967
Construction		—		—		—		—		15,518		15,518
Total real estate loans		1,845		734		193		2,772		221,197		223,969

Commercial		90		—		—		90		24,122		24,212

Consumer loans:
Home equity loans and lines of credit		32		—		—		32		3,685		3,717
Other consumer loans		27		—		—		27		2,687		2,714

Total	$	1,994	$	734	$	193	$	2,921	$	251,691	$	254,612

NOTE 3 – LOANS (Continued)

A loan past due 90 says or more need not be placed in nonaccrual status if the loan is a consumer loan (loans to individuals for household, family and other personal expenditures) or the loan is secured by a one-to-four family residential property. Such loans should be subject to other alternative methods of evaluation to assure that the Bank's interest income is not materially overstated. The loans that were past due 90 days or more were accruing interest as of June 30, 2022 due to the fact that they were well secured and in the process of collection.

The following tables present the recorded investment in nonaccrual loans by class of loans as of June 30, 2022 and December 31, 2021:


	2022		2021
Real estate loans:
One-to-four family	$	12	$	14
Commercial real estate		—		—
Construction		—		—
Total real estate loans		12		14

Commercial loans:		—		90

Consumer loans:
Other consumer loans		—		—
Total consumer loans		—		—

Total loans	$	12	$	104

NOTE 3 – LOANS (Continued)

Troubled Debt Restructurings:

Troubled debt restructurings at June 30, 2022 and December 31, 2021 were $2,877 and $2,878, respectively. The amount of impairment allocated to loans whose loan terms have been modified in troubled debt restructurings was $0 at June 30, 2022 and December 31, 2021. The Company has committed no additional amounts at June 30, 2022 and December 31, 2021 to customers with outstanding loans that are classified as troubled debt restructurings.

There were no troubled debt restructurings for which there was a payment default within twelve months of the modification during the six months ended June 30, 2022 or the year ended December 31, 2021. A loan is considered to be in payment default once it is 90 days contractually past due under the modified terms.

In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed under the Company’s internal underwriting policy.

During the year ended December 31, 2021, the Company originated $3,446 of small business loans under the Paycheck Protection Program (PPP), created by the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which was signed into law in March 2020. The CARES Act established the PPP through the Small Business Administration (SBA), which allowed us to lend money to small businesses to maintain employee payrolls through the COVID-19 crisis with guarantees from the SBA. Under this program, loan amounts may be forgiven if the borrower maintains employee payrolls and meet certain other requirements. PPP loans have a fixed interest rate of 1.00% and a maturity date of either two or five years. Such loans totaled $0 and $5,100 at June 30, 2022 and December 31, 2021, respectively. These loans are included in commercial loans.

Credit Quality Indicators:

The Company utilizes a grading system whereby all loans are assigned a grade based on the risk profile of each loan. Loan grades are determined based on an evaluation of 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. All loans, regardless of size, are analyzed and are given a grade based upon the management’s assessment of the ability of borrowers to service their debts. The analysis is performed on a quarterly basis.

NOTE 3 – LOANS (Continued)

The Company uses the following definitions for loan grades:

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 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 graded Pass. These loans are included within groups of homogenous pools of loans based upon portfolio segment and class for estimation of the allowance for loan losses on a collective basis.

NOTE 3 – LOANS (Continued)

At June 30, 2022 and December 31, 2021, based on the most recent analysis performed, the loan grade for each loan by portfolio class is as follows:


June 30, 2022	Pass		Special Mention		Substandard		Doubtful		Total

Real estate loans:
One-to-four family	$	152,470	$	—	$	310	$	—	$	152,780
Multi-family		3,059		—		—		—		3,059
Commercial		86,502		1,740		3,190		—		91,432
Construction		20,172		—		—		—		20,172
Total real estate loans		262,203		1,740		3,500		—		267,443

Commercial		33,367		99		178		—		33,644

Consumer loans:
Home equity loans and lines of credit		5,528		—		—		—		5,528
Other consumer loans		3,723		—		—		—		3,723

Total	$	304,821	$	1,839	$	3,678	$	—	$	310,338


December 31, 2021	Pass		Special Mention		Substandard		Doubtful		Total

Real estate loans:
One-to-four family	$	127,513	$	—	$	242	$	—	$	127,755
Multi-family		3,729		—		—		—		3,729
Commercial		71,774		1,969		3,224		—		76,967
Construction		15,518		—		—		—		15,518
Total real estate loans		218,534		1,969		3,466		—		223,969

Commercial		23,824		104		284		—		24,212

Consumer loans:
Home equity loans and lines of credit		3,717		—		—		—		3,717
Other consumer loans		2,714		—		—		—		2,714

Total	$	248,789	$	2,073	$	3,750	$	—	$	254,612