LOANS RECEIVABLE

6 Months Ended

Jun. 30, 2024

Receivables [Abstract]

LOANS RECEIVABLE

LOANS RECEIVABLE

A summary of loans receivable, net at June 30, 2024 and December 31, 2023, follows:

	June 30, 2024		December 31, 2023
	(In thousands)
Residential	$	526,453	$	550,929
Multifamily	671,185		682,564
Commercial real estate	241,867		232,505
Construction	71,882		60,414
Junior liens	23,653		22,503
Commercial and industrial	12,261		11,768
Consumer and other	83		47
Total loans	1,547,384		1,560,730
Less: Allowance for credit losses (1)	13,027		14,154
Loans receivable, net	$	1,534,357	$	1,546,576

(1) For more information, see Note 4 - Allowance for Credit Losses.

Loans are recorded at amortized cost, which includes principal balance, net deferred fees or costs, premiums and discounts. The Company elected to exclude accrued interest receivable from amortized cost. Accrued interest receivable is reported separately in the consolidated balance sheets and totaled $6.4 million and $6.1 million at June 30, 2024 and December 31, 2023, respectively. Loan origination fees and certain direct loan origination costs are deferred and the net fee or cost is recognized in interest income as an adjustment of yield. At June 30, 2024 and December 31, 2023, net deferred loan fees totaled $2.5 million and $2.0 million, respectively.

The portfolio classes in the above table have unique risk characteristics with respect to credit quality:

•Payment on multifamily and commercial real estate mortgages is driven principally by operating results of the managed properties or underlying business and secondarily by the sale or refinance of such properties. Both primary and secondary sources of repayment and the value of the properties in liquidation, may be affected to a greater extent by adverse conditions in the real estate market or the economy in general.

•Properties underlying construction loans often do not generate sufficient cash flows to service debt and thus repayment is subject to the ability of the borrower and, if applicable, guarantors, to complete development or construction of the property and carry the project, often for extended periods of time. As a result, the performance of these loans is contingent upon future events whose probability at the time of origination is uncertain.

•Commercial and industrial (“C&I”) loans include C&I revolving lines of credit, term loans, SBA 7a loans and to a lesser extent, Paycheck Protection Program (“PPP”) loans. Payments on C&I loans are driven principally by the cash flows of the businesses and secondarily by the sale or refinance of any collateral securing the loans. Both the cash flow and value of the collateral in liquidation may be affected by adverse general economic conditions.

•The ability of borrowers to service debt in the residential, junior liens and consumer loan portfolios is generally subject to personal income which may be impacted by general economic conditions, such as increased unemployment levels. These loans are predominately collateralized by first and second liens on single family properties. If a borrower cannot maintain the loan, the Company’s ability to recover against the collateral in sufficient amount and in a timely manner may be significantly influenced by market, legal and regulatory conditions.

Credit Quality Indicators

The Company categorizes loans into risk categories based on relevant information about the quality and realizable value of collateral, if any, and the ability of borrowers to service their debts such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans by credit risk. This analysis is performed whenever credit is extended, renewed, or modified, or when an observable event occurs indicating a potential decline in credit quality, and no less than annually for large balance loans. The Company used the following definitions for risk ratings for loan classification:

Pass – Loans classified as pass are loans performing under the original contractual terms, do not currently pose any identified risk and can range from the highest to pass/watch quality, depending on the degree of potential risk.

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 the Company’s credit position at some future date.

Substandard – Loans classified as substandard are inadequately protected by the current sound 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 repayment and liquidation of the debt. They are characterized by a distinct possibility that the Company 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 known facts, conditions, and values, highly questionable and improbable.

Loss – Assets classified as loss are considered uncollectible and of such little value that their continuance as bankable assets is not warranted. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer writing off the asset even though partial recovery may be effected in the future.

The following table presents the risk category of loans by class of loan and vintage as of June 30, 2024:

	Term Loans by Origination Year
	2024		2023		2022		2021		2020		Pre-2020		Revolving Loans		Total
	(in thousands)
Residential
Pass	$	2,034	$	13,149	$	95,083	$	105,468	$	14,079	$	290,729	$	—	$	520,542
Special mention	—		—		—		—		—		653		—		653
Substandard	—		—		—		—		—		5,258		—		5,258
Total	2,034		13,149		95,083		105,468		14,079		296,640		—		526,453
Multifamily
Pass	4,320		17,041		280,383		151,617		35,022		182,670		—		671,053
Substandard	—		—		—		—		—		132		—		132
Total	4,320		17,041		280,383		151,617		35,022		182,802		—		671,185
Commercial real estate
Pass	13,744		26,624		117,088		14,638		14,859		54,048		—		241,001
Special mention	—		—		—		—		—		866		—		866
Total	13,744		26,624		117,088		14,638		14,859		54,914		—		241,867
Construction
Pass	—		26,025		28,373		17,484		—		—		—		71,882
Total	—		26,025		28,373		17,484		—		—		—		71,882
Junior liens
Pass	2,235		5,734		5,125		1,243		242		9,027		—		23,606
Substandard	—		—		—		—		—		47		—		47
Total	2,235		5,734		5,125		1,243		242		9,074		—		23,653
Commercial and industrial
Pass	3,621		6,212		100		1,557		—		—		—		11,490
Substandard	—		756		—		15		—		—		—		771
Total	3,621		6,968		100		1,572		—		—		—		12,261
Consumer and other
Pass	55		—		—		—		—		—		28		83
Total	55		—		—		—		—		—		28		83
Total gross loans	$	26,009	$	95,541	$	526,152	$	292,022	$	64,202	$	543,430	$	28	$	1,547,384

The following table presents the risk category of loans by class of loan and vintage as of December 31, 2023:

	Term Loans by Origination Year
	2023		2022		2021		2020		2019		Pre-2019		Revolving Loans		Total
	(in thousands)
Residential
Pass	$	13,338	$	98,007	$	109,193	$	14,315	$	18,460	$	291,069	$	—	$	544,382
Special mention	—		—		—		—		—		663		—		663
Substandard	—		—		—		—		—		5,884		—		5,884
Total	13,338		98,007		109,193		14,315		18,460		297,616		—		550,929
Multifamily
Pass	17,144		281,906		158,705		35,407		56,739		132,517		—		682,418
Substandard	—		—		—		—		—		146		—		146
Total	17,144		281,906		158,705		35,407		56,739		132,663		—		682,564
Commercial real estate
Pass	26,610		118,247		14,785		15,080		5,386		51,493		—		231,601
Special mention	—		—		—		—		—		904		—		904
Total	26,610		118,247		14,785		15,080		5,386		52,397		—		232,505
Construction
Pass	22,798		21,067		16,549		—		—		—		—		60,414
Total	22,798		21,067		16,549		—		—		—		—		60,414
Junior liens
Pass	5,359		5,234		1,232		296		1,773		8,560		—		22,454
Substandard	—		—		—		—		—		49		—		49
Total	5,359		5,234		1,232		296		1,773		8,609		—		22,503
Commercial and industrial
Pass	7,055		105		4,492		77		—		—		—		11,729
Substandard	—		—		39		—		—		—		—		39
Total	7,055		105		4,531		77		—		—		—		11,768
Consumer and other
Pass	25		—		—		—		—		—		22		47
Total	25		—		—		—		—		—		22		47
Total gross loans	$	92,329	$	524,566	$	304,995	$	65,175	$	82,358	$	491,285	$	22	$	1,560,730

Past Due and Non-accrual Loans

The following table presents the recorded investment in past due and current loans by loan portfolio class as of June 30, 2024 and December 31, 2023:

	30-59 Days Past Due		60-89 Days Past Due		90 Days and Greater Past Due		Total Past Due		Current		Total Loans Receivable
	(In thousands)
June 30, 2024
Residential	$	1,139	$	—	$	4,595	$	5,734	$	520,719	$	526,453
Multifamily	—		—		—		—		671,185		671,185
Commercial real estate	398		—		—		398		241,469		241,867
Construction	—		—		—		—		71,882		71,882
Junior liens	150		—		47		197		23,456		23,653
Commercial and industrial	1		—		14		15		12,246		12,261
Consumer and other	—		—		—		—		83		83
Total	$	1,688	$	—	$	4,656	$	6,344	$	1,541,040	$	1,547,384
December 31, 2023
Residential	$	887	$	752	$	3,926	$	5,565	$	545,364	$	550,929
Multifamily	—		—		—		—		682,564		682,564
Commercial real estate	—		—		—		—		232,505		232,505
Construction	—		—		—		—		60,414		60,414
Junior liens	—		—		49		49		22,454		22,503
Commercial and industrial	—		—		39		39		11,729		11,768
Consumer and other	—		—		—		—		47		47
Total	$	887	$	752	$	4,014	$	5,653	$	1,555,077	$	1,560,730

The following tables presents information on non-accrual loans at June 30, 2024 and December 31, 2023:

	Non-accrual		Interest Income Recognized on Non-accrual Loans		Amortized Cost Basis of Loans >= 90 Day Past Due and Still Accruing		Amortized Cost Basis of Non-accrual Loans Without Related Allowance
June 30, 2024	(In thousands)
Residential	$	5,258	$	11	$	—	$	5,258
Multifamily	132		4		—		132
Junior liens	47		2		—		47
Commercial and industrial	771		—		—		771
Total	$	6,208	$	17	$	—	$	6,208

December 31, 2023
Residential	$	5,884	$	—	$	—	$	5,884
Multifamily	146		—		—		146
Junior liens	49		—		—		49
Commercial and industrial	39		—		—		39
Total	$	6,118	$	—	$	—	$	6,118

The Company had no loans held-for-sale at June 30, 2024 and December 31, 2023. Gains and losses on sales of loans are specifically identified and accounted for in accordance with U.S. GAAP.

Modifications made to borrowers experiencing financial difficulty may include principal forgiveness, interest rate reductions, other than insignificant payment delays, terms extensions or a combination thereof intended to minimize economic loss and to avoid foreclosure or repossession of collateral. If the borrower has demonstrated performance under the previous terms and our underwriting process show the borrower has the capacity to continue to perform under the restructured terms, the loan will continue to accrue interest.

In the second quarter of 2024, there were no modifications to borrowers experiencing financial difficulty. The following table presents the amortized cost basis at June 30, 2024, of loan modifications to borrowers experiencing financial difficulty during the six months ended June 30, 2024, disaggregated by type of modification.

	Payment Delays		Term Extensions		Total Principal		% of Total Class of Loans
	(Dollars in thousands)
Residential	$	—	$	113	$	113	0.02	%
Commercial and industrial	756		—		756		6.17
Total	$	756	$	113	$	869	0.06	%

	Types of Modifications
Residential	Term extensions of 3 to 12 months
Commercial and industrial	Deferral of three payments

In the first quarter of 2023, there were no modifications to borrowers experiencing financial difficulty. The following table presents the amortized cost basis at June 30, 2023, of loan modifications to borrowers experiencing financial difficulty during the three and six months ended June 30, 2023, disaggregated by type of modification.

	Payment Delays		Term Extensions		Total Principal		% of Total Class of Loans
	(Dollars in thousands)
Residential	$	752	$	374	$	1,126	0.19	%
Total	$	752	$	374	$	1,126	0.07	%

	Types of Modifications
Residential	Term extensions of 3 to 12 months
	Amortize past due balances over the remaining life of the loans

The Company closely monitors the performance of modified loans to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The following table presents the payment status and amortized cost basis at June 30, 2024, of loans that were modified during the twelve-month period ended June 30, 2024.

	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Non-Accrual		Total
	(In thousands)
Residential	$	1,860	$	—	$	—	$	—	$	185	$	2,045
Commercial and industrial	—		—		—		—		756		756
Total	$	1,860	$	—	$	—	$	—	$	941	$	2,801

The following table presents the payment status and amortized cost basis at June 30, 2023, of loans that were modified during the six-month period ended June 30, 2023.

	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Non-Accrual		Total
	(In thousands)
Residential	$	374	$	—	$	—	$	—	$	752	$	1,126
Total	$	374	$	—	$	—	$	—	$	752	$	1,126

The Company had $4.1 million and $4.0 million in consumer mortgage loans secured by residential real estate properties for which foreclosure proceedings are in process at June 30, 2024, and December 31, 2023, respectively. At June 30, 2024, the Company had no other real estate owned and reported one property totaling $593 thousand at December 31, 2023.