Loans Receivable and Allowance for Credit Losses

12 Months Ended

Dec. 31, 2024

Loans Receivable and Allowance for Credit Losses

Loans Receivable and Allowance for Credit Losses

Note 4.

Loans Receivable and Allowance for Credit Losses

Loans receivable at December 31, 2024 and 2023 are summarized as follows (in thousands):


(in thousands)	2024		2023
One-to-Four Family Mortgages	$	332,659	$	337,056
Home Equity Lines of Credit		7,952		8,550
Construction Loans		9,588		8,128
Consumer Loans		3,699		913
Commercial Loans		14,355		12,403

Total Loans Receivable		368,253		367,050

Allowance for Credit Losses		(1,699)		(2,802)
Net Deferred Loan Costs		779		790

Total Loans Receivable, Net	$	367,333	$	365,038

The following tables present an analysis of past-due loans as of December 31, 2024 and 2023 (in thousands):


					Loans 90 Days or
	30-59 Days		60-89 Days		More Past Due and		Nonaccrual		Current		Total Loans
(in thousands)	Past Due		Past Due		Still Accruing		Loans		Loans		Receivable
One-to-Four Family Mortgages	$	2,925	$	1,011	$	—	$	956	$	327,767	$	332,659
Home Equity Lines of Credit		—		—		—		—		7,952		7,952
Construction Loans		332		—		—		119		9,137		9,588
Consumer Loans		91		—		—		—		3,608		3,699
Commercial Loans		—		—		—		—		14,355		14,355

Total	$	3,348	$	1,011	$	—	$	1,075	$	362,819	$	368,253


					Loans 90 Days or
	30-59 Days		60-89 Days		More Past Due and		Nonaccrual		Current		Total Loans
December 31, 2023	Past Due		Past Due		Still Accruing		Loans		Loans		Receivable
One-to-Four Family Mortgages	$	2,655	$	1,524	$	950	$	153	$	331,774	$	337,056
Home Equity Loans / Lines of Credit		—		4		—		—		8,546		8,550
Construction Loans		—		—		—		—		8,128		8,128
Consumer Loans		33		—		—		—		880		913
Commercial Loans		—		—		—		—		12,403		12,403

Total	$	2,688	$	1,528	$	950	$	153	$	361,731	$	367,050

Credit Quality Indicators

The Company uses the following criteria to assess risk ratings with respect to its loan portfolio, which are consistent with regulatory guidelines:

Pass – Loans that comply in all material respects with the loan policies that are adequately secured with conforming collateral and that are extended to borrowers with documented ability to safely cover their total debt service requirements.

Special Mention – Includes loans that do not warrant adverse classification but do possess credit deficiencies or potential weaknesses that deserve close attention.

Substandard – Includes loans that are inadequately protected by the collateral pledged or the current net worth and paying capacity of the borrower. Such loans have one or more weaknesses that jeopardize the liquidation of the debt and expose the Company to loss if the weaknesses are not corrected.

The Company’s credit quality indicators are reviewed and updated annually.

The following table presents the Company’s recorded investment in loans by credit quality indicator by year of origination as of December 31, 2024 (in thousands):


	Term Loans by Year of Origination
(in thousands	2024		2023		2022		2021		2020		Prior		Revolving		Total
One-to-Four Family Mortgages
Pass	$	10,209	$	22,131	$	39,963	$	55,912	$	46,651	$	152,989	$	—	$	327,855
Special Mention		—		—		778		836		357		1,877		—		3,848
Substandard		—		—		—		406		—		550		—		956
Total One-to-Four Family Mortgages	$	10,209	$	22,131	$	40,741	$	57,154	$	47,008	$	155,416	$	—	$	332,659

Current Period Gross Write-Offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Home Equity Lines of Credit
Pass	$	378	$	66	$	82	$	—	$	—	$	531	$	6,819	$	7,876
Special Mention		—		—		—		—		—		—		76		76
Substandard		—		—		—		—		—		—		—		—
Total Home Equity Lines of Credit	$	378	$	66	$	82	$	—	$	—	$	531	$	6,895	$	7,952

Current Period Gross Write-Offs	$	—	$	—	$	—	$	—	$	—	$	—	$	3	$	3

Construction Loans
Pass	$	7,385	$	1,360	$	62	$	400	$	113	$	149	$	—	$	9,469
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		119		—		—		—		—		119
Total Construction Loans	$	7,385	$	1,360	$	181	$	400	$	113	$	149	$	—	$	9,588

Current Period Gross Write-Offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Consumer Loans
Pass	$	3,002	$	236	$	55	$	35	$	71	$	300	$	—	$	3,699
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Total Consumer Loans	$	3,002	$	236	$	55	$	35	$	71	$	300	$	—	$	3,699

Current Period Gross Write-Offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Commercial Loans
Pass	$	5,119	$	6,004	$	3,133	$	—	$	—	$	99	$	—	$	14,355
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Total Commercial Loans	$	5,119	$	6,004	$	3,133	$	—	$	—	$	99	$	—	$	14,355

Current Period Gross Write-Offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

The following table presents the Company’s recorded investment in loans by credit quality indicator as of December 31, 2023 (in thousands):


	Term Loans by Year of Origination
(in thousands)	2023		2022		2021		2020		2019		Prior		Revolving		Total
One-to-Four Family Mortgages
Pass	$	12,000	$	42,225	$	60,557	$	50,786	$	28,836	$	140,000	$	—	$	334,404
Special Mention		—		1,073		779		—		—		647		—		2,499
Substandard		—		—		—		—		—		153		—		153
Total One-to-Four Family Mortgages	$	12,000	$	43,298	$	61,336	$	50,786	$	28,836	$	140,800	$	—	$	337,056

Current Period Gross Write-Offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Home Equity Lines of Credit
Pass	$	20	$	226	$	—	$	—	$	174	$	369	$	7,570	$	8,359
Special Mention		—		—		—		—		—		—		191		191
Substandard		—		—		—		—		—		—		—		—
Total Home Equity Lines of Credit	$	20	$	226	$	—	$	—	$	174	$	369	$	7,761	$	8,550

Current Period Gross Write-Offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Construction Loans
Pass	$	4,987	$	2,189	$	414	$	366	$	—	$	172	$	—	$	8,128
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Total Construction Loans	$	4,987	$	2,189	$	414	$	366	$	—	$	172	$	—	$	8,128

Current Period Gross Write-Offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Consumer Loans
Pass	$	386	$	74	$	39	$	52	$	36	$	326	$	—	$	913
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Total Consumer Loans	$	386	$	74	$	39	$	52	$	36	$	326	$	—	$	913

Current Period Gross Write-Offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Commercial Loans
Pass	$	7,568	$	4,724	$	—	$	—	$	—	$	111	$	—	$	12,403
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Total Commercial Loans	$	7,568	$	4,724	$	—	$	—	$	—	$	111	$	—	$	12,403

Current Period Gross Write-Offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Nonaccrual Loans

The following table is a summary of the Company’s nonaccrual loans by major categories at December 31, 2024 and 2023 (in thousands):

December 31, 2024

December 31, 2023

Nonaccrual

Total

Loans

with

Total

with

Nonaccrual

(in thousands)

Allowance

Loans

Allowance

Loans

One-to-Four Family Mortgages

956

—

956

153

—

153

Home Equity Lines of Credit

—

Construction Loans

119

—

119

—

Consumer Loans

—

Commercial Loans

—

Total

1,075

—

1,075

153

—

153

Interest accrued but not received for loans placed on nonaccrual status is reversed against interest income. Payments received while on nonaccrual status are applied to the principal balance of nonaccrual loans. The Company does not recognize interest income while loans are on nonaccrual status.

The following table represents the accrued interest receivables written off by reversing interest income during the year ended December 31, 2024 and 2023 (in thousands):


	For the Year Ended
(in thousands)	December 31, 2024		December 31, 2023
One-to-Four Family Mortgages	$	15	$	3
Home Equity Lines of Credit		—		—
Construction Loans		7		—
Consumer Loans		—		—
Commercial Loans		—		—

Total	$	22	$	3

Collateral-Dependent Loans

The Company designates individually evaluated loans on nonaccrual status as collateral-dependent loans, as well as other loans that management of the Company designates as having higher risk. Collateral-dependent loans are loans for which the repayment is expected to be provided substantially through the operation or sale of the collateral and the borrower is experiencing financial difficulty. These loans do not share common risk characteristics and are not included within the collectively evaluated loans for determining the allowance for credit losses. For collateral-dependent loans, the Company has adopted the practical expedient to measure the allowance for credit losses based on the fair value of collateral. The allowance for credit losses is calculated on an individual loan basis based on the shortfall between the fair value of the loan’s collateral, which is adjusted for liquidation costs/discounts, and amortized cost. If the fair value of the collateral exceeds the amortized cost, no allowance is required.

The following table presents an analysis of collateral-dependent loans of the Company as of December 31, 2024 and 2023 (in thousands):


	Residential				Business
(in thousands)	Properties		Land		Assets		Other		Total
One-to-Four Family Mortgages	$	956	$	—	$	—	$	—	$	956
Home Equity Lines of Credit		—		—		—		—		—
Construction Loans		—		119		—		—		119
Consumer Loans		—		—		—		—		—
Commercial Loans		—		—		—		—		—

Total	$	956	$	119	$	—	$	—	$	1,075


	Residential				Business
December 31, 2023	Properties		Land		Assets		Other		Total
One-to-Four Family Mortgages	$	153	$	—	$	—	$	—	$	153
Home Equity Loans/Lines of Credit		—		—		—		—		—
Construction Loans		—		—		—		—		—
Consumer Loans		—		—		—		—		—
Commercial Loans		—		—		—		—		—

Total	$	153	$	—	$	—	$	—	$	153

Allowance for Credit Losses

The decrease in the allowance for credit losses of approximately $1.1 million as of December 31, 2024 as compared to December 31, 2023 was driven by various factors, including the evolving economic outlook, values in the local real estate market, and low net charge-offs. In addition the Company updated its peer group selection to better align with peers whose loan portfolios reflect the composition of the Company’s loan portfolio and the current local economic conditions. Adjusting this component of the estimate has resulted in a reduced peer group loss rate and corresponding adjustments to the peer comparisions. In turn our CECL reserve decreased resulting in $1.1 million recovery in our allowance for credit loss. This adjustment was made in the second quarter of 2024.

The following table summarizes the activity related to the allowance for credit losses for the year ended December 31, 2024 and 2023 (in thousands):


	One-to-Four
	Family		Home Equity		Construction		Consumer		Commercial
(in thousands)	Mortgages		Lines of Credit		Loans		Loans		Loans		Unallocated		Total
Allowance for Credit Losses
Beginning Balance	$	2,554	$	57	$	32	$	9	$	126	$	24	$	2,802
Recovery of Credit Loss		(1,028)		(9)		(19)		19		(46)		(17)		(1,100)
Loans Charged-Off		—		(3)		—		—		—		—		(3)
Recoveries Collected		—		—		—		—		—		—		—

Ending Balance	$	1,526	$	45	$	13	$	28	$	80	$	7	$	1,699

The following table includes disclosures related to the allowance for loan losses for the year ended December 31, 2024 and 2023 (in thousands):


	One-to-Four		Home Equity
	Family		Loans / Lines		Construction		Consumer		Commercial
December 31, 2023	Mortgages		of Credit		Loans		Loans		Loans		Unallocated		Total
Allowance for Credit Losses
Beginning Balance	$	2,738	$	60	$	73	$	—	$	2	$	380	$	3,253
Recovery of Credit Loss		(184)		(3)		(41)		9		124		(356)		(451)
Loans Charged-Off		—		—		—		—		—		—		—
Recoveries Collected		—		—		—		—		—		—		—

Ending Balance	$	2,554	$	57	$	32	$	9	$	126	$	24	$	2,802

Modifications Made to Borrowers Experiencing Financial Difficulty

The allowance for credit losses incorporates an estimate of lifetime expected credit losses and is recorded on each asset upon asset origination or acquisition. The starting point for the estimate of the allowance for credit losses is historical loss information, which includes losses from modifications of receivables to borrowers experiencing financial difficulty. The Company uses a probability of default/loss given default model to determine the allowance for credit losses. An assessment of whether a borrower is experiencing financial difficulty is made on the date of a modification.

Because the effect of most modifications made to borrowers experiencing financial difficulty is already included in the allowance for credit losses because of the measurement methodologies used to estimate the allowance, a change to the allowance for credit losses is generally not recorded upon modification. Occasionally, the Company modifies loans by providing principal forgiveness on certain of its loans. When principal forgiveness is provided, the amortized cost basis of the asset is written off against the allowance for credit losses. The amount of the principal forgiveness is deemed to be uncollectible; therefore, that portion of the loan is written off, resulting in a reduction of the amortized cost basis and a corresponding adjustment to the allowance for credit losses.

In some cases, the Company will modify a certain loan by providing multiple types of concessions. Typically, one type of concession, such as a term extension, is granted initially. If the borrower continues to experience financial difficulty, another concession, such as principal forgiveness, may be granted.

Upon the Company’s determination that a modified loan (or portion of a loan) has subsequently been deemed uncollectable, the loan (or portion of the loan) is written off. Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the allowance for credit losses is adjusted by the same amount.

The Company had no loans with modifications to borrowers experiencing financial difficulty as of December 31, 2024 and 2023.

The Company had no loans which had defaults during the year ended December 31, 2024 which were modified in the 12 months before default to borrower’s experiencing financial difficulty. There were no modifications to borrower’s experiencing financial difficulty entered into during the year ended December 31, 2024 and 2023 and no loans which had defaults during the year ended December 31, 2024 and 2023.

Unfunded Commitments

At December 31, 2024 and 2023, the liability for credit losses on off-balance-sheet credit exposures included in other liabilities was approximately $15,000 and $125,000.

Related Party Loans

In the normal course of business, loans are made to officers and directors of the Company, as well as to their affiliates. Such loans are made in the ordinary course of business with substantially the same terms (including interest rates and collateral) as those prevailing at the time for comparable transactions with other persons. They do not involve more than normal risk of collectability or present other unfavorable features.

An analysis of the related party activity during the year ended December 31, 2024 and 2023 is as follows (in thousands):


(in thousands)	2024		2023
Balance, Beginning of the Year	$	546	$	579
New Loans		—		—
Change in Related Parties, Net		—		—
Repayments, Net		(35)		(33)

Balance, End of Year	$	511	$	546

Related Party Other

The Company generally requires an inspection of the property before disbursement of funds during the term of the construction loan and inspections are typically performed by one of the Company’s directors. There is no revenue or expense recorded by the Company related to those services as the customer pays these fees through their closing costs.