SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
OR
For the transition period from _______________ to _______________
Commission File No.
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of | (I.R.S. Employer | |
incorporation or organization) | Identification Number) | |
(Address of Principal Executive Offices) | (Zip Code) |
(
(Registrant’s telephone number)
N/A
(Former name or former address, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such requirements for the past 90 days.
⌧ NO ◻
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
⌧ NO ◻
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:
Large accelerated filer ◻ | Accelerated filer ◻ |
Smaller reporting company | |
Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act). YES
As of May 9, 2022,
Eureka Homestead Bancorp, Inc.
Form 10-Q
Index
Part I. – Financial Information
Item 1. | Consolidated Financial Statements |
EUREKA HOMESTEAD BANCORP, INC.
CONSOLIDATED BALANCE SHEETS (Unaudited)
MARCH 31, 2022 AND DECEMBER 31, 2021
(in thousands)
March 31, | December 31, | |||||
| 2022 |
| 2021 | |||
ASSETS | ||||||
Cash and Cash Equivalents | $ | | $ | | ||
Interest-Bearing Deposits in Banks |
| |
| | ||
Investment Securities |
| |
| | ||
Loans Receivable, Net |
| |
| | ||
Loans Held-for-Sale |
| |
| | ||
Accrued Interest Receivable |
| |
| | ||
Federal Home Loan Bank Stock |
| |
| | ||
Premises and Equipment, Net |
| |
| | ||
Cash Surrender Value of Life Insurance |
| |
| | ||
Deferred Tax Asset |
| |
| — | ||
Prepaid Expenses and Other Assets |
| |
| | ||
Total Assets | $ | | $ | | ||
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
| ||
Liabilities: |
|
|
|
| ||
Deposits | $ | | $ | | ||
Advances from Federal Home Loan Bank |
| |
| | ||
Advance Payments by Borrowers for Taxes and Insurance |
| |
| | ||
Deferred Tax Liability | — | | ||||
Accrued Expenses and Other Liabilities |
| |
| | ||
Total Liabilities |
| |
| | ||
Commitments and Contingencies (Note 7) |
|
|
|
| ||
Stockholders' Equity: |
|
|
|
| ||
Preferred Stock, $ | ||||||
Common Stock, $ | | | ||||
Additional Paid-in Capital | | | ||||
Unallocated Common Stock Held by: | ||||||
Employee Stock Ownership Plan (ESOP) | ( | ( | ||||
Recognition and Retention Plan (RRP) | — | — | ||||
Retained Earnings |
| |
| | ||
Accumulated Other Comprehensive (Loss) Income |
| ( |
| | ||
Total Stockholders' Equity |
| |
| | ||
Total Liabilities and Stockholders' Equity | $ | | $ | | ||
The accompanying notes are an integral part of these financial statements.
3
EUREKA HOMESTEAD BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021 (Unaudited)
(in thousands except for Earnings Per Share )
Three Months Ended March 31, | ||||||
| 2022 |
| 2021 | |||
Interest Income: |
|
|
| |||
Loans Receivable | $ | | $ | | ||
Investment Securities |
| |
| | ||
Interest-Bearing Deposits in Banks |
| |
| | ||
Total Interest Income |
| |
| | ||
Interest Expense: |
|
|
|
| ||
Deposits |
| |
| | ||
Advances from Federal Home Loan Bank |
| |
| | ||
Total Interest Expense |
| |
| | ||
Net Interest Income |
| |
| | ||
Provision for Loan Losses |
| — |
| | ||
Net Interest Income After Provision for Loan Losses |
| |
| | ||
Non-Interest Income: |
|
|
|
| ||
Service Charges and Other Income |
| |
| | ||
Fees on Loans Sold |
| |
| | ||
Income from Life Insurance |
| |
| | ||
Total Non-Interest Income |
| |
| | ||
Non-Interest Expenses: |
|
|
|
| ||
Salaries and Employee Benefits |
| |
| | ||
Occupancy Expense |
| |
| | ||
FDIC Deposit Insurance Premium and Examination Fees |
| |
| | ||
Data Processing |
| |
| | ||
Accounting and Consulting |
| |
| | ||
Insurance |
| |
| | ||
Legal fees | | | ||||
Other |
| |
| | ||
Total Non-Interest Expenses |
| |
| | ||
(Loss) Income Before Income Tax Expense |
| ( |
| | ||
Income Tax Expense |
| — |
| — | ||
Net (Loss) Income | $ | ( | $ | | ||
(Loss) Earnings Per Share: Basic | $ | ( | $ | | ||
The accompanying notes are an integral part of these financial statements.
4
EUREKA HOMESTEAD BANCORP, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021 (Unaudited)
(in thousands)
Three Months Ended March 31, | ||||||
| 2022 |
| 2021 | |||
Net (Loss) Income | $ | ( | $ | | ||
Other Comprehensive (Loss): |
|
|
|
| ||
Unrealized (Losses) on Investment Securities |
| ( |
| ( | ||
Other Comprehensive (Loss) Before Income Taxes | ( | ( | ||||
Income Tax Effect |
| |
| | ||
Other Comprehensive (Loss), Net of Income Taxes |
| ( |
| ( | ||
Comprehensive (Loss) Income | $ | ( | $ | | ||
The accompanying notes are an integral part of these financial statements.
5
EUREKA HOMESTEAD BANCORP, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021 (Unaudited)
(in thousands)
Accumulated | ||||||||||||||||||
Additional | Unallocated | Other | ||||||||||||||||
Common | Paid-in | ESOP | Retained | Comprehensive | ||||||||||||||
| Stock |
| Capital |
| Shares |
| Earnings |
| Income/(Loss) |
| Total | |||||||
Balance, January 1, 2021 | $ | | $ | | $ | ( | $ | | $ | | $ | | ||||||
ESOP Shares Earned | — | | | — | — | | ||||||||||||
Stock Shares Repurchased | — | ( | — | — | — | ( | ||||||||||||
Net Income |
| — |
| — |
| — |
| |
| — |
| | ||||||
Other Comprehensive Loss |
| — |
| — |
| — |
| — |
| ( |
| ( | ||||||
Balance, March 31, 2021 | $ | | $ | | $ | ( | $ | | $ | | $ | | ||||||
Balance, January 1, 2022 | $ | | $ | | $ | ( | $ | | $ | | $ | | ||||||
ESOP Shares Earned | — | | | — | — | | ||||||||||||
Stock Shares Repurchased | ( | ( | — | — | — | ( | ||||||||||||
Net Loss |
| — |
| — |
| — |
| ( |
| — |
| ( | ||||||
Other Comprehensive Loss |
| — |
| — |
| — |
| — |
| ( |
| ( | ||||||
Balance, March 31, 2022 | $ | | $ | | $ | ( | $ | | $ | ( | $ | | ||||||
The accompanying notes are an integral part of these financial statements.
6
EUREKA HOMESTEAD BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021 (Unaudited)
(in thousands)
| Three Months Ended March 31, | |||||
| 2022 |
| 2021 | |||
Cash Flows from Operating Activities: |
|
|
|
| ||
Net (Loss) Income | $ | ( | $ | | ||
Adjustments to Reconcile Net (Loss) Income to Net Cash Provided by Operating Activities: |
|
|
|
| ||
Cash Provided by (Used in) Operating Activities: | ||||||
Provision for Loan Losses |
| — |
| | ||
Depreciation Expense |
| |
| | ||
Amortization of FHLB Advance Prepayment Penalty |
| |
| | ||
Net (Accretion) Amortization of Discount/Premium on Mortgage-Backed Securities |
| ( |
| | ||
Stock Dividend on Federal Home Loan Bank Stock |
| ( |
| ( | ||
Non-cash Compensation for ESOP | | | ||||
Net (Increase) Decrease in Loans Held-for-Sale |
| ( |
| | ||
Changes in Assets and Liabilities: |
|
|
|
| ||
Decrease (Increase) in Accrued Interest Receivable |
| |
| ( | ||
(Increase) in CSV of Life Insurance |
| ( |
| ( | ||
(Increase) Decrease in Prepaid Expenses and Other Assets |
| ( |
| | ||
Increase (Decrease) in Accrued Expenses and Other Liabilities |
| |
| ( | ||
Net Cash Provided by Operating Activities |
| |
| | ||
Cash Flows from Investing Activities: |
|
|
|
| ||
Net (Increase) in Loans |
| ( |
| ( | ||
Proceeds from Maturities of Interest-Bearing Deposits in Banks | | | ||||
Purchases of Interest-Bearing Deposits in Banks |
| ( |
| ( | ||
Proceeds from Sales, Calls and Principal Repayments of Investment Securities |
| |
| | ||
Net Cash Provided by (Used in) Investing Activities |
| |
| ( | ||
Cash Flows from Financing Activities: |
|
|
|
| ||
Net (Decrease) Increase in Deposits |
| ( |
| | ||
Shares Repurchased | ( | ( | ||||
Net (Decrease) in Advance Payments by Borrowers for Taxes and Insurance |
| ( |
| ( | ||
Net Cash (Used in) Provided by Financing Activities |
| ( |
| | ||
Net (Decrease) Increase in Cash and Cash Equivalents |
| ( |
| | ||
Cash and Cash Equivalents at Beginning of Period |
| |
| | ||
Cash and Cash Equivalents at End of Period | $ | | $ | | ||
Supplemental Disclosures for Cash Flow Information: |
|
|
|
| ||
Cash Paid for: |
|
|
|
| ||
Interest | $ | | $ | | ||
Supplemental Schedule for Noncash Investing and Financing Activities: |
|
|
|
| ||
Change in the Unrealized Gain/Loss on Investment Securities | $ | ( | $ | ( | ||
The accompanying notes are an integral part of these financial statements.
7
Eureka Homestead Bancorp, Inc.
Form 10-Q
EUREKA HOMESTEAD BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022 (Unaudited)
Note 1 – Basis of Presentation -
The accompanying unaudited consolidated financial statements of Eureka Homestead Bancorp, Inc. (the “Company”) were prepared in accordance with instructions for Form 10-Q and Regulation S-X and do not include information or footnotes necessary for a complete presentation of financial condition, results of operations, comprehensive income, changes in equity and cash flows in conformity with accounting principles generally accepted in the United States of America.
In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the financial statements have been included. The results of operations for the three-month period ended March 31, 2022 are not necessarily indicative of the results which may be expected for the entire year. These statements should be read in conjunction with the Financial Statements and notes thereto for the year ended December 31, 2021 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 as filed with the Securities and Exchange Commission (“SEC”). Reference is made to the accounting policies of the Company described in the Notes to the Financial Statements contained in the Annual Report.
In preparing the financial statements, the Company is required to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. The financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair statement of the Company’s financial condition, results of operations, comprehensive income, changes in equity and cash flows for the interim periods presented. These adjustments are of a normal recurring nature and include appropriate estimated provisions.
Note 2 – Recent Accounting Pronouncements -
Emerging Growth Company Status
The Company qualifies as an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). For as long as the Company is an emerging growth company, it may choose to take advantage of exemptions from various reporting requirements applicable to other public companies. An emerging growth company may elect to use the extended transition period to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies, but must make such election when the company is first required to file a registration statement. The Company has elected to use the extended transition period described above and intends to maintain its emerging growth company status as allowed under the JOBS Act.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), Conforming Amendments Related to Leases. This ASU amends the codification regarding leases in order to increase transparency and comparability. The ASU requires companies to recognize lease assets and liabilities on the balance sheet and disclose key information about leasing arrangements. A lessee would recognize a liability to make lease payments and a right-of-use asset representing its right to use the leased asset for the lease term. For an emerging growth company, the amendments in this update are effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. The adoption of this ASU is not expected to have a material effect on the Company’s Consolidated Financial Statements.
8
In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. The amendments introduce an impairment model that is based on current expected credit losses (“CECL”), rather than incurred losses, to estimate credit losses on certain types of financial instruments (e.g., loans and held to maturity securities), including certain off-balance sheet financial instruments (e.g., commitments to extend credit and standby letters of credit that are not unconditionally cancellable). The CECL should consider historical information, current information, and reasonable and supportable forecasts, including estimates of prepayments, over the contractual term. An entity must use judgment in determining the relevant information and estimation methods that are appropriate in its circumstances. Financial instruments with similar risk characteristics may be grouped together when estimating the CECL. The ASU also amends the current available-for-sale security impairment model for debt securities whereby credit losses relating to available-for-sale debt securities should be recorded through an allowance for credit losses. For an emerging growth company, the amendments in this update, as amended through more recent related ASUs, are effective for fiscal years beginning after December 15, 2022, and interim periods within fiscal years beginning after December 15, 2023. The amendments will be applied through a modified retrospective approach, resulting in a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. The Company is currently planning for the implementation of this accounting standard. It is too early to assess the impact this ASU will have on the Company’s Consolidated Financial Statements.
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplifies GAAP for other areas of Topic 740 by clarifying and amending existing guidance. The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2021. The amendments did not have a material impact on the Company’s Consolidated Financial Statements.
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting and in January 2021, issued an update ASU 2021-01. The ASUs provide optional guidance for a limited period of time to ease the potential burden in accounting for (or derecognizing the effects of) reference rate reform on financial reporting. Specifically, the amendments provide optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. These relate only to those contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The ASUs became effective March 12, 2020 and can be adopted anytime during the period of January 1, 2020 through December 31, 2022. The Company is currently evaluating the impact of this guidance. There is only one investment security relationship that has LIBOR pricing with a maturity date beyond December 31, 2022. The documentation for the relationship contains language for an alternative pricing index when LIBOR is no longer available.
In March 2022, the FASB issued ASU 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructuring and Vintage Disclosures. This ASU eliminates the troubled debt restructuring (“TDR”) accounting model for creditors that have already adopted Topic 326, which is commonly referred to as the current expected credit loss (“CECL”) model. In lieu of the TDR accounting model, creditors now will apply the general loan modification guidance in Subtopic 310-20 to all loan modifications, including modifications made for borrowers experiencing financial difficulty. Under the general loan modification guidance, a modification is treated as a new loan only if the terms of the new loan are at least as favorable to the lender as the terms for comparable loans to other customers with similar collection risks, and modifications to the terms of the original loan are more than minor. If either condition is not met, the modification is accounted for as the continuation of the old loan with any effect of the modification treated as a prospective adjustment to the loan’s effective interest rate. In addition, this ASU requires the disclosure of gross charge-offs recorded in the current period for financing receivables by origination year. For an emerging growth company, that has not adopted Topic 326, ASU 2022-02 takes effect in reporting periods when Topic 326 is adopted, with early adoption permitted. The Company is currently assessing the impact of this ASU on the Company’s Consolidated Financial Statements.
9
Note 3 – (Loss) Earnings Per Share -
Basic earnings per share (“EPS”) represents income available or loss attributable to common stockholders divided by the weighted average number of common shares outstanding; no dilution for any potentially convertible shares is included in the calculation. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company.
(Loss) earnings per common share were computed based on the following:
Three Months Ended March 31, | ||||||
(in thousands, except per share data) | 2022 | 2021 | ||||
Numerator: | ||||||
Net (loss) income available to common stockholders | $ | ( | $ | | ||
Denominator: |
|
| ||||
Weighted average common shares outstanding |
| |
| | ||
Less: Average unallocated ESOP shares | | | ||||
Weighted average shares | | | ||||
Basic (loss) earnings per common share | $ | ( | $ | | ||
Note 4 – Investment Securities -
The amortized cost and fair values of investment securities available-for-sale were as follows:
Gross | Gross | |||||||||||
March 31, 2022: | Amortized | Unrealized | Unrealized | Fair | ||||||||
(in thousands) |
| Cost |
| Gains |
| (Losses) |
| Value | ||||
Mortgage-Backed Securities: |
|
|
|
|
|
|
|
| ||||
FHLMC | $ | | $ | — | $ | ( | $ | | ||||
SBA 7a Pools |
| |
| |
| — |
| | ||||
Total Investment Securities Available-for-Sale | $ | | $ | | $ | ( | $ | | ||||
Gross | Gross | |||||||||||
December 31, 2021: | Amortized | Unrealized | Unrealized | Fair | ||||||||
(in thousands) |
| Cost |
| Gains |
| (Losses) |
| Value | ||||
Mortgage-Backed Securities: |
|
|
|
|
|
|
|
| ||||
FHLMC | $ | | $ | | $ | — | $ | | ||||
SBA 7a Pools |
| |
| |
| — |
| | ||||
Total Investment Securities Available-for-Sale | $ | | $ | | $ | — | $ | | ||||
All investment securities held on March 31, 2022 and December 31, 2021, were government-sponsored mortgage-backed or SBA pool securities.
The amortized cost and fair values of the investment securities available-for-sale at March 31, 2022, by contractual maturity, are shown below. For mortgage-backed securities and SBA 7a pools, expected maturities will differ from
10
contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
Available-for-Sale | ||||||
March 31, 2022 | Amortized | Fair | ||||
(in thousands) |
| Cost |
| Value | ||
Amounts Maturing: |
|
|
|
| ||
After One Year through Five Years | $ | — | $ | — | ||
After Five Years through Ten Years |
| |
| | ||
After Ten Years |
| |
| | ||
$ | | $ | | |||
There were
Gross unrealized losses in investment securities at March 31, 2022 and December 31, 2021, existing for continuous periods of less than 12 months and for continuous periods of 12 months or more, are as follows:
March 31, 2022 | ||||||||||||||||||
(in thousands) | Less Than 12 Months | 12 Months or More | Totals | |||||||||||||||
Security | Unrealized | Unrealized | Unrealized | |||||||||||||||
Description |
| Fair Value |
| (Losses) |
| Fair Value |
| (Losses) |
| Fair Value |
| (Losses) | ||||||
Mortgage-Backed |
|
|
|
|
|
|
|
|
|
|
|
| ||||||
FHLMC | $ | | $ | ( | $ | — | $ | — | $ | | $ | ( | ||||||
SBA 7a Pools |
| — |
| — |
| — |
| — |
| — |
| — | ||||||
$ | | $ | ( | $ | — | $ | — | $ | | $ | ( | |||||||
December 31, 2021 | ||||||||||||||||||
(in thousands) | Less Than 12 Months | 12 Months or More | Totals | |||||||||||||||
Security | Unrealized | Unrealized | Unrealized | |||||||||||||||
Description |
| Fair Value |
| (Losses) |
| Fair Value |
| (Losses) |
| Fair Value |
| (Losses) | ||||||
Mortgage-Backed |
|
|
|
|
|
|
|
|
|
|
|
| ||||||
FHLMC | $ | | $ | — | $ | — | $ | — | $ | | $ | — | ||||||
SBA 7a Pools |
| — |
| — |
| — |
| — |
| — |
| — | ||||||
$ | | $ | — | $ | — | $ | — | $ | | $ | — | |||||||
Management evaluates securities for other-than temporary impairment on a periodic and regular basis, as well as when economic or market concerns warrant such evaluation.
In analyzing an issuer’s financial condition, management considers whether the federal government or its agencies issued the securities, whether downgrades by bond rating agencies have occurred and the results of reviews of the issuer’s financial statements.
11
Note 5 – Loans Receivable and the Allowance for Loan Losses -
Loans receivable at March 31, 2022 and December 31, 2021 are summarized as follows:
March 31, | December 31, | |||||
(in thousands) |
| 2022 |
| 2021 | ||
Mortgage Loans |
|
|
|
| ||
1-4 Family | $ | | $ | | ||
Multifamily |
| |
| | ||
Construction and Land |
| |
| | ||
Commercial Real Estate | |
| | |||
Consumer Loans |
| |
| | ||
| |
| | |||
Plus (Less): |
|
|
|
| ||
Unamortized Loan Fees/Costs |
| |
| | ||
Allowance for Loan Losses |
| ( |
| ( | ||
Net Loans Receivable | $ | | $ | | ||
The performing mortgage loans are pledged, under a blanket lien, as collateral securing advances from the FHLB at March 31, 2022 and December 31, 2021.
Management evaluates the allowance for loan losses to assess the risk of loss in the loan portfolio and to determine the adequacy of the allowance for loan losses. For purposes of this evaluation, loans are aggregated into pools based on various characteristics. Some of those characteristics include payment status, concentrations, and loan to collateral value and the financial status of borrowers. The allowance allocated to each of these pools is based on historical charge-off rates, adjusted for changes in the credit risk characteristics within these pools, as determined from current information and analyses. In determining the appropriate level of the allowance, management also ensures that the overall allowance appropriately reflects current macroeconomic conditions, industry exposure and a margin for the imprecision inherent in most estimates of expected credit losses. In addition to these factors, management also considers the following for each segment of the loan portfolio when determining the allowance:
• Residential mortgages - This category consists of loans secured by first and junior liens on residential real estate. The performance of these loans may be adversely affected by unemployment rates, local residential real estate market conditions and the interest rate environment.
• Commercial real estate - This category consists of loans primarily secured by office buildings, and retail shopping facilities. The performance of commercial real estate loans may be adversely affected by conditions specific to the relevant industry, the real estate market for the property type and geographic region where the property or borrower is located.
• Construction and land - This category consists of loans to finance the ground-up construction and/or improvement of construction of residential and commercial properties and loans secured by land. The performance of construction and land loans is generally dependent upon the successful completion of improvements and/or land development for the end user, the sale of the property to a third party, or a secondary source of cash flow from the owners. The successful completion of planned improvements and development maybe adversely affected by changes in the estimated property value upon completion of construction, projected costs and other conditions leading to project delays.
• Multi-family residential - This category consists of loans secured by apartment or residential buildings with five or more units used to accommodate households on a temporary or permanent basis. The performance of multi-family loans is generally dependent on the receipt of rental income from the tenants who occupy the subject property. The occupancy rate of the subject property and the ability of the tenants to pay rent may be adversely affected by the location of the subject property and local economic conditions.
12
• Consumer - This category consists of loans to individuals for household, family and other personal use. The performance of these loans may be adversely affected by national and local economic conditions, unemployment rates and other factors affecting the borrower's income available to service the debt. All of our consumer loans are secured by our customers’ savings accounts and/or certificates of deposit.
As a result of the uncertainties inherent in the estimation process, management’s estimate of loan losses and the related allowance could change in the near term.
Based on management’s periodic evaluation of the allowance for loan losses, a provision for loan losses is charged to operations if additions to the allowance are required. Actual loan charge-offs are deducted from the allowance and subsequent recoveries of previously charged-off loans are added to the allowance.
The following tables set forth, as of March 31 2022 and December 31, 2021, the balance of the allowance for loan losses by portfolio segment, disaggregated by impairment methodology, which is then further segregated by amounts evaluated for impairment collectively and individually. The allowance for loan losses allocated to each portfolio segment is not necessarily indicative of future losses in any particular portfolio segment and does not restrict the use of the allowance to absorb losses in other portfolio segments.
Allowance for Loan Losses and Recorded Investment in Loans Receivable
March 31, 2022 (in thousands)
Mortgage- | Mortgage- | |||||||||||||||||
Mortgage- | Mortgage- | Construction | Commercial | |||||||||||||||
| 1-4 Family |
| Multifamily |
| and Land |
| Real Estate |
| Consumer |
| Total | |||||||
Allowance for Loan Losses: |
|
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|
|
|
|
|
|
|
|
| |||||||
Beginning Balance | $ | | $ | | $ | | $ | | $ | — | $ | | ||||||
Charge-Offs |
| — |
| — |
| — |
| — |
| — |
| — | ||||||
Recoveries |
| — |
| — |
| — |
| — |
| — |
| — | ||||||
Provision (Credit) |
| |
| ( |
| ( |
| — |
| — |
| — | ||||||
Ending Balance | $ | | $ | | $ | | $ | | $ | — | $ | | ||||||
Ending Balance: |
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|
|
|
|
|
|
|
|
|
|
| ||||||
Individually Evaluated for Impairment | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||
Collectively Evaluated for Impairment | $ | | $ | | $ | | $ | | $ | — | $ | | ||||||
Loans Receivable: |
|
|
|
|
|
|
|
|
|
| ||||||||
Ending Balance | $ | | $ | | $ | | $ | | $ | | $ | | ||||||
Ending Balance: |
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Individually Evaluated for Impairment | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||
Collectively Evaluated for Impairment | $ | | $ | | $ | | $ | | $ | | $ | | ||||||
The allowance for loan losses for Mortgage 1-4 Family Loans of $
13
Allowance for Loan Losses and Recorded Investment in Loans Receivable
December 31, 2021 (in thousands)
|
|
|
| Mortgage- |
| Mortgage- |
|
|
|
| ||||||||
Mortgage- | Mortgage- | Construction | Commercial | |||||||||||||||
1-4 Family | Multifamily | and Land | Real Estate | Consumer | Total | |||||||||||||
Allowance for Loan Losses: |
| |||||||||||||||||
Beginning Balance | $ | | $ | | $ | | $ | | $ | — | $ | | ||||||
Charge-Offs |
| — |
| — |
| — |
| — |
| — |
| — | ||||||
Recoveries |
| |
| — |
| — |
| — |
| — |
| | ||||||
Provision (Credit) |
| ( |
| ( |
| |
| |
| — |
| — | ||||||
Ending Balance | $ | | $ | | $ | | $ | | $ | — | $ | | ||||||
Ending Balance: |
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Individually Evaluated for Impairment | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||
Collectively Evaluated for Impairment | $ | | $ | | $ | | $ | | $ | — | $ | | ||||||
Loans Receivable: |
|
|
|
|
|
|
|
|
|
| ||||||||
Ending Balance | $ | | $ | | $ | | $ | | $ | | $ | | ||||||
Ending Balance: |
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Individually Evaluated for Impairment | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||
Collectively Evaluated for Impairment | $ | | $ | | $ | | $ | | $ | | $ |
| ||||||