6. Loans held for sale Loans held for sale are carried at the lower of cost or estimated fair value. At June 30, 2025, the Company did not have any loans designated as held for sale. At December 31, 2024, the Company had $70.1 million in performing multi-family loans held for sale net of a valuation allowance of $3.8 million. The valuation allowance represents the loss recorded to mark these loans down to the estimated price that could be obtained in a whole loan sale. The valuation allowance was recorded in net gain (loss) on sale of loans in the Consolidated Statements of Operations. During the three months ended June 30, 2025, the Company transferred $32.1 million of loans classified as held for sale back to held for investment, as management determined to no longer sell these performing loans. Upon transfer a previously recorded valuation allowance was reversed and recorded as a net gain on sale totaling $2.6 million. The Company has implemented a strategy of selling certain delinquent and non-performing loans. Once the Company has decided to sell a loan, the sale usually closes in a short period of time, generally within the same quarter. Loans designated held for sale are reclassified from loans held for investment to loans held for sale. Terms of sale generally includes cash due upon the closing of the sale, no contingencies or recourse to the Company and servicing is released to the buyer. The following tables show loans sold during the periods indicated: | | | | | | | | | | | | | | For the three months ended June 30, 2025 | (Dollars in thousands) | | Loans sold | | Proceeds | | Net charge-offs | | Net gain (1) | | Performing loans | | | Small Business Administration | | 2 | | $ | 1,025 | | $ | — | | $ | 98 | Total | | 2 | | $ | 1,025 | | $ | — | | $ | 98 | Delinquent and non-performing loans | | | | | | | | | | | | Multi-family residential | | 4 | | $ | 12,894 | | $ | (1,681) | | $ | 68 | Total | | 4 | | $ | 12,894 | | $ | (1,681) | | $ | 68 |
| | | | | | | | | | | | | | For the three months ended June 30, 2024 | (Dollars in thousands) | | Loans sold | | Proceeds | | Net charge-offs | | Net gain | Delinquent and non-performing loans | | | | | | | | | | | | Multi-family residential | | 1 | | S | 432 | | $ | — | | $ | — | One-to-four family - mixed-use property | | 1 | | | 258 | | | — | | | 26 | Total | | 2 | | $ | 690 | | $ | — | | $ | 26 |
| | | | | | | | | | | | | | For the six months ended June 30, 2025 | (Dollars in thousands) | | Loans sold | | Proceeds | | Net charge-offs | | Net gain (2) | | Performing loans | | | Multi-family residential | | 12 | | $ | 33,721 | | $ | — | | $ | — | Commercial | | 1 | | | 3,120 | | | — | | | — | Small Business Administration | | 6 | | | 6,829 | | | — | | | 532 | Total | | 19 | | $ | 43,670 | | $ | — | | $ | 532 | Delinquent and non-performing loans | | | | | | | | | | | | Multi-family residential | | 5 | | $ | 13,444 | | $ | (1,681) | | $ | 202 | Commercial | | 1 | | | 5,098 | | | — | | | 238 | One-to-four family - mixed-use property | | 1 | | | 137 | | | — | | | 19 | Total | | 7 | | $ | 18,679 | | $ | (1,681) | | $ | 459 | | | | | | | | | | | | | | | For the six months ended June 30, 2024 | (Dollars in thousands) | | Loans sold | | Proceeds | | Net charge-offs | | Net gain | | Delinquent and non-performing loans | | | Multi-family residential | | 4 | | $ | 1,984 | | $ | — | | $ | 55 | Commercial | | 2 | | | 970 | | | — | | | — | One-to-four family - mixed-use property | | 5 | | | 1,546 | | | — | | | 81 | Total | | 11 | | $ | 4,500 | | $ | — | | $ | 136 |
| (1) | Does not include $2.6 million net gain on sale recorded from the reversal of a previously recorded valuation allowance upon the transfer of $32.1 million of loans held for sale to loans held for investment. |
| (2) | Does not include $2.6 million net gain on sale recorded from the reversal of a previously recorded valuation allowance upon the transfer of $32.1 million of loans held for sale to loans held for investment and $0.2 million net loss on sale recorded to write-down performing mortgage loans to their anticipated sales price. |
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