Note 4 - Loans, Allowance for Credit Losses and Credit Quality

3 Months Ended

Mar. 31, 2026

Notes to Financial Statements

Financing Receivables [Text Block]

NOTE 4 – LOANS, ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY

Loans

Loans that the Company has the intent and ability to hold until maturity or payoff are carried at amortized cost (net of the allowance for credit losses). Amortized cost is the principal amount outstanding, adjusted by partial charge-offs and net of deferred loan origination costs and fees. For originated loans, loan fees and certain direct origination costs are deferred and amortized into interest income over the contractual life of the loan using the level-yield method. When a loan is paid off, the unamortized portion is recognized in interest income. Interest income on loans is accrued based upon the daily principal amount outstanding except for loans on non-accrual status. As a general rule, loans more than 90 days past due with respect to principal or interest, or sooner if management considers such action to be prudent, are classified as non-accrual loans. However, loans that are more than 90 days past due may be kept on an accruing status if the loan is well secured and in the process of collection. Income accruals are suspended on all non-accrual loans in a timely manner and all previously accrued and uncollected interest is reversed against current income. A loan can be returned to accrual status when collectibility of principal and interest is reasonably assured and the loan has performed for a period of time, generally six months. When doubt exists as to the collectibility of a loan, any payments received are applied to reduce the amortized cost of the loan to the extent necessary to eliminate such doubt. For all loan portfolios, a charge-off occurs when the Company determines that a specific loan, or portion thereof, is uncollectible. This determination is made based on management's review of specific facts and circumstances of the individual loan, including the expected cash flows to repay the loan, the value of the collateral and the ability and willingness of any guarantors to perform.

Allowance for Credit Losses - Loans Held for Investment

The allowance for credit losses is established based upon the Company's current estimate of expected lifetime credit losses on loans measured at amortized cost. Credit losses are charged against the allowance when management's assessments confirm that the Company will not collect the full amortized cost basis of a loan. Subsequent recoveries, if any, are credited to the allowance. Under the current expected credit loss (CECL) methodology, the Company estimates credit losses for financial assets on a collective basis for loans sharing similar risk characteristics. The Company segments financial assets with similar risk characteristics and has elected to segment its loans based on Federal Call codes used for reporting loans to the Federal Deposit Insurance Corporation as part of the Call Report process. These segments are collectively evaluated for expected credit losses using a quantitative Discounted Cash Flow ("DCF") model combined with an assessment of certain qualitative factors designed to address forecast risk and model risk inherent in the quantitative model output. The Company has elected to use this approach because DCF models allow for effective incorporation of a reasonable and supportable forecast in a directionally consistent and objective manner and peer data is available for certain inputs such as the probability of default and the loss given default. The quantitative model utilizes a loss factor based approach to estimate expected credit losses, which are derived from internal historical and industry peer loss experience. The model estimates expected credit losses using loan level data over the estimated life of the exposure, considering the effect of prepayments. Economic forecasts are incorporated into the estimate over a reasonable and supportable forecast period, beyond which is a reversion to the historical long-run average using the straight-line reversion method. Management periodically evaluates a reasonable and supportable forecast period and a reversion period to be appropriate for purposes of estimating expected credit losses. The qualitative risk factors impacting the expected risk of loss within the portfolio include the following:

●

Lending policies and procedures

●

Economic and business conditions

●

Nature and volume of loans

●

Changes in management

●

Changes in credit quality

●

Changes in loan review system

●

Changes to underlying collateral values

●

Concentrations of credit risk

●

Other external factors

Loans that do not share similar risk characteristics with any pools of assets are subject to individual evaluation and are removed from the collectively assessed pools to avoid double counting. This includes loans on non-accrual and loans that are 90 days or greater past due. For the loans that will be individually evaluated, the Company will use either a discounted cash flow ("DCF") approach or a fair value of collateral approach. The latter approach will be used for loans deemed to be collateral dependent or when foreclosure is probable. Accrued interest receivable amounts are excluded from balances of loans held at amortized cost and are included within accrued interest receivable in the consolidated balance sheets. Management has elected not to measure an allowance for credit losses on these amounts as the Company employs a timely write-off policy. Consistent with the Company's policy for non-accrual loans, accrued interest receivable is typically written off when loans reach 90 days past due and are placed on non-accrual status.

In the ordinary course of business, the Company enters into commitments to extend credit. Such financial instruments are recorded in the financial statements when they are funded. The credit risk associated with these commitments is evaluated in a manner similar to the allowance for credit losses on loans with an additional assumption of probability of funding. The reserve for unfunded lending commitments is included in other liabilities in the consolidated balance sheets.

Loans consisted of the following as of the dates indicated:

		*At March 31,*								*At December 31,*
		*2026*								*2025*
		*Amount*				*Percent*				*Amount*				*Percent*
		(Dollars in thousands)
Real estate loans:
One-to-four family residential		$	491,460				35.0	%		$	473,394				34.2	%
Multi-family			421,085				30.0	%			425,428				30.8	%
Commercial			335,381				23.9	%			336,412				24.3	%
Home equity lines of credit and loans			52,173				3.7	%			49,866				3.6	%
Construction			94,531				6.8	%			88,957				6.4	%
Other loans:
Commercial			7,861				0.6	%			7,938				0.6	%
Consumer			165				0.0	%			869				0.1	%
Total loans, gross			1,402,656				100.0	%			1,382,864				100.0	%
Less:
Net deferred loan fees			(755	)							(790	)
Allowance for credit losses			(10,412	)							(10,255	)
Total loans, net		$	1,391,489							$	1,371,819

The carrying value of loans pledged to secure advances from the FHLBB were $919.2 million and $920.9 million as of March 31, 2026 and December 31, 2025, respectively.

The carrying value of loans pledged to secure advances from the FRB were $118.7 million and $114.7 million as of March 31, 2026 and December 31, 2025, respectively.

The following tables set forth information regarding the allowance for credit losses on loans as of and for the three months ended March 31, 2026 and 2025:

		*For the three months ended March 31, 2026*
		(in thousands)
		*Beginning*												*Provision*				*Ending*
		*Balance*				*Charge-offs*				*Recoveries*				*(benefit)*				Balance⁽¹⁾
Real estate loans:
One-to-four family residential		$	3,069			$	—			$	—			$	103			$	3,172
Multi-family			2,260				—				—				(39	)			2,221
Commercial			3,640				—				—				10				3,650
Home equity lines of credit and loans			170				—				—				5				175
Construction			1,009				—				—				87				1,096
Other loans:
Commercial			102				—				—				(5	)			97
Consumer			5				—				—				(4	)			1
Total		$	10,255			$	—			$	—			$	157			$	10,412

		*For the three months ended March 31, 2025*
		(in thousands)
		*Beginning*												*(Benefit)*				*Ending*
		*Balance*				*Charge-offs*				*Recoveries*				*provision*				Balance⁽¹⁾
Real estate loans:
One-to-four family residential		$	2,928			$	—			$	—			$	(230	)		$	2,698
Multi-family			2,422				—				—				210				2,632
Commercial			2,260				—				—				272				2,532
Home equity lines of credit and loans			118				—				—				1				119
Construction			1,036				—				—				(328	)			708
Other loans:
Commercial			119				(81	)			—				80				118
Consumer			1				(1	)			—				1				1
Total		$	8,884			$	(82	)		$	—			$	6			$	8,808

(1) Balances of accrued interest receivable excluded from amortized cost and the calculation of allowance for credit losses amounted to $4.7 million and $4.6 million as of March 31, 2026 and December 31, 2025, respectively.

The following table sets forth information regarding the provision (benefit) for credit losses for the periods indicated:

		*Three months ended*
		*March 31, 2026*				*March 31, 2025*
Provision for losses on loans			157				6
Benefit for losses on off-balance sheet credit exposures			(4	)			(16	)
Total provision (benefit) for credit losses			153				(10	)

The following tables show the age analysis of past due loans as of the dates indicated:

																										*90 days or*
										*90 Days*				*Total*				*Total*				*Total*				*more past due*				*Loans on*
		*30–59 Days*				*60–89 Days*				*or More*				*Past Due*				*Current*				*Loans*				*and accruing*				*Non-accrual*
		(in thousands)
As of March 31, 2026
Real estate loans:
One-to-four family residential		$	61			$	871			$	103			$	1,035			$	490,425			$	491,460			$	—			$	1,090
Multi-family			—				—				—				—				421,085				421,085				—				—
Commercial			418				—				—				418				334,963				335,381				—				—
Home equity lines of credit and loans			236				—				100				336				51,837				52,173				—				140
Construction			—				—				—				—				94,531				94,531				—				—

Other loans:
Commercial			—				—				—				—				7,861				7,861				—				—
Consumer			—				—				—				—				165				165				—				—
		$	715			$	871			$	203			$	1,789			$	1,400,867			$	1,402,656			$	—			$	1,230

																										*90 days or*
										*90 Days*				*Total*				*Total*				*Total*				*more past due*				*Loans on*
		*30–59 Days*				*60–89 Days*				*or More*				*Past Due*				*Current*				*Loans*				*and accruing*				*Non-accrual*
		(in thousands)
As of December 31, 2025
Real estate loans:
One-to-four family residential		$	519			$	104			$	—			$	623			$	472,771			$	473,394			$	—			$	1,096
Multi-family			—				—				—				—				425,428				425,428				—				—
Commercial			246				—				—				246				336,166				336,412				—				—
Home equity lines of credit and loans			370				—				3				373				49,493				49,866				—				43
Construction			—				—				—				—				88,957				88,957				—				—

Other loans:
Commercial			—				—				—				—				7,938				7,938				—				—
Consumer			—				—				—				—				869				869				—				—
		$	1,135			$	104			$	3			$	1,242			$	1,381,622			$	1,382,864			$	—			$	1,139

During the three months ended March 31, 2026 and 2025, interest income recognized on non-accrual loans amounted to $16,000 and $39,000, respectively. The following tables show information regarding non-accrual loans as of the dates indicated:

														*Three Months Ended*
		*As of March 31, 2026*												*March 31, 2026*
		*With an*				*Without an*
		*Allowance for*				*Allowance for*								*Interest Income*
		*Credit Losses*				*Credit Losses*				*Total*				*Recognized*
		(in thousands)

Real estate loans:
One-to-four family residential		$	—			$	1,090			$	1,090			$	15
Home equity lines of credit and loans			—				140				140				1
Total non-accrual loans		$	—			$	1,230			$	1,230			$	16

														*Year Ended*
		*As of December 31, 2025*												*December 31, 2025*
		*With an*				*Without an*
		*Allowance for*				*Allowance for*								*Interest Income*
		*Credit Losses*				*Credit Losses*				*Total*				*Recognized*
		(in thousands)

Real estate loans:
One-to-four family residential		$	—			$	1,096			$	1,096			$	74
Home equity lines of credit and loans			—				43				43				25
Total non-accrual loans		$	—			$	1,139			$	1,139			$	99

Credit Quality Information

The Company's loan rating system for multi-family and commercial real estate, construction, commercial loans and certain residential and home equity lines of credit is as follows:

Loans rated 1 – 6: Loans in these categories are considered “pass” rated loans with low to average risk.

Loans rated 7: Loans in this category are considered “special mention.” These loans are starting to show signs of potential weakness and are being closely monitored by management.

Loans rated 8: Loans in this category are considered “substandard.” Generally, a loan is considered substandard if it is inadequately protected by the current net worth and paying capacity of the obligors and/or the collateral pledged. There is a distinct possibility that the Bank will sustain some loss if the weakness is not corrected.

Loans rated 9: Loans in this category are considered “doubtful.” Loans classified as doubtful have all the weaknesses inherent in those classified substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, highly questionable and improbable.

Loans rated 10: Loans in this category are considered uncollectible (loss) and of such little value that their continuance as loans is not warranted.

On an annual basis, or more often if needed, the Company formally reviews the ratings on all commercial loans with aggregate potential outstanding balances of $500,000 or more, and all commercial real estate loans (including multi-family and construction loans as well as residential and home equity line of credit loans to commercial borrowers) with aggregate potential outstanding balances of $2.0 million or more. For loans that are not formally rated, the Company initially assesses credit quality based upon the borrower’s ability to pay and subsequently monitors these loans based on the borrower’s payment activity.

The following tables detail the amortized cost balances of the Company's loan portfolios, presented by credit quality indicator and origination year as of March 31, 2026 and December 31, 2025:

																										Revolving
																										Loans
																										Amortized
		Term Loans Amortized Cost Basis by Origination Year																								Cost Basis				Total
		2026				2025				2024				2023				2022				Prior
		(in thousands)
As of March 31, 2026
One-to-four family residential
Pass		$	11,151			$	44,666			$	9,255			$	13,895			$	33,250			$	31,390			$	—			$	143,607
Special Mention			—				—				—				518				—				622				—				1,140
Substandard			—				—				—				—				—				—				—				—
Doubtful			—				—				—				—				—				—				—				—
Loans not formally rated ⁽¹⁾			11,259				42,137				23,978				38,885				75,973				154,481				—				346,713
Total		$	22,410			$	86,803			$	33,233			$	53,298			$	109,223			$	186,493			$	—			$	491,460

Current-period gross charge-offs		$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—

Multi-family
Pass		$	11,335			$	79,098			$	26,660			$	51,255			$	205,610			$	35,901			$	11,226			$	421,085
Special Mention			—				—				—				—				—				—				—				—
Substandard			—				—				—				—				—				—				—				—
Doubtful			—				—				—				—				—				—				—				—
Loans not formally rated ⁽¹⁾			—				—				—				—				—				—				—				—
Total		$	11,335			$	79,098			$	26,660			$	51,255			$	205,610			$	35,901			$	11,226			$	421,085

Current-period gross charge-offs		$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—

Commercial real estate
Pass		$	11,862			$	97,608			$	22,132			$	34,371			$	96,055			$	64,608			$	8,745			$	335,381
Special Mention			—				—				—				—				—				—				—				—
Substandard			—				—				—				—				—				—				—				—
Doubtful			—				—				—				—				—				—				—				—
Loans not formally rated ⁽¹⁾			—				—				—				—				—				—				—				—
Total		$	11,862			$	97,608			$	22,132			$	34,371			$	96,055			$	64,608			$	8,745			$	335,381

Current-period gross charge-offs		$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—

Home equity lines of credit and loans
Pass		$	—			$	—			$	195			$	317			$	—			$	—			$	7,829			$	8,341
Special Mention			—				—				—				—				—				—				190				190
Substandard			—				—				—				—				—				—				99				99
Doubtful			—				—				—				—				—				—				—				—
Loans not formally rated ⁽¹⁾			—				140				168				335				25				706				42,169				43,543
Total		$	—			$	140			$	363			$	652			$	25			$	706			$	50,287			$	52,173

Current-period gross charge-offs		$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—

Construction
Pass		$	10,596			$	39,616			$	32,415			$	8,127			$	—			$	2,988			$	—			$	93,742
Special Mention			—				—				—				—				—				—				—				—
Substandard			—				—				—				—				—				—				—				—
Doubtful			—				—				—				—				—				—				—				—
Loans not formally rated ⁽¹⁾			—				789				—				—				—				—				—				789
Total		$	10,596			$	40,405			$	32,415			$	8,127			$	—			$	2,988			$	—			$	94,531

Current-period gross charge-offs		$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—

Commercial
Pass		$	—			$	339			$	4,499			$	204			$	2,031			$	397			$	391			$	7,861
Special Mention			—				—				—				—				—				—				—				—
Substandard			—				—				—				—				—				—				—				—
Doubtful			—				—				—				—				—				—				—				—
Loans not formally rated ⁽¹⁾			—				—				—				—				—				—				—				—
Total		$	—			$	339			$	4,499			$	204			$	2,031			$	397			$	391			$	7,861

Current-period gross charge-offs		$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—

Consumer
Pass		$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—
Special Mention			—				—				—				—				—				—				—				—
Substandard			—				—				—				—				—				—				—				—
Doubtful			—				—				—				—				—				—				—				—
Loans not formally rated ⁽¹⁾			—				71				6				—				18				33				37				165
Total		$	—			$	71			$	6			$	—			$	18			$	33			$	37			$	165

Current-period gross charge-offs		$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—

																										*Revolving*				*Revolving*
																										*Loans*				*Loans*
																										*Amortized*				*Converted*
		*Term Loans Amortized Cost Basis by Origination Year*																								*Cost Basis*				*to Term*				*Total*
		*2025*				*2024*				*2023*				*2022*				*2021*				*Prior*
		(in thousands)
As of December 31, 2025
One-to-four family residential
Pass		$	40,466			$	9,290			$	13,941			$	33,430			$	14,226			$	14,488			$	—			$	—			$	125,841
Special Mention			—				—				519				—				—				629				—				—				1,148
Substandard			—				—				—				—				—				—				—				—				—
Doubtful			—				—				—				—				—				—				—				—				—
Loans not formally rated ⁽¹⁾			44,560				25,284				41,495				76,803				64,756				93,507				—				—				346,405
Total		$	85,026			$	34,574			$	55,955			$	110,233			$	78,982			$	108,624			$	—			$	—			$	473,394

Current-period gross charge-offs		$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—

Multi-family
Pass		$	87,627			$	26,358			$	51,235			$	207,128			$	24,712			$	16,769			$	11,599			$	—			$	425,428
Special Mention			—				—				—				—				—				—				—				—				—
Substandard			—				—				—				—				—				—				—				—				—
Doubtful			—				—				—				—				—				—				—				—				—
Loans not formally rated ⁽¹⁾			—				—				—				—				—				—				—				—				—
Total		$	87,627			$	26,358			$	51,235			$	207,128			$	24,712			$	16,769			$	11,599			$	—			$	425,428

Current-period gross charge-offs		$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—

Commercial real estate
Pass		$	102,619			$	24,301			$	38,665			$	96,593			$	24,203			$	41,656			$	8,375			$	—			$	336,412
Special Mention			—				—				—				—				—				—				—				—				—
Substandard			—				—				—				—				—				—				—				—				—
Doubtful			—				—				—				—				—				—				—				—				—
Loans not formally rated ⁽¹⁾			—				—				—				—				—				—				—				—				—
Total		$	102,619			$	24,301			$	38,665			$	96,593			$	24,203			$	41,656			$	8,375			$	—			$	336,412

Current-period gross charge-offs		$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—

Home equity lines of credit and loans
Pass		$	—			$	196			$	319			$	—			$	—			$	—			$	7,099			$	—			$	7,614
Special Mention			—				—				—				—				—				3				90				—				93
Substandard			—				—				—				—				—				—				99				—				99
Doubtful			—				—				—				—				—				—				—				—				—
Loans not formally rated ⁽¹⁾			142				170				347				25				2				54				40,760				560				42,060
Total		$	142			$	366			$	666			$	25			$	2			$	57			$	48,048			$	560			$	49,866

Current-period gross charge-offs		$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—

Construction
Pass		$	39,339			$	37,484			$	7,603			$	—			$	—			$	2,988			$	—			$	—			$	87,414
Special Mention			—				—				—				—				—				—				—				—				—
Substandard			—				—				—				—				—				—				—				—				—
Doubtful			—				—				—				—				—				—				—				—				—
Loans not formally rated ⁽¹⁾			790				753				—				—				—				—				—				—				1,543
Total		$	40,129			$	38,237			$	7,603			$	—			$	—			$	2,988			$	—			$	—			$	88,957

Current-period gross charge-offs		$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—

Commercial
Pass		$	355			$	4,500			$	213			$	2,091			$	258			$	159			$	362			$	—			$	7,938
Special Mention			—				—				—				—				—				—				—				—				—
Substandard			—				—				—				—				—				—				—				—				—
Doubtful			—				—				—				—				—				—				—				—				—
Loans not formally rated ⁽¹⁾			—				—				—				—				—				—				—				—				—
Total		$	355			$	4,500			$	213			$	2,091			$	258			$	159			$	362			$	—			$	7,938

Current-period gross charge-offs		$	—			$	—			$	—			$	—			$	—			$	16			$	65			$	—			$	81

Consumer
Pass		$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—
Special Mention			—				—				—				—				—				—				—				—				—
Substandard			—				—				—				—				—				—				—				—				—
Doubtful			—				—				—				—				—				—				—				—				—
Loans not formally rated ⁽¹⁾			705				6				8				20				31				4				95				—				869
Total		$	705			$	6			$	8			$	20			$	31			$	4			$	95			$	—			$	869

Current-period gross charge-offs		$	6			$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	6

(1) All loans not formally rated were accruing as of March 31, 2026 and December 31, 2025.

At March 31, 2026, the Company had one consumer mortgage loan secured by residential real estate property in the process of foreclosure for $103,000. At December 31, 2025, the Company had no consumer mortgage loans secured by residential real estate property in the process of foreclosure.

For the three months ended March 31, 2026 and 2025, the Company did not provide loan restructurings involving borrowers that are experiencing financial difficulty.