Note 3 – Loans Receivable

Portfolio loans, net of deferred costs and fees, are summarized by type as follows at June 30, 2025 and December 31, 2024:


	Period Ended
	June 30, 2025						December 31, 2024
(dollars in thousands)	Amount			Percent			Amount			Percent
Real estate
One to four family - owner occupied	$	152,524			20.29	%	$	141,867			19.23	%
One to four family - non owner occupied		94,469			12.57	%		99,824			13.53	%
Commercial owner occupied		81,905			10.90	%		82,614			11.20	%
Commercial investor		328,212			43.67	%		328,680			44.56	%
Construction and land		34,893			4.64	%		30,578			4.14	%
Farm loans		11,419			1.52	%		11,329			1.54	%
Total real estate loans		703,422			93.59	%		694,892			94.20	%

Marine and other consumer loans		16,135			2.15	%		16,772			2.27	%
Guaranteed by U.S. Government		2,265			0.30	%		2,902			0.39	%
Commercial		29,751			3.96	%		23,194			3.14	%
Total consumer and commercial		48,151			6.41	%		42,868			5.80	%

Total loans		751,573			100.0	%		737,760			100.0	%
Allowance for credit losses		(9,159	)					(8,522	)
Total loans, net of deferred costs and fees	$	742,414					$	729,238

Net deferred loan origination fees at June 30, 2025 and December 31, 2024 totaled $2.3 million and $2.2 million, respectively.

In the normal course of banking business, risks related to specific loan categories are as follows:

Real Estate Loans – Real estate loans are typically made to consumers and businesses and are secured by real estate. Credit risk arises from the borrower’s continuing financial stability, which can be adversely impacted by the economy as well as borrower-specific occurrences. Also impacting credit risk would be a shortfall in the value of the real estate in relation to the outstanding loan balance in the event of a default or subsequent liquidation of the collateral.

Residential lending repayment is generally dependent on economic and market conditions in the Company's lending area. Commercial real estate, commercial and construction loan repayments are generally dependent on the operations of the related properties or the financial condition of its borrower or guarantor. Accordingly, repayment of such loans can be more susceptible to adverse conditions in the real estate market and the regional economy.

Marine Loans – Marine loans are typically made to consumers and are secured by boats. Credit risk is similar to real estate loans above as it is subject to the borrower’s continuing financial stability and the value of the collateral securing the loan. Marine loans may entail greater risk than residential mortgage loans, as they are collateralized by assets that depreciate rapidly. Repossessed collateral for a defaulted loan may not provide an adequate source of repayment for the outstanding and small remaining deficiency often does not warrant further substantial collection efforts against the borrower.

Other Consumer – Other consumer loans include installment loans and personal lines of credit which may be secured or unsecured. Credit risk is similar to real estate loans above as it is subject to the borrower’s continuing financial stability and the value of the collateral securing the loan, if any. Consumer loans may entail greater risk than residential mortgage loans, particularly in the case of consumer loans that are unsecured or secured by assets that depreciate rapidly. Repossessed collateral for a defaulted consumer loan may not provide an adequate source of repayment for the outstanding loan and a small remaining deficiency often does not warrant further substantial collection efforts against the borrower.

Guaranteed by the U.S. Government – Loans guaranteed by the U.S. Government do not present similar risks as reflected in the other categories mentioned herein because of an explicit guarantee is provided by the government, therefore substantially mitigating any risk of loss in the event of credit deterioration.

Commercial – Commercial loans are secured or unsecured loans used for business purposes. Loans are typically secured by accounts receivable, inventory, equipment and/or other assets of the business. Credit risk arises from the successful operation of the business, which may be affected by competition, rising interest rates, tariffs, regulatory changes and adverse conditions in the local and regional economy.

Non-accrual loans as of June 30, 2025 and December 31, 2024 were as follows:


	June 30, 2025						December 31, 2024
	No		With an				No		With an
(dollars in thousands)	Allowance		Allowance		Total		Allowance		Allowance		Total
Real estate
One to four family - owner occupied	$	929	$	—	$	929	$	1,218	$	—	$	1,218
One to four family - non owner occupied		396		—		396		280		—		280
Commercial owner occupied		1,283		—		1,283		1,323		—		1,323
Commercial investor		716		—		716		772		—		772
Construction and land		26		—		26		26		—		26
Total real estate loans		3,350		—		3,350		3,619		—		3,619

Marine and other consumer loans		11		—		11		11		—		11
Commercial		650		380		1,030		—		380		380
Total consumer and commercial loans		661		380		1,041		11		380		391

Total nonaccrual loans	$	4,011	$	380	$	4,391	$	3,630	$	380	$	4,010

Loans can be current but classified as non-accrual due to customer operating results or payment history. All interest accrued but not collected from loans that are placed on non-accrual status or charged-off is reversed against interest income. In accordance with the Company’s policy, such interest income is recognized on a cash basis or cost-recovery method, until qualifying for return to accrual status. Interest that would have been accrued under the terms of the non-accrual loans had such loans been performing according to their terms was approximately $453,000 for the six-months ended June 30, 2025 and $1.2 million for the six-months ended June 30, 2024.

The Company considers a loan to be past due or delinquent when the terms of the contractual obligation are not met by the borrower. An analysis of days past due loans as of June 30, 2025 was as follows:


	June 30, 2025
	30 - 59		60 - 89		90+
	Days		Days		Days		Total		Current		Total
(dollars in thousands)	Past Due		Past Due		Past Due		Past Due		Loans		Loans
Real estate
One to four family - owner occupied	$	562	$	219	$	702	$	1,483	$	151,041	$	152,524
One to four family - non owner occupied		102		225		80		407		94,062		94,469
Commercial owner occupied		408		—		306		714		81,191		81,905
Commercial investor		—		—		—		—		328,212		328,212
Construction and land		—		—		26		26		34,867		34,893
Farm loans		—		—		—		—		11,419		11,419
Total real estate loans		1,072		444		1,114		2,630		700,792		703,422

Marine and other consumer loans		4		4		11		19		16,116		16,135
Guaranteed by U.S. Government		—		—		—		—		2,265		2,265
Commercial		—		—		380		380		29,371		29,751
Total consumer and commercial loans		4		4		391		399		47,752		48,151

Total loans	$	1,076	$	448	$	1,505	$	3,029	$	748,544	$	751,573

An analysis of days past due loans as of December 31, 2024 was as follows:


	December 31, 2024
	30 - 59		60 - 89		90+
	Days		Days		Days		Total		Current		Total
(dollars in thousands)	Past Due		Past Due		Past Due		Past Due		Loans		Loans
Real estate
One to four family - owner occupied	$	2,923	$	558	$	608	$	4,089	$	137,778	$	141,867
One to four family - non owner occupied		576		—		0		576		99,248		99,824
Commercial owner occupied		408		—		656		1,064		81,550		82,614
Commercial investor		0		—		—		—		328,680		328,680
Construction and land		299		—		0		299		30,279		30,578
Farm loans		—		—		—		—		11,329		11,329
Total real estate loans		4,206		558		1,264		6,028		688,864		694,892

Marine and other consumer loans		9		—		11		20		16,752		16,772
Guaranteed by U.S. Government		9		52		—		61		2,841		2,902
Commercial		—		—		380		380		22,814		23,194
Total consumer and commercial loans		18		52		391		461		42,407		42,868

Total loans	$	4,224	$	610	$	1,655	$	6,489	$	731,271	$	737,760

Allowance for Credit Losses

The following tables detail activity in the ACL at and for the three and six months ended June 30, 2025 and 2024. An allocation of the allowance to one category of loans does not prevent the Company from using that allowance to absorb losses in a different category.


Three Months Ended	June 30, 2025
(dollars in thousands)	Beginning Balance		Charge-offs		Recoveries		Provisions (Recovery)			Ending Balance
Real estate
One to four family - owner occupied	$	1,647	$	—	$	13	$	551		$	2,211
One to four family - non owner occupied		617		—		14		36			667
Commercial owner occupied		495		—		—		—			495
Commercial investor		4,032		—		—		(299	)		3,733
Construction and land		955		—		1		(88	)		868
Farm loans		73		—		—		24			97
Total real estate loans		7,819		—		28		224			8,071

Marine and other consumer loans		396		—		1		(27	)		370
Commercial		673		—		—		45			718
Total consumer and commercial		1,069		—		1		18			1,088

Total loans	$	8,888	$	—	$	29	$	242		$	9,159

The following table summarized the ACL provision activity for the three months ended June 30, 2025.


(dollars in thousands)
Provision for (recovery of) credit losses - loans	$	242
Provision for (recovery of) allowance for securities - HTM		(1	)
Provision for (recovery of ) allowance for credit losses - unfunded commitments		(63	)
Provision for (recovery of) credit losses per the consolidated statements of income	$	178


Three Months Ended	June 30, 2024
(dollars in thousands)	Beginning Balance		Charge-offs			Recoveries		Provisions (recovery)			Ending Balance
Real estate
One to four family - owner occupied	$	1,697	$	—		$	57	$	(127	)	$	1,627
One to four family - non owner occupied		1,015		—			11		(24	)		1,002
Commercial owner occupied		578		—			—		(64	)		514
Commercial investor		3,570		—			—		139			3,709
Construction and land		763		—			1		(19	)		745
Farm loans		174		—			—		83			257
Total real estate loans		7,797		—			69		(12	)		7,854

Marine and other consumer loans		428		(2	)		—		8			434
Commercial		281		—			—		(22	)		259
Total consumer and commercial		709		(2	)		—		(14	)		693

Total loans	$	8,506	$	(2	)	$	69	$	(26	)	$	8,547

The following table summarized the ACL provision activity for the three months ended June 30, 2024.


(dollars in thousands)
Provision for (recovery of) credit losses - loans	$	(26	)
Reduction in allowance for securities - HTM		(1	)
Provision for allowance for credit losses - unfunded commitments		(84	)
Provision for credit losses per the consolidated statement of income	$	(111	)


Six Months Ended	June 30, 2025
(dollars in thousands)	Beginning Balance		Charge-offs			Recoveries		Provisions (recovery)			Ending Balance
Real estate
One to four family - owner occupied	$	1,858	$	—		$	16	$	337		$	2,211
One to four family - non owner occupied		742		—			30		(105	)		667
Commercial owner occupied		511		—			—		(16	)		495
Commercial investor		3,592		—			—		141			3,733
Construction and land		940		—			2		(74	)		868
Farm loans		69		—			—		28			97
Total real estate loans		7,712		—			48		311			8,071

Marine and other consumer loans		399		(5	)		1		(25	)		370
Commercial		411		—			—		307			718
Total consumer and commercial		810		(5	)		1		282			1,088

Total loans	$	8,522	$	(5	)	$	49	$	593		$	9,159

The following table summarized the ACL provision activity for the six months ended June 30, 2025.


(dollars in thousands)
Provision for (recovery of) credit losses - loans	$	593
Provision for (recovery of) allowance for securities - HTM		(1	)
Provision for (recovery of ) allowance for credit losses - unfunded commitments		(117	)
Provision for (recovery of) credit losses per the consolidated statements of income	$	475


Six Months Ended	June 30, 2024
(dollars in thousands)	Beginning Balance		Charge-offs			Recoveries		Provisions (recovery)			Ending Balance
Real estate
One to four family - owner occupied	$	1,728	$	—		$	109	$	(210	)	$	1,627
One to four family - non owner occupied		1,030		(1	)		40		(67	)		1,002
Commercial owner occupied		563		—			3		(52	)		514
Commercial investor		3,725		—			—		(16	)		3,709
Construction and land		772		—			2		(29	)		745
Farm loans		179		—			—		78			257
Total real estate loans		7,997		(1	)		154		(296	)		7,854

Marine and other consumer loans		403		(2	)		1		32			434
Commercial		154		—			—		105			259
Total consumer and commercial		557		(2	)		1		137			693

Total loans	$	8,554	$	(3	)	$	155	$	(159	)	$	8,547

The following table summarized the ACL provision activity for the six months ended June 30, 2024.


(dollars in thousands)
Provision for (recovery of) credit losses - loans	$	(159	)
Reduction in allowance for securities - HTM		(1	)
Reduction in allowance for credit losses - unfunded commitments		68
Provision for credit losses per the consolidated statement of income	$	(92	)

Term Loans by Origination Year


(dollars in thousands)	Term Loans Amortized Cost Basis by Origination Year
Balance at June 30, 2025	2025		2024		2023		2022		2021		Prior		Revolving		Total
One to four family - owner occupied
Pass	$	20,002	$	23,254	$	5,356	$	7,613	$	12,656	$	73,158	$	9,891	$	151,930
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		333		261		—		594
Doubtful		—		—		—		—		—		—		—		—
Loss		—		—		—		—		—		—		—		—
Total One to four family - owner occupied	$	20,002	$	23,254	$	5,356	$	7,613	$	12,989	$	73,419	$	9,891	$	152,524
Current Period Gross Write-off	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

One to four family - non owner occupied
Pass	$	4,118	$	4,733	$	12,338	$	27,110	$	15,698	$	29,702	$	—	$	93,699
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		770		—		770
Doubtful		—		—		—		—		—		—		—		—
Loss		—		—		—		—		—		—		—		—
Total One to four family - non owner occupied	$	4,118	$	4,733	$	12,338	$	27,110	$	15,698	$	30,472	$	—	$	94,469
Current Period Gross Write-off	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Commercial owner occupied
Pass	$	2,358	$	4,522	$	20,036	$	10,642	$	5,739	$	36,251	$	—	$	79,548
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		306		2,051		—		2,357
Doubtful		—		—		—		—		—		—		—		—
Loss		—		—		—		—		—		—		—		—
Total Commercial owner occupied	$	2,358	$	4,522	$	20,036	$	10,642	$	6,045	$	38,302	$	—	$	81,905
Current Period Gross Write-off	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Commercial investor
Pass	$	14,460	$	37,966	$	63,863	$	93,818	$	69,340	$	48,049	$	—	$	327,496
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		716		—		716
Doubtful		—		—		—		—		—		—		—		—
Loss		—		—		—		—		—		—		—		—
Total Commercial investor	$	14,460	$	37,966	$	63,863	$	93,818	$	69,340	$	48,765	$	—	$	328,212
Current Period Gross Write-off	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Construction and land
Pass	$	3,598	$	27,101	$	154	$	2,136	$	989	$	766	$	—	$	34,744
Special Mention		—		—		123		—		—		—		—		123
Substandard		—		—		—		—		—		26		—

BV Financial, Inc. 10-Q