Loans receivable | 4. Loans receivable The composition of the loan portfolio was as follows: March 31, June 30, (in thousands) 2019 2018 Residential real estate One- to four-family $ 208,658 $ 206,908 Multi-family 15,573 15,113 Construction 2,662 2,919 Land 678 677 Farm 2,552 2,295 Nonresidential real estate 31,012 32,413 Commercial nonmortgage 2,167 1,917 Consumer and other: Loans on deposits 1,537 1,470 Home equity 7,920 7,603 Automobile 56 63 Unsecured 384 508 273,199 271,886 Allowance for loan losses (1,529 ) (1,576 ) $ 271,670 $ 270,310 The following table presents the activity in the allowance for loan losses by portfolio segment for the nine months ended March 31, 2019: (in thousands) Beginning balance Provision for loan losses Loans Recoveries Ending balance Residential real estate: One- to four-family $ 795 $ 27 $ (117 ) $ 39 $ 744 Multi-family 225 (9 ) -- -- 216 Construction 8 (4 ) -- -- 4 Land 1 -- -- -- 1 Farm 6 (1 ) -- -- 5 Nonresidential real estate 321 20 -- -- 341 Commercial nonmortgage 3 -- -- -- 3 Consumer and other: Loans on deposits 3 -- -- -- 3 Home equity 13 (1 ) -- -- 12 Automobile -- -- -- -- -- Unsecured 1 (21 ) -- 20 -- Unallocated 200 -- -- -- 200 Totals $ 1,576 $ 11 $ (117 ) $ 59 $ 1,529 The following table presents the activity in the allowance for loan losses by portfolio segment for the three months ended March 31, 2019: (in thousands) Beginning balance Provision for loan losses Loans Recoveries Ending balance Residential real estate: One- to four-family $ 734 $ 10 $ -- $ -- $ 744 Multi-family 220 (4 ) -- -- 216 Construction 3 1 -- -- 4 Land 1 -- -- -- 1 Farm 5 -- -- -- 5 Nonresidential real estate 346 (5 ) -- -- 341 Commercial nonmortgage 3 -- -- -- 3 Consumer and other: Loans on deposits 3 -- -- -- 3 Home equity 13 (1 ) -- -- 12 Automobile -- -- -- -- -- Unsecured 1 (1 ) -- -- -- Unallocated 200 -- -- -- 200 Totals $ 1,529 $ -- $ -- $ -- $ 1,529 The following table presents the activity in the allowance for loan losses by portfolio segment for the nine months ended March 31, 2018: (in thousands) Beginning balance Provision for loan losses Loans Recoveries Ending balance Residential real estate: One- to four-family $ 773 $ 75 $ (139 ) $ 48 $ 757 Multi-family 243 (15 ) -- -- 228 Construction 6 3 -- -- 9 Land 4 (3 ) -- -- 1 Farm 9 (1 ) -- -- 8 Nonresidential real estate 270 56 -- -- 326 Commercial nonmortgage 6 (2 ) -- -- 4 Consumer and other: Loans on deposits 4 (1 ) -- -- 3 Home equity 17 (5 ) -- -- 12 Automobile -- -- -- -- -- Unsecured 1 -- -- -- 1 Unallocated 200 -- -- -- 200 Totals $ 1,533 $ 107 $ (139 ) $ 48 $ 1,549 The following table presents the activity in the allowance for loan losses by portfolio segment for the three months ended March 31, 2018: (in thousands) Beginning balance Provision for loan losses Loans Recoveries Ending balance Residential real estate: One- to four-family $ 739 $ 104 $ (90 ) $ 4 $ 757 Multi-family 244 (16 ) -- -- 228 Construction 14 (5 ) -- -- 9 Land 2 (1 ) -- -- 1 Farm 10 (2 ) -- -- 8 Nonresidential real estate 293 33 -- -- 326 Commercial nonmortgage 6 (2 ) -- -- 4 Consumer and other: Loans on deposits 4 (1 ) -- -- 3 Home equity 18 (6 ) -- -- 12 Automobile -- -- -- -- -- Unsecured 1 -- -- -- 1 Unallocated 200 -- -- -- 200 Totals $ 1,531 $ 104 $ (90 ) $ 4 $ 1,549 The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio class and based on impairment method as of March 31, 2019. The recorded investment in loans excludes accrued interest receivable due to immateriality. March 31, 2019: (in thousands) Loans individually evaluated Loans Unpaid principal balance and recorded investment Ending allowance attributed to loans Unallocated allowance Total allowance Loans individually evaluated for impairment: Residential real estate: One- to four-family $ 4,822 $ 932 $ 5,754 $ -- $ -- $ -- Farm 310 -- 310 -- -- -- Nonresidential real estate 675 -- 675 -- -- -- 5,807 932 6,739 -- -- -- Loans collectively evaluated for impairment: Residential real estate: One- to four-family $ 202,904 $ 744 $ -- $ 744 Multi-family 15,573 216 -- 216 Construction 2,662 4 -- 4 Land 678 1 -- 1 Farm 2,242 5 -- 5 Nonresidential real estate 30,337 341 -- 341 Commercial nonmortgage 2,167 3 -- 3 Consumer: Loans on deposits 1,537 3 -- 3 Home equity 7,920 12 -- 12 Automobile 56 -- -- -- Unsecured 384 -- -- -- Unallocated -- -- 200 200 266,460 1,329 200 1,529 $ 273,199 $ 1,329 $ 200 $ 1,529 The following tables present the balance in the allowance for loan losses and the recorded investment in loans by portfolio class and based on impairment method as of June 30, 2018. June 30, 2018: (in thousands) Loans individually evaluated Loans Unpaid principal balance and recorded investment Ending allowance attributed to loans Unallocated allowance Total allowance Loans individually evaluated for impairment: Residential real estate: One- to four-family $ 2,977 $ 1,138 $ 4,115 $ -- $ -- $ -- Farm 310 310 Nonresidential real estate 122 -- 122 -- -- -- 3,409 1,138 4,547 -- -- -- Loans collectively evaluated for impairment: Residential real estate: One- to four-family $ 202,793 $ 795 $ -- $ 795 Multi-family 15,113 225 -- 225 Construction 2,919 8 -- 8 Land 677 1 -- 1 Farm 1,985 6 -- 6 Nonresidential real estate 32,291 321 -- 321 Commercial nonmortgage 1,917 3 -- 3 Consumer: Loans on deposits 1,470 3 -- 3 Home equity 7,603 13 -- 13 Automobile 63 -- -- -- Unsecured 508 1 -- 1 Unallocated -- -- 200 200 267,339 1,376 200 1,576 $ 271,886 $ 1,376 $ 200 $ 1,576 The following table presents loans individually evaluated for impairment by class of loans as of and for the nine months ended March 31: (in thousands) Average Recorded Investment Interest Income Recognized Cash Basis Income Recognized Average Recorded Investment Interest Cash Basis Income Recognized 2019 2018 With no related allowance recorded: One- to four-family $ 3,900 $ 120 $ 120 $ 3,340 $ 3 $ 3 Farm 310 -- -- 269 -- -- Nonresidential real estate 399 28 28 127 -- -- Purchased credit-impaired loans 1,035 45 45 1,490 42 42 5,644 193 193 5,226 45 45 With an allowance recorded: One- to four-family -- -- -- -- -- -- $ 5,644 $ 193 $ 193 $ 5,226 $ 45 $ 45 The following table presents interest income on loans individually evaluated for impairment by class of loans for the three months ended March 31: (in thousands) Average Recorded Investment Interest Income Recognized Cash Basis Income Recognized Average Recorded Investment Interest Cash Basis Income Recognized 2019 2018 With no related allowance recorded: One- to four-family $ 4,577 $ 45 $ 45 $ 2,919 $ -- $ -- Farm 310 -- -- 538 -- -- Nonresidential real estate 686 14 14 124 -- -- Purchased credit-impaired loans 963 9 9 1,311 3 3 6,536 68 68 4,892 3 3 With an allowance recorded: One- to four-family -- -- -- -- -- -- $ 6,536 $ 68 $ 68 $ 4,892 $ 3 $ 3 The following table presents the recorded investment in nonaccrual and loans past due over 90 days still on accrual by class of loans as of March 31, 2019 and June 30, 2018: March 31, 2019 June 30, 2018 (in thousands) Nonaccrual Loans Past Due Over 90 Days Still Accruing Nonaccrual Loans Past Due Over 90 Days Still Accruing One- to four-family residential real estate $ 4,559 $ 1,308 $ 4,210 $ 2,419 Multifamily 692 -- -- -- Farm 310 -- 310 -- Nonresidential real estate and land 693 -- 708 -- Commercial and industrial 2 -- 7 -- Consumer 315 -- 11 -- $ 6,571 $ 1,308 $ 5,246 $ 2,419 Troubled Debt Restructurings: A Troubled Debt Restructuring (“TDR”) is the situation where the Bank grants a concession to the borrower that the Banks would not otherwise have considered due to the borrower’s financial difficulties. All TDRs are considered “impaired.” At March 31, 2019 and June 30, 2018, the Company had $1.6 million and $1.7 million of loans classified as TDRs, respectively. Of the TDRs at March 31, 2019, approximately 34.5% were related to the borrower’s completion of Chapter 7 bankruptcy proceedings with no reaffirmation of the debt to the Banks. During the nine months ended March 31, 2019, the Company had two loans restructured as TDRs. A secondary mortgage loan of $219,000 was renewed and an additional $30,000 was loaned to a borrower to finish construction of an 8-plex, because the construction project had experienced cost overruns. The Company carries the first mortgage on this project and both the primary and secondary loans are secured by the 8-plex and additional real estate collateral. The Company also refinanced an existing single-family mortgage loan and provided additional funds to a borrower attempting to consolidate his debt. The Company had three TDRs during the nine months ended March 31, 2018. The Company had no allocated specific reserves to customers whose loan terms had been modified in troubled debt restructurings as of March 31, 2019 or at June 30, 2018. The Company had no commitments to lend on loans classified as TDRs at March 31, 2019 or June 30, 2018. The following table summarizes TDR loan modifications that occurred during the nine months ended March 31, 2019 and 2018, and their performance, by modification type: (in thousands) Troubled Debt Restructurings Performing to Modified Terms Troubled Debt Restructurings Not Performing to Modified Terms Total Troubled Debt Restructurings Nine months ended March 31, 2019 Residential real estate: Terms extended and additional funds advanced $ 324 $ -- $ 324 Nine months ended March 31, 2018 Residential real estate: Terms extended and additional funds advanced $ 325 $ -- $ 325 Chapter 7 bankruptcy without reaffirmation 32 -- 32 There were no TDR loan modifications during the three months ended March 31, 2019. The following table summarizes TDR loan modifications that occurred during the three months ended March 31, 2018, and their performance, by modification type: (in thousands) Troubled Debt Restructurings Performing to Modified Terms Troubled Debt Restructurings Not Performing to Modified Terms Total Three months ended March 31, 2018 Residential real estate: Terms extended and additional funds advanced $ 32 $ -- $ 32 No TDRs defaulted during the nine-month period ended March 31, 2019. Four TDRs with a carrying value of $136,000 defaulted during the nine-month period ended March 31, 2018. The properties were taken into REO and sold. The following table presents the aging of the principal balance outstanding in past due loans as of March 31, 2019, by class of loans: (in thousands) 30-89 Days Past Due 90 Days or Greater Past Due Total Past Due Loans Not Past Due Total Residential real estate: One-to four-family $ 2,998 $ 3,103 $ 6,101 $ 202,557 $ 208,658 Multi-family -- 443 443 15,130 15,573 Construction 603 -- 603 2,059 2,662 Land -- -- -- 678 678 Farm -- -- -- 2,552 2,552 Nonresidential real estate 1,061 260 1,321 29,691 31,012 Commercial non-mortgage 20 -- 20 2,147 2,167 Consumer and other: Loans on deposits -- -- -- 1,537 1,537 Home equity 92 5 97 7,823 7,920 Automobile -- -- -- 56 56 Unsecured -- -- -- 384 384 Total $ 4,774 $ 3,811 $ 8,585 $ 264,614 $ 273,199 The following tables present the aging of the principal balance outstanding in past due loans as of June 30, 2018, by class of loans: (in thousands) 30-89 Days Past Due 90 Days or Greater Past Due Total Past Due Loans Not Past Due Total Residential real estate: One-to four-family $ 3,182 $ 4,051 $ 7,233 $ 199,675 $ 206,908 Multi-family 792 -- 792 14,321 15,113 Construction -- -- -- 2,919 2,919 Land -- -- -- 677 677 Farm -- -- -- 2,295 2,295 Nonresidential real estate -- 269 269 32,144 32,413 Commercial nonmortgage -- -- -- 1,917 1,917 Consumer: Loans on deposits -- -- -- 1,470 1,470 Home equity 9 5 14 7,589 7,603 Automobile -- -- -- 63 63 Unsecured 3 -- 3 505 508 Total $ 3,986 $ 4,325 $ 8,311 $ 263,575 $ 271,886 Credit Quality Indicators: The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis is performed on an annual basis. The Company uses the following definitions for risk ratings: Special Mention. Substandard. Doubtful. Loans not meeting the criteria above that are analyzed individually as part of the above-described process are considered to be pass rated loans. Loans listed that are not rated are included in groups of homogeneous loans and are evaluated for credit quality based on performing status. See the aging of past due loan table above. As of March 31, 2019, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows: (in thousands) Pass Special Mention Substandard Doubtful Not rated Residential real estate: One- to four-family $ -- $ 939 $ 8,861 $ -- $ 198,858 Multi-family 14,881 -- 692 -- -- Construction 2,662 -- -- -- -- Land 678 -- -- -- -- Farm 2,242 -- 310 -- -- Nonresidential real estate 30,320 -- 692 -- -- Commercial nonmortgage 2,165 -- 2 -- -- Consumer: Loans on deposits 1,537 -- -- -- -- Home equity 7,812 79 29 -- -- Automobile 56 -- -- -- -- Unsecured 379 -- 5 -- -- $ 62,732 $ 1,018 $ 10,591 $ -- $ 198,858 At June 30, 2018, the risk category of loans by class of loans was as follows: (in thousands) Pass Special Mention Substandard Doubtful Not rated Residential real estate: One- to four-family $ -- $ 1,093 $ 10,215 $ -- $ 195,600 Multi-family 14,445 -- 668 -- -- Construction 2,919 -- -- -- -- Land 677 -- -- -- -- Farm 1,985 -- 310 -- -- Nonresidential real estate 31,700 -- 713 -- -- Commercial nonmortgage 1,910 -- 7 -- -- Consumer: Loans on deposits 1,470 -- -- -- -- Home equity 7,603 -- -- -- -- Automobile 63 -- -- -- -- Unsecured 506 -- 2 -- -- $ 63,278 $ 1,093 $ 11,915 $ -- $ 195,600 Purchased Credit Impaired Loans: The Company purchased loans during fiscal year 2013 for which there was, at acquisition, evidence of deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected. The carrying amount of those loans, net of a purchase credit discount of $351,000 and $383,000 at March 31, 2019 and June 30, 2018, respectively, is as follows: (in thousands) March 31, June 30, One- to four-family residential real estate $ 932 $ 1,138 Accretable yield, or income expected to be collected, is as follows (in thousands) Nine Twelve months ended June 30, Balance at beginning of period $ 634 $ 720 Accretion of income (61 ) (86 ) Disposals, net of recoveries -- -- Balance at end of period $ 573 $ 634 For those purchased loans disclosed above, the Company made no increase in allowance for loan losses for the year ended June 30, 2018, nor for the nine-month period ended March 31, 2019. Neither were any allowance for loan losses reversed during those periods. |