| Loans receivable | 4. Loans receivable The composition of the loan portfolio was as follows:
March 31, June 30,
(in thousands) 2021 2020
Residential real estate
One- to four-family $ 222,878 $ 222,489
Multi-family 19,773 12,373
Construction 5,959 4,045
Land 1,286 765
Farm 2,217 2,354
Nonresidential real estate 37,884 33,503
Commercial nonmortgage 2,082 2,214
Consumer and other:
Loans on deposits 1,126 1,245
Home equity 7,004 7,645
Automobile 75 67
Unsecured 528 675
300,812 287,375
Allowance for loan losses (1,622 ) (1,488 )
$ 299,190 $ 285,887 The following table presents the activity in the
allowance for loan losses by portfolio segment for the nine months ended March 31, 2021:
(in thousands) Beginning balance Provision for loan losses Loans charged off Recoveries Ending balance
Residential real estate:
One- to four-family $ 671 $ (3 ) $ (23 ) $ – $ 645
Multi-family 184 96 – – 280
Construction 6 3 – – 9
Land 1 1 – – 2
Farm 4 -- – – 4
Nonresidential real estate 405 61 – – 466
Commercial nonmortgage 3 -- – – 3
Consumer and other:
Loans on deposits 2 – – – 2
Home equity 11 37 (45 ) 7 10
Automobile – – – – –
Unsecured 1 (3 ) – 3 1
Unallocated 200 – – – 200
Totals $ 1,488 $ 192 $ (68 ) $ 10 $ 1,622 The following table presents the activity in the
allowance for loan losses by portfolio segment for the three months ended March 31, 2021:
(in thousands) Beginning
balance Provision
for loan losses Loans
charged off Recoveries Ending
balance
Residential real estate:
One- to four-family $ 647 $ (2 ) $ -- $ – $ 645
Multi-family 277 3 – – 280
Construction 6 3 – – 9
Land 2 -- – – 2
Farm 5 (1 ) – – 4
Nonresidential real estate 469 (3 ) – – 466
Commercial nonmortgage 2 1 – – 3
Consumer and other:
Loans on deposits 2 -- – – 2
Home equity 11 (1 ) – – 10
Automobile – – – – –
Unsecured 1 -- – -- 1
Unallocated 200 – – – 200
Totals $ 1,622 $ -- $ -- $ -- $ 1,622 The following table presents the activity in the
allowance for loan losses by portfolio segment for the nine months ended March 31, 2020:
(in thousands) Beginning
balance Provision
for loan losses Loans
charged off Recoveries Ending
balance
Residential real estate:
One- to four-family $ 685 $ 59 $ (65 ) $ 1 $ 680
Multi-family 200 (31 ) – – 169
Construction 6 1 – – 7
Land 1 1 – – 2
Farm 6 (2 ) – – 4
Nonresidential real estate 336 32 – – 368
Commercial nonmortgage 5 (2 ) – – 3
Consumer and other:
Loans on deposits 3 (1 ) – – 2
Home equity 14 (2 ) – – 12
Automobile – 8 (8 ) – –
Unsecured – 1 – – 1
Unallocated 200 – – – 200
Totals $ 1,456 $ 64 $ (73 ) $ 1 $ 1,448 The following table presents the activity in the
allowance for loan losses by portfolio segment for the three months ended March 31, 2020:
(in thousands) Beginning
balance Provision
for loan losses Loans
Recoveries Ending
balance
Residential real estate:
One- to four-family $ 684 $ (5 ) $ – $ 1 $ 680
Multi-family 172 (3 ) – – 169
Construction 6 1 – – 7
Land 2 -- – – 2
Farm 4 -- – – 4
Nonresidential real estate 361 7 – – 368
Commercial nonmortgage 4 (1 ) – – 3
Consumer and other:
Loans on deposits 2 – – – 2
Home equity 11 1 – – 12
Automobile – -- -- – –
Unsecured 1 -- – – 1
Unallocated 200 – – – 200
Totals $ 1,447 $ -- $ -- $ 1 $ 1,448 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, 2021.
The recorded investment in loans excludes accrued interest receivable due to immateriality. March 31, 2021:
(in thousands) Loans
individually evaluated Loans
acquired with deteriorated credit quality Unpaid
principal balance Ending
allowance attributed to loans Unallocated
allowance Total
allowance
Loans individually evaluated for impairment:
Residential real estate:
One- to four-family $ 3,903 $ 667 $ 4,570 $ – $ – $ –
Multi-family 652 – 652 – – –
Farm 290 – 290 – – –
Nonresidential real estate 636 – 636 – – –
Consumer:
Unsecured 17 -- 17 -- -- --
5,498 667 6,165 – – –
Loans collectively evaluated for impairment:
Residential real estate:
One- to four-family $ 218,308 $ 645 $ – $ 645
Multi-family 19,121 280 – 280
Construction 5,959 9 – 9
Land 1,286 2 – 2
Farm 1,927 4 – 4
Nonresidential real estate 37,248 466 – 466
Commercial nonmortgage 2,082 3 – 3
Consumer:
Loans on deposits 1,126 2 – 2
Home equity 7,004 10 – 10
Automobile 75 – – –
Unsecured 511 1 – 1
Unallocated – – 200 200
294,647 1,422 200 1,622
$ 300,812 $ 1,422 $ 200 $ 1,622 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, 2020. June 30, 2020:
(in thousands) Loans individually
evaluated Loans acquired with
deteriorated credit quality Unpaid principal
balance Ending allowance
attributed to loans Unallocated allowance Total allowance
Loans individually evaluated for impairment:
Residential real estate:
One- to four-family $ 3,983 $ 751 $ 4,734 $ – $ – $ –
Multi-family 671 – 671 – – –
Construction 63 – 63 – – –
Farm 309 – 309 – – –
Nonresidential real estate 660 – 660 – – –
5,686 751 6,437 – – –
Loans collectively evaluated for impairment:
Residential real estate:
One- to four-family $ 217,755 $ 671 $ – $ 671
Multi-family 11,702 184 – 184
Construction 3,982 6 – 6
Land 765 1 – 1
Farm 2,045 4 – 4
Nonresidential real estate 32,843 405 – 405
Commercial nonmortgage 2,214 3 – 3
Consumer:
Loans on deposits 1,245 2 – 2
Home equity 7,645 11 – 11
Automobile 67 – – –
Unsecured 675 1 – 1
Unallocated – – 200 200
280,938 1,288 200 1,488
$ 287,375 $ 1,288 $ 200 $ 1,488 The following table presents interest income
on loans individually evaluated for impairment by class of loans for the nine months ended March 31:
(in thousands) Average Interest Cash
Basis Average Interest Cash
Basis
2021 2020
With no related allowance recorded:
One- to four-family $ 3,941 $ 120 $ 120 $ 3,866 $ 74 $ 74
Multi-family 662 18 18 681 25 25
Construction 32 – – – – –
Farm 300 23 23 310 11 11
Nonresidential real estate 648 24 24 698 23 23
Consumer and other 9 -- -- -- -- --
Purchased credit-impaired
loans 709 40 40 859 60 60
6,301 225 225 6,413 193 193
With an allowance recorded:
One- to four-family – – – – – –
$ 6,301 $ 225 $ 225 $ 6,413 $ 193 $ 193 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 Cash Basis Income
Recognized Average Recorded
Investment Interest Cash Basis Income
Recognized
2021 2020
With no related allowance recorded:
Residential real estate:
One- to four-family $ 3,971 $ 36 $ 36 $ 3,951 $ 12 $ 12
Multi-family 655 6 6 680 8 8
Farm 291 -- -- 310 6 6
Nonresidential real estate 641 17 17 717 9 9
Consumer and other 9 -- -- -- -- --
Purchased credit-impaired
loans 676 16 16 846 25 25
6,243 75 75 6,503 60 60
With an allowance recorded:
One- to four-family – – – – – –
$ 6,243 $ 75 $ 75 $ 6,503 $ 60 $ 60 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, 2021 and June 30, 2020:
March 31, 2021 June 30, 2020
(in thousands) Nonaccrual Loans Past Due Over Nonaccrual Loans
Residential real estate:
One- to four-family residential
real estate $ 4,339 $ 248 $ 4,458 $ 1,135
Multifamily 652 – 671 –
Construction -- – 63 –
Farm 290 – 309 –
Nonresidential real estate and land 636 – 660 –
Commercial and industrial – – 4 –
Consumer 22 19 95 –
$ 5,939 $ 267 $ 6,260 $ 1,135 One- to four-family loans in process of foreclosure
totaled $649,000 and $694,000 at March 31, 2021 and June 30, 2020, respectively. 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.” The provisions of the CARES Act included an
election to not apply the guidance on accounting for troubled debt restructurings to loan modifications, such as extensions or
deferrals, related to COVID-19 made between March 1, 2020 and the earlier of (i) March 31, 2021 or (ii) 60 days after the end of the
COVID-19 national emergency. The relief can only be applied to modifications for borrowers that were not more than 30 days past due
as of December 31, 2019. In December 2020, Congress amended the CARES Act through the Consolidated Appropriation Act of 2021, which
provided additional COVID-19 relief to American families and businesses, including extending TDR relief under the CARES Act until
the earlier of December 31, 2021 or 60 days following the termination of the national emergency. The Company elected to adopt these
provisions of the CARES Act. As of March 31, 2021, the Banks had granted deferrals to 101 loans totaling $18.4 million. One
borrower who owed $859,000 at March 31, 2021, had been granted an additional extension and returned to normal payment status in
April 2021. All other borrowers granted a deferral, composed of 100 loans totaling $17.5 million in principal had resumed regular
payments at March 31, 2021. At March 31, 2021 and June 30, 2020, the Company
had $1.9 million and $1.9 million of loans classified as TDRs, respectively. Of the TDRs at March 31, 2021, approximately 29.4% 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, 2021,
the Company had two loans, which were associated with a single borrower and were both secured by a single-family residence, restructured
as TDRs. The loans were classified as TDRs pursuant to court action under Chapter 7 bankruptcy proceedings without the borrower reaffirming
the debt personally, and totaled $143,000 at March 31, 2021, and were current on payments as of that date. During the nine months ended March 31, 2020,
the Company had three loans restructured as TDRs. One borrower refinanced a piece of one- to four-family, non-owner occupied, residential
property to bring to current amounts owed on other loans with the Bank. Because the borrower’s financial condition had deteriorated,
it was unlikely that the borrower could have secured financing elsewhere. The restructured loan is collateralized and cross-collateralized
by real estate. Another single-family residential borrower filed for Chapter 7 bankruptcy protection and did not reaffirm the debt personally,
although the Company’s collateral position remains intact. Finally, a first and second mortgage on an 8-plex were refinanced into
a single loan with a slightly extended maturity term and a lower interest rate, which was consistent with similarly-priced comparable
loans at the time of refinance. The following table summarizes TDR loan modifications
that occurred during the nine months ended March 31, 2021 and 2020, and their performance, by modification type:
(in thousands) Troubled Debt Troubled Debt Total
Nine months ended March 31, 2021
Residential real estate:
Chapter 7 bankruptcy $ 143 $ – $ 143
Nine months ended March 31, 2020
Residential real estate:
Terms extended $ 677 $ – $ 677
Terms extended and additional funds advanced $ 119 $ – $ 119
Chapter 7 bankruptcy $ 21 $ – $ 21 No TDRs defaulted during the nine-month periods
ended March 31, 2021 or 2020. There were no TDR loan modifications that occurred
during the three months ended March 31, 2021 and 2020. The following table presents the aging of the
principal balance outstanding in past due loans as of March 31, 2021, by class of loans:
(in thousands) 30-89 Days 90 Days or Total Past Loans Not Total
Residential real estate:
One-to four-family $ 2,162 $ 1,582 $ 3,744 $ 219,134 $ 222,878
Multi-family – – – 19,773 19,773
Construction -- -- -- 5,959 5,959
Land – – – 1,286 1,286
Farm 102 – 102 2,115 2,217
Nonresidential real estate 99 245 344 37,540 37,884
Commercial non-mortgage – – – 2,082 2,082
Consumer and other:
Loans on deposits – – – 1,126 1,126
Home equity 176 19 195 6,809 7,004
Automobile -- – -- 75 75
Unsecured 76 – 76 452 528
Total $ 2,615 $ 1,846 $ 4,461 $ 296,351 $ 300,812 The following tables present the aging of the
principal balance outstanding in past due loans as of June 30, 2020, by class of loans:
(in thousands) 30-89 Days 90 Days or Total Past Loans Not Total
Residential real estate:
One-to four-family $ 2,546 $ 2,670 $ 5,216 $ 217,273 $ 222,489
Multi-family – – – 12,373 12,373
Construction 192 63 255 3,790 4,045
Land – – – 765 765
Farm 107 309 416 1,938 2,354
Nonresidential real estate 57 253 310 33,193 33,503
Commercial nonmortgage – – – 2,214 2,214
Consumer:
Loans on deposits – – – 1,245 1,245
Home equity 255 90 345 7,300 7,645
Automobile – – – 67 67
Unsecured – – – 675 675
Total $ 3,157 $ 3,385 $ 6,542 $ 280,833 $ 287,375 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, 2021, and based on the most recent analysis performed, the risk category of loans by class of loans is as
follows:
(in thousands) Pass Special Substandard Doubtful
Residential real estate:
One- to four-family $ 215,885 $ 677 $ 6,316 $ –
Multi-family 19,121 – 652 –
Construction 5,959 – -- –
Land 1,286 – – –
Farm 1,927 – 290 –
Nonresidential real estate 35,861 931 1,092 –
Commercial nonmortgage 2,082 – – –
Consumer:
Loans on deposits 1,126 – – –
Home equity 6,929 40 35 –
Automobile 75 – – –
Unsecured 522 – 6 –
$ 290,773 $ 1,648 $ 8,391 $ – At June 30, 2020, the risk category of loans
by class of loans was as follows:
(in thousands) Pass Special Substandard Doubtful
Residential real estate:
One- to four-family $ 215,010 $ 742 $ 6,737 $ –
Multi-family 11,702 – 671 –
Construction 3,982 – 63 –
Land 765 – – –
Farm 2,045 – 309 –
Nonresidential real estate 31,529 939 1,035 –
Commercial nonmortgage 2,188 – 26 –
Consumer:
Loans on deposits 1,245 – – –
Home equity 7,505 39 101 –
Automobile 67 – – –
Unsecured 670 – 5 –
$ 276,708 $ 1,720 $ 8,947 $ – 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 $351,000 at March 31, 2021 and June 30, 2020, respectively, is as follows:
(in thousands) March 31, June 30,
One- to four-family residential real estate $ 667 $ 751
Accretable yield, or income expected to be collected,
is as follows:
(in thousands) Nine months Twelve months
Balance at beginning of period $ 447 $ 544
Accretion of income (43 ) (97 )
Disposals, net of recoveries – –
Balance at end of period $ 404 $ 447 For those purchased loans disclosed above, the
Company made no increase in allowance for loan losses for the year ended June 30, 2020, nor for the nine-month period ended March 31,
2021. Neither were any allowance for loan losses reversed during those periods. |
