Loans | 9 Months Ended |
Mar. 31, 2014 |
Loans | ' |
8. Loans |
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The following table sets forth the composition of the Company’s loan portfolio in dollar amounts and as a percentage of the total loan portfolio at the dates indicated. |
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| | At March 31, 2014 | | | At June 30, 2013 | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Amount | | | Percent | | | Amount | | | Percent | | | Change | | | % Change | | | | | | | | | | | | | | | | | | | | | |
| | (Dollars In Thousands) | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Mortgage loans on real estate: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
1-4 family residential | | $ | 107,391 | | | | 21.41 | % | | $ | 107,617 | | | | 23.75 | % | | $ | (226 | ) | | | (0.21 | ) % | | | | | | | | | | | | | | | | | | | | |
Commercial | | | 200,102 | | | | 39.89 | | | | 167,381 | | | | 36.95 | | | | 32,721 | | | | 19.55 | | | | | | | | | | | | | | | | | | | | | |
Home equity: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
First lien | | | 36,962 | | | | 7.37 | | | | 36,093 | | | | 7.97 | | | | 869 | | | | 2.41 | | | | | | | | | | | | | | | | | | | | | |
Second lien | | | 40,357 | | | | 8.05 | | | | 42,328 | | | | 9.34 | | | | (1,971 | ) | | | (4.66 | ) | | | | | | | | | | | | | | | | | | | | |
Construction: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential | | | 3,703 | | | | 0.74 | | | | 3,736 | | | | 0.82 | | | | (33 | ) | | | (0.88 | ) | | | | | | | | | | | | | | | | | | | | |
Commercial | | | 27,284 | | | | 5.44 | | | | 21,237 | | | | 4.69 | | | | 6,047 | | | | 28.47 | | | | | | | | | | | | | | | | | | | | | |
Total mortgage loans on real estate | | | 415,799 | | | | 82.9 | | | | 378,392 | | | | 83.52 | | | | 37,407 | | | | 9.89 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Other loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial | | | 53,477 | | | | 10.66 | | | | 43,566 | | | | 9.62 | | | | 9,911 | | | | 22.75 | | | | | | | | | | | | | | | | | | | | | |
Consumer: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Manufactured homes | | | 21,863 | | | | 4.36 | | | | 21,716 | | | | 4.79 | | | | 147 | | | | 0.68 | | | | | | | | | | | | | | | | | | | | | |
Automobile and other secured loans | | | 8,027 | | | | 1.6 | | | | 7,682 | | | | 1.7 | | | | 345 | | | | 4.49 | | | | | | | | | | | | | | | | | | | | | |
Other | | | 2,424 | | | | 0.48 | | | | 1,679 | | | | 0.37 | | | | 745 | | | | 44.37 | | | | | | | | | | | | | | | | | | | | | |
Total other loans | | | 85,791 | | | | 17.1 | | | | 74,643 | | | | 16.48 | | | | 11,148 | | | | 14.94 | | | | | | | | | | | | | | | | | | | | | |
Total loans | | | 501,590 | | | | 100 | % | | | 453,035 | | | | 100 | % | | $ | 48,555 | | | | 10.72 | % | | | | | | | | | | | | | | | | | | | | |
Other items: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net deferred loan costs | | | 2,702 | | | | | | | | 2,726 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Allowance for loan losses | | | (5,618 | ) | | | | | | | (5,414 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total loans, net | | $ | 498,674 | | | | | | | $ | 450,347 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Management performs a quarterly evaluation of the adequacy of the allowance for loan losses. The analysis of the allowance for loan losses has two components: specific and general allocations, which are further described below. |
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Specific Allocation |
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Specific allocations are made for loans determined to be impaired. Impairment is measured by determining the present value of expected future cash flows or fair value of collateral for collateral dependent loans. The Company charges off any collateral shortfall on collaterally dependent impaired loans. |
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A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal and interest when due according to the contractual terms of the loan agreement. Impaired loans are generally placed on non-accrual status either when there is reasonable doubt as to the full collection of payments or when the loans become 90 days past due unless an evaluation clearly indicates that the loan is well secured and in the process of collection. Impairment is measured on a loan by loan basis for commercial loans by either the present value of expected future cash flows discounted at the loan’s effective interest rate, or the fair value of the collateral, adjusted for market conditions and selling expenses, if the loan is collateral dependent. |
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The Company may periodically agree to modify the contractual terms of loans. When a loan is modified and a concession is made to a borrower experiencing financial difficulty, the modification is considered a troubled debt restructure (“TDR”). All TDRs are initially classified as impaired and may be evaluated for removal from impaired status after one year of current payments for a modified loan with a market rate for that borrower at the time of restructuring. |
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General Allocation |
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The general allocation is determined by segregating the remaining loans by type of loan and payment history. Consideration is given to historical loss experience and qualitative factors such as delinquency trends, changes in underwriting standards or lending policies, procedures and practices, experience and depth of management and lending staff, and general economic conditions. This analysis establishes loss factors that are applied to the loan groups to determine the amount of the general allocations. This evaluation is inherently subjective as it requires material estimates that may be susceptible to significant revisions based upon changes in economic and real estate market conditions. Actual loan losses may be significantly more than the allowance for loan losses that have been established which could have a material negative effect on financial results. There were no changes in the Company’s policies or methodology pertaining to the general component of the allowance for loan losses during the nine months ended March 31, 2014. |
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On a quarterly basis, management’s Loan Review Committee reviews the current status of various loan assets in order to evaluate the adequacy of the allowance for loan losses. In this evaluation process specific loans with risk ratings of six (special mention) or higher are analyzed to determine their potential risk of loss. This process concentrates on watch list, non-accrual and classified loans. Any loan determined to be impaired is evaluated for potential loss exposure. Any shortfall results in a charge-off if the likelihood of loss is evaluated as probable. The Company’s policy for charging off uncollectible loans is based on an analysis of the financial condition of the borrower and/or the collateral value. To determine the adequacy of collateral on a particular loan, an estimate of the fair market value of the collateral is based on the most current appraised value, discounted cash flow valuation or other available information. |
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The qualitative factors are assessed based on the various risk characteristics of each loan segment. Risk characteristics relevant to each portfolio segment are as follows: |
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Residential real estate – The Company generally does not originate loans with a loan-to-value ratio greater than 80 percent unless there is private mortgage insurance. All loans in this segment are collateralized by 1-4 family residential real estate and repayment is dependent on the credit quality of the individual borrower. The overall health of the economy, including unemployment rates and housing prices, will have an effect on the credit quality in this segment. |
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Commercial real estate – Loans in these segments are primarily income-producing properties throughout Massachusetts and Connecticut. The underlying cash flows generated by the properties can be adversely impacted by a downturn in the economy as evidenced by increased vacancy rates, which in turn, will have an effect on the credit quality in this segment. Management requires annual borrower financial statements, obtains rent rolls annually and continually monitors the cash flows of these loans. |
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Home equity loans - Loans in this segment are secured by first or second mortgages on 1-4 family owner occupied properties, and are generally underwritten in amounts such that the combined first and second mortgage balances generally do not exceed 85% of the value of the property serving as collateral at time of origination. The lines-of-credit are available to be drawn upon for 10 to 20 years, at the end of which time they become term loans amortized over 5 to 10 years. Interest rates on home equity lines normally adjust based on the month-end prime rate published in the Wall Street Journal. |
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Residential construction loans – Loans in this segment primarily include construction to permanent non-speculative real estate loans. All loans in this segment are collateralized by 1-4 family residential real estate and repayment is dependent on the credit quality of the individual borrower. The overall health of the economy, including unemployment rates and housing prices, will have an effect on the credit quality in this segment. |
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Commercial construction loans – Loans in this segment primarily include construction to permanent non-speculative real estate loans. The underlying cash flows generated by the properties may be adversely impacted by a downturn in the economy, which in turn, will have an effect on the credit quality in this segment. |
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Commercial loans – Loans in this segment are made to businesses and are generally secured by assets of the business. Repayment is expected from the cash flows of the business. A weakened economy may have an effect on the credit quality in this segment. |
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Automobile and other secured loans – Loans in this segment include consumer non-real estate secured loans that the Company originates as well as automobile loans that the Company purchases from a third party. The Company has the ability to select the automobile loans it purchases based on its own underwriting standards. |
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Manufactured home loans – Loans in this segment are secured by first liens on properties located primarily in the Northeast. Repayment is dependent on the credit quality of the individual borrower. The overall health of the economy, including unemployment rates, will have an effect on the credit quality in this segment. The Company has the ability to select the manufactured home loans it purchases based on its own underwriting standards. |
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Other consumer loans – Loans in this segment are generally unsecured and repayment is dependent on the credit quality of the individual borrower. |
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Credit Quality Information |
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The Company utilizes a nine grade internal loan rating system for all loans as follows: |
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Loans rated 1 – 5 are considered “pass” rated loans with low to average risk. |
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Loans rated 6 are considered “special mention.” These loans are starting to show signs of potential weakness and are being closely monitored by management. |
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Loans rated 7 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 Company will sustain some loss if the weakness is not corrected. |
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Loans rated 8 are considered “doubtful” and 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. |
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Loans rated 9 are considered uncollectible (“loss”) and of such little value that their continuance as loans is not warranted. These loans are generally charged off at each quarter end. |
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On an annual basis, or more often if needed, the Company formally reviews the ratings on all commercial real estate, commercial construction and commercial loans. The Company engages an independent third-party to review a statistically significant portion of loans within these segments. Management uses the results of these reviews as part of its annual review process. All loans rated 6 or worse are reviewed on a quarterly basis by management and semi-annually by an independent third party. At origination, management assigns risk ratings to 1-4 family residential loans, home equity loans, residential construction loans, manufactured home loans, and other consumer loans. The Company updates these risk ratings during the term of the loan based primarily on delinquency, bankruptcy, or tax delinquency. |
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The following table presents the Company’s loans by risk rating at March 31, 2014 and June 30, 2013: |
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31-Mar-14 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 1-4 Family | | | Commercial | | | Home Equity | | | Home Equity | | | Residential Construction | | | Commercial Construction | | | | | | | | | | | | | | | | | | | | | |
Residential | Real Estate | First Lien | Second Lien | | | | | | | | | | | | | | | | | | | | |
| | (In Thousands) | | | | | | | | | | | | | | | | | | | | | |
Loans rated 1-5 | | $ | 104,533 | | | $ | 187,506 | | | $ | 36,962 | | | $ | 40,171 | | | $ | 3,703 | | | $ | 27,284 | | | | | | | | | | | | | | | | | | | | | |
Loans rated 6 | | | 1,870 | | | | 9,481 | | | | - | | | | - | | | | - | | | | - | | | | | | | | | | | | | | | | | | | | | |
Loans rated 7 | | | 842 | | | | 3,115 | | | | - | | | | 186 | | | | - | | | | - | | | | | | | | | | | | | | | | | | | | | |
Loans rated 8 | | | 146 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | | | | | | | | | | | | | | | | | | |
Loans rated 9 | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | | | | | | | | | | | | | | | | | | |
| | $ | 107,391 | | | $ | 200,102 | | | $ | 36,962 | | | $ | 40,357 | | | $ | 3,703 | | | $ | 27,284 | | | | | | | | | | | | | | | | | | | | | |
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| | Commercial | | | Manufactured | | | Automobile and | | | Other Consumer | | | Total | | | | | | | | | | | | | | | | | | | | | | | | | |
Homes | Other Secured Loans | | | | | | | | | | | | | | | | | | | | | | | | |
| | (In Thousands) | | | | | | | | | | | | | | | | | | | | | | | | | |
Loans rated 1-5 | | $ | 48,493 | | | $ | 21,534 | | | $ | 8,027 | | | $ | 2,423 | | | $ | 480,636 | | | | | | | | | | | | | | | | | | | | | | | | | |
Loans rated 6 | | | 969 | | | | 60 | | | | - | | | | 1 | | | | 12,381 | | | | | | | | | | | | | | | | | | | | | | | | | |
Loans rated 7 | | | 4,008 | | | | 99 | | | | - | | | | - | | | | 8,250 | | | | | | | | | | | | | | | | | | | | | | | | | |
Loans rated 8 | | | 7 | | | | 170 | | | | - | | | | - | | | | 323 | | | | | | | | | | | | | | | | | | | | | | | | | |
Loans rated 9 | | | - | | | | - | | | | - | | | | - | | | | - | | | | | | | | | | | | | | | | | | | | | | | | | |
| | $ | 53,477 | | | $ | 21,863 | | | $ | 8,027 | | | $ | 2,424 | | | $ | 501,590 | | | | | | | | | | | | | | | | | | | | | | | | | |
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30-Jun-13 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 1-4 Family | | | Commercial | | | Home Equity | | | Home Equity | | | Residential Construction | | | Commercial Construction | | | | | | | | | | | | | | | | | | | | | |
Residential | Real Estate | First Lien | Second Lien | | | | | | | | | | | | | | | | | | | | |
| | (In Thousands) | | | | | | | | | | | | | | | | | | | | | |
Loans rated 1-5 | | $ | 105,529 | | | $ | 153,513 | | | $ | 36,093 | | | $ | 41,963 | | | $ | 3,736 | | | $ | 21,237 | | | | | | | | | | | | | | | | | | | | | |
Loans rated 6 | | | 835 | | | | 7,624 | | | | - | | | | - | | | | - | | | | - | | | | | | | | | | | | | | | | | | | | | |
Loans rated 7 | | | 686 | | | | 6,244 | | | | - | | | | 115 | | | | - | | | | - | | | | | | | | | | | | | | | | | | | | | |
Loans rated 8 | | | 567 | | | | - | | | | - | | | | 250 | | | | - | | | | - | | | | | | | | | | | | | | | | | | | | | |
Loans rated 9 | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | | | | | | | | | | | | | | | | | | |
| | $ | 107,617 | | | $ | 167,381 | | | $ | 36,093 | | | $ | 42,328 | | | $ | 3,736 | | | $ | 21,237 | | | | | | | | | | | | | | | | | | | | | |
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| | Commercial | | | Manufactured | | | Automobile and | | | Other Consumer | | | Total | | | | | | | | | | | | | | | | | | | | | | | | | |
Homes | Other Secured Loans | | | | | | | | | | | | | | | | | | | | | | | | |
| | (In Thousands) | | | | | | | | | | | | | | | | | | | | | | | | | |
Loans rated 1-5 | | $ | 36,827 | | | $ | 21,398 | | | $ | 7,682 | | | $ | 1,678 | | | $ | 429,656 | | | | | | | | | | | | | | | | | | | | | | | | | |
Loans rated 6 | | | 994 | | | | 146 | | | | - | | | | - | | | | 9,599 | | | | | | | | | | | | | | | | | | | | | | | | | |
Loans rated 7 | | | 5,745 | | | | 36 | | | | - | | | | 1 | | | | 12,827 | | | | | | | | | | | | | | | | | | | | | | | | | |
Loans rated 8 | | | - | | | | 136 | | | | - | | | | - | | | | 953 | | | | | | | | | | | | | | | | | | | | | | | | | |
Loans rated 9 | | | - | | | | - | | | | - | | | | - | | | | - | | | | | | | | | | | | | | | | | | | | | | | | | |
| | $ | 43,566 | | | $ | 21,716 | | | $ | 7,682 | | | $ | 1,679 | | | $ | 453,035 | | | | | | | | | | | | | | | | | | | | | | | | | |
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The results of the quarterly evaluation of the adequacy of the allowance for loan losses are summarized, and appropriate recommendations and loan loss allowances are approved, by the Loan Review Committee. All supporting documentation with regard to the evaluation process, loan loss experience, allowance levels and the schedules of classified loans is maintained by the Company. The Loan Review Committee is chaired by the Company’s Chief Financial Officer. The allowance for loan loss calculation is presented to the Board of Directors on a quarterly basis with recommendations on its adequacy. |
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The following are summaries of past due and non-accrual loans at March 31, 2014 and June 30, 2013: |
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| | | | | | | | 90 Days | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 30-59 Days | | | 60-89 Days | | | or Greater | | | Total | | | Loans on | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Past Due | | | Past Due | | | Past Due | | | Past Due | | | Non-accrual | | | | | | | | | | | | | | | | | | | | | | | | | |
31-Mar-14 | | (In Thousands) | | | | | | | | | | | | | | | | | | | | | | | | | |
Mortgage loans on real estate: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
1-4 family residential | | $ | 703 | | | $ | 238 | | | $ | 1,991 | | | $ | 2,932 | | | $ | 2,370 | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial | | | 1,020 | | | | - | | | | 412 | | | | 1,432 | | | | 548 | | | | | | | | | | | | | | | | | | | | | | | | | |
Home equity: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Second lien | | | 16 | | | | 105 | | | | 57 | | | | 178 | | | | 108 | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial | | | 17 | | | | - | | | | 1,507 | | | | 1,524 | | | | 1,507 | | | | | | | | | | | | | | | | | | | | | | | | | |
Consumer: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Manufactured homes | | | 312 | | | | 182 | | | | 60 | | | | 554 | | | | 95 | | | | | | | | | | | | | | | | | | | | | | | | | |
Other | | | 26 | | | | 1 | | | | - | | | | 27 | | | | - | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 2,094 | | | $ | 526 | | | $ | 4,027 | | | $ | 6,647 | | | $ | 4,628 | | | | | | | | | | | | | | | | | | | | | | | | | |
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30-Jun-13 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Mortgage loans on real estate: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
1-4 family residential | | $ | 642 | | | $ | - | | | $ | 1,013 | | | $ | 1,655 | | | $ | 1,405 | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial | | | 148 | | | | - | | | | - | | | | 148 | | | | 148 | | | | | | | | | | | | | | | | | | | | | | | | | |
Home equity: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Second lien | | | 180 | | | | 29 | | | | 268 | | | | 477 | | | | 335 | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial | | | 16 | | | | 75 | | | | 1,984 | | | | 2,075 | | | | 1,988 | | | | | | | | | | | | | | | | | | | | | | | | | |
Consumer: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Manufactured homes | | | 115 | | | | - | | | | 103 | | | | 218 | | | | 103 | | | | | | | | | | | | | | | | | | | | | | | | | |
Automobile and other secured loans | | | 18 | | | | - | | | | - | | | | 18 | | | | - | | | | | | | | | | | | | | | | | | | | | | | | | |
Other | | | 1 | | | | - | | | | - | | | | 1 | | | | - | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 1,120 | | | $ | 104 | | | $ | 3,368 | | | $ | 4,592 | | | $ | 3,979 | | | | | | | | | | | | | | | | | | | | | | | | | |
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At March 31, 2014 and June 30, 2013 there were no loans past due 90 days or more and still accruing. |
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The following are summaries of impaired loans at March 31, 2014 and June 30, 2013: |
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| | 31-Mar-14 | | | 30-Jun-13 | | | | | | | | | | | | | | | | | | | | | |
| | Recorded | | | Unpaid | | | Related | | | Recorded | | | Unpaid | | | Related | | | | | | | | | | | | | | | | | | | | | |
Investment | Principal | Allowance | Investment | Principal | Allowance | | | | | | | | | | | | | | | | | | | | |
| Balance | | | Balance | | | | | | | | | | | | | | | | | | | | | |
| | (In Thousands) | | | | | | | | | | | | | | | | | | | | | |
Impaired loans without a valuation allowance: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Mortgage loans on real estate: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
1-4 family residential | | $ | 2,358 | | | $ | 2,506 | | | $ | - | | | $ | 1,405 | | | $ | 1,676 | | | $ | - | | | | | | | | | | | | | | | | | | | | | |
Commercial | | | 4,745 | | | | 4,745 | | | | - | | | | 5,962 | | | | 5,962 | | | | - | | | | | | | | | | | | | | | | | | | | | |
Home equity: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Second lien | | | 108 | | | | 112 | | | | - | | | | 335 | | | | 335 | | | | - | | | | | | | | | | | | | | | | | | | | | |
Other loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial | | | 3,883 | | | | 3,891 | | | | - | | | | 4,408 | | | | 4,415 | | | | - | | | | | | | | | | | | | | | | | | | | | |
Manufactured homes | | | 96 | | | | 95 | | | | - | | | | 103 | | | | 103 | | | | - | | | | | | | | | | | | | | | | | | | | | |
Total | | | 11,190 | | | | 11,349 | | | | - | | | | 12,213 | | | | 12,491 | | | | - | | | | | | | | | | | | | | | | | | | | | |
Impaired loans with a valuation allowance: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Mortgage loans on real estate: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial | | | 540 | | | | 540 | | | | 12 | | | | 2,208 | | | | 2,208 | | | | 32 | | | | | | | | | | | | | | | | | | | | | |
Other loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial | | | - | | | | - | | | | - | | | | 533 | | | | 533 | | | | - | | | | | | | | | | | | | | | | | | | | | |
Total | | | 540 | | | | 540 | | | | 12 | | | | 2,741 | | | | 2,741 | | | | 32 | | | | | | | | | | | | | | | | | | | | | |
Total impaired loans | | $ | 11,730 | | | $ | 11,889 | | | $ | 12 | | | $ | 14,954 | | | $ | 15,232 | | | $ | 32 | | | | | | | | | | | | | | | | | | | | | |
|
Information pertaining to impaired loans for the three and nine months ended March 31, 2014 and 2013 follows: |
|
| | Three Months Ended March 31, 2014 | | | Three Months Ended March 31, 2013 | | | | | | | | | | | | | | | | | | | | | |
| | Average | | | Interest Income | | | Average | | | Interest Income | | | | | | | | | | | | | | | | | | | | | |
| | Recorded | | | | | | | | | Recorded | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Investment on | | | | | | Recognized on | | | Investment on | | | | | | Recognized on | | | | | | | | | | | | | | | | | | | | | |
| | Impaired Loans | | | Recognized | | | a Cash Basis | | | Impaired Loans | | | Recognized | | | a Cash Basis | | | | | | | | | | | | | | | | | | | | | |
Mortgage loans on real estate: | | (In Thousands) | | | | | | | | | | | | | | | | | | | | | |
1-4 family residential | | $ | 1,589 | | | $ | 25 | | | $ | 12 | | | $ | 1,681 | | | $ | - | | | $ | 10 | | | | | | | | | | | | | | | | | | | | | |
Commercial | | | 5,101 | | | | 57 | | | | 55 | | | | 11,389 | | | | 173 | | | | 179 | | | | | | | | | | | | | | | | | | | | | |
Home equity: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
First lien | | | - | | | | - | | | | - | | | | 29 | | | | - | | | | - | | | | | | | | | | | | | | | | | | | | | |
Second lien | | | 110 | | | | 1 | | | | 1 | | | | 347 | | | | 2 | | | | 1 | | | | | | | | | | | | | | | | | | | | | |
Commercial | | | 4,223 | | | | 55 | | | | 36 | | | | 4,355 | | | | 17 | | | | 41 | | | | | | | | | | | | | | | | | | | | | |
Consumer: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Manufactured homes | | | 80 | | | | 2 | | | | 1 | | | | 102 | | | | - | | | | - | | | | | | | | | | | | | | | | | | | | | |
Total loans | | $ | 11,104 | | | $ | 140 | | | $ | 105 | | | $ | 17,903 | | | $ | 192 | | | $ | 231 | | | | | | | | | | | | | | | | | | | | | |
|
| | Nine Months Ended March 31, 2014 | | | Nine Months Ended March 31, 2013 | | | | | | | | | | | | | | | | | | | | | |
| | Average | | | Interest Income | | | Average | | | Interest Income | | | | | | | | | | | | | | | | | | | | |
| | Recorded | | | | | | | | | Recorded | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Investment on | | | | | | Recognized on | | | Investment on | | | | | | Recognized on | | | | | | | | | | | | | | | | | | | | | |
| | Impaired Loans | | | Recognized | | | a Cash Basis | | | Impaired Loans | | | Recognized | | | a Cash Basis | | | | | | | | | | | | | | | | | | | | | |
Mortgage loans on real estate: | | (In Thousands) | | | | | | | | | | | | | | | | | | | | | |
1-4 family residential | | $ | 1,414 | | | $ | 61 | | | $ | 38 | | | $ | 1,534 | | | $ | 19 | | | $ | 51 | | | | | | | | | | | | | | | | | | | | | |
Commercial | | | 6,460 | | | | 163 | | | | 161 | | | | 11,451 | | | | 483 | | | | 564 | | | | | | | | | | | | | | | | | | | | | |
Home equity: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
First lien | | | - | | | | - | | | | - | | | | 42 | | | | 2 | | | | 2 | | | | | | | | | | | | | | | | | | | | | |
Second lien | | | 230 | | | | 4 | | | | 4 | | | | 214 | | | | 11 | | | | 5 | | | | | | | | | | | | | | | | | | | | | |
Commercial | | | 4,511 | | | | 166 | | | | 110 | | | | 4,133 | | | | 93 | | | | 112 | | | | | | | | | | | | | | | | | | | | | |
Consumer: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Manufactured homes | | | 80 | | | | 4 | | | | 2 | | | | 137 | | | | 10 | | | | - | | | | | | | | | | | | | | | | | | | | | |
Total loans | | $ | 12,694 | | | $ | 398 | | | $ | 315 | | | $ | 17,511 | | | $ | 618 | | | $ | 734 | | | | | | | | | | | | | | | | | | | | | |
|
At March 31, 2014, the Company had two impaired loans that had $451,000 committed to be advanced. The $11.7 million of impaired loans as of March 31, 2014 include $4.6 million of non-accrual loans and $4.7 million of accruing troubled debt restructured loans. The remaining $2.4 million of impaired loans, all of which are current with payments, are loans that the Company believes, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Of the $11.7 million of impaired loans, $7.1 million, or 60.5%, are current with all payment terms. As of June 30, 2013, the $15.0 million of impaired loans included $4.0 million of non-accrual loans and $7.3 million of accruing troubled debt restructured loans. The remaining $3.7 million of impaired loans are loans that the Company believed, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Of the $15.0 million of impaired loans, $11.0 million, or 73%, were current with all payment terms as of June 30, 2013. |
|
The Company had no new TDR loan relationships in the three and nine months ended March 31, 2014 and 2013. As of March 31, 2014 and 2013, there were no TDR loans that were restructured within the previous twelve months that had any payment defaults. |
|
Information pertaining to the allowance for loan losses and recorded investment in loans at and for the three and nine months ended March 31, 2014 and 2013 follows: |
| | 1-4 Family Residential | | Commercial Real Estate | | Home Equity First Lien | | Home Equity Second Lien | | Residential Construction | | Commercial Construction | | Commercial | | Manufactured Homes | | Automobile | | Other Consumer | | Total | |
and Other |
Secured |
Loans |
Three Months Ended | | (In Thousands) | | |
31-Mar-14 |
Balance at | | $ | 689 | | | $ | 2,360 | | | $ | 236 | | | $ | 302 | | | $ | 33 | | | $ | 315 | | | $ | 1,079 | | | $ | 411 | | | $ | 33 | | | $ | 34 | | | $ | 5,492 | |
31-Dec-13 |
Charge-offs | | | (4 | ) | | | (5 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | | (26 | ) | | | (3 | ) | | | (4 | ) | | | (42 | ) |
Recoveries | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 16 | | | | - | | | | 2 | | | | - | | | | 18 | |
Provision | | | 32 | | | | 60 | | | | 12 | | | | 12 | | | | 1 | | | | 8 | | | | 15 | | | | 7 | | | | 3 | | | | - | | | | 150 | |
Balance at March 31, 2014 | | $ | 717 | | | $ | 2,415 | | | $ | 248 | | | $ | 314 | | | $ | 34 | | | $ | 323 | | | $ | 1,110 | | | $ | 392 | | | $ | 35 | | | $ | 30 | | | $ | 5,618 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Three Months Ended | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
31-Mar-13 |
Balance at | | $ | 791 | | | $ | 2,370 | | | $ | 167 | | | $ | 293 | | | $ | 40 | | | $ | 25 | | | $ | 1,013 | | | $ | 394 | | | $ | 26 | | | $ | 8 | | | $ | 5,127 | |
31-Dec-12 |
Charge-offs | | | (13 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | | (11 | ) | | | (6 | ) | | | (28 | ) | | | (1 | ) | | | (59 | ) |
Recoveries | | | 2 | | | | - | | | | 1 | | | | - | | | | - | | | | - | | | | 99 | | | | - | | | | - | | | | - | | | | 102 | |
Provision (credit) | | | (27 | ) | | | (113 | ) | | | 46 | | | | (5 | ) | | | (13 | ) | | | 189 | | | | (80 | ) | | | 57 | | | | 33 | | | | 13 | | | | 100 | |
Balance at March 31, 2013 | | $ | 753 | | | $ | 2,257 | | | $ | 214 | | | $ | 288 | | | $ | 27 | | | $ | 214 | | | $ | 1,021 | | | $ | 445 | | | $ | 31 | | | $ | 20 | | | $ | 5,270 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Nine Months Ended | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
31-Mar-14 |
Balance at June 30, 2013 | | $ | 762 | | | $ | 2,215 | | | $ | 233 | | | $ | 302 | | | $ | 33 | | | $ | 315 | | | $ | 1,065 | | | $ | 432 | | | $ | 34 | | | $ | 23 | | | $ | 5,414 | |
Charge-offs | | | (102 | ) | | | (26 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | | (107 | ) | | | (3 | ) | | | (5 | ) | | | (243 | ) |
Recoveries | | | - | | | | - | | | | 4 | | | | - | | | | - | | | | - | | | | 30 | | | | - | | | | 13 | | | | - | | | | 47 | |
Provision | | | 57 | | | | 226 | | | | 11 | | | | 12 | | | | 1 | | | | 8 | | | | 15 | | | | 67 | | | | (9 | ) | | | 12 | | | | 400 | |
Balance at March 31, 2014 | | $ | 717 | | | $ | 2,415 | | | $ | 248 | | | $ | 314 | | | $ | 34 | | | $ | 323 | | | $ | 1,110 | | | $ | 392 | | | $ | 35 | | | $ | 30 | | | $ | 5,618 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Nine Months Ended | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
31-Mar-13 |
Balance at June 30, 2012 | | $ | 865 | | | $ | 2,360 | | | $ | 206 | | | $ | 280 | | | $ | 38 | | | $ | 20 | | | $ | 969 | | | $ | 375 | | | $ | 25 | | | $ | 10 | | | $ | 5,148 | |
Charge-offs | | | (126 | ) | | | (87 | ) | | | (50 | ) | | | - | | | | - | | | | - | | | | (11 | ) | | | (6 | ) | | | (28 | ) | | | (9 | ) | | | (317 | ) |
Recoveries | | | 7 | | | | - | | | | 3 | | | | - | | | | - | | | | - | | | | 99 | | | | - | | | | - | | | | 5 | | | | 114 | |
Provision (credit) | | | 7 | | | | (16 | ) | | | 55 | | | | 8 | | | | (11 | ) | | | 194 | | | | (36 | ) | | | 76 | | | | 34 | | | | 14 | | | | 325 | |
Balance at March 31, 2013 | | $ | 753 | | | $ | 2,257 | | | $ | 214 | | | $ | 288 | | | $ | 27 | | | $ | 214 | | | $ | 1,021 | | | $ | 445 | | | $ | 31 | | | $ | 20 | | | $ | 5,270 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 1-4 Family Residential | | Commercial Real Estate | | Home Equity First Lien | | Home Equity Second Lien | | Residential Construction | | Commercial Construction | | Commercial | | Manufactured Homes | | Automobile | | Other Consumer | | Total | |
and Other Secured |
Loans |
At March 31, 2014 | | (In Thousands) | |
Allowance: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Impaired loans | | $ | - | | | $ | 12 | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | 12 | |
Non-impaired loans | | | 717 | | | | 2,403 | | | | 248 | | | | 314 | | | | 34 | | | | 323 | | | | 1,110 | | | | 392 | | | | 35 | | | | 30 | | | | 5,606 | |
Total allowance for | | $ | 717 | | | $ | 2,415 | | | $ | 248 | | | $ | 314 | | | $ | 34 | | | $ | 323 | | | $ | 1,110 | | | $ | 392 | | | $ | 35 | | | $ | 30 | | | $ | 5,618 | |
loan losses |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Impaired loans | | $ | 2,358 | | | $ | 5,285 | | | $ | - | | | $ | 108 | | | $ | - | | | $ | - | | | $ | 3,883 | | | $ | 96 | | | $ | - | | | $ | - | | | $ | 11,730 | |
Non-impaired loans | | | 105,033 | | | | 194,817 | | | | 36,962 | | | | 40,249 | | | | 3,703 | | | | 27,284 | | | | 49,594 | | | | 21,767 | | | | 8,027 | | | | 2,424 | | | | 489,860 | |
Total loans | | $ | 107,391 | | | $ | 200,102 | | | $ | 36,962 | | | $ | 40,357 | | | $ | 3,703 | | | $ | 27,284 | | | $ | 53,477 | | | $ | 21,863 | | | $ | 8,027 | | | $ | 2,424 | | | $ | 501,590 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
At June 30, 2013 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Allowance: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Impaired loans | | $ | - | | | $ | 32 | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | 32 | |
Non-impaired loans | | | 762 | | | | 2,183 | | | | 233 | | | | 302 | | | | 33 | | | | 315 | | | | 1,065 | | | | 432 | | | | 34 | | | | 23 | | | | 5,382 | |
Total allowance for | | $ | 762 | | | $ | 2,215 | | | $ | 233 | | | $ | 302 | | | $ | 33 | | | $ | 315 | | | $ | 1,065 | | | $ | 432 | | | $ | 34 | | | $ | 23 | | | $ | 5,414 | |
loan losses |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Impaired loans | | $ | 1,405 | | | $ | 8,170 | | | $ | - | | | $ | 335 | | | $ | - | | | $ | - | | | $ | 4,941 | | | $ | 103 | | | $ | - | | | $ | - | | | $ | 14,954 | |
Non-impaired loans | | | 106,212 | | | | 159,211 | | | | 36,093 | | | | 41,993 | | | | 3,736 | | | | 21,237 | | | | 38,625 | | | | 21,613 | | | | 7,682 | | | | 1,679 | | | | 438,081 | |
Total loans | | $ | 107,617 | | | $ | 167,381 | | | $ | 36,093 | | | $ | 42,328 | | | $ | 3,736 | | | $ | 21,237 | | | $ | 43,566 | | | $ | 21,716 | | | $ | 7,682 | | | $ | 1,679 | | | $ | 453,035 | |
|
The Company has transferred a portion of its originated commercial real estate and commercial loans to participating lenders. The amounts transferred have been accounted for as sales and are therefore not included in the Company’s accompanying consolidated balance sheets. The Company and participating lenders share ratably in any gains or losses that may result from a borrower’s lack of compliance with contractual terms of the loan. The Company continues to service the loans on behalf of the participating lenders and, as such, collects cash payments from the borrowers, remits payments (net of servicing fees) to participating lenders and disburses required escrow funds to relevant parties. At March 31, 2014 and June 30, 2013, the Company was servicing loans for participants aggregating $34.0 million and $35.0 million, respectively. |