Loans | 6 Months Ended |
Dec. 31, 2014 |
Receivables [Abstract] | |
Loans | Loans |
The composition of loans consists of the following: |
|
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, | | June 30, | | | | | | | | | | | | | | | | | | | | |
2014 | 2014 | | | | | | | | | | | | | | | | | | | | |
| (Dollars in thousands) | | | | | | | | | | | | | | | | | | | | |
Real Estate: | | | | | | | | | | | | | | | | | | | | | | | |
One-to-four family residential | $ | 278,501 | | | $ | 288,960 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Multi-family residential | 313,270 | | | 335,040 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Commercial real estate | 31,477 | | | 38,062 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| 623,248 | | | 662,062 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Consumer: | | | | | | | | | | | | | | | | | | | | | | | |
Automobile | 48,351 | | | 45,686 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Home equity | 607 | | | 625 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Other consumer loans, primarily unsecured | 12,323 | | | 11,481 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| 61,281 | | | 57,792 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Total loans | 684,529 | | | 719,854 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Deferred net loan origination costs | 44 | | | 213 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Net premium on purchased loans | 220 | | | 263 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Allowance for loan losses | (3,914 | ) | | (4,580 | ) | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Loans receivable, net | $ | 680,879 | | | $ | 715,750 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Loans held for sale totaled $2.0 million as of December 31, 2014 as compared to $3.7 million as of June 30, 2014. Loans held for sale are recorded at the lower of cost or fair value. Fair value, if lower than cost, is determined by outstanding commitments from the investor. Proceeds from sales of loans held for sale were $19.3 million and $17.0 million during the six months ended December 31, 2014 and 2013, resulting in net gain on sales of $311,000 and $330,000, respectively. |
The following is an analysis of the changes in the allowance for loan losses: |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Allowance for loan losses for the |
| Three months ended December 31, 2014 |
| One-to-four | | Multi-family | | Commercial | | Automobile | | Home | | Other | | Total |
family | residential | real estate | equity |
| (Dollars in thousands) |
Balance, beginning of period | $ | 2,151 | | | $ | 722 | | | $ | 1,103 | | | $ | 253 | | | $ | 2 | | | $ | 99 | | | $ | 4,330 | |
|
Provision for loan losses | (217 | ) | | (145 | ) | | (153 | ) | | 50 | | | — | | | 65 | | | (400 | ) |
|
Recoveries | — | | | — | | | — | | | 15 | | | — | | | 5 | | | 20 | |
|
Loans charged-off | — | | | — | | | — | | | (21 | ) | | — | | | (15 | ) | | (36 | ) |
|
Balance, end of period | $ | 1,934 | | | $ | 577 | | | $ | 950 | | | $ | 297 | | | $ | 2 | | | $ | 154 | | | $ | 3,914 | |
|
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Allowance for loan losses for the |
| Three months ended December 31, 2013 |
| One-to-four | | Multi-family | | Commercial | | Automobile | | Home | | Other | | Total |
family | residential | real estate | equity |
| (Dollars in thousands) |
Balance, beginning of period | $ | 2,628 | | | $ | 1,287 | | | $ | 1,408 | | | $ | 112 | | | $ | 4 | | | $ | 48 | | | $ | 5,487 | |
|
Provision for loan losses | (247 | ) | | (94 | ) | | (222 | ) | | 27 | | | (1 | ) | | 237 | | | (300 | ) |
|
Recoveries | 6 | | | — | | | — | | | 20 | | | — | | | 2 | | | 28 | |
|
Loans charged-off | — | | | (131 | ) | | — | | | (36 | ) | | — | | | (9 | ) | | (176 | ) |
|
Balance, end of period | $ | 2,387 | | | $ | 1,062 | | | $ | 1,186 | | | $ | 123 | | | $ | 3 | | | $ | 278 | | | $ | 5,039 | |
|
|
|
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| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Allowance for loan losses for the |
|
| Six Months Ended December 31, 2014 |
|
| One-to-four | | Multi-family | | Commercial | | Automobile | | Home | | Other | | Total |
family | residential | real estate | equity |
| (Dollars in thousands) |
Balance, beginning of period | $ | 2,300 | | | $ | 993 | | | $ | 1,051 | | | $ | 136 | | | $ | 2 | | | $ | 98 | | | $ | 4,580 | |
|
Provision for loan losses | (366 | ) | | (416 | ) | | (354 | ) | | 282 | | | — | | | 104 | | | (750 | ) |
|
Recoveries | — | | | — | | | 253 | | | 17 | | | — | | | 8 | | | 278 | |
|
Loans charged-off | — | | | — | | | — | | | (138 | ) | | — | | | (56 | ) | | (194 | ) |
|
Balance, end of period | $ | 1,934 | | | $ | 577 | | | $ | 950 | | | $ | 297 | | | $ | 2 | | | $ | 154 | | | $ | 3,914 | |
|
|
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Allowance for loan losses for the |
|
| Six Months Ended December 31, 2013 |
|
| One-to-four | | Multi-family | | Commercial | | Automobile | | Home | | Other | | Total |
family | residential | real estate | equity |
| (Dollars in thousands) |
Balance, beginning of period | $ | 3,009 | | | $ | 839 | | | $ | 1,654 | | | $ | 83 | | | $ | 4 | | | $ | 54 | | | $ | 5,643 | |
|
Provision for loan losses | (599 | ) | | 454 | | | (469 | ) | | 74 | | | (1 | ) | | 241 | | | (300 | ) |
|
Recoveries | 10 | | | — | | | 1 | | | 28 | | | — | | | 3 | | | 42 | |
|
Loans charged-off | (33 | ) | | (231 | ) | | — | | | (62 | ) | | — | | | (20 | ) | | (346 | ) |
|
Balance, end of period | $ | 2,387 | | | $ | 1,062 | | | $ | 1,186 | | | $ | 123 | | | $ | 3 | | | $ | 278 | | | $ | 5,039 | |
|
|
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The following tables present the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of December 31, 2014 and June 30, 2014: |
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| | | | | | | | | | | | | | | | | | | | | | | | | | | |
31-Dec-14 | One-to-four | | Multi-family | | Commercial | | Automobile | | Home | | Other | | Total |
family | residential | real estate | equity |
| (Dollars in thousands) |
Allowance for loan losses: | | | | | | | | | | | | | |
|
Ending allowance balance attributed to loans: | | | | | | | | | | | | | |
|
Individually evaluated for impairment | $ | 673 | | | $ | — | | | $ | 40 | | | $ | — | | | $ | — | | | $ | 6 | | | $ | 719 | |
|
Collectively evaluated for impairment | 1,261 | | | 577 | | | 910 | | | 297 | | | 2 | | | 148 | | | 3,195 | |
|
Total ending allowance balance | $ | 1,934 | | | $ | 577 | | | $ | 950 | | | $ | 297 | | | $ | 2 | | | $ | 154 | | | $ | 3,914 | |
|
| | | | | | | | | | | | | |
| One-to-four | | Multi-family | | Commercial | | Automobile | | Home | | Other | | Total |
family | residential | real estate | equity |
Loans: | | | | | | | | | | | | | |
|
Individually evaluated for impairment | $ | 11,693 | | | $ | 1,214 | | | $ | 2,501 | | | $ | — | | | $ | — | | | $ | 6 | | | $ | 15,414 | |
|
Collectively evaluated for impairment | 266,808 | | | 312,056 | | | 28,976 | | | 48,351 | | | 607 | | | 12,317 | | | 669,115 | |
|
Total ending loan balance | $ | 278,501 | | | $ | 313,270 | | | $ | 31,477 | | | $ | 48,351 | | | $ | 607 | | | $ | 12,323 | | | $ | 684,529 | |
|
| | | | | | | | | | | | | |
30-Jun-14 | One-to-four | | Multi-family | | Commercial | | Automobile | | Home | | Other | | Total |
family | residential | real estate | equity |
| (Dollars in thousands) |
Allowance for loan losses: | | | | | | | | | | | | | |
|
Ending allowance balance attributed to loans: | | | | | | | | | | | | | |
|
Individually evaluated for impairment | $ | 910 | | | $ | — | | | $ | 52 | | | $ | 2 | | | $ | — | | | $ | 15 | | | $ | 979 | |
|
Collectively evaluated for impairment | 1,390 | | | 993 | | | 999 | | | 134 | | | 2 | | | 83 | | | 3,601 | |
|
Total ending allowance balance | $ | 2,300 | | | $ | 993 | | | $ | 1,051 | | | $ | 136 | | | $ | 2 | | | $ | 98 | | | $ | 4,580 | |
|
| | | | | | | | | | | | | |
| One-to-four | | Multi-family | | Commercial | | Automobile | | Home | | Other | | Total |
family | residential | real estate | equity |
Loans: | | | | | | | | | | | | | |
|
Individually evaluated for impairment | $ | 12,431 | | | $ | 1,263 | | | $ | 3,506 | | | $ | 2 | | | $ | — | | | $ | 15 | | | $ | 17,217 | |
|
Collectively evaluated for impairment | 276,529 | | | 333,777 | | | 34,556 | | | 45,684 | | | 625 | | | 11,466 | | | 702,637 | |
|
Total ending loan balance | $ | 288,960 | | | $ | 335,040 | | | $ | 38,062 | | | $ | 45,686 | | | $ | 625 | | | $ | 11,481 | | | $ | 719,854 | |
|
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A loan is impaired when it is probable, based on current information and events, the Company will be unable to collect all contractual principal and interest payments due in accordance with the terms of the loan agreement. When it is determined that a loss is probable, a valuation allowance is established and included in the allowance for loan losses. The amount of impairment is determined by the difference between the recorded investment in the loan and the present value of expected cash flows, or estimated net realizable value of the underlying collateral on collateral dependent loans. |
The difference between the recorded investment and unpaid principal balance of loans relates to net deferred origination costs, net premiums on purchased loans, charge-offs and interest payments received on impaired loans that are recorded as a reduction of principal. There were no collateral dependent loans measured at fair value with a valuation allowance recorded and $6.9 million impaired loans evaluated based on the loans’ present value of expected cash flows with a valuation allowance of $713,000 at December 31, 2014. This compares to no collateral dependent loans measured at fair value with a valuation allowance recorded and $8.6 million impaired loans evaluated based on the loans’ present value of expected cash flows with a valuation allowance of $962,000 at June 30, 2014. |
The following tables present loans individually evaluated for impairment by class of loans as of December 31, 2014 and June 30, 2014: |
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| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
31-Dec-14 | Unpaid Principal | | Recorded | | Allowance for Loan | | | | | | | | | | | | | | | | |
Balance | Investment | Losses Allocated | | | | | | | | | | | | | | | | |
| (Dollars in thousands) | | | | | | | | | | | | | | | | |
With no related allowance recorded: | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Real estate loans: | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
One-to-four family | $ | 6,980 | | | $ | 5,910 | | | $ | — | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Multi-family residential | 1,638 | | | 1,214 | | | — | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Commercial real estate | 1,876 | | | 1,344 | | | — | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| 10,494 | | | 8,468 | | | — | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
With an allowance recorded: | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Real estate loans: | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
One-to-four family | 6,054 | | | 5,783 | | | 673 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Commercial real estate | 1,157 | | | 1,157 | | | 40 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Other loans: | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Other | 6 | | | 6 | | | 6 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| 7,217 | | | 6,946 | | | 719 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Total | $ | 17,711 | | | $ | 15,414 | | | $ | 719 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
30-Jun-14 | Unpaid Principal | | Recorded | | Allowance for Loan | | | | | | | | | | | | | | | | |
Balance | Investment | Losses Allocated | | | | | | | | | | | | | | | | |
| (Dollars in thousands) | | | | | | | | | | | | | | | | |
With no related allowance recorded: | | | | | | | | | | | | | | | | | | | | | |
Real estate loans: | | | | | | | | | | | | | | | | | | | | | |
One-to-four family | $ | 6,175 | | | $ | 5,035 | | | $ | — | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Multi-family residential | 1,656 | | | 1,263 | | | — | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Commercial real estate | 3,084 | | | 2,336 | | | — | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| 10,915 | | | 8,634 | | | — | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
With an allowance recorded: | | | | | | | | | | | | | | | | | | | | | |
Real estate loans: | | | | | | | | | | | | | | | | | | | | | |
One-to-four family | 7,705 | | | 7,396 | | | 910 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Commercial real estate | 1,170 | | | 1,170 | | | 52 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Other loans: | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Automobile | 2 | | | 2 | | | 2 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Other | 15 | | | 15 | | | 15 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| 8,892 | | | 8,583 | | | 979 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Total | $ | 19,807 | | | $ | 17,217 | | | $ | 979 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
The following table presents monthly average of individually impaired loans by class for the three and six months ended December 31, 2014 and 2013: |
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| | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended | | Six months ended | | | | | | | | | | | | |
December 31, | December 31, | | | | | | | | | | | | |
| 2014 | | 2013 | | 2014 | | 2013 | | | | | | | | | | | | |
| (Dollars in thousands) | | | | | | | | | | | | |
Real estate loan: | | | | | | | | | | | | | | | | | | | |
One-to-four family | $ | 11,636 | | | $ | 13,561 | | | $ | 11,901 | | | $ | 13,971 | | | | | | | | | | | | | |
| | | | | | | | | | | |
Multi-family residential | 1,227 | | | 1,921 | | | 1,239 | | | 1,796 | | | | | | | | | | | | | |
| | | | | | | | | | | |
Commercial real estate | 2,527 | | | 5,744 | | | 2,854 | | | 5,875 | | | | | | | | | | | | | |
| | | | | | | | | | | |
Total | $ | 15,390 | | | $ | 21,226 | | | $ | 15,994 | | | $ | 21,642 | | | | | | | | | | | | | |
| | | | | | | | | | | |
Payments received on non-accrual loans are recorded as a reduction of principal. Interest payments collected on non-accrual loans are characterized as payments of principal rather than payments of the outstanding accrued interest on the loans until the remaining principal on the non-accrual loans is considered to be fully collectible. If the loan returns to accrual status, interest income would be recognized based on the effective yield to maturity on the loan and the amount of interest applied to principal will be accreted over the remaining term of the loan. |
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Foregone interest income, which would have been recorded had the non-accrual loans been current in accordance with their original terms, amounted to $148,000 and $228,000 for the three months ended December 31, 2014 and 2013, respectively, and was not included in the results of operations, of which $116,000 and $155,000, respectively, was collected and applied to the net loan balances. Foregone interest income amounted to $307,000 and $444,000 for the six months ended December 31, 2014 and 2013, respectively, and was not included in the results of operations, of which $261,000 and $306,000, respectively, was collected and applied to the net loan balances. |
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The following table presents interest payments recorded as reduction of principal on impaired loans by class: |
| | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended | | Six months ended | | | | | | | | | | | | |
December 31, | December 31, | | | | | | | | | | | | |
| 2014 | | 2013 | | 2014 | | 2013 | | | | | | | | | | | | |
| (Dollars in thousands) | | | | | | | | | | | | |
Real estate loan: | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | |
One-to-four family | $ | 69 | | | $ | 102 | | | $ | 151 | | | $ | 195 | | | | | | | | | | | | | |
| | | | | | | | | | | |
Multi-family residential | 16 | | | 28 | | | 32 | | | 58 | | | | | | | | | | | | | |
| | | | | | | | | | | |
Commercial real estate | 31 | | | 25 | | | 78 | | | 53 | | | | | | | | | | | | | |
| | | | | | | | | | | |
Total | $ | 116 | | | $ | 155 | | | $ | 261 | | | $ | 306 | | | | | | | | | | | | | |
| | | | | | | | | | | |
At December 31, 2014 and June 30, 2014, there were no loans past due more than 90 days and still accruing interest. |
The following table presents non-accrual loans by class of loans: |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
Non-accrual loans: | 31-Dec-14 | | 30-Jun-14 | | | | | | | | | | | | | | | | | | | | |
| (Dollars in thousands) | | | | | | | | | | | | | | | | | | | | |
Real estate loans: | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
One-to-four family | $ | 5,711 | | | $ | 5,390 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Multi-family residential | 738 | | | 781 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Commercial | 1,344 | | | 1,460 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Other loans: | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Automobile | — | | | 2 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Other | 6 | | | 15 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Total non-accrual loans | $ | 7,799 | | | $ | 7,648 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
There were nine one-to-four family residential loans totaling $3.2 million, two multi-family loans totaling $737,000, and two commercial real estate loans totaling $1.3 million on non-accrual status that were performing in accordance with their contractual terms at December 31, 2014. There were seven one-to-four family residential loans totaling $2.1 million and two multi-family loans totaling $781,000 on non-accrual status that were performing in accordance with their contractual terms at June 30, 2014. |
The following tables present the aging of past due loans by class of loans: |
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31-Dec-14 | 30-59 Days | | 60-89 Days | | 90 Days or | | Total | | Total | | Total Loans | | | | |
Delinquent | Delinquent | More | Delinquent | Current | | | | |
| | Delinquent | Loans | Loans | | | | |
| (Dollars in thousands) | | | | |
Real estate loans: | | | | | | | | | | | | | | | |
| | | |
One-to-four family | $ | 1,374 | | | $ | 160 | | | $ | 967 | | | $ | 2,501 | | | $ | 276,000 | | | $ | 278,501 | | | | | |
| | | |
Multi-family | — | | | — | | | — | | | — | | | 313,270 | | | 313,270 | | | | | |
| | | |
Commercial | — | | | — | | | — | | | — | | | 31,477 | | | 31,477 | | | | | |
| | | |
Other loans: | | | | | | | | | | | | | | | |
| | | |
Automobile | 261 | | | 49 | | | — | | | 310 | | | 48,041 | | | 48,351 | | | | | |
| | | |
Home Equity | — | | | — | | | — | | | — | | | 607 | | | 607 | | | | | |
| | | |
Other | 58 | | | 20 | | | 2 | | | 80 | | | 12,243 | | | 12,323 | | | | | |
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Total loans | $ | 1,693 | | | $ | 229 | | | $ | 969 | | | $ | 2,891 | | | $ | 681,638 | | | $ | 684,529 | | | | | |
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30-Jun-14 | 30-59 Days | | 60-89 Days | | 90 Days or | | Total | | Total | | Total Loans | | | | |
Delinquent | Delinquent | More | Delinquent | Current | | | | |
| | Delinquent | Loans | Loans | | | | |
| (Dollars in thousands) | | | | |
Real estate loans: | | | | | | | | | | | | | | | |
| | | |
One-to-four family | $ | 2,123 | | | $ | 409 | | | $ | 301 | | | $ | 2,833 | | | $ | 286,127 | | | $ | 288,960 | | | | | |
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Multi-family | — | | | — | | | — | | | — | | | 335,040 | | | 335,040 | | | | | |
| | | |
Commercial | 1,061 | | | — | | | 399 | | | 1,460 | | | 36,602 | | | 38,062 | | | | | |
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Other loans: | | | | | | | | | | | | | | | |
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Automobile | 113 | | | 15 | | | 2 | | | 130 | | | 45,556 | | | 45,686 | | | | | |
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Home Equity | — | | | — | | | — | | | — | | | 625 | | | 625 | | | | | |
| | | |
Other | 31 | | | 4 | | | 15 | | | 50 | | | 11,431 | | | 11,481 | | | | | |
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Total loans | $ | 3,328 | | | $ | 428 | | | $ | 717 | | | $ | 4,473 | | | $ | 715,381 | | | $ | 719,854 | | | | | |
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Troubled Debt Restructurings: |
Troubled debt restructurings totaled $10.2 million and $12.5 million at December 31, 2014 and June 30, 2014, respectively. Troubled debt restructurings of $2.6 million and $2.9 million are included in the non-accrual loans at December 31, 2014 and June 30, 2014. The Bank has allocated $61,000 and $79,000 of valuation allowance to customers whose loan terms have been modified in troubled debt restructurings and were on non-accrual status as of December 31, 2014 and June 30, 2014, respectively. Troubled debt restructured loans are included in non-accrual loans until there is a sustained period of payment performance (usually six months or longer and determined on a case by case basis) and there is a reasonable assurance that the timely payment will continue. During the six months ended December 31, 2014, one troubled debt restructuring with an aggregate outstanding balance of $203,000 was returned to accrual status as a result of the borrower paying the modified terms as agreed for a sustained period of more than six months and the Bank believes there is reasonable assurance that timely payment will continue. This compares to eight troubled debt restructurings returning with an aggregate outstanding balance of $2.8 million that were returned to accrual status during the same period last year. There were no further commitments to customers whose loans were troubled debt restructurings at December 31, 2014 and June 30, 2014. |
During the six months ended December 31, 2014 and 2013, there were no new loans that were modified as troubled debt restructurings. |
At December 31, 2014 and 2013, there were no loans modified as troubled debt restructurings within the previous 12 months for which there was a payment default. A loan is considered to be in payment default once it is 30 days contractually past due under the modified terms. |
The terms of certain other loans were modified during the three and six months ended December 31, 2014 and 2013 that did not meet the definition of a troubled debt restructuring. During the three and six months ended December 31, 2014, seven loans in the amount of $2.7 million and seventeen loans in the amount of $5.8 million were modified and not accounted for as troubled debt restructurings. During the three and six months ended December 31, 2013, ten loans in the amount of $3.1 million and sixteen loans in the amount of $5.4 million were modified and not accounted for as troubled debt restructurings.The modifications were made to refinance the credits to maintain the borrowing relationships and generally consisted of term or rate modifications. The borrowers were not experiencing financial difficulty or delay in loan payments and the modifications were made at market terms. |
In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed under the Company’s internal underwriting policy. |
Credit Quality Indicators |
The Company categorizes loans into risk categories based on relevant information about the ability of the borrowers to service their debt such as: current financial information, historical payment experience, credit documentation and current economic trends among other factors. This analysis is performed monthly. The Company uses the following definitions for risk ratings: |
Special Mention. Loans are classified as special mention when it is determined a loan relationship should be monitored more closely. Loans that are 60 days to 89 days past due are generally classified as special mention. In addition, loans are classified as special mention for a variety of reasons including changes in recent borrower financial conditions, changes in borrower operations, changes in value of available collateral, concerns regarding changes in economic conditions in a borrower’s industry, and other matters. A loan classified as special mention in many instances may be performing in accordance with the loan terms. |
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Substandard. Loans that are 90 days or more past due are generally classified as substandard. A loan is also considered substandard if it is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Substandard assets include those characterized by the distinct possibility that the insured institution will sustain some loss if the deficiencies are not corrected. |
Doubtful. Assets classified as doubtful have all of the weaknesses inherent in those classified substandard with the added characteristic that the weaknesses present make collection or liquidation in full highly questionable and improbable. |
Loss. Assets classified as loss are considered uncollectible and of such little value that continuance as an asset, without establishment of a valuation allowance individually evaluated or charge-off, is not warranted. |
Loans not meeting the criteria as part of the above described process are considered to be Pass rated loans. Pass rated loans are generally well protected by the current net worth and paying capacity of the obligor or by the value of the underlying collateral. Pass rated assets are not more than 59 days past due and are generally performing in accordance with the loan terms. |
As of December 31, 2014 and June 30, 2014, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows: |
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31-Dec-14 | Pass | | Special Mention | | Substandard | | Doubtful | | Loss | | | | | | | | |
| (Dollars in thousands) | | | | | | | | |
Real estate loans: | | | | | | | | | | | | | | | | | |
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One-to-four family | $ | 263,379 | | | $ | 8,477 | | | $ | 6,645 | | | $ | — | | | $ | — | | | | | | | | | |
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Multi-family | 309,791 | | | 2,300 | | | 1,179 | | | — | | | — | | | | | | | | | |
| | | | | | | |
Commercial | 19,272 | | | 2,959 | | | 9,246 | | | — | | | — | | | | | | | | | |
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Other loans: | | | | | | | | | | | | | | | | | |
Automobile | 47,909 | | | 235 | | | 162 | | | 45 | | | — | | | | | | | | | |
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Home equity | 607 | | | — | | | — | | | — | | | — | | | | | | | | | |
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Other | 12,240 | | | 18 | | | 12 | | | 47 | | | 6 | | | | | | | | | |
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Total loans | $ | 653,198 | | | $ | 13,989 | | | $ | 17,244 | | | $ | 92 | | | $ | 6 | | | | | | | | | |
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30-Jun-14 | Pass | | Special Mention | | Substandard | | Doubtful | | Loss | | | | | | | | |
| (Dollars in thousands) | | | | | | | | |
Real estate loans: | | | | | | | | | | | | | | | | | |
| | | | | | | |
One-to-four family | $ | 272,261 | | | $ | 10,257 | | | $ | 6,442 | | | $ | — | | | $ | — | | | | | | | | | |
| | | | | | | |
Multi-family | 327,999 | | | 3,174 | | | 3,867 | | | — | | | — | | | | | | | | | |
| | | | | | | |
Commercial | 24,708 | | | 7,556 | | | 5,798 | | | — | | | — | | | | | | | | | |
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Other loans: | | | | | | | | | | | | | | | | | |
Automobile | 45,542 | | | 87 | | | 55 | | | — | | | 2 | | | | | | | | | |
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Home equity | 625 | | | — | | | — | | | — | | | — | | | | | | | | | |
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Other | 11,455 | | | 8 | | | 2 | | | 1 | | | 15 | | | | | | | | | |
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Total loans | $ | 682,590 | | | $ | 21,082 | | | $ | 16,164 | | | $ | 1 | | | $ | 17 | | | | | | | | | |
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