DISCLOSURES ABOUT THE CREDIT QUALITY OF LOANS RECEIVABLE AND THE ALLOWANCE FOR LOAN LOSSES | 11. DISCLOSURES ABOUT THE CREDIT QUALITY OF LOANS RECEIVABLE AND THE ALLOWANCE FOR LOAN LOSSES (IN THOUSANDS) The following tables illustrate certain disclosures required by ASC 310-10-50-11B(c), (g) and (h), the changes to the allowance for loan losses, for the three months ended September 30, 2017 (in thousands): Allowance for Credit Losses and Recorded Investment in Loans Receivable One- to Four- Family Owner-Occupied Mortgage Consumer One- to Four-family Non-owner Occupied Mortgage Multi-family Non-owner Occupied Mortgage Non-Residential Real estate Construction Land Commercial and Agricultural Total Allowance for Credit Losses: Balance, July 1, 2017: $ 1,093 $ 347 $ 60 $ 289 $ 2,171 $ 117 $ 127 $ 90 $ 4,294 Charge offs (70 ) (79 ) -- -- -- -- -- -- (149 ) Recoveries 49 22 -- 6 39 -- -- -- 116 Provision (credit) 33 46 (4 ) (17 ) (47 ) (13 ) 21 (5 ) 14 Ending Balance: $ 1,105 $ 336 $ 56 $ 278 $ 2,163 $ 104 $ 148 $ 85 $ 4,275 Balance, Individually Evaluated $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ -- Balance, Collectively Evaluated $ 1,105 $ 336 $ 56 $ 278 $ 2,163 $ 104 $ 148 $ 85 $ 4,275 Financing receivables: Ending balance $ 135,297 $ 33,486 $ 10,467 $ 15,506 $ 76,117 $ 5,931 $ 3,579 $ 10,032 $ 290,415 Ending Balance: individually evaluated for impairment $ 1,419 $ 229 $ 352 $ -- $ 586 $ -- $ 578 $ -- $ 3,164 Ending Balance: collectively evaluated for impairment $ 129,868 $ 31,186 $ 9,956 $ 15,506 $ 75,450 $ 5,931 $ 3,001 $ 10,025 $ 280,923 Ending Balance: loans acquired at fair value $ 4,010 $ 2,071 $ 159 $ -- $ 81 $ -- $ -- $ 7 $ 6,328 For the year ended June 30, 2017 (in thousands): Allowance for Credit Losses and Recorded Investment in Loans Receivable One- to Four- Family Owner-Occupied Mortgage Consumer One- to Four-family Non-owner Occupied Mortgage Multi-family Non-owner Occupied Mortgage Non-Residential Real estate Construction Land Commercial and Agricultural Total Allowance for Credit Losses: Beginning balance: $ 1,235 $ 426 $ 108 $ 275 $ 2,577 $ 132 $ 10 $ 122 $ 4,885 Charge offs (83 ) (210 ) (9 ) -- (600 ) -- (255 ) -- (1,157 ) Recoveries 68 177 -- 17 248 -- -- 1 511 Provision (credit) (127 ) (46 ) (39 ) (3 ) (54 ) (15 ) 372 (33 ) 55 Ending Balance: $ 1,093 $ 347 $ 60 $ 289 $ 2,171 $ 117 $ 127 $ 90 $ 4,294 Balance, Individually Evaluated $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ -- Balance, Collectively Evaluated $ 1,093 $ 347 $ 60 $ 289 $ 2,171 $ 117 $ 127 $ 90 $ 4,294 Financing receivables: Ending balance $ 133,667 $ 33,633 $ 10,667 $ 15,401 $ 74,791 $ 5,145 $ 3,026 $ 9,257 $ 285,587 Ending Balance: individually evaluated for impairment $ 1,887 $ 370 $ 235 $ -- $ 1,136 $ -- $ 594 $ -- $ 4,222 Ending Balance: collectively evaluated for impairment $ 127,304 $ 31,049 $ 10,271 $ 15,401 $ 73,566 $ 5,145 $ 2,432 $ 9,250 $ 274,418 Ending Balance: loans acquired at fair value $ 4,476 $ 2,214 $ 161 $ -- $ 89 $ -- $ -- $ 7 $ 6,947 Federal regulations require us to review and classify our assets on a regular basis. In addition, the OCC has the authority to identify problem assets and, if appropriate, require them to be classified. There are three classifications for problem assets: substandard, doubtful and loss. “Substandard assets” must have one or more defined weaknesses and are characterized by the distinct possibility that we will sustain some loss if the deficiencies are not corrected. “Doubtful assets” have the weaknesses of substandard assets with the additional characteristic that the weaknesses make collection or liquidation in full on the basis of currently existing facts, conditions and values questionable, and there is a high possibility of loss. An asset classified “loss” is considered uncollectible and of such little value that continuance as an asset of the institution is not warranted. The regulations also provide for a “special mention” category, described as assets which do not currently expose us to a sufficient degree of risk to warrant classification but do possess credit deficiencies or potential weaknesses deserving our close attention. If we classify an asset as substandard, doubtful or loss, we analyze that asset and may establish a specific allocation for the asset at that time. The following tables illustrate certain disclosures required by ASC 310-10-50-29(b). Credit Risk Profile by Internally Assigned Grade At September 30, 2017 (in thousands) One- to Four- Family Owner- Consumer One- to Four-family Non-owner Occupied Mortgage Multi-family Non-owner Occupied Mortgage Non- Construction Land Commercial and Agricultural Total Grade: Pass $ 131,064 $ 32,390 $ 6,347 $ 13,477 $ 67,727 $ 4,901 $ 2,407 $ 9,124 $ 267,437 Watch 2,446 717 3,689 2,029 6,603 1,030 594 908 18,016 Special mention 368 150 79 -- 835 -- -- -- 1,432 Substandard 1,419 229 352 -- 952 -- 578 -- 3,530 Total: $ 135,297 $ 33,486 $ 10,467 $ 15,506 $ 76,117 $ 5,931 $ 3,579 $ 10,032 $ 290,415 Credit Risk Profile by Internally Assigned Grade At June 30, 2017 (in thousands) One- to Four- Family Owner- Consumer One- to Four-family Non-owner Occupied Mortgage Multi-family Non-owner Occupied Mortgage Non- Construction Land Commercial and Agricultural Total Grade: Pass $ 129,053 $ 32,547 $ 6,404 $ 13,355 $ 65,031 $ 4,817 $ 2,379 $ 8,495 $ 262,081 Watch 2,283 509 3,741 2,046 7,405 328 53 762 17,127 Special mention 444 207 82 -- 1,134 -- -- -- 1,867 Substandard 1,887 370 440 -- 1,221 -- 594 -- 4,512 Total: $ 133,667 $ 33,633 $ 10,667 $ 15,401 $ 74,791 $ 5,145 $ 3,026 $ 9,257 $ 285,587 The following tables illustrate certain disclosures required by ASC 310-10-50-7A for gross loans. Age Analysis of Past Due Loans Receivable At September 30, 2017 (in thousands) 30-59 days past due 60-89 days past due Greater than 90 days Total past due Total current Total loans receivable One- to Four- Family Mortgage - Owner-Occupied $ 558 $ 250 $ 65 $ 873 $ 134,424 $ 135,297 Consumer 79 10 23 112 33,374 33,486 One- to Four- Family Mortgage - Non-Owner Occupied -- -- 222 222 10,245 10,467 Multi-family Mortgage -- -- -- -- 15,506 15,506 Nonresidential Real Estate – commercial and office buildings -- -- 586 586 75,531 76,117 Construction -- -- -- -- 5,931 5,931 Land -- -- -- -- 3,579 3,579 Commercial and Agricultural -- -- -- -- 10,032 10,032 Total $ 637 $ 260 $ 896 $ 1,793 $ 288,622 $ 290,415 Age Analysis of Past Due Loans Receivable At June 30, 2017 (in thousands) 30-59 days past due 60-89 days past due Greater than 90 days Total past due Total current Total loans receivable One- to Four- Family Mortgage - Owner-Occupied $ 345 $ 579 $ 382 $ 1,306 $ 132,361 $ 133,667 Consumer 93 57 23 173 33,460 33,633 One- to Four- Family Mortgage - Non-Owner-Occupied -- -- 235 235 10,432 10,667 Multi-family Mortgage -- -- -- -- 15,401 15,401 Nonresidential Real Estate – commercial and office buildings -- -- 535 535 74,256 74,791 Construction -- -- -- -- 5,145 5,145 Land -- -- -- -- 3,026 3,026 Commercial and Agricultural 118 -- -- 118 9,139 9,257 Total $ 556 $ 636 $ 1,175 $ 2,367 $ 283,220 $ 285,587 The following table illustrates certain disclosures required by ASC 310-10-50-15. Impaired Loans at September 30, 2017 (in thousands) For the three months ended September 30, 2017 Recorded investment Unpaid principal balance Specific allowance Interest income recognized Average Recorded investment One- to Four- Family Mortgage - Owner-Occupied $ 1,419 $ 1,576 $ -- $ 17 $ 1,653 Consumer 229 553 -- -- 300 One- to Four- Family Mortgage -Non-Owner Occupied 352 352 -- -- 294 Multi-family Mortgage -- 920 -- -- -- Nonresidential Real Estate – commercial and office buildings 586 1,619 -- -- 861 Construction -- -- -- -- -- Land 578 841 -- -- 586 Commercial and Agricultural -- 6 -- -- -- Total $ 3,164 $ 5,867 $ -- $ 17 $ 3,694 Impaired Loans at June 30, 2017 (in thousands) For the year ended June 30, 2017 Recorded investment Unpaid principal balance Specific allowance Interest income recognized Average recorded investment (in thousands) One- to Four- Family Mortgage - Owner-Occupied $ 1,887 $ 2,144 $ -- $ 59 $ 2,169 Consumer 370 653 -- 3 391 One- to Four- Family Mortgage - Non-Owner Occupied 235 235 -- 4 349 Multi-family Mortgage -- 920 -- -- -- Nonresidential Real Estate – commercial and office buildings 1,136 2,719 -- 20 1,468 Construction -- -- -- -- -- Land 594 857 -- -- 286 Commercial and Agricultural -- 6 -- -- -- Total $ 4,222 $ 7,534 $ -- $ 86 $ 4,663 The Bank did not have any investments in subprime loans at September 30, 2017. Impaired loans at September 30, 2017 included troubled debt restructurings (“TDR”) with an aggregate principal balance of $1.9 million and a recorded investment of $1.9 million. See Note 12 for a discussion on TDRs. |