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 and six months ended December 31, 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, October 1, 2017: $ 1,105 $ 336 $ 56 $ 278 $ 2,163 $ 104 $ 148 $ 85 $ 4,275 Charge offs -- (29 ) -- -- (136 ) -- (181 ) -- (346 ) Recoveries 14 58 -- 31 133 -- -- -- 236 Provision (credit) (13 ) (12 ) (2 ) (6 ) (304 ) (77 ) 445 (22 ) 9 Ending Balance: $ 1,106 $ 353 $ 54 $ 303 $ 1,856 $ 27 $ 412 $ 63 $ 4,174 Allowance for Credit Losses: Balance, July 1, 2017: $ 1,093 $ 347 $ 60 $ 289 $ 2,171 $ 117 $ 127 $ 90 $ 4,294 Charge offs (70 ) (108 ) -- -- (136 ) -- (181 ) -- (495 ) Recoveries 63 80 -- 37 172 -- -- -- 352 Provision (credit) 20 34 (6 ) (23 ) (351 ) (90 ) 466 (27 ) 23 Ending Balance: $ 1,106 $ 353 $ 54 $ 303 $ 1,856 $ 27 $ 412 $ 63 $ 4,174 Balance, Individually Evaluated $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ -- Balance, Collectively Evaluated $ 1,106 $ 353 $ 54 $ 303 $ 1,856 $ 27 $ 412 $ 63 $ 4,174 Financing receivables: Ending balance $ 136,079 $ 34,037 $ 9,948 $ 18,762 $ 76,068 $ 5,040 $ 4,514 $ 10,042 $ 294,490 Ending Balance: individually evaluated for impairment $ 1,408 $ 213 $ 125 $ -- $ -- $ -- $ 381 $ -- $ 2,127 Ending Balance: collectively evaluated for impairment $ 131,007 $ 31,796 $ 9,666 $ 18,762 $ 75,994 $ 5,040 $ 4,133 $ 10,035 $ 286,433 Ending Balance: loans acquired at fair value $ 3,664 $ 2,028 $ 157 $ -- $ 74 $ -- $ -- $ 7 $ 5,930 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: $ 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 December 31, 2017 (in thousands) 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 Grade: Pass $ 131,769 $ 32,918 $ 6,326 $ 17,116 $ 69,747 $ 3,718 $ 3,524 $ 8,917 $ 274,035 Watch 2,629 899 3,497 1,646 5,961 1,322 609 1,125 17,688 Special mention 273 7 -- -- -- -- -- -- 280 Substandard 1,408 213 125 -- 360 -- 381 -- 2,487 Total: $ 136,079 $ 34,037 $ 9,948 $ 18,762 $ 76,068 $ 5,040 $ 4,514 $ 10,042 $ 294,490 Credit Risk Profile by Internally Assigned Grade At June 30, 2017 (in thousands) 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 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 December 31, 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 $ 709 $ 264 $ 80 $ 1,053 $ 135,026 $ 136,079 Consumer 77 7 21 105 33,932 34,037 One- to Four- Family Mortgage - Non-Owner Occupied -- -- -- -- 9,948 9,948 Multi-family Mortgage -- -- -- -- 18,762 18,762 Nonresidential Real Estate – commercial and office buildings -- -- -- -- 76,068 76,068 Construction -- -- -- -- 5,040 5,040 Land -- -- -- -- 4,514 4,514 Commercial and Agricultural -- -- -- -- 10,042 10,042 Total $ 786 $ 271 $ 101 $ 1,158 $ 293,332 $ 294,490 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 December 31, 2017 (in thousands) For the six months ended Recorded investment Unpaid principal balance Specific allowance Interest income recognized Average Recorded investment Mortgage One- to Four- Family - Owner-Occupied $ 1,408 $ 1,549 $ -- $ 35 $ 1,751 Consumer 213 423 -- -- 322 One- to Four- Family Non-Owner Occupied Mortgage 125 125 -- -- 281 Multifamily Residential Real Estate Mortgage -- 920 -- -- - Non-Residential Real Estate -- -- -- -- 810 Construction -- -- -- -- - Land 381 825 -- -- 450 Commercial and Agricultural -- 6 -- -- - Total $ 2,127 $ 3,848 $ -- $ 35 $ 3,614 Impaired Loans at June 30, 2017 (in thousands) For the year ended Recorded investment Unpaid principal balance Specific allowance Interest income recognized Average Recorded investment Mortgage One- to Four- Family - Owner-Occupied $ 1,887 $ 2,144 $ - $ 59 $ 2,169 Consumer 370 653 - 3 391 One- to Four- Family Non-Owner Occupied Mortgage 235 235 - 4 349 Multifamily Residential Real Estate Mortgage - 920 - - - Non-Residential Real Estate 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 December 31, 2017. Impaired loans at December 31, 2017 included troubled debt restructurings (“TDR”) with an aggregate principal balance of $1.3 million and a recorded investment of $1.3 million. See Note 12 for a discussion on TDRs. |