Loans | 3 Months Ended |
Dec. 31, 2013 |
Loans | ' |
Note 4. Loans |
Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff generally are reported at their outstanding unpaid principal balances adjusted for charge-offs and the allowance for loan losses. Interest on loans is accrued and credited to income based on the unpaid principal balance. Loan-origination fees, net of certain direct origination costs, are deferred and recognized as an adjustment of the related loan yield using the interest method. |
The accrual of interest on loans is discontinued when, in the opinion of management, there is an indication the borrower may be unable to make payments as they become due. When loans are placed on nonaccrual or charged off, all unpaid accrued interest is reversed against interest income. The interest on these loans is subsequently accounted for on the cash-basis or cost-recovery method until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. |
Allowance for Loan Losses |
The allowance for loan losses is established through a provision for loan losses charged to expense as losses are estimated to have occurred. Loan losses are charged against the allowance when management believes that the collectibility of the principal is unlikely. Subsequent recoveries, if any, are credited to the allowance. |
Management regularly evaluates the allowance for loan losses using the Bank’s past loan loss experience, known and inherent risks in the portfolio, composition of the portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, current economic conditions, and other relevant factors. This evaluation is inherently subjective since it requires material estimates that may be susceptible to significant change. |
A loan is impaired when, based on current information, it is probable that the Bank will not collect all amounts due in accordance with the contractual terms of the loan agreement. Management determines whether a loan is impaired on a case-by-case basis, taking into consideration the payment status, collateral value, length and reason of any payment delays, the borrower’s prior payment record, and any other relevant factors. Large groups of smaller-balance homogeneous loans, such as residential mortgage and consumer loans, are collectively evaluated in the allowance for loan losses analysis and are not subject to impairment analysis unless such loans have been subject to a restructuring agreement. Specific allowances for impaired loans are based on discounted cash flows of expected future payments using the loan’s initial effective interest rate or the fair value of the collateral if the loan is collateral dependent. |
In addition, various regulatory agencies periodically review the allowance for loan losses. These agencies may require additions to the allowance for loan losses based on their judgments of collectibility. |
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The following table presents total loans by portfolio segment and class of loan as of December 31, 2013 and September 30, 2013: |
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| | | | | | | | | | | | | | | | | | | | |
| | December 31, | | | September 30, | | | | | | | | | | | | | |
2013 | 2013 | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Commercial: | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | $ | 1,798 | | | $ | 1,557 | | | | | | | | | | | | | |
Commercial real estate | | | 18,422 | | | | 17,022 | | | | | | | | | | | | | |
Multifamily real estate | | | 11,060 | | | | 10,474 | | | | | | | | | | | | | |
Construction | | | 1,110 | | | | 1,387 | | | | | | | | | | | | | |
Residential real estate: | | | | | | | | | | | | | | | | | | | | |
One- to four-family residential | | | 37,200 | | | | 35,436 | | | | | | | | | | | | | |
Second mortgage | | | 10,275 | | | | 10,374 | | | | | | | | | | | | | |
Consumer | | | 2,492 | | | | 2,392 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Subtotals | | | 82,357 | | | | 78,642 | | | | | | | | | | | | | |
Allowance for loan losses | | | (1,190 | ) | | | (1,146 | ) | | | | | | | | | | | | |
Net deferred loan expenses | | | (19 | ) | | | (23 | ) | | | | | | | | | | | | |
Undisbursed loan proceeds | | | (313 | ) | | | (357 | ) | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Loans, net | | $ | 80,835 | | | $ | 77,116 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Analysis of the allowance for loan losses for the quarters ended December 31, 2013 and 2012, follows: |
|
| | | | | | | | | | | | | | | | | | | | |
| | Commercial | | | Residential | | | Consumer | | | Totals | | | | | |
| | | | | | | | |
Balance at October 1, 2012 | | $ | 824 | | | $ | 263 | | | $ | 42 | | | $ | 1,129 | | | | | |
Provision for loan losses | | | 286 | | | | 75 | | | | (17 | ) | | | 344 | | | | | |
Loans charged off | | | (320 | ) | | | (35 | ) | | | (2 | ) | | | (357 | ) | | | | |
Recoveries of loans previously charged off | | | — | | | | — | | | | 1 | | | | 1 | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Balance at December 31, 2012 | | | 790 | | | | 303 | | | | 24 | | | | 1,117 | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
Balance at September 30, 2013 | | $ | 637 | | | $ | 480 | | | $ | 29 | | | $ | 1,146 | | | | | |
Provision for loan losses | | | 18 | | | | 33 | | | | — | | | | 51 | | | | | |
Loans charged off | | | (1 | ) | | | (7 | ) | | | (1 | ) | | | (9 | ) | | | | |
Recoveries of loans previously charged off | | | 1 | | | | — | | | | 1 | | | | 2 | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
Balance at December 31, 2013 | | $ | 655 | | | $ | 506 | | | $ | 29 | | | $ | 1,190 | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
Allowance for loan losses at December 31, 2013: | | | | | | | | | | | | | | | | | | | | |
Individually evaluated for impairment | | $ | 104 | | | $ | 145 | | | $ | — | | | $ | 249 | | | | | |
Collectively evaluated for impairment | | | 551 | | | | 361 | | | | 29 | | | | 941 | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Totals | | $ | 655 | | | $ | 506 | | | $ | 29 | | | $ | 1,190 | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
Allowance for loan losses at September 30, 2013: | | | | | | | | | | | | | | | | | | | | |
Individually evaluated for impairment | | $ | 109 | | | $ | 137 | | | $ | — | | | $ | 246 | | | | | |
Collectively evaluated for impairment | | | 528 | | | | 343 | | | | 29 | | | | 900 | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
Totals | | $ | 637 | | | $ | 480 | | | $ | 29 | | | $ | 1,146 | | | | | |
| | | | | | | | | | | | | | | | | | | | |
|
Analysis of the allowance for loan losses for the quarters ended December 31, 2013 and September 30, 2013, follows: |
|
| | | | | | | | | | | | | | | | | | | | |
| | Commercial | | | Residential | | | Consumer | | | Totals | | | | | |
| | | | | | | | |
Loans at December 31, 2013: | | | | | | | | | | | | | | | | | | | | |
Individually evaluated for impairment | | $ | 818 | | | $ | 1,394 | | | $ | — | | | $ | 2,212 | | | | | |
Collectively evaluated for impairment | | | 31,572 | | | | 46,081 | | | | 2,492 | | | | 80,145 | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
Totals | | $ | 32,390 | | | $ | 47,475 | | | $ | 2,492 | | | $ | 82,357 | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
Loans at September 30, 2013: | | | | | | | | | | | | | | | | | | | | |
Individually evaluated for impairment | | $ | 831 | | | $ | 1,403 | | | $ | — | | | $ | 2,234 | | | | | |
Collectively evaluated for impairment | | | 29,609 | | | | 44,407 | | | | 2,392 | | | | 76,408 | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
Totals | | $ | 30,440 | | | $ | 45,810 | | | $ | 2,392 | | | $ | 78,642 | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Information regarding impaired loans as of December 31, 2013, follows: |
|
| | | | | | | | | | | | | | | | | | | | |
| | Recorded | | | Principal | | | Related | | | Average | | | Interest | |
Investment | Balance | Allowance | Investment | Recognized |
| | | | | |
Loans with no related allowance for loan losses: | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | $ | 91 | | | $ | 91 | | | | N/A | | | $ | 127 | | | $ | — | |
Commercial real estate | | | 560 | | | | 560 | | | | N/A | | | | 564 | | | | 11 | |
Construction | | | — | | | | — | | | | N/A | | | | — | | | | — | |
One- to four- family | | | 613 | | | | 613 | | | | N/A | | | | 615 | | | | 6 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
Totals | | | 1,264 | | | | 1,264 | | | | N/A | | | | 1,306 | | | | 17 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
Loans with an allowance for loan losses: | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | 87 | | | | 87 | | | | 86 | | | | 88 | | | | — | |
Commercial real estate | | | — | | | | — | | | | — | | | | — | | | | — | |
Construction | | | 80 | | | | 80 | | | | 18 | | | | 80 | | | | 1 | |
One- to four- family | | | 781 | | | | 781 | | | | 145 | | | | 783 | | | | 7 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
Totals | | | 948 | | | | 948 | | | | 249 | | | | 751 | | | | 8 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
Grand totals | | $ | 2,212 | | | $ | 2,212 | | | $ | 249 | | | $ | 2,057 | | | $ | 25 | |
| | | | | | | | | | | | | | | | | | | | |
|
|
Information regarding impaired loans as of September 30, 2013, follows: |
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| | | | | | | | | | | | | | | | | | | | |
| | Recorded | | | Principal | | | Related | | | Average | | | Interest | |
Investment | Balance | Allowance | Investment | Recognized |
| | | | | |
Loans with no related allowance for loan losses: | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | $ | 91 | | | $ | 91 | | | | N/A | | | $ | 132 | | | $ | — | |
Commercial real estate | | | 567 | | | | 567 | | | | N/A | | | | 579 | | | | 35 | |
One- to four- family | | | 758 | | | | 758 | | | | N/A | | | | 1,019 | | | | 39 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
Totals | | | 1,416 | | | | 1,416 | | | | N/A | | | | 1,730 | | | | 74 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
Loans with an allowance for loan losses: | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | 93 | | | | 93 | | | | 93 | | | | 101 | | | | — | |
Construction | | | 80 | | | | 80 | | | | 16 | | | | 81 | | | | 4 | |
One- to four- family | | | 645 | | | | 645 | | | | 137 | | | | 558 | | | | 30 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
Totals | | | 818 | | | | 818 | | | | 246 | | | | 740 | | | | 34 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
Grand totals | | $ | 2,234 | | | $ | 2,234 | | | $ | 246 | | | $ | 2,470 | | | $ | 108 | |
| | | | | | | | | | | | | | | | | | | | |
No additional funds are committed to be advanced in connection with impaired loans. |
The Bank regularly evaluates various attributes of loans to determine the appropriateness of the allowance for loan losses. The credit quality indicators monitored differ depending on the class of loan. |
Commercial loans are generally evaluated using the following internally prepared ratings: |
“Pass” ratings are assigned to loans with adequate collateral and debt service ability such that collectibility of the contractual loan payments is highly probable. |
“Special mention/watch” ratings are assigned to loans where management has some concern that the collateral or debt service ability may not be adequate, though the collectibility of the contractual loan payments is still probable. |
“Substandard” ratings are assigned to loans that do not have adequate collateral and/or debt service ability such that collectability of the contractual loan payments is no longer probable. |
“Doubtful” ratings are assigned to loans that do not have adequate collateral and/or debt service ability, and collectibility of the contractual loan payments is unlikely. |
Residential real estate and consumer loans are generally evaluated based on whether or not the loan is performing according to the contractual terms of the loan. |
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Information regarding the credit quality indicators most closely monitored for commercial loans by class as of December 31, 2013 and September 30, 2013, follows: |
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| | | | | | | | | | | | | | | | | | | | |
| | Pass | | | Special | | | Substandard | | | Doubtful | | | Totals | |
Mention/ |
Watch |
| | | | | |
December 31, 2013 | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Commercial and industrial | | $ | 1,427 | | | $ | 193 | | | $ | 178 | | | $ | — | | | $ | 1,798 | |
Commercial real estate | | | 15,636 | | | | 2,225 | | | | 561 | | | | — | | | | 18,422 | |
Multifamily real estate | | | 11,060 | | | | — | | | | — | | | | — | | | | 11,060 | |
Construction | | | 640 | | | | 470 | | | | — | | | | — | | | | 1,110 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
Totals | | $ | 28,763 | | | $ | 2,888 | | | $ | 739 | | | $ | — | | | $ | 32,390 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
September 30, 2013 | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Commercial and industrial | | $ | 1,182 | | | $ | 191 | | | $ | 184 | | | $ | — | | | $ | 1,557 | |
Commercial real estate | | | 12,808 | | | | 3,707 | | | | 507 | | | | — | | | | 17,022 | |
Multifamily real estate | | | 10,474 | | | | — | | | | — | | | | — | | | | 10,474 | |
Construction | | | 912 | | | | 475 | | | | — | | | | — | | | | 1,387 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
Totals | | $ | 25,376 | | | $ | 4,373 | | | $ | 691 | | | $ | — | | | $ | 30,440 | |
| | | | | | | | | | | | | | | | | | | | |
Information regarding the credit quality indicators most closely monitored for residential real estate and consumer loans by class as of December 31, 2013 and September 30, 2013, follows: |
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| | | | | | | | | | | | | | | | | | | | |
| | Performing | | | Non- | | | Totals | | | | | | | | | |
performing | | | | | | | | |
| | | | | | | | | | | |
December 31, 2013 | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | |
One- to four- family | | $ | 36,724 | | | $ | 476 | | | $ | 37,200 | | | | | | | | | |
Second mortgage | | | 10,180 | | | | 95 | | | | 10,275 | | | | | | | | | |
Consumer | | | 2,490 | | | | 2 | | | | 2,492 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | |
Totals | | $ | 49,394 | | | $ | 573 | | | $ | 49,967 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | |
September 30, 2013 | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | |
One- to four- family | | $ | 35,059 | | | $ | 377 | | | $ | 35,436 | | | | | | | | | |
Second mortgage | | | 10,247 | | | | 127 | | | | 10,374 | | | | | | | | | |
Consumer | | | 2,392 | | | | — | | | | 2,392 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | |
Totals | | $ | 47,698 | | | $ | 504 | | | $ | 48,202 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
|
Loan aging information as of December 31, 2013, follows: |
|
| | | | | | | | | | | | | | | | | | | | |
| | Loans Past Due | | | Loans Past Due | | | Total Past | | | | | | | | | |
30-89 Days | 90+ Days | Due Loans | | | | | | | | |
| | | | | | | | | | | |
Commercial and industrial | | $ | 50 | | | $ | 179 | | | $ | 229 | | | | | | | | | |
One- to four- family | | | 1,046 | | | | 476 | | | | 1,522 | | | | | | | | | |
Second mortgage | | | 72 | | | | 95 | | | | 167 | | | | | | | | | |
Consumer | | | 3 | | | | 2 | | | | 5 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Totals | | $ | 1,171 | | | $ | 752 | | | $ | 1,923 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | |
| | Total Past | | | Total Current | | | Total Loans | | | Loans 90+ | | | Total | |
Due Loans | Loans | Days Past Due | Nonaccrual |
| | and Accruing | Loans |
| | Interest | |
| | | | | |
Commercial and industrial | | $ | 229 | | | $ | 1,569 | | | $ | 1,798 | | | $ | — | | | $ | 179 | |
Commercial real estate | | | — | | | | 18,422 | | | | 18,422 | | | | — | | | | — | |
Multifamily real estate | | | — | | | | 11,060 | | | | 11,060 | | | | — | | | | — | |
Construction | | | — | | | | 1,110 | | | | 1,110 | | | | — | | | | — | |
One- to four- family | | | 1,522 | | | | 35,678 | | | | 37,200 | | | | — | | | | 476 | |
Second mortgage | | | 167 | | | | 10,108 | | | | 10,275 | | | | — | | | | 95 | |
Consumer | | | 5 | | | | 2,487 | | | | 2,492 | | | | — | | | | 2 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
Totals | | $ | 1,923 | | | $ | 80,434 | | | $ | 82,357 | | | $ | — | | | $ | 752 | |
| | | | | | | | | | | | | | | | | | | | |
Loan aging information as of September 30, 2013, follows: |
|
| | | | | | | | | | | | | | | | | | | | |
| | Loans Past Due | | | Loans Past Due | | | Total Past | | | | | | | | | |
30-89 Days | 90+ Days | Due Loans | | | | | | | | |
| | | | | | | | | | | |
Commercial and industrial | | $ | 92 | | | $ | 93 | | | $ | 185 | | | | | | | | | |
Commercial real estate | | | 1,410 | | | | — | | | | 1,410 | | | | | | | | | |
One- to four- family | | | 700 | | | | 377 | | | | 1,077 | | | | | | | | | |
Second mortgage | | | 57 | | | | 127 | | | | 184 | | | | | | | | | |
Consumer | | | 3 | | | | — | | | | 3 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Totals | | $ | 2,262 | | | $ | 597 | | | $ | 2,859 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | |
| | Total Past | | | Total Current | | | Total Loans | | | Loans 90+ | | | Total | |
Due Loans | Loans | Days Past Due | Nonaccrual |
| | and Accruing | Loans |
| | Interest | |
| | | | | |
Commercial and industrial | | $ | 185 | | | $ | 1,372 | | | $ | 1,557 | | | $ | — | | | $ | 93 | |
Commercial real estate | | | 1,410 | | | | 15,612 | | | | 17,022 | | | | — | | | | — | |
Multifamily real estate | | | — | | | | 10,474 | | | | 10,474 | | | | — | | | | — | |
Construction | | | — | | | | 1,387 | | | | 1,387 | | | | — | | | | — | |
One- to four- family | | | 1,077 | | | | 34,359 | | | | 35,436 | | | | — | | | | 377 | |
Second mortgage | | | 184 | | | | 10,190 | | | | 10,374 | | | | — | | | | 127 | |
Consumer | | | 3 | | | | 2,389 | | | | 2,392 | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
Totals | | $ | 2,859 | | | $ | 75,783 | | | $ | 78,642 | | | $ | — | | | $ | 597 | |
| | | | | | | | | | | | | | | | | | | | |
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When, for economic or legal reasons related to the borrower’s financial difficulties, the Bank grants a concession to the borrower that the Bank would not otherwise consider, the modified loan is classified as a troubled debt restructuring. Loan modifications may consist of forgiveness of interest and/or principal, a reduction of the interest rate, interest-only payments for a period of time, and/or extending amortization terms. There were no new troubled debt restructurings entered into during the three months ended December 31, 2013. |
During the year ended and as of September 30, 2013, there were three new troubled debt restructurings: first, two commercial and industrial loans modified for one borrower, totaling $105; and second, a commercial real estate loan of $60. There were no changes in the principal balance as a result of these modifications. |
No troubled debt restructurings defaulted within 12 months of their modification date during the three months ended December 31, 2013 and the twelve months ended September 30, 2013. |