Financing Receivables [Text Block] | 4. Loans, Allowance for Loan Losses and Credit Quality Loans are carried at the principal amounts outstanding, or amortized acquired fair value in the case of acquired loans, adjusted by partial charge-offs and net of deferred loan costs or fees. Loan fees and certain direct origination costs are deferred and amortized into interest income over the expected term of the loan using the level-yield method. When a loan is paid off, the unamortized portion is recognized in interest income. Interest income is accrued based upon the daily principal amount outstanding, except for loans on nonaccrual status. Loans purchased by the Company are accounted for under ASC 310 30, Receivables—Loans and Debt Securities Acquired with Deteriorated Credit Quality 310 30" not 310 30 may Loans are generally placed on nonaccrual status when they are past due 90 310 30 not In cases where a borrower experiences financial difficulties and the Company makes certain concessionary modifications to contractual terms, the loan is classified as a troubled debt restructuring ("TDR"), and therefore by definition is an impaired loan. Concessionary modifications may 310 30, 310 30 not six not The composition of the Company’s loan portfolio is as follows on the dates indicated. March 31, 2018 June 30, 2017 Originated Purchased Total Originated Purchased Total (Dollars in thousands) Residential real estate $ 77,265 $ 8,597 $ 85,862 $ 83,759 $ 3,377 $ 87,136 Home equity 11,342 93 11,435 13,931 101 14,032 Commercial real estate 285,595 244,970 530,565 256,280 241,724 498,004 Commercial and industrial 184,009 1,040 185,049 174,468 1,186 175,654 Consumer 3,518 - 3,518 4,369 - 4,369 Total loans $ 561,729 $ 254,700 $ 816,429 $ 532,807 $ 246,388 $ 779,195 Total loans include net deferred loan origination costs of $300 $507 March 31, 2018 June 30, 2017, Past Due and Nonaccrual Loans The following is a summary of past due and nonaccrual loans: March 31, 2018 Past Due 30-59 Past Due 60-89 Past Due 90 Days or More-Still Past Due 90 Days or More- Total Past Total Total Nonaccrual Days Days Accruing Nonaccrual Due Current Loans Loans (Dollars in thousands) Originated portfolio: Residential real estate $ 877 $ 357 $ - $ 1,227 $ 2,461 $ 74,804 $ 77,265 $ 3,116 Home equity 95 - - 255 350 10,992 11,342 255 Commercial real estate 329 - - 174 503 285,092 285,595 1,408 Commercial and industrial 29 - - 32 61 183,948 184,009 636 Consumer 83 47 - 6 136 3,382 3,518 136 Total originated portfolio 1,413 404 - 1,694 3,511 558,218 561,729 5,551 Purchased portfolio: Residential real estate and home equity - - - 219 219 8,471 8,690 219 Commercial real estate 2,098 - - 5,294 7,392 237,578 244,970 7,562 Commercial and industrial 87 15 - - 102 938 1,040 282 Total purchased portfolio 2,185 15 - 5,513 7,713 246,987 254,700 8,063 Total loans $ 3,598 $ 419 $ - $ 7,207 $ 11,224 $ 805,205 $ 816,429 $ 13,614 June 30, 2017 Past Due 30-59 Past Due 60-89 Past Due 90 Days or More-Still Past Due 90 Days or More- Total Past Total Total Nonaccrual Days Days Accruing Nonaccrual Due Current Loans Loans (Dollars in thousands) Originated portfolio: Residential real estate $ 141 $ 574 $ - $ 1,398 $ 2,113 $ 81,646 $ 83,759 $ 3,337 Home equity 49 - - 58 107 13,824 13,931 58 Commercial real estate 2,266 - - 124 2,390 253,890 256,280 413 Commercial and industrial - - - 2,433 2,433 172,035 174,468 2,600 Consumer 69 50 - 32 151 4,218 4,369 103 Total originated portfolio 2,525 624 - 4,045 7,194 525,613 532,807 6,511 Purchased portfolio: Residential real estate and home equity - 1,082 - 16 1,098 2,380 3,478 1,056 Commercial real estate 173 1,997 - 2,922 5,092 236,632 241,724 6,364 Commercial and industrial - - - - - 1,186 1,186 32 Total purchased portfolio 173 3,079 - 2,938 6,190 240,198 246,388 7,452 Total loans $ 2,698 $ 3,703 $ - $ 6,983 $ 13,384 $ 765,811 $ 779,195 $ 13,963 Allowance for Loan Losses and Impaired Loans The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to earnings. For residential and consumer loans, a charge-off is recorded no 180 The allowance for loan losses consists of general, specific, and unallocated reserves and reflects management’s estimate of probable loan losses inherent in the loan portfolio at the balance sheet date. Management uses a consistent and systematic process and methodology to evaluate the appropriateness of the allowance for loan losses on a quarterly basis. The calculation of the allowance for loan losses is segregated by portfolio segments, which include: residential real estate, commercial real estate, commercial and industrial, consumer, and purchased loans. Risk characteristics relevant to each portfolio segment are as follows: Residential real estate: All loans in this segment are collateralized by residential real estate and repayment is primarily dependent on the credit quality, loan-to-value ratio and income of the individual borrower. The overall health of the economy, particularly unemployment rates and housing prices, has a significant effect on the credit quality in this segment. For purposes of the Company’s allowance for loan loss calculation, home equity loans and lines of credit are included in residential real estate. Commercial real estate: Loans in this segment are primarily income-producing properties. For owner-occupied properties, the cash flows are derived from an operating business, and the underlying cash flows may may Commercial and industrial: Loans in this segment are made to businesses and are generally secured by the assets of the business. Repayment is expected from the cash flows of the business. This segment also includes loans to non-bank lenders, which are generally secured by a collateral assignment of the notes and mortgages on loans originated by the non-bank lenders. Weakness in national or regional economic conditions, and a corresponding weakness in consumer or business spending, will have an adverse effect on the credit quality of this segment. Consumer: Loans in this segment are generally secured, and repayment is dependent on the credit quality of the individual borrower. Repayment of consumer loans is generally based on the earnings of individual borrowers, which may Purchased: Loans in this segment are typically secured by commercial real estate, multi-family residential real estate, or business assets and have been acquired by the Bank’s Loan Acquisition and Servicing Group (“LASG”). Loans acquired by the LASG are, with limited exceptions, performing loans at the date of purchase. Repayment of loans in this segment is largely dependent on cash flow from the successful operation of the property, in the case of non-owner occupied property, or operating business, in the case of owner-occupied property. Loan performance may 310 30. The general component of the allowance for loan losses for originated loans is based on historical loss experience adjusted for qualitative factors stratified by loan segment. The Company does not ● Levels and trends in delinquencies; ● Trends in the volume and nature of loans; ● Trends in credit terms and policies, including underwriting standards, procedures and practices, and the experience and ability of lending management and staff; ● Trends in portfolio concentration; ● National and local economic trends and conditions; ● Effects of changes or trends in internal risk ratings; and ● Other effects resulting from trends in the valuation of underlying collateral. The allocated component of the allowance for loan losses relates to loans that are classified as impaired. Impairment is measured on a loan-by-loan basis 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 if the loan is collateral dependent. An allowance is established when the discounted cash flows or collateral value of the impaired loan is lower than the carrying value of the loan. For all portfolio segments, except loans accounted for under ASC 310 30, not 310 30 The following table sets forth activity in the Company’s allowance for loan losses. Three Months Ended March 31, 2018 Residential Commercial Commercial Real Estate Real Estate and Industrial Consumer Purchased Unallocated Total (Dollars in thousands) Beginning balance $ 578 $ 2,517 $ 690 $ 50 $ 520 $ - $ 4,355 Provision (credit) 33 219 (56 ) (1 ) 169 - 364 Recoveries 2 - 2 3 - - 7 Charge-offs (28 ) - - (7 ) - - (35 ) Ending balance $ 585 $ 2,736 $ 636 $ 45 $ 689 $ - $ 4,691 Three Months Ended March 31, 2017 Residential Commercial Commercial Real Estate Real Estate and Industrial Consumer Purchased Unallocated Total (Dollars in thousands) Beginning balance $ 574 $ 1,750 $ 531 $ 70 $ 182 $ - $ 3,107 Provision (credit) 13 258 51 (13 ) 75 - 384 Recoveries 3 - 1 7 - - 11 Charge-offs (92 ) (3 ) (30 ) (2 ) - - (127 ) Ending balance $ 498 $ 2,005 $ 553 $ 62 $ 257 $ - $ 3,375 Nine Months Ended March 31, 2018 Residential Commercial Commercial Real Estate Real Estate and Industrial Consumer Purchased Unallocated Total (Dollars in thousands) Beginning balance $ 477 $ 2,312 $ 520 $ 53 $ 303 $ - $ 3,665 Provision 251 424 91 4 386 - 1,156 Recoveries 10 - 25 34 - - 69 Charge-offs (153 ) - - (46 ) - - (199 ) Ending balance $ 585 $ 2,736 $ 636 $ 45 $ 689 $ - $ 4,691 Nine Months Ended March 31, 2017 Residential Commercial Commercial Real Estate Real Estate and Industrial Consumer Purchased Unallocated Total (Dollars in thousands) Beginning balance $ 663 $ 1,195 $ 297 $ 62 $ 133 $ - $ 2,350 Provision (credit) (80 ) 835 275 51 124 - 1,205 Recoveries 32 19 12 39 - - 102 Charge-offs (117 ) (44 ) (31 ) (90 ) - - (282 ) Ending balance $ 498 $ 2,005 $ 553 $ 62 $ 257 $ - $ 3,375 The following table sets forth information regarding the allowance for loan losses by portfolio segment and impairment methodology. March 31, 2018 Residential Commercial Commercial Real Estate Real Estate and Industrial Consumer Purchased Unallocated Total (Dollars in thousands) Allowance for loan losses: Individually evaluated $ 336 $ 189 $ 131 $ 7 $ - $ - $ 663 Collectively evaluated 249 2,547 505 38 - - 3,339 ASC 310-30 - - - - 689 - 689 Total $ 585 $ 2,736 $ 636 $ 45 $ 689 $ - $ 4,691 Loans: Individually evaluated $ 5,934 $ 4,840 $ 2,298 $ 300 $ - $ - $ 13,372 Collectively evaluated 82,673 280,755 181,711 3,218 - - 548,357 ASC 310-30 - - - - 254,700 - 254,700 Total $ 88,607 $ 285,595 $ 184,009 $ 3,518 $ 254,700 $ - $ 816,429 June 30, 2017 Residential Commercial Commercial Real Estate Real Estate and Industrial Consumer Purchased Unallocated Total (Dollars in thousands) Allowance for loan losses: Individually evaluated $ 252 $ 147 $ 149 $ 4 $ - $ - $ 552 Collectively evaluated 225 2,165 371 49 - - 2,810 ASC 310-30 - - - - 303 - 303 Total $ 477 $ 2,312 $ 520 $ 53 $ 303 $ - $ 3,665 Loans: Individually evaluated $ 5,676 $ 1,759 $ 2,694 $ 296 $ - $ - $ 10,425 Collectively evaluated 92,014 254,521 171,774 4,073 - - 522,382 ASC 310-30 - - - - 246,388 - 246,388 Total $ 97,690 $ 256,280 $ 174,468 $ 4,369 $ 246,388 $ - $ 779,195 The following table sets forth information regarding impaired loans. Loans accounted for under ASC 310 30 not March 31, 2018 June 30, 2017 Unpaid Unpaid Recorded Principal Related Recorded Principal Related Investment Balance Allowance Investment Balance Allowance (Dollars in thousands) Impaired loans without a valuation allowance: Originated: Residential real estate $ 3,285 $ 3,274 $ - $ 4,052 $ 4,084 $ - Consumer 263 288 - 250 271 - Commercial real estate 3,363 3,360 - 359 354 - Commercial and industrial 1,662 1,662 - 1,870 1,870 - Purchased: Residential real estate 54 54 - 1,056 1,099 - Commercial real estate 8,844 11,410 - 8,696 11,468 - Commercial and industrial 20 53 - 32 65 - Total 17,491 20,101 - 16,315 19,211 - Impaired loans with a valuation allowance: Originated: Residential real estate 2,649 2,625 336 1,624 1,595 252 Consumer 37 39 7 46 55 4 Commercial real estate 1,477 1,466 189 1,400 1,388 147 Commercial and industrial 636 636 131 824 824 149 Purchased: Residential real estate 165 179 3 - - - Commercial real estate 4,836 5,341 351 3,528 3,929 176 Commercial and industrial 356 415 315 94 108 55 Total 10,156 10,701 1,332 7,516 7,899 783 Total impaired loans $ 27,647 $ 30,802 $ 1,332 $ 23,831 $ 27,110 $ 783 The following tables set forth information regarding interest income recognized on impaired loans. Three Months Ended March 31, 2018 2017 Average Interest Average Interest Recorded Income Recorded Income Investment Recognized Investment Recognized (Dollars in thousands) Impaired loans without a valuation allowance: Originated: Residential real estate $ 3,567 $ 11 $ 3,682 $ 95 Consumer 270 2 194 8 Commercial real estate 2,923 85 508 15 Commercial and industrial 1,710 2 1,873 20 Purchased: Residential real estate 54 - 1,070 - Commercial real estate 9,717 21 7,103 106 Commercial and industrial 22 - 29 - Total 18,263 121 14,459 244 Impaired loans with a valuation allowance: Originated: Residential real estate 2,427 60 1,999 38 Consumer 38 - 66 2 Commercial real estate 1,431 22 1,170 30 Commercial and industrial 735 - 916 12 Purchased: Residential real estate 166 - - - Commercial real estate 4,756 84 796 7 Commercial and industrial 359 - 42 - Total 9,912 166 4,989 89 Total impaired loans $ 28,175 $ 287 $ 19,448 $ 333 Nine Months Ended March 31, 2018 2017 Average Interest Average Interest Recorded Income Recorded Income Investment Recognized Investment Recognized (Dollars in thousands) Impaired loans without a valuation allowance: Originated: Residential real estate $ 3,830 $ 85 $ 3,706 $ 206 Consumer 271 15 218 19 Commercial real estate 2,158 179 477 38 Commercial and industrial 1,780 41 1,026 56 Purchased: Residential real estate 561 - 1,093 3 Commercial real estate 9,292 203 5,919 205 Commercial and industrial 26 - 27 - Total 17,918 523 12,466 527 Impaired loans with a valuation allowance: Originated: Residential real estate 2,020 123 1,842 127 Consumer 37 2 85 6 Commercial real estate 1,413 71 1,174 79 Commercial and industrial 790 6 459 24 Purchased: Residential real estate 83 1 - - Commercial real estate 4,145 149 1,163 31 Commercial and industrial 227 3 21 2 Total 8,715 355 4,744 269 Total impaired loans $ 26,633 $ 878 $ 17,210 $ 796 Credit Quality The Company utilizes a ten Loans rated 1 6: 1 5 6 Loans rated 7: Loans rated 8: Loans rated 9: one 8 Loans rated 10: not On an annual basis, or more often if needed, the Company formally reviews the ratings of all loans subject to risk ratings. Annually, the Company engages an independent third may The following tables present the Company’s loans by risk rating. March 31, 2018 Originated Portfolio Commercial Commercial Purchased Real Estate and Industrial Residential (1) Portfolio Total (Dollars in thousands) Loans rated 1- 6 $ 280,501 $ 180,879 $ 12,885 $ 242,069 $ 716,334 Loans rated 7 3,519 2,241 64 3,383 9,207 Loans rated 8 1,575 889 839 9,248 12,551 Loans rated 9 - - - - - Loans rated 10 - - - - - $ 285,595 $ 184,009 $ 13,788 $ 254,700 $ 738,092 June 30, 2017 Originated Portfolio Commercial Commercial Purchased Real Estate and Industrial Residential (1) Portfolio Total (Dollars in thousands) Loans rated 1- 6 $ 253,041 $ 171,160 $ 10,039 $ 229,980 $ 664,220 Loans rated 7 2,686 2,483 71 9,622 14,862 Loans rated 8 554 825 803 6,786 8,968 Loans rated 9 - - 19 - 19 Loans rated 10 - - - - - $ 256,281 $ 174,468 $ 10,932 $ 246,388 $ 688,069 ( 1 Certain of the Company’s loans made for commercial purposes, but secured by residential collateral, are rated under the Company’s risk-rating system. T roubled Debt Restructurings The following table shows the Company’s post-modification balance of TDRs by type of modification. Three Months Ended March 31, Nine Months Ended March 31, 2018 2017 2018 2017 Number of Recorded Number of Recorded Number of Recorded Number of Recorded Contracts Investment Contracts Investment Contracts Investment Contracts Investment (Dollars in thousands) Extended maturity 1 $ 16 2 $ 645 2 $ 34 3 $ 799 Adjusted interest rate - - 2 220 1 15 5 364 Rate and maturity - - 3 968 3 2,263 4 1,302 Principal deferment 4 2,418 - - 7 3,356 1 161 Court ordered concession 1 94 - - 1 94 - - 6 $ 2,528 7 $ 1,833 14 $ 5,762 13 $ 2,626 The following table shows loans modified in a TDR and the change in the recorded investment subsequent to the modifications occurring. Three Months Ended March 31, 2018 2017 Recorded Recorded Recorded Recorded Number of Investment Investment Number of Investment Investment Contracts Pre-Modification Post-Modification Contracts Pre-Modification Post-Modification (Dollars in thousands) Originated portfolio: Residential real estate 2 $ 577 $ 577 3 $ 621 $ 711 Home equity - - - - - - Commercial real estate 3 1,224 1,230 1 154 154 Commercial and industrial - - - - - - Consumer - - - - - - Total originated portfolio 5 1,801 1,807 4 775 865 Purchased portfolio: Residential real estate - - - - - - Commercial real estate 1 696 721 3 917 968 Total purchased portfolio 1 696 721 3 917 968 Total 6 $ 2,497 $ 2,528 7 $ 1,692 $ 1,833 Nine Months Ended March 31, 2018 2017 Recorded Recorded Recorded Recorded Number of Investment Investment Number of Investment Investment Contracts Pre-Modification Post-Modification Contracts Pre-Modification Post-Modification (Dollars in thousands) Originated portfolio: Residential real estate 5 $ 624 $ 625 7 $ 896 $ 1,009 Home equity - - - - - - Commercial real estate 5 3,303 3,370 1 154 154 Commercial and industrial 1 655 655 1 91 161 Consumer - - - - - - Total originated portfolio 11 4,582 4,650 9 1,141 1,324 Purchased portfolio: Residential real estate - - - - - - Commercial real estate 2 820 844 - - - Commercial and industrial 1 268 268 4 1,251 1,302 Total purchased portfolio 3 1,088 1,112 4 1,251 1,302 Total 14 $ 5,670 $ 5,762 13 $ 2,392 $ 2,626 The Company considers TDRs past due 90 One twelve $141 three nine March 31, 2018. March 31, 2018, no ASC 310 30 The following tables present a summary of loans accounted for under ASC 310 30 Three Months Ended March 31, 2018 Three Months Ended March 31, 2017 (Dollars in thousands) Contractually required payments receivable $ 51,602 $ 13,190 Nonaccretable difference (841 ) (44 ) Cash flows expected to be collected 50,761 13,146 Accretable yield (17,740 ) (5,285 ) Fair value of loans acquired $ 33,021 $ 7,861 Nine Months Ended March 31, 2018 Nine Months Ended March 31, 2017 (Dollars in thousands) Contractually required payments receivable $ 106,922 $ 107,910 Nonaccretable difference (2,665 ) (3,538 ) Cash flows expected to be collected 104,257 104,372 Accretable yield (32,783 ) (36,625 ) Fair value of loans acquired $ 71,474 $ 67,747 Certain loans accounted for under ASC 310 30 not As of and for the Three Months Ended March 31, 2018 As of and for the Nine Months Ended March 31, 2018 (Dollars in thousands) Loans acquired during the period $ 67 $ 72 Loans at end of period 7,431 7,431 The following tables summarize the activity in the accretable yield for loans accounted for under ASC 310 30. Three Months Ended March 31, 2018 Three Months Ended March 31, 2017 (Dollars in thousands) Beginning balance $ 124,903 $ 128,423 Acquisitions 17,740 5,285 Accretion (4,476 ) (4,762 ) Reclassifications from non-accretable difference to accretable yield 790 3,703 Disposals and other changes (7,750 ) (7,434 ) Ending balance $ 131,207 $ 125,215 Nine Months Ended March 31, 2018 Nine Months Ended March 31, 2017 (Dollars in thousands) Beginning balance $ 131,197 $ 124,151 Acquisitions 32,783 36,625 Accretion (13,145 ) (14,070 ) Reclassifications from non-accretable difference to accretable yield 5,313 4,834 Disposals and other changes (24,941 ) (26,325 ) Ending balance $ 131,207 $ 125,215 The following table provides information related to the unpaid principal balance and carrying amounts of ASC 310 30 March 31, 2018 June 30, 2017 (Dollars in thousands) Unpaid principal balance $ 281,325 $ 271,709 Carrying amount 247,869 239,583 |