LOANS AND LEASES RECEIVABLE | LOANS AND LEASES RECEIVABLE Loans and leases receivable by classes within portfolio segments, consist of the following: September 30, 2015 June 30, 2015 Amount Percent Amount Percent Residential: One-to four-family $ 55,125 6.1 % $ 55,572 6.1 % Construction 9,194 1.0 6,308 0.7 Commercial: Commercial business (1) 71,466 7.9 78,493 8.6 Equipment finance leases 130 — 158 — Commercial real estate: Commercial real estate 335,685 37.0 325,453 35.6 Multi-family real estate 115,268 12.7 111,354 12.2 Construction 56,527 6.2 48,224 5.3 Agricultural: Agricultural real estate 88,024 9.7 96,952 10.6 Agricultural business 106,550 11.7 123,988 13.5 Consumer: Consumer direct 14,983 1.7 14,837 1.6 Consumer home equity 50,786 5.7 50,377 5.5 Consumer overdraft & reserve 2,542 0.3 2,703 0.3 Total loans and leases receivable (2) $ 906,280 100.0 % $ 914,419 100.0 % _____________________________________ (1) Includes $1,376 and $1,377 tax exempt leases at September 30, 2015 and June 30, 2015 , respectively. (2) Exclusive of undisbursed portion of loans in process and net of deferred loan fees and discounts. The following tables summarize the activity in the allowance for loan and lease losses by portfolio segment for the three months ended: September 30, 2015 Residential Commercial Commercial Real Estate Agricultural Consumer Total Balance at beginning of period $ 301 $ 795 $ 4,761 $ 4,037 $ 1,336 $ 11,230 Charge-offs — — — — (193 ) (193 ) Recoveries — 11 — — 30 41 Provisions (32 ) (33 ) 436 (264 ) 71 178 Balance at end of period $ 269 $ 773 $ 5,197 $ 3,773 $ 1,244 $ 11,256 September 30, 2014 Residential Commercial Commercial Real Estate Agricultural Consumer Total Balance at beginning of period $ 283 $ 932 $ 3,819 $ 3,842 $ 1,626 $ 10,502 Charge-offs — — — — (141 ) (141 ) Recoveries — 7 — — 33 40 Provisions (23 ) (14 ) 337 (273 ) (49 ) (22 ) Balance at end of period $ 260 $ 925 $ 4,156 $ 3,569 $ 1,469 $ 10,379 The following tables summarize the related statement balances by portfolio segment: September 30, 2015 Residential Commercial Commercial Real Estate Agricultural Consumer Total Allowance for loan and lease losses: Individually evaluated for impairment $ 31 $ 7 $ — $ — $ 211 $ 249 Collectively evaluated for impairment 238 766 5,197 3,773 1,033 11,007 Total allowance for loan and lease losses $ 269 $ 773 $ 5,197 $ 3,773 $ 1,244 $ 11,256 Loans and leases receivable: Individually evaluated for impairment $ 148 $ 1,871 $ 753 $ 13,458 $ 1,035 $ 17,265 Collectively evaluated for impairment 64,171 69,725 506,727 181,116 67,276 889,015 Total loans and leases receivable $ 64,319 $ 71,596 $ 507,480 $ 194,574 $ 68,311 $ 906,280 June 30, 2015 Residential Commercial Commercial Real Estate Agricultural Consumer Total Allowance for loan and lease losses: Individually evaluated for impairment $ 32 $ 7 $ 4 $ — $ 236 $ 279 Collectively evaluated for impairment 269 788 4,757 4,037 1,100 10,951 Total allowance for loan and lease losses $ 301 $ 795 $ 4,761 $ 4,037 $ 1,336 $ 11,230 Loans and leases receivable: Individually evaluated for impairment $ 148 $ 2,731 $ 712 $ 14,009 $ 1,192 $ 18,792 Collectively evaluated for impairment 61,732 75,920 484,319 206,931 66,725 895,627 Total loans and leases receivable $ 61,880 $ 78,651 $ 485,031 $ 220,940 $ 67,917 $ 914,419 Credit Quality Indicators The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information and current economic trends, among other factors. For loans other than residential and consumer, the Company analyzes loans individually, by classifying the loans as to credit risk. This analysis includes non-term loans, regardless of balance and term loans with an outstanding balance greater than $100 . Each loan is reviewed annually, at a minimum. Specific events applicable to the loan may trigger an additional review prior to its scheduled review, if such event is determined to possibly modify the risk classification. The summary of the analysis for the portfolio is calculated on a monthly basis. The Company uses the following definitions for risk ratings: Pass —Loans classified as pass represent loans that are evaluated and are performing under the stated terms. Pass rated assets are analyzed by the pay capacity, the current net worth, and the value of the loan collateral of the obligor. Special Mention —Loans classified as special mention possess potential weaknesses that require management attention, but do not yet warrant adverse classification. While the status of a loan put on this list may not technically trigger their classification as Substandard or Doubtful, it is considered a proactive way to identify potential issues and address them before the situation deteriorates further and does result in a loss for the Company. Substandard —Loans classified as substandard are inadequately protected by the current net worth, paying capacity of the obligor, or by the collateral pledged. Substandard loans must have a well-defined weakness or weaknesses that jeopardize the repayment of the debt as originally contracted. They are characterized by the distinct possibility that the Company will sustain a loss if the deficiencies are not corrected. Doubtful —Loans classified as doubtful have the weaknesses of those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. Loans that fall into this class are deemed collateral dependent and an individual impairment analysis is performed on all relationships. Loans in this category are allocated a specific reserve if the estimated discounted cash flows from the loan (or collateral value less cost to sell for collateral dependent loans) does not support the outstanding loan balance or charged off if deemed uncollectible. The following tables summarize the credit quality indicators used to determine the credit quality by class within the portfolio segments: Credit risk profile by internally assigned grade—Commercial, Commercial real estate and Agricultural portfolio segments September 30, 2015 June 30, 2015 Pass Special Mention Substandard Doubtful Pass Special Mention Substandard Doubtful Commercial: Commercial business $ 69,470 $ 43 $ 1,953 $ — $ 74,660 $ 1,047 $ 2,795 $ — Equip. finance leases 130 — — — 158 — — — Commercial real estate: Commercial real estate 328,635 3,253 3,815 — 316,790 4,277 4,386 — Multi-family real estate 114,160 — 1,108 — 110,239 — 1,115 — Construction 56,527 — — — 48,224 — — — Agricultural: Agricultural real estate 80,407 595 7,022 — 89,772 595 6,599 — Agricultural business 101,981 1,061 3,627 — 118,937 912 4,303 — $ 751,310 $ 4,952 $ 17,525 $ — $ 758,780 $ 6,831 $ 19,198 $ — Credit risk profile based on payment activity—Residential and Consumer portfolio segments September 30, 2015 June 30, 2015 Performing Nonperforming Performing Nonperforming Residential: One-to four- family $ 55,012 $ 113 $ 55,460 $ 112 Construction 9,194 — 6,308 — Consumer: Consumer direct 14,950 33 14,792 45 Consumer home equity 50,576 210 50,140 237 Consumer OD & reserves 2,542 — 2,703 — $ 132,274 $ 356 $ 129,403 $ 394 The following table summarizes the aging of the past due financing receivables by classes within the portfolio segments and related accruing and nonaccruing balances: September 30, 2015 Accruing and Nonaccruing Loans Nonperforming Loans 30 - 59 Days Past Due 60 - 89 Days Past Due Greater Than 89 Days Total Past Due Current (2) Recorded Investment >90 Days and Accruing (1) Nonaccrual Balance Total Residential: One-to four-family $ — $ 144 $ 113 $ 257 $ 54,868 $ — $ 113 $ 113 Construction — — — — 9,194 — — — Commercial: Commercial business — — 123 123 71,343 — 1,590 1,590 Equipment finance leases — — — — 130 — — — Commercial real estate: Commercial real estate — 159 — 159 335,526 — 476 476 Multi-family real estate — — — — 115,268 — — — Construction — — — — 56,527 — — — Agricultural: Agricultural real estate — — 1,342 1,342 86,682 — 4,396 4,396 Agricultural business — 27 1,959 1,986 104,564 — 5,036 5,036 Consumer: Consumer direct — — 2 2 14,981 — 33 33 Consumer home equity 145 8 166 319 50,467 — 210 210 Consumer OD & reserve — — — — 2,542 — — — Total $ 145 $ 338 $ 3,705 $ 4,188 $ 902,092 $ — $ 11,854 $ 11,854 _____________________________________ (1) Loans accruing and delinquent greater than 90 days have either government guarantees or acceptable loan-to-value ratios. (2) Net of deferred loan fees and discounts and exclusive of undisbursed portion of loans in process. June 30, 2015 Accruing and Nonaccruing Loans Nonperforming Loans 30 - 59 Days Past Due 60 - 89 Days Past Due Greater Than 89 Days Total Past Due Current (2) Recorded Investment >90 Days and Accruing (1) Nonaccrual Balance Total Residential: One-to four-family $ — $ — $ — $ — $ 55,572 $ — $ 112 $ 112 Construction 4 — — 4 6,304 — — — Commercial: Commercial business 26 — 485 511 77,982 — 2,398 2,398 Equipment finance leases — — — — 158 — — — Commercial real estate: Commercial real estate 23 — — 23 325,430 — 359 359 Multi-family real estate — — — — 111,354 — — — Construction — — — — 48,224 — — — Agricultural: Agricultural real estate 375 139 1,203 1,717 95,235 — 4,482 4,482 Agricultural business 720 521 1,206 2,447 121,541 — 5,474 5,474 Consumer: Consumer direct 18 3 3 24 14,813 — 45 45 Consumer home equity 190 — 135 325 50,052 — 237 237 Consumer OD & reserve 5 — — 5 2,698 — — — Total $ 1,361 $ 663 $ 3,032 $ 5,056 $ 909,363 $ — $ 13,107 $ 13,107 _____________________________________ (1) Loans accruing and delinquent greater than 90 days have either government guarantees or acceptable loan-to-value ratios. (2) Net of deferred loan fees and discounts and exclusive of undisbursed portion of loans in process. At September 30, 2015 , the Company had identified $17,265 of loans as impaired which includes performing troubled debt restructurings. A loan is identified as impaired when, based on current information and events, it is probable that the Bank will be unable to collect all amounts due according to the contractual terms of the loan agreement and thus are placed on non-accrual status. Interest income on impaired loans is recognized on a cash basis. The average carrying amount is calculated for each quarter by using the daily average balance, which is then averaged with the other quarters' averages to determine an annual average balance. The following table summarizes impaired loans by class of loans and the specific valuation allowance: September 30, 2015 June 30, 2015 Recorded Investment Unpaid Principal Balance (1) Related Allowance Recorded Investment Unpaid Principal Balance (1) Related Allowance With no related allowance recorded: Commercial business $ 1,718 $ 1,718 $ — $ 2,571 $ 2,571 $ — Commercial real estate 753 753 — 689 689 — Agricultural real estate 7,521 7,521 — 7,633 7,633 — Agricultural business 5,937 5,937 — 6,376 6,376 — Consumer direct 7 22 — 9 24 — Consumer home equity 489 489 — 580 580 — 16,425 16,440 — 17,858 17,873 — With an allowance recorded: One-to four-family 148 148 31 148 148 32 Commercial business 153 153 7 160 160 7 Commercial real estate — — — 23 23 4 Consumer direct 27 27 27 36 36 36 Consumer home equity 512 512 184 567 567 200 840 840 249 934 934 279 Total: One-to four-family 148 148 31 148 148 32 Commercial business 1,871 1,871 7 2,731 2,731 7 Commercial real estate 753 753 — 712 712 4 Agricultural real estate 7,521 7,521 — 7,633 7,633 — Agricultural business 5,937 5,937 — 6,376 6,376 — Consumer direct 34 49 27 45 60 36 Consumer home equity 1,001 1,001 184 1,147 1,147 200 $ 17,265 $ 17,280 $ 249 $ 18,792 $ 18,807 $ 279 _____________________________________ (1) Represents the borrower's loan obligation, gross of any previously charged-off amounts. The following tables summarize the Company's average recorded investment in impaired loans by class of loans and the related interest income recognized for the periods indicated: Three Months Ended September 30, 2015 2014 Average Recorded Investment Interest Income Recognized Average Recorded Investment Interest Income Recognized One-to four-family $ 148 $ 1 $ 161 $ 1 Commercial business 2,301 4 3,976 13 Commercial real estate 733 2 827 1 Multi-family real estate — — 6,259 70 Agricultural real estate 7,577 3 10,372 46 Agricultural business 6,157 7 3,582 — Consumer direct 40 — 67 — Consumer home equity 1,074 15 1,773 16 $ 18,030 $ 32 $ 27,017 $ 147 No additional funds are committed to be advanced in connection with impaired loans. Modifications of terms for the Company's loans and their inclusion as troubled debt restructurings are based on individual facts and circumstances. Loan modifications that are included as troubled debt restructurings may involve reduction of the interest rate or renewing at an interest rate below current market rates, extension of the term of the loan and/or forgiveness of principal, regardless of the period of the modification. Loans and leases that are considered troubled debt restructurings are factored into the determination of the allowance for loan and lease losses through impaired loan analysis and any subsequent allocation of specific valuation allowance, if applicable. The Company measures impairment on an individual loan and the extent to which a specific valuation allowance is necessary by comparing the loan's outstanding balance to either the fair value of the collateral, less the estimated cost to sell or the present value of expected cash flows, discounted at the loan's effective interest rate. During fiscal 2016 , new TDRs consisted of two agricultural loans and four consumer loans. Of these new TDRs, all six were evaluated for impairment based on collateral adequacy. The following is a summary of the Company's performing troubled debt restructurings which are in-compliance with their modified terms: September 30, 2015 Number of Contracts (1) Pre-Modification Recorded Balance Post-Modification Outstanding Recorded Balance (1) Residential 1 $ 35 $ 35 Commercial business 5 1,740 1,740 Commercial real estate 4 594 594 Agricultural 9 9,059 9,059 Consumer 35 1,037 1,022 54 $ 12,465 $ 12,450 June 30, 2015 Number of Contracts (2) Pre-Modification Recorded Balance Post-Modification Outstanding Recorded Balance (2) Residential 2 $ 148 $ 148 Commercial business 5 2,234 2,234 Commercial real estate 5 712 712 Agricultural 8 8,045 8,045 Consumer 39 1,142 1,127 59 $ 12,281 $ 12,266 _____________________________________ (1) Includes 17 customers, which are in compliance with their restructured terms, that are not accruing interest and have a recorded investment balance of $9,905 . (2) Includes 18 customers, which are in compliance with their restructured terms, that are not accruing interest and have a recorded investment balance of $9,499 . Excluded from above, at September 30, 2015 , the Company had one residential loan with a recorded balance of $113 that was originally restructured in fiscal 2015. The residential loan is not in compliance with its restructured terms and is in nonaccrual status due to bankruptcy. At June 30, 2015 , the Company had no TDRs that were not in compliance with their stated terms in the agreements. Loans can retain their accrual status at the time of their modification if the restructuring is not a result of terminated loan payments. For nonaccruing loans, a minimum of six months of performance related to the restructured terms are required before a loan is returned to accruing status. New TDRs initially classified as a TDR during the three months ended September 30, were as follows: 2015 2014 Number of Contracts Pre-Modification Recorded Balance Post-Modification Outstanding Recorded Balance Number of Contracts Pre-Modification Recorded Balance Post-Modification Outstanding Recorded Balance Commercial business — $ — $ — 1 $ 11 $ 11 Agricultural 2 1,496 1,496 — — — Consumer 4 200 200 9 148 148 6 $ 1,696 $ 1,696 10 $ 159 $ 159 Six TDRs were added during the first three months of fiscal 2016 . Of these, four were negotiated to extend a loan maturity without reducing the interest rate below market rate and two were due to bankruptcy. None of the new TDRs defaulted during the first three months of fiscal 2016 . Ten TDRs were added during the first three months of fiscal 2015 of which eight were negotiated to extend a loan maturity without reducing the interest rate below market rate and two were due to bankruptcy. No TDRs defaulted during the first three months of fiscal 2015. |