v2.3.0.9
Loans
6 Months Ended
Dec. 31, 2011
Receivables [Abstract]  
Loans, Notes, Trade and Other Receivables Disclosure [Text Block]
Note 3 – Loans
 

Major classifications of loans were as follows:

 

    December 31,
2011
    June 30,
2011
 
Commercial   $ 18,250     $ 19,297  
Commercial real estate:                
Construction     1,494       1,057  
Other     101,558       97,403  
1 – 4 Family residential real estate:                
Owner occupied     33,812       34,488  
Non-owner occupied     18,307       19,098  
Construction     321       597  
Consumer     7,111       5,874  
Subtotal     180,853       177,814  
Less:  Net deferred loan fees     (235 )     (263 )
Allowance for loan losses     (2,126 )     (2,101 )
Net Loans   $ 178,492     $ 175,450  

 

The following table presents the activity in the allowance for loan losses by portfolio segment for the three months ending December 31, 2011:

 

                1-4 Family              
          Commercial     Residential              
          Real     Real              
    Commercial     Estate     Estate     Consumer     Total  
                                         
Allowance for loan losses:                                        
Beginning balance   $ 97     $ 1,054     $ 845     $ 91     $ 2,087  
Provision for loan losses     21       (89 )     50       85       67  
Loans charged-off                       (50 )     (50 )
Recoveries                 5       17       22  
Total ending allowance balance   $ 118     $ 965     $ 900     $ 143     $ 2,126  

 

The following table presents the activity in the allowance for loan losses by portfolio segment for the six months ending December 31, 2011:

 

                1-4 Family              
          Commercial     Residential              
          Real     Real              
    Commercial     Estate     Estate     Consumer     Total  
                               
Allowance for loan losses:                                        
Beginning balance   $ 179     $ 882     $ 947     $ 93     $ 2,101  
Provision for loan losses     (61 )     83       17       120       159  
Loans charged-off                 (69 )     (100 )     (169 )
Recoveries                 5       30       35  
Total ending allowance balance   $ 118     $ 965     $ 900     $ 143     $ 2,126  

 

A summary of activity in the allowance for loan losses for the three and six months ended December 31, 2010, was as follows:

 

    Three Months
Ended
December 31,
2010
    Six Months
Ended
December 31,
2010
 
Beginning of period   $ 2,357     $ 2,276  
Provision     142       244  
Charge-offs     (244 )     (285 )
Recoveries     11       31  
Balance at December 31,   $ 2,266     $ 2,266  

 

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of December 31, 2011. Included in the recorded investment in loans is $(235) of net deferred loan fees and $485 of accrued interest receivable.

 

                1-4 Family              
          Commercial     Residential              
          Real     Real              
    Commercial     Estate     Estate     Consumer     Total  
Allowance for loan losses:                                        
Ending allowance balance attributable to loans:                                        
Individually evaluated for impairment   $ 45     $ 117     $ 280     $     $ 442  
Collectively evaluated for impairment     73       848       620       143       1,684  
Total ending allowance balance   $ 118     $ 965     $ 900     $ 143     $ 2,126  
                                         
Recorded investment in loans:                                        
Loans individually evaluated for impairment   $ 159     $ 1,381     $ 1,347     $     $ 2,887  
Loans collectively evaluated for impairment     18,131       101,711       51,230       7,144       178,216  
Total ending loans balance   $ 18,290     $ 103,092     $ 52,577     $ 7,144     $ 181,103  

 

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of June 30, 2011. Included in the recorded investment in loans is $(263) of net deferred loan fees and $472 of accrued interest receivable.

 

                1-4 Family              
          Commercial     Residential              
          Real     Real              
    Commercial     Estate     Estate     Consumer     Total  
Allowance for loan losses:                                        
Ending allowance balance attributable to loans:                                        
Individually evaluated for impairment   $ 13     $ 126     $ 293     $     $ 432  
Collectively evaluated for impairment     166       756       654       93       1,669  
Total ending allowance balance   $ 179     $ 882     $ 947     $ 93     $ 2,101  
                                         
Recorded investment in loans:                                        
Loans individually evaluated for impairment   $ 82     $ 1,405     $ 1,042     $     $ 2,529  
Loans collectively evaluated for impairment     19,254       97,093       53,279       5,868       175,494  
Total ending loans balance   $ 19,336     $ 98,498     $ 54,321     $ 5,868     $ 178,023  

 

The following table presents information related to loans individually evaluated for impairment by class of loans as of and for the six months ended December 31, 2011:

 

    Unpaid           Allowance for     Average     Interest     Cash Basis  
    Principal     Recorded     Loan Losses     Recorded     Income     Interest  
    Balance     Investment     Allocated     Investment     Recognized     Recognized  
With no related allowance recorded:                                                
Commercial   $ 100     $ 100     $     $ 44     $     $  
Commercial real estate:                                                
Other     625       624             633       3       3  
1-4 Family residential real estate:                                                
Owner occupied     92       92             96       2       2  
Non-owner occupied     64       64             54       2       2  
With an allowance recorded:                                                
Commercial     59       59       45       61              
Commercial real estate:                                                
Other     756       757       117       760       11       11  
1-4 Family residential real estate:                                                
Owner occupied     219       217       13       218       6       6  
Non-owner occupied     974       974       267       917              
Total   $ 2,889     $ 2,887     $ 442     $ 2,783     $ 24     $ 24  

 

The following table presents information related to average recorded investment and interest income associated with loans individually evaluated for impairment by class of loans for the three months ended December 31, 2011:

 

    Average     Interest     Cash Basis  
    Recorded     Income     Interest  
    Investment     Recognized     Recognized  
With no related allowance recorded:                        
Commercial   $ 43     $     $  
Commercial real estate:                        
Other     630              
1-4 Family residential real estate:                        
Owner occupied     95              
Non-owner occupied     65       2       2  
With an allowance recorded:                        
Commercial     60              
Commercial real estate:                        
Other     758       6       6  
1-4 Family residential real estate:                        
Owner occupied     218       4       4  
Non-owner occupied     949              
Total   $ 2,818     $ 12     $ 12  

  

 

The following table presents information related to loans individually evaluated for impairment by class of loans as of June 30, 2011 and for the six months ended December 31, 2010:

 

    As of June 30, 2011     Six Months ended December 31, 2010  
    Unpaid           Allowance for     Average     Interest     Cash Basis  
    Principal     Recorded     Loan Losses     Recorded     Income     Interest  
    Balance     Investment     Allocated     Investment     Recognized     Recognized  
With no related allowance recorded:                                                
Commercial   $ 18     $ 18     $     $ 22     $     $  
Commercial real estate:                                                
Other     413       412             500              
With an allowance recorded:                                                
Commercial     64       64       13       54              
Commercial real estate:                                                
Other     997       993       126       1,307       24       18  
1-4 Family residential real estate:                                                
Owner occupied     320       319       3       282       3        
Non-owner occupied     724       723       290       751              
Total   $ 2,536     $ 2,529     $ 432     $ 2,916     $ 27     $ 18  

 

The following table presents information related to average recorded investment and interest income associated with loans individually evaluated for impairment by class of loans for the three months ended December 31, 2010:

 

    Average     Interest     Cash Basis  
    Recorded     Income     Interest  
    Investment     Recognized     Recognized  
With no related allowance recorded:                        
Commercial   $ 21     $     $  
Commercial real estate:                        
Other     507              
With an allowance recorded:                        
Commercial     78              
Commercial real estate:                        
Other     1,351       3        
1-4 Family residential real estate:                        
Owner occupied     343       1        
Non-owner occupied     727              
Total   $ 3,027     $ 4     $  

  

The following table presents the recorded investment in non-accrual and loans past due over 90 days still on accrual by class of loans as of December 31, 2011 and June 30, 2011:

 

    December 31, 2011     June 30, 2011  
          Loans Past Due           Loans Past Due  
          Over 90 Days           Over 90 Days  
          Still           Still  
    Non-accrual     Accruing     Non-accrual     Accruing  
Commercial   $ 59     $     $ 64     $  
Commercial real estate:                                
Other     935             754        
1 – 4 Family residential:                                
Owner occupied     352             219        
Non-owner occupied     684             723        
Consumer                        
Total   $ 2,030     $     $ 1,760     $  

 

Non-accrual loans and loans past due 90 days still on accrual include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans.

 

The following table presents the aging of the recorded investment in past due loans as of December 31, 2011 by class of loans:

 

    Days Past Due                    
                90 Days or                    
    30 - 59     60 - 89     Greater &     Total     Loans Not        
    Days     Days     Non-accrual     Past Due     Past Due     Total  
Commercial   $ 31     $ 15     $ 37     $ 83     $ 18,207     $ 18,290  
Commercial real estate:                                                
Construction                             1,494       1,494  
Other     471             648       1,119       100,479       101,598  
1-4 Family residential:                                                
Owner occupied     299             211       510       33,435       33,945  
Non-owner occupied     25                   25       18,286       18,311  
Construction                             321       321  
Consumer     14       6             20       7,124       7,144  
Total   $ 840     $ 21     $ 896     $ 1,757     $ 179,346     $ 181,103  

 

The above table of past due loans includes the recorded investment in non-accrual loans of $1,134 in the loans not past due category.

 

The following table presents the aging of the recorded investment in past due loans as of June 30, 2011 by class of loans:

 

    Days Past Due                    
                90 Days or                    
    30 - 59     60 - 89     Greater &     Total     Loans Not        
    Days     Days     Non-accrual     Past Due     Past Due     Total  
Commercial   $     $ 1     $     $ 1     $ 19,335     $ 19,336  
Commercial real estate:                                                
Construction                             1,053       1,053  
Other           242       412       654       96,791       97,445  
1-4 Family residential:                                                
Owner occupied           167       23       190       34,438       34,628  
Non-owner occupied           44       175       219       18,877       19,096  
Construction                             597       597  
Consumer     26                   26       5,842       5,868  
Total   $ 26     $ 454     $ 610     $ 1,090     $ 176,933     $ 178,023  

 

The above table of past due loans includes the recorded investment in non-accrual loans of $410 in the 60 – 89 days past due category and $740 in the loans not past due category.

 

Troubled Debt Restructurings:

The Corporation allocated $276 and $229 of specific reserves to customers whose loan terms have been modified in troubled debt restructurings as of December 31, 2011 and June 30, 2011. As of December 31, 2011 and June 30, 2011, the Corporation had not committed to lend any additional amounts to customers with outstanding loans that are classified as troubled debt restructurings.

 

During the period ending December 31, 2011, the terms of certain loans were modified as troubled debt restructurings. The modification of the terms of such loans included one or a combination of the following: a reduction of the stated interest rate of the loan; an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk; a permanent reduction of the recorded investment in the loan; or a temporary reduction in the payment amount to interest only.

 

Modifications involving a reduction of the stated interest rate of the loan were for periods ranging from 12 months to 6.5 years. Modifications involving an extension of the maturity date were for a period of 6.5 years.

 

The following table presents loans by class modified as troubled debt restructurings that occurred during the six month period ending December 31, 2011:

 

          Pre-Modification     Post-Modification  
    Number of     Outstanding Recorded     Outstanding Recorded  
    Loans     Investment     Investment  
Troubled debt restructuring:                        
Commercial     1     $ 85     $ 85  
1 – 4 Family residential:                        
Non-owner occupied     7       534       458  
Total     8     $ 619     $ 543  

 

The troubled debt restructurings described above increased the allowance for loan losses by $20 and resulted in charge offs of $63 during the period ending December 31, 2011.

 

Credit Quality Indicators:

The Corporation 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. The Corporation analyzes loans individually by classifying the loans as to credit risk. This analysis includes loans with a total outstanding loan relationship greater than $100 thousand and non-homogeneous loans, such as commercial and commercial real estate loans. Management monitors the loans on an ongoing basis for any changes in the borrower’s ability to service their debt and affirm the risk ratings for the loans and leases in their respective portfolio on an annual basis. The Corporation uses the following definitions for risk ratings:

 

Special Mention. Loans classified as special mention have a potential weakness that deserves management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution's credit position at some future date.

 

Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

 

Doubtful. Loans classified as doubtful have all the weaknesses inherent in 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 not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans. Loans listed as not rated are either less than $100 thousand or are included in groups of homogeneous loans. Based on the most recent analysis performed, the recorded investment by risk category of loans by class of loans was as follows:

    As of December 31, 2011  
          Special                 Not  
    Pass     Mention     Substandard     Doubtful     Rated  
Commercial   $ 17,676     $ 191     $ 52     $ 159     $ 212  
Commercial real estate:                                        
Construction     1,320       174                    
Other     90,528       7,491       1,696       1,381       502  
1-4 Family residential real estate:                                        
Owner occupied     4,815       110       100       309       28,611  
Non-owner occupied     13,554       2,598       941       1,038       180  
Construction     71                         250  
Consumer                             7,144  
Total   $ 127,964     $ 10,564     $ 2,789     $ 2,887     $ 36,899  

 

    As of June 30, 2011  
          Special                 Not  
    Pass     Mention     Substandard     Doubtful     Rated  
Commercial   $ 17,469     $ 743     $ 884     $ 82     $ 158  
Commercial real estate:                                        
Construction     868       76       109              
Other     87,857       5,624       2,055       1,405       504  
1-4 Family residential real estate:                                        
Owner occupied     5,526       305       372       319       28,106  
Non-owner occupied     14,549       1,976       1,657       723       191  
Construction     28                         569  
Consumer                             5,868  
Total   $ 126,297     $ 8,724     $ 5,077     $ 2,529     $ 35,396