v2.4.0.6
DOCUMENT AND ENTITY INFORMATION
9 Months Ended
Mar. 31, 2012
May 07, 2012
Entity Registrant Name CONSUMERS BANCORP INC /OH/  
Entity Central Index Key 0001006830  
Current Fiscal Year End Date --06-30  
Entity Filer Category Smaller Reporting Company  
Trading Symbol cbkm  
Entity Common Stock, Shares Outstanding   2,053,097
Document Type 10-Q  
Amendment Flag false  
Document Period End Date Mar. 31, 2012  
Document Fiscal Period Focus Q3  
Document Fiscal Year Focus 2012  
v2.4.0.6
CONSOLIDATED BALANCE SHEETS (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2012
Jun. 30, 2011
ASSETS    
Cash on hand and noninterest-bearing deposits in other banks $ 6,041 $ 5,944
Interest-bearing deposits in other banks 14,336 7,884
Total cash and cash equivalents 20,377 13,828
Certificates of deposit in other financial institutions 3,430 4,900
Securities, available-for-sale 109,773 91,889
Federal bank and other restricted stocks, at cost 1,186 1,186
Total loans 184,075 177,551
Less allowance for loan losses (2,214) (2,101)
Net loans 181,861 175,450
Cash surrender value of life insurance 5,559 5,411
Premises and equipment, net 5,610 4,776
Intangible assets 0 89
Other real estate owned 0 76
Accrued interest receivable and other assets 1,977 2,535
Total assets 329,773 300,140
LIABILITIES    
Non-interest bearing demand 63,917 64,657
Interest bearing demand 34,047 14,829
Savings 97,791 79,816
Time 83,549 88,944
Total deposits 279,304 248,246
Short-term borrowings 14,467 17,012
Federal Home Loan Bank advances 6,477 7,535
Accrued interest and other liabilities 2,049 2,023
Total liabilities 302,297 274,816
SHAREHOLDERS' EQUITY    
Preferred stock (no par value, 350,000 shares authorized, none outstanding) 0 0
Common stock (no par value, 3,500,000 shares authorized; 2,183,493 and 2,180,315 shares issued as of March 31, 2012 and June 30, 2011, respectively) 5,156 5,114
Retained earnings 22,368 20,881
Treasury stock, at cost (130,442 common shares) (1,659) (1,659)
Accumulated other comprehensive income 1,611 988
Total shareholders' equity 27,476 25,324
Total liabilities and shareholders' equity $ 329,773 $ 300,140
v2.4.0.6
CONSOLIDATED BALANCE SHEETS [Parenthetical]
Mar. 31, 2012
Jun. 30, 2011
Preferred stock, shares authorized 350,000 350,000
Common stock, shares authorized 3,500,000 3,500,000
Common stock, shares issued 2,180,315 2,183,493
Treasury stock, shares 130,442 130,442
v2.4.0.6
CONSOLIDATED STATEMENTS OF INCOME (USD $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended 9 Months Ended
Mar. 31, 2012
Mar. 31, 2011
Mar. 31, 2012
Mar. 31, 2011
Interest income        
Loans, including fees $ 2,540 $ 2,517 $ 7,637 $ 7,690
Securities, taxable 445 391 1,400 1,189
Securities, tax-exempt 267 227 761 658
Federal funds sold and other interest bearing deposits 12 15 42 38
Total interest income 3,264 3,150 9,840 9,575
Interest expense        
Deposits 289 373 924 1,270
Short-term borrowings 5 9 23 33
Federal Home Loan Bank advances 51 60 180 195
Total interest expense 345 442 1,127 1,498
Net interest income 2,919 2,708 8,713 8,077
Provision for loan losses 11 100 170 344
Net interest income after provision for loan losses 2,908 2,608 8,543 7,733
Non-interest income        
Service charges on deposit accounts 338 301 1,061 963
Debit card interchange income 187 160 545 467
Bank owned life insurance income 48 47 148 136
Securities gains (losses), net (37) 0 118 70
Other-than-temporary loss        
Total impairment loss 0 (327) 0 (358)
Loss recognized in other comprehensive income 0 177 0 158
Net impairment loss recognized in earnings 0 (150) 0 (200)
Gain (loss) on sale of other real estate owned 0 0 (53) 2
Other 49 44 135 152
Total non-interest income 585 402 1,954 1,590
Non-interest expenses        
Salaries and employee benefits 1,421 1,234 4,060 3,598
Occupancy and equipment 268 263 784 774
Data processing expenses 143 137 422 413
Professional and director fees 80 80 271 265
FDIC Assessments 48 77 147 233
Franchise taxes 69 61 198 178
Marketing and advertising 81 71 210 161
Telephone and network communications 60 57 176 167
Debit card processing expenses 97 84 284 252
Amortization of intangible 8 40 89 121
Other 336 315 1,032 999
Total non-interest expenses 2,611 2,419 7,673 7,161
Income before income taxes 882 591 2,824 2,162
Income tax expense 196 109 660 473
Net Income $ 686 $ 482 $ 2,164 $ 1,689
Average common shares - basic (in shares) 2,051,024 2,044,179 2,050,390 2,041,402
Average common shares - diluted (in shares) 2,051,558 2,044,179 2,050,835 2,041,402
Basic and diluted earnings per share (in dollars per share) $ 0.33 $ 0.24 $ 1.06 $ 0.83
v2.4.0.6
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Mar. 31, 2012
Mar. 31, 2011
Mar. 31, 2012
Mar. 31, 2011
Net Income $ 686 $ 482 $ 2,164 $ 1,689
Other-than-temporarily impaired securities:        
Unrealized losses on other-than-temporarily impaired securities 0 (327) 0 (358)
Reclassification adjustment for losses included in income 0 150 0 200
Net unrealized gain 0 (177) 0 (158)
Income tax effect 0 60 0 54
Net Unrealized Gain On Other-Than-Temporarily Impaired Securities, Net Of Tax 0 (117) 0 (104)
Available-for-sale securities:        
Unrealized gains (losses) arising during the period 199 346 1,062 (824)
Reclassification adjustment for (gains) losses included in income 37 0 (118) (70)
Net unrealized gain (losses) 236 346 944 (894)
Income tax effect 80 118 321 (303)
Other Comprehensive Income (Loss), Available-for-sale Securities Adjustment, Net of Tax 156 228 623 (591)
Other comprehensive income (loss) 156 111 623 (695)
Total comprehensive income $ 842 $ 593 $ 2,787 $ 994
v2.4.0.6
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 9 Months Ended
Mar. 31, 2012
Mar. 31, 2011
Mar. 31, 2012
Mar. 31, 2011
Balance at beginning of period $ 26,817 $ 23,778 $ 25,324 $ 23,716
Comprehensive income        
Net Income 686 482 2,164 1,689
Other comprehensive income (loss) 156 111 623 (695)
Total comprehensive income 842 593 2,787 994
Common stock issued for dividend reinvestment and stock purchase plan (3,178 shares for three and nine months in 2012 and 3,117 shares and 8,786 shares for the three and nine months in 2011, respectively) 42 38 42 106
Common cash dividends (225) (205) (677) (612)
Balance at the end of the period $ 27,476 $ 24,204 $ 27,476 $ 24,204
Common cash dividends per share (in dollars per share) $ 0.11 $ 0.10 $ 0.33 $ 0.30
v2.4.0.6
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY [Parenthetical]
3 Months Ended 9 Months Ended
Mar. 31, 2012
Mar. 31, 2011
Mar. 31, 2012
Mar. 31, 2011
Common shares issued for dividend reinvestment and stock purchase plan (in shares) 3,178 3,117 3,178 8,786
v2.4.0.6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)
In Thousands, unless otherwise specified
9 Months Ended
Mar. 31, 2012
Mar. 31, 2011
Cash flows from operating activities    
Net cash from operating activities $ 3,735 $ 3,037
Cash flow from investing activities    
Securities available-for-sale Purchases (45,105) (36,572)
Maturities, calls and principal pay downs 15,801 11,822
Proceeds from sales of available-for-sale securities 11,485 5,123
Net (increase) decrease in certificates of deposits in other financial institutions 1,470 (3,185)
Net increase in loans (6,581) (3,134)
Purchase of Bank owned life insurance 0 (431)
Acquisition of premises and equipment (1,099) (1,172)
Sale of other real estate owned 23 27
Net cash from investing activities (24,006) (27,522)
Cash flow from financing activities    
Net increase in deposit accounts 31,058 25,565
Net change in short-term borrowings (2,545) 1,131
Repayments of Federal Home Loan Bank advances (1,058) (719)
Proceeds from dividend reinvestment and stock purchase plan 42 106
Dividends paid (677) (612)
Net cash from financing activities 26,820 25,471
Increase in cash or cash equivalents 6,549 986
Cash and cash equivalents, beginning of period 13,828 13,806
Cash and cash equivalents, end of period 20,377 14,792
Supplemental disclosure of cash flow information:    
Interest 1,142 1,525
Federal income taxes $ 475 $ 680
v2.4.0.6
Summary of Significant Accounting Policies
9 Months Ended
Mar. 31, 2012
Organization, Consolidation and Presentation Of Financial Statements [Abstract]  
Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies [Text Block]

Note 1 – Summary of Significant Accounting Policies:

 

Nature of Operations: Consumers Bancorp, Inc. (the Corporation) is a bank holding company headquartered in Minerva, Ohio that provides, through its banking subsidiary, Consumers National Bank (the Bank), a broad array of products and services throughout its primary market area of Stark, Columbiana, Carroll and contiguous counties in Ohio. The Bank’s business involves attracting deposits from businesses and individual customers and using such deposits to originate commercial, mortgage and consumer loans in its primary market area.

 

Basis of Presentation: The consolidated financial statements for interim periods are unaudited and reflect all adjustments (consisting of only normal recurring adjustments), which, in the opinion of management, are necessary to present fairly the financial position and results of operations and cash flows for the periods presented. The unaudited financial statements are presented in accordance with the requirements of Form 10-Q and do not include all disclosures normally required by accounting principles generally accepted in the United States of America. The financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Corporation’s Form 10-K for the year ended June 30, 2011. The results of operations for the interim period disclosed herein are not necessarily indicative of the results that may be expected for a full year.

 

The consolidated financial statements include the accounts of the Corporation and the Bank. All significant inter-company transactions and accounts have been eliminated in consolidation.

 

Segment Information: Consumers Bancorp, Inc. is a bank holding company engaged in the business of commercial and retail banking, which accounts for substantially all of the revenues, operating income, and assets. Accordingly, all of its operations are recorded in one segment, banking.

 

Reclassifications: Certain items in prior financial statements have been reclassified to conform to the current presentation.

 

Newly Issued Accounting Standards: In May, 2011, the Financial Accounting Standards Board (FASB) issued an amendment to achieve common fair value measurement and disclosure requirements between U.S. and International accounting principles. Overall, the guidance is consistent with existing U.S. accounting principles; however, there are some amendments that change a particular principle or requirement for measuring fair value or for disclosing information about fair value measurements. The amendments in this guidance are effective for interim and annual reporting periods beginning after December 15, 2011. The effect of adopting this standard did not have a material effect on the Corporation’s operating results or financial condition, but the additional disclosures are included in Note 4.

  

In June 2011, the FASB amended existing guidance and eliminated the option to present the components of other comprehensive income as part of the statement of changes in shareholders’ equity. The amendment requires that comprehensive income be presented in either a single continuous statement or in two separate consecutive statements. The amendments in this guidance are effective as of the beginning of a fiscal reporting year, and interim periods within that year, that begins after December 15, 2011. Early adoption is permitted. The adoption of this amendment had no impact on the consolidated financial statements as the prior presentation of comprehensive income was in compliance with this amendment.

v2.4.0.6
Securities
9 Months Ended
Mar. 31, 2012
Investments, Debt and Equity Securities [Abstract]  
Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

Note 2 – Securities

 

Description of Securities  

Amortized
Cost
 

    Gross
Unrealized
Gains
    Gross
Unrealized
Losses
    Fair
Value
 
March 31, 2012                                
U.S. government-sponsored entities and agencies   $ 9,553     $ 86     $     $ 9,639  
Obligations of state and political subdivisions     32,821       1,479       (93 )     34,207  
Mortgage-backed securities – residential     49,580       1,171       (18 )     50,733  
Collateralized mortgage obligations     15,176       51       (97 )     15,130  
Trust preferred security     202             (138 )     64  
Total securities   $ 107,332     $ 2,787     $ (346 )   $ 109,773  

 

    Amortized
Cost
    Gross
Unrealized
Gains
    Gross
Unrealized
Losses
    Fair
Value
 
June 30, 2011                                
U.S. government-sponsored entities and agencies   $ 16,185     $ 98     $ (23 )   $ 16,260  
Obligations of state and political subdivisions     24,725       584       (211 )     25,098  
Mortgage-backed securities - residential     29,424       1,172             30,596  
Collateralized mortgage obligations     19,856       74       (62 )     19,868  
Trust preferred security     202             (135 )     67  
Total securities   $ 90,392     $ 1,928     $ (431 )   $ 91,889  

 

Proceeds from the sale of available-for-sale securities were as follows:

 

    Three Months Ended
March 31,
    Nine Months Ended
March 31,
 
    2012     2011     2012     2011  
Proceeds from sales   $ 4,153     $     $ 11,485     $ 5,123  
Gross realized gains     16             171       97  
Gross realized losses     53             53       27  

  

The amortized cost and fair values of available-for-sale securities at March 31, 2012, by expected maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date, primarily mortgage-backed securities, collateralized mortgage obligations and the trust preferred security are shown separately.

 

    Amortized
Cost
    Estimated Fair
Value
 
Due in one year or less   $ 4,517     $ 4,542  
Due after one year through five years     5,530       5,617  
Due after five years through ten years     8,674       9,074  
Due after ten years     23,653       24,613  
Total     42,374       43,846  
                 
Mortgage-backed securities – residential     49,580       50,733  
Collateralized mortgage obligations     15,176       15,130  
Trust preferred security     202       64  
Total   $ 107,332     $ 109,773  

 

The following table summarizes the securities with unrealized losses at March 31, 2012 and June 30, 2011, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position:

 

    Less than 12 Months     12 Months or more     Total  
Description of Securities   Fair
Value
    Unrealized
Loss
    Fair
Value
    Unrealized
Loss
    Fair
Value
    Unrealized
Loss
 
March 31, 2012                                                
Obligations of states and political subdivisions   $ 2,934     $ (90 )   $ 357     $ (3 )   $ 3,291     $ (93 )
Mortgage-backed securities - residential     9,400       (18 )                 9,400       (18 )
Collateralized mortgage obligations     11,462       (97 )                 11,462       (97 )
Trust preferred security                 64       (138 )     64       (138 )
Total temporarily impaired   $ 23,796     $ (205 )   $ 421     $ (141 )   $ 24,217     $ (346 )

 

    Less than 12 Months     12 Months or more     Total  
Description of Securities   Fair
Value
    Unrealized
Loss
    Fair
Value
    Unrealized
Loss
    Fair
Value
    Unrealized
Loss
 
June 30, 2011                                                
U.S. government-sponsored entities and agencies   $ 3,088     $ (23 )   $     $     $ 3,088     $ (23 )
Obligations of states and political subdivisions     3,656       (81 )     1,221       (130 )     4,877       (211 )
Collateralized mortgage obligations     9,665       (62 )                 9,665       (62 )
Trust preferred security                 67       (135 )     67       (135 )
Total temporarily impaired   $ 16,409     $ (166 )   $ 1,288     $ (265 )   $ 17,697     $ (431 )

  

Management evaluates securities for other-than-temporary impairment (OTTI) on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. The securities portfolio is evaluated for OTTI by segregating the portfolio into two general segments and applying the appropriate OTTI model. Investment securities are generally evaluated for OTTI under FASB ASC Topic 320, Accounting for Certain Investments in Debt and Equity Securities. However, the trust preferred security is evaluated using the model outlined in FASB ASC Topic 325, Recognition of Interest Income and Impairment on Purchased Beneficial Interests and Beneficial Interests that Continue to be Held by a Transfer in Securitized Financial Assets.

 

In determining OTTI under the ASC Topic 320 model, management considers many factors, including: (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, (3) whether the market decline was affected by macroeconomic conditions, and (4) whether the entity has the intent to sell the debt security or more likely than not will be required to sell the debt security before its anticipated recovery. The assessment of whether an other-than-temporary decline exists involves a high degree of subjectivity and judgment and is based on the information available to management at a point in time.

 

Unrealized losses on obligations of state and political subdivisions, residential mortgage-backed securities and collateralized mortgage obligations have not been recognized into income because the decline in fair value is not attributed to credit quality, management does not intend to sell and it is likely that management will not be required to sell the securities prior to their anticipated recovery, and the decline in fair value is largely due to changes in interest rates and other market conditions. The fair value is expected to recover as the securities approach maturity.

 

Under the ASC Topic 325 model, the present value of the remaining cash flows as estimated at the preceding evaluation date are compared to the current expected remaining cash flows. An OTTI is deemed to have occurred if there has been an adverse change in the remaining expected future cash flows. The analysis of the trust preferred security falls within the scope of ASC Topic 325.

 

The Corporation owns a trust preferred security, which represents collateralized debt obligations (CDOs) issued by other financial and insurance companies. The security is part of a pool of issuers that support a more senior tranche of securities. Due to the illiquidity in the market, it is unlikely the Corporation would be able to recover its investment in this security if the Corporation sold the security at this time.

  

Due to an increase in principal and/or interest deferrals by the issuers of the underlying securities, the cash interest payments for the trust preferred security are being deferred. On March 31, 2012, the lowest credit rating on this security was Fitch’s rating of C, which is defined as highly speculative. The issuers in this security are primarily banks, bank holding companies and a limited number of insurance companies. The investment security is evaluated using a model to compare the present value of expected cash flows to prior periods expected cash flows to determine if there has been an adverse change in cash flows during the period. The discount rate used to calculate the cash flows is the coupon rate of the security, based on the forward LIBOR curve. The OTTI model considers the structure and term of the CDO and the financial condition of the underlying issuers. Specifically, the model details interest rates, principal balances of note classes and underlying issuers, the timing and amount of interest and principal payments of the underlying issuers, and the allocation of the payments to the note classes. The current estimate of expected cash flows is based on the most recent trustee reports and any other relevant market information including announcements of interest payment deferrals or defaults of underlying trust preferred securities. Assumptions used in the model include expected future default rates and prepayments. We assume no recoveries on defaults and all interest payment deferrals are treated as defaults with an assumed recovery rate of 15% on deferrals. In addition we use the model to “stress” the CDO, or make assumptions more severe than expected activity, to determine the degree to which assumptions could deteriorate before the CDO could no longer fully support repayment of the Corporation’s note class. According to the March 31, 2012 analysis, the expected cash flows were above the recorded amortized cost of the trust preferred security. The accumulated other-than-temporary impairment loss that has been recognized in earnings was $780 at March 31, 2012 and June 30, 2011. If there is further deterioration in the underlying collateral of this security, other-than-temporary impairments may also occur in future periods.

v2.4.0.6
Loans
9 Months Ended
Mar. 31, 2012
Receivables [Abstract]  
Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

Note 3 – Loans

 

Major classifications of loans were as follows:

 

    March 31,
2012
    June 30,
2011
 
Commercial   $ 18,928     $ 19,297  
Commercial real estate:                
Construction     597       1,057  
Other     103,337       97,403  
1 – 4 Family residential real estate:                
Owner occupied     34,820       34,488  
Non-owner occupied     17,890       19,098  
Construction     330       597  
Consumer     8,396       5,874  
Subtotal     184,298       177,814  
Less:   Net deferred loan fees     (223 )     (263 )
Allowance for loan losses     (2,214 )     (2,101 )
Net Loans   $ 181,861     $ 175,450  

   

The following table presents the activity in the allowance for loan losses by portfolio segment for the three months ending March 31, 2012:

 

                1-4 Family              
          Commercial     Residential              
          Real     Real              
    Commercial     Estate     Estate     Consumer     Total  
                               
Allowance for loan losses:                                        
Beginning balance   $ 118     $ 965     $ 900     $ 143     $ 2,126  
Provision for loan losses     4       3       2       2       11  
Loans charged-off                       (27 )     (27 )
Recoveries           65             39       104  
Total ending allowance balance   $ 122     $ 1,033     $ 902     $ 157     $ 2,214  

  

The following table presents the activity in the allowance for loan losses by portfolio segment for the nine months ending March 31, 2012:

 

                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     (57 )     86       19       122       170  
Loans charged-off                 (69 )     (127 )     (196 )
Recoveries           65       5       69       139  
Total ending allowance balance   $ 122     $ 1,033     $ 902     $ 157     $ 2,214  

  

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

 

                1-4 Family              
          Commercial     Residential              
          Real     Real              
    Commercial     Estate     Estate     Consumer     Total  
                               
Allowance for loan losses:                                        
Beginning balance   $ 80     $ 1,110     $ 1,007     $ 69     $ 2,266  
Provision for loan losses     54       14       6       26       100  
Loans charged-off     (9 )     (238 )           (36 )     (283 )
Recoveries                       18       18  
Total ending allowance balance   $ 125     $ 886     $ 1,013     $ 77     $ 2,101  

  

A summary of activity in the allowance for loan losses for the nine months ended March 31, 2011, was as follows:

 

   

Nine Months Ended

March 31, 2011

 
Beginning of period   $ 2,276  
Provision     344  
Charge-offs     (568 )
Recoveries     49  
Balance at March 31,   $ 2,101  

  

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 March 31, 2012. Included in the recorded investment in loans is $(223) of net deferred loan fees and $463 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   $ 46     $ 99     $ 275     $     $ 420  
Collectively evaluated for impairment     76       934       627       157       1,794  
Total ending allowance balance   $ 122     $ 1,033     $ 902     $ 157     $ 2,214  
                                         
Recorded investment in loans:                                        
Loans individually evaluated for impairment   $ 152     $ 1,083     $ 1,443     $     $ 2,678  
Loans collectively evaluated for impairment     18,816       102,877       51,723       8,444       181,860  
Total ending loans balance   $ 18,968     $ 103,960     $ 53,166     $ 8,444     $ 184,538  

  

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 nine months ended March 31, 2012:

    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   $ 13     $ 13     $     $ 25     $     $  
Commercial real estate:                                                
Other     207       207             491       67       67  
1-4 Family residential real estate:                                                
Owner occupied     90       90             94       2       2  
Non-owner occupied     64       65             57       3       3  
With an allowance recorded:                                                
Commercial     139       139       46       88       2       2  
Commercial real estate:                                                
Other     876       876       99       797       12       12  
1-4 Family residential real estate:                                                
Owner occupied     323       324       14       255       2       2  
Non-owner occupied     963       964       261       929       10       10  
Total   $ 2,675     $ 2,678     $ 420     $ 2,736     $ 98     $ 98  

 

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 March 31, 2012:

 

    Average     Interest     Cash Basis  
    Recorded     Income     Interest  
    Investment     Recognized     Recognized  
With no related allowance recorded:                        
Commercial   $ 13     $     $  
Commercial real estate:                        
Other     208       64       64  
1-4 Family residential real estate:                        
Owner occupied     90              
Non-owner occupied     65       1       1  
With an allowance recorded:                        
Commercial     141       2       2  
Commercial real estate:                        
Other     869       1       1  
1-4 Family residential real estate:                        
Owner occupied     328       2       2  
Non-owner occupied     968       4       4  
Total   $ 2,682     $ 74     $ 74  

  

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

    As of June 30, 2011     Nine Months ended March 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   $ 18     $ 18     $     $ 21     $     $  
Commercial real estate:                                                
Other     413       412             516              
With an allowance recorded:                                                
Commercial     64       64       13       59              
Commercial real estate:                                                
Other     997       993       126       1,274       32       32  
1-4 Family residential real estate:                                                
Owner occupied     320       319       3       296       5       5  
Non-owner occupied     724       723       290       743              
Total   $ 2,536     $ 2,529     $ 432     $ 2,909     $ 37     $ 37  

  

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 March 31, 2011:

 

    Average     Interest     Cash Basis  
    Recorded     Income     Interest  
    Investment     Recognized     Recognized  
With no related allowance recorded:                        
Commercial   $ 18     $     $  
Commercial real estate:                        
Other     550              
With an allowance recorded:                        
Commercial     70              
Commercial real estate:                        
Other     1,220       8       8  
1-4 Family residential real estate:                        
Owner occupied     324       2       2  
Non-owner occupied     727              
Total   $ 2,909     $ 10     $ 10  

  

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 March 31, 2012 and June 30, 2011:

    March 31, 2012     June 30, 2011  
          Loans Past Due           Loans Past Due  
          Over 90 Days           Over 90 Days  
          Still           Still  
    Non-accrual     Accruing     Non-accrual     Accruing  
Commercial   $ 54     $     $ 64     $  
Commercial real estate:                                
Other     947             754        
1 – 4 Family residential:                                
Owner occupied     321             219        
Non-owner occupied     673             723        
Consumer                        
Total   $ 1,995     $     $ 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 March 31, 2012 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   $     $     $ 35     $ 35     $ 18,933     $ 18,968  
Commercial real estate:                                                
Construction                             597       597  
Other           466       226       692       102,671       103,363  
1-4 Family residential:                                                
Owner occupied     141             183       324       34,620       34,944  
Non-owner occupied                             17,893       17,893  
Construction                             329       329  
Consumer           15             15       8,429       8,444  
Total   $ 141     $ 481     $ 444     $ 1,066     $ 183,472     $ 184,538  

 

The above table of past due loans includes the recorded investment in non-accrual loans of $440 in the 60-89 days past due category and $1,111 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:

As of March 31, 2012, the recorded investment of loans classified as troubled debt restructurings was $2,071 with $274 of specific reserves allocated to these loans. As of June 30, 2011, the recorded investment of loans classified as troubled debt restructurings was $1,341 with $229 of specific reserves allocated to these loans. As of March 31, 2012 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 25 years. Modifications involving an extension of the maturity date were for a period of 6.5 years to 25 years.

 

The following table presents loans by class modified as troubled debt restructurings that occurred during the nine month period ending March 31, 2012:

 

          Pre-Modification     Post-Modification  
    Number of     Outstanding Recorded     Outstanding Recorded  
    Loans     Investment     Investment  
Troubled debt restructuring:                        
Commercial     1     $ 85     $ 85  
Commercial real estate:                        
Other     2       137       137  
1 – 4 Family residential:                        
Owner occupied     1       114       113  
Non-owner occupied     7       534       458  
Total     11     $ 619     $ 543  

  

The troubled debt restructurings described above increased the allowance for loan losses by $32 and resulted in charge offs of $63 during the period ending March 31, 2012.

 

The following table presents loans by class modified as troubled debt restructurings for which there was a payment default within twelve months following the modification during the period ending March 31, 2012:

 

    Number of     Recorded  
    Loans     Investment  
Troubled debt restructuring:                
Commercial real estate:                
Other     1     $ 440  

  

A loan is considered to be in payment default once it is 90 days contractually past due under the modified terms.

 

The troubled debt restructuring that subsequently defaulted described above did not increase the allowance for loan losses or have any charge-off during the period ending March 31, 2012.

 

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 March 31, 2012  
          Special                 Not  
    Pass     Mention     Substandard     Doubtful     Rated  
Commercial   $ 18,118     $ 173     $ 45     $ 152     $ 480  
Commercial real estate:                                        
Construction     428       169                    
Other     91,606       8,031       1,668       1,083       975  
1-4 Family residential real estate:                                        
Owner occupied     4,355             100       414       30,075  
Non-owner occupied     13,320       2,481       888       1,029       175  
Construction     188                         141  
Consumer                             8,444  
Total   $ 128,015     $ 10,854     $ 2,701     $ 2,678     $ 40,290  

 

    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
v2.4.0.6
Fair Value
9 Months Ended
Mar. 31, 2012
Fair Value Disclosures [Abstract]  
Fair Value Disclosures [Text Block]

Note 4 - Fair Value

 

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:

 

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

 

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

 

Level 3: Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

  

Financial assets and financial liabilities measured at fair value on a recurring basis include the following:

 

Securities available-for-sale: When available, the fair values of available-for-sale securities are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs). For securities where quoted market prices are not available, fair values are calculated based on market prices of similar securities (Level 2 inputs). For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators (Level 3 inputs). The fair value of the Level 3 security is obtained from a third-party pricing service. Discounted cash flows are calculated using spread to the swap and LIBOR curves. Rating agency and industry research reports as well as defaults and deferrals on the individual security is reviewed and incorporated into the calculation.

 

Assets and liabilities measured at fair value on a recurring basis are summarized below, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

 

          Fair Value Measurements at 
March 31, 2012 Using
 
    Balance at 
March 31,
2012
    Level 1     Level 2     Level 3  
Securities available-for-sale:                                
U.S. government-sponsored entities and agencies   $ 9,639     $     $ 9,639     $  
Obligations of states and political subdivisions     34,207             34,207        
Mortgage-backed securities – residential     50,733             50,733        
Collateralized mortgage obligations     15,130             15,130        
Trust preferred security     64                   64  

 

          Fair Value Measurements at 
June 30, 2011 Using
 
    Balance at 
June 30, 2011
    Level 1     Level 2     Level 3  
Securities available-for-sale:                                
U.S. government-sponsored entities and agencies   $ 16,260     $     $ 16,260     $  
Obligations of states and political subdivisions     25,098             25,098        
Mortgage-backed securities - residential     30,596             30,596        
Collateralized mortgage obligations     19,868             19,868        
Trust preferred security     67                   67  

 

There were no transfers between Level 1 and Level 2 during the nine months ended March 31, 2012 or the 2011 fiscal year.

  

The following table presents a reconciliation of the trust preferred security measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the nine months ended March 31, 2012 and 2011:

 

    2012     2011  
Beginning balance   $ 67     $ 422  
Realized losses included in non-interest income           (200 )
Change in fair value included in other comprehensive income     (3 )     (158 )
Ending balance, March 31   $ 64     $ 64  

 

The significant unobservable inputs used in the fair value measurement of the Corporation’s trust preferred security are probabilities of specific-issuer defaults and deferrals and specific-issuer recovery assumptions. Significant increases in specific-issuer default assumptions or decreases in specific-issuer recovery assumptions would result in a significantly lower fair value measurement. Conversely, decreases in specific-issuer default assumptions or increases in specific-issuer recovery assumptions would result in a higher fair value measurement.

 

Certain financial assets and financial liabilities are measured at fair value on a non-recurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances. Financial assets and financial liabilities measured at fair value on a non-recurring basis include the following:

 

Impaired Loans: At the time a loan is considered impaired, it is valued at the lower of cost or fair value. Impaired loans carried at fair value generally receive specific allocations of the allowance for loan losses. For collateral dependent loans, fair value is commonly based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.

 

Assets and liabilities measured at fair value on a non-recurring basis are summarized below:

  

          Fair Value Measurements at 
March 31, 2012 Using
 
    Balance at 
March 31, 2012
    Level 1     Level 2     Level 3  
Impaired loans:                                
Commercial   $ 12     $     $     $ 12  
Commercial real estate:                                
Other     646                   646  
1-4 Family                                
Owner occupied     40                   40  
Non-owner occupied     431                   431  

 

          Fair Value Measurements at 
June 30, 2011 Using
 
    Balance at 
June 30, 2011
    Level 1     Level 2     Level 3  
Impaired loans:                                
Commercial   $ 51     $     $     $ 51  
Commercial real estate:                                
Other     871                   871  
1-4 Family                                
Owner occupied     317                   317  
Non-owner occupied     434                   434  

 

Impaired loans, which are generally measured for impairment using the fair value of the collateral for collateral dependant loans, had a principal balance of $1,516, with a valuation allowance of $387 at March 31, 2012. As of June 30, 2011, impaired loans with a principal balance of $2,105 had a valuation allowance of $432. The resulting impact to the provision for loan losses was $20 and $303 being recorded for the nine month periods ended March 31, 2012 and 2011, respectively.

 

The significant unobservable (Level 3) inputs used in the fair value measurement of collateral for collateral-dependent impaired loans included in the above tables primarily relate to adjustments made to the value set forth in the appraisal by deducting estimated holding costs, costs to sell and a distressed sale adjustment. During the reported periods, collateral discounts ranged from 20% to 40% in the case of real estate collateral to 50% in the case of equipment collateral.

  

Disclosure of the fair value of financial assets and financial liabilities is required for those financial assets and financial liabilities that are not measured and reported at fair value on a recurring or non-recurring basis.

 

Estimated fair value for cash and cash equivalents, certificates of deposits in other financial institutions, accrued interest receivable and payable, demand and savings deposits and short-term borrowings were considered to approximate carrying value. The methodologies for other financial assets and financial liabilities are discussed below:

 

Loans: Fair value for loans was estimated for portfolios of loans with similar financial characteristics. For adjustable rate loans that reprice at least annually and for fixed rate commercial loans with maturities of six months or less which possess normal risk characteristics, carrying value was determined to be fair value. Fair value of other types of loans (including adjustable rate loans which reprice less frequently than annually and fixed rate term loans or loans which possess higher risk characteristics) was estimated by discounting future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for similar anticipated maturities. 

 

Time deposits: Fair value of fixed-maturity certificates of deposit was estimated using the rates offered at March 31, 2012 and June 30, 2011, for deposits of similar remaining maturities. Estimated fair value does not include the benefit that result from low-cost funding provided by the deposit liabilities compared to the cost of borrowing funds in the market.

 

Federal Home Loan Bank advances: Fair value of Federal Home Loan Bank advances was estimated using current rates at March 31, 2012 and June 30, 2011 for similar financing.

 

Federal bank and other restricted stocks include stock acquired for regulatory purposes, such as Federal Home Loan Bank stock and Federal Reserve Bank stock that are accounted for at cost due to restrictions placed on their transferability; and therefore, are not subject to the fair value disclosure requirements. The Corporation’s lending commitments have variable interest rates and “escape” clauses if the customer’s credit quality deteriorates. Therefore, the fair values of these items are not significant and are not included in the following table.

  

The following table shows the estimated fair values of financial instruments that are reported at amortized cost in the Corporation’s consolidated balance sheets, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

 

    March 31, 2012     June 30, 2011  
   

Carrying
Amount
 

    Estimated
Fair
Value
   

Carrying
Amount
 

   

Estimated
Fair
Value
 

 
Financial Assets:                                
Level 2 inputs:                                
Cash and cash equivalents   $ 20,377     $ 20,377     $ 13,828     $ 13,828  
Certificates of deposits in other financial institutions     3,430       3,430       4,900       4,900  
Accrued interest receivable     1,085       1,085       980       980  
Level 3 inputs:                                
Loans, net     181,861       183,830       175,450       174,182  
Financial Liabilities:                                
Level 2 inputs:                                
Demand and savings deposits     195,755       195,755       159,302       159,302  
Time deposits     83,549       84,453       88,944       89,725  
Short-term borrowings     14,467       14,467       17,012       17,012  
Federal Home Loan Bank advances     6,477       7,218       7,535       7,884  
Accrued interest payable     67       67       82       82  
v2.4.0.6
Earnings Per Share
9 Months Ended
Mar. 31, 2012
Earnings Per Share [Abstract]  
Earnings Per Share [Text Block]

Note 5 – Earnings Per Share

 

Basic earnings per share is the amount of earnings available to each share of common stock outstanding during the reporting period and is equal to net income divided by the weighted average number of shares outstanding during the period.  Diluted earnings per share is the amount of earnings available to each share of common stock outstanding during the reporting period adjusted to include the effect of potentially dilutive common shares that may be issued upon the vesting of restricted stock awards.  The following table details the calculation of basic and diluted earnings per share:

 

    For the Three Months Ended
March 31,
    For the Nine Months Ended
March 31,
 
    2012     2011     2012     2011  
Basic:                                
Net income available to common shareholders   $ 686     $ 482     $ 2,164     $ 1,689  
Weighted average common shares outstanding     2,051,024       2,044,179       2,050,390       2,041,402  
     Basic income per share   $ 0.33     $ 0.24     $ 1.06     $ 0.83  
                                 
Diluted:                                
Net income available to common shareholders   $ 686     $ 482     $ 2,164     $ 1,689  
Weighted average common shares outstanding     2,051,024       2,044,179       2,050,390       2,041,402  
Dilutive effect of restricted stock     534             445        
Total common shares and dilutive potential common shares     2,051,558       2,044,179       2,050,835       2,041,402  
     Dilutive income per share   $ 0.33     $ 0.24     $ 1.06     $ 0.83