v2.4.0.6
DOCUMENT AND ENTITY INFORMATION (USD $)
12 Months Ended
Jun. 30, 2012
Sep. 01, 2012
Dec. 31, 2011
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   2,056,349  
Document Type 10-K    
Amendment Flag false    
Document Period End Date Jun. 30, 2012    
Document Fiscal Period Focus FY    
Document Fiscal Year Focus 2012    
Entity Well-Known Seasoned Issuer No    
Entity Voluntary Filers No    
Entity Current Reporting Status Yes    
Entity Public Float     $ 17,591,175
v2.4.0.6
CONSOLIDATED BALANCE SHEETS (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2012
Jun. 30, 2011
ASSETS:    
Cash on hand and noninterest-bearing deposits in financial institutions $ 6,663 $ 5,944
Federal funds sold and interest-bearing deposits in financial institutions 7,082 7,884
Total cash and cash equivalents 13,745 13,828
Certificate of deposits in financial institutions 5,645 4,900
Securities, available-for-sale 105,335 91,889
Federal bank and other restricted stocks, at cost 1,186 1,186
Loans held for sale 377 0
Total loans 197,430 177,551
Less allowance for loan losses (2,335) (2,101)
Net loans 195,095 175,450
Cash surrender value of life insurance 5,605 5,411
Premises and equipment, net 5,752 4,776
Intangible assets, net 0 89
Other real estate owned 0 76
Accrued interest receivable and other assets 2,021 2,535
Total assets 334,761 300,140
LIABILITIES:    
Non-interest bearing demand 65,915 64,657
Interest bearing demand 35,055 14,829
Savings 99,041 79,816
Time 84,470 88,944
Total deposits 284,481 248,246
Short-term borrowings 13,722 17,012
Federal Home Loan Bank advances 6,446 7,535
Accrued interest payable and other liabilities 2,222 2,023
Total liabilities 306,871 274,816
Commitments and contingent liabilities      
SHAREHOLDERS' EQUITY:    
Preferred stock, no par value; 350,000 shares authorized 0 0
Common shares, no par value; 3,500,000 shares authorized; 2,186,791 and 2,180,315 shares issued as of June 30, 2012 and 2011, respectively 5,205 5,114
Retained earnings 22,740 20,881
Treasury stock, at cost (130,442 common shares at June 30, 2012 and 2011) (1,659) (1,659)
Accumulated other comprehensive income 1,604 988
Total shareholders' equity 27,890 25,324
Total liabilities and shareholders' equity $ 334,761 $ 300,140
v2.4.0.6
CONSOLIDATED BALANCE SHEETS [Parenthetical]
Jun. 30, 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 2,186,791 2,180,315
Treasury stock, shares 130,442 130,442
v2.4.0.6
CONSOLIDATED STATEMENTS OF INCOME (USD $)
In Thousands, except Per Share data, unless otherwise specified
12 Months Ended
Jun. 30, 2012
Jun. 30, 2011
Interest income:    
Loans, including fees $ 10,167 $ 10,212
Federal funds sold and interest-bearing deposits in financial institutions 57 54
Securities, taxable 1,802 1,624
Securities, tax-exempt 1,052 894
Total interest and dividend income 13,078 12,784
Interest expense:    
Deposits 1,200 1,617
Short-term borrowings 29 45
Federal Home Loan Bank advances 230 254
Total interest expense 1,459 1,916
Net interest income 11,619 10,868
Provision for loan losses 315 435
Net interest income after provision for loan losses 11,304 10,433
Other income:    
Service charges on deposit accounts 1,386 1,292
Debit card interchange income 743 644
Bank owned life insurance income 194 182
Securities gains, net 144 71
Other-than-temporary loss    
Total impairment loss 0 (370)
Loss recognized in other comprehensive income 0 0
Net impairment loss recognized in earnings 0 (370)
Gain (loss) on disposition or direct write-down of other real estate owned (53) 2
Other 190 190
Total other income 2,604 2,011
Other expenses:    
Salaries and employee benefits 5,508 4,827
Occupancy and equipment 1,062 1,019
Data processing expenses 566 553
Professional and director fees 356 346
Federal Deposit Insurance Corporation assessments 194 287
Franchise taxes 267 242
Marketing and advertising 300 241
Loan and collection expenses 123 121
Amortization of intangible 89 161
Telephone and communications 240 231
Debit card processing expenses 389 343
Other 1,251 1,204
Total other expenses 10,345 9,575
Income before income taxes 3,563 2,869
Income tax expense 799 621
Net income $ 2,764 $ 2,248
Basic and diluted earnings per share (in dollars per shares) $ 1.35 $ 1.10
v2.4.0.6
CONSOLIDATED STATEMENTS OF CHANGES IN COMPREHENSIVE INCOME (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Jun. 30, 2012
Jun. 30, 2011
Net income $ 2,764 $ 2,248
Other comprehensive income (loss), net of tax:    
Unrealized gains (loss) on other-than-temporarily impaired securities 0 (355)
Reclassification adjustment for losses included in income 0 370
Net unrealized gain (loss) 0 15
Income tax effect 0 5
Net Unrealized Gain On Other-Than-Temporarily Impaired Securities, Net Of Tax 0 10
Available-for-sale securities which are not other-than-temporarily impaired:    
Unrealized gains arising during the period 1,076 134
Reclassification adjustment for gains included in income (144) (71)
Net unrealized gain 932 63
Income tax effect 316 22
Other Comprehensive Income (Loss), Available-for-sale Securities Adjustment, Net of Tax 616 41
Other comprehensive income 616 51
Total comprehensive income $ 3,380 $ 2,299
v2.4.0.6
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (USD $)
In Thousands
Common Stock [Member]
Retained Earnings [Member]
Treasury Stock [Member]
Accumulated Other Comprehensive Income (Loss) [Member]
Total
Balance at Jun. 30, 2010 $ 4,968 $ 19,470 $ (1,659) $ 937 $ 23,716
Net income   2,248     2,248
Other comprehensive income       51 51
Issuance of shares for dividend reinvestment and stock purchase plan 146       146
Cash dividends declared   (837)     (837)
Balance at Jun. 30, 2011 5,114 20,881 (1,659) 988 25,324
Net income   2,764     2,764
Other comprehensive income       616 616
Issuance of shares for dividend reinvestment and stock purchase plan 91       91
Cash dividends declared   (905)     (905)
Balance at Jun. 30, 2012 $ 5,205 $ 22,740 $ (1,659) $ 1,604 $ 27,890
v2.4.0.6
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY [Parenthetical] (USD $)
12 Months Ended
Jun. 30, 2012
Jun. 30, 2011
Common shares issued for dividend reinvestment and stock purchase plan (in shares) 6,476 11,986
Cash dividends declared (in dollars per share) $ 0.44 $ 0.41
v2.4.0.6
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Jun. 30, 2012
Jun. 30, 2011
Cash flows from operating activities:    
Net income $ 2,764 $ 2,248
Adjustments to reconcile net income to net cash flows from operating activities:    
Depreciation 369 382
Securities amortization and accretion, net 1,367 843
Provision for loan losses 315 435
(Gain) loss on disposition or direct write-down of other real estate owned 53 (2)
Deferred income taxes (271) 81
Gain on sale of securities (144) (71)
Impairment loss on securities 0 370
Intangible amortization 89 161
Origination of loans held for sale (377) 0
Increase in cash surrender value of life insurance (194) (182)
Change in:    
Accrued interest receivable (63) (37)
Accrued interest payable (26) (40)
Other assets and other liabilities 757 (25)
Net cash flows from operating activities 4,639 4,163
Cash flows from investing activities:    
Purchases (49,613) (49,803)
Maturities, calls and principal pay downs 21,308 15,989
Proceeds from sales of available for sale securities 14,568 5,123
Net increase in certificates of deposit with other financial institutions (745) (3,920)
Net increase in loans (19,960) (3,954)
Purchase of Bank owned life insurance 0 (431)
Acquisition of premises and equipment (1,345) (1,577)
Proceeds from sale of other real estate owned 23 27
Net cash flows from investing activities (35,764) (38,546)
Cash flows from financing activities:    
Net increase in deposit accounts 36,235 31,932
Proceeds from FHLB advances 0 1,000
Repayments of FHLB advances (1,089) (1,762)
Change in short-term borrowings (3,290) 3,926
Proceeds from dividend reinvestment and stock purchase plan 91 146
Dividends paid (905) (837)
Net cash flows from financing activities 31,042 34,405
Increase (decrease) in cash and cash equivalents (83) 22
Cash and cash equivalents, beginning of year 13,828 13,806
Cash and cash equivalents, end of year 13,745 13,828
Supplemental disclosures of cash flow information:    
Interest 1,485 1,956
Federal income taxes paid 721 830
Noncash transactions:    
Transfers from loans to repossessed assets $ 0 $ 76
v2.4.0.6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
12 Months Ended
Jun. 30, 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

 

Unless otherwise indicated, dollar amounts are in thousands, except per share data.

 

Principles of Consolidation: The consolidated financial statements include the accounts of Consumers Bancorp, Inc. (Corporation) and its wholly owned subsidiary, Consumers National Bank (Bank), together referred to as the Corporation. All significant intercompany transactions have been eliminated in the consolidation.

 

Nature of Operations: Consumers Bancorp, Inc. is a bank holding company headquartered in Minerva, Ohio that provides, through its banking subsidiary, 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.

 

Business 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 its revenues, operating income, and assets. Accordingly, all of its operations are reported in one segment, banking.

 

Use of Estimates: To prepare financial statements in conformity with U. S. generally accepted accounting principles, management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and the disclosures provided, and actual results could differ. The allowance for loan losses, fair values of financial instruments, and determination of other-than-temporary impairment of securities are particularly subject to change.

 

Cash Flows: Cash and cash equivalents include cash, deposits with other financial institutions with original maturities of less than 90 days and federal funds sold.  Net cash flows are reported for customer loan and deposit transactions, interest bearing deposits in other financial institutions and short-term borrowings.

 

Interest–Bearing Deposits in Other Financial Institutions: Interest-bearing deposits in other financial institutions mature within one year and are carried at cost.

 

Cash Reserves: The Bank is required to maintain cash on hand and non-interest bearing balances on deposit with the Federal Reserve Bank to meet regulatory reserve and clearing requirements. The required reserve balance at June 30, 2012 and 2011 was $3,991 and $3,075, respectively.

 

Securities: Securities are generally classified into either held-to-maturity or available-for-sale categories. Held-to-maturity securities are carried at amortized cost and are those that the Corporation has the positive intent and ability to hold to maturity. Available-for-sale securities are those that the Corporation may decide to sell before maturity if needed for liquidity, asset-liability management, or other reasons. Available-for-sale securities are reported at fair value, with unrealized gains or losses included in other comprehensive income as a separate component of equity, net of tax.

 

Interest income includes amortization of purchase premiums and accretion of discounts. Premiums and discounts on securities are amortized on the level-yield method without anticipating prepayments, except for mortgage-backed securities where prepayments are anticipated. Gains and losses on sales are recorded on the trade date and determined using the specific identification method.

 

Management evaluates securities for other-than-temporary impairment (OTTI) at least on a quarterly basis and more frequently when economic or market conditions warrant such an evaluation. For securities in an unrealized loss position, management considers the extent and duration of the unrealized loss, and the financial condition and near-term prospects of the issuer. Management also assesses whether it intends to sell, or it is more likely than not that it will be required to sell, a security in an unrealized loss position before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the entire difference between amortized cost and fair value is recognized as impairment through earnings. For debt securities that do not meet the aforementioned criteria, the amount of impairment is split into two components as follows: 1) OTTI related to credit loss, which must be recognized in the income statement and 2) OTTI related to other factors, which is recognized in other comprehensive income. The credit loss is defined as the difference between the present value of the cash flows expected to be collected and the amortized cost basis. For equity securities, the entire amount of impairment is recognized through earnings.

 

Federal Bank and Other Restricted Stocks: The Bank is a member of the Federal Home Loan Bank (FHLB) system. Members are required to own a certain amount of stock based on the level of borrowings and other factors, and may invest in additional amounts. FHLB stock, included with Federal bank and other restricted stocks on the Consolidated Balance Sheet, is carried at cost, classified as a restricted security and periodically evaluated for impairment based on ultimate recovery of par value. Federal Reserve Bank stock is also carried at cost. Since these stocks are viewed as a long-term investment, impairment is based on ultimate recovery of par value. Both cash and stock dividends are reported as income.

 

Loans Held for Sale: Mortgage loans originated and intended for sale in the secondary market are carried at the lower of aggregate cost or fair value, as determined by outstanding commitments from investors. Mortgage loans held for sale are generally sold with servicing rights released. Net unrealized losses, if any, are recorded as a valuation allowance and charged to earnings. Gains and losses on sales of mortgage loans are based on the difference between the selling price and the carrying value of the related loan sold.

 

Loans: Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at the principal balance outstanding, net of deferred loan fees and costs, and an allowance for loan losses. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized in interest income using the level-yield method without anticipating prepayments. The recorded investment in loans includes accrued interest receivable.

 

Interest income on mortgage and commercial loans is discontinued at the time the loan is 90 days delinquent unless the loan is well-secured and in the process of collection. Consumer loans are typically charged off no later than 120 days past due. Past due status is determined by the contractual terms of the loan. In all cases, loans are placed on non-accrual or charged-off at an earlier date if collection of principal or interest is considered doubtful.

 

All interest accrued but not received on loans placed on non-accrual is reversed against interest income. Interest received on such loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when the customer has exhibited the ability to repay and demonstrated this ability over a consecutive six month period and future payments are reasonably assured.

 

Loan Commitments and Related Financial Instruments: Financial instruments include off-balance sheet credit instruments, such as commitments to make loans and commercial letters of credit, issued to meet customer financing needs. The face amount for these items represents the exposure to loss, before considering customer collateral or ability to repay. Such financial instruments are recorded when funded.

 

Concentrations of Credit Risk: The Bank grants consumer, real estate and commercial loans primarily to borrowers in Stark, Columbiana and Carroll counties. Therefore, the Corporation’s exposure to credit risk is significantly affected by changes in the economy in this tri-county area. Automobiles and other consumer assets, business assets and residential and commercial real estate secure most loans.

 

Allowance for Loan Losses: The allowance for loan losses is a valuation allowance for probable incurred credit losses. Loan losses are charged against the allowance when management believes the uncollectability of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. Management estimates the allowance balance required based on past loan loss experience, the nature and volume of the portfolio, information about specific borrower situations and estimated collateral values, economic conditions and other factors. Allocations of the allowance may be made for specific loans, but the entire allowance is available for any loan that, in management’s judgment, should be charged-off.

 

The allowance consists of specific and general components. The specific component relates to loans that are individually classified as impaired. The general component covers non-classified loans and is based on historical loss experience adjusted for current factors.

 

A loan is considered impaired when, based on current information and events, it is probable that the Corporation will be unable to collect all amounts due according to the contractual terms of the loan agreement. Loans, for which the terms have been modified resulting in a concession, and for which the borrower is experiencing financial difficulties, are considered trouble debt restructurings and classified as impaired. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed.

 

Impairment is evaluated in total for smaller-balance loans of similar nature such as residential mortgage, consumer loans and on an individual loan basis for other loans. If a loan is impaired, a portion of the allowance is allocated so the loan is reported, net, at the present value of estimated future cash flows using the loan’s existing rate or at the fair value of collateral if repayment is expected from the collateral. Loans are evaluated for impairment when payments are delayed, typically 90 days or more, or when it is probable that not all principal and interest amounts will be collected according to the original terms of the loan. Troubled debt restructurings are separately identified for impairment disclosures and are measured at the present value of estimated future cash flows using the loan’s effective interest rate at inception. If a troubled debt restructuring is considered to be a collateral dependent loan, the loan is reported, net, at the fair value of the collateral. For troubled debt restructurings that subsequently default, the Corporation determines the amount of reserve in accordance with the accounting policy for the allowance for loan losses.

 

The general component covers non-impaired loans and is based on historical loss experience adjusted for current factors. The historical loss experience is determined by portfolio segment and is based on the actual loss history experienced by the Corporation over the most recent three year period. This actual loss experience is supplemented with other economic factors based on the risks present for each portfolio segment. These economic factors include consideration of the following: levels of and trends in volume and terms of loans; effects of any changes in risk selection and underwriting standards; other changes in lending policies, procedures and practices; experience, ability and depth of lending management and other relevant staff; national and local economic trends and conditions; industry conditions; and effects of changes in credit concentrations. The following portfolio segments have been identified:

 

Commercial Loans: Commercial loans are made for a wide variety of general business purposes, including financing for equipment, inventories and accounts receivable. The term of each commercial loan varies by its purpose. Commercial loans are underwritten after evaluating and understanding the borrower’s ability to operate profitably and prudently expand its business. Current and projected cash flows are evaluated to determine the ability of the borrower to repay their obligations as agreed. Commercial loans are primarily made based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. The cash flows of borrowers, however, may not be as expected and the collateral securing these loans may fluctuate in value. Most commercial loans are secured by the assets being financed or other business assets such as accounts receivable or inventory and usually incorporate a personal guarantee; however, some short-term loans may be made on an unsecured basis. In the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers. The commercial loan portfolio includes loans to a wide variety of corporations and businesses across many industrial classifications in the areas where the Bank operates.

 

Commercial Real Estate: Commercial real estate loans include mortgage loans to farmers, multi-family investment properties, developers and owners of commercial real estate. Commercial real estate lending typically involves higher loan principal amounts and the repayment of these loans is generally largely dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan. Commercial real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy. The properties securing the Corporation’s commercial real estate portfolio are diverse in terms of type and geographic location. This diversity helps reduce the Corporation’s exposure to adverse economic events that affect any single market or industry. Management monitors and evaluates commercial real estate loans based on collateral, geography and risk grade criteria. In addition, management tracks the level of owner-occupied commercial real estate loans versus non-owner occupied loans.
 

Residential real estate: Residential real estate loans are secured by one to four family residential properties and include both owner occupied, non-owner occupied and home equity loans. Credit approval for residential real estate loans requires demonstration of sufficient income to repay the principal and interest and the real estate taxes and insurance, stability of employment, an established credit record and an appropriately appraised value of the real estate securing the loan that generally requires that the residential real estate loan amount be no more than 80% of the purchase price or the appraised value of the real estate securing the loan. Underwriting standards for home equity loans are heavily influenced by statutory requirements, which include, but are not limited to, a maximum loan-to-value percentage of 80%, collection remedies, the number of such loans a borrower can have at one time and documentation requirements.

 

Consumer Loans: The Corporation originates direct and indirect consumer loans, primarily automobile loans, personal lines of credit, and unsecured consumer loans in its primary market areas. Credit approval for consumer loans requires income sufficient to repay principal and interest due, stability of employment, an established credit record and sufficient collateral for secured loans. Consumer loans typically have shorter terms and lower balances with higher yields as compared to real estate mortgage loans, but generally carry higher risks of default. Consumer loan collections are dependent on the borrower’s continuing financial stability, and thus are more likely to be affected by adverse personal circumstances.

 

Other Real Estate Owned: Real estate properties acquired through, or in lieu of, loan foreclosure are initially recorded at fair value less costs to sell at the date of acquisition, establishing a new cost basis. Any reduction to fair value from the carrying value of the related loan at the time of acquisition is accounted for as a loan loss. These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell. If the fair value declines after acquisition, a valuation allowance is recorded as a charge to income. Operating costs after acquisition are expensed. Gains and losses on disposition are reported as a charge to income.

 

Premises and Equipment: Land is carried at cost. Premises and equipment are stated at cost less accumulated depreciation. Depreciation is computed primarily using the straight-line method over the estimated useful life of the owned asset and, for leasehold improvements, generally over the lesser of the remaining term of the lease facility or the estimated economic life of the improvement. Useful lives range from three years for software to thirty-nine and one-half years for buildings.

 

Cash Surrender Value of Life Insurance: The Bank has purchased single-premium life insurance policies to insure the lives of current and former participants in the salary continuation plan. As of June 30, 2012, the Bank had policies with total death benefits of $12,044 and total cash surrender values of $5,605. As of June 30, 2011, the Bank had policies with total death benefits of $11,944 and total cash surrender values of $5,411. Bank owned life insurance is recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other changes or other amounts due that are probable at settlement. Tax-exempt income is recognized from the periodic increases in cash surrender value of these policies.

 

Intangible Assets: Core deposit intangible is recorded at cost and is amortized over an estimated life of 12 years on a straight line method. Intangibles are assessed annually for impairment and written down as necessary. 

 

Long-term Assets: Premises and equipment, core deposit and other intangible assets and other long-term assets are reviewed for impairment when events indicate their carrying amount may not be recoverable from future undiscounted cash flows. If impaired, the assets are recorded at fair value.

 

Repurchase Agreements: Substantially all repurchase agreement liabilities, which are classified as short-term borrowings, represent amounts advanced by various customers. Securities are pledged to cover these liabilities, which are not covered by federal deposit insurance.

 

Retirement Plan: The Bank maintains a 401(k) savings and retirement plan covering all eligible employees. Matching contributions are made and expensed annually.

 

Income Taxes: The Corporation files a consolidated federal income tax return. Income tax expense is the sum of the current-year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are the expected future tax consequences of temporary differences between the carrying amounts and tax basis of assets and liabilities, computed using enacted tax rates. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized. The Corporation applies a more likely than not recognition threshold for all tax uncertainties in accordance with U.S. generally accepted accounting principles. A tax position is recognized as a benefit only if it is more likely than not the position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit greater than 50% likely of being realized on examination. The Corporation recognizes interest and/or penalties related to income tax matters in income tax expense.

 

Earnings per Common Share: Basic earnings per common share is net income divided by the weighted average number of common shares outstanding during the period. Diluted earnings per common share includes the dilutive effect of additional potential common shares issuable upon the vesting of restricted stock awards.

 

Stock-Based Compensation: Compensation cost is recognized for restricted stock awards issued to employees over the required service period, generally defined as the vesting period. The fair value of restricted stock awards is estimated by using the market price of the Corporation’s common stock at the date of grant. For awards with graded vesting, compensation cost is recognized on a straight-line basis over the requisite service period for the entire award.

 

Comprehensive Income: Comprehensive income consists of net income and other comprehensive income. Other comprehensive income includes unrealized gains and losses on securities available-for-sale, which are also recognized as a separate component of equity, net of tax.

 

Loss Contingencies: Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. Management does not believe there are such matters that will have a material effect on the financial statements.

 

Fair Value of Financial Instruments: Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed in a separate note. Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, discounted cash flows, prepayments, and other factors, especially in the absence of broad markets for particular items. Changes in assumptions or in market conditions could significantly affect the estimates.

 

 Dividend Restrictions: Banking regulations require maintaining certain capital levels and may limit the dividends paid by the Bank to the holding company or by the holding company to shareholders. As of June 30, 2012 the Bank could, without prior approval, declare a dividend of approximately $4,107.

 

Reclassifications: Certain reclassifications have been made to the June 30, 2011 financial statements to be comparable to the June 30, 2012 presentation.

 

Adoption of New 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 13.

 

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
12 Months Ended
Jun. 30, 2012
Investments, Debt and Equity Securities [Abstract]  
Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

NOTE 2—SECURITIES

 

The following table sets forth certain information regarding the amortized cost and fair value of the Corporation’s available-for-sale securities at the dates indicated.

 

Description of Securities    Amortized
Cost
 
    Gross
Unrealized
Gains
 
    Gross
Unrealized
Losses
 
    Fair
Value
 
 
June 30, 2012                                
Obligations of U.S. government-sponsored entities and agencies   $ 8,487     $ 80     $     $ 8,567  
Obligations of state and political subdivisions     33,808       1,577       (109 )     35,276  
Mortgage-backed securities - residential     48,255       1,108       (32 )     49,331  
Collateralized mortgage obligations     12,154       25       (82 )     12,097  
Trust preferred security     202             (138 )     64  
Total securities   $ 102,906     $ 2,790     $ (361 )   $ 105,335  

 

    Amortized
Cost
    Gross
Unrealized
Gains
    Gross
Unrealized
Losses
    Fair
Value
 
June 30, 2011                                
Obligations of 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 sales of debt securities during 2012 and 2011 were as follows:

 

    2012     2011  
Proceeds from sales   $ 14,568     $ 5,123  
Gross realized gains     204       77  
Gross realized gains from calls     -       21  
Gross realized losses     60       27  

 

The amortized cost and fair values of available-for-sale securities at June 30, 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
    Fair Value  
Due in one year or less   $ 3,507     $ 3,524  
Due after one year through five years     5,928       6,018  
Due after five years through ten years     10,105       10,577  
Due after ten years     22,755       23,724  
Total     42,295       43,843  
Mortgage-backed securities – residential     48,255       49,331  
Collateralized mortgage obligations     12,154       12,097  
Trust preferred security     202       64  
Total   $ 102,906     $ 105,335  

 

Securities with a carrying value of approximately $35,411 and $43,262 were pledged at June 30, 2012 and 2011, respectively, to secure public deposits and commitments as required or permitted by law. At June 30, 2012 and 2011, there were no holdings of securities of any one issuer, other than the U.S. government and its agencies, with an aggregate book value greater than 10% of shareholders’ equity.

 

The following table summarizes the securities with unrealized losses at June 30, 2012 and 2011, aggregated by investment category and length of time the 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
 
June 30, 2012                                                
Obligations of states and political subdivisions   $ 6,002     $ (109 )   $      $     $ 6,002     $ (109 )
Mortgage-backed securities - residential     11,135       (32 )                 11,135       (32 )
Collateralized mortgage obligations     6,411       (62 )     2,314       (20 )     8,725       (82 )
Trust preferred security                 64       (138 )     64       (138 )
Total temporarily impaired   $ 23,548     $ (203 )   $ 2,378     $ (158 )   $ 25,926     $ (361 )

 

    Less than 12 Months     12 Months or more     Total  
    Fair
Value
    Unrealized
Loss
    Fair
Value
    Unrealized
Loss
    Fair
Value
    Unrealized
Loss
 
                                     
June 30, 2011                                                
Obligations of U.S. government-sponsored entities   $ 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.

 

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.

 

As of June 30, 2012, the Corporation’s security portfolio consisted of $105,335, of which $25,926 were in an unrealized loss position. The unrealized losses are related to the Corporation’s obligations of states and political subdivisions, residential mortgage-backed securities, collateralized mortgage obligations and the trust preferred security, as discussed below:

 

Mortgage-Backed Securities and Collateralized Mortgage Obligations: At June 30, 2012, all of the mortgage-backed securities and collateralized mortgage obligations held by the Corporation were issued by U.S. government-sponsored entities and agencies, primarily Fannie Mae, Freddie Mac and Ginnie Mae, institutions which the government has affirmed its commitment to support. Because the decline in fair value is attributable to higher than projected prepayment speeds increasing the premium amortization, and not credit quality, and because the Corporation does not have the intent to sell nor is it likely that it will be required to sell the securities before their anticipated recovery, the Corporation does not consider these securities to be other-than-temporarily impaired.

 

Obligations of States and Political Subdivisions: At June 30, 2012, approximately 90.6% of the obligations of states and political subdivisions held by the Corporation were general obligation bonds and 9.4% were revenue bonds. The $109 unrealized loss was related to 17 municipal securities that were purchased during the third quarter of fiscal year 2012. The unrealized loss was mainly attributable to the spreads for these types of securities being wider at June 30, 2012 than when these securities were purchased. Management monitors the financial data of the individual municipalities to ensure they meet minimum credit standards. Since the Corporation does not intend to sell these securities and it is not likely the Corporation will be required to sell these securities at an unrealized loss position prior to any anticipated recovery in fair value, which may be maturity, management does not believe there is any other-than-temporary impairment related to these securities at June 30, 2012.

 

Trust Preferred Security: The Corporation owns a trust preferred security, which represents collateralized debt obligations (CDOs) issued by other banks, bank holding companies and insurance companies. The security is part of a pool of issuers that support a more senior tranche of securities. 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 June 30, 2012, the lowest credit rating on this security was Fitch’s rating of C, which is defined as highly speculative. 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 June 30, 2012 analysis, the expected cash flows were above the recorded amortized cost of the trust preferred security. Therefore, no other-than-temporary impairment loss was recognized during the 2012 fiscal year. An other-than-temporary impairment loss of $370 was recognized for the fiscal year-to-date period ended June 30, 2011 and the accumulated other-than-temporary impairment loss recognized in earnings was $780 at June 30, 2012 and 2011. If there is further deterioration in the underlying collateral of this security, other-than-temporary impairments may occur in future periods. 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.

v2.4.0.6
LOANS
12 Months Ended
Jun. 30, 2012
Receivables [Abstract]  
Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

NOTE 3—LOANS

 

Major classifications of loans were as follows as of June 30:

 

    2012     2011  
Commercial   $ 23,041     $ 19,297  
Commercial real estate:                
Construction     1,546       1,057  
Other     110,775       97,403  
1 – 4 Family residential real estate:                
Owner occupied     34,000       34,488  
Non-owner occupied     18,794       19,098  
Construction     187       597  
Consumer     9,407       5,874  
Subtotal     197,750       177,814  
Less: Deferred loan fees and costs     (320 )     (263 )
Allowance for loan losses     (2,335 )     (2,101 )
Net loans   $ 195,095     $ 175,450  

 

The following table presents the activity in the allowance for loan losses by portfolio segment for the year ending June 30, 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     (36 )     336       (171 )     186       315  
Loans charged-off                 (69 )     (158 )     (227 )
Recoveries           65       5       76       146  
                                         
Total ending allowance balance   $ 143     $ 1,283     $ 712     $ 197     $ 2,335  

 

The following table presents the activity in the allowance for loan losses by portfolio segment for the year ending June 30, 2011:

 

                1-4 Family              
          Commercial     Residential              
          Real     Real              
    Commercial     Estate     Estate     Consumer     Total  
                               
Allowance for loan losses:                                        
Beginning balance   $ 183     $ 1,337     $ 653     $ 103     $ 2,276  
Provision for loan losses     3       36       356       40       435  
Loans charged-off     (9 )     (510 )     (62 )     (116 )     (697 )
Recoveries     2       19             66       87  
                                         
Total ending allowance balance   $ 179     $ 882     $ 947     $ 93     $ 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 June 30, 2012. Included in the recorded investment in loans is $494 of accrued interest receivable net of deferred loans fees of $320.

 

                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   $ 50     $ 82     $ 258     $     $ 390  
Collectively evaluated for impairment     93       1,201       454       197       1,945  
                                         
Total ending allowance balance   $ 143     $ 1,283     $ 712     $ 197     $ 2,335  
                                         
Recorded investment in loans:                                        
Loans individually evaluated for impairment   $ 148     $ 996     $ 1,417     $     $ 2,561  
Loans collectively evaluated for impairment     22,940       111,352       51,683       9,388       195,363  
                                         
Total ending loans balance   $ 23,088     $ 112,348     $ 53,100     $ 9,388     $ 197,924  

 

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 $472 of accrued interest receivable net of deferred loans fees of $263.

 

                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 year ended June 30, 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   $ 12     $ 12     $     $ 22     $ 1     $ 1  
Commercial real estate:                                                
Other     144       144             412       67       67  
1-4 Family residential real estate:                                                
Owner occupied     238       238             92       2       2  
Non-owner occupied     64       65             59       5       5  
With an allowance recorded:                                                
Commercial     136       136       50       100       3       3  
Commercial real estate:                                                
Other     851       852       82       813       14       14  
1-4 Family residential real estate:                                                
Owner occupied     160       160       13       271       3       3  
Non-owner occupied     952       954       245       936       14       14  
Total   $ 2,557     $ 2,561     $ 390     $ 2,705     $ 109     $ 109  

 

The following table presents information related to loans individually evaluated for impairment by class of loans as of and for the year ended June 30, 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     $     $ 20     $     $  
Commercial real estate:                                                
Other     413       412             502              
With an allowance recorded:                                                
Commercial     64       64       13       61              
Commercial real estate:                                                
Other     997       993       126       1,238       23       18  
1-4 Family residential real estate:                                                
Owner occupied     320       319       3       302       6        
Non-owner occupied     724       723       290       738              
Total   $ 2,536     $ 2,529     $ 432     $ 2,861     $ 29     $ 18  

  

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 June 30, 2012 and 2011:

 

    June 30, 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   $ 51     $     $ 64     $  
Commercial real estate:                                
Other     911             754        
1 – 4 Family residential:                                
Owner occupied     307             219        
Non-owner occupied     663             723        
Consumer                        
Total   $ 1,932     $     $ 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 June 30, 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   $ 85     $     $ 33     $ 118     $ 22,970     $ 23,088  
Commercial real estate:                                                
Construction     202                   202       1,345       1,547  
Other     82             268       350       110,451       110,801  
1-4 Family residential:                                                
Owner occupied     174             178       352       33,766       34,118  
Non-owner occupied     43                   43       18,753       18,796  
Construction                             186       186  
Consumer           8             8       9,380       9,388  
Total   $ 586     $ 8     $ 479     $ 1,073     $ 196,851     $ 197,924  

 

The above table of past due loans includes the recorded investment in non-accrual loans of $43 in the 30-59 days past due category and $1,410 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 June 30, 2012, the recorded investment of loans classified as troubled debt restructurings was $1,973 with $258 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 June 30, 2012 and 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 year ended June 30, 2012, 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 year ended June 30, 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       114  
Non-owner occupied     7       534       466  
Total     11     $ 870     $ 802  

 

The troubled debt restructurings described above increased the allowance for loan losses by $32 and resulted in charge offs of $63 during the period ended June 30, 2012.

 

The following table presents loans by class modified as troubled debt restructurings for which there was a payment default within 12 months following the modification during the period ended June 30, 2012:

 

    Number of     Recorded  
    Loans     Investment  
Troubled debt restructuring:                
Commercial real estate:                
Other     1     $ 428  

 

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 ended June 30, 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 and non-homogeneous loans, such as commercial and commercial real estate loans. This analysis is performed on a monthly 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 or are included in groups of homogeneous loans. As of June 30, 2012, and based on the most recent analysis performed, the recorded investment by risk category of loans by class of loans is as follows:

 

          Special                 Not  
    Pass     Mention     Substandard     Doubtful     Rated  
Commercial   $ 21,642     $ 240     $ 14     $ 148     $ 1,044  
Commercial real estate:                                        
Construction     1,353       163                   31  
Other     98,942       7,332       2,657       996       874  
1-4 Family residential real estate:                                        
Owner occupied     4,256             99       398       29,365  
Non-owner occupied     14,205       2,197       875       1,019       500  
Construction     47                         139  
Consumer                             9,388  
Total   $ 140,445     $ 9,932     $ 3,645     $ 2,561     $ 41,341  

 

As of June 30, 2011, and based on the most recent analysis performed, the recorded investment by risk category of loans by class of loans is as follows:

 

          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  

 

The Bank has granted loans to certain of its executive officers, directors and their affiliates. A summary of activity during the year ended June 30, 2012 of related party loans were as follows:

  

Principal balance, July 1   $ 1,173  
New loans     74  
Repayments     (374 )
Principal balance, June 30   $ 873
v2.4.0.6
PREMISES AND EQUIPMENT
12 Months Ended
Jun. 30, 2012
Property, Plant and Equipment [Abstract]  
Property, Plant and Equipment Disclosure [Text Block]

NOTE 4—PREMISES AND EQUIPMENT

 

Major classifications of premises and equipment were as follows as of June 30:

 

    2012     2011  
Land   $ 1,379     $ 1,174  
Land improvements     385       368  
Building and leasehold improvements     4,957       4,174  
Furniture, fixture and equipment     4,594       4,278  
Total premises and equipment     11,315       9,994  
Accumulated depreciation and amortization     (5,563 )     (5,218 )
Premises and equipment, net   $ 5,752     $ 4,776  

 

Depreciation expense was $369 and $382 for the years ended June 30, 2012 and 2011, respectively.

 

The Corporation is obligated under non-cancelable operating leases for facilities and equipment. The approximate minimum annual rentals and commitments under these non-cancelable agreements and leases with remaining terms in excess of one year are as follows:

 

2013   $ 103  
2014     90  
2015     77  
2016     18  
2017      
Thereafter      
    $ 288  

 

Rent expense incurred was $110 and $111 during the years ended June 30, 2012 and 2011, respectively.

v2.4.0.6
INTANGIBLE ASSETS
12 Months Ended
Jun. 30, 2012
Goodwill and Intangible Assets Disclosure [Abstract]  
Intangible Assets Disclosure [Text Block]

NOTE 5—INTANGIBLE ASSETS

 

The following summarizes the original balance and accumulated amortization of core deposit intangible assets at June 30, 2012 and 2011:

 

   

2012

   

2011

 
Original balance   $ 1,927     $ 1,927  
Less: accumulated amortization     1,927       1,838  
Net balance, June 30   $     $ 89  

 

Amortization expense for the years ended June 30, 2012 and 2011 was $89 and $161, respectively. Amortization expense is estimated to be zero for the year ending June 30, 2013.

v2.4.0.6
DEPOSITS
12 Months Ended
Jun. 30, 2012
Banking and Thrift [Abstract]  
Deposit Liabilities Disclosures [Text Block]

NOTE 6—DEPOSITS

 

The aggregate amount of time deposits, each with a minimum denomination of $100 was $34,422 and $34,707 as of June 30, 2012 and 2011, respectively.

 

Scheduled maturities of time deposits at June 30, 2012 were as follows:

 

2013   $ 50,244  
2014     19,974  
2015     6,038  
2016     4,939  
2017     1,913  
Thereafter     1,362  
    $ 84,470  

 

Related party deposits totaled $5,920 as of June 30, 2012 and $4,178 as of June 30, 2011.

v2.4.0.6
SHORT-TERM BORROWINGS
12 Months Ended
Jun. 30, 2012
Debt Disclosure [Abstract]  
Debt Disclosure [Text Block]

NOTE 7—SHORT-TERM BORROWINGS

 

Short-term borrowings consisted of repurchase agreements. Repurchase agreements are financing arrangements. Physical control is maintained for all securities pledged to secure repurchase agreements. Information concerning all short-term borrowings at June 30, maturing in less than one year is summarized as follows:

 

    2012     2011  
Balance at June 30   $ 13,722     $ 17,012  
Average balance during the year     15,293       14,892  
Maximum month-end balance     17,636       18,169  
Average interest rate during the year     0.19 %     0.30 %
Weighted average rate, June 30     0.16 %     0.27 %

  

Repurchase agreements mature daily. The Bank has pledged obligations of government-sponsored entities and mortgage-backed securities with a carrying value of $15,320 and $18,055 at June 30, 2012 and 2011, respectively, as collateral for the repurchase agreements. Total interest expense on short-term borrowings was $29 and $45 for the years ended June 30, 2012 and 2011, respectively.

v2.4.0.6
FEDERAL HOME LOAN BANK ADVANCES
12 Months Ended
Jun. 30, 2012
Banking and Thrift [Abstract]  
Federal Home Loan Bank Advances, Disclosure [Text Block]

NOTE 8—FEDERAL HOME LOAN BANK ADVANCES

 

A summary of Federal Home Loan Bank (FHLB) advances were as follows:

 

Advance Type

  Maturity    

Term  

    Interest Rate     Balance
June 30, 2012
    Balance
June 30, 2011
 
Interest-only, single maturity     01/24/2012       Fixed       3.37 %   $     $ 500  
Interest-only, single maturity     07/24/2012       Fixed       3.50             500  
Principal and interest, mortgage matched     04/01/2014       Fixed       2.54       44       84  
Interest-only, single maturity     10/09/2015       Fixed       1.43       500       500  
Interest-only, single maturity     10/12/2017       Fixed       2.07       500       500  
Interest-only, putable     12/07/2017       Fixed       3.24       5,000       5,000  
Principal and interest, mortgage matched     04/01/2019       Fixed       4.30       402       451  
                            $ 6,446     $ 7,535  

  

Each fixed rate advance has a prepayment penalty equal to the present value of 100% of the lost cash flow based upon the difference between the contract rate on the advance and the current rate on the new advance. The $5 million putable advance with the maturity date of December 7, 2017 can be called quarterly until maturity at the option of the FHLB, with the next call option being September 7, 2012. The following table is a summary of the scheduled principal payments for all advances:

 

Twelve Months Ending June 30

 
 

Principal
Payments

 
 
2013   $ 86  
2014     69  
2015     56  
2016     559  
2017     62  
Thereafter     5,614  
    $ 6,446  

 

During fiscal year 2011, the Corporation prepaid two $500 fixed rate single maturity advances and replaced them with two $500 fixed rate single maturity advances with lower rates. Because the present value of the cash flows of the new debt including the prepayment penalty was not more than 10% different than the old debt, the transaction was considered to be an exchange rather than an extinguishment of debt. As such, prepayment penalties totaling $16 were capitalized and are being amortized over the life of the new debt. Unamortized capitalized prepayment penalties totaled $11 and $13 at June 30, 2012 and 2011, respectively.

 

Pursuant to collateral agreements with the FHLB, advances are secured by all the stock invested in the FHLB and certain qualifying first mortgage loans. The advances were collateralized by $36,907 and $39,180 of first mortgage loans under a blanket lien arrangement at June 30, 2012 and 2011, respectively. Based on this collateral and the Corporation’s holdings of FHLB stock, the Bank was eligible to borrow up to a total of $18,208 in advances at June 30, 2012.

v2.4.0.6
EMPLOYEE BENEFIT PLANS
12 Months Ended
Jun. 30, 2012
Compensation and Retirement Disclosure [Abstract]  
Compensation and Employee Benefit Plans [Text Block]

NOTE 9—EMPLOYEE BENEFIT PLANS

 

The Bank maintains a 401(k) savings and retirement plan that permits eligible employees to make before- or after-tax contributions to the plan, subject to the dollar limits from Internal Revenue Service regulations. The Bank matches 100% of the employee’s voluntary contributions to the plan based on the amount of each participant’s contributions up to a maximum of 4% of eligible compensation. All regular full-time and part-time employees who complete six months of service and are at least 21 years of age are eligible to participate. Amounts charged to operations were $122 and $115, for the years ended June 30, 2012 and 2011, respectively.

 

The Bank has adopted a Salary Continuation Plan (the Plan) to encourage Bank executives to remain employees of the Bank. The Plan provides such executives (and, in the event of the executive’s death, surviving beneficiary) with 180 months of salary continuation payments equal to a certain percentage of an executive’s average compensation, as defined within each agreement, for the three full calendar years prior to Normal Retirement Age. For purposes of the Plan, “Normal Retirement Age” means the executive’s 65th birthday. Vesting under the Plan commences at age 50 and is prorated until age 65. If an executive dies during active service, the executive’s beneficiary is entitled to the Normal Retirement Benefit. The executive can become fully vested in the Accrual Balance upon termination of employment following a disability or a change in control of the Bank. For purposes of the Plan, “Accrual Balance” means the liability that should be accrued by the Corporation for the Corporation’s obligation to the executive under the Plan. For purposes of calculating the Accrual Balance, the discount rate in effect at June 30, 2012 was 5.25%. The accrued liability for the salary continuation plan was $1,351 as of June 30, 2012 and $1,163 as of June 30, 2011. For the years ended June 30, 2012 and 2011, $210 and $183, respectively, have been charged to expense in connection with the Plan. Distributions to participants were $22 for both of the years ending June 30, 2012 and 2011, respectively.

 

The 2010 Omnibus Incentive Plan (2010 Plan) is a nonqualified share based compensation plan. The 2010 Plan was established to promote alignment between key employee’s performance and the Corporation’s shareholder interests by motivating performance through the award of stock-based compensation. The 2010 Plan is intended to attract, retain and motivate key employees and as a means to compensate outside directors for their service to the Corporation. The 2010 Plan has been approved by the Corporation’s shareholders. The Compensation Committee of the Corporation’s Board of Directors has sole authority to select the employees, establish the awards to be issued, and approve the terms and conditions of each award contract.

 

Under the 2010 Plan, the Corporation may grant, among other things, nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units, or any combination thereof to certain employees and directors. Each award is evidenced by an award agreement that specifies the number of shares awarded, the vesting period, the performance requirements, and such other provisions as the Compensation Committee determines. Upon a change-in-control of the Corporation, as defined in the 2010 Plan, all outstanding awards immediately vest.

 

The Corporation has granted restricted stock awards to certain employees and directors. Restricted stock awards are issued at no cost to the recipient, and can be settled only in shares at the end of the vesting period. These awards vest on the anniversary date of the award if certain specified net income performance targets as established by the Compensation Committee are achieved. Restricted stock awards provide the holder with full voting rights and cash dividends during the vesting period. The fair value of the restricted stock awards is the closing market price of the Corporation’s common stock on the date of the grant and compensation expense is recognized over the vesting period of the awards. Restricted stock awarded during the period presented vest under a graduated schedule over a five-year period.

 

The following table summarizes the status of the restricted stock awards as of June 30, 2012, and activity for the year ended June 30, 2012:

 

   

Restricted Stock
Awards

 
   

Weighted-Average
Grant Date Fair
Value Per Share

 
 
Granted     5,435     $ 10.85  
Forfeited     (319 )     10.85  
Nonvested at June 30, 2012     5,116     $ 10.85  

 

For the year ended June 30, 2012, $12 has been charged to expense in connection with the restricted stock awards. There was no expense recognized in the 2011 fiscal year since there were no stock grants prior to the 2012 fiscal year. As of June 30, 2012, there was $65 of total unrecognized compensation cost related to nonvested shares granted under the plan. The cost is expected to be recognized over a weighted-average period of 4.0 years.

v2.4.0.6
INCOME TAXES
12 Months Ended
Jun. 30, 2012
Income Tax Disclosure [Abstract]  
Income Tax Disclosure [Text Block]

NOTE 10—INCOME TAXES

 

The provision for income taxes consists of the following for the years ended June 30:

 

   

2012

 
   

2011

 
 
Current income taxes   $ 1,070     $ 540  
Deferred income taxes (benefits)     (271 )     81  
    $ 799     $ 621  

 

The net deferred income tax asset consists of the following components at June 30:

 

   

2012

 
   

2011

 
 
Deferred tax assets:                
Allowance for loan losses   $ 627     $ 520  
Deferred compensation     532       413  
Recognized loss on impairment of security     265       265  
Intangibles     109       122  
OREO deferred gain     16       18  
Nonaccrual loan interest income     74       47  
Gross deferred tax asset     1,623       1,385  
                 
Deferred tax liabilities:                
Depreciation     (261 )     (270 )
Loan fees     (211 )     (202 )
Prepaid expenses     (80 )     (113 )
FHLB stock dividends     (165 )     (165 )
Net unrealized securities gain     (826 )     (509 )
Gross deferred tax liabilities     (1,543 )     (1,259 )
Net deferred asset   $ 80     $ 126  

 

The difference between the provision for income taxes and amounts computed by applying the statutory income tax rate of 34% to statutory income before taxes consists of the following for the years ended June 30:

 

   

2012

 
   

2011

 
 
Income taxes computed at the statutory rate on pretax income   $ 1,211     $ 975  
Tax exempt income     (359 )     (304 )
Cash surrender value income     (66 )     (62 )
Other     13       12  
    $ 799     $ 621  

 

At June 30, 2012 and June 30, 2011, the Corporation had no unrecognized tax benefits recorded. The Corporation does not expect the total amount of unrecognized tax benefits to significantly increase within the next twelve months. There were no interest or penalties recorded for the years ended June 30, 2012 and 2011 and there were no amounts accrued for interest and penalties at June 30, 2012 and 2011.

 

The Corporation and the Bank are subject to U.S. federal income tax as an income-based tax and a capital-based franchise tax in the state of Ohio. The Corporation and the Bank are no longer subject to examination by taxing authorities for years before 2008.

v2.4.0.6
REGULATORY MATTERS
12 Months Ended
Jun. 30, 2012
Commitments and Contingencies Disclosure [Abstract]  
Legal Matters and Contingencies [Text Block]

NOTE 11—REGULATORY MATTERS

 

The Bank is subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and prompt corrective-action regulations involve quantitative measures of assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators about components, risk weightings, and other factors and the regulators can lower classifications in certain cases. Failure to meet various capital requirements can initiate regulatory action that could have a direct material effect on the financial statements. Management believes as of June 30, 2012, the Bank has met all capital adequacy requirements to which it is subject.  

  

The prompt corrective action regulations provide five classifications, including well capitalized, adequately capitalized, under-capitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and plans for capital restoration are required.

 

As of fiscal year-end 2012, the Corporation met the definition of a small bank holding company and, therefore, was exempt from consolidated risk-based and leverage capital adequacy guidelines for bank holding companies. At year-end 2012 and 2011, actual Bank capital levels (in millions) and minimum required levels were as follows:

   

Actual

   

Minimum Required
For Capital
Adequacy Purposes

   

Minimum Required
To Be Well
Capitalized Under
Prompt Corrective
Action Regulations

 
   

Amount

 
   

Ratio

 
   

Amount

 
   

Ratio

 
   

Amount

 
   

Ratio

 
 
June 30, 2012                                                
Total capital (to risk weighted assets)                                                
Bank   $ 28.5       13.4 %   $ 17.0       8.0 %   $ 21.2       10.0 %
Tier 1 capital (to risk weighted assets)                                                
Bank     24.2       11.4       8.5       4.0       12.7       6.0  
Tier 1 capital (to average assets)                                                
Bank     24.2       7.4       13.1       4.0       16.4       5.0  
June 30, 2011                                                
Total capital (to risk weighted assets)                                                
Bank   $ 26.3       14.0 %   $ 15.0       8.0 %   $ 18.8       10.0 %
Tier 1 capital (to risk weighted assets)                                                
Bank     22.2       11.8       7.5       4.0       11.3       6.0  
Tier 1 capital (to average assets)                                                
Bank     22.2       7.5       11.8       4.0       14.8       5.0  

 

As of the latest regulatory examination, the Bank was categorized as well capitalized. There are no conditions or events since that examination that management believes may have changed the Bank’s category.

 

The Corporation’s principal source of funds for dividend payment is dividends received from the Bank. Banking regulations limit the amount of dividends that may be paid without prior approval of regulatory agencies. Under these regulations, the amount of dividends that may be paid in any calendar year is limited to the current year’s net profits, combined with the retained net profits of the preceding two years, subject to the capital requirements described above. As of June 30, 2012 the Bank could, without prior approval, declare a dividend of approximately $4,107.