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