v2.4.0.6
LOANS
12 Months Ended
Jun. 30, 2013
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:
 
 
 
2013
 
2012
 
Commercial
 
$
26,678
 
$
23,041
 
Commercial real estate:
 
 
 
 
 
 
 
Construction
 
 
2,096
 
 
1,546
 
Other
 
 
125,630
 
 
110,775
 
1 – 4 Family residential real estate:
 
 
 
 
 
 
 
Owner occupied
 
 
32,755
 
 
34,000
 
Non-owner occupied
 
 
17,941
 
 
18,794
 
Construction
 
 
377
 
 
187
 
Consumer
 
 
11,866
 
 
9,407
 
Subtotal
 
 
217,343
 
 
197,750
 
Less: Deferred loan fees and costs
 
 
(303)
 
 
(320)
 
Allowance for loan losses
 
 
(2,496)
 
 
(2,335)
 
Net loans
 
$
214,544
 
$
195,095
 
 
The following table presents the activity in the allowance for loan losses by portfolio segment for the year ending June 30, 2013:
 
 
 
 
 
 
 
 
 
1-4 Family
 
 
 
 
 
 
 
 
 
 
 
 
Commercial
 
Residential
 
 
 
 
 
 
 
 
 
 
 
 
Real
 
Real
 
 
 
 
 
 
 
 
 
Commercial
 
Estate
 
Estate
 
Consumer
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Allowance for loan losses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Beginning balance
 
$
143
 
$
1,283
 
$
712
 
$
197
 
$
2,335
 
Provision for loan losses
 
 
53
 
 
212
 
 
(35)
 
 
107
 
 
337
 
Loans charged-off
 
 
(35)
 
 
(24)
 
 
(64)
 
 
(115)
 
 
(238)
 
Recoveries
 
 
 
 
 
 
1
 
 
61
 
 
62
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total ending allowance balance
 
$
161
 
$
1,471
 
$
614
 
$
250
 
$
2,496
 
 
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 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, 2013. Included in the recorded investment in loans is $546 of accrued interest receivable net of deferred loans fees of $303.
 
 
 
 
 
 
 
 
 
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
 
$
3
 
$
89
 
$
243
 
$
 
$
335
 
Collectively evaluated for impairment
 
 
158
 
 
1,382
 
 
371
 
 
250
 
 
2,161
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total ending allowance balance
 
$
161
 
$
1,471
 
$
614
 
$
250
 
$
2,496
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Recorded investment in loans:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans individually evaluated for impairment
 
$
51
 
$
865
 
$
1,396
 
$
 
$
2,312
 
Loans collectively evaluated for impairment
 
 
26,683
 
 
126,881
 
 
49,780
 
 
11,930
 
 
215,274
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total ending loans balance
 
$
26,734
 
$
127,746
 
$
51,176
 
$
11,930
 
$
217,586
 
 
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 information related to loans individually evaluated for impairment by class of loans as of and for the year ended June 30, 2013:
 
 
 
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 real estate:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other
 
$
65
 
$
65
 
$
 
$
63
 
$
 
$
 
1-4 Family residential real estate:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Owner occupied
 
 
125
 
 
125
 
 
 
 
103
 
 
 
 
 
Non-owner occupied
 
 
56
 
 
56
 
 
 
 
57
 
 
5
 
 
5
 
With an allowance recorded:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial
 
 
51
 
 
51
 
 
3
 
 
88
 
 
8
 
 
8
 
Commercial real estate:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other
 
 
793
 
 
800
 
 
89
 
 
808
 
 
72
 
 
72
 
1-4 Family residential real estate:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Owner occupied
 
 
283
 
 
281
 
 
56
 
 
298
 
 
 
 
 
Non-owner occupied
 
 
933
 
 
934
 
 
187
 
 
927
 
 
24
 
 
24
 
Total
 
$
2,306
 
$
2,312
 
$
335
 
$
2,344
 
$
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, 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 the recorded investment in non-accrual and loans past due over 90 days still on accrual by class of loans as of June 30, 2013 and 2012:
 
 
 
June 30, 2013
 
June 30, 2012
 
 
 
 
 
 
Loans Past Due
 
 
 
 
Loans Past Due
 
 
 
 
 
 
Over 90 Days
 
 
 
 
Over 90 Days
 
 
 
 
 
 
Still
 
 
 
 
Still
 
 
 
Non-accrual
 
Accruing
 
Non-accrual
 
Accruing
 
Commercial
 
$
46
 
$
 
$
51
 
$
 
Commercial real estate:
 
 
 
 
 
 
 
 
 
 
 
 
 
Other
 
 
86
 
 
 
 
911
 
 
 
1 – 4 Family residential:
 
 
 
 
 
 
 
 
 
 
 
 
 
Owner occupied
 
 
295
 
 
 
 
307
 
 
 
Non-owner occupied
 
 
663
 
 
 
 
663
 
 
 
Consumer
 
 
7
 
 
2
 
 
 
 
 
Total
 
$
1,097
 
$
2
 
$
1,932
 
$
 
 
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, 2013 by class of loans:
 
 
 
Days Past Due
 
 
 
 
 
 
 
 
 
 
 
 
30 - 59
 
60 - 89
 
90 Days or
 
Total
 
Loans Not
 
 
 
 
 
 
Days
 
Days
 
Greater
 
Past Due
 
Past Due
 
Total
 
Commercial
 
$
 
$
 
$
46
 
$
46
 
$
26,688
 
$
26,734
 
Commercial real estate:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Construction
 
 
 
 
 
 
 
 
 
 
2,088
 
 
2,088
 
Other
 
 
1,158
 
 
 
 
 
 
1,158
 
 
124,500
 
 
125,658
 
1-4 Family residential:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Owner occupied
 
 
245
 
 
 
 
252
 
 
497
 
 
32,365
 
 
32,862
 
Non-owner occupied
 
 
 
 
 
 
84
 
 
84
 
 
17,854
 
 
17,938
 
Construction
 
 
 
 
 
 
 
 
 
 
376
 
 
376
 
Consumer
 
 
72
 
 
35
 
 
2
 
 
109
 
 
11,821
 
 
11,930
 
Total
 
$
1,475
 
$
35
 
$
384
 
$
1,894
 
$
215,692
 
$
217,586
 
 
The above table of past due loans includes the recorded investment in non-accrual loans of $7 in the 30-59 days past due category, $382 in the 90 days or greater category and $708 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, 2012 by class of loans:
 
 
 
Days Past Due
 
 
 
 
 
 
 
 
 
 
 
 
30 - 59
 
60 - 89
 
90 Days or
 
Total
 
Loans Not
 
 
 
 
 
 
Days
 
Days
 
Greater
 
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, $479 in the 90 days or greater category and $1,410 in the loans not past due category.
 
Troubled Debt Restructurings:
As of June 30, 2013, the recorded investment of loans classified as troubled debt restructurings was $1,946 with $245 of specific reserves allocated to these loans. 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, 2013 and 2012, the Corporation had not committed to lend any additional amounts to customers with outstanding loans that are classified as troubled debt restructurings.
 
During the years ended June 30, 2013 and 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.
 
During the 2013 fiscal year, modifications completed involving a reduction of the stated interest rate of the loan were for periods ranging from 6 months to 5 years and modifications involving the extension of the maturity date were for a period of 5 years to 10 years. During the 2012 fiscal year, modifications completed involving a reduction of the stated interest rate of the loan were for periods ranging from 12 months to 25 years and 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 years ended June 30, 2013 and 2012:
 
 
 
 
 
 
Pre-Modification
 
Post-Modification
 
 
 
Number of
 
Outstanding Recorded
 
Outstanding Recorded
 
 
 
Loans
 
Investment
 
Investment
 
 
 
 
 
 
 
 
 
 
 
 
June 30, 2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial real estate:
 
 
 
 
 
 
 
 
 
 
Other
 
 
1
 
$
285
 
$
282
 
1 – 4 Family residential:
 
 
 
 
 
 
 
 
 
 
Owner occupied
 
 
1
 
 
21
 
 
21
 
Total
 
 
2
 
$
306
 
$
303
 
 
The troubled debt restructurings described above increased the allowance for loan losses by $42 and there were no charge offs from troubled debt restructurings during the fiscal year ending June 30, 2013.
 
 
 
 
 
Post-Modification
 
Pre-Modification
 
 
 
Number of
 
Outstanding Recorded
 
Outstanding Recorded
 
 
 
Loans
 
Investment
 
Investment
 
June 30, 2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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.
 
There were no loans classified as troubled debt restructurings for which there was a payment default during the 2013 fiscal year. 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. These loans are evaluated based on delinquency status, which was discussed previously. As of June 30, 2013, 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
 
$
23,886
 
$
1,236
 
$
224
 
$
51
 
$
1,337
 
Commercial real estate:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Construction
 
 
2,003
 
 
85
 
 
 
 
 
 
 
Other
 
 
115,269
 
 
4,439
 
 
4,073
 
 
865
 
 
1,012
 
1-4 Family residential real estate:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Owner occupied
 
 
4,083
 
 
 
 
 
 
406
 
 
28,373
 
Non-owner occupied
 
 
14,443
 
 
1,104
 
 
995
 
 
990
 
 
406
 
Construction
 
 
243
 
 
 
 
 
 
 
 
133
 
Consumer
 
 
 
 
 
 
 
 
 
 
11,930
 
Total
 
$
159,927
 
$
6,864
 
$
5,292
 
$
2,312
 
$
43,191
 
 
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
 
 
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, 2013 of related party loans were as follows: 
 
 
Principal balance, July 1
 
$
873
 
 
New loans
 
 
45
 
 
Repayments
 
 
(224)
 
 
Principal balance, June 30
 
$
694