ALLOWANCE FOR LOAN LOSSES

12 Months Ended

Mar. 31, 2019

Allowance For Loan Losses [Abstract]

6.	ALLOWANCE FOR LOAN LOSSES

The following tables present a reconciliation of the allowance for loan losses for the periods indicated (in thousands):

March 31, 2019	Commercial Business		Commercial Real Estate			Land		Multi- Family			Real Estate Construction		Consumer			Unallocated			Total

Beginning balance	$	1,668	$	4,914		$	220	$	822		$	618	$	1,809		$	715		$	10,766
Provision for (recapture of) loan losses		139		(685	)		34		(94	)		839		(178	)		(5	)		50
Charge-offs		-		-			-		-			-		(291	)		-			(291	)
Recoveries		1		824			-		-			-		107			-			932
Ending balance	$	1,808	$	5,053		$	254	$	728		$	1,457	$	1,447		$	710		$	11,457

March 31, 2018

Beginning balance	$	1,418	$	5,084		$	228		$	297	$	714		$	2,099		$	688	$	10,528
Provision for (recapture of) loan losses		10		(156	)		(301	)		525		(96	)		(9	)		27		-
Charge-offs		-		(68	)		-			-		-			(340	)		-		(408	)
Recoveries		240		54			293			-		-			59			-		646
Ending balance	$	1,668	$	4,914		$	220		$	822	$	618		$	1,809		$	715	$	10,766

March 31, 2017

Beginning balance	$	1,048		$	4,273		$	325		$	712		$	416	$	2,403		$	708		$	9,885
Provision for (recapture of) loan losses		(121	)		926			(558	)		(415	)		298		(110	)		(20	)		-
Charge-offs		(1	)		(117	)		-			-			-		(340	)		-			(458	)
Recoveries		492			2			461			-			-		146			-			1,101
Ending balance	$	1,418		$	5,084		$	228		$	297		$	714	$	2,099		$	688		$	10,528

The following tables present an analysis of loans receivable and the allowance for loan losses, based on impairment methodology, at the dates indicated (in thousands):

	Allowance for Loan Losses						Recorded Investment in Loans
March 31, 2019	Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Total		Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Total

Commercial business	$	-	$	1,808	$	1,808	$	160	$	162,636	$	162,796
Commercial real estate		-		5,053		5,053		2,482		458,950		461,432
Land		-		254		254		728		16,299		17,027
Multi-family		-		728		728		1,598		49,972		51,570
Real estate construction		-		1,457		1,457		-		90,882		90,882
Consumer		22		1,425		1,447		697		91,712		92,409
Unallocated		-		710		710		-		-		-
Total	$	22	$	11,435	$	11,457	$	5,665	$	870,451	$	876,116

March 31, 2018

Commercial business	$	-	$	1,668	$	1,668	$	1,004	$	136,668	$	137,672
Commercial real estate		-		4,914		4,914		2,883		447,714		450,597
Land		-		220		220		763		14,574		15,337
Multi-family		-		822		822		1,644		61,436		63,080
Real estate construction		-		618		618		-		39,584		39,584
Consumer		69		1,740		1,809		1,428		103,678		105,106
Unallocated		-		715		715		-		-		-
Total	$	69	$	10,697	$	10,766	$	7,722	$	803,654	$	811,376

Changes in the allowance for unfunded loan commitments were as follows for the years indicated (in thousands):

	Year Ended March 31,
	2019			2018		2017
Beginning balance	$	480		$	388	$	324
Net change in allowance for unfunded loan commitments		(11	)		92		64
Ending balance	$	469		$	480	$	388

The following tables present an analysis of loans by aging category at the dates indicated (in thousands):

March 31, 2019	30-89 Days Past Due		90 Days and Greater Past Due		Non-accrual		Total Past Due and Non- accrual		Current		Total Loans Receivable

Commercial business	$	-	$	-	$	225	$	225	$	162,571	$	162,796
Commercial real estate		-		-		1,081		1,081		460,351		461,432
Land		-		-		-		-		17,027		17,027
Multi-family		-		-		-		-		51,570		51,570
Real estate construction		-		-		-		-		90,882		90,882
Consumer		345		3		210		558		91,851		92,409
Total	$	345	$	3	$	1,516	$	1,864	$	874,252	$	876,116

March 31, 2018

Commercial business	$	7	$	-	$	178	$	185	$	137,487	$	137,672
Commercial real estate		-		-		1,200		1,200		449,397		450,597
Land		-		-		763		763		14,574		15,337
Multi-family		-		-		-		-		63,080		63,080
Real estate construction		-		-		-		-		39,584		39,584
Consumer		513		-		277		790		104,316		105,106
Total	$	520	$	-	$	2,418	$	2,938	$	808,438	$	811,376

Interest income foregone on non-accrual loans was $94,000, $102,000 and $81,000 for the years ended March 31, 2019, 2018 and 2017, respectively.

Credit quality indicators: The Company monitors credit risk in its loan portfolio using a risk rating system (on a scale of one to nine) for all commercial (non-consumer) loans. The risk rating system is a measure of the credit risk of the borrower based on their historical, current and anticipated future financial characteristics. The Company assigns a risk rating to each commercial loan at origination and subsequently updates these ratings, as necessary, so that the risk rating continues to reflect the appropriate risk characteristics of the loan. Application of appropriate risk ratings is key to management of loan portfolio risk. In determining the appropriate risk rating, the Company considers the following factors: delinquency, payment history, quality of management, liquidity, leverage, earnings trends, alternative funding sources, geographic risk, industry risk, cash flow adequacy, account practices, asset protection and extraordinary risks. Consumer loans, including custom construction loans, are not assigned a risk rating but rather are grouped into homogeneous pools with similar risk characteristics. When a consumer loan is delinquent 90 days, it is placed on non-accrual status and assigned a substandard risk rating. Loss factors are assigned to each risk rating and homogeneous pool based on historical loss experience for similar loans. This historical loss experience is adjusted for qualitative factors that are likely to cause the estimated credit losses to differ from the Company's historical loss experience. The Company uses these loss factors to estimate the general component of its allowance for loan losses.

Pass – These loans have a risk rating between 1 and 4 and are to borrowers that meet normal credit standards. Any deficiencies in satisfactory asset quality, liquidity, debt servicing capacity and coverage are offset by strengths in other areas. The borrower currently has the capacity to perform according to the loan terms. Any concerns about risk factors such as stability of margins, stability of cash flows, liquidity, dependence on a single product/supplier/customer, depth of management, etc. are offset by strengths in other areas. Typically, these loans are secured by the operating assets of the borrower and/or real estate. The borrower's management is considered competent. The borrower has the ability to repay the debt in the normal course of business.

Watch – These loans have a risk rating of 5 and are included in the "pass" rating. However, there would typically be some reason for additional management oversight, such as the borrower's recent financial setbacks and/or deteriorating financial position, industry concerns and failure to perform on other borrowing obligations. Loans with this rating are monitored closely in an effort to correct deficiencies.

Special mention – These loans have a risk rating of 6 and are rated in accordance with regulatory guidelines. These loans have potential weaknesses that deserve management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or in the credit position at some future date. These loans pose elevated risk but their weakness does not yet justify a "substandard" classification.

Substandard – These loans have a risk rating of 7 and are rated in accordance with regulatory guidelines, for which the accrual of interest may or may not be discontinued. By definition under regulatory guidelines, a "substandard" loan has defined weaknesses which make payment default or principal exposure likely but not yet certain. Repayment of such loans is likely to be dependent upon collateral liquidation, a secondary source of repayment, or an event outside of the normal course of business.

Doubtful – These loans have a risk rating of 8 and are rated in accordance with regulatory guidelines. Such loans are placed on non-accrual status and repayment may be dependent upon collateral which has value that is difficult to determine or upon some near-term event which lacks certainty.

Loss – These loans have a risk rating of 9 and are rated in accordance with regulatory guidelines. Such loans are charged-off or charged-down when payment is acknowledged to be uncertain or when the timing or value of payments cannot be determined. "Loss" is not intended to imply that the loan or some portion of it will never be paid, nor does it in any way imply that there has been a forgiveness of debt.

The following tables present an analysis of loans by credit quality indicators at the dates indicated (in thousands):

March 31, 2019	Pass		Special Mention		Substandard		Doubtful		Loss		Total Loans Receivable

Commercial business	$	159,997	$	840	$	1,959	$	-	$	-	$	162,796
Commercial real estate		454,013		4,030		3,389		-		-		461,432
Land		16,299		-		728		-		-		17,027
Multi-family		51,093		457		20		-		-		51,570
Real estate construction		90,882		-		-		-		-		90,882
Consumer		92,199		-		210		-		-		92,409
Total	$	864,483	$	5,327	$	6,306	$	-	$	-	$	876,116

March 31, 2018

Commercial business	$	132,309	$	1,976	$	3,387	$	-	$	-	$	137,672
Commercial real estate		440,123		7,489		2,985		-		-		450,597
Land		14,574		-		763		-		-		15,337
Multi-family		60,879		2,190		11		-		-		63,080
Real estate construction		39,584		-		-		-		-		39,584
Consumer		104,829		-		277		-		-		105,106
Total	$	792,298	$	11,655	$	7,423	$	-	$	-	$	811,376

Impaired loans: The following tables present the total and average recorded investment in impaired loans at the dates and for the years indicated (in thousands):

March 31, 2019	Recorded Investment with No Specific Valuation Allowance		Recorded Investment with Specific Valuation Allowance		Total Recorded Investment		Unpaid Principal Balance		Related Specific Valuation Allowance

Commercial business	$	160	$	-	$	160	$	182	$	-
Commercial real estate		2,482		-		2,482		3,424		-
Land		728		-		728		766		-
Multi-family		1,598		-		1,598		1,709		-
Consumer		281		416		697		807		22
Total	$	5,249	$	416	$	5,665	$	6,888	$	22
March 31, 2018
Commercial business	$	1,004	$	-	$	1,004	$	1,062	$	-
Commercial real estate		2,883		-		2,883		3,816		-
Land		763		-		763		790		-
Multi-family		1,644		-		1,644		1,765		-
Consumer		294		1,134		1,428		1,544		69
Total	$	6,588	$	1,134	$	7,722	$	8,977	$	69

	Year ended March 31, 2019				Year ended March 31, 2018				Year ended March 31, 2017
	Average Recorded Investment		Interest Recognized on Impaired Loans		Average Recorded Investment		Interest Recognized on Impaired Loans		Average Recorded Investment		Interest Recognized on Impaired Loans

Commercial business	$	334	$	-	$	930	$	41	$	255	$	10
Commercial real estate		2,607		64		4,185		101		8,823		337
Land		742		7		781		-		801		-
Multi-family		1,620		88		1,668		90		1,710		93
Consumer		992		45		1,452		62		1,529		62
Total	$	6,295	$	204	$	9,016	$	294	$	13,118	$	502

The cash basis interest income on impaired loans was not materially different than the interest recognized on impaired loans as shown in the above table.

TDRs are loans for which the Company, for economic or legal reasons related to the borrower's financial condition, has granted a concession to the borrower that it would otherwise not consider. A TDR typically involves a modification of terms such as a reduction of the stated interest rate or face amount of the loan, a reduction of accrued interest, and/or an extension of the maturity date(s) at a stated interest rate lower than the current market rate for a new loan with similar risk. TDRs are considered impaired loans and as such, impairment is measured as described for impaired loans in Note 1 – Summary of Significant Accounting Policies – Allowance for Loan Losses.

The following table presents TDRs by interest accrual status at the dates indicated (in thousands):

	March 31, 2019						March 31, 2018
	Accrual		Nonaccrual		Total		Accrual		Nonaccrual		Total

Commercial business	$	-	$	160	$	160	$	826	$	178	$	1,004
Commercial real estate		1,401		1,081		2,482		1,683		1,200		2,883
Land		728		-		728		-		763		763
Multi-family		1,598		-		1,598		1,644		-		1,644
Consumer		697		-		697		1,428		-		1,428
Total	$	4,424	$	1,241	$	5,665	$	5,581	$	2,141	$	7,722

At March 31, 2019, the Company had no commitments to lend additional funds on these loans. At March 31, 2019, all of the Company's TDRs were paying as agreed.

There were no new TDRs for the years ended March 31, 2019 and 2018. There was one new TDR for the year ended March 31, 2017 consisting of a commercial business loan with a pre-modification outstanding recorded investment balance of $116,000 and a post-modification outstanding recorded investment balance of $107,000. This loan was repaid in full during the year ended March 31, 2018. There were no loans that were modified as a TDR within the previous twelve months that subsequently defaulted in the twelve months ended March 31, 2019.