XML 29 R12.htm IDEA: XBRL DOCUMENT

Loans

12 Months Ended

Jun. 30, 2021

NOTE C - LOANS

The composition of the loan portfolio at June 30 was as follows:

(in thousands)	2021			2020
Residential real estate
One- to four-family	$	224,125		$	222,489
Multi-family		19,781			12,373
Construction		5,433			4,045
Land		1,308			765
Farm		2,234			2,354
Nonresidential real estate		35,492			33,503
Commercial and industrial		2,259			2,214
Consumer and other
Loans on deposits		1,129			1,245
Home equity		7,135			7,645
Automobile		75			67
Unsecured		553			675
		299,524			287,375

Allowance for loan losses		(1,622	)		(1,488	)
	$	297,902		$	285,887

The amounts above include net deferred loan fees of $167,000 and $177,000 as of June 30, 2021 and 2020.

The following tables present the balance in the allowance for loan losses and the recorded investment in loans by portfolio class and based on impairment method as of June 30, 2021 and 2020. There were $595,000 and $751,000 in loans acquired with deteriorated credit quality at June 30, 2021 and 2020, respectively.

June 30, 2021:

(in thousands)	Loans individually evaluated		Loans acquired with deteriorated credit quality*		Ending loans balance		Ending allowance attributed to loans
Loans individually evaluated for impairment:
Residential real estate:
One- to four-family	$	3,738	$	595	$	4,333	$	--
Multi-family		646		--		646		--
Farm		274		--		274		--
Nonresidential real estate		1,367		--		1,367		--
Consumer and other:
Unsecured		16		--		16		--
		6,041		595		6,636		--

Loans collectively evaluated for impairment:
Residential real estate:
One- to four-family					$	219,792	$	794
Multi-family						19,135		291
Construction						5,433		12
Land						1,308		3
Farm						1,960		5
Nonresidential real estate						34,125		494
Commercial and industrial						2,259		5
Consumer and other:
Loans on deposits						1,129		2
Home equity						7,135		15
Automobile						75		--
Unsecured						537		1
						292,888		1,622
					$	299,524	$	1,622

These loans were evaluated at acquisition date at their estimated fair value and there has been no subsequent deterioration since acquisition.

June 30, 2020:

(in thousands)	Loans individually evaluated		Loans acquired with deteriorated credit quality*		Ending loans balance		Ending allowance attributed to loans		Unallocated allowance		Total allowance
Loans individually evaluated for impairment:
Residential real estate:
One- to four-family	$	3,983	$	751	$	4,734	$	--	$	--	$	--
Multi-family		671		--		671		--		--		--
Construction		63		--		63		--		--		--
Farm		309		--		309		--		--		--
Nonresidential real estate		660		--		660		--		--		--
		5,686		751		6,437		--		--		--

Loans collectively evaluated for impairment:
Residential real estate:
One- to four-family					$	217,755	$	671	$	--	$	671
Multi-family						11,702		184		--		184
Construction						3,982		6		--		6
Land						765		1		--		1
Farm						2,045		4		--		4
Nonresidential real estate						32,843		405		--		405
Commercial and industrial						2,214		3		--		3
Consumer and other
Loans on deposits						1,245		2		--		2
Home equity						7,645		11		--		11
Automobile						67		--		--		--
Unsecured						675		1		--		1
Unallocated						--		--		200		200
						280,938		1,288		200		1,488
					$	287,375	$	1,288	$	200	$	1,488

These loans were evaluated at acquisition date at their estimated fair value and there has been no subsequent deterioration since acquisition.

The following tables present impaired loans by class of loans as of and for the years ended June 30, 2021 and 2020:

June 30, 2021:

(in thousands)	Unpaid Principal Balance and Recorded Investment		Allowance for Loan Losses Allocated		Average Recorded Investment		Interest Income Recognized		Cash Basis Income Recognized
With no related allowance recorded:
Residential real estate:
One- to four-family	$	4,333	$	--	$	4,534	$	107	$	107
Multi-family		646		--		659		24		24
Construction		--		--		32		--		--
Farm		274		--		292		35		35
Nonresidential real estate		1,367		--		1,014		60		60
Consumer and other:
Unsecured		16		--		8		1		1
Total	$	6,636	$	--	$	6,537	$	227	$	227

June 30, 2020:

(in thousands)	Unpaid Principal Balance and Recorded Investment		Allowance for Loan Losses Allocated		Average Recorded Investment		Interest Income Recognized		Cash Basis Income Recognized
With no related allowance recorded:
Residential real estate:
One- to four-family	$	4,734	$	--	$	4,713	$	172	$	172
Multi-family		671		--		679		32		32
Construction		63		--		13		--		--
Farm		309		--		309		11		11
Nonresidential real estate		660		--		701		47		47
Total	$	6,437	$	--	$	6,415	$	262	$	262

The following tables present the recorded investment in nonaccrual and loans past due over 90 days still on accrual status by class of loans as of June 30, 2021 and 2020. The tables include loans acquired with deteriorated credit quality. At June 30, 2021, the table below includes approximately $365,000 of loans on nonaccrual and no loans past due over 90 days and still accruing of loans acquired with deteriorated credit quality, while at June 30, 2020, approximately $508,000 of loans on nonaccrual and no loans past due over 90 days and still accruing represent such loans.

	June 30, 2021				June 30, 2020
(in thousands)	Nonaccrual		Loans Past Due Over 90 Days Still Accruing		Nonaccrual		Loans Past Due Over 90 Days Still Accruing
Residential real estate:
One- to four-family	$	4,104	$	243	$	4,458	$	1,135
Multi-family		646		--		671		--
Construction		--		--		63		--
Farm		274		--		309		--
Nonresidential real estate		1,367		--		660		--
Commercial and industrial		--		--		4		--
Consumer		21		--		95		--
	$	6,412	$	243	$	6,260	$	1,135

One- to four-family loans in process of foreclosure totaled $577,000 and $694,000 at June 30, 2021 and 2020, respectively.

Troubled Debt Restructurings:

A Troubled Debt Restructuring (“TDR”) is the situation where the Bank grants a concession to the borrower that the Banks would not otherwise have considered due to the borrower’s financial difficulties. All TDRs are considered “impaired.”

At June 30, 2021 and 2020, the Company had $1.7 million and $1.9 million of loans classified as TDRs, respectively. Of the TDRs at June 30, 2021, approximately 26.8% were related to the borrower’s completion of Chapter 7 bankruptcy proceedings with no reaffirmation of the debt to the Banks.

During the year ended June 30, 2021, the Company had two loans, which were associated with a single borrower and were both secured by a single-family residence, restructured as TDRs. The loans were classified as TDRs pursuant to court action under Chapter 7 bankruptcy proceedings without the borrower reaffirming the debt personally. Those two loans were current and totaled $142,000 at June 30, 2021.

In December 2020, Congress amended the CARES Act through the Consolidated Appropriation Act of 2021, which provided additional COVID-19 relief to American families and businesses, including extending TDR relief under the CARES Act until the earlier of December 31, 2021 or 60 days following the termination of the national emergency. The relief can only be applied to modifications for borrowers that were not more than 30 days past due as of December 31, 2019. The Company elected to adopt these provisions of the CARES Act. In response to the Covid-19 pandemic and the widespread economic downturn that immediately resulted, the Company adopted a loan forbearance plan in which then-current affected borrowers could request deferral of their loan payments for a period of three months. A total of $815,000 in loans were accepted into the plan for the twelve months ended June 30, 2021. At June 30, 2021 all of those loans had reached the end of their three-month deferral date period and returned to regular payment status.

During the year ended June 30, 2020, the Company had six loans restructured as TDRs. One borrower refinanced a piece of one- to four-family, non-owner occupied, residential property to bring to current amounts owed on other loans with the Bank. Because the borrower’s financial condition had deteriorated, it was unlikely that the borrower could have secured financing elsewhere. The restructured loan is collateralized and cross-collateralized by real estate. Three single family residential borrowers filed for Chapter 7 bankruptcy protection and did not reaffirm the debts personally, although the Company’s collateral position remains intact. Finally, a first and second mortgage on an 8-plex were refinanced into a single loan with a slightly extended maturity term and a lower interest rate, which was consistent with similarly-priced comparable loans at the time of refinance

In order to determine whether a borrower is experiencing financial difficulty, we consider the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed under the Company’s internal underwriting policy.

The Company had no allocated specific reserves to customers whose loan terms have been modified in troubled debt restructurings as of June 30, 2021 or 2020. At June 30, 2021 and 2020, TDR loans on nonaccrual status totaled $1.7 million and $1.8 million, respectively. The Company had no commitments to lend additional amounts as of June 30, 2021 and 2020, to customers with outstanding loans that are classified as troubled debt restructurings. The Company had no TDR loans which defaulted during fiscal 2021 or during fiscal 2020.

The following tables present the aging of the principal balance outstanding in accruing past due loans as of June 30, 2021 and 2020, by class of loans. The tables include loans acquired with deteriorated credit quality. At June 30, 2021, the table below includes $96,000 in loans 30-89 days past due and approximately $25,000 of loans past due over 90 days that were acquired with deteriorated credit quality, while at June 30, 2020, the table below includes $101,000 in loans 30-89 days past due and approximately $28,000 of loans past due over 90 days of such loans.

June 30, 2021:

(in thousands)	30-89 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Loans Not Past Due		Total
Residential real estate:
One-to four-family	$	2,392	$	1,338	$	3,730	$	220,395	$	224,125
Multi-family		--		--		--		19,781		19,781
Construction		80		--		80		5,353		5,433
Land		--		--		--		1,308		1,308
Farm		101		--		101		2,133		2,234
Nonresidential real estate		--		241		241		35,251		35,492
Commercial and industrial		6		--		6		2,253		2,259
Consumer and other:
Loans on deposits		--		--		--		1,129		1,129
Home equity		116		--		116		7,019		7,135
Automobile		--		--		--		75		75
Unsecured		4		--		4		549		553
Total	$	2,699	$	1,579	$	4,278	$	295,246	$	299,524

June 30, 2020:

(in thousands)	30-89 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Loans Not Past Due		Total
Residential real estate:
One-to four-family	$	2,546	$	2,670	$	5,216	$	217,273	$	222,489
Multi-family		--		--		--		12,373		12,373
Construction		192		63		255		3,790		4,045
Land		--		--		--		765		765
Farm		107		309		416		1,938		2,354
Nonresidential real estate		57		253		310		33,193		33,503
Commercial and industrial		--		--		--		2,214		2,214
Consumer and other:
Loans on deposits		--		--		--		1,245		1,245
Home equity		255		90		345		7,300		7,645
Automobile		--		--		--		67		67
Unsecured		--		--		--		675		675
Total	$	3,157	$	3,385	$	6,542	$	280,833	$	287,375

Credit Quality Indicators:

The Company 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 Company analyzes loans individually by classifying the loans as to credit risk. This analysis is performed on an annual basis. The Company 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 that are not rated are included in groups of homogeneous loans and are evaluated for credit quality based on performing status. See the aging of past due loan table above. As of June 30, 2021, and 2020, and based on the most recent analysis performed, the risk category of loans by class of loans was as follows:

June 30, 2021:

(in thousands)	Pass		Special Mention		Substandard		Doubtful
Residential real estate:
One- to four-family	$	217,485	$	596	$	6,044	$	--
Multi-family		19,135		--		646		--
Construction		5,433		--		--		--
Land		1,308		--		--		--
Farm		1,960		--		274		--
Nonresidential real estate		32,748		924		1,820		--
Commercial and industrial		2,259		--		--		--
Consumer and other:
Loans on deposits		1,129		--		--		--
Home equity		7,044		39		52		--
Automobile		75		--		--		--
Unsecured		546		--		7		--
Total	$	289,122	$	1,559	$	8,843	$	--

June 30, 2020:

(in thousands)	Pass		Special Mention		Substandard		Doubtful
Residential real estate:
One- to four-family	$	215,010	$	742	$	6,737	$	--
Multi-family		11,702		--		671		--
Construction		3,982		--		63		--
Land		765		--		--		--
Farm		2,045		--		309		--
Nonresidential real estate		31,529		939		1,035		--
Commercial and industrial		2,188		--		26		--
Consumer and other:
Loans on deposits		1,245		--		--		--
Home equity		7,505		39		101		--
Automobile		67		--		--		--
Unsecured		670		--		5		--
Total	$	276,708	$	1,720	$	8,947	$	--

The following tables present the activity in the allowance for loan losses by portfolio segment for the years ended June 30, 2021 and 2020:

June 30, 2021:

(in thousands)	Beginning balance		Provision for loan losses			Loans charged off			Recoveries		Ending balance
Residential real estate:
One- to four-family	$	671	$	146		$	(23	)	$	--	$	794
Multi-family		184		107			--			--		291
Construction		6		6			--			--		12
Land		1		2			--			--		3
Farm		4		1			--			--		5
Nonresidential real estate		405		89			--			--		494
Commercial and industrial		3		2			--			--		5
Consumer and other:
Loans on deposits		2		--			--			--		2
Home equity		11		42			(45	)		7		15
Auto		--		--			--			--		--
Unsecured		1		(3	)		--			3		1
Unallocated		200		(200	)		--			--		--
Totals	$	1,488	$	192		$	(68	)	$	10	$	1,622

June 30, 2020:

(in thousands)	Beginning balance		Provision for loan losses			Loans charged off			Recoveries		Ending balance
Residential real estate:
One- to four-family	$	685	$	49		$	(65	)	$	2	$	671
Multi-family		200		(16	)		--			--		184
Construction		6		--			--			--		6
Land		1		--			--			--		1
Farm		6		(2	)		--			--		4
Nonresidential real estate		336		69			--			--		405
Commercial and industrial		5		(2	)		--			--		3
Consumer and other:
Loans on deposits		3		(1	)		--			--		2
Home equity		14		(3	)		--			--		11
Auto		--		8			(8	)		--		--
Unsecured		--		1			--			--		1
Unallocated		200		--			--			--		200
Totals	$	1,456	$	103		$	(73	)	$	2	$	1,488

Purchased Loans:

The Company purchased loans during the fiscal year ended June 30, 2013 for which there was, at acquisition, evidence of deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected. The carrying amount of those loans, net of a purchase credit discount of $88,000 and $351,000, at June 30, 2021 and 2020, respectively, was as follows:

(in thousands)	2021		2020
Residential real estate:
One- to four-family	$	595	$	751

Accretable yield, or income expected to be collected on loans purchased during fiscal year 2013, for the years ended June 30 was as follows:

(in thousands)	2021			2020
Balance at beginning of year	$	447		$	544
Accretion of income		(57	)		(97	)
Balance at end of year	$	390		$	447

For those purchased loans disclosed above, the Company made no increase in allowance for loan losses for the years ended June 30, 2021 or 2020, nor were any allowance for loan losses reversed during those years.