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Loans Receivable
 9 Months Ended
Mar. 31, 2022
Receivables [Abstract]  
Loans receivable

4. Loans receivable

 

The composition of the loan portfolio was as follows:

 

   March 31,   June 30, 
(in thousands)  2022   2021 
Residential real estate          
One- to four-family  $209,344   $224,145 
Multi-family   13,298    19,781 
Construction   1,891    5,433 
Land   1,097    1,308 
Farm   1,839    2,234 
Nonresidential real estate   33,246    35,492 
Commercial nonmortgage   1,032    2,259 
Consumer and other:          
Loans on deposits   891    1,129 
Home equity   7,662    7,135 
Automobile   71    75 
Unsecured   509    533 
    270,880    299,524 
Allowance for loan losses   (1,484)   (1,622)
   $269,396   $297,902 

 

The amounts above include net deferred loan costs of $269,000 and $167,000 as of March 31, 2022, and June 30, 2021, respectively.

 

The following table presents the activity in the allowance for loan losses by portfolio segment for the nine months ended March 31, 2022:

 

(in thousands)  Beginning
balance		   Provision for
loan losses		   Loans
charged off		   Recoveries   Ending
balance		 
Residential real estate:                    
One- to four-family  $794   $(4)  $(31)  $
        –
   $759 
Multi-family   291    (68)   
–
    
–
    223 
Construction   12    (7)   
–
    
–
    5 
Land   3    1    
–
    
–
    4 
Farm   5    1    
–
    
–
    6 
Nonresidential real estate   494    (33)   
–
    
–
    461 
Commercial nonmortgage   5    (3)   
–
    
–
    2 
Consumer and other:                         
Loans on deposits   2    (1)   –    –    1 
Home equity   15    7    
–
    
–
    22 
Automobile   –    –    –    –    – 
Unsecured   1    1    (3)   2    1 
Totals  $1,622   $(106)  $(34)  $2   $1,484 

 

The following table presents the activity in the allowance for loan losses by portfolio segment for the three months ended March 31, 2022:

 

(in thousands)  Beginning
balance		   Provision for
loan losses		   Loans
charged off		   Recoveries   Ending
balance		 
Residential real estate:                    
One- to four-family  $831   $(58)  $(14)  $
        –
   $759 
Multi-family   212    11    
–
    
–
    223 
Construction   6    (1)   
–
    
–
    5 
Land   
–
    4    
–
    
–
    4 
Farm   6    
–
    
–
    
–
    6 
Nonresidential real estate   526    (65)   
–
    
–
    461 
Commercial nonmortgage   3    (1)   
–
    
–
    2 
Consumer and other:                         
Loans on deposits   1    –    –    –    1 
Home equity   17    5    
–
    
–
    22 
Automobile   –    –    –    –    – 
Unsecured   1    (1)   
–
    1    1 
Totals  $1,603   $(106)  $(14)  $1   $1,484 

 

The following table presents the activity in the allowance for loan losses by portfolio segment for the nine months ended March 31, 2021:

 

(in thousands)  Beginning
balance		   Provision for
loan losses		   Loans
charged off		   Recoveries   Ending
balance		 
Residential real estate:                    
One- to four-family  $671   $  (3)  $(23)  $
      –
   $645 
Multi-family   184    96    
–
    
–
    280 
Construction   6    3    
–
    
–
    9 
Land   1    1    
–
    
–
    2 
Farm   4    –    
–
    
–
    4 
Nonresidential real estate   405    61    
–
    
–
    466 
Commercial nonmortgage   3    –    
–
    
–
    3 
Consumer and other:                         
Loans on deposits   2    
–
    
–
    
–
    2 
Home equity   11    37    (45)   7    10 
Automobile   –    –    –    –    – 
Unsecured   1    (3)   
–
    3    1 
Unallocated   200    
–
    
–
    
–
    200 
Totals  $1,488   $192   $(68)  $10   $1,622 

 

The following table presents the activity in the allowance for loan losses by portfolio segment for the three months ended March 31, 2021:

 

(in thousands)  Beginning
balance		   Provision for
loan losses		   Loans
charged off		   Recoveries   Ending
balance		 
Residential real estate:                    
One- to four-family  $647   $     (2)  $     –   $
      –
   $645 
Multi-family   277    3    
–
    
–
    280 
Construction   6    3    
–
    
–
    9 
Land   2    –    
–
    
–
    2 
Farm   5    (1)   
–
    
–
    4 
Nonresidential real estate   469    (3)   
–
    
–
    466 
Commercial nonmortgage   2    1    
–
    
–
    3 
Consumer and other:                         
Loans on deposits   2    
–
    
–
    
–
    2 
Home equity   11    (1)   
–
    
–
    10 
Automobile   –    –    –    –    – 
Unsecured   1    –    
–
    –    1 
Unallocated   200    
–
    
–
    
–
    200 
Totals  $1,622   $–   $–   $–   $1,622 

 

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio class and based on impairment method as of March 31, 2022. The recorded investment in loans excludes accrued interest receivable due to immateriality.

 

March 31, 2022:

 

(in thousands)  Loans
individually
evaluated		   Loans
acquired with
deteriorated
credit quality		   Unpaid principal balance
and recorded investment		   Ending allowance attributed to loans 
Loans individually evaluated for impairment:                
Residential real estate:                    
One- to four-family  $3,250   $497   $3,747   $
–
 
Multi-family   574    
 
    574    
–
 
Farm   273    
 
    273    
–
 
Nonresidential real estate   1,091    
 
    1,091    
 
 
Consumer:                    
Home equity   87    
 
    87    
–
 
Unsecure   5    
 
    5    
–
 
    5,280    497    5,777    
–
 
                     
Loans collectively evaluated for impairment:                    
Residential real estate:                    
One- to four-family            $205,597   $759 
Multi-family             12,724    223 
Construction             1,891    5 
Land             1,097    4 
Farm             1,566    6 
Nonresidential real estate             32,155    461 
Commercial nonmortgage             1,032    2 
Consumer:                    
Loans on deposits             891    1 
Home equity             7,575    22 
Automobile             71    
–
 
Unsecured             504    1 
              265,103    1,484 
             $270,880   $1,484 

 

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.

 

June 30, 2021:

 

(in thousands)  Loans individually evaluated   Loans acquired with deteriorated credit quality   Unpaid principal balance
and recorded investment		   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 nonmortgage             2,259    5 
Consumer:                    
Loans on deposits             1,129    2 
Home equity             7,135    15 
Automobile             75    
–
 
Unsecured             537    1 
              292,888    1,622 
             $299,524   $1,622 

 

The following table presents interest income on loans individually evaluated for impairment by class of loans for the nine months ended March 31:

 

(in thousands)  Average
Recorded
Investment		   Interest
Income
Recognized		   Cash Basis
Income
Recognized		   Average
Recorded
Investment		   Interest
Income
Recognized		   Cash Basis
Income
Recognized		 
   2022   2021 
With no related allowance recorded:                              
One- to four-family  $3,494   $94   $94   $3,941   $120   $120 
Multi-family   610    16    16    662    18    18 
Construction   
–
    
–
    
–
    32    
–
    
–
 
Farm   274    
–
    
–
    300    23    23 
Nonresidential real estate   1,229    40    40    648    24    24 
Consumer and other   54    1    1    9    –    – 
Purchased credit-impaired loans   546    19    19    709    40    40 
    6,207    170    170    6,301    225    225 
With an allowance recorded:                              
One- to four-family   
 
    
 
    
 
    
–
    
–
    
–
 
   $6,207   $170   $170   $6,301   $225   $225 

 

The following table presents interest income on loans individually evaluated for impairment by class of loans for the three months ended March 31:

 

(in thousands)  Average Recorded Investment   Interest
Income Recognized		   Cash Basis Income Recognized   Average Recorded Investment   Interest
Income
Recognized		   Cash Basis Income Recognized 
   2022   2021 
With no related allowance recorded:                              
Residential real estate:                              
One- to four-family  $3,329   $83   $83   $3,971   $36   $36 
Multi-family   577    5    5    655    6    6 
Farm   274    
–
    
–
    291    
–
    
–
 
Nonresidential real estate   1,215    12    12    641    17    17 
Consumer and other   57    1    1    9    –    – 
Purchased credit-impaired loans   487    5    5    676    16    16 
    5,939    106    106    6,243    75    75 
With an allowance recorded:                              
One- to four-family   
 
    
 
    
 
    
–
    
–
    
–
 
   $5,939   $106   $106   $6,243   $75   $75 

 

The following table presents the recorded investment in nonaccrual and loans past due over 90 days still on accrual by class of loans as of March 31, 2022 and June 30, 2021:

 

   March 31, 2022   June 30, 2021 
(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 residential real estate  $3,589   $121   $4,104   $243 
Multifamily   574    
 
    646    
–
 
Construction   
–
         
–
    
–
 
Farm   273    
 
    274    
–
 
Nonresidential real estate and land   1,090    
 
    1,367    
–
 
Commercial and industrial             
–
    
–
 
Consumer   91         21   $
–
 
   $5,617   $121   $6,412   $243 

 

One- to four-family loans in process of foreclosure totaled $692,000 and $577,000 at March 31, 2022 and June 30, 2021, 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.”

 

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 the 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 data period and returned to regular payment status.

 

At March 31, 2022 and June 30, 2021, the Company had $1.4 million and $1.7 million of loans classified as TDRs, respectively. Of the TDRs at March 31, 2022, approximately 24.9% were related to the borrower’s completion of Chapter 7 bankruptcy proceedings with no reaffirmation of the debt to the Banks.

 

During the nine- and three-months ended March 31, 2022, the Company restructured no loans as TDRs. No TDRs defaulted during the nine-month periods ended March 31, 2022, or 2021.

 

During the nine months ended March 31, 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, and totaled $143,000 at March 31, 2021.

 

The following table summarizes TDR loan modifications that occurred during the nine months ended March 31, 2021, and their performance, by modification type:

 

(in thousands)  Troubled Debt
Restructurings
Performing to
Modified
Terms		   Troubled Debt
Restructurings
Not
Performing to
Modified
Terms		   Total
Troubled Debt
Restructurings		 
Nine months ended March 31, 2021               
Residential real estate:               
Chapter 7 bankruptcy  $143   $
     –
   $143 

 

There were no TDR loan modifications that occurred during the three months ended March 31, 2021.

 

The following table presents the aging of the principal balance outstanding in past due loans as of March 31, 2022, by class of loans:

 

(in thousands)  30-89 Days
Past Due		   90 Days or
Greater
Past Due		   Total Past
Due		   Loans Not
Past Due		   Total 
Residential real estate:                    
One-to four-family  $2,651   $981   $3,632   $205,712   $209,344 
Multi-family   
–
    
–
    
–
    13,298    13,298 
Construction   72    
–
    72    1,819    1,891 
Land   
–
    
–
    
–
    1,097    1,097 
Farm   –    
–
    –    1,839    1,839 
Nonresidential real estate   –    –    –    33,246    33,246 
Commercial non-mortgage   20    
–
    20    1,012    1,032 
Consumer and other:                         
Loans on deposits   
–
    
–
    
–
    891    891 
Home equity   14    71    85    7,577    7,662 
Automobile   
–
    
–
    
–
    71    71 
Unsecured   8    –    8    501    509 
Total  $2,765   $1,052   $3,817   $267,063   $270,880 

 

The following tables present the aging of the principal balance outstanding in past due loans as of June 30, 2021, by class of loans:

 

(in thousands)  30-89 Days
Past Due		   90 Days or
Greater
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 nonmortgage   6    
–
    6    2,253    2,259 
Consumer:                         
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 

 

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 March 31, 2022, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

 

(in thousands)   Pass     Special
Mention		     Substandard     Doubtful  
Residential real estate:                        
One- to four-family   $ 203,430     $ 199     $ 5,715     $
     –
  
Multi-family     13,024      
–
       274      
–
  
Construction     1,891      
–
      
–
      
–
  
Land     1,097      
–
      
–
      
–
  
Farm     1,566      
–
       273      
–
  
Nonresidential real estate     31,449       707       1,090      
–
  
Commercial nonmortgage     1,032      
–
      
–
      
–
  
Consumer:                                
Loans on deposits     891      
–
      
–
      
–
  
Home equity     7,540       –       122      
–
  
Automobile     71      
–
      
–
      
–
  
Unsecured     504      
–
       5      
–
  
    $ 262,495     $ 906     $ 7,479     $
–
  

 

At June 30, 2021, the risk category of loans by class of loans was as follows:

 

(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 nonmortgage   2,259    
–
    
–
    
–
 
Consumer:                    
Loans on deposits   1,129    
–
    
–
    
–
 
Home equity   7,044    39    52    
–
 
Automobile   75    
–
    
–
    
–
 
Unsecured   546    
–
    7    
–
 
   $289,122   $1,559   $8,843   $
–
 

 

Purchased Credit Impaired Loans:

 

The Company purchased loans during fiscal year 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 $88,000 at March 31, 2022 and June 30, 2021, respectively, is as follows:

 

(in thousands)  March 31,
2022		   June 30,
2021		 
One- to four-family residential real estate  $497   $595 

 

Accretable yield, or income expected to be collected, is as follows:

 

(in thousands)   Nine months
ended
March 31,
2022		     Twelve months
ended
June 30,
2021		  
Balance at beginning of period   $ 390     $ 447  
Accretion of income     (38)       (57 )
Disposals, net of recoveries     --      
–
  
Balance at end of period   $ 352     $ 390  

 

For those purchased loans disclosed above, the Company made no increase in allowance for loan losses for the year ended June 30, 2021, nor for the nine-month period ended March 31, 2022. Neither were any allowance for loan losses reversed during those periods.