NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Three Months Ended
September 30, 2012 and 2011
(Unaudited)
NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RELATED MATTERS
The accounting and reporting policies of PVF Capital Corp. (the “Company”) conform to U.S. generally accepted
accounting principles (“U.S. GAAP”) and general industry practice. The Company’s principal subsidiary, Park View Federal Savings Bank (the “Bank”) is primarily engaged in the business of offering deposits through the
issuance of savings accounts, money market accounts, and certificates of deposit and lending funds primarily for the purchase, construction, and improvement of real estate in Cuyahoga, Summit, Geauga, Lake, Medina, Lorain and Portage Counties, Ohio.
The deposit accounts of the Bank are insured up to applicable limits by the Federal Deposit Insurance Corporation (the “FDIC”). The following is a description of the significant policies which the Company follows in preparing and
presenting its consolidated financial statements.
Basis of Presentation
: The accompanying Unaudited Consolidated
Financial Statements of PVF Capital Corp. have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and the instructions for Form 10-Q and Article 10
of Regulation S-X. Accordingly, these financial statements do not contain all of the information and footnotes required by U.S. GAAP for annual financial statements and should be read in conjunction with PVF Capital Corp.’s Annual Report on
Form 10-K for the fiscal year ended June 30, 2012. These consolidated financial statements are prepared without audit and reflect all adjustments that, in the opinion of management, are necessary to present fairly the financial position of the
Company at September 30, 2012, and its results of operations and cash flows for the periods presented. All such adjustments are normal and recurring in nature. The accounting principles used to prepare the consolidated financial
statements are in compliance with U.S. GAAP. However, the financial statements were prepared in accordance with the instructions of Form 10-Q and, therefore, do not purport to contain all necessary financial and note disclosures required by
U.S. GAAP.
Principles of Consolidation
: The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries, the Bank, PVF Service Corporation (“PVFSC”), Mid Pines Land Company, PVF Holdings, Inc., PVF Mortgage Corp. and PVF Community Development Corp. PVFSC owns certain premises and leases them to the Bank. Mid
Pines Land Company, PVF Holdings, Inc., PVF Mortgage Corp. and PVF Community Development Corp. did not have any significant assets or activity as of or for the periods presented. All significant intercompany transactions and balances are eliminated
in consolidation. In the period ended September 30, 2012, the Company reclassified certain loans between the loan portfolio segments and reclassified certain deposits between interest bearing and non-interest bearing as presented previously in
the Company’s Annual Report on Form 10-K to conform to the current period presentation.
PVFSC and the Bank have entered
into various nonconsolidated joint ventures that own real estate, including properties leased to the Bank. The Bank has created various limited liability companies that have taken title to property acquired through or in lieu of foreclosure.
Use of Estimates
: The preparation of consolidated financial statements in conformity with U.S. GAAP requires
management to make estimates and assumptions that affect the reported amounts of assets
5
Part I — FINANCIAL INFORMATION
and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated
financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. The allowance for loan losses, valuation of mortgage servicing rights, fair value of mortgage
banking derivatives, valuation of loans held for sale, fair value of securities, valuation of other real estate owned, and the realizability of deferred tax assets are particularly susceptible to change.
NOTE 2 — SECURITIES
As of September 30, 2012 and June 30, 2012, respectively, the amortized cost and fair value of securities
available for sale and the related gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2012
|
|
|
|
|
|
|
|
Gross
|
|
|
Gross
|
|
|
|
|
|
|
|
Amortized
|
|
|
Unrealized
|
|
|
Unrealized
|
|
|
Fair
|
|
|
|
|
Cost
|
|
|
Gains
|
|
|
Losses
|
|
|
Value
|
|
|
FNMA structured notes
|
|
$
|
2,000,000
|
|
|
$
|
3,600
|
|
|
$
|
0
|
|
|
$
|
2,003,600
|
|
|
Trust preferred and corporate securities
|
|
|
18,210,212
|
|
|
|
460,346
|
|
|
|
(13,562
|
)
|
|
|
18,656,997
|
|
|
Mortgage-backed GSE securities
|
|
|
17,247,156
|
|
|
|
387,506
|
|
|
|
(14,708
|
)
|
|
|
17,619,954
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
37,457,369
|
|
|
$
|
851,452
|
|
|
$
|
(28,270
|
)
|
|
$
|
38,280,551
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2012
|
|
|
|
|
|
|
|
Gross
|
|
|
Gross
|
|
|
|
|
|
|
|
Amortized
|
|
|
Unrealized
|
|
|
Unrealized
|
|
|
Fair
|
|
|
|
|
Cost
|
|
|
Gains
|
|
|
Losses
|
|
|
Value
|
|
|
FNMA structured notes
|
|
$
|
2,000,000
|
|
|
$
|
9,320
|
|
|
$
|
0
|
|
|
$
|
2,009,320
|
|
|
Trust preferred and corporate securities
|
|
|
20,964,197
|
|
|
|
344,230
|
|
|
|
(46,665
|
)
|
|
|
21,261,762
|
|
|
Mortgage-backed GSE securities
|
|
|
15,093,864
|
|
|
|
293,098
|
|
|
|
|
|
|
|
15,386,962
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
38,058,061
|
|
|
$
|
646,648
|
|
|
$
|
(46,665
|
)
|
|
$
|
38,658,044
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management performs a quarterly evaluation of investment securities for other-than-temporary impairment.
At September 30, 2012 and June 30, 2012, respectively, the gross unrealized losses were in a loss position for less than 12 months. Management does not believe that any of these losses at September 30, 2012 or June 30, 2012
represent an other-than-temporary impairment. Should the impairment of any of these securities become other-than-temporary, the cost basis of the investment will be reduced and the resulting loss recognized within net income in the period the
other-then-temporary impairment is identified.
The amortized cost and fair value of securities available-for-sale, by
contractual maturity, are shown below:
6
Part I — FINANCIAL INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2012
|
|
|
|
|
Amortized
|
|
|
|
|
|
|
|
Cost
|
|
|
Fair Value
|
|
|
One to five years
|
|
$
|
2,000,000
|
|
|
$
|
2,003,600
|
|
|
Five to ten years
|
|
|
5,037,865
|
|
|
|
5,102,220
|
|
|
Greater than 10 years
|
|
|
13,172,347
|
|
|
|
13,554,827
|
|
|
Mortgage-backed GSE securities
|
|
|
17,225,615
|
|
|
|
17,619,954
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
37,435,828
|
|
|
$
|
38,280,551
|
|
|
|
|
|
|
|
|
|
|
|
The Fannie Mae (“FNMA”) structured note held at September 30, 2012 is callable on
November 9, 2012 and quarterly thereafter, has multiple coupon resets and matures on November 9, 2016. These mortgage-backed securities are backed by residential mortgage loans and do not mature on a single maturity date.
Securities pledged as collateral for contingent funding at the Federal Home Loan Bank of Cincinnati were approximately $14.6 million.
7
Part I — FINANCIAL INFORMATION
NOTE 3 — LOANS RECEIVABLE
Loans receivable at September 30, 2012, and June 30, 2012 consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
June 30,
|
|
|
|
|
2012
|
|
|
2012
|
|
|
One-to-Four Family Loans:
|
|
|
|
|
|
|
|
|
|
1-4 Family Owner Occupied
|
|
$
|
59,297,788
|
|
|
$
|
58,743,933
|
|
|
1-4 Family Non-Owner Occupied
|
|
|
34,303,456
|
|
|
|
34,368,320
|
|
|
1-4 Family Second Mortgage
|
|
|
28,729,779
|
|
|
|
29,202,145
|
|
|
Home Equity Lines of Credit
|
|
|
64,933,215
|
|
|
|
65,908,899
|
|
|
Home Equity Investment Lines of Credit
|
|
|
5,267,763
|
|
|
|
5,645,851
|
|
|
One-to-Four Family Construction Loans:
|
|
|
|
|
|
|
|
|
|
1-4 Family Construction
|
|
|
1,341,302
|
|
|
|
514,052
|
|
|
1-4 Family Construction Models/Speculative
|
|
|
621,042
|
|
|
|
1,608,137
|
|
|
Multi-Family Loans:
|
|
|
|
|
|
|
|
|
|
Multi-Family
|
|
|
62,638,057
|
|
|
|
53,959,459
|
|
|
Multi-Family Second Mortgage
|
|
|
144,754
|
|
|
|
145,642
|
|
|
Multi-Family Construction
|
|
|
108,428
|
|
|
|
5,375,000
|
|
|
Commercial Real Estate Loans:
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
198,023,597
|
|
|
|
198,287,457
|
|
|
Commercial Second Mortgage
|
|
|
4,799,704
|
|
|
|
5,750,283
|
|
|
Commercial Lines of Credit
|
|
|
22,656,803
|
|
|
|
22,335,619
|
|
|
Commercial Construction
|
|
|
9,126,892
|
|
|
|
7,732,736
|
|
|
Commercial and Industrial Loans
|
|
|
37,556,592
|
|
|
|
35,443,184
|
|
|
Land Loans:
|
|
|
|
|
|
|
|
|
|
Lot Loans
|
|
|
9,346,567
|
|
|
|
12,091,093
|
|
|
Acquisition and Development Loans
|
|
|
18,968,781
|
|
|
|
19,093,006
|
|
|
Consumer Loans
|
|
|
2,101,434
|
|
|
|
2,112,708
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans receivable
|
|
|
559,965,954
|
|
|
|
558,317,524
|
|
|
|
|
|
|
Net deferred loan origination fees
|
|
|
(644,038
|
)
|
|
|
(637,144
|
)
|
|
Allowance for loan losses
|
|
|
(16,135,640
|
)
|
|
|
(16,052,865
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total loans receivable, net
|
|
$
|
543,186,276
|
|
|
$
|
541,627,515
|
|
|
|
|
|
|
|
|
|
|
|
8
Part I — FINANCIAL INFORMATION
The following table presents activity in the allowance for loan losses by portfolio segment for the
three months ended September 30, 2012:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One-to-Four
|
|
|
|
|
|
Commercial
|
|
|
Commercial
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One-to-Four
|
|
|
Family
|
|
|
Multi-
|
|
|
Real
|
|
|
and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Family
|
|
|
Construction
|
|
|
Family
|
|
|
Estate
|
|
|
Industrial
|
|
|
Land
|
|
|
Consumer
|
|
|
Total
|
|
|
Beginning balance at June 30, 2012
|
|
$
|
5,765,276
|
|
|
$
|
305,312
|
|
|
$
|
1,903,138
|
|
|
$
|
5,084,179
|
|
|
$
|
928,043
|
|
|
$
|
2,057,301
|
|
|
$
|
9,616
|
|
|
$
|
16,052,865
|
|
|
Provision for loan losses
|
|
|
623,779
|
|
|
|
43,601
|
|
|
|
(766,960
|
)
|
|
|
943,294
|
|
|
|
312,966
|
|
|
|
(120,627
|
)
|
|
|
13,947
|
|
|
|
1,050,000
|
|
|
Charge-offs
|
|
|
(741,685
|
)
|
|
|
(45,959
|
)
|
|
|
—
|
|
|
|
(248,493
|
)
|
|
|
(12,500
|
)
|
|
|
(20,078
|
)
|
|
|
(13,000
|
)
|
|
|
(1,081,715
|
)
|
|
Recoveries
|
|
|
42,569
|
|
|
|
10,000
|
|
|
|
—
|
|
|
|
17,614
|
|
|
|
1,585
|
|
|
|
42,480
|
|
|
|
242
|
|
|
|
114,490
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance at September 30, 2012
|
|
$
|
5,689,939
|
|
|
$
|
312,954
|
|
|
$
|
1,136,178
|
|
|
$
|
5,796,594
|
|
|
$
|
1,230,094
|
|
|
$
|
1,959,076
|
|
|
$
|
10,805
|
|
|
$
|
16,135,640
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table presents activity in the allowance for loan losses by portfolio segment for the three months ended
September 30, 2011:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One-to-Four
|
|
|
|
|
|
Commercial
|
|
|
Commercial
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One-to-Four
|
|
|
Family
|
|
|
Multi-
|
|
|
Real
|
|
|
and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Family
|
|
|
Construction
|
|
|
Family
|
|
|
Estate
|
|
|
Industrial
|
|
|
Land
|
|
|
Consumer
|
|
|
Total
|
|
|
Beginning balance at June 30, 2011
|
|
$
|
8,841,454
|
|
|
$
|
1,266,740
|
|
|
$
|
1,767,335
|
|
|
$
|
8,458,943
|
|
|
$
|
1,663,894
|
|
|
$
|
7,891,305
|
|
|
$
|
107,222
|
|
|
$
|
29,996,893
|
|
|
Provision for loan losses
|
|
|
(511,394
|
)
|
|
|
39,566
|
|
|
|
(360,444
|
)
|
|
|
949,896
|
|
|
|
493,657
|
|
|
|
728,029
|
|
|
|
160,690
|
|
|
|
1,500,000
|
|
|
Charge-offs
|
|
|
(476,158
|
)
|
|
|
(109,322
|
)
|
|
|
(236,663
|
)
|
|
|
(1,089,347
|
)
|
|
|
(29,609
|
)
|
|
|
(28,421
|
)
|
|
|
—
|
|
|
|
(1,969,520
|
)
|
|
Recoveries
|
|
|
4,765
|
|
|
|
—
|
|
|
|
—
|
|
|
|
19,271
|
|
|
|
1,755
|
|
|
|
—
|
|
|
|
—
|
|
|
|
25,791
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance at September 30, 2011
|
|
$
|
7,858,667
|
|
|
$
|
1,196,984
|
|
|
$
|
1,170,228
|
|
|
$
|
8,338,763
|
|
|
$
|
2,129,697
|
|
|
$
|
8,590,913
|
|
|
$
|
267,912
|
|
|
$
|
29,553,164
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9
Part I — FINANCIAL INFORMATION
The following table presents the allowance for loan losses and the recorded investment
in loans by portfolio segment and based on the impairment method as of September 30, 2012. The recorded investment in loans includes the unpaid principal balance and unamortized loan origination fees, but excludes accrued interest receivable
which is not considered to be material.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One-to-Four
|
|
|
|
|
|
Commercial
|
|
|
Commercial
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One-to-Four
|
|
|
Family
|
|
|
Multi-
|
|
|
Real
|
|
|
and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Family
|
|
|
Construction
|
|
|
Family
|
|
|
Estate
|
|
|
Industrial
|
|
|
Land
|
|
|
Consumer
|
|
|
Total
|
|
|
Allowance for loan losses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending allowance balance attributable to loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individually evaluated for impairment
|
|
$
|
699,204
|
|
|
$
|
101,716
|
|
|
$
|
—
|
|
|
$
|
98,725
|
|
|
$
|
300,860
|
|
|
$
|
252,000
|
|
|
$
|
—
|
|
|
$
|
1,452,505
|
|
|
Collectively evaluated for impairment
|
|
|
4,990,735
|
|
|
|
211,238
|
|
|
|
1,136,178
|
|
|
|
5,697,869
|
|
|
|
929,234
|
|
|
|
1,707,076
|
|
|
|
10,805
|
|
|
|
14,683,135
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total ending allowance balance
|
|
$
|
5,689,939
|
|
|
$
|
312,954
|
|
|
$
|
1,136,178
|
|
|
$
|
5,796,594
|
|
|
$
|
1,230,094
|
|
|
$
|
1,959,076
|
|
|
$
|
10,805
|
|
|
$
|
16,135,640
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans individually evaluated for impairment
|
|
$
|
12,208,532
|
|
|
$
|
833,904
|
|
|
$
|
300,254
|
|
|
$
|
11,851,912
|
|
|
$
|
540,441
|
|
|
$
|
6,763,662
|
|
|
$
|
—
|
|
|
$
|
32,498,705
|
|
|
Loans collectively evaluated for impairment
|
|
|
180,102,030
|
|
|
|
1,126,183
|
|
|
|
62,518,652
|
|
|
|
222,485,254
|
|
|
|
36,972,956
|
|
|
|
21,519,119
|
|
|
|
2,099,017
|
|
|
|
526,823,211
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total ending loans balance
|
|
$
|
192,310,562
|
|
|
$
|
1,960,087
|
|
|
$
|
62,818,906
|
|
|
$
|
234,337,166
|
|
|
$
|
37,513,397
|
|
|
$
|
28,282,781
|
|
|
$
|
2,099,017
|
|
|
$
|
559,321,916
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10
Part I — FINANCIAL INFORMATION
The following table presents the allowance for loan losses and the recorded investment
in loans by portfolio segment and based on the impairment method as of June 30, 2012. The recorded investment in loans includes the unpaid principal balance and unamortized loan origination fees, but excludes accrued interest receivable which is not
considered to be material.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One-to-Four
|
|
|
|
|
|
Commercial
|
|
|
Commercial
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One-to-Four
|
|
|
Family
|
|
|
Multi-
|
|
|
Real
|
|
|
and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Family
|
|
|
Construction
|
|
|
Family
|
|
|
Estate
|
|
|
Industrial
|
|
|
Land
|
|
|
Consumer
|
|
|
Total
|
|
|
Allowance for loan losses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending allowance balance attributable to loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individually evaluated for impairment
|
|
$
|
665,033
|
|
|
$
|
101,716
|
|
|
$
|
—
|
|
|
$
|
98,725
|
|
|
$
|
300,860
|
|
|
$
|
252,000
|
|
|
$
|
—
|
|
|
$
|
1,418,334
|
|
|
Collectively evaluated for impairment
|
|
|
5,100,243
|
|
|
|
203,596
|
|
|
|
1,903,138
|
|
|
|
4,985,454
|
|
|
|
627,183
|
|
|
|
1,805,301
|
|
|
|
9,616
|
|
|
|
14,634,531
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total ending allowance balance
|
|
$
|
5,765,276
|
|
|
$
|
305,312
|
|
|
$
|
1,903,138
|
|
|
$
|
5,084,179
|
|
|
$
|
928,043
|
|
|
$
|
2,057,301
|
|
|
$
|
9,616
|
|
|
$
|
16,052,865
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans individually evaluated for impairment
|
|
$
|
13,243,350
|
|
|
$
|
880,749
|
|
|
$
|
622,228
|
|
|
$
|
11,902,730
|
|
|
$
|
740,297
|
|
|
$
|
7,189,109
|
|
|
$
|
—
|
|
|
$
|
34,578,463
|
|
|
Loans collectively evaluated for impairment
|
|
|
180,404,558
|
|
|
|
1,239,018
|
|
|
|
58,789,996
|
|
|
|
221,936,205
|
|
|
|
34,662,439
|
|
|
|
23,959,404
|
|
|
|
2,110,297
|
|
|
|
523,101,917
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total ending loans balance
|
|
$
|
193,647,908
|
|
|
$
|
2,119,767
|
|
|
$
|
59,412,224
|
|
|
$
|
233,838,935
|
|
|
$
|
35,402,736
|
|
|
$
|
31,148,513
|
|
|
$
|
2,110,297
|
|
|
$
|
557,680,380
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11
Part I — FINANCIAL INFORMATION
The following table presents loans individually evaluated for impairment by class of
loan as of September 30, 2012 and the average recorded investment and interest income recognized by class for the three months ended September 30, 2012:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2012
|
|
|
|
|
Unpaid
|
|
|
|
|
|
Allowance for
|
|
|
Average
|
|
|
Interest
|
|
|
Cash Basis
|
|
|
|
|
Principal
|
|
|
Recorded
|
|
|
Loan Losses
|
|
|
Recorded
|
|
|
Income
|
|
|
Interest
|
|
|
|
|
Balance
(1)
|
|
|
Investment
|
|
|
Allocated
|
|
|
Investment
|
|
|
Recognized
|
|
|
Recognized
|
|
|
With no related allowance recorded
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One-to-Four Family Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1-4 Family Owner Occupied
|
|
$
|
5,878,741
|
|
|
$
|
5,075,565
|
|
|
$
|
0
|
|
|
$
|
5,373,322
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
1-4 Family Non-Owner Occupied
|
|
|
3,487,465
|
|
|
|
2,130,102
|
|
|
|
0
|
|
|
|
2,291,842
|
|
|
|
164
|
|
|
|
164
|
|
|
1-4 Family Second Mortgage
|
|
|
1,405,390
|
|
|
|
1,142,585
|
|
|
|
0
|
|
|
|
1,186,435
|
|
|
|
0
|
|
|
|
0
|
|
|
Home Equity Lines of Credit
|
|
|
1,751,282
|
|
|
|
1,749,268
|
|
|
|
0
|
|
|
|
1,790,931
|
|
|
|
0
|
|
|
|
0
|
|
|
Home Equity Investment Lines of Credit
|
|
|
157,122
|
|
|
|
156,941
|
|
|
|
0
|
|
|
|
156,942
|
|
|
|
0
|
|
|
|
0
|
|
|
One-to-Four Family Construction Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1-4 Family Construction
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
0
|
|
|
|
0
|
|
|
1-4 Family Construction Models/Speculative
|
|
|
678,779
|
|
|
|
308,146
|
|
|
|
0
|
|
|
|
331,566
|
|
|
|
0
|
|
|
|
0
|
|
|
Multi-Family Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Multi-Family
|
|
|
312,714
|
|
|
|
300,254
|
|
|
|
0
|
|
|
|
461,241
|
|
|
|
0
|
|
|
|
0
|
|
|
Multi-Family Second Mortgage
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Multi-Family Construction
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Commercial Real Estate Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
10,366,525
|
|
|
|
9,239,212
|
|
|
|
0
|
|
|
|
9,262,945
|
|
|
|
43,972
|
|
|
|
43,972
|
|
|
Commercial Second Mortgage
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
0
|
|
|
|
0
|
|
|
Commercial Lines of Credit
|
|
|
613,910
|
|
|
|
613,204
|
|
|
|
0
|
|
|
|
614,870
|
|
|
|
0
|
|
|
|
0
|
|
|
Commercial Construction
|
|
|
828,491
|
|
|
|
643,855
|
|
|
|
0
|
|
|
|
643,859
|
|
|
|
0
|
|
|
|
0
|
|
|
Commercial and Industrial Loans
|
|
|
484,799
|
|
|
|
239,927
|
|
|
|
0
|
|
|
|
339,854
|
|
|
|
0
|
|
|
|
0
|
|
|
Land Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lot Loans
|
|
|
5,379,609
|
|
|
|
4,254,141
|
|
|
|
0
|
|
|
|
3,966,345
|
|
|
|
11,569
|
|
|
|
11,569
|
|
|
Acquisition and Development Loans
|
|
|
4,990,178
|
|
|
|
2,374,790
|
|
|
|
0
|
|
|
|
2,874,945
|
|
|
|
0
|
|
|
|
0
|
|
|
Consumer Loans
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total with no related allowance recorded
|
|
$
|
36,335,005
|
|
|
$
|
28,227,990
|
|
|
$
|
0
|
|
|
$
|
29,295,097
|
|
|
$
|
55,705
|
|
|
$
|
55,705
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With an allowance recorded
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One-to-Four Family Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1-4 Family Owner Occupied
|
|
$
|
231,051
|
|
|
$
|
230,786
|
|
|
$
|
39,982
|
|
|
$
|
231,635
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
1-4 Family Non-Owner Occupied
|
|
|
116,463
|
|
|
|
116,329
|
|
|
|
8,286
|
|
|
|
116,778
|
|
|
|
0
|
|
|
|
0
|
|
|
1-4 Family Second Mortgage
|
|
|
246,621
|
|
|
|
246,337
|
|
|
|
14,685
|
|
|
|
246,674
|
|
|
|
592
|
|
|
|
592
|
|
|
Home Equity Lines of Credit
|
|
|
963,762
|
|
|
|
962,653
|
|
|
|
338,080
|
|
|
|
928,753
|
|
|
|
0
|
|
|
|
0
|
|
|
Home Equity Investment Lines of Credit
|
|
|
398,424
|
|
|
|
397,966
|
|
|
|
298,171
|
|
|
|
402,629
|
|
|
|
0
|
|
|
|
0
|
|
|
One-to-Four Family Construction Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1-4 Family Construction
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
1-4 Family Construction Models/Speculative
|
|
|
526,363
|
|
|
|
525,758
|
|
|
|
101,716
|
|
|
|
525,760
|
|
|
|
7,062
|
|
|
|
7,062
|
|
|
Multi-Family Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Multi-Family
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Multi-Family Second Mortgage
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Multi-Family Construction
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Commercial Real Estate Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
1,357,202
|
|
|
|
1,355,641
|
|
|
|
98,725
|
|
|
|
1,355,647
|
|
|
|
0
|
|
|
|
0
|
|
|
Commercial Second Mortgage
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Commercial Lines of Credit
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
0
|
|
|
|
0
|
|
|
Commercial Construction
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Commercial and Industrial Loans
|
|
|
300,860
|
|
|
|
300,514
|
|
|
|
300,860
|
|
|
|
300,515
|
|
|
|
0
|
|
|
|
0
|
|
|
Land Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lot Loans
|
|
|
134,886
|
|
|
|
134,731
|
|
|
|
252,000
|
|
|
|
135,095
|
|
|
|
2,031
|
|
|
|
2,031
|
|
|
Acquisition and Development Loans
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Consumer Loans
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total with an allowance recorded
|
|
$
|
4,275,632
|
|
|
$
|
4,270,715
|
|
|
$
|
1,452,505
|
|
|
$
|
4,243,486
|
|
|
$
|
9,685
|
|
|
$
|
9,685
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans evaluated for impairment
|
|
$
|
40,610,637
|
|
|
$
|
32,498,705
|
|
|
$
|
1,452,505
|
|
|
$
|
33,538,583
|
|
|
$
|
65,390
|
|
|
$
|
65,390
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
There are $14.5 million of loans individually identified for impairment accruing interest.
|
12
Part I — FINANCIAL INFORMATION
The following table presents loans individually evaluated for impairment by class of
loans as of June 30, 2012:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2012
|
|
|
|
|
Unpaid
|
|
|
|
|
|
Allowance for
|
|
|
Average
|
|
|
Interest
|
|
|
Cash Basis
|
|
|
|
|
Principal
|
|
|
Recorded
|
|
|
Loan Losses
|
|
|
Recorded
|
|
|
Income
|
|
|
Interest
|
|
|
|
|
Balance
(1)
|
|
|
Investment
|
|
|
Allocated
|
|
|
Investment
|
|
|
Recognized
|
|
|
Recognized
|
|
|
With no related allowance recorded
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One-to-Four Family Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1-4 Family Owner Occupied
|
|
$
|
6,380,803
|
|
|
$
|
5,671,079
|
|
|
$
|
0
|
|
|
$
|
5,437,834
|
|
|
$
|
30,882
|
|
|
$
|
30,882
|
|
|
1-4 Family Non-Owner Occupied
|
|
|
4,597,708
|
|
|
|
2,453,581
|
|
|
|
0
|
|
|
|
3,503,049
|
|
|
|
48,828
|
|
|
|
48,828
|
|
|
1-4 Family Second Mortgage
|
|
|
1,455,914
|
|
|
|
1,230,284
|
|
|
|
0
|
|
|
|
1,374,161
|
|
|
|
3,958
|
|
|
|
3,958
|
|
|
Home Equity Lines of Credit
|
|
|
1,834,685
|
|
|
|
1,832,595
|
|
|
|
0
|
|
|
|
1,344,562
|
|
|
|
0
|
|
|
|
0
|
|
|
Home Equity Investment Lines of Credit
|
|
|
157,120
|
|
|
|
156,943
|
|
|
|
0
|
|
|
|
204,703
|
|
|
|
0
|
|
|
|
0
|
|
|
One-to-Four Family Construction Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1-4 Family Construction
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
52,573
|
|
|
|
4,821
|
|
|
|
4,821
|
|
|
1-4 Family Construction Models/Speculative
|
|
|
678,779
|
|
|
|
354,986
|
|
|
|
0
|
|
|
|
475,027
|
|
|
|
0
|
|
|
|
0
|
|
|
Multi-Family Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Multi-Family
|
|
|
635,053
|
|
|
|
622,228
|
|
|
|
0
|
|
|
|
550,760
|
|
|
|
4,081
|
|
|
|
4,081
|
|
|
Multi-Family Second Mortgage
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Multi-Family Construction
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Commercial Real Estate Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
10,902,253
|
|
|
|
9,286,679
|
|
|
|
0
|
|
|
|
8,005,131
|
|
|
|
147,148
|
|
|
|
147,148
|
|
|
Commercial Second Mortgage
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
192,399
|
|
|
|
1,660
|
|
|
|
1,660
|
|
|
Commercial Lines of Credit
|
|
|
617,240
|
|
|
|
616,536
|
|
|
|
0
|
|
|
|
2,413,942
|
|
|
|
0
|
|
|
|
0
|
|
|
Commercial Construction
|
|
|
828,490
|
|
|
|
643,863
|
|
|
|
0
|
|
|
|
575,159
|
|
|
|
0
|
|
|
|
0
|
|
|
Commercial and Industrial Loans
|
|
|
801,075
|
|
|
|
439,781
|
|
|
|
0
|
|
|
|
2,335,961
|
|
|
|
662
|
|
|
|
662
|
|
|
Land Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lot Loans
|
|
|
5,235,050
|
|
|
|
3,678,550
|
|
|
|
0
|
|
|
|
2,955,360
|
|
|
|
5,519
|
|
|
|
5,519
|
|
|
Acquisition and Development Loans
|
|
|
5,986,575
|
|
|
|
3,375,100
|
|
|
|
0
|
|
|
|
2,258,295
|
|
|
|
19,132
|
|
|
|
19,132
|
|
|
Consumer Loans
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total with no related allowance recorded
|
|
$
|
40,110,745
|
|
|
$
|
30,362,205
|
|
|
$
|
0
|
|
|
$
|
31,678,916
|
|
|
$
|
266,691
|
|
|
$
|
266,691
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With an allowance recorded
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One-to-Four Family Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1-4 Family Owner Occupied
|
|
$
|
232,751
|
|
|
$
|
232,485
|
|
|
$
|
39,981
|
|
|
$
|
526,956
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
1-4 Family Non-Owner Occupied
|
|
|
117,360
|
|
|
|
117,226
|
|
|
|
8,286
|
|
|
|
1,243,154
|
|
|
|
10,112
|
|
|
|
10,112
|
|
|
1-4 Family Second Mortgage
|
|
|
247,293
|
|
|
|
247,011
|
|
|
|
14,685
|
|
|
|
175,881
|
|
|
|
0
|
|
|
|
0
|
|
|
Home Equity Lines of Credit
|
|
|
895,875
|
|
|
|
894,852
|
|
|
|
299,759
|
|
|
|
1,629,256
|
|
|
|
0
|
|
|
|
0
|
|
|
Home Equity Investment Lines of Credit
|
|
|
407,757
|
|
|
|
407,293
|
|
|
|
302,322
|
|
|
|
470,382
|
|
|
|
0
|
|
|
|
0
|
|
|
One-to-Four Family Construction Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1-4 Family Construction
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
1-4 Family Construction Models/Speculative
|
|
|
526,363
|
|
|
|
525,762
|
|
|
|
101,716
|
|
|
|
1,064,520
|
|
|
|
14,047
|
|
|
|
14,047
|
|
|
Multi-Family Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Multi-Family
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
92,056
|
|
|
|
0
|
|
|
|
0
|
|
|
Multi-Family Second Mortgage
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Multi-Family Construction
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Commercial Real Estate Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
1,357,202
|
|
|
|
1,355,653
|
|
|
|
98,725
|
|
|
|
3,796,149
|
|
|
|
37,340
|
|
|
|
37,340
|
|
|
Commercial Second Mortgage
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
34,220
|
|
|
|
0
|
|
|
|
0
|
|
|
Commercial Lines of Credit
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
48,854
|
|
|
|
0
|
|
|
|
0
|
|
|
Commercial Construction
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
711,804
|
|
|
|
0
|
|
|
|
0
|
|
|
Commercial and Industrial Loans
|
|
|
300,860
|
|
|
|
300,517
|
|
|
|
300,860
|
|
|
|
1,404,807
|
|
|
|
0
|
|
|
|
0
|
|
|
Land Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lot Loans
|
|
|
135,614
|
|
|
|
135,459
|
|
|
|
252,000
|
|
|
|
962,537
|
|
|
|
0
|
|
|
|
0
|
|
|
Acquisition and Development Loans
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
2,397,176
|
|
|
|
0
|
|
|
|
0
|
|
|
Consumer Loans
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total with an allowance recorded
|
|
$
|
4,221,075
|
|
|
$
|
4,216,258
|
|
|
$
|
1,418,334
|
|
|
$
|
14,557,752
|
|
|
$
|
61,499
|
|
|
$
|
61,499
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans evaluated for impairment
|
|
$
|
44,331,820
|
|
|
$
|
34,578,463
|
|
|
$
|
1,418,334
|
|
|
$
|
46,236,668
|
|
|
$
|
328,190
|
|
|
$
|
328,190
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
There are $13.9 million of loans individually identified for impairment accruing interest.
|
13
Part I — FINANCIAL INFORMATION
The following table presents loans individually evaluated for impairment by class of
loans as of September 30, 2011:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2011
|
|
|
|
|
Unpaid
|
|
|
|
|
|
Allowance for
|
|
|
Average
|
|
|
Interest
|
|
|
Cash Basis
|
|
|
|
|
Principal
|
|
|
Recorded
|
|
|
Loan Losses
|
|
|
Recorded
|
|
|
Income
|
|
|
Interest
|
|
|
|
|
Balance
(1)
|
|
|
Investment
|
|
|
Allocated
|
|
|
Investment
|
|
|
Recognized
|
|
|
Recognized
|
|
|
With no related allowance recorded
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One-to-Four Family Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1-4 Family Owner Occupied
|
|
$
|
6,101,095
|
|
|
$
|
6,091,111
|
|
|
$
|
—
|
|
|
$
|
6,605,736
|
|
|
$
|
47,473
|
|
|
$
|
47,473
|
|
|
1-4 Family Non-Owner Occupied
|
|
|
2,845,537
|
|
|
|
2,840,881
|
|
|
|
—
|
|
|
|
1,998,029
|
|
|
|
7,295
|
|
|
|
7,295
|
|
|
1-4 Family Second Mortgage
|
|
|
1,517,563
|
|
|
|
1,515,080
|
|
|
|
—
|
|
|
|
1,279,294
|
|
|
|
107
|
|
|
|
107
|
|
|
Home Equity Lines of Credit
|
|
|
796,506
|
|
|
|
795,203
|
|
|
|
—
|
|
|
|
867,519
|
|
|
|
582
|
|
|
|
582
|
|
|
Home Equity Investment Lines of Credit
|
|
|
310,121
|
|
|
|
309,614
|
|
|
|
—
|
|
|
|
221,646
|
|
|
|
317
|
|
|
|
317
|
|
|
One-to-Four Family Construction Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1-4 Family Construction
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
1-4 Family Construction Models/Speculative
|
|
|
176,887
|
|
|
|
176,598
|
|
|
|
—
|
|
|
|
176,753
|
|
|
|
1,322
|
|
|
|
1,322
|
|
|
Multi-Family Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Multi-Family
|
|
|
305,904
|
|
|
|
305,404
|
|
|
|
—
|
|
|
|
1,224,791
|
|
|
|
—
|
|
|
|
—
|
|
|
Multi-Family Second Mortgage
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Multi-Family Construction
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Commercial Real Estate Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
7,266,866
|
|
|
|
7,254,974
|
|
|
|
—
|
|
|
|
6,842,586
|
|
|
|
25,577
|
|
|
|
25,577
|
|
|
Commercial Second Mortgage
|
|
|
571,473
|
|
|
|
570,538
|
|
|
|
—
|
|
|
|
570,519
|
|
|
|
—
|
|
|
|
—
|
|
|
Commercial Lines of Credit
|
|
|
2,623,140
|
|
|
|
2,618,848
|
|
|
|
—
|
|
|
|
2,758,567
|
|
|
|
2,186
|
|
|
|
2,186
|
|
|
Commercial Construction
|
|
|
370,000
|
|
|
|
369,395
|
|
|
|
—
|
|
|
|
369,382
|
|
|
|
—
|
|
|
|
—
|
|
|
Commercial and Industrial Loans
|
|
|
2,559,945
|
|
|
|
2,555,755
|
|
|
|
—
|
|
|
|
2,057,142
|
|
|
|
—
|
|
|
|
—
|
|
|
Land Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lot Loans
|
|
|
1,344,192
|
|
|
|
1,341,993
|
|
|
|
—
|
|
|
|
1,153,055
|
|
|
|
807
|
|
|
|
807
|
|
|
Acquisition and Development Loans
|
|
|
109,818
|
|
|
|
109,638
|
|
|
|
—
|
|
|
|
274,431
|
|
|
|
—
|
|
|
|
—
|
|
|
Consumer Loans
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total with no related allowance recorded
|
|
$
|
26,899,047
|
|
|
$
|
26,855,032
|
|
|
$
|
—
|
|
|
$
|
26,399,450
|
|
|
$
|
85,666
|
|
|
$
|
85,666
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With an allowance recorded
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One-to-Four Family Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1-4 Family Owner Occupied
|
|
$
|
1,631,018
|
|
|
$
|
1,628,349
|
|
|
$
|
405,552
|
|
|
$
|
1,158,082
|
|
|
$
|
719
|
|
|
$
|
719
|
|
|
1-4 Family Non-Owner Occupied
|
|
|
4,625,921
|
|
|
|
4,618,352
|
|
|
|
1,924,308
|
|
|
|
4,747,990
|
|
|
|
3,565
|
|
|
|
3,565
|
|
|
1-4 Family Second Mortgage
|
|
|
457,261
|
|
|
|
456,513
|
|
|
|
224,653
|
|
|
|
361,465
|
|
|
|
—
|
|
|
|
—
|
|
|
Home Equity Lines of Credit
|
|
|
2,329,197
|
|
|
|
2,325,385
|
|
|
|
987,669
|
|
|
|
2,298,073
|
|
|
|
—
|
|
|
|
—
|
|
|
Home Equity Investment Lines of Credit
|
|
|
345,735
|
|
|
|
345,170
|
|
|
|
102,008
|
|
|
|
345,158
|
|
|
|
1,286
|
|
|
|
1,286
|
|
|
One-to-Four Family Construction Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1-4 Family Construction
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
1-4 Family Construction Models/Speculative
|
|
|
2,685,405
|
|
|
|
2,681,011
|
|
|
|
862,554
|
|
|
|
2,838,155
|
|
|
|
—
|
|
|
|
—
|
|
|
Multi-Family Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Multi-Family
|
|
|
368,828
|
|
|
|
368,224
|
|
|
|
226,067
|
|
|
|
368,212
|
|
|
|
—
|
|
|
|
—
|
|
|
Multi-Family Second Mortgage
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,660
|
|
|
|
1,660
|
|
|
Multi-Family Construction
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Commercial Real Estate Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
6,378,282
|
|
|
|
6,367,846
|
|
|
|
929,808
|
|
|
|
7,485,402
|
|
|
|
6,936
|
|
|
|
6,936
|
|
|
Commercial Second Mortgage
|
|
|
137,105
|
|
|
|
136,881
|
|
|
|
3,553
|
|
|
|
68,440
|
|
|
|
—
|
|
|
|
—
|
|
|
Commercial Lines of Credit
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Commercial Construction
|
|
|
2,851,883
|
|
|
|
2,847,217
|
|
|
|
751,178
|
|
|
|
3,146,613
|
|
|
|
—
|
|
|
|
—
|
|
|
Commercial and Industrial Loans
|
|
|
3,279,788
|
|
|
|
3,274,422
|
|
|
|
1,041,066
|
|
|
|
2,456,243
|
|
|
|
2,920
|
|
|
|
2,920
|
|
|
Land Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lot Loans
|
|
|
3,202,019
|
|
|
|
3,196,779
|
|
|
|
1,291,302
|
|
|
|
3,084,307
|
|
|
|
6,742
|
|
|
|
6,742
|
|
|
Acquisition and Development Loans
|
|
|
9,604,420
|
|
|
|
9,588,705
|
|
|
|
4,810,417
|
|
|
|
9,826,391
|
|
|
|
24,176
|
|
|
|
24,176
|
|
|
Consumer Loans
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total with an allowance recorded
|
|
$
|
37,896,862
|
|
|
$
|
37,834,854
|
|
|
$
|
13,560,135
|
|
|
$
|
38,184,531
|
|
|
$
|
48,004
|
|
|
$
|
48,004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans evaluated for impairment
|
|
$
|
64,795,909
|
|
|
$
|
64,689,886
|
|
|
$
|
13,560,135
|
|
|
$
|
64,583,981
|
|
|
$
|
133,670
|
|
|
$
|
133,670
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
There are $17.0 million of loans individually identified for impairment accruing interest.
|
14
Part I — FINANCIAL INFORMATION
Past Due and Non-Accrual Loans
The following table presents the recorded investment in non-accrual loans and loans past due over 90 days still on accrual by class of
loan as of September 30, 2012 and June 30, 2012. Non-accrual loans and loans past due over 90 days still on accrual include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified
impaired loans.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2012
|
|
|
June 30, 2012
|
|
|
|
|
|
|
|
Loans Past Due
|
|
|
|
|
|
Loans Past Due
|
|
|
|
|
|
|
|
Over 90 Days
|
|
|
|
|
|
Over 90 Days
|
|
|
|
|
Nonaccrual
(1)
|
|
|
Still Accruing
(2)
|
|
|
Nonaccrual
(1)
|
|
|
Still Accruing
(2)
|
|
|
One-to-Four Family Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1-4 Family Owner Occupied
|
|
$
|
2,293,702
|
|
|
$
|
—
|
|
|
$
|
2,871,746
|
|
|
$
|
—
|
|
|
1-4 Family Non-Owner Occupied
|
|
|
2,084,520
|
|
|
|
0
|
|
|
|
2,461,281
|
|
|
|
0
|
|
|
1-4 Family Second Mortgage
|
|
|
481,843
|
|
|
|
0
|
|
|
|
566,444
|
|
|
|
0
|
|
|
Home Equity Lines of Credit
|
|
|
2,715,044
|
|
|
|
0
|
|
|
|
2,727,447
|
|
|
|
0
|
|
|
Home Equity Investment Lines of Credit
|
|
|
555,545
|
|
|
|
0
|
|
|
|
564,235
|
|
|
|
0
|
|
|
One-to-Four Family Construction Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1-4 Family Construction
|
|
|
—
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
1-4 Family Construction Models/Speculative
|
|
|
308,927
|
|
|
|
0
|
|
|
|
355,355
|
|
|
|
0
|
|
|
Multi-Family Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Multi-Family
|
|
|
5,720
|
|
|
|
0
|
|
|
|
324,602
|
|
|
|
0
|
|
|
Multi-Family Second Mortgage
|
|
|
—
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Multi-Family Construction
|
|
|
—
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Commercial Real Estate Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
3,146,513
|
|
|
|
0
|
|
|
|
3,310,170
|
|
|
|
0
|
|
|
Commercial Second Mortgage
|
|
|
—
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Commercial Lines of Credit
|
|
|
613,910
|
|
|
|
0
|
|
|
|
616,537
|
|
|
|
0
|
|
|
Commercial Construction
|
|
|
644,808
|
|
|
|
0
|
|
|
|
644,072
|
|
|
|
0
|
|
|
Commercial and Industrial Loans
|
|
|
238,229
|
|
|
|
0
|
|
|
|
437,729
|
|
|
|
0
|
|
|
Land Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lot Loans
|
|
|
3,578,542
|
|
|
|
0
|
|
|
|
3,815,778
|
|
|
|
0
|
|
|
Acquisition and Development Loans
|
|
|
1,197,045
|
|
|
|
0
|
|
|
|
1,380,199
|
|
|
|
0
|
|
|
Consumer Loans
|
|
|
—
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
17,864,348
|
|
|
$
|
—
|
|
|
$
|
20,075,595
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Non-accrual status denotes loans on which, in the opinion of management, the collection of additional interest is unlikely, or loans that meet the non-accrual criteria
established by regulatory authorities. Payments received on a non-accrual loan are either applied to the outstanding principal balance or recorded as interest income, depending on an assessment of the collectibility of the principal balance of the
loan.
|
|
(2)
|
At September 30, 2012 and June 30, 2012, the Company had balances of approximately $6.1 million and $6.3 million, respectively, in loans that have matured and
continue to make current payments. These loans are not considered past due as a result of their payment status being current.
|
15
Part I — FINANCIAL INFORMATION
The following table presents the aging of the recorded investment in past due loans as
of September 30, 2012 by class of loan. Performing loans are accruing loans less than 90 days past due. Nonperforming loans are all loans not accruing or greater than 90 days past due and accruing. At September 30, 2012, the Company had a balance of
approximately $6.1 million in loans that were contractually past maturity but were not considered past due as a result of the payment status being current.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Greater
Than
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30-59 Days
|
|
|
60-89 Days
|
|
|
90 Days
|
|
|
Total
|
|
|
Loans Not
|
|
|
|
|
|
|
|
Past Due
|
|
|
Past Due
|
|
|
Past Due
|
|
|
Past Due
|
|
|
Past Due
|
|
|
Total
|
|
|
Performing Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One-to-Four Family Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1-4 Family Owner Occupied
|
|
$
|
2,050,531
|
|
|
$
|
247,273
|
|
|
$
|
—
|
|
|
$
|
2,297,804
|
|
|
$
|
54,638,081
|
|
|
$
|
56,935,885
|
|
|
1-4 Family Non-Owner Occupied
|
|
|
16,284
|
|
|
|
—
|
|
|
|
—
|
|
|
|
16,284
|
|
|
|
32,163,198
|
|
|
|
32,179,482
|
|
|
1-4 Family Second Mortgage
|
|
|
273,583
|
|
|
|
—
|
|
|
|
—
|
|
|
|
273,583
|
|
|
|
27,941,310
|
|
|
|
28,214,893
|
|
|
Home Equity Lines of Credit
|
|
|
777,134
|
|
|
|
19,991
|
|
|
|
—
|
|
|
|
797,125
|
|
|
|
61,346,364
|
|
|
|
62,143,489
|
|
|
Home Equity Investment Lines of Credit
|
|
|
235,512
|
|
|
|
—
|
|
|
|
—
|
|
|
|
235,512
|
|
|
|
4,470,647
|
|
|
|
4,706,159
|
|
|
One-to-Four Family Construction Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1-4 Family Construction
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,339,759
|
|
|
|
1,339,759
|
|
|
1-4 Family Construction Models/Speculative
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
311,401
|
|
|
|
311,401
|
|
|
Multi-Family Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Multi-Family
|
|
|
235,540
|
|
|
|
—
|
|
|
|
—
|
|
|
|
235,540
|
|
|
|
62,324,755
|
|
|
|
62,560,295
|
|
|
Multi-Family Second Mortgage
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
144,588
|
|
|
|
144,588
|
|
|
Multi-Family Construction
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
108,303
|
|
|
|
108,303
|
|
|
Commercial Real Estate Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
405,037
|
|
|
|
616,238
|
|
|
|
—
|
|
|
|
1,021,275
|
|
|
|
193,628,054
|
|
|
|
194,649,329
|
|
|
Commercial Second Mortgage
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,794,184
|
|
|
|
4,794,184
|
|
|
Commercial Lines of Credit
|
|
|
587,524
|
|
|
|
1,183,484
|
|
|
|
—
|
|
|
|
1,771,008
|
|
|
|
20,245,827
|
|
|
|
22,016,835
|
|
|
Commercial Construction
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
8,471,587
|
|
|
|
8,471,587
|
|
|
Commercial and Industrial Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,275,168
|
|
|
|
37,275,168
|
|
|
Land Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lot Loans
|
|
|
14,622
|
|
|
|
95,903
|
|
|
|
—
|
|
|
|
110,525
|
|
|
|
5,646,750
|
|
|
|
5,757,275
|
|
|
Acquisition and Development Loans
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
17,749,919
|
|
|
|
17,749,919
|
|
|
Consumer Loans
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,099,017
|
|
|
|
2,099,017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Performing Loans
|
|
$
|
4,595,767
|
|
|
$
|
2,162,889
|
|
|
$
|
—
|
|
|
$
|
6,758,656
|
|
|
$
|
534,698,912
|
|
|
$
|
541,457,568
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonperforming Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One-to-Four Family Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1-4 Family Owner Occupied
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,036,669
|
|
|
$
|
2,036,669
|
|
|
$
|
257,033
|
|
|
$
|
2,293,702
|
|
|
1-4 Family Non-Owner Occupied
|
|
|
57,235
|
|
|
|
58,470
|
|
|
|
1,870,021
|
|
|
|
1,985,726
|
|
|
|
98,794
|
|
|
|
2,084,520
|
|
|
1-4 Family Second Mortgage
|
|
|
—
|
|
|
|
41,014
|
|
|
|
393,349
|
|
|
|
434,363
|
|
|
|
47,480
|
|
|
|
481,843
|
|
|
Home Equity Lines of Credit
|
|
|
119,966
|
|
|
|
—
|
|
|
|
2,249,808
|
|
|
|
2,369,774
|
|
|
|
345,270
|
|
|
|
2,715,044
|
|
|
Home Equity Investment Lines of Credit
|
|
|
84,536
|
|
|
|
—
|
|
|
|
471,009
|
|
|
|
555,545
|
|
|
|
—
|
|
|
|
555,545
|
|
|
One-to-Four Family Construction Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1-4 Family Construction
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
1-4 Family Construction Models/Speculative
|
|
|
—
|
|
|
|
—
|
|
|
|
190,256
|
|
|
|
190,256
|
|
|
|
118,671
|
|
|
|
308,927
|
|
|
Multi-Family Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Multi-Family
|
|
|
—
|
|
|
|
—
|
|
|
|
5,720
|
|
|
|
5,720
|
|
|
|
—
|
|
|
|
5,720
|
|
|
Multi-Family Second Mortgage
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Multi-Family Construction
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Commercial Real Estate Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
—
|
|
|
|
—
|
|
|
|
3,013,679
|
|
|
|
3,013,679
|
|
|
|
132,834
|
|
|
|
3,146,513
|
|
|
Commercial Second Mortgage
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Commercial Lines of Credit
|
|
|
—
|
|
|
|
—
|
|
|
|
494,972
|
|
|
|
494,972
|
|
|
|
118,938
|
|
|
|
613,910
|
|
|
Commercial Construction
|
|
|
—
|
|
|
|
—
|
|
|
|
644,808
|
|
|
|
644,808
|
|
|
|
—
|
|
|
|
644,808
|
|
|
Commercial and Industrial Loans
|
|
|
—
|
|
|
|
—
|
|
|
|
38,229
|
|
|
|
38,229
|
|
|
|
200,000
|
|
|
|
238,229
|
|
|
Land Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lot Loans
|
|
|
—
|
|
|
|
—
|
|
|
|
3,096,352
|
|
|
|
3,096,352
|
|
|
|
482,190
|
|
|
|
3,578,542
|
|
|
Acquisition and Development Loans
|
|
|
—
|
|
|
|
—
|
|
|
|
1,197,045
|
|
|
|
1,197,045
|
|
|
|
—
|
|
|
|
1,197,045
|
|
|
Consumer Loans
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Nonperforming Loans
|
|
$
|
261,737
|
|
|
$
|
99,484
|
|
|
$
|
15,701,917
|
|
|
$
|
16,063,138
|
|
|
$
|
1,801,210
|
|
|
$
|
17,864,348
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Loans
|
|
$
|
4,857,504
|
|
|
$
|
2,262,373
|
|
|
$
|
15,701,917
|
|
|
$
|
22,821,794
|
|
|
$
|
536,500,122
|
|
|
$
|
559,321,916
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16
Part I — FINANCIAL INFORMATION
The following table presents the aging of the recorded investment in past due loans as
of June 30, 2012 by class of loan. Performing loans are accruing loans less than 90 days past due. Nonperforming loans are all loans not accruing. At June 30, 2012, the Company had a balance of approximately $6.3 million in loans that were
contractually past maturity but were not considered past due as a result of the payment status being current.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Greater
Than
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30-59 Days
|
|
|
60-89 Days
|
|
|
90 Days
|
|
|
Total
|
|
|
Loans Not
|
|
|
|
|
|
|
|
Past Due
|
|
|
Past Due
|
|
|
Past Due
|
|
|
Past Due
|
|
|
Past Due
|
|
|
Total
|
|
|
Performing Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One-to-Four Family Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1-4 Family Owner Occupied
|
|
$
|
584,430
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
584,430
|
|
|
$
|
55,220,719
|
|
|
$
|
55,805,149
|
|
|
1-4 Family Non-Owner Occupied
|
|
|
375,660
|
|
|
|
303,667
|
|
|
|
—
|
|
|
|
679,327
|
|
|
|
31,188,492
|
|
|
|
31,867,819
|
|
|
1-4 Family Second Mortgage
|
|
|
14,221
|
|
|
|
—
|
|
|
|
—
|
|
|
|
14,221
|
|
|
|
28,588,155
|
|
|
|
28,602,376
|
|
|
Home Equity Lines of Credit
|
|
|
114,558
|
|
|
|
23,230
|
|
|
|
—
|
|
|
|
137,788
|
|
|
|
62,968,449
|
|
|
|
63,106,237
|
|
|
Home Equity Investment Lines of Credit
|
|
|
200,657
|
|
|
|
—
|
|
|
|
—
|
|
|
|
200,657
|
|
|
|
4,874,516
|
|
|
|
5,075,173
|
|
|
One-to-Four Family Construction Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1-4 Family Construction
|
|
|
—
|
|
|
|
145,771
|
|
|
|
—
|
|
|
|
145,771
|
|
|
|
367,695
|
|
|
|
513,466
|
|
|
1-4 Family Construction Models/Speculative
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,250,946
|
|
|
|
1,250,946
|
|
|
Multi-Family Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Multi-Family
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
53,573,280
|
|
|
|
53,573,280
|
|
|
Multi-Family Second Mortgage
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
145,476
|
|
|
|
145,476
|
|
|
Multi-Family Construction
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,368,866
|
|
|
|
5,368,866
|
|
|
Commercial Real Estate Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
744,536
|
|
|
|
—
|
|
|
|
—
|
|
|
|
744,536
|
|
|
|
194,006,468
|
|
|
|
194,751,004
|
|
|
Commercial Second Mortgage
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,743,721
|
|
|
|
5,743,721
|
|
|
Commercial Lines of Credit
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
21,693,593
|
|
|
|
21,693,593
|
|
|
Commercial Construction
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7,079,839
|
|
|
|
7,079,839
|
|
|
Commercial and Industrial Loans
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
34,965,008
|
|
|
|
34,965,007
|
|
|
Land Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lot Loans
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
8,261,518
|
|
|
|
8,261,518
|
|
|
Acquisition and Development Loans
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
17,691,018
|
|
|
|
17,691,018
|
|
|
Consumer Loans
|
|
|
—
|
|
|
|
58,394
|
|
|
|
—
|
|
|
|
58,394
|
|
|
|
2,051,903
|
|
|
|
2,110,297
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Performing Loans
|
|
$
|
2,034,062
|
|
|
$
|
531,062
|
|
|
$
|
—
|
|
|
$
|
2,565,124
|
|
|
$
|
535,039,662
|
|
|
$
|
537,604,785
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonperforming Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One-to-Four Family Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1-4 Family Owner Occupied
|
|
$
|
105,333
|
|
|
$
|
—
|
|
|
$
|
2,124,062
|
|
|
$
|
2,229,395
|
|
|
$
|
642,351
|
|
|
$
|
2,871,746
|
|
|
1-4 Family Non-Owner Occupied
|
|
|
—
|
|
|
|
—
|
|
|
|
2,405,774
|
|
|
|
2,405,774
|
|
|
|
55,507
|
|
|
|
2,461,281
|
|
|
1-4 Family Second Mortgage
|
|
|
—
|
|
|
|
—
|
|
|
|
499,154
|
|
|
|
499,154
|
|
|
|
67,290
|
|
|
|
566,444
|
|
|
Home Equity Lines of Credit
|
|
|
14,607
|
|
|
|
—
|
|
|
|
2,371,962
|
|
|
|
2,386,569
|
|
|
|
340,878
|
|
|
|
2,727,447
|
|
|
Home Equity Investment Lines of Credit
|
|
|
—
|
|
|
|
134,195
|
|
|
|
430,041
|
|
|
|
564,236
|
|
|
|
—
|
|
|
|
564,236
|
|
|
One-to-Four Family Construction Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1-4 Family Construction
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
1-4 Family Construction Models/Speculative
|
|
|
—
|
|
|
|
—
|
|
|
|
235,945
|
|
|
|
235,945
|
|
|
|
119,410
|
|
|
|
355,355
|
|
|
Multi-Family Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Multi-Family
|
|
|
—
|
|
|
|
—
|
|
|
|
324,602
|
|
|
|
324,602
|
|
|
|
—
|
|
|
|
324,602
|
|
|
Multi-Family Second Mortgage
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Multi-Family Construction
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Commercial Real Estate Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
—
|
|
|
|
—
|
|
|
|
3,166,992
|
|
|
|
3,166,992
|
|
|
|
143,178
|
|
|
|
3,310,170
|
|
|
Commercial Second Mortgage
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Commercial Lines of Credit
|
|
|
—
|
|
|
|
122,129
|
|
|
|
494,407
|
|
|
|
616,536
|
|
|
|
—
|
|
|
|
616,536
|
|
|
Commercial Construction
|
|
|
—
|
|
|
|
—
|
|
|
|
644,072
|
|
|
|
644,072
|
|
|
|
—
|
|
|
|
644,072
|
|
|
Commercial and Industrial Loans
|
|
|
—
|
|
|
|
—
|
|
|
|
237,957
|
|
|
|
237,957
|
|
|
|
199,772
|
|
|
|
437,729
|
|
|
Land Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lot Loans
|
|
|
—
|
|
|
|
—
|
|
|
|
3,144,721
|
|
|
|
3,144,721
|
|
|
|
671,057
|
|
|
|
3,815,778
|
|
|
Acquisition and Development Loans
|
|
|
—
|
|
|
|
—
|
|
|
|
1,380,199
|
|
|
|
1,380,199
|
|
|
|
—
|
|
|
|
1,380,199
|
|
|
Consumer Loans
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Nonperforming Loans
|
|
$
|
119,940
|
|
|
$
|
256,324
|
|
|
$
|
17,459,888
|
|
|
$
|
17,836,152
|
|
|
$
|
2,239,443
|
|
|
$
|
20,075,595
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Loans
|
|
$
|
2,154,002
|
|
|
$
|
787,386
|
|
|
$
|
17,459,888
|
|
|
$
|
20,401,276
|
|
|
$
|
537,279,105
|
|
|
$
|
557,680,380
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17
Part I — FINANCIAL INFORMATION
Troubled Debt Restructurings:
Included in loans individually impaired are loans with recorded investment of $15,345,654 and $15,590,705 for which the Company has
allocated $153,391 of specific reserves to customers whose terms have been modified in troubled debt restructurings as of both September 30, 2012 and June 30, 2012, respectively. Included in troubled debt restructurings are $1,608,276 and
$1,805,855 of restructured loans on non-accrual at September 30, 2012 and June 30, 2012, respectively. Of the restructured loans, both performing and non-accrual, one loan totaling $111,944 was not performing in accordance with its
modified terms. There are no commitments to lend additional amounts at September 30, 2012 and June 30, 2012.
The
following table presents the aggregate balance of loans by loan class whose terms have been modified in troubled debt restructurings as of September 30, 2012 and June 30, 2012:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding
|
|
|
|
|
|
Outstanding
|
|
|
|
|
|
|
|
Recorded
|
|
|
|
|
|
Recorded
|
|
|
|
|
Number
|
|
|
Investment
|
|
|
Number
|
|
|
Investment
|
|
|
|
|
of Loans
|
|
|
9/30/2012
|
|
|
of Loans
|
|
|
6/30/2012
|
|
|
Troubled Debt Restructurings:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One-to-Four Family Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1-4 Family Owner Occupied
|
|
|
20
|
|
|
$
|
3,756,859
|
|
|
|
20
|
|
|
$
|
3,775,715
|
|
|
1-4 Family Non-Owner Occupied
|
|
|
1
|
|
|
|
49,594
|
|
|
|
1
|
|
|
|
53,993
|
|
|
1-4 Family Second Mortgage
|
|
|
5
|
|
|
|
908,979
|
|
|
|
5
|
|
|
|
912,147
|
|
|
Home Equity Lines of Credit
|
|
|
1
|
|
|
|
63,782
|
|
|
|
1
|
|
|
|
63,782
|
|
|
Home Equity Investment Lines of Credit
|
|
|
0
|
|
|
|
—
|
|
|
|
0
|
|
|
|
0
|
|
|
One-to-Four Family Construction Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1-4 Family Construction
|
|
|
0
|
|
|
|
—
|
|
|
|
0
|
|
|
|
0
|
|
|
1-4 Family Construction Models/Speculative
|
|
|
0
|
|
|
|
—
|
|
|
|
0
|
|
|
|
0
|
|
|
Multi-Family Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Multi-Family
|
|
|
1
|
|
|
|
294,893
|
|
|
|
1
|
|
|
|
297,979
|
|
|
Multi-Family Second Mortgage
|
|
|
0
|
|
|
|
—
|
|
|
|
0
|
|
|
|
0
|
|
|
Multi-Family Construction
|
|
|
0
|
|
|
|
—
|
|
|
|
0
|
|
|
|
0
|
|
|
Commercial Real Estate Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
12
|
|
|
|
8,230,906
|
|
|
|
12
|
|
|
|
8,264,020
|
|
|
Commercial Second Mortgage
|
|
|
0
|
|
|
|
—
|
|
|
|
0
|
|
|
|
0
|
|
|
Commercial Lines of Credit
|
|
|
0
|
|
|
|
—
|
|
|
|
0
|
|
|
|
0
|
|
|
Commercial Construction
|
|
|
0
|
|
|
|
—
|
|
|
|
0
|
|
|
|
0
|
|
|
Commercial and Industrial Loans
|
|
|
2
|
|
|
|
40,485
|
|
|
|
2
|
|
|
|
40,696
|
|
|
Land Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lot Loans
|
|
|
0
|
|
|
|
—
|
|
|
|
0
|
|
|
|
0
|
|
|
Acquisition and Development Loans
|
|
|
2
|
|
|
|
2,000,156
|
|
|
|
2
|
|
|
|
2,182,373
|
|
|
Consumer Loans
|
|
|
0
|
|
|
|
—
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
44
|
|
|
$
|
15,345,654
|
|
|
|
44
|
|
|
$
|
15,590,705
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The summary of activity for troubled debt restructured loans for the three months ending September 30, 2012 was as
follows:
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
|
|
September 30, 2012
|
|
|
Troubled Debt Restructurings:
|
|
|
|
|
|
|
|
|
Beginning Balance
|
|
$
|
15,590,705
|
|
|
Additions
|
|
|
—
|
|
|
Charge-offs
|
|
|
(3,688
|
)
|
|
Payoffs or pay downs
|
|
|
(241,363
|
)
|
|
|
|
|
|
|
|
Ending Balance
|
|
$
|
15,345,654
|
|
|
|
|
|
|
|
18
Part I — FINANCIAL INFORMATION
During the periods ended September 30, 2012 and September 30, 2011, the terms
of certain loans to borrowers experiencing financial difficulty 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; or a permanent reduction of the recorded investment in the loan. In order to determine whether a borrower is
experiencing financial difficulty, an evaluation is performed of 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 following table presents loans, by classes, which were modified during the
three months ended September 30, 2012. All modifications during the three months ended September 30, 2012 were limited to loans which were already classified as troubled debt restructurings and involved an extension of the maturity dates
and were for periods ranging from 12 months to 24 months.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2012
|
|
|
|
|
|
|
|
Pre-Modification
|
|
|
Post-Modification
|
|
|
|
|
Number
|
|
|
Outstanding
Recorded
|
|
|
Outstanding
Recorded
|
|
|
|
|
of Loans
|
|
|
Investment
|
|
|
Investment
|
|
|
Troubled Debt Restructurings:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1-4 Family Owner Occupied
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
1-4 Family Non-Owner Occupied
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Commercial Real Estate
|
|
|
1
|
|
|
$
|
1,283,869
|
|
|
$
|
1,283,869
|
|
|
Commercial Second Mortgage
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Acquisition and Development
|
|
|
1
|
|
|
|
816,672
|
|
|
|
816,672
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2
|
|
|
$
|
2,100,541
|
|
|
$
|
2,100,541
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The troubled debt restructurings described above did not result in an increase in the allowance for loan
losses for the three months ended September 30, 2012, and did not result in charge offs during the three months ended September 30, 2012.
The following table presents loans by class modified as troubled debt restructurings that occurred during the three-month period ended September 30, 2011:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2011
|
|
|
|
|
|
|
|
Pre-Modification
|
|
|
Post-Modification
|
|
|
|
|
Number
|
|
|
Outstanding
Recorded
|
|
|
Outstanding
Recorded
|
|
|
|
|
of Loans
|
|
|
Investment
|
|
|
Investment
|
|
|
Troubled Debt Restructurings:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Real Estate
|
|
|
1
|
|
|
$
|
295,362
|
|
|
$
|
295,362
|
|
|
Commercial and Industrial
|
|
|
1
|
|
|
|
44,149
|
|
|
|
44,149
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2
|
|
|
$
|
339,511
|
|
|
$
|
339,511
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The troubled debt restructurings described above increased the allowance for loan losses by $36,395 and
did not result in charge offs during the period ended September 30, 2011.
19
Part I — FINANCIAL INFORMATION
During the three months ended September 30, 2012, one loan modified as a troubled
debt restructure had a payment default within twelve months following the modification.
The following table presents loans by
class modified as troubled debt restructurings for which there was a payment default within twelve months following the modification during the period ended September 30, 2011:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-Modification
|
|
|
Post-Modification
|
|
|
|
|
Number
|
|
|
Outstanding
Recorded
|
|
|
Outstanding
Recorded
|
|
|
|
|
of Loans
|
|
|
Investment
|
|
|
Investment
|
|
|
Troubled Debt Restructurings:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1-4 Family Non-Owner Occupied
|
|
|
13
|
|
|
$
|
1,050,206
|
|
|
$
|
1,050,206
|
|
|
Home Equity Lines of Credit
|
|
|
1
|
|
|
|
63,782
|
|
|
|
63,782
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
14
|
|
|
$
|
1,113,988
|
|
|
$
|
1,113,988
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the purpose of this disclosure, a loan is considered to be in payment default once it is 90 days contractually past
due under the modified terms.
The troubled debt restructurings that subsequently defaulted described above did not result in
increasing the allowance or result in charge offs during the period ending September 30, 2011.
Credit Quality Indicators
The Company categorizes loans into risk strata based on relevant borrower information about the ability to service debt.
This information includes a review of current financial information, historic payment experience, credit documentation, relevant public information and other factors, as determined by credit underwriting guidelines. Through its analysis of
individual borrowers, the Company classifies each loan as to credit risk. All loans considered non-homogeneous, specifically those that are deemed commercial and industrial or commercial real estate loans, are subject to review by the Company,
regardless of loan size. In practice, these loans are reviewed continually and changes to the risk rating, if necessary, occur on a quarterly basis. Loans that are considered homogeneous, or those which fall into the categories of one-to-four family
loans or into consumer loans, are not individually rated annually. The payment performance of the homogeneous loans serves as the clear credit indicator of classification into the categories of pass-rated loans or into substandard, non-accrual
loans. Homogeneous loans that are less than 90 days past due are generally reported as pass-rated loans, unless related to a rated commercial and industrial or commercial real estate loan. Homogeneous loans which are greater than 90 days past
due are placed on non-accrual and rated substandard. Payment performance indicators are based on performance through September 30, 2012. The Company uses the following definitions for adverse risk ratings:
Special Mention.
Loans classified as special mention have a potential weakness that requires close attention. If left unattended,
the potential weaknesses may result in further deterioration in the repayment prospects of the loan or of the institution’s credit position at a future date.
Substandard.
Loans classified as substandard are protected inadequately by the current financial means of the borrower or through the liquidation of collateral pledged. Loans classified as
substandard have a well-defined weakness and without substantial intervention, there is a distinct possibility that the Company may incur a loss. As a matter of practice, if the Company feels that a total loss is imminent, it
20
Part I — FINANCIAL INFORMATION
designates nearly all of these loans to charge off. Accordingly, the Company uses the loan
classification of doubtful (as defined hereafter), sparingly.
Doubtful.
Loans classified as doubtful have all of the
inherent weaknesses of those loans classified as substandard with the added structural weakness that the collection in full is highly unlikely. As such, this category is used sparingly by the Company.
As of September 30, 2012, and based on the most recent analysis performed by the Company, the risk category of loans by class of
loan was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Special
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pass
(1)
|
|
|
Mention
|
|
|
Substandard
|
|
|
Doubtful
|
|
|
Total
|
|
|
One-to-Four Family Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1-4 Family Owner Occupied
|
|
$
|
56,662,038
|
|
|
$
|
0
|
|
|
$
|
2,567,550
|
|
|
$
|
0
|
|
|
$
|
59,229,588
|
|
|
1-4 Family Non-Owner Occupied
|
|
|
30,693,293
|
|
|
|
1,108,211
|
|
|
|
2,462,498
|
|
|
|
0
|
|
|
|
34,264,002
|
|
|
1-4 Family Second Mortgage
|
|
|
27,762,887
|
|
|
|
205,384
|
|
|
|
728,464
|
|
|
|
0
|
|
|
|
28,696,735
|
|
|
Home Equity Lines of Credit
|
|
|
62,045,109
|
|
|
|
49,585
|
|
|
|
2,763,839
|
|
|
|
0
|
|
|
|
64,858,533
|
|
|
Home Equity Investment Lines of Credit
|
|
|
4,312,353
|
|
|
|
200,846
|
|
|
|
748,505
|
|
|
|
0
|
|
|
|
5,261,704
|
|
|
One-to-Four Family Construction Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1-4 Family Construction
|
|
|
1,030,832
|
|
|
|
0
|
|
|
|
308,927
|
|
|
|
0
|
|
|
|
1,339,759
|
|
|
1-4 Family Construction Models/Speculative
|
|
|
93,964
|
|
|
|
0
|
|
|
|
526,364
|
|
|
|
0
|
|
|
|
620,328
|
|
|
Multi-Family Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Multi-Family
|
|
|
61,448,233
|
|
|
|
1,112,062
|
|
|
|
5,720
|
|
|
|
0
|
|
|
|
62,566,015
|
|
|
Multi-Family Second Mortgage
|
|
|
144,588
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
144,588
|
|
|
Multi-Family Construction
|
|
|
108,303
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
108,303
|
|
|
Commercial Real Estate Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
182,950,964
|
|
|
|
3,389,855
|
|
|
|
11,455,022
|
|
|
|
0
|
|
|
|
197,795,841
|
|
|
Commercial Second Mortgage
|
|
|
4,794,184
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
4,794,184
|
|
|
Commercial Lines of Credit
|
|
|
19,724,964
|
|
|
|
0
|
|
|
|
2,905,781
|
|
|
|
0
|
|
|
|
22,630,745
|
|
|
Commercial Construction
|
|
|
8,471,587
|
|
|
|
0
|
|
|
|
644,808
|
|
|
|
0
|
|
|
|
9,116,395
|
|
|
Commercial and Industrial Loans
|
|
|
36,356,799
|
|
|
|
87,877
|
|
|
|
1,068,721
|
|
|
|
0
|
|
|
|
37,513,397
|
|
|
Land Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lot Loans
|
|
|
4,901,956
|
|
|
|
38,650
|
|
|
|
4,395,212
|
|
|
|
0
|
|
|
|
9,335,818
|
|
|
Acquisition and Development Loans
|
|
|
17,367,339
|
|
|
|
0
|
|
|
|
1,579,625
|
|
|
|
0
|
|
|
|
18,946,964
|
|
|
Consumer Loans
|
|
|
2,099,017
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
2,099,017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
520,968,410
|
|
|
$
|
6,192,470
|
|
|
$
|
32,161,036
|
|
|
$
|
0
|
|
|
$
|
559,321,916
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
There are $2.1 million in non-homogeneous loans which are subject to individual review for risk rating included in the pass risk category based on payment status as
they have not yet been individually reviewed.
|
21
Part I — FINANCIAL INFORMATION
As of June 30, 2012, and based on the most recent analysis performed by the Company, the risk
category of loans by class of loan was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Special
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pass
(1)
|
|
|
Mention
|
|
|
Substandard
|
|
|
Doubtful
|
|
|
Total
|
|
|
One-to-Four Family Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1-4 Family Owner Occupied
|
|
$
|
55,526,297
|
|
|
$
|
0
|
|
|
$
|
3,150,598
|
|
|
$
|
—
|
|
|
$
|
58,676,895
|
|
|
1-4 Family Non-Owner Occupied
|
|
|
30,621,009
|
|
|
|
1,117,122
|
|
|
|
2,590,969
|
|
|
|
—
|
|
|
|
34,329,100
|
|
|
1-4 Family Second Mortgage
|
|
|
28,147,735
|
|
|
|
206,701
|
|
|
|
814,384
|
|
|
|
—
|
|
|
|
29,168,820
|
|
|
Home Equity Lines of Credit
|
|
|
63,030,206
|
|
|
|
49,585
|
|
|
|
2,753,893
|
|
|
|
—
|
|
|
|
65,833,684
|
|
|
Home Equity Investment Lines of Credit
|
|
|
4,828,651
|
|
|
|
200,886
|
|
|
|
609,872
|
|
|
|
—
|
|
|
|
5,639,409
|
|
|
One-to-Four Family Construction Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1-4 Family Construction
|
|
|
513,466
|
|
|
|
0
|
|
|
|
0
|
|
|
|
—
|
|
|
|
513,466
|
|
|
1-4 Family Construction Models/Speculative
|
|
|
724,177
|
|
|
|
0
|
|
|
|
882,124
|
|
|
|
—
|
|
|
|
1,606,301
|
|
|
Multi-Family Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Multi-Family
|
|
|
52,448,152
|
|
|
|
1,124,756
|
|
|
|
324,974
|
|
|
|
—
|
|
|
|
53,897,882
|
|
|
Multi-Family Second Mortgage
|
|
|
145,476
|
|
|
|
0
|
|
|
|
0
|
|
|
|
—
|
|
|
|
145,476
|
|
|
Multi-Family Construction
|
|
|
5,368,866
|
|
|
|
0
|
|
|
|
0
|
|
|
|
—
|
|
|
|
5,368,866
|
|
|
Commercial Real Estate Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
183,422,738
|
|
|
|
3,100,295
|
|
|
|
11,538,141
|
|
|
|
—
|
|
|
|
198,061,174
|
|
|
Commercial Second Mortgage
|
|
|
5,743,721
|
|
|
|
0
|
|
|
|
0
|
|
|
|
—
|
|
|
|
5,743,721
|
|
|
Commercial Lines of Credit
|
|
|
19,401,017
|
|
|
|
0
|
|
|
|
2,909,112
|
|
|
|
—
|
|
|
|
22,310,129
|
|
|
Commercial Construction
|
|
|
7,079,104
|
|
|
|
0
|
|
|
|
644,807
|
|
|
|
—
|
|
|
|
7,723,911
|
|
|
Commercial and Industrial Loans
|
|
|
34,042,381
|
|
|
|
91,634
|
|
|
|
1,268,721
|
|
|
|
—
|
|
|
|
35,402,736
|
|
|
Land Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lot Loans
|
|
|
8,217,784
|
|
|
|
39,374
|
|
|
|
3,820,138
|
|
|
|
—
|
|
|
|
12,077,296
|
|
|
Acquisition and Development Loans
|
|
|
16,486,141
|
|
|
|
0
|
|
|
|
2,585,076
|
|
|
|
—
|
|
|
|
19,071,217
|
|
|
Consumer Loans
|
|
|
2,110,297
|
|
|
|
0
|
|
|
|
0
|
|
|
|
—
|
|
|
|
2,110,297
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
517,857,218
|
|
|
$
|
5,930,353
|
|
|
$
|
33,892,809
|
|
|
$
|
—
|
|
|
$
|
557,680,380
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
There are $2.6 million in non-homogeneous loans which are subject to individual review for risk rating included in the pass risk category based on payment status as
they have not yet been individually reviewed.
|
NOTE 4 — MORTGAGE BANKING ACTIVITIES
Loans held for sale at September 30, 2012 and June 30, 2012 were $19,765,946 and $25,062,786, respectively.
The Company utilizes the fair value option for accounting for its loans held for sale. The fair value of loans held for sale
exceeded the unpaid principal balance of these loans by $651,108 and $738,742 as of September 30, 2012 and June 30, 2012, respectively. The gain on loans held for sale as of September 30, 2012 was reported as gain on sale of mortgage
loans on the consolidated statement of operations. Interest on loans held for sale was reported in interest income.
The
Company services real estate loans for investors that are not included in the accompanying consolidated financial statements. Mortgage servicing rights are established based on the fair value of servicing rights retained on loans originated by the
Company and subsequently sold in the secondary market. Mortgage servicing rights are included in the consolidated statements of financial condition under the caption “Prepaid expenses and other assets.” At September 30, 2012, the
mortgage loan servicing portfolio was approximately $1.0 billion.
22
Part I — FINANCIAL INFORMATION
Originated mortgage servicing rights capitalized and amortized during the three months
ended September 30, 2012 and 2011 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
|
|
September 30
|
|
|
|
|
2012
|
|
|
2011
|
|
|
Servicing rights:
|
|
|
|
|
|
|
|
|
|
Beginning of period
|
|
$
|
6,867,334
|
|
|
$
|
7,519,287
|
|
|
Additions
|
|
|
1,548,248
|
|
|
|
520,263
|
|
|
Amortized to expense
|
|
|
(972,306
|
)
|
|
|
(773,379
|
)
|
|
Change in valuation allowance
|
|
|
(604,179
|
)
|
|
|
(698,468
|
)
|
|
|
|
|
|
|
|
|
|
|
|
End of period
|
|
$
|
6,839,097
|
|
|
$
|
6,567,703
|
|
|
|
|
|
|
|
|
|
|
|
Activity in the valuation allowance for mortgage servicing rights over the three months ended
September 30, 2012, as compared with the same periods during 2011, were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
Three months ended
|
|
|
|
|
September 30, 2012
|
|
|
September 30, 2011
|
|
|
Balance, beginning of period
|
|
$
|
(816,481
|
)
|
|
$
|
(304,001
|
)
|
|
Impairment charges
|
|
|
(604,179
|
)
|
|
|
(698,468
|
)
|
|
Impairment recoveries
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, end of period
|
|
$
|
(1,420,660
|
)
|
|
$
|
(1,002,469
|
)
|
|
|
|
|
|
|
|
|
|
|
Mortgage banking activities for the three months ended September 30, 2012 and 2011, net consisted of
the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
|
|
September 30
|
|
|
|
|
2012
|
|
|
2011
|
|
|
Mortgage loan servicing fees
|
|
$
|
671,611
|
|
|
$
|
654,577
|
|
|
Amortization of mortgage loan servicing rights
|
|
|
(972,306
|
)
|
|
|
(773,379
|
)
|
|
Impairment of mortgage loan servicing rights
|
|
|
(604,179
|
)
|
|
|
(698,468
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage loan servicing (loss), net
|
|
|
(904,874
|
)
|
|
|
(817,270
|
)
|
|
|
|
|
|
Changes in fair value of loans held for sale
|
|
|
(87,634
|
)
|
|
|
231,052
|
|
|
Changes in fair value of mortgage banking derivatives
|
|
|
567,931
|
|
|
|
748,776
|
|
|
Realized gains on sale of loans
|
|
|
3,550,824
|
|
|
|
847,607
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on the sale of mortgage loans
|
|
$
|
4,031,121
|
|
|
$
|
1,827,435
|
|
|
|
|
|
|
|
|
|
|
|
The above amounts do not include non-interest expense related to mortgage banking activities.
At September 30, 2012 and June 30, 2012, the Company had interest rate-lock commitments on $74,101,724 and $65,996,365,
respectively, of loans intended for sale in the secondary market. These commitments are considered to be free-standing derivatives and the change in fair value is recorded in the consolidated financial statements. The fair value of these commitments
as of September 30, 2012 and June 30, 2012 was estimated to be $3,067,188 and $1,773,453, respectively, as a reduction of accrued expenses and other liabilities in the consolidated statements of financial position. In order to mitigate the
interest rate risk represented by these interest rate-lock commitments, the Company entered into contracts to sell mortgage loans of $65,021,613 and $69,150,472 as of September 30, 2012 and June 30, 2012,
23
Part I — FINANCIAL INFORMATION
respectively. These contracts are also considered to be free-standing derivatives and the change in fair
value is also recorded in the consolidated financial statements. The fair value of these contracts at September 30, 2012 and June 30, 2012 were estimated to be $(843,522) and $(117,718) respectively. These amounts were netted against the
fair value of interest rate-lock commitments recorded in accrued expenses and other liabilities. Changes in fair value for both types of derivatives are reported in mortgage banking activities in the consolidated statements of operations.
NOTE 5 — STOCK BASED COMPENSATION
The 2010 Equity Incentive Plan (the “2010 Plan”) replaced the 2008 Equity Incentive Plan and all remaining
available shares from the 2008 Equity Incentive Plan were available for distribution under the 2010 Plan. Generally, the Company can issue incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock and other
stock-based compensation under the 2010 Plan; Generally, for incentive stock options, a percentage of the options awarded become exercisable on the date of grant and on each anniversary date of grant. The option period expires ten years from the
date of grant, except for awards to individuals who own more than 10% of the Company’s outstanding common shares. Incentive stock options awarded to individuals owning more than 10% of the Company’s outstanding common shares may only be
granted if the exercise price of such incentive stock options is at least 110% of the fair market value on the date of grant and the term of such options must expire not later than five years from the date of grant.
Previously, nonqualified stock options have been granted to directors, which vest immediately. The option period expires ten years from
the date of grant and the exercise price is the market price at the date of grant.
For the three months ended
September 30, 2012, and 2011, compensation expense of $35,906 and $61,005, respectively, was recognized in the income statement related to the vesting of option awards.
As of September 30, 2012, there was $288,169 of compensation expense related to unvested awards not yet recognized in the consolidated financial statements. The weighted-average period over which
this expense is to be recognized is 1.7 years.
The aggregate intrinsic value of all options outstanding at September 30,
2012 was $322,962. The aggregate intrinsic value of all options that were exercisable at September 30, 2012 was $71,865.
Options outstanding at September 30, 2012 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding
|
|
|
Exercisable
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
Weighted
|
|
|
Range of
|
|
|
|
|
Average
|
|
|
|
|
|
Average
|
|
|
Exercise
|
|
|
|
|
Remaining
|
|
|
|
|
|
Exercise
|
|
|
Price
|
|
Number
|
|
|
Life
|
|
|
Number
|
|
|
Price
|
|
|
$1.79 to $4.42
|
|
|
561,100
|
|
|
|
8.05
|
|
|
|
248,340
|
|
|
$
|
2.29
|
|
|
$8.32 to $13.64
|
|
|
177,456
|
|
|
|
2.30
|
|
|
|
195,494
|
|
|
|
11.05
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
738,556
|
|
|
|
6.67
|
|
|
|
443,834
|
|
|
$
|
6.15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24
Part I — FINANCIAL INFORMATION
A summary of stock-based compensation activity for the three months ended
September 30, 2012 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
|
|
September 30, 2012
|
|
|
|
|
Total options
outstanding
|
|
|
|
|
|
|
|
Weighted-
|
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
|
|
Exercise
|
|
|
|
|
Shares
|
|
|
Price
|
|
|
Options outstanding, beginning of period
|
|
|
740,256
|
|
|
$
|
4.15
|
|
|
Forfeited
|
|
|
(7,200
|
)
|
|
|
3.06
|
|
|
Expired
|
|
|
(4,500
|
)
|
|
|
10.64
|
|
|
Exercised
|
|
|
—
|
|
|
|
—
|
|
|
Granted
|
|
|
10,000
|
|
|
|
1.96
|
|
|
|
|
|
|
|
|
|
|
|
|
Options outstanding, end of period
|
|
|
738,556
|
|
|
$
|
4.28
|
|
|
|
|
|
|
|
|
|
|
|
|
Options exercisable, end of period
|
|
|
443,834
|
|
|
|
6.15
|
|
|
|
|
|
|
|
|
|
|
|
The weighted-average remaining contractual life of options outstanding as of September 30, 2012 was
6.7 years. The weighted-average remaining contractual life of vested options outstanding as of September 30, 2012 was 4.7 years.
The fair value for stock options granted during the three months ended September 30, 2012, which consisted of individual grants in July and August 2012, were determined at the date of grant using a
Black-Scholes options-pricing model and the following assumptions:
|
|
|
|
|
|
|
|
|
September 30
|
|
|
|
|
2012
|
|
|
Expected weighted average risk-free interest rate
|
|
|
0.81
|
%
|
|
Expected weighted average life (in years)
|
|
|
6.00
|
|
|
Expected volatility
|
|
|
60.00
|
%
|
|
Expected dividend yield
|
|
|
0.00
|
%
|
The weighted-average fair value of these grants was $1.10 per option. The expected average risk-free rate
is based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding with the life of the option. The expected average life represents the weighted-average period of time that options granted are expected to be
outstanding giving consideration to vesting schedules, historical exercise and forfeiture patterns. Expected volatility is based on historical volatilities of the Company’s common shares. The expected dividend yield is based on historical
information.
There were 420,790 restricted shares issued to directors and executive officers with a weighted average fair
value of $1.84 per share at September 30, 2012. During the three months ended September 30, 2012, the Company issued 77,937 restricted stock awards to directors of the Company in connection with the reinstitution of a directors’
compensation plan. This grant received prior approval from the OCC. The total fair value of restricted shares issued at September 30, 2012 was $773,148. As of September 30, 2012, there was $370,729 of compensation expense related to
unvested awards not yet recognized in the consolidated financial statements. The weighted-average period of time over which this expense is to be recognized was 1.77 years at September 30, 2012.
25
Part I — FINANCIAL INFORMATION
A summary of changes in the Company’s restricted shares for the three months ended
September 30, 2012 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-
|
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
|
|
Grant-Date
|
|
|
Nonvested Shares
|
|
Shares
|
|
|
Fair Value
|
|
|
Nonvested at July 1, 2012
|
|
|
162,333
|
|
|
$
|
303,537
|
|
|
Granted
|
|
|
77,937
|
|
|
|
157,432
|
|
|
Vested
|
|
|
(48,000
|
)
|
|
|
(90,240
|
)
|
|
Forfeited
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonvested at September 30, 2012
|
|
|
192,270
|
|
|
$
|
370,729
|
|
|
|
|
|
|
|
|
|
|
|
There were 2,330,210 shares available for future issuance under the 2010 Plan at September 30, 2012.
NOTE 6 — EARNINGS PER SHARE
The following table discloses the income (loss) per share for the three months ended September 30, 2012 and
September 30, 2011, respectively:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30,
|
|
|
|
|
2012
|
|
|
2011
|
|
|
|
|
Income
|
|
|
|
|
|
Per Share
|
|
|
Income
|
|
|
|
|
|
Per Share
|
|
|
|
|
(Loss)
|
|
|
Shares
|
|
|
Amount
|
|
|
(Loss)
|
|
|
Shares
|
|
|
Amount
|
|
|
Basic EPS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
1,551,087
|
|
|
|
25,832,271
|
|
|
$
|
0.06
|
|
|
$
|
(850,597
|
)
|
|
|
25,669,718
|
|
|
$
|
(0.03
|
)
|
|
|
|
|
|
|
|
|
|
Effect of dilutive securities—stock options and warrants
|
|
$
|
—
|
|
|
|
216,777
|
|
|
$
|
0.00
|
|
|
$
|
—
|
|
|
|
—
|
|
|
$
|
0.00
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
1,551,087
|
|
|
|
26,049,048
|
|
|
$
|
0.06
|
|
|
$
|
(850,597
|
)
|
|
|
25,669,718
|
|
|
$
|
(0.03
|
)
|
There were 235,496 and 618,338 options not considered in the diluted earnings per share calculation for
the three months ended September 30, 2012 and 2011, respectively, because they were not dilutive as the exercise price is higher than the average stock price for the periods. There was no dilution attributable to stock options for the three
months ended September 2011, since the Company was in a net loss position for the period.
Also included for consideration in
the diluted earnings per share calculation for the three month period ended September 30, 2012 were warrants to acquire common shares issued as part of two separate exchange offerings. The warrants issued on September 3, 2009 include
warrants to purchase 797,347 common shares, which expired on September 3, 2011. The warrants issued on March 16, 2010 include warrants to purchase 1,246,179 common shares and are exercisable at any time before March 16, 2015 at a
price of $1.75 per share. The warrants issued on March 16, 2010 were considered for potential dilution for the three months ended September 30, 2012.
26
Part I — FINANCIAL INFORMATION
NOTE 7 – FAIR VALUE
Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in
the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair value:
Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the company has the ability to access as of
the measurement date.
Level 2: Significant other observable inputs other than Level 1 prices, such as quoted prices for
similar assets or liabilities, quoted market prices in markets that are not active, and other inputs that are observable or can be corroborated by observable market data.
Level 3: Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use to price an asset or liability.
The Company used the following methods and significant assumptions to estimate fair value.
Securities and mortgage-backed securities
. The fair value of securities available for sale is determined by obtaining quoted
market prices on nationally recognized securities exchanges, if available (Level 1 inputs). For securities where quoted prices are not available, fair values are calculated based on market prices of similar securities. The fair value of
mortgage-backed securities is determined through matrix pricing. This is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on
the securities’ relationship to other benchmark quoted securities (Level 2 inputs).
Loans held for sale at fair
value
. The fair value of loans held for sale, which consist of single-family residential loans, is determined using quoted secondary market prices, adjusted for specific attributes of that loan or other observable data, such as outstanding
commitments from third party investors (Level 2 inputs).
Mortgage banking pipeline derivatives
. The fair value
of loan commitments is measured using current market rates for the associated mortgage loans (Level 2 inputs). The fair value of mandatory forward sales contracts is measured using secondary market pricing for similar product types (Level 2 inputs).
Impaired loans
. The fair value of impaired loans with specific allocations of the allowance for loan losses is
generally based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by
the independent appraisers to adjust for differences between the comparable sales and income data available as well as type and status of the property. Such adjustments are usually significant and typically result in a Level 3 classification of the
inputs for determining fair value.
Other real estate owned.
Nonrecurring adjustments to certain commercial and
residential real estate properties classified as other real estate owned are measured at fair value, less costs to sell. Fair values are based on recent real estate appraisals. These appraisals may use a single valuation approach or a combination of
approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data approach. Such adjustments
are usually significant and typically result in a level 3 classification of the inputs for determining fair value.
27
Part I — FINANCIAL INFORMATION
Appraisals for both collateral dependent impaired loans and other real estate owned are
performed by certified general appraisers for commercial properties or certified residential appraisers for residential properties, whose qualifications and licenses have been reviewed and verified by the Company. When the appraisals are received,
Credit Administration reviews the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value in comparison with independent data sources such as recent market data or industry-wide statistics. The Company
currently utilizes a 9% discount for selling costs and it is applied to all properties, regardless of size. This discount is supported by the Company’s most recent analysis. Also, an additional 10% discount is applied to properties with
appraisals performed greater than 12 months ago.
Loan Servicing Rights.
On a quarterly basis, loan servicing rights
are evaluated for impairment based upon the fair value of the rights as compared to carrying amount. If the carrying amount on an individual tranche exceeds fair value, impairment is recorded on that tranche so that the servicing asset is carried at
fair value. Fair value is determined at a tranche level based on a valuation model that calculates the present value of estimated future net servicing income. The valuation model utilizes assumptions that market participants would use in estimating
future net servicing income and that can be validated against available market data (Level 2).
28
Part I — FINANCIAL INFORMATION
Assets and liabilities measured at fair value on a recurring basis at September 30,
2012 and June 30, 2012, respectively, are summarized below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quoted Prices in
|
|
|
|
|
|
Significant
|
|
|
|
|
|
|
|
Active Markets for
|
|
|
Significant Other
|
|
|
Unobservable
|
|
|
|
|
|
|
|
Identical Assets
|
|
|
Observable Inputs
|
|
|
Inputs
|
|
|
|
|
September 30, 2012
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FNMA structured note
|
|
$
|
2,003,600
|
|
|
$
|
—
|
|
|
$
|
2,003,600
|
|
|
$
|
—
|
|
|
Trust preferred and corporate securities
|
|
|
18,656,997
|
|
|
|
—
|
|
|
|
18,656,997
|
|
|
|
—
|
|
|
Mortgage-backed GSE securities
|
|
|
17,619,954
|
|
|
|
—
|
|
|
|
17,619,954
|
|
|
|
—
|
|
|
Loans held-for-sale
|
|
|
19,765,946
|
|
|
|
—
|
|
|
|
19,765,946
|
|
|
|
—
|
|
|
Interest rate-lock commitments
|
|
|
3,067,188
|
|
|
|
—
|
|
|
|
3,067,188
|
|
|
|
—
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mandatory forward sales contracts
|
|
|
843,522
|
|
|
|
—
|
|
|
|
843,522
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quoted Prices in
|
|
|
|
|
|
Significant
|
|
|
|
|
|
|
|
Active Markets for
|
|
|
Significant Other
|
|
|
Unobservable
|
|
|
|
|
|
|
|
Identical Assets
|
|
|
Observable Inputs
|
|
|
Inputs
|
|
|
|
|
June 30, 2012
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FNMA structured note
|
|
$
|
2,009,320
|
|
|
$
|
—
|
|
|
$
|
2,009,320
|
|
|
$
|
—
|
|
|
Trust preferred and corportate securities
|
|
|
21,261,762
|
|
|
|
—
|
|
|
|
21,261,762
|
|
|
|
—
|
|
|
Mortgage-backed GSE securities
|
|
|
15,386,963
|
|
|
|
|
|
|
|
15,386,963
|
|
|
|
|
|
|
Loans held-for-sale
|
|
|
25,062,786
|
|
|
|
—
|
|
|
|
25,062,786
|
|
|
|
—
|
|
|
Interest rate-lock commitments
|
|
|
1,773,453
|
|
|
|
—
|
|
|
|
1,773,453
|
|
|
|
—
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mandatory forward sales contracts
|
|
|
117,718
|
|
|
|
—
|
|
|
|
117,718
|
|
|
|
—
|
|
There were no transfers between Level 1 and Level 2 in the period ended September 30, 2012 or
June 30, 2012. The Company's policy is to transfer assets or liabilities from one level to another when the methodology to obtain the fair value changes such that there are more or fewer unobservable inputs.
29
Part I — FINANCIAL INFORMATION
Assets measured at fair value on a nonrecurring basis at September 30, 2012 and
June 30, 2012, respectively are summarized below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quoted Prices in
|
|
|
|
|
|
Significant
|
|
|
|
|
|
|
|
Active Markets for
|
|
|
Significant Other
|
|
|
Unobservable
|
|
|
|
|
|
|
|
Identical Assets
|
|
|
Observable Inputs
|
|
|
Inputs
|
|
|
|
|
September 30, 2012
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impaired loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1-4 Family
|
|
$
|
3,784,204
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,784,204
|
|
|
1-4 Family Construction
|
|
|
614,903
|
|
|
|
—
|
|
|
|
—
|
|
|
|
614,903
|
|
|
Multi-Family
|
|
|
5,720
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,720
|
|
|
Commercial Real Estate
|
|
|
5,201,249
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,201,249
|
|
|
Commercial Non-Real Estate
|
|
|
238,229
|
|
|
|
—
|
|
|
|
—
|
|
|
|
238,229
|
|
|
Land
|
|
|
3,938,058
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,938,058
|
|
|
Real estate owned
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1-4 Family
|
|
|
2,256,177
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,256,177
|
|
|
Commercial Real Estate
|
|
|
2,136,191
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,136,191
|
|
|
Land
|
|
|
2,839,751
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,839,751
|
|
|
Impaired mortgage servicing rights
|
|
|
6,121,857
|
|
|
|
—
|
|
|
|
6,121,857
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quoted Prices in
|
|
|
|
|
|
Significant
|
|
|
|
|
|
|
|
Active Markets for
|
|
|
Significant Other
|
|
|
Unobservable
|
|
|
|
|
|
|
|
Identical Assets
|
|
|
Observable Inputs
|
|
|
Inputs
|
|
|
|
|
June 30, 2012
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impaired loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1-4 Family
|
|
$
|
4,033,385
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,033,385
|
|
|
1-4 Family Construction
|
|
|
660,862
|
|
|
|
—
|
|
|
|
—
|
|
|
|
660,862
|
|
|
Multi-Family
|
|
|
324,974
|
|
|
|
—
|
|
|
|
—
|
|
|
|
324,974
|
|
|
Commercial Real Estate
|
|
|
5,688,747
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,688,747
|
|
|
Commercial Non-Real Estate
|
|
|
238,229
|
|
|
|
—
|
|
|
|
—
|
|
|
|
238,229
|
|
|
Land
|
|
|
4,223,074
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,223,074
|
|
|
Real estate owned
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1-4 Family
|
|
|
2,042,573
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,042,573
|
|
|
Commercial Real Estate
|
|
|
923,262
|
|
|
|
—
|
|
|
|
—
|
|
|
|
923,262
|
|
|
Land
|
|
|
2,914,174
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,914,174
|
|
|
Impaired mortgage servicing rights
|
|
|
6,499,157
|
|
|
|
—
|
|
|
|
6,499,157
|
|
|
|
—
|
|
Impaired loans that are measured for impairment using the fair value of the collateral for collateral
dependent loans had a principal balance of $23.3 million after the application of impaired charge-offs and impaired recasting of $8.0 million, with a specific valuation allowance of $1.4 million at September 30, 2012. At June 30, 2012,
impaired loans that are measured for impairment using the fair value of the collateral for collateral dependent loans had a principal balance of $26.3 million after the application of impaired charge-offs of $9.7 million, with a specific valuation
allowance of $1.4 million. The provision for loan losses related to changes in the fair value of impaired loans was $.1 million and $2.5 million for the three months ended September 30, 2012 and 2011, respectively.
Tranches of mortgage servicing rights carried at fair value totaled $6.1 million, which is made up of the outstanding balance of $7.5
million, net of a valuation allowance of $1.4 million at September 30, 2012. During the three months ended September 30, 2012 and 2011, the Company recognized an impairment charge of $0.6 million and $0.7 million respectively. Tranches of
mortgage servicing rights carried at fair value totaled $6.5 million, which is made up of the outstanding balance of $7.3 million, net of a valuation
30
Part I — FINANCIAL INFORMATION
allowance of $0.8 million at June 30, 2012. Mortgage servicing rights are valued by an independent third party that is active in purchasing and selling these instruments. The value reflects
the characteristics of the underlying loans discounted at a market multiple.
Other real estate owned which is maintained at
fair value less costs to sell, had a net carrying amount of $7,232,119 and $7,733,578 at September 30, 2012, and June 30, 2012, respectively. The carrying amount of other real estate owned is not re-measured to fair value on a recurring
basis, but is subject to fair value adjustments when the carrying amount exceeds the fair value, less estimated selling costs. For the three months ended September 30, 2012, the Company recognized a net loss of $17,881 on the disposal of other
real estate owned compared to the gain of $140,112 recognized for three months ended September 30, 2011. The Company also recorded a provision for other real estate owned losses of $233,719 and $69,400 for the quarters ended September 30,
2012 and 2011, respectively. These direct write-downs recognized for the period are the result of obtaining updated appraisal valuations and reflect declining property values while holding the asset. The Company values all other real estate owned by
obtaining updated appraisal valuations every twelve months. There have been no upward adjustments made in determining fair value.
The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at September 30, 2012:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value at
September 30,
2012
|
|
|
Valuation Techniques
|
|
Unobservable Inputs
|
|
Range and
(weighted
Average)
|
|
Impaired loans
|
|
$
|
13,782,363
|
|
|
Appraisal value - sales comparison approach
|
|
Adjustment by management to reflect current conditions and selling costs
|
|
9% - 19%
|
|
Real estate owned
|
|
|
7,232,119
|
|
|
Appraisal value - sales comparison approach
|
|
Adjustment by management to reflect current conditions and selling costs
|
|
9% - 19%
|
31
Part I — FINANCIAL INFORMATION
The Company has elected the fair value option for loans held for sale. These loans are
intended for sale and are hedged with derivative instruments, and the Company believes the fair value is the best indicator of the valuation of these loans. Interest income is recorded based on the contractual terms of the loan and in accordance
with the Company’s policy on loans held for investment. None of these loans are 90 days or more past due or on nonaccrual as of September 30, 2012 and 2011.
As of September 30, 2012 and 2011, the aggregate fair value, contractual balance (including accrued interest), and gain or loss was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
2012
|
|
|
2011
|
|
|
Aggregate fair value
|
|
$
|
19,765,946
|
|
|
$
|
12,856,969
|
|
|
Contractual balance
|
|
|
19,114,838
|
|
|
|
12,443,953
|
|
|
Gain (loss)
|
|
|
651,108
|
|
|
|
413,016
|
|
The total amount of gains (losses) from changes in fair value included in earnings for the period ended
September 30, 2011 and 2012 for loans held for sale were $231,052 and $(87,634) respectively.
The carrying amounts and
estimated fair values of financial instruments at September 30, 2012 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying
|
|
|
Fair Value Measurements at September 30, 2012
|
|
|
|
|
Value
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
|
|
(dollars in thousands)
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and amounts due from financial institutions
|
|
$
|
16,903
|
|
|
$
|
16,903
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
16,903
|
|
|
Interest-bearing deposits
|
|
|
97,672
|
|
|
|
97,672
|
|
|
|
—
|
|
|
|
—
|
|
|
|
97,672
|
|
|
Securities available for sale
|
|
|
38,281
|
|
|
|
—
|
|
|
|
38,281
|
|
|
|
—
|
|
|
|
38,281
|
|
|
Loans receivable, net
|
|
|
543,186
|
|
|
|
—
|
|
|
|
—
|
|
|
|
565,090
|
|
|
|
565,090
|
|
|
Loans receivable held for sale, net
|
|
|
19,766
|
|
|
|
—
|
|
|
|
19,766
|
|
|
|
—
|
|
|
|
19,766
|
|
|
Federal Home Loan Bank stock
|
|
|
12,811
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
Accrued interest receivable
|
|
|
2,142
|
|
|
|
—
|
|
|
|
126
|
|
|
|
2,016
|
|
|
|
2,142
|
|
|
Commitments to make loans intended to be sold
|
|
|
3,067
|
|
|
|
—
|
|
|
|
3,067
|
|
|
|
—
|
|
|
|
3,067
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand deposits and savings
|
|
|
(284,340
|
)
|
|
|
(284,340
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(284,340
|
)
|
|
Time deposits
|
|
|
(361,810
|
)
|
|
|
—
|
|
|
|
(343,358
|
)
|
|
|
—
|
|
|
|
(343,358
|
)
|
|
Notes payable
|
|
|
(1,019
|
)
|
|
|
—
|
|
|
|
(1,019
|
)
|
|
|
—
|
|
|
|
(1,019
|
)
|
|
Advances from the Federal Home Loan Bank
|
|
|
(35,000
|
)
|
|
|
—
|
|
|
|
(37,173
|
)
|
|
|
—
|
|
|
|
(37,173
|
)
|
|
Mandatory forward sale contract
|
|
|
(844
|
)
|
|
|
—
|
|
|
|
(844
|
)
|
|
|
—
|
|
|
|
(844
|
)
|
|
Accrued interest payable
|
|
|
(127
|
)
|
|
|
(28
|
)
|
|
|
(99
|
)
|
|
|
—
|
|
|
|
(127
|
)
|
32
Part I — FINANCIAL INFORMATION
The carrying amount and estimated fair values of financial instruments at June 30,
2012 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying
|
|
|
Fair Value Measurements at June 30, 2012
|
|
|
|
|
Value
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
|
|
(dollars in thousands)
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and amounts due from financial institutions
|
|
$
|
5,841
|
|
|
$
|
5,841
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,841
|
|
|
Interest-bearing deposits
|
|
|
114,270
|
|
|
|
114,270
|
|
|
|
—
|
|
|
|
—
|
|
|
|
114,270
|
|
|
Securities available for sale
|
|
|
38,658
|
|
|
|
—
|
|
|
|
38,658
|
|
|
|
—
|
|
|
|
38,658
|
|
|
Loans receivable, net
|
|
|
541,628
|
|
|
|
—
|
|
|
|
—
|
|
|
|
569,603
|
|
|
|
569,603
|
|
|
Loans receivable held for sale, net
|
|
|
25,063
|
|
|
|
—
|
|
|
|
25,063
|
|
|
|
—
|
|
|
|
25,063
|
|
|
Federal Home Loan Bank stock
|
|
|
12,811
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
Accrued interest receivable
|
|
|
2,047
|
|
|
|
—
|
|
|
|
174
|
|
|
|
1,873
|
|
|
|
2,047
|
|
|
Commitments to make loans intended to be sold
|
|
|
1,773
|
|
|
|
—
|
|
|
|
1,773
|
|
|
|
—
|
|
|
|
1,773
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand deposits and savings
|
|
|
(271,412
|
)
|
|
|
(271,412
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(271,412
|
)
|
|
Time deposits
|
|
|
(384,567
|
)
|
|
|
—
|
|
|
|
(385,872
|
)
|
|
|
—
|
|
|
|
(385,872
|
)
|
|
Notes payable
|
|
|
(1,046
|
)
|
|
|
—
|
|
|
|
(1,046
|
)
|
|
|
—
|
|
|
|
(1,046
|
)
|
|
Advances from the Federal Home Loan Bank
|
|
|
(35,000
|
)
|
|
|
—
|
|
|
|
(37,222
|
)
|
|
|
—
|
|
|
|
(37,222
|
)
|
|
Mandatory forward sale contract
|
|
|
(118
|
)
|
|
|
—
|
|
|
|
(118
|
)
|
|
|
—
|
|
|
|
(118
|
)
|
|
Accrued interest payable
|
|
|
(120
|
)
|
|
|
(112
|
)
|
|
|
(8
|
)
|
|
|
—
|
|
|
|
(120
|
)
|
The estimated fair value amounts have been determined by the Company using available market information
and appropriate valuation methodologies. However, considerable judgment is involved in interpreting market data so as to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts
the Company could realize in a current market exchange and may not necessarily be the exit price. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.
The Company used the following methods and assumptions to estimate fair value for items not described above:
Cash and amounts due from financial institutions, interest-bearing deposits, and federal funds sold.
The carrying amount is a
reasonable estimate of fair value because of the short maturity of these instruments and therefore are classified as Level 1.
Loans receivable
. For performing variable-rate loans that reprice frequently and with no significant change in credit risk, fair
values are based on carrying values resulting in a level 3 classification. For other performing loans receivable, fair value is estimated by discounting contractual cash flows adjusted for prepayment estimates using discount rates based on secondary
market sources adjusted to reflect differences in servicing and credit costs resulting in a level 3 classification.
Federal Home Loan Bank stock.
It was not practical to determine the fair value of FHLB stock due to
33
Part I — FINANCIAL INFORMATION
restrictions placed on its transferability.
Accrued interest receivable and accrued interest payable
. The carrying amount is a reasonable estimate of the fair value. The fair
value level classification is consistent with the related final instrument.
Demand deposits and time deposits.
The
fair value of demand deposits, savings accounts, and certain money market deposits is the amount payable on demand at the reporting date resulting in a level 1 classification. The fair value of fixed-maturity certificates of deposit is estimated
using discounted cash flows and rates currently offered for deposits of similar remaining maturities resulting in a level 2 classification.
Note payable.
The carrying amount is a reasonable estimate of the fair value resulting in a level 2 classification.
Federal Home Loan Bank Advance.
The fair value of the Company’s FHLB debt is estimated based on the current rates offered to the Company for debt of the same remaining maturities resulting in
a level 2 classification.
NOTE 8 —NOTE PAYABLE
On November 24, 2008, one of the Company’s subsidiaries obtained a $1.4 million dollar loan from another
financial institution with a principal balance of $1,019,445 as of September 30, 2012. The loan was a refinance of a line of credit loan and is collateralized by the Company’s Solon, Ohio headquarters building. The note carries a variable
interest rate that adjusts to The Wall Street Journal published prime lending rate plus 50 basis points. The loan required the payment of interest only for nine months and then converted to an amortizing loan for a term of 15 years. At
September 30, 2012, the interest rate was 3.80%.
NOTE 9 — REGULATORY MATTERS
The Company and the Bank are subject to various regulatory capital requirements, which are now administered by the
Board of Governors of the Federal Reserve System (the “Federal Reserve Board”) and the Office of the Comptroller of the Currency (“OCC”). Failure to meet minimum capital requirements can result in certain mandatory and possibly
additional discretionary actions by banking regulators that, if undertaken, could have a direct material effect on the Company’s consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt
corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The Bank’s
capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.
Prompt corrective action regulations provide five classifications: well capitalized; adequately capitalized; undercapitalized; significantly undercapitalized; and critically undercapitalized, although
these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and
capital restoration plans are required. The most recent regulatory notifications categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that
management believes have changed the Bank’s category.
34
Part I — FINANCIAL INFORMATION
Federal regulations require savings institutions to maintain certain minimum levels of
regulatory capital. An institution that fails to comply with its regulatory capital requirements must obtain approval of a capital plan and can be subject to a capital directive and certain restrictions on its operations. At September 30, 2012,
the adjusted total minimum regulatory capital regulations require institutions to have a minimum tangible capital to adjusted total assets ratio of 1.5%; a minimum leverage ratio of core (Tier 1) capital to adjusted total assets of 4.0%; a minimum
ratio of core (Tier 1) capital to risk-weighted assets of 4.0%; and a minimum ratio of total capital to risk-weighted assets of 8.0%. At September 30, 2012 and 2011, respectively, the Bank exceeded all of the aforementioned regulatory capital
requirements. For more information, please see Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources.
On October 19, 2009, the Company and the Bank each entered into a Stipulation and Consent to the Issuance of Order to Cease and
Desist with the Office of Thrift Supervision (the “OTS”), whereby the Company and the Bank each consented to the issuance of an Order to Cease and Desist (the “Company Order” and the “Bank Order”) without admitting or
denying that grounds existed for the OTS to initiate an administrative proceeding against the Company or the Bank. Effective July 21, 2011, the OCC and the Federal Reserve Board succeeded to all powers, authorities, rights, and duties of the
OTS relating to the enforcement of the Bank and Company Orders, respectively, as a result of the regulatory transition under the Dodd-Frank Wall Street Reform and Consumer Protection. On August 27, 2012, the Bank was released from the Bank
Order.
The Company Order requires the Company to take several actions, including, but not limited to: (i) submit a
capital plan that includes, among other things, (1) the establishment of a minimum tangible capital ratio of tangible equity capital to total tangible assets commensurate with the Company’s consolidated risk profile, and (2) specific
plans to reduce the risks to the Company from its current debt levels and debt servicing requirements; (ii) not declare, make or pay any cash dividends or other capital distributions or purchase, repurchase or redeem or commit to purchase,
repurchase or redeem Company equity stock without the prior non-objection of the OTS, except that this provision does not apply to immaterial capital stock redemptions that arise in the normal course of the Company’s business in connection with
its stock-based compensation plans; and (iii) not incur, issue, renew, roll over or increase any debt or commit to do so without the prior non-objection of the OTS (debt includes loans, bonds, cumulative preferred stock, hybrid capital
instruments such as subordinated debt or trust preferred securities, and guarantees of debt).
The Company Order also imposes
certain on-going reporting obligations and additional restrictions on severance and indemnification payments, changes in directors and management, employment agreements and compensation arrangements that the Company may enter into, third-party
service contracts and transactions with affiliates.
At September 30, 2012, the Company believes it is in compliance with
all requirements of the Order that are required to date. The Company Order will remain in effect until terminated, modified, or suspended in writing.
Regulations limit capital distributions by savings institutions. Generally, capital distributions are limited to undistributed net income for the current and prior two years. At September 30, 2012,
the Bank was not allowed to make any capital distributions without regulatory approval.
35
Part I — FINANCIAL INFORMATION
At September 30, 2012, the Bank was in compliance with regulatory capital requirements
as set forth below (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
To Be Well
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Required
|
|
|
Capitalized Under
|
|
|
Required Under
|
|
|
|
|
|
|
|
|
|
|
For Capital
|
|
|
Prompt Corrective
|
|
|
Regulatory
|
|
|
|
|
Actual
|
|
|
Adequacy Purposes
|
|
|
Action Regulations
|
|
|
Bank Order
|
|
|
|
|
Amount
|
|
|
Ratio
|
|
|
Amount
|
|
|
Ratio
|
|
|
Amount
|
|
|
Ratio
|
|
|
Amount
|
|
|
Ratio
|
|
|
September 30, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Capital to risk weighted assets
|
|
$
|
79,587
|
|
|
|
13.34
|
%
|
|
$
|
47,765
|
|
|
|
8.00
|
%
|
|
$
|
59,706
|
|
|
|
10.00
|
%
|
|
|
N/A
|
|
|
|
N/A
|
|
|
Tier 1 (Core) Capital to risk weighted assets
|
|
|
72,017
|
|
|
|
12.06
|
%
|
|
|
23,882
|
|
|
|
4.00
|
%
|
|
|
35,824
|
|
|
|
6.00
|
%
|
|
|
N/A
|
|
|
|
N/A
|
|
|
Tier 1 (Core) Capital to adjusted total assets
|
|
|
72,017
|
|
|
|
9.16
|
%
|
|
|
31,454
|
|
|
|
4.00
|
%
|
|
|
39,318
|
|
|
|
5.00
|
%
|
|
|
N/A
|
|
|
|
N/A
|
|
|
Tangible Capital to adjusted total assets
|
|
|
72,017
|
|
|
|
9.16
|
%
|
|
|
11,795
|
|
|
|
1.50
|
%
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
At June 30, 2012, the Bank was in compliance with regulatory capital requirements as set forth below
(dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
To Be Well
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Required
|
|
|
Capitalized Under
|
|
|
Required Under
|
|
|
|
|
|
|
|
|
|
|
For Capital
|
|
|
Prompt Corrective
|
|
|
Regulatory
|
|
|
|
|
Actual
|
|
|
Adequacy Purposes
|
|
|
Action Regulations
|
|
|
Bank Order
|
|
|
|
|
Amount
|
|
|
Ratio
|
|
|
Amount
|
|
|
Ratio
|
|
|
Amount
|
|
|
Ratio
|
|
|
Amount
|
|
|
Ratio
|
|
|
June 30, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Capital to risk weighted assets
|
|
$
|
77,932
|
|
|
|
13.10
|
%
|
|
$
|
47,605
|
|
|
|
8.00
|
%
|
|
$
|
59,506
|
|
|
|
10.00
|
%
|
|
$
|
71,407
|
|
|
|
12.00
|
%
|
|
Tier 1 (Core) Capital to risk weighted assets
|
|
|
70,387
|
|
|
|
11.83
|
%
|
|
|
23,802
|
|
|
|
4.00
|
%
|
|
|
35,704
|
|
|
|
6.00
|
%
|
|
|
N/A
|
|
|
|
N/A
|
|
|
Tier 1 (Core) Capital to adjusted total assets
|
|
|
70,387
|
|
|
|
8.74
|
%
|
|
|
32,224
|
|
|
|
4.00
|
%
|
|
|
40,280
|
|
|
|
5.00
|
%
|
|
|
64,448
|
|
|
|
8.00
|
%
|
|
Tangible Capital to adjusted total assets
|
|
|
70,387
|
|
|
|
8.74
|
%
|
|
|
12,084
|
|
|
|
1.50
|
%
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
NOTE 10 — FEDERAL INCOME TAXES
Management recorded net deferred tax assets at September 30, 2012 of $4.2 million. A valuation allowance is
established to reduce the deferred tax asset if it is more likely than not that the related tax benefits will not be realized. In management’s opinion, it is more likely than not that the tax benefits will not be realized; consequently, a full
valuation allowance was established as of June 30, 2011. When determining the amount of deferred tax assets that are more-likely-than-not to be realized, and therefore recorded as a benefit, the Company conducts a regular assessment of all
available information. This information includes, but is not limited to, taxable income in prior periods, projected future income, and projected future reversals of deferred tax items. Based on these criteria, the Company determined that it was
necessary to carry a valuation allowance against deferred tax assets of $4.2 million at September 30, 2012 to reduce the carrying amount of the Company’s net deferred tax asset to zero. At June 30, 2012, the Company recorded a
deferred tax asset of $4.8 million with a valuation allowance of $4.8 million reducing the carrying amount of the Company’s net deferred tax asset to zero.
36