x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Maryland | 20-5120010 | |
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification Number) |
Large accelerated filer | ¨ | Accelerated filer | ¨ | |||
Non-accelerated filer | ¨ (do not check if a smaller reporting company) | Smaller reporting company | x |
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Item 1A. | |||
Item 2. | |||
Item 3. | |||
Item 4. | |||
Item 5. | |||
Item 6. | |||
ITEM 1. | FINANCIAL STATEMENTS |
December 31, 2015 | September 30, 2015 | ||||||
Assets | |||||||
Cash and cash equivalents | $ | 15,230 | $ | 23,872 | |||
Other interest-bearing deposits | 3,242 | 2,992 | |||||
Investment securities (available for sale securities at fair value of $87,161 and $79,921, and held to maturity securities at cost of $7,724 and $8,012 at December 31, 2015 and September 30, 2015, respectively) | 94,885 | 87,933 | |||||
Non-marketable equity securities, at cost | 4,626 | 4,626 | |||||
Loans receivable | 453,649 | 450,510 | |||||
Allowance for loan losses | (6,441 | ) | (6,496 | ) | |||
Loans receivable, net | 447,208 | 444,014 | |||||
Office properties and equipment, net | 2,803 | 2,669 | |||||
Accrued interest receivable | 1,586 | 1,574 | |||||
Intangible assets | 90 | 104 | |||||
Foreclosed and repossessed assets, net | 804 | 902 | |||||
Other assets | 11,296 | 11,462 | |||||
TOTAL ASSETS | $ | 581,770 | $ | 580,148 | |||
Liabilities and Stockholders’ Equity | |||||||
Liabilities: | |||||||
Deposits | $ | 457,732 | $ | 456,298 | |||
Federal Home Loan Bank advances | 58,891 | 58,891 | |||||
Other liabilities | 3,911 | 4,424 | |||||
Total liabilities | 520,534 | 519,613 | |||||
Stockholders’ equity: | |||||||
Common stock— $0.01 par value, authorized 30,000,000, 5,231,265 and 5,232,579 shares issued and outstanding, respectively | 52 | 52 | |||||
Additional paid-in capital | 54,744 | 54,740 | |||||
Retained earnings | 7,105 | 6,245 | |||||
Unearned deferred compensation | (261 | ) | (288 | ) | |||
Accumulated other comprehensive loss | (404 | ) | (214 | ) | |||
Total stockholders’ equity | 61,236 | 60,535 | |||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 581,770 | $ | 580,148 |
Three Months Ended | |||||||
December 31, 2015 | December 31, 2014 | ||||||
Interest and dividend income: | |||||||
Interest and fees on loans | $ | 5,250 | $ | 5,596 | |||
Interest on investments | 424 | 364 | |||||
Total interest and dividend income | 5,674 | 5,960 | |||||
Interest expense: | |||||||
Interest on deposits | 956 | 952 | |||||
Interest on borrowed funds | 165 | 167 | |||||
Total interest expense | 1,121 | 1,119 | |||||
Net interest income before provision for loan losses | 4,553 | 4,841 | |||||
Provision for loan losses | 75 | 235 | |||||
Net interest income after provision for loan losses | 4,478 | 4,606 | |||||
Non-interest income: | |||||||
Net gains on sale of available for sale securities | — | 2 | |||||
Net gains on available for sale securities | — | 2 | |||||
Service charges on deposit accounts | 423 | 472 | |||||
Loan fees and service charges | 321 | 355 | |||||
Other | 206 | 205 | |||||
Total non-interest income | 950 | 1,034 | |||||
Non-interest expense: | |||||||
Salaries and related benefits | 2,218 | 2,175 | |||||
Occupancy | 569 | 820 | |||||
Office | 252 | 256 | |||||
Data processing | 409 | 389 | |||||
Amortization of core deposit intangible | 14 | 14 | |||||
Advertising, marketing and public relations | 137 | 98 | |||||
FDIC premium assessment | 85 | 104 | |||||
Professional services | 151 | 319 | |||||
Other | 259 | 317 | |||||
Total non-interest expense | 4,094 | 4,492 | |||||
Income before provision for income taxes | 1,334 | 1,148 | |||||
Provision for income taxes | 474 | 433 | |||||
Net income attributable to common stockholders | $ | 860 | $ | 715 | |||
Per share information: | |||||||
Basic earnings | $ | 0.16 | $ | 0.14 | |||
Diluted earnings | $ | 0.16 | $ | 0.14 | |||
Cash dividends paid | $ | — | $ | — |
Three Months Ended | |||||||
December 31, 2015 | December 31, 2014 | ||||||
Net income attributable to common stockholders | $ | 860 | $ | 715 | |||
Other comprehensive income (loss), net of tax: | |||||||
Securities available for sale | |||||||
Net unrealized (losses) gains arising during period | (190 | ) | 417 | ||||
Reclassification adjustment for gains (losses) included in net income | — | 1 | |||||
Unrealized (losses) gains on securities | (190 | ) | 418 | ||||
Comprehensive income | $ | 670 | $ | 1,133 |
Details about Accumulated Other Comprehensive Income Components | Amounts Reclassified from Accumulated Other Comprehensive Income | (1) | Affected Line Item on the Statement of Operations | |||
Unrealized gains and losses | ||||||
Sale of securities | $ | — | Net gain on sale of available for sale securities | |||
— | Provision for income taxes | |||||
Total reclassifications for the period | $ | — | Net income attributable to common shareholders |
Additional Paid-In Capital | Retained Earnings | Unearned Deferred Compensation | Accumulated Other Comprehensive Income (Loss) | Total Stockholders' Equity | ||||||||||||||||||||||
Common Stock | ||||||||||||||||||||||||||
Shares | Amount | |||||||||||||||||||||||||
Balance, October 1, 2015 | 5,232,579 | $ | 52 | $ | 54,740 | $ | 6,245 | $ | (288 | ) | $ | (214 | ) | $ | 60,535 | |||||||||||
Net income | 860 | 860 | ||||||||||||||||||||||||
Other comprehensive loss, net of tax | (190 | ) | (190 | ) | ||||||||||||||||||||||
Surrender of restricted shares of common stock | (1,314 | ) | (12 | ) | (12 | ) | ||||||||||||||||||||
Stock option expense | 16 | 16 | ||||||||||||||||||||||||
Amortization of restricted stock | 27 | 27 | ||||||||||||||||||||||||
Balance, December 31, 2015 | 5,231,265 | $ | 52 | $ | 54,744 | $ | 7,105 | $ | (261 | ) | $ | (404 | ) | $ | 61,236 |
Three Months Ended | |||||||
December 31, 2015 | December 31, 2014 | ||||||
Cash flows from operating activities: | |||||||
Net income attributable to common stockholders | $ | 860 | $ | 715 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Net amortization of premium/discount on securities | 280 | 217 | |||||
Depreciation | 216 | 432 | |||||
Provision for loan losses | 75 | 235 | |||||
Net realized gain on sale of securities | — | (1 | ) | ||||
Amortization of core deposit intangible | 14 | 14 | |||||
Amortization of restricted stock | 27 | 18 | |||||
Stock based compensation expense | 16 | 12 | |||||
Loss on sale of office properties | — | 7 | |||||
Provision (benefit) for deferred income taxes | 34 | (278 | ) | ||||
Net gains from disposals of foreclosed properties | (52 | ) | (22 | ) | |||
Provision for valuation allowance on foreclosed properties | — | 27 | |||||
Decrease (increase) in accrued interest receivable and other assets | 245 | (1,526 | ) | ||||
(Decrease) increase in other liabilities | (513 | ) | 496 | ||||
Total adjustments | 342 | (369 | ) | ||||
Net cash provided by operating activities | 1,202 | 346 | |||||
Cash flows from investing activities: | |||||||
Purchase of investment securities | (9,989 | ) | (4,191 | ) | |||
Net increase in interest-bearing deposits | (250 | ) | (1,000 | ) | |||
Proceeds from sale of securities available for sale | — | 1,965 | |||||
Principal payments on investment securities | 2,441 | 1,672 | |||||
Proceeds from sale of Federal Home Loan Bank (FHLB) stock | — | 240 | |||||
Proceeds from sale of foreclosed properties | 473 | 264 | |||||
Net (increase) decrease in loans | (3,592 | ) | 9,059 | ||||
Net capital expenditures | (349 | ) | (34 | ) | |||
Net cash (used in) provided by investing activities | (11,266 | ) | 7,975 | ||||
Cash flows from financing activities: | |||||||
Net decrease in Federal Home Loan Bank advances | — | (5,000 | ) | ||||
Net increase in deposits | 1,434 | 4,637 | |||||
Surrender of restricted shares of common stock | (12 | ) | (12 | ) | |||
Exercise of common stock options | — | 177 | |||||
Net cash provided by (used in) financing activities | 1,422 | (198 | ) | ||||
Net (decrease) increase in cash and cash equivalents | (8,642 | ) | 8,123 | ||||
Cash and cash equivalents at beginning of period | 23,872 | 11,434 | |||||
Cash and cash equivalents at end of period | $ | 15,230 | $ | 19,557 | |||
Supplemental cash flow information: | |||||||
Cash paid during the period for: | |||||||
Interest on deposits | $ | 960 | $ | 950 | |||
Interest on borrowings | $ | 164 | $ | 167 | |||
Income taxes | $ | 690 | $ | 2 | |||
Supplemental noncash disclosure: | |||||||
Transfers from loans receivable to foreclosed and repossessed assets | $ | 323 | $ | 409 |
Fair Value | Quoted Prices in Active Markets for Identical Instruments (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
December 31, 2015 | |||||||||||||||
Investment securities: | |||||||||||||||
U.S. government agency obligations | $ | 14,718 | $ | — | $ | 14,718 | $ | — | |||||||
Obligations of states and political subdivisions | 29,596 | — | 29,596 | — | |||||||||||
Mortgage-backed securities | 42,781 | — | 42,781 | — | |||||||||||
Federal Agricultural Mortgage Corporation | 66 | — | 66 | — | |||||||||||
Total | $ | 87,161 | $ | — | $ | 87,161 | $ | — | |||||||
September 30, 2015 | |||||||||||||||
Investment securities: | |||||||||||||||
U.S. government agency obligations | $ | 15,020 | $ | — | $ | 15,020 | $ | — | |||||||
Obligations of states and political | |||||||||||||||
subdivisions | 27,407 | — | 27,407 | — | |||||||||||
Mortgage-backed securities | 37,440 | — | 37,440 | — | |||||||||||
Federal Agricultural Mortgage Corporation | 54 | — | 54 | — | |||||||||||
Total | $ | 79,921 | $ | — | $ | 79,921 | $ | — |
Fair Value | Quoted Prices in Active Markets for Identical Instruments (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
December 31, 2015 | |||||||||||||||
Foreclosed and repossessed assets, net | $ | 804 | $ | — | $ | — | $ | 804 | |||||||
Impaired loans with allocated allowances | 1,752 | — | — | 1,752 | |||||||||||
Total | $ | 2,556 | $ | — | $ | — | $ | 2,556 | |||||||
September 30, 2015 | |||||||||||||||
Foreclosed and repossessed assets, net | $ | 902 | $ | — | $ | — | $ | 902 | |||||||
Impaired loans with allocated allowances | 2,349 | — | — | 2,349 | |||||||||||
Total | $ | 3,251 | $ | — | $ | — | $ | 3,251 |
December 31, 2015 | September 30, 2015 | ||||||||||||||
Carrying Amount | Estimated Fair Value | Carrying Amount | Estimated Fair Value | ||||||||||||
Financial assets: | |||||||||||||||
Cash and cash equivalents | $ | 15,230 | $ | 15,230 | $ | 23,872 | $ | 23,872 | |||||||
Interest-bearing deposits | 3,242 | 3,257 | 2,992 | 3,022 | |||||||||||
Investment securities | 94,885 | 95,015 | 87,933 | 88,140 | |||||||||||
Non-marketable equity securities, at cost | 4,626 | 4,626 | 4,626 | 4,626 | |||||||||||
Loans receivable, net | 447,208 | 463,061 | 444,014 | 462,227 | |||||||||||
Accrued interest receivable | 1,586 | 1,586 | 1,574 | 1,574 | |||||||||||
Financial liabilities: | |||||||||||||||
Deposits | $ | 457,732 | $ | 461,661 | $ | 456,298 | $ | 460,450 | |||||||
FHLB advances | 58,891 | 58,909 | 58,891 | 59,357 | |||||||||||
Accrued interest payable | 14 | 14 | 18 | 18 |
1 to 5 | 6 | 7 | 8 | 9 | TOTAL | |||||||||||||||||||
Real estate loans: | ||||||||||||||||||||||||
Consumer | $ | 171,525 | $ | — | $ | 1,650 | $ | — | $ | — | $ | 173,175 | ||||||||||||
Commercial/agricultural | 74,153 | — | — | — | — | 74,153 | ||||||||||||||||||
Total real estate loans | 245,678 | — | 1,650 | — | — | 247,328 | ||||||||||||||||||
Consumer and other loans: | 203,496 | — | 634 | — | 2 | 204,132 | ||||||||||||||||||
Gross loans | $ | 449,174 | $ | — | $ | 2,284 | $ | — | $ | 2 | $ | 451,460 | ||||||||||||
Net deferred loan costs (fees) | 2,189 | |||||||||||||||||||||||
Allowance for loan losses | (6,441 | ) | ||||||||||||||||||||||
Loans receivable, net | $ | 447,208 |
1 to 5 | 6 | 7 | 8 | 9 | TOTAL | |||||||||||||||||||
Real estate loans: | ||||||||||||||||||||||||
Consumer | $ | 179,946 | $ | — | $ | 1,260 | $ | — | $ | — | $ | 181,206 | ||||||||||||
Commercial/agricultural | 63,266 | — | — | — | — | 63,266 | ||||||||||||||||||
Total real estate loans | 243,212 | — | 1,260 | — | — | 244,472 | ||||||||||||||||||
Consumer and other loans: | 203,054 | — | 547 | — | 7 | 203,608 | ||||||||||||||||||
Gross loans | $ | 446,266 | $ | — | $ | 1,807 | $ | — | $ | 7 | $ | 448,080 | ||||||||||||
Net deferred loan costs (fees) | 2,430 | |||||||||||||||||||||||
Allowance for loan losses | (6,496 | ) | ||||||||||||||||||||||
Loans receivable, net | $ | 444,014 |
Consumer Real Estate | Commercial/Agriculture Real Estate | Consumer and Other | Unallocated | Total | |||||||||||||||
Three Months Ended December 31, 2015: | |||||||||||||||||||
Allowance for Loan Losses: | |||||||||||||||||||
Beginning balance, October 1, 2015 | $ | 2,364 | $ | 1,617 | $ | 2,263 | $ | 252 | $ | 6,496 | |||||||||
Charge-offs | (41 | ) | — | (138 | ) | — | (179 | ) | |||||||||||
Recoveries | 2 | — | 47 | — | 49 | ||||||||||||||
Provision | 30 | 10 | 35 | — | 75 | ||||||||||||||
Allowance allocation adjustment | (340 | ) | 137 | 205 | (2 | ) | — | ||||||||||||
Ending balance, December 31, 2015 | $ | 2,015 | $ | 1,764 | $ | 2,412 | $ | 250 | $ | 6,441 | |||||||||
Allowance for Loan Losses at December 31, 2015: | |||||||||||||||||||
Amount of allowance for loan losses arising from loans individually evaluated for impairment | $ | 141 | $ | — | $ | 84 | $ | — | $ | 225 | |||||||||
Amount of allowance for loan losses arising from loans collectively evaluated for impairment | $ | 1,874 | $ | 1,764 | $ | 2,328 | $ | 250 | $ | 6,216 | |||||||||
Loans Receivable as of December 31, 2015: | |||||||||||||||||||
Ending balance | $ | 172,713 | $ | 73,233 | $ | 207,703 | $ | — | $ | 453,649 | |||||||||
Ending balance: individually evaluated for impairment | $ | 4,631 | $ | — | $ | 849 | $ | — | $ | 5,480 | |||||||||
Ending balance: collectively evaluated for impairment | $ | 168,082 | $ | 73,233 | $ | 206,854 | $ | — | $ | 448,169 |
Consumer Real Estate | Commercial/Agriculture Real Estate | Consumer and Other | Unallocated | Total | |||||||||||||||
Year Ended September 30, 2015: | |||||||||||||||||||
Allowance for Loan Losses: | |||||||||||||||||||
Beginning balance, October 1, 2014 | $ | 2,759 | $ | — | $ | 3,747 | $ | — | $ | 6,506 | |||||||||
Charge-offs | (405 | ) | — | (601 | ) | — | (1,006 | ) | |||||||||||
Recoveries | 69 | — | 271 | — | 340 | ||||||||||||||
Provision | 382 | 16 | 258 | — | 656 | ||||||||||||||
Allowance allocation adjustment | (441 | ) | 1,601 | (1,412 | ) | 252 | — | ||||||||||||
Ending balance, September 30, 2015 | $ | 2,364 | $ | 1,617 | $ | 2,263 | $ | 252 | $ | 6,496 | |||||||||
Allowance for Loan Losses at September 30, 2015: | |||||||||||||||||||
Amount of allowance for loan losses arising from loans individually evaluated for impairment | $ | 463 | $ | — | $ | 119 | $ | — | $ | 582 | |||||||||
Amount of allowance for loan losses arising from loans collectively evaluated for impairment | $ | 1,901 | $ | 1,617 | $ | 2,144 | $ | 252 | $ | 5,914 | |||||||||
Loans Receivable as of September 30, 2015: | |||||||||||||||||||
Ending balance | $ | 180,693 | $ | 63,266 | $ | 206,551 | $ | — | $ | 450,510 | |||||||||
Ending balance: individually evaluated for impairment | $ | 4,466 | $ | — | $ | 848 | $ | — | $ | 5,314 | |||||||||
Ending balance: collectively evaluated for impairment | $ | 176,227 | $ | 63,266 | $ | 205,703 | $ | — | $ | 445,196 |
Real Estate Loans | Commercial/Agriculture Real Estate Loans | Consumer and Other Loans | Total Loans | ||||||||||||||||||||||||||||
December 31, 2015 | September 30, 2015 | December 31, 2015 | September 30, 2015 | December 31, 2015 | September 30, 2015 | December 31, 2015 | September 30, 2015 | ||||||||||||||||||||||||
Performing loans | |||||||||||||||||||||||||||||||
Performing TDR loans | $ | 3,038 | $ | 3,206 | $ | — | $ | — | $ | 420 | $ | 472 | $ | 3,458 | $ | 3,678 | |||||||||||||||
Performing loans other | 168,588 | 176,650 | 73,233 | 63,266 | 206,750 | 205,695 | 448,571 | 445,611 | |||||||||||||||||||||||
Total performing loans | 171,626 | 179,856 | 73,233 | 63,266 | 207,170 | 206,167 | 452,029 | 449,289 | |||||||||||||||||||||||
Nonperforming loans (1) | |||||||||||||||||||||||||||||||
Nonperforming TDR loans | 267 | 273 | — | — | 69 | 59 | 336 | 332 | |||||||||||||||||||||||
Nonperforming loans other | 820 | 564 | — | — | 464 | 325 | 1,284 | 889 | |||||||||||||||||||||||
Total nonperforming loans | $ | 1,087 | $ | 837 | $ | — | $ | — | $ | 533 | $ | 384 | $ | 1,620 | $ | 1,221 | |||||||||||||||
Total loans | $ | 172,713 | $ | 180,693 | $ | 73,233 | $ | 63,266 | $ | 207,703 | $ | 206,551 | $ | 453,649 | $ | 450,510 |
(1) | Nonperforming loans are either 90+ days past due or nonaccrual. |
30-59 Days Past Due | 60-89 Days Past Due | Greater Than 89 Days | Total Past Due | Current | Total Loans | Recorded Investment > 89 days and Accruing | |||||||||||||||||||||
December 31, 2015 | |||||||||||||||||||||||||||
Real estate loans | $ | 725 | $ | 299 | $ | 670 | $ | 1,694 | $ | 171,019 | $ | 172,713 | $ | 398 | |||||||||||||
Commercial/Agriculture real estate | — | — | — | — | 73,233 | 73,233 | — | ||||||||||||||||||||
Consumer and other loans | 478 | 110 | 266 | 854 | 164,166 | 165,020 | 167 | ||||||||||||||||||||
Purchased third party loans | 693 | 217 | 207 | 1,117 | 41,566 | 42,683 | 207 | ||||||||||||||||||||
Total | $ | 1,896 | $ | 626 | $ | 1,143 | $ | 3,665 | $ | 449,984 | $ | 453,649 | $ | 772 | |||||||||||||
September 30, 2015 | |||||||||||||||||||||||||||
Real estate loans | $ | 555 | $ | 500 | $ | 387 | $ | 1,442 | $ | 179,251 | $ | 180,693 | $ | 244 | |||||||||||||
Commercial/Agriculture real estate | — | — | — | — | 63,266 | 63,266 | — | ||||||||||||||||||||
Consumer and other loans | 386 | 65 | 135 | 586 | 166,260 | 166,846 | 52 | ||||||||||||||||||||
Purchased third party loans | 238 | 189 | 177 | 604 | 39,101 | 39,705 | 177 | ||||||||||||||||||||
Total | $ | 1,179 | $ | 754 | $ | 699 | $ | 2,632 | $ | 447,878 | $ | 450,510 | $ | 473 |
With No Related Allowance Recorded | With An Allowance Recorded | Totals | |||||||||||||||||||||||||||||||||||||||
Consumer Real Estate | Commercial/Agricultural Real Estate | Consumer and Other | Total | Consumer Real Estate | Commercial/Agricultural Real Estate | Consumer and Other | Total | Consumer Real Estate | Commercial/Agricultural Real Estate | Consumer and Other | Total | ||||||||||||||||||||||||||||||
Recorded investment at December 31, 2015 | $ | 2,952 | $ | — | $ | 551 | $ | 3,503 | $ | 1,679 | $ | — | $ | 298 | $ | 1,977 | $ | 4,631 | $ | — | $ | 849 | $ | 5,480 | |||||||||||||||||
Unpaid balance at December 31, 2015 | 2,952 | — | 551 | 3,503 | 1,679 | — | 298 | 1,977 | 4,631 | — | 849 | 5,480 | |||||||||||||||||||||||||||||
Recorded investment at September 30, 2015 | 2,494 | — | 471 | 2,965 | 1,972 | — | 377 | 2,349 | 4,466 | — | 848 | 5,314 | |||||||||||||||||||||||||||||
Unpaid balance at September 30, 2015 | 2,494 | — | 471 | 2,965 | 1,972 | — | 377 | 2,349 | 4,466 | — | 848 | 5,314 | |||||||||||||||||||||||||||||
Average recorded investment; three months ended December 31, 2015 | 2,723 | — | 511 | 3,234 | 1,826 | — | 338 | 2,164 | 4,549 | — | 849 | 5,398 | |||||||||||||||||||||||||||||
Average recorded investment; twelve months ended September 30, 2015 | 3,178 | — | 485 | 3,663 | 2,220 | — | 556 | 2,776 | 5,398 | — | 1,041 | 6,439 | |||||||||||||||||||||||||||||
Interest income received; three months ended December 31, 2015 | 32 | — | 10 | 42 | 10 | — | 2 | 12 | 42 | — | 12 | 54 | |||||||||||||||||||||||||||||
Interest income received; twelve months ended September 30, 2015 | 136 | — | 35 | 171 | 61 | — | 23 | 84 | 197 | — | 58 | 255 |
Consumer Real Estate | Consumer/Agricultural Real Estate | Consumer and Other | Total | ||||||||||
December 31, 2015 and | |||||||||||||
Three Months then Ended: | |||||||||||||
Accruing / Performing: | |||||||||||||
Beginning balance | $ | 3,206 | $ | — | $ | 472 | $ | 3,678 | |||||
Principal payments | (31 | ) | — | (20 | ) | (51 | ) | ||||||
Charge-offs | — | — | — | — | |||||||||
Advances | — | — | 1 | 1 | |||||||||
New restructured (1) | — | — | — | — | |||||||||
Class transfers out (2) | — | — | — | — | |||||||||
Transfers between accrual/non-accrual | (137 | ) | — | (33 | ) | (170 | ) | ||||||
Ending balance | $ | 3,038 | $ | — | $ | 420 | $ | 3,458 | |||||
Non-accrual / Non-performing: | |||||||||||||
Beginning balance | $ | 273 | $ | — | $ | 59 | $ | 332 | |||||
Principal payments | (125 | ) | — | (2 | ) | (127 | ) | ||||||
Charge-offs | (20 | ) | — | (21 | ) | (41 | ) | ||||||
Advances | 2 | — | — | 2 | |||||||||
New restructured (1) | — | — | — | — | |||||||||
Class transfers out (2) | — | — | — | — | |||||||||
Transfers between accrual/non-accrual | 137 | — | 33 | 170 | |||||||||
Ending balance | $ | 267 | $ | — | $ | 69 | $ | 336 | |||||
Totals: | |||||||||||||
Beginning balance | $ | 3,479 | $ | — | $ | 531 | $ | 4,010 | |||||
Principal payments | (156 | ) | — | (22 | ) | (178 | ) | ||||||
Charge-offs | (20 | ) | — | (21 | ) | (41 | ) | ||||||
Advances | 2 | — | 1 | 3 | |||||||||
New restructured (1) | — | — | — | — | |||||||||
Class transfers out (2) | — | — | — | — | |||||||||
Transfers between accrual/non-accrual | — | — | — | — | |||||||||
Ending balance | $ | 3,305 | $ | — | $ | 489 | $ | 3,794 |
(1) | “New restructured” represent loans restructured during the applicable period that met TDR criteria in accordance with the Bank’s policy at the time of the restructuring. |
(2) | “Class transfers out” represent previously restructured loans that are in compliance with the modified terms for a minimum of one year, are yielding a market rate and conform to normal underwriting standards. |
Consumer Real Estate | Commercial/Agricultural Real Estate | Consumer and Other | Total | ||||||||||
December 31, 2014 and | |||||||||||||
Three Months then Ended: | |||||||||||||
Accruing / Performing: | |||||||||||||
Beginning balance | $ | 4,535 | $ | — | $ | 797 | $ | 5,332 | |||||
Principal payments | (360 | ) | — | (77 | ) | (437 | ) | ||||||
Charge-offs | — | — | (2 | ) | (2 | ) | |||||||
Advances | 2 | — | — | 2 | |||||||||
New restructured (1) | — | — | 14 | 14 | |||||||||
Class transfers out (2) | (181 | ) | — | — | (181 | ) | |||||||
Transfers between accrual/non-accrual | — | — | (28 | ) | (28 | ) | |||||||
Ending balance | $ | 3,996 | $ | — | $ | 704 | $ | 4,700 | |||||
Non-accrual / Non-performing: | |||||||||||||
Beginning balance | $ | 202 | $ | — | $ | 47 | $ | 249 | |||||
Principal payments | (99 | ) | — | (2 | ) | (101 | ) | ||||||
Charge-offs | (16 | ) | — | (1 | ) | (17 | ) | ||||||
Advances | — | — | — | — | |||||||||
New restructured (1) | — | — | — | — | |||||||||
Class transfers out (2) | — | — | — | — | |||||||||
Transfers between accrual/non-accrual | — | — | 28 | 28 | |||||||||
Ending balance | $ | 87 | $ | — | $ | 72 | $ | 159 | |||||
Totals: | |||||||||||||
Beginning balance | $ | 4,737 | $ | — | $ | 844 | $ | 5,581 | |||||
Principal payments | (459 | ) | — | (79 | ) | (538 | ) | ||||||
Charge-offs | (16 | ) | — | (3 | ) | (19 | ) | ||||||
Advances | 2 | — | — | 2 | |||||||||
New restructured (1) | — | — | 14 | 14 | |||||||||
Class transfers out (2) | (181 | ) | — | — | (181 | ) | |||||||
Transfers between accrual/non-accrual | — | — | — | — | |||||||||
Ending balance | $ | 4,083 | $ | — | $ | 776 | $ | 4,859 |
(1) | “New restructured” represent loans restructured during the applicable period that met TDR criteria in accordance with the Bank’s policy at the time of the restructuring. |
(2) | “Class transfers out” represent previously restructured loans that are in compliance with the modified terms for a minimum of one year, are yielding a market rate and conform to normal underwriting standards. |
Real Estate | Commercial/Agricultural Real Estate | Consumer and Other | Total | ||||||||||
September 30, 2015 and | |||||||||||||
Twelve Months then Ended: | |||||||||||||
Accruing / Performing: | |||||||||||||
Beginning balance | $ | 4,535 | $ | — | $ | 797 | $ | 5,332 | |||||
Principal payments | (945 | ) | — | (301 | ) | (1,246 | ) | ||||||
Charge-offs | — | — | (8 | ) | (8 | ) | |||||||
Advances | 12 | — | 1 | 13 | |||||||||
New restructured (1) | 17 | — | 52 | 69 | |||||||||
Class transfers out (2) | (181 | ) | — | — | (181 | ) | |||||||
Transfers between accrual/non-accrual | (232 | ) | — | (69 | ) | (301 | ) | ||||||
Ending balance | $ | 3,206 | $ | — | $ | 472 | $ | 3,678 | |||||
Non-accrual / Non-performing: | |||||||||||||
Beginning balance | $ | 202 | $ | — | $ | 47 | $ | 249 | |||||
Principal payments | (120 | ) | — | (11 | ) | (131 | ) | ||||||
Charge-offs | (41 | ) | — | (46 | ) | (87 | ) | ||||||
Advances | — | — | — | — | |||||||||
New restructured (1) | — | — | — | — | |||||||||
Class transfers out (2) | — | — | — | — | |||||||||
Transfers between accrual/non-accrual | 232 | — | 69 | 301 | |||||||||
Ending balance | $ | 273 | $ | — | $ | 59 | $ | 332 | |||||
Totals: | |||||||||||||
Beginning balance | $ | 4,737 | $ | — | $ | 844 | $ | 5,581 | |||||
Principal payments | (1,065 | ) | — | (312 | ) | (1,377 | ) | ||||||
Charge-offs | (41 | ) | — | (54 | ) | (95 | ) | ||||||
Advances | 12 | — | 1 | 13 | |||||||||
New restructured (1) | 17 | — | 52 | 69 | |||||||||
Class transfers out (2) | (181 | ) | — | — | (181 | ) | |||||||
Transfers between accrual/non-accrual | — | — | — | — | |||||||||
Ending balance | $ | 3,479 | $ | — | $ | 531 | $ | 4,010 |
(1) | “New restructured” represent loans restructured during the applicable period that met TDR criteria in accordance with the Bank’s policy at the time of the restructuring. |
(2) | “Class transfers out” represent previously restructured loans that are in compliance with the modified terms for a minimum of one year, are yielding a market rate and conform to normal underwriting standards. |
December 31, 2015 | September 30, 2015 | ||||||||||||
Number of Modifications | Recorded Investment | Number of Modifications | Recorded Investment | ||||||||||
Troubled debt restructurings: | |||||||||||||
Consumer Real Estate | 32 | $ | 3,305 | 34 | $ | 3,479 | |||||||
Commercial/Agricultural Real Estate | — | — | — | — | |||||||||
Consumer and other | 33 | 489 | 39 | 531 | |||||||||
Total troubled debt restructurings | 65 | $ | 3,794 | 73 | $ | 4,010 |
Available for sale securities | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||
December 31, 2015 | |||||||||||||||
U.S. government agency obligations | $ | 15,035 | $ | 1 | $ | 318 | $ | 14,718 | |||||||
Obligations of states and political subdivisions | 29,586 | 165 | 155 | 29,596 | |||||||||||
Mortgage-backed securities | 43,199 | 53 | 471 | 42,781 | |||||||||||
Federal Agricultural Mortgage Corporation | 71 | — | 5 | 66 | |||||||||||
Total available for sale securities | $ | 87,891 | $ | 219 | $ | 949 | $ | 87,161 | |||||||
September 30, 2015 | |||||||||||||||
U.S. government agency obligations | $ | 15,240 | $ | — | $ | 220 | $ | 15,020 | |||||||
Obligations of states and political subdivisions | 27,573 | 81 | 247 | 27,407 | |||||||||||
Mortgage-backed securities | 37,451 | 133 | 144 | 37,440 | |||||||||||
Federal Agricultural Mortgage Corporation | 71 | — | 17 | 54 | |||||||||||
Total available for sale securities | $ | 80,335 | $ | 214 | $ | 628 | $ | 79,921 |
Held to maturity securities | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||
December 31, 2015 | |||||||||||||||
Obligations of states and political subdivisions | $ | 1,318 | $ | 3 | $ | 3 | $ | 1,318 | |||||||
Mortgage-backed securities | 6,406 | 130 | — | 6,536 | |||||||||||
Total held to maturity securities | $ | 7,724 | $ | 133 | $ | 3 | $ | 7,854 | |||||||
September 30, 2015 | |||||||||||||||
Obligations of states and political subdivisions | $ | 1,319 | $ | 3 | $ | 4 | $ | 1,318 | |||||||
Mortgage-backed securities | 6,693 | 208 | — | 6,901 | |||||||||||
Total held to maturity securities | $ | 8,012 | $ | 211 | $ | 4 | $ | 8,219 |
As of | Weighted Average Rate | As of | Weighted Average Rate | ||||||||||
Maturing during the fiscal year | December 31 | September 30, | |||||||||||
Ended September 30, | 2015 | 2015 | |||||||||||
2016 | $ | 33,600 | 0.58 | % | $ | 33,600 | 0.67 | % | |||||
2017 | 15,461 | 1.46 | % | 15,461 | 1.46 | % | |||||||
2018 | 6,100 | 2.24 | % | 6,100 | 2.24 | % | |||||||
2019 | 3,730 | 1.87 | % | 3,730 | 1.87 | % | |||||||
2020 | — | — | % | — | — | % | |||||||
Total fixed maturity | $ | 58,891 | $ | 58,891 | |||||||||
Advances with amortizing principal | — | — | % | — | — | % | |||||||
Total advances | $ | 58,891 | $ | 58,891 | |||||||||
Irrevocable standby letters of credit | $ | 24,040 | $ | 24,040 | |||||||||
Total credit outstanding | $ | 82,931 | $ | 82,931 |
Three months ended December 31, 2015 | Three months ended December 31, 2014 | ||||||
Current tax provision | |||||||
Federal | $ | 344 | $ | 613 | |||
State | 96 | 98 | |||||
440 | 711 | ||||||
Deferred tax (benefit) provision | |||||||
Federal | 25 | (239 | ) | ||||
State | 9 | (39 | ) | ||||
34 | (278 | ) | |||||
Total | $ | 474 | $ | 433 |
Three months ended December 31, 2015 | Three months ended December 31, 2014 | ||||||||||||
Amount | Rate | Amount | Rate | ||||||||||
Tax expense at statutory rate | $ | 454 | 34.0 | % | $ | 390 | 34.0 | % | |||||
State income taxes net of federal taxes | 69 | 5.2 | 59 | 5.2 | |||||||||
Tax exempt interest | (36 | ) | (2.7 | ) | (11 | ) | (1.0 | ) | |||||
Other | (13 | ) | (0.9 | ) | (5 | ) | (0.5 | ) | |||||
Total | $ | 474 | 35.6 | % | $ | 433 | 37.7 | % |
December 31, 2015 | September 30, 2015 | ||||||
Deferred tax assets: | |||||||
Allowance for loan losses | $ | 2,523 | $ | 2,544 | |||
Deferred loan costs/fees | 129 | 145 | |||||
Director/officer compensation plans | 515 | 536 | |||||
Net unrealized loss on securities available for sale | 292 | 166 | |||||
Other | 511 | 520 | |||||
Deferred tax assets | 3,970 | 3,911 | |||||
Deferred tax liabilities: | |||||||
Office properties and equipment | (75 | ) | (114 | ) | |||
Other | (116 | ) | (110 | ) | |||
Deferred tax liabilities | (191 | ) | (224 | ) | |||
Net deferred tax assets | $ | 3,779 | $ | 3,687 |
Restricted Common Stock Award | ||||||||||||||
December 31, 2015 | September 30, 2015 | |||||||||||||
Number of Shares | Weighted Average Grant Price | Number of Shares | Weighted Average Grant Price | |||||||||||
Restricted Shares | ||||||||||||||
Unvested and outstanding at beginning of fiscal year | 46,857 | $ | 7.59 | 41,014 | $ | 6.51 | ||||||||
Granted | — | — | 17,500 | 9.20 | ||||||||||
Vested | (2,031 | ) | 5.56 | (11,657 | ) | 6.18 | ||||||||
Forfeited | — | — | — | — | ||||||||||
Unvested and outstanding fiscal to date | 44,826 | $ | 7.68 | 46,857 | $ | 7.59 |
Common Stock Option Awards | |||||||||||||
Option Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term | Aggregate Intrinsic Value | ||||||||||
2016 | |||||||||||||
Outstanding at September 30, 2015 | 171,737 | $ | 7.46 | ||||||||||
Granted | — | — | |||||||||||
Exercised | — | ||||||||||||
Forfeited or expired | — | ||||||||||||
Outstanding at December 31, 2015 | 171,737 | $ | 7.46 | 7.58 | |||||||||
Exercisable at December 31, 2015 | 68,408 | $ | 6.71 | 5.20 | $ | 188 | |||||||
Fully vested and expected to vest | 171,737 | $ | 7.46 | 7.32 | $ | 344 | |||||||
2015 | |||||||||||||
Outstanding at September 30, 2014 | 179,192 | $ | 6.52 | ||||||||||
Granted | 50,000 | 9.20 | |||||||||||
Exercised | (51,955 | ) | |||||||||||
Forfeited or expired | (5,500 | ) | |||||||||||
Outstanding at September 30, 2015 | 171,737 | $ | 7.46 | 7.58 | $ | — | |||||||
Exercisable at September 30, 2015 | 63,764 | $ | 6.79 | 5.33 | |||||||||
Fully vested and expected to vest | 171,737 | $ | 7.46 | 7.58 |
2016 | 2015 | |||||||
Intrinsic value of options exercised | $ | — | $ | 180 | ||||
Cash received from options exercised | $ | — | $ | 299 | ||||
Tax benefit realized from options exercised | $ | — | $ | 9 |
2016 | 2015 | |||||
Dividend yield | 0.00 | % | 0.88 | % | ||
Risk-free interest rate | — | % | 2.1 | % | ||
Weighted average expected life (years) | 0 | 10 | ||||
Expected volatility | — | % | 2 | % |
Before-Tax Amount | Tax Expense | Net-of-Tax Amount | |||||||||
Unrealized gains (losses) on securities: | |||||||||||
Net unrealized losses arising during the period | $ | (316 | ) | 126 | $ | (190 | ) | ||||
Other comprehensive income | $ | (316 | ) | $ | 126 | $ | (190 | ) |
Unrealized Gains (Losses) on Securities | Defined Benefit Plans | Other Comprehensive Income (Loss) | |||||||||
Balance, October 1, 2015 | $ | (249 | ) | $ | 35 | $ | (214 | ) | |||
Current year-to-date other comprehensive income, net of tax | (190 | ) | — | (190 | ) | ||||||
Ending balance, December 31, 2015 | $ | (439 | ) | $ | 35 | $ | (404 | ) |
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Three Months Ended December 31, | |||||||
2015 | 2014 | ||||||
Net income as reported | $ | 860 | $ | 715 | |||
EPS - basic, as reported | $ | 0.16 | $ | 0.14 | |||
EPS - diluted, as reported | $ | 0.16 | $ | 0.14 | |||
Cash dividends paid | $ | — | $ | — | |||
Return on average assets (annualized) | 0.59 | % | 0.50 | % | |||
Return on average equity (annualized) | 5.60 | % | 4.89 | % | |||
Efficiency ratio, as reported (1) | 72.23 | % | 72.90 | % |
(1) | The efficiency ratio is calculated as non-interest expense minus branch closure costs divided by the sum of net interest income plus non-interest income, excluding net impairment losses recognized in net income. A lower ratio indicates greater efficiency. |
• | Net interest income was $4,553 for the three month period ended December 31, 2015, a decrease of $288 or 5.95% from the prior year period. The decrease was primarily due to loan sales in prior years of fixed rate longer term consumer real estate loans and the continued pressure on interest earning asset yields from the low interest rate environment and from market competition. These loan sales are part of the Company's ongoing loan portfolio and balance sheet management activities undertaken to manage, among other things, interest rate risk and liquidity. |
• | The net interest margin of 3.22% for the three months ended December 31, 2015 represents a 25 bp decrease from a net interest margin of 3.47% for the three months ended December 31, 2014. |
• | Total loans were $453,649 at December 31, 2015, an increase of $3,139, or 0.70%, from their balances at September 30, 2015, due to commercial loan growth. Total deposits were $457,732 at December 31, 2015, an increase of $1,434, or 0.31%, from their balances at September 30, 2015. |
• | Net loan charge-offs decreased from $194 for the three months ended December 31, 2014 to $130 for the three months ended December 31, 2015, as a result of overall credit quality improvement within our loan portfolio. Continued lower levels of net loan charge-offs in recent periods led to a decreased provision for loan losses of $75 for the three month period ended December 31, 2015, compared to $235 for the three months ended December 31, 2014. Annualized net loan charge-offs as a percentage of average loans were 0.12% for the three months ended December 31, 2015, compared to 0.17% for the three months ended December 31, 2014. |
• | Non-interest income decreased from $1,034 for the three months ended December 31, 2014 to $950 for the three months ended December 31, 2015, due to a loan sale premium received in the first quarter of the previous year in the amount of $89 and lower service charges on deposit accounts in the current period. |
• | Non-interest expense decreased $398, from $4,492 to $4,094, for the three month period ending December 31, 2015 compared to the three month period ending December 31, 2014. Non-interest expense reductions reflected reduced occupancy expenses as part of our branch rationalization plan. |
Three months ended December 31, 2015 | Three months ended December 31, 2014 | ||||||||||||||||||||
Average Balance | Interest Income/ Expense | Average Yield/ Rate | Average Balance | Interest Income/ Expense | Average Yield/ Rate | ||||||||||||||||
Average interest earning assets: | |||||||||||||||||||||
Cash and cash equivalents | $ | 19,575 | $ | 15 | 0.30 | % | $ | 13,010 | $ | 8 | 0.24 | % | |||||||||
Loans | 451,809 | 5,250 | 4.61 | % | 464,540 | 5,596 | 4.78 | % | |||||||||||||
Interest-bearing deposits | 3,055 | 17 | 2.21 | % | 808 | 4 | 1.96 | % | |||||||||||||
Investment securities (1) | 88,938 | 424 | 1.89 | % | 71,684 | 342 | 1.89 | % | |||||||||||||
Non-marketable equity securities, at cost | 4,626 | 28 | 2.40 | % | 5,346 | 30 | 2.23 | % | |||||||||||||
Total interest earning assets | $ | 568,003 | $ | 5,734 | 4.01 | % | $ | 555,388 | $ | 5,980 | 4.27 | % | |||||||||
Average interest-bearing liabilities: | |||||||||||||||||||||
Savings accounts | $ | 27,019 | $ | 8 | 0.12 | % | $ | 27,578 | $ | 7 | 0.10 | % | |||||||||
Demand deposits | 23,952 | 44 | 0.73 | % | 18,642 | 34 | 0.72 | % | |||||||||||||
Money market | 144,284 | 154 | 0.42 | % | 139,561 | 151 | 0.43 | % | |||||||||||||
CD’s | 219,873 | 683 | 1.23 | % | 225,702 | 694 | 1.22 | % | |||||||||||||
IRA’s | 22,528 | 67 | 1.18 | % | 22,261 | 66 | 1.18 | % | |||||||||||||
Total deposits | 437,656 | 956 | 0.87 | % | 433,744 | 952 | 0.87 | % | |||||||||||||
FHLB Advances | 58,891 | 165 | 1.11 | % | 55,141 | 167 | 1.20 | % | |||||||||||||
Total interest-bearing liabilities | $ | 496,547 | $ | 1,121 | 0.90 | % | $ | 488,885 | $ | 1,119 | 0.91 | % | |||||||||
Net interest income | $ | 4,613 | $ | 4,861 | |||||||||||||||||
Interest rate spread | 3.11 | % | 3.36 | % | |||||||||||||||||
Net interest margin | 3.22 | % | 3.47 | % | |||||||||||||||||
Average interest earning assets to average interest-bearing liabilities | 1.14 | 1.14 |
Increase (decrease) due to | |||||||||||
Volume | Rate | Net | |||||||||
Interest income: | |||||||||||
Cash and cash equivalents | $ | 5 | $ | 2 | $ | 7 | |||||
Loans | (151 | ) | (195 | ) | (346 | ) | |||||
Interest-bearing deposits | 12 | 1 | 13 | ||||||||
Investment securities | 82 | — | 82 | ||||||||
Non-marketable equity securities, at cost | (4 | ) | 2 | (2 | ) | ||||||
Total interest earning assets | (56 | ) | (190 | ) | (246 | ) | |||||
Interest expense: | |||||||||||
Savings accounts | — | 1 | 1 | ||||||||
Demand deposits | 10 | — | 10 | ||||||||
Money market accounts | 5 | (2 | ) | 3 | |||||||
CD’s | (18 | ) | 7 | (11 | ) | ||||||
IRA’s | 1 | — | 1 | ||||||||
Total deposits | (2 | ) | 6 | 4 | |||||||
FHLB Advances | 11 | (13 | ) | (2 | ) | ||||||
Total interest bearing liabilities | 9 | (7 | ) | 2 | |||||||
Net interest income | $ | (65 | ) | $ | (183 | ) | $ | (248 | ) |
Three months ended December 31, | % | |||||||||
2015 | 2014 | Change | ||||||||
Non-interest Income: | ||||||||||
Net gain (loss) on available for sale securities | $ | — | $ | 2 | (100.00 | )% | ||||
Service charges on deposit accounts | 423 | 472 | (10.38 | ) | ||||||
Loan fees and service charges | 321 | 355 | (9.58 | ) | ||||||
Other | 206 | 205 | 0.49 | |||||||
Total non-interest income | $ | 950 | $ | 1,034 | (8.12 | )% |
Three months ended December 31, | % | |||||||||
2015 | 2014 | Change | ||||||||
Non-interest Expense: | ||||||||||
Salaries and related benefits | $ | 2,218 | $ | 2,175 | 1.98 | % | ||||
Occupancy - net | 569 | 820 | (30.61 | ) | ||||||
Office | 252 | 256 | (1.56 | ) | ||||||
Data processing | 409 | 389 | 5.14 | |||||||
Amortization of core deposit intangible | 14 | 14 | — | |||||||
Advertising, marketing and public relations | 137 | 98 | 39.80 | |||||||
FDIC premium assessment | 85 | 104 | (18.27 | ) | ||||||
Professional services | 151 | 319 | (52.66 | ) | ||||||
Other | 259 | 317 | (18.30 | ) | ||||||
Total non-interest expense | $ | 4,094 | $ | 4,492 | (8.86 | )% | ||||
Non-interest expense (annualized) / Average assets | 2.80 | % | 3.23 | % | (4.64 | )% |
December 31, 2015 and Three Months Then Ended | September 30, 2015 and Twelve Months Then Ended | ||||||
Nonperforming assets: | |||||||
Nonaccrual loans | $ | 848 | $ | 748 | |||
Accruing loans past due 90 days or more | 772 | 473 | |||||
Total nonperforming loans (“NPLs”) | 1,620 | 1,221 | |||||
Other real estate owned | 734 | 838 | |||||
Other collateral owned | 70 | 64 | |||||
Total nonperforming assets (“NPAs”) | $ | 2,424 | $ | 2,123 | |||
Troubled Debt Restructurings (“TDRs”) | $ | 3,794 | $ | 4,010 | |||
Nonaccrual TDRs | 311 | 332 | |||||
Average outstanding loan balance | 445,687 | 460,438 | |||||
Loans, end of period (1) | 453,649 | 450,510 | |||||
Total assets, end of period | 581,770 | 580,148 | |||||
ALL, at beginning of period | $ | 6,496 | $ | 6,506 | |||
Loans charged off: | |||||||
Real estate loans | (41 | ) | (405 | ) | |||
Consumer and other loans | (138 | ) | (601 | ) | |||
Total loans charged off | (179 | ) | (1,006 | ) | |||
Recoveries of loans previously charged off: | |||||||
Real estate loans | 2 | 69 | |||||
Consumer and other loans | 47 | 271 | |||||
Total recoveries of loans previously charged off: | 49 | 340 | |||||
Net loans charged off (“NCOs”) | (130 | ) | (666 | ) | |||
Additions to ALL via provision for loan losses charged to operations | 75 | 656 | |||||
ALL, at end of period | $ | 6,441 | $ | 6,496 | |||
Ratios: | |||||||
ALL to NCOs (annualized) | 1,238.65 | % | 975.38 | % | |||
NCOs (annualized) to average loans | 0.12 | % | 0.14 | % | |||
ALL to total loans | 1.42 | % | 1.44 | % | |||
NPLs to total loans | 0.36 | % | 0.27 | % | |||
NPAs to total assets | 0.42 | % | 0.37 | % |
Securities available for sale | Amortized Cost | Fair Value | |||||
December 31, 2015 | |||||||
U.S. government agency obligations | $ | 15,035 | $ | 14,718 | |||
Obligations of states and political subdivisions | 29,586 | 29,596 | |||||
Mortgage-backed securities | 43,199 | 42,781 | |||||
Federal Agricultural Mortgage Corporation | 71 | 66 | |||||
Totals | $ | 87,891 | $ | 87,161 | |||
September 30, 2015 | |||||||
U.S. government agency obligations | $ | 15,240 | $ | 15,020 | |||
Obligations of states and political subdivisions | 27,573 | 27,407 | |||||
Mortgage-backed securities | 37,451 | 37,440 | |||||
Federal Agricultural Mortgage Corporation | 71 | 54 | |||||
Totals | $ | 80,335 | $ | 79,921 |
Securities held to maturity | Amortized Cost | Fair Value | |||||
December 31, 2015 | |||||||
Obligations of states and political subdivisions | $ | 1,318 | $ | 1,318 | |||
Mortgage-backed securities | 6,406 | 6,536 | |||||
Totals | $ | 7,724 | $ | 7,854 | |||
September 30, 2015 | |||||||
Obligations of states and political subdivisions | $ | 1,319 | $ | 1,318 | |||
Mortgage-backed securities | 6,693 | 6,901 | |||||
Totals | $ | 8,012 | $ | 8,219 |
December 31, 2015 | September 30, 2015 | ||||||||||||||
Securities available for sale | Amortized Cost | Fair Value | Amortized Cost | Fair Value | |||||||||||
U.S. government agency | $ | 58,234 | $ | 57,499 | $ | 52,692 | $ | 52,460 | |||||||
AAA | 733 | 740 | 734 | 735 | |||||||||||
AA | 24,333 | 24,291 | 22,228 | 22,057 | |||||||||||
A | 3,233 | 3,267 | 2,970 | 2,959 | |||||||||||
BBB | — | — | — | — | |||||||||||
Below investment grade | — | — | — | — | |||||||||||
Non-rated | 1,358 | 1,364 | 1,711 | 1,710 | |||||||||||
Total | $ | 87,891 | $ | 87,161 | $ | 80,335 | $ | 79,921 |
December 31, 2015 | September 30, 2015 | ||||||||||||||
Securities held to maturity | Amortized Cost | Fair Value | Amortized Cost | Fair Value | |||||||||||
U.S. government agency | $ | 6,406 | $ | 6,536 | $ | 6,693 | $ | 6,901 | |||||||
AAA | — | — | — | — | |||||||||||
AA | — | — | — | — | |||||||||||
A | 968 | 968 | 969 | 968 | |||||||||||
BBB | — | — | — | — | |||||||||||
Below investment grade | — | — | — | — | |||||||||||
Non-rated | 350 | 350 | 350 | 350 | |||||||||||
Total | $ | 7,724 | $ | 7,854 | $ | 8,012 | $ | 8,219 |
Actual | For Capital Adequacy Purposes | To Be Well Capitalized Under Prompt Corrective Action Provisions | ||||||||||||||||||||||
Amount | Ratio | Amount | Ratio | Amount | Ratio | |||||||||||||||||||
As of December 31, 2015 (Unaudited) | ||||||||||||||||||||||||
Total capital (to risk weighted assets) | $ | 65,939,000 | 16.6 | % | $ | 31,750,000 | >= | 8.0 | % | $ | 39,688,000 | >= | 10.0 | % | ||||||||||
Tier 1 capital (to risk weighted assets) | 60,960,000 | 15.4 | % | 23,813,000 | >= | 6.0 | % | 31,750,000 | >= | 8.0 | % | |||||||||||||
Common equity tier 1 capital (to risk weighted assets) | 60,960,000 | 15.4 | % | 17,860,000 | >= | 4.5 | % | 25,797,000 | >= | 6.5 | % | |||||||||||||
Tier 1 leverage ratio (to adjusted total assets) | 60,960,000 | 10.5 | % | 23,303,000 | >= | 4.0 | % | 29,129,000 | >= | 5.0 | % | |||||||||||||
As of September 30, 2015 (Audited) | ||||||||||||||||||||||||
Total capital (to risk weighted assets) | $ | 64,930,000 | 16.5 | % | $ | 31,443,000 | >= | 8.0 | % | $ | 39,304,000 | >= | 10.0 | % | ||||||||||
Tier 1 capital (to risk weighted assets) | 59,997,000 | 15.3 | % | 23,583,000 | >= | 6.0 | % | 31,443,000 | >= | 8.0 | % | |||||||||||||
Common equity tier 1 capital (to risk weighted assets) | 59,997,000 | 15.3 | % | 17,687,000 | >= | 4.5 | % | 25,548,000 | >= | 6.5 | % | |||||||||||||
Tier 1 leverage ratio (to adjusted total assets) | 59,997,000 | 10.4 | % | 23,031,000 | >= | 4.0 | % | 28,788,000 | >= | 5.0 | % |
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
• | originating shorter-term secured consumer, commercial and agricultural loan maturities; |
• | managing our funding needs by utilizing core deposits, institutional certificates of deposits and borrowings as appropriate to extend terms and lock in fixed interest rates; |
• | reducing non-interest expense and managing our efficiency ratio by implementing technologies to enhance customer service and increase employee productivity; |
• | realigning supervision and control of our branch network by modifying their configuration, staffing, locations and reporting structure to focus resources on our most productive markets; |
• | managing our exposure to changes in interest rates, including but not limited to the sale of longer term fixed rate consumer loans. In fiscal 2015, the bank sold approximately $15.7 million in fixed rate longer term consumer real estate loans to lessen our exposure to changes in interest rates. Additional loan sales may occur in the future if the analysis proves advantageous to the Bank; and |
• | originating balloon mortgage loans with a term of 7 years or less to minimize the impact of sudden rate changes. |
Change in Interest Rates in Basis Points (“bp”) Rate Shock in Rates (1) | Economic Value of Equity (EVE) | EVE Ratio (EVE as a % of Assets) | ||||||||||||||||
Amount | Change | % Change | EVE Ratio | Change | ||||||||||||||
(Dollars in thousands) | ||||||||||||||||||
+300 bp | $ | 36,916 | $ | (41,454 | ) | (53 | )% | 7.10 | % | (505 | ) | bp | ||||||
+200 bp | 54,752 | (23,618 | ) | (30 | )% | 10.06 | % | (209 | ) | |||||||||
+100 bp | 68,836 | (9,534 | ) | (12 | )% | 12.15 | % | (121 | ) | |||||||||
0 bp | 78,370 | — | — | 13.36 | % | — | ||||||||||||
-100 bp | 80,768 | 2,398 | 3 | % | 13.45 | % | 9 |
(1) | Assumes an immediate and parallel shift in the yield curve at all maturities. |
Change in Interest Rates in Basis Points (“bp”) Rate Shock in Rates (1) | Economic Value of Equity (EVE) | EVE Ratio (EVE as a % of Assets) | ||||||||||||||||
Amount | Change | % Change | EVE Ratio | Change | ||||||||||||||
(Dollars in thousands) | ||||||||||||||||||
+300 bp | $ | 22,109 | $ | (50,199 | ) | (69 | )% | 4.37 | % | (812 | ) | bp | ||||||
+200 bp | 42,829 | (29,479 | ) | (41 | )% | 8.04 | % | (445 | ) | |||||||||
+100 bp | 59,966 | (12,342 | ) | (17 | )% | 10.75 | % | (174 | ) | |||||||||
0 bp | 72,308 | — | — | 12.49 | % | — | ||||||||||||
-100 bp | 78,457 | 6,149 | 9 | % | 13.19 | % | 70 |
Change in Net Interest Income Over One Year Horizon | |||||||||||||
At September 30, 2015 | At September 30, 2014 | ||||||||||||
Change in Interest Rates in Basis Points (“bp”) Rate Shock in Rates (1) | Dollar Change in Net Interest Income (in thousands) | Percentage Change | Dollar Change in Net Interest Income (in thousands) | Percentage Change | |||||||||
+300 bp | $ | (1,921 | ) | (9.53 | )% | $ | (2,183 | ) | (10.06 | )% | |||
+200 bp | (909 | ) | (4.50 | )% | (1,050 | ) | (4.84 | )% | |||||
+100 bp | (368 | ) | (1.83 | )% | (476 | ) | (2.19 | )% | |||||
0 bp | (221 | ) | (1.09 | )% | (291 | ) | (1.34 | )% | |||||
-100 bp | (309 | ) | (1.53 | )% | (380 | ) | (1.75 | )% |
(1) | Assumes an immediate and parallel shift in the yield curve at all maturities. |
ITEM 4. | CONTROLS AND PROCEDURES |
Item 1. | LEGAL PROCEEDINGS |
Item 1A. | RISK FACTORS |
Item 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
(a) | Not applicable. |
(b) | Not applicable. |
(c) | Not applicable. |
Item 3. | DEFAULTS UPON SENIOR SECURITIES |
Item 4. | MINE SAFETY DISCLOSURES |
Item 5. | OTHER INFORMATION |
Item 6. | EXHIBITS |
31.1 | Rule 13a-14(a) Certification of the Company’s Chief Executive Officer | |
31.2 | Rule 13a-14(a) Certification of the Company’s Chief Financial Officer | |
32.1* | Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350 (Section 906 of the Sarbanes-Oxley Act of 2002). | |
101 | The following materials from Citizens Community Bancorp, Inc.’s Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2015 formatted in XBRL (eXtensible Business Reporting Language) and furnished electronically herewith: (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Operations; (iii) Consolidated Statements of Comprehensive Income (Loss); (iv) Consolidated Statement of Changes in Stockholders’ Equity; (v) Consolidated Statements of Cash Flows; and (vi) Condensed Notes to Consolidated Financial Statements. |
* | This certification is not “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended. |
CITIZENS COMMUNITY BANCORP, INC. | ||||
Date: February 8, 2016 | By: | /s/ Edward H. Schaefer | ||
Edward H. Schaefer | ||||
Chief Executive Officer | ||||
Date: February 8, 2016 | By: | /s/ Mark C. Oldenberg | ||
Mark C. Oldenberg | ||||
Chief Financial Officer |
1) | I have reviewed this quarterly report on Form 10-Q of Citizens Community Bancorp, Inc.; |
2) | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3) | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4) | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5) | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: February 8, 2016 | By: | /s/ Edward H. Schaefer | |
Edward H. Schaefer | |||
Chief Executive Officer |
1) | I have reviewed this quarterly report on Form 10-Q of Citizens Community Bancorp, Inc.; |
2) | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3) | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4) | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5) | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: February 8, 2016 | By: | /s/ Mark C. Oldenberg | |
Mark C. Oldenberg | |||
Chief Financial Officer |
Date: February 8, 2016 | By: | /s/ Edward H. Schaefer | |
Edward H. Schaefer | |||
Chief Executive Officer |
Date: February 8, 2016 | By: | /s/ Mark C. Oldenberg | |
Mark C. Oldenberg | |||
Chief Financial Officer |
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Dec. 31, 2015 |
Feb. 08, 2016 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Citizens Community Bancorp Inc. | |
Entity Central Index Key | 0001367859 | |
Document Type | 10-Q | |
Document Period End Date | Dec. 31, 2015 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q1 | |
Current Fiscal Year End Date | --09-30 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 5,227,909 |
Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands |
Dec. 31, 2015 |
Sep. 30, 2015 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Estimated Fair Value | $ 87,161 | $ 79,921 |
Held-to-maturity Securities, Amortized Cost before Other than Temporary Impairment | $ 7,724 | $ 8,012 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized (in shares) | 30,000,000 | 30,000,000 |
Common stock, issued (in shares) | 5,231,265 | 5,232,579 |
Common stock, outstanding (in shares) | 5,231,265 | 5,232,579 |
Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Statement of Comprehensive Income [Abstract] | ||
Net income attributable to common stockholders | $ 860 | $ 715 |
Securities available for sale | ||
Net unrealized (losses) gains arising during period | (190) | 417 |
Reclassification adjustment for gains (losses) included in net income | 0 | 1 |
Unrealized (losses) gains on securities | (190) | 418 |
Comprehensive income | $ 670 | $ 1,133 |
Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - Reclassifications Out of Accumulated Other Comprehensive Income $ in Thousands |
3 Months Ended | |||
---|---|---|---|---|
Dec. 31, 2015
USD ($)
| ||||
Reclassification out of Accumulated Other Comprehensive Income [Line Items] | ||||
Net gain on sale of available for sale securities | $ 0 | |||
Provision for income taxes | (474) | |||
Net income attributable to common stockholders | 860 | |||
Accumulated Net Unrealized Investment Gain (Loss) [Member] | Reclassification out of Accumulated Other Comprehensive Income [Member] | ||||
Reclassification out of Accumulated Other Comprehensive Income [Line Items] | ||||
Net gain on sale of available for sale securities | 0 | [1] | ||
Provision for income taxes | 0 | [1] | ||
Net income attributable to common stockholders | $ 0 | [1] | ||
|
Consolidated Statement of Changes in Stockholders' Equity (Unaudited) - 3 months ended Dec. 31, 2015 - USD ($) $ in Thousands |
Total |
Common Stock |
Additional Paid-In Capital |
Retained Earnings |
Unearned Deferred Compensation |
Accumulated Other Comprehensive Income (Loss) |
---|---|---|---|---|---|---|
Beginning balance at Sep. 30, 2015 | $ 60,535 | $ 52 | $ 54,740 | $ 6,245 | $ (288) | $ (214) |
Beginning balance, shares at Sep. 30, 2015 | 5,232,579 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net Income | 860 | 860 | ||||
Other comprehensive loss, net of tax | (190) | (190) | ||||
Surrender of restricted shares of commons stock, shares | (1,314) | |||||
Surrender of restricted shares of common stock | (12) | (12) | ||||
Stock option expense | 16 | 16 | ||||
Amortization of restricted stock | 27 | 27 | ||||
Ending balance, shares at Dec. 31, 2015 | 5,231,265 | |||||
Ending balance at Dec. 31, 2015 | $ 61,236 | $ 52 | $ 54,744 | $ 7,105 | $ (261) | $ (404) |
Nature of Business and Summary of Significant Accounting Policies |
3 Months Ended |
---|---|
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying consolidated financial statements include the accounts of Citizens Community Bancorp, Inc. (the “Company”) and its wholly owned subsidiary, Citizens Community Federal N.A. (the "Bank"), and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. As used in this quarterly report, the terms “we”, “us”, “our”, and “Citizens Community Bancorp, Inc.” mean the Company and its wholly-owned subsidiary, the Bank, unless the context indicates other meaning. On April 16, 2014, the U.S. Office of the Comptroller of the Currency (the "OCC"), the primary federal regulator for Citizens Community Bancorp, Inc. and Citizens Community Federal, provided written notice to the Bank of the OCC's approval for the Bank to convert to a national banking association (a "National Bank") and operate under the title of Citizens Community Federal National Association ("Citizens Community Federal N.A."). The consummation of the conversion to a National Bank was effective as of May 31, 2014. On April 18, 2014, Citizens Community Bancorp, Inc. received written notice from the Federal Reserve Bank of Minneapolis (the "FRB") notifying the Company of the FRB's approval of the Company becoming a bank holding company as a result of the proposed conversion of the Bank from a federally-chartered savings bank to a National Bank, which approval was also effective as of May 31, 2014. The consolidated income of the Company is principally derived from the income of the Bank, the Company’s wholly owned subsidiary. The Bank originates residential, commercial, agricultural, consumer and commercial and industrial (C&I) loans and accepts deposits from customers, primarily in Wisconsin, Minnesota and Michigan. The Bank operates 15 full-service offices, seven stand-alone locations and 8 branches predominantly located inside Walmart Supercenters. The Bank is subject to competition from other financial institutions and non-financial institutions providing financial products. Additionally, the Bank is subject to the regulations of certain regulatory agencies and undergoes periodic examination by those regulatory agencies. In preparing these consolidated financial statements, we evaluated the events and transactions that occurred through February 8, 2016, the date on which the financial statements were available to be issued. As of February 8, 2016, there were no subsequent events which required recognition or disclosure. The accompanying consolidated interim financial statements are unaudited. However, in the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Unless otherwise stated herein, and except for shares and per share amounts, all amounts are in thousands. Principles of Consolidation – The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Citizens Community Federal N.A. All significant intercompany accounts and transactions have been eliminated. Use of Estimates – Preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying disclosures. These estimates are based on management’s best knowledge of current events and actions the Company may undertake in the future. Estimates are used in accounting for, among other items, fair value of financial instruments, the allowance for loan losses, valuation of acquired intangible assets, useful lives for depreciation and amortization, indefinite-lived intangible assets and long-lived assets, deferred tax assets, uncertain income tax positions and contingencies. Management does not anticipate any material changes to estimates made herein in the near term. Factors that may cause sensitivity to the aforementioned estimates include, but are not limited to, external market factors such as market interest rates and unemployment rates, changes to operating policies and procedures, and changes in applicable banking regulations. Actual results may ultimately differ from estimates, although management does not generally believe such differences would materially affect the consolidated financial statements in any individual reporting period. Investment Securities; Held to Maturity and Available for Sale – Management determines the appropriate classification of investment securities at the time of purchase and reevaluates such designation as of the date of each balance sheet. Securities are classified as held to maturity when the Company has the positive intent and ability to hold the securities to maturity. Held to maturity securities are stated at amortized cost. Investment securities not classified as held to maturity are classified as available for sale. Available for sale securities are stated at fair value, with unrealized holding gains and losses deemed other than temporarily impaired due to non-credit issues being reported in other comprehensive income (loss), net of tax. Unrealized losses deemed other-than-temporary due to credit issues are reported in the Company’s net income in the period in which the losses arise. Interest income includes amortization of purchase premium or accretion of purchase discount. Amortization of premiums and accretion of discounts are recognized in interest income using the interest method over the estimated lives of the underlying securities. The Company evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. As part of such monitoring, the credit quality of individual securities and their issuer is assessed. Significant inputs used to measure the amount of other-than-temporary impairment related to credit loss include, but are not limited to, default and delinquency rates of the underlying collateral, remaining credit support, and historical loss severities. Adjustments to market value of available for sale securities that are considered temporary are recorded as separate components of equity, net of tax. If the unrealized loss of a security is identified as other-than-temporary based on information available, such as the decline in the creditworthiness of the issuer, external market ratings, or the anticipated or realized elimination of associated dividends, such impairments are further analyzed to determine if credit loss exists. If there is a credit loss, it will be recorded in the Company's consolidated statement of operations. Unrealized losses on available for sale securities, other than credit, will continue to be recognized in other comprehensive income (loss), net of tax. Unrealized losses reflected in the preceding tables have not been included in results of operations because the unrealized loss was not deemed other-than-temporary. Management has determined that more likely than not, the Company neither intends to sell, nor will it be required to sell each debt security before its anticipated recovery, and therefore recovery of cost will occur. Loans – Loans that management has the intent and ability to hold for the foreseeable future, until maturity or payoff are reported at the principal balance outstanding, net of unearned interest, and net of deferred loan fees and costs. Interest income is accrued on the unpaid principal balance of these loans. Loan origination fees, net of certain direct origination costs, are deferred and recognized in interest income using the interest method without anticipating prepayments. Delinquency fees are recognized into income when chargeable, assuming collection is reasonably insured. Interest income on commercial, mortgage and consumer loans is discontinued according to the following schedules: •Commercial loans, including agricultural and C&I loans, past due 90 days or more; •Closed end consumer loans past due 120 days or more; and •Real estate loans and open ended consumer loans past due 180 days or more. Past due status is based on the contractual terms of the loan. In all cases, loans are placed on nonaccrual status or charged off at an earlier date if collection of principal or interest is considered doubtful. All interest accrued but not received for a loan placed on nonaccrual status is reversed against interest income. Interest received on such loans is accounted for on the cash basis or cost recovery method, and is generally applied against principal, until qualifying for return to accrual status. Loans are returned to accrual status when payments are made that bring the loan account current with the contractual term of the loan and a 6 month payment history has been established. Interest on impaired loans considered troubled debt restructurings (“TDRs”) or substandard, less than 90 days delinquent, is recognized as income as it accrues based on the revised terms of the loan over an established period of continued payment. Substandard loans, as defined by the OCC, our primary banking regulator, are loans that are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Real estate loans and open ended consumer loans are charged off to estimated net realizable value less estimated selling costs at the earlier of when (a) the loan is deemed by management to be uncollectible, or (b) the loan becomes past due 180 days or more. Closed end consumer loans are charged off to net realizable value at the earlier of when (a) the loan is deemed by management to be uncollectible, or (b) the loan becomes past due 120 days or more. Commercial loans, including agricultural and C&I loans, are charged off to net realizable value at the earlier of when (a) the loan is deemed by management to be uncollectible, or (b) the loan becomes past due 90 days or more. Allowance for Loan Losses – The allowance for loan losses (“ALL”) is a valuation allowance for probable and inherent credit losses in our loan portfolio. Loan losses are charged against the ALL when management believes that the collectability of a loan balance is unlikely. Subsequent recoveries, if any, are credited to the ALL. Management estimates the required ALL balance taking into account the following factors: past loan loss experience; the nature, volume and composition of our loan portfolio; known and inherent risks in our loan portfolio; information about specific borrowers’ ability to repay; estimated collateral values; current economic conditions; and other relevant factors determined by management. The ALL consists of specific and general components. The specific component relates to loans that are individually classified as impaired. The general component covers non-impaired loans and is based on historical loss experience adjusted for certain qualitative factors. The entire ALL balance is available for any loan that, in our management’s judgment, should be charged off. A loan is impaired when full payment under the loan terms is not expected. Impaired loans consist of all TDRs, as well as individual substandard loans not considered a TDR when full payment under the loan terms is not expected. All TDRs are individually evaluated for impairment. See Note 3, “Loans, Allowance for Loan Losses and Impaired Loans” for more information on what we consider to be a TDR. If a TDR or substandard loan is deemed to be impaired, a specific ALL allocation may be established so that the loan is reported, net, at the lower of (a) outstanding principal balance, (b) the present value of estimated future cash flows using the loan’s existing rate; or (c) at the fair value of any collateral, less estimated disposal costs, if repayment is expected solely from the underlying collateral of the loan. For TDRs less than 90 days past due, and certain substandard loans that are less than 90 days delinquent, the likelihood of the loan migrating to over 90 days past due is also taken into account when determining the specific ALL allocation for these particular loans. Large groups of smaller balance homogeneous loans, such as non-TDR commercial, consumer and residential real estate loans, are collectively evaluated for impairment, and accordingly, are not separately identified for impairment disclosures. Foreclosed and Repossessed Assets, net – Assets acquired through foreclosure or repossession are initially recorded at fair value, less estimated costs to sell, which establishes a new cost basis. If the fair value declines subsequent to foreclosure or repossession, a valuation allowance is recorded through expense. Costs incurred after acquisition are expensed and are included in non-interest expense, other on our Consolidated Statements of Operations. Income Taxes – The Company accounts for income taxes in accordance with the Financial Accounting Standards Board ("FASB") Accounting Standards Codification (“ASC”) Topic 740, “Income Taxes.” Under this guidance, deferred taxes are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates that will apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized as income or expense in the period that includes the enactment date. See Note 6, "Income Taxes" for details on the Company’s income taxes. The Company regularly reviews the carrying amount of its net deferred tax assets to determine if the establishment of a valuation allowance is necessary. If based on the available evidence, it is more likely than not that all or a portion of the Company’s net deferred tax assets will not be realized in future periods, a deferred tax valuation allowance would be established. Consideration is given to various positive and negative factors that could affect the realization of the deferred tax assets. In evaluating this available evidence, management considers, among other things, historical performance, expectations of future earnings, the ability to carry back losses to recoup taxes previously paid, the length of statutory carryforward periods, any experience with utilization of operating loss and tax credit carryforwards not expiring, tax planning strategies and timing of reversals of temporary differences. Significant judgment is required in assessing future earnings trends and the timing of reversals of temporary differences. Accordingly, the Company’s evaluation is based on current tax laws as well as management’s expectations of future performance. Earnings Per Share – Basic earnings per common share is net income or loss divided by the weighted average number of common shares outstanding during the period. Diluted earnings per common share includes the dilutive effect of additional potential common shares issuable during the period, consisting of stock options outstanding under the Company’s stock incentive plans that have an exercise price that is less than the Company's stock price on the reporting date. Reclassifications – Certain items previously reported were reclassified for consistency with the current presentation. Recent Accounting Pronouncements - In August 2014, the FASB issued Accounting Standards Update ("ASU") 2014-14; "Receivables; Troubled Debt Restructurings by Creditors (Subtopic 310-40): Classification of Certain Government-Guaranteed Mortgage Loans upon Foreclosure". ASU 2014-14 is intended to improve accounting and disclosure consistency related to how creditors classify government-guaranteed mortgage loans, including FHA or VA guaranteed loans, upon foreclosure. For public entities, ASU 2014-09 is effective on a prospective basis for the annual periods, and interim periods within those annual periods, beginning after December 15, 2014. The Company has adopted ASU 2014-14 effective December 31, 2015. The adoption of ASU 2014-04 had no effect on the Company's consolidated results of operations, financial position or cash flows. In May 2014, the FASB issued ASU 2014-09; "Revenue from Contracts with Customers (Topic 606). ASU 2014-09 is intended to clarify and simplify revenue recognition principles, develop a common revenue standard across industries and accounting frameworks, and improve the usefulness and consistency of revenue reporting. The effective dates for ASU 2014-09 were deferred one year when the FASB issued ASU 2015-14 - "Revenue from Contracts with Customers (Topic (606) Deferral of the Effective Date", in August 2015. For public entities, ASU 2014-09 is effective on a retrospective basis for the annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is not permitted. The Company expects the adoption of ASU 2014-09 will have no material effect on the Company's consolidated results of operations, financial position or cash flows. In January 2014, the FASB issued ASU 2014-04; "Receivables - Troubled Debt Restructurings by Creditors (Subtopic 310-40): Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure (a consensus of the FASB Emerging Issues Task Force)". ASU 2014-04 is intended to improve consistency among reporting entities by clarifying when an in substance foreclosure occurs, that is, when a creditor should derecognize a loan and recognize the corresponding real estate collateral as a separate asset. For public entities, ASU 2014-04 is effective for the annual periods, and interim periods within those annual periods, beginning after December 15, 2014. The Company has adopted ASU 2014-04 effective December 31, 2015. The adoption of ASU 2014-04 had no effect on the Company's consolidated results of operations, financial position or cash flows. |
Fair Value Accounting |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE ACCOUNTING | FAIR VALUE ACCOUNTING ASC Topic 820-10, “Fair Value Measurements and Disclosures” establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The statement describes 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 prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3- Significant unobservable inputs that reflect the Company’s assumptions about the factors that market participants would use in pricing an asset or liability. A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input within the valuation hierarchy that is significant to the fair value measurement. The fair value of securities available for sale is determined by obtaining market price quotes from independent third parties wherever such quotes are available (Level 1 inputs); or matrix pricing, which 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). Where such quotes are not available, the Company utilizes independent third party valuation analysis to support the Company’s estimates and judgments in determining fair value (Level 3 inputs). Assets Measured on a Recurring Basis The following tables present the financial instruments measured at fair value on a recurring basis as of December 31, 2015 and September 30, 2015:
Assets Measured on a Nonrecurring Basis The following tables present the financial instruments measured at fair value on a nonrecurring basis as of December 31, 2015 and September 30, 2015:
The fair value of impaired loans referenced above was determined by obtaining independent third party appraisals and/or internally developed collateral valuations to support the Company’s estimates and judgments in determining the fair value of the underlying collateral supporting impaired loans. The fair value of foreclosed and repossessed assets was determined by obtaining market price valuations from independent third parties wherever such quotes were available for other collateral owned. The Company utilized independent third party appraisals to support the Company’s estimates and judgments in determining fair value for other real estate owned. Fair Values of Financial Instruments ASC 825-10 and ASC 270-10, Interim Disclosures about Fair Value Financial Instruments, require disclosures about fair value financial instruments and significant assumptions used to estimate fair value. The estimated fair values of financial instruments not previously disclosed are determined as follows: Cash and Cash Equivalents Due to their short-term nature, the carrying amounts of cash and cash equivalents are considered to be a reasonable estimate of fair value. Other Interest-Bearing Deposits Fair value of interest bearing deposits is estimated using a discounted cash flow analysis based on current interest rates being offered by instruments with similar terms. Non-marketable Equity Securities, at cost Non-marketable equity securities are comprised of Federal Home Loan Bank stock and Federal Reserve Bank stock carried at cost, which are their redeemable fair values since the market for each category of this stock is restricted. Loans Receivable, net Fair value is estimated for portfolios of loans with similar financial characteristics. Loans are segregated by type such as real estate, C&I and consumer. The fair value of loans is calculated by discounting scheduled cash flows through the estimated maturity date using market discount rates reflecting the credit and interest rate risk inherent in the loan. The estimate of maturity is based on the Bank’s repayment schedules for each loan classification. Accrued Interest Receivable and Payable Due to their short-term nature, the carrying amounts of accrued interest receivable and payable are considered to be a reasonable estimate of fair value. Deposits The fair value of deposits with no stated maturity, such as demand deposits, savings accounts, and money market accounts, is the amount payable on demand at the reporting date. The fair value of fixed rate certificate accounts is calculated by using discounted cash flows applying interest rates currently being offered on similar certificates. Federal Home Loan Bank Advances The fair value of long-term borrowed funds is estimated using discounted cash flows based on the Bank’s current incremental borrowing rates for similar borrowing arrangements. The carrying value of short-term borrowed funds approximates their fair value. Off-Balance-Sheet Instruments The fair value of off-balance sheet commitments would be estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements, the current interest rates, and the present creditworthiness of the customers. Since this amount is immaterial to the Company’s consolidated financial statements, no amount for fair value is presented. The table below represents what we would receive to sell an asset or what we would have to pay to transfer a liability in an orderly transaction between market participants at the measurement date. The carrying amount and estimated fair value of the Company's financial instruments as of the dates indicated below were as follows:
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Loans, Allowance for Loan Losses and Impaired Loans |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LOANS, ALLOWANCE FOR LOAN LOSSES AND IMPAIRED LOANS | LOANS, ALLOWANCE FOR LOAN LOSSES AND IMPAIRED LOANS Credit Quality/Risk Ratings: Management utilizes a numeric risk rating system to identify and quantify the Bank’s risk of loss within its loan portfolio. Ratings are initially assigned prior to funding the loan, and may be changed at any time as circumstances warrant. Ratings range from the highest to lowest quality based on factors that include measurements of ability to pay, collateral type and value, borrower stability and management experience. The Bank’s loan portfolio is presented below in accordance with the risk rating framework that has been commonly adopted by the federal banking agencies. The definitions of the various risk rating categories are as follows: 1 through 4 - Pass. A "Pass" loan means that the condition of the borrower and the performance of the loan is satisfactory or better. 5 - Watch. A "Watch" loan has clearly identifiable developing weaknesses that deserve additional attention from management. Weaknesses that are not corrected or mitigated, may jeopardize the ability of the borrower to repay the loan in the future. 6 - Special Mention. A "Special Mention" loan has one or more potential weakness that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or in the institution’s credit position in the future. 7 - Substandard. A "Substandard" loan is inadequately protected by the current net worth and paying capacity of the obligor or the collateral pledged, if any. Assets classified as substandard must have a well-defined weakness, or weaknesses, that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. 8 - Doubtful. A "Doubtful" loan has all the weaknesses inherent in a Substandard loan with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. 9 - Loss. Loans classified as "Loss" are considered uncollectible, and their continuance as bankable assets is not warranted. This classification does not mean that the loan has absolutely no recovery or salvage value, and a partial recovery may occur in the future. Below is a breakdown of loans by risk rating as of December 31, 2015:
Below is a breakdown of loans by risk rating as of September 30, 2015:
The ALL represents management’s estimate of probable and inherent credit losses in the Bank’s loan portfolio. Estimating the amount of the ALL requires the exercise of significant judgment and the use of estimates related to the amount and timing of expected future cash flows on impaired loans, estimated losses on pools of homogeneous loans based on historical loss experience, and consideration of other qualitative factors such as current economic trends and conditions, all of which may be susceptible to significant change. There are many factors affecting the ALL; some are quantitative, while others require qualitative judgment. The process for determining the ALL (which management believes adequately considers potential factors which result in probable credit losses), includes subjective elements and, therefore, may be susceptible to significant change. To the extent actual outcomes differ from management estimates, additional provision for loan losses could be required that could adversely affect the Company’s earnings or financial position in future periods. Allocations of the ALL may be made for specific loans but the entire ALL is available for any loan that, in management’s judgment, should be charged-off or for which an actual loss is realized. As an integral part of their examination process, various regulatory agencies also review the Bank’s ALL. Such agencies may require that changes in the ALL be recognized when such regulators’ credit evaluations differ from those of our management based on information available to the regulators at the time of their examinations. Changes in the ALL by loan type for the periods presented below were as follows:
The Bank has originated substantially all loans currently recorded on the Company’s accompanying Consolidated Balance Sheet, except as noted below. During October 2012, the Bank entered into an agreement to purchase short term consumer loans from a third party on an ongoing basis. As part of the servicer agreement entered into in connection with this purchase agreement, the third party seller agreed to purchase or substitute performing consumer loans for all contracts that become 120 days past due. Pursuant to the ongoing loan purchase agreement, a Board of Director determinant was originally established to limit the purchase of these consumer loans under this arrangement to a maximum of $40,000 and a restricted reserve account was established at 3% of the outstanding consumer loan balances purchased up to a maximum of $1,000, with such percentage amount of the loans being deposited into a segregated reserve account. The funds in the reserve account are to be released to compensate the Bank for any purchased loans that are not purchased back by the seller or substituted with performing loans and are ultimately charged off by the Bank. During the first quarter of fiscal 2015, the Board of Directors increased the limit of these purchased consumer loans to a maximum of $50,000. As of December 31, 2015, the balance of the consumer loans purchased was $42,683. The balance in the cash reserve account has reached the maximum allowed balance of $1,000, which is included in Deposits on the accompanying Consolidated Balance Sheet. To date, the Company has not charged off or experienced losses related to the purchased loans. The weighted average rate earned on these purchased consumer loans was 4.23% as of December 31, 2015. Since March 2014, the rate earned for all new loan originations of these purchased consumer loans was 4.00%. As of January 2016, new loans purchased will be at an interest rate of 4.25% due to the increase in the Prime Rate. Loans receivable by loan type as of the end of the periods shown below were as follows:
An aging analysis of the Company’s real estate, commercial/agriculture real estate, consumer and other loans and purchased third party loans as of December 31, 2015 and September 30, 2015, respectively, was as follows:
At December 31, 2015, the Company has identified $3,794 of TDR loans and $1,686 of substandard loans as impaired, totaling $5,480, which includes $3,458 of performing TDR loans. A loan is identified as impaired when, based on current information and events, it is probable that the Bank will be unable to collect all amounts due according to the contractual terms of the loan agreement. Performing TDRs consist of loans that have been modified and are performing in accordance with the modified terms for a sufficient length of time, generally six months, or loans that were modified on a proactive basis. A summary of the Company’s impaired loans as of December 31, 2015 and September 30, 2015 was as follows:
Troubled Debt Restructuring – A TDR includes a loan modification where a borrower is experiencing financial difficulty and the Bank grants a concession to that borrower that the Bank would not otherwise consider except for the borrower’s financial difficulties. Concessions include an extension of loan terms, renewals of existing balloon loans, reductions in interest rates and consolidating existing Bank loans at modified terms. A TDR may be either on accrual or nonaccrual status based upon the performance of the borrower and management’s assessment of collectability. If a TDR is placed on nonaccrual status, it remains there until a sufficient period of performance under the restructured terms has occurred at which time it is returned to accrual status. There were 4 delinquent TDRs greater than 59 days past due with a recorded investment of $166 at December 31, 2015, compared to 4 such loans with a recorded investment of $191 at September 30, 2015. A summary of loans by loan type modified in a troubled debt restructuring as of December 31, 2015 and December 31, 2014, and during each of the three months then ended, and as of September 30, 2015 and during the twelve months then ended was as follows:
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Investment Securities |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVESTMENT SECURITIES | INVESTMENT SECURITIES The amortized cost, estimated fair value and related unrealized gains and losses on securities available for sale and held to maturity as of December 31, 2015 and September 30, 2015, respectively, were as follows:
The Bank has pledged certain of its U.S. Government Agency securities as collateral against a borrowing line of credit with the Federal Reserve Bank. However, as of December 31, 2015, there were no borrowings outstanding on this Federal Reserve Bank line of credit. The Bank has pledged certain of its U.S. Government Agency securities as collateral against specific municipal deposits. |
Federal Home Loan Bank Advances |
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Banking and Thrift [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FEDERAL HOME LOAN BANK ADVANCES | FEDERAL HOME LOAN BANK ADVANCES A summary of Federal Home Loan Bank advances at December 31, 2015 and September 30, 2015 was as follows:
The Bank has an irrevocable Standby Letter of Credit Master Reimbursement Agreement with the Federal Home Loan Bank. This irrevocable standby letter of credit ("LOC") is supported by loan collateral as an alternative to directly pledging investment securities on behalf of a municipal customer as collateral for their interest bearing deposit balances. At December 31, 2015, the Bank’s available and unused portion of this borrowing arrangement was approximately $57,880. The weighted average remaining term of the borrowings at December 31, 2015 is 11.60 months compared to 14.25 months at September 30, 2015. Maximum month-end amounts outstanding were $58,891 and $53,891 during the three month periods ended December 31, 2015 and 2014, respectively. Each Federal Home Loan Bank advance is payable at the maturity date, with a prepayment penalty for fixed rate advances. These advances are secured by $140,811 of real estate mortgage loans. |
Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INCOME TAXES | INCOME TAXES Income tax expense (benefit) for each of the periods shown below consisted of the following:
The provision for income taxes differs from the amount of income tax determined by applying statutory federal income tax rates to pretax income as result of the following differences:
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The following is a summary of the significant components of the Company’s deferred tax assets and liabilities as of December 31, 2015 and September 30, 2015, respectively:
The Company regularly reviews the carrying amount of its deferred tax assets to determine if the establishment of a valuation allowance is necessary, as further discussed in Note 1 “Nature of Business and Summary of Significant Accounting Policies,” above. At December 31, 2015 and September 30, 2015, respectively, management determined that no valuation allowance was necessary for any of the deferred tax assets. The Company’s income tax returns are subject to review and examination by federal, state and local government authorities. As of December 31, 2015, years open to examination by the U.S. Internal Revenue Service include taxable years ended September 30, 2012 to present. The years open to examination by state and local government authorities varies by jurisdiction. The tax effects from uncertain tax positions can be recognized in the consolidated financial statements, provided the position is more likely than not to be sustained on audit, based on the technical merits of the position. The Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the consolidated financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. The Company applied the foregoing accounting standard to all of its tax positions for which the statute of limitations remained open as of the date of the accompanying consolidated financial statements. The Company’s policy is to recognize interest and penalties related to income tax issues as components of other noninterest expense. During the three month periods ended December 31, 2015 and 2014, the Company did not recognize any interest or penalties related to income tax issues in its consolidated statements of operations. The Company had no recorded accrual or liability for the payment of interest and penalties related to income tax issues as of December 31, 2015 or September 30, 2015 respectively. |
Stock-Based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION In February 2005, the Company’s stockholders approved the Company’s 2004 Recognition and Retention Plan. This plan provides for the grant of up to 113,910 shares of the Company’s common stock to eligible participants under this plan. As of December 31, 2015, 113,910 restricted shares under this plan were granted. In February 2005, the Company’s stockholders also approved the Company’s 2004 Stock Option and Incentive Plan. This plan provides for the grant of nonqualified and incentive stock options and stock appreciation rights to eligible participants under the plan. The plan provides for the grant of awards for up to 284,778 shares of the Company’s common stock. At December 31, 2015, 284,778 options had been granted under this plan to eligible participants. In February 2008, the Company’s stockholders approved the Company’s 2008 Equity Incentive Plan. The aggregate number of shares of common stock reserved and available for issuance under the 2008 Equity Incentive Plan is 597,605 shares. Under this Plan, the Compensation Committee may grant stock options and stock appreciation rights that, upon exercise, result in the issuance of 426,860 shares of the Company’s common stock. The Committee may also grant shares of restricted stock and restricted stock units for an aggregate of 170,745 shares of Company common stock under this plan. As of December 31, 2015, 32,500 restricted shares under this plan were granted. As of December 31, 2015, 95,000 options had been granted to eligible participants. Restricted shares granted to date under these plans were awarded at no cost to the employee and vest pro rata over a five-year period from the grant date. Options granted to date under these plans vest pro rata over a five-year period from the grant date. Unexercised, nonqualified stock options expire within 15 years of the grant date and unexercised incentive stock options expire within 10 years of the grant date. Compensation expense related to restricted stock awards from both the 2004 Recognition and Retention Plan and the 2008 Equity Incentive Plan were $27 and $18 for the years ended December 31, 2015 and 2014, respectively.
The Company accounts for stock-based employee compensation related to the Company’s 2004 Stock Option and Incentive Plan and the 2008 Equity Incentive Plan using the fair-value-based method. Accordingly, management records compensation expense based on the value of the award as measured on the grant date and then the Company recognizes that cost over the vesting period for the award. The compensation cost recognized for stock-based employee compensation related to both plans for the three month periods ended December 31, 2015 and 2014, was $16 and $12, respectively.
Information related to the 2004 Stock Option and Incentive Plan and 2008 Equity Incentive Plan during each year follows:
Set forth below is a table showing relevant assumptions used in calculating stock option expense related to the Company’s 2004 Stock Option and Incentive Plan and 2008 Equity Incentive Plan:
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Other Comprehensive Income (Loss) |
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OTHER COMPREHENSIVE INCOME (LOSS) | OTHER COMPREHENSIVE INCOME (LOSS) The following table shows the tax effects allocated to each component of other comprehensive income for the three months ended December 31, 2015:
The changes in the accumulated balances for each component of other comprehensive income (loss) for the three months ended December 31, 2015 were as follows:
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Nature of Business and Summary of Significant Accounting Policies (Policies) |
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Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation – The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Citizens Community Federal N.A. All significant intercompany accounts and transactions have been eliminated. |
Use of Estimates | Use of Estimates – Preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying disclosures. These estimates are based on management’s best knowledge of current events and actions the Company may undertake in the future. Estimates are used in accounting for, among other items, fair value of financial instruments, the allowance for loan losses, valuation of acquired intangible assets, useful lives for depreciation and amortization, indefinite-lived intangible assets and long-lived assets, deferred tax assets, uncertain income tax positions and contingencies. Management does not anticipate any material changes to estimates made herein in the near term. Factors that may cause sensitivity to the aforementioned estimates include, but are not limited to, external market factors such as market interest rates and unemployment rates, changes to operating policies and procedures, and changes in applicable banking regulations. Actual results may ultimately differ from estimates, although management does not generally believe such differences would materially affect the consolidated financial statements in any individual reporting period. |
Investment Securities; Held to Maturity and Available for Sale | Investment Securities; Held to Maturity and Available for Sale – Management determines the appropriate classification of investment securities at the time of purchase and reevaluates such designation as of the date of each balance sheet. Securities are classified as held to maturity when the Company has the positive intent and ability to hold the securities to maturity. Held to maturity securities are stated at amortized cost. Investment securities not classified as held to maturity are classified as available for sale. Available for sale securities are stated at fair value, with unrealized holding gains and losses deemed other than temporarily impaired due to non-credit issues being reported in other comprehensive income (loss), net of tax. Unrealized losses deemed other-than-temporary due to credit issues are reported in the Company’s net income in the period in which the losses arise. Interest income includes amortization of purchase premium or accretion of purchase discount. Amortization of premiums and accretion of discounts are recognized in interest income using the interest method over the estimated lives of the underlying securities. The Company evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. As part of such monitoring, the credit quality of individual securities and their issuer is assessed. Significant inputs used to measure the amount of other-than-temporary impairment related to credit loss include, but are not limited to, default and delinquency rates of the underlying collateral, remaining credit support, and historical loss severities. Adjustments to market value of available for sale securities that are considered temporary are recorded as separate components of equity, net of tax. If the unrealized loss of a security is identified as other-than-temporary based on information available, such as the decline in the creditworthiness of the issuer, external market ratings, or the anticipated or realized elimination of associated dividends, such impairments are further analyzed to determine if credit loss exists. If there is a credit loss, it will be recorded in the Company's consolidated statement of operations. Unrealized losses on available for sale securities, other than credit, will continue to be recognized in other comprehensive income (loss), net of tax. Unrealized losses reflected in the preceding tables have not been included in results of operations because the unrealized loss was not deemed other-than-temporary. Management has determined that more likely than not, the Company neither intends to sell, nor will it be required to sell each debt security before its anticipated recovery, and therefore recovery of cost will occur. |
Loans | Loans – Loans that management has the intent and ability to hold for the foreseeable future, until maturity or payoff are reported at the principal balance outstanding, net of unearned interest, and net of deferred loan fees and costs. Interest income is accrued on the unpaid principal balance of these loans. Loan origination fees, net of certain direct origination costs, are deferred and recognized in interest income using the interest method without anticipating prepayments. Delinquency fees are recognized into income when chargeable, assuming collection is reasonably insured. Interest income on commercial, mortgage and consumer loans is discontinued according to the following schedules: •Commercial loans, including agricultural and C&I loans, past due 90 days or more; •Closed end consumer loans past due 120 days or more; and •Real estate loans and open ended consumer loans past due 180 days or more. Past due status is based on the contractual terms of the loan. In all cases, loans are placed on nonaccrual status or charged off at an earlier date if collection of principal or interest is considered doubtful. All interest accrued but not received for a loan placed on nonaccrual status is reversed against interest income. Interest received on such loans is accounted for on the cash basis or cost recovery method, and is generally applied against principal, until qualifying for return to accrual status. Loans are returned to accrual status when payments are made that bring the loan account current with the contractual term of the loan and a 6 month payment history has been established. Interest on impaired loans considered troubled debt restructurings (“TDRs”) or substandard, less than 90 days delinquent, is recognized as income as it accrues based on the revised terms of the loan over an established period of continued payment. Substandard loans, as defined by the OCC, our primary banking regulator, are loans that are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Real estate loans and open ended consumer loans are charged off to estimated net realizable value less estimated selling costs at the earlier of when (a) the loan is deemed by management to be uncollectible, or (b) the loan becomes past due 180 days or more. Closed end consumer loans are charged off to net realizable value at the earlier of when (a) the loan is deemed by management to be uncollectible, or (b) the loan becomes past due 120 days or more. Commercial loans, including agricultural and C&I loans, are charged off to net realizable value at the earlier of when (a) the loan is deemed by management to be uncollectible, or (b) the loan becomes past due 90 days or more. |
Allowance for Loan Losses | Allowance for Loan Losses – The allowance for loan losses (“ALL”) is a valuation allowance for probable and inherent credit losses in our loan portfolio. Loan losses are charged against the ALL when management believes that the collectability of a loan balance is unlikely. Subsequent recoveries, if any, are credited to the ALL. Management estimates the required ALL balance taking into account the following factors: past loan loss experience; the nature, volume and composition of our loan portfolio; known and inherent risks in our loan portfolio; information about specific borrowers’ ability to repay; estimated collateral values; current economic conditions; and other relevant factors determined by management. The ALL consists of specific and general components. The specific component relates to loans that are individually classified as impaired. The general component covers non-impaired loans and is based on historical loss experience adjusted for certain qualitative factors. The entire ALL balance is available for any loan that, in our management’s judgment, should be charged off. A loan is impaired when full payment under the loan terms is not expected. Impaired loans consist of all TDRs, as well as individual substandard loans not considered a TDR when full payment under the loan terms is not expected. All TDRs are individually evaluated for impairment. See Note 3, “Loans, Allowance for Loan Losses and Impaired Loans” for more information on what we consider to be a TDR. If a TDR or substandard loan is deemed to be impaired, a specific ALL allocation may be established so that the loan is reported, net, at the lower of (a) outstanding principal balance, (b) the present value of estimated future cash flows using the loan’s existing rate; or (c) at the fair value of any collateral, less estimated disposal costs, if repayment is expected solely from the underlying collateral of the loan. For TDRs less than 90 days past due, and certain substandard loans that are less than 90 days delinquent, the likelihood of the loan migrating to over 90 days past due is also taken into account when determining the specific ALL allocation for these particular loans. Large groups of smaller balance homogeneous loans, such as non-TDR commercial, consumer and residential real estate loans, are collectively evaluated for impairment, and accordingly, are not separately identified for impairment disclosures. |
Foreclosed and Repossessed Assets, net | Foreclosed and Repossessed Assets, net – Assets acquired through foreclosure or repossession are initially recorded at fair value, less estimated costs to sell, which establishes a new cost basis. If the fair value declines subsequent to foreclosure or repossession, a valuation allowance is recorded through expense. Costs incurred after acquisition are expensed and are included in non-interest expense, other on our Consolidated Statements of Operations. |
Income Taxes | Income Taxes – The Company accounts for income taxes in accordance with the Financial Accounting Standards Board ("FASB") Accounting Standards Codification (“ASC”) Topic 740, “Income Taxes.” Under this guidance, deferred taxes are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates that will apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized as income or expense in the period that includes the enactment date. See Note 6, "Income Taxes" for details on the Company’s income taxes. The Company regularly reviews the carrying amount of its net deferred tax assets to determine if the establishment of a valuation allowance is necessary. If based on the available evidence, it is more likely than not that all or a portion of the Company’s net deferred tax assets will not be realized in future periods, a deferred tax valuation allowance would be established. Consideration is given to various positive and negative factors that could affect the realization of the deferred tax assets. In evaluating this available evidence, management considers, among other things, historical performance, expectations of future earnings, the ability to carry back losses to recoup taxes previously paid, the length of statutory carryforward periods, any experience with utilization of operating loss and tax credit carryforwards not expiring, tax planning strategies and timing of reversals of temporary differences. Significant judgment is required in assessing future earnings trends and the timing of reversals of temporary differences. Accordingly, the Company’s evaluation is based on current tax laws as well as management’s expectations of future performance. |
Earnings Per Share | Earnings Per Share – Basic earnings per common share is net income or loss divided by the weighted average number of common shares outstanding during the period. Diluted earnings per common share includes the dilutive effect of additional potential common shares issuable during the period, consisting of stock options outstanding under the Company’s stock incentive plans that have an exercise price that is less than the Company's stock price on the reporting date. |
Reclassifications | Reclassifications – Certain items previously reported were reclassified for consistency with the current presentation. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements - In August 2014, the FASB issued Accounting Standards Update ("ASU") 2014-14; "Receivables; Troubled Debt Restructurings by Creditors (Subtopic 310-40): Classification of Certain Government-Guaranteed Mortgage Loans upon Foreclosure". ASU 2014-14 is intended to improve accounting and disclosure consistency related to how creditors classify government-guaranteed mortgage loans, including FHA or VA guaranteed loans, upon foreclosure. For public entities, ASU 2014-09 is effective on a prospective basis for the annual periods, and interim periods within those annual periods, beginning after December 15, 2014. The Company has adopted ASU 2014-14 effective December 31, 2015. The adoption of ASU 2014-04 had no effect on the Company's consolidated results of operations, financial position or cash flows. In May 2014, the FASB issued ASU 2014-09; "Revenue from Contracts with Customers (Topic 606). ASU 2014-09 is intended to clarify and simplify revenue recognition principles, develop a common revenue standard across industries and accounting frameworks, and improve the usefulness and consistency of revenue reporting. The effective dates for ASU 2014-09 were deferred one year when the FASB issued ASU 2015-14 - "Revenue from Contracts with Customers (Topic (606) Deferral of the Effective Date", in August 2015. For public entities, ASU 2014-09 is effective on a retrospective basis for the annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is not permitted. The Company expects the adoption of ASU 2014-09 will have no material effect on the Company's consolidated results of operations, financial position or cash flows. In January 2014, the FASB issued ASU 2014-04; "Receivables - Troubled Debt Restructurings by Creditors (Subtopic 310-40): Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure (a consensus of the FASB Emerging Issues Task Force)". ASU 2014-04 is intended to improve consistency among reporting entities by clarifying when an in substance foreclosure occurs, that is, when a creditor should derecognize a loan and recognize the corresponding real estate collateral as a separate asset. For public entities, ASU 2014-04 is effective for the annual periods, and interim periods within those annual periods, beginning after December 15, 2014. The Company has adopted ASU 2014-04 effective December 31, 2015. The adoption of ASU 2014-04 had no effect on the Company's consolidated results of operations, financial position or cash flows. |
Fair Value Accounting (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets Measured on a Recurring Basis | The following tables present the financial instruments measured at fair value on a recurring basis as of December 31, 2015 and September 30, 2015:
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Assets Measured on a Nonrecurring Basis | The following tables present the financial instruments measured at fair value on a nonrecurring basis as of December 31, 2015 and September 30, 2015:
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Carrying amount and estimated fair value of financial instruments | The carrying amount and estimated fair value of the Company's financial instruments as of the dates indicated below were as follows:
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Loans, Allowance for Loan Losses and Impaired Loans (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of loans by risk rating | Below is a breakdown of loans by risk rating as of December 31, 2015:
Below is a breakdown of loans by risk rating as of September 30, 2015:
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Changes in a specific component on impaired loans and a general component for non-impaired loans for the periods | Changes in the ALL by loan type for the periods presented below were as follows:
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Loans receivable | Loans receivable by loan type as of the end of the periods shown below were as follows:
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Aging analysis of the Bank real estate and consumer loans | An aging analysis of the Company’s real estate, commercial/agriculture real estate, consumer and other loans and purchased third party loans as of December 31, 2015 and September 30, 2015, respectively, was as follows:
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Bank impaired loans | A summary of the Company’s impaired loans as of December 31, 2015 and September 30, 2015 was as follows:
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Troubled Debt Restructuring | A summary of loans by loan type modified in a troubled debt restructuring as of December 31, 2015 and December 31, 2014, and during each of the three months then ended, and as of September 30, 2015 and during the twelve months then ended was as follows:
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Investment Securities (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of amortized cost, estimated fair value and related unrealized gains and losses on securities available for sale | The amortized cost, estimated fair value and related unrealized gains and losses on securities available for sale and held to maturity as of December 31, 2015 and September 30, 2015, respectively, were as follows:
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Held-to-maturity Securities |
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Federal Home Loan Bank Advances (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Banking and Thrift [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A summary of Federal Home Loan Bank advances | A summary of Federal Home Loan Bank advances at December 31, 2015 and September 30, 2015 was as follows:
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Income Taxes (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income tax expense (benefit) | Income tax expense (benefit) for each of the periods shown below consisted of the following:
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The provision for income taxes differs from the amount of income tax determined by applying statutory federal income tax rates to pretax income | The provision for income taxes differs from the amount of income tax determined by applying statutory federal income tax rates to pretax income as result of the following differences:
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Deferred Tax Assets and Liabilities | The following is a summary of the significant components of the Company’s deferred tax assets and liabilities as of December 31, 2015 and September 30, 2015, respectively:
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Stock-Based Compensation (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of restricted stock awards |
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Summary of stock option activity |
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Information related to stock option plan | Information related to the 2004 Stock Option and Incentive Plan and 2008 Equity Incentive Plan during each year follows:
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Assumption used in calculating stock option expense | Set forth below is a table showing relevant assumptions used in calculating stock option expense related to the Company’s 2004 Stock Option and Incentive Plan and 2008 Equity Incentive Plan:
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Other Comprehensive Income (Loss) (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Tax Effects Allocated to Each Component of Other Comprehensive Income | The following table shows the tax effects allocated to each component of other comprehensive income for the three months ended December 31, 2015:
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Changes in the accumulated balances for each component of other comprehensive income | The changes in the accumulated balances for each component of other comprehensive income (loss) for the three months ended December 31, 2015 were as follows:
|
Nature of Business and Summary of Significant Accounting Policies (Details Textual) |
3 Months Ended |
---|---|
Dec. 31, 2015
Location
Service_Office
| |
Nature of Business and Summary of Significant Accounting Policies (Textual) [Abstract] | |
Total number of service offices | Service_Office | 15 |
Number of stand-alone locations | 7 |
Number of in-store branch locations | 8 |
Interest income recognized debt past due (less than days) | 90 days |
Loans charged off past due more than days | 180 days |
Closed end loan charged off past due more than days | 120 days |
Commercial Loan | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
Interest income discontinued over delinquent days | 90 days |
Closed End Consumer Loan | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
Interest income discontinued over delinquent days | 120 days |
Real Estate and Open Ended Consumer Loans | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
Interest income discontinued over delinquent days | 180 days |
Fair Value Accounting (Details 2) - Fair Value, Measurements, Nonrecurring - USD ($) $ in Thousands |
Dec. 31, 2015 |
Sep. 30, 2015 |
---|---|---|
Assets Measured on a Nonrecurring Basis | ||
Foreclosed and repossessed assets, net | $ 804 | $ 902 |
Impaired loans with allocated allowances | 1,752 | 2,349 |
Total | 2,556 | 3,251 |
Quoted Prices in Active Markets for Identical Instruments (Level 1) | ||
Assets Measured on a Nonrecurring Basis | ||
Foreclosed and repossessed assets, net | 0 | |
Impaired loans with allocated allowances | 0 | |
Total | 0 | |
Significant Other Observable Inputs (Level 2) | ||
Assets Measured on a Nonrecurring Basis | ||
Foreclosed and repossessed assets, net | 0 | 0 |
Impaired loans with allocated allowances | 0 | 0 |
Total | 0 | 0 |
Significant Unobservable Inputs (Level 3) | ||
Assets Measured on a Nonrecurring Basis | ||
Foreclosed and repossessed assets, net | 804 | 902 |
Impaired loans with allocated allowances | 1,752 | 2,349 |
Total | $ 2,556 | $ 3,251 |
Loans, Allowance for Loan Losses and Impaired Loans (Details 6) $ in Thousands |
3 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2015
USD ($)
Contract
|
Sep. 30, 2015
USD ($)
Contract
|
Dec. 31, 2014
USD ($)
|
Sep. 30, 2014
USD ($)
|
|
Troubled Debt Restructuring | ||||
Number of Modifications | Contract | 65 | 73 | ||
Recorded Investment | $ | $ 3,794 | $ 4,010 | $ 4,859 | $ 5,581 |
Consumer Real Estate | ||||
Troubled Debt Restructuring | ||||
Number of Modifications | Contract | 32 | 34 | ||
Recorded Investment | $ | $ 3,305 | $ 3,479 | 4,083 | 4,737 |
Commercial/agricultural | ||||
Troubled Debt Restructuring | ||||
Number of Modifications | Contract | 0 | 0 | ||
Recorded Investment | $ | $ 0 | $ 0 | 0 | 0 |
Consumer and Other | ||||
Troubled Debt Restructuring | ||||
Number of Modifications | Contract | 33 | 39 | ||
Recorded Investment | $ | $ 489 | $ 531 | $ 776 | $ 844 |
Investment Securities (Details 1) - USD ($) $ in Thousands |
Dec. 31, 2015 |
Sep. 30, 2015 |
---|---|---|
Schedule of Held-to-maturity Securities [Line Items] | ||
Amortized Cost | $ 7,724 | $ 8,012 |
Gross Unrealized Gains | 133 | 211 |
Gross Unrealized Losses | 3 | 4 |
Estimated Fair Value | 7,854 | 8,219 |
Obligations of states and political subdivisions | ||
Schedule of Held-to-maturity Securities [Line Items] | ||
Amortized Cost | 1,318 | 1,319 |
Gross Unrealized Gains | 3 | 3 |
Gross Unrealized Losses | 3 | 4 |
Estimated Fair Value | 1,318 | 1,318 |
Mortgage-backed securities | ||
Schedule of Held-to-maturity Securities [Line Items] | ||
Amortized Cost | 6,406 | 6,693 |
Gross Unrealized Gains | 130 | 208 |
Gross Unrealized Losses | 0 | 0 |
Estimated Fair Value | $ 6,536 | $ 6,901 |
Investment Securities (Details Textual) |
Dec. 31, 2015
USD ($)
|
---|---|
Federal Reserve Bank | |
Schedule of Available-for-sale Securities [Line Items] | |
Borrowings outstanding under line of credit facility | $ 0 |
Federal Home Loan Bank Advances - Summary of Federal Home Loan Bank Advances (Details) - USD ($) $ in Thousands |
Dec. 31, 2015 |
Sep. 30, 2015 |
---|---|---|
Summary of Federal Home Loan Bank advances | ||
Maturing during 2016 | $ 33,600 | $ 33,600 |
Maturing during 2017 | 15,461 | 15,461 |
Maturing during 2018 | 6,100 | 6,100 |
Maturing during 2019 | 3,730 | 3,730 |
Maturing After 2020 | $ 0 | $ 0 |
Weighted Average Rate 2016 | 0.58% | 0.67% |
Weighted Average Rate 2017 | 1.46% | 1.46% |
Weighted Average Rate 2018 | 2.24% | 2.24% |
Weighted Average Rate 2019 | 1.87% | 1.87% |
Weighted Average Rate After 2020 | 0.00% | 0.00% |
Total fixed maturity | $ 58,891 | $ 58,891 |
Advances with amortizing principal | 0 | 0 |
Total advances | 58,891 | 58,891 |
Irrevocable standby letters of credit | 24,040 | 24,040 |
Total credit outstanding | $ 82,931 | $ 82,931 |
Federal Home Loan Bank Advances | ||
Summary of Federal Home Loan Bank advances | ||
Weighted Average Rate | 0.00% | 0.00% |
Federal Home Loan Bank Advances (Details) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Dec. 31, 2015
USD ($)
month
|
Dec. 31, 2014
USD ($)
|
Sep. 30, 2015
USD ($)
month
|
|
Schedule of Fair Value of Separate Accounts by Major Category of Investment [Line Items] | |||
Banks available and unused portion of borrowing agreement | $ 57,880 | ||
Weighted average remaining term of borrowings, in months | month | 11.60 | 14.25 | |
Maximum month-end amounts outstanding | $ 58,891 | $ 53,891 | |
Federal Home Loan Bank advances | 58,891 | $ 58,891 | |
Mortgage Loans on Real Estate | |||
Schedule of Fair Value of Separate Accounts by Major Category of Investment [Line Items] | |||
Federal Home Loan Bank advances | $ 140,811 |
Income Taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Current tax provision | ||
Federal | $ 344 | $ 613 |
State | 96 | 98 |
Current Income Tax Expense (Benefit), Total | 440 | 711 |
Deferred tax (benefit) provision | ||
Federal | 25 | (239) |
State | 9 | (39) |
Deferred Income Tax Expense (Benefit), Total | 34 | (278) |
Total | $ 474 | $ 433 |
Income Taxes (Details 1) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
|
The provision for income taxes differs from the amount of income tax determined by applying statutory federal income tax rates to pretax income | ||
Tax expense at statutory rate | $ 454 | $ 390 |
State income taxes net of federal taxes | 69 | 59 |
Tax exempt interest | (36) | (11) |
Other | (13) | (5) |
Total | $ 474 | $ 433 |
Tax expense at statutory rate in percent | 34.00% | 34.00% |
State income taxes net of exception in percent | 5.20% | 5.20% |
Tax exempt interest in percent | (2.70%) | (1.00%) |
Other in percent | (0.90%) | (0.50%) |
Total, in percent | 35.60% | 37.70% |
Income Taxes (Details 2) - USD ($) $ in Thousands |
Dec. 31, 2015 |
Sep. 30, 2015 |
---|---|---|
Deferred tax assets: | ||
Allowance for loan losses | $ 2,523 | $ 2,544 |
Deferred loan costs/fees | 129 | 145 |
Director/officer compensation plans | 515 | 536 |
Net unrealized loss on securities available for sale | 292 | 166 |
Other | 511 | 520 |
Deferred tax assets | 3,970 | 3,911 |
Deferred tax liabilities: | ||
Office properties and equipment | (75) | (114) |
Other | (116) | (110) |
Deferred tax liabilities | (191) | (224) |
Net deferred tax assets | $ 3,779 | $ 3,687 |
Income Taxes (Details Textual) - USD ($) |
3 Months Ended | |
---|---|---|
Dec. 31, 2015 |
Sep. 30, 2015 |
|
Income Taxes (Textual) [Abstract] | ||
Valuation allowance | $ 0 | $ 0 |
Percentage of likelihood | 50.00% | |
Accrual for the payments of interest and penalties related to income tax issues | $ 0 | $ 0 |
Stock-Based Compensation - 2004 Stock Option and Incentive Plan and 2008 Equity Incentive Plan Information (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended |
---|---|---|
Dec. 31, 2015 |
Sep. 30, 2015 |
|
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Intrinsic value of options exercised | $ 0 | $ 180 |
Cash received from options exercised | 0 | 299 |
Tax benefit realized from options exercised | $ 0 | $ 9 |
Stock-Based Compensation - Assumptions for Stock Option Expense (Details) |
3 Months Ended | 12 Months Ended |
---|---|---|
Dec. 31, 2015 |
Sep. 30, 2015 |
|
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Dividend yield | 0.00% | 0.88% |
Risk-free interest rate | 0.00% | 2.10% |
Weighted average expected life (years) | 0 years | 10 years |
Expected volatility | 0.00% | 2.00% |
Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Unrealized gains (losses) on securities: | ||
Net unrealized losses arising during the period, before tax amount | $ (316) | |
Net unrealized losses arising during period, tax expense | 126 | |
Net unrealized losses arising during period, net of tax amount | (190) | $ 417 |
Other comprehensive income Before- Tax Amount | (316) | |
Other comprehensive income Tax Expense | 126 | |
Total other comprehensive income (loss), net of tax | $ (190) |
Other Comprehensive Income (Loss) (Details 1) $ in Thousands |
3 Months Ended |
---|---|
Dec. 31, 2015
USD ($)
| |
Changes in the accumulated balances for each component of other comprehensive income | |
Beginning Balance | $ (214) |
Current period other comprehensive income (loss), net of tax | (190) |
Ending Balance | (404) |
Unrealized Gains (Losses) on Securities | |
Changes in the accumulated balances for each component of other comprehensive income | |
Beginning Balance | (249) |
Current period other comprehensive income (loss), net of tax | (190) |
Ending Balance | (439) |
Defined Benefit Plans | |
Changes in the accumulated balances for each component of other comprehensive income | |
Beginning Balance | 35 |
Current period other comprehensive income (loss), net of tax | 0 |
Ending Balance | $ 35 |
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