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 |
Page Number | |||
Item 1. | |||
Item 2. | |||
Item 3. | |||
Item 4. | |||
Item 1. | |||
Item 1A. | |||
Item 2. | |||
Item 3. | |||
Item 4. | |||
Item 5. | |||
Item 6. | |||
ITEM 1. | FINANCIAL STATEMENTS |
December 31, 2012 | September 30, 2012 | ||||||
Assets | |||||||
Cash and cash equivalents | $ | 25,306 | $ | 23,259 | |||
Other interest-bearing deposits | 2,241 | — | |||||
Securities available for sale (at fair value) | 73,663 | 67,111 | |||||
Federal Home Loan Bank stock | 3,800 | 3,800 | |||||
Loans receivable | 421,119 | 427,789 | |||||
Allowance for loan losses | (5,820 | ) | (5,745 | ) | |||
Loans receivable, net | 415,299 | 422,044 | |||||
Office properties and equipment, net | 5,306 | 5,530 | |||||
Accrued interest receivable | 1,443 | 1,571 | |||||
Intangible assets | 260 | 274 | |||||
Foreclosed and repossessed assets, net | 1,032 | 542 | |||||
Other assets | 6,183 | 6,052 | |||||
TOTAL ASSETS | $ | 534,533 | $ | 530,183 | |||
Liabilities and Stockholders’ Equity | |||||||
Liabilities: | |||||||
Deposits | $ | 427,259 | $ | 422,058 | |||
Federal Home Loan Bank advances | 49,450 | 49,250 | |||||
Other liabilities | 2,558 | 3,772 | |||||
Total liabilities | 479,267 | 475,080 | |||||
Stockholders’ equity: | |||||||
Common stock—5,145,203 and 5,135,550 shares, respectively | 51 | 51 | |||||
Additional paid-in capital | 54,033 | 53,969 | |||||
Retained earnings | 1,789 | 1,529 | |||||
Unearned deferred compensation | (141 | ) | (94 | ) | |||
Accumulated other comprehensive loss | (466 | ) | (352 | ) | |||
Total stockholders’ equity | 55,266 | 55,103 | |||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 534,533 | $ | 530,183 |
Three Months Ended | |||||||
December 31, 2012 | December 31, 2011 | ||||||
Interest and dividend income: | |||||||
Interest and fees on loans | $ | 5,995 | $ | 6,802 | |||
Interest on investments | 375 | 341 | |||||
Total interest and dividend income | 6,370 | 7,143 | |||||
Interest expense: | |||||||
Interest on deposits | 1,236 | 1,495 | |||||
Interest on borrowed funds | 173 | 330 | |||||
Total interest expense | 1,409 | 1,825 | |||||
Net interest income | 4,961 | 5,318 | |||||
Provision for loan losses | 900 | 1,540 | |||||
Net interest income after provision for loan losses | 4,061 | 3,778 | |||||
Non-interest income: | |||||||
Total fair value adjustments and other-than-temporary impairment | (829 | ) | (3,002 | ) | |||
Portion of loss recognized in other comprehensive income (loss) (before tax) | 536 | 2,329 | |||||
Net gains on sale of available for sale securities | 210 | 83 | |||||
Net losses on available for sale securities | (83 | ) | (590 | ) | |||
Service charges on deposit accounts | 390 | 387 | |||||
Loan fees and service charges | 294 | 120 | |||||
Other | 159 | 133 | |||||
Total non-interest income | 760 | 50 | |||||
Non-interest expense: | |||||||
Salaries and related benefits | 2,195 | 2,151 | |||||
Occupancy | 610 | 606 | |||||
Office | 297 | 274 | |||||
Data processing | 384 | 351 | |||||
Amortization of core deposit intangible | 14 | 83 | |||||
Advertising, marketing and public relations | 41 | 53 | |||||
FDIC premium assessment | 175 | 180 | |||||
Professional services | 366 | 312 | |||||
Other | 310 | 498 | |||||
Total non-interest expense | 4,392 | 4,508 | |||||
Income (loss) before provision for income tax | 429 | (680 | ) | ||||
Provision (benefit) for income taxes | 169 | (266 | ) | ||||
Net income (loss) attributable to common stockholders | $ | 260 | $ | (414 | ) | ||
Per share information: | |||||||
Basic earnings | $ | 0.05 | $ | (0.08 | ) | ||
Diluted earnings | $ | 0.05 | $ | (0.08 | ) | ||
Dividends paid | $ | — | $ | — |
Three Months Ended | |||||||
December 31, 2012 | December 31, 2011 | ||||||
Net income (loss) attributable to common stockholders | $ | 260 | $ | (414 | ) | ||
Other comprehensive income (loss), net of tax: | |||||||
Securities available for sale | |||||||
Net unrealized losses arising during period | (417 | ) | (220 | ) | |||
Reclassification adjustment for gains included in net income | 126 | 50 | |||||
Change for realized losses on securities available for sale for other-than-temporary impairment write-down | 176 | 404 | |||||
Unrealized (losses) gains on securities | (115 | ) | 234 | ||||
Defined benefit plans: | |||||||
Amortization of unrecognized prior service costs and net gains | 1 | 1 | |||||
Total other comprehensive (loss) income, net of tax | (114 | ) | 235 | ||||
Comprehensive income (loss) | $ | 146 | $ | (179 | ) |
Additional Paid-In Capital | Retained Earnings | Unearned Deferred Compensation | Accumulated Other Comprehensive Income (loss) | Total Stockholders' Equity | ||||||||||||||||||||||
Common Stock | ||||||||||||||||||||||||||
Shares | Amount | |||||||||||||||||||||||||
Balance, October 1, 2012 | 5,135,550 | $ | 51 | $ | 53,969 | $ | 1,529 | $ | (94 | ) | $ | (352 | ) | $ | 55,103 | |||||||||||
Net Income | 260 | 260 | ||||||||||||||||||||||||
Other comprehensive loss | (114 | ) | (114 | ) | ||||||||||||||||||||||
Forfeiture of unvested shares - 503 shares | (503 | ) | — | |||||||||||||||||||||||
Common stock awarded under recognition and retention plan - 10,156 shares | 10,156 | 56 | (56 | ) | — | |||||||||||||||||||||
Stock option expense | 8 | 8 | ||||||||||||||||||||||||
Amortization of restricted stock | 9 | 9 | ||||||||||||||||||||||||
Balance, December 31, 2012 | 5,145,203 | $ | 51 | $ | 54,033 | $ | 1,789 | $ | (141 | ) | $ | (466 | ) | $ | 55,266 |
Three Months Ended | |||||||
December 31, 2012 | December 31, 2011 | ||||||
Cash flows from operating activities: | |||||||
Net income (loss) attributable to common stockholders | $ | 260 | $ | (414 | ) | ||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||
Net amortization of premium/discount on securities | 215 | 108 | |||||
Depreciation | 264 | 258 | |||||
Provision for loan losses | 900 | 1,540 | |||||
Net realized gain on sale of securities | (210 | ) | (83 | ) | |||
Other-than-temporary impairment on mortgage-backed securities | 293 | 673 | |||||
Amortization of core deposit intangible | 14 | 83 | |||||
Amortization of restricted stock | 9 | 5 | |||||
Stock based compensation expense | 8 | 5 | |||||
Loss on sale of office properties | — | 134 | |||||
Net gains from disposals of foreclosed properties | (13 | ) | (2 | ) | |||
Provision for valuation allowance on foreclosed properties | 22 | 25 | |||||
Increase in accrued interest receivable and other assets | (91 | ) | (239 | ) | |||
Decrease in other liabilities | (1,214 | ) | 61 | ||||
Total adjustments | 197 | 2,568 | |||||
Net cash from operating activities | 457 | 2,154 | |||||
Cash flows from investing activities: | |||||||
Purchase of securities available for sale | (20,029 | ) | (15,647 | ) | |||
Net (increase) decrease in interest-bearing deposits | (2,241 | ) | 198 | ||||
Proceeds from sale of securities available for sale | 10,194 | 3,888 | |||||
Principal payments on securities available for sale | 2,795 | 1,783 | |||||
Proceeds from sale of foreclosed properties | 363 | 541 | |||||
Net decrease in loans | 5,145 | 34 | |||||
Net capital expenditures | (38 | ) | (138 | ) | |||
Net cash received from sale of office properties | — | 464 | |||||
Net cash used in investing activities | (3,811 | ) | (8,877 | ) | |||
Cash flows from financing activities: | |||||||
Net increase (decrease) in Federal Home Loan Bank advances | 200 | (800 | ) | ||||
Net increase (decrease) in deposits | 5,201 | (4,843 | ) | ||||
Net cash from (used in) financing activities | 5,401 | (5,643 | ) | ||||
Net increase (decrease) in cash and cash equivalents | 2,047 | (12,366 | ) | ||||
Cash and cash equivalents at beginning of period | 23,259 | 31,763 | |||||
Cash and cash equivalents at end of period | $ | 25,306 | $ | 19,397 | |||
Supplemental cash flow information: | |||||||
Cash paid during the year for: | |||||||
Interest on deposits | $ | 1,267 | $ | 1,482 | |||
Interest on borrowings | $ | 192 | $ | 330 | |||
Income taxes | $ | 355 | $ | 5 | |||
Supplemental noncash disclosure: | |||||||
Transfers from loans receivable to foreclosed and repossessed assets | $ | 712 | $ | 134 |
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, 2012 | |||||||||||||||
Securities available for sale: | |||||||||||||||
U.S. Agency securities | $ | 5,574 | $ | 5,574 | |||||||||||
U.S. Agency mortgage-backed securities | 16,086 | — | 16,086 | — | |||||||||||
U.S. Agency Floating Rate Bonds | 7,849 | — | 7,849 | — | |||||||||||
Fannie Mae mortgage-backed securities | 14,656 | — | 14,656 | — | |||||||||||
Freddie Mac mortgage-backed securities | 8,961 | — | 8,961 | — | |||||||||||
Non-agency mortgage-backed securities | 5,928 | — | — | 5,928 | |||||||||||
General Obligation Municipal Bonds | 11,250 | — | 11,250 | — | |||||||||||
Revenue Municipal Bonds | 3,359 | — | 3,359 | — | |||||||||||
Total | $ | 73,663 | $ | — | $ | 67,735 | $ | 5,928 | |||||||
September 30, 2012 | |||||||||||||||
Securities available for sale: | |||||||||||||||
U.S. Agency mortgage-backed securities | $ | 17,022 | $ | — | $ | 17,022 | $ | — | |||||||
U.S. Agency Floating Rate Bonds | 7,977 | — | 7,977 | — | |||||||||||
Fannie Mae mortgage-backed securities | 11,817 | — | 11,817 | — | |||||||||||
Freddie Mac mortgage-backed securities | 11,887 | — | 11,887 | — | |||||||||||
Non-agency mortgage-backed securities | 6,586 | — | — | 6,586 | |||||||||||
General Obligation Municipal Bonds | 9,463 | — | 9,463 | — | |||||||||||
Revenue Municipal Bonds | 2,359 | — | 2,359 | — | |||||||||||
Total | $ | 67,111 | $ | — | $ | 60,525 | $ | 6,586 |
Three Months Ended | |||||||
December 31, 2012 | December 31, 2011 | ||||||
Balance beginning of period | $ | 6,586 | $ | 9,143 | |||
Total gains or losses (realized/unrealized): | |||||||
Included in earnings | (293 | ) | (673 | ) | |||
Included in other comprehensive loss | 287 | 606 | |||||
Sales | — | — | |||||
Payments, accretion and amortization | (652 | ) | (778 | ) | |||
Balance end of period | $ | 5,928 | $ | 8,298 |
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, 2012 | |||||||||||||||
Foreclosed and repossessed assets, net | $ | 1,032 | $ | — | $ | — | $ | 1,032 | |||||||
Loans restructured in a TDR | 8,535 | — | — | 8,535 | |||||||||||
Total | $ | 9,567 | $ | — | $ | — | $ | 9,567 | |||||||
September 30, 2012 | |||||||||||||||
Foreclosed and repossessed assets, net | $ | 542 | $ | — | $ | — | $ | 542 | |||||||
Loans restructured in a TDR | 7,511 | — | — | 7,511 | |||||||||||
Total | $ | 8,053 | $ | — | $ | — | $ | 8,053 |
December 31, 2012 | September 30, 2012 | ||||||||||||||
Carrying Amount | Estimated Fair Value | Carrying Amount | Estimated Fair Value | ||||||||||||
Financial assets: | |||||||||||||||
Cash and cash equivalents | $ | 25,306 | $ | 25,306 | $ | 23,259 | $ | 23,259 | |||||||
Interest-bearing deposits | 2,241 | 2,241 | — | — | |||||||||||
Securities available for sale | 73,663 | 73,663 | 67,111 | 67,111 | |||||||||||
FHLB stock | 3,800 | 3,800 | 3,800 | 3,800 | |||||||||||
Loans receivable, net | 415,299 | 447,739 | 422,044 | 452,520 | |||||||||||
Accrued interest receivable | 1,443 | 1,443 | 1,571 | 1,571 | |||||||||||
Financial liabilities: | |||||||||||||||
Deposits | $ | 427,259 | $ | 431,650 | $ | 422,058 | $ | 427,893 | |||||||
FHLB advances | 49,450 | 49,905 | 49,250 | 50,254 | |||||||||||
Accrued interest payable | 49 | 49 | 99 | 99 |
Real Estate | Consumer and Other | Total | |||||||||
Three Months then Ended December 31, 2012: | |||||||||||
Allowance for Loan Losses: | |||||||||||
Beginning balance, October 1, 2012 | $ | 2,287 | $ | 3,458 | $ | 5,745 | |||||
Charge-offs | (338 | ) | (537 | ) | (875 | ) | |||||
Recoveries | 3 | 47 | 50 | ||||||||
Provision | 365 | 535 | 900 | ||||||||
Ending balance, December 31, 2012 | $ | 2,317 | $ | 3,503 | $ | 5,820 | |||||
Allowance for Loan Losses at December 31, 2012: | |||||||||||
Amount of Allowance for Loan Losses arising from loans individually evaluated for impairment | $ | 502 | $ | 137 | $ | 639 | |||||
Amount of Allowance for Loan Losses arising from loans collectively evaluated for impairment | $ | 1,815 | $ | 3,366 | $ | 5,181 | |||||
Loans Receivable as of December 31, 2012: | |||||||||||
Ending balance (1) | $ | 265,108 | $ | 156,011 | $ | 421,119 | |||||
Ending balance: individually evaluated for impairment | $ | 4,312 | $ | 1,051 | $ | 5,363 | |||||
Ending balance: collectively evaluated for impairment | $ | 260,796 | $ | 154,960 | $ | 415,756 |
Real Estate | Consumer and Other | Total | |||||||||
Year ended September 30, 2012 | |||||||||||
Allowance for Loan Losses: | |||||||||||
Beginning balance, October 1, 2011 | $ | 1,907 | $ | 2,991 | $ | 4,898 | |||||
Charge-offs | (1,984 | ) | (1,965 | ) | (3,949 | ) | |||||
Recoveries | 30 | 326 | 356 | ||||||||
Provision | 2,334 | 2,106 | 4,440 | ||||||||
Ending balance, September 30, 2012 | $ | 2,287 | $ | 3,458 | $ | 5,745 | |||||
Allowance for Loan Losses at September 30, 2012: | |||||||||||
Amount of Allowance for Loan Losses arising from loans individually evaluated for impairment | $ | 500 | $ | 124 | $ | 624 | |||||
Amount of Allowance for Loan Losses arising from loans collectively evaluated for impairment | $ | 1,787 | $ | 3,334 | $ | 5,121 | |||||
Loans Receivable as of September 30, 2012: | |||||||||||
Ending balance (1) | $ | 271,739 | $ | 156,050 | $ | 427,789 | |||||
Ending balance: individually evaluated for impairment | $ | 4,371 | $ | 946 | $ | 5,317 | |||||
Ending balance: collectively evaluated for impairment | $ | 267,368 | $ | 155,104 | $ | 422,472 |
(1) | Ending loan balances above do not include deferred loan origination fees net of costs. |
Real Estate Loans | Consumer and Other Loans | Total Loans | |||||||||||||||||||||
December 31, 2012 | September 30, 2012 | December 31, 2012 | September 30, 2012 | December 31, 2012 | September 30, 2012 | ||||||||||||||||||
Performing loans | |||||||||||||||||||||||
Performing TDR loans | $ | 5,346 | $ | 5,751 | $ | 1,095 | $ | 1,055 | $ | 6,441 | $ | 6,806 | |||||||||||
Performing loans other | 253,555 | 260,719 | 153,898 | 154,427 | 407,453 | 415,146 | |||||||||||||||||
Total performing loans | 258,901 | 266,470 | 154,993 | 155,482 | 413,894 | 421,952 | |||||||||||||||||
Nonperforming loans (1) | |||||||||||||||||||||||
Nonperforming TDR loans | 1,811 | 1,259 | 283 | 70 | 2,094 | 1,329 | |||||||||||||||||
Nonperforming loans other | 4,396 | 4,010 | 735 | 498 | 5,131 | 4,508 | |||||||||||||||||
Total nonperforming loans | $ | 6,207 | $ | 5,269 | $ | 1,018 | $ | 568 | $ | 7,225 | $ | 5,837 | |||||||||||
Total loans | $ | 265,108 | $ | 271,739 | $ | 156,011 | $ | 156,050 | $ | 421,119 | $ | 427,789 |
(1) | Nonperforming loans are defined as loans that are (a) 91+ days past due and nonaccruing, or (b) TDR loans restructured at a 0% interest rate that were 91+ days past due and nonaccruing at the time of restructuring. |
1 Month Past Due | 2 Months Past Due | Greater Than 3 Months | Total Past Due | Current | Total Loans | Recorded Investment > 3 months and Accruing | |||||||||||||||||||||
December 31, 2012 | |||||||||||||||||||||||||||
Real estate loans | $ | 2,939 | $ | 758 | $ | 2,894 | $ | 6,591 | $ | 258,517 | $ | 265,108 | $ | — | |||||||||||||
Consumer and other loans | 1,706 | 576 | 352 | 2,634 | 153,377 | 156,011 | — | ||||||||||||||||||||
Total | $ | 4,645 | $ | 1,334 | $ | 3,246 | $ | 9,225 | $ | 411,894 | $ | 421,119 | $ | — | |||||||||||||
September 30, 2012 | |||||||||||||||||||||||||||
Real estate loans | $ | 1,814 | $ | 676 | $ | 3,348 | $ | 5,838 | $ | 265,900 | $ | 271,738 | $ | — | |||||||||||||
Consumer and other loans | 1,846 | 453 | 341 | 2,640 | 153,411 | 156,051 | — | ||||||||||||||||||||
Total | $ | 3,660 | $ | 1,129 | $ | 3,689 | $ | 8,478 | $ | 419,311 | $ | 427,789 | $ | — |
With No Related Allowance Recorded | With An Allowance Recorded | Totals | |||||||||||||||||||||||||||||||||
Real Estate | Consumer and Other | Total | Real Estate | Consumer and Other | Total | Real Estate | Consumer and Other | Total | |||||||||||||||||||||||||||
Recorded investment at December 31, 2012 | $ | 2,845 | $ | 327 | $ | 3,172 | $ | 4,312 | $ | 1,051 | $ | 5,363 | $ | 7,157 | $ | 1,378 | $ | 8,535 | |||||||||||||||||
Unpaid balance at December 31, 2012 | 2,845 | 327 | 3,172 | 4,312 | 1,051 | 5,363 | 7,157 | 1,378 | 8,535 | ||||||||||||||||||||||||||
Recorded investment at September 30, 2012 | 2,720 | 179 | 2,899 | 4,290 | 946 | 5,236 | 7,010 | 1,125 | 8,135 | ||||||||||||||||||||||||||
Unpaid balance at September 30, 2012 | 2,720 | 179 | 2,899 | 4,290 | 946 | 5,236 | 7,010 | 1,125 | 8,135 | ||||||||||||||||||||||||||
Average recorded investment; three months ended December 31, 2012 | 2,742 | 253 | 2,995 | 4,312 | 1,051 | 5,363 | 7,054 | 1,304 | 8,358 | ||||||||||||||||||||||||||
Average recorded investment; twelve months ended September 30, 2012 | 3,128 | 343 | 3,471 | 3,092 | 837 | 3,929 | 6,220 | 1,180 | 7,400 | ||||||||||||||||||||||||||
Interest income received; three months ended December 31, 2012 | 36 | 16 | 52 | 2 | 1 | 3 | 38 | 17 | 55 | ||||||||||||||||||||||||||
Interest income received; twelve months ended September 30, 2012 | 43 | 8 | 51 | 78 | 27 | 105 | 121 | 35 | 156 |
Real Estate | Consumer and Other | Total | |||||||||
December 31, 2012 and | |||||||||||
Three Months then Ended: | |||||||||||
Accruing / Performing: | |||||||||||
Beginning balance | $ | 5,751 | $ | 1,055 | $ | 6,806 | |||||
Principal payments | (121 | ) | (48 | ) | (169 | ) | |||||
Charge-offs | (55 | ) | (4 | ) | (59 | ) | |||||
Advances | 1 | 1 | 2 | ||||||||
New restructured (1) | 112 | 47 | 159 | ||||||||
Class transfers (2) | 240 | 44 | 284 | ||||||||
Transfers between accrual/non-accrual | (582 | ) | — | (582 | ) | ||||||
Ending balance | $ | 5,346 | $ | 1,095 | $ | 6,441 | |||||
Non-accrual / Non-performing: | |||||||||||
Beginning balance | $ | 1,259 | $ | 70 | $ | 1,329 | |||||
Principal payments | (113 | ) | (2 | ) | (115 | ) | |||||
Charge-offs | (23 | ) | — | (23 | ) | ||||||
Advances | 5 | 2 | 7 | ||||||||
New restructured (1) | — | — | — | ||||||||
Class transfers (2) | 101 | 213 | 314 | ||||||||
Transfers between accrual/non-accrual | 582 | — | 582 | ||||||||
Ending balance | $ | 1,811 | $ | 283 | $ | 2,094 | |||||
Totals: | |||||||||||
Beginning balance | $ | 7,010 | $ | 1,125 | $ | 8,135 | |||||
Principal payments | (234 | ) | (50 | ) | (284 | ) | |||||
Charge-offs | (78 | ) | (4 | ) | (82 | ) | |||||
Advances | 6 | 3 | 9 | ||||||||
New restructured (1) | 112 | 47 | 159 | ||||||||
Class transfers (2) | 341 | 257 | 598 | ||||||||
Transfers between accrual/non-accrual | — | — | — | ||||||||
Ending balance | $ | 7,157 | $ | 1,378 | $ | 8,535 |
(1) | “New restructured” represent loans restructured during the current period that meet TDR criteria in accordance with the Bank’s policy at the time of the restructuring. |
(2) | “Class transfers” represent previously restructured loans that met TDR criteria per the Bank’s policy for the first time during the current period. |
Real Estate | Consumer and Other | Total | |||||||||
December 31, 2011 and | |||||||||||
Three Months then Ended: | |||||||||||
Accruing / Performing: | |||||||||||
Beginning balance | $ | 3,506 | $ | 950 | $ | 4,456 | |||||
Principal payments | (33 | ) | (25 | ) | (58 | ) | |||||
Charge-offs | — | — | — | ||||||||
Advances | — | 3 | 3 | ||||||||
New restructured (1) | 7 | 41 | 48 | ||||||||
Class transfers (2) | 199 | (48 | ) | 151 | |||||||
Transfers between accrual/non-accrual | — | (137 | ) | (137 | ) | ||||||
Ending balance | $ | 3,679 | $ | 784 | $ | 4,463 | |||||
Non-accrual / Non-performing: | |||||||||||
Beginning balance | $ | 1,923 | $ | 283 | $ | 2,206 | |||||
Principal payments | (18 | ) | (82 | ) | (100 | ) | |||||
Charge-offs | (21 | ) | (80 | ) | (101 | ) | |||||
Advances | 3 | 1 | 4 | ||||||||
New restructured (1) | — | 32 | 32 | ||||||||
Class transfers (2) | — | 83 | 83 | ||||||||
Transfers between accrual/non-accrual | — | 137 | 137 | ||||||||
Ending balance | $ | 1,887 | $ | 374 | $ | 2,261 | |||||
Totals: | |||||||||||
Beginning balance | $ | 5,429 | $ | 1,233 | $ | 6,662 | |||||
Principal payments | (51 | ) | (107 | ) | (158 | ) | |||||
Charge-offs | (21 | ) | (80 | ) | (101 | ) | |||||
Advances | 3 | 4 | 7 | ||||||||
New restructured (1) | 7 | 73 | 80 | ||||||||
Class transfers (2) | 199 | 35 | 234 | ||||||||
Transfers between accrual/non-accrual | — | — | — | ||||||||
Ending balance | $ | 5,566 | $ | 1,158 | $ | 6,724 |
(1) | “New restructured” represent loans restructured during the current period that meet TDR criteria in accordance with the Bank’s policy at the time of the restructuring. |
(2) | “Class transfers” represent previously restructured loans that met TDR criteria per the Bank’s policy for the first time during the current period. |
Real Estate | Consumer and Other | Total | |||||||||
September 30, 2012 and | |||||||||||
Twelve Months then Ended: | |||||||||||
Accruing / Performing: | |||||||||||
Beginning balance | $ | 3,506 | $ | 950 | $ | 4,456 | |||||
Principal payments | (200 | ) | (152 | ) | (352 | ) | |||||
Charge-offs | (79 | ) | (117 | ) | (196 | ) | |||||
Advances | 28 | 10 | 38 | ||||||||
New restructured (1) | 518 | 331 | 849 | ||||||||
Class transfers (2) | 1,383 | (124 | ) | 1,259 | |||||||
Transfers between accrual/non-accrual | 595 | 157 | 752 | ||||||||
Ending balance | $ | 5,751 | $ | 1,055 | $ | 6,806 | |||||
Non-accrual / Non-performing: | |||||||||||
Beginning balance | $ | 1,923 | $ | 283 | $ | 2,206 | |||||
Principal payments | (33 | ) | (93 | ) | (126 | ) | |||||
Charge-offs | (440 | ) | (144 | ) | (584 | ) | |||||
Advances | 11 | 1 | 12 | ||||||||
New restructured (1) | 393 | 106 | 499 | ||||||||
Class transfers (2) | — | 74 | 74 | ||||||||
Transfers between accrual/non-accrual | (595 | ) | (157 | ) | (752 | ) | |||||
Ending balance | $ | 1,259 | $ | 70 | $ | 1,329 | |||||
Totals: | |||||||||||
Beginning balance | $ | 5,429 | $ | 1,233 | $ | 6,662 | |||||
Principal payments | (233 | ) | (245 | ) | (478 | ) | |||||
Charge-offs | (519 | ) | (261 | ) | (780 | ) | |||||
Advances | 39 | 11 | 50 | ||||||||
New restructured (1) | 911 | 437 | 1,348 | ||||||||
Class transfers (2) | 1,383 | (50 | ) | 1,333 | |||||||
Transfers between accrual/non-accrual | — | — | — | ||||||||
Ending balance | $ | 7,010 | $ | 1,125 | $ | 8,135 |
(1) | “New restructured” represent loans restructured during the current period that meet TDR criteria in accordance with the Bank’s policy at the time of the restructuring. |
(2) | “Class transfers” represent previously restructured loans that met TDR criteria per the Bank’s policy for the first time during the current period. |
December 31, 2012 | December 31 2011 | ||||||||||||
Number of Modifications | Recorded Investment | Number of Modifications | Recorded Investment | ||||||||||
Troubled debt restructurings: | |||||||||||||
Real estate | 54 | $ | 7,157 | 38 | $ | 5,566 | |||||||
Consumer and other | 100 | 1,378 | 63 | 1,158 | |||||||||
154 | $ | 8,535 | 101 | $ | 6,724 |
Description of Securities | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||
December 31, 2012 | |||||||||||||||
U.S. Agency securities | $ | 5,559 | $ | 15 | $ | — | $ | 5,574 | |||||||
U.S. Agency mortgage-backed securities | 15,619 | 467 | — | 16,086 | |||||||||||
U.S. Agency floating rate bonds | 7,588 | 261 | — | 7,849 | |||||||||||
Fannie Mae mortgage-backed securities | 14,603 | 95 | 42 | 14,656 | |||||||||||
Freddie Mac mortgage-backed securities | 8,915 | 77 | 31 | 8,961 | |||||||||||
Non-agency mortgage-backed securities | 7,579 | — | 1,651 | 5,928 | |||||||||||
General obligation municipal bonds | 11,189 | 150 | 89 | 11,250 | |||||||||||
Revenue municipal bonds | 3,369 | 31 | 41 | 3,359 | |||||||||||
Total investment securities | $ | 74,421 | $ | 1,096 | $ | 1,854 | $ | 73,663 | |||||||
September 30, 2012 | |||||||||||||||
U.S. Agency mortgage-backed securities | $ | 16,504 | $ | 524 | $ | 6 | $ | 17,022 | |||||||
U.S. Agency floating rate bonds | 7,742 | 235 | — | 7,977 | |||||||||||
Fannie Mae mortgage-backed securities | 11,591 | 226 | — | 11,817 | |||||||||||
Freddie Mac mortgage-backed securities | 11,660 | 227 | — | 11,887 | |||||||||||
Non-agency mortgage-backed securities | 8,524 | — | 1,938 | 6,586 | |||||||||||
General obligation municipal bonds | 9,367 | 147 | 51 | 9,463 | |||||||||||
Revenue municipal bonds | 2,291 | 68 | — | 2,359 | |||||||||||
Total investment securities | $ | 67,679 | $ | 1,427 | $ | 1,995 | $ | 67,111 |
Three months ended December 31, 2012 | Three months ended December 31, 2011 | ||||||
Beginning balance of the amount of OTTI related to credit losses | $ | 3,740 | $ | 2,408 | |||
Credit portion of OTTI on securities for which OTTI was not previously recognized | 293 | 673 | |||||
Ending balance of the amount of OTTI related to credit losses | $ | 4,033 | $ | 3,081 |
As of | Weighted Average Rate | As of | Weighted Average Rate | ||||||||||
Maturing during the fiscal year | December 31, | September 30, | |||||||||||
Ended September 30, | 2012 | 2012 | |||||||||||
2013 | $ | 16,950 | 0.17 | % | $ | 22,100 | 1.34 | % | |||||
2014 | 2,500 | 0.53 | % | 8,650 | 3.31 | % | |||||||
2015 | 10,000 | 0.75 | % | 11,500 | 1.18 | % | |||||||
2016 | 11,600 | 1.01 | % | 7,000 | 0.96 | % | |||||||
After 2016 | 8,400 | 2.36 | % | — | NA | ||||||||
Total fixed maturity | $ | 49,450 | $ | 49,250 | |||||||||
Advances with amortizing principal | — | — | |||||||||||
Total | $ | 49,450 | $ | 49,250 |
Three months ended December 31, 2012 | Three months ended December 31, 2011 | ||||||
Current tax provision (benefit) | |||||||
Federal | $ | (74 | ) | $ | 327 | ||
State | (11 | ) | 72 | ||||
(85 | ) | 399 | |||||
Deferred tax provision (benefit) | |||||||
Federal | 212 | (580 | ) | ||||
State | 42 | (85 | ) | ||||
254 | (665 | ) | |||||
Total | $ | 169 | $ | (266 | ) |
Three months ended December 31, 2012 | Three months ended December 31, 2011 | ||||||||||||
Tax expense at statutory rate | $ | 146 | 34.0 | % | $ | (231 | ) | 34.0 | % | ||||
State income taxes net of federal | 23 | 5.4 | (36 | ) | 5.4 | ||||||||
Tax exempt interest | (5 | ) | (1.3 | ) | — | — | |||||||
Other | 5 | 1.3 | 1 | (0.3 | ) | ||||||||
Total | $ | 169 | 39.4 | % | $ | (266 | ) | 39.1 | % |
December 31, 2012 | September 30, 2012 | ||||||
Deferred tax assets: | |||||||
Allowance for loan losses | $ | 2,291 | $ | 2,262 | |||
Deferred loan costs/fees | 330 | 352 | |||||
Director/officer compensation plans | 629 | 1,088 | |||||
Net unrealized loss on securities available for sale | 303 | 227 | |||||
Impairment loss | 1,536 | 1,421 | |||||
Other | 200 | 196 | |||||
Deferred tax assets | 5,289 | $ | 5,546 | ||||
Deferred tax liabilities: | |||||||
Office properties and equipment | (686 | ) | (759 | ) | |||
Federal Home Loan Bank stock | (42 | ) | (64 | ) | |||
Other | (99 | ) | (83 | ) | |||
Deferred tax liabilities | (827 | ) | (906 | ) | |||
Net deferred tax assets | $ | 4,462 | $ | 4,640 |
Before-Tax Amount | Tax Expense | Net-of-Tax Amount | |||||||||
Unrealized gains (losses) on securities: | |||||||||||
Net unrealized losses arising during the period | $ | (695 | ) | (278 | ) | $ | (417 | ) | |||
Less: reclassification adjustment for gains included in net income | 210 | 84 | 126 | ||||||||
Changes for realized losses on securities available for sale for OTTI write-down | 293 | 117 | 176 | ||||||||
Defined benefit plans: | |||||||||||
Amortization of unrecognized prior service costs and net gains | 2 | 1 | 1 | ||||||||
Other comprehensive loss | $ | (190 | ) | $ | (76 | ) | $ | (114 | ) |
Unrealized Gains (Losses) on Securities | Defined Benefit Plans | Other Comprehensive Income (Loss) | |||||||||
Balance, October 1, 2012 | $ | (341 | ) | $ | (11 | ) | $ | (352 | ) | ||
Current period other comprehensive income (loss), net of tax | (115 | ) | 1 | (114 | ) | ||||||
Ending balance, December 31, 2012 | $ | (456 | ) | $ | (10 | ) | $ | (466 | ) |
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Three Months Ended December 31, | |||||||
2012 | 2011 | ||||||
Net income (loss) as reported | $ | 260 | $ | (414 | ) | ||
EPS - basic, as reported | $ | 0.05 | $ | (0.08 | ) | ||
EPS - diluted, as reported | $ | 0.05 | $ | (0.08 | ) | ||
Cash dividends paid | $ | — | $ | — | |||
Return on average assets (annualized) | 0.19 | % | (0.31 | )% | |||
Return on average equity (annualized) | 1.87 | % | (3.11 | )% | |||
Efficiency ratio, as reported (1) | 76.77 | % | 74.62 | % |
(1) | Non-interest expense divided by the sum of net interest income plus non-interest income, excluding net impairment losses recognized in earnings. A lower ratio indicates greater efficiency. |
• | Net interest income and net interest margin decreased during the three months ended December 31, 2012 from the comparable period last year. We continue to see both rate and volume related decreases in both interest income on loans and interest expense on deposits. |
• | Net interest income was $4,961 for the three month period ended December 31, 2012, a decrease of $357 or 6.71% from the three month period ended December 31, 2011. |
• | The net interest margin of 3.76% for the three months ended December 31, 2012 represents a 28 bp decrease from a net interest margin of 4.04% for the three months ended December 31, 2011. The decrease in our net interest margin was primarily attributable to corresponding decreases in our interest rate spread over the prior year periods. The primary factor contributing to the decrease in our interest rate spread between the periods was a decrease in the average balance of outstanding higher rate loans offset in part, by the restructuring of higher rate FHLB borrowings and new advances of FHLB Borrowings at lower interest rates. In December 2012, $13,000 of FHLB borrowings were restructured from an average rate of 4.13% to 1.92%. |
• | Total loans were $421,119 at December 31, 2012, a decrease of $6,670, or 1.56% from their balances at September 30, 2012. Total deposits were $427,259 at December 31, 2012, an increase of $5,201 or 1.23% from their balances at September 30, 2012. |
• | Net loan charge-offs decreased from $902 for the three months ended December 31, 2011 to $825 for the three months ended December 31, 2012. Continued lower levels of net loan charge-offs led to a decreased provision for loan losses of $900 for the three month period ended December 31, 2012, compared to $1,540 for the three months ended December 31, 2011. Annualized net loan charge-offs as a percentage of average loans were 0.78% for the three months ended December 31, 2012, compared to 0.84% for the three months ended December 31, 2011. |
• | Non-interest income increased from $50 for the three months ended December 31, 2011 to $760 for the three months ended December 31, 2012. The increase of $710 during the current year three month period was a result, in part, to a $210 gain on sale of available for sale securities in the three months ended December 31, 2012 compared to $83 for the comparable prior year period, a reduction in other than temporary impairment losses of $380 over the comparable prior year period, and an increase in income from loan fees and service charges of $177 during the current year quarter. |
• | Non-interest expense decreased 2.57%, from $4,508 to $4,392 for the three month period ending December 31, 2012 compared to the three month period ending December 31, 2011. The decrease in non-interest expense in the current year period was primarily attributable to a loss on disposal of properties of $134 included in "other" for the three months ended December 31, 2011. |
• | The length of time, and extent to which, the fair value has been less than the amortized cost. |
• | Adverse conditions specifically related to the security, industry or geographic area. |
• | The historical and implied volatility of the fair value of the security. |
• | The payment structure of the debt security and the likelihood of the issuer or underlying borrowers being able to make payments that may increase in the future. |
• | The failure of the issuer of the security or the underlying borrowers to make scheduled interest or principal payments. |
• | Any changes to the rating of the security by a rating agency. |
• | Recoveries or additional declines in fair value subsequent to the balance sheet date. |
• | Obtaining individual loan level data directly from servicers and trustees, and making assumptions regarding the frequency of foreclosure, loss severity and conditional prepayment rate (for both the entire pool and the loan group pertaining to the bond we hold). |
• | Projecting cash flows based on these assumptions and stressing the cash flows under different time periods and requirements based on the class structure and credit enhancement features of the bond we hold. |
• | Identifying various price/yield scenarios based on the Bank’s book value and valuations based on both hold-to-maturity and current free market trade scenarios. Discount rates were determined based on the volatility and complexity of the security and the yields demanded by buyers in the market at the time of the valuation. |
Three months ended December 31, 2012 | Three months ended December 31, 2011 | ||||||||||||||||||||
Average Balance | Interest Income/ Expense | Average Yield/ Rate | Average Balance | Interest Income/ Expense | Average Yield/ Rate | ||||||||||||||||
Average interest-earning assets: | |||||||||||||||||||||
Cash and cash equivalents | $ | 23,235 | $ | 9 | 0.15 | % | $ | 26,315 | $ | 13 | 0.20 | % | |||||||||
Loans | 424,396 | 5,995 | 5.60 | % | 432,218 | 6,802 | 6.24 | % | |||||||||||||
Interest-bearing deposits | 996 | 1 | 0.40 | % | 9,494 | 18 | 0.75 | % | |||||||||||||
Securities available for sale | 70,377 | 361 | 2.04 | % | 48,239 | 309 | 2.54 | % | |||||||||||||
FHLB stock | 3,800 | 4 | 0.42 | % | 5,787 | 1 | 0.07 | % | |||||||||||||
Total interest earning assets | $ | 522,804 | $ | 6,370 | 4.83 | % | $ | 522,053 | $ | 7,143 | 5.43 | % | |||||||||
Average interest-bearing liabilities: | |||||||||||||||||||||
Savings accounts | $ | 23,512 | $ | 3 | 0.05 | % | $ | 24,270 | $ | 5 | 0.08 | % | |||||||||
Demand deposits | 27,993 | 1 | 0.01 | % | 23,644 | 1 | 0.02 | % | |||||||||||||
Money market | 140,615 | 191 | 0.54 | % | 152,862 | 277 | 0.72 | % | |||||||||||||
CD’s | 208,149 | 945 | 1.80 | % | 221,774 | 1,100 | 1.97 | % | |||||||||||||
IRA’s | 23,719 | 96 | 1.61 | % | 24,667 | 112 | 1.80 | % | |||||||||||||
Total deposits | 423,988 | 1,236 | 1.16 | % | 447,217 | 1,495 | 1.34 | % | |||||||||||||
FHLB Advances | 49,025 | 173 | 1.40 | % | 29,800 | 330 | 4.39 | % | |||||||||||||
Total interest bearing liabilities | $ | 473,013 | $ | 1,409 | 1.18 | % | $ | 477,017 | $ | 1,825 | 1.52 | % | |||||||||
Net interest income | $ | 4,961 | $ | 5,318 | |||||||||||||||||
Interest rate spread | 3.65 | % | 3.91 | % | |||||||||||||||||
Net interest margin | 3.76 | % | 4.04 | % | |||||||||||||||||
Average interest-earning assets to average interest-bearing liabilities | 1.11 | 1.09 |
Increase (decrease) due to | |||||||||||
Volume | Rate | Net | |||||||||
Interest income: | |||||||||||
Cash and cash equivalents | $ | (1 | ) | $ | (3 | ) | $ | (4 | ) | ||
Loans | (121 | ) | (686 | ) | (807 | ) | |||||
Interest-bearing deposits | (9 | ) | (8 | ) | (17 | ) | |||||
Securities available for sale | 125 | (73 | ) | 52 | |||||||
FHLB stock | (1 | ) | 4 | 3 | |||||||
Total interest earning assets | (7 | ) | (766 | ) | (773 | ) | |||||
Interest expense: | |||||||||||
Savings accounts | — | (2 | ) | (2 | ) | ||||||
Demand deposits | — | — | — | ||||||||
Money market | (21 | ) | (65 | ) | (86 | ) | |||||
CD’s | (65 | ) | (90 | ) | (155 | ) | |||||
IRA’s | (4 | ) | (12 | ) | (16 | ) | |||||
Total deposits | (90 | ) | (169 | ) | (259 | ) | |||||
FHLB Advances | 160 | (317 | ) | (157 | ) | ||||||
Total interest bearing liabilities | 70 | (486 | ) | (416 | ) | ||||||
Net interest income | $ | (77 | ) | $ | (280 | ) | $ | (357 | ) |
(1) | the change in interest due to both rate and volume has been allocated in proportion to the relationship to the dollar amounts of the change in each. |
Three months ended December 31, | % | |||||||||
2012 | 2011 | Change | ||||||||
Non-interest Income: | ||||||||||
Net impairment losses recognized in earnings | $ | (83 | ) | $ | (590 | ) | (85.93 | )% | ||
Service charges on deposit accounts | 390 | 387 | 0.78 | |||||||
Loan fees and service charges | 294 | 120 | 145.00 | |||||||
Other | 159 | 133 | 19.55 | |||||||
Total non-interest income | $ | 760 | $ | 50 | >100% |
Three months ended December 31 | % | |||||||||
2012 | 2011 | Change | ||||||||
Non-interest Expense: | ||||||||||
Salaries and related benefits | $ | 2,195 | $ | 2,151 | 2.05 | % | ||||
Occupancy - net | 610 | 606 | 0.66 | |||||||
Office | 297 | 274 | 8.39 | |||||||
Data processing | 384 | 351 | 9.40 | |||||||
Amortization of core deposit | 14 | 83 | (83.13 | ) | ||||||
Advertising, marketing and public relations | 41 | 53 | (22.64 | ) | ||||||
FDIC premium assessment | 175 | 180 | (2.78 | ) | ||||||
Professional services | 366 | 312 | 17.31 | |||||||
Other | 310 | 498 | (37.75 | ) | ||||||
Total non-interest expense | $ | 4,392 | $ | 4,508 | (2.57 | )% | ||||
Non-interest expense (annualized) / Average assets | 3.30 | % | 3.38 | % | (2.33 | )% |
December 31, 2012 and Three Months Then Ended | September 30, 2012 and Twelve Months Then Ended | ||||||
Nonperforming assets: | |||||||
Nonaccrual loans | $ | 5,131 | $ | 4,508 | |||
Accruing loans past due 90 days or more | — | — | |||||
Total nonperforming loans (“NPLs”) | 5,131 | 4,508 | |||||
Other real estate owned | 837 | 497 | |||||
Other collateral owned | 195 | 45 | |||||
Total nonperforming assets (“NPAs”) | $ | 6,163 | $ | 5,050 | |||
Troubled Debt Restructurings (“TDRs”) | $ | 8,535 | $ | 8,135 | |||
Nonaccrual TDRs | $ | 2,095 | $ | 1,329 | |||
Average outstanding loan balance | $ | 424,454 | $ | 429,768 | |||
Loans, end of period | $ | 421,119 | $ | 427,789 | |||
Total assets, end of period | $ | 534,533 | $ | 530,183 | |||
ALL, at beginning of period | $ | 5,745 | $ | 4,898 | |||
Loans charged off: | |||||||
Real estate loans | (338 | ) | (1,984 | ) | |||
Consumer and other loans | (537 | ) | (1,965 | ) | |||
Total loans charged off | (875 | ) | (3,949 | ) | |||
Recoveries of loans previously charged off: | |||||||
Real estate loans | 3 | 30 | |||||
Consumer and other loans | 47 | 326 | |||||
Total recoveries of loans previously charged off: | 50 | 356 | |||||
Net loans charged off (“NCOs”) | (825 | ) | (3,593 | ) | |||
Additions to ALL via provision for loan losses charged to operations | 900 | 4,440 | |||||
ALL, at end of period | $ | 5,820 | $ | 5,745 | |||
Ratios: | |||||||
ALL to NCOs (annualized) | 176.12 | % | 159.89 | % | |||
NCOs (annualized) to average loans | 0.78 | % | 0.84 | % | |||
ALL to total loans | 1.38 | % | 1.34 | % | |||
NPLs to total loans | 1.22 | % | 1.05 | % | |||
NPAs to total assets | 1.15 | % | 0.95 | % | |||
Total Assets: | $ | 534,533 | $ | 530,183 |
Amortized Cost | Fair Value | ||||||
December 31, 2012 | |||||||
U.S. Agency securities | $ | 5,559 | $ | 5,574 | |||
U.S. Agency mortgage-backed securities | 15,619 | 16,086 | |||||
U.S. Agency Floating rate bonds | 7,588 | 7,849 | |||||
Fannie Mae mortgage-backed securities | 14,603 | 14,656 | |||||
Freddie Mac mortgage-backed securities | 8,915 | 8,961 | |||||
Non-agency mortgage-backed securities | 7,579 | 5,928 | |||||
General Obligation Municipal Bonds | 11,189 | 11,250 | |||||
Revenue Municipal Bonds | 3,369 | 3,359 | |||||
Totals | $ | 74,421 | $ | 73,663 | |||
September 30, 2012 | |||||||
U.S. Agency mortgage-backed securities | $ | 16,504 | $ | 17,022 | |||
U.S. Agency Floating rate bonds | 7,742 | 7,977 | |||||
Fannie Mae mortgage-backed securities | 11,591 | 11,817 | |||||
Freddie Mac mortgage-backed securities | 11,660 | 11,887 | |||||
Non-agency mortgage-backed securities | 8,524 | 6,586 | |||||
General Obligation Municipal Bonds | 9,367 | 9,463 | |||||
Revenue Municipal Bonds | 2,291 | 2,359 | |||||
Totals | $ | 67,679 | $ | 67,111 |
December 31, 2012 | September 30, 2012 | ||||||||||||||
Amortized Cost | Fair Value | Amortized Cost | Fair Value | ||||||||||||
Agency | $ | 52,284 | $ | 53,126 | $ | 47,497 | $ | 48,703 | |||||||
AAA | 1,453 | 1,504 | 3,647 | 3,705 | |||||||||||
AA | 11,571 | 11,585 | 6,865 | 6,964 | |||||||||||
A | 1,205 | 1,191 | 1,146 | 1,153 | |||||||||||
BBB | — | — | — | — | |||||||||||
Below investment grade | 7,579 | 5,928 | 8,524 | 6,586 | |||||||||||
Non-rated | $ | 329 | $ | 329 | $ | — | $ | — | |||||||
Total | $ | 74,421 | $ | 73,663 | $ | 67,679 | $ | 67,111 |
September 30, 2012, balance of OTTI related to credit losses | $ | 3,740 | |
Credit portion of OTTI recognized during the three months ended December 31, 2012 | 293 | ||
December 31, 2012, balance of OTTI related to credit losses | $ | 4,033 |
In-store | Traditional | Institutional | Total | ||||||||||||
Non-CD deposits | $ | (2,467 | ) | $ | 3,166 | $ | — | $ | 699 | ||||||
CD deposits - customer | 1,545 | 1,265 | — | 2,810 | |||||||||||
CD deposits - institutional | — | — | 1,692 | 1,692 | |||||||||||
Total change in deposits | $ | (922 | ) | $ | 4,431 | $ | 1,692 | $ | 5,201 |
Actual | For Capital Adequacy Purposes | To Be Well Capitalized Under Prompt Corrective Action Provisions | ||||||||||||||||||||||
Amount | Ratio | Amount | Ratio | Amount | Ratio | |||||||||||||||||||
As of December 31, 2012 (Unaudited) | ||||||||||||||||||||||||
Total capital (to risk weighted assets) | $ | 57,589,000 | 15.6 | % | $ | 26,461,000 | >= | 8.0 | % | $ | 36,826,000 | >= | 10.0 | % | ||||||||||
Tier 1 capital (to risk weighted assets) | 52,970,000 | 14.4 | % | 14,730,000 | >= | 4.0 | % | 22,096,000 | >= | 6.0 | % | |||||||||||||
Tier 1 capital (to adjusted total assets) | 52,970,000 | 10.0 | % | 21,302,000 | >= | 4.0 | % | 26,628,000 | >= | 5.0 | % | |||||||||||||
As of September 30, 2012 (Audited) | ||||||||||||||||||||||||
Total capital (to risk weighted assets) | $ | 58,673,000 | 15.4 | % | $ | 30,519,000 | >= | 8.0 | % | $ | 38,148,000 | >= | 10.0 | % | ||||||||||
Tier 1 capital (to risk weighted assets) | 53,904,000 | 14.1 | % | 15,259,000 | >= | 4.0 | % | 22,889,000 | >= | 6.0 | % | |||||||||||||
Tier 1 capital (to adjusted total assets) | 53,904,000 | 10.2 | % | 21,174,000 | >= | 4.0 | % | 26,467,000 | >= | 5.0 | % |
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
• | originating shorter-term secured consumer loans; |
• | managing our funding needs by utilizing core deposits and borrowings as appropriate based on term and interest rate; |
• | reducing non-interest expense and managing our efficiency ratio; |
• | realigning supervision and control of our branch network by modifying their configuration, staffing, locations and reporting structure; |
• | improving our asset and collateral disposition practices; and |
• | focusing on sound and consistent loan underwriting practices based primarily on borrowers’ debt ratios, credit score and collateral values. |
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 | $ | 38,453 | $ | (28,821 | ) | (43 | )% | 7.82 | % | (455 | ) | bp | ||||||
+200 bp | 45,330 | (21,944 | ) | (33 | )% | 8.96 | % | (341 | ) | |||||||||
+100 bp | 57,433 | (9,841 | ) | (15 | )% | 10.93 | % | (144 | ) | |||||||||
0 bp | 67,274 | — | — | 12.37 | % | — | ||||||||||||
-100 bp | 75,065 | 7,791 | 12 | % | 13.48 | % | 111 |
(1) | Assumes a gradual change in interest rates over 12 months 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 |
10.1 | Letter Agreement by and between Edward H. Schaefer and Citizens Community Bancorp, Inc. dated as of October 1, 2012. (Filed as Exhibit 10.8 to the Company's annual report on Form 10-K for the year ended September 30, 2012 and incorporated herein by reference. | |
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, 2012 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. |
** | Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files in Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections. |
CITIZENS COMMUNITY BANCORP, INC. | ||||
Date: February 11, 2013 | By: | /s/ Edward H. Schaefer | ||
Edward H. Schaefer | ||||
Chief Executive Officer | ||||
Date: February 11, 2013 | 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 11, 2013 | 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 11, 2013 | By: | /s/ Mark C. Oldenberg | |
C. Oldenberg | Mark C. Oldenberg | ||
ief Financial Office | Chief Financial Officer |
Date: February 11, 2013 | By: | /s/ Edward H. Schaefer | |
Edward H. Schaefer | |||
Chief Executive Officer |
Date: February 11, 2013 | By: | /s/ Mark C. Oldenberg | |
Mark C. Oldenberg | |||
Chief Financial Officer |
Federal Home Loan Bank Advances (Details) (USD $)
In Thousands, unless otherwise specified |
Dec. 31, 2012
|
Sep. 30, 2012
|
---|---|---|
Summary of Federal Home Loan Bank advances | ||
Maturing during 2013 | $ 16,950 | $ 22,100 |
Maturing during 2014 | 2,500 | 8,650 |
Maturing during 2015 | 10,000 | 11,500 |
Maturing during 2016 | 11,600 | 7,000 |
Maturing After 2016 | 8,400 | 0 |
Weighted Average Rate 2013 | 0.17% | 1.34% |
Weighted Average Rate 2014 | 0.53% | 3.31% |
Weighted Average Rate 2015 | 0.75% | 1.18% |
Weighted Average Rate 2016 | 1.01% | 0.96% |
Weighted Average Rate After 2016 | 2.36% | |
Total fixed maturity | 49,450 | 49,250 |
Advances with amortizing principal | 0 | 0 |
Total | $ 49,450 | $ 49,250 |
Loans, Allowance for Loan Losses and Impaired Loans (Details 4) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 12 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2012
|
Dec. 31, 2011
|
Sep. 30, 2012
|
||||||||
Troubled Debt Restructuring | ||||||||||
Beginning balance | $ 8,135 | $ 6,662 | $ 6,662 | |||||||
Principal payments | (284) | (158) | (478) | |||||||
Charge-offs | (82) | (101) | (780) | |||||||
Advances | 9 | 7 | 50 | |||||||
New restructured | 159 | [1] | 80 | [1] | 1,348 | [1] | ||||
Class Transfers | 598 | [2] | 234 | [2] | 1,333 | [2] | ||||
Transfers between accrual/non-accrual | 0 | 0 | 0 | |||||||
Ending balance | 8,535 | 6,724 | 8,135 | |||||||
Real Estate [Member]
|
||||||||||
Troubled Debt Restructuring | ||||||||||
Beginning balance | 7,010 | 5,429 | 5,429 | |||||||
Principal payments | (234) | (51) | (233) | |||||||
Charge-offs | (78) | (21) | (519) | |||||||
Advances | 6 | 3 | 39 | |||||||
New restructured | 112 | [1] | 7 | [1] | 911 | [1] | ||||
Class Transfers | 341 | [2] | 199 | [2] | 1,383 | [2] | ||||
Transfers between accrual/non-accrual | 0 | 0 | 0 | |||||||
Ending balance | 7,157 | 5,566 | 7,010 | |||||||
Consumer and Other Loans [Member]
|
||||||||||
Troubled Debt Restructuring | ||||||||||
Beginning balance | 1,125 | 1,233 | 1,233 | |||||||
Principal payments | (50) | (107) | (245) | |||||||
Charge-offs | (4) | (80) | (261) | |||||||
Advances | 3 | 4 | 11 | |||||||
New restructured | 47 | [1] | 73 | [1] | 437 | [1] | ||||
Class Transfers | 257 | [2] | 35 | [2] | (50) | [2] | ||||
Transfers between accrual/non-accrual | 0 | 0 | 0 | |||||||
Ending balance | 1,378 | 1,158 | 1,125 | |||||||
Performing [Member]
|
||||||||||
Troubled Debt Restructuring | ||||||||||
Beginning balance | 6,806 | 4,456 | 4,456 | |||||||
Principal payments | (169) | (58) | (352) | |||||||
Charge-offs | (59) | 0 | (196) | |||||||
Advances | 2 | 3 | 38 | |||||||
New restructured | 159 | [1] | 48 | [1] | 849 | [1] | ||||
Class Transfers | 284 | [2] | 151 | 1,259 | [2] | |||||
Transfers between accrual/non-accrual | (582) | (137) | 752 | |||||||
Ending balance | 6,441 | 4,463 | 6,806 | |||||||
Performing [Member] | Real Estate [Member]
|
||||||||||
Troubled Debt Restructuring | ||||||||||
Beginning balance | 5,751 | 3,506 | 3,506 | |||||||
Principal payments | (121) | (33) | (200) | |||||||
Charge-offs | (55) | 0 | (79) | |||||||
Advances | 1 | 0 | 28 | |||||||
New restructured | 112 | [1] | 7 | [1] | 518 | [1] | ||||
Class Transfers | 240 | [2] | 199 | 1,383 | [2] | |||||
Transfers between accrual/non-accrual | (582) | 0 | 595 | |||||||
Ending balance | 5,346 | 3,679 | 5,751 | |||||||
Performing [Member] | Consumer and Other Loans [Member]
|
||||||||||
Troubled Debt Restructuring | ||||||||||
Beginning balance | 1,055 | 950 | 950 | |||||||
Principal payments | (48) | (25) | (152) | |||||||
Charge-offs | (4) | 0 | (117) | |||||||
Advances | 1 | 3 | 10 | |||||||
New restructured | 47 | [1] | 41 | [1] | 331 | [1] | ||||
Class Transfers | 44 | [2] | (48) | (124) | [2] | |||||
Transfers between accrual/non-accrual | 0 | (137) | 157 | |||||||
Ending balance | 1,095 | 784 | 1,055 | |||||||
Non Performing Loans [Member]
|
||||||||||
Troubled Debt Restructuring | ||||||||||
Beginning balance | 1,329 | 2,206 | 2,206 | |||||||
Principal payments | (115) | (100) | (126) | |||||||
Charge-offs | (23) | (101) | (584) | |||||||
Advances | 7 | 4 | 12 | |||||||
New restructured | 0 | 32 | [1] | 499 | [1] | |||||
Class Transfers | 314 | 83 | 74 | [2] | ||||||
Transfers between accrual/non-accrual | 582 | 137 | (752) | |||||||
Ending balance | 2,094 | 2,261 | 1,329 | |||||||
Non Performing Loans [Member] | Real Estate [Member]
|
||||||||||
Troubled Debt Restructuring | ||||||||||
Beginning balance | 1,259 | 1,923 | 1,923 | |||||||
Principal payments | (113) | (18) | (33) | |||||||
Charge-offs | (23) | (21) | (440) | |||||||
Advances | 5 | 3 | 11 | |||||||
New restructured | 0 | 0 | [1] | 393 | [1] | |||||
Class Transfers | 101 | 0 | 0 | [2] | ||||||
Transfers between accrual/non-accrual | 582 | 0 | (595) | |||||||
Ending balance | 1,811 | 1,887 | 1,259 | |||||||
Non Performing Loans [Member] | Consumer and Other Loans [Member]
|
||||||||||
Troubled Debt Restructuring | ||||||||||
Beginning balance | 70 | 283 | 283 | |||||||
Principal payments | (2) | (82) | (93) | |||||||
Charge-offs | 0 | (80) | (144) | |||||||
Advances | 2 | 1 | 1 | |||||||
New restructured | 0 | 32 | [1] | 106 | [1] | |||||
Class Transfers | 213 | 83 | 74 | [2] | ||||||
Transfers between accrual/non-accrual | 0 | 137 | (157) | |||||||
Ending balance | $ 283 | $ 374 | $ 70 | |||||||
|
Fair Value Accounting (Details) (USD $)
In Thousands, unless otherwise specified |
Dec. 31, 2012
|
Sep. 30, 2012
|
---|---|---|
Assets Measured on a Recurring Basis | ||
Securities available for sale, Fair Value | $ 73,663 | $ 67,111 |
U.S. Agency securities [Member]
|
||
Assets Measured on a Recurring Basis | ||
Securities available for sale, Fair Value | 5,574 | |
U.S. Agency mortgage-backed securities [Member]
|
||
Assets Measured on a Recurring Basis | ||
Securities available for sale, Fair Value | 16,086 | 17,022 |
U.S. Agency Floating Rate Bonds [Member]
|
||
Assets Measured on a Recurring Basis | ||
Securities available for sale, Fair Value | 7,849 | 7,977 |
Fannie Mae mortgage-backed securities [Member]
|
||
Assets Measured on a Recurring Basis | ||
Securities available for sale, Fair Value | 14,656 | 11,817 |
Freddie Mac mortgage-backed securities [Member]
|
||
Assets Measured on a Recurring Basis | ||
Securities available for sale, Fair Value | 8,961 | 11,887 |
Non-agency mortgage-backed securities [Member]
|
||
Assets Measured on a Recurring Basis | ||
Securities available for sale, Fair Value | 5,928 | 6,586 |
General Obligation Municipal Bonds [Member]
|
||
Assets Measured on a Recurring Basis | ||
Securities available for sale, Fair Value | 11,250 | 9,463 |
Revenue Municipal Bonds [Member]
|
||
Assets Measured on a Recurring Basis | ||
Securities available for sale, Fair Value | 3,359 | 2,359 |
Fair Value, Measurements, Recurring [Member]
|
||
Assets Measured on a Recurring Basis | ||
Securities available for sale, Fair Value | 73,663 | 67,111 |
Fair Value, Measurements, Recurring [Member] | U.S. Agency securities [Member]
|
||
Assets Measured on a Recurring Basis | ||
Securities available for sale, Fair Value | 5,574 | |
Fair Value, Measurements, Recurring [Member] | U.S. Agency mortgage-backed securities [Member]
|
||
Assets Measured on a Recurring Basis | ||
Securities available for sale, Fair Value | 16,086 | 17,022 |
Fair Value, Measurements, Recurring [Member] | U.S. Agency Floating Rate Bonds [Member]
|
||
Assets Measured on a Recurring Basis | ||
Securities available for sale, Fair Value | 7,849 | 7,977 |
Fair Value, Measurements, Recurring [Member] | Fannie Mae mortgage-backed securities [Member]
|
||
Assets Measured on a Recurring Basis | ||
Securities available for sale, Fair Value | 14,656 | 11,817 |
Fair Value, Measurements, Recurring [Member] | Freddie Mac mortgage-backed securities [Member]
|
||
Assets Measured on a Recurring Basis | ||
Securities available for sale, Fair Value | 8,961 | 11,887 |
Fair Value, Measurements, Recurring [Member] | Non-agency mortgage-backed securities [Member]
|
||
Assets Measured on a Recurring Basis | ||
Securities available for sale, Fair Value | 5,928 | 6,586 |
Fair Value, Measurements, Recurring [Member] | General Obligation Municipal Bonds [Member]
|
||
Assets Measured on a Recurring Basis | ||
Securities available for sale, Fair Value | 11,250 | 9,463 |
Fair Value, Measurements, Recurring [Member] | Revenue Municipal Bonds [Member]
|
||
Assets Measured on a Recurring Basis | ||
Securities available for sale, Fair Value | 3,359 | 2,359 |
Fair Value, Measurements, Recurring [Member] | Quoted Price in Active Market for Identical Instruments (Level 1) [Member]
|
||
Assets Measured on a Recurring Basis | ||
Securities available for sale, Fair Value | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | Quoted Price in Active Market for Identical Instruments (Level 1) [Member] | U.S. Agency mortgage-backed securities [Member]
|
||
Assets Measured on a Recurring Basis | ||
Securities available for sale, Fair Value | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | Quoted Price in Active Market for Identical Instruments (Level 1) [Member] | U.S. Agency Floating Rate Bonds [Member]
|
||
Assets Measured on a Recurring Basis | ||
Securities available for sale, Fair Value | 0 | |
Fair Value, Measurements, Recurring [Member] | Quoted Price in Active Market for Identical Instruments (Level 1) [Member] | Fannie Mae mortgage-backed securities [Member]
|
||
Assets Measured on a Recurring Basis | ||
Securities available for sale, Fair Value | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | Quoted Price in Active Market for Identical Instruments (Level 1) [Member] | Freddie Mac mortgage-backed securities [Member]
|
||
Assets Measured on a Recurring Basis | ||
Securities available for sale, Fair Value | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | Quoted Price in Active Market for Identical Instruments (Level 1) [Member] | Non-agency mortgage-backed securities [Member]
|
||
Assets Measured on a Recurring Basis | ||
Securities available for sale, Fair Value | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | Quoted Price in Active Market for Identical Instruments (Level 1) [Member] | General Obligation Municipal Bonds [Member]
|
||
Assets Measured on a Recurring Basis | ||
Securities available for sale, Fair Value | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | Quoted Price in Active Market for Identical Instruments (Level 1) [Member] | Revenue Municipal Bonds [Member]
|
||
Assets Measured on a Recurring Basis | ||
Securities available for sale, Fair Value | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member]
|
||
Assets Measured on a Recurring Basis | ||
Securities available for sale, Fair Value | 67,735 | 60,525 |
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | U.S. Agency securities [Member]
|
||
Assets Measured on a Recurring Basis | ||
Securities available for sale, Fair Value | 5,574 | |
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | U.S. Agency mortgage-backed securities [Member]
|
||
Assets Measured on a Recurring Basis | ||
Securities available for sale, Fair Value | 16,086 | 17,022 |
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | U.S. Agency Floating Rate Bonds [Member]
|
||
Assets Measured on a Recurring Basis | ||
Securities available for sale, Fair Value | 7,849 | 7,977 |
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | Fannie Mae mortgage-backed securities [Member]
|
||
Assets Measured on a Recurring Basis | ||
Securities available for sale, Fair Value | 14,656 | 11,817 |
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | Freddie Mac mortgage-backed securities [Member]
|
||
Assets Measured on a Recurring Basis | ||
Securities available for sale, Fair Value | 8,961 | 11,887 |
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | Non-agency mortgage-backed securities [Member]
|
||
Assets Measured on a Recurring Basis | ||
Securities available for sale, Fair Value | 0 | |
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | General Obligation Municipal Bonds [Member]
|
||
Assets Measured on a Recurring Basis | ||
Securities available for sale, Fair Value | 11,250 | 9,463 |
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | Revenue Municipal Bonds [Member]
|
||
Assets Measured on a Recurring Basis | ||
Securities available for sale, Fair Value | 3,359 | 2,359 |
Fair Value, Measurements, Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member]
|
||
Assets Measured on a Recurring Basis | ||
Securities available for sale, Fair Value | 5,928 | 6,586 |
Fair Value, Measurements, Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | U.S. Agency mortgage-backed securities [Member]
|
||
Assets Measured on a Recurring Basis | ||
Securities available for sale, Fair Value | 0 | |
Fair Value, Measurements, Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | U.S. Agency Floating Rate Bonds [Member]
|
||
Assets Measured on a Recurring Basis | ||
Securities available for sale, Fair Value | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | Fannie Mae mortgage-backed securities [Member]
|
||
Assets Measured on a Recurring Basis | ||
Securities available for sale, Fair Value | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | Freddie Mac mortgage-backed securities [Member]
|
||
Assets Measured on a Recurring Basis | ||
Securities available for sale, Fair Value | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | Non-agency mortgage-backed securities [Member]
|
||
Assets Measured on a Recurring Basis | ||
Securities available for sale, Fair Value | 5,928 | 6,586 |
Fair Value, Measurements, Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | General Obligation Municipal Bonds [Member]
|
||
Assets Measured on a Recurring Basis | ||
Securities available for sale, Fair Value | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | Revenue Municipal Bonds [Member]
|
||
Assets Measured on a Recurring Basis | ||
Securities available for sale, Fair Value | $ 0 | $ 0 |
Income Taxes (Details 1) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | |
---|---|---|
Dec. 31, 2012
|
Dec. 31, 2011
|
|
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 | $ 146 | $ (231) |
State income taxes net of exception | 23 | (36) |
Tax exempt interest | (5) | 0 |
Other | 5 | 1 |
Total | $ 169 | $ (266) |
Tax expense at statutory rate in percent | 34.00% | 34.00% |
State income taxes net of exception in percent | 5.40% | 5.40% |
Tax exempt interest in percent | (1.30%) | 0.00% |
Other in percent | 1.30% | (0.30%) |
Total, in percent | 39.40% | 39.10% |
Investment Securities (Details 1) (Available-for-sale securities [Member], USD $)
In Thousands, unless otherwise specified |
3 Months Ended | |
---|---|---|
Dec. 31, 2012
|
Dec. 31, 2011
|
|
Available-for-sale securities [Member]
|
||
Summary of amount of other-than-temporary impairment related to credit losses on available-for-sale securities | ||
Beginning balance of the amount of OTTI related to credit losses | $ 3,740 | $ 2,408 |
Credit portion of OTTI on securities for which OTTI was not previously recognized | 293 | 673 |
Ending balance of the amount of OTTI related to credit losses | $ 4,033 | $ 3,081 |
Other Comprehensive Income (Loss) (Details 1) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | |
---|---|---|
Dec. 31, 2012
|
Dec. 31, 2011
|
|
Changes in the accumulated balances for each component of other comprehensive income | ||
Beginning Balance | $ (352) | |
Current period other comprehensive income (loss), net of tax | (114) | 235 |
Ending Balance | (466) | |
Unrealized Gains Losses on Securities [Member]
|
||
Changes in the accumulated balances for each component of other comprehensive income | ||
Beginning Balance | (341) | |
Current period other comprehensive income (loss), net of tax | (115) | |
Ending Balance | (456) | |
Defined Benefit Plans [Member]
|
||
Changes in the accumulated balances for each component of other comprehensive income | ||
Beginning Balance | (11) | |
Current period other comprehensive income (loss), net of tax | 1 | |
Ending Balance | $ (10) |
Nature of Business and Summary of Significant Accounting Policies
|
3 Months Ended |
---|---|
Dec. 31, 2012
|
|
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 (the "Bank"), and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. Citizens Community Bancorp was a successor to Citizens Community Federal as a result of a regulatory restructuring into the mutual holding company form, which was effective on March 29, 2004. Originally, Citizens Community Federal was a credit union. In December 2001, Citizens Community Federal converted to a federal mutual savings bank. In 2004, Citizens Community Federal reorganized into the mutual holding company form of organization. In 2006, Citizens Community Bancorp completed its second-step mutual to stock conversion. The consolidated income of the Company is principally derived from the income of the Company’s wholly owned subsidiary. The Bank originates residential and consumer loans and accepts deposits from customers, primarily in Wisconsin, Minnesota and Michigan. The Bank operates 25 full-service offices; eight stand-alone locations and 17 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 11, 2013, the date on which the financial statements were available to be issued. As of February 11, 2013, 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, 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. All significant inter-company 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 employment 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. Securities – Securities are classified as available for sale when they might be sold before maturity. Securities available for sale are carried 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 earnings 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 securities. In estimating other-than-temporary impairment, management considers: (1) the length of time and extent that fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the Company’s ability and intent to hold the security for a period sufficient to allow for any anticipated recovery in fair value. The difference between the present values of the cash flows expected to be collected and the amortized cost basis is the credit loss. The credit loss is the portion of OTTI that is recognized in operations and is a reduction to the cost basis of the security. The portion of other-than-temporary impairment related to all other factors is included in other comprehensive income (loss), net of the related tax effect. Loans – Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at the principal balance outstanding, net of unearned interest, and deferred loan fees and costs. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized in interest income using the interest method without anticipating prepayments. Interest income on mortgage and consumer loans is discontinued at the time the loan is over 91 days delinquent. 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 until qualifying for return to accrual status. Loans are returned to accrual status when payments are made that bring the loan account less than 92 days delinquent and a 6 month payment history has been established. Interest on impaired loans considered troubled debt restructurings (“TDRs”) that are not 92 days delinquent is recognized as income as it accrues based on the revised terms of the loan over an established period of continued payment. 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 greater than 180 days past due. 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 greater than 120 days past due. Allowance for Loan Losses – The allowance for loan losses (“ALL”) is a valuation allowance for probable and inherent credit losses in the 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 ALL balance required using past loan loss experience; the nature, volume and composition of the loan portfolio; known and inherent risks in the 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 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. All TDRs are individually evaluated for impairment. See Note 3 “Loans, Allowance for Loan Losses and Impaired Loans” for information on what we consider to be a TDR. If a TDR loan is deemed to be impaired, a specific ALL allocation is established so that the loan is reported, net, at either (a) the present value of estimated future cash flows using the loan’s existing rate; or (b) at the fair value of collateral less estimated disposal costs, if repayment is expected solely from the underlying collateral of the loan. For TDRs less than 91+ days past due, and certain TDRs that are less than 91+ days delinquent; the likelihood of the loan migrating to over 91 days past due is also factored when determining the specific ALL allocation. Large groups of smaller balance homogeneous loans, such as non-TDR 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 the Consolidated Statements of Operations. Foreclosed and repossessed asset balances were $1,032 and $542 at December 31, 2012 and September 30, 2012, respectively. 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 carry forward periods, any experience with utilization of operating loss and tax credit carry forwards 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. 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 include the dilutive effect of additional potential common shares issuable during the period, consisting of stock options and shares of unvested restricted stock outstanding under the Company’s stock incentive plans. Reclassifications – Certain items previously reported were reclassified for consistency with the current presentation. Recent Accounting Pronouncements - No new accounting pronouncements, issued or effective during the three months ended December 31, 2012, have had or are expected to have a significant impact on the Company's consolidated financial statements. |