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 |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification Number) | |
(Address of Principal Executive Offices) |
Zip Code |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
☒ | Smaller reporting company | |||||
Emerging growth company |
IF Bancorp, Inc.
Form 10-Q
Index
Item 1. |
Condensed Consolidated Financial Statements |
March 31, 2024 |
June 30, 2023 |
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(Unaudited) |
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Assets |
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Cash and due from banks |
$ | $ | ||||||
Interest-bearing demand deposits |
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Cash and cash equivalents |
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Interest-bearing time deposits in banks |
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Available-for-sale |
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Loans, net of allowance for credit losses of $ |
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Premises and equipment, net of accumulated depreciation of $ |
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Federal Home Loan Bank stock, at cost |
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Foreclosed assets held for sale |
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Accrued interest receivable |
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Bank-owned life insurance |
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Mortgage servicing rights |
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Deferred income taxes |
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Other |
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Total assets |
$ | $ | ||||||
Liabilities and Equity |
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Liabilities |
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Deposits |
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Demand |
$ | $ | ||||||
Savings, NOW and money market |
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Certificates of deposit |
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Brokered certificates of deposit |
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Total deposits |
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Repurchase agreements |
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Federal Home Loan Bank advances |
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Other borrowings |
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Advances from borrowers for taxes and insurance |
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Accrued post-retirement benefit obligation |
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Accrued interest payable |
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Allowance for credit losses on off-balance sheet credit exposures |
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Other |
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Total liabilities |
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Commitments and Contingencies |
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Stockholders’ Equity |
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Common stock, $ |
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Additional paid-in capital |
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Unearned ESOP shares, at cost, |
( |
) | ( |
) | ||||
Retained earnings |
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Accumulated other comprehensive loss, net of tax |
( |
) | ( |
) | ||||
Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
$ | $ | ||||||
Three Months Ended March 31, |
Nine Months Ended March 31, |
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2024 |
2023 |
2024 |
2023 |
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Interest and Dividend Income |
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Interest and fees on loans |
$ | $ | $ | $ | ||||||||||||
Securities: |
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Taxable |
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Tax-exempt |
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Federal Home Loan Bank dividends |
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Deposits with other financial institutions |
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Total interest and dividend income |
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Interest Expense |
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Deposits |
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Federal Home Loan Bank advances and repurchase agreements |
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Line of credit and other borrowings |
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Total interest expense |
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Net Interest Income |
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Provision (Credit) for Credit Losses |
( |
) | ||||||||||||||
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Net Interest Income After Provision (Credit) for Credit Losses |
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Noninterest Income |
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Customer service fees |
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Other service charges and fees |
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Insurance commissions |
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Brokerage commissions |
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Net realized gains (losses) on sales of available-for-sale |
( |
) | ||||||||||||||
Mortgage banking income, net |
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Gain on sale of loans |
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Bank-owned life insurance income, net |
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Other |
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Total noninterest income |
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Noninterest Expense |
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Compensation and benefits |
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Office occupancy |
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Equipment |
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Federal deposit insurance |
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Stationary, printing and office |
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Advertising |
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Professional services |
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Supervisory examinations |
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Audit and accounting services |
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Organizational dues and subscriptions |
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Insurance bond premiums |
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Telephone and postage |
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Loss (gain) on foreclosed assets, net |
( |
) | ||||||||||||||
Other |
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Total noninterest expense |
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Income Before Income Tax |
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Provision for Income Tax |
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Net Income |
$ | $ | $ | $ | ||||||||||||
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Earnings Per Share: |
||||||||||||||||
Basic |
$ | $ | $ | $ | ||||||||||||
Diluted |
$ | $ | $ | $ | ||||||||||||
Dividends declared per common share |
$ | $ | $ | $ |
Three Months Ended March 31, |
||||||||
2024 |
2023 |
|||||||
Net Income |
$ | $ | ||||||
Other Comprehensive Income (Loss) |
||||||||
Unrealized appreciation (depreciation) on available-for-sale $( |
( |
) | ||||||
Less: reclassification adjustment for realized gains included in net income, net of taxes of $ |
||||||||
( |
) | |||||||
Postretirement health plan amortization of transition obligation and prior service cost and change in net loss, net of taxes of $ |
( |
) | ( |
) | ||||
Other comprehensive income (loss), net of tax |
( |
) | ||||||
Comprehensive Income (Loss) |
$ | ( |
) | $ | ||||
Nine Months Ended March 31, |
||||||||
2024 |
2023 |
|||||||
Net Income |
$ | $ | ||||||
Other Comprehensive Income (Loss) |
||||||||
Unrealized appreciation (depreciation) on available-for-sale $ |
( |
) | ||||||
Less: reclassification adjustment for realized gains (losses) included in net income, net of taxes of $ |
( |
) | ||||||
( |
) | |||||||
Postretirement health plan amortization of transition obligation and prior service cost and change in net loss, net of taxes of $ |
( |
) | ||||||
Other comprehensive income (loss), net of tax |
( |
) | ||||||
Comprehensive Income |
$ | $ | ||||||
Common Stock |
Additional Paid-In Capital |
Unearned ESOP Shares |
Retained Earnings |
Accumulated Other Comprehensive Income (Loss) |
Total |
|||||||||||||||||||
For the three months ended March 31, 2024 |
||||||||||||||||||||||||
Balance, January 1, 2024 |
$ | $ | $ | ( |
) | $ | $ | ( |
) | $ | ||||||||||||||
Net income |
— | — | — | — | ||||||||||||||||||||
Other comprehensive loss |
— | — | — | — | ( |
) | ( |
) | ||||||||||||||||
Dividends on common stock, $ |
— | — | — | ( |
) | — | ( |
) | ||||||||||||||||
Stock equity plan |
— | — | — | — | ||||||||||||||||||||
ESOP shares earned, |
— | — | — | |||||||||||||||||||||
Balance, March 31, 2024 |
$ | $ | $ | ( |
) | $ | $ | ( |
) | $ | ||||||||||||||
For the three months ended March 31, 2023 |
||||||||||||||||||||||||
Balance, January 1, 2023 |
$ | $ | $ | ( |
) | $ | $ | ( |
) | $ | ||||||||||||||
Net income |
— | — | — | — | ||||||||||||||||||||
Other comprehensive income |
— | — | — | — | ||||||||||||||||||||
Dividends on common stock, $ |
— | — | — | ( |
) | — | ( |
) | ||||||||||||||||
Stock options exercised |
— | — | — | — | ||||||||||||||||||||
Stock equity plan |
— | — | — | — | ||||||||||||||||||||
ESOP shares earned, |
— | — | — | |||||||||||||||||||||
Balance, March 31, 2023 |
$ | $ | $ | ( |
) | $ | $ | ( |
) | $ | ||||||||||||||
Common Stock |
Additional Paid-In Capital |
Unearned ESOP Shares |
Retained Earnings |
Accumulated Other Comprehensive Income (Loss) |
Total |
|||||||||||||||||||
For the nine months ended March 31, 2024 |
||||||||||||||||||||||||
Balance, July 1, 2023 |
$ | $ | $ | ( |
) | $ | $ | ( |
) | $ | ||||||||||||||
Net income |
— | — | — | — | ||||||||||||||||||||
Other comprehensive income |
— | — | — | — | ||||||||||||||||||||
Dividends on common stock, $ |
— | — | — | ( |
) | — | ( |
) | ||||||||||||||||
Stock equity plan |
— | — | — | — | ||||||||||||||||||||
ESOP shares earned, |
— | — | — | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance, March 31, 2024 |
$ | $ | $ | ( |
) | $ | $ | ( |
) | $ | ||||||||||||||
|
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|
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For the nine months ended March 31, 2023 |
||||||||||||||||||||||||
Balance, June 30, 2022 |
$ | $ | $ | ( |
) | $ | $ | ( |
) | $ | ||||||||||||||
Cumulative impact of ASU 2016-13 |
( |
) | ( |
) | ||||||||||||||||||||
|
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|
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|
|||||||||||||
Balance, July 1, 2022 |
$ | $ | $ | ( |
) | $ | $ | ( |
) | $ | ||||||||||||||
Net income |
— | — | — | — | ||||||||||||||||||||
Other comprehensive loss |
— | — | — | — | ( |
) | ( |
) | ||||||||||||||||
Dividends on common stock, $ |
— | — | — | ( |
) | — | ( |
) | ||||||||||||||||
Stock options exercised |
— | — | — | |||||||||||||||||||||
Stock equity plan |
— | — | — | — | ||||||||||||||||||||
ESOP shares earned, |
— | — | — | |||||||||||||||||||||
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|
|||||||||||||
Balance, March 31, 2023 |
$ | $ | $ | ( |
) | $ | $ | ( |
) | $ | ||||||||||||||
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|
|
|
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|
Nine Months Ended March 31, |
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2024 |
2023 |
|||||||
Operating Activities |
||||||||
Net income |
$ | $ | ||||||
Items not requiring (providing) cash |
||||||||
Depreciation |
||||||||
Provision for credit losses |
||||||||
Amortization (accretion) of premiums and discounts on securities |
( |
) | ||||||
Deferred income taxes |
( |
) | ||||||
Net realized gains on loan sales |
( |
) | ( |
) | ||||
Net realized losses on sales of available-for-sale |
||||||||
Loss (gain) on foreclosed assets held for sale |
( |
) | ||||||
Bank-owned life insurance income, net |
( |
) | ( |
) | ||||
ESOP compensation expense |
||||||||
Stock equity plan expense |
||||||||
Originations of loans held for sale |
( |
) | ( |
) | ||||
Proceeds from sales of loans held for sale |
||||||||
Changes in |
||||||||
Accrued interest receivable |
( |
) | ( |
) | ||||
Other assets |
( |
) | ||||||
Accrued interest payable |
||||||||
Post-retirement benefit obligation |
||||||||
Other liabilities |
( |
) | ( |
) | ||||
Net cash provided by operating activities |
||||||||
Investing Activities |
||||||||
Net change in interest bearing time deposits |
||||||||
Purchases of available-for-sale |
( |
) | ( |
) | ||||
Proceeds from the sales of available-for-sale |
||||||||
Proceeds from maturities and pay-downs of available-for-sale |
||||||||
Net change in loans |
( |
) | ( |
) | ||||
Purchase of premises and equipment |
( |
) | ( |
) | ||||
Proceeds from sale of premises and equipment |
||||||||
Proceeds from sale of foreclosed assets |
||||||||
Purchase of Federal Home Loan Bank stock |
( |
) | ( |
) | ||||
Redemption of Federal Home Loan Bank Stock |
||||||||
Net cash used in investing activities |
( |
) | ( |
) | ||||
Financing Activities |
||||||||
Net decrease in demand deposits, money market, NOW and savings accounts |
( |
) | ( |
) | ||||
Net increase in certificates of deposit, including brokered certificates |
||||||||
Net increase in advances from borrowers for taxes and insurance |
||||||||
Proceeds from other borrowings |
||||||||
Repayments of other borrowings |
( |
) | ||||||
Proceeds from Federal Home Loan Bank advances |
||||||||
Repayments of Federal Home Loan Bank advances |
( |
) | ( |
) | ||||
Net increase in repurchase agreements |
||||||||
Dividends paid |
( |
) | ( |
) | ||||
Proceeds from exercise of stock options |
||||||||
Net cash provided by (used in) financing activities |
( |
) | ||||||
Net Increase (Decrease) in Cash and Cash Equivalents |
( |
) | ||||||
Cash and Cash Equivalents, Beginning of Period |
||||||||
Cash and Cash Equivalents, End of Period |
$ | $ | ||||||
Supplemental Cash Flows Information |
||||||||
Interest paid |
$ | $ | ||||||
Income taxes paid, net of refunds |
$ | $ | ||||||
Foreclosed assets acquired in settlement of loans |
$ | $ | ||||||
Dividends payable |
$ | $ |
• | Customer Service Fees - The Company generates revenue from fees charged for deposit account maintenance, overdrafts, wire transfers, and check fees. The revenue related to deposit fees is recognized at the time the performance obligation is satisfied. |
• | Insurance Commissions - The Company’s insurance agency, IF Insurance Agency, receives commissions on premiums of new and renewed business policies. IF Insurance Agency records commission revenue on direct bill policies as the cash is received. For agency bill policies, IF Insurance Agency retains its commission portion of the customer premium payment and remits the balance to the carrier. In both cases, the carrier holds the performance obligation. |
• | Brokerage Commissions - The primary brokerage revenue is recorded at the beginning of each quarter through billing to customers based on the account asset size on the last day of the previous quarter. If a withdrawal of funds takes place, a prorated refund may occur; this is reflected within the same quarter as the original billing occurred. All performance obligations are met within the same quarter that the revenue is recorded. |
• | Other - The Company generates revenue through service charges from the use of its ATM machines and interchange income from the use of Company issued credit and debit cards. The revenue is recognized at the time the service is used, and the performance obligation is satisfied. |
July 1, 2022 |
||||||||||||
Allowance for credit losses as reported under ASU 2016-13 |
Allowance pre-ASU 2016- 13 Adoption |
Impact on Allowance of ASU 2016-13 Adoption |
||||||||||
Assets: |
||||||||||||
Real Estate Loans |
||||||||||||
One- to four-family |
$ | $ | $ | |||||||||
Multi-Family |
( |
) | ||||||||||
Commercial |
||||||||||||
HELOC |
||||||||||||
Construction |
||||||||||||
Commercial Business |
( |
) | ||||||||||
Consumer |
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|
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Allowance for credit losses for all loans |
$ | $ | $ | |||||||||
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|
|||||||
Liabilities: |
||||||||||||
Allowance for credit losses on off-balance sheet exposures |
$ | $ | $ | |||||||||
|
|
|
|
|
|
March 31, 2024 | June 30, 2023 | |||||||
Allocated shares |
||||||||
Shares committed for release |
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Unearned shares |
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|
|||||
Total ESOP shares |
||||||||
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|
|||||
Fair value of unearned ESOP shares (1) |
$ | $ | ||||||
|
|
|
|
(1) | Based on closing price of $ |
Options |
Weighted-Average Exercise Price/Share |
Weighted-Average Remaining Contractual Life (in years) |
Aggregate Intrinsic Value |
|||||||||||||
Outstanding, June 30, 2023 |
$ | |||||||||||||||
Granted |
||||||||||||||||
Exercised |
||||||||||||||||
Forfeited |
||||||||||||||||
Outstanding, March 31, 2024 |
$ | $ | ||||||||||||||
Exercisable, March 31, 2024 |
$ | $ | ||||||||||||||
Shares |
Weighted-Average Grant-Date Fair Value |
|||||||
Balance, June 30, 2023 |
$ | |||||||
Granted |
||||||||
Forfeited |
||||||||
Earned and issued |
||||||||
Balance, March 31, 2024 |
$ | |||||||
Three Months Ended March 31, 2024 |
Three Months Ended March 31, 2023 |
Nine Months Ended March 31, 2024 |
Nine Months Ended March 31, 2023 |
|||||||||||||
Net income |
$ | $ | $ | $ | ||||||||||||
Basic weighted average shares outstanding |
||||||||||||||||
Less: Average unallocated ESOP shares |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Basic average shares outstanding |
||||||||||||||||
Diluted effect of restricted stock awards and stock options |
||||||||||||||||
Diluted average shares outstanding |
||||||||||||||||
Basic earnings per common share |
$ | $ | $ | $ | ||||||||||||
Diluted earnings per common share |
$ | $ | $ | $ | ||||||||||||
Amortized Cost |
Gross Unrealized Gains |
Gross Unrealized Losses |
Fair Value |
|||||||||||||
Available-for-sale |
||||||||||||||||
March 31, 2024: |
||||||||||||||||
U.S. Treasury |
$ | $ | $ | ( |
) | $ | ||||||||||
U.S. Government and federal agency |
( |
) | ||||||||||||||
Mortgage-backed: |
||||||||||||||||
GSE residential |
( |
) | ||||||||||||||
Small Business Administration |
( |
) | ||||||||||||||
State and political subdivisions |
( |
) | ||||||||||||||
$ | $ | $ | ( |
) | $ | |||||||||||
June 30, 2023: |
||||||||||||||||
U.S. Treasury |
$ | $ | $ | ( |
) | $ | ||||||||||
U.S. Government and federal agency |
( |
) | ||||||||||||||
Mortgage-backed: |
||||||||||||||||
GSE residential |
( |
) | ||||||||||||||
Small Business Administration |
( |
) | ||||||||||||||
State and political subdivisions |
( |
) | ||||||||||||||
$ | $ | $ | ( |
) | $ | |||||||||||
Available-for-sale Securities |
||||||||
Amortized Cost |
Fair Value |
|||||||
Within one year |
$ | $ | ||||||
One to five years |
||||||||
Five to ten years |
||||||||
After ten years |
||||||||
Mortgage-backed securities |
||||||||
Totals |
$ | $ | ||||||
Less Than 12 Months |
12 Months or More |
Total |
||||||||||||||||||||||
Description of Securities |
Fair Value |
Unrealized Losses |
Fair Value |
Unrealized Losses |
Fair Value |
Unrealized Losses |
||||||||||||||||||
March 31, 2024: |
||||||||||||||||||||||||
U.S. Treasury |
$ | $ | $ | $ | ( |
) | $ | $ | ( |
) | ||||||||||||||
U.S. Government and federal agency |
( |
) | ( |
) | ||||||||||||||||||||
Mortgage-backed: |
||||||||||||||||||||||||
GSE residential |
( |
) | ( |
) | ( |
) | ||||||||||||||||||
Small Business Administration |
( |
) | ( |
) | ||||||||||||||||||||
State and political subdivisions |
( |
) | ( |
) | ||||||||||||||||||||
Total |
$ | $ | ( |
) | $ | $ | ( |
) | $ | $ | ( |
) | ||||||||||||
June 30, 2023: |
||||||||||||||||||||||||
U.S. Treasury |
$ | $ | $ | $ | ( |
) | $ | $ | ( |
) | ||||||||||||||
U.S. Government and federal agency |
( |
) | ( |
) | ||||||||||||||||||||
Mortgage-backed: |
||||||||||||||||||||||||
GSE residential |
( |
) | ( |
) | ( |
) | ||||||||||||||||||
Small Business Administration |
( |
) | ( |
) | ( |
) | ||||||||||||||||||
State and political subdivisions |
( |
) | ( |
) | ||||||||||||||||||||
Total |
$ | $ | ( |
) | $ | $ | ( |
) | $ | $ | ( |
) | ||||||||||||
March 31, 2024 |
June 30, 2023 |
|||||||
Real estate loans: |
||||||||
One- to four-family |
$ | $ | ||||||
Multi-family |
||||||||
Commercial |
||||||||
Home equity lines of credit |
||||||||
Construction |
||||||||
Commercial |
||||||||
Consumer |
||||||||
Total loans |
||||||||
Less: |
||||||||
Unearned fees and discounts, net |
( |
) | ( |
) | ||||
Allowance for credit losses |
||||||||
Loans, net |
$ | $ | ||||||
Three Months Ended March 31, 2024 Real Estate Loans |
||||||||||||||||
One- toFour-Family |
Multi-Family |
Commercial |
Home Equity Lines of Credit |
|||||||||||||
Allowance for credit losses: |
||||||||||||||||
Balance, beginning of period |
$ | $ | $ | $ | ||||||||||||
Provision (credit) for credit losses |
( |
) | ( |
) | ||||||||||||
Losses charged off |
||||||||||||||||
Recoveries |
||||||||||||||||
Balance, end of period |
$ | $ | $ | $ | ||||||||||||
Loans: |
||||||||||||||||
Ending balance |
$ | $ | $ | $ | ||||||||||||
Three Months Ended March 31, 2024 (Continued) |
||||||||||||||||
Construction |
Commercial |
Consumer |
Total |
|||||||||||||
Allowance for credit losses: |
||||||||||||||||
Balance, beginning of period |
$ | $ | $ | $ | ||||||||||||
Provision (credit) for credit losses |
( |
) | ( |
) | ( |
) | ||||||||||
Losses charged off |
( |
) | ( |
) | ||||||||||||
Recoveries |
||||||||||||||||
Balance, end of period |
$ | $ | $ | $ | ||||||||||||
Loans: |
||||||||||||||||
Ending balance |
$ | $ | $ | $ | ||||||||||||
Nine Months Ended March 31, 2024 Real Estate Loans |
||||||||||||||||
One- toFour-Family |
Multi-Family |
Commercial |
Home Equity Lines of Credit |
|||||||||||||
Allowance for credit losses: |
||||||||||||||||
Balance, beginning of period |
$ | $ | $ | $ | ||||||||||||
Provision (credit) for credit losses |
( |
) | ( |
) | ||||||||||||
Losses charged off |
||||||||||||||||
Recoveries |
||||||||||||||||
Balance, end of period |
$ | $ | $ | $ | ||||||||||||
Loans: |
||||||||||||||||
Ending balance |
$ | $ | $ | $ | ||||||||||||
Nine Months Ended March 31, 2024 (Continued) |
||||||||||||||||
Construction |
Commercial |
Consumer |
Total |
|||||||||||||
Allowance for credit losses: |
||||||||||||||||
Balance, beginning of period |
$ | $ | $ | $ | ||||||||||||
Provision (credit) for credit losses |
( |
) | ||||||||||||||
Losses charged off |
( |
) | ( |
) | ||||||||||||
Recoveries |
||||||||||||||||
Balance, end of period |
$ | $ | $ | $ | ||||||||||||
Loans: |
||||||||||||||||
Ending balance |
$ | $ | $ | $ | ||||||||||||
Year Ended June 30, 2023 Real Estate Loans |
||||||||||||||||
One- toFour- Family |
Multi- Family |
Commercial |
Home Equity Lines of Credit |
|||||||||||||
Allowance for credit losses: |
||||||||||||||||
Balance, beginning of year (prior to adoption of ASU 2016-13) |
$ | $ | $ | $ | ||||||||||||
Impact of adopting ASU 2016-13 |
( |
) | ||||||||||||||
Provision charged to expense |
( |
) | ( |
) | ||||||||||||
Losses charged off |
||||||||||||||||
Recoveries |
||||||||||||||||
Balance, end of year |
$ | $ | $ | $ | ||||||||||||
Loans: |
||||||||||||||||
Ending balance |
$ | $ | $ | $ | ||||||||||||
Year Ended June 30, 2023 (Continued) |
||||||||||||||||
Construction |
Commercial |
Consumer |
Total |
|||||||||||||
Allowance for credit losses: |
||||||||||||||||
Balance, beginning of year (prior to adoption of ASU 2016-13) |
$ | $ | $ | $ | ||||||||||||
Impact of adopting ASU 2016-13 |
( |
) | ||||||||||||||
Provision charged to expense |
( |
) | ||||||||||||||
Losses charged off |
( |
) | ( |
) | ( |
) | ||||||||||
Recoveries |
||||||||||||||||
Balance, end of year |
$ | $ | $ | $ | ||||||||||||
Loans: |
||||||||||||||||
Ending balance |
$ | $ | $ | $ | ||||||||||||
Three Months Ended March 31, 2023 |
||||||||||||||||
Real Estate Loans |
||||||||||||||||
One- toFour-Family |
Multi- Family |
Commercial |
Home Equity Lines of Credit |
|||||||||||||
Allowance for credit losses: |
||||||||||||||||
Balance, beginning of period |
$ | $ | $ | $ | ||||||||||||
Provision charged to expense |
( |
) | ( |
) | ||||||||||||
Losses charged off |
||||||||||||||||
Recoveries |
||||||||||||||||
Balance, end of period |
$ | $ | $ | $ | ||||||||||||
Loans: |
||||||||||||||||
Ending balance |
$ | $ | $ | $ | ||||||||||||
Three Months Ended March 31, 2023 (Continued) |
||||||||||||||||
Construction |
Commercial |
Consumer |
Total |
|||||||||||||
Allowance for credit losses: |
||||||||||||||||
Balance, beginning of period |
$ | $ | $ | $ | ||||||||||||
Provision charged to expense |
( |
) | ||||||||||||||
Losses charged off |
( |
) | ( |
) | ||||||||||||
Recoveries |
||||||||||||||||
Balance, end of period |
$ | $ | $ | $ | ||||||||||||
Loans: |
||||||||||||||||
Ending balance |
$ | $ | $ | $ | ||||||||||||
Nine Months Ended March 31, 2023 |
||||||||||||||||
Real Estate Loans |
||||||||||||||||
One- toFour-Family |
Multi- Family |
Commercial |
Home Equity Lines of Credit |
|||||||||||||
Allowance for credit losses: |
||||||||||||||||
Balance, beginning of period (prior to adoption of ASU 2016-13) |
$ | $ | $ | $ | ||||||||||||
Impact of adopting ASU 2016-13 |
( |
) | ||||||||||||||
Provision charged to expense |
( |
) | ||||||||||||||
Losses charged off |
||||||||||||||||
Recoveries |
||||||||||||||||
Balance, end of period |
$ | $ | $ | $ | ||||||||||||
Loans: |
||||||||||||||||
Ending balance |
$ | $ | $ | $ | ||||||||||||
Nine Months Ended March 31, 2023 (Continued) |
||||||||||||||||
Construction |
Commercial |
Consumer |
Total |
|||||||||||||
Allowance for credit losses: |
||||||||||||||||
Balance, beginning of period (prior to adoption of ASU 2016-13) |
$ | $ | $ | $ | ||||||||||||
Impact of adopting ASU 2016-13 |
( |
) | ||||||||||||||
Provision charged to expense |
( |
) | ||||||||||||||
Losses charged off |
( |
) | ( |
) | ( |
) | ||||||||||
Recoveries |
||||||||||||||||
Balance, end of period |
$ | $ | $ | $ | ||||||||||||
Loans: |
||||||||||||||||
Ending balance |
$ | $ | $ | $ | ||||||||||||
Risk Rating |
2024 |
2023 |
2022 |
2021 |
2020 |
Prior Years |
Total |
|||||||||||||||||||||
One- to Four-Family |
||||||||||||||||||||||||||||
Pass |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
Special Mention |
— |
— |
— |
— |
— |
|||||||||||||||||||||||
Substandard |
— |
— |
||||||||||||||||||||||||||
Total |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
Multi-Family |
||||||||||||||||||||||||||||
Pass |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
Special Mention |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||||
Substandard |
— |
— |
— |
— |
— |
|||||||||||||||||||||||
Total |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
Commercial Real Estate |
||||||||||||||||||||||||||||
Pass |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
Special Mention |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||||
Substandard |
— |
— |
— |
|||||||||||||||||||||||||
Total |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
Home Equity Line of Credit |
||||||||||||||||||||||||||||
Pass |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
Special Mention |
— |
— |
— |
— |
— |
— |
— |
Substandard |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||||
Total |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
Construction |
||||||||||||||||||||||||||||
Pass |
$ |
$ |
$ |
$ |
— |
$ |
— |
$ |
$ |
|||||||||||||||||||
Special Mention |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||||
Substandard |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||||
Total |
$ |
$ |
$ |
$ |
— |
$ |
— |
$ |
$ |
|||||||||||||||||||
Commercial Business |
||||||||||||||||||||||||||||
Pass |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
Special Mention |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||||
Substandard |
— |
|||||||||||||||||||||||||||
Total |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
Consumer |
||||||||||||||||||||||||||||
Pass |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
Special Mention |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||||
Substandard |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||||
Total |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
Total Loans |
||||||||||||||||||||||||||||
Pass |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
Special Mention |
— |
— |
— |
— |
||||||||||||||||||||||||
Substandard |
||||||||||||||||||||||||||||
Total |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
Risk Rating |
2023 |
2022 |
2021 |
2020 |
2019 |
Prior Years |
Total |
|||||||||||||||||||||
One- to Four-Family |
||||||||||||||||||||||||||||
Pass |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
Watch |
— |
— |
— |
— |
— |
|||||||||||||||||||||||
Substandard |
— |
|||||||||||||||||||||||||||
Total |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
Multi-Family |
||||||||||||||||||||||||||||
Pass |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
Watch |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||||
Substandard |
— |
— |
— |
— |
— |
|||||||||||||||||||||||
Total |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
Commercial Real Estate |
||||||||||||||||||||||||||||
Pass |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
Watch |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||||
Substandard |
— |
— |
— |
— |
||||||||||||||||||||||||
Total |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
Home Equity Line of Credit |
||||||||||||||||||||||||||||
Pass |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
Watch |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||||
Substandard |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||||
Total |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
Construction |
||||||||||||||||||||||||||||
Pass |
$ |
$ |
$ |
$ |
$ |
— |
$ |
— |
$ |
|||||||||||||||||||
Watch |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||||
Substandard |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||||
Total |
$ |
$ |
$ |
$ |
$ |
— |
$ |
— |
$ |
|||||||||||||||||||
Commercial Business |
||||||||||||||||||||||||||||
Pass |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
Watch |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||||
Substandard |
||||||||||||||||||||||||||||
Total |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
Consumer |
||||||||||||||||||||||||||||
Pass |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
Watch |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||||
Substandard |
— |
— |
— |
— |
||||||||||||||||||||||||
Total |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
Total Loans |
||||||||||||||||||||||||||||
Pass |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
Watch |
— |
— |
— |
— |
— |
|||||||||||||||||||||||
Substandard |
||||||||||||||||||||||||||||
Total |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
30-59 Days Past Due |
60-89 Days Past Due |
90 Days or Greater |
Total Past Due |
Current |
Total Loans Receivable |
Total Loans 90 Days Past Due & Accruing |
||||||||||||||||||||||
March 31, 2024: |
||||||||||||||||||||||||||||
Real estate loans: |
||||||||||||||||||||||||||||
One- to four-family |
$ |
$ |
$ |
— |
$ |
$ |
$ |
$ |
— |
|||||||||||||||||||
Multi-family |
— |
— |
— |
— |
— |
|||||||||||||||||||||||
Commercial |
||||||||||||||||||||||||||||
Home equity lines of credit |
— |
— |
— |
|||||||||||||||||||||||||
Construction |
— |
— |
— |
— |
— |
|||||||||||||||||||||||
Commercial |
— |
— |
||||||||||||||||||||||||||
Consumer |
— |
— |
||||||||||||||||||||||||||
Total |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
30-59 Days Past Due |
60-89 Days Past Due |
90 Days or Greater |
Total Past Due |
Current |
Total Loans Receivable |
Total Loans 90 Days Past Due & Accruing |
||||||||||||||||||||||
June 30, 2023: |
||||||||||||||||||||||||||||
Real estate loans: |
||||||||||||||||||||||||||||
One- to four-family |
$ |
$ |
$ |
— |
$ |
$ |
$ |
$ |
— |
|||||||||||||||||||
Multi-family |
— |
— |
— |
— |
— |
|||||||||||||||||||||||
Commercial |
— |
— |
— |
|||||||||||||||||||||||||
Home equity lines of credit |
— |
— |
— |
|||||||||||||||||||||||||
Construction |
— |
— |
— |
— |
— |
|||||||||||||||||||||||
Commercial |
— |
— |
||||||||||||||||||||||||||
Consumer |
— |
|||||||||||||||||||||||||||
Total |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
— |
||||||||||||||||||||
March 31, 2024 |
June 30, 2023 |
|||||||||||||||
Nonaccrual with no Allowance for Credit Losses |
Nonaccrual | Nonaccrual with no Allowance for Credit Losses |
Nonaccrual | |||||||||||||
Mortgages on real estate: |
||||||||||||||||
One- to four-family |
$ | $ | $ | $ | ||||||||||||
Multi-family |
||||||||||||||||
Commercial |
||||||||||||||||
Home equity lines of credit |
||||||||||||||||
Construction loans |
||||||||||||||||
Commercial business loans |
||||||||||||||||
Consumer loans |
||||||||||||||||
Total |
$ | $ | $ | $ | ||||||||||||
June 30, 2023 |
||||
Real estate loans |
||||
One- to four-family |
$ | |||
Multi-family |
||||
Commercial |
||||
Home equity lines of credit |
||||
Total real estate loans |
||||
Construction loans |
||||
Commercial business loans |
||||
Consumer loans |
||||
Total |
$ | |||
Unrealized Gains and Losses on Available-for- Sale Securities |
Defined Benefit Pension Items |
Total |
||||||||||
March 31, 2024: |
||||||||||||
Beginning balance |
$ | ( |
) | $ | $ | ( |
) | |||||
Other comprehensive loss before reclassification |
||||||||||||
Amounts reclassified from accumulated other comprehensive income |
||||||||||||
Net current period other comprehensive loss |
||||||||||||
Ending balance |
$ | ( |
) | $ | $ | ( |
) | |||||
March 31, 2023: |
||||||||||||
Beginning balance |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Other comprehensive loss before reclassification |
( |
) | ( |
) | ||||||||
Amounts reclassified from accumulated other comprehensive income |
||||||||||||
Net current period other comprehensive loss |
( |
) | ( |
) | ||||||||
Ending balance |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Amounts Reclassified from AOCI |
||||||||||||||||||
Three Months Ended March 31, |
Nine Months Ended March 31, |
|||||||||||||||||
2024 |
2023 |
2024 |
2023 |
Affected Line Item in the Condensed Consolidated Statements of Income | ||||||||||||||
Realized gains (losses) on available-for-sale |
$ | $ | $ | $ | ( |
) | Net realized gains (losses) on sale of available-for- sale securities | |||||||||||
Amortization of defined benefit pension items: |
Components are included in computation of net periodic pension cost | |||||||||||||||||
Actuarial losses |
( |
) | ( |
) | ( |
) | ||||||||||||
Total reclassified amount before tax |
( |
) | ( |
) | ||||||||||||||
Tax expense |
( |
) | Provision for Income Tax | |||||||||||||||
Total reclassification out of AOCI |
$ | ( |
) | $ | $ | $ | ( |
) | Net Income | |||||||||
Three Months Ended March 31, |
Nine Months Ended March 31, |
|||||||||||||||
2024 |
2023 |
2024 |
2023 |
|||||||||||||
Computed at the statutory rate |
$ | $ | $ | $ | ||||||||||||
Decrease resulting from |
||||||||||||||||
Tax exempt interest |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Cash surrender value of life insurance |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
State income taxes |
||||||||||||||||
Other |
( |
) | ( |
) | ||||||||||||
Actual expense |
$ | $ | $ | $ | ||||||||||||
Level 1 | Quoted prices in active markets for identical assets |
Level 2 | Observable inputs other than Level 1 prices, such as quoted prices for similar assets; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets |
Level 3 | Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets |
Fair Value Measurements Using |
||||||||||||||||
Fair Value |
Quoted Prices in Active Markets for Identical Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
|||||||||||||
March 31, 2024: |
||||||||||||||||
Available-for-sale |
||||||||||||||||
US Treasury |
$ | $ | $ | — | $ | — | ||||||||||
US Government and federal agency |
— | — | ||||||||||||||
Mortgage-backed securities – GSE residential |
— | — | ||||||||||||||
Small Business Administration |
— | — | ||||||||||||||
State and political subdivisions |
— | |||||||||||||||
Mortgage servicing rights |
— | — |
Fair Value Measurements Using |
||||||||||||||||
Fair Value |
Quoted Prices in Active Markets for Identical Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
|||||||||||||
June 30, 2023: |
||||||||||||||||
Available-for-sale |
||||||||||||||||
US Treasury |
$ | $ | — | $ | $ | — | ||||||||||
U.S. Government and federal agency and Government sponsored enterprises (GSE’s) |
— | — | ||||||||||||||
Mortgage-backed: GSE residential |
— | — | ||||||||||||||
Small Business Administration |
— | — | ||||||||||||||
State and political subdivisions |
— | |||||||||||||||
Mortgage servicing rights |
— | — |
Obligations of State and Political Subdivisions |
Mortgage Servicing Rights |
Total |
||||||||||
Beginning balance |
$ | $ | $ | |||||||||
Transfers into Level 3 |
— | |||||||||||
Transfers out of Level 3 |
— | ( |
) | ( |
) | |||||||
Total realized and unrealized gains and losses included in net income |
— | ( |
) | ( |
) | |||||||
Purchases |
— | — | — | |||||||||
Sales |
— | — | — | |||||||||
Settlements |
( |
) | — | ( |
) | |||||||
Ending balance |
$ | $ | $ | |||||||||
Total gains or losses for the period included in net income attributable to the change in unrealized gains or losses related to assets and liabilities still held at the reporting date |
$ | — | $ | ( |
) | $ | ( |
) | ||||
Year ended June 30, 2023 |
||||||||||||
Obligations of State and Political Subdivisions |
Mortgage Servicing Rights |
Total |
||||||||||
Beginning balance |
$ | $ | $ | |||||||||
Transfers into Level 3 |
— | |||||||||||
Transfers out of Level 3 |
— | ( |
) | ( |
) | |||||||
Total realized and unrealized gains and losses included in net income |
— | |||||||||||
Purchases |
— | — | — | |||||||||
Sales |
— | — | — | |||||||||
Settlements |
( |
) | — | ( |
) | |||||||
Ending balance |
$ | $ | $ | |||||||||
Total gains or losses for the period included in net income attributable to the change in unrealized gains or losses related to assets and liabilities still held at the reporting date |
$ | — | $ | $ | ||||||||
Fair Value at March 31, 2024 |
Valuation Technique |
Unobservable Inputs |
Range (Weighted Average) | |||||||
Mortgage servicing rights |
$ | Discounted cash flow | Discount rate | |||||||
Constant prepayment rate | ||||||||||
Probability of default | ||||||||||
State and political subdivisions |
Discounted cash flow | Maturity/Call Date | ||||||||
Weighted average coupon |
||||||||||
Marketability yield adjustment |
Fair Value at June 30, 2023 |
Valuation Technique |
Unobservable Inputs |
Range (Weighted Average) | |||||||||
Mortgage servicing rights |
$ | Discounted cash flow | Discount rate | |||||||||
Constant prepayment rate | ||||||||||||
Probability of default | ||||||||||||
State and political subdivisions |
Discounted cash flow | Maturity/Call Date | ||||||||||
Weighted average coupon | ||||||||||||
Marketability yield adjustment |
Carrying Amount |
Fair Value Measurements Using Quoted Prices in Active Markets for Identical Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
|||||||||||||
March 31, 2024: |
||||||||||||||||
Financial assets |
||||||||||||||||
Cash and cash equivalents |
$ | $ | $ | — | $ | — | ||||||||||
Interest-bearing time deposits in banks |
— | — | ||||||||||||||
Loans, net of allowance for credit losses |
— | — | ||||||||||||||
Federal Home Loan Bank stock |
— | — | ||||||||||||||
Accrued interest receivable |
— | |||||||||||||||
Financial liabilities |
||||||||||||||||
Deposits |
— |
Repurchase agreements |
— | — | ||||||||||||||
Federal Home Loan Bank advances |
— | — | ||||||||||||||
Other borrowings |
— | — | ||||||||||||||
Advances from borrowers for taxes and insurance |
— | — | ||||||||||||||
Accrued interest payable |
— | — | ||||||||||||||
Unrecognized financial instruments (net of contract amount) |
||||||||||||||||
Commitments to originate loans |
Carrying Amount |
Fair Value Measurements Using Quoted Prices in Active Markets for Identical Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
|||||||||||||
June 30, 2023: |
||||||||||||||||
Financial assets |
||||||||||||||||
Cash and cash equivalents |
$ | $ | $ | — | $ | — | ||||||||||
Interest-bearing time deposits in banks |
— | — | ||||||||||||||
Loans, net of allowance for credit losses |
— | — | ||||||||||||||
Federal Home Loan Bank stock |
— | — | ||||||||||||||
Accrued interest receivable |
— | — | ||||||||||||||
Financial liabilities |
||||||||||||||||
Deposits |
— | |||||||||||||||
Repurchase agreements |
— | — | ||||||||||||||
Federal Home Loan Bank advances |
— | — | ||||||||||||||
Advances from borrowers for taxes and insurance |
— | — | ||||||||||||||
Accrued interest payable |
— | — | ||||||||||||||
Unrecognized financial instruments (net of contract amount) |
||||||||||||||||
Commitments to originate loans |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report may contain forward-looking statements within the meaning of the federal securities laws. These statements are not historical facts, but rather are statements based on management’s current expectations regarding its business strategies and their intended results and IF Bancorp, Inc.’s (“the Company”) future performance. Forward-looking statements are preceded by terms such as “expects,” “believes,” “anticipates,” “intends” and similar expressions.
Management’s ability to predict results or the effect of future plans or strategies is inherently uncertain. Factors that could have a material adverse effect on our actual results include, but are not limited to, general economic conditions, changes in the interest rate environment, legislative or regulatory changes that may adversely affect our business, changes in accounting policies and practices, changes in competition and demand for financial services, adverse changes in the securities markets and changes in the quality or composition of the Association’s loan or investment portfolios.
Additional factors that may affect our results are discussed under “Item 1A. - Risk Factors”, in the Company’s Annual Report on Form 10-K for the year ended June 30, 2023, and the Company’s other filings with the SEC, including Part II. of this Form 10-Q. These factors should be considered in evaluating the forward-looking statements and undue reliance should not be placed on such statements. See “COVID-19” below for a discussion of how the COVID-19 pandemic may affect our future performance. IF Bancorp, Inc. assumes no obligation to update any forward-looking statement, except as may be required by law.
Overview
On July 7, 2011 the Company completed its initial public offering of common stock in connection with the Association’s mutual-to-stock conversion, selling 4,496,500 shares of common stock at $10.00 per share, including 384,900 shares sold to the Association’s employee stock ownership plan, and raising approximately $45.0 million of gross proceeds. The Company also established a charitable foundation, Iroquois Federal Foundation, to which the Company contributed 314,755 shares of our common stock. As of March 31, 2024, the Company repurchased 1,674,479 shares of common stock under stock repurchase plans.
The Company is a savings and loan holding company and is subject to regulation by the Board of Governors of the Federal Reserve System. The Company’s business activities are limited to oversight of its investment in the Association.
The Association is primarily engaged in providing a full range of banking and mortgage services to individual and corporate customers within a 100-mile radius of its locations in Watseka, Danville, Clifton, Hoopeston, Savoy, Champaign and Bourbonnais, Illinois and Osage Beach, Missouri. The principal activity of the Association’s wholly-owned subsidiary, L.C.I. Service Corporation (“L.C.I.”), is the sale of property and casualty insurance. The Association is subject to regulation by the Office of the Controller of the Currency and the Federal Deposit Insurance Corporation.
Our results of operations depend primarily on our net interest income. Net interest income is the difference between the interest income we earn on our interest-earning assets, consisting primarily of loans, investment securities and other interest-earning assets, and the interest paid on our interest-bearing liabilities, consisting primarily of savings and transaction accounts, certificates of deposit, repurchase agreements, borrowings from the Federal Reserve Bank, and Federal Home Loan Bank of Chicago advances. Our results of operations also are affected by our provision for credit losses, noninterest income and noninterest expense. Noninterest income consists primarily of customer service fees, brokerage commission income, insurance commission income, net realized gains on loan sales, mortgage banking income, and income on bank-owned life insurance. Noninterest expense consists primarily of compensation and benefits, occupancy and equipment, data processing, professional fees, marketing, office supplies, federal deposit insurance premiums, and foreclosed assets. Our results of operations also may be affected significantly by general and local economic and competitive conditions, changes in market interest rates, governmental policies and actions of regulatory authorities.
38
Our net interest rate spread (the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities) was 1.80% and 2.83% for the nine months ended March 31, 2024 and 2023, respectively. Net interest income decreased to $13.2 million for the nine months ended March 31, 2024, from $17.3 million for the nine months ended March 31, 2023.
Our emphasis on conservative loan underwriting has historically resulted in relatively low levels of non-performing assets. Our non-performing loans totaled $252,000, or 0.1%, of total loans at March 31, 2024 and $117,000, or 0.1%, of total loans at June 30, 2023. Our non-performing assets totaled $258,000 or 0.1% of total assets at March 31, 2024, and $148,000, or 0.1% of total assets at June 30, 2023.
At March 31, 2024, the Association was categorized as “well capitalized” under regulatory capital requirements.
Our net income for the nine months ended March 31, 2024, was $1.4 million, compared to a net income of $4.1 million for the nine months ended March 31, 2023.
Management’s discussion and analysis of the financial condition and results of operations at and for the three and nine months ended March 31, 2024 and 2023 is intended to assist in understanding the financial condition and results of operations of the Association. The information contained in this section should be read in conjunction with the unaudited financial statements and the notes thereto, appearing in Part I, Item 1 of this quarterly report on Form 10-Q.
Critical Accounting Policies
We define critical accounting policies as those policies that require management to exercise significant judgment or discretion or make significant assumptions that have, or could have, a material impact on the carrying value of certain assets or on income. We consider the following to be our critical accounting policies.
Allowance for Credit Losses. The Company believes the allowance for credit losses for loans is the critical accounting policy that requires the most significant judgments and assumptions used in the preparation of the consolidated financial statements. The allowance for credit losses for loans represents the best estimate of losses inherent in the existing loan portfolio. An estimate of potential losses inherent in the loan portfolio are determined and an allowance for those losses is established by factors considered by the Company during the evaluation of the overall adequacy of the allowance which include historical net loan losses, the level and composition of nonaccrual, past due and troubled debt restructurings, trends in volumes and terms of loans, effects of changes in risk selection and underwriting standards or lending practices, lending staff changes, concentrations of credit, industry conditions and the current economic conditions in the region where the Company operates. In addition, a forecast, using reasonable and supportable future conditions, is prepared that is used to estimate expected changes to existing and historical conditions in the current period.
The Company adopted ASU 2016-13, effective July 1, 2022, and utilizes a current expected credit loss (“CECL”) methodology which relies on segmenting the loan portfolio into pools with similar risks, tracking the performance of the pools over time, and using the data to determine pool loss experience. Based on our estimate of the level of allowance for credit losses required, we record a provision for credit losses as a charge to earnings to maintain the allowance for credit losses at an appropriate level. The allowance for credit losses on most loans is measured on a collective (pool) basis for loans with similar risk characteristics. The Company estimates the appropriate level of allowance for credit losses for collateral-dependent loans by evaluating them separately. The Company also uses the CECL model to calculate the allowance for credit losses on off-balance sheet credit exposures, such as undrawn amounts on lines of credit. While the allowance for credit losses on loans is reported as a contra-asset asset for loans, the allowance for credit losses on off-balance sheet credit exposures is reported as a liability.
The allowance for credit losses is evaluated on a regular basis by management and reflects consideration of all significant factors that affect the collectability of the loan portfolio. This evaluation is inherently subjective as it requires estimates that are subject to significant revision as more information becomes available. Actual loan losses may be significantly more than the allowance for credit losses we have established, which could have a material negative effect on our financial results.
39
Income Tax Accounting. The provision for income taxes is based upon income in our consolidated financial statements, rather than amounts reported on our income tax return. Deferred tax assets and liabilities 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 expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on our deferred tax assets and liabilities is recognized as income or expense in the period that includes the enactment date. Under U.S. GAAP, a valuation allowance is required to be recognized if it is more likely than not that a deferred tax asset will not be realized. The determination as to whether we will be able to realize the deferred tax assets is highly subjective and dependent upon judgment concerning our evaluation of both positive and negative evidence, our forecasts of future income, applicable tax planning strategies, and assessments of current and future economic and business conditions. Positive evidence includes the existence of taxes paid in available carryback years as well as the probability that taxable income will be generated in future periods, while negative evidence includes any cumulative losses in the current year and prior two years and general business and economic trends. Any reduction in estimated future taxable income may require us to record a valuation allowance against our deferred tax assets. Any required valuation allowance would result in additional income tax expense in the period and could have a significant impact on our future earnings. Positions taken in our tax returns may be subject to challenge by the taxing authorities upon examination. The benefit of an uncertain tax position is initially recognized in the financial statements only when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions are both initially and subsequently measured as the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement with the tax authority, assuming full knowledge of the position and all relevant facts. Differences between our position and the position of tax authorities could result in a reduction of a tax benefit or an increase to a tax liability, which could adversely affect our future income tax expense.
There are no material changes to the critical accounting policies disclosed in IF Bancorp, Inc.’s Form 10-K for fiscal year ended June 30, 2023.
Comparison of Financial Condition at March 31, 2024 and June 30, 2023
Total assets increased $56.0 million, or 6.6%, to $905.0 million at March 31, 2024 from $849.0 million at June 30, 2023. The increase was primarily due to a $55.9 million increase in loans receivable, and a $5.1 million increase in cash and cash equivalents, partially offset by a $6.0 million decrease in investment securities.
Net loans receivable, including loans held for sale, increased by $55.9 million, or 9.5%, to $643.3 million at March 31, 2024 from $587.5 million at June 30, 2023. The increase in net loans receivable during this period was due primarily to a $38.1 million, or 42.5%, increase in multi-family loans, a $12.3 million, or 7.5%, increase in one- to four-family loans, a $9.7 million, or 12.2%, increase in commercial business loans, a $5.1 million, or 2.6%, increase in commercial real estate loans, and a $1.5 million, or 19.0%, increase in home equity lines of credit, partially offset by a $9.6 million, or 18.9%, decrease in construction loans, and a $725,000, or 8.6%, decrease in consumer loans.
Investment securities, consisting entirely of securities available for sale, decreased $6.0 million, or 3.0%, to $195.3 million at March 31, 2024 from $201.3 million at June 30, 2023. We had no securities classified as held-to-maturity at March 31, 2024 or June 30, 2023.
Between June 30, 2023 and March 31, 2024, accrued interest receivable increased $968,000 to $3.7 million, and Federal Home Loan Bank (FHLB) stock increased $2.3 million to $5.4 million, while premises and equipment decreased $409,000 to $10.7 million, foreclosed assets held for sale decreased $24,000 to $7,000, other assets decreased $1.3 million to $2.4 million, deferred income taxes decreased $191,000 to $10.8 million, and mortgage servicing rights decreased $28,000 to $1.5 million. The increase in accrued interest receivable was primarily the result of an increase in the average balance and average yields of interest earning assets, and the increase in FHLB stock was the result of an increased stock requirement due to an increase in FHLB advances, while the decrease in premises and equipment was the result of ordinary depreciation, the decrease in foreclosed assets was due to the sale of property, the decrease in other assets was due to the receipt of a large accounts receivable item in the nine months ended March 31, 2024, the decrease in deferred income taxes was mostly due to a decrease in unrealized losses on the sale of available-for-sale securities, and the decrease in mortgage servicing rights was the result of a decreased valuation.
40
At March 31, 2024, our investment in bank-owned life insurance was $15.1 million, an increase of $318,000 from $14.8 million at June 30, 2023. We invest in bank-owned life insurance to provide us with a funding source for our benefit plan obligations. Bank-owned life insurance also generally provides us noninterest income that is non-taxable. Federal regulations generally limit our investment in bank-owned life insurance to 25% of our Tier 1 capital plus our allowance for credit losses, which resulted in a limit of $23.5 million at March 31, 2024.
Deposits decreased $53.5 million, or 7.3%, to $681.8 million at March 31, 2024 from $735.3 million at June 30, 2023. Certificates of deposit, excluding brokered certificates of deposit, increased $29.5 million, or 11.2%, to $293.6 million, while brokered certificates of deposit increased $9.5 million, or 48.4%, to $29.0 million. Noninterest bearing demand accounts decreased $64.4 million, or 59.4%, to $43.2 million, while savings, NOW, and money market accounts decreased $28.2 million, or 8.2%, to $316.0 million. The large decrease in noninterest bearing demand accounts was due primarily to approximately $62.1 million in deposits from a public entity that collects real estate taxes that was on deposit at June 30, 2023 and withdrawn in the nine months ended March 31, 2024, when tax monies were distributed. Repurchase agreements increased $7.4 million, or 68.6%, to $18.2 million at March 31, 2024, from $10.8 million at June 30, 2023. Borrowings consisted of advances from the Federal Home Loan Bank of Chicago which increased $76.5 million to $96.0 million at March 31, 2024, from $19.5 million at June 30, 2023, while other borrowings consisted of $25.3 million from the Federal Reserve Bank Term Funding Program (BTFP), which increased $25.3 million from $0 borrowed at June 30, 2023.
Advances from borrowers for taxes and insurance increased $98,000, or 7.9%, to $1.3 million at March 31, 2024, from $1.2 million at June 30, 2023. Accrued interest payable increased $1.1 million, or 65.8%, to $2.8 million at March 31, 2024, from $1.7 million at June 30, 2023. The increase in advances from borrowers for taxes and insurance was attributable to the timing of the payment of real estate taxes and insurance, while the increase in accrued interest payable was mostly due to increases in both the average balance and the average cost of interest-bearing liabilities.
Total equity increased $631,000, or 0.9%, to $72.4 million at March 31, 2024 from $71.8 million at June 30, 2023. Equity increased primarily due to net income of $1.4 million, an increase of $147,000 in accumulated other comprehensive income (loss), net of tax, and ESOP and stock equity plan activity of $435,000, partially offset by the accrual of approximately $1.3 million in dividends to our shareholders, of which about half were still payable as of March 31, 2024, and were paid on April 15, 2024.
Comparison of Operating Results for the Nine Months Ended March 31, 2024 and 2023
General. Net income decreased $2.7 million to $1.4 million for the nine months ended March 31, 2024, from $4.1 million for the nine months ended March 31, 2023. The decrease in net income was due to a decrease in net interest income, partially offset by a decrease in provision for credit losses, an increase in noninterest income and a decrease in noninterest expense.
Net Interest Income. Net interest income decreased by $4.1 million, or 23.7%, to $13.2 million for the nine months ended March 31, 2024, from $17.3 million for the nine months ended March 31, 2023. The decrease was due to an increase of $11.0 million in interest expense, partially offset by an increase of $6.9 million in interest and dividend income. A $70.6 million, or 10.3%, increase in the average balance of interest-bearing liabilities was partially offset by a $62.1 million, or 8.0% increase in interest earning assets. Our interest rate spread decreased by 103 basis points to 1.80% for the nine months ended March 31, 2024, compared to 2.83% for the nine months ended March 31, 2023, while our net interest margin decreased by 86 basis points to 2.10% for the nine months ended March 31, 2024, compared to 2.96% for the nine months ended March 31, 2023.
41
Interest and Dividend Income. Interest and dividend income increased $6.9 million, or 29.7%, to $30.3 million for the nine months ended March 31, 2024, from $23.4 million for the nine months ended March 31, 2023. The increase in interest and dividend income was due to a $6.8 million increase in interest on loans, a $70,000 increase in interest income on securities, and a $52,000 increase in other interest income. The increase in interest income on loans was due to a $77.4 million, or 13.8%, increase in the average balance of loans to $637.0 million for the nine months ended March 31, 2024 from $559.5 million for the nine months ended March 31, 2023, and an 88 basis point increase in the average yield on loans to 5.38% for the nine months ended March 31, 2024 from 4.50% for the nine months ended March 31, 2023. The increase in interest income on securities was due to a 24 basis point increase in the average yield on securities to 2.87% for the nine months ended March 31, 2024 from 2.63% for the nine months ended March 31, 2023, partially offset by a $14.5 million, or 6.9%, decrease in the average balance of securities to $195.1 million for the nine months ended March 31, 2024, from $209.6 million for the nine months ended March 31, 2023. The increase in other interest income was a result of a 110 basis point increase in the average yield of other investments, partially offset by a $868,000 decrease in the average balance of other investments, including Federal Home Loan Bank stock dividends and deposits with other financial institutions, to $9.9 million from $10.8 million.
Interest Expense. Interest expense increased $11.0 million, or 182.5%, to $17.1 million for the nine months ended March 31, 2024, from $6.1 million for the nine months ended March 31, 2023. The increase was primarily due to an $8.4 million increase in interest on deposits and a $2.7 million increase in interest on borrowings and repurchase agreements.
Interest expense on interest-bearing deposits increased $8.4 million, or 183.5%, to $12.9 million for the nine months ended March 31, 2024, from $4.6 million for the nine months ended March 31, 2023. This increase was due to a 172 basis point increase in the average cost of interest-bearing deposits to 2.70% for the nine months ended March 31, 2024 from 0.98% for the nine months ended March 31, 2023, and an increase of $14.9 million in the average balance of interest-bearing deposits to $637.7 million for the nine months ended March 31, 2024, from $622.8 million for the nine months ended March 31, 2023.
Interest expense on borrowings, including FHLB advances, borrowings from the Federal Reserve Bank Term Funding Program (BTFP), and repurchase agreements, increased $2.7 million, or 179.4%, to $4.2 million for the nine months ended March 31, 2024, from $1.5 million for the nine months ended March 31, 2023. This increase was mostly due to a $55.7 million increase in the average balance of borrowings to $121.3 million for the nine months ended March 31, 2024, from $65.6 million for the nine months ended March 31, 2023, and a 155 basis point increase in the average cost of such borrowings to 4.58% for the nine months ended March 31, 2024 from 3.03% for the nine months ended March 31, 2023.
Provision (Credit) for Credit Losses. The Company establishes provisions for credit losses, which are charged to operations in order to maintain the allowance for credit losses at a level we consider necessary to absorb probable credit losses inherent in our loan portfolio. The Company recorded a provision for credit losses on loans for $369,000 and a credit for credit losses on off-balance sheet credit exposures of $(173,000) for a total provision for credit losses of $196,000 for the nine months ended March 31, 2024, compared to a provision for credit losses on loans for $442,000 and a credit for credit losses on off-balance sheet credit exposures of $(189,000) for a total provision for credit losses of $253,000 for the nine months ended March 31, 2023. The allowance for credit losses was $7.7 million, or 1.19% of total loans at March 31, 2024, compared to $7.5 million, or 1.29% of total loans at March 31, 2023, and $7.1 million, or 1.20% of total loans at June 30, 2023. During the nine months ended March 31, 2024, net recoveries of $217,000 were recorded, while during the nine months ended March 31, 2023, net charge-offs of $6,000 were recorded.
The following table sets forth information regarding the allowance for credit losses and nonperforming assets at the dates indicated:
At or for the Nine Months Ended March 31, 2024 |
At or for the Year Ended June 30, 2023 |
|||||||
Allowance to non-performing loans at end of the period |
3065.48 | % | 6101.71 | % | ||||
Allowance to total loans outstanding at the end of the period |
1.19 | % | 1.20 | % | ||||
Net charge-offs to average total loans outstanding during the period, annualized |
0.00 | % | 0.01 | % | ||||
Total non-performing loans to total loans |
0.04 | % | 0.02 | % | ||||
Total non-performing assets to total assets |
0.03 | % | 0.02 | % |
42
Noninterest Income. Noninterest income increased $155,000, or 5.1%, to $3.2 million for the nine months ended March 31, 2024 from $3.0 million for the nine months ended March 31, 2023. The increase was primarily due to an increase in net realized gain (loss) on sale of available-for-sale securities, an increase in gain on sale of loans, and an increase in insurance commissions, partially offset by a decrease in brokerage commissions. For the nine months ended March 31, 2024, net realized gain (loss) on sale of available-for-sale securities increased $171,000 to $0, gain on sale of loans increased $62,000 to $186,000, and insurance commissions increased $50,000 to $556,000, while brokerage commissions decreased $122,000 to $485,000 from the nine months ended March 31, 2023. The increase in gain (loss) on sale of available-for-sale securities was the result of securities sold at a loss in the nine months ended March 31, 2023, the increase in gain on sale of loans were a result of an increase in loans originated and sold through the FHLBC Mortgage Partnership Finance program in the nine months ended March 31, 2024, and the increase in insurance commissions was due to an increase in personal lines commissions. The decrease in brokerage commissions was the result of a decrease in the amount of renewal commissions and management fees.
Noninterest Expense. Noninterest expense decreased $222,000, or 1.5%, to $14.4 million for the nine months ended March 31, 2024 from $14.6 million for the nine months ended March 31, 2023. Compensation and benefits decreased $485,000, or 5.2%, advertising decreased $93,000, or 24.5%, professional services decreased $64,000, or 17.4%, and supervisory examinations decreased $59,000, or 44.7%, while office occupancy increased $126,000, or 17.3% and federal deposit insurance increased $266,000, or 157.4% for the nine months ended March 31, 2024 from the nine months ended March 31, 2023. Compensation and benefits decreased due to a decrease in 401(k) profit sharing and annual incentive plan expenses, advertising decreased as a result of an ad campaign that ran in the nine months ended March 31, 2023, professional services decreased as a result of additional services received during the nine months ended March 31, 2023, and supervisory examinations decreased as a result of a reduction in assessments for community banks by the OCC. Office occupancy increased due to the addition of a new banking facility in Hoopeston, and federal deposit insurance increased as a result of FDIC increasing the initial base deposit insurance assessment rate.
Income Tax Expense. We recorded a provision for income tax of $465,000 for the nine months ended March 31, 2024, compared to a provision for income tax of $1.4 million for the nine months ended March 31, 2023, reflecting effective tax rates of 25.5% and 26.0%, respectively.
Comparison of Operating Results for the Three Months Ended March 31, 2024 and 2023
General. Net income increased $18,000 to $708,000 net income for the three months ended March 31, 2024, from $690,000 net income for the three months ended March 31, 2023. The increase was primarily due to a decrease in provision (credit) for credit losses, an increase in noninterest income, and a decrease in noninterest expense, partially offset by a decrease in net interest income.
Net Interest Income. Net interest income decreased $777,000 to $4.3 million for the three months ended March 31, 2024, from $5.0 million for the three months ended March 31, 2023. The decrease was the result of an increase in interest expense of $3.4 million, partially offset by an increase of $2.6 million in interest and dividend income. We had a $76.6 million, or 10.8%, increase in the average balance of interest-bearing liabilities, partially offset by a $67.6 million, or 8.5%, increase in average balance of interest earning assets. Our interest rate spread decreased by 67 basis points to 1.65% for the three months ended March 31, 2024, from 2.32% for the three months ended March 31, 2023, and our net interest margin decreased by 56 basis points to 1.96% for the three months ended March 31, 2024, from 2.52% for the three months ended March 31, 2023.
43
Interest and Dividend Income. Interest and dividend income increased $2.6 million, or 31.8%, to $10.8 million for the three months ended March 31, 2024, from $8.2 million for the three months ended March 31, 2023. The increase in interest and dividend income was primarily due to a $2.6 million increase in interest income on loans and a $16,000 increase in interest income on securities. The increase in interest on loans resulted from a 101-basis point, or 21.9%, increase in the average yield on loans to 5.61% from 4.60%, and a $79.9 million, or 13.7%, increase in the average balance of loans to $661.5 million from $581.6 million. The increase in interest income on securities resulted from a 21-basis point, or 7.9%, increase in the average yield on securities to 2.84% from 2.63%, partially offset by a $13.0 million, or 6.2%, decrease in the average balance of securities to $195.6 million from $208.6 million.
Interest Expense. Interest expense increased $3.4 million, or 107.0%, to $6.5 million for the three months ended March 31, 2024 from $3.2 million for the three months ended March 31, 2023. The increase was primarily due to a 155-basis point increase in the average cost of interest-bearing liabilities and a $76.6 million increase in the average balance of interest-bearing liabilities.
Interest expense on interest-bearing deposits increased by $2.3 million, or 90.2%, to $4.8 million for the three months ended March 31, 2024 from $2.5 million for the three months ended March 31, 2023. This increase was due to a 140 basis point, or 89.5%, increase in the average cost of interest-bearing deposits to 2.97% for the three months ended March 31, 2024 from 1.57% for the three months ended March 31, 2023, and a $2.3 million, or 0.4%, increase in the average balance of interest-bearing deposits to $639.8 million for the three months ended March 31, 2024 from $637.5 million for the three months ended March 31, 2023.
Interest expense on borrowings increased by $1.1 million, or 170.5%, to $1.8 million for the three months ended March 31, 2024, from $661,000 for the three months ended March 31, 2023. The increase was due to a 123 basis point, or 33.9%, increase in the average cost of borrowings to 4.86% for the three months ended March 31, 2024 from 3.63% for the three months ended March 31, 2023, and an increase in the average balance of borrowings of $74.3 million, or 102.1%, to $147.1 million for the three months ended March 31, 2024, from $72.8 million for the three months ended March 31, 2023.
Provision (Credit) for Credit Losses. We establish provisions for credit losses, which are charged to operations in order to maintain the allowance for credit losses at a level we consider necessary to absorb credit losses inherent in our loan portfolio. We recorded a provision (credit) for credit losses on loans of $(378,000) and a credit for credit losses on off-balance sheet credit exposures of $(12,000) for a total provision (credit) for credit losses of $(390,000) for the three months ended March 31, 2024, compared to a provision for credit losses on loans of $367,000 and a credit for credit losses on off-balance sheet credit exposures of $(127,000) for a total provision for credit losses of $240,000 for the three months ended March 31, 2023. For the three months ended March 31, 2024, a credit for credit losses on loans was necessary as a result of a decrease in loan portfolio balance and the receipt of a large recovery during the period. During the three months ended March 31, 2024, a net recovery of $168,000 was recorded, while a net recovery of $2,000 was recorded for the three months ended March 31, 2023.
Noninterest Income. Noninterest income increased $198,000, or 21.0%, to $1.1 million for the three months ended March 31, 2024 from $942,000 for the three months ended March 31, 2023. The increase was primarily due to an increase in mortgage banking income, net, an increase in insurance commissions, and an increase in gain on sale of loans, partially offset by a decrease in net realized gain (loss) on sale of available-for-sale securities. For the three months ended March 31, 2024, mortgage banking income, net, increased $83,000 to $126,000, insurance commissions increased $52,000 to $182,000, and gain on sale of loans increased $28,000 to $76,000, while net realized gains (losses) on sale of available-for-sale securities decreased $12,000 to $0. The increase in mortgage banking income was the result of an increase in the valuation of mortgage servicing rights in the three months ended March 31, 2024, the increase in insurance commissions was due to an increase in personal lines commissions, and the increase in gain on sale of loans was the result of an increase in loans originated and sold through the FHLBC Mortgage Partnership Finance program in the three months ended March 31, 2024, while the decrease in net realized gain on sale of available-for-sale securities was due to a gain in the three months ended March 31, 2023 and no sales in the three months ended March 31, 2024.
44
Noninterest Expense. Noninterest expense decreased $8,000, or 0.2%, and was $4.8 million for both the three months ended March 31, 2024 and 2023. The largest components of this decrease were compensation and benefits, which decreased $122,000, or 3.8%, supervisory examination, which decreased $24,000, or 55.8% and audit and accounting, which decreased $22,000, or 51.2%. These decreases were partially offset by a $78,000, or 136.8%, increase in federal deposit insurance, a $29,000, or 11.7%, increase in office occupancy, and a $47,000, or 12.5%, increase in other expenses. Compensation and benefits decreased due to a decrease in 401(k) profit sharing and annual incentive plan expenses, supervisory examination decreased as a result of a reduction in assessments for community banks by the OCC, and audit and accounting decreased due to additional services received in the three months ended March 31, 2023. Federal deposit insurance increased as a result of FDIC increasing the initial base deposit insurance assessment rate, office occupancy increased due to the addition of a new banking facility in Hoopeston, and other expenses increased as a result of an increase in debit card and deposit account expenses.
Income Tax Expense. We recorded a provision for income tax of $243,000 for the three months ended March 31, 2024, compared to a provision for income tax of $202,000 for the three months ended March 31, 2023, reflecting effective tax rates of 25.6% and 22.6%, respectively.
Asset Quality
At March 31, 2024, we had no non-accrual loans. At March 31, 2024, we had one commercial real estate loan in the amount of $252,000 that was delinquent 90 days or greater and still accruing interest.
At March 31, 2024, $3.6 million in loans were classified as substandard, and no loans were classified as doubtful or loss. Loans classified as substandard consisted of $197,000 in one- to four-family loans, $236,000 in multi-family loans, $1.2 million in commercial real estate loans, and $1.9 million in commercial business loans.
At March 31, 2024, watch assets consisted of $77,000 in one-to four-family loans.
Loan Modifications and Troubled Debt Restructurings (“TDRs”). After adopting ASU 2022-02, effective July 1, 2023, we no longer held any TDRs and made no loan modifications for borrowers with financial difficulties in the nine months ended March 31, 2024. Prior to adoption of ASU 2022-02, we had TDRs which included loans for which economic concessions had been granted to borrowers with financial difficulties. The Company periodically modified loans to extend the term or make other concessions to help borrowers stay current on their loans and to avoid foreclosure. At June 30, 2023, we had $215,000 in TDRs.
Foreclosed Assets. At March 31, 2024, we had $7,000 in foreclosed assets compared to $31,000 as of June 30, 2023. Foreclosed assets at March 31, 2024 consisted of one vehicle, while foreclosed assets at June 30, 2023 consisted of $24,000 in residential real estate property and a $7,000 vehicle.
Allowance for Credit Loss Activity
The Company regularly reviews its allowance for credit losses and makes adjustments to its balance based on management’s analysis of the loan portfolio, the amount of non-performing and classified loans, as well as general economic conditions. Although the Company maintains its allowance for credit losses at a level that it considers sufficient to provide for losses, there can be no assurance that future losses will not exceed internal estimates. In addition, the amount of the allowance for credit losses is subject to review by regulatory agencies, which can order the establishment of additional loss provisions. The following table summarizes changes in the allowance for credit losses over the nine-month periods ended March 31, 2024 and 2023:
45
Nine months ended March 31, |
||||||||
2024 | 2023 | |||||||
Balance, beginning of period |
$ | 7,139 | $ | 7,052 | ||||
Impact of adopting ASU 2016-13 |
— | 47 | ||||||
Loans charged off |
||||||||
Real estate loans: |
||||||||
One- to four-family |
— | — | ||||||
Multi-family |
— | — | ||||||
Commercial |
— | — | ||||||
HELOC |
— | — | ||||||
Construction |
— | — | ||||||
Commercial |
— | (4 | ) | |||||
Consumer |
(35 | ) | (30 | ) | ||||
|
|
|
|
|||||
Gross charged off loans |
(35 | ) | (34 | ) | ||||
|
|
|
|
|||||
Recoveries of loans previously charged off |
||||||||
Real estate loans: |
||||||||
One- to four-family |
3 | 1 | ||||||
Multi-family |
— | — | ||||||
Commercial |
— | — | ||||||
HELOC |
— | — | ||||||
Construction |
— | — | ||||||
Commercial |
241 | 18 | ||||||
Consumer |
8 | 9 | ||||||
|
|
|
|
|||||
Gross recoveries of charged off loans |
252 | 28 | ||||||
|
|
|
|
|||||
Net recoveries (charge offs) |
217 | (6 | ) | |||||
|
|
|
|
|||||
Provision charged to expense |
369 | 442 | ||||||
|
|
|
|
|||||
Balance, end of period |
$ | 7,725 | $ | 7,535 | ||||
|
|
|
|
The allowance for credit losses has been calculated based upon an evaluation of pertinent factors underlying the various types and quality of the Company’s loans. Management considers such factors as the repayment status of a loan, the estimated net fair value of the underlying collateral, the borrower’s intent and ability to repay the loan, local economic conditions, and the Company’s historical loss ratios. The Company maintains the allowance for credit losses through the provisions for credit losses that we charge to income. The Company charges losses on loans against the allowance for credit losses when we believe the collection of loan principal is unlikely. The allowance for credit losses increased $586,000 to $7.7 million at March 31, 2024, from $7.1 million at June 30, 2023. This increase in allowance was primarily the result of an increase in our loan portfolio and was necessary in order to bring the allowance for credit losses to a level that reflects management’s best estimate of the reserve necessary to adequately account for probable losses expected over the remaining contractual life of the loans.
Within each pool, risk elements are evaluated that have specific impacts to the borrowers within the pool. These, along with the general risks and events, and the specific lending policies and procedures by loan type, are analyzed to estimate the qualitative factors used to adjust the historical loss rates. Factors considered by the Company during the evaluation of the overall adequacy of the allowance include historical net loan losses, the level and composition of nonaccrual, past due and loan modifications for borrowers with financial difficulties, trends in volumes and terms of loans, effects of changes in risk selection and underwriting standards or lending practices, lending staff changes, concentrations of credit, industry conditions and the current economic conditions in the region where the Company operates. Management reviews economic factors including the potential for reduced cash flow for commercial operating loans from reduction in sales or increased operating costs, decreased occupancy rates for commercial buildings, reduced levels of home sales for commercial land developments, increased operating costs for businesses, and increased levels of unemployment and bankruptcy impacting consumer’s ability to pay. Each of these economic uncertainties was taken into consideration in developing the level of the reserve, and management has included a qualitative factor within the ACL. In addition, a forecast, using reasonable and supportable future conditions, is prepared that is used to estimate expected changes to existing and historical conditions in the current period.
46
While management believes that our asset quality remains strong, it recognizes that, due to the continued growth in the loan portfolio, and the potential changes in market conditions, our level of nonperforming assets and resulting charge-offs may fluctuate. Higher levels of net charge-offs requiring additional provisions for loan losses could result. Although management uses the best information available, the level of the allowance for loan losses remains an estimate that is subject to significant judgment and short-term change.
Liquidity and Capital Resources
Liquidity is the ability to meet current and future financial obligations of a short-term nature. Our primary sources of funds consist of deposit inflows, loan sales and repayments, borrowings from the Federal Reserve Bank, advances from the Federal Home Loan Bank of Chicago, and maturities of securities. While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and mortgage prepayments are greatly influenced by general interest rates, economic conditions and competition. Our Asset/Liability Management Committee is responsible for establishing and monitoring our liquidity targets and strategies in order to ensure that sufficient liquidity exists for meeting the borrowing needs and deposit withdrawals of our customers as well as unanticipated contingencies. For the three months ended March 31, 2024, the nine months ended March 31, 2024, and the year ended June 30, 2023, our liquidity ratio averaged 25.2%, 26.0% and 29.3% of our total assets, respectively. We believe that we had enough sources of liquidity to satisfy our short- and long-term liquidity needs as of March 31, 2024.
We regularly monitor and adjust our investments in liquid assets based upon our assessment of: (i) expected loan demand; (ii) expected deposit flows; (iii) yields available on interest-earning deposits and securities; and (iv) the objectives of our asset/liability management program. Excess liquid assets are invested generally in interest-earning deposits and short- and medium-term securities.
Our most liquid assets are cash and cash equivalents. The levels of these assets are affected by our operating, financing, lending and investing activities during any given period. At March 31, 2024, cash and cash equivalents totaled $16.1 million. Interest-bearing time deposits which can offer additional sources of liquidity, totaled $750,000 at March 31, 2024.
Our cash flows are derived from operating activities, investing activities and financing activities as reported in our Condensed Consolidated Statement of Cash Flows included in our financial statements. Net cash provided by operating activities were $1.1 million and $1.7 million for the nine months ended March 31, 2024, and 2023, respectively. Net cash used in investing activities consisted primarily of disbursements for loan originations and the purchase of securities and Federal Home Loan Bank stock, offset by net cash provided by principal collections on loans, proceeds from maturing securities, the sale of securities, the redemption of Federal Home Loan Bank stock, and pay downs on mortgage-backed securities. Net cash used in investing activities was $(51.2) million and $(51.5) million for the nine months ended March 31, 2024, and 2023, respectively. Net cash provided by (used in) financing activities consisted primarily of the activity in deposit accounts, FHLB Advances, dividends paid, and stock repurchases. The net cash provided by (used in) financing activities was $55.1 million and $(16.5) million for the nine months ended March 31, 2024, and 2023, respectively.
The Company must also maintain adequate levels of liquidity to ensure the availability of funds to satisfy loan commitments. The Company anticipates that it will have sufficient funds available to meet its current commitments principally through the use of current liquid assets and through its borrowing capacity discussed above. The following table summarizes these commitments at March 31, 2024 and June 30, 2023.
March 31, 2024 |
June 30, 2023 |
|||||||
(Dollars in thousands) | ||||||||
Commitments to fund loans |
$ | 9,137 | $ | 5,081 | ||||
Lines of credit |
75,952 | 94,159 |
47
At March 31, 2024, certificates of deposit due within one year of March 31, 2024 totaled $286.7 million, or 42.1% of total deposits. Depending on market conditions, we may be required to pay higher rates on such deposits or other borrowings than we currently pay on the certificates of deposit due on or before March 31, 2024. Moreover, it is our intention as we continue to grow our commercial real estate portfolio, to emphasize lower cost deposit relationships with these commercial loan customers and thereby replace the higher cost certificates with lower cost deposits. We have the ability to attract and retain deposits by adjusting the interest rates offered.
Liquidity management is both a daily and long-term function of business management. If we require funds beyond our ability to generate them internally, borrowing agreements, which provide an additional source of funds, exist with the Federal Home Loan Bank of Chicago, Federal Reserve Discount Window, Federal Reserve Bank Term Funding Program (BTFP) and CIBC Bank USA. Federal Home Loan Bank advances were $96.0 million at March 31, 2024, while we had borrowings of $25.3 million from the Federal Reserve BTFP. At March 31, 2024, we had the ability to borrow up to an additional $57.1 million from the Federal Home Loan Bank of Chicago, we had $14.0 million available on our CIBC Bank, and also had the ability to borrow another $33.6 million from the Federal Reserve based on current collateral pledged.
The Association is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and discretionary actions by regulators that if undertaken, could have a direct material effect on the Association’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Association must meet specific capital guidelines involving quantitative measures of the Association’s assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. The Association’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk-weightings and other factors.
The Basel III regulatory capital framework (the “Basel III Capital Rules”) adopted by U.S. federal regulatory authorities, among other things, (i) establish the capital measure called “Common Equity Tier 1” (“CET1”), (ii) specify that Tier 1 capital consist of CET1 and “Additional Tier 1 Capital” instruments meeting stated requirements, (iii) define CET1 narrowly by requiring that most deductions/adjustments to regulatory capital measures be made to CET1 and not to the other components of capital and (iv) set forth the acceptable scope of deductions/adjustments to the specified capital measures.
In addition, to avoid restrictions on capital distributions, including dividend payments and stock repurchases, or discretionary bonus payments to executives, a covered banking organization must maintain a “capital conservation buffer” of 2.5 percent on top of its minimum risk-based capital requirements. This buffer must consist solely of Tier 1 Common Equity and the buffer applies to all three measurements: Common Equity Tier 1, Tier 1 capital and total capital.
As a result of the Economic Growth, Regulatory Relief, and Consumer Protection Act, the federal banking agencies were required to develop a “Community Bank Leverage Ratio” (the ratio of a bank’s tangible equity capital to average total consolidated assets) for financial institutions with assets of less than $10 billion. A “qualifying community bank” that exceeds this ratio will be deemed to be in compliance with all other capital and leverage requirements, including the capital requirements to be considered “well capitalized” under Prompt Corrective Action statutes. The Community Bank Leverage Ratio is currently set at 9%. The Association opted in to the Community Bank Leverage Ratio in 2020.
As of March 31, 2024, the Association was categorized as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events that management believes have changed the Association’s prompt corrective action category. The Association’s Community Bank Leverage Ratio is presented in the table below.
48
March 31, 2024 | June 30, 2023 | Minimum to Be Well | ||||||||||
Actual | Actual | Capitalized | ||||||||||
Community Bank Leverage Ratio |
9.03 | % | 9.51 | % | 9.00 | % |
Average Balances and Yields
The following tables set forth average balance sheets, average yields and costs, and certain other information at and for the periods indicated. Yields and costs are presented on an annualized basis. Tax-equivalent yield adjustments have not been made for tax-exempt securities. All average balances are based on month-end balances, which management deems to be representative of the operations of the Company. Non-accrual loans were included in the computation of average balances but have been reflected in the table as loans carrying a zero yield. The yields set forth below include the effect of deferred fees, discounts and premiums that are amortized or accreted to interest income or expense.
For the Three Months Ended March 31, | ||||||||||||||||||||||||
2024 | 2023 | |||||||||||||||||||||||
Average Balance |
Interest Income/ Expense |
Yield/ Cost |
Average Balance |
Interest Income/ Expense |
Yield/ Cost |
|||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Assets |
||||||||||||||||||||||||
Total Loans |
$ | 661,492 | $ | 9,273 | 5.61 | % | $ | 581,600 | $ | 6,690 | 4.60 | % | ||||||||||||
Securities: |
||||||||||||||||||||||||
U.S. Treasury |
443 | 2 | 1.81 | % | 1,599 | 6 | 1.50 | % | ||||||||||||||||
U.S. Government and federal agency |
6,562 | 40 | 2.44 | % | 6,490 | 40 | 2.47 | % | ||||||||||||||||
Mortgage-backed: |
||||||||||||||||||||||||
GSE-residential |
171,148 | 1,222 | 2.86 | % | 180,953 | 1,200 | 2.65 | % | ||||||||||||||||
Small Business Administration |
14,358 | 100 | 2.79 | % | 16,137 | 99 | 2.45 | % | ||||||||||||||||
State and political subdivisions |
3,110 | 23 | 2.96 | % | 3,433 | 26 | 3.03 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Total securities |
195,621 | 1,387 | 2.84 | % | 208,612 | 1,371 | 2.63 | % | ||||||||||||||||
Other |
10,922 | 143 | 5.24 | % | 10,187 | 137 | 5.38 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Total interest-earning assets |
868,035 | 10,803 | 4.98 | % | 800,399 | 8,198 | 4.10 | % | ||||||||||||||||
Non-interest earning assets |
38,536 | 40,952 | ||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
Total assets |
$ | 906,571 | $ | 841,351 | ||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
Liabilities and Stockholders’ Equity |
||||||||||||||||||||||||
Interest-bearing liabilities: |
||||||||||||||||||||||||
Interest-bearing checking or NOW |
$ | 101,555 | 38 | 0.15 | % | $ | 112,506 | 44 | 0.16 | % | ||||||||||||||
Savings accounts |
60,914 | 97 | 0.64 | % | 68,783 | 62 | 0.36 | % | ||||||||||||||||
Money market accounts |
152,149 | 1,159 | 3.05 | % | 178,544 | 783 | 1.75 | % | ||||||||||||||||
Certificates of deposit |
325,196 | 3,462 | 4.26 | % | 277,691 | 1,612 | 2.32 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
49
For the Three Months Ended March 31, | ||||||||||||||||||||||||
2024 | 2023 | |||||||||||||||||||||||
Average Balance |
Interest Income/ Expense |
Yield/ Cost |
Average Balance |
Interest Income/ Expense |
Yield/ Cost |
|||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Total interest-bearing deposits |
639,814 | 4,756 | 2.97 | % | 637,524 | 2,501 | 1.57 | % | ||||||||||||||||
Borrowings and repurchase agreements |
147,108 | 1,788 | 4.86 | % | 72,801 | 661 | 3.63 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Total interest-bearing liabilities |
786,922 | 6,544 | 3.33 | % | 710,325 | 3,162 | 1.78 | % | ||||||||||||||||
Noninterest-bearing liabilities |
41,829 | 48,554 | ||||||||||||||||||||||
Other Noninterest-bearing liabilities |
5,798 | 9,712 | ||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
Total liabilities |
834,549 | 768,591 | ||||||||||||||||||||||
Stockholders’ Equity |
72,022 | 72,760 | ||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
Total liabilities and stockholders’ equity |
$ | 906,571 | $ | 841,351 | ||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
Net interest income |
$ | 4,259 | $ | 5,036 | ||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
Interest rate spread (1) |
1.65 | % | 2.32 | % | ||||||||||||||||||||
Net interest margin (2) |
1.96 | % | 2.52 | % | ||||||||||||||||||||
Net interest-earning assets (3) |
$ | 81,113 | $ | 90,074 | ||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
Average interest-earning assets to interest-bearing liabilities |
110 | % | 113 | % |
(1) | Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities. |
(2) | Net interest margin represents net interest income divided by average total interest-earning assets. |
(3) | Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities. |
50
For the Nine Months Ended March 31, | ||||||||||||||||||||||||
2024 | 2023 | |||||||||||||||||||||||
Average Balance |
Interest Income/ Expense |
Yield/ Cost |
Average Balance |
Interest Income/ Expense |
Yield/ Cost |
|||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Assets |
||||||||||||||||||||||||
Loans |
$ | 636,955 | $ | 25,708 | 5.38 | % | $ | 559,516 | $ | 18,889 | 4.50 | % | ||||||||||||
Securities: |
||||||||||||||||||||||||
U.S. Treasury |
438 | 5 | 1.52 | % | 2,467 | 29 | 1.57 | % | ||||||||||||||||
U.S. Government and federal agency |
6,503 | 119 | 2.44 | % | 7,314 | 137 | 2.50 | % | ||||||||||||||||
Mortgage-backed: |
||||||||||||||||||||||||
GSE-residential |
170,395 | 3,696 | 2.89 | % | 180,118 | 3,590 | 2.66 | % | ||||||||||||||||
SBA |
14,473 | 304 | 2.80 | % | 16,076 | 292 | 2.42 | % | ||||||||||||||||
State and political subdivisions |
3,262 | 74 | 3.02 | % | 3,591 | 80 | 2.97 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Total securities |
195,071 | 4,198 | 2.87 | % | 209,566 | 4,128 | 2.63 | % | ||||||||||||||||
Other |
9,896 | 417 | 5.62 | % | 10,764 | 365 | 4.52 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Total interest-earning assets |
841,922 | 30,323 | 4.80 | % | 779,846 | 23,382 | 4.00 | % | ||||||||||||||||
Non-interest earning assets |
39,311 | 41,544 | ||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
Total assets |
$ | 881,233 | $ | 821,390 | ||||||||||||||||||||
Liabilities and Stockholders’ Equity |
||||||||||||||||||||||||
Interest-bearing liabilities: |
||||||||||||||||||||||||
Interest-bearing checking or NOW |
$ | 103,593 | 126 | 0.16 | % | $ | 120,701 | 154 | 0.17 | % | ||||||||||||||
Savings accounts |
61,487 | 306 | 0.66 | % | 71,950 | 170 | 0.32 | % | ||||||||||||||||
Money market accounts |
164,858 | 3,715 | 3.00 | % | 171,171 | 1,416 | 1.10 | % | ||||||||||||||||
Certificates of deposit |
307,753 | 8,780 | 3.80 | % | 258,989 | 2,820 | 1.45 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Total interest-bearing deposits |
637,691 | 12,927 | 2.70 | % | 622,811 | 4,560 | 0.98 | % | ||||||||||||||||
Borrowings and repurchase agreements |
121,337 | 4,166 | 4.58 | % | 65,596 | 1,491 | 3.03 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Total interest-bearing liabilities |
759,028 | 17,093 | 3.00 | % | 688,407 | 6,051 | 1.17 | % | ||||||||||||||||
Noninterest-bearing liabilities |
46,213 | 52,035 | ||||||||||||||||||||||
Other Noninterest-bearing liabilities |
5,784 | 10,122 | ||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
Total liabilities |
811,025 | 750,564 | ||||||||||||||||||||||
Stockholders’ equity |
70,208 | 70,826 | ||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
Total liabilities and stockholders’ equity |
$ | 881,233 | $ | 821,390 | ||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
Net interest income |
$ | 13,230 | $ | 17,331 | ||||||||||||||||||||
|
|
|
|
51
For the Nine Months Ended March 31, | ||||||||||||||||||||||||
2024 | 2023 | |||||||||||||||||||||||
Average Balance |
Interest Income/ Expense |
Yield/ Cost |
Average Balance |
Interest Income/ Expense |
Yield/ Cost |
|||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Interest rate spread (1) |
1.80 | % | 2.83 | % | ||||||||||||||||||||
Net interest margin (2) |
2.10 | % | 2.96 | % | ||||||||||||||||||||
Net interest-earning assets (3) |
$ | 82,894 | $ | 91,439 | ||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||
Average interest-earning assets to interest-bearing liabilities |
111 | % | 113 | % |
(1) | Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities. |
(2) | Net interest margin represents net interest income divided by average total interest-earning assets. |
(3) | Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities. |
Rate/Volume Analysis
The following table presents the effects of changing rates and volumes on our net interest income for the periods indicated. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The total column represents the sum of the prior columns. For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated to the changes due to rate and the changes due to volume in proportion to the relationship of the absolute dollar amounts of change in each.
Three Months Ended March 31, 2024 vs. 2023 |
Nine Months Ended March 31, 2024 vs. 2023 |
|||||||||||||||||||||||
Increase (Decrease) Due to |
Total Increase (Decrease) |
Increase (Decrease) Due to |
Total Increase (Decrease) |
|||||||||||||||||||||
Volume | Rate | Volume | Rate | |||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Interest-earning assets: |
||||||||||||||||||||||||
Loans |
$ | 994 | $ | 1,589 | $ | 2,583 | $ | 2,826 | $ | 3,993 | $ | 6,819 | ||||||||||||
Securities |
(377 | ) | 393 | 16 | (403 | ) | 473 | 70 | ||||||||||||||||
Other |
25 | (19 | ) | 6 | (46 | ) | 98 | 52 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total interest-earning assets |
$ | 642 | $ | 1,963 | $ | 2,605 | $ | 2,377 | $ | 4,564 | $ | 6,941 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Interest-bearing liabilities: |
||||||||||||||||||||||||
Interest-bearing checking or NOW |
$ | (4 | ) | $ | (2 | ) | $ | (6 | ) | $ | (20 | ) | $ | (8 | ) | $ | (28 | ) | ||||||
Savings accounts |
(44 | ) | 79 | 35 | (42 | ) | 178 | 136 | ||||||||||||||||
Certificates of deposit |
314 | 1,536 | 1,850 | 620 | 5,340 | 5,960 | ||||||||||||||||||
Money market accounts |
(708 | ) | 1,084 | 376 | (87 | ) | 2,386 | 2,299 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total interest-bearing deposits |
(442 | ) | 2,697 | 2,255 | 471 | 7,896 | 8,367 | |||||||||||||||||
Federal Home Loan Bank advances and repurchase agreements |
846 | 281 | 1,127 | 1,670 | 1,005 | 2,675 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total interest-bearing liabilities |
$ | 404 | $ | 2,978 | $ | 3,382 | $ | 2,141 | $ | 8,901 | $ | 11,042 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Change in net interest income |
$ | 238 | $ | (1,015 | ) | $ | (777 | ) | $ | 236 | $ | (4,337 | ) | $ | (4,101 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
52
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
An internal interest rate risk analysis is performed at least quarterly to assess the Company’s Earnings at Risk, Capital at Risk, and Value at Risk. As of March 31, 2024 there were no material changes in interest rate risk from the analysis disclosed in the Company’s Form 10-K for the fiscal year ended June 30, 2023, as filed with the Securities and Exchange Commission.
Item 4. | Controls and Procedures |
An evaluation was performed under the supervision and with the participation of the Company’s management, including the Company’s principal executive officer and principal financial officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities and Exchange Act of 1934, as amended) as of March 31, 2024. Based upon such evaluation, the principal executive officer and principal financial officer concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective for the purpose of ensuring that the information required to be disclosed in the reports that the Company files or submits under the Exchange Act with the Securities and Exchange Commission (the “SEC”) (1) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (2) is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.
During the quarter ended March 31, 2024, there have been no changes in the Company’s internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
53
Part II – Other Information
Item 1. | Legal Proceedings |
The Association and Company are subject to various legal actions arising in the normal course of business. In the opinion of management, the resolution of these legal actions is not expected to have a material adverse effect on the Association’s or the Company’s financial condition or results of operations.
Item 1A. | Risk Factors |
In addition to the other information set forth in this report, you should carefully consider the factors discussed below and in “Item1A.- Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended June 30, 2023, which could materially affect our business, financial condition or future results of operations. The risks described in our Annual Report on Form 10-K are not the only risks that we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or results of operations.
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
None.
Item 3. | Defaults Upon Senior Securities |
None.
Item 4. | Mine Safety Disclosures |
None.
Item 5. | Other Information |
None.
54
Item 6. | Exhibits |
31.1 | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
31.2 | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
32 | Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
101 | Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Condensed Consolidated Balance Sheets as of March 31, 2024 and June 30, 2023, (ii) the Condensed Consolidated Statements of Income for the three and nine months ended March 31, 2024 and 2023, (iii) the Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended March 31, 2024 and 2023, (iv) the Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended March 31, 2024 and 2023, (v) the Condensed Consolidated Statements of Cash Flows for the nine months ended March 31, 2024 and 2023, and (vi) the notes to the Condensed Consolidated Financial Statements.* |
* | This information is furnished and not filed for purposes of Section 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934. |
55
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
IF BANCORP, INC. | ||
Date: May 13, 2024 | /s/ Walter H. Hasselbring III | |
Walter H. Hasselbring III | ||
President and Chief Executive Officer | ||
Date: May 13, 2024 | /s/ Pamela J. Verkler | |
Pamela J. Verkler | ||
Senior Executive Vice President and Chief Financial Officer (Principal Financial Officer) |
56
Exhibit 31.1
Certification of Chief Executive Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Walter H. Hasselbring III, certify that:
1. | I have reviewed this Quarterly Report on Form 10-Q of IF 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 consolidated 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 registrants 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 registrants 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 registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors: |
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 registrants 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 registrants internal control over financial reporting. |
Date: May 13, 2024 | /s/ Walter H. Hasselbring III | |||||
Walter H. Hasselbring III | ||||||
President and Chief Executive Officer |
Exhibit 31.2
Certification of Chief Financial Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Pamela J. Verkler, certify that:
1. | I have reviewed this Quarterly Report on Form 10-Q of IF 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 consolidated 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 registrants 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 registrants 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 registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors: |
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 registrants 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 registrants internal control over financial reporting. |
Date: May 13, 2024 | /s/ Pamela J. Verkler | |||||
Pamela J. Verkler | ||||||
Senior Executive Vice President and Chief Financial Officer |
Exhibit 32
Certification of Chief Executive Officer and Chief Financial Officer
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Walter H. Hasselbring III, President and Chief Executive Officer of IF Bancorp, Inc., (the Company) and Pamela J. Verkler, Senior Executive Vice President and Chief Financial Officer of the Company, each certify in their capacity as an officer of the Company that they have reviewed the quarterly report on Form 10-Q for the quarter ended March 31, 2024 (the Report) and that to the best of their knowledge:
1. | the Report fully complies with the requirements of Sections 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: May 13, 2024 | /s/ Walter H. Hasselbring III | |||||
Walter H. Hasselbring III | ||||||
President and Chief Executive Officer | ||||||
Date: May 13, 2024 | /s/ Pamela J. Verkler | |||||
Pamela J. Verkler | ||||||
Senior Executive Vice President and Chief Financial Officer |
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Mar. 31, 2024 |
Jun. 30, 2023 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Allowance for loan losses | $ 7,725 | $ 7,139 |
Premises and equipment, accumulated depreciation | $ 9,105 | $ 9,212 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 3,353,026 | 3,354,626 |
Common stock, shares outstanding | 3,353,026 | 3,354,626 |
Unearned ESOP shares | 139,527 | 153,960 |
Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net Income | $ 708 | $ 690 | $ 1,359 | $ 4,063 |
Other Comprehensive Income (Loss) | ||||
Unrealized appreciation (depreciation) on available-for-sale securities, net of taxes | (1,521) | 2,195 | 146 | (1,630) |
Less: reclassification adjustment for realized gains (losses) included in net income, net of taxes | 0 | 8 | 0 | (123) |
Accumulated other comprehensive income (loss) before tax | (1,521) | 2,187 | 146 | (1,507) |
Postretirement health plan amortization of transition obligation and prior service cost and change in net loss, net of tax | (1) | (2) | 1 | (4) |
Other comprehensive income (loss), net of tax | (1,522) | 2,185 | 147 | (1,511) |
Comprehensive Income (Loss) | $ (814) | $ 2,875 | $ 1,506 | $ 2,552 |
Condensed Consolidated Statements of Comprehensive Income (Loss) (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Statement of Comprehensive Income [Abstract] | ||||
Unrealized appreciation (depreciation) on available-for-sale securities, net of taxes | $ (606) | $ 874 | $ 58 | $ (649) |
Reclassification adjustment for realized losses included in net income, net taxes | 0 | 4 | 0 | 48 |
Postretirement health plan amortization of transition obligation and prior service cost and change in net loss, net of tax | $ 0 | $ 0 | $ 1 | $ 1 |
Condensed Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands |
Total |
Cumulative Impact Of ASU Two Thousand Sixteen Thirteen [Member] |
Cumulative Effect, Period of Adoption, Adjusted Balance [Member] |
Common Stock [Member] |
Common Stock [Member]
Cumulative Impact Of ASU Two Thousand Sixteen Thirteen [Member]
|
Common Stock [Member]
Cumulative Effect, Period of Adoption, Adjusted Balance [Member]
|
Additional Paid-In Capital [Member] |
Additional Paid-In Capital [Member]
Cumulative Impact Of ASU Two Thousand Sixteen Thirteen [Member]
|
Additional Paid-In Capital [Member]
Cumulative Effect, Period of Adoption, Adjusted Balance [Member]
|
Unearned Esop Shares [Member] |
Unearned Esop Shares [Member]
Cumulative Impact Of ASU Two Thousand Sixteen Thirteen [Member]
|
Unearned Esop Shares [Member]
Cumulative Effect, Period of Adoption, Adjusted Balance [Member]
|
Retained Earnings [Member] |
Retained Earnings [Member]
Cumulative Impact Of ASU Two Thousand Sixteen Thirteen [Member]
|
Retained Earnings [Member]
Cumulative Effect, Period of Adoption, Adjusted Balance [Member]
|
Accumulated Other Comprehensive Income (Loss) [Member] |
Accumulated Other Comprehensive Income (Loss) [Member]
Cumulative Impact Of ASU Two Thousand Sixteen Thirteen [Member]
|
Accumulated Other Comprehensive Income (Loss) [Member]
Cumulative Effect, Period of Adoption, Adjusted Balance [Member]
|
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Beginning Balance at Jun. 30, 2022 | $ 71,658 | $ (388) | $ 71,270 | $ 32 | $ 0 | $ 32 | $ 50,342 | $ 0 | $ 50,342 | $ (1,732) | $ 0 | $ (1,732) | $ 40,362 | $ (388) | $ 39,974 | $ (17,346) | $ 0 | $ (17,346) |
Net Income | 4,063 | 4,063 | ||||||||||||||||
Other comprehensive income (loss) | (1,511) | (1,511) | ||||||||||||||||
Dividends on common stock | (1,305) | (1,305) | ||||||||||||||||
Stock options exercised | 732 | 1 | 731 | |||||||||||||||
Stock equity plan | 237 | 237 | ||||||||||||||||
ESOP shares earned | 263 | 119 | 144 | |||||||||||||||
Ending Balance at Mar. 31, 2023 | 73,749 | 33 | 51,429 | (1,588) | 42,732 | (18,857) | ||||||||||||
Beginning Balance at Dec. 31, 2022 | 71,090 | 33 | 51,021 | (1,636) | 42,714 | (21,042) | ||||||||||||
Net Income | 690 | 690 | ||||||||||||||||
Other comprehensive income (loss) | 2,185 | 2,185 | ||||||||||||||||
Dividends on common stock | (672) | (672) | ||||||||||||||||
Stock options exercised | 283 | 283 | ||||||||||||||||
Stock equity plan | 90 | 90 | ||||||||||||||||
ESOP shares earned | 83 | 35 | 48 | |||||||||||||||
Ending Balance at Mar. 31, 2023 | 73,749 | 33 | 51,429 | (1,588) | 42,732 | (18,857) | ||||||||||||
Beginning Balance at Jun. 30, 2023 | 71,753 | 33 | 51,543 | (1,540) | 43,365 | (21,648) | ||||||||||||
Net Income | 1,359 | 1,359 | ||||||||||||||||
Other comprehensive income (loss) | 147 | 147 | ||||||||||||||||
Dividends on common stock | (1,310) | (1,310) | ||||||||||||||||
Stock equity plan | 212 | 212 | ||||||||||||||||
ESOP shares earned | 223 | 78 | 145 | |||||||||||||||
Ending Balance at Mar. 31, 2024 | 72,384 | 33 | 51,833 | (1,395) | 43,414 | (21,501) | ||||||||||||
Beginning Balance at Dec. 31, 2023 | 73,741 | 33 | 51,753 | (1,443) | 43,377 | (19,979) | ||||||||||||
Net Income | 708 | 708 | ||||||||||||||||
Other comprehensive income (loss) | (1,522) | (1,522) | ||||||||||||||||
Dividends on common stock | (671) | (671) | ||||||||||||||||
Stock equity plan | 49 | 49 | ||||||||||||||||
ESOP shares earned | 79 | 31 | 48 | |||||||||||||||
Ending Balance at Mar. 31, 2024 | $ 72,384 | $ 33 | $ 51,833 | $ (1,395) | $ 43,414 | $ (21,501) |
Condensed Consolidated Statements of Stockholders' Equity (Parenthetical) - $ / shares |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Dividends declared per common share | $ 0.2 | $ 0.2 | $ 0.4 | $ 0.4 |
ESOP shares earned, shares | 4,811 | 4,811 | 14,433 | 14,434 |
Retained Earnings [Member] | ||||
Dividends declared per common share | $ 0.2 | $ 0.2 | $ 0.4 | $ 0.4 |
Basis of Financial Statement Presentation |
9 Months Ended | ||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2024 | |||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||
Basis of Financial Statement Presentation | Note 1: Basis of Financial Statement Presentation IF Bancorp, Inc., (“IF Bancorp” or the “Company”) is a Maryland corporation whose principal activity is the ownership and management of its wholly owned subsidiary, Iroquois Federal Savings and Loan Association (“Iroquois Federal” or the “Association”). The unaudited condensed consolidated financial statements include the accounts of the Company, the Association, and the Association’s wholly owned subsidiary, L.C.I. Service Corporation. All significant intercompany accounts and transactions have been eliminated in consolidation. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial reporting and with instructions for Form 10–Q and Regulation S–X. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. The preparation of consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the balance sheet date and revenues and expenses for the period. Actual results could differ from these estimates. In the opinion of management, the preceding unaudited condensed consolidated financial statements contain all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of the financial condition of the Company as of March 31, 2024 and June 30, 2023, and the results of its operations for the three month and nine month periods ended March 31, 2024 and 2023. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2023. The results of operations for the three-month and nine-month periods ended March 31, 2024 are not necessarily indicative of the results that may be expected for the entire year. Revenue Recognition Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers The majority of our revenue-generating transactions are not subject to ASC 606, including revenue generated from financial instruments, such as our loans, letters of credit and investments securities, as well as revenue related to our mortgage servicing activities and bank owned life insurance, as these activities are subject to other GAAP discussed elsewhere within our disclosures. Descriptions of our revenue-generating activities that are within the scope of ASC 606, and which are presented in our income statements as components of noninterest income are as follows:
|
New Accounting Pronouncements |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
New Accounting Pronouncements | Note 2: New Accounting Pronouncements In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments available-for-sale 2016-13, we engaged a firm specializing in ALLL modeling and utilized transition modeling for the two years prior to implementation. We also had our CECL model validated by an independent firm. The Company early adopted ASU 2016-13 using the current expected credit loss (“CECL”) methodology for financial assets measured at amortized cost, effective July 1, 2022. Results for the periods beginning after July 1, 2022, are presented under ASU 2016-13, while prior period amounts were reported in accordance with the previously applicable accounting standards. The Company recorded a reduction to retained earnings of approximately $388,000 upon adoption of ASU 2016-13. The transition adjustment included an increase to the allowance for credit losses on loans of $47,000 and an increase to the allowance to credit losses on off-balance sheet credit exposure of $496,000. The transition adjustment included a corresponding increase in deferred tax assets. The following table illustrates the impact of ASU 2016-13 adoption (in thousands):
In March 2022, FASB issued ASU
2022-02, Financial Instruments-Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures . 310-40, Receivables—Troubled Debt Restructurings by Creditors 326-20, Financial Instruments—Credit Losses—Measured at Amortized Cost 2022-02, effective July 1, 2023, with changes applied prospectively, except with respect to the recognition and measurement of TDRs where a modified retrospective transition method was applied. The adoption of this accounting guidance did not have a material impact on the Company’s consolidated financial statements. |
Stock-based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based Compensation | Note 3: Stock-based Compensation In connection with the conversion to stock form, the Association established an ESOP for the exclusive benefit of eligible employees (all salaried employees who have completed at least hours of service in a twelve-month period and have attained the age of 21). The ESOP borrowed funds from the Company in an amount sufficient to purchase 384,900 shares (approximately 8% of the common stock issued in the stock offering). The loan is secured by the shares purchased and will be repaid by the ESOP with funds from contributions made by the Association and dividends received by the ESOP. Contributions will be applied to repay interest on the loan first, and then the remainder will be applied to principal. The loan is expected to be repaid over a period of up to 20 years. Shares purchased with the loan proceeds are held in a suspense account for allocation among participants as the loan is repaid. Contributions to the ESOP and shares released from the suspense account are allocated among participants in proportion to their compensation, relative to total compensation of all active participants. Participants will vest 100% in their accrued benefits under the employee stock ownership plan after vesting years, with prorated vesting in years through . Vesting is accelerated upon retirement, death or disability of the participant or a change in control of the Association. Forfeitures will be reallocated to remaining plan participants. Benefits may be payable upon retirement, death, disability, separation from service, or termination of the ESOP. Since the Association’s annual contributions are discretionary, benefits payable under the ESOP cannot be estimated. Participants receive the shares at the end of employment. The Company is accounting for its ESOP in accordance with ASC Topic 718, Employers Accounting for Employee Stock Ownership Plans A summary of ESOP shares at March 31, 2024 and June 30, 2023 are as follows (dollars in thousands):
During the nine months ended March 31, 2024, 9,130 ESOP shares were paid to ESOP participants due to separation from service and 2,405 shares were transferred out as a result of participant diversification. During the nine months ended March 31, 2023, 9,348 ESOP shares were paid to ESOP participants due to separation from service and 7,683 shares were transferred out as a result of participant diversification. The IF Bancorp, Inc. 2012 Equity Incentive Plan (the “Equity Incentive Plan”) was approved by stockholders in 2012 for a ten-year period which ended in November 2022. The purpose of the Equity Incentive Plan was to promote the long-term financial success of the Company and its Subsidiaries by providing a means to attract, retain and reward individuals who contribute to such success and to further align their interests with those of the Company’s stockholders. The Equity Incentive Plan authorized the issuance or delivery to participants of up to 673,575 shares of the Company common stock pursuant to grants of incentive and non-qualified stock options, restricted stock awards and restricted stock unit awards, provided that the maximum number of shares of Company common stock that may be delivered pursuant to the exercise of stock options (all of which may be granted as incentive stock options) was 481,125 and the maximum number of shares of Company stock that may be issued as restricted stock awards or restricted stock units was 192,450. This plan was replaced by the 2022 Equity Incentive Plan when the stockholders approved the new plan on November 21, 2022. The new plan authorizes the issuance or delivery to participants of up to 264,850 shares of the Company common stock pursuant to grants of incentive and non-qualified stock options, restricted stock awards and restricted stock unit awards, provided that the maximum number of shares of Company common stock that may be delivered pursuant to the exercise of stock options (all of which may be granted as incentive stock options) was 52,970 and the maximum number of shares of Company stock that may be issued as restricted stock awards or restricted stock units was 211,880. On December 10, 2013, 85,500 shares of restricted stock and 167,000 in stock options were awarded to senior officers and directors of the Association. These shares of restricted stock vested in equal installments over 10 years and the stock options vested in equal installments over 7 years. Vesting of both the restricted stock and options started in December 2014, and were fully vested in December 2023. On December 10, 2015, 16,900 shares of restricted stock were awarded to senior officers and directors of the Association. These shares of restricted stock vest in equal installments over 8 years, starting in December 2016, and were fully vested in December 2023. On September 9, 2022, 53,000 shares of restricted stock were awarded to senior officers and directors of the Association. These shares of restricted stock will vest in equal installments over 5 years, starting in September 2023. No shares have been granted from the 2022 Equity Incentive Plan as of March 31, 2024, so there are 211,880 shares of restricted stock and 52,970 stock option shares available for future grants under this plan. The following table summarizes stock option activity for the nine months ended March 31, 2024 (dollars in thousands):
Intrinsic value for stock options is defined as the difference between the current market value and the exercise price. There were no stock options granted during the nine months ended March 31, 2024, and no stock options outstanding as of March 31, 2024. No stock options vested during the nine months ended March 31, 2024 and 2023. Stock-based compensation expense and related tax benefit were zero for stock options for the nine months ended March 31, 2024 and 2023. Compensation cost related to non-vested stock options was recognized over the seven-year vesting period ending in December, 2020, leaving no unrecognized compensation cost at March 31, 2024. The following table summarizes non-vested restricted stock activity for the nine months ended March 31, 2024:
The fair value of the restricted stock awards is amortized to compensation expense over the vesting period and is based on the market price of the Company’s common stock at the date of grant multiplied by the number of shares granted that are expected to vest. At the date of grant the par value of the shares granted was recorded in equity as a credit to common stock and a debit to
paid-in capital. Stock-based compensation expense and related tax benefit for restricted stock, which was recognized in non-interest expense, was $212,000 and $61,000, respectively, for the nine months ended March 31, 2024, and was $234,000 and $67,000, respectively, for the nine months ended March 31, 2023. Unrecognized compensation expense for non-vested restricted stock awards was $666,000 at March 31, 2024, and is expected to be recognized over 3.4 years with a corresponding credit to paid-in capital. |
Earnings Per Common Share ("EPS") |
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Common Share ("EPS") | Note 4: Earnings Per Common Share (“EPS”) Basic and diluted earnings per common share are presented for the three month and nine-month periods ended March 31, 2024 and 2023. The factors used in the earnings per common share computation are as follows:
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Securities |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securities | Note 5: Securities The amortized cost and approximate fair value of securities, together with gross unrealized gains and losses on securities, are as follows:
Available for sale securities (“AFS”), which include any security for which the Company has no immediate plan to sell but which may be sold in the future, are carried at fair value. Unrealized gains and losses, net of tax, are reported in accumulated other comprehensive income (loss), a component of stockholders’ equity. All securities have been classified as available for sale. Premiums and discounts on debt securities are amortized or accreted as adjustments to income over the estimated life of the security using the level yield method or to the earlier of call or maturity date. Realized gains or losses on the sale of securities is based on the specific identification method. The fair value of securities is based on quoted market prices or dealer quotes. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities. For AFS securities with fair value less than amortized cost that management has no intent to sell and believes that it more likely than not will not be required to sell prior to recovery, only the credit loss component of the impairment is recognized in earnings, while the noncredit loss is recognized in accumulated other comprehensive income (loss). The credit loss component recognized in earnings is identified as the amount of principal cash flows not expected to be received over the remaining term of the security as projected based on cash flow projections, and is recorded to the allowance for credit losses (ACL) on investments, by a charge to provision for credit losses. Accrued interest receivable, or $531,000, is excluded from the estimate of credit losses. Both the ACL and the adjustment to net income may be reversed if conditions change. However, if the Company intends to sell an impaired AFS security, or, if it is more likely than not the Company will be required to sell such a security before recovering its amortized cost basis, the entire impairment amount would be recognized in earnings with a corresponding adjustment to the security’s amortized cost basis. Because the security’s amortized cost basis is adjusted to fair value, there would be no ACL in this situation. At adoption of ASU 2016-13, no impairment on AFS securities was attributable to credit. The Company will evaluate impaired AFS securities at the individual level on a quarterly basis, and will consider such factors including, but not limited to: the extent to which the fair value of the security is less than the amortized cost basis; adverse conditions specifically related to the security, an industry, or geographic area; the payment structure of the security and likelihood of the issuer to be able to make payments that may increase in the future; failure of the issuer to make scheduled interest or principal payments; any changes to the rating of the security by a rating agency; and the ability and intent to hold the security until maturity. A qualitative determination as to whether any portion of the impairment is attributable to credit risk is acceptable. There were no credit related factors underlying unrealized losses on AFS securities at March 31, 2024, and June 30, 2023. Changes in the ACL are recorded as expense. Losses are charged against the ACL when management believes the uncollectability of an AFS debt security is confirmed or when either of the criteria regarding intent or requirement to sell is met. The Company did not hold securities of any one issuer at March 31, 2024 with a book value that exceeded 10% of the Company’s total equity except for: Mortgage-backed Government Sponsored Entity (GSE) residential securities and Small Business Administration securities with a book value of approximately $198,279,000 and $16,560,000, respectively, and a market value of approximately $170,938,000 and $14,201,000, respectively, at March 31, 2024. All mortgage-backed securities at March 31, 2024 and June 30, 2023 were issued by GSEs. The amortized cost and fair value of available-for-sale
The carrying value of securities pledged as collateral to secure public deposits and for other purposes was $83,514,000 and $138,022,000 as of March 31, 2024 and June 30, 2023, respectively. The carrying value of securities sold under agreement to repurchase amounted to $18.2 million at March 31, 2024 and $10.8 million at June 30, 2023. At March 31, 2024, all $18.2 million of our repurchase agreements had an overnight maturity and all of our repurchase agreements were secured by U.S. Government, federal agency and GSE securities. The right of offset for a repurchase agreement resembles a secured borrowing, whereby the collateral pledged by the Company would be used to settle the fair value of the repurchase agreement should the Company be in default. The collateral is held by the Company in a segregated custodial account. In the event the collateral fair value falls below stipulated levels, the Company will pledge additional securities. The Company closely monitors collateral levels to ensure adequate levels are maintained. Gross gains of $0 and $12,000 and gross losses of $0 and $183,000, resulting from sales of available-for-sale available-for-sale Certain investments in debt securities are reported in the consolidated financial statements at an amount less than their historical cost. Total fair value of these investments at March 31, 2024 and June 30, 2023 was $190,402,000 and $194,818,000, respectively, which is approximately 98% and 97% of the Company’s available-for-sale The following tables show the gross unrealized investment losses and the fair value of the Company’s investments for which an allowance for credit losses has not been recorded, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at March 31, 2024 and June 30, 2023:
As of March 31, 2024, the company’s available-for-sale The unrealized losses on the Company’s investment in U.S. Treasury, U.S. Government and federal agency, Mortgage-backed Government sponsored enterprises, Small Business Administration and state and political subdivision securities at March 31, 2024 and June 30, 2023, were mostly the result of a decline in market value that was attributable to changes in interest rates and not credit quality, and the Company does not consider those investments to need an allowance for credit losses at March 31, 2024 and June 30, 2023.
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Loans and Allowance for Credit Losses |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans and Allowance for Credit Losses | Note 6: Loans and Allowance for Credit Losses Classes of loans include:
The Company had loans held for sale included in one- to four-family real estate loans totaling $501,000 and $0 as of March 31, 2024 and June 30, 2023, respectively. The Company believes that sound loans are a necessary and desirable means of deploying funds available for investment. Recognizing the Company’s obligations to its depositors and to the communities it serves, authorized personnel are expected to seek to develop and make sound, profitable loans that resources permit, and that opportunity affords. The Company maintains lending policies and procedures designed to focus our lending efforts on the types, locations, and duration of loans most appropriate for our business model and markets. The Company’s lending activity includes the origination of one- to four-family residential mortgage loans, multi-family loans, commercial real estate loans, home equity lines of credits, commercial business loans, consumer loans (consisting primarily of automobile loans), construction loans and land loans. The primary lending market includes the Illinois counties of Vermilion, Iroquois, Champaign, and Kankakee, as well as the adjacent counties in Illinois and Indiana. The Company also has a loan production management office in Osage Beach, Missouri, which serves the Missouri counties of Camden, Miller, and Morgan. Generally, loans are collateralized by assets, primarily real estate, of the borrowers and guaranteed by individuals. The loans are expected to be repaid from cash flows of the borrowers or from proceeds from the sale of selected assets of the borrowers. Management reviews and approves the Company’s lending policies and procedures on a routine basis. Management routinely (at least quarterly) reviews our allowance for credit losses and reports related to loan production, loan quality, concentrations of credit, loan delinquencies and non-performing and potential problem loans. Our underwriting standards are designed to encourage relationship banking rather than transactional banking. Relationship banking implies a primary banking relationship with the borrower that includes, at minimum, an active deposit banking relationship in addition to the lending relationship. The integrity and character of the borrower are significant factors in our loan underwriting. As a part of underwriting, tangible positive or negative evidence of the borrower’s integrity and character are sought out. Additional significant underwriting factors beyond location, duration, the sound and profitable cash flow basis underlying the loan and the borrower’s character are the quality of the borrower’s financial history, the liquidity of the underlying collateral and the reliability of the valuation of the underlying collateral. The Company’s policies and loan approval limits are established by the Board of Directors. The structure of the Company’s loan approval process is based on progressively larger lending authorities granted to loan officers, loan committees, and ultimately the Board of Directors through its Operating Committee, consisting of the Chairman and up to four other Board members. At no time is a borrower’s total borrowing relationship to exceed our regulatory lending limit. Loans to related parties, including executive officers and the Company’s directors, are reviewed for compliance with regulatory guidelines and the Board of Directors at least annually. The Company conducts internal loan reviews that validate the loans against the Company’s loan policy quarterly for mortgage, consumer, and small commercial loans on a sample basis, and all larger commercial loans on an annual basis. The Company also receives independent loan reviews performed by a third party on larger commercial loans to be performed semi-annually. In addition to compliance with our policy, the third-party loan review process reviews the risk assessments made by our credit department, lenders and loan committees. Results of these reviews are presented to management and the Board of Directors. The Company’s lending can be summarized into six primary areas: one- to four-family residential mortgage loans, commercial real estate and multi-family real estate loans, home equity lines of credit, real estate construction, commercial business loans, and consumer loans. One- to four-family Residential Mortgage Loans The Company offers one- to four-family residential mortgage loans that conform to Fannie Mae and Freddie Mac underwriting standards (conforming loans) as well as non-conforming loans. The Company has sold a substantial portion of the fixed-rate one- to four-family residential mortgage loans with terms of 15 years or greater. Generally, the Company retains fixed-rate one- to four-family residential mortgage loans with terms of less than 15 years, although this has represented a small percentage of the fixed-rate loans originated in recent years due to the favorable long-term rates for borrowers. The Company offers USDA (USDA Rural Development), FHA and VA loans that are originated through a nationwide wholesale lender. In addition, the Company also offers home equity loans that are secured by a second mortgage on the borrower’s primary or secondary residence. Home equity loans are generally underwritten using the same criteria used to underwrite one- to four-family residential mortgage loans. As one- to four-family residential mortgage and home equity loan underwriting are subject to specific regulations, the Company typically underwrites its one- to four-family residential mortgage and home equity loans to conform to widely accepted standards. Several factors are considered in underwriting including the value of the underlying real estate and the debt-to-income Commercial Real Estate and Multi-Family Real Estate Loans Commercial real estate mortgage loans are primarily secured by owner-occupied businesses, retail rentals, churches, office buildings and farm loans secured by real estate. In underwriting commercial real estate and multi-family real estate loans, the Company considers a number of factors, which include the projected net cash flow to the loan’s debt service requirement, the age and condition of the collateral, the financial resources and income level of the borrower and the borrower’s experience in owning or managing similar properties. Personal guarantees are typically obtained from commercial real estate and multi-family real estate borrowers. In addition, the borrower’s financial information on such loans is monitored on an ongoing basis by requiring periodic financial statement updates. The repayment of these loans is primarily dependent on the cash flows of the underlying property. However, the commercial real estate loan generally must be supported by an adequate underlying collateral value. The performance and the value of the underlying property may be adversely affected by economic factors or geographical and/or industry specific factors. These loans are subject to other industry guidelines that are closely monitored by the Company. Home Equity Lines of Credit In addition to traditional one- to four-family residential mortgage loans and home equity loans, the Company offers home equity lines of credit that are secured by the borrower’s primary or secondary residence. Home equity lines of credit are generally underwritten using the same criteria used to underwrite one- to four-family residential mortgage loans. As home equity lines of credit underwriting is subject to specific regulations, the Company typically underwrites its home equity lines of credit to conform to widely accepted standards. Several factors are considered in underwriting including the value of the underlying real estate and the debt-to-income Commercial Business Loans The Company originates commercial non-mortgage business (term) loans and lines of credit. These loans are generally originated to small- and medium-sized companies in the Company’s primary market area. Commercial business loans are generally used for working capital purposes or for acquiring equipment, inventory or furniture, and are primarily secured by business assets other than real estate, such as business equipment and inventory, accounts receivable or stock. The Company also offers agriculture loans that are not secured by real estate. The commercial business loan portfolio consists primarily of secured loans. When making commercial business loans, the Company considers the financial statements, lending history and debt service capabilities of the borrower, the projected cash flows of the business and the value of any collateral. The cash flows of the underlying borrower, however, may not perform consistently with historical or projected information. Further, the collateral securing loans may fluctuate in value due to individual economic or other factors. Loans are typically guaranteed by the principals of the borrower. The Company has established minimum standards and underwriting guidelines for all commercial loan types. Real Estate Construction Loans The Company originates construction loans for one- to four-family residential properties and commercial real estate properties, including multi-family properties. The Company generally requires that a commitment for permanent financing be in place prior to closing the construction loan. The repayment of these loans is typically through permanent financing following completion of the construction. Real estate construction loans are inherently riskier than loans on completed properties as the unimproved nature and the financial risks of construction significantly enhance the risks of commercial real estate loans. These loans are closely monitored and subject to other industry guidelines. Consumer Loans Consumer loans consist of installment loans to individuals, primarily automotive loans. These loans are underwritten utilizing the borrower’s financial history, including the Fair Isaac Corporation (“FICO”) Loan-to-value Loan Concentration The loan portfolio includes a concentration of loans secured by commercial and multi-family real estate properties amounting to $352,406,000 and $328,721,000 as of March 31, 2024 and June 30, 2023, respectively. Generally, these loans are collateralized by multi-family and nonresidential properties. The loans are expected to be repaid from cash flows or from proceeds from the sale of the properties of the borrower. Purchased Loans and Loan Participations The Company’s loans receivable included purchased loans of $589,000 and $652,000 at March 31, 2024 and June 30, 2023, respectively. All of these purchased loans are secured by single family homes located out of our primary market area primarily in the Midwest. The Company’s loans receivable also include commercial loan participations of $50,748,000 and $46,073,000 at March 31, 2024 and June 30, 2023, respectively, of which $33,794,000 and $28,951,000, at March 31, 2024 and June 30, 2023 were outside our primary market area. Allowance for Credit Losses The following tables present the activity in the allowance for credit losses for the three-month and nine-month periods ended March 31, 2024 and 2023 and the year ended June 30, 2023:
Management’s opinion as to the ultimate collectability of loans is subject to estimates regarding future cash flows from operations and the value of property, real and personal, pledged as collateral. These estimates are affected by changing economic conditions and the economic prospects of borrowers. The allowance for credit losses represents the Company’s best estimate of the reserve necessary to adequately account for probable losses expected over the remaining contractual life of the assets. The provision for credit losses is the charge against current earnings that is determined by the Company as the amount needed to maintain an adequate allowance for credit losses. In determining the adequacy of the allowance for credit losses, and therefore the provision to be charged to current earnings, the Company relies on a sound credit review and approval process. The review process is directed by the overall lending policy and is intended to identify, at the earliest possible stage, borrowers who might be facing financial difficulty. The Company utilizes the CECL cohort methodology analysis which relies on segmenting the loan portfolio into pools with similar risks, tracking the performance of the pools over time, and using the data to determine pool loss experience. The ACL is a valuation account that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on the loans and is established through provision for credit losses charged to current earnings. The ACL is increased by the provision for losses on loans charged to expense and reduced by loans charged off, net of recoveries. Loans are charged off in the period deemed uncollectible, based on management’s analysis of expected cash flows (for non-collateral dependent loans) or collateral value (for collateral-dependent loans). Subsequent recoveries of loans previously charged off, if any, are credited to the allowance when received. Management estimates the ACL balance using relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. Adjustments may be made to historical loss information for differences identified in current loan-specific risk characteristics, such as differences in underwriting standards or terms; lending review systems; experience, ability, or depth of lending management and staff; portfolio growth and mix; delinquency levels and trends; as well as for changes in environmental conditions, such as changes in economic activity or employment, industry economic conditions, property values, or other relevant factors. The allowance for credit losses on most loans is measured on a collective (pool) basis for loans with similar risk characteristics. The Company estimates the appropriate level of allowance for credit losses for specifically identified loans by evaluating them individually. The specific allowance for collateral-dependent loans that are evaluated separately is measured by determining the fair value of the collateral adjusted for market conditions and selling expense. Factors used in identifying a specific problem loan include: (1) the strength of the customer’s personal or business cash flows; (2) the availability of other sources of repayment; (3) the amount due or past due; (4) the type and value of collateral; (5) the strength of the collateral position; (6) the estimated cost to sell the collateral; and (7) the borrower’s effort to cure the delinquency. In addition, for loans secured by real estate, the Company also considers the extent of any past due and unpaid property taxes applicable to the property serving as collateral on the mortgage. The Company establishes a general allowance for loans that are not individually evaluated to recognize the inherent losses associated with lending activities, but which, unlike specific allowances, has not been allocated to particular problem assets. The general valuation allowance is determined by segmenting the loan portfolio into pools with similar risks and collecting data to determine pool loss experience. Factors considered by the Company in evaluating the overall adequacy of the allowance include historical net loan losses, the level and composition of nonaccrual, past due and loan modifications for borrowers with financial difficulties, trends in volumes and terms of loans, effects of changes in risk selection and underwriting standards or lending practices, lending staff changes, concentrations of credit, industry conditions and the current economic conditions in the region where the Company operates. In addition, a forecast, using reasonable and supportable future conditions, is prepared that is used to estimate expected changes to existing and historical conditions in the current period. The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as current financial information, historical payment experience, credit documentation, public information and current economic trends, among other factors. All loans are graded at inception of the loan. Subsequently, analyses are performed on an annual basis and grade changes are made as necessary. Interim grade reviews may take place if the circumstances of the borrower warrant a timelier review. The Company utilizes an internal asset classification system as a means of reporting problem and potential problem loans. Under the Company’s risk rating system, the Company classifies problem and potential problem loans as “Watch,” “Substandard,” “Doubtful,” and “Loss.” The Company uses the following definitions for risk ratings: Pass – Watch – Substandard – Doubtful – Loss – Risk characteristics applicable to each segment of the loan portfolio are described as follows. Residential One- to Four-Family and Equity Lines of Credit Real Estate:one- to four-family real estate loans are generally secured by owner-occupied one- to four-family residences. Repayment of these loans is primarily dependent on the personal income and credit rating of the borrowers. Credit risk in these loans can be impacted by economic conditions within the Company’s market areas that might impact either property values or a borrower’s personal income. Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers. Commercial and Multi-family Real Estate: Construction Real Estate: Commercial: Consumer: The following tables present the credit risk profile of the Company’s loan portfolio based on risk rating category and calendar year of origination as of March 31, 2024 and June 30, 2023 (in thousands): March 31, 2024
June 30, 2023
The following tables present the Company’s loan portfolio aging analysis:
The allowance for credit losses on most loans is measured on a collective (pool) basis for loans with similar risk characteristics, while some loans are selected to be evaluated individually. At March 31, 2024 June 30, 2023, no non-performing loans were individually evaluated and no specific reserve was established. The following table presents the amortized cost basis of loans on nonaccrual status and of nonaccrual loans individually evaluated for which no allowance was recorded at March 31, 2024 and June 30, 2023:
Loan Modifications and Troubled Debt Restructurings (TDRs) After adopting ASU 2022-02, effective July 1, 2023, the Company has had no loan modifications for borrowers with financial difficulties in the three and nine months ended March 31, 2024. Prior to the adoption of ASU 2022-02, the Company had no loans that were modified in troubled debt restructurings in the year ended June 30, 2023. As of March 31, 2024, the Company no longer held any TDRs, while as of June 30, 2023, the Company had a number of loans that were modified in troubled debt restructurings. The modification of such loans included one or a combination of the following: an extension of maturity, a reduction of the stated interest rate or a permanent reduction of the recorded investment in the loan. The following table presents the recorded balance, at original cost, of troubled debt restructurings, as of June 30, 2023. All TDRs were performing according to the terms of the restructuring and were accruing as of June 30, 2023.
TDRs with Defaults The Company had no TDRs in default and no restructured loans in foreclosure as of March 31, 2024 or as of June 30, 2023. The Company defines a default as any loan that becomes 90 days or more past due. Specific loss allowances are included in the calculation of estimated future loss ratios, which are applied to the various loan portfolios for the purpose of estimating future losses. Management considers the level of defaults within the various portfolios, as well as the current adverse economic environment and negative outlook in the real estate and collateral markets when evaluating qualitative adjustments used to determine the adequacy of the allowance for loan losses. Management believes the qualitative adjustments more accurately reflect collateral values in light of the sales and economic conditions that the Company has recently observed. The Company may obtain physical possession of real estate collateralizing a residential mortgage loan or home equity loan via foreclosure or
in-substance repossession. As of March 31, 2024, the Company did not have any foreclosed residential real estate properties as a result of obtaining physical possession. As of March 31, 2024, the Company did not have any residential mortgage loans and home equity loans with a collateralized by residential real estate property for which formal foreclosure proceedings were in process. |
Federal Home Loan Bank Stock |
9 Months Ended |
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Mar. 31, 2024 | |
Federal Home Loan Banks [Abstract] | |
Federal Home Loan Bank Stock | Note 7: Federal Home Loan Bank Stock Federal Home Loan Bank stock is a required investment for institutions that are members of the Federal Home Loan Bank system. The required investment in the common stock is based on a predetermined formula. The Company owned approximately $5,419,000 and $3,127,000 of Federal Home Loan Bank stock as of March 31, 2024 and June 30, 2023, respectively. The FHLB provides liquidity and funding through advances.
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Federal Home Loan Bank Advances and Other Borrowings |
9 Months Ended |
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Mar. 31, 2024 | |
Advance from Federal Home Loan Bank [Abstract] | |
Federal Home Loan Bank Advances and Other Borrowings | Note 8: Federal Home Loan Bank Advances and Other Borrowings The Federal Home Loan Bank advances totaled $95,999,000 and $19,500,000 as of March 31, 2024 and June 30, 2023, respectively. The Federal Home Loan Bank advances are secured by mortgage, multi-family, commercial real estate and HELOC loans totaling $449,386,000 at March 31, 2024 and $350,838,000 at June 30, 2023, and are subject to restrictions or penalties in the event of prepayment. Interest rates on advances were from 0 to 5.46 percent with maturities from 2024 to 2030 at March 31, 2024, while interest rates on advances were from 2.58 to 5.16 percent with maturities from 2024 to 2026 at June 30, 2023. At March 31, 2024, our advances included seven advances at a rate of 0% totaling $1,499,000 as part of the Federal Home Loan Bank Community Small Business Advance program. Other borrowings include borrowings from the Federal Reserve Bank Term Funding Program (BTFP). The Federal Reserve created the BTFP in March 2023 to offer loans of up to one year in length to qualifying financial institutions which pledge collateral, such as U.S. Treasuries, U.S. agency securities, and U.S. agency mortgage-backed securities. The collateral is valued at par and advances under this program do not include any fees or prepayment penalties. At March 31, 2024, we had total borrowings from the Federal Reserve BTFP of $25,325,000 at a rate of 4.76% with a maturity of January 16, 2025. The collateral par value of securities pledged to the Federal Reserve BTFP was $25,325,000 as of March 31, 2024. At June 30, 2023, we had no borrowings from the Federal Reserve.
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Accumulated Other Comprehensive Income (Loss) |
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Accumulated Other Comprehensive Income (Loss) | Note 9: Accumulated Other Comprehensive Income (Loss) The following tables present changes in accumulated other comprehensive income (loss), by component, net of tax, for the nine months ended March 31, 2024 and 2023:
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Changes in Accumulated Other Comprehensive Income (Loss) (AOCI) by Component |
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Text Block [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Accumulated Other Comprehensive Income (Loss) (AOCI) by Component | Note 10: Changes in Accumulated Other Comprehensive Income (Loss) (AOCI) by Component Amounts reclassified from AOCI and the affected line items in the statements of income during the three- and nine-month periods ended March 31, 2024 and 2023, were as follows:
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Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Note 11: Income Taxes A reconciliation of income tax expense at the statutory rate to the Company’s actual income tax expense is shown below:
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Regulatory Capital |
9 Months Ended |
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Mar. 31, 2024 | |
Federal Home Loan Banks [Abstract] | |
Regulatory Capital | Note 12: Regulatory Capital The Association is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and discretionary actions by regulators that if undertaken, could have a direct material effect on the Association’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Association must meet specific capital guidelines involving quantitative measures of the Association’s assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. The Association’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk-weightings and other factors. The Basel III regulatory capital framework (the “Basel III Capital Rules”) adopted by U.S. federal regulatory authorities, among other things, (i) establish the capital measure called “Common Equity Tier 1” (“CET1”), (ii) specify that Tier 1 capital consist of CET1 and “Additional Tier 1 Capital” instruments meeting stated requirements, (iii) define CET1 narrowly by requiring that most deductions/adjustments to regulatory capital measures be made to CET1 and not to the other components of capital and (iv) set forth the acceptable scope of deductions/adjustments to the specified capital measures. In addition, to avoid restrictions on capital distributions, including dividend payments and stock repurchases, or discretionary bonus payments to executives, a covered banking organization must maintain a “capital conservation buffer” of 2.5 percent on top of its minimum risk-based capital requirements. This buffer must consist solely of Tier 1 Common Equity and the buffer applies to all three measurements: Common Equity Tier 1, Tier 1 capital and total capital. As a result of the Economic Growth, Regulatory Relief, and Consumer Protection Act, the federal banking agencies were required to develop a “Community Bank Leverage Ratio” (the ratio of a bank’s tangible equity capital to average total consolidated assets) for financial institutions with assets of less than $10 billion. A “qualifying community bank” that exceeds this ratio will be deemed to be in compliance with all other capital and leverage requirements, including the capital requirements to be considered “well capitalized” under Prompt Corrective Action statutes. The Community Bank Leverage Ratio is currently set at 9%. The Association opted into the Community Bank Leverage Ratio in 2020. As of March 31, 2024, the Association met all capital adequacy requirements to which it is subject and was categorized as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events that management believes have changed the Association’s prompt corrective action category.
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Disclosures About Fair Value of Assets |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosures About Fair Value of Assets | Note 13: Disclosures About Fair Value of Assets Fair value is the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date. Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs. There is a hierarchy of three levels of inputs that may be used to measure fair value:
Recurring Measurements The following table presents the fair value measurements of assets recognized in the accompanying condensed consolidated balance sheets measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall at March 31, 2024 and June 30, 2023:
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a recurring basis and recognized in the accompanying condensed consolidated balance sheets, as well as the general classification of such assets pursuant to the valuation hierarchy. There have been no significant changes in the valuation techniques during the period ended March 31, 2024. For assets classified within Level 3 of the fair value hierarchy, the process used to develop the reported fair value is described below. Available-for-Sale Where quoted market prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics or discounted cash flows. For these investments, the inputs used by the pricing service to determine fair value may include one, or a combination of, observable inputs such as benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bid, offers and reference data market research publications and are classified within Level 2 of the valuation hierarchy. Level 2 securities include U.S. Treasury, U.S. Government and federal agency, mortgage-backed securities (GSE—residential), Small Business Administration and state and political subdivisions. In certain cases where Level 1 or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy. Mortgage Servicing Rights Mortgage servicing rights do not trade in an active, open market with readily observable prices. Accordingly, fair value is estimated using discounted cash flow models. Due to the nature of the valuation inputs, mortgage servicing rights are classified within Level 3 of the hierarchy. Level 3 Reconciliation The following is a reconciliation of the beginning and ending balances of recurring fair value measurements recognized in the accompanying balance sheet using significant unobservable (Level 3) inputs: Nine months ended March 31, 2024
Realized and unrealized gains and losses for items reflected in the table above are included in net income in the consolidated statements of income as noninterest income. Unobservable (Level 3) Inputs The following tables present quantitative information about unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements at March 31, 2024 and June 30, 2023.
Fair Value of Financial Instruments The following tables present estimated fair values of the Company’s financial instruments and the level within the fair value hierarchy in which the fair value measurements fall at March 31, 2024 and June 30, 2023.
The methods utilized to measure the fair value of financial instruments at March 31, 2024, represent an approximation of exit price; however, an actual exit price may differ. |
Commitments |
9 Months Ended |
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Mar. 31, 2024 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments | Note 14: Commitments Commitments to Originate Loans Commitments to extend credit are agreements to lend to a customer if there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since a portion of the commitments may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Each customer’s creditworthiness is evaluated on a case-by-case Lines of Credit Lines of credit are agreements to lend to a customer if there is no violation of any condition established in the contract. Lines of credit generally have fixed expiration dates. Since a portion of the line may expire without being drawn upon, the total unused lines do not necessarily represent future cash requirements. Each customer’s creditworthiness is evaluated on a case-by-case on-balance-sheet instruments. Off-Balance Sheet Credit Exposures Off-balance sheet credit instruments include commitments to make loans, and commercial letters of credit, issued to meet customer financing needs. The Company’s exposure to credit loss in the event of non-performance by the other party to the financial instrument for off-balance sheet loan commitments is represented by the contractual amount of those instruments. Such financial instruments are recorded when they are funded. The ACL on off-balance sheet credit exposures is estimated by loan pool on a quarterly basis under the current CECL model using the same methodologies as portfolio loans, taking into consideration the likelihood that funding will occur and is included in other liabilities on the Company’s consolidated balance sheets. The Company records an ACL on off-balance sheet credit exposures, unless the commitments to extend credit are unconditionally cancelable. During the nine months ended March 31, 2024, the Company recorded a credit for credit losses on off-balance sheet credit exposures of $(173,000), compared to credit for credit losses of $(189,000) for the nine months ended March 31, 2023. During the three months ended March 31, 2024, the Company recorded a credit for credit losses on off-balance sheet credit exposures of $(12,000), compared to credit for credit losses of $(127,000) for the three months ended March 31, 2023. Our ACL on off-balance sheet credit exposures was $44,000 and $216,000, at March 31, 2024 and June 30, 2023, respectively. This reduction was primarily due to a decrease in loans with unfunded balances without the Bank’s ability to cancel on demand. |
New Accounting Pronouncements (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Liabilities | In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments available-for-sale 2016-13, we engaged a firm specializing in ALLL modeling and utilized transition modeling for the two years prior to implementation. We also had our CECL model validated by an independent firm. The Company early adopted ASU 2016-13 using the current expected credit loss (“CECL”) methodology for financial assets measured at amortized cost, effective July 1, 2022. Results for the periods beginning after July 1, 2022, are presented under ASU 2016-13, while prior period amounts were reported in accordance with the previously applicable accounting standards. The Company recorded a reduction to retained earnings of approximately $388,000 upon adoption of ASU 2016-13. The transition adjustment included an increase to the allowance for credit losses on loans of $47,000 and an increase to the allowance to credit losses on off-balance sheet credit exposure of $496,000. The transition adjustment included a corresponding increase in deferred tax assets. The following table illustrates the impact of ASU 2016-13 adoption (in thousands):
In March 2022, FASB issued ASU
2022-02, Financial Instruments-Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures . 310-40, Receivables—Troubled Debt Restructurings by Creditors 326-20, Financial Instruments—Credit Losses—Measured at Amortized Cost 2022-02, effective July 1, 2023, with changes applied prospectively, except with respect to the recognition and measurement of TDRs where a modified retrospective transition method was applied. The adoption of this accounting guidance did not have a material impact on the Company’s consolidated financial statements. |
New Accounting Pronouncements (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Impact Of ASU 201613 Adoption | The following table illustrates the impact of ASU 2016-13 adoption (in thousands):
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Stock-based Compensation (Tables) |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of ESOP Shares | A summary of ESOP shares at March 31, 2024 and June 30, 2023 are as follows (dollars in thousands):
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Summary of Stock Option Activity | The following table summarizes stock option activity for the nine months ended March 31, 2024 (dollars in thousands):
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Summary of Non-vested Restricted Stock Activity | The following table summarizes non-vested restricted stock activity for the nine months ended March 31, 2024:
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Earnings Per Common Share ("EPS") (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Factors Used in Earnings Per Common Share Computation | Basic and diluted earnings per common share are presented for the three month and nine-month periods ended March 31, 2024 and 2023. The factors used in the earnings per common share computation are as follows:
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Securities (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortized Cost and Approximate Fair Value of Securities, Together with Gross Unrealized Gains and Losses of Securities | The amortized cost and approximate fair value of securities, together with gross unrealized gains and losses on securities, are as follows:
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Amortized Cost and Fair Value of Available for Sale Securities by Contractual Maturity | The amortized cost and fair value of available-for-sale
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Association's Investments Gross Unrealized Investment Losses and Fair Value of Association's Investments with Unrealized Losses | The following tables show the gross unrealized investment losses and the fair value of the Company’s investments for which an allowance for credit losses has not been recorded, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at March 31, 2024 and June 30, 2023:
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Loans and Allowance for Credit Losses (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Categories of Loans | Classes of loans include:
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Allowance for Credit Losses | Allowance for Credit Losses The following tables present the activity in the allowance for credit losses for the three-month and nine-month periods ended March 31, 2024 and 2023 and the year ended June 30, 2023:
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Credit Risk Profile of Association's Loan Portfolio Based on Risk Rating Category and Calendar Year of Origination | The following tables present the credit risk profile of the Company’s loan portfolio based on risk rating category and calendar year of origination as of March 31, 2024 and June 30, 2023 (in thousands): March 31, 2024
June 30, 2023
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Association's Loan Portfolio Aging Analysis | The following tables present the Company’s loan portfolio aging analysis:
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Nonaccrual with no Allowance for Credit Losses and Nonaccrual Loans | The following table presents the amortized cost basis of loans on nonaccrual status and of nonaccrual loans individually evaluated for which no allowance was recorded at March 31, 2024 and June 30, 2023:
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Loans Modified as Troubled Debt Restructurings | The following table presents the recorded balance, at original cost, of troubled debt restructurings, as of June 30, 2023. All TDRs were performing according to the terms of the restructuring and were accruing as of June 30, 2023.
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Accumulated Other Comprehensive Income (Loss) (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Accumulated Other Comprehensive Income (Loss) | The following tables present changes in accumulated other comprehensive income (loss), by component, net of tax, for the nine months ended March 31, 2024 and 2023:
|
Changes in Accumulated Other Comprehensive Income (Loss) (AOCI) by Component (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Text Block [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amounts Reclassified from Accumulated Other Comprehensive Income | Amounts reclassified from AOCI and the affected line items in the statements of income during the three- and nine-month periods ended March 31, 2024 and 2023, were as follows:
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Income Taxes (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Income Tax Expense at the Statutory Rate | A reconciliation of income tax expense at the statutory rate to the Company’s actual income tax expense is shown below:
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Disclosures About Fair Value of Assets (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements of Assets Recognized on Recurring Basis | The following table presents the fair value measurements of assets recognized in the accompanying condensed consolidated balance sheets measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall at March 31, 2024 and June 30, 2023:
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Reconciliation of Beginning and Ending Balances of Recurring Fair Value Measurements Recognized in Accompanying Balance Sheet | The following is a reconciliation of the beginning and ending balances of recurring fair value measurements recognized in the accompanying balance sheet using significant unobservable (Level 3) inputs: Nine months ended March 31, 2024
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Quantitative Information about Unobservable Inputs Used in Recurring and Nonrecurring Level 3 Fair Value Measurements | The following tables present quantitative information about unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements at March 31, 2024 and June 30, 2023.
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Estimated Fair Values of Financial Instruments and Level within Fair Value Hierarchy in which Fair Value Measurements Fall | The following tables present estimated fair values of the Company’s financial instruments and the level within the fair value hierarchy in which the fair value measurements fall at March 31, 2024 and June 30, 2023.
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New Accounting Pronouncements - Additional Information (Detail) - USD ($) |
Mar. 31, 2024 |
Dec. 31, 2023 |
Jun. 30, 2023 |
Mar. 31, 2023 |
Dec. 31, 2022 |
Jul. 01, 2022 |
Jun. 30, 2022 |
---|---|---|---|---|---|---|---|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Retained Earnings (Accumulated Deficit) | $ 43,414,000 | $ 43,365,000 | |||||
Allowance for loan losses | 7,725,000 | $ 7,935,000 | 7,139,000 | $ 7,535,000 | $ 7,166,000 | $ 7,052,000 | |
Off-Balance-Sheet, Credit Loss, Liability | $ 44,000 | $ 216,000 | |||||
Accounting Standards Update 2016-13 [Member] | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Retained Earnings (Accumulated Deficit) | $ 388,000,000 | ||||||
Allowance for loan losses | 47,000,000 | ||||||
Off-Balance-Sheet, Credit Loss, Liability | $ 496,000,000 |
Stock-based Compensation - Summary of ESOP Shares (Detail) - USD ($) $ in Thousands |
Mar. 31, 2024 |
Jun. 30, 2023 |
||
---|---|---|---|---|
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||
Allocated shares | 170,696 | 162,986 | ||
Shares committed for release | 14,433 | 19,245 | ||
Unearned shares | 139,527 | 153,960 | ||
Total ESOP shares | 324,656 | 336,191 | ||
Fair value of unearned ESOP shares | [1] | $ 2,320 | $ 2,223 | |
|
Stock-based Compensation - Summary of ESOP Shares (Parenthetical) (Detail) - $ / shares |
Mar. 31, 2024 |
Jun. 30, 2023 |
---|---|---|
Employee Stock Ownership Plan Esop [Member] | ||
Employee Stock Ownership Plan (ESOP) Disclosures [Line Items] | ||
ESOP, closing price per share | $ 16.63 | $ 14.44 |
Stock-based Compensation - Summary of Stock Option Activity (Detail) $ / shares in Units, $ in Thousands |
9 Months Ended |
---|---|
Mar. 31, 2024
USD ($)
$ / shares
shares
| |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Outstanding, June 30, 2023 | shares | 90,143 |
Granted | shares | |
Exercised | shares | |
Forfeited | shares | 90,143 |
Outstanding, December 31, 2023 | shares | 0 |
Exercisable, December 31, 2023 | shares | 0 |
Outstanding, June 30, 2023 | $ / shares | $ 16.63 |
Granted | $ / shares | |
Exercised | $ / shares | |
Forfeited | $ / shares | 16.63 |
Outstanding, December 31, 2023 | $ / shares | 0 |
Exercisable, December 31, 2023 | $ / shares | $ 0 |
Outstanding, December 31, 2023 | 0 years |
Exercisable, December 31, 2023 | 0 years |
Outstanding, December 31, 2023 | $ | $ 0 |
Exercisable, December 31, 2023 | $ | $ 0 |
Stock-based Compensation - Summary of Non-vested Restricted Stock Activity (Detail) - Restricted Stock [Member] |
9 Months Ended |
---|---|
Mar. 31, 2024
$ / shares
shares
| |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Beginning balance, Shares | shares | 62,314 |
Granted, Shares | shares | |
Forfeited, Shares | shares | 1,600 |
Earned and issued, Shares | shares | 19,914 |
Ending balance, Shares | shares | 40,800 |
Beginning balance, Weighted-Average Grant-Date Fair Value | $ / shares | $ 18.76 |
Granted, Weighted-Average Grant-Date Fair Value | $ / shares | |
Forfeited, Weighted-Average Grant-Date Fair Value | $ / shares | 19.1 |
Earned and issued, Weighted-Average Grant-Date Fair Value | $ / shares | 18.76 |
Ending balance, Weighted-Average Grant-Date Fair Value | $ / shares | $ 19.1 |
Earnings Per Common Share ("EPS") - Factors Used in Earnings Per Common Share Computation (Detail) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Earnings Per Share [Abstract] | ||||
Net income (loss) | $ 708 | $ 690 | $ 1,359 | $ 4,063 |
Basic weighted average shares outstanding | 3,353,026 | 3,343,670 | 3,354,097 | 3,318,809 |
Less: Average unallocated ESOP shares | (141,932) | (161,177) | (146,743) | (165,988) |
Basic average shares outstanding | 3,211,094 | 3,182,493 | 3,207,354 | 3,152,821 |
Diluted effect of restricted stock awards and stock options | 0 | 82,103 | 0 | 86,964 |
Diluted average shares outstanding | 3,211,094 | 3,264,596 | 3,207,354 | 3,239,785 |
Basic earnings per common share | $ 0.22 | $ 0.22 | $ 0.42 | $ 1.29 |
Diluted earnings per common share | $ 0.22 | $ 0.21 | $ 0.42 | $ 1.25 |
Securities - Amortized Cost and Fair Value of Available-for-Sale Securities by Contractual Maturity (Detail) - USD ($) $ in Thousands |
Mar. 31, 2024 |
Jun. 30, 2023 |
---|---|---|
Debt Securities, Available-for-sale [Line Items] | ||
Within one year, Amortized Cost | $ 4,001 | |
One to five years, Amortized Cost | 3,691 | |
Five to ten years, Amortized Cost | 9,633 | |
After ten years, Amortized Cost | 9,821 | |
Amortized Cost | 27,146 | |
Amortized Cost | 225,425 | $ 231,672 |
Within one year, Fair Value | 3,921 | |
One to five years, Fair Value | 3,558 | |
Five to ten years, Fair Value | 8,713 | |
After ten years, Fair Value | 8,127 | |
Fair Value | 24,319 | |
Fair Value | 195,257 | 201,299 |
Mortgage-backed securities – GSE residential [Member] | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 198,279 | 203,139 |
Fair Value | $ 170,938 | $ 175,726 |
Loans and Allowance for Credit Losses - Categories of Loans (Detail) - USD ($) $ in Thousands |
Mar. 31, 2024 |
Dec. 31, 2023 |
Jun. 30, 2023 |
Mar. 31, 2023 |
Dec. 31, 2022 |
Jun. 30, 2022 |
---|---|---|---|---|---|---|
Real estate loans | ||||||
Total loans | $ 650,681 | $ 594,324 | $ 585,814 | |||
Unearned fees and discounts, net | (370) | (272) | ||||
Allowance for credit losses | 7,725 | $ 7,935 | 7,139 | 7,535 | $ 7,166 | $ 7,052 |
Loans, net | 643,326 | 587,457 | ||||
One- to four-family [Member] | ||||||
Real estate loans | ||||||
Total loans | 176,117 | 163,854 | ||||
Multi-family [Member] | ||||||
Real estate loans | ||||||
Total loans | 127,757 | 89,649 | 98,891 | |||
Allowance for credit losses | 1,789 | 1,865 | 1,121 | 1,285 | 1,402 | 1,375 |
Home equity lines of credit [Member] | ||||||
Real estate loans | ||||||
Total loans | 9,602 | 8,066 | 7,058 | |||
Allowance for credit losses | 147 | 147 | 121 | 98 | 101 | 70 |
Construction [Member] | ||||||
Real estate loans | ||||||
Total loans | 41,342 | 50,973 | 42,881 | |||
Allowance for credit losses | 537 | 539 | 765 | 686 | 585 | 489 |
Commercial [Member] | ||||||
Real estate loans | ||||||
Total loans | 198,823 | 193,707 | 198,976 | |||
Allowance for credit losses | 2,313 | 2,593 | 2,369 | 2,510 | 2,392 | 1,985 |
Commercial [Member] | ||||||
Real estate loans | ||||||
Total loans | 89,383 | 79,693 | 71,129 | |||
Allowance for credit losses | 1,045 | 915 | 794 | 889 | 871 | 2,025 |
Consumer [Member] | ||||||
Real estate loans | ||||||
Total loans | 7,657 | 8,382 | 8,491 | |||
Allowance for credit losses | $ 66 | $ 67 | $ 71 | $ 77 | $ 93 | $ 80 |
Loans and Allowance for Credit Losses - Loans Modified as Troubled Debt Restructurings (Detail) $ in Thousands |
Jun. 30, 2023
USD ($)
|
---|---|
Real estate loans | |
Total | $ 215 |
One- to four-family [Member] | |
Real estate loans | |
Total | 189 |
Multi-family [Member] | |
Real estate loans | |
Total | 0 |
Home equity lines of credit [Member] | |
Real estate loans | |
Total | 0 |
Real estate loan [Member] | |
Real estate loans | |
Total | 189 |
Construction loans [Member] | |
Real estate loans | |
Total | 0 |
Commercial [Member] | |
Real estate loans | |
Total | 0 |
Commercial business loans [Member] | |
Real estate loans | |
Total | 26 |
Consumer loans [Member] | |
Real estate loans | |
Total | $ 0 |
Federal Home Loan Bank Stock - Additional Information (Detail) - USD ($) $ in Thousands |
Mar. 31, 2024 |
Jun. 30, 2023 |
---|---|---|
Federal Home Loan Banks [Abstract] | ||
Federal Home Loan Bank stock | $ 5,419 | $ 3,127 |
Income Taxes - Reconciliation of Income Tax Expense at the Statutory Rate (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Income Taxes Paid, Net [Abstract] | ||||
Computed at the statutory rate | $ 200 | $ 187 | $ 383 | $ 1,153 |
Decrease resulting from | ||||
Tax exempt interest | (6) | (6) | (24) | (17) |
Cash surrender value of life insurance | (24) | (20) | (67) | (61) |
State income taxes | 66 | 88 | 127 | 423 |
Other | 7 | (47) | 46 | (70) |
Actual expense | $ 243 | $ 202 | $ 465 | $ 1,428 |
Regulatory Capital - Additional Information (Detail) $ in Billions |
Mar. 31, 2024
USD ($)
|
Mar. 31, 2020 |
---|---|---|
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items] | ||
Tier 1 capital ratio of risk-weighted assets | 0.025 | |
Maximum asset value required to be maintained leverage ratio | $ 10 | |
Maximum [Member] | ||
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items] | ||
Leverage ratio | 0.09 |
Commitments - Additional Information (Detail) - USD ($) |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
Mar. 31, 2024 |
Mar. 31, 2023 |
Jun. 30, 2023 |
|
Commitments And Contingencies Disclosure [Line Items] | |||||
Off-Balance-Sheet, Credit Loss,Credit Loss Expense | $ (12,000) | $ (127,000) | $ (173,000) | $ (189,000) | |
Off-Balance-Sheet, Credit loss, Liability | $ 44,000 | $ 44,000 | $ 216,000 |
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