XML 23 R12.htm IDEA: XBRL DOCUMENT v3.21.2
Loans Receivable
3 Months Ended
Sep. 30, 2021
Receivables [Abstract]  
Loans Receivable

Note 4. Loans Receivable

Loans receivable are summarized as follows (in thousands):

 

 

 

September 30,

 

 

June 30,

 

 

 

2021

 

 

2021

 

Mortgage loans:

 

 

 

 

 

 

 

 

Residential

 

$

221,735

 

 

$

224,305

 

Commercial

 

 

838,021

 

 

 

826,624

 

Construction

 

 

11,639

 

 

 

10,151

 

Net deferred loan origination costs

 

 

97

 

 

 

196

 

Total mortgage loans

 

 

1,071,492

 

 

 

1,061,276

 

Commercial and consumer loans:

 

 

 

 

 

 

 

 

Commercial loans

 

 

122,031

 

 

 

150,658

 

Home equity lines of credit

 

 

24,936

 

 

 

25,439

 

Consumer and overdrafts

 

 

394

 

 

 

345

 

Net deferred loan origination costs

 

 

(20

)

 

 

(386

)

Total commercial and consumer loans

 

 

147,341

 

 

 

176,056

 

Total loans receivable

 

 

1,218,833

 

 

 

1,237,332

 

Allowance for loan losses

 

 

(8,159

)

 

 

(7,881

)

Loans receivable, net

 

$

1,210,674

 

 

$

1,229,451

 

 

 

 

The following tables present the activity in the allowance for loan losses by portfolio segment for the three months ended September 30, 2021 and 2020 (in thousands):

 

 

 

Three Months Ended September 30, 2021

 

 

 

Beginning

Allowance

 

 

Provision

(benefit)

 

 

Charge-offs

 

 

Recoveries

 

 

Ending

Allowance

 

Residential mortgages

 

$

337

 

 

$

(13

)

 

$

-

 

 

$

2

 

 

$

326

 

Commercial mortgages

 

 

6,435

 

 

 

134

 

 

 

-

 

 

 

-

 

 

 

6,569

 

Construction

 

 

102

 

 

 

25

 

 

 

-

 

 

 

-

 

 

 

127

 

Commercial loans

 

 

948

 

 

 

(143

)

 

 

(100

)

 

 

367

 

 

 

1,072

 

Home equity lines of credit

 

 

54

 

 

 

(3

)

 

 

-

 

 

 

2

 

 

 

53

 

Consumer and overdrafts

 

 

5

 

 

 

13

 

 

 

(7

)

 

 

1

 

 

 

12

 

Total

 

$

7,881

 

 

$

13

 

 

$

(107

)

 

$

372

 

 

$

8,159

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30, 2020

 

 

 

Beginning

Allowance

 

 

Provision

(benefit)

 

 

Charge-offs

 

 

Recoveries

 

 

Ending

Allowance

 

Residential mortgages

 

$

373

 

 

$

(33

)

 

$

-

 

 

$

2

 

 

$

342

 

Commercial mortgages

 

 

6,913

 

 

 

53

 

 

 

-

 

 

 

-

 

 

 

6,966

 

Construction

 

 

165

 

 

 

8

 

 

 

-

 

 

 

-

 

 

 

173

 

Commercial loans

 

 

1,124

 

 

 

71

 

 

 

(105

)

 

 

31

 

 

 

1,121

 

Home equity lines of credit

 

 

60

 

 

 

1

 

 

 

-

 

 

 

2

 

 

 

63

 

Consumer and overdrafts

 

 

4

 

 

 

9

 

 

 

(8

)

 

 

2

 

 

 

7

 

Total

 

$

8,639

 

 

$

109

 

 

$

(113

)

 

$

37

 

 

$

8,672

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The following tables present the balance in the allowance for loan losses and the recorded investment in loans, excluding net deferred fees and accrued interest, by portfolio segment, and based on impairment method as of September 30, 2021 and June 30, 2021 (in thousands):

 

 

 

September 30, 2021

 

 

 

Loans

 

 

Allowance for Loan Losses

 

 

 

Individually

Evaluated for

Impairment

 

 

Collectively

Evaluated for

Impairment

 

 

Acquired With

Deteriorated

Credit Quality

 

 

Total

 

 

Individually

Evaluated for

Impairment

 

 

Collectively

Evaluated for

Impairment

 

 

Acquired With

Deteriorated

Credit Quality

 

 

Total

 

Residential mortgages

 

$

2,351

 

 

$

218,666

 

 

$

719

 

 

$

221,736

 

 

$

111

 

 

$

215

 

 

$

-

 

 

$

326

 

Commercial mortgages

 

 

3,582

 

 

 

833,556

 

 

 

883

 

 

 

838,021

 

 

 

-

 

 

 

6,569

 

 

 

-

 

 

 

6,569

 

Construction

 

 

-

 

 

 

11,639

 

 

 

-

 

 

 

11,639

 

 

 

-

 

 

 

127

 

 

 

-

 

 

 

127

 

Commercial loans

 

 

256

 

 

 

121,775

 

 

 

-

 

 

 

122,031

 

 

 

-

 

 

 

1,072

 

 

 

-

 

 

 

1,072

 

Home equity lines of credit

 

 

372

 

 

 

24,445

 

 

 

119

 

 

 

24,936

 

 

 

8

 

 

 

45

 

 

 

-

 

 

 

53

 

Consumer and overdrafts

 

 

-

 

 

 

394

 

 

 

-

 

 

 

394

 

 

 

-

 

 

 

12

 

 

 

-

 

 

 

12

 

Total

 

$

6,561

 

 

$

1,210,475

 

 

$

1,721

 

 

$

1,218,757

 

 

$

119

 

 

$

8,040

 

 

$

-

 

 

$

8,159

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2021

 

 

 

Loans

 

 

Allowance for Loan Losses

 

 

 

Individually

Evaluated for

Impairment

 

 

Collectively

Evaluated for

Impairment

 

 

Acquired With

Deteriorated

Credit Quality

 

 

Total

 

 

Individually

Evaluated for

Impairment

 

 

Collectively

Evaluated for

Impairment

 

 

Acquired With

Deteriorated

Credit Quality

 

 

Total

 

Residential mortgages

 

$

2,356

 

 

$

221,229

 

 

$

720

 

 

$

224,305

 

 

$

113

 

 

$

224

 

 

$

-

 

 

$

337

 

Commercial mortgages

 

 

3,582

 

 

 

822,154

 

 

 

888

 

 

 

826,624

 

 

 

-

 

 

 

6,435

 

 

 

-

 

 

 

6,435

 

Construction

 

 

-

 

 

 

10,151

 

 

 

-

 

 

 

10,151

 

 

 

-

 

 

 

102

 

 

 

-

 

 

 

102

 

Commercial loans

 

 

1,707

 

 

 

148,951

 

 

 

-

 

 

 

150,658

 

 

 

-

 

 

 

948

 

 

 

-

 

 

 

948

 

Home equity lines of credit

 

 

414

 

 

 

24,902

 

 

 

123

 

 

 

25,439

 

 

 

8

 

 

 

46

 

 

 

-

 

 

 

54

 

Consumer and overdrafts

 

 

-

 

 

 

345

 

 

 

-

 

 

 

345

 

 

 

-

 

 

 

5

 

 

 

-

 

 

 

5

 

Total

 

$

8,059

 

 

$

1,227,732

 

 

$

1,731

 

 

$

1,237,522

 

 

$

121

 

 

$

7,760

 

 

$

-

 

 

$

7,881

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The following tables present information related to loans individually evaluated for impairment (excluding loans acquired with deteriorated credit quality) by portfolio segment as of September 30, 2021 and June 30, 2021 (in thousands):

 

 

September 30, 2021

 

 

June 30, 2021

 

 

 

Unpaid

Principal

Balance

 

 

Recorded Investment

 

 

Allowance for Loan Losses

 

 

Unpaid

Principal

Balance

 

 

Recorded Investment

 

 

Allowance for Loan Losses

 

With no related allowance recorded:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential mortgages

 

$

2,035

 

 

$

1,928

 

 

$

-

 

 

$

2,044

 

 

$

1,931

 

 

$

-

 

Commercial mortgages

 

 

3,582

 

 

 

3,582

 

 

 

 

 

 

 

3,582

 

 

 

3,582

 

 

 

-

 

Commercial loans

 

 

268

 

 

 

256

 

 

 

-

 

 

 

1,878

 

 

 

1,707

 

 

 

-

 

Home equity lines of credit

 

 

314

 

 

 

339

 

 

 

-

 

 

 

358

 

 

 

381

 

 

 

-

 

With an allowance recorded:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential mortgages

 

 

360

 

 

 

423

 

 

 

111

 

 

 

363

 

 

 

425

 

 

 

113

 

Home equity lines of credit

 

 

33

 

 

 

33

 

 

 

8

 

 

 

33

 

 

 

33

 

 

 

8

 

Total

 

$

6,592

 

 

$

6,561

 

 

$

119

 

 

$

8,258

 

 

$

8,059

 

 

$

121

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The tables below present the average recorded investment and interest income recognized on loans individually evaluated for impairment, by portfolio segment, for the three months ended September 30, 2021 and 2020 (in thousands):

 

Three months ended

 

 

Three months ended

 

 

September 30, 2021

 

 

September 30, 2020

 

 

Average

Recorded

Investment

 

 

Interest

Income

Recognized

 

 

Average

Recorded

Investment

 

 

Interest

Income

Recognized

 

With no related allowance recorded:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential mortgages

$

1,936

 

 

$

7

 

 

$

2,015

 

 

$

8

 

Commercial mortgages

 

3,582

 

 

 

-

 

 

 

-

 

 

 

-

 

Commercial loans

 

980

 

 

 

191

 

 

 

1,809

 

 

 

49

 

Home equity lines of credit

 

350

 

 

 

2

 

 

 

339

 

 

 

-

 

With an allowance recorded:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential mortgages

 

424

 

 

 

3

 

 

 

434

 

 

 

3

 

Commercial loans

 

-

 

 

 

-

 

 

 

15

 

 

 

-

 

Home equity lines of credit

 

33

 

 

 

-

 

 

 

16

 

 

 

-

 

Total

$

7,305

 

 

$

203

 

 

$

4,628

 

 

$

60

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The following table presents the recorded investment in nonaccrual loans and in loans past due over 90 days and still on accrual status, by portfolio segment, as of September 30, 2021 and June 30, 2021 (in thousands):

 

 

 

 

 

 

Loans Past Due Over 90 Days

 

 

 

Nonaccrual

 

 

and Still Accruing

 

 

 

September 30,

 

 

June 30,

 

 

September 30,

 

 

June 30,

 

 

 

2021

 

 

2021

 

 

2021

 

 

2021

 

Residential mortgages

 

$

1,390

 

 

$

1,391

 

 

$

-

 

 

$

-

 

Commercial mortgages

 

 

3,582

 

 

 

3,582

 

 

 

421

 

 

 

411

 

Home equity lines of credit

 

 

339

 

 

 

381

 

 

 

-

 

 

 

-

 

Total

 

$

5,311

 

 

$

5,354

 

 

$

421

 

 

$

411

 

 

 

Nonperforming loans include both smaller-balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans. The table above excludes acquired loans that are accounted for as purchased credit impaired loans totaling $362,000 and $368,000 as of September 30, 2021 and June 30, 2021, respectively. Such loans are excluded because the loans are in pools that are considered performing. The discounts arising from recording these loans at fair value upon acquisition were due in part to credit quality and the accretable yield is being recognized as interest income over the life of the loans based on expected cash flows.

The following tables present the aging of the recorded investment in past due loans by portfolio segment as of September 30, 2021 and June 30, 2021 (in thousands):

 

 

 

September 30, 2021

 

 

 

30-59

 

 

60-89

 

 

90 Days or

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Days Past

 

 

Days Past

 

 

More Past

 

 

Total Past

 

 

 

 

 

 

 

 

 

 

 

Due

 

 

Due

 

 

Due

 

 

Due

 

 

Current (1)

 

 

Total

 

Residential mortgages

 

$

-

 

 

$

-

 

 

$

1,090

 

 

$

1,090

 

 

$

220,645

 

 

$

221,735

 

Commercial mortgages

 

 

-

 

 

 

-

 

 

 

421

 

 

 

421

 

 

 

837,600

 

 

 

838,021

 

Construction

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

11,639

 

 

 

11,639

 

Commercial loans

 

 

169

 

 

 

21

 

 

 

-

 

 

 

190

 

 

 

121,841

 

 

 

122,031

 

Home equity lines of credit

 

 

-

 

 

 

19

 

 

 

339

 

 

 

358

 

 

 

24,578

 

 

 

24,936

 

Consumer and overdrafts

 

 

-

 

 

 

12

 

 

 

-

 

 

 

12

 

 

 

382

 

 

 

394

 

Total

 

$

169

 

 

$

52

 

 

$

1,850

 

 

$

2,071

 

 

$

1,216,685

 

 

$

1,218,756

 

 

 

 

June 30, 2021

 

 

 

30-59

 

 

60-89

 

 

90 Days or

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Days Past

 

 

Days Past

 

 

More Past

 

 

Total Past

 

 

 

 

 

 

 

 

 

 

 

Due

 

 

Due

 

 

Due

 

 

Due

 

 

Current (1)

 

 

Total

 

Residential mortgages

 

$

198

 

 

$

126

 

 

$

948

 

 

$

1,272

 

 

$

223,033

 

 

$

224,305

 

Commercial mortgages

 

 

453

 

 

 

-

 

 

 

411

 

 

 

864

 

 

 

825,760

 

 

 

826,624

 

Construction

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

10,151

 

 

 

10,151

 

Commercial loans

 

 

69

 

 

 

76

 

 

 

-

 

 

 

145

 

 

 

150,513

 

 

 

150,658

 

Home equity lines of credit

 

 

-

 

 

 

19

 

 

 

381

 

 

 

400

 

 

 

25,039

 

 

 

25,439

 

Consumer and overdrafts

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

345

 

 

 

345

 

Total

 

$

720

 

 

$

221

 

 

$

1,740

 

 

$

2,681

 

 

$

1,234,841

 

 

$

1,237,522

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

As of September 30, 2021 and June 30, 2021, loans on a COVID-19-related payment deferral are considered current.  

 

Troubled Debt Restructurings

The terms of certain loans have been modified as troubled debt restructurings (“TDR”). The modification of the terms of such loans included one or a combination of the following: a reduction of the stated interest rate of the loan; an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk; or a permanent reduction of the recorded investment in the loan. All TDRs are considered impaired loans.

As of September 30, 2021 and June 30, 2021, the Company had 8 and 12 loans, classified as TDRs totaling $1.6 million and $3.1 million, including $1.2 million and $2.7 million, respectively, of loans still accruing interest. The Company has allocated $119,000 and $121,000, respectively, of specific reserves to customers whose loan terms have been modified in TDRs as of both September 30, 2021 and June 30, 2021. As of September 30, 2021, the Company has committed to lend an additional $3,000  to customers with outstanding loans that are classified as TDRs.

The Company did not modify any loans during the three months ended September 30, 2021 or 2020 that were classified as TDRs.       

There were no defaults of troubled debt restructurings occurring in the three months ended September 30, 2021 or September 30, 2020 that were modified in the twelve months prior to default.       

In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed under the Company’s internal underwriting policy.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law. Section 4013 of the CARES Act, “Temporary Relief From Troubled Debt Restructurings,” provides banks the option to temporarily suspend certain requirements under U.S. GAAP related to TDRs for a limited period of time to account for the effects of COVID-19. On December 27, 2020, the Consolidated Appropriations Act 2021 was signed into law. Section 541 of this legislation, “Extension of Temporary Relief From Troubled Debt Restructurings and Insurer Clarification,” extends Section 4013 of the CARES Act to the earlier of January 1, 2022 or 60 days after the termination of the national emergency declared relating to COVID-19. Additionally, on April 7, 2020, the banking agencies, including the Board of Governors of the Federal Reserve System and the Federal Deposit Insurance Corporation, issued a statement, “Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working With Customers Affected by the Coronavirus (Revised)” (“Interagency Statement”), to encourage banks to work prudently with borrowers and to describe the agencies’ interpretation of how accounting rules under ASC 310-40, “Troubled Debt Restructurings by Creditors,” apply to certain COVID-19-related modifications.

During the three months ended September 30, 2021, the Company granted or extended loan payment deferrals for 5 commercial mortgage, construction and commercial loans totaling $3.7 million. In accordance with either the CARES Act (as amended) or Interagency Statement, these modifications are not considered troubled debt restructurings. The Company had 11 and 19 loans totaling $18.5 million and $27.3 million on loan payment deferral as of September 30, 2021 and June 30, 2021, respectively.

Credit Quality Indicators

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis includes non-homogeneous loans, such as commercial and commercial real estate loans. This analysis is performed on a monthly basis. The Company utilizes the same grading process for acquired loans as it does for originated loans. The Company uses the following definitions for risk ratings:

Special Mention – Loans classified as special mention have a potential weakness that deserves management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution's credit position at some future date.

Substandard – Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful – Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loans not meeting the criteria above that are analyzed individually as part of the above-described process and loans in groups of homogenous loans are considered to be pass rated loans. These loans are monitored based on delinquency and performance. Based on the most recent analysis performed, the risk category of loans by portfolio segment is as follows (in thousands):

 

 

 

September 30, 2021

 

 

 

Pass

 

 

Special

Mention

 

 

Substandard

 

 

Total

 

Residential mortgages

 

$

217,832

 

 

$

1,986

 

 

$

1,917

 

 

$

221,735

 

Commercial mortgages

 

 

821,074

 

 

 

1,605

 

 

 

15,342

 

 

 

838,021

 

Construction

 

 

10,526

 

 

 

1,113

 

 

 

-

 

 

 

11,639

 

Commercial loans

 

 

117,677

 

 

 

485

 

 

 

3,869

 

 

 

122,031

 

Home equity lines of credit

 

 

23,947

 

 

 

556

 

 

 

433

 

 

 

24,936

 

Consumer and overdrafts

 

 

394

 

 

 

-

 

 

 

-

 

 

 

394

 

Total

 

$

1,191,450

 

 

$

5,745

 

 

$

21,561

 

 

$

1,218,756

 

 

 

 

June 30, 2021

 

 

 

Pass

 

 

Special

Mention

 

 

Substandard

 

 

Total

 

Residential mortgages

 

$

219,901

 

 

$

2,480

 

 

$

1,924

 

 

$

224,305

 

Commercial mortgages

 

 

809,660

 

 

 

1,615

 

 

 

15,349

 

 

 

826,624

 

Construction

 

 

9,038

 

 

 

1,113

 

 

 

-

 

 

 

10,151

 

Commercial loans

 

 

146,275

 

 

 

491

 

 

 

3,892

 

 

 

150,658

 

Home equity lines of credit

 

 

24,400

 

 

 

602

 

 

 

437

 

 

 

25,439

 

Consumer and overdrafts

 

 

345

 

 

 

-

 

 

 

-

 

 

 

345

 

Total

 

$

1,209,619

 

 

$

6,301

 

 

$

21,602

 

 

$

1,237,522

 

 

As of September 30, 2021, of the $18.5 million in loans in a COVID-19 related payment deferral, $8.2 million were pass-rated, with $1.7 million and $8.6 million rated special mention and substandard, respectively. As of June 30, 2021, of the $27.3 million in loans on deferral, $9.9 million were pass-rated, with $3.2 million and $14.2 million rated special mention and substandard, respectively.

Purchased Credit Impaired Loans

The Company has acquired loans for which there was, at acquisition, evidence of deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected. The carrying amount of those loans as of September 30, 2021 and June 30, 2021 is as follows (in thousands):

 

 

 

September 30,

 

 

June 30,

 

 

 

2021

 

 

2021

 

Residential mortgages

 

$

719

 

 

$

720

 

Commercial mortgages

 

 

883

 

 

 

888

 

Home equity lines of credit

 

 

119

 

 

 

123

 

Carrying amount, net of allowance of $0

 

$

1,721

 

 

$

1,731

 

 

There was no provision for loan losses on purchased credit impaired loans during the three months ended September 30, 2021 or 2020.

Accretable yield, or income expected to be collected, for acquired loans is as follows (in thousands):

 

 

 

Three Months Ended September 30,

 

 

 

2021

 

 

2020

 

Beginning balance

 

$

130

 

 

$

156

 

New loans acquired

 

 

-

 

 

 

-

 

Accretion income

 

 

(10

)

 

 

(5

)

Reclassification from non-accretable difference

 

 

-

 

 

 

-

 

Disposals

 

 

-

 

 

 

-

 

Ending balance

 

$

120

 

 

$

151