XML 106 R12.htm IDEA: XBRL DOCUMENT v2.4.0.8
Loans Receivable, Net
 12 Months Ended
Dec. 31, 2013
Receivables [Abstract]  
Loans Receivable, Net
Loans Receivable, Net

Loans receivable, net, consisted of the following as of the dates shown:
 
December 31, 2013
 
December 31, 2012
Residential Real Estate Loans
$
83,004,482

 
$
90,677,625

Consumer Loans
52,205,901

 
56,595,093

Commercial Business
7,775,098

 
8,063,901

Commercial Real Estate
228,399,555

 
250,924,094

Total Loans Held For Investment
371,385,036

 
406,260,713

Loans Held For Sale
1,234,158

 
4,770,760

Total Loans Receivable, Gross
372,619,194

 
411,031,473

Less:
 
 
 
Allowance For Loan Losses
10,241,970

 
11,318,371

Loans In Process
3,465,072

 
2,002,595

Deferred Loan Fees
(4,513
)
 
4,687

 
13,702,529

 
13,325,653

Total Loans Receivable, Net
$
358,916,665

 
$
397,705,820



Changes in the allowance for loan losses for the years ended December 31, 2013 and March 31, 2012 and the nine months ended December 31, 2012 are summarized as follows:
 
 
Year Ended December 31,
 
Nine Months Ended December 31,
 
Year Ended March 31,
 
 
2013
 
2012
 
2012
Balance At Beginning Of Period
 
$
11,318,371

 
$
14,615,198

 
$
12,501,800

Provision For Loan Losses
 
2,645,381

 
1,975,000

 
8,650,000

Charge Offs
 
(5,209,830
)
 
(7,422,393
)
 
(6,643,834
)
Recoveries
 
1,488,048

 
2,150,566

 
107,232

Total Allowance For Loan Losses
 
$
10,241,970

 
$
11,318,371

 
$
14,615,198



The Company uses a risk based approach based on the following credit quality measures when analyzing the loan portfolio: pass, caution, special mention, and substandard. These indicators are used to rate the credit quality of loans for the purposes of determining the Company’s allowance for loan losses. Pass loans are loans that are performing and are deemed adequately protected by the net worth of the borrower or the underlying collateral value. These loans are considered the least risky in terms of determining the allowance for loan losses. Substandard loans are considered the most risky category. These loans typically have an identified weakness or weaknesses and are inadequately protected by the net worth of the borrower or collateral value. All loans 60 days or more past due are automatically classified in this category. The other two categories fall in between these two grades.

(4)      Loans Receivable, Net, Continued

The following tables list the loan grades used by the Company as credit quality indicators and the balance in each category at the dates presented, excluding loans held for sale.
 
Credit Quality Measures
December 31, 2013
 
Pass
 
 
Caution
 
Special
Mention
 
 
Substandard
 
 
Total Loans
Residential Real Estate
$
74,505,587

 
$
890,902

 
$
403,138

 
$
7,204,855

 
$
83,004,482

Consumer
50,370,640

 
843,799

 
143,649

 
847,813

 
52,205,901

Commercial Business
6,807,620

 
368,019

 
524,928

 
74,531

 
7,775,098

Commercial Real Estate
135,793,150

 
43,252,464

 
25,581,235

 
23,772,706

 
228,399,555

Total
$
267,476,997

 
$
45,355,184

 
$
26,652,950

 
$
31,899,905

 
$
371,385,036


 
Credit Quality Measures
December 31, 2012
 
Pass
 
 
Caution
 
Special
Mention
 
 
Substandard
 
 
Total Loans
Residential Real Estate
$
82,565,630

 
$
222,046

 
$
293,079

 
$
7,596,870

 
$
90,677,625

Consumer
54,899,665

 
152,368

 
184,731

 
1,358,329

 
56,595,093

Commercial Business
7,256,607

 
151,521

 
514,253

 
141,520

 
8,063,901

Commercial Real Estate
162,570,021

 
32,049,447

 
17,417,778

 
38,886,848

 
250,924,094

Total
$
307,291,923

 
$
32,575,382

 
$
18,409,841

 
$
47,983,567

 
$
406,260,713



The following table presents an age analysis of past due balances by category at December 31, 2013.
 
 
30-59 Days
Past Due
 
 
60-89 Days
Past Due
 
90 Days or
More Past
Due
 
 
Total Past
Due
 
 
 
Current
 
 
Total Loans
Receivable
Residential
   Real Estate
$
—

 
$
1,363,132

 
$
4,607,613

 
$
5,970,745

 
$
77,033,737

 
$
83,004,482

Consumer
1,494,429

 
234,878

 
399,062

 
2,128,369

 
50,077,532

 
52,205,901

Commercial
   Business
115,186

 
—

 
33,055

 
148,241

 
7,626,857

 
7,775,098

Commercial
   Real Estate
5,103,522

 
2,046,666

 
4,972,667

 
12,122,855

 
216,276,700

 
228,399,555

Total
$
6,713,137

 
$
3,644,676

 
$
10,012,397

 
$
20,370,210

 
$
351,014,826

 
$
371,385,036


The following table presents an age analysis of past due balances by category at December 31, 2012.
 
 
30-59 Days
Past Due
 
 
60-89 Days
Past Due
 
90 Days or
More Past
Due
 
 
Total Past
Due
 
 
 
Current
 
 
Total Loans
Receivable
Residential
   Real Estate
$
—

 
$
1,794,644

 
$
3,757,801

 
$
5,552,445

 
$
85,125,180

 
$
90,677,625

Consumer
1,862,611

 
211,756

 
646,136

 
2,720,503

 
53,874,590

 
56,595,093

Commercial
   Business
445,113

 
36,079

 
86,991

 
568,183

 
7,495,718

 
8,063,901

Commercial
   Real Estate
2,432,423

 
4,852,227

 
13,913,190

 
21,197,840

 
229,726,254

 
250,924,094

Total
$
4,740,147

 
$
6,894,706

 
$
18,404,118

 
$
30,038,971

 
$
376,221,742

 
$
406,260,713


(4)      Loans Receivable, Net, Continued

At December 31, 2013 and 2012, the Company did not have any loans that were 90 days or more past due and still accruing interest. Our strategy is to work with our borrowers to reach acceptable payment plans while protecting our interests in the existing collateral.  In the event an acceptable arrangement cannot be reached, we may have to acquire these properties through foreclosure or other means and subsequently sell, develop, or liquidate them. The following table shows non-accrual loans by category at December 31, 2013 compared to 2012.
 
At December 31, 2013
 
At December 31, 2012
 
$
 
%
 
Amount
 
Percent (1)
 
Amount
 
Percent (1)
 
Increase (Decrease)
 
Increase (Decrease)
Non-accrual Loans:
 
 
 
 
 
 
 
 
 
 
 
Residential Real Estate
$
4,607,613

 
1.3
%
 
$
3,757,801

 
0.9
%
 
$
849,812

 
22.6
 %
Commercial Business
33,055

 
—

 
86,991

 
—

 
(53,936
)
 
(62.0
)
Commercial Real Estate
4,972,667

 
1.4

 
13,913,190

 
3.4

 
(8,940,523
)
 
(64.3
)
Consumer
399,062

 
0.1

 
646,136

 
0.2

 
(247,074
)
 
(38.2
)
Total Non- accrual Loans
$
10,012,397

 
2.7
%
 
$
18,404,118

 
4.5
%
 
$
(8,391,721
)
 
(45.6
)%

(1) PERCENT OF GROSS LOANS RECEIVABLE HELD FOR INVESTMENT, NET OF DEFERRED FEES AND LOANS IN PROCESS AND LOANS HELD FOR SALE. 
The following tables show the activity in the allowance for loan losses by category for the periods indicated.
 
 
For the Year Ended December 31, 2013
 
 
Residential
Real Estate
 
 
Consumer
 
Commercial
Business
 
Commercial
Real Estate
 
 
Total
Beginning Balance
 
$
1,521,559

 
$
1,001,271

 
$
618,919

 
$
8,176,622

 
$
11,318,371

Provision
 
1,030,237

 
(5,306
)
 
(187,377
)
 
1,807,827

 
2,645,381

Charge-Offs
 
(1,118,168
)
 
(207,230
)
 
(31,831
)
 
(3,852,601
)
 
(5,209,830
)
Recoveries
 
273,015

 
59,042

 
26,947

 
1,129,044

 
1,488,048

Ending Balance
 
$
1,706,643

 
$
847,777

 
$
426,658

 
$
7,260,892

 
$
10,241,970

 
 
For the Nine Months Ended December 31, 2012
 
 
Residential
Real Estate
 
 
Consumer
 
Commercial
Business
 
Commercial
Real Estate
 
 
Total
Beginning Balance
 
$
1,928,625

 
$
1,498,111

 
$
644,855

 
$
10,543,607

 
$
14,615,198

Provision
 
183,236

 
(227,872
)
 
175,141

 
1,844,495

 
1,975,000

Charge-Offs
 
(647,161
)
 
(286,612
)
 
(209,898
)
 
(6,278,722
)
 
(7,422,393
)
Recoveries
 
56,859

 
17,644

 
8,821

 
2,067,242

 
2,150,566

Ending Balance
 
$
1,521,559

 
$
1,001,271

 
$
618,919

 
$
8,176,622

 
$
11,318,371


(4)      Loans Receivable, Net, Continued

The following tables present information related to impaired loans evaluated individually for impairment and collectively evaluated for impairment in the allowance for loan losses.
 
 
Allowance For Loan Losses
December 31, 2013
 
Individually Evaluated For
Impairment
 
Collectively Evaluated For
Impairment
 
 
Total
Residential Real Estate
 
$
158,791

 
$
1,547,852

 
$
1,706,643

Consumer
 
103,109

 
744,668

 
847,777

Commercial Business
 
—

 
426,658

 
426,658

Commercial Real Estate
 
840,658

 
6,420,234

 
7,260,892

Total
 
$
1,102,558

 
$
9,139,412

 
$
10,241,970

 
 
Allowance For Loan Losses
December 31, 2012
 
Individually Evaluated For
Impairment
 
Collectively Evaluated For
Impairment
 
 
Total
Residential Real Estate
 
$
—

 
$
1,521,559

 
$
1,521,559

Consumer
 
—

 
1,001,271

 
1,001,271

Commercial Business
 
—

 
618,919

 
618,919

Commercial Real Estate
 
440,000

 
7,736,622

 
8,176,622

Total
 
$
440,000

 
$
10,878,371

 
$
11,318,371



The following tables present information related to impaired loans evaluated individually for impairment and collectively evaluated for impairment in loans receivable for the periods indicated.
 
 
Loans Receivable
December 31, 2013
 
Individually Evaluated For
Impairment
 
Collectively Evaluated For
Impairment
 
 
Total
Residential Real Estate
 
$
4,838,236

 
$
78,166,246

 
$
83,004,482

Consumer
 
275,491

 
51,930,410

 
52,205,901

Commercial Business
 
19,775

 
7,755,323

 
7,775,098

Commercial Real Estate
 
26,221,312

 
202,178,243

 
228,399,555

Total
 
$
31,354,814

 
$
340,030,222

 
$
371,385,036

 
 
Loans Receivable
December 31, 2012
 
Individually Evaluated For
Impairment
 
Collectively Evaluated For
Impairment
 
 
Total
Residential Real Estate
 
$
4,500,902

 
$
86,176,723

 
$
90,677,625

Consumer
 
322,588

 
56,272,505

 
56,595,093

Commercial Business
 
7,853

 
8,056,048

 
8,063,901

Commercial Real Estate
 
35,115,195

 
215,808,899

 
250,924,094

Total
 
$
39,946,538

 
$
366,314,175

 
$
406,260,713




(4)       Loans Receivable, Net, Continued

Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are considered impaired. Once a loan is identified as individually impaired management measures impairment and records the loan at fair value. Fair value is estimated using one of the following methods: fair value of the collateral less estimated costs to sale, discounted cash flows, or market value of the loan based on similar debt. The fair value of the collateral less estimated costs to sell is the most frequently used method. Typically, the Company reviews the most recent appraisal and if it is over 24 months old will request a new third party appraisal. Depending on the particular circumstances surrounding the loan, including the location of the collateral, the date of the most recent appraisal and the value of the collateral relative to the recorded investment in the loan, management may order an independent appraisal immediately or, in some instances, may elect to perform an internal analysis. The average balance of impaired loans was $33.6 million for year ended December 31, 2013 compared to $41.6 million for the nine months ended December 31, 2012.

The following tables are a summary of information related to impaired loans as of December 31, 2013 and 2012.
 
 
December 31, 2013
Impaired Loans
 
Recorded
Investment
 
Unpaid
Principal
Balance
 
Related
Allowance
 
Average
Recorded
Investment
 
Interest
Income
Recognized
With No Related Allowance
   Recorded:
 
 
 
 
 
 
 
 
 
 
Residential Real Estate
 
$
3,936,316

 
$
4,588,645

 
$
—

 
$
4,044,142

 
$
31,704

Consumer Loans
 
106,197

 
106,198

 
—

 
104,539

 
953

Commercial Business
 
19,775

 
19,775

 
—

 
19,896

 
389

Commercial Real Estate
 
21,810,347

 
26,775,853

 
—

 
23,618,648

 
886,737

With An Allowance Recorded:
 
 
 
 
 
 
 
 
 
 
Residential Real Estate
 
901,920

 
901,920

 
158,791

 
909,473

 
—

Consumer Loans
 
169,294

 
169,294

 
103,109

 
170,499

 
5,173

Commercial Business
 
—

 
—

 
—

 
—

 
—

Commercial Real Estate
 
4,410,965

 
4,954,058

 
840,658

 
4,707,658

 
251,505

Total
 
 
 
 
 
 
 
 
 
 
Residential Real Estate
 
4,838,236

 
5,490,565

 
158,791

 
4,953,615

 
31,704

Consumer Loans
 
275,491

 
275,492

 
103,109

 
275,038

 
6,126

Commercial Business
 
19,775

 
19,775

 
—

 
19,896

 
389

Commercial Real Estate
 
26,221,312

 
31,729,911

 
840,658

 
28,326,306

 
1,138,242

Total
 
$
31,354,814

 
$
37,515,743

 
$
1,102,558

 
$
33,574,855

 
$
1,176,461


(4)       Loans Receivable, Net, Continued

 
 
December 31, 2012
Impaired Loans
 
Recorded
Investment
 
Unpaid
Principal
Balance
 
 
Related
Allowance
 
Average
Recorded
Investment
 
Interest
Income
Recognized
With No Related Allowance
   Recorded:
 
 
 
 
 
 
 
 
 
 
Residential Real Estate
 
$
4,500,902

 
$
4,611,873

 
$
—

 
$
4,531,543

 
$
130,896

Consumer Loans
 
322,588

 
386,588

 
—

 
342,916

 
28,419

Commercial Business
 
7,853

 
7,853

 
—

 
12,236

 
—

Commercial Real Estate
 
31,808,577

 
35,373,833

 
—

 
32,963,079

 
1,036,344

With An Allowance Recorded:
 
 
 
 
 
 
 
 
 
 
Residential Real Estate
 
—

 
—

 
—

 
—

 
—

Consumer Loans
 
—

 
—

 
—

 
—

 
—

Commercial Business
 
—

 
—

 
—

 
—

 
—

Commercial Real Estate
 
3,306,618

 
4,766,031

 
440,000

 
3,705,660

 
—

Total
 
 
 
 
 
 
 
 
 
 
Residential Real Estate
 
4,500,902

 
4,611,873

 
—

 
4,531,543

 
130,896

Consumer Loans
 
322,588

 
386,588

 
—

 
342,916

 
28,419

Commercial Business
 
7,853

 
7,853

 
—

 
12,236

 
—

Commercial Real Estate
 
35,115,195

 
40,139,864

 
440,000

 
36,668,739

 
1,036,344

Total
 
$
39,946,538

 
$
45,146,178

 
$
440,000

 
$
41,555,434

 
$
1,195,659



In the course of resolving delinquent loans, the Bank may choose to restructure the contractual terms of certain loans. A troubled debt restructuring ("TDR") is a restructuring in which the Bank, for economic or legal reasons related to a borrower’s financial difficulties, grants a concession to a borrower that it would not otherwise consider (FASB ASC Topic 310-40).  The concessions granted on TDRs generally include terms to reduce the interest rate, extend the term of the debt obligation, or modify the payment structure on the debt obligation. The Bank grants such concessions to reassess the borrower’s financial status and develop a plan for repayment.  TDRs included in impaired loans at December 31, 2013 and 2012 amounted to $12.4 million and $10.4 million, respectively.

Loans on nonaccrual status at the date of modification are initially classified as nonaccrual TDRs. Loans on accruing status at the date of concession are initially classified as accruing TDRs if the note is reasonably assured of repayment and performance is expected in accordance with its modified terms. Such loans may be designated as nonaccrual loans subsequent to the concession date if reasonable doubt exists as to the collection of interest or principal under the restructuring agreement. Nonaccrual TDRs are returned to accruing status when there is economic substance to the restructuring, there is documented credit evaluation of the borrower's financial condition, the remaining balance is reasonably assured of repayment in accordance with its modified terms, and the borrower has demonstrated sustained repayment performance in accordance with the modified terms for a reasonable period of time (generally a minimum of six months).

(4)       Loans Receivable, Net, Continued

The following table is a summary of loans restructured as TDRs during the periods indicated:

 
 
For the Year Ended December 31, 2013
 
 
 
Troubled Debt
Restructurings
 
 
 
Number of
Contracts
 
Pre-
Modification
Outstanding
Recorded
Investment
 
Post-
Modification
Outstanding
Recorded
Investment
Residential Real Estate
 
—

 
$
—

 
$
—

Consumer Loans
 
—

 
—

 
—

Commercial Business
 
1

 
32,850

 
32,850

Commercial Real Estate
 
4

 
1,409,693

 
1,409,693

Total
 
5

 
1,442,543

 
1,442,543


 
 
For the Nine Months Ended December 31, 2012
 
For the Year Ended
March 31, 2012
 
 
 
Troubled Debt
Restructurings
 
 
 
Number of
Contracts
 
Pre-
Modification
Outstanding
Recorded
Investment
 
Post-
Modification
Outstanding
Recorded
Investment
 
 
 
Number of
Contracts
 
Pre-
Modification
Outstanding
Recorded
Investment
 
Post-
Modification
Outstanding
Recorded
Investment
Residential Real Estate
 
—

 
$
—

 
$
—

 
—

 
$
—

 
$
—

Consumer Loans
 
—

 
—

 
—

 
1

 
15,358

 
15,358

Commercial Business
 
—

 
—

 
—

 
—

 
—

 
—

Commercial Real Estate
 
1

 
257,452

 
257,452

 
14

 
11,988,576

 
11,988,576

Total
 
1

 
257,452

 
257,452

 
15

 
$
12,003,934

 
$
12,003,934



During the year ended December 31, 2013, the Bank modified five loans that were considered to be TDRs. The Bank lowered the interest rate on each of these loans and changed the payment to interest only on for an agreed upon period on three of these loans. During the year ended December 31, 2012, the Bank modified 1 loan that was considered to be a TDR. The Bank lowered the interest rate on the loan and changed the payment to interest only. The following table is a summary of TDRs restructured in the last 12 months that subsequently defaulted during the period:

 
For the Year Ended December 31, 2013
Troubled Debt Restructurings That Subsequently Defaulted During the Period
Number of Contracts
 
Recorded Investment
Residential Real Estate
—

 
$
—

Consumer Loans
—

 
—

Commercial Business
—

 
—

Commercial Real Estate
1

 
146,267

Total
1

 
$
146,267


(4)       Loans Receivable, Net, Continued

 
For the Nine Months Ended December 31, 2012
 
For the Year Ended March 31, 2012
Troubled Debt Restructurings That Subsequently Defaulted During the Period
Number of Contracts
 
Recorded Investment
 
Number of Contracts
 
Recorded Investment
Residential Real Estate
—

 
$
—

 
—

 
$
—

Consumer Loans
—

 
—

 
—

 
—

Commercial Business
—

 
—

 
—

 
—

Commercial Real Estate
4

 
880,745

 
—

 
—

Total
4

 
$
880,745

 
—

 
$
—



At December 31, 2013, five loans that had been previously restructured were in default, one of which defaulted during the year and had been restructured in the last 12 months. During the nine months ended December 31, 2012, 6 loans that had been previously restructured were in default. The Bank considers any loan 30 days or more past due to be in default.

Our policy with respect to accrual of interest on loans restructured in a TDR follows relevant supervisory guidance.  That is, if a borrower has demonstrated performance under the previous loan terms and shows capacity to perform under the restructured loan terms, continued accrual of interest at the restructured interest rate is likely.  If a borrower was materially delinquent on payments prior to the restructuring but shows capacity to meet the restructured loan terms, the loan will likely continue as nonaccrual going forward.  Lastly, if the borrower does not perform under the restructured terms, the loan is placed on nonaccrual status.

We will continue to closely monitor these loans and will cease accruing interest on them if management believes that the borrowers may not continue performing based on the restructured note terms.  If, after previously being classified as a TDR, a loan is restructured a second time, then that loan is automatically placed on nonaccrual status.  Our policy with respect to nonperforming loans requires the borrower to make a minimum of six consecutive payments in accordance with the loan terms before that loan can be placed back on accrual status.  Further, the borrower must show capacity to continue performing into the future prior to restoration of accrual status.