XML 28 R11.htm IDEA: XBRL DOCUMENT v3.5.0.2
Note 4: Accounting For Certain Loans Acquired in A Transfer
 12 Months Ended
Jun. 30, 2016
Notes  
Note 4: Accounting For Certain Loans Acquired in A Transfer

NOTE 4: Accounting for Certain Loans Acquired in a Transfer

 

The Company acquired loans in transfers during the fiscal years ended June 30, 2011 and June 30, 2015. At acquisition, certain transferred loans evidenced deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected.

 

Loans purchased with evidence of credit deterioration since origination and for which it is probable that all contractually required payments will not be collected are considered to be credit impaired. Evidence of credit quality deterioration as of the purchase date may include information such as past-due and nonaccrual status, borrower credit scores and recent loan to value percentages. Purchased credit-impaired loans are accounted for under the accounting guidance for loans and debt securities acquired with deteriorated credit quality (ASC 310-30) and initially measured at fair value, which includes estimated future credit losses expected to be incurred over the life of the loan. Accordingly, an allowance for credit losses related to these loans is not carried over and recorded at the acquisition date. Management estimated the cash flows expected to be collected at acquisition using our internal risk models, which incorporate the estimate of current key assumptions, such as default rates, severity and prepayment speeds.

 

The carrying amount of those loans is included in the balance sheet amounts of loans receivable at June 30, 2016 and June 30, 2015. The amount of these loans is shown below:

 

 

June 30,

(dollars in thousands)

2016

2015

Residential real estate

 $               3,254

 $               3,542

Construction real estate

                  1,777

                  2,806

Commercial real estate

                11,523

                12,523

Consumer loans

                       -  

                     207

Commercial loans

                  1,103

                  1,180

      Outstanding balance

 $             17,657

 $             20,258

     Carrying amount, net of fair value adjustment of      $2,347 and $3,132 at June 30, 2016 & 2015,      respectively

 $             15,310

 $             17,126

 

 

Accretable yield, or income expected to be collected, is as follows:

 

 

 

June 30,

(dollars in thousands)

2016

2015

2014

Balance at beginning of period

 $                  548

 $                  380

 $                  799

      Additions

                       -  

                       (4)

                       -  

      Accretion

                  (435)

                  (259)

                  (281)

      Reclassification from nonaccretable difference

                       543

                     431

                     4

      Disposals

                       -  

                       -  

                  (142)

Balance at end of period

 $                  656

 $                  548

 $                  380

 

 

During the fiscal years ended June 30, 2016 and 2015, the Company did not increase or reverse the allowance for loan losses related to these purchased credit impaired loans.