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Note 4: Accounting For Certain Acquired Loans
 12 Months Ended
Jun. 30, 2017
Notes  
Note 4: Accounting For Certain Acquired Loans

NOTE 4: Accounting for Certain Acquired Loans

The Company acquired loans in transfers during the fiscal years ended June 30, 2011, June 30, 2015 and June 30, 2017. 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, 2017 and June 30, 2016. The amount of these loans is shown below:

 

June 30,

(dollars in thousands)

2017

2016

Residential real estate

  $           4,158

  $           3,254

Construction real estate

               1,660

               1,777

Commercial real estate

             13,394

             11,523

Consumer loans

                       -

                       -

Commercial loans

               4,502

               1,103

      Outstanding balance

  $         23,714

  $         17,657

     Carrying amount, net of fair value adjustment of      $3,584 and $2,347 at June 30, 2017 & 2016,      respectively

  $         20,130

  $         15,310

 

 

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

 

June 30,

(dollars in thousands)

2017

2016

2015

Balance at beginning of period

$               656 

$              548 

$              380 

      Additions

                  208 

                      - 

                    (4)

      Accretion

                (391)

                (435)

                (259)

      Reclassification from nonaccretable difference

                  344 

                  543 

                  431 

      Disposals

                      - 

                      - 

                      - 

Balance at end of period

$               817 

$              656 

$              548 

 

 

During the fiscal years ended June 30, 2017 and 2016, the Company did not increase or reverse the allowance for loan losses related to these purchased credit impaired loans.