v2.3.0.11
Document And Entity Information
9 Months Ended
Jun. 30, 2011
Aug. 19, 2011
Document And Entity Information    
Document Type 10-Q  
Amendment Flag false  
Document Period End Date Jun. 30, 2011
Document Fiscal Period Focus Q3  
Document Fiscal Year Focus 2011  
Entity Registrant Name Poage Bankshares, Inc.  
Entity Central Index Key 0001511071  
Current Fiscal Year End Date --09-30  
Entity Filer Category Smaller Reporting Company  
Entity Common Stock, Shares Outstanding   0

 

Balance Sheets (USD $)
In Thousands
Jun. 30, 2011
Sep. 30, 2010
ASSETS    
Cash and due from financial institutions $ 6,023 $ 4,058
Federal funds sold 7,625 39,175
Cash and cash equivalents 13,648 43,233
Interest-bearing deposits in other financial institutions   100
Securities available for sale 82,674 45,234
Loans held for sale 318 1,701
Loans, net of allowance of $1,523, and $1,134 182,050 182,358
Federal Home Loan Bank stock, at cost 1,906 1,883
Other real estate owned, net 318 219
Premises and equipment, net 6,360 6,449
Company owned life insurance 6,411 6,239
Accrued interest receivable 1,549 1,370
Other assets 2,961 2,361
Assets, Total 298,195 291,147
LIABILITIES AND EQUITY    
Non-interest bearing 1,125 745
Interest bearing 240,479 227,067
Total deposits 241,604 227,812
Federal Home Loan Bank advances 24,974 32,205
Accrued interest payable 347 505
Other liabilities 2,165 2,879
Total liabilities 269,090 263,401
Commitments and contingent liabilities    
Equity    
Retained earnings 28,444 27,067
Accumulated other comprehensive income 661 679
Total equity 29,105 27,746
Liabilities and Equity, Total $ 298,195 $ 291,147

 

Balance Sheets (Parenthetical) (USD $)
In Thousands
Jun. 30, 2011
Sep. 30, 2010
Balance Sheets    
Loans, allowance $ 1,523 $ 1,134

 

Statements Of Income (USD $)
In Thousands
3 Months Ended 9 Months Ended
Jun. 30, 2011
Jun. 30, 2010
Jun. 30, 2011
Jun. 30, 2010
Interest and dividend income        
Loans, including fees $ 2,766 $ 2,766 $ 8,314 $ 8,188
Taxable securities 181 484 423 1,784
Tax exempt securities 291 201 870 617
Federal funds sold and other 22 24 66 67
Interest and Dividend Income, Operating, Total 3,260 3,475 9,673 10,656
Interest expense        
Deposits 894 1,098 2,832 3,460
Federal Home Loan Bank advances and other 195 226 623 776
Interest Expense, Total 1,089 1,324 3,455 4,236
Net interest income 2,171 2,151 6,218 6,420
Provision for loan losses 160 150 460 450
Net interest income after provision for loan losses 2,011 2,001 5,758 5,970
Non-interest income        
Service charges on deposits 107 144 296 355
Other service charges 6 1 14 13
Net gains on sales of loans 50   294  
Net gains on sales of securities 28 2,269 28 2,269
Income from company owned life insurance 56 40 170 156
Other 3 5 12 13
Noninterest Income, Total 250 2,459 814 2,806
Noninterest expense        
Salaries and employee benefits 946 726 2,659 2,182
Occupancy and equipment 203 161 561 486
Data processing 140 1,079 312 1,620
Federal deposit insurance 94 73 264 202
Foreclosed assets, net 87 8 134 31
Advertising 73 68 203 195
Other 287 221 855 786
Noninterest Expense, Total 1,830 2,336 4,988 5,502
Income before income taxes 431 2,124 1,584 3,274
Income tax expense 36 736 207 872
Net income $ 395 $ 1,388 $ 1,377 $ 2,402

 

 

Statements Of Comprehensive Income (USD $)
In Thousands
3 Months Ended 9 Months Ended
Jun. 30, 2011
Jun. 30, 2010
Jun. 30, 2011
Jun. 30, 2010
Statements Of Comprehensive Income        
Net income $ 395 $ 1,388 $ 1,377 $ 2,402
Other comprehensive income (loss):        
Unrealized holding gains (losses) on available for sale securities 755 (325) (1) 17
Reclassification adjustments for (gains) losses recognized in income (28) (2,269) (28) (2,269)
Net unrealized holding gains (losses) on available for sale securities 727 (2,594) (29) (2,252)
Tax effect (247) 882 11 766
Other comprehensive income (loss): 480 (1,712) (18) (1,486)
Comprehensive income (loss) $ 875 $ (324) $ 1,359 $ 916

 

 

Statements Of Equity (USD $)
In Thousands
Retained Earnings [Member]
Accumulated Other Comprehensive Income (Loss), Net [Member]
Total
Balances at Sep. 30, 2010 $ 27,067 $ 679 $ 27,746
Net income 1,377   1,377
Change in unrealized gain (loss) on securities available for sale, net of taxes   (18) (18)
Balances at Jun. 30, 2011 $ 28,444 $ 661 $ 29,105

 

 

Statements Of Cash Flows (USD $)
In Thousands
9 Months Ended
Jun. 30, 2011
Jun. 30, 2010
OPERATING ACTIVITY    
Net income $ 1,377 $ 2,402
Adjustments to reconcile net income to net cash from operating activities:    
Depreciation 277 240
Provision for loan losses 460 450
Loss (gain) on sale of securities (28) (2,269)
Loss (gain) on sale of other real estate owned 52 3
Net amortization (accretion) on securities 360 5
Net gain on sale of loans (294)  
Origination of loans held for sale (7,996)  
Proceeds from loans held for sale 9,673  
Increase in cash value of life insurance (172) (156)
Decrease (increase) in:    
Accrued interest receivable (179) 188
Other assets (591) (1,349)
Increase (decrease) in:    
Accrued interest payable (158) (381)
Other liabilities (714) 498
Net cash from (used in) operating activities 2,067 (369)
INVESTING ACTIVITIES    
Proceeds from sales 1,964 48,820
Proceeds from calls 15,283 896
Proceeds from maturities 445 375
Purchases (55,554) (18,559)
Principal payments received 61 11,977
Purchase of Federal Home Loan Bank Stock (23) (49)
Term deposits in other financial institutions:    
Proceeds from maturities 100  
Purchases    
Loan originations and principal payments on loans, net (659) (14,112)
Proceeds from the sale of other real estate owned 358 80
Purchase of premises and equipment (188) (591)
Net cash from (used in) investing activities (38,213) 28,837
FINANCING ACTIVITIES    
Net change in deposits 13,792 12,282
Payments on Federal Home Loan Bank borrowings (7,231) (4,883)
Net cash from (used in) financing activities 6,561 7,399
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (29,585) 35,867
Cash and cash equivalents at beginning of year 43,233 18,715
CASH AND CASH EQUIVALENTS AT END OF YEAR 13,648 54,582
Additional cash flows and supplementary information:    
Interest on deposits and advances 3,613 4,617
Income taxes   665
Real estate acquired in settlement of loans $ 508 $ 30

 

 

Basis Of Presentation And Summary Of Significant Accounting Policies
9 Months Ended
Jun. 30, 2011
Basis Of Presentation And Summary Of Significant Accounting Policies  
Basis Of Presentation And Summary Of Significant Accounting Policies

NOTE 1 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited financial statements of Home Federal Savings and Loan Association (the "Association") have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of 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 financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates used in the preparation of the financial statements are based on various factors including the current interest rate environment and the general strength of the local economy. Changes in the overall interest rate environment can significantly affect the Company's net interest income and the value of its recorded assets and liabilities. Actual results could differ from those estimates used in the preparation of the financial statements.

In the opinion of management, the accompanying unaudited financial statements contain all adjustments (consisting only of normal recurring accruals) necessary to present fairly the Association's financial position as of June 30, 2011 and September 30, 2010 and the results of operations and cash flows for the interim periods ended June 30, 2011 and 2010. All interim amounts have not been audited, and the results of operations for the interim periods herein are not necessarily indicative of the results of operations to be expected for the year. These financial statements should be read in conjunction with the Association's audited financial statements and notes thereto filed as part of Poage Bankshares, Inc.'s Prospectus dated July 11, 2011, as filed with the Securities and Exchange Commission pursuant to Securities Act Rule 424(b)(3) on July 21, 2011.

In the opinion of management, all adjustments considered necessary for a fair presentation have been reflected in the accompanying unaudited financial statements. Those adjustments consist only of normal recurring adjustments. Results of interim periods are not necessarily indicative of results to be expected for the full fiscal year. The balance sheet of the Association as of June 30, 2011 has been derived from the unaudited balance sheet of the Association as of that date.

 

 

Adoption Of New Accounting Standards
9 Months Ended
Jun. 30, 2011
Adoption Of New Accounting Standards  
Adoption Of New Accounting Standards

NOTE 2 – ADOPTION OF NEW ACCOUNTING STANDARDS

Effect of newly issued but not yet effective accounting standards:

In January 2011, the FASB issued ASU No. 2011-01, "Deferral of the Effective Date of Disclosures about Troubled Debt Restructurings in Update No. 2010-20." The provisions of ASU No. 2010-20 required the disclosure of more granular information on the nature and extent of troubled debt restructurings and their effect on the allowance for loan and lease losses effective for the Company's reporting period ended June 30, 2011. The amendments in ASU No. 2011-01 defer the effective date related to these disclosures, enabling creditors to provide such disclosures after the FASB completes their project clarifying the guidance for determining what constitutes a troubled debt restructuring. As the provisions of this ASU only defer the effective date of disclosure requirements related to troubled debt restructurings, the adoption of this ASU will have no impact on the Association's statements of income and condition.

In April 2011, the FASB issued ASU No. 2011-02, "A Creditor's Determination of Whether a Restructuring is a Troubled Debt Restructuring." The provisions of ASU No. 2011-02 provide additional guidance related to determining whether a creditor has granted a concession, include factors and examples for creditors to consider in evaluating whether a restructuring results in a delay in payment that is insignificant, prohibit creditors from using the borrower's effective rate test to evaluate whether a concession has been granted to the borrower, and add factors for creditors to use in determining whether a borrower is experiencing financial difficulties. A provision in ASU No. 2011-02 also ends the FASB's deferral of the additional disclosures about troubled debt restructurings as required by ASU No. 2010-20. The provisions of ASU No. 2011-02 are effective for the Association's reporting period ending September 30, 2011. The adoption of ASU No. 2011-02 is not expected to have a material impact on the Association's statements of income and condition.

 

 

 

Securities Available For Sale
9 Months Ended
Jun. 30, 2011
Securities Available For Sale  
Securities Available For Sale

NOTE 3 – SECURITIES AVAILABLE FOR SALE

The amortized cost and fair value of securities available for sale and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) at June 30, 2011 and September 30, 2010 were as follows (in thousands):

 

                                 
     Amortized
Cost
     Gross
Unrealized
Gains
     Gross
Unrealized
Losses
    Fair
Value
 
     (in thousands)  

June 30, 2011 (Unaudited)

                                  

States and political subdivisions

   $ 28,435       $ 927       $ (129   $ 29,233   

U.S. Government agencies and sponsored entities

     50,786         179         —          50,965   

Government sponsored entities residential mortgage-backed:

                                  

FNMA

     2,452         24         —          2,476   
    

 

 

    

 

 

    

 

 

   

 

 

 

Total securities

   $ 81,673       $ 1,130       $ (129   $ 82,674   
    

 

 

    

 

 

    

 

 

   

 

 

 
         

September 30, 2010

                                  

States and political subdivisions

   $ 28,201       $ 1,010       $ (1   $ 29,210   

U.S. Government agencies and sponsored entities

     16,003         29         (8     16,024   
    

 

 

    

 

 

    

 

 

   

 

 

 

Total securities

   $ 44,204       $ 1,039       $ (9   $ 45,234   
    

 

 

    

 

 

    

 

 

   

 

 

 

The proceeds from sales of securities and the associated gross gains and losses are listed below (in thousands):

                                 
     Three months ended
June 30,
     Nine months ended
June 30,
 
     (Unaudited)  
     2011      2010      2011      2010  

Proceeds

   $ 1,964       $ 48,820       $ 1,964       $ 48,820   

Gross gains

     28         2,270         28         2,270   

Gross losses

     —           1         —           1   

The provision for income taxes for the three months and nine months ended June 30, 2011 and 2010 related to net realized securities gains was $10,000 and $771,000, respectively, based on an income tax rate of 34%.

The amortized cost and fair value of the securities portfolio at June 30, 2011 and September 30, 2010 are shown by expected maturity. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties.

 

                               
     June 30, 2011      September 30, 2010  
     Amortized
Cost
     Fair
Value
     Amortized
Cost
     Fair
Value
 
     (Unaudited)         

Within one year

   $ 520       $ 534       $ 445       $ 454   

One to five years

     29,486         29,690         15,820         15,954   

Five to ten years

     33,998         34,506         17,182         17,654   

Beyond ten years

     17,669         17,944         10,757         11,172   
    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 81,673       $ 82,674       $ 44,204       $ 45,234   
    

 

 

    

 

 

    

 

 

    

 

 

 

 

The following table summarizes the securities with unrealized losses at June 30, 2011 and September 30, 2010, aggregated by major security type and length of time in a continuous unrealized loss position:

                                                 
     Less Than 12 Months     12 Months or Longer      Total  
     Fair
Value
     Unrealized
Losses
    Fair
Value
     Unrealized
Losses
     Fair
Value
     Unrealized
Losses
 
(Dollars in thousands)                                         
             

June 30, 2011

                                                    

States and political subdivisions

   $ 6,665       $ (129   $ —         $ —         $ 6,665       $ (129

U.S. Government agencies and sponsored entities

     —           —          —           —           —           —     
    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Total securities

   $ 6,665       $ (129   $ —         $ —         $ 6,665       $ (129
    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 
             

September 30, 2010

                                                    

States and political subdivisions

   $ 214       $ (1   $ —         $ —         $ 214       $ (1

U.S. Government agencies and sponsored entities

     1,770         (8     —           —           1,770         (8
    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Total securities

   $ 1,984       $ (9   $ —         $ —         $ 1,984       $ (9
    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Unrealized losses on bonds have not been recognized into income because the issuers of the bonds are of high credit quality, management does not intend to sell and it is not more likely than not that management would be required to sell the securities prior to their anticipated recovery, and the decline in fair value is largely due to changes in interest rates. The fair value is expected to recover as the bond(s) approach maturity.

Management evaluates securities for other-than-temporary impairment ("OTTI") on at least a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. For securities in an unrealized loss position, management considers the extent and duration of the unrealized loss, and the financial condition and near-term prospects of the issuer. Management also assesses whether it intends to sell, or it is more likely than not that it will be required to sell, a security in an unrealized loss position before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the entire difference between amortized cost and fair value is recognized as impairment through earnings. For debt securities that do not meet the aforementioned criteria, the amount of impairment is split into two components as follows: 1) OTTI related to credit loss, which must be recognized in the income statement, and 2) OTTI related to other factors, which is recognized in other comprehensive income. The credit loss is defined as the difference between the present value of the cash flows expected to be collected and the amortized cost basis. For equity securities, the entire amount of impairment is recognized through earnings.

 

 

 

Loans
9 Months Ended
Jun. 30, 2011
Loans  
Loans

NOTE 4 – LOANS

Loans at June 30, 2011 and September 30, 2010 were as follows:

 

                 
     (Unaudited)  
     June 30,
2011
     September 30,
2010
 
     (in thousands)  
     

Real estate:

                 

One to four family

   $ 149,344       $ 154,098   

Multi-family

     2,044         2,860   

Commercial Real Estate

     8,000         7,331   

Construction and land

     4,975         3,700   
    

 

 

    

 

 

 
       164,363         167,989   
     

Commercial and Industrial

     2,977         1,970   
     

Consumer

                 

Home equity loans and lines of credit

     5,378         5,005   

Motor vehicle

     7,099         5,544   

Other

     3,851         3,076   
    

 

 

    

 

 

 
       16,328         13,625   
    

 

 

    

 

 

 
     

Total

     183,668         183,584   

Less: Net deferred loan fees

     95         92   

Allowance for loan losses

     1,523         1,134   
    

 

 

    

 

 

 
     
     $ 182,050       $ 182,358   
    

 

 

    

 

 

 

The following table summarizes the scheduled maturities of our loan portfolio at June 30, 2011. Demand loans, loans having no stated repayment schedule or maturity, and overdraft loans are reported as being due in one year or less. Loans are presented net of loans in process.

 

                                                         

June 30, 2011

   One- to  Four-
Family
     Home Equity      Multi-Family
and

Commercial
Real Estate
     Construction
and Land
     Commercial
Business
     Consumer      Total  
     (In thousands)  

Amounts due in:

                                                              

One year or less

     122       $ —           88       $ 4,516       $ 1,657         340       $ 6,723   

More than one to two years

     144         —           60         —           591         734         1,529   

More than two to three years

     287         —           92         —           105         1,467         1,951   

More than three to five years

     899         9         135         17         590         4,299         5,949   

More than five to ten years

     9,932         —           1,142         56         34         1,333         12,497   

More than ten to fifteen years

     22,764         —           2,391         386         —           11         25,552   

More than fifteen years

     115,196         5,369         6,136         —           —           2,766         129,467   
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 149,344       $ 5,378       $ 10,044       $ 4,975       $ 2,977       $ 10,950       $ 183,668   
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment based on impairment method as of June 30, 2011. Accrued interest receivable of $898,000 and net deferred loans fees of $95,000 are not considered significant and therefore are not included in the loan balances presented in the table below (in thousands):

 

                                                 
     Allowance for Loan Losses      Loan Balances  

Loan Segment

   Individually
Evaluated  for
Impairment
     Collectively
Evaluated for
Impairment
     Total      Individually
Evaluated for
Impairment
     Collectively
Evaluated for
Impairment
     Total  
             

Real estate

   $ —         $ 1,043       $ 1,043       $ —         $ 164,363       $ 164,363   

Commercial and industrial

     —           131         131         —           2,977         2,977   

Consumer

     —           349         349         —           16,328         16,328   
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
             

Total

   $ —         $ 1,523       $ 1,523       $ —         $ 183,668       $ 183,668   
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

The following table sets forth an analysis of our allowance for loan losses for the three and nine months ended June 30, 2011 and 2010:

 

                                 
     (Dollars in thousands)  
     Three months ended June 30,      Nine months ended June 30,  
     2011      2010      2011      2010  
     (Unaudited)  

Balance at beginning of period

   $ 1,372       $ 819       $ 1,134       $ 555   

Provision for loan losses:

                                   

Commercial

     28         —           82         —     

Commercial real estate

     84         22         240         66   

Residential real estate

     —           113         —           339   

Consumer

     48         15         138         45   
    

 

 

    

 

 

    

 

 

    

 

 

 

Total provision

     160         150         460         450   

Amounts charged off:

                                   

Commercial

     —           —           —           —     

Commercial real estate

     —           —           —           —     

Residential real estate

     3         1         3         37   

Consumer

     7         —           69         —     
    

 

 

    

 

 

    

 

 

    

 

 

 

Total loans charged off

     10         1         72         37   

Recoveries of amounts previously charged off:

                                   

Commercial

     —           —           —           —     

Commercial real estate

     —           —           —           —     

Residential real estate

     —           —           —           —     

Consumer

     1         —           1         —     
    

 

 

    

 

 

    

 

 

    

 

 

 

Total recoveries

     1         —           1         —     

Net charge-offs

     —           —           —           —     
    

 

 

    

 

 

    

 

 

    

 

 

 

Balance at end of period

   $ 1,523       $ 968       $ 1,523       $ 968   
    

 

 

    

 

 

    

 

 

    

 

 

 

There were no impaired loans as of or during the three or nine months ended June 30, 2011 or 2010, or as of or during the year ended September 30, 2010.

Nonaccrual loans and loans past due 90 days still on accrual consist of smaller balance homogeneous loans that are collectively evaluated for impairment.

 

The following table presents the recorded investment in nonaccrual and loans past due over 90 days still on accrual by class of loans as of June 30, 2011 and September 30, 2010 (in thousands):

 

                                 
     (Unaudited)                
     As of June 30, 2011      As of September 30, 2010  
     Nonaccrual      Loans Past Due
Over 90 Days
Still Accruing
     Nonaccrual      Loans Past Due
Over 90 Days
Still Accruing
 

Real estate:

                                   

One to four family

   $ 775       $ —         $ 1,322       $ 890   

Multi-family

     494         —           —           —     

Commercial real estate

     —           —           —           —     

Construction and land

     —           —           —           —     

Commercial and industrial

     —           —           —           6   

Consumer:

                                   

Home equity loans and lines of credit

     9         —           —           —     

Motor vehicle

     22         —           8         —     

Other

     4         —           4         —     
    

 

 

    

 

 

    

 

 

    

 

 

 
         

Total

   $ 1,304       $ —         $ 1,334       $ 896   
    

 

 

    

 

 

    

 

 

    

 

 

 

The following table presents the aging of the recorded investment in past due loans as of June 30, 2011 by class of loans. Non-accrual loans of $1,304,000 as of June 30, 2011 is included in the table below and has been categorized based on payment status (in thousands).

 

                                                 
    

30 - 59

Days

Past Due

    

60 - 89

Days

Past Due

    

Greater than

90 Days

Past Due

    

Total

Past Due

    

Loans Not

Past Due

     Total  
             

June 30, 2011 (Unaudited)

                                                     

Real estate:

                                                     

One to four family

   $ 811       $ 160       $ 775       $ 1,746       $ 147,598       $ 149,344   

Multi-family

     —           —           494         494         1,550         2,044   

Commercial real estate

     264         20         —           284         7,716         8,000   

Construction and land

     —           —           —           —           4,975         4,975   

Commercial and industrial

     23         4         —           27         2,950         2,977   

Consumer:

                                                     

Home equity loans and lines of credit

     —           —           9         9         5,369         5,378   

Motor vehicle

     27         40         22         89         7,010         7,099   

Other

     13         4         4         21         3,830         3,851   
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
             

Total

   $ 1,138       $ 228       $ 1,304       $ 2,670       $ 180,998       $ 183,668   
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

The Association had no troubled debt restructurings at June 30, 2011 or September 30, 2010. The Association has no classes of loans that are considered to be subprime. The Association, as a matter of policy, does not originate subprime loans.

 

The Association considers the performance of the loan portfolio and its impact on the allowance for loan losses. For all loan classes, the Association also evaluates credit quality based on the aging status of the loan, which was previously presented, and by payment activity. The following table presents the recorded investment in loans based on payment activity as of June 30, 2011:

 

                 
     Performing      Nonperforming  
     (In thousands)  

Real estate:

                 

One to four family

   $ 148,569       $ 775   

Multi-family

     1,550         494   

Commercial real estate

     8,000         —     

Construction and land

     4,975         —     

Commercial and industrial

     2,977         —     

Consumer:

                 

Home equity loans and lines of credit

     5,369         9   

Motor vehicle

     7,077         22   

Other

     3,847         4   
    

 

 

    

 

 

 
     $ 182,364       $ 1,304   
    

 

 

    

 

 

 

 

 

Federal Home Loan Bank Advances
9 Months Ended
Jun. 30, 2011
Federal Home Loan Bank Advances  
Federal Home Loan Bank Advances  

NOTE 5: FEDERAL HOME LOAN BANK ADVANCES

Advances from the FHLB at June 30, 2011 and September 30, 2010 were as follows:

     June 30,
2011
     September 30,
2010
 

Maturities October 2010 through June 2024, fixed rate at rates from 1.94% to 6.75%, weighted average rate of 2.97% at June 30, 2011 and 2.94% at September 30, 2010

   $ 24,974       $ 32,205   

Payments contractually required over the next five years are as follows (in thousands):

     June 30,  

2012

     6,899   

2013

     4,482   

2014

     3,668   

2015

     2,996   

2016

     2,433   

Thereafter

     4,496   
  

 

 

 

Total

   $ 24,974   
  

 

 

 

 

 

Fair Value
9 Months Ended
Jun. 30, 2011
Fair Value  
Fair Value

NOTE 6: FAIR VALUE

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:

Level 1 – Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2 – Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. 

Level 3 – Significant unobservable inputs that reflect a company's own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The Association used the following methods and significant assumptions to estimate fair value:

Securities: The fair values for securities are determined by quoted market prices, if available (Level 1). If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments (Level 2). This includes the use of "matrix pricing" used to value debt securities absent the exclusive use of quoted prices. For securities where quoted prices or market prices of similar securities are not available, which include municipal securities, fair values are calculated using discounted cash flows (Level 3).

Other Real Estate Owned: Nonrecurring adjustments to certain commercial and residential real estate properties classified as other real estate owned (OREO) are measured at fair value, less costs to sell. Fair values are based on recent real estate appraisals. These appraisals may use a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are typically result in a Level 3 classification of the inputs for determining fair value.

Other real estate owned measured at fair value less costs to sell, had a net carrying amount of $318,000, which is made up of the outstanding balance of $346,000, net of a valuation allowance of $28,000 at June 30, 2011, resulting in a write-down of $28,000 for the nine months ended June 30, 2011. This is compared to $20,000 in write downs for the nine months ended June 30, 2010. At September 30, 2010, other real estate owned had a net carrying amount of $219,000, made up of the outstanding balance of $306,000, net of a valuation allowance of $87,000.

Assets and liabilities measured at fair value on a recurring basis, including financial assets and liabilities for which the Association has elected the fair value option, are summarized below:

 

                                 
            Fair Value Measurements at
June 30, 2011 Using:
 
     Carrying
Value
     Quoted Prices in
Active  Markets for
Identical Assets
(Level 1)
     Significant
Other
Observable
Inputs
(Level 2)
     Significant
Unobservable
Inputs
(Level 3)
 
(Dollars in thousands)                            

Financial Assets

                                   

Securities:

                                   

States and political subdivisions

   $ 29,233       $ —         $ 29,233       $ —     

U.S. Government agencies and sponsored entitites

     50,965         —           50,965         —     

Mortgage backed securities

     2,476         —           2,476         —     
    

 

 

    

 

 

    

 

 

    

 

 

 
         

Total securities

   $ 82,674       $ —         $ 82,674       $ —     
    

 

 

    

 

 

    

 

 

    

 

 

 
     
            Fair Value Measurements at
September 30, 2010 Using:
 
     Carrying
Value
     Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
     Significant
Other
Observable
Inputs
(Level 2)
     Significant
Unobservable
Inputs
(Level 3)
 
(Dollars in thousands)                            

Financial Assets

                                   

Securities:

                                   

States and political subdivisions

   $ 29,210       $ —         $ 29,210       $ —     

U.S. Government agencies and sponsored entitites

     16,024         —           16,024         —     
    

 

 

    

 

 

    

 

 

    

 

 

 
         

Total securities

   $ 45,234       $  —         $ 45,234       $ —     
    

 

 

    

 

 

    

 

 

    

 

 

 

 

 Assets measured at fair value on a non-recurring basis are summarized below:

 

                                 
            Fair Value Measurements at
June 30, 2011 Using:
 
     Carrying
Value
     Quoted Prices in
Active  Markets for
Identical Assets
(Level 1)
     Significant
Other
Observable
Inputs
(Level 2)
     Significant
Unobservable
Inputs
(Level 3)
 
(Dollars in thousands)                            
         

Other real estate owned, net

   $ 318       $ —         $ —         $ 318   
     
            Fair Value Measurements at
September 30, 2010 Using:
 
     Carrying
Value
     Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
     Significant
Other
Observable
Inputs
(Level 2)
     Significant
Unobservable
Inputs
(Level 3)
 
(Dollars in thousands)                            
         

Other real estate owned, net

   $ 219         —           —         $ 219   

The carrying amounts and estimated fair values of financial instruments, at June 30, 2011 and September 30, 2010 are as follows:

 

                 

June 30, 2011

(Dollars in thousands)

   Carrying
Amount
    Fair
Value
 
     

Financial assets

                

Cash and cash equivalents

   $ 13,648      $ 13,648   

Securities

     82,674        82,674   

Federal Home Loan Bank stock

     1,906        N/A   

Loans held for sale

     318        326   

Loans, net

     182,050        194,577   

Accrued interest receivable

     1,549        1,549   
     

Financial liabilities

                

Deposits

   $ (241,604     (243,033

Federal Home Loan Bank advances

     (24,974     (26,368

Accrued interest payable

     (347     (347
     

September 30, 2010

(Dollars in thousands)

   Carrying
Amount
    Fair
Value
 
     

Financial assets

                

Cash and cash equivalents

   $ 43,233      $ 43,233   

Interest bearing deposits with other financial institutions

     100        100   

Securities

     45,234        45,234   

Federal Home Loan Bank stock

     1,883        N/A   

Loans held for sale

     1,701        1,701   

Loans, net

     182,358        194,906   

Accrued interest receivable

     1,370        1,370   
     

Financial liabilities

                

Deposits

   $ (227,812   $ (229,160

Federal Home Loan Bank advances

     (32,205     (34,003

Accrued interest payable

     (505     (505

 

The methods and assumptions, not previously presented, used to estimate fair value are described as follows:

Carrying amount is the estimated fair value for cash and cash equivalents, interest bearing deposits, accrued interest receivable and payable, demand deposits, short-term debt, advance payments by borrowers for taxes and insurance, and variable rate loans or deposits that reprice frequently and fully. The methods for determining the fair values for securities were described previously. For fixed rate loans or deposits and for variable rate loans or deposits with infrequent repricing or repricing limits, fair value is based on discounted cash flows using current market rates applied to the estimated life. Fair value of debt is based on current rates for similar financing. It was not practicable to determine the fair value of FHLB stock due to restrictions placed on its transferability. The fair value of off-balance sheet items and commitments to make loans held for sale is not considered material.

 

 

Adoption Of Plan Of Conversion
9 Months Ended
Jun. 30, 2011
Adoption Of Plan Of Conversion  
Adoption Of Plan Of Conversion

NOTE 7: ADOPTION OF PLAN OF CONVERSION

The Board of Directors of the Association, subject to regulatory approval and approval by the members of the Association, adopted a Plan of Conversion on December 21, 2010 (the "Plan") from a federally chartered mutual savings association to a federally chartered stock savings association (the "Conversion"). The Conversion is expected to be accomplished through the amendment of the Association's charter and the sale of common stock in an amount equal to the market value of the Association. A subscription offering of the shares of the Association's common stock will be first offered to the Association's depositors and second, to the Association's tax-qualified employee benefit plans. Any shares not sold in the subscription offering may be offered for sale to the general public. The conversion was approved July 11, 2011, and the offering commenced July 21, 2011.

At the time of consummation of the Conversion, the Association shall establish a liquidation account in an amount equal to the retained earnings of the Association as of the latest statement of financial condition contained in the final offering circular utilized in connection with the Conversion. The liquidation account will be maintained for the benefit of eligible depositors who continue to maintain their accounts at the Association after the conversion. The liquidation account will be reduced annually to the extent that eligible depositors have reduced their qualifying deposits. Subsequent increases will not restore an eligible account holder's interest in the liquidation account. In the event of a complete liquidation, each eligible depositor will be entitled to receive a distribution from the liquidation account in an amount proportionate to the current adjusted qualifying balances for accounts then held. The Association may not pay dividends, or repurchase any of the capital stock of the Association, if such dividend or repurchase would reduce stockholders' equity below the required liquidation account balance.

Under Office of Thrift Supervision ("OTS") regulations, which have been adopted by the Office of the Comptroller of the Currency ("OCC"), limitations have been imposed on all "capital distributions" by savings institutions, including cash dividends. The regulation establishes a three-tiered system of restrictions, with the greatest flexibility afforded to thrifts which are both well-capitalized and given favorable qualitative examination ratings.

Costs associated with the Conversion will be deferred and deducted from the proceeds of the stock offering. If, for any reason, the offering is not successful, the deferred costs will be charged to operations. As of June 30, 2011 and September 30, 2010, there were $845,000 and $10,000 costs associated with the conversion, respectively, which are included in other assets on the balance sheet.