Document And Entity Information
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Document And Entity Information (USD $)
In Millions, except Share data, unless otherwise specified
 12 Months Ended
Sep. 30, 2011
Document And Entity Information [Abstract]  
Document Type 10-K
Amendment Flag false
Document Period End Date Sep. 30, 2011
Document Fiscal Period Focus FY
Document Fiscal Year Focus 2011
Entity Registrant Name Poage Bankshares, Inc.
Entity Central Index Key 0001511071
Entity Current Reporting Status Yes
Entity Voluntary Filers No
Current Fiscal Year End Date --09-30
Entity Filer Category Smaller Reporting Company
Entity Well-known Seasoned Issuer No
Entity Common Stock, Shares Outstanding 3,372,375
Entity Public Float $ 37.3

Consolidated Balance Sheets
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Consolidated Balance Sheets (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2011
Sep. 30, 2010
ASSETS    
Cash and due from financial institutions $ 48,440 $ 4,058
Federal funds sold   39,175
Cash and cash equivalents 48,440 43,233
Interest-bearing deposits in other financial institutions   100
Securities available for sale 76,745 45,234
Loans held for sale 1,012 1,701
Loans, net of allowance of $1,658, and $1,134 183,696 182,358
Federal Home Loan Bank stock, at cost 1,906 1,883
Other real estate owned, net 87 219
Premises and equipment, net 6,322 6,449
Company owned life insurance 6,467 6,239
Accrued interest receivable 1,491 1,370
Other assets 1,786 2,361
Assets, Total 327,952 291,147
LIABILITIES AND SHAREHOLDERS' EQUITY    
Non-interest bearing 1,139 745
Interest bearing 241,583 227,067
Total deposits 242,722 227,812
Federal Home Loan Bank advances 23,117 32,205
Accrued interest payable 435 505
Other liabilities 2,590 2,879
Total liabilities 268,864 263,401
Commitments and contingent liabilities (Note 13)      
Shareholders' equity    
Common stock, $.01 par value, 30,000,000 shares authorized, 3,372,375 issued and outstanding 34  
Additional paid-in-capital 31,955  
Retained earnings 28,757 27,067
Unearned Employee Stock Ownership Plan (ESOP) shares (2,698)  
Accumulated other comprehensive income 1,040 679
Total shareholders' equity 59,088 27,746
Liabilities and Equity, Total $ 327,952 $ 291,147

Consolidated Balance Sheets (Parenthetical)
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Consolidated Balance Sheets (Parenthetical) (USD $)
In Thousands, except Share data, unless otherwise specified
Sep. 30, 2011
Sep. 30, 2010
Consolidated Balance Sheets [Abstract]    
Loans, allowance $ 1,658 $ 1,134
Common stock, par value $ 0.01 $ 0.01
Common stock, shares authorized 30,000,000 30,000,000
Common stock, shares issued 3,372,375 3,372,375
Common stock, shares outstanding 3,372,375 3,372,375

Consolidated Statements Of Income
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Consolidated Statements Of Income (USD $)
In Thousands, except Per Share data, unless otherwise specified
 12 Months Ended
Sep. 30, 2011
Sep. 30, 2010
Interest and dividend income    
Loans, including fees $ 11,070 $ 10,985
Taxable securities 758 1,824
Tax exempt securities 1,022 819
Federal funds sold and other 88 101
Interest and Dividend Income, Operating, Total 12,938 13,729
Interest expense    
Deposits 3,731 4,513
Federal Home Loan Bank advances and other 799 1,058
Interest Expense, Total 4,530 5,571
Net interest income 8,408 8,158
Provision for loan losses 615 650
Net interest income after provision for loan losses 7,793 7,508
Non-interest income    
Service charges on deposits 416 464
Other service charges 17 14
Net gains on sales of loans 361 93
Net gains on sales of securities 28 2,269
Income from company owned life insurance 226 234
Other 19 37
Noninterest Income, Total 1,067 3,111
Non-interest expense    
Salaries and employee benefits 3,693 3,321
Occupancy and equipment 751 695
Data processing 502 1,878
Federal deposit insurance 260 286
Foreclosed assets, net 204 88
Advertising 279 285
Other 1,202 1,228
Noninterest Expense, Total 6,891 7,781
Income before income taxes 1,969 2,838
Income tax expense 279 651
Net income $ 1,690 $ 2,187
Earnings per share since conversion:    
Basic $ 0.01  
Diluted $ 0.01  

Consolidated Statements Of Comprehensive Income
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Consolidated Statements Of Comprehensive Income (USD $)
In Thousands, unless otherwise specified
 12 Months Ended
Sep. 30, 2011
Sep. 30, 2010
Consolidated Statements Of Comprehensive Income [Abstract]    
Net income $ 1,690 $ 2,187
Other comprehensive income (loss):    
Unrealized holding gains (losses) on available for sale securities 574 268
Reclassification adjustments for (gains) losses recognized in income (28) (2,269)
Net unrealized holding gains (losses) on available for sale securities 546 (2,001)
Tax effect (185) 680
Other comprehensive income (loss): 361 (1,321)
Comprehensive income $ 2,051 $ 866

Consolidated Statements Of Changes In Shareholders' Equity
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Consolidated Statements Of Changes In Shareholders' Equity (USD $)
In Thousands
Common Stock [Member]
Additional Paid-In Capital [Member]
Retained Earnings [Member]
Unearned ESOP Shares [Member]
Accumulated Other Comprehensive Income (Loss) [Member]
Total
Balances at Sep. 30, 2009     $ 24,880   $ 2,000 $ 26,880
Net income     2,187     2,187
Change in unrealized gain (loss) on securities available for sale, net of taxes         (1,321) (1,321)
Balances at Sep. 30, 2010     27,067   679 27,746
Net income     1,690     1,690
Change in unrealized gain (loss) on securities available for sale, net of taxes         361 361
Issuance of 3,372,375 common shares, net of costs of $1.7 million 34 31,955       31,989
269,790 shares purchased under employee stock ownership plan       (2,698)   (2,698)
Balances at Sep. 30, 2011 $ 34 $ 31,955 $ 28,757 $ (2,698) $ 1,040 $ 59,088

Consolidated Statements Of Changes In Shareholders' Equity (Parenthetical)
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Consolidated Statements Of Changes In Shareholders' Equity (Parenthetical) (USD $)
In Millions, except Share data, unless otherwise specified
 12 Months Ended
Sep. 30, 2011
Consolidated Statements Of Changes In Shareholders' Equity [Abstract]  
Common shares issued, shares 3,372,375
Net of costs of issuance of common shares $ 1.7
Shares purchased under employee stock ownership plan 269,790

Consolidated Statements Of Cash Flows
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Consolidated Statements Of Cash Flows (USD $)
In Thousands, unless otherwise specified
 12 Months Ended
Sep. 30, 2011
Sep. 30, 2010
OPERATING ACTIVITIES:    
Net income $ 1,690 $ 2,187
Adjustments to reconcile net income to net cash from operating activities:    
Depreciation 371 320
Provision for loan losses 615 650
Loss (gain) on sale of securities (28) (2,269)
Loss (gain) on sale of other real estate owned 81 63
Net amortization on securities 459 94
Deferred income tax (benefit) expense (160) 38
Net gain on sale of loans (361) (93)
Origination of loans held for sale (10,627) (4,721)
Proceeds from loans held for sale 11,677 3,113
Increase in cash value of life insurance (226) (234)
Decrease (increase) in:    
Accrued interest receivable (121) (1)
Other assets 550 (1,570)
Increase (decrease) in:    
Accrued interest payable (70) (189)
Other liabilities (291) 531
Net cash from (used in) operating activities 3,559 (2,081)
INVESTING ACTIVITIES    
Proceeds from sales 1,964 48,820
Proceeds from calls 41,143 4,046
Proceeds from maturities 445 375
Purchases (75,065) (32,595)
Principal payments received 117 11,978
Purchase of Federal Home Loan Bank Stock (23) (49)
Term deposits in other financial institutions:    
Proceeds from maturities 100 100
Purchases   (100)
Loan originations and principal payments on loans, net (2,504) (16,399)
Proceeds from the sale of other real estate owned 602 161
Purchase of office properties and equipment (244) (689)
Net cash from (used in) investing activities (33,465) 15,648
FINANCING ACTIVITIES    
Net change in deposits 14,910 18,114
Proceeds from Federal Home Loan Bank borrowings   1,200
Payments on Federal Home Loan Bank borrowings (9,088) (8,363)
Proceeds from issuance of common stock, net of conversion costs 31,989  
Cash provided to ESOP (2,698)  
Net cash from (used in) financing activities 35,113 10,951
INCREASE IN CASH AND CASH EQUIVALENTS 5,207 24,518
Cash and cash equivalents at beginning of year 43,233 18,715
CASH AND CASH EQUIVALENTS AT END OF YEAR 48,440 43,233
Additional cash flows and supplementary information:    
Interest on deposits and advances 4,600 5,760
Income taxes   1,765
Real estate acquired in settlement of loans $ 551 $ 295

Summary Of Significant Accounting Policies
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Summary Of Significant Accounting Policies
 12 Months Ended
Sep. 30, 2011
Summary Of Significant Accounting Policies [Abstract]  
Summary Of Significant Accounting Policies

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations and Principles of Consolidation: The consolidated financial statements include Poage Bankshares, Inc. (the "Company") and the Company's wholly owned subsidiary, Home Federal Savings and Loan Association (the "Association"). The Company's principal business is the business of the Association. Inter-company transactions and balances are eliminated in consolidation.

The Association is a federally chartered savings and loan association. The Association currently serves the financial needs of communities in its market area through its main office located in Ashland, Kentucky and its branch offices located in Flatwoods, South Shore, Louisa, Summitt and Greenup, Kentucky. The Association's business involves attracting deposits from the general public and using such deposits, together with other funds, to originate primarily one-to-four family residential mortgage loans and, to a lesser extent, commercial and multi-family real estate and construction loans primarily in its market area which includes the Kentucky counties of Boyd, Greenup and Lawrence and the Ohio counties of Scioto and Lawrence.

Reorganization: The Board of Directors 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 was 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 the shares of the Association's common stock was offered to the Association's depositors, and second, to the Association's tax-qualified employee benefit plans. No shares in the subscription were offered for sale to the general public.

On September 12, 2011, the conversion from a mutual savings association to a federally chartered stock savings association was completed. A new holding company, Poage Bankshares, Inc., was established as part of the conversion. The public offering was consummated through the sale and issuance by the Company of 3,372,375 shares of common stock at $10 per share. Net proceeds of $32.0 million were raised in the stock offering, after deduction of conversion costs of $1.7 million and excluding $2.7 million which was loaned by the Company to a trust for the Employee Stock Ownership Plan (the ESOP), enabling it to finance the purchase of 269,790 shares of common stock in the offering.

Voting rights are held and exercised exclusively by the stockholders of the new holding company. Deposit account holders will continue to be insured by the FDIC.

A liquidation account was established in the amount of $28,049,000, which represented the Association's retained earnings 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 declare, pay a dividend on, or repurchase any of its capital stock, if the effect thereof would cause retained earnings to be reduced below the liquidation account amount or regulatory capital requirements. Any repurchases of the Company's common stock will be conducted in accordance with applicable laws and regulations.

Subsequent Events: The Company has evaluated subsequent events for recognition and disclosure through the date the financial statements were issued.

Use of Estimates: To prepare financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and the disclosures provided, and actual results could differ. The allowance for loan losses and fair values of financial instruments are particularly subject to change.

 

Cash Flows: Cash and cash equivalents include cash, deposits with other financial institutions with maturities fewer than 90 days, and federal funds sold. Net cash flows are reported for customer loan and deposit transactions, interest bearing deposits in other financial institutions, federal funds purchased and sold, and repurchase agreements.

Interest-Bearing Deposits in Other Financial Institutions: Interest-bearing deposits in other financial institutions mature within one year and are carried at cost.

Securities: Debt securities are classified as held to maturity and carried at amortized cost when management has the positive intent and ability to hold them to maturity. Debt securities are classified as available for sale when they might be sold before maturity. Equity securities with readily determinable fair values are classified as available for sale. Securities available for sale are carried at fair value, with unrealized holding gains and losses reported in other comprehensive income, net of tax.

Interest income includes amortization of purchase premium or discount. Premiums and discounts on securities are amortized on the level-yield method without anticipating prepayments, except for mortgage backed securities where prepayments are anticipated. Gains and losses on sales are recorded on the trade date and determined using the specific identification method.

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) other-than-temporary impairment (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 Held for Sale: Mortgage loans originated and intended for sale in the secondary market are carried at the lower of aggregate cost or fair value, as determined by outstanding commitments from investors. Net unrealized losses, if any, are recorded as a valuation allowance and charged to earnings.

Mortgage loans held for sale are generally sold with servicing rights retained. The carrying value of mortgage loans sold is reduced by the amount allocated to the servicing right. Gains and losses on sales of mortgage loans are based on the difference between the selling price and the carrying value of the related loan sold.

Loans: Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at the principal balance outstanding, deferred loan fees and costs, and an allowance for loan losses. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized in interest income over the contractual life of the loan using the level-yield method without anticipating prepayments.

Interest income on mortgage and commercial loans is discontinued at the time the loan is 90 days delinquent unless the loan is well-secured and in process of collection. Consumer loans are typically charged off no later than 120 days past due. Real estate loans and commercial and industrial loans are charged off on a case by case basis at such time that management determines the loan to be uncollectible. Past due status of all loan types is based on the contractual terms of the loan. In all cases, loans are placed on nonaccrual or charged-off at an earlier date if collection of principal or interest is considered doubtful. Nonaccrual loans and loans past due 90 days still on accrual include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans. All loan types are moved to non-accrual status in accordance with the Association's policy, typically after 90 days of non-payment.

 

All interest accrued but not received for all loans placed on nonaccrual is reversed against interest income. Interest received on such loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. All loan types are returned to accrual status when all principal and interest are brought current and the loan has been performing according to the contractual terms for a period of not less than 6 months.

Concentration of Credit Risk: Most of the Company's business activity is with customers located within a 50 mile radius of its home office. Therefore, the Company's exposure to credit risk is significantly affected by changes in the economy in the immediate area. At September 30, 2011 and September 30, 2010, the Association held $0, and $39,175,000, respectively, in overnight deposits/federal funds sold at Federal Home Loan Bank of Cincinnati ("FHLB"). In addition, the Company held common stock of the FHLB totaling $1,906,000, and $1,883,000, and other deposits totaling $6,376,000, and $737,000 at September 30, 2011 and 2010, respectively.

Allowance for Loan Losses: The allowance for loan losses is a valuation allowance for probable incurred credit losses. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. If a loan is categorized as loss under the regulatory definitions of loan classifications, the loan is immediately charged off. Subsequent recoveries, if any, are credited to the allowance. Management estimates the allowance balance required using past loan loss experience, the nature and volume of the portfolio, information about specific borrower situations and estimated collateral values, economic conditions, and other factors. Allocations of the allowance may be made for specific loans, but the entire allowance is available for any loan that, in management's judgment, should be charged off. The allowance for loan losses reflects the estimate management believes to be appropriate to cover incurred probable losses which are inherent in the loan portfolio at September 30, 2011 and September 30, 2010.

The allowance consists of specific and general components. The specific component relates to loans that are individually classified as impaired or loans otherwise classified as substandard or doubtful. The general component covers non-classified loans and is based on historical loss experience adjusted for qualitative factors. At September 30, 2011, although all of the aforementioned qualitative factors were considered, management specifically made qualitative adjustments to increase the general component of the reserve to reflect the impact of the continued weak national and local economies as well as the decline in real estate values for all loan segments. For commercial and industrial loans, management increased the general component to reflect the lack of prolonged history of the Company in making these types of loans.

A loan is impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. Loans, for which the terms have been modified at the borrower's request, and for which the borrower is experiencing financial difficulties, are considered troubled debt restructurings and classified as impaired.

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower's prior payment record, and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan by loan basis for all commercial and construction loans by either the present value of expected future cash flows discounted at the loan's effective interest rate, the loan's obtainable market price, or the fair value of the collateral if the loan is collateral dependent. Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, the Company does not separately identify individual consumer and residential mortgage loans for impairment disclosures. Troubled debt restructurings are measured at the present value of estimated future cash flows using the loan's effective rate at inception.

The general component of the allowance covers non-impaired loans and is based on historical loss experience adjusted for current factors. The historical loss experience is determined by portfolio segment and is based on the actual loss history experienced by the Company. This actual loss experience is supplemented with other economic factors based on the risks present for each portfolio segment. These economic factors include consideration of the following: levels of and trends in delinquencies and impaired loans; levels of and trends in charge-offs and recoveries; trends in volume and terms of loans; effects of any changes in risk selection and underwriting standards; other changes in lending policies, procedures, and practices; experience, ability, and depth of lending management and other relevant staff; national and local economic trends and conditions; industry conditions; and effects of changes in credit concentrations. The following portfolio segments have been identified as having differing risk characteristics:

Real estate loans: Loans secured by real estate represent the lowest risk of loans for the Company. The majority of loans in this segment are loans secured by the borrower's principal residence; however, there are also loans secured by apartment buildings, non-owner occupied property, commercial real estate, or construction and land development projects. They include fixed and floating rate loans as well as loans for commercial purposes or consumer purposes. Borrowers with loans in this category, whether for commercial or consumer purposes, tend to make their payments timely as they do not want to risk foreclosure and loss of the primary residence.

Commercial and industrial loans: These loans to businesses do not have real estate as the underlying collateral. Instead of real estate, collateral could be business assets such as equipment or accounts receivable or the personal guarantee of one or more guarantors. These loans generally present a higher level of risk than loans secured by real estate because in the event of default by the borrower, the business assets must be liquidated and/or guarantors pursued for deficit funds. Business assets are worth more while they are in use to produce income for the business and worth significantly less if the business is no longer in operation. For this reason, the Company discounts the value on these types of collateral prior to meeting the Company's loan-to-value policy limits.

Consumer loans: Consumer loans are generally loans to borrowers for non-business purposes. They can be either secured or unsecured. Consumer loans are generally small in the individual amount of principal outstanding and are repaid from the borrower's private funds earned from employment. Consumer lending risk is very susceptible to local economic trends. If there is a consumer loan default, any collateral that may be repossessed is generally not well maintained and has a diminished value. For this reason, consumer loans tend to have higher overall interest rates to cover the higher cost of repossession and charge-offs. However, due to their smaller average balance per borrower, consumer loans are collectively evaluated for impairment in determining the appropriate allowance for loan losses.

Servicing Rights: Servicing rights are recognized separately when they are acquired through sales of loans. When mortgage loans are sold, servicing rights are initially recorded at fair value with the income statement effect recorded in gains on sales of loans. Fair value is based on market prices for comparable mortgage servicing contracts when available or, alternatively, is based on a valuation model that calculates the present value of estimated future net servicing income. All classes of servicing assets are subsequently measured using the amortization method which requires servicing rights to be amortized into non-interest income in proportion to, and over the period of, the estimated future net servicing income of the underlying loans. Servicing rights are included in the other assets line item of the balance sheet.

 

Servicing rights are evaluated for impairment based upon the fair value of the rights as compared to carrying amount. Impairment is determined by stratifying rights into groupings based on predominant risk characteristics, such as interest rate, loan type and investor type. Impairment is recognized through a valuation allowance for an individual grouping, to the extent that fair value is less than the carrying amount. If the Corporation later determines that all or a portion of the impairment no longer exists for a particular grouping, a reduction of the allowance may be recorded as an increase to income. No valuation allowance was required at September 30, 2011 or September 30, 2010. The fair values of servicing rights are subject to significant fluctuations as a result of changes in estimated and actual prepayment speeds and default rates and losses.

Servicing fee income which is reported on the income statement as other income is recorded for fees earned for servicing loans. The fees are based on a contractual percentage of the outstanding principal; or a fixed amount per loan and are recorded as income when earned. The amortization of mortgage servicing rights is netted against loan servicing fee income.

Foreclosed Assets: Assets acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. If fair value declines subsequent to foreclosure, a valuation allowance is recorded through expense. Operating costs after acquisition are expensed.

Premises and Equipment: Land is carried at cost. Premises and equipment are stated at cost less accumulated depreciation. Buildings and related components are depreciated using the straight-line method with useful lives ranging from 5 to 50 years. Furniture, fixtures and equipment are depreciated using the straight-line (or accelerated) method with useful lives ranging from 3 to 10 years.

Federal Home Loan Bank (FHLB) Stock: The Association is a member of the FHLB system. Members are required to own a certain amount of stock based on the level of borrowings and other factors, and may invest in additional amounts. FHLB stock is carried at cost, classified as a restricted security, and periodically evaluated for impairment based on ultimate recovery of par value. Both cash and stock dividends are reported as income.

Company Owned Life Insurance: The Association has purchased life insurance policies on certain key executives. Company owned life insurance is recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other charges or other amounts due that are probable at settlement.

Loan Commitments and Related Financial Instruments: Financial instruments include off-balance sheet credit instruments, such as commitments to make loans and commercial letters of credit, issued to meet customer financing needs. The face amount for these items represents the exposure to loss, before considering customer collateral or ability to repay. Such financial instruments are recorded when they are funded.

Income Taxes: Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are the expected future tax amounts for the temporary differences between carrying amounts and tax bases of assets and liabilities, computed using enacted tax rates. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized.

A tax position is recognized as a benefit only if it is "more likely than not" that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the "more likely than not" test, no tax benefit is recorded. The effect of adopting this new guidance was not material.

The Company recognizes interest and/or penalties related to income tax matters in income tax expense.

Retirement Plans: Employee 401(k) and profit sharing plan expense is the amount of matching contributions. Supplemental retirement plan expense allocates the benefits over years of service. The Association participates in the Pentegra Defined Benefit Pension Plan for Financial Institutions. This plan covers eligible employees who were employed by the Association prior to January 1, 2007. Employees hired subsequent to that date are not eligible to participate. The employees hired prior to January 1, 2007 continue to earn benefits under the plan. It is the policy of the Association to fund the amount that is determined by annual actuarial valuations.

 

Comprehensive Income: Comprehensive income consists of net income and other comprehensive income. Other comprehensive income includes unrealized gains and losses on securities available for sale which are also recognized as separate components of equity.

Loss Contingencies: Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. Management does not believe there now are such matters that will have a material effect on the financial statements.

Restrictions on Cash: Cash on hand or on deposit with the Federal Reserve Bank was required to meet regulatory reserve and clearing requirements. These balances do not earn interest. The Association is required to maintain reserve funds in cash or on deposit with a designated depository financial institution. The required reserve at September 30, 2011 and September 30, 2010 was $360,000 and $259,000, respectively.

Fair Value of Financial Instruments: Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed in a separate note. Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments, and other factors, especially in the absence of broad markets for particular items. Changes in assumptions or in market conditions could significantly affect the estimates.

Employee Stock Ownership Plan: The cost of shares issued to the ESOP, but not yet allocated to participants, is shown as a reduction of shareholders' equity. Compensation expense is based on the market price of shares as they are committed to be released to participant accounts. Dividends on allocated ESOP shares reduce retained earnings; dividends on unearned ESOP shares reduce debt and accrued interest.

Earnings Per Common Share: Basic earnings per common share is net income since the conversion divided by the weighted average number of common shares outstanding during the period. ESOP shares are considered outstanding for this calculation unless unearned. All outstanding unvested share-based payment awards that contain rights to nonforfeitable dividends are considered participating securities for this calculation. Diluted earnings per common share includes the dilutive effect of additional potential common shares issuable under stock options. Earnings and dividends per share are restated for all stock splits and stock dividends through the date of issuance of the financial statements.

Reclassifications: Some items in the prior year financial statements were reclassified to conform to the current presentation.

Recently Issued but not yet Effective Accounting Pronouncements: In July 2010, the FASB issued Accounting Standards Update (ASU) No. 2010-20 to Receivables (ASC 310) Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses. This ASU adds new disclosures designed to enhance the transparency of an entity's allowance for loan and lease losses (ALLL), and the credit quality of its financing receivables, and to increase the understanding of an entity's credit risk exposure and adequacy of the ALLL. The required disclosures will include the nature of the credit risk inherent in the loan portfolio, how the risk is analyzed and assessed to determine the ALLL, and the changes and reasons for those changes in the ALLL. These disclosures are effective for interim and annual reporting periods ending on or after December 15, 2010. The disclosures about activity that occurs during a reporting period are effective for interim and annual reporting periods beginning on or after December 15, 2010. This pronouncement had no effect on the Association's financial position or results of operations. The required disclosures are included as of and for the year ended September 30, 2011.

 

In April 2011, the FASB amended existing guidance for assisting a creditor in determining whether a restructuring is a troubled debt restructuring. The amendments clarify the guidance for a creditor's evaluation of whether it has granted a concession and whether a debtor is experiencing financial difficulties. With regard to determining whether a concession has been granted, the ASU clarifies that creditors are precluded from using the effective interest method to determine whether a concession has been granted. In the absence of using the effective interest method, a creditor must now focus on other considerations such as the value of the underlying collateral, evaluation of other collateral or guarantees, the debtor's ability to access other funds at market rates, interest rate increases and whether the restructuring results in a delay in payment that is insignificant. This guidance is effective for interim and annual reporting periods beginning after June 15, 2011, and should be applied retrospectively to the beginning of the annual period of adoption. For purposes of measuring impairment on newly identified troubled debt restructurings, the amendments should be applied prospectively for the first interim or annual period beginning on or after June 15, 2011. The adoption of this guidance is not expected to have a material impact on the Company's financial statements.

In May, 2011, the FASB issued an amendment to achieve common fair value measurement and disclosure requirements between U.S. and International accounting principles. Overall, the guidance is consistent with existing U.S. accounting principles; however, there are some amendments that change a particular principle or requirement for measuring fair value or for disclosing information about fair value measurements. The amendments in this guidance are effective for interim and annual reporting periods beginning after December 15, 2011. The adoption of this guidance is not expected to have a material impact on the Company's financial statements.

In June 2011, the FASB amended existing guidance and eliminated the option to present the components of other comprehensive income as part of the statement of changes in shareholder's equity. The amendment requires that comprehensive income be presented in either a single continuous statement or in two separate consecutive statements. The amendments in this guidance are effective as of the beginning of a fiscal reporting year, and interim periods within that year, that begins after December 15, 2011. The adoption of this guidance is not expected to have a material impact on the Company's financial statements.

Securities Available For Sale
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Securities Available For Sale
 12 Months Ended
Sep. 30, 2011
Securities Available For Sale [Abstract]  
Securities Available For Sale

NOTE 2 - SECURITIES AVAILABLE FOR SALE

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

 

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

September 30, 2011

           

States and political subdivisions

    $ 32,132       $ 1,305       $ (20 )    $ 33,417   

U.S. Government agencies and sponsored entities

      39,093         249         (11 )      39,331   

Government sponsored entities residential mortgage-backed:

           

FNMA

      3,944         58         (5 )      3,997   
  

 

 

     

 

 

     

 

 

    

 

 

  

Total securities

    $ 75,169       $ 1,612       $ (36 )    $ 76,745   
  

 

 

     

 

 

     

 

 

    

 

 

  

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):

 

     Year ended
September 30,		  
     2011      2010  

Proceeds

    $ 1,964       $ 48,820   

Gross gains

      28         2,270   

Gross losses

      —           1   

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

The amortized cost and fair value of the securities portfolio at September 30, 2011 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.

 

     September 30,
2011		  
     Amortized
Cost		      Fair
Value		  
     (in thousands)  

Within one year

    $ 520       $ 530   

One to five years

      32,649         33,011   

Five to ten years

      24,673         25,300   

Beyond ten years

      13,383         13,907   

Mortgage-backed securities

      3,944         3,997   
  

 

 

     

 

 

  

Total

    $ 75,169       $ 76,745   
  

 

 

     

 

 

  

Securities pledged at September 30, 2011 and September 30, 2010 had a carrying amount of $1,313,000 and $1,870,000, respectively, and were pledged to secure public deposits and repurchase agreements.

At year end 2011 and 2010, there were no holdings of securities of any one issuer, other than the U.S. Government and its agencies, in an amount greater than 10% of equity.

 

The following table summarizes the securities with unrealized losses at September 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)                                        

September 30, 2011

                

States and political subdivisions

    $ —         $ —        $ 1,747       $ (20 )    $ 1,747       $ (20 ) 

U.S. Government agencies and sponsored entities

      5,102         (11 )      —           —          5,102         (11 ) 

Government sponsored entities residential mortgage-backed:

                

FNMA

      1,547         (5 )      —           —          1,547         (5 ) 
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

  

Total securities

    $ 6,649       $ (16 )    $ 1,747       $ (20 )    $ 8,396       $ (36 ) 
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

  

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.

Loans
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Loans
 12 Months Ended
Sep. 30, 2011
Loans [Abstract]  
Loans

NOTE 3 - LOANS

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

 

     September 30,  
     2011      2010  
     (Dollars in thousands)  

Real estate:

      

One to four family

    $ 147,733       $ 154,098   

Multi-family

      2,016         2,860   

Commercial real estate

      9,786         7,331   

Construction and land

      5,209         3,700   
  

 

 

     

 

 

  
     164,744         167,989   

Commercial and Industrial

      3,722         1,970   

Consumer

      

Home equity loans and lines of credit

      5,796         5,005   

Motor vehicle

      7,299         5,544   

Other

      3,885         3,076   
  

 

 

     

 

 

  
     16,980         13,625   
  

 

 

     

 

 

  

Total

      185,446         183,584   

Less: Net deferred loan fees

      92         92   

          Allowance for loan losses

      1,658         1,134   
  

 

 

     

 

 

  
     183,696       $ 182,358   
  

 

 

     

 

 

  

Activity in the allowance for loan losses for the periods indicated was as follows:

 

     Year ended
September 30,		  
     2011     2010  
     (Dollars in Thousands)  

Beginning balance

    $ 1,134      $ 555   

Provision for loan losses

      615        650   

Loans charged-off

      (94 )      (71 ) 

Recoveries

      3        —     
  

 

 

    

 

 

  

Ending balance

    $ 1,658      $ 1,134   
  

 

 

    

 

 

  

 

The components of the provision for loan loss and loans charged-off for the year ended September 30, 2011 were as follows:

 

     Provision for
Loan Losses		     Loans
Charged-Off		  
     (in thousands)  

Real estate:

     

One to four family

    $ 565      $ 83   

Multi-family

      16     

Commercial real estate

      (55 )      —     

Construction and land

      56     

Commercial and Industrial

      —          —     

Consumer:

     

Home equity loans and lines of credit

      83        —     

Motor vehicle

      (35 )      —     

Other

      (15 )      11   
  

 

 

    

 

 

  
   $ 615      $ 94   
  

 

 

    

 

 

  

The following tables present the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment based on impairment method as of September 30, 2011. Accrued interest receivable of $872,000 and net deferred loans fees of $92,000 are not considered significant and therefore are not included in the loan balances presented in the tables 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

    $ —         $ 1,368       $ 1,368       $ —         $ 164,744       $ 164,744   

Commercial and industrial

      —           49         49         —           3,722         3,722   

Consumer

      —           241         241         —           16,980         16,980   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total

    $ —         $ 1,658       $ 1,658       $ —         $ 185,446       $ 185,446   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

There were no impaired loans as of or during the years ended September 30, 2011 and September 30, 2010.

Nonaccrual loans and loans past due 90 days still on accrual were as follows (in thousands):

 

     September 30,  
     2011      2010  
     (in thousands)  

Loans past due over 90 days still on accrual

    $ —         $ 896   

Nonaccrual loans

      2,697         1,334   

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 September 30, 2011 (in thousands):

 

     Nonaccrual      Loans Past Due
Over 90 Days
Still Accruing		  

Real estate:

      

One to four family

    $ 2,158       $ —     

Multi-family

      495         —     

Commercial real estate

      —           —     

Construction and land

      —           —     

Commercial and industrial

      —           —     

Consumer:

      

Home equity loans and lines of credit

      19         —     

Motor vehicle

      21         —     

Other

      4         —     
  

 

 

     

 

 

  

Total

    $ 2,697       $ —     
  

 

 

     

 

 

  

The following table presents the aging of the recorded investment in past due loans as of September 30, 2011 by class of loans. Non-accrual loans of $2,697,000 are included in the table below and have been categorized based on their 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  

Real estate:

                  

One to four family

    $ 100       $ 11       $ 2,158       $ 2,269       $ 145,464       $ 147,733   

Multi-family

      —           —           495         495         1,521         2,016   

Commercial real estate

      302         59         —           361         9,425         9,786   

Construction and land

      —           20         —           20         5,189         5,209   

Commercial and industrial

      1,030         1         —           1,031         2,691         3,722   

Consumer:

                  

Home equity loans and lines of credit

      —           —           19         19         5,777         5,796   

Motor vehicle

      49         59         21         129         7,170         7,299   

Other

      7         1         4         12         3,873         3,885   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total

    $ 1,488       $ 151       $ 2,697       $ 4,336       $ 181,110       $ 185,446   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

The Company had no troubled debt restructurings at September 30, 2011 or September 30, 2010. The Company has no classes of loans that are considered to be subprime.

 

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

 

     Performing      Nonperforming  
     (In thousands)  

Real estate:

      

One to four family

    $ 145,575       $ 2,158   

Multi-family

      1,521         495   

Commercial real estate

      9,786         —     

Construction and land

      5,209         —     

Commercial and industrial

      3,722         —     

Consumer:

      

Home equity loans and lines of credit

      5,777         19   

Motor vehicle

      7,278         21   

Other

      3,881         4   
  

 

 

     

 

 

  
   $ 182,749       $ 2,697   
  

 

 

     

 

 

  

Fair Value
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Fair Value
 12 Months Ended
Sep. 30, 2011
Fair Value [Abstract]  
Fair Value

NOTE 4 - 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 the lower of carrying amount or fair value, less costs to sell. Fair values are generally based on third party appraisals of the property, resulting in a Level 3 classification. In cases where the carrying amount exceeds the fair value, less costs to sell, an impairment loss is recognized.

 

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
September 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

    $ 33,417       $ —         $ 33,417       $ —     

U.S. Government agencies and sponsored entitites

      39,331         —           39,331         —     

Mortgage backed securities: residential

      3,997         —           3,997         —     
  

 

 

     

 

 

     

 

 

     

 

 

  

Total securities

    $ 76,745       $ —         $ 76,745       $ —     
  

 

 

     

 

 

     

 

 

     

 

 

  

 

            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
September 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
(one to four family), net

    $ 87       $ —         $ —         $ 87   

 

            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
(one to four family), net

    $ 129         —           —         $ 129   

Other real estate owned which is measured at fair value less costs to sell, had a net carrying amount of $87,000, which is made up of the outstanding balance of $87,000 with no valuation allowance at September 30, 2011. At September 30, 2010, other real estate owned had a net carrying amount of $129,000 made up of the outstanding balance of $216,000, net of a valuation allowance of $87,000.

 

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

 

September 30, 2011    Carrying      Fair  
(Dollars in thousands)    Amount      Value  

Financial assets

      

Cash and cash equivalents

    $ 48,440       $ 48,440   

Securities

      76,745         76,745   

Federal Home Loan Bank stock

      1,906         N/A   

Loans held for sale

      1,012         1,037   

Loans, net

      183,696         190,737   

Accrued interest receivable

      1,491         1,491   

Financial liabilities

      

Deposits

    $ 242,722       $ 244,812   

Federal Home Loan Bank advances

      23,117         24,642   

Accrued interest payable

      435         435   

 

September 30, 2010    Carrying      Fair  
(Dollars in thousands)    Amount      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.

Loan Servicing
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Loan Servicing
 12 Months Ended
Sep. 30, 2011
Loan Servicing [Abstract]  
Loan Servicing

NOTE 5 - LOAN SERVICING

The Company began selling mortgage loans with servicing rights retained during the year ended September 30, 2010. Mortgage loans serviced for others are not reported as assets. The principal balance of these loans at September 30, 2011 and 2010 were $14,387,000 and $3,119,000, respectively. Custodial escrow balances maintained in connection with serviced loans were $19,000 and $2,000 at September 30, 2011 and year-end 2010.

 

Activity for loan servicing during the period and year ends were as follows (in thousands):

 

     September 30,  
     2011     2010  

Beginning of period

    $ 31      $ —     

Additions

      112        31   

Disposals

      —          —     

Amortizion to expense

      (10 )      —     
  

 

 

    

 

 

  

End of period

    $ 133      $ 31   
  

 

 

    

 

 

  

There was no valuation allowance for servicing rights at September 30, 2011 and September 30, 2010. The fair value of servicing rights is estimated to be $133,000 and $31,000 at September 30, 2011 and September 30, 2010.

Premises And Equipment
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Premises And Equipment
 12 Months Ended
Sep. 30, 2011
Premises And Equipment [Abstract]  
Premises And Equipment

NOTE 6 - PREMISES AND EQUIPMENT

Premises and equipment at September 30, 2011 and September 30, 2010 were as follows (in thousands):

 

     September 30,  
     2011      2010  

Land

    $ 1,132       $ 1,132   

Buildings

      5,702         5,617   

Furniture, fixtures, and equipment

      1,920         1,762   

Automobiles

      59         59   
  

 

 

     

 

 

  
     8,813         8,570   

Less: Accumulated depreciation

      2,491         2,121   
  

 

 

     

 

 

  
   $ 6,322       $ 6,449   
  

 

 

     

 

 

  

Depreciation expense was $371,000 and $320,000 for the years ended 2011 and 2010, respectively.

Accrued Interest Receivable
v0.0.0.0
Accrued Interest Receivable
 12 Months Ended
Sep. 30, 2011
Accrued Interest Receivable [Abstract]  
Accrued Interest Receivable

NOTE 7 - ACCRUED INTEREST RECEIVABLE

Accrued interest receivable was as follows (in thousands):

 

     September 30,  
     2011      2010  

Loans

    $ 872       $ 858   

Securities

      606         512   

Mortgage backed securities: residential

      13         —     
  

 

 

     

 

 

  
   $ 1,491       $ 1,370   
  

 

 

     

 

 

  

Deposits
v0.0.0.0
Deposits
 12 Months Ended
Sep. 30, 2011
Deposits [Abstract]  
Deposits

NOTE 8 - DEPOSITS

Time deposits of $100 thousand or more were $70,008,000 and $77,546,000 at years ended September 30, 2011 and 2010.

Scheduled maturities of time deposits for the next five years were as follows (in thousands):

 

     September 30,  

2012

    $ 88,088   

2013

      40,488   

2014

      12,573   

2015

      1,467   

2016

      6,940   
  

 

 

  

Total

    $ 149,556   
  

 

 

  

At September 30, 2011 and 2010, generally accounts in excess of $250,000 are not federally insured.

Interest expense on deposits was as follows (in thousands):

 

     Year ended
September 30,		  
     2011      2010  

Savings

    $ 691       $ 566   

Time deposits

      3,040         3,947   
  

 

 

     

 

 

  
   $ 3,731       $ 4,513   
  

 

 

     

 

 

  

Federal Home Loan Bank Advances
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Federal Home Loan Bank Advances
 12 Months Ended
Sep. 30, 2011
Federal Home Loan Bank Advances [Abstract]  
Federal Home Loan Bank Advances

NOTE 9 - FEDERAL HOME LOAN BANK ADVANCES

At September 30, 2011 and 2010, advances from the Federal Home Loan Bank were as follows:

 

     September 31,  
     2011      2010  
     (In Thousands)  

Maturities October 2010 through June 2024, fixed rate at rates from 1.94% to 6.75%, weighted average rate of 2.95%at September 30, 2011 and 2.94% at September 30, 2010

    $ 23,117       $ 32,205   

Rates on advances were as follows:

 

     September 31,  
     2011      2010  
     (In thousands)  

1.75% - 2.75%

    $ 11,601       $ 16,086   

2.76% - 3.75%

      8,908         12,492   

3.76% - 4.75%

      2,446         3,350   

4.76% - 5.75%

      —           38   

5.76% - 6.75%

      162         239   
  

 

 

     

 

 

  
   $ 23,117       $ 32,205   
  

 

 

     

 

 

  

 

Each advance is payable at its maturity date, with a prepayment penalty for fixed rate advances. The advances were collateralized by all of the Association's one to four family first mortgage loans under a blanket lien arrangement at year-end 2011 and 2010 and the Association's FHLB stock. Based on this collateral and the Association's holdings of FHLB stock, the Association is eligible to borrow up to a total of $50,593,000 at year-end 2011 and $41,501,000 at year-end 2010.

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

 

     September 30,  

2012

    $ 5,647   

2013

      4,421   

2014

      3,614   

2015

      2,948   

2016

      2,385   
  

 

 

  

Total

    $ 19,015   
  

 

 

  

Benefit Plans
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Benefit Plans
 12 Months Ended
Sep. 30, 2011
Benefit Plans [Abstract]  
Benefit Plans

NOTE 10 - BENEFIT PLANS

Multi-Employer Pension Plan: The Association participates in the Pentegra multi-employer pension plan. This non-contributory defined benefit plan covers all eligible employees meeting certain service and age requirements that were employed by the Association prior to January 1, 2007. Effective January 1, 2007, the Association discontinued the defined benefit plan for all employees hired after December 31, 2006. Contributions to the plan will continue to be made for all eligible pre-2007 participants. It is the Association's policy to fund the normal cost of the plan. The normal costs totaled $596,000 and $353,000 for the years ended September 30, 2011 and 2010, respectively. The Association's estimated plan contribution for the fiscal year ending September 30, 2012 is approximately $703,000.

401(k) Plan: A 401(k) benefit plan allows employee contributions up to 15% of their compensation, which are matched equal to 50% of the first 6% of the compensation contributed. Expense for the years ended 2011 and 2010 was $22,000 and $8,000, respectively.

Deferred Compensation Plan: A deferred compensation plan covers all directors and certain executive officers. Under the plan, the Association pays each participant, or their beneficiary, the amount of fees deferred plus interest over 20 years, beginning with the individual's termination of service. A liability is accrued for the obligation under these plans. In January 2003, the Association adopted a non-contributory retirement plan which provides benefits to directors and certain key officers. The Association's obligations under the plan have been informally funded through the purchase of single premium key man life insurance of which the Association is the beneficiary. The expense incurred for the deferred compensation for the years ended September 30, 2011 and 2010 was $199,000 and $155,000, respectively, resulting in a deferred compensation liability of $1,728,000 and $963,000, respectively. The cash surrender value of the key man life insurance policies totaled $6,467,000 and $6,239,000 at September 30, 2011 and 2010, respectively.

Income Taxes
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Income Taxes
 12 Months Ended
Sep. 30, 2011
Income Taxes [Abstract]  
Income Taxes

NOTE 11 - INCOME TAXES

The provision for income taxes consists of (in thousands):

 

     Years Ended
September 30,		  
     2011     2010  

Currently payable

    $ 439      $ 613   

Deferred expense (benefit)

      (160 )      38   
  

 

 

    

 

 

  
   $ 279      $ 651   
  

 

 

    

 

 

  

The following tabulation reconciles the federal statutory tax rate of 34% to the effective rate of taxes provided for income taxes (in thousands):

 

     Years Ended
September 30,		  
     2011     2010  

Tax at statutory rate

    $ 669      $ 965   

Tax exempt income

      (394 )      (325 ) 

Other

      4        11   
  

 

 

    

 

 

  

Federal income tax expense

    $ 279      $ 651   
  

 

 

    

 

 

  

Effective tax rate

      14.17 %      22.94 % 

The components of the Company's net deferred tax asset (liability) as of September 30, 2011 and 2010 are summarized as follows (in thousands):

 

     September 30,  
     2011      2010  

Deferred tax assets:

      

Deferred compensation plan

    $ 384       $ 328   

Deferred loan origination fees

      31         31   

AMT credit carryforward

      591         616   

Allowance for loan losses

      564         385   

Other

      20         14   
  

 

 

     

 

 

  
     1,590         1,374   

Deferred tax liabilities:

      

Federal Home Loan Bank stock dividends

      431         431   

Basis in property and equipment

      343         320   

Accretion on securities

      43         46   

Other

      45         10   

Unrealized gains on available for sale securities

      536         350   
  

 

 

     

 

 

  
     1,398         1,157   
  

 

 

     

 

 

  

Net deferred tax asset

    $ 192       $ 217   
  

 

 

     

 

 

  

Management evaluated whether a valuation allowance was necessary based on taxes paid in prior periods and recoverable, projected future income, projected future reversals of deferred tax items, and tax planning strategies. Based on its assessments, management concluded that it was more likely than not that all deferred tax assets could be realized based primarily on current taxes paid and recoverable and projected reversals of deferred tax liabilities, as well as future income. As such, no valuation allowance was recorded as of September 30, 2011 or 2010.

 

The Company is subject to U.S. federal income tax. The Company is no longer subject to examination by taxing authorities for years before September 30, 2008.

Retained earnings at September 30, 2011 included approximately $2,340,688 for which no provision for federal income taxes has been made. This amount represents the tax bad debt reserve at September 30, 1987, which is the end of the Association's base year for purposes of calculating the bad debt deduction for tax purposes. If this portion of retained earnings is used in the future for any purpose other than to absorb bad debts, the amount used will be added to future taxable income. The unrecorded deferred tax liability on the above amount at September 30, 2011 was approximately $795,834.