Notes to Consolidated Financial Statements
(Unaudited)
NOTE 1 – Organization
PB Bancorp,
Inc. (the “Company”) is a Maryland corporation incorporated in 2015 to be the successor to PSB Holdings, Inc.
upon completion of the second-step mutual-to-stock conversion (the “Conversion”) of Putnam Bancorp, MHC
(the “MHC”), the top tier mutual holding company of PSB Holdings, Inc. PSB Holdings, Inc. was the former
mid-tier holding company for Putnam Bank (the “Bank”). Prior to completion of the Conversion, a majority of
the shares of common stock of PSB Holdings, Inc. were owned by the MHC. In conjunction with the Conversion, the MHC and
PSB Holdings, Inc. merged into the Company and the Company became PSB Holdings, Inc.’s successor. The Conversion
was completed on January 7, 2016. The Company raised gross proceeds of $33.7 million in the related stock offering.
Concurrent with the completion of the stock offering, each share of PSB Holdings, Inc. stock owned by public
stockholders (stockholders other than the MHC) was exchanged for 1.1907 shares of Company common stock. The Conversion
was accounted for as a capital raising transaction by entities under common control. The historical financial results of the
MHC were immaterial to the results of the Company and therefore the net assets of the MHC were reflected as an increase
to stockholders’ equity.
Acquisition
On October 22,
2019, the Company, Putnam Bank and Centreville Bank announced they had entered into a definitive agreement under which
Centreville Bank will acquire the Company and Putnam Bank in an all cash transaction valued at approximately $115.5 million.
The Company’s stockholders will receive $15.25 for each share of Company common stock that they own. The
transaction is expected to close in the first or second quarter of 2020 and is subject to customary closing conditions,
including the approval of the Company’s stockholders and required regulatory approvals. However, it is possible
that factors outside the control of both companies, including whether or when the required regulatory approvals will be
received, could result in the merger being completed at a different time or not at all.
NOTE 2 – Basis of Presentation
The accompanying unaudited
consolidated interim financial statements have been prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial statements and the instructions to Form 10-Q, and accordingly do not include all
of the information and footnotes required by accounting principles generally accepted in the United States of America for complete
financial statements. In the opinion of management, the accompanying unaudited consolidated financial statements reflect all adjustments
necessary, consisting of only normal recurring accruals and the elimination of all significant intercompany accounts, to present
fairly the financial position, results of operations and cash flows of the Company for the periods presented. The interim results
of operations are not necessarily indicative of the operating results to be expected for future periods, including the fiscal year
ending June 30, 2020. These financial statements should be read in conjunction with the 2019 consolidated financial statements
and notes thereto included in PB Bancorp, Inc.’s Annual Report on Form 10-K filed with the Securities and Exchange Commission
(‘’SEC’’) on September 26, 2019.
NOTE 3 – Recent Accounting Pronouncements
In
February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)
2016-02, Leases (Topic 842), which supersedes the requirements in Topic 840, Leases. The objective of Topic 842
is to establish the principles that lessees and lessors shall apply to report useful information to users of financial statements
about the amount, timing, and uncertainty of cash flows arising from a lease. The core principle of Topic 842 is that a lessee
should recognize the assets and liabilities that arise from leases. The amendments in this Update are effective for companies
that qualify as “smaller reporting companies” under SEC regulations, like the Company, fiscal years beginning after
December 31, 2018, including interim periods within those fiscal years. Early application of the amendments in this Update is
permitted for all entities. Based on the current level of long-term leases in place, adoption of this guideline was not material
to the Company’s results of operations or financial position.
In June 2016, the
FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326), which requires entities to measure
all expected credit losses for certain financial assets (such as loans and held-to-maturity securities) held at the reporting
date based on historical experience, current conditions, and reasonable and supportable forecasts. Entities will now use
forward-looking information to better form their credit loss estimates. The ASU also requires enhanced disclosures to help financial
statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit
quality and underwriting standards of an entity’s portfolio. The amendments in this Update are effective for companies that
qualify as “smaller reporting companies” under SEC regulations, like the Company, fiscal years, and interim periods
within those fiscal years, beginning after December 15, 2019. Early application will be permitted for fiscal years, and interim
periods within those fiscal years, beginning after December 15, 2018. However, the FASB recently voted to propose delaying the
standard by three years for small reporting companies, which includes Putnam Bank. Management is currently working to implement
these requirements to determine the potential impact on the Company’s consolidated financial statements.
In January 2017, the
FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.
The amendments in this update simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment
test. Instead, an entity will be required to perform its annual, or interim, goodwill impairment test by comparing the fair
value of a reporting unit with its carrying amount. An entity will recognize an impairment charge for the amount by which the carrying
amount exceeds the reporting unit’s fair value; however, the loss recognized will not exceed the total amount of goodwill
allocated to that reporting unit. Additionally, an entity will consider income tax effects from any tax deductible goodwill on
the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. For public business
entities, the amendments are effective for annual and any interim goodwill impairment tests in fiscal years beginning after December
15, 2020. Early adoption is permitted. We do not expect the application of this guidance to have a material impact
on our consolidated financial statements.
In August 2018, the FASB issued ASU 2018-13,
Fair Value Measurement (Topic 820), which amends the disclosure requirements by adding, changing, or removing certain disclosures
about recurring or non-recurring fair value measurements. This ASU will be effective for public business entities for fiscal years
beginning after December 15, 2019, including interim periods within those fiscal years. The adoption of this update will not have
a significant impact on the consolidated financial statements.
NOTE
4 – Critical Accounting Policies
Critical accounting
policies are those that involve significant judgments and assumptions by management that have, or could have, a material impact
on our income or the carrying value of our assets. Our critical accounting policies are those related to the allowance for loan
losses, realizability of deferred income taxes, valuation of goodwill and the impairment of securities.
Allowance for Loan
Losses. The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan
losses charged to earnings. Loan losses are charged against the allowance when management believes the uncollectability of a loan
balance is confirmed.
The allowance for loan
losses is evaluated on a quarterly basis by management. This evaluation is inherently subjective as it requires estimates that
are susceptible to significant revision as more information becomes available. The allowance consists of general, specific and
unallocated components, as further described below.
General component
The general component
of the allowance for loan losses is based on historical loss experience adjusted for qualitative factors stratified by the following
loan segments: residential real estate, commercial real estate, residential construction, commercial and consumer/other. Management
uses a rolling average of historical losses based on a time frame appropriate to capture relevant loss data for each loan segment.
This historical loss factor is adjusted for the following qualitative factors: levels/trends in delinquencies; trends in volume
and terms of loans; concentrations; changes in lending policies and procedures; experience/ability/depth of lending management
and staff; loan rating migration; the effect of other external factors; changes in the value of underlying collateral; changes
in the loan review system and national and local economic trends and conditions. The Company calculates historical losses using
a five-year rolling average, which is considered indicative of the risk in the Company’s current loan portfolio. There were
no changes in the Company’s policies or methodology pertaining to the general component of the allowance for loan losses
through September 30, 2019.
The qualitative factors
are determined based on the various risk characteristics of each loan segment. Risk characteristics relevant to each portfolio
segment are as follows:
Residential real estate
- The Company does not originate loans with a loan-to-value ratio greater than 100% and does not originate subprime loans. Loans
originated with a loan-to-value ratio greater than 80% generally require private mortgage insurance. All loans in this segment
are collateralized by owner-occupied residential real estate and repayment is dependent on the credit quality of the individual
borrower. The overall health of the economy, including unemployment rates and housing prices, will have an effect on the credit
quality in this segment.
Commercial real estate
- Loans in this segment are primarily income-producing properties throughout New England. The underlying cash flows generated by
the properties may be adversely impacted by a downturn in the economy as evidenced by increased vacancy rates, which in turn, would
have an effect on the credit quality in this segment. Management obtains rent rolls annually and continually monitors the cash
flows of these loans.
Residential construction
– Loans in this segment include speculative real estate development loans for which payment is derived from sale of the property.
Credit risk is affected by the accuracy of estimated costs to complete the project, cost overruns, time to sell at an adequate
price, and market conditions.
Commercial -
Loans in this segment are made to businesses and are generally secured by assets of the business. Repayment is expected from the
cash flows of the business. A weakened economy, and resultant decreased consumer spending, will have an effect on the credit quality
in this segment.
Consumer/other - Loans in this segment are
generally unsecured and repayment is dependent on the credit quality of the individual borrower.
Specific component
The specific component
relates to loans that are classified as impaired. Impairment is measured on a loan by loan basis by either the present value of
expected future cash flows discounted at the loan’s effective interest rate or the fair value of the collateral if the loan
is collateral dependent or foreclosure is probable. An allowance is established when the discounted cash flows (or collateral value)
of the impaired loan is lower than the carrying value of that loan. Large groups of smaller balance homogeneous loans are collectively
evaluated for impairment. Accordingly, the Company does not separately identify individual consumer/other and residential real
estate loans for impairment disclosures, unless such loans are non-accrual or subject to a troubled debt restructuring (“TDR”)
agreement.
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 a 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.
The Company periodically
may agree to modify the contractual terms of loans. When a loan is modified and a concession is made to a borrower experiencing
financial difficulty, the modification is considered a troubled debt restructuring (“TDR”). All TDRs are classified
as impaired.
Unallocated component
An unallocated component
is maintained to cover uncertainties that could affect management’s estimate of probable losses. The unallocated component
of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating
specific and general reserves in the portfolio.
Goodwill. Goodwill
is measured as the excess of the cost of a business acquisition over the sum of the amounts assigned to identifiable tangible and
intangible assets acquired less liabilities assumed. Goodwill is not amortized but is subject to a review of qualitative factors
annually or more frequently if circumstances warrant, to determine if an impairment test is required. If required, the Company
uses the following two-step approach for reviewing goodwill for impairment:
The first step (“Step
1”) is used to identify potential impairment, and involves comparing the reporting unit’s (the consolidated Company)
estimated fair value to its carrying amount, including goodwill. If the estimated fair value of the reporting unit exceeds its
carrying amount, goodwill is not deemed to be impaired. Should the carrying amount of the reporting unit exceed its estimated fair
value, an indicator of impairment is deemed to exist and a second step is performed to measure the amount of such impairment, if
any. The second step (“Step 2”) involves calculating the implied fair value of goodwill. The implied fair value of
goodwill is determined in a manner similar to how the amount of goodwill is determined in a business combination (i.e. by measuring
the excess of the estimated fair value, as determined in Step 1, over the aggregate estimated fair values of the individual assets,
liabilities, and identifiable intangibles as of the impairment testing date). If the implied fair value of goodwill exceeds the
carrying amount of goodwill assigned to the reporting unit, no impairment exists. If the carrying amount of goodwill exceeds the
implied fair value of the goodwill, an impairment loss is recorded in an amount equal to such excess. An impairment loss cannot
exceed the carrying amount of goodwill, and the loss (write-down) establishes a new carrying amount for the goodwill. Subsequent
reversal of goodwill impairment losses is not permitted. Application of the goodwill impairment test requires significant judgments
including estimation of future cash flows, which are dependent on internal forecasts, estimation of the long-term rate of growth,
the period over which cash flows will occur, and determination of our cost of capital. Changes in these estimates and assumptions
could materially affect the determination of fair value and/or conclusions related to goodwill impairment.
Other-Than-Temporary
Impairment of Securities. Each reporting period, the Company evaluates all securities classified as available-for-sale or
held-to-maturity with a decline in fair value below the amortized cost of the investment to determine whether or not the impairment
is deemed to be other-than-temporary (“OTTI”).
OTTI is required to
be recognized if (1) the Company intends to sell the security; (2) it is “more likely than not” that the Company will
be required to sell the security before recovery of its amortized cost basis; or (3) for debt securities, the present value of
expected cash flows is not sufficient to recover the entire amortized cost basis. For impaired debt securities that the Company
intends to sell, or more likely than not will be required to sell, the full amount of the depreciation is recognized as OTTI through
earnings. For all other impaired debt securities, credit-related OTTI is recognized through earnings and non-credit related OTTI
is recognized in other comprehensive income, net of applicable taxes.
Income
Taxes. The Company recognizes income taxes under the asset and liability method. Under this method, deferred tax
assets and liabilities are established for the temporary differences between the accounting basis and the tax basis of the
Company’s assets and liabilities at enacted rates expected to be in effect when the amounts related to such temporary
differences are realized or settled. A valuation allowance is established against deferred tax assets when, based upon the
available evidence including historical and projected taxable income, it is more likely than not that some or all of the
deferred tax assets will not be realized.
Management has discussed
the development and selection of these critical accounting policies with the Audit Committee.
NOTE 5 – Earnings Per Share (EPS)
Basic earnings per
share is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding
for the period. The rights to dividends on unvested options/awards are non-forfeitable, therefore the unvested awards/options are
considered outstanding in the computation of basic earnings per share. Diluted earnings per share reflect the potential dilution
that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted
in the issuance of common stock that then shared in the earnings of the Company. For purposes of computing diluted EPS, the treasury
stock method is used.
The following information
was used in the computation of EPS on both a basic and diluted basis for the three months ended September 30, 2019:
|
|
Three months ended
September 30,
|
|
|
|
2019
|
|
|
2018
|
|
Net income
|
|
$
|
956,000
|
|
|
$
|
1,391,000
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares applicable to basic EPS
|
|
|
7,059,885
|
|
|
|
7,218,179
|
|
Effect of dilutive potential common shares
|
|
|
12,064
|
|
|
|
8,611
|
|
Weighted average common shares applicable to diluted EPS
|
|
|
7,071,949
|
|
|
|
7,226,790
|
|
Earnings per share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.14
|
|
|
$
|
0.19
|
|
Diluted
|
|
$
|
0.14
|
|
|
$
|
0.19
|
|
For the three months ended September 30,
2019 and 2018, there were no antidilutive options not being included in the computation of diluted earnings per share.
NOTE
6 – Investment Securities
The carrying value,
estimated fair values, and gross unrealized gains and losses of investment securities by maturity and type are as follows:
|
|
Amortized
|
|
|
Gross Unrealized
|
|
|
Fair
|
|
|
|
Cost Basis
|
|
|
Gains
|
|
|
(Losses)
|
|
|
Value
|
|
|
|
(in thousands)
|
|
September 30, 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available-for-sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. government and government-sponsored securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
After ten years
|
|
$
|
2,088
|
|
|
$
|
-
|
|
|
$
|
(68
|
)
|
|
$
|
2,020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate bonds:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Due from five through ten years
|
|
|
3,999
|
|
|
|
-
|
|
|
|
(307
|
)
|
|
|
3,692
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Government-sponsored and guaranteed mortgage-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Due from one through five years
|
|
|
4,505
|
|
|
|
16
|
|
|
|
(3
|
)
|
|
|
4,518
|
|
From five through ten years
|
|
|
1,085
|
|
|
|
-
|
|
|
|
(3
|
)
|
|
|
1,082
|
|
After ten years
|
|
|
13,167
|
|
|
|
111
|
|
|
|
(62
|
)
|
|
|
13,216
|
|
|
|
|
18,757
|
|
|
|
127
|
|
|
|
(68
|
)
|
|
|
18,816
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-agency mortgage-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Due after ten years
|
|
|
2,386
|
|
|
|
398
|
|
|
|
(277
|
)
|
|
|
2,507
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other debt securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Auction rate preferred:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Due from five through ten years
|
|
|
8,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
8,000
|
|
After ten years
|
|
|
2,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,000
|
|
|
|
|
10,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total available-for-sale securities
|
|
$
|
37,230
|
|
|
$
|
525
|
|
|
$
|
(720
|
)
|
|
$
|
37,035
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Held-to-maturity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. government and government-sponsored securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Due in one year or less
|
|
$
|
3,991
|
|
|
$
|
19
|
|
|
$
|
-
|
|
|
$
|
4,010
|
|
After ten years
|
|
|
4,150
|
|
|
|
32
|
|
|
|
-
|
|
|
|
4,182
|
|
|
|
|
8,141
|
|
|
|
51
|
|
|
|
-
|
|
|
|
8,192
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
State agency and municipal obligations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
From one through five years
|
|
|
439
|
|
|
|
-
|
|
|
|
-
|
|
|
|
439
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Government-sponsored and guaranteed mortgage-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Due from one through five years
|
|
|
329
|
|
|
|
7
|
|
|
|
-
|
|
|
|
336
|
|
From five through ten years
|
|
|
9,627
|
|
|
|
66
|
|
|
|
(26
|
)
|
|
|
9,667
|
|
After ten years
|
|
|
39,556
|
|
|
|
492
|
|
|
|
(137
|
)
|
|
|
39,911
|
|
|
|
|
49,512
|
|
|
|
565
|
|
|
|
(163
|
)
|
|
|
49,914
|
|
Total held-to-maturity securities
|
|
$
|
58,092
|
|
|
$
|
616
|
|
|
$
|
(163
|
)
|
|
$
|
58,545
|
|
|
|
Amortized
|
|
|
Gross Unrealized
|
|
|
Fair
|
|
|
|
Cost Basis
|
|
|
Gains
|
|
|
(Losses)
|
|
|
Value
|
|
|
|
(in thousands)
|
|
June 30, 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available-for-sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. government and government-sponsored securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Due after ten years
|
|
$
|
2,310
|
|
|
$
|
-
|
|
|
$
|
(68
|
)
|
|
$
|
2,242
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate bonds:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Due from five through ten years
|
|
|
3,999
|
|
|
|
-
|
|
|
|
(323
|
)
|
|
|
3,676
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Government-sponsored and guaranteed mortgage-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Due from one through five years
|
|
|
5,066
|
|
|
|
13
|
|
|
|
(5
|
)
|
|
|
5,074
|
|
From five through ten years
|
|
|
1,147
|
|
|
|
-
|
|
|
|
(5
|
)
|
|
|
1,142
|
|
After ten years
|
|
|
14,235
|
|
|
|
118
|
|
|
|
(117
|
)
|
|
|
14,236
|
|
|
|
|
20,448
|
|
|
|
131
|
|
|
|
(127
|
)
|
|
|
20,452
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-agency mortgage-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Due after ten years
|
|
|
2,503
|
|
|
|
410
|
|
|
|
(340
|
)
|
|
|
2,573
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other debt securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Auction rate preferred:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Due from five through ten years
|
|
|
8,000
|
|
|
|
-
|
|
|
|
(24
|
)
|
|
|
7,976
|
|
After ten years
|
|
|
2,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
-
|
|
|
|
(24
|
)
|
|
|
9,976
|
|
Total available-for-sale securities
|
|
$
|
39,260
|
|
|
$
|
541
|
|
|
$
|
(882
|
)
|
|
$
|
38,919
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Held-to-maturity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. government and government-sponsored securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Due in one year or less
|
|
$
|
4,000
|
|
|
$
|
-
|
|
|
$
|
(4
|
)
|
|
$
|
3,996
|
|
From one through five years
|
|
|
989
|
|
|
|
22
|
|
|
|
-
|
|
|
|
1,011
|
|
After ten years
|
|
|
4,379
|
|
|
|
-
|
|
|
|
(2
|
)
|
|
|
4,377
|
|
|
|
|
9,368
|
|
|
|
22
|
|
|
|
(6
|
)
|
|
|
9,384
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
State agency and municipal obligations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Due from one through five years
|
|
|
440
|
|
|
|
-
|
|
|
|
(2
|
)
|
|
|
438
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Government-sponsored and guaranteed mortgage-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Due from one through five years
|
|
|
411
|
|
|
|
9
|
|
|
|
-
|
|
|
|
420
|
|
From five through ten years
|
|
|
9,636
|
|
|
|
24
|
|
|
|
(37
|
)
|
|
|
9,623
|
|
After ten years
|
|
|
43,625
|
|
|
|
543
|
|
|
|
(175
|
)
|
|
|
43,993
|
|
|
|
|
53,672
|
|
|
|
576
|
|
|
|
(212
|
)
|
|
|
54,036
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total held-to-maturity securities
|
|
$
|
63,480
|
|
|
$
|
598
|
|
|
$
|
(220
|
)
|
|
$
|
63,858
|
|
There were no sales
of available-for-sale securities for the three months ended September 30, 2019 and 2018. Gains and losses on the sales of securities
are recorded on the trade date and are determined using the specific identification method. There were other-than-temporary impairment
charges on available-for-sale securities realized in income during the three months ended September 30, 2019 of $47,000 and no
other-than-temporary charges during the three months ended September 30, 2018. The write-downs for the three months ended September
30, 2019 included total other-than-temporary impairment losses on non-agency mortgage-backed securities of $199,000, net of $152,000
recognized in other comprehensive loss, before taxes.
The following is a summary of the estimated
fair value and related unrealized losses segregated by category and length of time that individual securities have been in a continuous
unrealized loss position at:
|
|
Less than 12 months
|
|
|
12 months or more
|
|
|
Total
|
|
|
|
Fair
|
|
|
Unrealized
|
|
|
Fair
|
|
|
Unrealized
|
|
|
Fair
|
|
|
Unrealized
|
|
|
|
Value
|
|
|
Losses
|
|
|
Value
|
|
|
Losses
|
|
|
Value
|
|
|
Losses
|
|
|
|
(in thousands)
|
|
September 30, 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available-for-sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Government and government-sponsored securities
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
2,020
|
|
|
$
|
68
|
|
|
$
|
2,020
|
|
|
$
|
68
|
|
Corporate bonds
|
|
|
-
|
|
|
|
-
|
|
|
|
3,692
|
|
|
|
307
|
|
|
|
3,692
|
|
|
|
307
|
|
U.S. Government-sponsored and guaranteed mortgage-backed securities
|
|
|
2,266
|
|
|
|
12
|
|
|
|
5,944
|
|
|
|
56
|
|
|
|
8,210
|
|
|
|
68
|
|
Total temporarily impaired available-for-sale
|
|
|
2,266
|
|
|
|
12
|
|
|
|
11,656
|
|
|
|
431
|
|
|
|
13,922
|
|
|
|
443
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Held-to-maturity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Government and government-sponsored securities
|
|
|
-
|
|
|
|
-
|
|
|
|
1,000
|
|
|
|
-
|
|
|
|
1,000
|
|
|
|
-
|
|
State and political subdivisions
|
|
|
439
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
439
|
|
|
|
-
|
|
U.S. Government-sponsored and guaranteed mortgage-backed securities
|
|
|
6,427
|
|
|
|
23
|
|
|
|
17,585
|
|
|
|
140
|
|
|
|
24,012
|
|
|
|
163
|
|
Total temporarily impaired held-to-maturity
|
|
|
6,866
|
|
|
|
23
|
|
|
|
18,585
|
|
|
|
140
|
|
|
|
25,451
|
|
|
|
163
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other-than-temporarily impaired debt securities (1):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-agency mortgage-backed securities
|
|
|
265
|
|
|
|
12
|
|
|
|
952
|
|
|
|
265
|
|
|
|
1,217
|
|
|
|
277
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total temporarily-impaired and other-than-temporarily impaired securities
|
|
$
|
9,397
|
|
|
$
|
47
|
|
|
$
|
31,193
|
|
|
$
|
836
|
|
|
$
|
40,590
|
|
|
$
|
883
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less than 12 months
|
|
|
|
12 months or more
|
|
|
|
Total
|
|
|
|
|
Fair
|
|
|
|
Unrealized
|
|
|
|
Fair
|
|
|
|
Unrealized
|
|
|
|
Fair
|
|
|
|
Unrealized
|
|
|
|
|
Value
|
|
|
|
Losses
|
|
|
|
Value
|
|
|
|
Losses
|
|
|
|
Value
|
|
|
|
Losses
|
|
|
|
|
(in
thousands)
|
|
June 30, 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available-for-sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Government and government-sponsored securities
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
2,242
|
|
|
$
|
68
|
|
|
$
|
2,242
|
|
|
$
|
68
|
|
Corporate bonds
|
|
|
-
|
|
|
|
-
|
|
|
|
3,676
|
|
|
|
323
|
|
|
|
3,676
|
|
|
|
323
|
|
U.S. Government-sponsored and guaranteed mortgage-backed securities
|
|
|
1,425
|
|
|
|
7
|
|
|
|
13,576
|
|
|
|
120
|
|
|
|
15,001
|
|
|
|
127
|
|
Other securities
|
|
|
2,976
|
|
|
|
24
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,976
|
|
|
|
24
|
|
Total temporarily impaired available-for-sale
|
|
|
4,401
|
|
|
|
31
|
|
|
|
19,494
|
|
|
|
511
|
|
|
|
23,895
|
|
|
|
542
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Held-to-maturity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Government and government-sponsored securities
|
|
|
-
|
|
|
|
-
|
|
|
|
8,373
|
|
|
|
6
|
|
|
|
8,373
|
|
|
|
6
|
|
State and political subdivisions
|
|
|
-
|
|
|
|
-
|
|
|
|
438
|
|
|
|
2
|
|
|
|
438
|
|
|
|
2
|
|
U.S. Government-sponsored and guaranteed mortgage-backed securities
|
|
|
-
|
|
|
|
-
|
|
|
|
29,400
|
|
|
|
212
|
|
|
|
29,400
|
|
|
|
212
|
|
Total temporarily impaired held-to-maturity
|
|
|
-
|
|
|
|
-
|
|
|
|
38,211
|
|
|
|
220
|
|
|
|
38,211
|
|
|
|
220
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other-than-temporarily impaired debt securities (1):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-agency mortgage-backed securities
|
|
|
268
|
|
|
|
11
|
|
|
|
947
|
|
|
|
329
|
|
|
|
1,215
|
|
|
|
340
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total temporarily-impaired and other-than-temporarily impaired securities
|
|
$
|
4,669
|
|
|
$
|
42
|
|
|
$
|
58,652
|
|
|
$
|
1,060
|
|
|
$
|
63,321
|
|
|
$
|
1,102
|
|
|
(1)
|
Includes
other-than-temporary impaired available-for-sale debt securities in which a portion of the other-than-temporary impairment loss
remains in accumulated other comprehensive loss.
|
Management evaluates securities for OTTI
at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation.
At September 30, 2019,
there were 50 individual investment securities with aggregate depreciation of 2.1% from the Company’s amortized cost basis.
Management has the intent and ability to hold these securities until cost recovery occurs and considers these declines to be temporary.
The unrealized losses
on the Company’s investment in U.S. Government-sponsored agency bonds and U.S. government-guaranteed and government-sponsored
residential mortgage-backed securities were primarily caused by interest rate fluctuations. These investments are guaranteed or
sponsored by the U.S. government or an agency thereof. Accordingly, it is expected that the securities would not be settled at
a price less than the par value of the investment. Because the decline in market value is attributable to changes in interest rates
and not to credit quality, and because the Company does not intend to sell the investments and it is not more likely than not that
the Company will be required to sell the investments before recovery of their amortized cost bases, which may be maturity, the
Company does not consider these investments to be other-than-temporarily impaired at September 30, 2019.
The Company’s
unrealized losses on investments in corporate bonds and other securities relate to investments in companies within the financial
services sector. As of September 30, 2019, the Company had three investments in corporate single-issuer trust preferred securities
(TRUPs) with a total book value of $4.0 million and total fair value of $3.7 million, all of which were classified as available-for-sale.
The single-issuer trust preferred investments are evaluated for other-than-temporary impairment by performing a present value of
cash flows calculation each quarter. None of the issuers have deferred interest payments or announced the intention to defer interest
payments. The Company believes the decline in fair value is related to the spread over three-month LIBOR, on which the quarterly
interest payments are based, as the spread over LIBOR being received is significantly lower than current market spreads. Management
concluded the impairment of these investments was considered temporary and asserts that the Company does not have the intent to
sell these investments and that it is more likely than not it will not have to sell the investments before recovery of their cost
bases which may be at maturity.
At September 30, 2019,
there was one state and political subdivision security that had an unrealized loss of 0.1% from the Company’s amortized cost
basis. We believe the unrealized loss was primarily caused by interest rate fluctuations. This security is guaranteed by a school
district located in Texas. Because the decline in market value is attributable to changes in interest rates and not to credit quality,
and because the Company does not intend to sell the investment and it is not more likely than not that the Company will be required
to sell the investments before recovery of its amortized cost basis, which may be at maturity, the Company does not consider this
investment to be other-than-temporarily impaired at September 30, 2019.
For the three months
ended September 30, 2019, there was $47,000 in other-than-temporary impairment losses recognized in earnings. There were no other-than-temporary
impairment losses for the three months ended September 30, 2018. The other-than-temporary impairment losses were on non-agency
mortgage-backed securities. The Company estimates the portion of possible loss attributable to credit loss using a discounted cash
flow model. Significant inputs include the estimated cash flows of the underlying loans based on key assumptions, such as default
rate, loss severity and prepayment rate. Assumptions can vary widely from security to security, and are influenced by such factors
as loan interest rate, geographical location of the borrower, borrower characteristics and collateral type. The present value of
the expected cash flows is compared to the Company’s amortized cost basis to determine if there was a credit-related impairment
loss. Based on the expected cash flows derived from the model, the Company expects to recover the remaining unrealized losses on
these securities.
The following table represents a roll-forward
of the amount of credit losses on debt securities for which a portion of other-than-temporary impairment was recognized in other
comprehensive loss:
|
|
Three months ended
|
|
|
|
September 30,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
(in thousands)
|
|
Balance at beginning of period
|
|
$
|
16,016
|
|
|
$
|
15,983
|
|
|
|
|
|
|
|
|
|
|
Additional credit losses on securities for which an other-than-temporary impairment charge was previously recorded
|
|
|
47
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Balance at end of period
|
|
$
|
16,063
|
|
|
$
|
15,983
|
|
NOTE 7 – Loans
The following table sets forth the composition
of our loan portfolio at September 30, 2019 and June 30, 2019:
|
|
September 30,
|
|
|
June 30,
|
|
|
|
2019
|
|
|
2019
|
|
|
|
(in thousands)
|
|
Real Estate:
|
|
|
|
|
|
|
|
|
Residential (1)
|
|
$
|
216,101
|
|
|
$
|
221,488
|
|
Commercial
|
|
|
144,360
|
|
|
|
145,694
|
|
Residential construction
|
|
|
1,974
|
|
|
|
1,476
|
|
Commercial
|
|
|
11,216
|
|
|
|
10,298
|
|
Consumer and other
|
|
|
785
|
|
|
|
968
|
|
|
|
|
|
|
|
|
|
|
Total loans
|
|
|
374,436
|
|
|
|
379,924
|
|
|
|
|
|
|
|
|
|
|
Net deferred loan costs
|
|
|
1,118
|
|
|
|
1,156
|
|
Allowance for loan losses
|
|
|
(3,212
|
)
|
|
|
(3,063
|
)
|
|
|
|
|
|
|
|
|
|
Loans, net
|
|
$
|
372,342
|
|
|
$
|
378,017
|
|
(1) Residential real estate loans include
one-to four-family mortgage loans, second mortgage loans, and home equity lines of credit.
Credit Quality Information
The Company utilizes a nine grade internal
loan rating system as follows:
Loans rated 1 - 5 are considered “pass”
rated loans with low to average risk.
Loans rated 6 are considered “special
mention.” These loans are starting to show signs of potential weakness and are being closely monitored by management.
Loans rated 7 are considered “substandard.”
Generally, a loan is considered substandard if it is inadequately protected by the current net worth and paying capacity of the
obligors and/or the collateral pledged. There is a distinct possibility that the Company will sustain some loss if the weakness
is not corrected.
Loans rated 8 are considered “doubtful.”
Loans classified as doubtful have all the weaknesses inherent in those classified substandard with the added characteristic that
the weaknesses make collection or liquidation in full, on the basis of currently existing facts, highly questionable and improbable.
Loans rated 9 are considered uncollectible
(“loss”) and of such little value that their continuance as loans is not warranted.
On an annual basis, or more often if needed,
the Company formally reviews the ratings on all commercial real estate, construction and commercial loans. Annually, the Company
engages an independent third party to review a significant portion of loans within these segments. Management uses the results
of these reviews as part of its annual review process. Credit quality for residential real estate and consumer/other loans is determined
by monitoring loan payment history and ongoing communications with the borrower.
The following table presents the Company’s loan classes
by internally assigned grades at September 30, 2019 and June 30, 2019:
|
|
Residential
|
|
|
Commercial
|
|
|
Residential
|
|
|
|
|
|
Consumer
|
|
|
|
|
|
|
Real Estate
|
|
|
Real Estate
|
|
|
Construction
|
|
|
Commercial
|
|
|
and other
|
|
|
Total
|
|
|
|
(in thousands)
|
|
September 30, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grade:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pass
|
|
$
|
211,480
|
|
|
$
|
141,541
|
|
|
$
|
1,974
|
|
|
$
|
10,293
|
|
|
$
|
785
|
|
|
$
|
366,073
|
|
Special Mention
|
|
|
1,384
|
|
|
|
1,567
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,951
|
|
Substandard
|
|
|
3,237
|
|
|
|
1,252
|
|
|
|
-
|
|
|
|
923
|
|
|
|
-
|
|
|
|
5,412
|
|
Doubtful
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Total
|
|
$
|
216,101
|
|
|
$
|
144,360
|
|
|
$
|
1,974
|
|
|
$
|
11,216
|
|
|
$
|
785
|
|
|
$
|
374,436
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grade:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pass
|
|
$
|
217,800
|
|
|
$
|
142,829
|
|
|
$
|
1,476
|
|
|
$
|
9,355
|
|
|
$
|
968
|
|
|
$
|
372,428
|
|
Special Mention
|
|
|
-
|
|
|
|
1,557
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,557
|
|
Substandard
|
|
|
3,688
|
|
|
|
1,308
|
|
|
|
-
|
|
|
|
943
|
|
|
|
-
|
|
|
|
5,939
|
|
Doubtful
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Total
|
|
$
|
221,488
|
|
|
$
|
145,694
|
|
|
$
|
1,476
|
|
|
$
|
10,298
|
|
|
$
|
968
|
|
|
$
|
379,924
|
|
Modifications deemed to be troubled debt restructures were not
material for the three months ended September 30, 2019 and 2018.
There were no material troubled debt restructurings that subsequently
defaulted (defined as 30 or more days past due subsequent to restructuring) within one year of modification during the three months
ended September 30, 2019 and 2018.
NOTE 8 – Non-performing Assets, Past Due and Impaired
Loans
The table below sets forth the amounts
and categories of non-performing assets at the dates indicated:
|
|
At September 30,
2019
|
|
|
At June 30,
2019
|
|
|
|
(Dollars in thousands)
|
|
Non-accrual loans:
|
|
|
|
|
|
|
|
|
Real Estate:
|
|
|
|
|
|
|
|
|
Residential
|
|
$
|
3,237
|
|
|
$
|
3,530
|
|
Commercial
|
|
|
526
|
|
|
|
260
|
|
Consumer
|
|
|
-
|
|
|
|
-
|
|
Total non-accrual loans
|
|
|
3,763
|
|
|
|
3,790
|
|
|
|
|
|
|
|
|
|
|
Accruing loans past due 90 days or more:
|
|
|
|
|
|
|
|
|
Real Estate:
|
|
|
|
|
|
|
|
|
Residential
|
|
|
-
|
|
|
|
159
|
|
Commercial
|
|
|
-
|
|
|
|
279
|
|
Total accruing loans past due 90 days or more
|
|
|
-
|
|
|
|
438
|
|
Total non-performing loans
|
|
|
3,763
|
|
|
|
4,228
|
|
|
|
|
|
|
|
|
|
|
Other real estate owned
|
|
|
1,327
|
|
|
|
1,271
|
|
Total non-performing assets
|
|
$
|
5,090
|
|
|
$
|
5,499
|
|
|
|
|
|
|
|
|
|
|
Total non-performing loans to total loans
|
|
|
1.00
|
%
|
|
|
1.11
|
%
|
Total non-performing assets to total assets
|
|
|
0.94
|
%
|
|
|
1.02
|
%
|
Management is focused on working with borrowers
and guarantors to resolve non-accrual loans by restructuring or liquidating assets when prudent. Many of our commercial relationships
are secured by development loans, in particular condominiums which have experienced a significant reduction in demand. The Company
reviews the strength of the guarantors; requires face to face discussions and offers restructuring suggestions that provide the
borrowers with short term relief and exit strategies. The Company obtains a current appraisal on all real estate secured loans
that are 180 days or more past due if the appraisal on file is older than one year. If the determination is made that there is
the potential for collateral shortfall, an allocated reserve will be assigned to the loan for the expected deficiency. It is the
policy of the Company to charge off or write down loans or other assets when, in the opinion of the Credit Committee and Loan Review,
the ultimate amount recoverable is less than the carrying value, or the collection of the amount is expected to be unduly prolonged.
The level of non-performing assets is expected to fluctuate in response to changing economic and market conditions, and the relative
sizes of the respective loan portfolios, along with management’s degree of success in resolving problem assets.
The following table
sets forth information regarding past due loans at September 30, 2019 and June 30, 2019:
|
|
30–59 Days
Past Due
|
|
|
60–89 Days
Past Due
|
|
|
90 days
or Greater
Past Due
|
|
|
Total
Past Due
|
|
|
|
(in thousands)
|
|
At September 30, 2019
|
|
|
|
Real Estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential
|
|
$
|
245
|
|
|
$
|
392
|
|
|
$
|
446
|
|
|
$
|
1,083
|
|
Commercial
|
|
|
-
|
|
|
|
-
|
|
|
|
278
|
|
|
|
278
|
|
Consumer and other
|
|
|
5
|
|
|
|
1
|
|
|
|
-
|
|
|
|
6
|
|
Total
|
|
$
|
250
|
|
|
$
|
393
|
|
|
$
|
724
|
|
|
$
|
1,367
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At June 30, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real Estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential
|
|
$
|
39
|
|
|
$
|
397
|
|
|
$
|
668
|
|
|
$
|
1,104
|
|
Commercial
|
|
|
-
|
|
|
|
-
|
|
|
$
|
279
|
|
|
|
279
|
|
Consumer and other
|
|
|
3
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3
|
|
Total
|
|
$
|
42
|
|
|
$
|
397
|
|
|
$
|
947
|
|
|
$
|
1,386
|
|
The following is a summary of information
pertaining to impaired loans at September 30, 2019 and June 30, 2019, none of which had a valuation allowance:
|
|
At September 30, 2019
|
|
|
At June 30, 2019
|
|
|
|
|
|
|
Unpaid
|
|
|
|
|
|
Unpaid
|
|
|
|
Recorded
|
|
|
Principal
|
|
|
Recorded
|
|
|
Principal
|
|
|
|
Investment
|
|
|
Balance
|
|
|
Investment
|
|
|
Balance
|
|
|
|
(in thousands)
|
|
Real Estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential
|
|
$
|
1,830
|
|
|
$
|
1,976
|
|
|
$
|
2,150
|
|
|
$
|
2,296
|
|
Commercial
|
|
|
248
|
|
|
|
248
|
|
|
|
260
|
|
|
|
260
|
|
Total impaired loans
|
|
$
|
2,078
|
|
|
$
|
2,224
|
|
|
$
|
2,410
|
|
|
$
|
2,556
|
|
The following is a summary of additional information pertaining
to impaired loans:
|
|
Three months
ended
|
|
|
Three months
ended
|
|
|
|
September
30, 2019
|
|
|
September
30, 2018
|
|
|
|
Average
|
|
|
Interest
|
|
|
Interest
Income
|
|
|
Average
|
|
|
Interest
|
|
|
Interest
Income
|
|
|
|
Recorded
|
|
|
Income
|
|
|
Recognized
|
|
|
Recorded
|
|
|
Income
|
|
|
Recognized
|
|
|
|
Investment
|
|
|
Recognized
|
|
|
on
Cash Basis
|
|
|
Investment
|
|
|
Recognized
|
|
|
on
Cash Basis
|
|
|
|
(in thousands)
|
|
Real Estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential
|
|
$
|
1,990
|
|
|
$
|
20
|
|
|
$
|
18
|
|
|
$
|
2,512
|
|
|
$
|
17
|
|
|
$
|
14
|
|
Commercial
|
|
|
254
|
|
|
|
-
|
|
|
|
-
|
|
|
|
824
|
|
|
|
7
|
|
|
|
-
|
|
Total
impaired loans
|
|
$
|
2,244
|
|
|
$
|
20
|
|
|
$
|
18
|
|
|
$
|
3,336
|
|
|
$
|
24
|
|
|
$
|
14
|
|
NOTE 9 – Allowance for Loan Losses
An analysis of the allowance for loan losses for the three
months ended September 30, 2019 and 2018 is as follows:
|
|
Residential
|
|
|
Commercial
|
|
|
Residential
|
|
|
|
|
|
Consumer
|
|
|
|
|
|
|
|
|
|
Real
Estate
|
|
|
Real
Estate
|
|
|
Construction
|
|
|
Commercial
|
|
|
and
Other
|
|
|
Unallocated
|
|
|
Total
|
|
|
|
(in thousands)
|
|
Three months ended
September 30, 2019
|
|
|
|
Beginning balance
|
|
$
|
1,456
|
|
|
$
|
1,418
|
|
|
$
|
10
|
|
|
$
|
79
|
|
|
$
|
28
|
|
|
$
|
72
|
|
|
$
|
3,063
|
|
Charge-offs
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(9
|
)
|
|
|
-
|
|
|
|
(9
|
)
|
Recoveries
|
|
|
3
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3
|
|
|
|
2
|
|
|
|
-
|
|
|
|
8
|
|
Provision
|
|
|
92
|
|
|
|
25
|
|
|
|
4
|
|
|
|
9
|
|
|
|
1
|
|
|
|
19
|
|
|
|
150
|
|
Ending Balance
|
|
$
|
1,551
|
|
|
$
|
1,443
|
|
|
$
|
14
|
|
|
$
|
91
|
|
|
$
|
22
|
|
|
$
|
91
|
|
|
$
|
3,212
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
|
$
|
1,385
|
|
|
$
|
1,194
|
|
|
$
|
14
|
|
|
$
|
80
|
|
|
$
|
135
|
|
|
$
|
135
|
|
|
$
|
2,943
|
|
Charge-offs
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(8
|
)
|
|
|
-
|
|
|
|
(8
|
)
|
Recoveries
|
|
|
5
|
|
|
|
560
|
|
|
|
-
|
|
|
|
2
|
|
|
|
4
|
|
|
|
-
|
|
|
|
571
|
|
(Credit)
provision
|
|
|
98
|
|
|
|
(660
|
)
|
|
|
(7
|
)
|
|
|
(5
|
)
|
|
|
-
|
|
|
|
(26
|
)
|
|
|
(600
|
)
|
Ending Balance
|
|
$
|
1,488
|
|
|
$
|
1,094
|
|
|
$
|
7
|
|
|
$
|
77
|
|
|
$
|
131
|
|
|
$
|
109
|
|
|
$
|
2,906
|
|
Further information pertaining to the allowance for loan losses at September 30, 2019 and June 30, 2019 is as follows:
|
|
Residential
|
|
|
Commercial
|
|
|
Residential
|
|
|
|
|
|
Consumer
|
|
|
|
|
|
|
|
|
|
Real Estate
|
|
|
Real Estate
|
|
|
Construction
|
|
|
Commercial
|
|
|
and Other
|
|
|
Unallocated
|
|
|
Total
|
|
|
|
(in thousands)
|
|
At September 30, 2019
|
|
|
|
Amount of allowance for loan losses for impaired loans
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount of allowance
for loan losses for non-impaired loans
|
|
$
|
1,551
|
|
|
$
|
1,443
|
|
|
$
|
14
|
|
|
$
|
91
|
|
|
$
|
22
|
|
|
$
|
91
|
|
|
$
|
3,212
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impaired loans
|
|
$
|
1,830
|
|
|
$
|
248
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
2,078
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-impaired loans
|
|
$
|
214,271
|
|
|
$
|
144,112
|
|
|
$
|
1,974
|
|
|
$
|
11,216
|
|
|
$
|
785
|
|
|
$
|
-
|
|
|
$
|
372,358
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At June 30, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount of allowance for loan losses for impaired loans
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount of allowance for loan
losses for non-impaired loans
|
|
$
|
1,456
|
|
|
$
|
1,418
|
|
|
$
|
10
|
|
|
$
|
79
|
|
|
$
|
28
|
|
|
$
|
72
|
|
|
$
|
3,063
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impaired loans
|
|
$
|
2,150
|
|
|
$
|
260
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
2,410
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-impaired loans
|
|
$
|
219,338
|
|
|
$
|
145,434
|
|
|
$
|
1,476
|
|
|
$
|
10,298
|
|
|
$
|
968
|
|
|
$
|
-
|
|
|
$
|
377,514
|
|
NOTE 10 – Stock-Based Incentive Plan
In February 2017, stockholders
of the Company approved the PB Bancorp, Inc. 2017 Stock-Based Incentive Plan (the “Incentive Plan”). Under the Incentive
Plan, the Company may grant up to 453,267 stock options and 181,306 shares of restricted stock to its employees, officers and directors
for an aggregate amount of up to 634,573 shares. Both incentive stock options and non-statutory stock options may be granted under
the Incentive Plan.
There were no stock
options or awards granted during the three months ended September 30, 2019 and 2018.
Both stock option
and restricted stock awards granted to date vest at 20% per year beginning on the first anniversary of the date of the grant,
and become fully vested in the event of a change in control of the Company
Stock options are considered
common stock equivalents for the purpose of computing earnings per share on a diluted basis. Restricted stock awards have non-forfeitable
dividend rights, and are considered participating securities outstanding for the purpose of computing basic earnings per share.
The Company has recorded
share-based compensation expense related to outstanding stock option and restricted stock awards based upon the fair value at the
date of grant over the vesting period of such awards on a straight-line basis. The fair value of each restricted stock allocation,
based on the market price at the date of grant, is recorded to unearned stock awards. Compensation expense related to unearned
restricted shares is amortized to compensation and benefits expense over the vesting period of the restricted stock awards, adjusted
by actual forfeitures. The fair value of each stock option award is estimated on the date of grant using the Black-Scholes option
pricing method which includes several assumptions such as volatility, expected dividends, expected term and risk-free rate for
each stock option award. The Company recorded share-based compensation expense in connection with the stock option and restricted
stock awards for the three months ended September 30, 2019 of $111,000. The Company recorded share-based compensation expense in
connection with the stock option and restricted stock awards for the three months ended September 30, 2018 of $118,000.
NOTE 11 – Accumulated Other Comprehensive
Loss
Accounting principles
generally require that recognized revenue, expenses, gains and losses be included in net income. Although certain changes in assets
and liabilities are reported as a separate component of the equity section of the consolidated balance sheets, such items are components
of accumulated other comprehensive loss.
The components of accumulated
other comprehensive loss and related tax effects are as follows:
|
|
September 30,
|
|
|
June 30,
|
|
|
|
2019
|
|
|
2019
|
|
|
|
(in thousands)
|
|
Net unrealized loss on securities available-for-sale
|
|
$
|
(195
|
)
|
|
$
|
(341
|
)
|
Tax effect
|
|
|
40
|
|
|
|
72
|
|
Accumulated other comprehensive loss
|
|
$
|
(155
|
)
|
|
$
|
(269
|
)
|
NOTE 12 – FAIR VALUE MEASUREMENTS
The Company groups
its assets measured at fair value in three levels, based on the markets in which the assets are traded and the reliability of the
assumptions used to determine fair value as follows:
Level 1 – Valuations for assets traded
in active exchange markets, such as the New York Stock Exchange. Valuations are obtained from readily available pricing sources
for market transactions involving identical assets.
Level 2 – Valuations for assets traded
in less active dealer or broker markets. Valuations are obtained from third party pricing services for identical or comparable
assets.
Level 3 – Valuations for assets that
are derived from other methodologies, including option pricing models, discounted cash flow models and similar techniques, and
not based on market exchange, dealer, or broker traded transactions. Level 3 valuations incorporate certain assumptions and projections
in determining the fair value assigned to such assets.
The level within the
fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. A description of
the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments
pursuant to the valuation hierarchy, is set forth below. These valuation methodologies were applied to all of the Company’s
assets carried at fair value for September 30, 2019 and June 30, 2019.
The Company’s
mortgage-backed securities and other debt securities available-for-sale are generally classified within Level 2 of the fair value
hierarchy. For these securities, we obtain fair value measurements from independent pricing services, which are not adjusted by
management. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the
U. S. treasury yield curve, trading levels, market consensus prepayment speeds, credit information and the instrument’s terms
and conditions.
Level 3 is for positions
that are not traded in active markets or are subject to transfer restrictions, valuations are adjusted to reflect illiquidity and/or
non-transferability, and such adjustments are generally based on available market evidence. In the absence of such evidence, management’s
best estimate is used. Subsequent to inception, management only changes Level 3 inputs and assumptions when corroborated by evidence
such as transactions in similar instruments, completed or pending third-party transactions in the underlying investment or comparable
entities, subsequent rounds of financing, recapitalization and other transactions across the capital structure, offerings in the
equity or debt markets, and changes in financial ratios or cash flows. Level 3 assets consisted of available-for-sale auction-rate
trust preferred securities (ARPs). All dividends are current. The Company has the ability and intent to hold these securities
for the time necessary to collect the expected cash flows.
The fair value of impaired
loans and other real estate owned is based on the underlying collateral if repayment is expected solely from the collateral. Collateral
values are estimated using Level 3 inputs based upon appraisals of similar properties obtained from a third party and adjusted
by management as needed.
The Company did not have any transfers of
assets between levels of the fair value hierarchy during the three months ended September 30, 2019.
The following summarizes assets measured at fair value on a
recurring basis at September 30, 2019 and June 30, 2019:
|
|
Total Fair
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
|
(in thousands)
|
|
At September 30, 2019
|
|
|
|
Securities available-for-sale:
|
|
|
|
U.S. government and government-sponsored securities
|
|
$
|
2,020
|
|
|
$
|
-
|
|
|
$
|
2,020
|
|
|
$
|
-
|
|
Corporate bonds
|
|
|
3,692
|
|
|
|
-
|
|
|
|
3,692
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Government-sponsored and
guaranteed mortgage-backed securities
|
|
|
18,816
|
|
|
|
-
|
|
|
|
18,816
|
|
|
|
-
|
|
Non-agency mortgage-backed securities
|
|
|
2,507
|
|
|
|
-
|
|
|
|
2,507
|
|
|
|
-
|
|
Other securities
|
|
|
10,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
10,000
|
|
Total
|
|
$
|
37,035
|
|
|
$
|
-
|
|
|
$
|
27,035
|
|
|
$
|
10,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At June 30, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities available-for-sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. government and government-sponsored securities
|
|
$
|
2,242
|
|
|
$
|
-
|
|
|
$
|
2,242
|
|
|
$
|
-
|
|
Corporate bonds
|
|
|
3,676
|
|
|
|
-
|
|
|
|
3,676
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Government-sponsored and guaranteed
mortgage-backed securities
|
|
|
20,452
|
|
|
|
-
|
|
|
|
20,452
|
|
|
|
-
|
|
Non-agency mortgage-backed securities
|
|
|
2,573
|
|
|
|
-
|
|
|
|
2,573
|
|
|
|
-
|
|
Other securities
|
|
|
9,976
|
|
|
|
-
|
|
|
|
-
|
|
|
|
9,976
|
|
Total
|
|
$
|
38,919
|
|
|
$
|
-
|
|
|
$
|
28,943
|
|
|
$
|
9,976
|
|
There were no changes in level 3 assets measured at fair value for the three months ended September 30, 2019 and 2018.
The Company had no
assets measured at fair value on a non-recurring basis at September 30, 2019. The following summarizes assets measured at fair
value on a non-recurring basis and the adjustments to the carrying value at and for the three months ended September 30, 2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Losses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
for the three
|
|
|
|
Total
Fair
|
|
|
|
|
|
|
|
|
|
|
|
months
ended
September 30,
|
|
|
|
Value
|
|
|
Level
1
|
|
|
Level
2
|
|
|
Level
3
|
|
|
2018
|
|
|
|
(in thousands)
|
|
At June 30, 2019
|
|
|
|
Impaired loans
|
|
$
|
219
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
219
|
|
|
$
|
-
|
|
Other
real estate owned
|
|
|
984
|
|
|
|
-
|
|
|
|
-
|
|
|
|
984
|
|
|
|
91
|
|
|
|
$
|
1,203
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
1,203
|
|
|
$
|
91
|
|
The amount of other
real estate owned represents the carrying value for which write-downs are based on the estimated fair value of the property.
Fair value estimates are made
at a specific point in time, based on relevant market information and information about the asset. These estimates do not reflect
any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular
asset. Because a market may not readily exist for a significant portion of the Company’s asset, fair value estimates are
based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial
instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment
and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
There were no liabilities measured at fair
value on a recurring or non-recurring basis at September 30, 2019 or June 30, 2019.
The following methods
and assumptions were used by the Company in estimating fair value disclosures of its financial instruments:
Cash
and Cash Equivalents. The carrying amounts of cash and cash equivalents approximate fair values based on the short-term
nature of the assets.
Investment
Securities Held-to-Maturity and FHLBB Stock. The fair value of securities held-to-maturity is estimated based on
quoted market prices, where available. If quoted market prices are not available, fair values are based on quoted market prices
of comparable instruments or available market evidence. Ownership of Federal Home Loan Bank of Boston (“FHLBB”) stock
is restricted to member banks; therefore, the stock is not traded. The estimated fair value of FHLBB stock is equal to its carrying
value, which represents the price at which the FHLBB is obligated to redeem its stock.
Loans.
For valuation purposes, the loan portfolio was segregated into its significant categories, which are residential,
commercial real estate, residential construction, commercial and consumer and other loans. These categories were further segregated,
where appropriate, into components based on significant financial characteristics such as type of interest rate (fixed or adjustable).
Fair values were estimated for each component using assumptions developed by management and a valuation model provided by a third
party specialist.
The fair values of
residential, commercial real estate, residential construction, commercial and consumer and other loans were estimated by discounting
the anticipated cash flows from the respective portfolios. Estimates of the timing and amount of these cash flows considered factors
such as future loan prepayments. The discount rates reflected current market rates for loans with similar terms to borrowers of
similar credit quality. The fair value of home equity lines of credit was based on the outstanding loan balances. Fair values for
non-performing loans are estimated using discounted cash flow analyses or underlying collateral values, where applicable.
Deposits
and Mortgagors’ Escrow. The fair value of deposits with no stated maturity such as demand deposits, NOW, regular
savings, and money market deposit accounts and mortgagors’ escrow accounts, is equal to the amount payable on demand. The
fair value estimates do not include the benefit that results from the generally lower cost of funding provided by the deposit liabilities
compared to the cost of borrowing funds in the market. The fair value estimate of time deposits is based on the discounted value
of contractual cash flows. The discount rate is estimated using the rates currently offered for deposits having similar remaining
maturities.
Federal
Home Loan Bank Advances. The fair values of the Company’s Federal Home Loan Bank advances are estimated using
discounted cash flow analyses based on the current incremental borrowing rates in the market for similar types of borrowing arrangements.
Securities
Sold Under Agreements to Repurchase. The Company enters into overnight repurchase agreements with its customers.
Since these agreements are short-term instruments, the fair value of these agreements approximates their recorded balance. The
Company also secures term repurchase agreements through other financial institutions. The fair value of these agreements are determined
by discounting the anticipated future cash payments using rates currently available to the Bank for debt with similar terms and
remaining maturities.
Accrued
Interest. The carrying amounts of accrued interest approximate fair value.
Off-Balance
Sheet Instruments. The fair value of off-balance-sheet mortgage lending commitments are based on fees currently
charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’
credit standing. In the case of the commitments discussed in Note 14, the fair value equals the carrying amounts which are not
significant.
Summary
of Fair Values of Financial Instruments. The estimated fair values, and related carrying amounts, of the Company’s
financial instruments are as follows. Certain financial instruments and all nonfinancial instruments are exempt from disclosure
requirements. Accordingly, the aggregate fair value amounts presented herein do not represent the underlying fair value of the
Company.
The following table presents the carrying
amount and estimated fair values of the Company’s financial instruments, all of which are held or issued for purposes other
than trading, as of September 30, 2019 and June 30, 2019:
|
|
September
30, 2019
|
|
|
|
Carrying
|
|
|
Fair
Value Hierarchy
|
|
|
Total
Fair
|
|
|
|
Amount
|
|
|
Level
1
|
|
|
Level
2
|
|
|
Level
3
|
|
|
Value
|
|
|
|
(in thousands)
|
|
Financial assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
44,456
|
|
|
$
|
44,456
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
44,456
|
|
Securities available-for-sale
|
|
|
37,035
|
|
|
|
-
|
|
|
|
27,035
|
|
|
|
10,000
|
|
|
|
37,035
|
|
Securities
held-to-maturity
|
|
|
58,092
|
|
|
|
-
|
|
|
|
58,545
|
|
|
|
-
|
|
|
|
58,545
|
|
Federal Home
Loan Bank stock
|
|
|
3,464
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,464
|
|
|
|
3,464
|
|
Loans, net
|
|
|
372,342
|
|
|
|
-
|
|
|
|
-
|
|
|
|
363,409
|
|
|
|
363,409
|
|
Accrued interest
receivable
|
|
|
1,400
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,400
|
|
|
|
1,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
392,441
|
|
|
|
-
|
|
|
|
-
|
|
|
|
393,429
|
|
|
|
393,429
|
|
Mortgagors'
escrow accounts
|
|
|
1,701
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,701
|
|
|
|
1,701
|
|
Federal Home
Loan Bank advances
|
|
|
60,132
|
|
|
|
-
|
|
|
|
59,946
|
|
|
|
-
|
|
|
|
59,946
|
|
Securities
sold under agreements to repurchase
|
|
|
1,618
|
|
|
|
-
|
|
|
|
1,618
|
|
|
|
-
|
|
|
|
1,618
|
|
Accrued interest
payable
|
|
|
343
|
|
|
|
-
|
|
|
|
-
|
|
|
|
343
|
|
|
|
343
|
|
|
|
June
30, 2019
|
|
|
|
Carrying
|
|
|
Fair
Value Hierarchy
|
|
|
Total
Fair
|
|
|
|
Amount
|
|
|
Level
1
|
|
|
Level
2
|
|
|
Level
3
|
|
|
Value
|
|
|
|
(in thousands)
|
|
Financial assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$
|
25,672
|
|
|
$
|
25,672
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
25,672
|
|
Securities
available-for-sale
|
|
|
38,919
|
|
|
|
-
|
|
|
|
28,943
|
|
|
|
9,976
|
|
|
|
38,919
|
|
Securities
held-to-maturity
|
|
|
63,480
|
|
|
|
-
|
|
|
|
63,858
|
|
|
|
-
|
|
|
|
63,858
|
|
Federal Home
Loan Bank stock
|
|
|
3,464
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,464
|
|
|
|
3,464
|
|
Loans, net
|
|
|
378,017
|
|
|
|
-
|
|
|
|
-
|
|
|
|
366,442
|
|
|
|
366,442
|
|
Accrued interest
receivable
|
|
|
1,559
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,559
|
|
|
|
1,559
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
383,859
|
|
|
|
-
|
|
|
|
-
|
|
|
|
384,698
|
|
|
|
384,698
|
|
Mortgagors'
escrow accounts
|
|
|
3,371
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,371
|
|
|
|
3,371
|
|
Federal Home
Loan Bank advances
|
|
|
62,145
|
|
|
|
-
|
|
|
|
62,773
|
|
|
|
-
|
|
|
|
62,773
|
|
Securities
sold under agreements to repurchase
|
|
|
804
|
|
|
|
-
|
|
|
|
804
|
|
|
|
-
|
|
|
|
804
|
|
Accrued interest
payable
|
|
|
251
|
|
|
|
-
|
|
|
|
-
|
|
|
|
251
|
|
|
|
251
|
|
NOTE 13 – Subsequent Events
On October 2, 2019,
the Board of Directors of PB Bancorp, Inc. declared a quarterly cash dividend of $0.07 per share for stockholders of record as
of October 16, 2019, which is payable on October 30, 2019.
NOTE 14 – Commitments to Extend
Credit
The Company is party
to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers.
These financial instruments include commitments to extend credit. These commitments involve, to varying degrees, elements of credit
and interest rate risk in excess of the amounts recognized in the consolidated balance sheets.
The contractual amounts
of outstanding commitments were as follows:
|
|
September 30,
|
|
|
June 30,
|
|
|
|
2019
|
|
|
2019
|
|
|
|
(in thousands)
|
|
Commitments to extend credit:
|
|
|
|
|
|
|
|
|
Commitments to grant loans
|
|
$
|
20,262
|
|
|
$
|
1,118
|
|
Unadvanced construction loans
|
|
|
4,852
|
|
|
|
6,872
|
|
Unadvanced lines of credit
|
|
|
21,645
|
|
|
|
21,819
|
|
Standby letters of credit
|
|
|
395
|
|
|
|
395
|
|
Outstanding commitments
|
|
$
|
47,154
|
|
|
$
|
30,204
|
|