Non-performing Assets

9 Months Ended

Mar. 31, 2012

NOTE 7 – Non-performing Assets

The table below sets forth the amounts and categories of non-performing assets at the dates indicated:

	At March 31,			At June 30,
	2012			2011
	(Dollars in thousands)
Non-accrual loans:
Residential	$	3,278		$	1,752
Commercial real estate		4,800			4,635
Residential construction		674			-
Commercial		65			-
Total non-accrual loans		8,817			6,387

Accruing loans past due 90 days or more:
Residential		-			32
Total		-			32

Total non-performing loans		8,817			6,419

Other real estate owned		2,153			1,074
Other non-performing assets		-			46
Total non-performing assets	$	10,970		$	7,539

Total non-performing loans to total loans		3.49	%		2.51	%
Total non-performing assets to total assets		2.43			1.60

The balance in non-performing loans is a direct correlation to the deteriorating real estate climate. Management is focused on working with borrowers and guarantors to resolve these trends 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 Bank 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. Overall, we expect to see improvement as solutions are identified and executed. The Bank 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 Bank 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 book 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. Management takes a proactive approach with respect to the identification and resolution of problem loans.

The following table sets forth information regarding past due loans at March 31, 2012 and June 30, 2011:


	30–59 Days		60–89 Days		90 days		Total
At March 31, 2012	Past Due		Past Due		or greater		Past Due
(in thousands)
Real Estate:
Residential	$	1,131	$	258	$	1,266	$	2,655
Commercial		-		280		1,029		1,309
Residential Construction		-		-		674		674
Commercial		-		-		65		65
Total	$	1,131	$	538	$	3,034	$	4,703

At June 30, 2011
(in thousands)
Real Estate:
Residential	$	92	$	247	$	1,126	$	1,465
Commercial		629		488		3,324		4,441
Residential Construction		-		-		-		-
Commercial		150		-		-		150
Total	$	871	$	735	$	4,450	$	6,056

The following is a summary of information pertaining to impaired loans at March 31, 2012 and June 30, 2011.


	At March 31, 2012						At June 30, 2011
			Unpaid						Unpaid
	Recorded		Principal		Related		Recorded		Principal		Related
	Investment		Balance		Allowance		Investment		Balance		Allowance
Impaired loans without a valuation allowance:	(in thousands)
Real Estate:
Residential	$	1,728	$	1,848	$	-	$	395	$	393	$	-
Commercial		2,541		2,770		-		2,625		2,623		-
Commercial		130		130		-		-		-		-
Consumer and other		24		24		-		51		51		-
Total impaired with no related allowance		4,423		4,772		-		3,071		3,067		-

Impaired loans with a valuation allowance:
Real Estate:
Residential		1,609		1,610		174		2,025		2,022		236
Commercial		5,083		5,159		411		5,472		5,470		686
Consumer and other		-		-		-		6		6		6
Total impaired with an allowance recorded		6,692		6,769		585		7,503		7,498		928

Total Impaired Loans:
Real Estate:
Residential		3,337		3,458		174		2,420		2,415		236
Commercial		7,624		7,929		411		8,097		8,093		686
Commercial		130		130		-		-		-		-
Consumer and other		24		24		-		57		57		6
Total impaired loans	$	11,115	$	11,541	$	585	$	10,574	$	10,565	$	928

The following is a summary of additional information pertaining to impaired loans:

	Three months ended						Three months ended
	March 31, 2012						March 31, 2011
	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	$	3,551		20	$	7	$	2,885	$	10	$	-
Commercial		7,473		51		22		7,272		53		11
Commercial		65		-		-		-		-		-
Consumer and other		38		1		-		32		1		-
Total impaired loans	$	11,127	$	72	$	29	$	10,189	$	64	$	11

	Nine months ended						Nine months ended
	March 31, 2012						March 31, 2011
	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	$	3,258	$	47	$	25	$	2,552	$	45	$	9
Commercial		7,044		145		57		6,109		72		11
Commercial		33		4		5		53		-		-
Consumer and other		44		3		-		33		2		-
Total impaired loans	$	10,379	$	199	$	87	$	8,747	$	119	$	20