Loans and Allowance for Loan Losses (Tables)

3 Months Ended

Dec. 31, 2018

Accounts, Notes, Loans and Financing Receivable, Gross, Allowance, and Net [Abstract]

Loans

Loans at December 31, 2018 and September 30, 2018 consisted of the following:

	December 31, 2018			September 30, 2018
	(In thousands)
Real estate mortgage:
1-4 family residential	$	196,810		$	195,274
Commercial		355,951			343,498
Multifamily residential		27,731			28,814
Residential construction		23,825			19,527
Commercial construction		10,383			8,669
Land and land development		10,960			10,504
Commercial business		75,834			67,786
Consumer:
Home equity		25,133			24,635
Auto		12,007			11,720
Other consumer		4,802			2,918
Total Loans		743,436			713,345
Deferred loan origination fees and costs, net		245			249
Allowance for loan losses		(9,620	)		(9,323	)
Loans, net	$	734,061		$	704,271

Components of Recorded Investment in Loans for Each Portfolio Class

The following table provides the components of the recorded investment in loans as of December 31, 2018:

	Residential Real Estate			Commercial Real Estate		Multifamily			Construction			Land & Land Development			Commercial Business		Consumer			Total
	(In thousands)
Recorded Investment in Loans:
Principal loan balance	$	196,810		$	355,951	$	27,731		$	34,208		$	10,960		$	75,834	$	41,942		$	743,436
Accrued interest receivable		552			1,546		65			127			22			412		70			2,794
Net deferred loan origination fees and costs		(73	)		114		(29	)		(22	)		(4	)		288		(29	)		245
Recorded investment in loans	$	197,289		$	357,611	$	27,767		$	34,313		$	10,978		$	76,534	$	41,983		$	746,475
Recorded Investment in Loans as Evaluated for Impairment:
Individually evaluated for impairment	$	4,924		$	7,848	$	-		$	-		$	-		$	294	$	340		$	13,406
Collectively evaluated for impairment		192,365			349,763		27,767			34,313			10,978			76,240		41,643			733,069
Ending balance	$	197,289		$	357,611	$	27,767		$	34,313		$	10,978		$	76,534	$	41,983		$	746,475

The following table provides the components of the recorded investment in loans as of September 30, 2018:

	Residential Real Estate			Commercial Real Estate		Multifamily			Construction			Land & Land Development			Commercial Business		Consumer			Total
	(In thousands)
Recorded Investment in Loans:
Principal loan balance	$	195,274		$	343,498	$	28,814		$	28,196		$	10,504		$	67,786	$	39,273		$	713,345
Accrued interest receivable		589			1,403		81			156			24			365		69			2,687
Net deferred loan origination fees and costs		(62	)		104		(30	)		(5	)		(4	)		275		(29	)		249
Recorded investment in loans	$	195,801		$	345,005	$	28,865		$	28,347		$	10,524		$	68,426	$	39,313		$	716,281
Recorded Investment in Loans as Evaluated for Impairment:
Individually evaluated for impairment	$	5,107		$	7,719	$	-		$	-		$	27		$	231	$	243		$	13,327
Collectively evaluated for impairment		190,694			337,286		28,865			28,347			10,497			68,195		39,070			702,954
Ending balance	$	195,801		$	345,005	$	28,865		$	28,347		$	10,524		$	68,426	$	39,313		$	716,281

Allowance for Loan Losses

An analysis of the allowance for loan losses as of December 31, 2018 is as follows:

	Residential Real Estate		Commercial Real Estate		Multifamily		Construction		Land & Land Development		Commercial Business		Consumer		Total
	(In thousands)
Ending Allowance Balance Attributable to Loans:
Individually evaluated for impairment	$	2	$	654	$	-	$	-	$	-	$	-	$	39	$	695
Collectively evaluated for impairment		247		6,062		158		693		219		1,288		258		8,925
Ending balance	$	249	$	6,716	$	158	$	693	$	219	$	1,288	$	297	$	9,620

An analysis of the allowance for loan losses as of September 30, 2018 is as follows:

	Residential Real Estate		Commercial Real Estate		Multifamily		Construction		Land & Land Development		Commercial Business		Consumer		Total
	(In thousands)
Ending Allowance Balance Attributable to Loans:
Individually evaluated for impairment	$	7	$	492	$	-	$	-	$	-	$	-	$	12	$	511
Collectively evaluated for impairment		267		6,333		195		580		210		1,041		186		8,812
Ending balance	$	274	$	6,825	$	195	$	580	$	210	$	1,041	$	198	$	9,323

An analysis of the changes in the allowance for loan losses for the three months ended December 31, 2018 is as follows:

	Residential Real Estate			Commercial Real Estate			Multifamily			Construction		Land & Land Development		Commercial Business		Consumer			Total
	(In thousands)
Changes in Allowance for Loan Losses:
Beginning balance	$	274		$	6,825		$	195		$	580	$	210	$	1,041	$	198		$	9,323
Provisions		(30	)		(109	)		(37	)		113		9		247		122			315
Charge-offs		(1	)		-			-			-		-		-		(42	)		(43	)
Recoveries		6			-			-			-		-		-		19			25
Ending balance	$	249		$	6,716		$	158		$	693	$	219	$	1,288	$	297		$	9,620

An analysis of the changes in the allowance for loan losses for the three months ended December 31, 2017 is as follows:

	Residential Real Estate			Commercial Real Estate		Multifamily			Construction		Land & Land Development			Commercial Business			Consumer			Total
	(In thousands)
Changes in Allowance for Loan Losses:
Beginning balance	$	252		$	5,739	$	106		$	810	$	223		$	839		$	123		$	8,092
Provisions		(18	)		367		(4	)		93		(4	)		(23	)		51			462
Charge-offs		(13	)		-		-			-		-			-			(52	)		(65	)
Recoveries		12			-		-			-		-			-			10			22
Ending balance	$	233		$	6,106	$	102		$	903	$	219		$	816		$	132		$	8,511

Impaired Loans Individually Evaluated for Impairment

The following table presents impaired loans individually evaluated for impairment as of December 31, 2018 and for the three months ended December 31, 2018 and 2017.

	At December 31, 2018						Three Months Ended  December 31,
							2018		2018		2017		2017
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(In thousands)
Loans with no related allowance recorded:
Residential real estate	$	4,654	$	5,135	$	-	$	4,744	$	34	$	4,751	$	36
Commercial real estate		6,525		6,714		-		6,547		82		6,147		64
Multifamily		-		-		-		-		-		-		-
Construction		-		-		-		-		-		-		-
Land and land development		-		-		-		14		-		30		-
Commercial business		294		305		-		263		2		274		2
Consumer		117		126		-		120		1		100		1
	$	11,590	$	12,280	$	-	$	11,688	$	119	$	11,302	$	103
Loans with an allowance recorded:
Residential real estate	$	270	$	281	$	2	$	272	$	-	$	235	$	-
Commercial real estate		1,323		1,376		654		1,237		-		-		-
Multifamily		-		-		-		-		-		-		-
Construction		-		-		-		-		-		-		-
Land and land development		-		-		-		-		-		-		-
Commercial business		-		-		-		-		-		-		-
Consumer		223		223		39		172		-		101		-
	$	1,816	$	1,880	$	695	$	1,681	$	-	$	336	$	-
Total:
Residential real estate	$	4,924	$	5,416	$	2	$	5,016	$	34	$	4,986	$	36
Commercial real estate		7,848		8,090		654		7,784		82		6,147		64
Multifamily		-		-		-		-		-		-		-
Construction		-		-		-		-		-		-		-
Land and land development		-		-		-		14		-		30		-
Commercial business		294		305		-		263		2		274		2
Consumer		340		349		39		292		1		201		1
	$	13,406	$	14,160	$	695	$	13,369	$	119	$	11,638	$	103

The Company did not recognize any interest income on impaired loans using the cash receipts method during the three-month periods ended December 31, 2018 and 2017.

The following table presents impaired loans individually evaluated for impairment as of September 30, 2018.

	Recorded Investment		Unpaid Principal Balance		Related Allowance
	(In thousands)
Loans with no related allowance recorded:
Residential real estate	$	4,833	$	5,285	$	-
Commercial real estate		6,568		6,715		-
Multifamily		-		-		-
Construction		-		-		-
Land and land development		27		28		-
Commercial business		231		241		-
Consumer		122		123		-
	$	11,781	$	12,392	$	-
Loans with an allowance recorded:
Residential real estate	$	274	$	282	$	7
Commercial real estate		1,151		1,293		492
Multifamily		-		-		-
Construction		-		-		-
Land and land development		-		-		-
Commercial business		-		-		-
Consumer		121		128		12
	$	1,546	$	1,703	$	511
Total:
Residential real estate	$	5,107	$	5,567	$	7
Commercial real estate		7,719		8,008		492
Multifamily		-		-		-
Construction		-		-		-
Land and land development		27		28		-
Commercial business		231		241		-
Consumer		243		251		12
	$	13,327	$	14,095	$	511

Recorded Investment in Nonperforming Loans by Class of Loans

Nonperforming loans consist of nonaccrual loans and loans over 90 days past due and still accruing interest. The following table presents the recorded investment in nonperforming loans at December 31, 2018:

	Nonaccrual Loans		Loans 90+ Days Past Due Still Accruing		Total Nonperforming Loans
	(In thousands)
Residential real estate	$	2,684	$	57	$	2,741
Commercial real estate		1,528		-		1,528
Multifamily		-		-		-
Construction		-		-		-
Land and land development		-		-		-
Commercial business		79		-		79
Consumer		260		-		260
Total	$	4,551	$	57	$	4,608

The following table presents the recorded investment in nonperforming loans at September 30, 2018:

	Nonaccrual Loans		Loans 90+ Days Past Due Still Accruing		Total Nonperforming Loans
	(In thousands)
Residential real estate	$	2,711	$	91	$	2,802
Commercial real estate		1,284		-		1,284
Multifamily		-		-		-
Construction		-		-		-
Land and land development		27		-		27
Commercial business		-		-		-
Consumer		160		-		160
Total	$	4,182	$	91	$	4,273

Aging of Recorded Investment in Past Due Loans

The following table presents the aging of the recorded investment in past due loans at December 31, 2018:

	30-59 Days Past Due		60-89 Days Past Due		90 + Days Past Due		Total Past Due		Current		Total Loans
	(In thousands)
Residential real estate	$	1,903	$	815	$	998	$	3,716	$	193,573	$	197,289
Commercial real estate		1,306		-		1,239		2,545		355,066		357,611
Multifamily		80		-		-		80		27,687		27,767
Construction		-		-		-		-		34,313		34,313
Land and land development		-		-		-		-		10,978		10,978
Commercial business		43		-		79		122		76,412		76,534
Consumer		159		12		3		174		41,809		41,983
Total	$	3,491	$	827	$	2,319	$	6,637	$	739,838	$	746,475

The following table presents the aging of the recorded investment in past due loans at September 30, 2018:

	30-59 Days Past Due		60-89 Days Past Due		90 + Days Past Due		Total Past Due		Current		Total Loans
	(In thousands)
Residential real estate	$	2,088	$	649	$	1,202	$	3,939	$	191,862	$	195,801
Commercial real estate		696		-		210		906		344,099		345,005
Multifamily		-		-		-		-		28,865		28,865
Construction		-		-		-		-		28,347		28,347
Land and land development		-		27		-		27		10,497		10,524
Commercial business		7		-		-		7		68,419		68,426
Consumer		43		37		32		112		39,201		39,313
Total	$	2,834	$	713	$	1,444	$	4,991	$	711,290	$	716,281

Recorded Investment in Loans by Risk Category

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass-rated loans. As of December 31, 2018, and based on the most recent analysis performed, the recorded investment in loans by risk category was as follows:

	Residential Real Estate		Commercial Real Estate		Multifamily		Construction		Land and Land Development		Commercial Business		Consumer		Total
	(In thousands)
Pass	$	192,749	$	344,399	$	27,275	$	34,313	$	10,895	$	74,208	$	41,932	$	725,771
Special Mention		-		5,096		-		-		83		-		-		5,179
Substandard		4,470		8,116		492		-		-		2,326		51		15,455
Doubtful		70		-		-		-		-		-		-		70
Loss		-		-		-		-		-		-		-		-
Total	$	197,289	$	357,611	$	27,767	$	34,313	$	10,978	$	76,534	$	41,983	$	746,475

As of September 30, 2018, the recorded investment in loans by risk category was as follows:

	Residential Real Estate		Commercial Real Estate		Multifamily		Construction		Land and Land Development		Commercial Business		Consumer		Total
	(In thousands)
Pass	$	190,647	$	338,256	$	28,365	$	28,347	$	10,207	$	66,162	$	39,246	$	701,230
Special Mention		19		-		-		-		290		-		-		309
Substandard		5,061		6,749		500		-		27		2,264		67		14,668
Doubtful		74		-		-		-		-		-		-		74
Loss		-		-		-		-		-		-		-		-
Total	$	195,801	$	345,005	$	28,865	$	28,347	$	10,524	$	68,426	$	39,313	$	716,281

Recorded Investment in Troubled Debt Restructurings by Class of Loan and Accrual Status

The following table summarizes the Company’s recorded investment in TDRs at December 31, 2018 and September 30, 2018. There was no specific reserve included in the allowance for loan losses related to TDRs at December 31, 2018. There was $5,000 of specific reserve included in the allowance for loan losses related to TDRs at September 30, 2018.

	Accruing		Nonaccrual		Total
	(In thousands)
December 31, 2018:
Residential real estate	$	2,240	$	136	$	2,376
Commercial real estate		6,320		68		6,388
Commercial business		215		-		215
Consumer		80		-		80
Total	$	8,855	$	204	$	9,059
September 30, 2018:
Residential real estate	$	2,396	$	21	$	2,417
Commercial real estate		6,435		65		6,500
Commercial business		231		-		231
Consumer		83		-		83
Total	$	9,145	$	86	$	9,231

Troubled Debt Restructurings

The following table summarizes information in regard to TDRs that were restructured during the three-month period ended December 31, 2017:

	Number of Loans		Pre- Modification Principal Balance		Post- Modification Principal Balance
	(Dollars in thousands)
Three Months Ended December 31, 2017:
Commercial real estate		1	$	1,674	$	1,674
Commercial business		1		170		170
Consumer		1		3		3
Total		3	$	1,847	$	1,847

Loan Servicing Rights

An analysis of SBA loan servicing rights for the three month periods ended December 31, 2018 and 2017 is as follows:

(In thousands)	Three Months Ended December 31, 2018
		2018			2017
Balance, beginning of period	$	2,405		$	1,389
Servicing rights resulting from transfers of loans		251			429
Amortization		(102	)		(72	)
Change in valuation allowance		-			-
Balance, end of period	$	2,554		$	1,746