UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period ended March 31, 2014

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For transition period from to

Commission File Number 001-35033

Oconee Federal Financial Corp.

(Exact Name of Registrant as Specified in Charter)

Federal		32-0330122
(State of Other Jurisdiction of Incorporation)		(I.R.S Employer Identification Number)

201 East North Second Street, Seneca, South Carolina		29678
(Address of Principal Executive Officers)		(Zip Code)

(864) 882-2765

Registrant’s telephone number, including area code

Not Applicable

(Former name or former address, if changed since last report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	o	Accelerated filer	o

Non-accelerated filer	o	Smaller reporting company	x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

Indicate the number of shares outstanding of each of the Issuer’s classes of common stock as of the latest practicable date.

There were 5,835,895 shares of Common Stock, par value $.01 per share, outstanding as of May 8, 2014.

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OCONEE FEDERAL FINANCIAL CORP.

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except share and per share data)

(Unaudited)

PART I

ITEM 1. FINANCIAL STATEMENTS

	March 31, 2014			June 30, 2013 (*)
	(Unaudited)
ASSETS
Cash and due from banks	$	1,907		$	1,362
Interest-bearing deposits	16,617			36,580
Total cash and cash equivalents	18,524			37,942
Securities held-to-maturity (fair value: at March 31, 2014 $0 and June 30, 2013 - $8,223)	—			8,039
Securities available-for-sale	100,713			87,985
Loans, net of allowance for loan losses of $829 and $751	225,481			221,163
Premises and equipment, net	3,032			3,047
Real estate owned, net	822			1,047
Accrued interest receivable
Loans	822			863
Investments	339			269
Restricted equity securities	320			449
Bank owned life insurance	8,687			8,450
Other assets	815			841
Total assets	$	359,555		$	370,095

LIABILITIES
Deposits
Non-interest bearing	$	5,229		$	4,861
Interest bearing	277,167			287,561
Total deposits	282,396			292,422
Accrued interest payable and other liabilities	1,024			1,511
Total liabilities	283,420			293,933

SHAREHOLDERS’ EQUITY
Common stock, $0.01 par value, 100,000,000 shares authorized; 5,835,895 and 5,923,295 shares outstanding at March 31, 2014 and June 30, 2013	64			64
Treasury stock, at par 599,199 and 511,799 shares at March 31, 2014 and June 30, 2013	(6		)	(5		)
Additional paid in capital	12,119			13,413
Retained earnings	66,436			65,315
Accumulated other comprehensive loss	(610		)	(559		)
Unearned ESOP shares	(1,868		)	(2,066		)
Total shareholders’ equity	76,135			76,162
Total liabilities and shareholders’ equity	$	359,555		$	370,095

* Derived from audited consolidated financial statements

See accompanying notes to the consolidated financial statements

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OCONEE FEDERAL FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(Amounts in thousands, except share and per share data)

(Unaudited)

	Three Months Ended						Nine Months Ended
	March 31, 2014			March 31, 2013			March 31, 2014			March 31, 2013
Interest and dividend income:
Loans, including fees	$	2,820		$	3,136		$	8,542		$	9,740
Securities, taxable	388			296			1,139			836
Securities, tax-exempt	2			—			2			—
Federal funds sold and other	11			19			40			57
Total interest income	3,221			3,451			9,723			10,633

Interest expense:
Deposits	345			513			1,156			1,706
Total interest expense	345			513			1,156			1,706
Net interest income	2,876			2,938			8,567			8,927
Provision for loan losses	41			180			82			257

Net interest income after provision for loan losses	2,835			2,758			8,485			8,670
Noninterest income:
Service charges on deposit accounts	19			21			56			63
Gain on sales of securities	70			—			215			14
Gain (loss) on sales of real estate owned	3			—			(11		)	65
Other	87			67			238			80
Total noninterest income	179			88			498			222

Noninterest expense:
Salaries and employee benefits	876			859			2,730			2,473
Occupancy and equipment	176			158			496			489
Data processing	71			65			200			193
Professional and supervisory fees	230			131			485			306
Office expense	80			71			109			117
Advertising	19			19			57			54
FDIC deposit insurance	40			40			118			107
Charitable contributions	—			1			—			2
Provision for real estate owned and related expenses	113			11			166			65
Other	68			82			270			228
Total noninterest expense	1,673			1,437			4,631			4,034

Income before income taxes	1,341			1,409			4,352			4,858
Income tax expense	486			559			1,567			1,885
Net income	$	855		$	850		$	2,785		$	2,973

Other comprehensive income (loss)
Unrealized (loss) gain on securities available-for-sale	$	854		$	(40	)	$	87		$	301
Tax effect	(325		)	15			(33		)	(114		)
Reclassification adjustment for gains realized in net income	(70		)	—			(215		)	(14		)
Tax effect	27			—			82			5
Total other comprehensive income (loss)	486			(25		)	(79		)	178
Comprehensive income	$	1,341		$	825		$	2,706		$	3,151

Basic net income per share: (Note 2)	$	0.15		$	0.14		$	0.49		$	0.49
Diluted net income per share: (Note 2)	$	0.15		$	0.14		$	0.49		$	0.48
Dividends declared per share:	$	0.10		$	0.10		$	0.30		$	0.30

See accompanying notes to the consolidated financial statements

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OCONEE FEDERAL FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)

(Amounts in thousands, except share and per share data)

												Accumulated
						Additional						Other			Unearned
	Common		Treasury			Paid-In			Retained			Comprehensive			ESOP
	Stock		Stock			Capital			Earnings			Income (Loss)			Shares			Total

Balance at July 1, 2012	$	64	$	—		$	20,880		$	63,693		$	599		$	(2,252	)	$	82,984
Net income	—		—			—			2,973			—			—			2,973
Other comprehensive income	—		—			—			—			178			—			178
Purchase of 352,550 shares of treasury stock	—		(4		)	(5,475		)	—			—			—			(5,479		)
Stock-based compensation expense	—		—			171			—			—			—			171
Dividends	—		—			—			(1,818		)	—			—			(1,818		)
ESOP shares earned	—		—			57			—			—			141			198
Balance at March 31, 2013	$	64	$	(4	)	$	15,633		$	64,848		$	777		$	(2,111	)	$	79,207

Balance at July 1, 2013	$	64	$	(5	)	$	13,413		$	65,315		$	(559	)	$	(2,066	)	$	76,162
Net income	—		—			—			2,785			—			—			2,785
Other comprehensive loss	—		—			—			—			(79		)	—			(79		)
Transfers of securities from classifed as held-to-maturity to available-for-sale, net of tax of $17	—		—			—			—			28			—			28
Purchase of 97,570 shares of treasury stock (1)	—		(1		)	(1,599		)	—			—			—			(1,600		)
Issuance of 12,600 shares of restricted stock (2)	—		—			—			—			—			—			—
Stock-based compensation expense	—		—			184			—			—			—			184
Dividends (3) (4)	—		—			—			(1,650		)	—			—			(1,650		)
ESOP shares earned (4)	—		—			121			(14		)	—			198			305
Balance at March 31, 2014	$	64	$	(6	)	$	12,119		$	66,436		$	(610	)	$	(1,868	)	$	76,135

(1) The weighted average cost of treasury shares purchased during the nine months ended was $16.02 per share. Treasury stock repurchases were accounted for using the par value method.

(2) On November 13, 2013, the Company granted 12,600 shares of restricted stock. The grant date fair value of these shares was $17.16.

(3) Cash dividends declared on July 25, 2013 were paid on August 29, 2013. Cash dividends declared on October 24, 2013 were paid on November 21, 2013. Cash dividends declared on January 30, 2014 were paid on February 27, 2014.

(4) Approximately $99 of cash dividends paid on shares in the ESOP was used as additional principal reduction on the ESOP debt, resulting in the release of approximately 8,000 additional shares. The portion of the dividend paid on allocated shares of approximately $14 was treated as a dividend. The remaining portion of the dividend payment and resulting release of approximately 7,000 shares was accounted for as additional compensation expense of approximately $63 for the nine months ended March 31, 2014.

See accompanying notes to the consolidated financial statements

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OCONEE FEDERAL FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Amounts in thousands, except share and per share data)

	Nine Months Ended
	March 31, 2014			March 31, 2013
Cash Flows From Operating Activities
Net income	$	2,785		$	2,973
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	82			257
Provision for real estate owned	87			3
Depreciation and amortization, net	681			858
Deferred loan fees, net	16			(262		)
(Gain) loss on sales of real estate owned	11			(65		)
Gain on sales of securities	(215		)	(14		)
Increase in cash surrender value of bank owned life insurance	(237		)	(15		)
ESOP compensation expense	305			198
Stock based compensation expense	184			171
Net change in operating assets and liabilities:
Accrued interest receivable	(29		)	(54		)
Accrued interest payable	(2		)	(16		)
Other	(428		)	394
Net cash provided by operating activities	3,240			4,428

Cash Flows From Investing Activities
Purchases of premises and equipment	(134		)	(69		)
Purchases of securities held-to-maturity	(3,486		)	(1,743		)
Purchases of securities available-for-sale	(28,553		)	(31,309		)
Proceeds from maturities, paydowns and calls of securities available-for-sale	10,402			9,399
Proceeds from maturities, paydowns and calls of securities held-to-maturity	—			2,292
Proceeds from sales of securities available-for-sale	14,278			1,243
Proceeds from sales of securities held-to-maturity	2,270			—
Purchases of restricted equity securities	129			—
(Purchases) redemptions of restricted equity securities	—			115
Proceeds from sale of real estate owned	197			1,128
Loan originations and repayments, net	(4,485		)	21,445
Net cash provided by (used in) investing activities	(9,382		)	2,501

Cash Flows from Financing Activities
Net change in deposits	(10,026		)	416
Dividends paid	(1,650		)	(1,818		)
Purchase of treasury stock	(1,600		)	(5,479		)
Net cash used in financing activities	(13,276		)	(6,881		)

Change in cash and cash equivalents	(19,418		)	48

Cash and cash equivalents, beginning of year	37,942			47,612

Cash and cash equivalents, end of period	$	18,524		$	47,660

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OCONEE FEDERAL FINANCIAL CORP.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Amounts in thousands, except share and per share data)

(1) BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements of Oconee Federal Financial Corp., which include the accounts of its wholly owned subsidiary Oconee Federal Savings and Loan Association (the “Association”) (referred to herein as “the Company,” “we,” “us,” or “our”) have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Intercompany accounts and transactions are eliminated during consolidation. The Company is majority owned (70.60%) by Oconee Federal, MHC. These financial statements do not include the transactions and balances of Oconee Federal, MHC.

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting only of normal recurring accruals) necessary to present fairly the Company’s financial position as of March 31, 2014 and June 30, 2013 and the results of operations and cash flows for the interim periods ended March 31, 2014 and 2013. All interim amounts have not been audited, and the results of operations for the interim periods herein are not necessarily indicative of the results of operations to be expected for the year. These consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Form 10-K Annual Report of Oconee Federal Financial Corp. for the year ended June 30, 2013.

(2) EARNINGS PER SHARE (“EPS”)

Basic EPS is determined by dividing net earnings available to common shareholders by the weighted average number of common shares outstanding for the period. ESOP shares are considered outstanding for this calculation unless unearned. The factors used in the earnings per common share computation follow:

	Three Months Ended						Nine Months Ended
	March 31, 2014			March 31, 2013			March 31, 2014			March 31, 2013
Earnings per share
Net income	$	855		$	850		$	2,785		$	2,973
Less: distributed earnings allocated to participating securities	(8		)	(9		)	(25		)	(26		)
Less: (undistributed income) dividends in excess of earnings allocated to participating securities	(4		)	(3		)	(17		)	(16		)
Net earnings available to common shareholders	$	843		$	838		$	2,743		$	2,931

Weighted average common shares outstanding including participating securities	5,844,087			6,202,843			5,844,865			6,339,926
Less: participating securities	(83,695		)	(87,092		)	(83,695		)	(87,092		)
Less: average unearned ESOP shares	(188,754		)	(213,364		)	(196,568		)	(218,040		)
Weighted average common shares outstanding	5,571,638			5,902,387			5,564,602			6,034,794

Basic earnings per share	$	0.15		$	0.14		$	0.49		$	0.49

Weighted average common shares outstanding	5,571,638			5,902,387			5,564,602			6,034,794
Add: dilutive effects of assumed exercises of stock options	55,607			28,208			51,379			30,200
Average shares and dilutive potential common shares	5,627,245			5,930,595			5,615,981			6,064,994

Diluted earnings per share	$	0.15		$	0.14		$	0.49		$	0.48

During the three and nine months ended March 31, 2014, 7,700 shares were considered anti-dilutive. During the three and nine months ended March 31, 2013, no shares were considered anti-dilutive.

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OCONEE FEDERAL FINANCIAL CORP.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Amounts in thousands, except share and per share data)

(3) SECURITIES AVAILABLE-FOR-SALE AND HELD-TO-MATURITY

Debt, mortgage-backed and equity securities have been classified in the consolidated balance sheets according to management’s intent. U.S. Government agency mortgage-backed securities consist of securities issued by U.S. Government agencies and U.S. Government sponsored enterprises. Investment securities at March 31, 2014 and June 30, 2013 are as follows:

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
March 31, 2014
Available-for-sale:
FHLMC common stock	$	20	$	294	$	—		$	314
Preferred stock (1)	271		27		—			298
Certificates of deposit	6,723		18		(10		)	6,731
Municipal securities	1,787		—		(31		)	1,756
U.S. Government agency mortgage-backed securities	59,939		199		(1,056		)	59,082
U.S. Government agency bonds	32,958		201		(627		)	32,532
Total available-for-sale	$	101,698	$	739	$	(1,724	)	$	100,713

June 30, 2013
Held-to-maturity:
Certificates of deposit	$	3,985	$	18	$	(13	)	$	3,990
U.S. Government agency mortgage-backed securities	4,054		179		—			4,233
Total held-to-maturity	$	8,039	$	197	$	(13	)	$	8,223

Available-for-sale:
FHLMC common stock	$	20	$	90	$	—		$	110
Preferred stock (1)	271		26		—			297
U.S. Government agency mortgage-backed securities	50,209		184		(866		)	49,527
U.S. Government agency bonds	38,387		294		(630		)	38,051
Total available-for-sale	$	88,887	$	594	$	(1,496	)	$	87,985

(1) Consists of 300 shares of Southern First Bancshares, Inc. cumulative perpetual preferred stock, series T.

The following table shows securities with unrealized losses at March 31, 2014, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position.

	Less than 12 Months					12 Months or More					Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
March 31, 2014
Available for Sale:
Certificates of deposit	$	2,231	$	(10	)	$	—	$	—		$	2,231	$	(10	)
Municipal securities	1,256		(31		)	—		—			1,256		(31		)
U.S. Government agency mortgage-backed securities	28,587		(727		)	6,203		(329		)	34,790		(1,056		)
U.S. Government agency bonds	16,460		(500		)	1,873		(127		)	18,333		(627		)
	$	48,534	$	(1,268	)	$	8,076	$	(456	)	$	56,610	$	(1,724	)

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OCONEE FEDERAL FINANCIAL CORP.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Amounts in thousands, except share and per share data)

At March 31, 2014, there were thirteen U.S. Government agency securities, twenty-nine U.S. Government agency mortgage-backed securities, three municipal securities, and nine certificates of deposits with unrealized losses. One U.S. Government agency security and six U.S. Government agency mortgage-backed securities had unrealized losses for more than twelve months. None of the unrealized losses for these securities have been recognized into net income for the nine months ended March 31, 2014 because the issuer’s bonds are of high credit quality, management does not intend to sell and it is likely that management will not 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 of these securities is expected to recover as they approach their maturity date or reset date. None of the unrealized losses at June 30, 2013 were recognized as having other-than-temporary impairments (“OTTI”) during the three and nine months ended March 31, 2014.

There were no securities at June 30, 2013 with unrealized losses that had been in an unrealized loss position for twelve continuous months or more.

The Company evaluates securities for OTTI at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. The Company considers the length of time and the extent to which the fair value has been less than cost and the financial condition and near-term prospects of the issuer. Additionally, the Company considers its intent to sell or whether it will be more likely than not it will be required to sell the security prior to the security’s anticipated recovery in fair value. In analyzing an issuer’s financial condition, the Company may consider whether the securities are issued by the federal Government agencies, whether downgrades by bond rating agencies have occurred, and the results of reviews of the issuer’s financial condition.

The amortized cost and fair value of debt securities classified available-for-sale and held-to-maturity at March 31, 2014 by contractual maturity are summarized as follows:

	March 31, 2014				June 30, 2013
	Amortized		Estimated		Amortized		Estimated
	Cost		Fair Value		Cost		Fair Value
Less than one year	$	5,015	$	5,050	$	996	$	997
Due from one to five years	20,469		20,562		26,178		26,437
Due from five to ten years	11,253		10,910		11,198		10,800
Due after ten years	4,731		4,497		4,000		3,807
Mortgage backed securities	59,939		59,082		54,263		53,760
Total	$	101,407	$	100,101	$	96,635	$	95,801

The following table presents the gross proceeds from sales of securities available-for-sale and held-to-maturity and gains or losses recognized for the three and nine months ended March 31, 2014 and 2013:

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OCONEE FEDERAL FINANCIAL CORP.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Amounts in thousands, except share and per share data)

	Three Months Ended				Nine Months Ended
	March 31, 2014		March 31, 2013		March 31, 2014			March 31, 2013
Available for Sale:
Proceeds	$	3,420	$	—	$	14,278		$	1,243
Gross gains	70		—		163			14
Gross losses	—		—		(30		)	—
Held-to-maturity:
Proceeds	$	—	$	—	$	2,270		$	—
Gross gains	—		—		82			—
Gross losses	—		—		—			—
Total:
Proceeds	$	3,420	$	—	$	16,548		$	1,243
Gross gains	$	70	$	—	$	245		$	14
Gross losses	$	—	$	—	$	(30	)	$	—

During the nine months ended March 31, 2014, the Company sold two securities classified as held-to-maturity. One of those securities was a GNMA mortgage-backed security for which at least 85 percent of its original principal amount had been repaid. The second security was also a GNMA mortgage-backed security. Because the Company determined that it no longer had the positive intent to hold its investment in securities classified as held-to-maturity for an indefinite period of time because of the Company’s desire to have more flexibility in managing the investment portfolio, all of the Company’s securities classified as held-to-maturity were transferred to the available-for-sale category. The securities transferred had a total amortized cost of $7.8 million, with unrealized gross gains of $56 and unrealized gross losses of $11 at the time of transfer. The net unrealized gain of $45 was added to other comprehensive income at the time of transfer.

(4) LOANS

The components of loans at March 31, 2014 and June 30, 2013 were as follows:

	March 31, 2014			June 30, 2013
Real estate loans:
One-to-four family	$	207,801		$	204,397
Multi-family	253			258
Home equity	239			292
Nonresidential	8,567			8,521
Construction and land	9,997			8,735
Total real estate loans	226,857			222,203
Consumer and other loans	683			925
Total loans	227,540			223,128
Net deferred loan fees	(1,230		)	(1,214		)
Allowance for loan losses	(829		)	(751		)
Loans, net	$	225,481		$	221,163

The following tables present the activity in the allowance for loan losses for the three and nine months ended March 31, 2014 and 2013 and the balances in the allowance for loan losses and the recorded investment in loans by portfolio segment based on impairment method at March 31, 2014 and 2013:

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OCONEE FEDERAL FINANCIAL CORP.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Amounts in thousands, except share and per share data)

Three Months Ended March 31, 2014

	Real estate
	One-to- four family		Multi- family		Home Equity		Nonresidential		Construction and land		Consumer		Total
Beginning balance	$	701	$	4	$	1	$	51	$	30	$	1	$	788
Provision	39		—		—		—		1		1		41
Charge-offs	—		—		—		—		—		—		—
Recoveries	—		—		—		—		—		—		—
Ending balance	$	740	$	4	$	1	$	51	$	31	$	2	$	829

Allowance for loan losses:
Ending allowance attributed to loans:
Individually evaluated for impairment	$	81	$	—	$	—	$	—	$	—	$	—	$	81
Collectively evaluated for impairment	659		4		1		51		31		2		748
Total ending allowance balance	$	740	$	4	$	1	$	51	$	31	$	2	$	829

Loans:
Loans individually evaluated for impairment	$	2,470	$	—	$	—	$	—	$	—	$	—	$	2,470
Loans collectively evaluated for impairment	205,331		253		239		8,567		9,997		683		225,070
Total ending loans balance	$	207,801	$	253	$	239	$	8,567	$	9,997	$	683	$	227,540

Nine Months Ended March 31, 2014

	Real estate
	One-to- four family			Multi- family		Home Equity		Nonresidential			Construction and land		Consumer		Total
Beginning balance	$	665		$	4	$	1	$	52		$	27	$	2	$	751
Provision	79			—		—		(1		)	4		—		82
Charge-offs	(4		)	—		—		—			—		—		(4		)
Recoveries	—			—		—		—			—		—		—
Ending balance	$	740		$	4	$	1	$	51		$	31	$	2	$	829

Table of Contents

OCONEE FEDERAL FINANCIAL CORP.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Amounts in thousands, except share and per share data)

Three Months Ended March 31, 2013

	Real estate
	One-to- four family			Multi- family		Home Equity		Nonresidential			Construction and land			Consumer		Total
Beginning balance	$	778		$	4	$	1	$	54		$	26		$	3	$	866
Provision	183			—		—		(1		)	(2		)	—		180
Charge-offs	(299		)	—		—		—			—			—		(299		)
Recoveries	—			—		—		—			—			—		—
Ending balance	$	662		$	4	$	1	$	53		$	24		$	3	$	747

Allowance for loan losses:
Ending allowance attributed to loans:
Individually evaluated for impairment	$	60		$	—	$	—	$	—		$	—		$	—	$	60
Collectively evaluated for impairment	602			4		1		53			24			3		687
Total ending allowance balance	$	662		$	4	$	1	$	53		$	24		$	3	$	747

Loans:
Loans individually evaluated for impairment	$	2,680		$	—	$	—	$	—		$	—		$	—	$	2,680
Loans collectively evaluated for impairment	207,970			259		304		8,754			8,127			869		226,283
Total ending loans balance	$	210,650		$	259	$	304	$	8,754		$	8,127		$	869	$	228,963

Nine Months Ended March 31, 2013

	Real estate
	One-to- four family			Multi- family		Home Equity		Nonresidential			Construction and land		Consumer		Total
Beginning balance	$	773		$	4	$	1	$	56		$	21	$	2	$	857
Provision	256			—		—		(3		)	3		1		257
Charge-offs	(367		)	—		—		—			—		—		(367		)
Recoveries	—			—		—		—			—		—		—
Ending balance	$	662		$	4	$	1	$	53		$	24	$	3	$	747

Table of Contents

OCONEE FEDERAL FINANCIAL CORP.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Amounts in thousands, except share and per share data)

The following table presents the balances in the allowance for loan losses and the recorded investment in loans by portfolio segment based on impairment method at June 30, 2013:

June 30, 2013

	Real estate
	One-to- four family		Multi- family		Home Equity		Nonresidential		Construction and land		Consumer		Total
Allowance for loan losses:
Ending allowance attributed to loans:
Individually evaluated for impairment	$	27	$	—	$	—	$	—	$	—	$	—	$	27
Collectively evaluated for impairment	638		4		1		52		27		2		724
Total ending allowance balance	$	665	$	4	$	1	$	52	$	27	$	2	$	751

Loans:
Loans individually evaluated for impairment	$	1,986	$	—	$	—	$	—	$	—	$	—	$	1,986
Loans collectively evaluated for impairment	202,411		258		292		8,521		8,735		925		221,142
Total ending loans balance	$	204,397	$	258	$	292	$	8,521	$	8,735	$	925	$	223,128

Table of Contents

OCONEE FEDERAL FINANCIAL CORP.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Amounts in thousands, except share and per share data)

The following table presents loans individually evaluated for impairment by portfolio segment at March 31, 2014 and June 30, 2013, including the average recorded investment balance and interest earned for the nine months ended March 31, 2014 and year ended June 30, 2013:

	March 31, 2014										June 30, 2013
	Unpaid Principal Balance		Recorded Investment		Related Allowance		Average Recorded Investment		Interest Income Recognized		Unpaid Principal Balance		Recorded Investment		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no recorded allowance:
Real estate loans:
One-to-four family	$	830	$	830	$	—	$	1,282	$	12	$	1,734	$	1,734	$	—	$	1,202	$	27
Multi-family	—		—		—		—		—		—		—		—		—		—
Home equity	—		—		—		—		—		—		—		—		—		—
Nonresidential	—		—		—		—		—		—		—		—		—		—
Construction and land	—		—		—		—		—		—		—		—		—		—
Total real estate loans	830		830		—		1,282		12		1,734		1,734		—		1,202		27
Consumer and other loans	—		—		—		—		—		—		—		—		—		—
Total	$	830	$	830	$	—	$	1,282	$	12	$	1,734	$	1,734	$	—	$	1,202	$	27

PART I.		2

ITEM 1.	FINANCIAL STATEMENTS	2

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	25

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	35

ITEM 4.	CONTROLS AND PROCEDURES	35

PART II.		35

ITEM 1.	LEGAL PROCEEDINGS	35

ITEM 1A.	RISK FACTORS	35

ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	35

ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	36

ITEM 4.	MINE SAFETY DISCLOSURES	36

ITEM 5.	OTHER INFORMATION	36

ITEM 6.	EXHIBITS	36

SIGNATURES		37

INDEX TO EXHIBITS		38