UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the Quarterly Period ended
Or
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For transition period from to
Commission
File Number
(Exact Name of Registrant as Specified in Charter)
(State of Other Jurisdiction of Incorporation) |
(I.R.S Employer Identification Number) | |
| (Address of Principal Executive Officers) | (Zip Code) | |
Registrant’s telephone number, including area code
Not Applicable
(Former name or former address, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) |
Name of each exchange on which registered | ||
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.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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
such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
| ☒ | Smaller reporting company | |||||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐
As of May 5, 2023, the registrant had shares of common stock, $0.01 par value per share, outstanding.
OCONEE FEDERAL FINANCIAL CORP.
Form 10-Q Quarterly Report
Table of Contents
OCONEE FEDERAL FINANCIAL CORP.
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share and per share data)
PART I
| ITEM 1. | FINANCIAL STATEMENTS |
| March 31, 2023 (unaudited) | June 30, 2022 | |||||||
| ASSETS | ||||||||
| Cash and due from banks | $ | $ | ||||||
| Interest-earning deposits | ||||||||
| Fed funds sold | ||||||||
| Total cash and cash equivalents | ||||||||
| Securities available-for-sale | ||||||||
| Loans | ||||||||
| Allowance for loan losses | ( | ) | ( | ) | ||||
| Net loans | ||||||||
| Loans held for sale, at fair value | ||||||||
| Premises and equipment, net | ||||||||
| Accrued interest receivable | ||||||||
| Loans | ||||||||
| Investments | ||||||||
| Restricted equity securities, at cost | ||||||||
| Bank owned life insurance | ||||||||
| Goodwill | ||||||||
| Core deposit intangible | ||||||||
| Loan servicing rights | ||||||||
| Deferred tax assets | ||||||||
| Other assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES | ||||||||
| Deposits | ||||||||
| Noninterest - bearing | $ | $ | ||||||
| Interest - bearing | ||||||||
| Total deposits | ||||||||
| Federal Home Loan Bank advances | ||||||||
| Accrued interest payable and other liabilities | ||||||||
| Total liabilities | ||||||||
| SHAREHOLDERS’ EQUITY | ||||||||
| Common stock, $ par value, shares authorized; and shares outstanding, respectively |
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| Treasury stock, at par, and shares, respectively | ( | ) | ( | ) | ||||
| Additional paid-in capital | ||||||||
| Retained earnings | ||||||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Unearned ESOP shares | ( | ) | ||||||
| Total shareholders’ equity | ||||||||
| Total liabilities and shareholders’ equity | $ | $ | ||||||
See accompanying notes to the consolidated financial statements
1
OCONEE FEDERAL FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME/(LOSS)
(Unaudited)
(Amounts in thousands, except share and per share data)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| March 31, 2023 | March 31, 2022 | March 31, 2023 | March 31, 2022 | |||||||||||||
| Interest and dividend income: | ||||||||||||||||
| Loans, including fees | $ | $ | $ | $ | ||||||||||||
| Securities, taxable | ||||||||||||||||
| Securities, tax-exempt | ||||||||||||||||
| Other interest-earning assets | ||||||||||||||||
| Total interest income | ||||||||||||||||
| Interest expense: | ||||||||||||||||
| Deposits | ||||||||||||||||
| Other borrowings | ||||||||||||||||
| Total interest expense | ||||||||||||||||
| Net interest income | ||||||||||||||||
| Provision for loan losses | ||||||||||||||||
| Net interest income after provision for loan losses | ||||||||||||||||
| Noninterest income: | ||||||||||||||||
| Service charges on deposit accounts | ||||||||||||||||
| Income on bank owned life insurance | ||||||||||||||||
| Mortgage servicing income | ||||||||||||||||
| Gain on sale of mortgage loans | ||||||||||||||||
| ATM & debit card income | ||||||||||||||||
| Change in fair value of equity securities, net | ( | ) | ( | ) | ||||||||||||
| Loss on sale of securities, net | ( | ) | ||||||||||||||
| Gain on payoff of purchase credit impaired loans | ||||||||||||||||
| Other | ||||||||||||||||
| Total noninterest income | ||||||||||||||||
| Noninterest expense: | ||||||||||||||||
| Salaries and employee benefits | ||||||||||||||||
| Occupancy and equipment | ||||||||||||||||
| Data processing | ||||||||||||||||
| ATM & debit card expense | ||||||||||||||||
| Professional and supervisory fees | ||||||||||||||||
| Office expense | ||||||||||||||||
| Advertising | ||||||||||||||||
| FDIC deposit insurance | ||||||||||||||||
| Foreclosed assets, net | ( | ) | ( | ) | ( | ) | ||||||||||
| Change in loan servicing asset | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other | ||||||||||||||||
| Total noninterest expense | ||||||||||||||||
| Income before income taxes | ||||||||||||||||
| Income tax expense | ||||||||||||||||
| Net income | $ | $ | $ | $ | ||||||||||||
| Other comprehensive income/(loss) | ||||||||||||||||
| Unrealized gains/(losses) on securities available-for-sale | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Tax effect | ( | ) | ||||||||||||||
| Reclassification adjustment for losses realized in net income | ||||||||||||||||
| Tax effect | ( | ) | ||||||||||||||
| Total other comprehensive income/(loss) | ( | ) | ( | ) | ( | ) | ||||||||||
| Comprehensive income/(loss) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Basic net income per share: (Note 3) | $ | $ | $ | $ | ||||||||||||
| Diluted net income per share: (Note 3) | $ | $ | $ | $ | ||||||||||||
| Dividends declared per share: | $ | $ | $ | $ | ||||||||||||
See accompanying notes to the consolidated financial statements
2
OCONEE FEDERAL FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
(Amounts in thousands, except share and per share data)
For the three months ended March 31, 2023 and March 31, 2022
| Accumulated | ||||||||||||||||||||||||||||
| Additional | Other | Unearned | ||||||||||||||||||||||||||
| Common | Treasury | Paid-In | Retained | Comprehensive | ESOP | |||||||||||||||||||||||
| Stock | Stock | Capital | Earnings | Income (loss) | Shares | Total | ||||||||||||||||||||||
| Balance at December 31, 2021 | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| Net income | ||||||||||||||||||||||||||||
| Other comprehensive loss | ( | ) | ( | ) | ||||||||||||||||||||||||
| Purchase of shares of treasury stock(1) | ( | ) | ( | ) | ||||||||||||||||||||||||
| Stock-based compensation expense | ||||||||||||||||||||||||||||
| Dividends | — | — | ( | ) | — | — | ( | ) | ||||||||||||||||||||
| ESOP shares earned | ||||||||||||||||||||||||||||
| Balance at March 31, 2022 | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| Balance at December 31, 2022 | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
| Net income | ||||||||||||||||||||||||||||
| Other comprehensive income | ||||||||||||||||||||||||||||
| Stock-based compensation expense | ||||||||||||||||||||||||||||
| Dividends | ( | ) | ( | ) | ||||||||||||||||||||||||
| Balance at March 31, 2023 | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
| (1) |
See accompanying notes to the consolidated financial statements
3
OCONEE FEDERAL FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
(Amounts in thousands, except share and per share data)
For the nine months ended March 31, 2023 and March 31, 2022
| Accumulated | ||||||||||||||||||||||||||||
| Additional | Other | Unearned | ||||||||||||||||||||||||||
| Common | Treasury | Paid-In | Retained | Comprehensive | ESOP | |||||||||||||||||||||||
| Stock | Stock | Capital | Earnings | Income (loss) | Shares | Total | ||||||||||||||||||||||
| Balance at June 30, 2021 | $ | $ | ( | ) | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Net income | ||||||||||||||||||||||||||||
| Other comprehensive loss | ( | ) | ( | ) | ||||||||||||||||||||||||
| Purchase of shares of treasury stock(1) | ( | ) | ( | ) | ||||||||||||||||||||||||
| Stock-based compensation expense | ||||||||||||||||||||||||||||
| Dividends(2) | — | — | ( | ) | — | — | ( | ) | ||||||||||||||||||||
| ESOP shares earned | ||||||||||||||||||||||||||||
| Balance at March 31, 2022 | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| Balance at June 30, 2022 | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| Net income | ||||||||||||||||||||||||||||
| Other comprehensive loss | ( | ) | ( | ) | ||||||||||||||||||||||||
| Stock-based compensation expense | ||||||||||||||||||||||||||||
| Dividends(3) | — | — | ( | ) | — | — | ( | ) | ||||||||||||||||||||
| ESOP shares earned | ( | ) | ||||||||||||||||||||||||||
| Balance at March 31, 2023 | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
| (1) |
| (2) |
| (3) |
See accompanying notes to the consolidated financial statements
4
OCONEE FEDERAL FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Amounts in thousands, except share and per share data)
| Nine Months Ended | ||||||||
| March 31, 2023 | March 31, 2022 | |||||||
| Cash Flows From Operating Activities | ||||||||
| Net income | $ | $ | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Provision for loan losses | ||||||||
| Depreciation and amortization, net | ||||||||
| Net amortization/(accretion) of purchase accounting adjustments | ( | ) | ||||||
| Deferred income tax benefit | ( | ) | ( | ) | ||||
| Net gain on sale of real estate owned | ( | ) | ||||||
| Change in loan servicing asset | ( | ) | ( | ) | ||||
| Net loss on sales of securities | ||||||||
| Mortgage loans originated for sale | ( | ) | ( | ) | ||||
| Mortgage loans sold | ||||||||
| Gain on sales of mortgage loans | ( | ) | ( | ) | ||||
| Change in fair value of equity securities | ||||||||
| Increase in cash surrender value of bank owned life insurance | ( | ) | ( | ) | ||||
| Gain on payoff of purchased credit impaired loans | ( | ) | ( | ) | ||||
| ESOP shares earned | ||||||||
| Stock based compensation expense | ||||||||
| Net change in operating assets and liabilities: | ||||||||
| Accrued interest receivable and other assets | ( | ) | ||||||
| Accrued interest payable and other liabilities | ||||||||
| Net cash provided by operating activities | ||||||||
| Cash Flows From Investing Activities | ||||||||
| Purchases of premises and equipment | ( | ) | ( | ) | ||||
| Purchases of securities available-for-sale | ( | ) | ( | ) | ||||
| Proceeds from maturities, paydowns and calls of securities available-for-sale | ||||||||
| Proceeds from sales of securities available-for-sale | ||||||||
| Sales of restricted equity securities | ||||||||
| Purchases of restricted equity securities | ( | ) | ( | ) | ||||
| Proceeds from sale of real estate owned | ||||||||
| Loan originations and repayments, net | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash Flows from Financing Activities | ||||||||
| Net change in deposits | ||||||||
| Proceeds from notes payable to FHLB | ||||||||
| Repayment of notes payable to FHLB | ( | ) | ( | ) | ||||
| Dividends paid | ( | ) | ( | ) | ||||
| Purchase of treasury stock | ( | ) | ||||||
| Net cash provided by financing activities | ||||||||
| Change in cash and cash equivalents | ( | ) | ( | ) | ||||
| Cash and cash equivalents, beginning of period | ||||||||
| Cash and cash equivalents, end of period | $ | $ | ||||||
See accompanying notes to the consolidated financial statements
5
OCONEE FEDERAL FINANCIAL CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Amounts in thousands, except share and per share data)
| (1) | BASIS OF PRESENTATION, RISKS AND UNCERTAINTIES |
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 (
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, 2023 and June 30, 2022 and the results of operations and cash flows for the interim periods ended March 31, 2023 and 2022. All interim amounts are unaudited, 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 ending June 30, 2023 or any other period. These consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2022.
Reclassifications:
Certain amounts have been reclassified to conform to the current period presentation. The reclassifications had no effect on net income or shareholders’ equity as previously reported.
Cash Flows:
Cash and cash equivalents include cash on hand, federal funds sold, overnight interest-earning deposits and amounts due from other depository institutions.
Use of Estimates:
To prepare financial statements in conformity with GAAP, management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the consolidated financial statements and the disclosures provided, and actual results could differ.
6
OCONEE FEDERAL FINANCIAL CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Amounts in thousands, except share and per share data)
| (2) | NEW ACCOUNTING STANDARDS |
Accounting Standards Update (“ASU”) 2023-01, “Leases (Topic 842): Common Control Arrangements”. Issued in March 2023, the FASB amended the Leases topic in the Accounting Standards Codification to provide a practical expedient for private companies and not-for-profit entities that are not conduit bond obligors to use the written terms and conditions of a common control arrangement to determine whether a lease exists and, if so, the classification of and accounting for that lease. The amendments also change the guidance for public and private companies to require that leasehold improvements be amortized over the useful life of those improvements to the common control group regardless of the lease term. The amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted. The Company does not expect these amendments to have a material effect on its financial statements.
ASU 2022-06, “Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848”. Issued in December 2022, the FASB issued amendments to extend the period of time preparers can use the reference rate reform relief guidance under Accounting Standards Codification (ASC) Topic 848 from December 31, 2022, to December 31, 2024, to address the fact that all London Interbank Offered Rate (LIBOR) tenors were not discontinued as of December 31, 2021, and some tenors will be published until June 2023. The amendments are effective immediately for all entities and applied prospectively. The Company does not expect these amendments to have a material effect on its financial statements.
ASU 2022-03, “Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions”. Issued in June 2022, ASU 2022-03 provides guidance on the fair value measurement of an equity security that is subject to a contractual sale restriction and require specific disclosures related to such an equity security. The amendments are effective for financial statements issued for annual periods beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted. The Company does not expect these amendments to have a material effect on its financial statements.
ASU 2022-02, “Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures”. Issued in March 2022, ASU 2022-02 provides guidance to improve the decision usefulness of information provided to investors about certain loan re-financings, restructurings, and write-offs. The guidance is effective for financial statements issued for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company does not expect these amendments to have a material effect on its financial statements.
ASU 2021-10, “Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance”. Issued in November 2021, ASU 2021-10 requires certain annual disclosures about transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy to other accounting guidance. The guidance is effective for financial statements issued for annual periods beginning after December 15, 2021. The Company adopted this standard on July 1, 2022. This pronouncement did not have a material effect on the financial statements.
ASU 2020-04, “Reference Rate Reform (Topic 848)”. Issued in March 2020, ASU 2020-04 provides temporary optional guidance to ease the potential burden in accounting for reference rate reform. The amendments are effective as of March 12, 2020 through December 31, 2022. The Company does not expect these amendments to have a material effect on its financial statements.
ASU 2019-11, “Codification to Improvements to Topic 326, Financial Instruments – Credit Losses”. Issued in November 2019, ASU 2019-11 provides guidance that addresses issues raised by stakeholders during the implementation of ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The amendments affect a variety of Topics in the Accounting Standards Codification. For the Company, the amendments are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted in any interim period as long as an entity has adopted the amendments in ASU 2016-13.
ASU 2019-10, “Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842)”. Issued in November 2019, ASU 2019-10 provides guidance to defer the effective dates for private companies, not-for-profit organizations, and certain smaller reporting companies (such as the Company) applying standards on current expected credit losses (CECL), derivatives, hedging and leases. For the Company, the new effective date for Credit Losses (CECL) will be for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. For the Company, the effective dates for Derivatives, Hedging and Leases were not deferred under this guidance.
ASU 2019-05, “Financial Instruments—Credit Losses (Topic 326): Targeted Transition Relief”. Issued in May 2019, ASU 2019-05 provides entities with an option to irrevocably elect the fair value option, applied on an instrument-by-instrument basis for eligible instruments, upon adoption of ASU 2016-13, Measurement of Credit Losses on Financial Instruments. On October 16, 2019, the Financial Accounting Standards Board (“FASB”) announced a delay in the implementation schedule allowing certain entities, including smaller reporting companies (such as the Company) to adopt ASU 2016-13 in fiscal years beginning after December 15, 2022, and interim periods within those years.
7
OCONEE FEDERAL FINANCIAL CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Amounts in thousands, except share and per share data)
| (2) | NEW ACCOUNTING STANDARDS (continued) |
ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”. Issued in June 2016, ASU 2016-13 provides financial statement users with more decision-useful information about the expected credit losses on financial instruments that are not accounted for at fair value through net income, including loans held for investment, held-to-maturity debt securities, trade and other receivables, net investment in leases and other commitments to extend credit held by a reporting entity at each reporting date. ASU 2016-13 requires that financial assets measured at amortized cost be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The amendments in ASU 2016-13 eliminate the probable incurred loss recognition in current GAAP and reflect an entity’s current estimate of all expected credit losses. The measurement of expected credit losses is based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the financial assets. For purchased financial assets with a more-than-insignificant amount of credit deterioration since origination (“PCD assets”) that are measured at amortized cost, the initial allowance for credit losses is added to the purchase price rather than being reported as a credit loss expense. Subsequent changes in the allowance for credit losses on PCD assets are recognized through the statement of income as a credit loss expense. Credit losses relating to available-for-sale debt securities will be recorded through an allowance for credit losses rather than as a direct write-down to the security. Early adoption is permitted for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company is currently evaluating the impact of ASU 2016-13 on its consolidated financial statements by running a parallel loss model. In November 2019, the FASB issued guidance delaying the implementation schedule and allowing certain entities, including smaller reporting companies (such as the Company) to adopt ASU 2016-13 in fiscal years beginning after December 15, 2022, and interim periods within those years.
There have been no accounting standards that have been issued or proposed by the FASB or other standards-setting bodies during the quarter ended March 31, 2023 that are expected to have a material impact on the Company’s financial position, results of operations or cash flows. The Company continues to evaluate the impact of standards previously issued and not yet effective, and has no changes in its assessment since filing the Annual Report on Form 10-K.
8
OCONEE FEDERAL FINANCIAL CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Amounts in thousands, except share and per share data)
| (3) | EARNINGS PER SHARE (“EPS”) |
| Three Months Ended | Nine Months Ended | |||||||||||||||
| March 31, 2023 | March 31, 2022 | March 31, 2023 | March 31, 2022 | |||||||||||||
| Earnings per share | ||||||||||||||||
| Net income | $ | $ | $ | $ | ||||||||||||
| Less: distributed earnings allocated to participating securities | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Less: (undistributed income) dividends in excess of earnings allocated to participating securities | ( | ) | ( | ) | ( | ) | ||||||||||
| Net earnings available to common shareholders | $ | $ | $ | $ | ||||||||||||
| Weighted average common shares outstanding including participating securities | ||||||||||||||||
| Less: participating securities | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Less: average unearned ESOP shares | ( | ) | ( | ) | ( | ) | ||||||||||
| Weighted average common shares outstanding | ||||||||||||||||
| Basic earnings per share | $ | $ | $ | $ | ||||||||||||
| Weighted average common shares outstanding | ||||||||||||||||
| Add: dilutive effects of assumed exercises of stock options | ||||||||||||||||
| Average shares and dilutive potential common shares | ||||||||||||||||
| Diluted earnings per share | $ | $ | $ | $ | ||||||||||||
For the three and the nine months ended March 31, 2023 and 2022, options were considered anti-dilutive as the exercise price was in excess of the average market price.
9
OCONEE FEDERAL FINANCIAL CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Amounts in thousands, except share and per share data)
| (4) | SECURITIES AVAILABLE-FOR-SALE |
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 consists of securities issued by U.S. Government agencies and U.S. Government sponsored enterprises. Investment securities at March 31, 2023 and June 30, 2022 are as follows:
| March 31, 2023 | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Change
in Fair Value Equity Securities | Fair Value | |||||||||||||||
| Available-for-sale: | ||||||||||||||||||||
| FHLMC common stock | $ | $ | — | $ | — | $ | $ | |||||||||||||
| Municipal securities | — | ( | ) | — | ||||||||||||||||
| CMOs | — | ( | ) | — | ||||||||||||||||
| U.S. Government agency mortgage-backed securities | — | ( | ) | — | ||||||||||||||||
| U.S. Treasury and Government agency bonds | — | ( | ) | — | ||||||||||||||||
| Total available-for-sale | $ | $ | — | $ | ( | ) | $ | $ | ||||||||||||
| June 30, 2022 | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Change
in Fair Value Equity Securities | Fair Value | |||||||||||||||
| Available-for-sale: | ||||||||||||||||||||
| FHLMC common stock | $ | $ | — | $ | — | $ | $ | |||||||||||||
| Certificates of deposit | — | — | ||||||||||||||||||
| Municipal securities | ( | ) | — | |||||||||||||||||
| CMOs | — | ( | ) | — | ||||||||||||||||
| U.S. Government agency mortgage-backed securities | — | ( | ) | — | ||||||||||||||||
| U.S. Treasury and Government agency bonds | — | ( | ) | — | ||||||||||||||||
| Total available-for-sale | $ | $ | $ | ( | ) | $ | $ | |||||||||||||
Securities
pledged at March 31, 2023 and June 30, 2022 had fair values of $
At March 31, 2023 and June 30, 2022, there were no holdings of securities of any one issuer, other than U.S. Government agencies and U.S. Government sponsored enterprises, in an amount greater than % of shareholders’ equity.
10
OCONEE FEDERAL FINANCIAL CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Amounts in thousands, except share and per share data)
| (4) | SECURITIES AVAILABLE-FOR-SALE (continued) |
The following tables show the fair value and unrealized loss of securities that have been in unrealized loss positions for less than twelve months and for twelve months or more at March 31, 2023 and June 30, 2022. The tables also show the number of securities in an unrealized loss position for each category of investment security as of the respective dates.
| Less than 12 Months | 12 Months or More | Total | ||||||||||||||||||||||||||||||||||
| Fair Value | Unrealized Loss | Number in Unrealized Loss(1) | Fair Value | Unrealized Loss | Number in Unrealized Loss(1) | Fair Value | Unrealized Loss | Number in Unrealized Loss(1) | ||||||||||||||||||||||||||||
| March 31, 2023 | ||||||||||||||||||||||||||||||||||||
| Available-for-sale: | ||||||||||||||||||||||||||||||||||||
| Municipal securities | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||||||
| CMOs | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| U.S. Government agency mortgage-backed securities | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| U.S. Treasury and Government agency bonds | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||||||||||||
| Less than 12 Months | 12 Months or More | Total | ||||||||||||||||||||||||||||||||||
| Fair Value | Unrealized Loss | Number in Unrealized Loss(1) | Fair Value | Unrealized Loss | Number in Unrealized Loss(1) | Fair Value | Unrealized Loss | Number in Unrealized Loss(1) | ||||||||||||||||||||||||||||
| June 30, 2022 | ||||||||||||||||||||||||||||||||||||
| Available-for-sale: | ||||||||||||||||||||||||||||||||||||
| Municipal securities | $ | $ | ( | ) | $ | — | $ | — | — | $ | $ | ( | ) | |||||||||||||||||||||||
| CMOs | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| U.S. Government agency mortgage-backed securities | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| U.S. Treasury and Government agency bonds | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||||||||||||
| (1) |
The Company evaluates securities for other-than-temporary impairments (“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 amortized 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 federal Government agencies, whether downgrades by bond rating agencies have occurred, and the results of reviews of the issuer’s financial condition.
None
of the unrealized losses at March 31, 2023 were recognized into net income for the three or nine months ended March 31, 2023 because
the issuers’ bonds are of high credit quality, management does not intend to sell and it is more likely than not 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, 2022 were recognized as having OTTI during the year ended June 30, 2022.
11
OCONEE FEDERAL FINANCIAL CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Amounts in thousands, except share and per share data)
| (4) | SECURITIES AVAILABLE-FOR-SALE (continued) |
The following table presents the amortized cost and fair value of debt securities classified as available-for-sale at March 31, 2023 and June 30, 2022 by contractual maturity.
| March 31, 2023 | June 30, 2022 | |||||||||||||||
| Amortized | Fair | Amortized | Fair | |||||||||||||
| Cost | Value | Cost | Value | |||||||||||||
| Less than one year | $ | — | $ | — | $ | $ | ||||||||||
| Due from one to five years | ||||||||||||||||
| Due after five years to ten years | ||||||||||||||||
| Due after ten years | ||||||||||||||||
| Mortgage-backed securities, CMOs and FHLMC stock(1) | ||||||||||||||||
| Total available for sale | $ | $ | $ | $ | ||||||||||||
| (1) |
The following table presents the gross proceeds from sales of securities available-for-sale and gains or losses recognized for the three and nine months ended March 31, 2023 and 2022:
| Three Months Ended | Nine Months Ended | |||||||||||||||
| Available-for-sale: | March 31, 2023 | March 31, 2022 | March 31, 2023 | March 31, 2022 | ||||||||||||
| Proceeds | $ | $ | $ | $ | ||||||||||||
| Gross gains | ||||||||||||||||
| Gross losses | ( | ) | ||||||||||||||
The
tax benefit related to the net realized loss for the nine months ended March 31, 2023 was $
12
OCONEE FEDERAL FINANCIAL CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Amounts in thousands, except share and per share data)
(5) LOANS
The components of loans at March 31, 2023 and June 30, 2022 were as follows:
| March 31, 2023 | June 30, 2022 | |||||||
| Real estate loans: | ||||||||
| One-to-four family | $ | $ | ||||||
| Multi-family | ||||||||
| Home equity | ||||||||
| Nonresidential | ||||||||
| Agricultural | ||||||||
| Construction and land | ||||||||
| Total real estate loans | ||||||||
| Commercial and industrial | ||||||||
| Consumer and other loans | ||||||||
| Total loans | $ | $ | ||||||
The table above includes net deferred loan
fees of $
13
OCONEE FEDERAL FINANCIAL CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Amounts in thousands, except share and per share data)
(5) LOANS (continued)
The following table presents the activity in the allowance for loan losses for the three and nine months ended March 31, 2023 by portfolio segment:
| Three months March 31, 2023 | Beginning Balance | Provision | Charge-offs | Recoveries | Ending Balance | |||||||||||||||
| Real estate loans: | ||||||||||||||||||||
| One-to-four family | $ | $ | ( | ) | $ | — | $ | — | $ | |||||||||||
| Multi-family | — | — | — | |||||||||||||||||
| Home equity | — | — | ||||||||||||||||||
| Nonresidential | — | — | ||||||||||||||||||
| Agricultural | — | — | — | |||||||||||||||||
| Construction and land | — | — | ||||||||||||||||||
| Total real estate loans | — | — | ||||||||||||||||||
| Commercial and industrial | — | — | ||||||||||||||||||
| Consumer and other loans | — | — | — | |||||||||||||||||
| Total loans | $ | $ | $ | — | $ | — | $ | |||||||||||||
| Nine months ended March 31, 2023 | Beginning Balance | Provision | Charge-offs | Recoveries | Ending Balance | |||||||||||||||
| Real estate loans: | ||||||||||||||||||||
| One-to-four family | $ | $ | $ | — | $ | — | $ | |||||||||||||
| Multi-family | ( | ) | — | — | ||||||||||||||||
| Home equity | — | — | ||||||||||||||||||
| Nonresidential | — | — | ||||||||||||||||||
| Agricultural | — | — | — | |||||||||||||||||
| Construction and land | — | — | ||||||||||||||||||
| Total real estate loans | — | — | ||||||||||||||||||
| Commercial and industrial | — | — | ||||||||||||||||||
| Consumer and other loans | — | — | — | |||||||||||||||||
| Total loans | $ | $ | $ | — | $ | — | $ | |||||||||||||
The following table presents the recorded balances of loans and amount of allowance allocated based upon impairment method by portfolio segment at March 31, 2023:
| Ending Allowance on Loans: | Loans: | |||||||||||||||
| At March 31, 2023 | Individually Evaluated for Impairment | Collectively Evaluated for Impairment | Individually Evaluated for Impairment | Collectively Evaluated for Impairment | ||||||||||||
| Real estate loans: | ||||||||||||||||
| One-to-four family | $ | — | $ | $ | — | $ | ||||||||||
| Multi-family | — | — | ||||||||||||||
| Home equity | — | — | ||||||||||||||
| Nonresidential | — | |||||||||||||||
| Agricultural | — | — | ||||||||||||||
| Construction and land | — | — | ||||||||||||||
| Total real estate loans | — | |||||||||||||||
| Commercial and industrial | — | — | ||||||||||||||
| Consumer and other loans | — | — | ||||||||||||||
| Total loans | $ | — | $ | $ | $ | |||||||||||
14
OCONEE FEDERAL FINANCIAL CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Amounts in thousands, except share and per share data)
(5) LOANS (continued)
The following table presents the activity in the allowance for loan losses for the three and nine months ended March 31, 2022 by portfolio segment:
| Three months ended March 31, 2022 | Beginning Balance | Provision | Charge-offs | Recoveries | Ending Balance | |||||||||||||||
| Real estate loans: | ||||||||||||||||||||
| One-to-four family | $ | $ | $ | — | $ | — | $ | |||||||||||||
| Multi-family | — | — | — | |||||||||||||||||
| Home equity | ( | ) | — | — | ||||||||||||||||
| Nonresidential | — | — | ||||||||||||||||||
| Agricultural | — | — | — | |||||||||||||||||
| Construction and land | ( | ) | — | — | ||||||||||||||||
| Total real estate loans | — | — | ||||||||||||||||||
| Commercial and industrial | — | — | — | |||||||||||||||||
| Consumer and other loans | ( | ) | — | — | ||||||||||||||||
| Total loans | $ | $ | — | $ | — | $ | — | $ | ||||||||||||
| Nine months ended March 31, 2022 | Beginning Balance | Provision | Charge-offs | Recoveries | Ending Balance | |||||||||||||||
| Real estate loans: | ||||||||||||||||||||
| One-to-four family | $ | $ | $ | — | $ | — | $ | |||||||||||||
| Multi-family | — | — | — | |||||||||||||||||
| Home equity | ( | ) | — | — | ||||||||||||||||
| Nonresidential | — | — | ||||||||||||||||||
| Agricultural | — | — | — | |||||||||||||||||
| Construction and land | ( | ) | — | — | ||||||||||||||||
| Total real estate loans | — | — | ||||||||||||||||||
| Commercial and industrial | — | — | ||||||||||||||||||
| Consumer and other loans | ( | ) | — | — | ||||||||||||||||
| Total loans | $ | $ | — | $ | — | $ | — | $ | ||||||||||||
The following table presents the recorded balances of loans and amount of allowance allocated based upon impairment method by portfolio segment at June 30, 2022:
| Ending Allowance on Loans: | Loans: | |||||||||||||||
| At June 30, 2022 | Individually Evaluated for Impairment | Collectively Evaluated for Impairment | Individually Evaluated for Impairment | Collectively Evaluated for Impairment | ||||||||||||
| Real estate loans: | ||||||||||||||||
| One-to-four family | $ | — | $ | $ | $ | |||||||||||
| Multi-family | — | — | ||||||||||||||
| Home equity | — | — | ||||||||||||||
| Nonresidential | — | |||||||||||||||
| Agricultural | — | — | ||||||||||||||
| Construction and land | — | — | ||||||||||||||
| Total real estate loans | — | |||||||||||||||
| Commercial and industrial | — | — | ||||||||||||||
| Consumer and other loans | — | — | ||||||||||||||
| Total loans | $ | — | $ | $ | $ | |||||||||||
15
OCONEE FEDERAL FINANCIAL CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Amounts in thousands, except share and per share data)
(5) LOANS (continued)
The tables below present loans that were individually evaluated for impairment by portfolio segment at March 31, 2023 and June 30, 2022, including the average recorded investment balance and interest earned for the nine months ended March 31, 2023 and the year ended June 30, 2022:
| March 31, 2023 | ||||||||||||||||||||
| Unpaid Principal Balance | Recorded Investment | Related Allowance | Average Recorded Investment | Interest Income Recognized | ||||||||||||||||
| With no recorded allowance: | ||||||||||||||||||||
| Real estate loans: | ||||||||||||||||||||
| One-to-four family | $ | $ | $ | — | $ | $ | ||||||||||||||
| Multi-family | — | — | — | — | — | |||||||||||||||
| Home equity | — | — | — | — | — | |||||||||||||||
| Nonresidential | — | — | ||||||||||||||||||
| Agricultural | — | — | — | — | — | |||||||||||||||
| Construction and land | — | — | — | — | — | |||||||||||||||
| Total real estate loans | — | — | ||||||||||||||||||
| Commercial and industrial | — | — | — | — | — | |||||||||||||||
| Consumer and other loans | — | — | — | — | — | |||||||||||||||
| Total | $ | $ | $ | — | $ | $ | — | |||||||||||||
| With recorded allowance: | ||||||||||||||||||||
| Real estate loans: | ||||||||||||||||||||
| One-to-four family | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
| Multi-family | — | — | — | — | — | |||||||||||||||
| Home equity | — | — | — | — | — | |||||||||||||||
| Nonresidential | — | — | — | — | — | |||||||||||||||
| Agricultural | — | — | — | — | — | |||||||||||||||
| Construction and land | — | — | — | — | — | |||||||||||||||
| Total real estate loans | — | — | — | — | — | |||||||||||||||
| Commercial and industrial | — | — | — | — | — | |||||||||||||||
| Consumer and other loans | — | — | — | — | — | |||||||||||||||
| Total | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
| Totals: | ||||||||||||||||||||
| Real estate loans | $ | $ | $ | — | $ | $ | — | |||||||||||||
| Consumer and other loans | — | — | — | — | — | |||||||||||||||
| Total | $ | $ | $ | — | $ | $ | — | |||||||||||||
16
OCONEE FEDERAL FINANCIAL CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Amounts in thousands, except share and per share data)
(5) LOANS (continued)
| June 30, 2022 | ||||||||||||||||||||
| Unpaid Principal Balance | Recorded Investment | Related Allowance | Average Recorded Investment | Interest Income Recognized | ||||||||||||||||
| With no recorded allowance: | ||||||||||||||||||||
| Real estate loans: | < | |||||||||||||||||||