Note 8 - Credit Quality of Financing Receivables

12 Months Ended

Jun. 30, 2015

Credit Quanlity Of Financing Receivables [Abstract]

Credit Quanlity Of Financing Receivables [Text Block]

Note 8 – Credit Quality of Financing Receivables:

The following tables provide information on the credit profile of the components of the portfolio and allowance for credit losses related to “financing receivables” as defined under Topic 310, Receivables.  This disclosure on “financing receivables” covers the Company’s direct finance and sales-type leases and all commercial loans, but does not include operating leases and transactions in process.   The portfolio is disaggregated into segments and classifications appropriate for assessing and monitoring the portfolios’ risk and performance. This disclosure does not encompass all risk assets or the entire allowance for credit losses.

Portfolio segments identified by the Company include leases and loans. These segments have been disaggregated into four classes: 1) commercial leases, 2) education, government and non-profit leases, 3) commercial and industrial loans and 4) commercial real estate loans. Relevant risk characteristics for establishing these portfolio classes generally include the nature of the borrower, structure of the transaction and collateral type. The Company’s credit process includes a policy of classifying all leases and loans in accordance with a risk rating classification system consistent with regulatory models under which leases and loans may be rated as “pass”, “special mention”, “substandard”, or “doubtful”. These risk categories reflect an assessment of the ability of the borrowers to service their obligation based on current financial position, historical payment experience, and collateral adequacy, among other factors. The Company uses the following definitions for risk ratings:

Pass – Includes credits of the highest quality as well as credits with positive primary repayment source but one or more characteristics that are of higher than average risk.

Special Mention – Have a potential weakness that if left uncorrected may result in deterioration of the repayment prospects for the lease or loan or of the Company’s credit position at some future date.

Substandard – Are inadequately protected by the paying capacity of the obligor or of the collateral, if any. Substandard credits have a well-defined weakness that jeopardize the liquidation of the debt or indicate the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

Doubtful – Based on current information and events, collection of all amounts due according to the contractual terms of the lease or loan agreement is considered highly questionable and improbable.

The risk classification of financing receivables by portfolio class is as follows:

(in thousands)	Commercial Leases		Education Government Non-profit Leases		Commercial & Industrial Loans		Commercial Real Estate Loans		Total Financing Receivable
As of June 30, 2015:
Pass	$	219,814	$	69,865	$	234,076	$	7,523	$	531,278
Special Mention		6,080		304		4,910		-		11,294
Substandard		5,435		217		-		-		5,652
Doubtful		14		4		-		-		18
	$	231,343	$	70,390	$	238,986	$	7,523	$	548,242
Non-accrual	$	37	$	4	$	-	$	-	$	41
As of June 30, 2014:
Pass	$	245,360	$	76,569	$	108,453	$	2,344	$	432,726
Special Mention		6,440		566		9,881		-		16,887
Substandard		4		972		4,917		5,563		11,456
Doubtful		20		4		-		-		24
	$	251,824	$	78,111	$	123,251	$	7,907	$	461,093
Non-accrual	$	43	$	4	$	-	$	-	$	47

The accrual of interest income on leases and loans will be discontinued when the customer becomes ninety days or more past due on its lease or loan payments with the Company, unless the Company believes the investment is otherwise recoverable. Leases and loans may be placed on non-accrual earlier if the Company has significant doubt about the ability of the customer to meet its lease or loan obligations, as evidenced by consistent delinquency, deterioration in the customer’s financial condition or other relevant factors. Payments received while on non-accrual are applied to reduce the Company’s recorded value. A lease with a net balance of $2.7 million was placed on non-accrual in July 2015, and is not included in past due leases at June 30, 2015.

The following table presents the aging of the financing receivables by portfolio class:

(in thousands)	31-89 Days		Greater Than 90 Days		Total Past Due		Current		Total Financing Receivable		Over 90 Days & Accruing
As of June 30, 2015:
Commercial Leases	$	2,733	$	37	$	2,770	$	228,573	$	231,343	$	-
Education, Government, Non-profit Leases		8		4		12		70,378		70,390		-
Commercial and Industrial Loans		-		-		-		238,986		238,986		-
Commercial Real Estate Loans		-		-		-		7,523		7,523		-
	$	2,741	$	41	$	2,782	$	545,460	$	548,242	$	-
As of June 30, 2014:
Commercial Leases	$	-	$	43	$	43	$	251,781	$	251,824	$	-
Education, Government, Non-profit Leases		-		4		4		78,107		78,111		-
Commercial and Industrial Loans		-		-		-		123,251		123,251		-
Commercial Real Estate Loans		-		-		-		7,907		7,907		-
	$	-	$	47	$	47	$	461,046	$	461,093	$	-

The following table presents the allowance balances and activity in the allowance related to financing receivables, along with the recorded investment and allowance determined based on impairment method as of June 30, 2015 and 2014:

(in thousands)	Commercial Leases			Education Government Non-profit Leases			Commercial & Industrial Loans		Commercial Real Estate Loans			Total Financing Receivable
As of June 30, 2015:
Allowance for lease and loan losses
Balance beginning of period	$	2,510		$	817		$	1,761	$	211		$	5,299
Charge-offs		(19	)		-			-		-			(19	)
Recoveries		1			-			-		-			1
Provision		100			-			1,175		(100	)		1,175
Balance end of period	$	2,592		$	817		$	2,936	$	111		$	6,456
Individually evaluated for impairment	$	563		$	58		$	-	$	-		$	621
Collectively evaluated for impairment		2,029			759			2,936		111			5,835
Total ending allowance balance	$	2,592		$	817		$	2,936	$	111		$	6,456
Finance receivables
Individually evaluated for impairment	$	5,449		$	221		$	-	$	-		$	5,670
Collectively evaluated for impairment		225,894			70,169			238,986		7,523			542,572
Total ending finance receivable balance	$	231,343		$	70,390		$	238,986	$	7,523		$	548,242
As of June 30, 2014:
Allowance for lease and loan losses
Balance beginning of period	$	2,557		$	618		$	1,561	$	411		$	5,147
Charge-offs		(61	)		(1	)		-		-			(62	)
Recoveries		14			-			-		-			14
Provision		-			200			200		(200	)		200
Balance end of period	$	2,510		$	817		$	1,761	$	211		$	5,299
Individually evaluated for impairment	$	27		$	191		$	-	$	-		$	218
Collectively evaluated for impairment		2,483			626			1,761		211			5,081
Total ending allowance balance	$	2,510		$	817		$	1,761	$	211		$	5,299
Finance receivables
Individually evaluated for impairment	$	73		$	976		$	-	$	-		$	1,049
Collectively evaluated for impairment		251,751			77,135			123,251		7,907			460,044
Total ending finance receivable balance	$	251,824		$	78,111		$	123,251	$	7,907		$	461,093