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EX-31.1 - SECTION 302 CEO CERTIFICATION - Citizens Community Bancorp Inc.czwi-20151231xex311.htm
EX-32.1 - SECTION 906 CEO AND CFO CERTIFICATION - Citizens Community Bancorp Inc.czwi-20151231xex321.htm
EX-31.2 - SECTION 302 CFO CERTIFICATION - Citizens Community Bancorp Inc.czwi-20151231xex312.htm


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
 
(Mark One)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2015
OR
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from             to            
Commission file number 001-33003
 
 
CITIZENS COMMUNITY BANCORP, INC.
(Exact name of registrant as specified in its charter)
 
 
Maryland
 
20-5120010
(State or other jurisdiction of
incorporation or organization)
 
(IRS Employer
Identification Number)
2174 EastRidge Center, Eau Claire, WI 54701
(Address of principal executive offices)
715-836-9994
(Registrant’s telephone number, including area code)
 
 
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  ¨
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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of "large accelerated filer", "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act (Check one):
Large accelerated filer
 
¨
 
Accelerated filer
 
¨
Non-accelerated filer
 
¨ (do not check if a smaller reporting company)
 
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  ¨ No  x
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date:
At February 8, 2016 there were 5,227,909 shares of the registrant’s common stock, par value $0.01 per share, outstanding.




CITIZENS COMMUNITY BANCORP, INC.
FORM 10-Q
December 31, 2015
INDEX
 
 
 
Page Number
 
 
Item 1.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2.
 
Item 3.
 
Item 4.
 
Item 1.
 
Item 1A.
 
Item 2.
 
Item 3.
 
Item 4.
 
Item 5.
 
Item 6.
 

2



PART 1 – FINANCIAL INFORMATION

ITEM 1.
FINANCIAL STATEMENTS

CITIZENS COMMUNITY BANCORP, INC.
Consolidated Balance Sheets
December 31, 2015 (unaudited) and September 30, 2015
(derived from audited financial statements)
(in thousands, except share data)
 
December 31, 2015
 
September 30, 2015
Assets
 
 
 
Cash and cash equivalents
$
15,230

 
$
23,872

Other interest-bearing deposits
3,242

 
2,992

Investment securities (available for sale securities at fair value of $87,161 and $79,921, and held to maturity securities at cost of $7,724 and $8,012 at December 31, 2015 and September 30, 2015, respectively)
94,885

 
87,933

Non-marketable equity securities, at cost
4,626

 
4,626

Loans receivable
453,649

 
450,510

Allowance for loan losses
(6,441
)
 
(6,496
)
Loans receivable, net
447,208

 
444,014

Office properties and equipment, net
2,803

 
2,669

Accrued interest receivable
1,586

 
1,574

Intangible assets
90

 
104

Foreclosed and repossessed assets, net
804

 
902

Other assets
11,296

 
11,462

TOTAL ASSETS
$
581,770

 
$
580,148

 
 
 
 
 
 
 
 
Liabilities and Stockholders’ Equity
 
 
 
Liabilities:
 
 
 
Deposits
$
457,732

 
$
456,298

Federal Home Loan Bank advances
58,891

 
58,891

Other liabilities
3,911

 
4,424

Total liabilities
520,534

 
519,613

 
 
 
 
Stockholders’ equity:
 
 
 
Common stock— $0.01 par value, authorized 30,000,000, 5,231,265 and 5,232,579 shares issued and outstanding, respectively
52

 
52

Additional paid-in capital
54,744

 
54,740

Retained earnings
7,105

 
6,245

Unearned deferred compensation
(261
)
 
(288
)
Accumulated other comprehensive loss
(404
)
 
(214
)
Total stockholders’ equity
61,236

 
60,535

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
$
581,770

 
$
580,148

See accompanying condensed notes to unaudited consolidated financial statements.


3




CITIZENS COMMUNITY BANCORP, INC.
Consolidated Statements of Operations (unaudited)
Three Months Ended December 31, 2015 and 2014
(in thousands, except per share data)
 
Three Months Ended
 
December 31, 2015
 
December 31, 2014
Interest and dividend income:
 
 
 
Interest and fees on loans
$
5,250

 
$
5,596

Interest on investments
424

 
364

Total interest and dividend income
5,674

 
5,960

Interest expense:
 
 
 
Interest on deposits
956

 
952

Interest on borrowed funds
165

 
167

Total interest expense
1,121

 
1,119

Net interest income before provision for loan losses
4,553

 
4,841

Provision for loan losses
75

 
235

Net interest income after provision for loan losses
4,478

 
4,606

Non-interest income:
 
 
 
Net gains on sale of available for sale securities

 
2

Net gains on available for sale securities

 
2

Service charges on deposit accounts
423

 
472

Loan fees and service charges
321

 
355

Other
206

 
205

Total non-interest income
950

 
1,034

Non-interest expense:
 
 
 
Salaries and related benefits
2,218

 
2,175

Occupancy
569

 
820

Office
252

 
256

Data processing
409

 
389

Amortization of core deposit intangible
14

 
14

Advertising, marketing and public relations
137

 
98

FDIC premium assessment
85

 
104

Professional services
151

 
319

Other
259

 
317

Total non-interest expense
4,094

 
4,492

Income before provision for income taxes
1,334

 
1,148

Provision for income taxes
474

 
433

Net income attributable to common stockholders
$
860

 
$
715

Per share information:
 
 
 
Basic earnings
$
0.16

 
$
0.14

Diluted earnings
$
0.16

 
$
0.14

Cash dividends paid
$

 
$

See accompanying condensed notes to unaudited consolidated financial statements.
 

4




CITIZENS COMMUNITY BANCORP, INC.
Consolidated Statements of Comprehensive Income (Loss) (unaudited)
Three months ended December 31, 2015 and 2014
(in thousands, except per share data)
 
Three Months Ended
 
December 31, 2015

 
December 31, 2014

Net income attributable to common stockholders
$
860

 
$
715

Other comprehensive income (loss), net of tax:
 
 
 
Securities available for sale
 
 
 
Net unrealized (losses) gains arising during period
(190
)
 
417

Reclassification adjustment for gains (losses) included in net income

 
1

Unrealized (losses) gains on securities
(190
)
 
418

Comprehensive income
$
670

 
$
1,133


Reclassifications out of accumulated other comprehensive income for the three months ended December 31, 2015 were as follows:

Details about Accumulated Other Comprehensive Income Components
 
Amounts Reclassified from Accumulated Other Comprehensive Income
(1)
Affected Line Item on the Statement of Operations
Unrealized gains and losses
 
 
 
 
Sale of securities
 
$

 
Net gain on sale of available for sale securities
 
 

 
Provision for income taxes
Total reclassifications for the period
 
$

 
Net income attributable to common shareholders


(1)    Amounts in parentheses indicate decreases to profit/loss.


See accompanying condensed notes to unaudited consolidated financial statements.


5




CITIZENS COMMUNITY BANCORP, INC.
Consolidated Statement of Changes in Stockholders’ Equity (unaudited)
Three Months Ended December 31, 2015
(in thousands, except Shares)
 
 
 
 
 
Additional Paid-In Capital
 
Retained Earnings
 
Unearned Deferred Compensation
 
Accumulated Other Comprehensive Income (Loss)
 
Total Stockholders' Equity
 
Common Stock
 
 
 
 
 
 
Shares
 
Amount
 
 
 
 
 
Balance, October 1, 2015
5,232,579

 
$
52

 
$
54,740

 
$
6,245

 
$
(288
)
 
$
(214
)
 
$
60,535

Net income
 
 
 
 
 
 
860

 
 
 
 
 
860

Other comprehensive loss, net of tax
 
 
 
 
 
 
 
 
 
 
(190
)
 
(190
)
Surrender of restricted shares of common stock
(1,314
)
 
 
 
(12
)
 
 
 
 
 
 
 
(12
)
Stock option expense
 
 
 
 
16

 
 
 
 
 
 
 
16

Amortization of restricted stock
 
 
 
 
 
 
 
 
27

 
 
 
27

Balance, December 31, 2015
5,231,265

 
$
52

 
$
54,744

 
$
7,105

 
$
(261
)
 
$
(404
)
 
$
61,236

See accompanying condensed notes to unaudited consolidated financial statements.
 

6





CITIZENS COMMUNITY BANCORP, INC.
Consolidated Statements of Cash Flows (unaudited)
Three Months Ended December 31, 2015 and 2014
(in thousands, except per share data)
 
Three Months Ended
 
December 31, 2015

 
December 31, 2014

Cash flows from operating activities:
 
 
 
Net income attributable to common stockholders
$
860

 
$
715

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Net amortization of premium/discount on securities
280

 
217

Depreciation
216

 
432

Provision for loan losses
75

 
235

Net realized gain on sale of securities

 
(1
)
Amortization of core deposit intangible
14

 
14

Amortization of restricted stock
27

 
18

Stock based compensation expense
16

 
12

Loss on sale of office properties

 
7

Provision (benefit) for deferred income taxes
34

 
(278
)
Net gains from disposals of foreclosed properties
(52
)
 
(22
)
Provision for valuation allowance on foreclosed properties

 
27

Decrease (increase) in accrued interest receivable and other assets
245

 
(1,526
)
(Decrease) increase in other liabilities
(513
)
 
496

Total adjustments
342

 
(369
)
Net cash provided by operating activities
1,202

 
346

Cash flows from investing activities:
 
 
 
Purchase of investment securities
(9,989
)
 
(4,191
)
Net increase in interest-bearing deposits
(250
)
 
(1,000
)
Proceeds from sale of securities available for sale

 
1,965

Principal payments on investment securities
2,441

 
1,672

Proceeds from sale of Federal Home Loan Bank (FHLB) stock

 
240

Proceeds from sale of foreclosed properties
473

 
264

Net (increase) decrease in loans
(3,592
)
 
9,059

Net capital expenditures
(349
)
 
(34
)
Net cash (used in) provided by investing activities
(11,266
)
 
7,975

Cash flows from financing activities:
 
 
 
Net decrease in Federal Home Loan Bank advances

 
(5,000
)
Net increase in deposits
1,434

 
4,637

Surrender of restricted shares of common stock
(12
)
 
(12
)
Exercise of common stock options

 
177

Net cash provided by (used in) financing activities
1,422

 
(198
)
Net (decrease) increase in cash and cash equivalents
(8,642
)
 
8,123

Cash and cash equivalents at beginning of period
23,872

 
11,434

Cash and cash equivalents at end of period
$
15,230

 
$
19,557

Supplemental cash flow information:
 
 
 
Cash paid during the period for:
 
 
 
Interest on deposits
$
960

 
$
950

Interest on borrowings
$
164

 
$
167

Income taxes
$
690

 
$
2

Supplemental noncash disclosure:
 
 
 
Transfers from loans receivable to foreclosed and repossessed assets
$
323

 
$
409

See accompanying condensed notes to unaudited consolidated financial statements. 

7




CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 – NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying consolidated financial statements include the accounts of Citizens Community Bancorp, Inc. (the “Company”) and its wholly owned subsidiary, Citizens Community Federal N.A. (the "Bank"), and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. As used in this quarterly report, the terms “we”, “us”, “our”, and “Citizens Community Bancorp, Inc.” mean the Company and its wholly-owned subsidiary, the Bank, unless the context indicates other meaning.
On April 16, 2014, the U.S. Office of the Comptroller of the Currency (the "OCC"), the primary federal regulator for
Citizens Community Bancorp, Inc. and Citizens Community Federal, provided written notice to the Bank of the OCC's approval for the Bank to convert to a national banking association (a "National Bank") and operate under the title of Citizens Community Federal National Association ("Citizens Community Federal N.A."). The consummation of the conversion to a National Bank was effective as of May 31, 2014.
On April 18, 2014, Citizens Community Bancorp, Inc. received written notice from the Federal Reserve Bank of
Minneapolis (the "FRB") notifying the Company of the FRB's approval of the Company becoming a bank holding company as
a result of the proposed conversion of the Bank from a federally-chartered savings bank to a National Bank, which approval
was also effective as of May 31, 2014.
The consolidated income of the Company is principally derived from the income of the Bank, the Company’s wholly owned subsidiary. The Bank originates residential, commercial, agricultural, consumer and commercial and industrial (C&I) loans and accepts deposits from customers, primarily in Wisconsin, Minnesota and Michigan. The Bank operates 15 full-service offices, seven stand-alone locations and 8 branches predominantly located inside Walmart Supercenters.
The Bank is subject to competition from other financial institutions and non-financial institutions providing financial products. Additionally, the Bank is subject to the regulations of certain regulatory agencies and undergoes periodic examination by those regulatory agencies.
In preparing these consolidated financial statements, we evaluated the events and transactions that occurred through February 8, 2016, the date on which the financial statements were available to be issued. As of February 8, 2016, there were no subsequent events which required recognition or disclosure.
The accompanying consolidated interim financial statements are unaudited. However, in the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Unless otherwise stated herein, and except for shares and per share amounts, all amounts are in thousands.
Principles of Consolidation – The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Citizens Community Federal N.A. All significant intercompany accounts and transactions have been eliminated.
Use of Estimates – Preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying disclosures. These estimates are based on management’s best knowledge of current events and actions the Company may undertake in the future. Estimates are used in accounting for, among other items, fair value of financial instruments, the allowance for loan losses, valuation of acquired intangible assets, useful lives for depreciation and amortization, indefinite-lived intangible assets and long-lived assets, deferred tax assets, uncertain income tax positions and contingencies. Management does not anticipate any material changes to estimates made herein in the near term. Factors that may cause sensitivity to the aforementioned estimates include, but are not limited to, external market factors such as market interest rates and unemployment rates, changes to operating policies and procedures, and changes in applicable banking regulations. Actual results may ultimately differ from estimates, although management does not generally believe such differences would materially affect the consolidated financial statements in any individual reporting period.
Investment Securities; Held to Maturity and Available for Sale – Management determines the appropriate classification of investment securities at the time of purchase and reevaluates such designation as of the date of each balance sheet. Securities are classified as held to maturity when the Company has the positive intent and ability to hold the securities to maturity. Held to maturity securities are stated at amortized cost. Investment securities not classified as held to maturity are classified as available for sale. Available for sale securities are stated at fair value, with unrealized holding gains and losses

8




deemed other than temporarily impaired due to non-credit issues being reported in other comprehensive income (loss), net of tax. Unrealized losses deemed other-than-temporary due to credit issues are reported in the Company’s net income in the period in which the losses arise. Interest income includes amortization of purchase premium or accretion of purchase discount. Amortization of premiums and accretion of discounts are recognized in interest income using the interest method over the estimated lives of the underlying securities.
The Company evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. As part of such monitoring, the credit quality of individual securities and their issuer is assessed. Significant inputs used to measure the amount of other-than-temporary impairment related to credit loss include, but are not limited to, default and delinquency rates of the underlying collateral, remaining credit support, and historical loss severities. Adjustments to market value of available for sale securities that are considered temporary are recorded as separate components of equity, net of tax. If the unrealized loss of a security is identified as other-than-temporary based on information available, such as the decline in the creditworthiness of the issuer, external market ratings, or the anticipated or realized elimination of associated dividends, such impairments are further analyzed to determine if credit loss exists. If there is a credit loss, it will be recorded in the Company's consolidated statement of operations. Unrealized losses on available for sale securities, other than credit, will continue to be recognized in other comprehensive income (loss), net of tax. Unrealized losses reflected in the preceding tables have not been included in results of operations because the unrealized loss was not deemed other-than-temporary. Management has determined that more likely than not, the Company neither intends to sell, nor will it be required to sell each debt security before its anticipated recovery, and therefore recovery of cost will occur.
Loans – Loans that management has the intent and ability to hold for the foreseeable future, until maturity or payoff are reported at the principal balance outstanding, net of unearned interest, and net of deferred loan fees and costs. Interest income is accrued on the unpaid principal balance of these loans. Loan origination fees, net of certain direct origination costs, are deferred and recognized in interest income using the interest method without anticipating prepayments. Delinquency fees are recognized into income when chargeable, assuming collection is reasonably insured.
Interest income on commercial, mortgage and consumer loans is discontinued according to the following schedules:
Commercial loans, including agricultural and C&I loans, past due 90 days or more;
Closed end consumer loans past due 120 days or more; and
Real estate loans and open ended consumer loans past due 180 days or more.
Past due status is based on the contractual terms of the loan. In all cases, loans are placed on nonaccrual status or charged off at an earlier date if collection of principal or interest is considered doubtful. All interest accrued but not received for a loan placed on nonaccrual status is reversed against interest income. Interest received on such loans is accounted for on the cash basis or cost recovery method, and is generally applied against principal, until qualifying for return to accrual status. Loans are returned to accrual status when payments are made that bring the loan account current with the contractual term of the loan and a 6 month payment history has been established. Interest on impaired loans considered troubled debt restructurings (“TDRs”) or substandard, less than 90 days delinquent, is recognized as income as it accrues based on the revised terms of the loan over an established period of continued payment. Substandard loans, as defined by the OCC, our primary banking regulator, are loans that are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any.
Real estate loans and open ended consumer loans are charged off to estimated net realizable value less estimated selling costs at the earlier of when (a) the loan is deemed by management to be uncollectible, or (b) the loan becomes past due 180 days or more. Closed end consumer loans are charged off to net realizable value at the earlier of when (a) the loan is deemed by management to be uncollectible, or (b) the loan becomes past due 120 days or more. Commercial loans, including agricultural and C&I loans, are charged off to net realizable value at the earlier of when (a) the loan is deemed by management to be uncollectible, or (b) the loan becomes past due 90 days or more.
Allowance for Loan Losses – The allowance for loan losses (“ALL”) is a valuation allowance for probable and inherent credit losses in our loan portfolio. Loan losses are charged against the ALL when management believes that the collectability of a loan balance is unlikely. Subsequent recoveries, if any, are credited to the ALL. Management estimates the required ALL balance taking into account the following factors: past loan loss experience; the nature, volume and composition of our loan portfolio; known and inherent risks in our loan portfolio; information about specific borrowers’ ability to repay; estimated collateral values; current economic conditions; and other relevant factors determined by management. The ALL consists of specific and general components. The specific component relates to loans that are individually classified as impaired. The general component covers non-impaired loans and is based on historical loss experience adjusted for certain qualitative factors. The entire ALL balance is available for any loan that, in our management’s judgment, should be charged off.

9




A loan is impaired when full payment under the loan terms is not expected. Impaired loans consist of all TDRs, as well as individual substandard loans not considered a TDR when full payment under the loan terms is not expected. All TDRs are individually evaluated for impairment. See Note 3, “Loans, Allowance for Loan Losses and Impaired Loans” for more information on what we consider to be a TDR. If a TDR or substandard loan is deemed to be impaired, a specific ALL allocation may be established so that the loan is reported, net, at the lower of (a) outstanding principal balance, (b) the present value of estimated future cash flows using the loan’s existing rate; or (c) at the fair value of any collateral, less estimated disposal costs, if repayment is expected solely from the underlying collateral of the loan. For TDRs less than 90 days past due, and certain substandard loans that are less than 90 days delinquent, the likelihood of the loan migrating to over 90 days past due is also taken into account when determining the specific ALL allocation for these particular loans. Large groups of smaller balance homogeneous loans, such as non-TDR commercial, consumer and residential real estate loans, are collectively evaluated for impairment, and accordingly, are not separately identified for impairment disclosures.
Foreclosed and Repossessed Assets, net – Assets acquired through foreclosure or repossession are initially recorded at fair value, less estimated costs to sell, which establishes a new cost basis. If the fair value declines subsequent to foreclosure or repossession, a valuation allowance is recorded through expense. Costs incurred after acquisition are expensed and are included in non-interest expense, other on our Consolidated Statements of Operations.
Income Taxes – The Company accounts for income taxes in accordance with the Financial Accounting Standards Board ("FASB") Accounting Standards Codification (“ASC”) Topic 740, “Income Taxes.” Under this guidance, deferred taxes are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates that will apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized as income or expense in the period that includes the enactment date. See Note 6, "Income Taxes" for details on the Company’s income taxes.
The Company regularly reviews the carrying amount of its net deferred tax assets to determine if the establishment of a valuation allowance is necessary. If based on the available evidence, it is more likely than not that all or a portion of the Company’s net deferred tax assets will not be realized in future periods, a deferred tax valuation allowance would be established. Consideration is given to various positive and negative factors that could affect the realization of the deferred tax assets. In evaluating this available evidence, management considers, among other things, historical performance, expectations of future earnings, the ability to carry back losses to recoup taxes previously paid, the length of statutory carryforward periods, any experience with utilization of operating loss and tax credit carryforwards not expiring, tax planning strategies and timing of reversals of temporary differences. Significant judgment is required in assessing future earnings trends and the timing of reversals of temporary differences. Accordingly, the Company’s evaluation is based on current tax laws as well as management’s expectations of future performance.
Earnings Per Share – Basic earnings per common share is net income or loss divided by the weighted average number of common shares outstanding during the period. Diluted earnings per common share includes the dilutive effect of additional potential common shares issuable during the period, consisting of stock options outstanding under the Company’s stock incentive plans that have an exercise price that is less than the Company's stock price on the reporting date.
Reclassifications – Certain items previously reported were reclassified for consistency with the current presentation.
Recent Accounting Pronouncements - In August 2014, the FASB issued Accounting Standards Update ("ASU") 2014-14; "Receivables; Troubled Debt Restructurings by Creditors (Subtopic 310-40): Classification of Certain Government-Guaranteed Mortgage Loans upon Foreclosure". ASU 2014-14 is intended to improve accounting and disclosure consistency related to how creditors classify government-guaranteed mortgage loans, including FHA or VA guaranteed loans, upon foreclosure. For public entities, ASU 2014-09 is effective on a prospective basis for the annual periods, and interim periods within those annual periods, beginning after December 15, 2014. The Company has adopted ASU 2014-14 effective December 31, 2015. The adoption of ASU 2014-04 had no effect on the Company's consolidated results of operations, financial position or cash flows.
In May 2014, the FASB issued ASU 2014-09; "Revenue from Contracts with Customers (Topic 606). ASU 2014-09 is intended to clarify and simplify revenue recognition principles, develop a common revenue standard across industries and accounting frameworks, and improve the usefulness and consistency of revenue reporting. The effective dates for ASU 2014-09 were deferred one year when the FASB issued ASU 2015-14 - "Revenue from Contracts with Customers (Topic (606) Deferral of the Effective Date", in August 2015. For public entities, ASU 2014-09 is effective on a retrospective basis for the annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is not permitted. The Company expects the adoption of ASU 2014-09 will have no material effect on the Company's consolidated results of operations, financial position or cash flows.

10




In January 2014, the FASB issued ASU 2014-04; "Receivables - Troubled Debt Restructurings by Creditors (Subtopic 310-40): Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure (a consensus of the FASB Emerging Issues Task Force)". ASU 2014-04 is intended to improve consistency among reporting entities by clarifying when an in substance foreclosure occurs, that is, when a creditor should derecognize a loan and recognize the corresponding real estate collateral as a separate asset. For public entities, ASU 2014-04 is effective for the annual periods, and interim periods within those annual periods, beginning after December 15, 2014. The Company has adopted ASU 2014-04 effective December 31, 2015. The adoption of ASU 2014-04 had no effect on the Company's consolidated results of operations, financial position or cash flows.
NOTE 2 – FAIR VALUE ACCOUNTING
ASC Topic 820-10, “Fair Value Measurements and Disclosures” establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The statement describes three levels of inputs that may be used to measure fair value:
Level 1- Quoted prices (unadjusted) for identical assets or liabilities in active markets that the Company has the ability to access as of the measurement date.
Level 2- Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
Level 3- Significant unobservable inputs that reflect the Company’s assumptions about the factors that market participants would use in pricing an asset or liability.
A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input within the valuation hierarchy that is significant to the fair value measurement.
The fair value of securities available for sale is determined by obtaining market price quotes from independent third parties wherever such quotes are available (Level 1 inputs); or matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs). Where such quotes are not available, the Company utilizes independent third party valuation analysis to support the Company’s estimates and judgments in determining fair value (Level 3 inputs).
Assets Measured on a Recurring Basis
The following tables present the financial instruments measured at fair value on a recurring basis as of December 31, 2015 and September 30, 2015:
 
Fair
Value
 
Quoted Prices in
Active Markets
for Identical
Instruments
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
December 31, 2015
 
 
 
 
 
 
 
Investment securities:
 
 
 
 
 
 
 
U.S. government agency obligations
$
14,718

 
$

 
$
14,718

 
$

Obligations of states and political subdivisions
29,596

 

 
29,596

 

Mortgage-backed securities
42,781

 

 
42,781

 

Federal Agricultural Mortgage Corporation
66

 

 
66

 

Total
$
87,161

 
$

 
$
87,161

 
$

September 30, 2015
 
 
 
 
 
 
 
Investment securities:
 
 
 
 
 
 
 
U.S. government agency obligations
$
15,020

 
$

 
$
15,020

 
$

Obligations of states and political


 


 


 


subdivisions
27,407

 

 
27,407

 

Mortgage-backed securities
37,440

 

 
37,440

 

Federal Agricultural Mortgage Corporation
54

 

 
54

 

Total
$
79,921

 
$

 
$
79,921

 
$


11




Assets Measured on a Nonrecurring Basis
The following tables present the financial instruments measured at fair value on a nonrecurring basis as of December 31, 2015 and September 30, 2015:
 
Fair
Value
 
Quoted Prices in
Active Markets
for Identical
Instruments
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level  3)
December 31, 2015
 
 
 
 
 
 
 
Foreclosed and repossessed assets, net
$
804

 
$

 
$

 
$
804

Impaired loans with allocated allowances
1,752

 

 

 
1,752

Total
$
2,556

 
$

 
$

 
$
2,556

September 30, 2015
 
 
 
 
 
 
 
Foreclosed and repossessed assets, net
$
902

 
$

 
$

 
$
902

Impaired loans with allocated allowances
2,349

 

 

 
2,349

Total
$
3,251

 
$

 
$

 
$
3,251

The fair value of impaired loans referenced above was determined by obtaining independent third party appraisals and/or internally developed collateral valuations to support the Company’s estimates and judgments in determining the fair value of the underlying collateral supporting impaired loans.
The fair value of foreclosed and repossessed assets was determined by obtaining market price valuations from independent third parties wherever such quotes were available for other collateral owned. The Company utilized independent third party appraisals to support the Company’s estimates and judgments in determining fair value for other real estate owned.
Fair Values of Financial Instruments
ASC 825-10 and ASC 270-10, Interim Disclosures about Fair Value Financial Instruments, require disclosures about fair value financial instruments and significant assumptions used to estimate fair value. The estimated fair values of financial instruments not previously disclosed are determined as follows:
Cash and Cash Equivalents
Due to their short-term nature, the carrying amounts of cash and cash equivalents are considered to be a reasonable estimate of fair value.
Other Interest-Bearing Deposits
Fair value of interest bearing deposits is estimated using a discounted cash flow analysis based on current interest rates being offered by instruments with similar terms.
Non-marketable Equity Securities, at cost
Non-marketable equity securities are comprised of Federal Home Loan Bank stock and Federal Reserve Bank stock carried at cost, which are their redeemable fair values since the market for each category of this stock is restricted.
Loans Receivable, net
Fair value is estimated for portfolios of loans with similar financial characteristics. Loans are segregated by type such as real estate, C&I and consumer. The fair value of loans is calculated by discounting scheduled cash flows through the estimated maturity date using market discount rates reflecting the credit and interest rate risk inherent in the loan. The estimate of maturity is based on the Bank’s repayment schedules for each loan classification.
Accrued Interest Receivable and Payable
Due to their short-term nature, the carrying amounts of accrued interest receivable and payable are considered to be a reasonable estimate of fair value.

12




Deposits
The fair value of deposits with no stated maturity, such as demand deposits, savings accounts, and money market accounts, is the amount payable on demand at the reporting date. The fair value of fixed rate certificate accounts is calculated by using discounted cash flows applying interest rates currently being offered on similar certificates.
Federal Home Loan Bank Advances
The fair value of long-term borrowed funds is estimated using discounted cash flows based on the Bank’s current incremental borrowing rates for similar borrowing arrangements. The carrying value of short-term borrowed funds approximates their fair value.
Off-Balance-Sheet Instruments
The fair value of off-balance sheet commitments would be estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements, the current interest rates, and the present creditworthiness of the customers. Since this amount is immaterial to the Company’s consolidated financial statements, no amount for fair value is presented.
The table below represents what we would receive to sell an asset or what we would have to pay to transfer a liability in an orderly transaction between market participants at the measurement date. The carrying amount and estimated fair value of the Company's financial instruments as of the dates indicated below were as follows:
 
December 31, 2015
 
September 30, 2015
 
Carrying
Amount
 
Estimated
Fair
Value
 
Carrying
Amount
 
Estimated
Fair
Value
Financial assets:
 
 
 
 
 
 
 
Cash and cash equivalents
$
15,230

 
$
15,230

 
$
23,872

 
$
23,872

Interest-bearing deposits
3,242

 
3,257

 
2,992

 
3,022

Investment securities
94,885

 
95,015

 
87,933

 
88,140

Non-marketable equity securities, at cost
4,626

 
4,626

 
4,626

 
4,626

Loans receivable, net
447,208

 
463,061

 
444,014

 
462,227

Accrued interest receivable
1,586

 
1,586

 
1,574

 
1,574

Financial liabilities:
 
 
 
 
 
 
 
Deposits
$
457,732

 
$
461,661

 
$
456,298

 
$
460,450

FHLB advances
58,891

 
58,909

 
58,891

 
59,357

Accrued interest payable
14

 
14

 
18

 
18

NOTE 3 – LOANS, ALLOWANCE FOR LOAN LOSSES AND IMPAIRED LOANS
Credit Quality/Risk Ratings: Management utilizes a numeric risk rating system to identify and quantify the Bank’s risk of loss within its loan portfolio. Ratings are initially assigned prior to funding the loan, and may be changed at any time as circumstances warrant.
Ratings range from the highest to lowest quality based on factors that include measurements of ability to pay, collateral type and value, borrower stability and management experience. The Bank’s loan portfolio is presented below in accordance with the risk rating framework that has been commonly adopted by the federal banking agencies. The definitions of the various risk rating categories are as follows:
1 through 4 - Pass. A "Pass" loan means that the condition of the borrower and the performance of the loan is satisfactory or better.
5 - Watch. A "Watch" loan has clearly identifiable developing weaknesses that deserve additional attention from management. Weaknesses that are not corrected or mitigated, may jeopardize the ability of the borrower to repay the loan in the future.

13




6 - Special Mention. A "Special Mention" loan has one or more potential weakness that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or in the institution’s credit position in the future.
7 - Substandard. A "Substandard" loan is inadequately protected by the current net worth and paying capacity of the obligor or the collateral pledged, if any. Assets classified as substandard must have a well-defined weakness, or weaknesses, that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.
8 - Doubtful. A "Doubtful" loan has all the weaknesses inherent in a Substandard loan with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable.
9 - Loss. Loans classified as "Loss" are considered uncollectible, and their continuance as bankable assets is not warranted. This classification does not mean that the loan has absolutely no recovery or salvage value, and a partial recovery may occur in the future.
Below is a breakdown of loans by risk rating as of December 31, 2015:
 
 
1 to 5
 
6
 
7
 
8
 
9
 
TOTAL
Real estate loans:
 
 
 
 
 
 
 
 
 
 
 
 
Consumer
 
$
171,525

 
$

 
$
1,650

 
$

 
$

 
$
173,175

Commercial/agricultural
 
74,153

 

 

 

 

 
74,153

Total real estate loans
 
245,678

 

 
1,650

 

 

 
247,328

Consumer and other loans:
 
203,496

 

 
634

 

 
2

 
204,132

Gross loans
 
$
449,174

 
$

 
$
2,284

 
$

 
$
2

 
$
451,460

Net deferred loan costs (fees)
 
 
 
 
 
 
 
 
 
 
 
2,189

Allowance for loan losses
 
 
 
 
 
 
 
 
 
 
 
(6,441
)
Loans receivable, net
 
 
 
 
 
 
 
 
 
 
 
$
447,208

Below is a breakdown of loans by risk rating as of September 30, 2015:
 
 
1 to 5
 
6
 
7
 
8
 
9
 
TOTAL
Real estate loans:
 
 
 
 
 
 
 
 
 
 
 
 
Consumer
 
$
179,946

 
$

 
$
1,260

 
$

 
$

 
$
181,206

Commercial/agricultural
 
63,266

 

 

 

 

 
63,266

Total real estate loans
 
243,212

 

 
1,260

 

 

 
244,472

Consumer and other loans:
 
203,054

 

 
547

 

 
7

 
203,608

Gross loans
 
$
446,266

 
$

 
$
1,807

 
$

 
$
7

 
$
448,080

Net deferred loan costs (fees)
 
 
 
 
 
 
 
 
 
 
 
2,430

Allowance for loan losses
 
 
 
 
 
 
 
 
 
 
 
(6,496
)
Loans receivable, net
 
 
 
 
 
 
 
 
 
 
 
$
444,014

The ALL represents management’s estimate of probable and inherent credit losses in the Bank’s loan portfolio. Estimating the amount of the ALL requires the exercise of significant judgment and the use of estimates related to the amount and timing of expected future cash flows on impaired loans, estimated losses on pools of homogeneous loans based on historical loss experience, and consideration of other qualitative factors such as current economic trends and conditions, all of which may be susceptible to significant change.
There are many factors affecting the ALL; some are quantitative, while others require qualitative judgment. The process for determining the ALL (which management believes adequately considers potential factors which result in probable credit losses), includes subjective elements and, therefore, may be susceptible to significant change. To the extent actual outcomes differ from management estimates, additional provision for loan losses could be required that could adversely affect the

14




Company’s earnings or financial position in future periods. Allocations of the ALL may be made for specific loans but the entire ALL is available for any loan that, in management’s judgment, should be charged-off or for which an actual loss is realized.
As an integral part of their examination process, various regulatory agencies also review the Bank’s ALL. Such agencies may require that changes in the ALL be recognized when such regulators’ credit evaluations differ from those of our management based on information available to the regulators at the time of their examinations.
Changes in the ALL by loan type for the periods presented below were as follows:
 
Consumer Real Estate
 
Commercial/Agriculture Real Estate
 
Consumer and Other
 
Unallocated
 
Total
Three Months Ended December 31, 2015:
 
 
 
 
 
 
 
 
 
Allowance for Loan Losses:
 
 
 
 
 
 
 
 
 
Beginning balance, October 1, 2015
$
2,364

 
$
1,617

 
$
2,263

 
$
252

 
$
6,496

Charge-offs
(41
)
 

 
(138
)
 

 
(179
)
Recoveries
2

 

 
47

 

 
49

Provision
30

 
10

 
35

 

 
75

Allowance allocation adjustment
(340
)
 
137

 
205

 
(2
)
 

Ending balance, December 31, 2015
$
2,015

 
$
1,764

 
$
2,412

 
$
250

 
$
6,441

Allowance for Loan Losses at December 31, 2015:
 
 
 
 
 
 
 
 
 
Amount of allowance for loan losses arising from loans individually evaluated for impairment
$
141

 
$

 
$
84

 
$

 
$
225

Amount of allowance for loan losses arising from loans collectively evaluated for impairment
$
1,874

 
$
1,764

 
$
2,328

 
$
250

 
$
6,216

Loans Receivable as of December 31, 2015:

 

 

 
 
 
 
Ending balance
$
172,713

 
$
73,233

 
$
207,703

 
$

 
$
453,649

Ending balance: individually evaluated for impairment
$
4,631

 
$

 
$
849

 
$

 
$
5,480

Ending balance: collectively evaluated for impairment
$
168,082

 
$
73,233

 
$
206,854

 
$

 
$
448,169


15




 
Consumer Real Estate
 
Commercial/Agriculture Real Estate
 
Consumer and Other
 
Unallocated
 
Total
Year Ended September 30, 2015:
 
 
 
 
 
 
 
 
 
Allowance for Loan Losses:
 
 
 
 
 
 
 
 
 
Beginning balance, October 1, 2014
$
2,759

 
$

 
$
3,747

 
$

 
$
6,506

Charge-offs
(405
)
 

 
(601
)
 

 
(1,006
)
Recoveries
69

 

 
271

 

 
340

Provision
382

 
16

 
258

 

 
656

Allowance allocation adjustment
(441
)
 
1,601

 
(1,412
)
 
252

 

Ending balance, September 30, 2015
$
2,364

 
$
1,617

 
$
2,263

 
$
252

 
$
6,496

Allowance for Loan Losses at September 30, 2015:
 
 
 
 

 
 
 
 
Amount of allowance for loan losses arising from loans individually evaluated for impairment
$
463

 
$

 
$
119

 
$

 
$
582

Amount of allowance for loan losses arising from loans collectively evaluated for impairment
$
1,901

 
$
1,617

 
$
2,144

 
$
252

 
$
5,914

Loans Receivable as of September 30, 2015:
 
 
 
 

 
 
 
 
Ending balance
$
180,693

 
$
63,266

 
$
206,551

 
$

 
$
450,510

Ending balance: individually evaluated for impairment
$
4,466

 
$

 
$
848

 
$

 
$
5,314

Ending balance: collectively evaluated for impairment
$
176,227

 
$
63,266

 
$
205,703

 
$

 
$
445,196

The Bank has originated substantially all loans currently recorded on the Company’s accompanying Consolidated Balance Sheet, except as noted below.
During October 2012, the Bank entered into an agreement to purchase short term consumer loans from a third party on an ongoing basis. As part of the servicer agreement entered into in connection with this purchase agreement, the third party seller agreed to purchase or substitute performing consumer loans for all contracts that become 120 days past due. Pursuant to the ongoing loan purchase agreement, a Board of Director determinant was originally established to limit the purchase of these consumer loans under this arrangement to a maximum of $40,000 and a restricted reserve account was established at 3% of the outstanding consumer loan balances purchased up to a maximum of $1,000, with such percentage amount of the loans being deposited into a segregated reserve account. The funds in the reserve account are to be released to compensate the Bank for any purchased loans that are not purchased back by the seller or substituted with performing loans and are ultimately charged off by the Bank. During the first quarter of fiscal 2015, the Board of Directors increased the limit of these purchased consumer loans to a maximum of $50,000. As of December 31, 2015, the balance of the consumer loans purchased was $42,683. The balance in the cash reserve account has reached the maximum allowed balance of $1,000, which is included in Deposits on the accompanying Consolidated Balance Sheet. To date, the Company has not charged off or experienced losses related to the purchased loans.
The weighted average rate earned on these purchased consumer loans was 4.23% as of December 31, 2015. Since March 2014, the rate earned for all new loan originations of these purchased consumer loans was 4.00%. As of January 2016, new loans purchased will be at an interest rate of 4.25% due to the increase in the Prime Rate.

16




Loans receivable by loan type as of the end of the periods shown below were as follows:
 
Real Estate Loans
 
Commercial/Agriculture Real Estate Loans
 
Consumer and Other Loans
 
Total Loans
 
December 31, 2015
 
September 30, 2015
 
December 31, 2015
 
September 30, 2015
 
December 31, 2015
 
September 30, 2015
 
December 31, 2015
 
September 30, 2015
Performing loans
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Performing TDR loans
$
3,038

 
$
3,206

 
$

 
$

 
$
420

 
$
472

 
$
3,458

 
$
3,678

Performing loans other
168,588

 
176,650

 
73,233

 
63,266

 
206,750

 
205,695

 
448,571

 
445,611

Total performing loans
171,626

 
179,856

 
73,233

 
63,266

 
207,170

 
206,167

 
452,029

 
449,289

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nonperforming loans (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nonperforming TDR loans
267

 
273

 

 

 
69

 
59

 
336

 
332

Nonperforming loans other
820

 
564

 

 

 
464

 
325

 
1,284

 
889

Total nonperforming loans
$
1,087

 
$
837

 
$

 
$

 
$
533

 
$
384

 
$
1,620

 
$
1,221

Total loans
$
172,713

 
$
180,693

 
$
73,233

 
$
63,266

 
$
207,703

 
$
206,551

 
$
453,649

 
$
450,510

(1)
Nonperforming loans are either 90+ days past due or nonaccrual.
An aging analysis of the Company’s real estate, commercial/agriculture real estate, consumer and other loans and purchased third party loans as of December 31, 2015 and September 30, 2015, respectively, was as follows:
 
30-59 Days
Past Due
 
60-89 Days
Past Due
 
Greater
Than
89 Days
 
Total
Past Due
 
Current
 
Total
Loans
 
Recorded
Investment >
89 days and
Accruing
December 31, 2015
 
 
 
 
 
 
 
 
 
 
 
 
 
Real estate loans
$
725

 
$
299

 
$
670

 
$
1,694

 
$
171,019

 
$
172,713

 
$
398

Commercial/Agriculture real estate

 

 

 

 
73,233

 
73,233

 

Consumer and other loans
478

 
110

 
266

 
854

 
164,166

 
165,020

 
167

Purchased third party loans
693

 
217

 
207

 
1,117

 
41,566

 
42,683

 
207

Total
$
1,896

 
$
626

 
$
1,143

 
$
3,665

 
$
449,984

 
$
453,649

 
$
772

September 30, 2015
 
 
 
 
 
 
 
 
 
 
 
 
 
Real estate loans
$
555

 
$
500

 
$
387

 
$
1,442

 
$
179,251

 
$
180,693

 
$
244

Commercial/Agriculture real estate

 

 

 

 
63,266

 
63,266

 

Consumer and other loans
386

 
65

 
135

 
586

 
166,260

 
166,846

 
52

Purchased third party loans
238

 
189

 
177

 
604

 
39,101

 
39,705

 
177

Total
$
1,179

 
$
754

 
$
699

 
$
2,632

 
$
447,878

 
$
450,510

 
$
473


17




At December 31, 2015, the Company has identified $3,794 of TDR loans and $1,686 of substandard loans as impaired, totaling $5,480, which includes $3,458 of performing TDR loans. A loan is identified as impaired when, based on current information and events, it is probable that the Bank will be unable to collect all amounts due according to the contractual terms of the loan agreement. Performing TDRs consist of loans that have been modified and are performing in accordance with the modified terms for a sufficient length of time, generally six months, or loans that were modified on a proactive basis. A summary of the Company’s impaired loans as of December 31, 2015 and September 30, 2015 was as follows:
 
With No Related Allowance Recorded
 
With An Allowance Recorded
 
Totals
 
Consumer Real Estate
Commercial/Agricultural Real Estate
Consumer and Other
 
Total
 
Consumer Real Estate
Commercial/Agricultural Real Estate
Consumer and Other
 
Total
 
Consumer Real Estate
Commercial/Agricultural Real Estate
Consumer and Other
 
Total
Recorded investment at December 31, 2015
$
2,952

$

$
551

 
$
3,503

 
$
1,679

$

$
298

 
$
1,977

 
$
4,631

$

$
849

 
$
5,480

Unpaid balance at December 31, 2015
2,952


551

 
3,503

 
1,679


298

 
1,977

 
4,631


849

 
5,480

Recorded investment at September 30, 2015
2,494


471

 
2,965

 
1,972


377

 
2,349

 
4,466


848

 
5,314

Unpaid balance at September 30, 2015
2,494


471

 
2,965

 
1,972


377

 
2,349

 
4,466


848

 
5,314

Average recorded investment; three months ended December 31, 2015
2,723


511

 
3,234

 
1,826


338

 
2,164

 
4,549


849

 
5,398

Average recorded investment; twelve months ended September 30, 2015
3,178


485

 
3,663

 
2,220


556

 
2,776

 
5,398


1,041

 
6,439

Interest income received; three months ended December 31, 2015
32


10

 
42

 
10


2

 
12

 
42


12

 
54

Interest income received; twelve months ended September 30, 2015
136


35

 
171

 
61


23

 
84

 
197


58

 
255


18




Troubled Debt Restructuring – A TDR includes a loan modification where a borrower is experiencing financial difficulty and the Bank grants a concession to that borrower that the Bank would not otherwise consider except for the borrower’s financial difficulties. Concessions include an extension of loan terms, renewals of existing balloon loans, reductions in interest rates and consolidating existing Bank loans at modified terms. A TDR may be either on accrual or nonaccrual status based upon the performance of the borrower and management’s assessment of collectability. If a TDR is placed on nonaccrual status, it remains there until a sufficient period of performance under the restructured terms has occurred at which time it is returned to accrual status. There were 4 delinquent TDRs greater than 59 days past due with a recorded investment of $166 at December 31, 2015, compared to 4 such loans with a recorded investment of $191 at September 30, 2015. A summary of loans by loan type modified in a troubled debt restructuring as of December 31, 2015 and December 31, 2014, and during each of the three months then ended, and as of September 30, 2015 and during the twelve months then ended was as follows:
 
Consumer Real Estate
Consumer/Agricultural Real Estate
Consumer and Other
 
Total
December 31, 2015 and
 
 
 
 
 
Three Months then Ended:
 
 
 
 
 
Accruing / Performing:
 
 
 
 
 
Beginning balance
$
3,206

$

$
472

 
$
3,678

Principal payments
(31
)

(20
)
 
(51
)
Charge-offs



 

Advances


1

 
1

New restructured (1)



 

Class transfers out (2)



 

Transfers between accrual/non-accrual
(137
)

(33
)
 
(170
)
Ending balance
$
3,038

$

$
420

 
$
3,458

Non-accrual / Non-performing:
 
 
 
 
 
Beginning balance
$
273

$

$
59

 
$
332

Principal payments
(125
)

(2
)
 
(127
)
Charge-offs
(20
)

(21
)
 
(41
)
Advances
2



 
2

New restructured (1)



 

Class transfers out (2)



 

Transfers between accrual/non-accrual
137


33

 
170

Ending balance
$
267

$

$
69

 
$
336

Totals:
 
 
 
 
 
Beginning balance
$
3,479

$

$
531

 
$
4,010

Principal payments
(156
)

(22
)
 
(178
)
Charge-offs
(20
)

(21
)
 
(41
)
Advances
2


1

 
3

New restructured (1)



 

Class transfers out (2)



 

Transfers between accrual/non-accrual



 

Ending balance
$
3,305

$

$
489

 
$
3,794

(1)
“New restructured” represent loans restructured during the applicable period that met TDR criteria in accordance with the Bank’s policy at the time of the restructuring.
(2)
“Class transfers out” represent previously restructured loans that are in compliance with the modified terms for a minimum of one year, are yielding a market rate and conform to normal underwriting standards.

19




 
Consumer Real Estate
Commercial/Agricultural Real Estate
Consumer and Other
 
Total
December 31, 2014 and
 
 
 
 
 
Three Months then Ended:
 
 
 
 
 
Accruing / Performing:
 
 
 
 
 
Beginning balance
$
4,535

$

$
797

 
$
5,332

Principal payments
(360
)

(77
)
 
(437
)
Charge-offs


(2
)
 
(2
)
Advances
2



 
2

New restructured (1)


14

 
14

Class transfers out (2)
(181
)


 
(181
)
Transfers between accrual/non-accrual


(28
)
 
(28
)
Ending balance
$
3,996

$

$
704

 
$
4,700

Non-accrual / Non-performing:
 

 
 
 
Beginning balance
$
202

$

$
47

 
$
249

Principal payments
(99
)

(2
)
 
(101
)
Charge-offs
(16
)

(1
)
 
(17
)
Advances



 

New restructured (1)



 

Class transfers out (2)



 

Transfers between accrual/non-accrual


28

 
28

Ending balance
$
87

$

$
72

 
$
159

Totals:
 

 
 
 
Beginning balance
$
4,737

$

$
844

 
$
5,581

Principal payments
(459
)

(79
)
 
(538
)
Charge-offs
(16
)

(3
)
 
(19
)
Advances
2



 
2

New restructured (1)


14

 
14

Class transfers out (2)
(181
)


 
(181
)
Transfers between accrual/non-accrual



 

Ending balance
$
4,083

$

$
776

 
$
4,859

(1)
“New restructured” represent loans restructured during the applicable period that met TDR criteria in accordance with the Bank’s policy at the time of the restructuring.
(2)
“Class transfers out” represent previously restructured loans that are in compliance with the modified terms for a minimum of one year, are yielding a market rate and conform to normal underwriting standards.



20




 
Real Estate
Commercial/Agricultural Real Estate
Consumer and Other
 
Total
September 30, 2015 and
 
 
 
 
 
Twelve Months then Ended:
 
 
 
 
 
Accruing / Performing:
 
 
 
 
 
Beginning balance
$
4,535

$

$
797

 
$
5,332

Principal payments
(945
)

(301
)
 
(1,246
)
Charge-offs


(8
)
 
(8
)
Advances
12


1

 
13

New restructured (1)
17


52

 
69

Class transfers out (2)
(181
)


 
(181
)
Transfers between accrual/non-accrual
(232
)

(69
)
 
(301
)
Ending balance
$
3,206

$

$
472

 
$
3,678

Non-accrual / Non-performing:
 
 
 
 
 
Beginning balance
$
202

$

$
47

 
$
249

Principal payments
(120
)

(11
)
 
(131
)
Charge-offs
(41
)

(46
)
 
(87
)
Advances



 

New restructured (1)



 

Class transfers out (2)



 

Transfers between accrual/non-accrual
232


69

 
301

Ending balance
$
273

$

$
59

 
$
332

Totals:
 
 
 
 
 
Beginning balance