IF Bancorp, Inc. - Quarter Report: 2019 March (Form 10-Q)

 

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 10-Q

 

 

 

☒	Quarterly Report Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2019

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 No. 001-35226

 

 

IF Bancorp, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

Maryland		45-1834449
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)
201 East Cherry Street, Watseka, Illinois		60970
(Address of Principal Executive Offices)		Zip Code

(815) 432-2476

(Registrant’s telephone number)

N/A

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

 

 

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

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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    YES  ☒    NO  ☐

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 the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one)

 

Large accelerated filer		☐		Accelerated filer		☐
Non-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 7(a)(2)(B) of the Securities Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    YES  ☐    NO  ☒

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.01 per share		IROQ		Nasdaq Capital Market

The Registrant had 3,581,052 shares of common stock, par value $0.01 per share, issued and outstanding as of May 2, 2019.

 

 

 

IF Bancorp, Inc.

Form 10-Q

Index

 

				Page
Part I. Financial Information
Item 1.		Condensed Consolidated Financial Statements			1
		Condensed Consolidated Balance Sheets as of March 31, 2019 (unaudited) and June 30, 2018			1
		Condensed Consolidated Statements of Income for the Three Months and Nine Months Ended March 31, 2019 and 2018 (unaudited)			2
		Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three Months and Nine Months Ended March 31, 2019 and 2018 (unaudited)			3
		Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended March 31, 2019 and 2018 (unaudited)			4
		Condensed Consolidated Statements of Cash Flows for the Nine Months Ended March 31, 2019 and 2018 (unaudited)			6
		Notes to Condensed Consolidated Financial Statements (unaudited)			7
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations			37
Item 3.		Quantitative and Qualitative Disclosures about Market Risk			52
Item 4.		Controls and Procedures			52
Part II. Other Information
Item 1.		Legal Proceedings			53
Item 1A.		Risk Factors			53
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds			53
Item 3.		Defaults upon Senior Securities			53
Item 4.		Mine Safety Disclosures			53
Item 5.		Other Information			53
Item 6.		Exhibits			54
		Signature Page			55

 

Part I. – Financial Information

Item 1. Financial Statements

IF Bancorp, Inc.

Condensed Consolidated Balance Sheets

(Dollars in thousands, except per share amount)

 

		March 31, 2019				June 30, 2018
Assets		(Unaudited)
Cash and due from banks		$	5,607			$	4,240
Interest-bearing demand deposits			951				514
Cash and cash equivalents			6,558				4,754
Interest-bearing time deposits in banks			2,500				1,750
Available-for-sale securities			130,927				125,996
Loans, net of allowance for loan losses of $6,378 and $5,945 at March 31, 2019 and June 30, 2018, respectively			492,504				476,480
Premises and equipment, net of accumulated depreciation of $7,213 and $6,717 at March 31, 2019 and June 30, 2018, respectively			10,680				10,226
Federal Home Loan Bank stock, at cost			2,430				3,285
Foreclosed assets held for sale			1,610				219
Accrued interest receivable			2,254				1,821
Bank-owned life insurance			9,005				8,803
Mortgage servicing rights			861				866
Deferred income taxes			2,674				4,003
Other			522				720
Total assets		$	662,525			$	638,923
Liabilities and Equity
Liabilities
Deposits
Demand		$	22,256			$	21,350
Savings, NOW and money market			195,615				195,491
Certificates of deposit			258,274				229,236
Brokered certificates of deposit			41,534				34,344
Total deposits			517,679				480,421
Repurchase agreements			2,242				2,281
Federal Home Loan Bank advances			54,000				67,500
Advances from borrowers for taxes and insurance			1,227				309
Accrued post-retirement benefit obligation			2,796				2,770
Accrued interest payable			594				188
Other			3,881				3,779
Total liabilities			582,419				557,248
Commitments and Contingencies
Stockholders’ Equity
Common stock, $.01 par value per share, 100,000,000 shares authorized, 3,581,052 and 3,871,408 shares issued and outstanding at March 31, 2019 and June 30, 2018, respectively			36				39
Additional paid-in capital			48,708				48,361
Unearned ESOP shares, at cost, 235,751 and 250,185 shares at March 31, 2019 and June 30, 2018, respectively			(2,358	)			(2,502	)
Retained earnings			34,351				38,885
Accumulated other comprehensive loss, net of tax			(631	)			(3,108	)
Total stockholders’ equity			80,106				81,675
Total liabilities and stockholders’ equity		$	662,525			$	638,923

See accompanying notes to the unaudited condensed consolidated financial statements.

 

1

IF Bancorp, Inc.

Condensed Consolidated Statements of Income (Unaudited)

(Dollars in thousands except per share amounts)

 

		Three Months Ended March 31,								Nine Months Ended March 31,
		2019				2018				2019				2018
Interest and Dividend Income
Interest and fees on loans		$	5,747			$	4,849			$	16,973			$	14,512
Securities:
Taxable			828				730				2,481				2,026
Tax-exempt			29				32				92				102
Federal Home Loan Bank dividends			41				26				110				71
Deposits with other financial institutions			68				38				134				102
Total interest and dividend income			6,713				5,675				19,790				16,813
Interest Expense
Deposits			1,829				1,170				5,106				3,082
Federal Home Loan Bank advances and repurchase agreements			440				200				1,287				568
Total interest expense			2,269				1,370				6,393				3,650
Net Interest Income			4,444				4,305				13,397				13,163
Provision for Loan Losses			61				110				436				468
Net Interest Income After Provision for Loan Losses			4,383				4,195				12,961				12,695
Noninterest Income
Customer service fees			80				75				286				296
Other service charges and fees			53				62				208				262
Insurance commissions			160				129				497				472
Brokerage commissions			228				239				751				644
Net realized gains on sales of available-for-sale securities			—				—				—				13
Mortgage banking income, net			25				121				177				256
Gain on sale of loans			48				23				227				173
Gain (Loss) on foreclosed assets, net			(82	)			(24	)			16				(24	)
Bank-owned life insurance income, net			67				65				202				311
Other			189				223				725				655
Total noninterest income			768				913				3,089				3,058
Noninterest Expense
Compensation and benefits			2,625				2,417				7,839				7,312
Office occupancy			240				206				680				569
Equipment			345				315				1,016				973
Federal deposit insurance			41				44				127				129
Stationary, printing and office			30				45				93				111
Advertising			130				123				385				337
Professional services			75				154				289				421
Supervisory examinations			35				43				123				123
Audit and accounting services			18				18				103				106
Organizational dues and subscriptions			7				4				41				50
Insurance bond premiums			36				40				114				112
Telephone and postage			50				62				183				201
Other			429				363				1,622				1,571
Total noninterest expense			4,061				3,834				12,615				12,015
Income Before Income Tax			1,090				1,274				3,435				3,738
Provision for Income Tax			286				280				910				2,497
Net Income		$	804			$	994			$	2,525			$	1,241
Earnings Per Share:
Basic		$	0.24			$	0.27			$	0.72			$	0.34
Diluted		$	0.24			$	0.27			$	0.71			$	0.33
Dividends declared per common share		$	0.125			$	0.10			$	0.25			$	0.20

See accompanying notes to the unaudited condensed consolidated financial statements.

 

2

IF Bancorp, Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)

(Dollars in thousands)

 

		Three Months Ended March 31,
		2019				2018
Net Income		$	804			$	994
Other Comprehensive Income (Loss)
Unrealized appreciation (depreciation) on available-for-sale securities, net of taxes of $718 and $(874), for 2019 and 2018, respectively			1,799				(1,689	)
Postretirement health plan amortization of transition obligation and prior service cost and change in net loss, net of taxes of $2 and $9 for 2019 and 2018, respectively			5				50
Other comprehensive income (loss), net of tax			1,804				(1,639	)
Comprehensive Income (Loss)		$	2,608			$	(645	)
		Nine Months Ended March 31,
		2019				2018
Net Income		$	2,525			$	1,241
Other Comprehensive Income (Loss)
Unrealized appreciation (depreciation) on available-for-sale securities, net of taxes of $1,350 and $(1,125), for 2019 and 2018, respectively			2,497				(2,352	)
Less: reclassification adjustment for realized gains included in net income, net of taxes of $0 and $4, for 2019 and 2018, respectively			—				9
			2,497				(2,361	)
Postretirement health plan amortization of transition obligation and prior service cost and change in net loss, net of taxes of $35 and $7 for 2019 and 2018, respectively			(20	)			46
Other comprehensive income (loss), net of tax			2,477				(2,315	)
Comprehensive Income (Loss)		$	5,002			$	(1,074	)

See accompanying notes to the unaudited condensed consolidated financial statements.

 

3

IF Bancorp, Inc.

Condensed Consolidated Statement of Stockholders’ Equity (Unaudited)

(Dollars in thousands, except per share amounts)

 

		Common Stock				Additional Paid-In Capital				Unearned ESOP Shares				Retained Earnings				Accumulated Other Comprehensive Income (Loss)				Total
For the three months ended March 31, 2019
Balance, January 1, 2019		$	36			$	48,600			$	(2,406	)		$	34,726			$	(2,435	)		$	78,521
Net income			—				—				—				804				—				804
Other comprehensive income			—				—				—				—				1,804				1,804
Dividends on common stock, $0.125 per share			—				—				—				(447	)			—				(447	)
Stock equity plan			—				56				—				—				—				56
Stock repurchase, 35,356 shares, average price $20.72 each			—				—				—				(732	)			—				(732	)
ESOP shares earned, 4,811 shares			—				52				48				—				—				100
Balance, March 31, 2019		$	36			$	48,708			$	(2,358	)		$	34,351			$	(631	)		$	80,106
For the three months ended March 31, 2018
Balance, January 1, 2018		$	39			$	48,146			$	(2,598	)		$	39,138			$	(1,249	)		$	83,476
Net income			—				—				—				994				—				994
Other comprehensive loss			—				—				—				—				(1,639	)			(1,639	)
Dividends on common stock, $0.10 per share			—				—				—				(390	)			—				(390	)
Stock equity plan			—				57				—				—				—				57
Stock repurchase, 49,000 shares, average price $20.00 each			—				—				—				(980	)			—				(980	)
ESOP shares earned, 4,811 shares			—				47				48				—				—				95
Balance, March 31, 2018		$	39			$	48,250			$	(2,550	)		$	38,762			$	(2,888	)		$	81,613

See accompanying notes to the unaudited condensed consolidated financial statements.

 

4

		Common Stock				Additional Paid-In Capital				Unearned ESOP Shares				Retained Earnings				Accumulated Other Comprehensive Income (Loss)				Total
For the nine months ended March 31, 2019
Balance, July 1, 2018		$	39			$	48,361			$	(2,502	)		$	38,885			$	(3,108	)		$	81,675
Net income			—				—				—				2,525				—				2,525
Other comprehensive income			—				—				—				—				2,477				2,477
Dividends on common stock, $0.25 per share			—				—				—				(900	)			—				(900	)
Stock equity plan			—				169				—				—				—				169
Stock repurchase, 290,356 shares, average price $21.23 each			(3	)			—				—				(6,159	)			—				(6,162	)
ESOP shares earned, 14,434 shares			—				178				144				—				—				322
Balance, March 31, 2019		$	36			$	48,708			$	(2,358	)		$	34,351			$	(631	)		$	80,106
For the nine months ended March 31, 2018
Balance, July 1, 2017		$	39			$	47,940			$	(2,694	)		$	39,051			$	(367	)		$	83,969
Net income			—				—				—				1,241				—				1,241
Other comprehensive loss			—				—				—				—				(2,315	)			(2,315	)
Reclassification of stranded tax effects due to tax reform			—				—				—				206				(206	)			—
Dividends on common stock, $0.20 per share			—				—				—				(756	)			—				(756	)
Stock equity plan			—				169				—				—				—				169
Stock repurchase, 49,000 shares, average price $20.00 each			—				—				—				(980	)			—				(980	)
ESOP shares earned, 14,434 shares			—				141				144				—				—				285
Balance, March 31, 2018		$	39			$	48,250			$	(2,550	)		$	38,762			$	(2,888	)		$	81,613

See accompanying notes to the unaudited condensed consolidated financial statements.

 

5

IF Bancorp, Inc.

Condensed Consolidated Statement of Cash Flows (Unaudited)

(Dollars in thousands)

 

		Nine Months Ended March 31,
		2019				2018
Operating Activities
Net income		$	2,525			$	1,241
Items not requiring (providing) cash
Depreciation			496				370
Provision for loan losses			436				468
Amortization of premiums and discounts on securities			47				128
Deferred income taxes			(56	)			1,639
Net realized gains on loan sales			(227	)			(173	)
Net realized gains on sales of available-for-sale securities			—				(13	)
Loss (Gain) on foreclosed assets held for sale			(16	)			24
Bank-owned life insurance income, net			(202	)			(311	)
Originations of loans held for sale			(11,221	)			(14,615	)
Proceeds from sales of loans held for sale			11,659				13,493
ESOP compensation expense			322				285
Stock equity plan expense			169				169
Changes in
Accrued interest receivable			(433	)			(467	)
Other assets			198				(77	)
Accrued interest payable			406				93
Post-retirement benefit obligation			41				(296	)
Other liabilities			(345	)			(377	)
Net cash provided by operating activities			3,799				1,581
Investing Activities
Net change in interest bearing time deposits			(750	)			—
Purchases of available-for-sale securities			(10,495	)			(32,514	)
Proceeds from the sales of available-for-sale securities			—				5,966
Proceeds from maturities and pay-downs of available-for-sale securities			9,364				12,833
Net change in loans			(22,998	)			(17,453	)
Purchase of premises and equipment			(950	)			(3,915	)
Proceeds from sale of foreclosed assets			4,957				257
Redemption of Federal Home Loan Bank stock			2,295				1,666
Purchase of Federal Home Loan Bank stock			(1,440	)			(1,328	)
Proceeds from settlement of bank-owned life insurance policies			—				397
Net cash used in investing activities			(20,017	)			(34,091	)
Financing Activities
Net increase in demand deposits, money market, NOW and savings accounts			1,030				26,991
Net increase in certificates of deposit, including brokered certificates			36,228				12,669
Net increase in advances from borrowers for taxes and insurance			918				356
Proceeds from Federal Home Loan Bank advances			111,500				85,500
Repayments of Federal Home Loan Bank advances			(125,000	)			(90,000	)
Net increase (decrease) in repurchase agreements			(39	)			551
Dividends paid			(453	)			(366	)
Stock purchase per stock repurchase plan			(6,162	)			(980	)
Net cash provided by financing activities			18,022				34,721
Net Increase in Cash and Cash Equivalents			1,804				2,211
Cash and Cash Equivalents, Beginning of Period			4,754				7,766
Cash and Cash Equivalents, End of Period		$	6,558			$	9,977
Supplemental Cash Flows Information
Interest paid		$	5,987			$	3,557
Income taxes paid, net of refunds		$	175			$	1,980
Foreclosed assets acquired in settlement of loans		$	6,332			$	179
Dividends payable		$	447			$	390

See accompanying notes to the unaudited condensed consolidated financial statements.

 

6

IF Bancorp, Inc.

Form 10-Q (Unaudited)

(Table dollar amounts in thousands)

Notes to Condensed Consolidated Financial Statements

Note 1:    Basis of Financial Statement Presentation

IF Bancorp, Inc., a Maryland corporation (the “Company”), became the holding company for Iroquois Federal Savings and Loan Association (the “Association”) upon completion of the Association’s conversion from the mutual form of organization to the stock holding company form of organization (the “Conversion”) on July 7, 2011. In connection with the conversion, the Company completed its initial public offering of common stock, selling 4,496,500 shares of common stock at $10.00 per share, including 384,900 shares sold to the Association’s employee stock ownership plan, and raising approximately $45.0 million of gross proceeds. The Company also established a charitable foundation, Iroquois Federal Foundation, to which the Company donated 314,755 shares of Company stock and $450,000 cash. IF Bancorp, Inc.’s common stock trades on the NASDAQ Capital Market under the symbol “IROQ”.

The unaudited condensed consolidated financial statements include the accounts of the Company, the Association, and the Association’s wholly owned subsidiary, L.C.I. Service Corporation. All significant intercompany accounts and transactions have been eliminated in consolidation.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial reporting and with instructions for Form 10–Q and 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. The preparation of consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the balance sheet date and revenues and expenses for the period. Actual results could differ from these estimates. In the opinion of management, the preceding unaudited condensed consolidated financial statements contain all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of the financial condition of the Company as of March 31, 2019 and June 30, 2018, and the results of its operations for the three month and nine month periods ended March 31, 2019 and 2018. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2018. The results of operations for the three month and nine month periods ended March 31, 2019 are not necessarily indicative of the results that may be expected for the entire year.

Note 2:    New Accounting Pronouncements

In May, 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606). The guidance implements a common revenue standard that clarifies the principles for recognizing revenue. The core principal of ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 establishes a five-step model which entities must follow to recognize revenue and removes inconsistencies and weaknesses in existing guidance. The guidance does not apply to revenue associated with financial instruments, including loans and investments securities that are accounted for under other GAAP, which comprises a significant portion of our revenue stream. ASU 2014-09 became effective for the Company on July 1, 2018 and had no material effect on how we recognize revenue or to our consolidated financial statements. See below for additional information related to revenue generated from contracts with customers.

 

7

Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers (“ASC 606”), establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts to provide goods or services to customers. The core principle requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized as performance obligations are satisfied.

The majority of our revenue-generating transactions are not subject to ASC 606, including revenue generated from financial instruments, such as our loans, letters of credit and investments securities, as well as revenue related to our mortgage servicing activities and bank owned life insurance, as these activities are subject to other GAAP discussed elsewhere within our disclosures. Descriptions of our revenue-generating activities that are within the scope of ASC 606, and which are presented in our income statements as components of noninterest income are as follows:

 

•

Customer Service Fees - The Company generates revenue from fees charged for deposit account maintenance, overdrafts, wire transfers, and check fees. The revenue related to deposit fees is recognized at the time the performance obligation is satisfied.

 

•

Insurance Commissions - The Company’s insurance agency, Iroquois Insurance Agency, receives commissions on premiums of new and renewed business policies. Iroquois Insurance Agency records commission revenue on direct bill policies as the cash is received. For agency bill policies, Iroquois Insurance Agency retains its commission portion of the customer premium payment and remits the balance to the carrier. In both cases, the carrier holds the performance obligation.

 

•

Brokerage Commissions - The primary brokerage revenue is recorded at the beginning of each quarter through billing to customers based on the account asset size on the last day of the previous quarter. If a withdrawal of funds takes place, a prorated refund may occur; this is reflected within the same quarter as the original billing occurred. All performance obligations are met within the same quarter that the revenue is recorded.

 

•

Other - The Company generates revenue through service charges from the use of its ATM machines and interchange income from the use of Company issued credit and debit cards. The revenue is recognized at the time the service is used, and the performance obligation is satisfied.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10) - Recognition and Measurement of Financial Assets and Financial Liabilities. ASU 2016-01 is intended to enhance the reporting model for financial instruments to provide users of financial statements with more decision-useful information. ASU 2016-01 became effective for the Company on July 1, 2018, and the adoption did not have material impact on our consolidated financial statements. The guidance also emphasizes the existing requirement to use exit prices to measure fair value for disclosure purposes and clarifies that entities should not make use of a practicability exception in determining the fair value of loans. Accordingly, we refined the calculation used to determine the disclosed fair value of our loans held for investment portfolio as part of adopting this standard. The refined calculation did not have a significant impact on our fair value disclosures.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which amends the existing standards for lease accounting effectively bringing most leases onto the balance sheets of the related lessees by requiring them to recognize a right-of-use asset and a corresponding lease liability, while leaving lessor accounting largely unchanged with only targeted changes incorporated into the update. ASU 2016-02 is effective for annual reporting periods beginning after December 15, 2018, and interim periods within those annual periods with early adoption permitted. The Company is currently reviewing the amendments to ensure it is fully compliant by the adoption date. As permitted by the amendments, the Company is anticipating electing an accounting policy to not recognize lease assets and lease liabilities for leases with a term of twelve months or less. The impact is not expected to have a material effect on the Company’s financial position or results of operations since the Company does not have a material amount of lease agreements. The Company continues to evaluate the amendments and does not expect to early adopt.

 

8

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The ASU requires an organization to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. Organizations will continue to use judgment to determine which loss estimation method is appropriate for their circumstances. Additionally, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. For public companies, this update will be effective for interim and annual periods beginning after December 15, 2019. As we prepare for the adoption of ASU 2016-13, we have established a team to review the requirements as published, monitor developments and new guidance, and review and collect data that will be required to calculate and report the allowance when ASU 2016-13 becomes effective. This team has determined that our best option for compliance with ASU 2016-13 is an outsourced model. Therefore, we have entered an agreement with a firm specializing in ALLL modeling to begin transition modeling so we will be ready for the required adoption. We expect to have the new model in place and run parallel models beginning with quarter ending June 30, 2019. The Company has not yet determined the impact the adoption of ASU 2016-13 will have on the consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230), which amends ASC 230 to add or clarify guidance on the classification of certain cash receipts and payments in the statement of cash flows. ASC 230 lacks consistent principles for evaluating the classification of cash payments and receipts in the statement of cash flows. This has led to diversity in practice and, in certain circumstances, financial statement restatements. Therefore, the FASB issued the ASU with the intent of reducing diversity in practice with respect to eight types of cash flows. The amendment became effective for the Company on July 1, 2018, and the adoption of ASU-2016-15 did not have a material impact on the Company’s consolidated financial statements.

In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification”. ASU 2017-09 was issued to provide clarity and reduce both 1) diversity in practice and 2) cost and complexity when applying the guidance in Topic 718, Compensation - Stock Compensation, to a change to the terms or conditions of a share-based payment award. Diversity in practice has arisen in part because some entities apply modification accounting under Topic 718 for modifications to terms and conditions that they consider substantive, but do not when they conclude that particular modifications are not substantive. Others apply modification accounting for any change to an award, except for changes that they consider purely administrative in nature. Still others apply modification accounting when a change to an award changes the fair value, the vesting, or the classification of the award. In practice, it appears that the evaluation of a change in fair value, vesting, or classification may be used to evaluate whether a change is substantive. ASU 2017-09 include guidance on determining which changes to the terms and conditions of share-based payment awards require an entity to apply modification accounting under Topic 718. ASU 2017-09 became effective for the Company on July 1, 2018, and did not have a material impact on the Company’s consolidated financial statements.

Note 3:    Stock-based Compensation

In connection with the conversion to stock form, the Association established an ESOP for the exclusive benefit of eligible employees (all salaried employees who have completed at least 1,000 hours of service in a twelve-month period and have attained the age of 21). The ESOP borrowed funds from the Company in an amount sufficient to purchase 384,900 shares (approximately 8% of the common stock issued in the stock offering). The loan is secured by the shares purchased and will be repaid by the ESOP with funds from contributions made by the Association and dividends received by the ESOP, with funds from any contributions on ESOP assets. Contributions will be applied to repay interest on the loan first, and then the remainder will be applied to principal. The loan is expected to be repaid over a period of up to 20 years. Shares purchased with the loan proceeds are held in a suspense account for allocation among participants as the loan is repaid. Contributions to the ESOP and shares released from the suspense account are allocated among participants in proportion

 

9

to their compensation, relative to total compensation of all active participants. Participants will vest 100% in their accrued benefits under the employee stock ownership plan after six vesting years, with prorated vesting in years two through five. Vesting is accelerated upon retirement, death or disability of the participant or a change in control of the Association. Forfeitures will be reallocated to remaining plan participants. Benefits may be payable upon retirement, death, disability, separation from service, or termination of the ESOP. Since the Association’s annual contributions are discretionary, benefits payable under the ESOP cannot be estimated. Participants receive the shares at the end of employment.

The Company is accounting for its ESOP in accordance with ASC Topic 718, Employers Accounting for Employee Stock Ownership Plans. Accordingly, the debt of the ESOP is eliminated in consolidation and the shares pledged as collateral are reported as unearned ESOP shares in the consolidated balance sheets. Contributions to the ESOP shall be sufficient to pay principal and interest currently due under the loan agreement. As shares are committed to be released from collateral, the Company reports compensation expense equal to the average market price of the shares for the respective period, and the shares become outstanding for earnings per share computations. Dividends, if any, on unallocated ESOP shares are recorded as a reduction of debt and accrued interest.

A summary of ESOP shares at March 31, 2019 and June 30, 2018 are as follows (dollars in thousands):

 

		March 31, 2019				June 30, 2018
Allocated shares			109,018				96,133
Shares committed for release			14,434				19,245
Unearned shares			235,751				250,185
Total ESOP shares			359,203				365,563
Fair value of unearned ESOP shares (1)		$	4,699			$	5,979

 

(1)	Based on closing price of $19.93 and $23.90 per share on March 31, 2019, and June 30, 2018, respectively.

During the nine months ended March 31, 2019, 6,360 ESOP shares were paid to ESOP participants due to separation from service. During the nine months ended March 31, 2018, 6,116 ESOP shares were paid to ESOP participants due to separation from service.

At the annual meeting on November 19, 2012, the IF Bancorp, Inc. 2012 Equity Incentive Plan (the “Equity Incentive Plan”) was approved by stockholders. The purpose of the Equity Incentive Plan is to promote the long-term financial success of the Company and its Subsidiaries by providing a means to attract, retain and reward individuals who contribute to such success and to further align their interests with those of the Company’s stockholders. The Equity Incentive Plan authorizes the issuance or delivery to participants of up to 673,575 shares of the Company common stock pursuant to grants of incentive and non-qualified stock options, restricted stock awards and restricted stock unit awards, provided that the maximum number of shares of Company common stock that may be delivered pursuant to the exercise of stock options (all of which may be granted as incentive stock options) is 481,125 and the maximum number of shares of Company stock that may be issued as restricted stock awards or restricted stock units is 192,450.

On December 10, 2013, 85,500 shares of restricted stock and 167,000 in stock options were awarded to senior officers and directors of the Association. The restricted stock vests in equal installments over 10 years and the stock options vest in equal installments over 7 years. Vesting of both the restricted stock and options started in December 2014. On December 10, 2015, 16,900 shares of restricted stock were awarded to senior officers and directors of the Association. The restricted stock vests in equal installments over 8 years, starting in December 2016. As of March 31, 2019, there were 90,050 shares of restricted stock and 314,125 stock option shares available for future grants under this plan.

 

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The following table summarizes stock option activity for the nine months ended March 31, 2019 (dollars in thousands):

 

		Options				Weighted-Average Exercise Price/Share				Weighted-Average Remaining Contractual Life (in years)				Aggregate Intrinsic Value
Outstanding, June 30, 2018			153,143			$	16.63
Granted			—				—
Exercised			—				—
Forfeited			—				—
Outstanding, March 31, 2019			153,143			$	16.63				4.7			$	505	(1)
Exercisable, March 31, 2019			108,571			$	16.63				4.7			$	358	(1)

 

(1)	Based on closing price of $19.93 per share on March 31, 2019.

Intrinsic value for stock options is defined as the difference between the current market value and the exercise price. There were no stock options granted during the nine months ended March 31, 2019.

There were 22,286 options that vested during the nine months ended March 31, 2019 compared to 22,285 stock options that vested during the nine months ended March 31, 2018. Stock-based compensation expense and related tax benefit was considered nominal for stock options for the nine months ended March 31, 2019 and 2018. Total unrecognized compensation cost related to non-vested stock options was $94,000 at March 31, 2019 and is expected to be recognized over the remaining weighted-average period of 1.7 years.

The following table summarizes non-vested restricted stock activity for the nine months ended March 31, 2019:

 

		Shares				Weighted-Average Grant-Date Fair Value
Balance, June 30, 2018			60,375			$	16.79
Granted			—				—
Forfeited			—				—
Earned and issued			10,062				16.79
Balance, March 31, 2019			50,313			$	16.79

The fair value of the restricted stock awards is amortized to compensation expense over the vesting period (ten years) and is based on the market price of the Company’s common stock at the date of grant multiplied by the number of shares granted that are expected to vest. At the date of grant the par value of the shares granted was recorded in equity as a credit to common stock and a debit to paid-in capital. Stock-based compensation expense and related tax benefit for restricted stock, which was recognized in non-interest expense, was $127,000 and $35,000, respectively, for both the nine months ended March 31, 2019, and for the nine months ended March 31, 2018. Unrecognized compensation expense for non-vested restricted stock awards was $799,000 and is expected to be recognized over 4.7 years with a corresponding credit to paid-in capital.

Note 4:    Earnings Per Common Share (“EPS”)

Basic and diluted earnings per common share are presented for the three month and nine month periods ended March 31, 2019 and 2018. The factors used in the earnings per common share computation are as follows:

 

		Three Months Ended March 31, 2019				Three Months Ended March 31, 2018				Nine Months Ended March 31, 2019				Nine Months Ended March 31, 2018
Net income		$	804			$	994			$	2,525			$	1,241
Basic weighted average shares outstanding			3,597,762				3,917,819				3,762,126				3,932,988
Less: Average unallocated ESOP shares			(238,157	)			(257,402	)			(242,968	)			(262,213	)
Basic average shares outstanding			3,359,605				3,660,417				3,519,158				3,670,775
Diluted effect of restricted stock awards and stock options			45,749				38,126				57,472				35,806
Diluted average shares outstanding			3,405,354				3,698,543				3,576,630				3,706,581
Basic earnings per common share		$	0.24			$	0.27			$	0.72			$	0.34
Diluted earnings per common share		$	0.24			$	0.27			$	0.71			$	0.33

 

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The Company announced a stock repurchase plan on December 5, 2018, which allowed the Company to repurchase up to 290,356 shares of its common stock, or approximately 7.5% of its then current outstanding shares. As of March 31, 2019, all 290,356 shares had been repurchased under this plan at an average price of $21.23 per share.

On December 10, 2013, the Company awarded 85,500 shares of restricted stock and 167,000 in stock options to officers and directors of the Association as part of the IF Bancorp, Inc. 2012 Equity Incentive Plan. The restricted stock vests over 10 years and the stock options vest over 7 years, both starting in December 2014. On December 10, 2015, the Company awarded 16,900 shares of restricted stock to officers and directors of the Association as part of this plan. This restricted stock vests over 8 years, starting in December 2016.

Note 5:    Securities

The amortized cost and approximate fair value of securities, together with gross unrealized gains and losses on securities, are as follows:

 

		Amortized Cost				Gross Unrealized Gains				Gross Unrealized Losses				Fair Value
Available-for-sale securities:
March 31, 2019:
U.S. Government and federal agency and Government sponsored enterprises (GSE’s)		$	24,792			$	202			$	(102	)		$	24,892
Mortgage-backed:
GSE residential			98,610				394				(998	)			98,006
Small Business Administration			5,193				—				(30	)			5,163
State and political subdivisions			2,725				141				—				2,866
		$	131,320			$	737			$	(1,130	)		$	130,927
June 30, 2018:
U.S. Government and federal agency and Government sponsored enterprises (GSE’s)		$	24,757			$	—			$	(835	)		$	23,922
Mortgage-backed:
GSE residential			100,534				24				(3,499	)			97,059
Small Business Administration			1,965				—				(74	)			1,891
State and political subdivisions			2,980				144				—				3,124
		$	130,236			$	168			$	(4,408	)		$	125,996

 

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With the exception of U.S. Government and federal agency and GSE securities, and mortgage-backed GSE residential securities with a book value of approximately $24,792,000 and $98,610,000, respectively, and a market value of approximately $24,892,000 and $98,006,000, respectively, at March 31, 2019, the Company held no securities at March 31, 2019 with a book value that exceeded 10% of total equity.

All mortgage-backed securities at March 31, 2019 and June 30, 2018 were issued by GSEs.

The amortized cost and fair value of available-for-sale securities at March 31, 2019, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

 

		Available-for-sale Securities
		Amortized Cost				Fair Value
Within one year		$	1,149			$	1,183
One to five years			10,058				9,956
Five to ten years			18,137				18,435
After ten years			3,366				3,347
			32,710				32,921
Mortgage-backed securities			98,610				98,006
Totals		$	131,320			$	130,927

The carrying value of securities pledged as collateral to secure public deposits and for other purposes was $51,735,000 and $64,625,000 as of March 31, 2019 and June 30, 2018, respectively.

The carrying value of securities sold under agreement to repurchase amounted to $2,242,000 at March 31, 2019 and $2,281,000 at June 30, 2018. At March 31, 2019, approximately $777,000 of our repurchase agreements had an overnight maturity, while the remaining $1,465,000 in repurchase agreements had a monthly maturity. All of our repurchase agreements were secured by U.S. Government, federal agency and GSE securities. The right of offset for a repurchase agreement resembles a secured borrowing, whereby the collateral pledged by the Company would be used to settle the fair value of the repurchase agreement should the Company be in default. The collateral is held by the Company in a segregated custodial account. In the event the collateral fair value falls below stipulated levels, the Company will pledge additional securities. The Company closely monitors collateral levels to ensure adequate levels are maintained.

There were no sales of available-for-sale securities for the nine months ended March 31, 2019. Gross gains of $20,000 and gross losses of $7,000, resulting from sales of available-for-sale securities were realized for the nine month period ended March 31, 2018. The tax provision applicable to these net realized gains amounted to approximately $4,000. No gross gains or gross losses resulting from sales of available-for-sale securities were realized for the three month periods ended March 31, 2019 and 2018.

Certain investments in debt securities are reported in the consolidated financial statements at an amount less than their historical cost. Total fair value of these investments at March 31, 2019 and June 30, 2018 was $83,346,000 and $119,180,000, respectively, which is approximately 64% and 95% of the Company’s available-for-sale investment portfolio. These declines in fair value at March 31, 2019 and June 30, 2018, resulted from increases in market interest rates and are considered temporary.

 

13

The following table shows the gross unrealized losses of the Company’s securities and the fair value of the Company’s securities with unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at March 31, 2019 and June 30, 2018:

 

		Less Than 12 Months								12 Months or More								Total
Description of Securities		Fair Value				Unrealized Losses				Fair Value				Unrealized Losses				Fair Value				Unrealized Losses
March 31, 2019:
U.S. Government and federal agency and Government sponsored enterprises (GSE’s)		$	—			$	—			$	8,778			$	(102	)		$	8,778			$	(102	)
Mortgage-backed:
GSE residential			5,396				(89	)			63,966				(909	)			69,362				(998	)
Small Business Administration			3,391				(19	)			1,815				(11	)			5,206				(30	)
Total temporarily impaired securities		$	8,787			$	(108	)		$	74,559			$	(1,022	)		$	83,346			$	(1,130	)
June 30, 2018:
U.S. Government and federal agency and Government sponsored enterprises (GSE’s)		$	15,541			$	(439	)		$	8,381			$	(396	)		$	23,922			$	(835	)
Mortgage-backed:
GSE residential			59,478				(1,836	)			33,889				(1,663	)			93,367				(3,499	)
Small Business Administration			—				—				1,891				(74	)			1,891				(74	)
Total temporarily impaired securities		$	75,019			$	(2,275	)		$	44,161			$	(2,133	)		$	119,180			$	(4,408	)

The unrealized losses on the Company’s investment in residential mortgage-backed securities and U.S. Government and federal agency and Government sponsored enterprises at March 31, 2019 and June 30, 2018, were mostly the result of a decline in market value that was attributable to changes in interest rates and not credit quality, and the Company does not consider those investments to be other-than-temporarily impaired at March 31, 2019 and June 30, 2018.

Note 6:    Loans and Allowance for Loan Losses

Classes of loans include:

 

		March 31, 2019				June 30, 2018
Real estate loans:
One-to four-family, including home equity loans		$	129,266			$	134,977
Multi-family			106,400				107,436
Commercial			152,019				140,944
Home equity lines of credit			9,058				9,058
Construction			14,521				13,763
Commercial			80,350				68,720
Consumer			6,964				7,366
Total loans			498,578				482,264
Less:
Unearned fees and discounts, net			(304	)			(161	)
Allowance for loan losses			6,378				5,945
Loans, net		$	492,504			$	476,480

 

14

The Company believes that sound loans are a necessary and desirable means of employing funds available for investment. Recognizing the Company’s obligations to its depositors and to the communities it serves, authorized personnel are expected to seek to develop and make sound, profitable loans that resources permit and that opportunity affords. The Company maintains lending policies and procedures designed to focus our lending efforts on the types, locations, and duration of loans most appropriate for our business model and markets. The Company’s lending activity includes the origination of one-to four-family residential mortgage loans, multi-family loans, commercial real estate loans, home equity lines of credits, commercial business loans, consumer loans (consisting primarily of automobile loans), construction loans and land loans. The primary lending market includes the Illinois counties of Vermilion, Iroquois, Champaign and Kankakee, as well as the adjacent counties in Illinois and Indiana. The Company also has a loan production and wealth management office in Osage Beach, Missouri, which serves the Missouri counties of Camden, Miller, and Morgan. Generally, loans are collateralized by assets, primarily real estate, of the borrowers and guaranteed by individuals. The loans are expected to be repaid from cash flows of the borrowers or from proceeds from the sale of selected assets of the borrowers.

Management reviews and approves the Company’s lending policies and procedures on a routine basis. Management routinely (at least quarterly) reviews our allowance for loan losses and reports related to loan production, loan quality, concentrations of credit, loan delinquencies and non-performing and potential problem loans. Our underwriting standards are designed to encourage relationship banking rather than transactional banking. Relationship banking implies a primary banking relationship with the borrower that includes, at minimum, an active deposit banking relationship in addition to the lending relationship. The integrity and character of the borrower are significant factors in our loan underwriting. As a part of underwriting, tangible positive or negative evidence of the borrower’s integrity and character are sought out. Additional significant underwriting factors beyond location, duration, the sound and profitable cash flow basis underlying the loan and the borrower’s character are the quality of the borrower’s financial history, the liquidity of the underlying collateral and the reliability of the valuation of the underlying collateral.

The Company’s policies and loan approval limits are established by the Board of Directors. The loan officers generally have authority to approve one-to four-family residential mortgage loans up to $100,000, other secured loans up to $50,000, and unsecured loans up to $10,000. Managing Officers (those with designated loan approval authority), generally have authority to approve one-to four-family residential mortgage loans up to $375,000, other secured loans up to $375,000, and unsecured loans up to $100,000. In addition, any two individual officers may combine their loan authority limits to approve a loan. Our Loan Committee may approve one-to four-family residential mortgage loans, commercial real estate loans, multi-family real estate loans and land loans up to $2,000,000 in aggregate loans, and unsecured loans up to $500,000. All loans above these limits must be approved by the Operating Committee, consisting of the Chairman and up to four other Board members. At no time is a borrower’s total borrowing relationship to exceed our regulatory lending limit. Loans to related parties, including executive officers and the Company’s directors, are reviewed for compliance with regulatory guidelines and the Board of Directors at least annually.

The Company conducts internal loan reviews that validate the loans against the Company’s loan policy quarterly for mortgage, consumer, and small commercial loans on a sample basis, and all larger commercial loans on an annual basis. The Company also receives independent loan reviews performed by a third party on larger commercial loans to be performed semi-annually. In addition to compliance with our policy, the third party loan review process reviews the risk assessments made by our credit department, lenders and loan committees. Results of these reviews are presented to management and the Board of Directors.

 

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The Company’s lending can be summarized into six primary areas; one-to four-family residential mortgage loans, commercial real estate and multi-family real estate loans, home equity lines of credit, real estate construction, commercial business loans, and consumer loans.

One-to four-family Residential Mortgage Loans

The Company offers one- to four-family residential mortgage loans that conform to Fannie Mae and Freddie Mac underwriting standards (conforming loans) as well as non-conforming loans. In recent years there has been an increased demand for long-term fixed-rate loans, as market rates have dropped and remained near historic lows. As a result, the Company has sold a substantial portion of the fixed-rate one- to four-family residential mortgage loans with terms of 15 years or greater. Generally, the Company retains fixed-rate one- to four-family residential mortgage loans with terms of less than 15 years, although this has represented a small percentage of the fixed-rate loans originated in recent years due to the favorable long-term rates for borrower.

The Company offers USDA Rural Development loans which are originated and sold servicing released. The Company also offers FHA and VA loans that are originated through a nationwide wholesale lender.

In addition, the Company also offers home equity loans that are secured by a second mortgage on the borrower’s primary or secondary residence. Home equity loans are generally underwritten using the same criteria used to underwrite one-to four-family residential mortgage loans.

As one-to four-family residential mortgage and home equity loan underwriting are subject to specific regulations, the Company typically underwrites its one-to four-family residential mortgage and home equity loans to conform to widely accepted standards. Several factors are considered in underwriting including the value of the underlying real estate and the debt to income ratio and credit history of the borrower.

Commercial Real Estate and Multi-Family Real Estate Loans

Commercial real estate mortgage loans are primarily secured by office buildings, owner-occupied businesses, strip mall centers, churches and farm loans secured by real estate. In underwriting commercial real estate and multi-family real estate loans, the Company considers a number of factors, which include the projected net cash flow to the loan’s debt service requirement, the age and condition of the collateral, the financial resources and income level of the borrower and the borrower’s experience in owning or managing similar properties. Personal guarantees are typically obtained from commercial real estate and multi-family real estate borrowers. In addition, the borrower’s financial information on such loans is monitored on an ongoing basis by requiring periodic financial statement updates. The repayment of these loans is primarily dependent on the cash flows of the underlying property. However, the commercial real estate loan generally must be supported by an adequate underlying collateral value. The performance and the value of the underlying property may be adversely affected by economic factors or geographical and/or industry specific factors. These loans are subject to other industry guidelines that are closely monitored by the Company.

Home Equity Lines of Credit

In addition to traditional one-to four-family residential mortgage loans and home equity loans, the Company offers home equity lines of credit that are secured by the borrower’s primary or secondary residence. Home equity lines of credit are generally underwritten using the same criteria used to underwrite one-to four-family residential mortgage loans. As home equity lines of credit underwriting is subject to specific regulations, the Company typically underwrites its home equity lines of credit to conform to widely accepted standards. Several factors are considered in underwriting including the value of the underlying real estate and the debt to income ratio and credit history of the borrower.

Commercial Business Loans

The Company originates commercial non-mortgage business (term) loans and lines of credit. These loans are generally originated to small- and medium-sized companies in the Company’s primary market area. Commercial business loans are

 

16

generally used for working capital purposes or for acquiring equipment, inventory or furniture, and are primarily secured by business assets other than real estate, such as business equipment and inventory, accounts receivable or stock. The Company also offers agriculture loans that are not secured by real estate.

The commercial business loan portfolio consists primarily of secured loans. When making commercial business loans, the Company considers the financial statements, lending history and debt service capabilities of the borrower, the projected cash flows of the business and the value of any collateral. The cash flows of the underlying borrower, however, may not perform consistently with historical or projected information. Further, the collateral securing loans may fluctuate in value due to individual economic or other factors. Loans are typically guaranteed by the principals of the borrower. The Company has established minimum standards and underwriting guidelines for all commercial loan types.

Real Estate Construction Loans

The Company originates construction loans for one-to four-family residential properties and commercial real estate properties, including multi-family properties. The Company generally requires that a commitment for permanent financing be in place prior to closing the construction loan. The repayment of these loans is typically through permanent financing following completion of the construction. Real estate construction loans are inherently more risky than loans on completed properties as the unimproved nature and the financial risks of construction significantly enhance the risks of commercial real estate loans. These loans are closely monitored and subject to other industry guidelines.

Consumer Loans

Consumer loans consist of installment loans to individuals, primarily automotive loans. These loans are underwritten utilizing the borrower’s financial history, including the Fair Isaac Corporation (“FICO”) credit scoring and information as to the underlying collateral. Repayment is expected from the cash flow of the borrower. Consumer loans may be underwritten with terms up to seven years, fully amortized. Unsecured loans are limited to twelve months. Loan-to-value ratios vary based on the type of collateral. The Company has established minimum standards and underwriting guidelines for all consumer loan collateral types.

Loan Concentration

The loan portfolio includes a concentration of loans secured by commercial and multi-family real estate properties amounting to $270,863,000 and $260,671,000 as of March 31, 2019 and June 30, 2018, respectively. Generally, these loans are collateralized by multi-family and nonresidential properties. The loans are expected to be repaid from cash flows or from proceeds from the sale of the properties of the borrower.

Purchased Loans and Loan Participations

The Company’s loans receivable included purchased loans of $5,038,000 and $5,855,000 at March 31, 2019 and June 30, 2018, respectively. All of these purchased loans are secured by single family homes located out of our primary market area primarily in the Midwest. The Company’s loans receivable also include commercial loan participations of $27,954,000 and $32,874,000 at March 31, 2019 and June 30, 2018, respectively, of which $9,820,000 and $11,009,000, at March 31, 2019 and June 30, 2018 were outside our primary market area.

 

17

Allowance for Loan Losses

The following tables present the balance in the allowance for loan losses and the recorded investment in loans based on portfolio segment and impairment method as of the three month and nine month periods ended March 31, 2019 and 2018 and the year ended June 30, 2018:

 

		Three Months Ended March 31, 2019 Real Estate Loans
		One-to Four- Family				Multi-Family				Commercial				Home Equity Lines of Credit
Allowance for loan losses:
Balance, beginning of period		$	1,023			$	1,668			$	1,804			$	103
Provision charged to expense			(13	)			—				(77	)			2
Losses charged off			—				—				—				(15	)
Recoveries			21				—				—				—
Balance, end of period		$	1,031			$	1,668			$	1,727			$	90
Ending balance: individually evaluated for impairment		$	17			$	—			$	1			$	—
Ending balance: collectively evaluated for impairment		$	1,014			$	1,668			$	1,726			$	90
Loans:
Ending balance		$	129,266			$	106,400			$	152,019			$	9,058
Ending balance: individually evaluated for impairment		$	1,831			$	—			$	25			$	23
Ending balance: collectively evaluated for impairment		$	127,435			$	106,400			$	151,994			$	9,035
		Three Months Ended March 31, 2019 (Continued)
		Construction				Commercial				Consumer				Total
Allowance for loan losses:
Balance, beginning of period		$	170			$	1,481			$	70			$	6,319
Provision charged to expense			29				116				4				61
Losses charged off			—				—				(8	)			(23	)
Recoveries			—				—				—				21
Balance, end of period		$	199			$	1,597			$	66			$	6,378
Ending balance: individually evaluated for impairment		$	—			$	5			$	—			$	23
Ending balance: collectively evaluated for impairment		$	199			$	1,592			$	66			$	6,355
Loans:
Ending balance		$	14,521			$	80,350			$	6,964			$	498,578
Ending balance: individually evaluated for impairment		$	—			$	172			$	3			$	2,054
Ending balance: collectively evaluated for impairment		$	14,521			$	80,178			$	6,961			$	496,524
		Nine Months Ended March 31, 2019 Real Estate Loans
		One-to Four- Family				Multi-Family				Commercial				Home Equity Lines of Credit
Allowance for loan losses:
Balance, beginning of period		$	997			$	1,650			$	1,604			$	91
Provision charged to expense			12				18				123				14
Losses charged off			—				—				—				(15	)
Recoveries			22				—				—				—
Balance, end of period		$	1,031			$	1,668			$	1,727			$	90
Ending balance: individually evaluated for impairment		$	17			$	—			$	1			$	—
Ending balance: collectively evaluated for impairment		$	1,014			$	1,668			$	1,726			$	90
Loans:
Ending balance		$	129,266			$	106,400			$	152,019			$	9,058
Ending balance: individually evaluated for impairment		$	1,831			$	—			$	25			$	23
Ending balance: collectively evaluated for impairment		$	127,435			$	106,400			$	151,994			$	9,035

 

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