WVS FINANCIAL CORP - Quarter Report: 2019 September (Form 10-Q)

Form 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X]

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

For the quarterly period ended September 30, 2019

[ ]

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: 0-22444

WVS Financial Corp.

(Exact name of registrant as specified in its charter)



Pennsylvania						25-1710500
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification Number)

9001 Perry Highway Pittsburgh, Pennsylvania						15237
(Address of principal executive offices)						(Zip Code)

Registrant’s telephone number, including area code: (412) 364-1911

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 $.01

WVFC

NASDAQ Global Market^SM

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 requirement for the past 90 days. YES X 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 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.


Large accelerated filer		Accelerated filer
Non-accelerated filer		Smaller reporting company X
		Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13 (a) of the Exchange Act.

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

Shares outstanding as of November 8, 2019: 1,935,641 shares of Common Stock, $.01 par value.

WVS FINANCIAL CORP. AND SUBSIDIARY

INDEX


PART I.	Financial Information	Page

Item 1.	Financial Statements

	Consolidated Balance Sheet as of September 30, 2019 and June 30, 2019 (Unaudited)	3

	Consolidated Statement of Income for the Three Months Ended September 30, 2019 and 2018 (Unaudited)	4

	Consolidated Statement of Comprehensive Income for the Three Months Ended September 30, 2019 and 2018 (Unaudited)	5

	Consolidated Statement of Changes in Stockholders’ Equity for the Three Months Ended September 30, 2019 and 2018 (Unaudited)	6

	Consolidated Statement of Cash Flows for the Three Months Ended September 30, 2019 and 2018 (Unaudited)	7

	Notes to Unaudited Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations for the Three Months Ended September 30, 2019	35

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	41

Item 4.	Controls and Procedures	45

PART II.	Other Information	Page

Item 1.	Legal Proceedings	46
Item 1A.	Risk Factors	46
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	46
Item 3.	Defaults Upon Senior Securities	47
Item 4.	Mine Safety Disclosures	47
Item 5.	Other Information	47
Item 6.	Exhibits	47
	Signatures	48

WVS FINANCIAL CORP. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEET

(UNAUDITED)

(In thousands)


	September 30, 2019			June 30, 2019
Assets
Cash and due from banks		$ 2,383			$ 1,849
Interest-earning demand deposits		4,930			2,530

Total cash and cash equivalents		7,313			4,379
Certificates of deposit		2,587			1,843
Investment securities available-for-sale (amortized cost of $134,586 and $132,673)		134,750			132,780
Investment securities held-to-maturity (fair value of $3,589 and $4,080)		3,495			3,995
Mortgage-backed securities held-to-maturity (fair value of $106,441 and $108,708)		106,316			108,331
Net loans receivable (allowance for loan losses of $538 and $548)		90,333			90,588
Accrued interest receivable		1,180			1,219
Federal Home Loan Bank (FHLB) stock, at cost		6,627			7,010
Premises and equipment, net		355			346
Bank owned life insurance		4,819			4,789
Deferred tax assets (net)		364			368
Other assets		434			170

TOTAL ASSETS		$ 358,573			$ 355,818


Liabilities and Stockholders’ Equity
Liabilities:
Deposits
Non-interest-bearing accounts		$ 31,847			$ 19,770
Interest-earning checking		21,801			23,541
Savings accounts		42,478			43,740
Money market accounts		20,496			19,958
Certificates of deposit		42,020			37,361
Advance payments by borrowers for taxes and insurance		982			2,065

Total deposits		159,624			146,435
Federal Home Loan Bank advances: long-term – fixed rate		15,000			15,000
Federal Home Loan Bank advances: long-term – variable rate		85,000			85,000
Federal Home Loan Bank advances: short-term		59,554			70,828
Accrued interest payable		797			823
Other liabilities		1,960			1,683

TOTAL LIABILITIES		321,935			319,769


Stockholders’ equity:
Preferred stock:
5,000,000 shares, no par value per share, authorized; none issued		-			-
Common stock:
10,000,000 shares, $.01 par value per share, authorized; 3,805,636 shares issued;		38			38
Additional paid-in capital		21,560			21,550
Treasury stock: 1,869,995 and 1,862,520 shares at cost, respectively		(28,382	)		(28,269	)
Retained earnings, substantially restricted		45,423			44,807
Accumulated other comprehensive income		63			15
Unallocated Employee Stock Ownership Plan (“ESOP”) shares		(2,064	)		(2,092	)

TOTAL STOCKHOLDERS’ EQUITY		36,638			36,049

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$ 358,573			$ 355,818

See accompanying notes to unaudited consolidated financial statements.

WVS FINANCIAL CORP. AND SUBSIDIARY

CONSOLIDATED STATEMENT OF INCOME

(UNAUDITED)

(In thousands, except per share data)


	Three Months Ended
	September 30,
	2019			2018
INTEREST AND DIVIDEND INCOME:
Loans, including fees	$	883		$	804
Investment securities		1,081			1,022
Mortgage-backed securities		885			889
Certificates of deposit		15			2
Interest-earning demand deposits		1			3
FHLB Stock		122			112

Total interest and dividend income		2,987			2,832


INTEREST EXPENSE:
Deposits		250			123
Federal Home Loan Bank advances – long-term – fixed rate		114			-
Federal Home Loan Bank advances – long-term – variable rate		518			-
Federal Home Loan Bank advances – short-term		302			909

Total interest expense		1,184			1,032


NET INTEREST INCOME		1,803			1,800
PROVISION FOR LOAN LOSSES		(10	)		19

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		1,813			1,781


NON-INTEREST INCOME:
Service charges on deposits		29			29
Earnings on Bank Owned Life Insurance		30			31
Investment securities losses		-			(2	)
Other than temporary impairment (“OTTI”) losses		(1	)		-
Portion of loss (gain) recognized in other comprehensive income (before taxes)		-			-

Net impairment loss recognized in earnings		(1	)		-
ATM fee income		42			42
Other		10			10

Total non-interest income		110			110


NON-INTEREST EXPENSE:
Salaries and employee benefits		545			556
Occupancy and equipment		63			68
Data processing		57			58
Correspondent bank service charges		9			7
Federal deposit insurance premium		(23	)		28
ATM Network expense		23			37
Other		173			147

Total non-interest expense		847			901


INCOME BEFORE INCOME TAXES		1,076			990
INCOME TAX EXPENSE		283			242

NET INCOME	$	793		$	748


EARNINGS PER SHARE:
Basic	$	0.45		$	0.42
Diluted	$	0.45		$	0.42

AVERAGE SHARES OUTSTANDING:
Basic		1,775,561			1,793,055
Diluted		1,775,561			1,793,272

See accompanying notes to unaudited consolidated financial statements.

WVS FINANCIAL CORP. AND SUBSIDIARY

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(UNAUDITED)

(In thousands)


	Three Months Ended
	September 30,
	2019			2018

NET INCOME	$	793		$	748

OTHER COMPREHENSIVE INCOME

Investment securities available for sale not other-than-temporarily impaired:
Gains arising during the year		57			122
Less: Income tax effect		(13	)		(26	)

		44			96
Losses recognized in earnings		-			2
Less: Income tax effect		-			-

		-			2

Unrealized holding gains on investment securities available for sale not other-than-temporarily impaired, net of tax		44			98


Investment securities held to maturity other-than-temporarily impaired:
Total losses		-			-
Losses recognized in earnings		1			-

Gains (losses) recognized in comprehensive income		-			-
Income tax effect		-			-

		1			-

Accretion of other comprehensive loss on other-than- temporarily impaired securities held to maturity		4			(39	)
Less: Income tax effect		(1	)		8

		3			(31	)

Unrealized holding gains (losses) on other-than-temporarily impaired securities held to maturity, net of tax		3			(31	)


Other comprehensive income		48			67


COMPREHENSIVE INCOME	$	841		$	815

See accompanying notes to unaudited consolidated financial statements.

WVS FINANCIAL CORP. AND SUBSIDIARY

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

(UNAUDITED)

(In thousands, except per share data)


	Common Stock		Additional Paid-in Capital		Treasury Stock			Retained Earnings – Substantially Restricted			Accumulated Other Comprehensive Income		Unallocated ESOP Shares		Total
Balance June 30, 2019		$ 38		$ 21,550		$ (28,269)			$ 44,807			$ 15		$ (2,092)		$ 36,049

Net income									793							793

Other comprehensive income												48				48

Purchase of treasury stock (7,475 shares)						(113	)									(113	)

Amortization of unallocated ESOP shares				10										28		38

Cash dividends declared ($0.10 per share)									(177	)						(177	)


Balance September 30, 2019		$ 38		$ 21,560		$ (28,382)			$ 45,423			$ 63		$ (2,064)		$ 36,638


	Common Stock		Additional Paid-in Capital		Treasury Stock			Retained Earnings – Substantially Restricted			Accumulated Other Comprehensive Loss		Unallocated ESOP Shares		Total
Balance June 30, 2018		$ 38		$ 21,516		$ (27,886)			$ 42,795			$ (188)		$ (2,258)		$ 34,017

Net income									748							748

Other comprehensive income												67				67

Purchase of treasury stock (2,000 shares)						(32	)									(32	)

Amortization of unallocated ESOP shares				9										39		48

Cash dividends declared ($0.08 per share)									(143	)						(143	)


Balance September 30, 2018		$ 38		$ 21,525		$ (27,918)			$ 43,400			$ (121)		$ (2,219)		$ 34,705

See accompanying notes to unaudited consolidated financial statements.

WVS FINANCIAL CORP. AND SUBSIDIARY

CONSOLIDATED STATEMENT OF CASH FLOWS

(UNAUDITED)

(In thousands)


	Three Months Ended
	September 30,
	2019			2018
OPERATING ACTIVITIES

Net income	$	793		$	748
Adjustments to reconcile net income to cash provided by operating activities:
Provision for loan losses		(10	)		19
Depreciation		6			15
Net impairment loss recognized in earnings		1			-
Amortization of discounts, premiums and deferred loan fees		24			70
Amortization of unallocated ESOP shares		38			48
Deferred income taxes		(9	)		(17	)
Increase in accrued income taxes		94			67
Earnings on bank owned life insurance		(30	)		(31	)
Decrease (increase) in accrued interest receivable		39			(15	)
(Decrease) increase in accrued interest payable		(26	)		11
Increase in deferred director compensation payable		12			11
Other, net		(95	)		(23	)

Net cash provided by operating activities		837			903


INVESTING ACTIVITIES

Available-for-sale:
Purchases of investment securities		(1,965	)		(15,364	)
Proceeds from sale of investments		-			1,364
Proceeds from repayments of investment securities		-			14,450
Held-to-maturity:
Proceeds from repayments of investment securities		500			1,125
Proceeds from repayments of mortgage-backed securities		2,024			4,861
Purchases of certificates of deposit		(1,092	)		(100	)
Maturities/redemptions of certificates of deposit		349			100
Purchase of loans		(2,377	)		(2,382	)
Net decrease in net loans receivable		2,665			1,246
Purchase of FHLB stock		(2,525	)		(1,793	)
Redemption of FHLB stock		2,908			2,351
Acquisition of premises and equipment		(15	)		-

Net cash provided by investing activities		472			5,858

WVS FINANCIAL CORP. AND SUBSIDIARY

CONSOLIDATED STATEMENT OF CASH FLOWS

(UNAUDITED)

(In thousands)


	Three Months Ended
	September 30,
	2019			2018
FINANCING ACTIVITIES

Net increase in transaction and savings accounts	$	9,613		$	10,599
Net increase (decrease) in certificates of deposit		4,659			(1,699	)
Net decrease in advance payments by borrowers for taxes and insurance		(1,083	)		(1,091	)
Net decrease in FHLB short-term advances		(11,274	)		(10,919	)
Purchase of treasury stock		(113	)		(32	)
Cash dividends paid		(177	)		(143	)

Net cash provided by (used for) financing activities		1,625			(3,285	)


Increase in cash and cash equivalents		2,934			3,476

CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD		4,379			2,441


CASH AND CASH EQUIVALENTS AT END OF THE PERIOD	$	7,313		$	5,917


SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

Cash paid during the period for:
Interest on deposits and borrowings	$	1,210		$	1,021
Income taxes		198			193

See accompanying notes to unaudited consolidated financial statements.

WVS FINANCIAL CORP. AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1.	BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions for Form 10-Q and therefore do not include information or footnotes necessary for a complete presentation of financial condition, results of operations, and cash flows in conformity with U.S. generally accepted accounting principles (GAAP). However, all adjustments (consisting only of normal recurring adjustments) which, in the opinion of management, are necessary for a fair presentation have been included. The results of operations for the three months ended September 30, 2019, are not necessarily indicative of the results which may be expected for the entire fiscal year.

2.	Recently Adopted Accounting Pronouncements

Accounting Standards Update (“ASU”) 2016-02, Leases. On July 1, 2019, we adopted the Accounting Standards Codification 842, Leases, and all the related amendments. This standard required lessees to recognize the assets and liabilities that arise from leases on the balance sheet. Adoption of the standard did not have a significant impact on our financial statements.

Recent Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which changes the impairment model for most financial assets. This ASU is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The underlying premise of the ASU is that financial assets measured at amortized cost should be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The allowance for credit losses should reflect management’s current estimate of credit losses that are expected to occur over the remaining life of a financial asset. The income statement will be effected for the measurement of credit losses for newly recognized financial assets, as well as the expected increases or decreases of expected credit losses that have taken place during the period. ASU 2016-13 is effective for annual and interim periods beginning after December 15, 2019, and early adoption is permitted for annual and interim periods beginning after December 15, 2018. With certain exceptions, transition to the new requirements will be through a cumulative effect adjustment to opening retained earnings as of the beginning of the first reporting period in which the guidance is adopted. On October 16, 2019, the FASB voted to defer the effective date for ASC 326, Financial Instruments – Credit Losses, for smaller reporting companies to fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. The final ASU is expected to be issued in mid-November. We expect to recognize a one-time cumulative effect adjustment to the allowance for loan losses as of the beginning of the first reporting period in which the new standard is effective, but cannot yet determine the magnitude of any such one-time adjustment or the overall impact of the new guidance on the consolidated financial statements.

In June 2018, the FASB issued ASU 2018-07, Compensation – Stock Compensation (Topic 718), which simplified the accounting for nonemployee share-based payment transactions. The amendments in this update expand the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. The amendments in this Update improve the following areas of nonemployee share-based payment accounting; (a) the overall measurement objective, (b) the measurement date, (c) awards with performance conditions, (d) classification reassessment of certain equity-classified awards, (e) calculated value (nonpublic entities only), and (f) intrinsic value (nonpublic entities only). The amendments in this Update are effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. This Update is not expected to have a significant impact on the Company’s financial statements.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes the Disclosure Requirements for Fair Value Measurements. The Update removes the requirement to disclose the amount of and reasons for transfers between Level I and Level II of the fair value hierarchy; the policy for timing of transfers between levels; and the valuation processes for Level III fair value measurements. The Update requires disclosure of changes in unrealized gains and losses for the period included in other comprehensive income (loss) for recurring Level III fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level III fair value measurements. This Update is effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position or results of operations.

In August 2018, the FASB issued ASU 2018-14, Compensation – Retirement Benefits (Topic 715-20). This Update amends ASC 715 to add, remove and clarify disclosure requirements related to defined benefit pension and other postretirement plans. The Update eliminates the requirement to disclose the amounts in accumulated other comprehensive income expected to be recognized as part of net periodic benefit cost over the next year. The Update also removes the disclosure requirements for the effects of a one-percentage-point change on the assumed health care costs and the effect of this change in rates on service cost, interest cost and the benefit obligation for postretirement health care benefits. This Update is effective for public business entities for fiscal years ending after December 15, 2020, and must be applied on a retrospective basis. For all other entities, this Update is effective for fiscal years ending after December 15, 2021. This standard is not expected to have a significant impact on the Company’s financial position or results of operations.

In November, 2018, the FASB issued ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments – Credit Losses, which amended the effective date of ASU 2016-13 for entities other than public business entities (PBEs), by requiring non-PBEs to adopt the standard for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Therefore, the revised effective dates of ASU 2016-13 for PBEs that are SEC filers will be fiscal years beginning after December 15, 2019, including interim periods within those years, PBEs other than SEC filers will be for fiscal years beginning after December 15, 2020, including interim periods within those years, and all other entities (non-PBEs) will be for fiscal years beginning after December 15, 2021, including interim periods within those years. The ASU also clarifies that receivables arising from operating leases are not within the scope of Subtopic 326-20. Rather, impairment of receivables arising from operating leases should be accounted for in accordance with Topic 842, Leases. The effective date and transition requirements for ASU 2018-19 are the same as those in ASU 2016-13, as amended by ASU 2018-19. On October 16, 2019, the FASB voted to defer the effective date for ASC 326, Financial Instruments – Credit Losses, for smaller reporting companies to fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. The final ASU is expected to be issued in mid-November. This Update is not expected to have a significant impact on the Company’s financial statements.

In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments – Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, which affects a variety of topics in the Codification and applies to all reporting entities within the scope of the affected accounting guidance. Topic 326, Financial Instruments – Credit Losses amendments are effective for SEC registrants for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. For all other public business entities, the effective date is for fiscal years beginning after December 15, 2020, and for all other entities, the effective date is for fiscal years beginning after December 15, 2021. On October 16, 2019, the FASB voted to defer the effective date for ASC 326, Financial Instruments – Credit Losses, for smaller reporting companies to fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. The final ASU is expected to be issued in mid-November. Topic 815, Derivatives and Hedging amendments are effective

for public business entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods beginning after December 15, 2020. For entities that have adopted the amendments in Update 2017-12, the effective date is as of the beginning of the first annual period beginning after the issuance of this Update. Topic 825, Financial Instruments amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position or results of operations.

In May 2019, the FASB issued ASU 2019-05, Financial Instruments – Credit Losses, Topic 326, which allows entities to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost upon adoption of the new credit losses standard. To be eligible for the transition election, the existing financial asset must otherwise be both within the scope of the new credit losses standard and eligible for applying the fair value option in ASC 825-10.3. The election must be applied on an instrument-by-instrument basis and is not available for either available-for-sale or held-to-maturity debt securities. For entities that elect the fair value option, the difference between the carrying amount and the fair value of the financial asset would be recognized through a cumulative-effect adjustment to opening retained earnings as of the date an entity adopted ASU 2016-13. Changes in fair value of that financial asset would subsequently be reported in current earnings. For entities that have not yet adopted ASU 2016-13, the effective dates and transition requirements are the same as those in ASU 2016-13. For entities that have adopted ASU 2016-13, ASU 2019-05 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted once ASU 2016-13 has been adopted. On October 16, 2019, the FASB voted to defer the effective date for ASC 326, Financial Instruments – Credit Losses, for smaller reporting companies to fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. The final ASU is expected to be issued in mid-November. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position or results of operations.

In July 2019, the FASB issued ASU 2019-07, Codification Updates to SEC Sections, Amendments to SEC Paragraphs Pursuant to SEC Final Rule Releases No. 33-10532, Disclosure Update and Simplification, and Nos. 33-10231 and 33-10442, Investment Company Reporting Modernization, and Miscellaneous Updates. This ASU amends various SEC paragraphs pursuant to the issuance of SEC Final Rule Releases No. 33-10532, Disclosure Update and Simplification, and Nos. 33-10231 and 33-10442, Investment Company Reporting Modernization. Other miscellaneous updates to agree to the electronic Code of Federal Regulations also have been incorporated.

3.	REVENUE RECOGNITION

Effective July 1, 2018, the Company adopted Accounting Standards Update ASU 2014-09, Revenue from contracts with Customers – Topic 606, and all subsequent ASUs that modified ASC 606. The Company has elected to apply the standard to all prior periods presented utilizing the full retrospective approach. The implementation of the new standard had no material impact to the measurement or recognition of revenue of prior periods. Management determined that the primary sources of revenue emanating from interest and dividend income on loans and investments along with noninterest revenue resulting from investment security gains, and earnings on bank owned life insurances are not within the scope of ASC 606. As a result, no changes were made during the period related to these sources of revenue. The main types of noninterest income within the scope of the standard are as follows: Service Charges on deposit accounts – the Company has contracts with its deposit customers where fees are charged if certain parameters are not met. These agreements can be cancelled at any time by either the Company or the deposit customer. Revenue from these transactions is recognized on a monthly basis as the Company has an unconditional right to the fee consideration. The Company also has transaction fees related to specific transactions or activities resulting from a customer request or activity that include overdraft fees, online banking fees, interchange fees, ATM fees and other transaction fees. All of these fees are attributable to specific performance obligations of the Company where the revenue is recognized at a defined point in time upon the completion of the requested service/transaction.

4.	EARNINGS PER SHARE

The following table sets forth the computation of the weighted-average common shares used to calculate basic and diluted earnings per share.


	Three Months Ended
	September 30,
	2019			2018
Weighted average common shares issued		3,805,636			3,805,636
Average treasury stock shares		(1,863,414	)		(1,836,884	)
Average unallocated ESOP shares		(166,661	)		(175,697	)


Weighted average common shares and common stock equivalents used to calculate basic earnings per share		1,775,561			1,793,055
Additional common stock equivalents (stock options) used to calculate diluted earnings per share		-			217


Weighted average common shares and common stock equivalents used to calculate diluted earnings per share		1,775,561			1,793,272

There are no convertible securities that would affect the numerator in calculating basic and diluted earnings per share; therefore, net income as presented on the Consolidated Statement of Income is used.

As of September 30, 2019, all outstanding options had expired. At September 30, 2018 there were 77,019 options outstanding with an exercise price of $16.20 which were dilutive for the three month period.

5.	STOCK BASED COMPENSATION

The Company previously maintained the 2008 Stock Incentive Plan (the “Plan”), which was approved by shareholders in October 2008, permitted the grant of stock options or restricted shares to its directors and employees for up to 152,000 shares (up to 38,000 restricted shares may be issued). Option awards were generally granted with an exercise price equal to the market price of the Company’s stock at the date of grant; those option awards generally vested over five years of continuous service and had ten-year contractual terms. The Plan expired by its terms in September 2018.

During the three months ended September 30, 2019 and 2018, the Company recorded no compensation expense related to our share-based compensation awards. As of September 30, 2019, there was no unrecognized compensation cost related to unvested share-based compensation awards granted in fiscal 2009.

There were no stock options exercised or issued during the three months ended September 30, 2019 and 2018.

6.	INVESTMENT SECURITIES

The amortized cost, gross unrealized gains and losses, and fair values of investments are as follows:


					Gross			Gross
		Amortized			Unrealized			Unrealized				Fair
		Cost			Gains			Losses				Value
		(Dollars in Thousands)
September 30, 2019

AVAILABLE FOR SALE
Corporate debt securities	$		106,682	$		351	$		(206	)	$		106,827
Foreign debt securities ¹			26,574			68			(49	)			26,593
Obligations of states and political subdivisions			1,330			-			-				1,330


Total	$		134,586	$		419	$		(255	)	$		134,750


					Gross			Gross
		Amortized			Unrealized			Unrealized				Fair
		Cost			Gains			Losses				Value
		(Dollars in Thousands)
September 30, 2019

HELD TO MATURITY
Obligations of states and political subdivisions	$		3,495	$		94	$		-		$		3,589


Total	$		3,495	$		94	$		-		$		3,589

¹U.S. dollar denominated investment-grade corporate bonds of large foreign corporate issuers.


					Gross			Gross
		Amortized			Unrealized			Unrealized				Fair
		Cost			Gains			Losses				Value
		(Dollars in Thousands)
June 30, 2019

AVAILABLE FOR SALE
Corporate debt securities	$		104,760	$		355	$		(207	)	$		104,908
Foreign debt securities²			26,583			35			(75	)			26,543
Obligations of states and political subdivisions			1,330			-			(1	)			1,329


Total	$		132,673	$		390	$		(283	)	$		132,780


					Gross			Gross
		Amortized			Unrealized			Unrealized				Fair
		Cost			Gains			Losses				Value
		(Dollars in Thousands)
June 30, 2019

HELD TO MATURITY
Obligations of states and political subdivisions	$		3,995	$		85	$		-		$		4,080


Total	$		3,995	$		85	$		-		$		4,080

There were no sales of investment securities for the three months ended September 30, 2019.

Proceeds from sales of investments during the quarter ended September 30, 2018 were $1.4 million and the Company recorded gross realized investment security losses of $2 thousand during this same period.

²U.S. dollar denominated investment-grade corporate bonds of large foreign corporate issuers.

The amortized cost and fair values of debt securities at September 30, 2019, by contractual maturity, are shown below. Expected maturities may differ from the contractual maturities because issuers may have the right to call securities prior to their final maturities.


		Due in one year or less			Due after one through five years			Due after five through ten years			Due after ten years			Total
		(Dollars in Thousands)
AVAILABLE FOR SALE
Amortized cost	$		15,433	$		118,513	$		640	$		-	$		134,586
Fair value			15,406			118,704			640			-			134,750

HELD TO MATURITY
Amortized cost	$		-	$		3,495	$		-	$		-	$		3,495
Fair value			-			3,589			-			-			3,589

At September 30, 2019 investment securities with amortized costs of $3.5 million and fair values of $3.6 million were pledged to secure borrowings with the Federal Home Loan Bank (FHLB) of Pittsburgh.

7.	MORTGAGE-BACKED SECURITIES

Mortgage-backed securities (“MBS”) include mortgage pass-through certificates (“PCs”) and collateralized mortgage obligations (“CMOs”). With a pass-through security, investors own an undivided interest in the pool of mortgages that collateralize the PCs. Principal and interest is passed through to the investor as it is generated by the mortgages underlying the pool. PCs and CMOs may be insured or guaranteed by Freddie Mac (“FHLMC”), Fannie Mae (“FNMA”) and the Government National Mortgage Association (“GNMA”). CMOs may also be privately issued with varying degrees of credit enhancements. A CMO reallocates mortgage pool cash flow to a series of bonds (called traunches) with varying stated maturities, estimated average lives, coupon rates and prepayment characteristics.

The Company’s CMO portfolio is comprised of two segments: CMOs backed by U.S. Government Agencies (“Agency CMOs”) and CMOs backed by single-family whole loans not guaranteed by a U.S. Government Agency (“Private-Label CMOs”).

At September 30, 2019, the Company’s Agency CMOs totaled $105.5 million as compared to $107.4 million at June 30, 2019. The Company’s Private-Label CMOs totaled $837 thousand at September 30, 2019 as compared to $883 thousand at June 30, 2019. The $1.9 million decrease in the Agency CMO segment of our MBS portfolio was due to repayments on our Agency CMOs which totaled $1.9 million. During the three months ended September 30, 2019, the Company received principal payments totaling $49 thousand on its Private-Label CMOs. At September 30, 2019 and June 30, 2019, all of the Company’s MBS portfolio was comprised of adjustable or floating rate investments. All of the Company’s floating rate MBS adjust monthly based upon changes in the one month London Interbank Offered Rate (“LIBOR”). The Company has no investment in multi-family or commercial real estate based MBS.

Due to prepayments of the underlying loans, and the prepayment characteristics of the CMO traunches, the actual maturities of the Company’s MBS are expected to be substantially less than the scheduled maturities.

The Company retains an independent third party to assist it in the determination of a fair value for its three private-label CMOs. This valuation is meant to be a “Level Three” valuation as defined by ASC Topic 820, Fair Value Measurements and Disclosures. The valuation does not represent the actual terms or prices at which any party could purchase the securities. There is currently no active secondary market for Private-Label CMOs and there can be no assurance that any secondary market for Private-Label CMOs will develop. The Private-Label CMO portfolio had four previously recorded other-than-temporary impairments at September 30, 2019. During the three months ended September 30, 2019, the Company recorded an additional credit impairment charge of $1 thousand on its Private-Label CMO portfolio.

The Company believes that the data and assumptions used to determine the fair values are reasonable. The fair value calculations reflect relevant facts and market conditions. Events and conditions occurring after the valuation date could have a material effect on the Private-Label CMO segment’s fair value.

The following table sets forth information with respect to the Company’s Private-Label CMO portfolio as of September 30, 2019. At the time of purchase, all of our Private-Label CMOs were rated in the highest investment category by at least two ratings agencies.


			At September 30, 2019
			Rating						Book Value		Fair Value^³		Life to Date Impairment Recorded in Earnings
Cusip #	Security Description		S&P		Moody’s		Fitch		(in thousands)
126694CP1		CWHL SER 21 A11		N/A		Caa2		D	$	483	$	480	$	214
126694KF4		CWHL SER 24 A15		NR		N/A		D		91		92		49
126694KF4		CWHL SER 24 A15		NR		N/A		D		183		185		97
126694MP0		CWHL SER 26 1A5		NR		N/A		D		80		86		41

									$	837	$	843	$	401

³Fair value estimate provided by the Company’s independent third party valuation consultant.

The amortized cost and fair values of the Company’s mortgage-backed securities are as follows:


					Gross			Gross
		Amortized			Unrealized			Unrealized				Fair
		Cost			Gains			Losses				Value
		(Dollars in Thousands)
September 30, 2019
HELD TO MATURITY

Collateralized mortgage obligations:
Agency	$		105,479	$		831	$		(712	)	$		105,598
Private-label			837			9			(3	)			843


Total	$		106,316	$		840	$		(715	)	$		106,441


					Gross			Gross
		Amortized			Unrealized			Unrealized				Fair
		Cost			Gains			Losses				Value
		(Dollars in Thousands)
June 30, 2019
HELD TO MATURITY

Collateralized mortgage obligations:
Agency	$		107,448	$		954	$		(570	)	$		107,832
Private-label			883			5			(12	)			876


Total	$		108,331	$		959	$		(582	)	$		108,708

The amortized cost and fair value of the Company’s mortgage-backed securities at September 30, 2019, by contractual maturity, are shown below. Expected maturities may differ from the contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.


		Due in one year or less			Due after one through five years			Due after five through ten years			Due after ten years			Total
		(Dollars in Thousands)

HELD TO MATURITY
Amortized cost	$		-	$		125	$		-	$		106,191	$		106,316
Fair value			-			127			-			106,314			106,441

At September 30, 2019, mortgage-backed securities with amortized costs of $105.4 million and fair values of $105.6 million were pledged to secure public deposits and borrowings with the FHLB. Of the securities pledged, $17.7 million of fair value was excess collateral. At June 30, 2019, mortgage-backed securities with an amortized cost of $107.4 million and fair values of $107.8 million, were pledged to secure public deposits and borrowings with the FHLB. Of the securities pledged, $2.4 million of fair value was excess collateral. Excess collateral is maintained to support future borrowings and may be withdrawn by the Company at any time.

8.	ACCUMULATED OTHER COMPREHENSIVE LOSS

The following tables present the changes in accumulated other comprehensive loss by component, for the three months ended September 30, 2019 and 2018.


	Three Months Ended September 30, 2019
	(Dollars in Thousands – net of tax)

	Unrealized Gains and Losses on Available-for-Sale Securities		Unrealized Gains and Losses on Held-to-Maturity Securities			Total

Beginning Balance – June 30, 2019	$	84	$	(69	)	$	15

Other comprehensive income before reclassifications		44		3			47

Amounts reclassified from accumulated other comprehensive income (loss)		1		-			1


Net current-period other comprehensive income		45		3			48


Ending Balance – September 30, 2019	$	129	$	(66	)	$	63


	Three Months Ended September 30, 2018
	(Dollars in Thousands – net of tax)

	Unrealized Gains and Losses on Available-for-Sale Securities		Unrealized Gains and Losses on Held-to-Maturity Securities			Total

Beginning Balance – June 30, 2018	$	(10)	$	(178)		$	(188)

Other comprehensive income (loss) before reclassifications		96		(31	)		65

Amounts reclassified from accumulated other comprehensive income (loss)		2		-			2


Net current-period other comprehensive income (loss)		98		(31	)		67


Ending Balance – September 30, 2018	$	88	$	(209	)	$	(121	)

9.	UNREALIZED LOSSES ON SECURITIES

The following tables show the Company’s gross unrealized losses and fair value, aggregated by category and length of time that the individual securities have been in a continuous unrealized loss position, at September 30, 2019 and June 30, 2019.


			September 30, 2019

			Less Than Twelve Months							Twelve Months or Greater							Total

			Fair Value			Gross Unrealized Losses				Fair Value			Gross Unrealized Losses				Fair Value			Gross Unrealized Losses

				(Dollars in Thousands)
Corporate debt securities	$			12,042	$		(22	)	$		19,493	$		(184	)	$		31,535	$		(206	)
Foreign debt securities⁴				-			-				3,191			(49	)			3,191			(49	)
Obligations of states and political subdivisions				-			-				-			-				-			-
Collateralized mortgage obligations				20,544			(276	)			22,100			(439	)			42,644			(715	)


Total		$		32,586	$		(298	)	$		44,784	$		(672	)	$		77,370	$		(970	)


			June 30, 2019

			Less Than Twelve Months							Twelve Months or Greater							Total

			Fair Value			Gross Unrealized Losses				Fair Value			Gross Unrealized Losses				Fair Value			Gross Unrealized Losses

				(Dollars in Thousands)
Corporate debt securities		$		11,728	$		(86	)	$		17,077	$		(121	)	$		28,805	$		(207	)
Foreign debt securities⁴				2,004			(2	)			5,699			(73	)			7,703			(75	)
Obligations of states and political subdivisions				-			-				1,329			(1	)			1,329			(1	)
Collateralized mortgage obligations				24,368			(182	)			18,614			(400	)			42,982			(582	)


Total		$		38,100	$		(270	)	$		42,719	$		(595	)	$		80,819	$		(865	)

For debt securities, impairment is considered to be other than temporary if an entity (1) intends to sell the security, (2) more likely than not will be required to sell the security before recovering its amortized cost basis, or (3) does not expect to recover the security’s entire amortized cost basis (even if the entity does not intend to sell the security). In addition, impairment is considered to be other than temporary if the present value of cash flows expected to be collected from the debt security is less than the amortized cost basis of the security (any such shortfall is referred to as a credit loss).

The Company evaluates outstanding available-for-sale and held-to-maturity securities in an unrealized loss position (i.e., impaired securities) for other-than-temporary impairment (“OTTI”) on a quarterly basis. In doing so, the Company considers many factors including, but not limited to: the credit ratings assigned to the securities by the Nationally Recognized Statistical Rating Organizations (“NRSRO”); other indicators of the credit quality of the issuer; the strength of the provider of any guarantees; the length of time and extent that fair value has been less than amortized cost; and whether the Company has the intent to sell the security or more likely than not will be required to sell the security before its anticipated recovery. In the case of its Private Label residential MBS, the Company also considers prepayment speeds, the historical and projected performance of the underlying loans and the credit support provided by the subordinate securities. These evaluations are inherently subjective and consider a number of quantitative and qualitative factors.

⁴U.S. dollar denominated investment-grade corporate bonds of large foreign corporate issuers.

The following table presents a roll-forward of the credit loss component of the amortized cost of mortgage-backed securities that we have written down for OTTI and the credit component of the loss that is recognized in earnings. OTTI recognized in earnings for credit impaired mortgage-backed securities is presented as additions in two components based upon whether the current period is the first time the mortgage-backed security was credit-impaired (initial credit impairment) or is not the first time the mortgage-backed security was credit impaired (subsequent credit impairments). The credit loss component is reduced if we sell, intend to sell or believe that we will be required to sell previously credit-impaired mortgage-backed securities. Additionally, the credit loss component is reduced if we receive cash flows in excess of what we expected to receive over the remaining life of the credit impaired mortgage-backed securities, the security matures or is fully written down.


	Three Months Ended
	September 30,
	2019			2018
	(Dollars in Thousands)
Beginning balance	$	248		$	239
Initial credit impairment		-			-
Subsequent credit impairment		1			-
Reductions for amounts recognized in earnings due to intent or requirement to sell		-			-
Reductions for securities sold		-			-
Reduction for actual realized losses		(10	)		(3	)
Reduction for increase in cash flows expected to be collected		-			-

Ending Balance	$	239		$	236

During the three months ended September 30, 2019, the Company recorded a $1 thousand subsequent credit impairment charge and no non-credit unrealized holding losses to accumulated other comprehensive income. During the three months ended September 30, 2019, the Company accreted back out of other comprehensive income $4 thousand (net of income tax effect of $1 thousand), based on principal repayments on Private-Label CMOs previously identified with OTTI.

In the case of its Private-Label residential CMOs that exhibit adverse risk characteristics, the Company employs models to determine the cash flows that it is likely to collect from the securities. These models consider borrower characteristics and the particular attributes of the loans underlying the securities, in conjunction with assumptions about future changes in home prices and interest rates, to predict the likelihood a loan will default and the impact on default frequency, loss severity and remaining credit enhancement. A significant input to these models is the forecast of future housing price changes for the relevant states and metropolitan statistical areas, which are based upon an assessment of the various housing markets. In general, since the ultimate receipt of contractual payments on these securities will depend upon the credit and prepayment performance of the underlying loans and, if needed, the credit enhancements for the senior securities owned by the Company, the Company uses these models to assess whether the credit enhancement associated with each security is sufficient to protect against likely losses of principal and interest on the underlying mortgage loans. The development of the modeling assumptions requires significant judgment.

In conjunction with our adoption of ASC Topic 820 effective June 30, 2009, the Company retained an independent third party to assist it with assessing its investments within the Private-Label CMO portfolio. The independent third party utilized certain assumptions for producing the cash flow analyses used in the OTTI assessment. Key assumptions would include interest rates, expected market participant spreads and discount rates, housing prices, projected future delinquency levels and assumed loss rates on any liquidated collateral.

The Company reviewed the independent third party’s assumptions used in the September 30, 2019 OTTI process. Based on the results of this review, the Company deemed the independent third party’s assumptions to be reasonable and adopted them. However, different assumptions could produce materially different results, which could impact the Company’s conclusions as to whether an impairment is considered other-than-temporary and the magnitude of the credit loss.

If the Company intends to sell an impaired debt security, or more likely than not will be required to sell the security before recovery of its amortized cost basis, the impairment is other-than-temporary and is recognized currently in earnings in an amount equal to the entire difference between fair value and amortized cost. The Company does not anticipate selling its private-label CMO portfolio, nor does Management believe that the Company will be required to sell these securities before recovery of this amortized cost basis.

In instances in which the Company determines that a credit loss exists but the Company does not intend to sell the security and it is not more likely than not that the Company will be required to sell the security before the anticipated recovery of its remaining amortized cost basis, the OTTI is separated into (1) the amount of the total impairment related to the credit loss and (2) the amount of the total impairment related to all other factors (i.e., the noncredit portion). The amount of the total OTTI related to the credit loss is recognized in earnings and the amount of the total OTTI related to all other factors is recognized in accumulated other comprehensive loss. The total OTTI is presented in the Consolidated Statement of Income with an offset for the amount of the total OTTI that is recognized in accumulated other comprehensive loss. Absent the intent or requirement to sell a security, if a credit loss does not exist, any impairment is considered to be temporary.

Regardless of whether an OTTI is recognized in its entirety in earnings or if the credit portion is recognized in earnings and the noncredit portion is recognized in other comprehensive income (loss), the estimation of fair values has a significant impact on the amount(s) of any impairment that is recorded.

The noncredit portion of any OTTI losses on securities classified as available-for-sale is adjusted to fair value with an offsetting adjustment to the carrying value of the security. The fair value adjustment could increase or decrease the carrying value of the security. All of the Company’s private-label CMOs were originally, and continue to be classified, as held to maturity.

In periods subsequent to the recognition of an OTTI loss, the other-than-temporarily impaired debt security is accounted for as if it had been purchased on the measurement date of the OTTI at an amount equal to the previous amortized cost basis less the credit-related OTTI recognized in earnings. For debt securities for which credit-related OTTI is recognized in earnings, the difference between the new cost basis and the cash flows expected to be collected is accreted into interest income over the remaining life of the security in a prospective manner based on the amount and timing of future estimated cash flows.

The Company had investments in 46 positions that were temporarily impaired at September 30, 2019. Based on its analysis, management has concluded that three Private-Label CMOs are other-than-temporarily impaired, while the remaining securities portfolio has experienced unrealized losses and a decrease in fair value due to interest rate volatility, illiquidity in the marketplace, or credit deterioration in the U.S. mortgage markets.

10.

LOANS AND RELATED ALLOWANCE FOR LOAN LOSSES

The following table summarizes the primary segments of the loan portfolio as of September 30, 2019 and June 30, 2019.


		September 30, 2019							June 30, 2019
		Total Loans			Individually evaluated for impairment		Collectively evaluated for impairment		Total Loans			Individually evaluated for impairment		Collectively evaluated for impairment

		(Dollars in Thousands)
First mortgage loans:
1 – 4 family dwellings	$		77,959		$	-	$	77,959	$	76,789		$	-	$	76,789
Construction			1,276			-		1,276		2,907			-		2,907
Land acquisition & development			441			-		441		694			-		694
Multi-family dwellings			3,047			-		3,047		3,123			-		3,123
Commercial			4,195			-		4,195		3,727			-		3,727

Consumer Loans
Home equity			1,016			-		1,016		906			-		906
Home equity lines of credit			1,948			-		1,948		1,953			-		1,953
Other			115			-		115		112			-		112

Commercial Loans			378			-		378		418			-		418

	$		90,375		$	-	$	90,375	$	90,629		$	-	$	90,629

Plus: Deferred loan costs			496							507
Allowance for loan losses			(538	)						(548	)

Total	$		90,333						$	90,588

Impaired loans are loans for which it is probable the Company will not be able to collect all amounts due according to the contractual terms of the loan agreement. The following loan categories are collectively evaluated for impairment. First mortgage loans: 1 – 4 family dwellings and all consumer loan categories (home equity, home equity lines of credit, and other). The following loan categories are individually evaluated for impairment. First mortgage loans: construction, land acquisition and development, multi-family dwellings, and commercial. The Company evaluates commercial loans not secured by real property individually for impairment.

The definition of “impaired loans” is not the same as the definition of “nonaccrual loans,” although the two categories overlap. The Company may choose to place a loan on nonaccrual status due to payment delinquency or uncertain collectability, while not classifying the loan as impaired if the loan is not a commercial or commercial real estate loan. Factors considered by management in determining impairment include payment status and collateral value. The amount of impairment for these types of impaired loans is determined by the difference between the present value of the expected cash flows related to the loan, using the original interest rate, and its recorded value, or as a practical expedient in the case of collateralized loans, the difference between the fair value of the collateral and the recorded amount of the loans. When foreclosure is probable, impairment is measured based on the fair value of the collateral.

Loans that experience insignificant payment delays, which are defined as 90 days or less, generally are not classified as impaired. Management determines the significance of payment delays on a case-by-case basis taking into consideration all circumstances surrounding the loan and the borrower, including the length of the delay, the borrower’s prior payment record, and the amount of shortfall in relation to the principal and interest owed.

As of September 30, 2019 and June 30, 2019, there were no loans considered to be impaired.

Total nonaccrual loans as of September 30, 2019 and June 30, 2019 and the related interest income recognized for the three months ended September 30, 2019 and September 30, 2018 are as follows:


		September 30, 2019			June 30, 2019
		(Dollars in Thousands)
Principal outstanding
1 – 4 family dwellings	$		-	$		225
Construction			-			-
Land acquisition & development			-			-
Commercial real estate			-			-
Home equity lines of credit			-			-

Total	$		-	$		225

During the quarter ended September 30, 2019, the Company’s one non-performing asset consisting of a single-family real estate loan was discharged from bankruptcy and was not delinquent at September 30, 2019.


		Three Months Ended
		September 30, 2019			September 30, 2018
		(Dollars in Thousands)
Average nonaccrual loans
1 – 4 family dwellings	$		185	$		234
Construction			-			-
Land acquisition & development			-			-
Commercial real estate			-			-
Home equity lines of credit			-			-

Total	$		185	$		234

Income that would have been recognized	$		2	$		3
Interest income recognized	$		2	$		3
Interest income foregone	$		-	$		-

The Company’s loan portfolio may also include troubled debt restructurings (“TDRs”), where economic concessions have been granted to borrowers who have experienced or are expected to experience financial difficulties. These concessions typically result from the Company’s loss mitigation activities and could include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance or other actions. Certain TDRs are classified as nonperforming at the time of restructure and may only be returned to performing status after considering the borrower’s sustained repayment performance for a reasonable period, generally six months.

During the three months ended September 30, 2019 and 2018, there were no troubled debt restructurings, and no troubled debt restructurings that subsequently defaulted.

When the Company modifies a loan, management evaluates any possible impairment based on the present value of expected future cash flows, discounted at the contractual interest rate of the original loan agreement, except when the sole (remaining) source of repayment for the loan is the operation or liquidation of the collateral. In these cases, management uses the current fair value of the collateral, less selling costs, instead of discounted cash flows. If management determines that the value of the modified loan is less than the recorded investment in the loan (net of previous charge-offs, deferred loan fees or costs and unamortized premium or discount), impairment is recognized by segment or class of loan, as applicable, through an allowance estimate or a charge-off to the allowance. Segment and class status is determined by the loan’s classification at origination.

The allowance for loan losses is established through provisions for loan losses charged against income. Loans deemed to be uncollectible are charged against the allowance account. Subsequent recoveries, if any, are credited to the allowance. The allowance is maintained at a level believed adequate by management to absorb estimated potential loan losses. Management’s determination of the adequacy of the allowance is based on periodic evaluations of the loan portfolio considering past experience, current economic conditions, composition of the loan portfolio and other relevant factors. This evaluation is inherently subjective, as it requires material estimates that may be susceptible to significant change.

Effective December 13, 2006, the Federal Deposit Insurance Corporation (“FDIC”), in conjunction with the other federal banking agencies adopted a Revised Interagency Policy Statement on the Allowance for Loan and Lease Losses (“ALLL”). The revised policy statement revised and replaced the banking agencies’ 1993 policy statement on the ALLL. The revised policy statement provides that an institution must maintain an ALLL at a level that is appropriate to cover estimated credit losses on individually evaluated loans determined to be impaired, as well as estimated credit losses inherent in the remainder of the loan and lease portfolio. The banking agencies also revised the policy to ensure consistency with generally accepted accounting principles (“GAAP”). The revised policy statement updates the previous guidance that describes the responsibilities of the board of directors, management, and bank examiners regarding the ALLL, factors to be considered in the estimation of the ALLL, and the objectives and elements of an effective loan review system.

Federal regulations require that each insured savings institution classify its assets on a regular basis. In addition, in connection with examinations of insured institutions, federal examiners have authority to identify problem assets and, if appropriate, classify them. There are three classifications for problem assets: “substandard”, “doubtful” and “loss”. Substandard assets have one or more defined weaknesses and are characterized by the distinct possibility that the insured institution will sustain some loss if the deficiencies are not corrected. Doubtful assets have the weaknesses of those classified as substandard with the added characteristic that the weaknesses make collection or liquidation in full on the basis of currently existing facts, conditions and values questionable, and there is a high possibility of loss. An asset classified as loss is considered uncollectible and of such little value that continuance as an asset of the institution is not warranted. Another category designated “asset watch” is also utilized by the Bank for assets which do not currently expose an insured institution to a sufficient degree of risk to warrant classification as substandard, doubtful or loss. Assets classified as substandard or doubtful require the institution to establish general allowances for loan losses. If an asset or portion thereof is classified as loss, the insured institution must

either establish specific allowances for loan losses in the amount of 100% of the portion of the asset classified loss, or charge-off such amount. General loss allowances established to cover possible losses related to assets classified substandard or doubtful may be included in determining an institution’s regulatory capital, while specific valuation allowances for loan losses do not qualify as regulatory capital.

The Company’s general policy is to internally classify its assets on a regular basis and establish prudent general valuation allowances that are adequate to absorb losses that have not been identified but that are inherent in the loan portfolio. The Company maintains general valuation allowances that it believes are adequate to absorb losses in its loan portfolio that are not clearly attributable to specific loans. The Company’s general valuation allowances are within the following general ranges: (1) 0% to 5% of assets subject to special mention; (2) 1.00% to 100% of assets classified substandard; and (3) 50% to 100% of assets classified doubtful. Any loan classified as loss is charged-off. To further monitor and assess the risk characteristics of the loan portfolio, loan delinquencies are reviewed to consider any developing problem loans. Based upon the procedures in place, considering the Company’s past charge-offs and recoveries and assessing the current risk elements in the portfolio, management believes the allowance for loan losses at September 30, 2019, is adequate.

The following tables present the classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans as of September 30, 2019 and June 30, 2019:


		Current			30 – 59 Days Past Due			60 – 89 Days Past Due			90 Days + Past Due Accruing			90 Days + Past Due Non-accrual			Total Past Due			Total Loans

		(Dollars in Thousands)
September 30, 2019
First mortgage loans:
1 – 4 family dwellings	$		77,959	$		-	$		-	$		-	$		-	$		-	$		77,959
Construction			1,276			-			-			-			-			-			1,276
Land acquisition & development			441			-			-			-			-			-			441
Multi-family dwellings			3,047			-			-			-			-			-			3,047
Commercial			4,195			-			-			-			-			-			4,195

Consumer Loans:
Home equity			1,016			-			-			-			-			-			1,016
Home equity lines of credit			1,948			-			-			-			-			-			1,948
Other			115			-			-			-			-			-			115

Commercial Loans			378			-			-			-			-			-			378

	$		90,375	$		-	$		-	$		-	$		-	$		-			90,375

Deferred loan costs																					496
Allowance for loan losses																					(538	)

Net Loans Receivable																			$		90,333


		Current			30 – 59 Days Past Due			60 – 89 Days Past Due			90 Days + Past Due Accruing			90 Days + Past Due Non-accrual			Total Past Due			Total Loans

		(Dollars in Thousands)
June 30, 2019
First mortgage loans:
1 – 4 family dwellings	$		76,564	$		-	$		-	$		-	$		225	$		225	$		76,789
Construction			2,907			-			-			-			-			-			2,907
Land acquisition & development			694			-			-			-			-			-			694
Multi-family dwellings			3,123			-			-			-			-			-			3,123
Commercial			3,727			-			-			-			-			-			3,727

Consumer Loans
Home equity			906			-			-			-			-			-			906
Home equity lines of credit			1,953			-			-			-			-			-			1,953
Other			112			-			-			-			-			-			112

Commercial Loans			418			-			-			-			-			-			418

	$		90,404	$		-	$		-	$		-	$		225	$		225			90,629

Deferred loan costs																					507
Allowance for loan losses																					(548	)

Net Loans Receivable																			$		90,588

Credit quality information

The following tables represent credit exposure by internally assigned grades for the periods ended September 30, 2019 and June 30, 2019. The grading system analysis estimates the capability of the borrower to repay the contractual obligations of the loan agreements as scheduled or not at all. The Company’s internal credit risk grading system is based on experiences with similarly graded loans.

The Company’s internally assigned grades are as follows:

Pass – loans which are protected by the current net worth and paying capacity of the obligor or by the value of the underlying collateral.

Special Mention – loans where a potential weakness or risk exists, which could cause a more serious problem if not corrected.

Substandard – loans that have a well-defined weakness based on objective evidence and can be characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

Doubtful – loans classified as doubtful have all the weaknesses inherent in a substandard loan. In addition, these weaknesses make collection or liquidation in full highly questionable and improbable, based on existing circumstances.

Loss – loans classified as loss are considered uncollectible, or of such value that continuance as a loan is not warranted.

The primary credit quality indicator used by management in the 1 – 4 family and consumer loan portfolios is the performance status of the loans. Payment activity is reviewed by Management on a monthly basis to determine how loans are performing. Loans are considered to be non-performing when they become 90 days delinquent, have a history of delinquency, or have other inherent characteristics which Management deems to be weaknesses.

The following tables present the Company’s internally classified construction, land acquisition and development, multi-family residential, commercial real estate and commercial (not secured by real estate) loans at September 30, 2019 and June 30, 2019.


		September 30, 2019
		Construction			Land Acquisition & Development Loans			Multi- family Residential			Commercial Real Estate			Commercial

		(Dollars in Thousands)
Pass	$		1,276	$		441	$		3,047	$		4,195	$		378
Special Mention		-			-			-			-			-
Substandard			-			-			-			-			-
Doubtful			-			-			-			-			-

Ending Balance	$		1,276	$		441	$		3,047	$		4,195	$		378


		June 30, 2019
	Construction				Land Acquisition & Development Loans			Multi-family Residential			Commercial Real Estate			Commercial

		(Dollars in Thousands)

Pass	$		2,907	$		694	$		3,123	$		3,727	$		418
Special Mention			-			-			-			-			-
Substandard			-			-			-			-			-
Doubtful			-			-			-			-			-

Ending Balance	$		2,907	$		694	$		3,123	$		3,727	$		418

The following table presents performing and non-performing 1 – 4 family residential and consumer loans based on payment activity for the periods ended September 30, 2019 and June 30, 2019.


		September 30, 2019

		1 – 4 Family			Consumer

		(Dollars in Thousands)

Performing	$		77,959	$		3,079
Non-performing			-			-

Total	$		77,959	$		3,079


		June 30, 2019

		1 – 4 Family			Consumer

		(Dollars in Thousands)

Performing	$		76,564	$		2,971
Non-performing			225			-

Total	$		76,789	$		2,971

The Company determines its allowance for loan losses in accordance with generally accepted accounting principles. The Company uses a systematic methodology as required by Financial Reporting Release No. 28 and the various Federal Financial Institutions Examination Council guidelines. The Company also endeavors to adhere to SEC Staff Accounting Bulletin No. 102 in connection with loan loss allowance methodology and documentation issues.

Our methodology used to determine the allocated portion of the allowance is as follows. For groups of homogenous loans, we apply a loss rate to the groups’ aggregate balance. Our group loss rate reflects our historical loss experience. We may adjust these group rates to compensate for changes in environmental factors; but our adjustments have not been frequent due to a relatively stable charge-off experience. The Company also monitors industry loss experience on similar loan portfolio segments. We then identify loans for individual evaluation under ASC Topic 310. If the individually identified loans are performing, we apply a segment specific loss rate adjusted for relevant environmental factors, if necessary, for those loans reviewed individually and considered individually impaired, we use one of the three methods for measuring impairment mandated by ASC Topic 310. Generally the fair value of collateral is used since our impaired loans are generally real estate based. In connection with the fair value of collateral measurement, the Company generally uses an independent appraisal and determines costs to sell. The Company’s appraisals for commercial income based loans, such as multi-family and commercial real estate loans, assess value based upon the operating cash flows of the business as opposed to merely “as built” values. The Company then

validates the reasonableness of our calculated allowances by: (1) reviewing trends in loan volume, delinquencies, restructurings and concentrations; (2) reviewing prior period (historical) charge-offs and recoveries; and (3) presenting the results of this process, quarterly, to the Asset Classification Committee and the Savings Bank’s Board of Directors. We then tabulate, format and summarize the current loan loss allowance balance for financial and regulatory reporting purposes.

The Company had no unallocated loss allowance balance at September 30, 2019.

The allowance for loan losses represents the amount which management estimates is adequate to provide for probable losses inherent in its loan portfolio. The allowance method is used in providing for loan losses. Accordingly, all loan losses are charged to the allowance, and all recoveries are credited to it. The allowance for loan losses is established through a provision for loan losses charged to operations. The provision for loan losses is based on management’s periodic evaluation of individual loans, economic factors, past loan loss experience, changes in the composition and volume of the portfolio, and other relevant factors. The estimates used in determining the adequacy of the allowance for loan losses, including the amounts and timing of future cash flows expected on impaired loans, are particularly susceptible to changes in the near term.

The following tables summarize the primary segments of the allowance for loan losses (“ALLL”), segregated into the amount required for loans individually evaluated for impairment and the amount required for loans collectively evaluated for impairment as of September 30, 2019 and 2018. Activity in the allowance is presented for the three months ended September 30, 2019 and 2018.


		As of September 30, 2019
		First Mortgage Loans
		1 – 4 Family			Construction				Land Acquisition & Development				Multi- family			Commercial			Consumer Loans			Commercial Loans				Total

		(Dollars in Thousands)
Beginning ALLL Balance at June 30, 2019	$		405	$		46		$		10		$		17	$		37	$		30	$		3		$		548
Charge-offs			-			-				-				-			-			-			-				-
Recoveries			-			-				-				-			-			-			-				-
Provisions			7			(17	)			(4	)			-			5			-			(1	)			(10	)

Ending ALLL Balance at September 30, 2019	$		412	$		29		$		6		$		17	$		42	$		30	$		2		$		538

Individually evaluated for impairment	$		-	$		-		$		-		$		-	$		-	$		-	$		-		$		-
Collectively evaluated for impairment			412			29				6				17			42			30			2				538

	$		412	$		29		$		6		$		17	$		42	$		30	$		2		$		538


		As of September 30, 2018
		First Mortgage Loans
		1 – 4 Family			Construction			Land Acquisition & Development			Multi- family			Commercial				Consumer Loans			Commercial Loans				Total

		(Dollars in Thousands)
Beginning ALLL Balance at June 30, 2018	$		356	$		24	$		-	$		18	$		35		$		31	$		4		$		468
Charge-offs			-			-			-			-			-				-			-				-
Recoveries			-			-			-			-			-				-			-				-
Provisions			7			5			10			-			(3	)			1			(1	)			19

Ending ALLL Balance at September 30, 2018	$		363	$		29	$		10	$		18	$		32		$		32	$		3		$		487

Individually evaluated for impairment	$		-	$		-	$		-	$		-	$		-		$		-	$		-		$		-
Collectively evaluated for impairment			363			29			10			18			32				32			3				487

	$		363	$		29	$		10	$		18	$		32		$		32	$		3		$		487

During the quarter ended September 30, 2019, the ALLL decreased $10 thousand primarily due to lower levels of construction and land acquisition and development loans.

During the three months ended September 30, 2018 the Company’s ALLL increased by $19 thousand. This increase in the ALLL was primarily attributable to increases in the ALLL associated with the following segments: land acquisition and development, 1 – 4 family and construction. These increases were $10 thousand, $7 thousand and $5 thousand, respectively. Changes to the ALLL within a particular loan segment during the quarter ended September 30, 2018, were primarily due to changes in associated loan balances.

11.

FEDERAL HOME LOAN BANK (FHLB) ADVANCES

The following table presents contractual maturities of FHLB long-term advances as of September 30, 2019.


					Weighted-		Stated interest
	Maturity range				average		rate range					September 30,			June 30,
Description	from		to		interest rate⁵		from		to			2019			2019
												(Dollars in Thousands)
Fixed		10/01/20		10/03/22		3.03%		2.95%		3.09%	$		15,000	$		15,000
Adjustable		10/01/20		10/01/21		2.31%		2.18%		2.38%			85,000			85,000


Total											$		100,000	$		100,000

⁵As	of September 30, 2019

Maturities of FHLB long-term advances at September 30, 2019, are summarized as follows:


Maturing During Fiscal Year Ended June 30:			Amount		Weighted- Average Interest Rate
		(Dollars in Thousands)
2020	$			-		-
2021				65,000		2.33%
2022				30,000		2.49%
2023				5,000		3.09%
2024				-		-
2025 and thereafter				-		-


Total	$			100,000		2.41%

The Company also utilized revolving and short-term FHLB advances. Short-term FHLB advances generally mature within 90 days, while revolving FHLB advances may be repaid by the Company without penalty. The following table presents information regarding such advances as of September 30, 2019 and June 30, 2019:


		September 30, 2019				June 30, 2019

		(Dollars in Thousands)
FHLB revolving and short-term advances:
Ending balance	$		59,554		$		70,828
Average balance			49,054				81,556
Maximum month-end balance			59,554				161,289
Average interest rate			2.46	%			2.45	%
Weighted-average rate			2.08	%			2.46	%

At September 30, 2019, the Company had remaining borrowing capacity with the FHLB of approximately $12.2 million.

The FHLB advances are secured by the Company’s FHLB stock, loans, and mortgage-backed and investment securities held in safekeeping at the FHLB. FHLB advances are subject to substantial prepayment penalties.

12.

FAIR VALUE MEASUREMENTS

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for an asset or liability in an orderly transaction between market participants at the measurement date. GAAP established a fair value hierarchy that prioritizes the use of inputs used in valuation methodologies into the following three levels:


Level I:		Quoted prices are available in active markets for identical assets or liabilities as of the reported date.

Level II:		Pricing inputs are other than the quoted prices in active markets, which are either directly or indirectly observable as of the reported date. The nature of these assets and liabilities includes items for which quoted prices are available but traded less frequently and items that are fair-valued using other financial instruments, the parameters of which can be directly observed.

Level III:		Assets and liabilities that have little to no pricing observability as of the reported date. These items do not have two-way markets and are measured using management’s best estimate of fair value, where the inputs into the determination of fair value require significant management judgment or estimation.

Assets Measured at Fair Value on a Recurring Basis

Investment Securities Available-for-Sale

Fair values for securities available for sale are determined by obtaining quoted prices on nationally recognized securities exchanges 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. The Company has no Level I or Level III investment securities. Level II investment securities were primarily comprised of investment-grade corporate bonds and U.S. dollar-denominated investment-grade corporate bonds of large foreign issuers.

The following tables present the assets reported on a recurring basis on the Consolidated Balance Sheet at their fair value as of September 30, 2019 and June 30, 2019, by level within the fair value hierarchy. As required by GAAP, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.


		September 30, 2019
		Level I			Level II			Level III			Total
		(Dollars in Thousands)
Assets measured on a recurring basis:
Investment securities – available for sale:
Corporate securities	$		-	$		106,827	$		-	$		106,827
Foreign debt securities⁶			-			26,593			-			26,593
Obligations of states and political subdivisions			-			1,330			-			1,330

	$		-	$		134,750	$		-	$		134,750


		June 30, 2019
		Level I			Level II			Level III			Total
		(Dollars in Thousands)
Assets measured on a recurring basis:
Investment securities – available for sale:
Corporate securities	$		-	$		104,908	$		-	$		104,908
Foreign debt securities⁶			-			26,543			-			26,543
Obligations of states and political subdivisions			-			1,329			-			1,329

	$		-	$		132,780	$		-	$		132,780

⁶U.S. dollar-denominated investment-grade corporate bonds of large foreign corporate issuers.

13.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts and estimated fair values are as follows:


		September 30, 2019
		Carrying Amount			Fair Value			Level I			Level II			Level III
		(Dollars in Thousands)
FINANCIAL ASSETS
Cash and cash equivalents	$		7,313	$		7,313	$		7,313	$		-	$		-
Certificates of deposit			2,587			2,587			2,587			-			-
Investment securities – held to maturity			3,495			3,589			-			3,589			-
Mortgage-backed securities – held to maturity:
Agency			105,479			105,598			-			105,598			-
Private-label			837			843			-			-			843
Net loans receivable			90,333			93,794			-			-			93,794
Accrued interest receivable			1,180			1,180			1,180			-			-
FHLB stock			6,627			6,627			6,627			-			-
Bank owned life insurance			4,819			4,819			4,819			-			-

FINANCIAL LIABILITIES
Deposits:
Non-interest bearing deposits	$		31,847	$		31,847	$		31,847	$		-	$		-
Interest-earning checking			21,801			21,801			21,801			-			-
Savings accounts			42,478			42,478			42,478			-			-
Money market accounts			20,496			20,496			20,496			-			-
Certificates of deposit			42,020			42,059			-			-			42,059
Advance payments by borrowers for taxes and insurance			982			982			982			-			-
FHLB advances – fixed rate			15,000			14,735			-			-			14,735
FHLB advances – variable rate			85,000			85,000			85,000
FHLB short-term advances			59,554			59,554			59,554			-			-
Accrued interest payable			797			797			797			-			-


		June 30, 2019
		Carrying Amount			Fair Value			Level I			Level II			Level III
		(Dollars in Thousands)

FINANCIAL ASSETS
Cash and cash equivalents	$		4,379	$		4,379	$		4,379	$		-	$		-
Certificates of deposit			1,843			1,843			1,843			-			-
Investment securities – held to maturity			3,995			4,080			-			4,080			-
Mortgage-backed securities – held to maturity:
Agency			107,448			107,832			-			107,832			-
Private-label			883			876			-			-			876
Net loans receivable			90,588			92,062			-			-			92,062
Accrued interest receivable			1,219			1,219			1,219			-			-
FHLB stock			7,010			7,010			7,010			-			-
Bank owned life insurance			4,789			4,789			4,789			-			-

FINANCIAL LIABILITIES
Deposits:
Non-interest bearing deposits	$		19,770	$		19,770	$		19,770	$		-	$		-
Interest-earning checking			23,541			23,541			23,541			-			-
Savings accounts			43,740			43,740			43,740			-			-
Money market accounts			19,958			19,958			19,958			-			-
Certificates of deposit			37,361			37,359			-			-			37,359
Advance payments by borrowers for taxes and insurance			2,065			2,065			2,065			-			-
FHLB advances – fixed rate			15,000			14,323			-			-			14,323
FHLB advances – variable rate			85,000			85,000			85,000			-			-
FHLB short-term advances			70,828			70,828			70,828			-			-
Accrued interest payable			823			823			823			-			-

All financial instruments included in the above tables, with the exception of net loans receivable, certificates of deposit liabilities, and FHLB advances – fixed rate, are carried at cost, which approximates the fair value of the instruments.

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2019

FORWARD LOOKING STATEMENTS

In the normal course of business, we, in an effort to help keep our shareholders and the public informed about our operations, may from time to time issue or make certain statements, either in writing or orally, that are or contain forward-looking statements, as that term is defined in the U.S. federal securities laws. Generally, these statements relate to business plans or strategies, projected or anticipated benefits from acquisitions made by or to be made by us, projections involving anticipated revenues, earnings, profitability or other aspects of operating results or other future developments in our affairs or the industry in which we conduct business. Forward-looking statements may be identified by reference to a future period or periods or by the use of forward-looking terminology such as “anticipated,” “believe,” “expect,” “intend,” “plan,” “estimate” or similar expressions.

Although we believe that the anticipated results or other expectations reflected in our forward-looking statements are based on reasonable assumptions, we can give no assurance that those results or expectations will be attained. Forward-looking statements involve risks, uncertainties and assumptions (some of which are beyond our control), and as a result actual results may differ materially from those expressed in forward-looking statements. Factors that could cause actual results to differ from forward-looking statements include, but are not limited to, the following, as well as those discussed elsewhere herein:

•

our investments in our businesses and in related technology could require additional incremental spending, and might not produce expected deposit and loan growth and anticipated contributions to our earnings;

•

general economic or industry conditions could be less favorable than expected, resulting in a deterioration in credit quality, a change in the allowance for loan losses or a reduced demand for credit or fee-based products and services;

•

changes in the interest rate environment could reduce net interest income and could increase credit losses;

•

the conditions of the securities markets could change, which could adversely affect, among other things, the value or credit quality of our assets, the availability and terms of funding necessary to meet our liquidity needs and our ability to originate loans and leases;

•

changes in the extensive laws, regulations and policies governing financial holding companies and their subsidiaries could alter our business environment or affect our operations;

•

the potential need to adapt to industry changes in information technology systems, on which we are highly dependent, could present operational issues or require significant capital spending;

•

competitive pressures could intensify and affect our profitability, including as a result of continued industry consolidation, the increased availability of financial services from non-banks, technological developments such as the internet or bank regulatory reform; and

•

acts or threats of terrorism and actions taken by the United States or other governments as a result of such acts or threats, including possible military action, could further adversely affect business and economic conditions in the United States generally and in our principal markets, which could have an adverse effect on our financial performance and that of our borrowers and on the financial markets and the price of our common stock.

You should not put undue reliance on any forward-looking statements. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update them in light of new or future events except to the extent required by federal securities laws.

GENERAL

WVS Financial Corp. (the “Company”) is the parent holding company of West View Savings Bank (“West View” or the “Savings Bank”). The Company was organized in July 1993 as a Pennsylvania-chartered unitary bank holding company and acquired 100% of the common stock of the Savings Bank in November 1993.

West View Savings Bank is a Pennsylvania-chartered, FDIC-insured stock savings bank conducting business from six offices in the North Hills suburbs of Pittsburgh. The Savings Bank converted from the mutual to the stock form of ownership in November 1993. The Savings Bank had no subsidiaries at September 30, 2019.

The operating results of the Company depend primarily upon its net interest income, which is determined by the difference between income on interest-earning assets, principally loans, mortgage-backed securities and investment securities, and interest expense on interest-bearing liabilities, which consist primarily of deposits and borrowings. The Company’s net income is also affected by its provision for loan losses, as well as the level of its non-interest income, including loan fees and service charges, and its non-interest expenses, such as compensation and employee benefits, income taxes, deposit insurance and occupancy costs.

FINANCIAL CONDITION

The Company’s assets totaled $358.6 million at September 30, 2019, as compared to $355.8 million at June 30, 2019. The $2.8 million or 0.8% increase in total assets was primarily due to a $2.4 million increase in interest-earning demand deposits, a $2.0 million increase in investment securities and a $744 thousand increase in certificates of deposit, which were partially offset by a $2.0 million decrease in mortgage-backed securities and a $500 thousand decrease in investment securities held to maturity. The increase in interest-earning demand deposits is associated with higher liquidity needs associated with seasonal demand deposits by local tax collectors and higher levels of loan commitments. The increase in investment securities available for sale was primarily the result of purchases of investment-grade corporate bonds totaling $2.0 million. The decrease in mortgage-backed securities was principally due to repayments totaling $2.0 million and the decrease in investment securities held to maturity was the result of maturities and calls totaling $500 thousand.

The Company’s total liabilities increased $2.2 million or 0.7% to $321.9 million as of September 30, 2019 from $319.8 million as of June 30, 2019. The increase in total liabilities was primarily comprised of a $13.2 million or 9.0% increase in total deposits, partially offset by an $11.3 million decrease in Federal Home Loan Bank (“FHLB”) short-term advances. The increase in total deposits was primarily attributable to increases in non-interest bearing accounts and certificates of deposit of $12.1 million and $4.7 million, respectively. Management believes that the increase in non-interest bearing deposits was primarily attributable to seasonal deposits of local real estate tax collectors and the increase in certificates of deposit was primarily the result of higher levels of wholesale certificates of deposits (“CDs”) issued. The decrease in FHLB short-term borrowings was primarily funded by the increase in non-interest earning deposits as part of the Company’s overall funding strategy. See also Quantitative and Qualitative Disclosures About Market Risk “Asset and Liability Management”.

Total stockholders’ equity increased $589 thousand or 1.6% to $36.6 million as of September 30, 2019, from $36.0 million as of June 30, 2019. The changes to stockholders’ equity were primarily attributable to net income of $793 thousand, which was partially offset by cash dividends paid totaling $177 thousand and the purchase $113 thousand of Treasury shares.

RESULTS OF OPERATIONS

General. WVS reported net income of $793 thousand or $0.45 earnings per share (basic and diluted) for the three months ended September 30, 2019. Net income increased by $45 thousand or 6.0% and earnings per share (basic and diluted) increased $0.03 or 7.1% for the three months ended September 30, 2019, when compared to the same period in 2018. The increase in net income for the three months ended September 30, 2019 was primarily attributable to a $29 thousand decrease in the provision for loan losses, a $54 thousand decrease in non-interest expense and a $3 thousand increase in net interest income, which were partially offset by a $41 thousand increase in income tax expense.

Net Interest Income. The Company’s net interest income increased by $3 thousand or 0.2% for the three months ended September 30, 2019, when compared to the same period in 2018. The increase in net interest income is attributable to a $155 thousand increase in interest and dividend income, which was partially offset by a $152 thousand increase in interest expense. The increase in interest and dividend income during the three months ended September 30, 2019 was primarily attributable to higher yields earned on the Company’s investment and mortgage-backed securities, FHLB Stock and net loans, when compared to the same period in 2018. The increase in interest expense during the three months ended September 30, 2019, was primarily attributable to higher market interest rates paid on FHLB advances and time deposits as well as higher average balances of time deposits, when compared to the same period in 2018.

Interest Income. Interest income on net loans receivable increased $79 thousand or 9.8% for the three months ended September 30, 2019, when compared to the same period in 2018. The increase for the quarter ended September 30, 2019 was primarily attributable to a $5.8 million increase in the average balance of net loans receivable, and a 10 basis point increase in average portfolio yield, when compared to the same period in 2018. The increase in the average balance of loans outstanding was primarily attributable to increased loan originations and purchases which were in excess of repayments. During fiscal 2019 and into fiscal 2020, the Company enjoyed higher demand for single-family home purchase loans. Substantially all of our loan originations and purchases were fixed-rate with a mix of 15, 20, and 30 year terms.

Interest income on investment securities increased $59 thousand or 5.8% for the three months ended September 30, 2019, when compared to the same period in 2018. The increase for the three months ended September 30, 2019 was primarily attributable to $2.6 million increase in the average balance of investment securities, and a 15 basis point increase in the weighted average yield, when compared to the same period in 2018.

Interest income on mortgage-backed securities decreased $4 thousand or 0.4% for the three months ended September 30, 2019, when compared to the same period in 2018. The decrease for the three months ended September 30, 2019 was primarily attributable to a $5.8 million decrease in the average balance of U.S. Government agency mortgage-backed securities which was partially offset by a 10 basis point increase in the weighted average yield earned on U.S. Government agency mortgage-backed securities, when compared to the same period in 2018. The decrease in the average balances of U.S. Government agency and private-label mortgage-backed securities during the three months ended September 30, 2019 was attributable to principal pay-downs of U.S. Government agency and private-label mortgage-backed securities, when compared to the same period in 2018.

Interest income on bank certificates of deposit increased $13 thousand for the three months ended September 30, 2019 when compared to the same period in 2018. The increase for the three months ended September 30, 2019 was primarily attributable to a $2.0 million increase in the average balance of certificates of deposit.

Interest income on FHLB stock increased $10 thousand or 8.9% for the three months ended September 30, 2019 when compared to the same period in 2018. The increase for the three months ended September 30, 2019 was primarily attributable to a 93 basis point increase in the weighted average yield earned which was partially offset by $340 thousand decrease in the average balance of FHLB stock held.

Interest Expense. Interest paid on FHLB short-term advances decreased $607 thousand or 66.8% for the three months ended September 30, 2019, when compared to the same period in 2018. The decrease for the three months ended September 30, 2019 was primarily attributable to a $110 million decrease in the average balance of FHLB short-term advances outstanding, partially offset by a 16 basis point increase in the weighted average rate paid on FHLB short-term advances. The increase in rates paid on FHLB short-term borrowings were consistent with increases in short-term market interest rates.

Interest paid on FHLB long-term advances increased $632 thousand for the three months ended September 30, 2019, when compared to the same period in 2018. The increase for the three months ended September 30, 2019 was primarily attributable to a $100.0 million increase in the average balance of FHLB long-term advances outstanding. The proceeds from the FHLB long-term advances were used to repay the FHLB short-term advances. The increase in FHLB long-term advances reflects a shift from FHLB short-time advances to FHLB long-term advances on part of the Company’s asset/liability management strategy.

Interest expense on deposits increased $127 thousand or 103.3% for the three months ended September 30, 2019, when compared to the same period in 2018. The increase in interest expense on deposits for the three months ended September 30, 2019 was primarily attributable to a $14.9 million increase in the average balance of time deposits and a 64 basis point increase in the weighted average rate paid on time deposits. These increases in time deposits were partially offset by decreases in the average balances of savings and interest-earning checking deposits of $1.2 million and $1.3 million, respectively, when compared to the same period in 2018. The increase in time deposits was primarily due to increases in brokered CDs issued. The decreases in savings and interest-earning checking deposits reflected seasonal customer withdrawals associated with the payment of local real estate taxes.

Provision for Loan Losses. A provision for loan losses is charged to earnings (while credit provision for loan losses are accretive to earnings) to maintain the total allowance at a level considered adequate by management to absorb potential losses in the portfolio. Management’s determination of the adequacy of the allowance is based on an evaluation of the portfolio considering past experience, current economic conditions, volume, growth and composition of the loan portfolio, and other relevant factors.

Provision for loan losses decreased $29 thousand for the three months ended September 30, 2019, when compared to the same period in 2018. The decrease in the provision for loan losses for the three months ended September 30, 2019 was primarily due to lower levels of construction and land acquisition and development loans when compared to the same period in 2018. At September 30, 2019, the Company’s total allowance for loan losses amounted to $538 thousand or 0.60% of the Company’s total loan portfolio, as compared to $548 thousand and 0.60% at June 30, 2019. At September 30, 2019, the Company had no non-performing loans compared to $225 thousand at June 30, 2019.

Non-Interest Income. For the three months ended September 30, 2019 non-interest income was unchanged when compared to the same period in 2018.

Non-Interest Expense. Non-interest expense decreased $54 thousand or 6.0% for the three months ended September 30, 2019, when compared to the same period in 2018. This decline was primarily due to a $51 thousand decrease in federal deposit insurance premium expense resulting from the application of Small Bank Assessment Credits by the Federal Deposit Insurance Corporation (“FDIC”). The FDIC will provide small banks (those with consolidated assets of less than $10 billion) assessment credits after the Deposit Insurance Fund ratio reaches, and remains at, 1.38 percent. The Bank’s remaining future credits totaled approximately $64 thousand at September 30, 2019.

Income Tax Expense. Income tax expense increased $41 thousand for the three months ended September 30, 2019, when compared to the same period in 2018. The increase for the three months ended September 30, 2019 was primarily due to higher levels of taxable income, when compared to the same period in 2018.

LIQUIDITY AND CAPITAL RESOURCES

Net cash provided by operating activities totaled $837 thousand during the three months ended September 30, 2019. Net cash provided by operating activities was primarily comprised of net income totaling $793 thousand and a $39 thousand increase in accrued interest payable.

Net cash provided by investing activities totaled $472 thousand for the three months ended September 30, 2019. Primary sources of funds from investing activities during the three months ended September 30, 2019 included a net decrease in loans receivable of $2.7 million, $2.0 million of repayments of mortgage-backed securities, $500 thousand of repayments of investment securities held to maturity and $2.9 million from redemptions of FHLB stock and proceeds from matured certificates of deposit totaling $349 thousand. Primary uses of funds for investing activities during the three months ended September 30, 2019 included $2.4 million for the purchase of loans, purchases of investment securities available for sale totaling $2.0 million, purchases of FHLB stock totaling $2.5 million, and purchases of certificates of deposit totaling $1.1 million.

Funds provided by financing activities totaled $1.6 million for the three months ended September 30, 2019. Primary sources of funds provided by financing activities were increases in transaction accounts and certificates of deposit of $9.6 million and $4.7 million, respectively.

The increase in transaction accounts was primarily attributable to the seasonally higher volumes of local tax collector deposits. The increase in certificates of deposit at September 30, 2019 was due principally to higher levels of wholesale CDs issued. Management has determined that it currently is maintaining adequate liquidity and continues to match funding sources with lending and investment opportunities.

The Company’s primary sources of funds are deposits, amortization, repayments and maturities of existing loans, mortgage-backed securities and investment securities, funds from operations, and funds obtained through FHLB advances and other borrowings. Certificates of deposit scheduled to mature in one year or less at September 30, 2019 totaled $37.1 million, including $10.0 million of wholesale time deposits.

Historically, the Company used its sources of funds primarily to meet its ongoing commitments to pay maturing savings certificates and savings withdrawals, fund loan commitments and maintain a substantial portfolio of investment securities. At September 30, 2019, total approved loan commitments outstanding were $4.5 million. At the same date, commitments under unused lines of credit amounted to $5.3 million and the unadvanced portion of construction loans approximated $2.8 million. The Company has been able to generate sufficient cash through the retail deposit market, its traditional funding source, and through FHLB advances, and other borrowings, to provide the cash utilized in investing activities. The Company’s available for sale segment of the investment portfolio totaled $134.8 million at September 30, 2019. In addition, the Company had $2.6 million of certificates of deposit at September 30, 2019. Management believes that the Company currently has adequate liquidity available to respond to liquidity demands.

On October 29, 2019, the Company’s Board of Directors declared a quarterly cash dividend of $0.10 per share, payable on November 21, 2019, to shareholders of record at the close of business on November 11, 2019. Dividends are subject to determination and declaration by the Board of Directors, which take into account the Company’s financial condition, statutory and regulatory restrictions, general economic conditions and other factors. There can be no assurance that dividends will in fact be paid on the Common Stock in future periods or that, if paid, such dividends will not be reduced or eliminated.

As of September 30, 2019, WVS Financial Corp. exceeded all regulatory capital requirements and maintained Common Equity Tier I Capital, Tier I, and total risk-based capital equal to $36.6 million or 19.16%, $36.6 million or 19.16%, and $37.2 million or 19.47%, respectively, of total risk-weighted assets, and Tier I leverage capital of $36.6 million or 10.33% of average quarterly assets.

Nonperforming assets consist of nonaccrual loans and real estate owned. A loan is placed on nonaccrual status when, in the judgment of management, the probability of collection of interest is deemed insufficient to warrant further accrual. When a loan is placed on nonaccrual status, previously accrued but uncollected interest is deducted from interest income. The Company normally does not accrue interest on loans past due 90 days or more, however, interest may be accrued if management believes that it will collect on the loan.

During the quarter ended September 30, 2019, the Company’s one non-performing asset, consisting of a single-family real estate loan, was discharged from bankruptcy. The loan was not delinquent at September 30, 2019. Accordingly, the Company had no non-performing assets at September 30, 2019 compared to $225 thousand or 0.06% of total assets at June 30, 2019.

During the three months ended September 30, 2019, the Company collected $2 thousand of interest income on non-accrual loans.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ASSET AND LIABILITY MANAGEMENT

The Company’s primary market risk exposure is interest rate risk and, to a lesser extent, liquidity risk. All of the Company’s transactions are denominated in US dollars with no specific foreign exchange exposure. The Savings Bank has no agricultural loan assets and therefore would not have a specific exposure to changes in commodity prices. Any impacts that changes in foreign exchange rates and commodity prices would have on interest rates are assumed to be exogenous and will be analyzed on an ex post basis.

Interest rate risk (“IRR”) is the exposure of a banking organization’s financial condition to adverse movements in interest rates. Accepting this risk can be an important source of profitability and shareholder value, however excessive levels of IRR can pose a significant threat to the Company’s earnings and capital base. Accordingly, effective risk management that maintains IRR at prudent levels is essential to the Company’s safety and soundness.

Evaluating a financial institution’s exposure to changes in interest rates includes assessing both the adequacy of the management process used to control IRR and the organization’s quantitative level of exposure. When assessing the IRR management process, the Company seeks to ensure that appropriate policies, procedures, management information systems and internal controls are in place to maintain IRR at prudent levels with consistency and continuity. Evaluating the quantitative level of IRR exposure requires the Company to assess the existing and potential future effects of changes in interest rates on its consolidated financial condition, including capital adequacy, earnings, liquidity, and, where appropriate, asset quality.

Financial institutions derive their income primarily from the excess of interest collected over interest paid. The rates of interest an institution earns on its assets and owes on its liabilities generally are established contractually for a period of time. Since market interest rates change over time, an institution is exposed to lower profit margins (or losses) if it cannot adapt to interest-rate changes. For example, assume that an institution’s assets carry intermediate- or long-term fixed rates and that those assets were funded with short-term liabilities. If market interest rates rise by the time the short-term liabilities must be refinanced, the increase in the institution’s interest expense on its liabilities may not be sufficiently offset if assets continue to earn at the long-term fixed rates. Accordingly, an institution’s profits could decrease on existing assets because the institution will either have lower net interest income or, possibly, net interest expense. Similar risks exist when assets are subject to contractual interest-rate ceilings, or rate sensitive assets are funded by longer-term, fixed-rate liabilities in a decreasing-rate environment.

During the fiscal years 2013-2019 and into fiscal year 2020, intermediate and long-term market interest rates fluctuated considerably. Many central banks, including the Federal Reserve, continued above normal levels of monetary accommodation including quantitative easing and targeted asset purchase programs. The desired outcomes of these programs are to stimulate aggregate demand, reduce high levels of unemployment and to further lower market interest rates.

The effect of interest rate changes on a financial institution’s assets and liabilities may be analyzed by examining the “interest rate sensitivity” of the assets and liabilities and by monitoring an institution’s interest rate sensitivity “gap”. An asset or liability is said to be interest rate sensitive within a specific time period if it will mature or reprice within a given time period. A gap is considered positive (negative) when the amount of rate sensitive assets (liabilities) exceeds the amount of rate sensitive liabilities (assets). During a period of falling interest rates, a negative gap would tend to result in an increase in net interest income. During a period of rising interest rates, a positive gap would tend to result in an increase in net interest income.

As part of its asset/liability management strategy, the Company maintained an asset sensitive financial position due to unusually low market interest rates. An asset sensitive financial position may benefit earnings during a period of rising interest rates and reduce earnings during a period of declining interest rates.

The following table sets forth certain information at the dates indicated relating to the Company’s interest-earning assets and interest-bearing liabilities which are estimated to mature or are scheduled to reprice within one year.


	September 30,			June 30,
	2019			2019			2018
	Dollars in Thousands
Interest-earning assets maturing or repricing within one year	$	281,587		$	282,429		$	270,356
Interest-bearing liabilities maturing or repricing within one year		209,788			214,916			229,231

Interest sensitivity gap	$	71,799		$	67,513		$	41,125

Interest sensitivity gap as a percentage of total assets		20.02	%		18.97	%		11.67	%
Ratio of assets to liabilities maturing or repricing within one year		134.22	%		131.41	%		117.94	%

The following table illustrates the Company’s estimated stressed cumulative repricing gap – the difference between the amount of interest-earning assets and interest-bearing liabilities expected to reprice at a given point in time – at September 30, 2019. The table estimates the impact of an upward or downward change in market interest rates of 100 and 200 basis points.

Cumulative Stressed Repricing Gap


	Month 3			Month 6			Month 12			Month 24			Month 36			Month 60			Long Term
	(Dollars in Thousands)
Base Case Up 200 bp
Cumulative Gap ($’s)	$	67,939		$	64,992		$	62,011		$	56,227		$	51,385		$	47,333		$	30,732
% of Total Assets		18.9	%		18.1	%		17.3	%		15.7	%		14.3	%		13.2	%		8.6	%
Base Case Up 100 bp
Cumulative Gap ($’s)	$	68,564		$	66,200		$	64,243		$	60,025		$	55,919		$	52,268		$	30,732
% of Total Assets		19.1	%		18.5	%		17.9	%		16.7	%		15.6	%		14.6	%		8.6	%
Base Case No Change
Cumulative Gap ($’s)	$	70,805		$	70,440		$	71,800		$	70,865		$	68,790		$	65,651		$	30,732
% of Total Assets		19.7	%		19.6	%		20.0	%		19.8	%		19.2	%		18.3	%		8.6	%
Base Case Down 100 bp
Cumulative Gap ($’s)	$	71,911		$	72,498		$	75,290		$	76,685		$	75,547		$	71,556		$	30,732
% of Total Assets		20.1	%		20.2	%		21.0	%		21.4	%		21.1	%		20.0	%		8.6	%
Base Case Down 200 bp
Cumulative Gap ($’s)	$	72,512		$	73,612		$	77,151		$	79,397		$	78,375		$	73,544		$	30,732
% of Total Assets		20.2	%		20.5	%		21.5	%		22.1	%		21.9	%		20.5	%		8.6	%

The Company utilizes an income simulation model to measure interest rate risk and to manage interest rate sensitivity. The Company believes that income simulation modeling may enable the Company to better estimate the possible effects on net interest income due to changing market interest rates. Other key model parameters include: estimated prepayment rates on the Company’s loan, mortgage-backed securities and investment portfolios; savings decay rate assumptions; and the repayment terms and embedded options of the Company’s borrowings.

The following table presents the simulated impact of a 100 and 200 basis point upward or downward (parallel) shift in market interest rates on net interest income, return on average equity, return on average assets and the market value of portfolio equity at September 30, 2019. This analysis was done assuming that the interest-earning assets will average approximately $346 million and $348 million over a projected twelve and twenty-four month period, respectively, for the estimated impact on change in net interest income, return on average equity and return on average assets. The estimated changes in market value of equity were calculated using balance sheet levels at September 30, 2019. Actual future results could differ materially from our estimates primarily due to unknown future interest rate changes and the level of prepayments on our investment and loan portfolios and future FDIC regular and special assessments.

Analysis of Sensitivity to Changes in Market Interest Rates


	Twelve Month Forward Modeled Change in Market Interest Rates
	September 30, 2020															September 30, 2021
Estimated impact on:	-200			-100			0			+100			+200			-200			-100			0			+100			+200
Change in net interest income		-25.2	%		-12.4	%		-			8.1	%		16.4	%		-32.6	%		-16.0	%		-			10.8	%		21.4	%
Return on average equity		3.46	%		5.23	%		6.93	%		8.01	%		9.13	%		2.50	%		4.71	%		6.73	%		8.03	%		9.26	%
Return on average assets		0.36	%		0.54	%		0.73	%		0.84	%		0.96	%		0.26	%		0.50	%		0.74	%		0.89	%		1.04	%
Market value of equity (in thousands)	$	36,846		$	40,743		$	44,664		$	46,375		$	47,308

The table below provides information about the Company’s anticipated transactions comprised of firm loan commitments and other commitments, including undisbursed letters and lines of credit, at September 30, 2019. The Company used no derivative financial instruments to hedge such anticipated transactions as of September 30, 2019.


Anticipated Transactions

	(Dollars in Thousands)
Undisbursed construction and development loans	$	2,785
Undisbursed lines of credit	$	5,276
Loan origination commitments	$	4,486

	$	12,547

In the ordinary course of its construction lending business, the Savings Bank enters into performance standby letters of credit. Typically, the standby letters of credit are issued on behalf of a builder to a third party to ensure the timely completion of a certain aspect of a construction project or land development. At September 30, 2019, the Savings Bank had no performance standby letters of credit outstanding. In the event that an obligor is unable to perform its obligations as specified in the applicable letter of credit agreement, the Savings Bank would be obligated to disburse funds up to the amount specified in the letter of credit agreement. The Savings Bank’s policy is to maintain adequate collateral that could be liquidated to fund such contingent obligations.

ITEM 4. CONTROLS AND PROCEDURES

As of September 30, 2019, an evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Accounting Officer, on the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934). Based on that evaluation, the Company’s management, including the Chief Executive Officer and Chief Accounting Officer, concluded that the Company’s disclosure controls and procedures were effective as of September 30, 2019.

Disclosure controls and procedures are the controls and other procedures that are designed to ensure that the information required to be disclosed by the Company in its reports filed and submitted under the Securities Exchange Act of 1934, as amended (“Exchange Act”) is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in its reports filed under the Exchange Act is accumulated and communicated to the Company’s management, including the principal executive officer and principal accounting officer, as appropriate to allow timely decisions regarding required disclosure.

During the quarter ended September 30, 2019, no change in the Company’s internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) has occurred that has materially affected, or is reasonably likely to materially affect, the Company’s internal controls over financial reporting.

PART II—OTHER INFORMATION

ITEM 1. Legal Proceedings

(a)The Company is involved with various legal actions arising in the ordinary course of business. Management believes the outcome of these matters will have no material effect on the consolidated operations or consolidated financial condition of WVS Financial Corp.

(b)Not applicable.

ITEM 1A. Risk Factors

There are no material changes to the risk factors included in Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2019.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a) Not applicable.

(b) Not applicable.

(c) The following table sets forth information with respect to purchases of common stock of the Company made by WVS Financial Corp. during the three months ended September 30, 2019.


COMPANY PURCHASES OF EQUITY SECURITIES
Period	Total Number of Shares Purchased	Average Price Paid per Share ($)		Total Number of Shares Purchased as part of Publicly Announced Plans or Programs⁽¹⁾	Maximum Number of Shares that May Yet Be Repurchased Under the Plans or Programs ⁽²⁾
07/01/19 – 07/31/19	-		-	-		27,731
08/01/19 – 08/31/19	-		-	-		27,731
09/01/19 – 09/30/19	7,475		15.12	7,475		20,256
Total	7,475		15.12	7,475		20,256

(1)	All shares indicated were purchased under the Company’s reopened Eleventh Stock Repurchase Program.

(2)	Eleventh Stock Repurchase Program

(a)

Announced October 27, 2015.

(b)

100,800 common shares approved for repurchase.

(c)

No fixed date of expiration.

(d)

This Program has not expired and has 20,256 common shares remaining to be purchased at September 30, 2019.

(e)

Not applicable.

ITEM 3. Defaults Upon Senior Securities

Not applicable.

ITEM 4. Mine Safety Disclosures

Not applicable.

ITEM 5. Other Information

(a) Not applicable.

(b) Not applicable.

ITEM 6. Exhibits

The following exhibits are filed as part of this Form 10-Q, and this list includes the Exhibit Index.


Number	Description	Page
31.1	Rule 13a-14(a) / 15d-14(a) Certification of the Chief Executive Officer	E-1
31.2	Rule 13a-14(a) / 15d-14(a) Certification of the Chief Accounting Officer	E-2
32.1	Section 1350 Certification of the Chief Executive Officer	E-3
32.2	Section 1350 Certification of the Chief Accounting Officer	E-4
99	Report of Independent Registered Public Accounting Firm	E-5
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definitions Linkbase Document

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	WVS FINANCIAL CORP.

November 13, 2019	BY:	/s/ David J. Bursic
Date		David J. Bursic
		President and Chief Executive Officer (Principal Executive Officer)

November 13, 2019	BY:	/s/ Linda K. Butia
Date		Linda K. Butia
		Vice-President, Treasurer and Chief Accounting Officer (Principal Accounting Officer)