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Section 1: 10-Q (10-Q)

 

UNITED STATES OF AMERICA

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________________

 

FORM 10-Q

 _______________________

 

  (Mark One)
     
 

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

 

For the Quarterly Period Ended March 31, 2018

 

OR

 

 

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

 

For the transition period from                to               

 

Commission File Number:  000-54835

__________________________

 

MALVERN BANCORP, INC.

(Exact Name of Registrant as Specified in Its Charter)

 ___________________________

 

Pennsylvania 45-5307782

(State or Other Jurisdiction of

Incorporation or Organization)

(IRS Employer

Identification No.)

 

42 E. Lancaster Avenue, Paoli, Pennsylvania 19301

(Address of Principal Executive Offices) (Zip Code)

 

(610) 644-9400

(Registrant’s Telephone Number, Including Area Code)

 

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

 

 Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes    ☒   No  ☐

 

 Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definition of “large accelerated filer”, “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act (check one):

 

 Large accelerated filer  ☐ Accelerated filer  ☒

Non-accelerated filer  ☐ 

(Do not check if smaller reporting company)

Smaller reporting company  ☐

Emerging growth company ☐

 

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

 

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

 

 Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

 Common Stock, par value $0.01: 6,572,684 shares
(Title of Class) (Outstanding as of May 10, 2018)

 

 

 

Table of Contents

 

      Page
       
PART I – FINANCIAL INFORMATION   3
       
Item  1. Financial Statements    
  Consolidated Statements of Financial Condition at March 31, 2018 (unaudited) and September 30, 2017   4
  Consolidated Statements of Operations for the three- and six- month periods ended March 31, 2018 and 2017 (unaudited)   5
  Consolidated Statements of Comprehensive Income for the three- and six- month periods ended March 31, 2018 and 2017 (unaudited)   6
  Consolidated Statements of Changes in Shareholders’ Equity for the six- month periods ended March 31, 2018 and 2017 (unaudited)   7
  Consolidated Statements of Cash Flows for the six- month periods ended March 31, 2018 and 2017 (unaudited)   8
  Notes to unaudited Consolidated Financial Statements   9
     
Item  2. Management’s Discussion and Analysis of Financial Condition and Results of Operations   39
       
Item  3. Qualitative and Quantitative Disclosures about Market Risks   56
       
Item  4. Controls and Procedures   56
       
PART II – OTHER INFORMATION    
       
Item  1. Legal Proceedings   57
       
Item  1A. Risk Factors   57
       
Item  2. Unregistered Sales of Equity Securities and Use of Proceeds   57
       
Item  3. Default Upon Senior Securities   57
       
Item  4. Mine Safety Disclosure   57
       
Item  5. Other Information   57
       
Item  6. Exhibits   57
       
SIGNATURES     58

 

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PART I – FINANCIAL INFORMATION

 

The following unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X, and, accordingly, do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. However, in the opinion of management, all adjustments (consisting only of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six months ended March 31, 2018 are not necessarily indicative of the results that may be expected for the full year ending September 30, 2018, or for any other interim period. The Malvern Bancorp, Inc. 2017 Annual Report on Form 10-K should be read in conjunction with these financial statements.

 

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Item 1. Financial Statements

 

MALVERN BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Unaudited)

 

   March 31,
2018
   September 30,
2017
 
   (Dollars in thousands, except per share data) 
Assets        
  Cash and due from depository institutions  $1,566   $1,615 
  Interest bearing deposits in depository institutions   120,144    115,521 
     Cash and Cash Equivalents   121,710    117,136 
Investment securities available for sale, at fair value (amortized cost of $44.8 million and $14.9 million at March 31, 2018 and September 30, 2017, respectively)   44,341    14,587 
Investment securities held to maturity, at cost (fair value of $32.1 million and $34.6 million at March 31, 2018 and September 30, 2017, respectively)   33,052    34,915 
  Restricted stock, at cost   8,583    5,559 
Loans receivable, net of allowance for loan losses of $8.5 million and $8.4 million, respectively   837,314    834,331 
  Accrued interest receivable   3,583    3,139 
  Property and equipment, net   7,357    7,507 
  Deferred income taxes, net   3,713    6,671 
  Bank-owned life insurance   19,163    18,923 
  Other assets   4,500    3,244 
      Total Assets  $1,083,316   $1,046,012 
           
Liabilities and Shareholders’ Equity          
           
Liabilities          
  Deposits:          
    Deposits-noninterest-bearing  $38,444   $42,121 
    Deposits-interest-bearing   787,125    748,275 
      Total Deposits   825,569    790,396 
  FHLB advances   118,000    118,000 
  Other short-term borrowings   2,500    5,000 
  Subordinated debt   24,382    24,303 
  Advances from borrowers for taxes and insurance   2,463    1,553 
  Accrued interest payable   713    694 
  Other liabilities   4,327    3,546 
      Total Liabilities   977,954    943,492 
           
Commitments and Contingencies        
           
Shareholders’ Equity          
  Preferred stock, $0.01 par value, 10,000,000 shares authorized, none issued        
Common stock, $0.01 par value, 50,000,000 shares authorized, issued and outstanding: 6,572,684 shares at March 31, 2018 and September 30, 2017
   66    66 
  Additional paid-in-capital   60,886    60,736 
  Retained earnings   45,536    43,139 
  Unearned Employee Stock Ownership Plan (ESOP) shares   (1,411)   (1,483)
  Accumulated other comprehensive income   285    62 
      Total Shareholders’ Equity   105,362    102,520 
      Total Liabilities and Shareholders’ Equity  $1,083,316   $1,046,012 

 

See accompanying notes to unaudited consolidated financial statements.

 

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MALVERN BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

   Three Months Ended March 31,   Six Months Ended March 31, 
(Dollars in thousands, except for per share data)  2018   2017   2018   2017 
                 
Interest and Dividend Income                    
Loans, including fees  $8,740   $7,367   $17,441   $13,680 
Investment securities, taxable   302    470    532    942 
Investment securities, tax-exempt   65    159    130    322 
Dividends, restricted stock   134    64    203    128 
Interest-bearing cash accounts   463    115    909    208 
       Total Interest and Dividend Income   9,704    8,175    19,215    15,280 
Interest Expense                    
Deposits   2,182    1,424    4,337    2,748 
Short-term borrowings   22    11    41    11 
Long-term borrowings   546    528    1,109    1,070 
Subordinated debt   386    221    778    221 
Total Interest Expense   3,136    2,184    6,265    4,050 
Net interest income   6,568    5,991    12,950    11,230 
Provision for Loan Losses   240    997    240    1,657 

Net Interest Income after Provision for Loan Losses 

   6,328    4,994    12,710    9,573 
Other Income                    
Service charges and other fees   237    274    508    497 
Rental income-other   67    55    133    110 
Net gains on sales of investments       58        58 
Net gains on sale of real estate           1,186     
Net gains on sale of loans   26    30    93    75 
Earnings on bank-owned life insurance   119    125    240    255 
Total Other Income   449    542    2,160    995 
Other Expense                    
Salaries and employee benefits   2,001    1,804    3,991    3,516 
Occupancy expense   586    514    1,148    1,008 
Federal deposit insurance premium   75    91    151    95 
Advertising   38    73    92    124 
Data processing   267    301    545    603 
Professional fees   450    399    1,238    800 
Other operating expenses   688    596    1,411    1,202 
Total Other Expense   4,105    3,778    8,576    7,348 
Income before income tax expense   2,672    1,758    6,294    3,220 
Income tax expense   654    588    3,873    1,077 
Net Income  $2,018   $1,170   $2,421   $2,143 
                     
Earnings Per Common Share:                    
  Basic  $0.31   $0.18   $0.38   $0.33 
  Diluted  $0.31   $0.18   $0.38   $0.33 

Weighted Average Common Shares Outstanding:

                    
  Basic   6,448,691    6,427,309    6,446,959    6,422,899 
  Diluted   6,452,246    6,427,932    6,451,205    6,423,269 
                     
Dividends Declared Per Share  $   $   $   $ 

 

See accompanying notes to unaudited consolidated financial statements.

 

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MALVERN BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

 

   Three Months Ended March 31,   Six Months Ended March 31, 
(Dollars in thousands)  2018   2017   2018   2017 
                 
Net Income  $2,018   $1,170   $2,421   $2,143 
Other Comprehensive Income, Net of Tax:                    
Unrealized holding gains (losses) on available-for-sale securities   (136)   352    (219)   (745)
Tax effect   3    (120)   28    253 
      Net of tax amount   (133)   232    (191)   (492)

Reclassification adjustment for net gains arising during the period(1)

       (58)       (58)
Tax effect       20        20 
      Net of tax amount       (38)       (38)

Accretion of unrealized holding losses on securities transferred from available-for-sale to held-to-maturity(2)

   4    2    6    6 
Tax effect   (1)   (1)   (2)   (2)
   Net of tax amount   3    1    4    4 
Fair value adjustments on derivatives   253    74    495    1,019 
Tax effect   (86)   (26)   (109)   (347)
    Net of tax amount   167    48    386    672 
Total other comprehensive income   37    243    199    146 
Total comprehensive income  $2,055   $1,413   $2,620   $2,289 

 

 

(1)  Amounts are included in net gains on sales of investments, net on the Consolidated Statements of Operations in total other income.
(2)  Amounts are included in interest and dividends on investment securities on the Consolidated Statements of Operations.

 

See accompanying notes to unaudited consolidated financial statements.

 

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MALVERN BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)

                         
   Common Stock   Additional
Paid-In
Capital
   Retained Earnings   Unearned ESOP Shares  

Accumulated Other Comprehensive

Income (Loss)

   Total
Shareholders’ Equity
 
   (Dollars in thousands, except share data) 
Balance, October 1, 2016  $66   $60,461   $37,322   $(1,629)  $(63)  $96,157 
Net Income           2,143            2,143 
Other comprehensive income                   146    146 
Committed to be released ESOP shares (7,200 shares)       71        73        144 
Stock based compensation       4                4 
Balance, March 31, 2017  $66   $60,536   $39,465   $(1,556)  $83   $98,594 
                               
Balance, October 1, 2017  $66   $60,736   $43,139   $(1,483)  $62   $102,520 
Net Income           2,421            2,421 
Impact of adoption of new accounting standard (1)           (24)       24     
Other comprehensive income                   199    199 
Committed to be released ESOP shares (7,200 shares)       112        72        184 
Stock based compensation       38                38 
Balance, March 31, 2018  $66   $60,886   $45,536   $(1,411)  $285   $105,362 

 

 

(1) Represents the impact of adopting ASU 2018-02. See Note 2 to the consolidated financial statements for more information.

 

See accompanying notes to unaudited consolidated financial statements.

 

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MALVERN BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

   Six Months Ended March 31, 
(Dollars in thousands)  2018   2017 
Cash Flows from Operating Activities          
Net income  $2,421   $2,143 
Adjustments to reconcile net income to net cash provided by operating activities:          
Depreciation expense   377    361 
Provision for loan losses   240    1,657 
Deferred income taxes expense   2,898    871 
ESOP expense   184    144 
Stock based compensation   38    4 
Amortization of premiums and discounts on investment securities, net   166    480 
Accretion of loan origination fees and costs   (122)   (876)
Amortization of mortgage service rights   24    31 
Net gain on sale of investment securities available-for-sale       (58)
Net gain on sale of real estate   (1,186)    
Net gain on sale of secondary market loans   (93)   (75)
Proceeds on sale of secondary market loans   8,037    3,892 
Originations of secondary market loans   (7,944)   (3,817)
Earnings on bank-owned life insurance   (240)   (255)
Increase in accrued interest receivable   (444)   (619)
Increase in accrued interest payable   19    222 
Increase (decrease) in other liabilities   781    (907)
Increase in other assets   (808)   (510)
Amortization of subordinated debt   79     
Net Cash Provided by Operating Activities   4,427    2,688 
Cash Flows from Investing Activities          
Investment securities available-for-sale:          
Purchases   (30,140)    
Sales       3,903 
Maturities, calls and principal repayments   123    151 
Investment securities held-to-maturity:          
Maturities, calls and principal repayments   1,747    3,379 
(Loan originations) and principal collections, net   (3,101)   (179,329)
Net decrease (increase) in restricted stock   (3,024)   27 
Proceeds from sale of property and equipment   1,315     
Purchases of property and equipment   (356)   (620)
Net Cash Used in Investing Activities   (33,436)   (172,489)
Cash Flows from Financing Activities          
Net increase in deposits   35,173    102,226 
Net increase in short-term borrowings       10,000 
Proceeds from long-term borrowings   70,000    70,000 
Repayment of long-term borrowings   (70,000)   (70,000)
Repayment of other borrowed money   (2,500)    
Increase in advances from borrowers for taxes and insurance   910    1,565 
Proceeds from issuance of subordinated debt       25,000 
Net Cash Provided by Financing Activities   33,583    138,791 
Net Increase (Decrease) in Cash and Cash Equivalents   4,574    (31,010)
Cash and Cash Equivalent–Beginning   117,136    96,762 
Cash and Cash Equivalent–Ending  $121,710   $65,752 
Supplementary Cash Flows Information          
Interest paid  $6,246   $3,828 
Income taxes paid  $254   $ 

 

See accompanying notes to unaudited consolidated financial statements.

 

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

Note 1 – The Company

 

Malvern Bancorp, Inc. (the “Company” or “Malvern Bancorp”) is the holding company for Malvern Bank, National Association (the “Bank”), a national bank that was originally organized in 1887 as a federally-chartered savings bank. Malvern Bank, National Association now serves as one of the oldest banks headquartered on the Philadelphia Main Line. For more than a century, the Bank has been committed to helping people build prosperous communities as a trusted financial partner, forging lasting relationships through teamwork, respect and integrity.

 

 The Bank conducts business from its headquarters in Paoli, Pennsylvania, a suburb of Philadelphia and through its nine other banking locations in Chester, Delaware and Bucks counties, Pennsylvania and Morristown, New Jersey, its New Jersey regional headquarters. The Bank also maintains new representative offices in Palm Beach, Florida and Montchanin, Delaware. The Bank’s wholly-owned subsidiary, Malvern Insurance Associates, LLC (“Malvern Insurance”) offers a full line of business and personal insurance products.

 

Note 2 – Summary of Significant Accounting Policies

 

Basis of financial statement presentation. The unaudited condensed consolidated financial statements of the Company include the accounts of the Company and its wholly-owned subsidiary, Malvern Bank, National Association and the Bank’s wholly-owned subsidiary, Malvern Insurance. All significant intercompany accounts and transactions have been eliminated in consolidation.

 

The accompanying unaudited condensed consolidated financial statements present the Company’s financial position at March 31, 2018 and the results of operations for the three-and six-month periods ended March 31, 2018 and 2017, and cash flows for the six-month periods ended March 31, 2018 and 2017. In Management’s opinion, the unaudited Condensed Consolidated Financial Statements contain all adjustments, which include normal and recurring adjustments, necessary for a fair presentation of the financial position and results of operations for the interim periods presented. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and note disclosures included in the Company’s Form 10-K filed with the Securities and Exchange Commission (“SEC”) on December 29, 2017. The consolidated results of operations for the three-and six -month periods ended March 31, 2018 and the consolidated statements of cash flows for the six-month periods ended March 31, 2018 are not necessarily indicative of the results of operations or cash flows for the full year ending September 30, 2018 or any other period.

 

There have been no significant changes to our Critical Accounting Policies as described in our 2017 Annual Report on Form 10-K.

 

Recently Issued Accounting Standards

 

Income Taxes. In March 2018, the Financial Accounting Standards Board (“FASB”) issued ASU 2018- 05, Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 to update the income tax accounting in U.S. generally accepted accounting principles (“GAAP”) to reflect the Securities and Exchange Commission (“SEC”) interpretive guidance released on Dec. 22, 2017, when the Tax Cuts and Jobs Act was signed into law. The adoption of this new requirement is not expected to have a material impact on the consolidated earnings, financial position or cash flows of the Company.

 

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

Investments and Regulated Operations. In March 2018, the FASB issued ASU 2018-04, Investments—Debt Securities (Topic 320) and Regulated Operations (Topic 980): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 117 and SEC Release No. 33-9273, to delete ASC 320-10-S99-1, which had codified SAB Topic 5.M which provided the SEC guidance determining when a decline in fair value below cost for an available-for-sale equity security is OTTI. ASU 2018-04 also removes from the ASC special requirements in SEC Regulation S-X Rule 3A-05 for public utility holding companies. The changes were effective when issued. The adoption of this new requirement is not expected to have a material impact on the consolidated earnings, financial position or cash flows of the Company.

 

Leases. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The update requires lessees to recognize, as of the lease commencement date, assets and liabilities for all such leases with lease terms of more than 12 months, which is a change from the current GAAP requirement to recognize only capital leases on the balance sheet. Pursuant to the new standard, the liability initially recognized for the lease obligation is equal to the present value of the lease payments not yet made, discounted over the lease term at the implicit interest rate of the lease, if available, or otherwise at the lessee’s incremental borrowing rate. The lessee is also required to recognize an asset for its right to use the underlying asset for the lease term, based on the liability subject to certain adjustments, such as for initial direct costs. Leases are required to be classified as either operating or finance, with expense on operating leases recorded as a single lease cost on a straight-line basis. For finance leases, interest expense on the lease liability is required to be recognized separately from the straight-line amortization of the right-of-use asset. Quantitative disclosures are required for certain items, including the cost of leases, the weighted-average remaining lease term, the weighted-average discount rate and a maturity analysis of lease liabilities. Additional qualitative disclosures are also required regarding the nature of the leases, such as basis, terms and conditions of: (i) variable interest payments; (ii) extension and termination options; and (iii) residual value guarantees. For lessors, the standard modifies classification criteria and accounting for sales-type and direct financing leases and requires a lessor to derecognize the carrying value of the leased asset that is considered to have been transferred to a lessee and record a lease receivable and residual asset (“receivable and residual” approach). This Update is effective for public companies for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The Company does not expect to early adopt this standard. The new standard must be adopted by applying the new guidance as of the beginning of the earliest comparative period presented, using a modified retrospective transition approach with certain optional practical expedients. The Company is still evaluating the impact of this new guidance.

 

Revenue Recognition. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (a new revenue recognition standard). The ASU’s core principle is that a company will recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, this ASU specifies the accounting for certain costs to obtain or fulfill a contract with a customer and expands disclosure requirements for revenue recognition. This ASU is effective, as a result of ASU 2015-14, for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The Company expects to adopt the revenue recognition guidance on October 1, 2018 using the modified retrospective approach. A significant amount of the Company’s revenues is derived from net interest income on financial assets and liabilities, which are excluded from the scope of the amended guidance. With respect to other income, the Company is in the process of identifying and evaluating the revenue streams and underlying revenue contracts within the scope of the guidance. The Company is expecting to develop processes and procedures during the fiscal third quarter of 2018 to ensure it is fully compliant with these amendments. To date, the Company has not yet identified any significant changes in the timing of revenue recognition when considering the amended accounting guidance; however, the Company’s implementation efforts are ongoing and such assessments may change prior to the October 1, 2018 implementation date.

 

Recently Adopted Accounting Standards

 

Income Statement. In February 2018, the FASB issued ASU 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The amendments in this Update allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act (the “TCJA”). Consequently, the amendments eliminate the stranded tax effects resulting from the TCJA and will improve the usefulness of information reported to financial statement users. All entities may adopt the amendments in this Update for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The amendments in this Update should be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the TCJA is recognized. We have elected to early adopt the ASU as of January 1, 2018. The adoption of the guidance resulted in a reclassification of an insignificant amount stranded in accumulated other comprehensive income to retained earnings in the fiscal second quarter of 2018.

 

Note 3 – Earnings Per Share

 

Basic earnings per common share is computed based on the weighted average number of shares outstanding reduced by unearned ESOP shares. Diluted earnings per share is computed based on the weighted average number of shares outstanding and common stock equivalents (“CSEs”) that would arise from the exercise of dilutive securities reduced by unearned ESOP shares. The Company did not grant any stock options to purchase common stock and restricted shares during the three months ended March 31, 2018. During the six months ended March 31, 2018, the Company granted stock options to purchase 4,664 shares of common stock and 4,768 restricted shares. During the three and six months ended March 31, 2017, the Company granted stock options to purchase 7,000 shares of common stock and 12,552 restricted shares.

 

-10-

 

 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

The following table sets forth the composition of the weighted average shares (denominator) used in the earnings per share computations.

 

   Three Months Ended March 31,   Six Months Ended March 31, 
(Dollars in thousands, except for share data)  2018   2017   2018   2017 
                 
Net Income  $2,018   $1,170   $2,421   $2,143 
                     
Weighted average shares outstanding   6,572,443    6,565,461    6,572,525    6,562,865 
Average unearned ESOP shares   (123,752)   (138,152)   (125,566)   (139,966)
Basic weighted average shares outstanding   6,448,691    6,427,309    6,446,959    6,422,899 
                     
Plus: effect of dilutive options   3,555    623    4,246    370 
Diluted weighted average common shares outstanding   6,452,246    6,427,932    6,451,205    6,423,269 
                     
Earnings per share:                    
  Basic  $0.31   $0.18   $0.38   $0.33 
  Diluted  $0.31   $0.18   $0.38   $0.33 

 

Note 4 – Employee Stock Ownership Plan

 

The Company established an ESOP for substantially all of its full-time employees. The current ESOP trustee is Pentegra. Shares of the Company’s common stock purchased by the ESOP are held until released for allocation to participants. Shares released are allocated to each eligible participant based on the ratio of each such participant’s base compensation to the total base compensation of all eligible plan participants. As the unearned shares are committed to be released and allocated among participants, the Company recognizes compensation expense equal to the fair value of the ESOP shares during the periods in which they become committed to be released. To the extent that the fair value of the ESOP shares released differs from the cost of such shares, the difference is charged or credited to additional paid-in capital. During the period from May 20, 2008 to September 30, 2008, the ESOP purchased 241,178 shares of common stock for approximately $2.6 million, an average price of $10.86 per share, which was funded by a loan from Malvern Federal Bancorp, Inc. (the Company’s predecessor). The ESOP loan is being repaid principally from the Bank’s contributions to the ESOP. The loan, which bears an interest rate of 5%, is being repaid in quarterly installments through 2026. Shares are released to participants proportionately as the loan is repaid. During the three and six months ended March 31, 2018 and 2017 there were 3,600 and 7,200 shares, respectively, committed to be released. At March 31, 2018, there were 121,965 unallocated shares and 137,253 allocated shares held by the ESOP which had an aggregate fair value of approximately $3.2 million.

 

Note 5 - Investment Securities

 

The Company’s investment securities are classified as available-for-sale or held-to-maturity at March 31, 2018 and at September 30, 2017. Investment securities available-for-sale are reported at fair value with unrealized gains or losses included in equity, net of tax. Accordingly, the carrying value of such securities reflects their fair value at the balance sheet date. Fair value is based upon either quoted market prices, or in certain cases where there is limited activity in the market for a particular instrument, assumptions are made to determine their fair value.

 

-11-

 

 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

Transfers of debt securities from the available-for-sale category to the held-to-maturity category are made at fair value at the date of transfer. The unrealized holding gain or loss at the date of transfer remains in accumulated other comprehensive income and in the carrying value of the held-to-maturity investment security. Premiums or discounts on investment securities are amortized or accreted using the effective interest method over the life of the security as an adjustment of yield. Unrealized holding gains or losses that remain in accumulated other comprehensive income are amortized or accreted over the remaining life of the security as an adjustment of yield, offsetting the related amortization of the premium or accretion of the discount.

 

The following tables present information related to the Company’s investment securities at March 31, 2018 and September 30, 2017.

 

   March 31, 2018 
   Amortized
Cost
   Gross
Unrealized
Gains
   Gross
Unrealized
Losses
   Fair
Value
 
   (Dollars in thousands) 
Investment Securities Available-for-Sale:                    
U.S. treasury notes  $29,999   $   $(57)  $29,942 
State and municipal obligations   6,972    1    (32)   6,941 
Single issuer trust preferred security   1,000        (82)   918 
Corporate debt securities   6,616        (326)   6,290 
Mutual fund   250            250 
Total   44,837    1    (497)   44,341 
Investment Securities Held-to-Maturity:                    
U.S. government agencies  $1,999   $   $(24)  $1,975 
State and municipal obligations   9,447    5    (40)   9,412 
Corporate debt securities   3,767        (45)   3,722 
Mortgage-backed securities:                    
Collateralized mortgage obligations, fixed-rate   17,839        (854)   16,985 
Total  $33,052   $5   $(963)  $32,094 
Total investment securities  $77,889   $6   $(1,460)  $76,435 

 

   September 30, 2017 
   Amortized
Cost
   Gross
Unrealized
Gains
   Gross
Unrealized
Losses
   Fair
Value
 
   (Dollars in thousands) 
Investment Securities Available-for-Sale:                    
State and municipal obligations  $6,992   $39   $(2)  $7,029 
Single issuer trust preferred security   1,000        (66)   934 
Corporate debt securities   6,627        (253)   6,374 
Mutual fund   250            250 
Total   14,869    39    (321)   14,587 
Investment Securities Held-to-Maturity:                    
U.S. government agencies  $1,999   $   $(8)  $1,991 
State and municipal obligations   9,574    89        9,663 
Corporate debt securities   3,818    26        3,844 
Mortgage-backed securities:                    
Collateralized mortgage obligations, fixed-rate   19,524    1    (457)   19,068 
Total  $34,915   $116   $(465)  $34,566 
Total investment securities  $49,784   $155   $(786)  $49,153 

 

-12-

 

 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

For the three and six months ended March 31, 2018, no available-for-sale investment securities were sold. For the three and six months ended March 31, 2017, proceeds of investment securities sold amounted to approximately $3.9 million and gross realized gains on investment securities sold amounted to approximately $0.1 million.

 

The following tables indicate gross unrealized losses not recognized in income and fair value, aggregated by investment category and the length of time individual securities have been in a continuous unrealized loss position at March 31, 2018 and September 30, 2017:

 

   March 31, 2018 
   Less than 12 Months   More than 12 Months   Total 
   Fair
Value
   Unrealized
Losses
   Fair
Value
   Unrealized
Losses
   Fair
value
   Unrealized
Losses
 
   (Dollars in thousands) 
Investment Securities Available-for-Sale:                              
U.S. treasury notes  $29,942   $(57)  $   $   $29,942   $(57)
State and municipal obligations   5,382    (26)   495    (6)   5,877    (32)
Single issuer trust preferred security           918    (82)   918    (82)
Corporate debt securities           6,290    (326)   6,290    (326)
Total  $35,324   $(83)  $7,703   $(414)  $43,027   $(497)
Investment Securities Held-to-Maturity:                              
U.S. government agencies           1,975    (24)   1,975    (24)
State and municipal obligations   8,229    (40)           8,229    (40)
Corporate securities   3,722    (45)           3,722    (45)
Mortgage-backed securities:                              
CMO, fixed-rate   797    (23)   16,188    (831)   16,985    (854)
Total   12,748    (108)   18,163    (855)   30,911    (963)
Total investment securities  $48,072   $(191)  $25,866   $(1,269)  $73,938   $(1,460)

 

   September 30, 2017 
   Less than 12 Months   12 Months or longer   Total 
   Fair
Value
   Unrealized
Losses
   Fair
Value
   Unrealized
Losses
   Fair
value
   Unrealized
Losses
 
   (Dollars in thousands) 
Investment Securities Available-for-Sale:                              
State and municipal obligations  $   $   $500   $(2)  $500   $(2)
Single issuer trust preferred security           934    (66)   934    (66)
Corporate debt securities           6,375    (253)   6,375    (253)
Total  $   $   $7,809   $(321)  $7,809   $(321)
Investment Securities Held-to-Maturity:                              
U.S. government agencies  $   $   $1,991   $(8)  $1,991   $(8)
State and municipal obligations                        
Mortgage-backed securities:                              
CMO, fixed-rate           18,902    (457)   18,902    (457)
Total           20,893    (465)   20,893    (465)
Total investment securities  $   $   $28,702   $(786)  $28,702   $(786)

 

-13-

 

 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

As of March 31, 2018, the estimated fair value of the securities disclosed above was primarily dependent upon the movement in market interest rates, particularly given the negligible inherent credit risk associated with these securities. These investment securities are comprised of securities that are rated investment grade by at least one bond credit rating service. Although the fair value will fluctuate as market interest rates move, management believes that these fair values will recover as the underlying portfolios mature and are reinvested in market rate yielding investments. As of March 31, 2018, the Company held three U.S. government treasury notes, two U.S. government agency securities, sixteen municipal bonds, four corporate securities, thirty-seven mortgage-backed securities and one single issuer trust preferred security which were in an unrealized loss position. The Company does not intend to sell and expects that it is not more likely than not that it will be required to sell these securities until such time as the value recovers or the securities mature. Management does not believe any individual unrealized loss as of March 31, 2018 represents other-than-temporary impairment.

 

Investment securities having a carrying value of approximately $42.1 million and $9.6 million at March 31, 2018 and September 30, 2017, respectively, were pledged to secure public deposits.

 

 The following table presents information for investment securities at March 31, 2018, based on scheduled maturities. Actual maturities can be expected to differ from scheduled maturities due to prepayment or early call options of the issuer.

 

   March 31, 2018 
   Amortized Cost   Fair Value 
   (Dollars in thousands) 
Investment Securities Available-for-Sale:          
Due in one year or less  $29,999   $29,942 
Due after one year through five years   7,556    7,435 
Due after five years through ten years   5,827    5,591 
Due after ten years   1,455    1,373 
Total  $44,837   $44,341 
Investment Securities Held-to-Maturity:          
Due after one year through five years  $1,999   $1,975 
Due after five years through ten years   6,170    6,092 
Due after ten years   24,883    24,027 
Total  $33,052   $32,094 
           
Total investment securities  $77,889   $76,435 

 

-14-

 

 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

Note 6 - Loans Receivable and Related Allowance for Loan Losses

 

Loans receivable in the Company’s portfolio consisted of the following at the dates indicated below:

 

   March 31,   September 30, 
   2018   2017 
   (Dollars in thousands) 
Residential mortgage  $184,318   $192,500 
Construction and Development:          
Residential and commercial   35,213    35,622 
Land   21,727    18,377 
Total Construction and Development   56,940    53,999 
Commercial:          
Commercial real estate   445,995    437,760 
Farmland   12,069    1,723 
Multi-family   32,608    39,768 
Other   75,368    74,837 
Total Commercial   566,040    554,088 
Consumer:          
Home equity lines of credit   15,538    16,509 
Second mortgages   19,960    22,480 
Other   2,404    2,570 
Total Consumer   37,902    41,559 
Total loans   845,200    842,146 
Deferred loan fees and cost, net   579    590 
Allowance for loan losses   (8,465)   (8,405)
Total loans receivable, net  $837,314   $834,331 

 

-15-

 

 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

The following tables summarize the primary classes 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 March 31, 2018 and September 30, 2017.  Activity in the allowance is presented for the three and six months ended March 31, 2018 and 2017 and the year ended September 30, 2017, respectively.

 

   Three Months Ended March 31, 2018 
       Construction and Development   Commercial   Consumer         
                                                 
   Residential Mortgage   Residential and Commercial   Land  

Commercial Real

Estate

   Farmland   Multi- family   Other   Home Equity Lines of Credit   Second
Mortgages
   Other   Unallocated   Total 
       (Dollars in thousands) 
Allowance for loan losses:                                                            

Beginning balance

  $1,029   $532   $130   $4,260   $12   $200   $449   $94   $463   $30   $1,238   $8,437 
Charge-offs   (6)           (221)                   (54)           (281)
Recoveries   56            1            1        9    2        69 
Provisions   (92)   (135)   28    6    70    (5)   40    (7)   (11)   (5)   351    240 
Ending Balance  $987   $397   $158   $4,046   $82   $195   $490   $87   $407   $27   $1,589   $8,465 

 

   Three Months Ended March 31, 2017 
       Construction and Development   Commercial   Consumer         
                                             
   Residential Mortgage   Residential and Commercial   Land  

Commercial Real

Estate

   Multi- family   Other   Home
Equity
Lines of Credit
   Second Mortgages   Other   Unallocated   Total 
   (Dollars in thousands) 
Allowance for loan losses:                                                       
Beginning
balance
  $1,162   $874   $90   $2,215   $106   $208   $111   $408   $28   $975   $6,177 
Charge-offs                               (50)           (50)
Recoveries               26        1    1    25    4        57 
Provision (Credit)   (120)   469    38    238    (39)   160    (5)   32    (12)   236    997 
Ending Balance  $1,042   $1,343   $128   $2,479   $67   $369   $107   $415   $20   $1,211   $7,181 

 

-16-

 

 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENT

 

   Six Months Ended March 31, 2018 
       Construction and Development   Commercial   Consumer         
                                                 
   Residential Mortgage   Residential and Commercial   Land  

Commercial Real

Estate

   Farmland   Multi- family   Other   Home Equity Lines of Credit   Second Mortgages   Other   Unallocated   Total 
       (Dollars in thousands) 
Allowance for loan losses:                                                            
Beginning
balance
  $1,004   $523   $132   $3,581   $9   $224   $541   $90   $402   $27   $1,872   $8,405 
Charge-offs   (6)           (221)                   (54)   (2)       (283)
Recoveries   58            10            2    1    28    4        103 
Provisions   (69)   (126)   26    676    73    (29)   (53)   (4)   31    (2)   (283)   240 
Ending Balance  $987   $397   $158   $4,046   $82   $195   $490   $87   $407   $27   $1,589   $8,465 
Ending balance:
individually
evaluated
for impairment
  $   $   $   $243   $   $   $45   $   $132   $1   $   $421 
Ending balance:
collectively
evaluated for
impairment
  $987   $397   $158   $3,803   $82   $195   $445   $87   $275   $26   $1,589   $8,044 
                                                             
Loans receivable:                                                            
Ending balance  $184,318   $35,213   $21,727   $445,995   $12,069   $32,608   $75,368   $15,538   $19,960   $2,404        $845,200 
Ending balance:
individually
evaluated for
impairment
  $2,420   $   $85   $17,535   $   $   $45   $34   $675   $1        $20,795 
Ending balance:
collectively
evaluated for
impairment
  $181,898   $35,213   $21,642   $428,460   $12,069   $32,608   $75,323   $15,504   $19,285   $2,403        $824,405 

 

-17-

 

 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

   Six Months Ended March 31, 2017 
       Construction and Development   Commercial   Consumer         
                                             
   Residential Mortgage   Residential and Commercial   Land  

Commercial Real

Estate

   Multi- family   Other   Home Equity Lines of Credit   Second Mortgages   Other   Unallocated   Total 
   (Dollars in thousands) 
Allowance for loan losses:                                                       
Beginning
balance
  $1,201   $199   $97   $1,874   $109   $158   $116   $467   $34   $1,179   $5,434 
Charge-offs                               (121)   (5)       (126)
Recoveries       90        30        6    2    82    6        216 
Provisions   (159)   1,054    31    575    (42)   205    (11)   (13)   (15)   32    1,657 
Ending Balance  $1,042   $1,343   $128   $2,479   $67   $369   $107   $415   $20   $1,211   $7,181 
Ending balance:
individually
evaluated
for impairment
  $   $   $   $   $   $116   $   $99   $   $   $215 
Ending balance:
collectively
evaluated for
impairment
  $1,042   $1,343   $128   $2,479   $67   $253   $107   $316   $20   $1,211   $6,966 
                                                        
Loans receivable:                                                       
Ending balance  $192,775   $46,721   $14,322   $383,170   $12,838   $63,551   $19,214   $25,103   $1,512        $759,206 
Ending balance:
individually
evaluated for
impairment
  $2,094   $109   $   $752   $   $249   $60   $174   $        $3,438 
Ending balance:
collectively
evaluated for
impairment
  $190,681   $46,612   $14,322   $382,418   $12,838   $63,302   $19,154   $24,929   $1,512        $755,768 

 

-18-

 

 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

   Year Ended September 30, 2017 
       Construction and Development   Commercial   Consumer         
                                                 
   Residential Mortgage   Residential and Commercial   Land  

Commercial Real

Estate

   Farmland   Multi- family   Other   Home Equity Lines of Credit   Second Mortgages   Other   Unallocated   Total 
       (Dollars in thousands) 
Allowance for loan losses:                                                            
Beginning
balance
  $1,201   $199   $97   $1,874   $   $109   $158   $116   $467   $34   $1,179   $5,434 
Charge-offs                                   (218)   (5)       (223)
Recoveries   2    90        40            9    18    232    12        403 
Provisions   (199)   234    35    1,667    9    115    374    (44)   (79)   (14)   693    2,791 
Ending Balance  $1,004   $523   $132   $3,581   $9   $224   $541   $90   $402   $27   $1,872   $8,405 
Ending balance:
individually
evaluated
for impairment
  $   $   $   $   $   $   $109   $   $128   $   $   $237 
Ending balance:
collectively
evaluated for
impairment
  $1,004   $523   $132   $3,581   $9   $224   $432   $90   $274   $27   $1,872   $8,168 
                                                             
Loans receivable:                                                            
Ending balance  $192,500   $35,622   $18,377   $437,760   $1,723   $39,768   $74,837   $16,509   $22,480   $2,570        $842,146 
Ending balance:
individually
evaluated for
impairment
  $2,262   $   $94   $555   $   $   $243   $10   $356   $        $3,520 
Ending balance:
collectively
evaluated for
impairment
  $190,238   $35,622   $18,283   $437,205   $1,723   $39,768   $74,594   $16,499   $22,124   $2,570        $838,626 

 

In assessing the adequacy of the ALLL, it is recognized that the process, methodology and underlying assumptions require a significant degree of judgment. The estimation of credit losses is not precise; the range of factors considered is wide and is significantly dependent upon management’s judgment, including the outlook and potential changes in the economic environment.  At present, components of the commercial loan segments of the portfolio are new originations and the associated volumes continue to see increased growth.  At the same time, historical loss levels have decreased as factors in assessing the portfolio.   The combination of these factors has given rise to an increase in the unallocated level within the allowance.  Any unallocated portion of the allowance in conjunction with the quarterly review and changes to the qualitative factors to adjust for the risk due to current economic conditions, reflects management’s estimate of probable inherent but undetected losses within the portfolio due to uncertainties in economic conditions, delays in obtaining information, including unfavorable information about a borrower’s financial condition, the difficulty in identifying triggering events that correlate perfectly to subsequent loss rates, and risk factors that have not yet manifested themselves in loss allocation factors.

 

-19-

 

 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

The following table presents impaired loans in portfolio by class, segregated by those for which a specific allowance was required and those for which a specific allowance was not necessary as of March 31, 2018 and September 30, 2017.

 

   Impaired Loans With
Specific Allowance
   Impaired
Loans
With No
Specific
Allowance
   Total Impaired Loans 
   Recorded
Investment
   Related
Allowance
   Recorded
Investment
   Recorded
Investment
   Unpaid
Principal
Balance
 
   (Dollars in thousands) 
March 31, 2018:                    
Residential mortgage  $   $   $2,420   $2,420   $2,537 
Construction and Development:                         
Land           85    85    85 
Commercial:                         
Commercial real estate   9,970    243    7,565    17,535    17,756 
Other   45    45        45    45 
Consumer:                         
Home equity lines of credit           34    34    34 
Second mortgages   159    132    516    675    771 
Other   1    1        1    1 
Total impaired loans  $10,175   $421   $10,620   $20,795   $21,229 
September 30, 2017:                         
Residential mortgage  $   $   $2,262   $2,262   $2,379 
Construction and Development:                         
Land           94    94    94 
Commercial:                         
Commercial real estate           555    555    555 
Other   243    109        243    243 
Consumer:                         
Home equity lines of credit           10    10    11 
Second mortgages   131    128    225    356    385 
Total impaired loans  $374   $237   $3,146   $3,520   $3,667 

 

-20-

 

 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

The following table presents the average recorded investment in impaired loans in portfolio and related interest income recognized for three and six months ended March 31, 2018 and 2017.

 

   Three Months Ended March 31, 2018   Six Months Ended March 31, 2018 
(Dollars in thousands)  Average Impaired Loans   Interest Income Recognized on Impaired Loans   Average Impaired Loans   Interest Income Recognized on Impaired Loans 
                 
Residential mortgage  $2,425   $2   $2,408   $13 
Construction and Development:                    
Land   86    1    88    2 
Commercial:                    
Commercial real estate   6,998    14    4,011    14 
Other   185        214     
Consumer:                    
Home equity lines of credit   12        11     
Second mortgages   655    1    574    4 
Other   1        1      
Total  $10,362   $18   $7,307   $33 

 

   Three Months Ended March 31, 2017   Six Months Ended March 31, 2017 
(Dollars in thousands)  Average Impaired Loans   Interest Income Recognized on Impaired Loans   Average Impaired Loans   Interest Income Recognized on Impaired Loans 
                 
Residential mortgage  $2,178   $13   $2,099   $33 
Construction and Development:                    
Residential and commercial   109    1    109    2 
Commercial:                    
   Commercial real estate   755    5    1,187    9 
   Other   86    2    43    2 
Consumer:                    
Home equity lines of credit   60        65     
Second mortgages   139        184    1 
Total  $3,327   $21   $3,687   $47 

 

-21-

 

 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

The following table presents the classes of the loan portfolio summarized by loans considered to be rated as pass and the categories of special mention, substandard and doubtful within the Company’s internal risk rating system as of March 31, 2018 and September 30, 2017.

 

   March 31, 2018 
   Pass   Special
Mention
   Substandard   Doubtful   Total 
   (Dollars in thousands) 
Residential mortgage  $181,589   $   $2,729   $   $184,318 
Construction and Development:                         
Residential and commercial   35,213                35,213 
Land   17,273        4,454        21,727 
Commercial:                         
Commercial real estate   424,881    2,201    18,913        445,995 
Farmland   12,069                12,069 
Multi-family   32,261    347            32,608 
Other   75,156        212        75,368 
Consumer:                         
Home equity lines of credit   15,403        135        15,538 
Second mortgages   18,883    107    970        19,960 
Other   2,399    4    1        2,404 
Total  $815,127   $2,659   $27,414   $   $845,200 

 

   September 30, 2017 
   Pass   Special
Mention
   Substandard   Doubtful   Total 
   (Dollars in thousands) 
Residential mortgage  $189,925   $114   $2,461   $   $192,500 
Construction and Development:                         
Residential and commercial   35,622                35,622 
Land   13,207        5,170        18,377 
Commercial:                         
Commercial real estate   431,336    4,456    1,968        437,760 
Farmland   1,723                1,723 
Multi-family   39,410    358            39,768 
Other   73,935        902        74,837 
Consumer:                         
Home equity lines of credit   16,399        110        16,509 
Second mortgages   21,611    112    757        22,480 
Other   2,563    6    1        2,570 
Total  $825,731   $5,046   $11,369   $   $842,146 

 

-22-

 

 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

The following table presents loans that are no longer accruing interest by portfolio class.

 

   March 31,   September 30, 
   2018   2017 
   (Dollars in thousands) 
Residential mortgage  $1,130   $826 
Commercial:          
Commercial real estate   575     
Other   45     
Consumer:          
Home equity lines of credit   34    10 
Second  mortgages   344    202 
Other   1     
Total non-accrual loans  $2,129   $1,038 

 

Under the Bank’s loan policy, once a loan has been placed on non-accrual status, we do not resume interest accruals until the loan has been brought current and has maintained a current payment status for not less than six consecutive months. Interest income that would have been recognized on nonaccrual loans had they been current in accordance with their original terms was less than $0.1 million for each of the three months ended March 31, 2018 and 2017 and was less than $0.1 million for each of the six months ended March 31, 2018 and 2017.

 

Management further monitors the performance and credit quality of the loan portfolio by analyzing the age of the portfolio as determined by whether a loan payment is “current,” that is, it is received from a borrower by the scheduled due date, or the length of time a scheduled payment is past due. The following table presents the classes of the loan portfolio summarized by the aging categories as of March 31, 2018 and September 30, 2017.

 

   Current   30-59
Days Past
Due
   60-89
Days Past
Due
   90
Days or More Past
Due
   Total Past Due   Total Loans Receivable   Accruing 90
Days or More Past
Due
 
   (Dollars in thousands) 
March 31, 2018:                            
Residential mortgage  $180,164   $2,597   $   $1,557   $4,154   $184,318   $427 
Construction and Development:                                   
Residential and commercial   34,446    767            767    35,213     
 Land   21,727                    21,727     
Commercial:                                   
 Commercial real estate   444,969    156    295    575    1,026    445,995     
 Farmland   12,069