Company Quick10K Filing
Quick10K
Community Savings Bancorp
10-Q 2019-03-31 Quarter: 2019-03-31
10-Q 2018-12-31 Quarter: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-K 2018-06-30 Annual: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-Q 2017-12-31 Quarter: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-K 2017-06-30 Annual: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-Q 2016-12-31 Quarter: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
8-K 2018-11-19 Shareholder Vote, Exhibits
8-K 2018-11-15 Other Events, Exhibits
8-K 2018-10-15 Accountant, Exhibits
8-K 2018-02-19 Shareholder Vote, Exhibits
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GSIT GSI Technology 174
PVL Permianville Royalty Trust 104
FXC Invesco Currencyshares Canadian Dollar Trust 0
INTZ Intrusion 0
ACUR Acura Pharmaceuticals 0
LZD Lazard Group 0
CCSB 2019-03-31
Part I - Financial Information
Item 1. Interim Financial Statements (Unaudited)
Note 1:Basis of Presentation
Note 2:Securities
Note 3:Loans and Allowance for Loan Losses
Note 4:Regulatory Matters
Note 5:Disclosures About Fair Value of Assets and Liabilities
Note 6:Accumulated Other Comprehensive Income (Loss)
Note 7:Recent Accounting Pronouncements
Note 8:Loss per Share
Note 9:Employee Stock Ownership Plan (Esop)
Note 10:Equity Incentive Plan
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II
Item 1.Legal Proceedings
Item 1A. Risk Factors
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.1 tv520935_ex31-1.htm
EX-31.2 tv520935_ex31-2.htm
EX-32 tv520935_ex32.htm

Community Savings Bancorp Earnings 2019-03-31

CCSB 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 tv520935_10q.htm FORM 10-Q

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

 

FORM 10-Q

(Mark One)

 

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

 

For the quarterly period ended March 31, 2019  

 

OR

 

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

 

For the transition period from ____________ to _______________

 

Commission File No. 000-55732

 

          COMMUNITY SAVINGS BANCORP, INC.          

(Exact name of registrant as specified in its charter)

 

Maryland   81-3840964
(State or other jurisdiction of   (I.R.S. Employer
incorporation or organization)   Identification Number)
     
425 Main Street    
Caldwell, Ohio        43724
(Address of principal   (Zip Code)
executive office)    

 

(740) 732-5678

(Registrant’s telephone number, including area code)

 

N/A

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

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements 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). x 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 the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer ¨    Accelerated filer ¨     Non-accelerated filer x     Smaller reporting company x

 

Emerging growth company x

 

If an emerging growth company, indicate by checkmark 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 

 

As of May 14, 2019, the latest practicable date, 408,739 shares of the registrant’s common stock, $0.01 par value, were issued and outstanding.

 

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

 

Title of class   Trading symbol   Name of exchange on which registered
         

 

 

   

 

 

Community Savings Bancorp, Inc.

 

Index to Quarterly Report on Form 10-Q

 

PART I – FINANCIAL INFORMATION   3
     
Item 1 Interim Financial Statements (Unaudited)   3
     
  Consolidated Balance Sheets as of March 31, 2019 and June 30, 2018   3
     
  Consolidated Statements of Operations for the Three and Nine Months Ended March 31, 2019 and 2018   4
     
  Consolidated Statements of Comprehensive Loss for the Three and Nine Months Ended March 31, 2019 and 2018   5
     
  Consolidated Statements of Changes in Shareholders’ Equity for the Three and Nine Months Ended March 31, 2019 and 2018   6
     
  Consolidated Statements of Cash Flows for the Nine Months Ended March 31, 2019 and 2018   8
     
  Notes to Consolidated Financial Statements   9
     
Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations   39
     
Item 3 Quantitative and Qualitative Disclosures About Market Risk   48
     
Item 4 Controls and Procedures   48
     
PART II – OTHER INFORMATION   49
     
Item 1 Legal Proceedings   49
     
Item 1A   Risk Factors   49
     
Item 2  Unregistered Sales of Equity Securities and Use of Proceeds   49
     
Item 3  Defaults Upon Senior Securities   49
     
Item 4  Mine Safety Disclosures   49
     
Item 5   Other Information   49
     
Item 6  Exhibits   50
     
SIGNATURES   51

 

  2 

 

 

Part I – Financial Information

Item 1. Interim Financial Statements (Unaudited)

Community Savings Bancorp, Inc.

Consolidated Balance Sheets

(In thousands, except share data)

 

   March 31,   June 30, 
   2019   2018 
   (Unaudited)     
Assets          
Cash and due from banks  $1,607   $2,222 
Interest-earning demand deposits in other financial institutions   2,842    2,082 
           
Cash and cash equivalents   4,449    4,304 
           
Interest-earning time deposits in other financial institutions   3,595    4,595 
Investment securities available-for-sale, at fair value   5,282    6,651 
Restricted Stock   940    940 
Loans   36,186    31,888 
Less: allowance for loan losses   (239)   (253)
Loans, net   35,947    31,635 
Premises and equipment, net   387    422 
Foreclosed assets, net   104    9 
Accrued interest receivable   110    135 
Bank owned life insurance   787    769 
Other assets   517    508 
           
Total assets  $52,118   $49,968 
           
Liabilities and Shareholders' Equity          
           
Liabilities          
Deposits          
Demand  $10,188   $10,406 
Savings and money market   23,707    22,067 
Time   7,744    7,926 
           
Total deposits   41,639    40,399 
           
Federal Home Loan Bank advances   2,500    1,000 
Payments by borrowers for taxes and insurance   173    92 
Other liabilities   130    190 
           
Total liabilities   44,442    41,681 
           
Shareholders' Equity          
Preferred stock - par value $0.01 per share, 5,000,000 shares authorized, none issued   -    - 
Common stock - par value $0.01 per share, 50,000,000 shares authorized, 399,029 shares issued and outstanding as of March 31, 2019 and 441,290 shares issued and outstanding as of June 30, 2018   4    4 
Additional paid in capital   2,675    3,264 
Unearned employee stock ownership plan (ESOP) shares   (294)   (311)
Retained earnings   5,301    5,424 
Accumulated other comprehensive loss   (10)   (94)
           
Total shareholders' equity   7,676    8,287 
           
Total liabilities and shareholders' equity  $52,118   $49,968 

 

See Notes to Consolidated Financial Statements (unaudited)

 

  3 

 

 

Community Savings Bancorp, Inc.

Consolidated Statements of Operations

(In thousands, except share data)

 

   Three Months Ended March 31,   Nine Months Ended March 31, 
   2019   2018   2019   2018 
   (Unaudited) 
Interest Income                    
Loans, including fees  $412   $361   $1,195   $1,078 
Taxable securities   23    30    71    94 
Tax exempt securities   10    10    30    30 
Interest-earning deposits   62    46    159    124 
                     
Total interest income   507    447    1,455    1,326 
                     
Interest Expense                    
Deposits   34    31    95    95 
Federal Home Loan Bank advances   19    10    42    36 
                     
Total interest expense   53    41    137    131 
                     
Net Interest Income   454    406    1,318    1,195 
                     
Provision for Loan Losses   -    -    -    - 
                     
Net Interest Income After Provision for Loan Losses   454    406    1,318    1,195 
                     
Noninterest Income                    
Service charges and fees   78    62    245    192 
Gain on sale of foreclosed assets, net   -    -    11    - 
Increase in cash surrender value-bank owned life insurance   6    6    18    13 
Other operating   -    4    10    4 
                     
Total noninterest income   84    72    284    209 
                     
Noninterest Expense                    
Salaries, employee benefits and directors fees   224    202    664    640 
Occupancy and equipment   29    27    95    75 
Data processing   83    96    243    259 
Correspondent bank service charges   59    58    175    169 
Franchise taxes   16    18    52    44 
FDIC insurance premiums   5    5    14    12 
Professional services   76    128    225    325 
Advertising   5    3    18    13 
Office supplies   24    22    69    73 
Impairment of foreclosed assets   -    8    -    8 
Other   87    56    202    136 
                     
Total noninterest expense   608    623    1,757    1,754 
                     
Loss Before Federal Income Tax Benefit   (70)   (145)   (155)   (350)
                     
Federal Income Tax Benefit   (17)   (37)   (32)   (50)
                     
Net loss  $(53)  $(108)  $(123)  $(300)
                     
Loss per share - basic and diluted  $(0.14)  $(0.26)  $(0.31)  $(0.73)
                     
Weighted-average shares outstanding - basic and diluted   379,599    410,236    395,135    409,147 

 

See Notes to Consolidated Financial Statements (unaudited)

 

  4 

 

 

Community Savings Bancorp, Inc.

Consolidated Statements of Comprehensive Loss

(In thousands)

 

   Three Months Ended March 31,   Nine Months Ended March 31, 
   2019   2018   2019   2018 
   (Unaudited) 
                 
Net loss  $(53)  $(108)  $(123)  $(300)
                     
Other comprehensive income (loss):                    
Unrealized holding gains (losses) on securities available for sale  $64    (72)   106    (147)
                     
Tax effect   (13)   15    (22)   40 
                     
Total other comprehensive income (loss)   51    (57)   84    (107)
                     
Comprehensive loss  $(2)  $(165)  $(39)  $(407)

 

See Notes to Consolidated Financial Statements (unaudited)

 

  5 

 

 

Community Savings Bancorp, Inc.

Consolidated Statements of Changes in Shareholders’ Equity

(In thousands, except share data)

 

Three Months Ended March 31, 2019

 

                       Accumulated     
           Additional   Unearned       Other     
   Preferred   Common   Paid in   ESOP   Retained   Comprehensive     
   Stock   Stock   Capital   Shares   Earnings   Income (Loss)   Total 
   (Unaudited) 
                             
Balance at January 1, 2019  $-   $4   $2,950   $(311)  $5,354   $(61)  $7,936 
                                    
Net loss   -    -    -    -    (53)   -    (53)
                                    
ESOP Shares Earned   -    -    5    17    -    -    22 
                                    
Other comprehensive income   -    -    -    -    -    51    51 
                                    
Stock buyback (20,261 shares)   -    -    (279)   -    -    -    (279)
                                    
Balance at March 31, 2019  $-   $4   $2,675   $(294)  $5,301   $(10)  $7,676 

 

Three Months Ended March 31, 2018

 

                       Accumulated     
           Additional   Unearned       Other     
   Preferred   Common   Paid in   ESOP   Retained   Comprehensive     
   Stock   Stock   Capital   Shares   Earnings   Income (Loss)   Total 
   (Unaudited) 
                             
Balance at January 1, 2018  $-   $4   $3,258   $(327)  $6,241   $(25)  $9,151 
                                    
Net loss   -    -    -    -    (108)   -   $(108)
                                    
ESOP Shares Earned   -    -    4    16    -    -   $20 
                                    
Other comprehensive loss   -    -    -    -    -    (57)  $(57)
                                    
Reclassification of certain tax effects from accumulated other comprehensive income   -    -    -    -    5    (5)   - 
                                    
Balance at March 31, 2018  $-   $4   $3,262   $(311)  $6,138   $(87)  $9,006 

 

See Notes to Consolidated Financial Statements (unaudited)

 

  6 

 

 

Community Savings Bancorp, Inc.

Consolidated Statements of Changes in Shareholders’ Equity

(In thousands, except share data)

 

Nine Months Ended March 31, 2019

 

                       Accumulated     
           Additional   Unearned       Other     
   Preferred   Common   Paid in   ESOP   Retained   Comprehensive     
   Stock   Stock   Capital   Shares   Earnings   Income (Loss)   Total 
   (Unaudited) 
                             
Balance at July 1, 2018   $-   $4   $3,264   $(311)  $5,424   $(94)  $8,287 
                                    
Net loss    -    -    -    -    (123)   -    (123)
                                    
ESOP Shares Earned    -    -    5    17    -    -    22 
                                    
Other comprehensive income    -    -    -    -    -    84    84 
                                    
Stock buyback (42,261 shares)    -    -    (593)   -    -    -    (593)
                                    
Balance at March 31, 2019   $-   $4   $2,675   $(294)  $5,301   $(10)  $7,676 

 

Nine Months Ended March 31, 2018

 

                       Accumulated     
           Additional   Unearned       Other     
   Preferred   Common   Paid in   ESOP   Retained   Comprehensive     
   Stock   Stock   Capital   Shares   Earnings   Loss   Total 
   (Unaudited) 
                             
Balance at July 1, 2017  $-   $4   $3,258   $(327)  $6,433   $25   $9,393 
                                    
Net loss   -    -    -    -    (300)   -    (300)
                                    
ESOP Shares Earned   -    -    4    16    -    -    20 
                                    
Other comprehensive loss   -    -    -    -    -    (107)   (107)
                                    
Reclassification of certain tax effects from  accumulated other comprehensive income   -    -    -    -    5    (5)   - 
                                    
Balance at March 31, 2018  $-   $4   $3,262   $(311)  $6,138   $(87)  $9,006 

 

See Notes to Consolidated Financial Statements (unaudited)

 

  7 

 

 

Community Savings Bancorp, Inc.

Consolidated Statements of Cash Flows

(In thousands)

 

   Nine Months Ended March 31, 
   2019   2018 
   (Unaudited) 
Cash Flows from Operating Activities          
Net loss  $(123)  $(300)
Adjustments to reconcile net loss to net cash from operating activities:          
Depreciation and amortization   44    50 
Deferred income tax expense   (32)   (50)
Amortization of premiums and discounts on securities, net   51    85 
Gain on reposession of foreclosed assets   (11)   - 
Net changes in:          
Accrued interest receivable   25    27 
Bank owned life insurance-cash surrender value   (18)   (13)
Other assets   (4)   32 
Other liabilities   (59)   45 
           
Net cash used in operating activities   (127)   (124)
           
Cash Flows from Investing Activities          
Net change in interest-earning time deposits in other financial institutions   1,000    485 
Proceeds from maturities of available for sale securities   550    555 
Principal repayments of available for sale mortgage-backed securities   874    1,117 
Net change in loans   (4,393)   (434)
Purchase of premises and equipment   (9)   (31)
Purchase of bank owned life insurance   -    (750)
           
Net cash (used in) provided by investing activities   (1,978)   942 
           
Cash Flows from Financing Activities          
Net change in deposits   1,240    65 
Proceeds from Federal Home Loan Bank advances   1,500    - 
Repayment of Federal Home Loan Bank advances   -    (3,500)
Payments by borrowers for taxes and insurance   81    74 
ESOP shares earned   22    20 
Stock buyback   (593)   - 
           
Net cash provided by ( used in) financing activities   2,250    (3,341)
           
Net Change in Cash and Cash Equivalents   145    (2,523)
           
Beginning Cash and Cash Equivalents   4,304    8,699 
           
Ending Cash and Cash Equivalents  $4,449   $6,176 
           
Supplemental Disclosure of Cash Flow Information          
Cash paid during the period for:          
Interest on deposits and borrowings  $137   $131 
Supplemental Disclosure of Noncash Investing Activities          
Transfers from loans to foreclosed assets  $-   $- 

 

See Notes to Consolidated Financial Statements (unaudited)

 

  8 

 

 

Community Savings Bancorp, Inc.

Notes to Consolidated Financial Statements (unaudited)

 

 

Note 1:Basis of Presentation

 

Community Savings Bancorp, Inc. (the “Company”), headquartered in Caldwell, Ohio, was formed to serve as the holding company for Community Savings (the “Bank”) as part of the Bank’s mutual-to-stock conversion. The conversion was effective January 10, 2017.  In the conversion and concurrent stock offering, the Company issued 441,290 shares at an offering price of $10.00 per share.

 

The Company’s consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) which are necessary for a fair presentation of the unaudited financial statements have been included to present fairly the financial position as of March 31, 2019 and the results of operations for the three and nine months ended March 31, 2019 and 2018. Amounts have not been audited and the results of operations for the three and nine months ended March 31, 2019, herein are not necessarily indicative of the results of operations to be expected for the entire fiscal year.

 

The accompanying consolidated balance sheet as of June 30, 2018 has been derived from audited financial statements included in the Company’s Form 10-K. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles have been omitted. Accordingly, these consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto of the Company as of and for the year ended June 30, 2018 included in the Company’s Form 10-K.

 

Principles of Consolidation

 

The consolidated financial statements as of and for the periods ended March 31, 2019, include Community Savings Bancorp, Inc. and its wholly-owned subsidiary, Community Savings (the “Bank”), together referred to as the “Company.” Intercompany transactions and balances have been eliminated in consolidation.

 

Use of Estimates

 

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

 

Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for loan losses, valuation of foreclosed assets, valuation of deferred tax assets, and fair values of financial instruments.

 

  9 

 

 

Community Savings Bancorp, Inc.

Notes to Consolidated Financial Statements (unaudited)

 

Note 2:Securities

 

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

 

   Amortized
Cost
   Gross
Unrealized
Gains
   Gross
Unrealized
Losses
   Fair
Value
 
   (In thousands) 
Available-for-sale Securities:                    
March 31, 2019                    
Mortgage-backed securities of U.S. government sponsored entities - residential  $3,409   $19   $(27)  $3,401 
Collateralized mortgage obligations of government sponsored entities - residential   180    1    (2)   179 
State and political subdivisions                    
Taxable   257    -    -    257 
Nontaxable   1,449    4    (8)   1,445 
                     
   $5,295   $24   $(37)  $5,282 
                     
                     
June 30, 2018                    
Mortgage-backed securities of U.S. government sponsored entities - residential  $4,280   $6   $(94)  $4,192 
Collateralized mortgage obligations of government sponsored entities - residential   218    1    (5)   214 
State and political subdivisions                    
Taxable   815    1    (3)   813 
Nontaxable   1,457    1    (26)   1,432 
                     
   $6,770   $9   $(128)  $6,651 

 

  10 

 

 

Community Savings Bancorp, Inc.

Notes to Consolidated Financial Statements (unaudited)

 

The amortized cost and fair value of available-for-sale securities at March 31, 2019, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date are shown separately.

 

   Amortized   Fair 
   Cost   Value 
   (In thousands) 
         
Five to ten years  $287   $287 
Beyond ten years   1,419    1,415 
           
    1,706    1,702 
Mortgage-backed securities of U.S. government sponsored entities - residential   3,409    3,401 
Collateralized mortgage obligations of government sponsored entities - residential   180    179 
           
Totals  $5,295   $5,282 

 

The Company had no sales of investment securities during the three and nine-month periods ended March 31, 2019 and 2018.

 

The Company had pledged $1.4 million and $1.7 million of its investment securities at March 31, 2019 and June 30, 2018, respectively, and $885,000 and $635,000 of interest-earning time deposits at March 31, 2019 and June 30, 2018. The Company also had pledged $175,000 and $125,000 of interest-earning demand deposits at March 31, 2019 and June 30, 2018, primarily to secure public deposits.

 

The Company’s restricted stock consists of $915,000 of stock in the Federal Home Loan Bank of Cincinnati (FHLB) and $25,000 of stock in the Company’s data service provider at both March 31, 2019 and June 30, 2018. Restricted stock is carried at cost and has limited transferability.

 

  11 

 

 

Community Savings Bancorp, Inc.

Notes to Consolidated Financial Statements (unaudited)

 

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

 

   Less than 12 Months   12 Months or Longer   Total 
Description of Securities  Fair
Value
   Unrealized
Losses
   Fair
Value
   Unrealized
Losses
   Fair
Value
   Unrealized
Losses
 
   (In thousands) 
March 31, 2019                        
Available-for-sale Securities:                              
Mortgage-backed securities of U.S. government sponsored entities - residential  $-   $-   $1,890   $(27)  $1,890   $(27)
Collateralized mortgage obligations of government sponsored entities - residential   -    -    109    (2)  $109    (2)
State and political subdivisions                              
Nontaxable   -    -    665    (8)   665    (8)
                               
   $-   $-   $2,664   $(37)  $2,664   $(37)
June 30, 2018                              
Available-for-sale Securities:                              
Mortgage-backed securities of U.S. government sponsored entities - residential  $1,777   $(31)  $1,568   $(63)  $3,345   $(94)
Collateralized mortgage obligations of government sponsored entities - residential   121    (5)   -    -    121    (5)
State and political subdivisions                              
Taxable   -    -    510    (3)   510    (3)
Nontaxable   531    (3)   363    (23)   894    (26)
                               
   $2,429   $(39)  $2,441   $(89)  $4,870   $(128)

 

Other-than-temporary Impairment

 

At March 31, 2019 and June 30, 2018, the decline in fair value of the Company’s investment securities available-for-sale is attributable to changes in interest rates and not credit quality. At March 31, 2019 there were a total of thirteen securities in a loss position. The contractual terms of these investments do not permit the issuer to settle the securities at a price less than the amortized cost basis of the investments. Because the Company does not have the intent to sell these securities and it is likely that it will not be required to sell the securities before recovery of their amortized cost basis, the Company does not consider these securities to be other-than-temporarily impaired at March 31, 2019.

 

  12 

 

 

Community Savings Bancorp, Inc.

Notes to Consolidated Financial Statements (unaudited)

 

Note 3:Loans and Allowance for Loan Losses

 

Loans at March 31, 2019 and June 30, 2018 include:

 

   March 31,   June 30, 
   2019   2018 
   (In thousands) 
Real estate          
Residential  $25,055   $25,127 
Home equity lines of credit   1,839    1,979 
Commercial and multi-family   1,268    1,927 
Consumer and other   8,024    2,855 
           
Total loans   36,186    31,888 
           
Allowance for loan losses   (239)   (253)
           
Net loans  $35,947   $31,635 

 

The risk characteristics applicable to each segment of the loan portfolio are described below:

 

Residential Real Estate and Home Equity Lines of Credit

 

Residential mortgage loans and home equity lines of credit are secured by one-to four-family residences and are comprised of owner-occupied and non-owner-occupied loans. Construction real estate loans (immaterial for the periods presented) are usually based upon estimates of costs and estimated value of the completed project and include independent appraisal reviews and a financial analysis of the developers and property owners. Sources of repayment of these loans may include permanent loans, sales of developed property or an interim loan commitment from the Company until permanent financing is obtained. The Company generally establishes a maximum loan-to-value ratio and requires private mortgage insurance if that ratio is exceeded. Repayment of these loans is primarily dependent on the personal income of the borrowers, which can be impacted by economic conditions in their market areas, such as unemployment levels. Repayment can also be impacted by changes in property values or residential properties. Risk is mitigated by the fact that loans are of smaller individual amounts and spread over a large number of borrowers.

 

Multi-family Real Estate

 

Multi-family real estate loans generally involve a greater degree of credit risk than residential mortgage loans and carry larger loan balances. This increased credit risk is a result of several factors, including the concentration of principal in a limited number of loans and borrowers, the effects of general economic conditions on income-producing properties, and the increased difficulty of evaluating and monitoring these types of loans. Furthermore, the repayment of loans secured by multi-family real estate is typically dependent upon the successful operation of the related real estate property. If the cash flow from the project is reduced, the borrower’s ability to repay the loan may be impaired.

 

  13 

 

 

Community Savings Bancorp, Inc.

Notes to Consolidated Financial Statements (unaudited)

 

Commercial Real Estate

 

Commercial real estate loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Commercial real estate lending typically involves higher loan principal amounts and the repayment of these loans is generally dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan. Commercial real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy. The characteristics of properties securing the Company’s real estate portfolio are diverse, but with geographic location almost entirely in the Company’s market area. Management monitors and evaluates commercial real estate loans based on collateral, geography, and risk grade criteria. In general, the Company avoids financing single purpose projects unless other underwriting factors are present to help mitigate risk.

 

Consumer and Other Loans

 

Consumer and other loans entail greater credit risk than residential real estate loans, particularly in the case of consumer loans that are unsecured or secured by assets that depreciate rapidly, such as automobiles. In such cases, repossessed collateral for a defaulted consumer loan may not provide an adequate source of repayment for the outstanding loan and the remaining deficiency often does not warrant further substantial collection efforts against the borrower. In particular, amounts realizable on the sale of repossessed automobiles may be significantly reduced based upon the condition of the automobiles and the lack of demand for used automobiles.

 

  14 

 

 

Community Savings Bancorp, Inc.

Notes to Consolidated Financial Statements (unaudited)

 

The following table presents, by portfolio segment, the activity in the allowance for loan losses for the three and nine months ended March 31, 2019 and the loans by impairment method as of March 31, 2019:

 

   Real Estate             
           Commercial             
       Home Equity   and Multi-   Consumer         
   Residential   Lines of Credit   Family   and Other   Unallocated   Total 
   (In thousands) 
Three Months Ended March 31, 2019                        
Allowance for loan losses:                              
Balance, January 1, 2019  $160   $13   $9   $53   $18   $253 
Provision for loan losses   17    (1)   (3)   (6)   (7)   - 
Charge-offs   (14)   -    -    -    -    (14)
Recoveries   -    -    -    -    -    - 
                               
Balance, March 31, 2019  $163   $12   $6   $47   $11   $239 
                               
Nine Months Ended March 31, 2019                              
Allowance for loan losses:                              
Balance, July 1, 2018  $171   $13   $10   $23   $36   $253 
Provision for loan losses   6    (1)   (4)   24    (25)   - 
Charge-offs   (14)   -    -    -    -    (14)
Recoveries   -    -    -    -    -    - 
                               
Balance, March 31, 2019  $163   $12   $6   $47   $11   $239 
                               
Allowance for loan losses:                              
Ending balance, individually evaluated for impairment  $6   $-   $-   $-   $-   $6 
                               
Ending balance, collectively evaluated for impairment  $157   $12   $6   $47   $11   $233 
                               
Loans:                              
Ending balance  $25,055   $1,839   $1,268   $8,024        $36,186 
                               
Ending balance; individually evaluated for impairment  $610   $5   $79   $-        $694 
                               
Ending balance; collectively evaluated for impairment  $24,445   $1,834   $1,189   $8,024        $35,492 

 

  15 

 

 

Community Savings Bancorp, Inc.

Notes to Consolidated Financial Statements (unaudited)

 

The following table presents, by portfolio segment, the activity in the allowance for loan losses for the three and nine months ended March 31, 2018:

 

   Real Estate             
           Commercial             
       Home Equity   and Multi-   Consumer         
   Residential   Lines of Credit   Family   and Other   Unallocated   Total 
   (In thousands) 
Three Months Ended March 31, 2018                              
Allowance for loan losses:                              
Balance, January 1, 2018  $175   $16   $10   $17   $35   $253 
Provision for loan losses   -    (2)   -    1    1    - 
Charge-offs   -    -    -    -    -    - 
Recoveries   -    -    -    -    -    - 
                               
Balance, March 31, 2018  $175   $14   $10   $18   $36   $253 
                               
Nine Months Ended March 31, 2018                              
Allowance for loan losses:                              
Balance, July 1, 2017  $162   $21   $8   $20   $42   $253 
Provision for loan losses   13    (7)   2    (2)   (6)   - 
Charge-offs   -    -    -    -    -    - 
Recoveries   -    -    -    -    -    - 
                               
Balance, March 31, 2018  $175   $14   $10   $18   $36   $253 

 

  16 

 

 

Community Savings Bancorp, Inc.

Notes to Consolidated Financial Statements (unaudited)

 

The following table presents, by portfolio segment, the allowance for loan losses, the recorded investment in loans and impairment method as of June 30, 2018:

 

   June 30, 2018 
   Real Estate             
           Commercial             
       Home Equity   and Multi-   Consumer         
   Residential   Lines of Credit   Family   and Other   Unallocated   Total 
   (In thousands) 
                         
Allowance for loan losses:                              
Ending balance, individually evaluated for impairment  $7   $-   $-   $-   $-   $7 
                               
Ending balance, collectively evaluated for impairment  $164   $13   $10   $23   $36   $246 
                               
Loans:                              
Ending balance  $25,127   $1,979   $1,927   $2,855        $31,888 
                               
Ending balance; individually evaluated for impairment  $366   $5   $87   $-        $458 
                               
Ending balance; collectively evaluated for impairment  $24,761   $1,974   $1,840   $2,855        $31,430 

 

  17 

 

 

Community Savings Bancorp, Inc.

Notes to Consolidated Financial Statements (unaudited)

 

Internal Risk Categories

 

The Company has adopted a standard loan grading system for all loans. Loans are selected for a grading review based on certain characteristics, including credit concentrations, subprime criteria, and delinquency of 90 days or more. Definitions are as follows:

 

Pass: These are higher quality loans that do not fit any of the other categories described below.

 

Special Mention: The loans identified as special mention have an obvious flaw or a potential weakness that deserves special management attention, but which has not yet impacted collectability. These flaws or weaknesses, if left uncorrected, may result in the deterioration of the prospects of repayment or the deterioration of the Company’s credit position.

 

Substandard: These are loans with a well-defined weakness, where the Company has a serious concern about the borrower’s ability to make full repayment if the weaknesses are not corrected. The loan may contain a flaw, which could impact the borrower’s ability to repay, or the borrower’s continuance as a “going concern.” When collateral values are not sufficient to secure the loan and other weaknesses are present, the loan may be rated substandard. A loan will also be rated substandard when full repayment is expected, but it must come from the liquidation of collateral.

 

One-to-four family residential real estate loans and home equity loans that are past due 90 days or more with loan to value ratios greater than 60 percent are classified as substandard.

 

Doubtful: These are loans with major defined weaknesses, where future charge-off of a part of the credit is highly likely. The primary repayment source is no longer viable and the viability of the secondary source of repayment is in doubt. The amount of loss is uncertain due to circumstances within the credit that are not yet fully developed and the loan is rated “Doubtful” until the loss can be accurately estimated.

 

Loss: These are near term charge-offs. Loans classified as loss are considered uncollectible and of such little value that it is not desirable to continue carrying them as assets on the Company’s financial statements, even though partial recovery may be possible at some future time.

 

  18 

 

 

Community Savings Bancorp, Inc.

Notes to Consolidated Financial Statements (unaudited)

 

The following tables present the credit risk profile of the Company’s loan portfolio based on internal rating category and payment activity as of March 31, 2019 and June 30, 2018. There were no loans classified as doubtful or loss for the periods presented.

 

   Real Estate         
           Commercial         
       Home Equity   and Multi-   Consumer     
   Residential   Lines of Credit   Family   and Other   Total 
  (In thousands) 
March 31, 2019    
Pass  $24,254   $1,792   $1,188   $8,024   $35,258 
Special mention   -    -    -    -    - 
Substandard   801    47    80    -    928 
                          
Total  $25,055   $1,839   $1,268   $8,024   $36,186 
                          
June 30, 2018                         
Pass  $24,507   $1,941   $1,840   $2,855   $31,143 
Special mention   -    -    -    -    - 
Substandard   620    38    87    -    745 
                          
Total  $25,127   $1,979   $1,927   $2,855   $31,888 

 

The Company evaluates the loan risk grading system definitions and allowance for loan losses methodology on an ongoing basis. No significant changes were made to either during the past year.

 

  19 

 

 

Community Savings Bancorp, Inc.

Notes to Consolidated Financial Statements (unaudited)

 

The following tables present the Company’s loan portfolio aging analysis of the recorded investment in loans as of March 31, 2019 and June 30, 2018:

 

           90 Days and             
   30-59 Days   60-89 Days   Greater   Total       Total Loans 
   Past Due   Past Due   Past Due   Past Due   Current   Receivable 
   (In thousands) 
March 31, 2019    
Real estate                              
Residential  $73   $-   $68   $141   $24,914   $25,055 
Home equity lines of credit   -    -    -    -    1,839    1,839 
Commercial and multi-family   -    -    -    -    1,268    1,268 
Consumer and other   23    -    -    23    8,001    8,024 
                               
Total  $96   $-   $68   $164   $36,022   $36,186 
                               
                               
June 30, 2018                              
Real estate                              
Residential  $271   $3   $65   $339   $24,788   $25,127 
Home equity lines of credit   -    4    -    4    1,975    1,979 
Commercial and multi-family   74    -    13    87    1,840    1,927 
Consumer and other   12    34    -    46    2,809    2,855 
                               
Total  $357   $41   $78   $476   $31,412   $31,888 

 

A loan is considered impaired when based on current information and events, it is probable the Company will be unable to collect all amounts due from the borrower in accordance with the contractual terms of the loan. Impaired loans include nonperforming loans, but also include loans modified in troubled debt restructurings.

 

  20 

 

 

Community Savings Bancorp, Inc.

Notes to Consolidated Financial Statements (unaudited)

 

The following table presents impaired loan information as of and for the three and nine months ended March 31, 2019:

 

               For the Three Months Ended   For the Nine Months Ended 
   As of March 31, 2019   March 31, 2019   March 31, 2019 
   Recorded
Investment
   Unpaid
Principal
Balance
   Allowance
for Loan
Losses
Allocated
   Average
Recorded
Investment
   Interest
Income
Recognized
   Average
Recorded
Investment
   Interest
Income
Recognized
 
   (In thousands) 
Loans with no related allowance recorded:                                   
Real estate                                   
Residential  $545   $545   $-   $547   $-   $433   $- 
Home equity lines of credit   5    5    -    5    -    5    - 
Commercial and multi-family   79    79    -    80    -    83    - 
Consumer and other   -    -    -    -    -    -    - 
                                    
Loans with an allowance recorded:                                   
Real estate                                   
Residential   65    67    6    67    1    68    3 
Home equity lines of credit   -    -    -    -    -    -    - 
Commercial and multi-family   -    -    -    -    -    -    - 
Consumer and other   -    -    -    -    -    -    - 
                                    
Totals  $694   $696   $6   $699   $1   $589   $3 

 

  21 

 

 

Community Savings Bancorp, Inc.

Notes to Consolidated Financial Statements (unaudited)

 

The following table presents impaired loan information as of June 30, 2018 and for the three and nine months ended March 31, 2018:

 

               For the Three Months Ended   For the Nine Months Ended 
   As of June 30, 2018   March 31, 2018   March 31, 2018 
   Recorded
Investment
   Unpaid
Principal
Balance
   Allowance
for Loan
Losses
Allocated
   Average
Recorded
Investment
   Interest
Income
Recognized
   Average
Recorded
Investment
   Interest
Income
Recognized
 
   (In thousands) 
Loans with no related allowance recorded:                                   
Real estate                                   
Residential  $305   $305   $-   $292   $-   $293   $- 
Home equity lines of credit   5    5    -    6    -    6    - 
Commercial and multi-family   87    87    -    89    -    91    - 
Consumer and other   -    -    -    -    -    -    - 
                                    
Loans with an allowance recorded:                                   
Real estate                                   
Residential   69    71    7    87    1    89    3 
Home equity lines of credit   -    -    -    -    -    -    - 
Commercial and multi-family   -    -    -    -    -    -    - 
Consumer and other   -    -    -    -    -    -    - 
                                    
Totals  $466   $468   $7   $474   $1   $479   $3 

 

The recorded investment in loans excludes accrued interest receivable and loan origination fees, net due to immateriality. For purposes of this disclosure, the unpaid principal balance is not reduced for partial charge-offs.  Interest income recognized on a cash basis was not materially different than interest income recognized. 

 

  22 

 

 

Community Savings Bancorp, Inc.

Notes to Consolidated Financial Statements (unaudited)

 

The following table presents the Company’s nonaccrual loans at March 31, 2019 and June 30, 2018. The table excludes performing troubled debt restructurings.

 

   March 31,   June 30, 
   2019   2018 
   (In thousands) 
Real estate          
Residential  $545   $305 
Home equity lines of credit   5    5 
Commercial and multi-family   79    87 
Consumer and other   -    - 
           
Total nonaccrual  $629   $397 

 

No loans were modified as troubled debt restructurings during the three and nine months ended March 31, 2019 or 2018. The Company had loans modified, in previous years, in a troubled debt restructuring totaling $65,000 and $69,000 at March 31, 2019 and June 30, 2018, respectively. Troubled debt restructured loans had specific allowances totaling $6,000 and $7,000 at March 31, 2019 and June 30, 2018, respectively. At March 31, 2019, the Company had no commitments to lend additional funds to borrowers with troubled debt restructured loans.

 

The Company had no troubled debt restructurings modified in the 12 months prior to March 31, 2019 or 2018 that subsequently defaulted during the nine-month periods ended March 31, 2019 or 2018. A troubled debt restructured loan is considered to be in payment default once it is 30 days contractually past due under the loan’s modified terms.

 

  23 

 

 

Community Savings Bancorp, Inc.

Notes to Consolidated Financial Statements (unaudited)

 

Note 4:Regulatory Matters

 

The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary, actions by regulators that, if undertaken, could have a direct material effect on the Company’s consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Furthermore, the Bank’s regulators could require adjustments to regulatory capital not reflected in these financial statements.

 

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the table below) of total capital, Tier I capital, and common equity Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined), and of leverage capital to adjusted average total assets (as defined).

 

Management believes, as of March 31, 2019 and June 30, 2018, that the Bank meets all capital adequacy requirements to which it is subject.

 

Basel III requires the Bank to maintain minimum amounts and ratios of common equity Tier 1 capital to risk-weighted assets, as defined in the regulation. Under the Basel III rules, in order to avoid limitations on capital distributions, including dividends, the Bank must hold a capital conservation buffer above the adequately capitalized common equity Tier 1 capital to risk-weighted assets ratio. The capital conservation buffer is 2.50 percent. Under Basel III, the Bank elected to opt-out of including accumulated other comprehensive income in regulatory capital.

 

As of March 31, 2019 and June 30, 2018, the most recent notification categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Bank must maintain minimum total capital, Tier I capital, common equity Tier I capital and leverage capital ratios as set forth in the table. There are no conditions or events since that notification that management believes have changed the Bank’s category.

 

  24 

 

 

Community Savings Bancorp, Inc.

Notes to Consolidated Financial Statements (unaudited)

 

The Company’s and the Bank’s actual capital amounts and ratios are presented in the following table:

 

   Actual   For Capital Adequacy
Purposes
   To Be Well Capitalized
Under Prompt
Corrective Action
Provisions
 
   Amount   Ratio   Amount   Ratio   Amount   Ratio 
   (Dollars in thousands) 
As of March 31, 2019                              
Total Capital
(to Risk-Weighted Assets)
                              
Company  $8,223    29.4%  $2,239    8.0%           N/A          N/A  
Bank  $7,532    26.9%  $2,239    8.0%  $2,799    10.0%
                               
Tier I Capital
(to Risk-Weighted Assets)
                              
Company  $7,984    28.5%  $1,679    6.0%           N/A          N/A  
Bank  $7,293    26.1%  $1,679    6.0%  $2,239    8.0%
                               
Common Equity Tier I Capital
(to Risk-Weighted Assets)
                              
Company  $7,984    28.5%  $1,259    4.5%           N/A          N/A  
Bank  $7,293    26.1%  $1,259    4.5%  $1,819    6.5%
                               
Leverage Capital
(to Adjusted Average Total Assets)
                              
Company  $7,984    14.7%  $2,171    4.0%           N/A          N/A  
Bank  $7,293    13.4%  $2,171    4.0%  $2,714    5.0%
                               
As of June 30, 2018                              
Total Capital
(to Risk-Weighted Assets)
                              
Company  $8,634    37.0%  $1,868    8.0%           N/A          N/A  
Bank  $7,849    33.6%  $1,868    8.0%  $2,335    10.0%
                               
Tier I Capital
(to Risk-Weighted Assets)
                              
Company  $8,381    35.9%  $1,401    6.0%           N/A          N/A  
Bank  $7,596    32.5%  $1,401    6.0%  $1,868    8.0%
                               
Common Equity Tier I Capital
(to Risk-Weighted Assets)
                              
Company  $8,381    35.9%  $1,051    4.5%           N/A          N/A  
Bank  $7,596    32.5%  $1,051    4.5%  $1,517    6.5%
                               
Leverage Capital
(to Adjusted Average Total Assets)
                              
Company  $8,381    16.4%  $2,047    4.0%           N/A          N/A  
Bank  $7,596    14.8%  $2,047    4.0%  $2,559    5.0%

 

  25 

 

 

Community Savings Bancorp, Inc.

Notes to Consolidated Financial Statements (unaudited)

 

Note 5:Disclosures about Fair Value of Assets and Liabilities

 

Fair value is the exchange price that would be received to sell an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs. There is a hierarchy of three levels of inputs that may be used to measure fair value:

 

Level 1Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.
  
Level 2Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
  
Level 3 Significant unobservable inputs that reflect an entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

 

  26 

 

 

Community Savings Bancorp, Inc.

Notes to Consolidated Financial Statements (unaudited)

 

Recurring Measurements

 

The following table presents the fair value measurement of assets recognized in the accompanying consolidated balance sheets measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall at March 31, 2019 and June 30, 2018:

 

       Fair Value Measurement Using 
   Fair
Value
   Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
   Significant Other
Observable Inputs
(Level 2)
   Significant
Unobservable
Inputs
(Level 3)
 
   (In thousands) 
March 31, 2019                    
Mortgage-backed securities of U.S. government sponsored entities - residential  $3,401   $-   $3,401   $- 
Collateralized mortgage obligations of government sponsored entities - residential   179    -    179    - 
State and political subdivisions                    
Taxable   257    -    257    - 
Nontaxable   1,445    -    1,445    - 
                     
   $5,282   $-   $5,282   $- 
                     
June 30, 2018                    
Mortgage-backed securities of U.S. government sponsored entities - residential  $4,192   $-   $4,192   $- 
Collateralized mortgage obligations of government sponsored entities - residential   214    -    214    - 
State and political subdivisions                    
Taxable   813    -    813    - 
Nontaxable   1,432    -    1,432    - 
                     
   $6,651   $-   $6,651   $- 

 

Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets, as well as the general classification of such assets pursuant to the valuation hierarchy. There were no assets classified within Level 3 of the fair value hierarchy measured on a recurring basis.

 

  27 

 

 

Community Savings Bancorp, Inc.

Notes to Consolidated Financial Statements (unaudited)

 

Available-for-sale Securities

 

Where quoted market prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. If quoted prices are not available, then fair values are estimated by using quoted prices of securities with similar characteristics or independent asset pricing services and pricing models, the inputs of which are market-based or independently sourced market parameters, including, but not limited to yield curves, interest rates, volatilities, prepayments, defaults, cumulative loss projections and cash flow. Such securities are classified within Level 2 of the valuation hierarchy.

 

Nonrecurring Measurements

 

The following table presents fair value measurements of assets measured at fair value on a non-recurring basis and the level within the fair value hierarchy in which fair value measurements fall at March 31, 2019 and June 30, 2018:

 

       Fair Value Measurement Using 
   Fair
Value
   Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
   Significant
Other
Observable
Inputs
(Level 2)
   Significant
Unobservable
Inputs
(Level 3)
 
   (In thousands) 
March 31, 2019                    
Impaired loans                    
Real estate                    
1-4 family residential  $59   $-   $-   $59 
Forclosed assets                    
Residential real estate  $104   $-   $-   $104 
                     
June 30, 2018                    
Impaired loans                    
Real estate                    
1-4 family residential  $62   $-   $-   $62 
Foreclosed assets                    
Residential real estate  $9   $-   $-   $9 

 

Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a nonrecurring basis and recognized in the accompanying consolidated balance sheets, as well as the general classification of such assets pursuant to the valuation hierarchy. For assets classified within Level 3 of the fair value hierarchy, the process used to develop the reported fair value is described below.

 

  28 

 

 

Community Savings Bancorp, Inc.

Notes to Consolidated Financial Statements (unaudited)

 

Impaired Loans (Collateral Dependent)

 

The fair value of impaired loans with specific allocations of the allowance for loan losses is generally based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the borrower and borrower’s business, resulting in a Level 3 fair value classification. Impaired loans are evaluated on a quarterly basis for additional impairment and adjusted accordingly.

 

Foreclosed Assets

 

Assets acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. The assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell. Fair value is commonly based on recent real estate appraisals which are updated no less frequently than annually. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a level 3 classification of the inputs for determining fair value. Real estate owned properties are evaluated on a quarterly basis for additional impairment and adjusted accordingly.

 

Appraisals for collateral-dependent impaired loans and other real estate owned are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by the Company. Once received, a member of management reviews the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value in comparison with independent data sources such as recent market data or industry-wide statistics.

 

  29 

 

 

 

Community Savings Bancorp, Inc.

Notes to Consolidated Financial Statements (unaudited)

 

Unobservable (Level 3) Inputs

 

The following table presents quantitative information about unobservable inputs used in nonrecurring Level 3 fair value measurements:

 

   Fair Value   Valuation Technique  Unobservable Inputs  Range
(Weighted
Average)
 
   (In thousands)           
March 31, 2019                
Impaired loans (collateral dependent) - residential real estate  $59   Sales comparison approach  Adjustments for selling
cost and holding period
   13%
Foreclosed assets - residential real estate  $104   Sales comparison approach  Adjustments for selling
cost and discount for time
since appraisal
   17%
                 
June 30, 2018                
Impaired loans (collateral dependent) - residential real estate  $62   Sales comparison approach  Adjustments for selling
cost and holding period
   13%
Foreclosed assets - residential real estate  $9   Sales comparison approach  Adjustments for selling
cost and discount for time
since appraisal
   52%

 

  30 

 

 

Community Savings Bancorp, Inc.

Notes to Consolidated Financial Statements (unaudited)

 

Fair Value of Financial Instruments

 

The following table presents the carrying amount and fair values of the Company’s financial instruments and the level within the fair value hierarchy in which the fair value measurements fall at March 31, 2019 and June 30, 2018.

 

       Fair Value Measurement Using 
   Carrying
Amount
   Quoted Prices in
Active Markets for
Identical
Assets/Liabilities
(Level 1)
   Significant Other
Observable Inputs
(Level 2)
   Significant
Unobservable
Inputs
(Level 3)
   Fair
Value
 
   (In thousands) 
March 31, 2019                         
Financial assets                         
Cash and cash equivalents  $4,449   $4,449   $-   $-   $4,449 
Interest-earning time deposits   3,595    3,595    -    -    3,595 
Investments securities available-for-sale   5,282    -    5,282    -    5,282 
Restricted Stock   940    -    -    940    940 
Loans, net   35,947    -    -    36,880    36,880 
Accrued interest receivable   110    110    -    -    110 
Bank owned life insurance   787    787    -    -    787 
Financial liabilities                         
Deposits   41,639    33,895    7,619    -    41,514 
Federal Home Loan Bank advances   2,500    -    2,517    -    2,517 
Payments by borrowers for taxes and insurance   173    173    -    -    173 
                          
June 30, 2018                         
Financial assets                         
Cash and cash equivalents  $4,304   $4,304   $-   $-   $4,304 
Interest-earning time deposits   4,595    4,595    -    -    4,595 
Investments securities available-for-sale   6,651    -    6,651    -    6,651 
Restricted Stock   940    -    -    940    940 
Loans, net   31,635    -    -    32,195    32,195 
Accrued interest receivable   135    -    135    -    135 
Bank owned life insurance   769    -    769    -    769 
Financial liabilities                         
Deposits   40,399    32,473    7,682    -    40,155 
Federal Home Loan Bank advances   1,000    -    1,008    -    1,008 
Payments by borrowers for taxes and insurance   92    -    92    -    92 

 

  31 

 

 

Community Savings Bancorp, Inc.

Notes to Consolidated Financial Statements (unaudited)

 

The following methods were used to estimate the fair value of all other financial instruments recognized in the accompanying condensed consolidated balance sheets at amounts other than fair value.

 

Cash and Cash Equivalents and Interest-earning Time Deposits

 

The carrying amount of cash, short-term instruments and time deposits approximate fair value and are classified as Level 1.

 

Investment Securities Available-for-Sale

 

The carrying amount of investment securities available-for-sale approximate fair value and are classified as Level 2.

 

Restricted Stock

 

Due to restrictions placed on their transferability, the FHLB and COCC stock are carried at cost, which approximates fair value based on redemption provisions resulting in a Level 3 classification.

 

Loans

 

Fair values of loans are estimated as follows: For variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values, resulting in a Level 3 classification. Fair values for other loans are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality, resulting in a Level 3 classification. Impaired loans are valued at the lower of cost or fair value of collateral as described previously. The methods utilized to estimate the fair value of loans do not necessarily represent an exit price.

 

Accrued Interest Receivable

 

The carrying amounts of accrued interest approximate fair value, resulting in a Level 1 classification.

 

Bank Owned Life Insurance

 

The fair value of bank owned life insurance approximates the cash surrender value of the policies, resulting in a level 1 classification.

 

Deposits

 

The fair values disclosed for demand deposits (e.g., interest and non-interest checking, passbook savings, and certain types of money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amount) resulting in a Level 1 classification. Fair values for fixed rate certificates of deposit are estimated using a discounted cash flows calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits, resulting in a Level 2 classification.

 

  32 

 

 

Community Savings Bancorp, Inc.

Notes to Consolidated Financial Statements (unaudited)

 

Federal Home Loan Bank Advances

 

The fair values of FHLB advances are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements, resulting in a Level 2 classification.

 

Payments by Borrowers for Taxes and Insurance

 

The fair value of escrow accounts is estimated to approximate the carrying amount resulting in a Level 1 classification.

 

Off-Balance Sheet Instruments

 

Fair values of off-balance sheet, credit-related financial instruments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standing. The fair value of commitments is not material.

 

  33 

 

 

Community Savings Bancorp, Inc.

Notes to Consolidated Financial Statements (unaudited)

 

Note 6:Accumulated Other Comprehensive Income (Loss)

 

Changes in accumulated other comprehensive loss by component, net of tax, for the three and nine months ended March 31, 2019 and 2018 are as follows:

 

   Three Months Ended March 31, 
   2019   2018 
   (In thousands) 
Balance, January 1  $(61)  $(25)
           
Other comprehensive income (loss) before tax effect   51    (57)
           
Reclassification of certain tax effects from accumulated other comprehensive income (loss)   -    (5)
           
Balance, March 31  $(10)  $(87)

 

   Nine Months Ended March 31, 
   2019   2018 
   (In thousands) 
Balance, July 1  $(94)  $25 
           
Net current period other comprehensive income (loss)   84    (107)
           
Reclassification of certain tax effects from accumulated other comprehensive income (loss)   -   (5)
           
Balance, March 31  $(10)  $(87)

 

There were no material items reclassified from accumulated other comprehensive income (loss) to the consolidated statement of operations for the three and nine months ended March 31, 2019 and 2018.

 

Note 7:Recent Accounting Pronouncements

 

FASB ASU 2014-09, Revenue from Contracts with Customers. In May 2014, the Financial Accounting Standards Board (“FASB”) issued amended guidance on revenue recognition from contracts with customers. The standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most contract revenue recognition guidance, including industry-specific guidance. The core principle of the amended guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The amended guidance is effective, as to the Company, for annual reporting periods beginning after December 15, 2018, and interim periods within annual reporting periods beginning after December 15, 2019, and should be applied either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying the amendments recognized at the date of initial application. Early adoption is prohibited. ASU 2014-09 may require the Company to change how it recognizes certain components of noninterest income, but the Company does not believe it will have a material impact on the Company’s financial statements or disclosures.

 

  34 

 

 

Community Savings Bancorp, Inc.

Notes to Consolidated Financial Statements (unaudited)

 

FASB ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities. In January 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities. For public business entities, the amendments in this update include the elimination of the requirement to disclose the method(s) and significant assumptions used to estimate fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet, the requirement to use the exit price notion when measuring fair value of financial instruments for disclosure purposes, the requirement to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments, the requirement for separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (that is, securities or loans and receivables) on the balance sheet or accompanying notes to the financial statements, and the amendments clarify that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity's other deferred tax assets.

 

The amendments in this update are effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Early adoption of the amendments in this update is not permitted, except that early application by public business entities to financial statements of fiscal years or interim periods that have not yet been issued or, by all other entities, that have not yet been made available for issuance are permitted as of the beginning of the fiscal year of adoption for the following amendment: An entity should present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk if the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. An entity should apply the amendments to this update by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The Company does not believe it will have a material impact on the Company’s financial statements or disclosures.

 

FASB ASU 2016-02, Leases. In February 2016, the FASB issued ASU 2016-02, Leases. Under the new guidance, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the commencement date:

 

  A lease liability, which is a lessee‘s obligation to make lease payments arising from a lease, measured on a discounted basis; and

 

  A right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term.

 

  35 

 

 

Community Savings Bancorp, Inc.

Notes to Consolidated Financial Statements (unaudited)

 

Under the new guidance, lessor accounting is largely unchanged. Certain targeted improvements were made to align, where necessary, lessor accounting with the lessee accounting model and Topic 606, Revenue from Contracts with Customers.

 

The new lease guidance simplified the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. Lessees will no longer be provided with a source of off-balance sheet financing.

 

The amendments in ASU 2016-02 are effective, as to the Company, for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early application is permitted for all public business entities upon issuance. Lessees (for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees and lessors may not apply a full retrospective transition approach. Management is currently evaluating the impact of adopting this guidance on the Company’s financial statements.

 

FASB ASU 2016-13, Financial Instruments-Credit Losses. In June 2016, the FASB issued ASU 2016-13. The amendments in this ASU replace the incurred loss model for recognition of credit losses with a methodology that reflects expected credit losses over the life of the loan and requires consideration of a broader range of reasonable and supportable information to calculate credit loss estimates. The amendments are effective, as to the Company, for annual reporting periods beginning after December 15, 2020 and for interim periods within fiscal years beginning after December 15, 2021. The Company is currently evaluating the impact of these amendments to the Company’s financial position and results of operations.

 

FASB ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which addresses eight specific cash flow issues with the objective of reducing diversity in practice. Among these include recognizing cash payments for debt prepayment or debt extinguishment as cash outflows for financing activities; cash proceeds received from the settlement of insurance claims should be classified on the basis of the related insurance coverage; and cash proceeds received from the settlement of bank-owned life insurance policies should be classified as cash inflows from investing activities while the cash payments for premiums on bank-owned policies may be classified as cash outflows for investing activities, operating activities, or a combination of investing and operating activities. The amendments in this Update are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period. The amendments in this Update should be applied using a retrospective transition method to each period presented. If it is impracticable to apply the amendments retrospectively for some of the issues, the amendments for those issues would be applied prospectively as of the earliest date practicable. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s statement of cash flows.

 

  36 

 

 

Community Savings Bancorp, Inc.

Notes to Consolidated Financial Statements (unaudited)

 

FASB ASU 2017-08, Receivables-Nonrefundable Fees and Other Costs. In March 2017, the FASB issued ASU 2017-08. The amendment shortens the amortization period for certain callable debt securities purchased at a premium. Upon adoption of the standard, premiums on these qualifying callable debt securities will be amortized to the earliest call date. Discounts on purchased debt securities will continue to be accreted to maturity. This ASU will become effective for the Company for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted, including adoption in an interim period. Upon transition, entities should apply the guidance on a modified retrospective basis, with a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption and provide the disclosures required for a change in accounting principle. Management has not determined the expected effect of the adoption of ASU 2017-08 on the Company’s financial statements.

 

FASB ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value. In August, 2018, the FASB issued ASU 2018-13, "Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement," which changes the fair value measurement disclosure requirements of ASC 820. The ASU amends ASC 820 to add, remove, and modify certain fair value measurement disclosure requirements, primarily related to Level 3 fair value measurements. The ASU is effective for all entities for fiscal years beginning after December 15, 2019, including interim periods therein. Early adoption is permitted for any eliminated or modified disclosures upon issuance of this ASU. Management is evaluating the new ASU, but does not expect the ASU to have a material effect on the Company's financial position or results of operations.

 

FASB ASU 2019-01, Leases (Topic 842): Codification Improvements. In March 2019, the FASB issued ASU 2019-01, Leases (Topic 842): Codification Improvements, which addressed issues lessors sometimes encounter. Specifically addressed in this Update were issues related to 1) determining the fair value of the underlying asset by the lessor that are not manufacturers or dealers (generally financial institutions and captive finance companies), and 2) lessors that are depository and lending institutions should classify principal and payments received under sales-type and direct financing leases within investing activities in the cash flow statement. The ASU also exempts both lessees and lessors from having to provide the interim disclosures required by ASC 250-10-50-3 in the fiscal year in which a company adopts the new leases standard. The amendments addressing the two lessor accounting issues are effective for public business entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. For all other entities, the effective date is 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.

 

  37 

 

 

Community Savings Bancorp, Inc.

Notes to Consolidated Financial Statements (unaudited)

 

FASB ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments – Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments. 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. This Update is not expected to have a significant impact on the Company’s financial statements.

 

Note 8:Loss Per Share

 

Basic loss per share (“LPS”) is calculated by dividing net loss applicable to common stock by the weighted-average number of shares of common stock outstanding during the period. Unallocated common shares held by the Company’s Employee Stock Ownership Plan (the “ESOP”) are shown as a reduction in stockholders’ equity and are excluded from weighted-average common shares outstanding for basic and diluted LPS calculations until they are committed to be released.

 

Loss per share for the three months ended March 31, 2019 was $(0.14), calculated using 409,019 average shares outstanding less 29,420 unallocated shares held by the ESOP. Loss per share for the nine months ended March 31, 2019 was $(0.31), calculated using 424,555 average shares outstanding, less 29,420 unallocated shares held by the ESOP. The Company had no dilutive or potentially dilutive securities at March 31, 2019. Loss per share for the three and nine months ended March 31, 2018 was $(0.26) and $(0.73) respectively, calculated using 441,290 and 440,201 shares issued, respectively, less 31,054 unallocated shares held by the ESOP. The Company had no dilutive or potentially dilutive securities at March 31, 2018.

 

Note 9:Employee Stock Ownership Plan (ESOP)

 

As part of the Company’s stock conversion, shares were purchased by the ESOP with a loan from Community Savings Bancorp, Inc. All employees of the Bank meeting certain tenure requirements are entitled to participate in the ESOP. Compensation expense related to the ESOP was $6,000 and $18,000 for the three and nine months ended March 31, 2019. Compensation expense related to the ESOP was $6,000 and $18,000 for the three and nine months ended March 31, 2018.

 

The stock price at the formation date was $10.00. The aggregate fair value of the 29,420 unallocated shares was $426,590 based on the $14.50 closing price of our common stock on March 31, 2019.

 

Note 10:Equity Incentive Plan

 

On March 12, 2019, Community Savings Bancorp, Inc. issued 9,710 shares of common stock to distribute to officers and directors as a restricted stock award under the Equity Incentive Plan approved by the Board of Directors February 19, 2018.

 

  38 

 

 

Community Savings Bancorp, Inc.

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Management’s discussion and analysis of the financial condition at March 31, 2019 and results of operations for the three and nine months ended March 31, 2019 and 2018, is intended to assist in understanding the financial condition and results of operations of the Company. The information contained in this section should be read in conjunction with the unaudited consolidated financial statements and the notes thereto, appearing in Part I, Item 1 of this quarterly report on Form 10-Q.

 

Forward-Looking Statements

 

This document contains forward-looking statements, which can be identified by the use of words such as “estimate,” “project,” “believe,” “intend,” “anticipate,” “plan,” “seek,” “expect” and similar expressions. These forward-looking statements include: statements of goals, intentions and expectations, statements regarding prospects and business strategy, statements regarding asset quality and market risk, and estimates of future costs, benefits and results.

 

These forward-looking statements are subject to significant risks, assumptions and uncertainties, including, among other things, the following: (1) general economic conditions, (2) competitive pressure among financial services companies, (3) changes in interest rates, (4) deposit flows, (5) loan demand, (6) changes in legislation or regulation, (7) changes in accounting principles, policies and guidelines and (8) other economic, competitive, governmental, regulatory and technological factors affecting our operations, pricing, products and services.

 

Because of these and other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements. We have no obligation to update or revise any forward-looking statements to reflect any changed assumptions, any unanticipated events or any changes in the future.

 

Comparison of Financial Condition at March 31, 2019 and June 30, 2018

 

Total Assets. Total assets increased $2.1 million, or 4.2%, to $52.1 million at March 31, 2019 from $50.0 million at June 30, 2018. The increase was due primarily to an increase in net loans of $4.3 million, partially offset by a $1.4 million decrease in investment securities available-for-sale and a decrease in interest-earning time deposits in other institutions of $1.0 million.

 

Cash and Cash Equivalents. Cash and cash equivalents increased $144,000, or 3.4%, to $4.4 million at March 31, 2019 from $4.3 million at June 30, 2018. The increase in cash and cash equivalents was due primarily to a $1.2 million increase in deposits, an increase of $1.5 million in FHLB advances, a $1.4 million decrease in investment securities available for sale, and a $1 million decrease in interest-earning time deposits in other institutions, partially offset by a $4.3 million increase in net loans.

 

Investment Securities available-for-sale. Investment securities available-for-sale decreased $1.4 million, or 20.1%, to $5.3 million at March 31, 2019 from $6.7 million at June 30, 2018. The decrease in investment securities available-for-sale was primarily due to principal repayments on mortgage-backed securities totaling $874,000 and the maturity of municipal bond in the amount of $550,000.

 

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Community Savings Bancorp, Inc.

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Net Loans. Net loans increased $4.3 million, or 13.6%, to $35.9 million at March 31, 2019 from $31.6 million at June 30, 2018. The increase in net loans was due primarily to an increase of $5.1 million, or 179.3%, in consumer and other loans to $8.0 million at March 31, 2019 from $2.9 million at June 30, 2018, partially offset by a decrease of $659,000, or 34.2%, in commercial and multi-family loans and a decrease of $140,000, or 7.1%, in home equity lines of credit. Loans originated during the nine months ended March 31, 2019 totaled $8.9 million, of which $6.7 million were consumer and other loans and $2.1 million were one- to four family residential loans. The substantial increase in consumer loans was due to an increase in auto loans, most of which were generated from applications taken at car dealerships as part of our indirect auto lending program. This program was implemented beginning in June of 2018.

 

Deposits. Deposits increased $1.2 million, or 3.1%, to $41.6 million at March 31, 2019 from $40.4 million at June 30, 2018. The increase resulted primarily from a $1.6 million, or 7.2%, increase in savings and money market accounts, partially offset by a decrease in demand deposits of $218,000, or 2.1%, and a decrease in time deposits of $181,000, or 2.3%.

 

Bank Owned Life Insurance. Cash surrender value of Bank Owned Life Insurance increased $18,000, or 2.3%, to $787,000 at March 31, 2019 from $769,000 at June 30, 2018.

 

FHLB Advances. FHLB advances increased $1.5 million, or 150.0%, to $2.5 million at March 31, 2019 from $1.0 million at June 30, 2018, as we utilized certain FHLB advances to partially fund the increase in consumer and other loans.

 

Shareholders’ Equity. Shareholders’ equity decreased $611,000, or 7.4%, to $7.7 million at March 31, 2019 from $8.3 million at June 30, 2018. The decrease was due primarily to a net loss of $123,000 during the nine months ended March 31, 2019 and a $593,000 stock buyback, partially offset by an increase in accumulated other comprehensive income of $106,000 during the period.

 

Comparison of Operating Results for the Three-Month Periods Ended March 31, 2019 and 2018

 

General. For the three months ended March 31, 2019, we had a net loss of $53,000 compared to a net loss of $108,000 for the three months ended March 31, 2018, an increase in income of $55,000. The increase in income resulted primarily from an increase in net interest income of $48,000, an increase in noninterest income of $12,000, and decrease of $15,000 in non-interest expense, which were partially offset by a decrease of $20,000 in federal income tax benefits.

 

Average Balance Sheets. The following table sets forth average balance sheets, average yields and costs, and certain other information for the three-month periods ended March 31, 2019 and 2018. All average balances are daily average balances. Nonaccrual loans were included in the computation of average balances, but have been reflected in the table as loans carrying a zero yield. The yields set forth below include the effect of net deferred costs, discounts and premiums that are accreted to interest income.

 

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Community Savings Bancorp, Inc.

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

   For the Three Months Ended March 31, 
   2019   2018 
                         
   Average
Outstanding
Balance
   Interest   Yield/Rate   Average
Outstanding
Balance
   Interest   Yield/Rate 
   (Dollars in thousands) 
Interest-earning assets:                              
Loans  $36,020   $412    4.58%  $32,554   $361    4.44%
Investment securities   5,406    33    2.48%   7,196    40    2.22%
Other interest-earning assets (1)   9,340    62    2.65%   9,435    46    1.95%
Total interest-earning assets   50,766    507    3.99%   49,185    447    3.64%
Noninterest-earning assets   3,753              1,922           
Allowance for loan losses   (245)             (253)          
Total assets  $54,274             $50,854           
                               
Interest-bearing liabilities:                              
Demand accounts  $2,397    1    0.17%  $2,186    1    0.18%
Savings and money market accounts   25,470    16    0.25%   22,559    15    0.27%