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Equitable Financial
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
10-K 2016-06-30 Annual: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-Q 2015-12-31 Quarter: 2015-12-31
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10-K 2015-06-30 Annual: 2015-06-30
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EQFN 2018-03-31
Part I – Financial Information
Item 1.Financial Statements
Note 1.Basis of Presentation
Note 2.New Accounting Pronouncements
Note 3.Securities
Note 4.Loans
Note 5.Borrowings
Note 6.Regulatory Matters
Note 7.Employee Benefit Plan
Note 8.Earnings per Share
Note 9.Fair Value Measurements
Note 10.Accumulated Other Comprehensive Loss
Note 11.Income Taxes
Note 12.Stock Buyback
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 – Other Information
Item 1.Legal Proceedings.
Item 1A.Risk Factors.
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds.
Item 3. Defaults Upon Senior Securities.
Item 4. Mine Safety Disclosures.
Item 5. Other Information.
Item 6. Exhibits.
EX-31.1 eqfn-20180331ex3114ea83a.htm
EX-31.2 eqfn-20180331ex312013f80.htm
EX-32.1 eqfn-20180331ex3215f4f3a.htm
EX-32.2 eqfn-20180331ex3229ecb89.htm

Equitable Financial Earnings 2018-03-31

EQFN 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 eqfn-20180331x10q.htm 10-Q eqfn_Current_Folio_10Q

 

UNITED STATES

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

 

 

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. 333-202707

 

Equitable Financial Corp.

(Exact name of registrant as specified in its charter)

 

Maryland

    

32-0467709

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification Number)

 

 

 

113 North Locust Street

 

 

Grand Island, NE

 

68801

(Address of principal executive offices)

 

(Zip Code)

 

(308) 382-3136

(Registrant’s telephone number, including area code)

 

N/A

(Former name, former address and former fiscal year, 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 ☒ 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, a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

 

 

 

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

☐ (Do not check if a 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  ☒

 

Shares of the Registrant’s common stock, par value $0.01 per share, 3,317,670 issued and outstanding as of May 14, 2018.

 

 

 


 

 

EQUITABLE FINANCIAL CORP.

FORM 10-Q

 

INDEX

 

 

 

Page

Part I.  Financial Information 

 

 

 

Item 1. 

Financial Statements

3

 

 

 

 

Consolidated Balance Sheets

3

 

Consolidated Statements of Income

4

 

Consolidated Statements of Comprehensive Income

5

 

Consolidated Statement of Changes in Stockholders’ Equity

6

 

Consolidated Statements of Cash Flows

7

 

Notes to Consolidated Financial Statements

9

 

 

 

Item 2. 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

32

 

 

 

Item 3. 

Quantitative and Qualitative Disclosures about Market Risk

42

 

 

 

Item 4. 

Controls and Procedures

42

 

 

 

Part II.  Other Information 

 

 

 

Item 1. 

Legal Proceedings

43

 

 

 

Item 1A. 

Risk Factors

43

 

 

 

Item 2. 

Unregistered Sales of Equity Securities and Use of Proceeds

43

 

 

 

Item 3. 

Defaults upon Senior Securities

43

 

 

 

Item 4. 

Mine Safety Disclosures

43

 

 

 

Item 5. 

Other Information

43

 

 

 

Item 6. 

Exhibits

44

 

 

 

Signatures 

46

 

 

2


 

PART I – FINANCIAL INFORMATION

 

Item 1.Financial Statements

 

Equitable Financial Corp. and Subsidiary

Consolidated Balance Sheets

 

 

 

 

 

 

 

 

 

 

 

(Unaudited)

 

 

 

 

 

March 31, 2018

    

June 30, 2017

 

Assets

 

 

 

 

 

 

 

Cash and due from financial institutions

 

$

7,669,608

 

$

4,881,007

 

Interest-earning deposits

 

 

28,317,000

 

 

 —

 

 

 

 

35,986,608

 

 

4,881,007

 

Securities available-for-sale

 

 

1,306,454

 

 

1,410,955

 

Securities held-to-maturity

 

 

710,943

 

 

735,978

 

Federal Home Loan Bank stock, at cost

 

 

282,300

 

 

453,400

 

Loans, net of allowance for loan losses of $4,598,000 and $3,555,000, respectively

 

 

255,946,923

 

 

236,545,125

 

Premises and equipment, net

 

 

5,369,485

 

 

5,424,855

 

Foreclosed assets, net

 

 

223,200

 

 

223,200

 

Accrued interest receivable

 

 

1,512,532

 

 

1,297,908

 

Deferred taxes, net

 

 

810,004

 

 

862,009

 

Customer list intangible

 

 

1,441,264

 

 

289,058

 

Other assets

 

 

2,077,815

 

 

1,718,993

 

 

 

 

 

 

 

 

 

Total assets

 

$

305,667,528

 

$

253,842,488

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

Noninterest-bearing deposits

 

$

37,452,083

 

$

29,546,051

 

Interest-bearing deposits

 

 

223,257,251

 

 

179,512,265

 

 

 

 

260,709,334

 

 

209,058,316

 

Federal funds purchased

 

 

 —

 

 

399,000

 

Federal Home Loan Bank Borrowings

 

 

5,000,000

 

 

6,745,400

 

Advance payments from borrowers for taxes and insurance

 

 

562,082

 

 

432,960

 

Accrued interest payable and other liabilities

 

 

2,743,811

 

 

820,229

 

Total liabilities

 

 

269,015,227

 

 

217,455,905

 

 

 

 

 

 

 

 

 

Common stock in ESOP subject to contingent repurchase obligation

 

 

992,922

 

 

815,280

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

Common stock, $0.01 par value, 25,000,000 shares authorized 3,317,670 and 3,372,532 shares issued and outstanding at March 31, 2018 and June 30, 2017, respectively

 

 

33,177

 

 

33,725

 

Additional paid-in capital

 

 

25,213,501

 

 

25,794,124

 

Retained earnings

 

 

13,046,057

 

 

12,474,958

 

Unearned ESOP shares

 

 

(1,003,894)

 

 

(1,107,692)

 

Shares reserved for stock compensation

 

 

(608,620)

 

 

(797,950)

 

Accumulated other comprehensive loss net of tax

 

 

(27,920)

 

 

(10,582)

 

Reclassification of ESOP shares

 

 

(992,922)

 

 

(815,280)

 

Total stockholders’ equity

 

 

35,659,379

 

 

35,571,303

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

305,667,528

 

$

253,842,488

 

 

See Notes to Consolidated Financial Statements.

3


 

Equitable Financial Corp. and Subsidiary

Consolidated Statements of Income

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three months ended

 

For the nine months ended

 

 

    

March 31, 2018

    

March 31, 2017

    

March 31, 2018

    

March 31, 2017

 

Interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

 

$

2,870,207

 

$

2,301,482

 

$

8,436,343

 

$

6,737,414

 

Securities

 

 

15,113

 

 

13,417

 

 

47,940

 

 

32,500

 

Other

 

 

27,652

 

 

5,329

 

 

37,858

 

 

21,704

 

Total interest income

 

 

2,912,972

 

 

2,320,228

 

 

8,522,141

 

 

6,791,618

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

448,530

 

 

281,285

 

 

1,209,968

 

 

813,465

 

Federal Home Loan Bank borrowings

 

 

19,400

 

 

1,011

 

 

69,060

 

 

1,011

 

Other

 

 

1,237

 

 

595

 

 

4,895

 

 

1,357

 

Total interest expense

 

 

469,167

 

 

282,891

 

 

1,283,923

 

 

815,833

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

2,443,805

 

 

2,037,337

 

 

7,238,218

 

 

5,975,785

 

Provision for loan losses

 

 

134,497

 

 

60,830

 

 

1,001,836

 

 

382,703

 

Net interest income after provision for loan losses

 

 

2,309,308

 

 

1,976,507

 

 

6,236,382

 

 

5,593,082

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

Service charges on deposit accounts

 

 

164,781

 

 

150,976

 

 

491,359

 

 

468,544

 

Brokerage fee income

 

 

142,094

 

 

160,542

 

 

453,602

 

 

545,779

 

Gain on sale of loans

 

 

71,205

 

 

103,721

 

 

374,520

 

 

595,439

 

Other loan fees

 

 

73,286

 

 

57,644

 

 

180,477

 

 

208,947

 

Other income

 

 

60,869

 

 

38,930

 

 

263,189

 

 

107,231

 

Total noninterest income

 

 

512,235

 

 

511,813

 

 

1,763,147

 

 

1,925,940

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

1,299,035

 

 

1,225,488

 

 

3,847,371

 

 

3,538,488

 

Director and committee fees

 

 

39,042

 

 

41,557

 

 

123,242

 

 

122,342

 

Data processing fees

 

 

164,304

 

 

146,346

 

 

471,017

 

 

433,039

 

Occupancy and equipment

 

 

266,986

 

 

247,386

 

 

767,093

 

 

729,916

 

Regulatory fees and deposit insurance premium

 

 

70,144

 

 

42,804

 

 

183,401

 

 

126,003

 

Advertising and public relations

 

 

64,796

 

 

58,207

 

 

179,041

 

 

153,379

 

Professional fees

 

 

99,400

 

 

53,198

 

 

306,976

 

 

310,931

 

Supplies, telephone and postage

 

 

67,865

 

 

75,480

 

 

206,823

 

 

207,570

 

Other expenses

 

 

244,701

 

 

183,888

 

 

584,313

 

 

558,685

 

Total noninterest expense

 

 

2,316,273

 

 

2,074,354

 

 

6,669,277

 

 

6,180,353

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

 

505,270

 

 

413,966

 

 

1,330,252

 

 

1,338,669

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

 

(155,170)

 

 

(138,620)

 

 

(759,153)

 

 

(488,801)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

350,100

 

$

275,346

 

$

571,099

 

$

849,868

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

 

$

0.11

 

$

0.08

 

$

0.18

 

$

0.26

 

Diluted earnings per share

 

$

0.11

 

$

0.08

 

$

0.18

 

$

0.25

 

 

See Notes to Consolidated Financial Statements.

4


 

Equitable Financial Corp. and Subsidiary

Consolidated Statements of Comprehensive Income

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three months ended

 

For the nine months ended

 

 

    

March 31, 2018

    

March 31, 2017

    

March 31, 2018

    

March 31, 2017

 

Net income

 

$

350,100

 

$

275,346

 

$

571,099

 

$

849,868

 

Other comprehensive gain/(loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain/(loss) on securities available-for-sale, net of tax

 

 

(14,211)

 

 

4,941

 

 

(17,338)

 

 

(22,306)

 

Comprehensive income

 

$

335,889

 

$

280,287

 

$

553,761

 

$

827,562

 

 

See Notes to Consolidated Financial Statements.

 

 

5


 

Equitable Financial Corp. and Subsidiary

Consolidated Statement of Changes in Stockholders’ Equity

For the nine months ended March 31, 2018

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

Accumulated

 

Amount

 

 

 

 

 

 

 

 

 

 

 

 

 

Reserved for

 

Other

 

Reclassified

 

 

 

 

 

Common

 

Additional

 

Retained

 

Unearned

 

Stock

 

Comprehensive

 

on ESOP

 

 

 

 

    

Stock

    

Paid-in Capital

    

Earnings

    

ESOP Shares

    

Compensation

    

Loss

    

Shares

    

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, June 30, 2017

 

$

33,725

 

$

25,794,124

 

$

12,474,958

 

$

(1,107,692)

 

$

(797,950)

 

$

(10,582)

 

$

(815,280)

 

$

35,571,303

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

 

 

 

 

 

 

 

571,099

 

 

 

 

 

 

 

 

 

 

 

 

 

 

571,099

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(17,338)

 

 

 

 

 

(17,338)

 

Release of 11,897 unearned ESOP shares

 

 

 

 

 

20,723

 

 

 

 

 

103,798

 

 

 

 

 

 

 

 

 

 

 

124,521

 

Stock compensation expense

 

 

 

 

 

(19,702)

 

 

 

 

 

 

 

 

189,330

 

 

 

 

 

 

 

 

169,628

 

Stock Buyback

 

 

(548)

 

 

(581,644)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(582,192)

 

Reclassification due to release and changes in fair value of common stock in ESOP subject to contingent repurchase obligation of ESOP shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(177,642)

 

 

(177,642)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, March 31, 2018

 

$

33,177

 

$

25,213,501

 

$

13,046,057

 

$

(1,003,894)

 

$

(608,620)

 

$

(27,920)

 

$

(992,922)

 

$

35,659,379

 

 

See Notes to Consolidated Financial Statements.

 

 

6


 

Equitable Financial Corp. and Subsidiary

Consolidated Statements of Cash Flows

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

For the nine months ended

 

 

    

March 31, 2018

    

March 31, 2017

 

Cash Flows from Operating Activities:

 

 

 

 

 

 

 

Net income

 

$

571,099

 

$

849,868

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

Depreciation

 

 

264,255

 

 

254,167

 

Federal Home Loan Bank stock dividends

 

 

(7,900)

 

 

(1,800)

 

ESOP expense

 

 

124,521

 

 

111,615

 

Stock compensation expense

 

 

169,628

 

 

57,701

 

Amortization of deferred loan origination costs, net

 

 

381,298

 

 

369,661

 

Amortization of intangibles

 

 

36,677

 

 

16,676

 

Amortization of premiums and discounts

 

 

903

 

 

8,641

 

Gain on sale of loans

 

 

(374,520)

 

 

(595,439)

 

(Gain)/Loss on sale of foreclosed assets

 

 

30,298

 

 

(4,579)

 

Loss on disposal of premises and equipment

 

 

5,078

 

 

 —

 

Provision for loan losses

 

 

1,001,836

 

 

382,703

 

Deferred taxes

 

 

57,442

 

 

(67,456)

 

Loans originated for sale

 

 

(14,105,906)

 

 

(23,044,937)

 

Proceeds from sale of loans

 

 

14,350,012

 

 

23,355,172

 

Loss on investment in partnership

 

 

 —

 

 

34,859

 

Changes in:

 

 

 

 

 

 

 

Accrued interest receivable

 

 

(214,624)

 

 

(85,835)

 

Other assets

 

 

(213,409)

 

 

(66,893)

 

Accrued interest payable and other liabilities

 

 

963,582

 

 

202,857

 

Net cash provided by operating activities

 

 

3,040,270

 

 

1,776,981

 

 

 

 

 

 

 

 

 

Cash Flows from Investing Activities:

 

 

 

 

 

 

 

Net change in loans

 

 

(21,310,398)

 

 

(23,303,567)

 

Proceeds from sale of foreclosed assets, net

 

 

491,288

 

 

243,226

 

Securities available-for-sale:

 

 

 

 

 

 

 

Proceeds from calls and principal repayments

 

 

80,909

 

 

175,728

 

Purchases

 

 

 —

 

 

(985,400)

 

Securities held-to-maturity:

 

 

 

 

 

 

 

Proceeds from calls and principal repayments

 

 

24,948

 

 

35,374

 

Redemption of Federal Home Loan Bank stock

 

 

400,500

 

 

 —

 

Purchases of Federal Home Loan Bank stock

 

 

(221,500)

 

 

 —

 

Purchase of customer list intangible

 

 

(240,000)

 

 

 —

 

Purchase of premises and equipment

 

 

(213,964)

 

 

(439,626)

 

Net cash used in investing activities

 

 

(20,988,217)

 

 

(24,274,265)

 

 

(Continued)

7


 

Equitable Financial Corp. and Subsidiary

Consolidated Statements of Cash Flows (Continued)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

For the nine months ended

 

 

    

March 31, 2018

    

March 31, 2017

 

Cash Flows from Financing Activities:

 

 

 

 

 

 

 

Net change in deposits

 

$

51,651,018

 

$

15,926,015

 

Net change in federal funds purchased

 

 

(399,000)

 

 

 —

 

Proceeds from Federal Home Loan Bank borrowings

 

 

23,000,000

 

 

2,620,000

 

Repayments of Federal Home Loan Bank borrowings

 

 

(24,745,400)

 

 

( 2,620,000 )

 

Net change in advance payments from borrowers for taxes and insurance

 

 

129,122

 

 

58,380

 

Stock Buyback

 

 

(582,192)

 

 

(1,027,463)

 

Net cash provided by financing activities

 

 

49,053,548

 

 

14,956,932

 

 

 

 

 

 

 

 

 

Increase/(Decrease) in cash and cash equivalents

 

 

31,105,601

 

 

(7,540,352)

 

 

 

 

 

 

 

 

 

Cash and Cash Equivalents:

 

 

 

 

 

 

 

Beginning

 

 

4,881,007

 

 

14,947,296

 

 

 

 

 

 

 

 

 

Ending

 

$

35,986,608

 

$

7,406,944

 

 

 

 

 

 

 

 

 

Supplemental Cash Flow Information:

 

 

 

 

 

 

 

Interest paid on deposits and borrowings

 

$

1,243,072

 

$

816,262

 

Income taxes paid

 

$

633,401

 

$

162,879

 

 

 

 

 

 

 

 

 

Supplemental Noncash Disclosure:

 

 

 

 

 

 

 

Transfer of loans to foreclosed assets

 

$

521,586

 

$

 —

 

Deferred payments on purchase of customer list intangible

 

$

960,000

 

$

 —

 

 

See Notes to Consolidated Financial Statements.

 

8


 

Table of Contents

Equitable Financial Corp. and Subsidiary

 

Notes to Consolidated Financial Statements (Unaudited)

 

 

Note 1.Basis of Presentation

 

The accompanying consolidated financial statements of Equitable Financial Corp. (the “Company”) and its wholly owned subsidiary Equitable Bank (the “Bank”) have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and in accordance with SEC rules and regulations. Accordingly, the statements do not include all the information and footnotes required by GAAP for complete financial statements. These interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto that were included in the Company’s annual report for the year ended June 30, 2017.  The consolidated balance sheet of the Company as of June 30, 2017 has been derived from the audited consolidated balance sheet of the Company as of that date.  All significant intercompany transactions are eliminated in consolidation.  In the opinion of the Company’s management, all adjustments necessary (i) for a fair presentation of the financial statements for the interim periods included herein and (ii) to make such financial statements not misleading have been made and are of a normal and recurring nature. Interim results are not necessarily indicative of results for a full year.

 

In preparing the financial statements, management is required to make estimates and assumptions that affect the recorded amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses for the period.  Actual results could differ from those estimates.  For further information with respect to significant accounting policies followed by the Company in preparation of the financial statements, refer to the Company’s annual report for the year ended June 30, 2017.  

 

The Bank is a federally chartered stock savings bank and a member of the Federal Home Loan Bank (“FHLB”) system. The Bank maintains insurance on deposit accounts with the Deposit Insurance Fund of the Federal Deposit Insurance Corporation (“FDIC”).  

 

Note 2.New Accounting Pronouncements

 

In May 2014, the Financial Accounting Standards Board (“the FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers.  This ASU is effective for the Company beginning with the fiscal year ending June 30, 2019, including interim periods within these fiscal years.  The FASB issued this ASU to clarify the principles for recognizing revenue and to develop a common revenue standard.  The Company believes this will have a minimal impact on its financial statements.

 

In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities.  The amendments in this ASU address certain aspects of recognition, measurement, presentation and disclosure of financial instruments.  The amendments in this ASU are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years.  This ASU is not expected to have a material impact on the Company’s consolidated financial statements.

 

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), intended to improve financial reporting about leasing transactions. This ASU is effective for the Company with the interim period beginning July 1, 2019. We are currently evaluating the effect of this proposal on our financial statements.

 

In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments. The purpose of this ASU is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity. This ASU replaces the current incurred loss methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. This ASU will be effective for annual periods beginning after December 15, 2019, and interim periods within those annual periods.  This ASU is expected to have an impact on the Company’s consolidated financial statements. The Company is currently evaluating the effect this will have on its financial statements.

 

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows; Classification of Certain Cash Receipts and Cash Payments.  The purpose of this ASU is to address existing diversity in practice related to specific cash

9


 

Table of Contents

Equitable Financial Corp. and Subsidiary

 

Notes to Consolidated Financial Statements (Unaudited)

 

flow issues.  This ASU will be effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years.  The Company does not expect this ASU to have a material impact on the Company’s consolidated financial statements.

 

In October 2016, the FASB issued ASU 2016-16, Intra-Entity Transfers of Assets Other Than Inventory.  The purpose of this ASU is to improve the accounting for income tax consequences of intra-entity transfers of assets other than inventory.  This ASU will be effective for annual reporting periods beginning after December 15, 2017.  The Company does not expect this ASU to have a material impact on the Company’s consolidated financial statements.

 

In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other.  The purpose of this ASU is to simplify how an entity is required to test goodwill for impairment.  This ASU will be effective for annual fiscal years beginning after December 15, 2019.  The Company does not expect this ASU to have a material impact on the Company’s consolidated financial statements.

 

In February 2017, the FASB issued ASU 2017-05, Other Income – Gains and Losses from the Derecognition of Nonfinancial Assets.  The purpose of this ASU is to clarify the scope for recognizing gains and losses from the transfer of nonfinancial assets in contracts with noncustomers and add guidance for partial sales of nonfinancing assets.  This ASU is effective for the Company beginning with the fiscal year ending June 30, 2019.  The Company does not expect this ASU to have a material impact on the Company’s consolidated financial statements.

 

In March 2017, the FASB issued ASU 2017-08, Receivables – Nonrefundable Fees and Other Costs.  The purpose of this ASU is to shorten the amortization period of certain callable debt securities held at a premium.  This ASU will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018.  The Company does not expect this ASU to have a material impact on the Company’s consolidated financial statements.

 

In May 2017, the FASB issued ASU 2017-09, Compensation – Stock Compensation.  The purpose of this ASU is to provide clarity and reduce both diversity in practice and cost and complexity when applying the guidance in Topic 718, Compensation – Stock Compensation, to a change to the terms or conditions of a share-based payment award.  This ASU will be effective for annual periods, and interim periods within those annual periods, beginning December 15, 2017.  The Company adopted this standard effective July 1, 2017 and it did not have a material impact to the Company’s consolidated financial statements.

 

In July 2017, the FASB issued ASU 2017-11, Earnings Per Share, Distinguishing Liabilities from Equity, and Derivatives and Hedging.  The purpose of this ASU is to address complexity of accounting for certain financial instruments with down round features and the difficulty of navigating Topic 480, Distinguishing Liabilities from Equity.  This ASU is effective for fiscal years beginning after December 15, 2019.  The Company does not expect this ASU to have a material impact on the Company’s consolidated financial statements.

 

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging.  The purpose of this ASU is to improve the hedge accounting model to facilitate financial reporting that more closely reflects an entity’s risk management activities.  This ASU will be effective for fiscal years beginning after December 15, 2018.  The  Company does not expect this ASU to have a material impact on the Company’s consolidated financial statements.

 

In February 2018, the FASB issued ASU 2018-02, Income Statement – Reporting Comprehensive Income.  The purpose of this ASU is to allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act.  This amendment is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years.  The Company does not expect this ASU to have a material impact on the Company’s consolidated financial statements.

 

 

 

10


 

Table of Contents

Equitable Financial Corp. and Subsidiary

 

Notes to Consolidated Financial Statements (Unaudited)

 

Note 3.Securities

 

The fair value of securities available-for-sale and the related gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) are as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

    

Gross

    

Gross

    

 

 

 

 

Amortized

 

Unrealized

 

Unrealized

 

 

 

March 31, 2018

 

Cost

 

Gains

 

Losses

 

Fair Value

 

U.S. Government-sponsored agencies securities

 

$

988,759

 

$

 —

 

$

(32,856)

 

$

955,903

 

Residential mortgage-backed securities

 

 

356,505

 

 

 —

 

 

(5,954)

 

 

350,551

 

 

 

$

1,345,264

 

$

 —

 

$

(38,810)

 

$

1,306,454

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

    

Gross

    

Gross

    

 

 

 

 

Amortized

 

Unrealized

 

Unrealized

 

 

 

June 30, 2017

 

Cost

 

Gains

 

Losses

 

Fair Value

 

U.S. Government-sponsored agencies securities

 

$

986,919

 

$

 —

 

$

(17,974)

 

$

968,945

 

Residential mortgage-backed securities

 

 

440,070

 

 

1,973

 

 

(33)

 

 

442,010

 

 

 

$

1,426,989

 

$

1,973

 

$

(18,007)

 

$

1,410,955

 

 

The carrying amount, unrecognized gross gains and losses, and fair value of securities held-to-maturity are as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

    

Gross

    

Gross

    

 

 

 

 

Amortized

 

Unrealized

 

Unrealized

 

 

 

March 31, 2018

 

Cost

 

Gains

 

Losses

 

Fair Value

 

Residential mortgage-backed securities

 

$

110,943

 

$

5,575

 

$

 —

 

$

116,518

 

Municipal securities

 

 

600,000

 

 

 —

 

 

(4,596)

 

 

595,404

 

 

 

$

710,943

 

$

5,575

 

$

(4,596)

 

$

711,922

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

    

Gross

    

Gross

    

 

 

 

 

Amortized

 

Unrealized

 

Unrealized

 

 

 

June 30, 2017

 

Cost

 

Gains

 

Losses

 

Fair Value

 

Residential mortgage-backed securities

 

$

135,978

 

$

10,279

 

$

 —

 

$

146,257

 

Municipal securities

 

 

600,000