Table of Contents
Quarterly Report Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification Number) | |
(Address of Principal Executive Offices) |
Zip Code | |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
| ☒ | Smaller reporting company | |||||
| Emerging growth company | ||||||
Table of Contents
IF Bancorp, Inc.
Form 10-Q
Index
Table of Contents
Item 1. |
Condensed Consolidated Financial Statements |
March 31, 2024 |
June 30, 2023 |
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(Unaudited) |
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Assets |
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Cash and due from banks |
$ | $ | ||||||
Interest-bearing demand deposits |
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Cash and cash equivalents |
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Interest-bearing time deposits in banks |
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Available-for-sale |
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Loans, net of allowance for credit losses of $ |
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Premises and equipment, net of accumulated depreciation of $ |
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Federal Home Loan Bank stock, at cost |
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Foreclosed assets held for sale |
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Accrued interest receivable |
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Bank-owned life insurance |
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Mortgage servicing rights |
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Deferred income taxes |
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Other |
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Total assets |
$ | $ | ||||||
Liabilities and Equity |
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Liabilities |
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Deposits |
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Demand |
$ | $ | ||||||
Savings, NOW and money market |
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Certificates of deposit |
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Brokered certificates of deposit |
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Total deposits |
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Repurchase agreements |
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Federal Home Loan Bank advances |
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Other borrowings |
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Advances from borrowers for taxes and insurance |
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Accrued post-retirement benefit obligation |
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Accrued interest payable |
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Allowance for credit losses on off-balance sheet credit exposures |
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Other |
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Total liabilities |
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Commitments and Contingencies |
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Stockholders’ Equity |
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Common stock, $ |
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Additional paid-in capital |
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Unearned ESOP shares, at cost, |
( |
) | ( |
) | ||||
Retained earnings |
||||||||
Accumulated other comprehensive loss, net of tax |
( |
) | ( |
) | ||||
Total stockholders’ equity |
||||||||
Total liabilities and stockholders’ equity |
$ | $ | ||||||
Three Months Ended March 31, |
Nine Months Ended March 31, |
|||||||||||||||
2024 |
2023 |
2024 |
2023 |
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| Interest and Dividend Income |
||||||||||||||||
| Interest and fees on loans |
$ | $ | $ | $ | ||||||||||||
| Securities: |
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| Taxable |
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| Tax-exempt |
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| Federal Home Loan Bank dividends |
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| Deposits with other financial institutions |
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| Total interest and dividend income |
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| Interest Expense |
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| Deposits |
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| Federal Home Loan Bank advances and repurchase agreements |
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| Line of credit and other borrowings |
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| Total interest expense |
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| |
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| Net Interest Income |
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| Provision (Credit) for Credit Losses |
( |
) | ||||||||||||||
| |
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| Net Interest Income After Provision (Credit) for Credit Losses |
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| Noninterest Income |
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| Customer service fees |
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| Other service charges and fees |
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| Insurance commissions |
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| Brokerage commissions |
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| Net realized gains (losses) on sales of available-for-sale |
( |
) | ||||||||||||||
| Mortgage banking income, net |
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| Gain on sale of loans |
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| Bank-owned life insurance income, net |
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| Other |
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| |
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| Total noninterest income |
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| Noninterest Expense |
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| Compensation and benefits |
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| Office occupancy |
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| Equipment |
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| Federal deposit insurance |
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| Stationary, printing and office |
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| Advertising |
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| Professional services |
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| Supervisory examinations |
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| Audit and accounting services |
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| Organizational dues and subscriptions |
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| Insurance bond premiums |
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| Telephone and postage |
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| Loss (gain) on foreclosed assets, net |
( |
) | ||||||||||||||
| Other |
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| |
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|
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| Total noninterest expense |
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| |
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| Income Before Income Tax |
||||||||||||||||
| Provision for Income Tax |
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| |
|
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|
|||||||||
| Net Income |
$ | $ | $ | $ | ||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Earnings Per Share: |
||||||||||||||||
| Basic |
$ | $ | $ | $ | ||||||||||||
| Diluted |
$ | $ | $ | $ | ||||||||||||
| Dividends declared per common share |
$ | $ | $ | $ | ||||||||||||
Three Months Ended March 31, |
||||||||
2024 |
2023 |
|||||||
Net Income |
$ | $ | ||||||
Other Comprehensive Income (Loss) |
||||||||
Unrealized appreciation (depreciation) on available-for-sale $( |
( |
) | ||||||
Less: reclassification adjustment for realized gains included in net income, net of taxes of $ |
||||||||
| ( |
) | |||||||
Postretirement health plan amortization of transition obligation and prior service cost and change in net loss, net of taxes of $ |
( |
) | ( |
) | ||||
Other comprehensive income (loss), net of tax |
( |
) | ||||||
Comprehensive Income (Loss) |
$ | ( |
) | $ | ||||
Nine Months Ended March 31, |
||||||||
2024 |
2023 |
|||||||
Net Income |
$ | $ | ||||||
Other Comprehensive Income (Loss) |
||||||||
Unrealized appreciation (depreciation) on available-for-sale $ |
( |
) | ||||||
Less: reclassification adjustment for realized gains (losses) included in net income, net of taxes of $ |
( |
) | ||||||
| ( |
) | |||||||
Postretirement health plan amortization of transition obligation and prior service cost and change in net loss, net of taxes of $ |
( |
) | ||||||
Other comprehensive income (loss), net of tax |
( |
) | ||||||
Comprehensive Income |
$ | $ | ||||||
Common Stock |
Additional Paid-In Capital |
Unearned ESOP Shares |
Retained Earnings |
Accumulated Other Comprehensive Income (Loss) |
Total |
|||||||||||||||||||
For the three months ended March 31, 2024 |
||||||||||||||||||||||||
Balance, January 1, 2024 |
$ | $ | $ | ( |
) | $ | $ | ( |
) | $ | ||||||||||||||
Net income |
— | — | — | — | ||||||||||||||||||||
Other comprehensive loss |
— | — | — | — | ( |
) | ( |
) | ||||||||||||||||
Dividends on common stock, $ |
— | — | — | ( |
) | — | ( |
) | ||||||||||||||||
Stock equity plan |
— | — | — | — | ||||||||||||||||||||
ESOP shares earned, |
— | — | — | |||||||||||||||||||||
Balance, March 31, 2024 |
$ | $ | $ | ( |
) | $ | $ | ( |
) | $ | ||||||||||||||
For the three months ended March 31, 2023 |
||||||||||||||||||||||||
Balance, January 1, 2023 |
$ | $ | $ | ( |
) | $ | $ | ( |
) | $ | ||||||||||||||
Net income |
— | — | — | — | ||||||||||||||||||||
Other comprehensive income |
— | — | — | — | ||||||||||||||||||||
Dividends on common stock, $ |
— | — | — | ( |
) | — | ( |
) | ||||||||||||||||
Stock options exercised |
— | — | — | — | ||||||||||||||||||||
Stock equity plan |
— | — | — | — | ||||||||||||||||||||
ESOP shares earned, |
— | — | — | |||||||||||||||||||||
Balance, March 31, 2023 |
$ | $ | $ | ( |
) | $ | $ | ( |
) | $ | ||||||||||||||
Common Stock |
Additional Paid-In Capital |
Unearned ESOP Shares |
Retained Earnings |
Accumulated Other Comprehensive Income (Loss) |
Total |
|||||||||||||||||||
| For the nine months ended March 31, 2024 |
||||||||||||||||||||||||
| Balance, July 1, 2023 |
$ | $ | $ | ( |
) | $ | $ | ( |
) | $ | ||||||||||||||
| Net income |
— | — | — | — | ||||||||||||||||||||
| Other comprehensive income |
— | — | — | — | ||||||||||||||||||||
| Dividends on common stock, $ |
— | — | — | ( |
) | — | ( |
) | ||||||||||||||||
| Stock equity plan |
— | — | — | — | ||||||||||||||||||||
| ESOP shares earned, |
— | — | — | |||||||||||||||||||||
| |
|
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|
|||||||||||||
| Balance, March 31, 2024 |
$ | $ | $ | ( |
) | $ | $ | ( |
) | $ | ||||||||||||||
| |
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| For the nine months ended March 31, 2023 |
||||||||||||||||||||||||
| Balance, June 30, 2022 |
$ | $ | $ | ( |
) | $ | $ | ( |
) | $ | ||||||||||||||
| Cumulative impact of ASU 2016-13 |
( |
) | ( |
) | ||||||||||||||||||||
| |
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|
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| Balance, July 1, 2022 |
$ | $ | $ | ( |
) | $ | $ | ( |
) | $ | ||||||||||||||
| Net income |
— | — | — | — | ||||||||||||||||||||
| Other comprehensive loss |
— | — | — | — | ( |
) | ( |
) | ||||||||||||||||
| Dividends on common stock, $ |
— | — | — | ( |
) | — | ( |
) | ||||||||||||||||
| Stock options exercised |
— | — | — | |||||||||||||||||||||
| Stock equity plan |
— | — | — | — | ||||||||||||||||||||
| ESOP shares earned, |
— | — | — | |||||||||||||||||||||
| |
|
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|
|||||||||||||
| Balance, March 31, 2023 |
$ | $ | $ | ( |
) | $ | $ | ( |
) | $ | ||||||||||||||
| |
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Nine Months Ended March 31, |
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2024 |
2023 |
|||||||
Operating Activities |
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Net income |
$ | $ | ||||||
Items not requiring (providing) cash |
||||||||
Depreciation |
||||||||
Provision for credit losses |
||||||||
Amortization (accretion) of premiums and discounts on securities |
( |
) | ||||||
Deferred income taxes |
( |
) | ||||||
Net realized gains on loan sales |
( |
) | ( |
) | ||||
Net realized losses on sales of available-for-sale |
||||||||
Loss (gain) on foreclosed assets held for sale |
( |
) | ||||||
Bank-owned life insurance income, net |
( |
) | ( |
) | ||||
ESOP compensation expense |
||||||||
Stock equity plan expense |
||||||||
Originations of loans held for sale |
( |
) | ( |
) | ||||
Proceeds from sales of loans held for sale |
||||||||
Changes in |
||||||||
Accrued interest receivable |
( |
) | ( |
) | ||||
Other assets |
( |
) | ||||||
Accrued interest payable |
||||||||
Post-retirement benefit obligation |
||||||||
Other liabilities |
( |
) | ( |
) | ||||
Net cash provided by operating activities |
||||||||
Investing Activities |
||||||||
Net change in interest bearing time deposits |
||||||||
Purchases of available-for-sale |
( |
) | ( |
) | ||||
Proceeds from the sales of available-for-sale |
||||||||
Proceeds from maturities and pay-downs of available-for-sale |
||||||||
Net change in loans |
( |
) | ( |
) | ||||
Purchase of premises and equipment |
( |
) | ( |
) | ||||
Proceeds from sale of premises and equipment |
||||||||
Proceeds from sale of foreclosed assets |
||||||||
Purchase of Federal Home Loan Bank stock |
( |
) | ( |
) | ||||
Redemption of Federal Home Loan Bank Stock |
||||||||
Net cash used in investing activities |
( |
) | ( |
) | ||||
Financing Activities |
||||||||
Net decrease in demand deposits, money market, NOW and savings accounts |
( |
) | ( |
) | ||||
Net increase in certificates of deposit, including brokered certificates |
||||||||
Net increase in advances from borrowers for taxes and insurance |
||||||||
Proceeds from other borrowings |
||||||||
Repayments of other borrowings |
( |
) | ||||||
Proceeds from Federal Home Loan Bank advances |
||||||||
Repayments of Federal Home Loan Bank advances |
( |
) | ( |
) | ||||
Net increase in repurchase agreements |
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Dividends paid |
( |
) | ( |
) | ||||
Proceeds from exercise of stock options |
||||||||
Net cash provided by (used in) financing activities |
( |
) | ||||||
Net Increase (Decrease) in Cash and Cash Equivalents |
( |
) | ||||||
Cash and Cash Equivalents, Beginning of Period |
||||||||
Cash and Cash Equivalents, End of Period |
$ | $ | ||||||
Supplemental Cash Flows Information |
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Interest paid |
$ | $ | ||||||
Income taxes paid, net of refunds |
$ | $ | ||||||
Foreclosed assets acquired in settlement of loans |
$ | $ | ||||||
Dividends payable |
$ | $ | ||||||
| • | Customer Service Fees - The Company generates revenue from fees charged for deposit account maintenance, overdrafts, wire transfers, and check fees. The revenue related to deposit fees is recognized at the time the performance obligation is satisfied. |
| • | Insurance Commissions - The Company’s insurance agency, IF Insurance Agency, receives commissions on premiums of new and renewed business policies. IF Insurance Agency records commission revenue on direct bill policies as the cash is received. For agency bill policies, IF Insurance Agency retains its commission portion of the customer premium payment and remits the balance to the carrier. In both cases, the carrier holds the performance obligation. |
| • | Brokerage Commissions - The primary brokerage revenue is recorded at the beginning of each quarter through billing to customers based on the account asset size on the last day of the previous quarter. If a withdrawal of funds takes place, a prorated refund may occur; this is reflected within the same quarter as the original billing occurred. All performance obligations are met within the same quarter that the revenue is recorded. |
| • | Other - The Company generates revenue through service charges from the use of its ATM machines and interchange income from the use of Company issued credit and debit cards. The revenue is recognized at the time the service is used, and the performance obligation is satisfied. |
July 1, 2022 |
||||||||||||
Allowance for credit losses as reported under ASU 2016-13 |
Allowance pre-ASU 2016- 13 Adoption |
Impact on Allowance of ASU 2016-13 Adoption |
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| Assets: |
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| Real Estate Loans |
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| One- to four-family |
$ | $ | $ | |||||||||
| Multi-Family |
( |
) | ||||||||||
| Commercial |
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| HELOC |
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| Construction |
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| Commercial Business |
( |
) | ||||||||||
| Consumer |
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| Allowance for credit losses for all loans |
$ | $ | $ | |||||||||
| |
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| Liabilities: |
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| Allowance for credit losses on off-balance sheet exposures |
$ | $ | $ | |||||||||
| |
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|
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| March 31, 2024 | June 30, 2023 | |||||||
| Allocated shares |
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| Shares committed for release |
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| Unearned shares |
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| |
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| Total ESOP shares |
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| |
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|
|||||
| Fair value of unearned ESOP shares (1) |
$ | $ | ||||||
| |
|
|
|
|||||
| (1) | Based on closing price of $ |
Options |
Weighted-Average Exercise Price/Share |
Weighted-Average Remaining Contractual Life (in years) |
Aggregate Intrinsic Value |
|||||||||||||
Outstanding, June 30, 2023 |
$ | |||||||||||||||
Granted |
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Exercised |
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Forfeited |
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Outstanding, March 31, 2024 |
$ | $ | ||||||||||||||
Exercisable, March 31, 2024 |
$ | $ | ||||||||||||||
Shares |
Weighted-Average Grant-Date Fair Value |
|||||||
Balance, June 30, 2023 |
$ | |||||||
Granted |
||||||||
Forfeited |
||||||||
Earned and issued |
||||||||
Balance, March 31, 2024 |
$ | |||||||
Three Months Ended March 31, 2024 |
Three Months Ended March 31, 2023 |
Nine Months Ended March 31, 2024 |
Nine Months Ended March 31, 2023 |
|||||||||||||
Net income |
$ | $ | $ | $ | ||||||||||||
Basic weighted average shares outstanding |
||||||||||||||||
Less: Average unallocated ESOP shares |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Basic average shares outstanding |
||||||||||||||||
Diluted effect of restricted stock awards and stock options |
||||||||||||||||
Diluted average shares outstanding |
||||||||||||||||
Basic earnings per common share |
$ | $ | $ | $ | ||||||||||||
Diluted earnings per common share |
$ | $ | $ | $ | ||||||||||||
Amortized Cost |
Gross Unrealized Gains |
Gross Unrealized Losses |
Fair Value |
|||||||||||||
Available-for-sale |
||||||||||||||||
March 31, 2024: |
||||||||||||||||
U.S. Treasury |
$ | $ | $ | ( |
) | $ | ||||||||||
U.S. Government and federal agency |
( |
) | ||||||||||||||
Mortgage-backed: |
||||||||||||||||
GSE residential |
( |
) | ||||||||||||||
Small Business Administration |
( |
) | ||||||||||||||
State and political subdivisions |
( |
) | ||||||||||||||
| $ | $ | $ | ( |
) | $ | |||||||||||
June 30, 2023: |
||||||||||||||||
U.S. Treasury |
$ | $ | $ | ( |
) | $ | ||||||||||
U.S. Government and federal agency |
( |
) | ||||||||||||||
Mortgage-backed: |
||||||||||||||||
GSE residential |
( |
) | ||||||||||||||
Small Business Administration |
( |
) | ||||||||||||||
State and political subdivisions |
( |
) | ||||||||||||||
| $ | $ | $ | ( |
) | $ | |||||||||||
Available-for-sale Securities |
||||||||
Amortized Cost |
Fair Value |
|||||||
Within one year |
$ | $ | ||||||
One to five years |
||||||||
Five to ten years |
||||||||
After ten years |
||||||||
Mortgage-backed securities |
||||||||
Totals |
$ | $ | ||||||
Less Than 12 Months |
12 Months or More |
Total |
||||||||||||||||||||||
Description of Securities |
Fair Value |
Unrealized Losses |
Fair Value |
Unrealized Losses |
Fair Value |
Unrealized Losses |
||||||||||||||||||
March 31, 2024: |
||||||||||||||||||||||||
U.S. Treasury |
$ | $ | $ | $ | ( |
) | $ | $ | ( |
) | ||||||||||||||
U.S. Government and federal agency |
( |
) | ( |
) | ||||||||||||||||||||
Mortgage-backed: |
||||||||||||||||||||||||
GSE residential |
( |
) | ( |
) | ( |
) | ||||||||||||||||||
Small Business Administration |
( |
) | ( |
) | ||||||||||||||||||||
State and political subdivisions |
( |
) | ( |
) | ||||||||||||||||||||
Total |
$ | $ | ( |
) | $ | $ | ( |
) | $ | $ | ( |
) | ||||||||||||
June 30, 2023: |
||||||||||||||||||||||||
U.S. Treasury |
$ | $ | $ | $ | ( |
) | $ | $ | ( |
) | ||||||||||||||
U.S. Government and federal agency |
( |
) | ( |
) | ||||||||||||||||||||
Mortgage-backed: |
||||||||||||||||||||||||
GSE residential |
( |
) | ( |
) | ( |
) | ||||||||||||||||||
Small Business Administration |
( |
) | ( |
) | ( |
) | ||||||||||||||||||
State and political subdivisions |
( |
) | ( |
) | ||||||||||||||||||||
Total |
$ | $ | ( |
) | $ | $ | ( |
) | $ | $ | ( |
) | ||||||||||||
March 31, 2024 |
June 30, 2023 |
|||||||
Real estate loans: |
||||||||
One- to four-family |
$ | $ | ||||||
Multi-family |
||||||||
Commercial |
||||||||
Home equity lines of credit |
||||||||
Construction |
||||||||
Commercial |
||||||||
Consumer |
||||||||
Total loans |
||||||||
Less: |
||||||||
Unearned fees and discounts, net |
( |
) | ( |
) | ||||
Allowance for credit losses |
||||||||
Loans, net |
$ | $ | ||||||
Three Months Ended March 31, 2024 Real Estate Loans |
||||||||||||||||
One- toFour-Family |
Multi-Family |
Commercial |
Home Equity Lines of Credit |
|||||||||||||
Allowance for credit losses: |
||||||||||||||||
Balance, beginning of period |
$ | $ | $ | $ | ||||||||||||
Provision (credit) for credit losses |
( |
) | ( |
) | ||||||||||||
Losses charged off |
||||||||||||||||
Recoveries |
||||||||||||||||
Balance, end of period |
$ | $ | $ | $ | ||||||||||||
Loans: |
||||||||||||||||
Ending balance |
$ | $ | $ | $ | ||||||||||||
Three Months Ended March 31, 2024 (Continued) |
||||||||||||||||
Construction |
Commercial |
Consumer |
Total |
|||||||||||||
Allowance for credit losses: |
||||||||||||||||
Balance, beginning of period |
$ | $ | $ | $ | ||||||||||||
Provision (credit) for credit losses |
( |
) | ( |
) | ( |
) | ||||||||||
Losses charged off |
( |
) | ( |
) | ||||||||||||
Recoveries |
||||||||||||||||
Balance, end of period |
$ | $ | $ | $ | ||||||||||||
Loans: |
||||||||||||||||
Ending balance |
$ | $ | $ | $ | ||||||||||||
Nine Months Ended March 31, 2024 Real Estate Loans |
||||||||||||||||
One- toFour-Family |
Multi-Family |
Commercial |
Home Equity Lines of Credit |
|||||||||||||
Allowance for credit losses: |
||||||||||||||||
Balance, beginning of period |
$ | $ | $ | $ | ||||||||||||
Provision (credit) for credit losses |
( |
) | ( |
) | ||||||||||||
Losses charged off |
||||||||||||||||
Recoveries |
||||||||||||||||
Balance, end of period |
$ | $ | $ | $ | ||||||||||||
Loans: |
||||||||||||||||
Ending balance |
$ | $ | $ | $ | ||||||||||||
Nine Months Ended March 31, 2024 (Continued) |
||||||||||||||||
Construction |
Commercial |
Consumer |
Total |
|||||||||||||
Allowance for credit losses: |
||||||||||||||||
Balance, beginning of period |
$ | $ | $ | $ | ||||||||||||
Provision (credit) for credit losses |
( |
) | ||||||||||||||
Losses charged off |
( |
) | ( |
) | ||||||||||||
Recoveries |
||||||||||||||||
Balance, end of period |
$ | $ | $ | $ | ||||||||||||
Loans: |
||||||||||||||||
Ending balance |
$ | $ | $ | $ | ||||||||||||
Year Ended June 30, 2023 Real Estate Loans |
||||||||||||||||
One- toFour- Family |
Multi- Family |
Commercial |
Home Equity Lines of Credit |
|||||||||||||
Allowance for credit losses: |
||||||||||||||||
Balance, beginning of year (prior to adoption of ASU 2016-13) |
$ | $ | $ | $ | ||||||||||||
Impact of adopting ASU 2016-13 |
( |
) | ||||||||||||||
Provision charged to expense |
( |
) | ( |
) | ||||||||||||
Losses charged off |
||||||||||||||||
Recoveries |
||||||||||||||||
Balance, end of year |
$ | $ | $ | $ | ||||||||||||
Loans: |
||||||||||||||||
Ending balance |
$ | $ | $ | $ | ||||||||||||
Year Ended June 30, 2023 (Continued) |
||||||||||||||||
Construction |
Commercial |
Consumer |
Total |
|||||||||||||
Allowance for credit losses: |
||||||||||||||||
Balance, beginning of year (prior to adoption of ASU 2016-13) |
$ | $ | $ | $ | ||||||||||||
Impact of adopting ASU 2016-13 |
( |
) | ||||||||||||||
Provision charged to expense |
( |
) | ||||||||||||||
Losses charged off |
( |
) | ( |
) | ( |
) | ||||||||||
Recoveries |
||||||||||||||||
Balance, end of year |
$ | $ | $ | $ | ||||||||||||
Loans: |
||||||||||||||||
Ending balance |
$ | $ | $ | $ | ||||||||||||
Three Months Ended March 31, 2023 |
||||||||||||||||
Real Estate Loans |
||||||||||||||||
One- toFour-Family |
Multi- Family |
Commercial |
Home Equity Lines of Credit |
|||||||||||||
Allowance for credit losses: |
||||||||||||||||
Balance, beginning of period |
$ | $ | $ | $ | ||||||||||||
Provision charged to expense |
( |
) | ( |
) | ||||||||||||
Losses charged off |
||||||||||||||||
Recoveries |
||||||||||||||||
Balance, end of period |
$ | $ | $ | $ | ||||||||||||
Loans: |
||||||||||||||||
Ending balance |
$ | $ | $ | $ | ||||||||||||
Three Months Ended March 31, 2023 (Continued) |
||||||||||||||||
Construction |
Commercial |
Consumer |
Total |
|||||||||||||
Allowance for credit losses: |
||||||||||||||||
Balance, beginning of period |
$ | $ | $ | $ | ||||||||||||
Provision charged to expense |
( |
) | ||||||||||||||
Losses charged off |
( |
) | ( |
) | ||||||||||||
Recoveries |
||||||||||||||||
Balance, end of period |
$ | $ | $ | $ | ||||||||||||
Loans: |
||||||||||||||||
Ending balance |
$ | $ | $ | $ | ||||||||||||
Nine Months Ended March 31, 2023 |
||||||||||||||||
Real Estate Loans |
||||||||||||||||
One- toFour-Family |
Multi- Family |
Commercial |
Home Equity Lines of Credit |
|||||||||||||
Allowance for credit losses: |
||||||||||||||||
Balance, beginning of period (prior to adoption of ASU 2016-13) |
$ | $ | $ | $ | ||||||||||||
Impact of adopting ASU 2016-13 |
( |
) | ||||||||||||||
Provision charged to expense |
( |
) | ||||||||||||||
Losses charged off |
||||||||||||||||
Recoveries |
||||||||||||||||
Balance, end of period |
$ | $ | $ | $ | ||||||||||||
Loans: |
||||||||||||||||
Ending balance |
$ | $ | $ | $ | ||||||||||||
Nine Months Ended March 31, 2023 (Continued) |
||||||||||||||||
Construction |
Commercial |
Consumer |
Total |
|||||||||||||
Allowance for credit losses: |
||||||||||||||||
Balance, beginning of period (prior to adoption of ASU 2016-13) |
$ | $ | $ | $ | ||||||||||||
Impact of adopting ASU 2016-13 |
( |
) | ||||||||||||||
Provision charged to expense |
( |
) | ||||||||||||||
Losses charged off |
( |
) | ( |
) | ( |
) | ||||||||||
Recoveries |
||||||||||||||||
Balance, end of period |
$ | $ | $ | $ | ||||||||||||
Loans: |
||||||||||||||||
Ending balance |
$ | $ | $ | $ | ||||||||||||
Risk Rating |
2024 |
2023 |
2022 |
2021 |
2020 |
Prior Years |
Total |
|||||||||||||||||||||
One- to Four-Family |
||||||||||||||||||||||||||||
Pass |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
Special Mention |
— |
— |
— |
— |
— |
|||||||||||||||||||||||
Substandard |
— |
— |
||||||||||||||||||||||||||
Total |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
Multi-Family |
||||||||||||||||||||||||||||
Pass |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
Special Mention |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||||
Substandard |
— |
— |
— |
— |
— |
|||||||||||||||||||||||
Total |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
Commercial Real Estate |
||||||||||||||||||||||||||||
Pass |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
Special Mention |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||||
Substandard |
— |
— |
— |
|||||||||||||||||||||||||
Total |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
Home Equity Line of Credit |
||||||||||||||||||||||||||||
Pass |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
Special Mention |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||||
Substandard |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||||
Total |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
Construction |
||||||||||||||||||||||||||||
Pass |
$ |
$ |
$ |
$ |
— |
$ |
— |
$ |
$ |
|||||||||||||||||||
Special Mention |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||||
Substandard |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||||
Total |
$ |
$ |
$ |
$ |
— |
$ |
— |
$ |
$ |
|||||||||||||||||||
Commercial Business |
||||||||||||||||||||||||||||
Pass |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
Special Mention |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||||
Substandard |
— |
|||||||||||||||||||||||||||
Total |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
Consumer |
||||||||||||||||||||||||||||
Pass |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
Special Mention |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||||
Substandard |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||||
Total |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
Total Loans |
||||||||||||||||||||||||||||
Pass |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
Special Mention |
— |
— |
— |
— |
||||||||||||||||||||||||
Substandard |
||||||||||||||||||||||||||||
Total |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
Risk Rating |
2023 |
2022 |
2021 |
2020 |
2019 |
Prior Years |
Total |
|||||||||||||||||||||
One- to Four-Family |
||||||||||||||||||||||||||||
Pass |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
Watch |
— |
— |
— |
— |
— |
|||||||||||||||||||||||
Substandard |
— |
|||||||||||||||||||||||||||
Total |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
Multi-Family |
||||||||||||||||||||||||||||
Pass |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
Watch |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||||
Substandard |
— |
— |
— |
— |
— |
|||||||||||||||||||||||
Total |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
Commercial Real Estate |
||||||||||||||||||||||||||||
Pass |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
Watch |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||||
Substandard |
— |
— |
— |
— |
||||||||||||||||||||||||
Total |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
Home Equity Line of Credit |
||||||||||||||||||||||||||||
Pass |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
Watch |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||||
Substandard |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||||
Total |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
Construction |
||||||||||||||||||||||||||||
Pass |
$ |
$ |
$ |
$ |
$ |
— |
$ |
— |
$ |
|||||||||||||||||||
Watch |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||||
Substandard |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||||
Total |
$ |
$ |
$ |
$ |
$ |
— |
$ |
— |
$ |
|||||||||||||||||||
Commercial Business |
||||||||||||||||||||||||||||
Pass |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
Watch |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||||
Substandard |
||||||||||||||||||||||||||||
Total |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
Consumer |
||||||||||||||||||||||||||||
Pass |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
Watch |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||||
Substandard |
— |
— |
— |
— |
||||||||||||||||||||||||
Total |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
Total Loans |
||||||||||||||||||||||||||||
Pass |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
Watch |
— |
— |
— |
— |
— |
|||||||||||||||||||||||
Substandard |
||||||||||||||||||||||||||||
Total |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
30-59 Days Past Due |
60-89 Days Past Due |
90 Days or Greater |
Total Past Due |
Current |
Total Loans Receivable |
Total Loans 90 Days Past Due & Accruing |
||||||||||||||||||||||
March 31, 2024: |
||||||||||||||||||||||||||||
Real estate loans: |
||||||||||||||||||||||||||||
One- to four-family |
$ |
$ |
$ |
— |
$ |
$ |
$ |
$ |
— |
|||||||||||||||||||
Multi-family |
— |
— |
— |
— |
— |
|||||||||||||||||||||||
Commercial |
||||||||||||||||||||||||||||
Home equity lines of credit |
— |
— |
— |
|||||||||||||||||||||||||
Construction |
— |
— |
— |
— |
— |
|||||||||||||||||||||||
Commercial |
— |
— |
||||||||||||||||||||||||||
Consumer |
— |
— |
||||||||||||||||||||||||||
Total |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||
30-59 Days Past Due |
60-89 Days Past Due |
90 Days or Greater |
Total Past Due |
Current |
Total Loans Receivable |
Total Loans 90 Days Past Due & Accruing |
||||||||||||||||||||||
June 30, 2023: |
||||||||||||||||||||||||||||
Real estate loans: |
||||||||||||||||||||||||||||
One- to four-family |
$ |
$ |
$ |
— |
$ |
$ |
$ |
$ |
— |
|||||||||||||||||||
Multi-family |
— |
— |
— |
— |
— |
|||||||||||||||||||||||
Commercial |
— |
— |
— |
|||||||||||||||||||||||||
Home equity lines of credit |
— |
— |
— |
|||||||||||||||||||||||||
Construction |
— |
— |
— |
— |
— |
|||||||||||||||||||||||
Commercial |
— |
— |
||||||||||||||||||||||||||
Consumer |
— |
|||||||||||||||||||||||||||
Total |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
— |
||||||||||||||||||||
March 31, 2024 |
June 30, 2023 |
|||||||||||||||
| Nonaccrual with no Allowance for Credit Losses |
Nonaccrual | Nonaccrual with no Allowance for Credit Losses |
Nonaccrual | |||||||||||||
Mortgages on real estate: |
||||||||||||||||
One- to four-family |
$ | $ | $ | $ | ||||||||||||
Multi-family |
||||||||||||||||
Commercial |
||||||||||||||||
Home equity lines of credit |
||||||||||||||||
Construction loans |
||||||||||||||||
Commercial business loans |
||||||||||||||||
Consumer loans |
||||||||||||||||
Total |
$ | $ | $ | $ | ||||||||||||
June 30, 2023 |
||||
Real estate loans |
||||
One- to four-family |
$ | |||
Multi-family |
||||
Commercial |
||||
Home equity lines of credit |
||||
Total real estate loans |
||||
Construction loans |
||||
Commercial business loans |
||||
Consumer loans |
||||
Total |
$ | |||
Unrealized Gains and Losses on Available-for- Sale Securities |
Defined Benefit Pension Items |
Total |
||||||||||
March 31, 2024: |
||||||||||||
Beginning balance |
$ | ( |
) | $ | $ | ( |
) | |||||
Other comprehensive loss before reclassification |
||||||||||||
Amounts reclassified from accumulated other comprehensive income |
||||||||||||
Net current period other comprehensive loss |
||||||||||||
Ending balance |
$ | ( |
) | $ | $ | ( |
) | |||||
March 31, 2023: |
||||||||||||
Beginning balance |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Other comprehensive loss before reclassification |
( |
) | ( |
) | ||||||||
Amounts reclassified from accumulated other comprehensive income |
||||||||||||
Net current period other comprehensive loss |
( |
) | ( |
) | ||||||||
Ending balance |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Amounts Reclassified from AOCI |
||||||||||||||||||
Three Months Ended March 31, |
Nine Months Ended March 31, |
|||||||||||||||||
2024 |
2023 |
2024 |
2023 |
Affected Line Item in the Condensed Consolidated Statements of Income | ||||||||||||||
Realized gains (losses) on available-for-sale |
$ | $ | $ | $ | ( |
) | Net realized gains (losses) on sale of available-for- sale securities | |||||||||||
Amortization of defined benefit pension items: |
Components are included in computation of net periodic pension cost | |||||||||||||||||
Actuarial losses |
( |
) | ( |
) | ( |
) | ||||||||||||
Total reclassified amount before tax |
( |
) | ( |
) | ||||||||||||||
Tax expense |
( |
) | Provision for Income Tax | |||||||||||||||
Total reclassification out of AOCI |
$ | ( |
) | $ | $ | $ | ( |
) | Net Income | |||||||||
Three Months Ended March 31, |
Nine Months Ended March 31, |
|||||||||||||||
2024 |
2023 |
2024 |
2023 |
|||||||||||||
Computed at the statutory rate |
$ | $ | $ | $ | ||||||||||||
Decrease resulting from |
||||||||||||||||
Tax exempt interest |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Cash surrender value of life insurance |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
State income taxes |
||||||||||||||||
Other |
( |
) | ( |
) | ||||||||||||
Actual expense |
$ | $ | $ | $ | ||||||||||||
| Level 1 | Quoted prices in active markets for identical assets |
| Level 2 | Observable inputs other than Level 1 prices, such as quoted prices for similar assets; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets |
| Level 3 | Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets |
Fair Value Measurements Using |
||||||||||||||||
Fair Value |
Quoted Prices in Active Markets for Identical Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
|||||||||||||
March 31, 2024: |
||||||||||||||||
Available-for-sale |
||||||||||||||||
US Treasury |
$ | $ | $ | — | $ | — | ||||||||||
US Government and federal agency |
— | — | ||||||||||||||
Mortgage-backed securities – GSE residential |
— | — | ||||||||||||||
Small Business Administration |
— | — | ||||||||||||||
State and political subdivisions |
— | |||||||||||||||
Mortgage servicing rights |
— | — | ||||||||||||||
Fair Value Measurements Using |
||||||||||||||||
Fair Value |
Quoted Prices in Active Markets for Identical Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
|||||||||||||
June 30, 2023: |
||||||||||||||||
Available-for-sale |
||||||||||||||||
US Treasury |
$ | $ | — | $ | $ | — | ||||||||||
U.S. Government and federal agency and Government sponsored enterprises (GSE’s) |
— | — | ||||||||||||||
Mortgage-backed: GSE residential |
— | — | ||||||||||||||
Small Business Administration |
— | — | ||||||||||||||
State and political subdivisions |
— | |||||||||||||||
Mortgage servicing rights |
— | — | ||||||||||||||
Obligations of State and Political Subdivisions |
Mortgage Servicing Rights |
Total |
||||||||||
Beginning balance |
$ | $ | $ | |||||||||
Transfers into Level 3 |
— | |||||||||||
Transfers out of Level 3 |
— | ( |
) | ( |
) | |||||||
Total realized and unrealized gains and losses included in net income |
— | ( |
) | ( |
) | |||||||
Purchases |
— | — | — | |||||||||
Sales |
— | — | — | |||||||||
Settlements |
( |
) | — | ( |
) | |||||||
Ending balance |
$ | $ | $ | |||||||||
Total gains or losses for the period included in net income attributable to the change in unrealized gains or losses related to assets and liabilities still held at the reporting date |
$ | — | $ | ( |
) | $ | ( |
) | ||||
Year ended June 30, 2023 |
||||||||||||
Obligations of State and Political Subdivisions |
Mortgage Servicing Rights |
Total |
||||||||||
Beginning balance |
$ | $ | $ | |||||||||
Transfers into Level 3 |
— | |||||||||||
Transfers out of Level 3 |
— | ( |
) | ( |
) | |||||||
Total realized and unrealized gains and losses included in net income |
— | |||||||||||
Purchases |
— | — | — | |||||||||
Sales |
— | — | — | |||||||||
Settlements |
( |
) | — | ( |
) | |||||||
Ending balance |
$ | $ | $ | |||||||||
Total gains or losses for the period included in net income attributable to the change in unrealized gains or losses related to assets and liabilities still held at the reporting date |
$ | — | $ | $ | ||||||||
Fair Value at March 31, 2024 |
Valuation Technique |
Unobservable Inputs |
Range (Weighted Average) | |||||||
Mortgage servicing rights |
$ | Discounted cash flow | Discount rate | |||||||
| Constant prepayment rate | ||||||||||
| Probability of default | ||||||||||
State and political subdivisions |
Discounted cash flow | Maturity/Call Date | ||||||||
| Weighted average coupon |
||||||||||
| Marketability yield adjustment |
||||||||||
Fair Value at June 30, 2023 |
Valuation Technique |
Unobservable Inputs |
Range (Weighted Average) | |||||||||
Mortgage servicing rights |
$ | Discounted cash flow | Discount rate | |||||||||
| Constant prepayment rate | ||||||||||||
| Probability of default | ||||||||||||
State and political subdivisions |
Discounted cash flow | Maturity/Call Date | ||||||||||
| Weighted average coupon | ||||||||||||
| Marketability yield adjustment |
||||||||||||
Carrying Amount |
Fair Value Measurements Using Quoted Prices in Active Markets for Identical Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
|||||||||||||
March 31, 2024: |
||||||||||||||||
Financial assets |
||||||||||||||||
Cash and cash equivalents |
$ | $ | $ | — | $ | — | ||||||||||
Interest-bearing time deposits in banks |
— | — | ||||||||||||||
Loans, net of allowance for credit losses |
— | — | ||||||||||||||
Federal Home Loan Bank stock |
— | — | ||||||||||||||
Accrued interest receivable |
— | |||||||||||||||
Financial liabilities |
||||||||||||||||
Deposits |
— | |||||||||||||||
Repurchase agreements |
— | — | ||||||||||||||
Federal Home Loan Bank advances |
— | — | ||||||||||||||
Other borrowings |
— | — | ||||||||||||||
Advances from borrowers for taxes and insurance |
— | — | ||||||||||||||
Accrued interest payable |
— | — | ||||||||||||||
Unrecognized financial instruments (net of contract amount) |
||||||||||||||||
Commitments to originate loans |
Carrying Amount |
Fair Value Measurements Using Quoted Prices in Active Markets for Identical Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
|||||||||||||
June 30, 2023: |
||||||||||||||||
Financial assets |
||||||||||||||||
Cash and cash equivalents |
$ | $ | $ | — | $ | — | ||||||||||
Interest-bearing time deposits in banks |
— | — | ||||||||||||||
Loans, net of allowance for credit losses |
— | — | ||||||||||||||
Federal Home Loan Bank stock |
— | — | ||||||||||||||
Accrued interest receivable |
— | — | ||||||||||||||
Financial liabilities |
||||||||||||||||
Deposits |
— | |||||||||||||||
Repurchase agreements |
— | — | ||||||||||||||
Federal Home Loan Bank advances |
— | — | ||||||||||||||
Advances from borrowers for taxes and insurance |
— | — | ||||||||||||||
Accrued interest payable |
— | — | ||||||||||||||
Unrecognized financial instruments (net of contract amount) |
||||||||||||||||
Commitments to originate loans |
||||||||||||||||
Table of Contents
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report may contain forward-looking statements within the meaning of the federal securities laws. These statements are not historical facts, but rather are statements based on management’s current expectations regarding its business strategies and their intended results and IF Bancorp, Inc.’s (“the Company”) future performance. Forward-looking statements are preceded by terms such as “expects,” “believes,” “anticipates,” “intends” and similar expressions.
Management’s ability to predict results or the effect of future plans or strategies is inherently uncertain. Factors that could have a material adverse effect on our actual results include, but are not limited to, general economic conditions, changes in the interest rate environment, legislative or regulatory changes that may adversely affect our business, changes in accounting policies and practices, changes in competition and demand for financial services, adverse changes in the securities markets and changes in the quality or composition of the Association’s loan or investment portfolios.
Additional factors that may affect our results are discussed under “Item 1A. - Risk Factors”, in the Company’s Annual Report on Form 10-K for the year ended June 30, 2023, and the Company’s other filings with the SEC, including Part II. of this Form 10-Q. These factors should be considered in evaluating the forward-looking statements and undue reliance should not be placed on such statements. See “COVID-19” below for a discussion of how the COVID-19 pandemic may affect our future performance. IF Bancorp, Inc. assumes no obligation to update any forward-looking statement, except as may be required by law.
Overview
On July 7, 2011 the Company completed its initial public offering of common stock in connection with the Association’s mutual-to-stock conversion, selling 4,496,500 shares of common stock at $10.00 per share, including 384,900 shares sold to the Association’s employee stock ownership plan, and raising approximately $45.0 million of gross proceeds. The Company also established a charitable foundation, Iroquois Federal Foundation, to which the Company contributed 314,755 shares of our common stock. As of March 31, 2024, the Company repurchased 1,674,479 shares of common stock under stock repurchase plans.
The Company is a savings and loan holding company and is subject to regulation by the Board of Governors of the Federal Reserve System. The Company’s business activities are limited to oversight of its investment in the Association.
The Association is primarily engaged in providing a full range of banking and mortgage services to individual and corporate customers within a 100-mile radius of its locations in Watseka, Danville, Clifton, Hoopeston, Savoy, Champaign and Bourbonnais, Illinois and Osage Beach, Missouri. The principal activity of the Association’s wholly-owned subsidiary, L.C.I. Service Corporation (“L.C.I.”), is the sale of property and casualty insurance. The Association is subject to regulation by the Office of the Controller of the Currency and the Federal Deposit Insurance Corporation.
Our results of operations depend primarily on our net interest income. Net interest income is the difference between the interest income we earn on our interest-earning assets, consisting primarily of loans, investment securities and other interest-earning assets, and the interest paid on our interest-bearing liabilities, consisting primarily of savings and transaction accounts, certificates of deposit, repurchase agreements, borrowings from the Federal Reserve Bank, and Federal Home Loan Bank of Chicago advances. Our results of operations also are affected by our provision for credit losses, noninterest income and noninterest expense. Noninterest income consists primarily of customer service fees, brokerage commission income, insurance commission income, net realized gains on loan sales, mortgage banking income, and income on bank-owned life insurance. Noninterest expense consists primarily of compensation and benefits, occupancy and equipment, data processing, professional fees, marketing, office supplies, federal deposit insurance premiums, and foreclosed assets. Our results of operations also may be affected significantly by general and local economic and competitive conditions, changes in market interest rates, governmental policies and actions of regulatory authorities.
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Our net interest rate spread (the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities) was 1.80% and 2.83% for the nine months ended March 31, 2024 and 2023, respectively. Net interest income decreased to $13.2 million for the nine months ended March 31, 2024, from $17.3 million for the nine months ended March 31, 2023.
Our emphasis on conservative loan underwriting has historically resulted in relatively low levels of non-performing assets. Our non-performing loans totaled $252,000, or 0.1%, of total loans at March 31, 2024 and $117,000, or 0.1%, of total loans at June 30, 2023. Our non-performing assets totaled $258,000 or 0.1% of total assets at March 31, 2024, and $148,000, or 0.1% of total assets at June 30, 2023.
At March 31, 2024, the Association was categorized as “well capitalized” under regulatory capital requirements.
Our net income for the nine months ended March 31, 2024, was $1.4 million, compared to a net income of $4.1 million for the nine months ended March 31, 2023.
Management’s discussion and analysis of the financial condition and results of operations at and for the three and nine months ended March 31, 2024 and 2023 is intended to assist in understanding the financial condition and results of operations of the Association. The information contained in this section should be read in conjunction with the unaudited financial statements and the notes thereto, appearing in Part I, Item 1 of this quarterly report on Form 10-Q.
Critical Accounting Policies
We define critical accounting policies as those policies that require management to exercise significant judgment or discretion or make significant assumptions that have, or could have, a material impact on the carrying value of certain assets or on income. We consider the following to be our critical accounting policies.
Allowance for Credit Losses. The Company believes the allowance for credit losses for loans is the critical accounting policy that requires the most significant judgments and assumptions used in the preparation of the consolidated financial statements. The allowance for credit losses for loans represents the best estimate of losses inherent in the existing loan portfolio. An estimate of potential losses inherent in the loan portfolio are determined and an allowance for those losses is established by factors considered by the Company during the evaluation of the overall adequacy of the allowance which include historical net loan losses, the level and composition of nonaccrual, past due and troubled debt restructurings, trends in volumes and terms of loans, effects of changes in risk selection and underwriting standards or lending practices, lending staff changes, concentrations of credit, industry conditions and the current economic conditions in the region where the Company operates. In addition, a forecast, using reasonable and supportable future conditions, is prepared that is used to estimate expected changes to existing and historical conditions in the current period.
The Company adopted ASU 2016-13, effective July 1, 2022, and utilizes a current expected credit loss (“CECL”) methodology which relies on segmenting the loan portfolio into pools with similar risks, tracking the performance of the pools over time, and using the data to determine pool loss experience. Based on our estimate of the level of allowance for credit losses required, we record a provision for credit losses as a charge to earnings to maintain the allowance for credit losses at an appropriate level. The allowance for credit losses on most loans is measured on a collective (pool) basis for loans with similar risk characteristics. The Company estimates the appropriate level of allowance for credit losses for collateral-dependent loans by evaluating them separately. The Company also uses the CECL model to calculate the allowance for credit losses on off-balance sheet credit exposures, such as undrawn amounts on lines of credit. While the allowance for credit losses on loans is reported as a contra-asset asset for loans, the allowance for credit losses on off-balance sheet credit exposures is reported as a liability.
The allowance for credit losses is evaluated on a regular basis by management and reflects consideration of all significant factors that affect the collectability of the loan portfolio. This evaluation is inherently subjective as it requires estimates that are subject to significant revision as more information becomes available. Actual loan losses may be significantly more than the allowance for credit losses we have established, which could have a material negative effect on our financial results.
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Income Tax Accounting. The provision for income taxes is based upon income in our consolidated financial statements, rather than amounts reported on our income tax return. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on our deferred tax assets and liabilities is recognized as income or expense in the period that includes the enactment date. Under U.S. GAAP, a valuation allowance is required to be recognized if it is more likely than not that a deferred tax asset will not be realized. The determination as to whether we will be able to realize the deferred tax assets is highly subjective and dependent upon judgment concerning our evaluation of both positive and negative evidence, our forecasts of future income, applicable tax planning strategies, and assessments of current and future economic and business conditions. Positive evidence includes the existence of taxes paid in available carryback years as well as the probability that taxable income will be generated in future periods, while negative evidence includes any cumulative losses in the current year and prior two years and general business and economic trends. Any reduction in estimated future taxable income may require us to record a valuation allowance against our deferred tax assets. Any required valuation allowance would result in additional income tax expense in the period and could have a significant impact on our future earnings. Positions taken in our tax returns may be subject to challenge by the taxing authorities upon examination. The benefit of an uncertain tax position is initially recognized in the financial statements only when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions are both initially and subsequently measured as the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement with the tax authority, assuming full knowledge of the position and all relevant facts. Differences between our position and the position of tax authorities could result in a reduction of a tax benefit or an increase to a tax liability, which could adversely affect our future income tax expense.
There are no material changes to the critical accounting policies disclosed in IF Bancorp, Inc.’s Form 10-K for fiscal year ended June 30, 2023.
Comparison of Financial Condition at March 31, 2024 and June 30, 2023
Total assets increased $56.0 million, or 6.6%, to $905.0 million at March 31, 2024 from $849.0 million at June 30, 2023. The increase was primarily due to a $55.9 million increase in loans receivable, and a $5.1 million increase in cash and cash equivalents, partially offset by a $6.0 million decrease in investment securities.
Net loans receivable, including loans held for sale, increased by $55.9 million, or 9.5%, to $643.3 million at March 31, 2024 from $587.5 million at June 30, 2023. The increase in net loans receivable during this period was due primarily to a $38.1 million, or 42.5%, increase in multi-family loans, a $12.3 million, or 7.5%, increase in one- to four-family loans, a $9.7 million, or 12.2%, increase in commercial business loans, a $5.1 million, or 2.6%, increase in commercial real estate loans, and a $1.5 million, or 19.0%, increase in home equity lines of credit, partially offset by a $9.6 million, or 18.9%, decrease in construction loans, and a $725,000, or 8.6%, decrease in consumer loans.
Investment securities, consisting entirely of securities available for sale, decreased $6.0 million, or 3.0%, to $195.3 million at March 31, 2024 from $201.3 million at June 30, 2023. We had no securities classified as held-to-maturity at March 31, 2024 or June 30, 2023.
Between June 30, 2023 and March 31, 2024, accrued interest receivable increased $968,000 to $3.7 million, and Federal Home Loan Bank (FHLB) stock increased $2.3 million to $5.4 million, while premises and equipment decreased $409,000 to $10.7 million, foreclosed assets held for sale decreased $24,000 to $7,000, other assets decreased $1.3 million to $2.4 million, deferred income taxes decreased $191,000 to $10.8 million, and mortgage servicing rights decreased $28,000 to $1.5 million. The increase in accrued interest receivable was primarily the result of an increase in the average balance and average yields of interest earning assets, and the increase in FHLB stock was the result of an increased stock requirement due to an increase in FHLB advances, while the decrease in premises and equipment was the result of ordinary depreciation, the decrease in foreclosed assets was due to the sale of property, the decrease in other assets was due to the receipt of a large accounts receivable item in the nine months ended March 31, 2024, the decrease in deferred income taxes was mostly due to a decrease in unrealized losses on the sale of available-for-sale securities, and the decrease in mortgage servicing rights was the result of a decreased valuation.
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At March 31, 2024, our investment in bank-owned life insurance was $15.1 million, an increase of $318,000 from $14.8 million at June 30, 2023. We invest in bank-owned life insurance to provide us with a funding source for our benefit plan obligations. Bank-owned life insurance also generally provides us noninterest income that is non-taxable. Federal regulations generally limit our investment in bank-owned life insurance to 25% of our Tier 1 capital plus our allowance for credit losses, which resulted in a limit of $23.5 million at March 31, 2024.
Deposits decreased $53.5 million, or 7.3%, to $681.8 million at March 31, 2024 from $735.3 million at June 30, 2023. Certificates of deposit, excluding brokered certificates of deposit, increased $29.5 million, or 11.2%, to $293.6 million, while brokered certificates of deposit increased $9.5 million, or 48.4%, to $29.0 million. Noninterest bearing demand accounts decreased $64.4 million, or 59.4%, to $43.2 million, while savings, NOW, and money market accounts decreased $28.2 million, or 8.2%, to $316.0 million. The large decrease in noninterest bearing demand accounts was due primarily to approximately $62.1 million in deposits from a public entity that collects real estate taxes that was on deposit at June 30, 2023 and withdrawn in the nine months ended March 31, 2024, when tax monies were distributed. Repurchase agreements increased $7.4 million, or 68.6%, to $18.2 million at March 31, 2024, from $10.8 million at June 30, 2023. Borrowings consisted of advances from the Federal Home Loan Bank of Chicago which increased $76.5 million to $96.0 million at March 31, 2024, from $19.5 million at June 30, 2023, while other borrowings consisted of $25.3 million from the Federal Reserve Bank Term Funding Program (BTFP), which increased $25.3 million from $0 borrowed at June 30, 2023.
Advances from borrowers for taxes and insurance increased $98,000, or 7.9%, to $1.3 million at March 31, 2024, from $1.2 million at June 30, 2023. Accrued interest payable increased $1.1 million, or 65.8%, to $2.8 million at March 31, 2024, from $1.7 million at June 30, 2023. The increase in advances from borrowers for taxes and insurance was attributable to the timing of the payment of real estate taxes and insurance, while the increase in accrued interest payable was mostly due to increases in both the average balance and the average cost of interest-bearing liabilities.
Total equity increased $631,000, or 0.9%, to $72.4 million at March 31, 2024 from $71.8 million at June 30, 2023. Equity increased primarily due to net income of $1.4 million, an increase of $147,000 in accumulated other comprehensive income (loss), net of tax, and ESOP and stock equity plan activity of $435,000, partially offset by the accrual of approximately $1.3 million in dividends to our shareholders, of which about half were still payable as of March 31, 2024, and were paid on April 15, 2024.
Comparison of Operating Results for the Nine Months Ended March 31, 2024 and 2023
General. Net income decreased $2.7 million to $1.4 million for the nine months ended March 31, 2024, from $4.1 million for the nine months ended March 31, 2023. The decrease in net income was due to a decrease in net interest income, partially offset by a decrease in provision for credit losses, an increase in noninterest income and a decrease in noninterest expense.
Net Interest Income. Net interest income decreased by $4.1 million, or 23.7%, to $13.2 million for the nine months ended March 31, 2024, from $17.3 million for the nine months ended March 31, 2023. The decrease was due to an increase of $11.0 million in interest expense, partially offset by an increase of $6.9 million in interest and dividend income. A $70.6 million, or 10.3%, increase in the average balance of interest-bearing liabilities was partially offset by a $62.1 million, or 8.0% increase in interest earning assets. Our interest rate spread decreased by 103 basis points to 1.80% for the nine months ended March 31, 2024, compared to 2.83% for the nine months ended March 31, 2023, while our net interest margin decreased by 86 basis points to 2.10% for the nine months ended March 31, 2024, compared to 2.96% for the nine months ended March 31, 2023.
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Interest and Dividend Income. Interest and dividend income increased $6.9 million, or 29.7%, to $30.3 million for the nine months ended March 31, 2024, from $23.4 million for the nine months ended March 31, 2023. The increase in interest and dividend income was due to a $6.8 million increase in interest on loans, a $70,000 increase in interest income on securities, and a $52,000 increase in other interest income. The increase in interest income on loans was due to a $77.4 million, or 13.8%, increase in the average balance of loans to $637.0 million for the nine months ended March 31, 2024 from $559.5 million for the nine months ended March 31, 2023, and an 88 basis point increase in the average yield on loans to 5.38% for the nine months ended March 31, 2024 from 4.50% for the nine months ended March 31, 2023. The increase in interest income on securities was due to a 24 basis point increase in the average yield on securities to 2.87% for the nine months ended March 31, 2024 from 2.63% for the nine months ended March 31, 2023, partially offset by a $14.5 million, or 6.9%, decrease in the average balance of securities to $195.1 million for the nine months ended March 31, 2024, from $209.6 million for the nine months ended March 31, 2023. The increase in other interest income was a result of a 110 basis point increase in the average yield of other investments, partially offset by a $868,000 decrease in the average balance of other investments, including Federal Home Loan Bank stock dividends and deposits with other financial institutions, to $9.9 million from $10.8 million.
Interest Expense. Interest expense increased $11.0 million, or 182.5%, to $17.1 million for the nine months ended March 31, 2024, from $6.1 million for the nine months ended March 31, 2023. The increase was primarily due to an $8.4 million increase in interest on deposits and a $2.7 million increase in interest on borrowings and repurchase agreements.
Interest expense on interest-bearing deposits increased $8.4 million, or 183.5%, to $12.9 million for the nine months ended March 31, 2024, from $4.6 million for the nine months ended March 31, 2023. This increase was due to a 172 basis point increase in the average cost of interest-bearing deposits to 2.70% for the nine months ended March 31, 2024 from 0.98% for the nine months ended March 31, 2023, and an increase of $14.9 million in the average balance of interest-bearing deposits to $637.7 million for the nine months ended March 31, 2024, from $622.8 million for the nine months ended March 31, 2023.
Interest expense on borrowings, including FHLB advances, borrowings from the Federal Reserve Bank Term Funding Program (BTFP), and repurchase agreements, increased $2.7 million, or 179.4%, to $4.2 million for the nine months ended March 31, 2024, from $1.5 million for the nine months ended March 31, 2023. This increase was mostly due to a $55.7 million increase in the average balance of borrowings to $121.3 million for the nine months ended March 31, 2024, from $65.6 million for the nine months ended March 31, 2023, and a 155 basis point increase in the average cost of such borrowings to 4.58% for the nine months ended March 31, 2024 from 3.03% for the nine months ended March 31, 2023.
Provision (Credit) for Credit Losses. The Company establishes provisions for credit losses, which are charged to operations in order to maintain the allowance for credit losses at a level we consider necessary to absorb probable credit losses inherent in our loan portfolio. The Company recorded a provision for credit losses on loans for $369,000 and a credit for credit losses on off-balance sheet credit exposures of $(173,000) for a total provision for credit losses of $196,000 for the nine months ended March 31, 2024, compared to a provision for credit losses on loans for $442,000 and a credit for credit losses on off-balance sheet credit exposures of $(189,000) for a total provision for credit losses of $253,000 for the nine months ended March 31, 2023. The allowance for credit losses was $7.7 million, or 1.19% of total loans at March 31, 2024, compared to $7.5 million, or 1.29% of total loans at March 31, 2023, and $7.1 million, or 1.20% of total loans at June 30, 2023. During the nine months ended March 31, 2024, net recoveries of $217,000 were recorded, while during the nine months ended March 31, 2023, net charge-offs of $6,000 were recorded.
The following table sets forth information regarding the allowance for credit losses and nonperforming assets at the dates indicated:
| At or for the Nine Months Ended March 31, 2024 |
At or for the Year Ended June 30, 2023 |
|||||||
| Allowance to non-performing loans at end of the period |
3065.48 | % | 6101.71 | % | ||||
| Allowance to total loans outstanding at the end of the period |
1.19 | % | 1.20 | % | ||||
| Net charge-offs to average total loans outstanding during the period, annualized |
0.00 | % | 0.01 | % | ||||
| Total non-performing loans to total loans |
0.04 | % | 0.02 | % | ||||
| Total non-performing assets to total assets |
0.03 | % | 0.02 | % | ||||
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Noninterest Income. Noninterest income increased $155,000, or 5.1%, to $3.2 million for the nine months ended March 31, 2024 from $3.0 million for the nine months ended March 31, 2023. The increase was primarily due to an increase in net realized gain (loss) on sale of available-for-sale securities, an increase in gain on sale of loans, and an increase in insurance commissions, partially offset by a decrease in brokerage commissions. For the nine months ended March 31, 2024, net realized gain (loss) on sale of available-for-sale securities increased $171,000 to $0, gain on sale of loans increased $62,000 to $186,000, and insurance commissions increased $50,000 to $556,000, while brokerage commissions decreased $122,000 to $485,000 from the nine months ended March 31, 2023. The increase in gain (loss) on sale of available-for-sale securities was the result of securities sold at a loss in the nine months ended March 31, 2023, the increase in gain on sale of loans were a result of an increase in loans originated and sold through the FHLBC Mortgage Partnership Finance program in the nine months ended March 31, 2024, and the increase in insurance commissions was due to an increase in personal lines commissions. The decrease in brokerage commissions was the result of a decrease in the amount of renewal commissions and management fees.
Noninterest Expense. Noninterest expense decreased $222,000, or 1.5%, to $14.4 million for the nine months ended March 31, 2024 from $14.6 million for the nine months ended March 31, 2023. Compensation and benefits decreased $485,000, or 5.2%, advertising decreased $93,000, or 24.5%, professional services decreased $64,000, or 17.4%, and supervisory examinations decreased $59,000, or 44.7%, while office occupancy increased $126,000, or 17.3% and federal deposit insurance increased $266,000, or 157.4% for the nine months ended March 31, 2024 from the nine months ended March 31, 2023. Compensation and benefits decreased due to a decrease in 401(k) profit sharing and annual incentive plan expenses, advertising decreased as a result of an ad campaign that ran in the nine months ended March 31, 2023, professional services decreased as a result of additional services received during the nine months ended March 31, 2023, and supervisory examinations decreased as a result of a reduction in assessments for community banks by the OCC. Office occupancy increased due to the addition of a new banking facility in Hoopeston, and federal deposit insurance increased as a result of FDIC increasing the initial base deposit insurance assessment rate.
Income Tax Expense. We recorded a provision for income tax of $465,000 for the nine months ended March 31, 2024, compared to a provision for income tax of $1.4 million for the nine months ended March 31, 2023, reflecting effective tax rates of 25.5% and 26.0%, respectively.
Comparison of Operating Results for the Three Months Ended March 31, 2024 and 2023
General. Net income increased $18,000 to $708,000 net income for the three months ended March 31, 2024, from $690,000 net income for the three months ended March 31, 2023. The increase was primarily due to a decrease in provision (credit) for credit losses, an increase in noninterest income, and a decrease in noninterest expense, partially offset by a decrease in net interest income.
Net Interest Income. Net interest income decreased $777,000 to $4.3 million for the three months ended March 31, 2024, from $5.0 million for the three months ended March 31, 2023. The decrease was the result of an increase in interest expense of $3.4 million, partially offset by an increase of $2.6 million in interest and dividend income. We had a $76.6 million, or 10.8%, increase in the average balance of interest-bearing liabilities, partially offset by a $67.6 million, or 8.5%, increase in average balance of interest earning assets. Our interest rate spread decreased by 67 basis points to 1.65% for the three months ended March 31, 2024, from 2.32% for the three months ended March 31, 2023, and our net interest margin decreased by 56 basis points to 1.96% for the three months ended March 31, 2024, from 2.52% for the three months ended March 31, 2023.
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Interest and Dividend Income. Interest and dividend income increased $2.6 million, or 31.8%, to $10.8 million for the three months ended March 31, 2024, from $8.2 million for the three months ended March 31, 2023. The increase in interest and dividend income was primarily due to a $2.6 million increase in interest income on loans and a $16,000 increase in interest income on securities. The increase in interest on loans resulted from a 101-basis point, or 21.9%, increase in the average yield on loans to 5.61% from 4.60%, and a $79.9 million, or 13.7%, increase in the average balance of loans to $661.5 million from $581.6 million. The increase in interest income on securities resulted from a 21-basis point, or 7.9%, increase in the average yield on securities to 2.84% from 2.63%, partially offset by a $13.0 million, or 6.2%, decrease in the average balance of securities to $195.6 million from $208.6 million.
Interest Expense. Interest expense increased $3.4 million, or 107.0%, to $6.5 million for the three months ended March 31, 2024 from $3.2 million for the three months ended March 31, 2023. The increase was primarily due to a 155-basis point increase in the average cost of interest-bearing liabilities and a $76.6 million increase in the average balance of interest-bearing liabilities.
Interest expense on interest-bearing deposits increased by $2.3 million, or 90.2%, to $4.8 million for the three months ended March 31, 2024 from $2.5 million for the three months ended March 31, 2023. This increase was due to a 140 basis point, or 89.5%, increase in the average cost of interest-bearing deposits to 2.97% for the three months ended March 31, 2024 from 1.57% for the three months ended March 31, 2023, and a $2.3 million, or 0.4%, increase in the average balance of interest-bearing deposits to $639.8 million for the three months ended March 31, 2024 from $637.5 million for the three months ended March 31, 2023.
Interest expense on borrowings increased by $1.1 million, or 170.5%, to $1.8 million for the three months ended March 31, 2024, from $661,000 for the three months ended March 31, 2023. The increase was due to a 123 basis point, or 33.9%, increase in the average cost of borrowings to 4.86% for the three months ended March 31, 2024 from 3.63% for the three months ended March 31, 2023, and an increase in the average balance of borrowings of $74.3 million, or 102.1%, to $147.1 million for the three months ended March 31, 2024, from $72.8 million for the three months ended March 31, 2023.
Provision (Credit) for Credit Losses. We establish provisions for credit losses, which are charged to operations in order to maintain the allowance for credit losses at a level we consider necessary to absorb credit losses inherent in our loan portfolio. We recorded a provision (credit) for credit losses on loans of $(378,000) and a credit for credit losses on off-balance sheet credit exposures of $(12,000) for a total provision (credit) for credit losses of $(390,000) for the three months ended March 31, 2024, compared to a provision for credit losses on loans of $367,000 and a credit for credit losses on off-balance sheet credit exposures of $(127,000) for a total provision for credit losses of $240,000 for the three months ended March 31, 2023. For the three months ended March 31, 2024, a credit for credit losses on loans was necessary as a result of a decrease in loan portfolio balance and the receipt of a large recovery during the period. During the three months ended March 31, 2024, a net recovery of $168,000 was recorded, while a net recovery of $2,000 was recorded for the three months ended March 31, 2023.
Noninterest Income. Noninterest income increased $198,000, or 21.0%, to $1.1 million for the three months ended March 31, 2024 from $942,000 for the three months ended March 31, 2023. The increase was primarily due to an increase in mortgage banking income, net, an increase in insurance commissions, and an increase in gain on sale of loans, partially offset by a decrease in net realized gain (loss) on sale of available-for-sale securities. For the three months ended March 31, 2024, mortgage banking income, net, increased $83,000 to $126,000, insurance commissions increased $52,000 to $182,000, and gain on sale of loans increased $28,000 to $76,000, while net realized gains (losses) on sale of available-for-sale securities decreased $12,000 to $0. The increase in mortgage banking income was the result of an increase in the valuation of mortgage servicing rights in the three months ended March 31, 2024, the increase in insurance commissions was due to an increase in personal lines commissions, and the increase in gain on sale of loans was the result of an increase in loans originated and sold through the FHLBC Mortgage Partnership Finance program in the three months ended March 31, 2024, while the decrease in net realized gain on sale of available-for-sale securities was due to a gain in the three months ended March 31, 2023 and no sales in the three months ended March 31, 2024.
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Table of Contents
Noninterest Expense. Noninterest expense decreased $8,000, or 0.2%, and was $4.8 million for both the three months ended March 31, 2024 and 2023. The largest components of this decrease were compensation and benefits, which decreased $122,000, or 3.8%, supervisory examination, which decreased $24,000, or 55.8% and audit and accounting, which decreased $22,000, or 51.2%. These decreases were partially offset by a $78,000, or 136.8%, increase in federal deposit insurance, a $29,000, or 11.7%, increase in office occupancy, and a $47,000, or 12.5%, increase in other expenses. Compensation and benefits decreased due to a decrease in 401(k) profit sharing and annual incentive plan expenses, supervisory examination decreased as a result of a reduction in assessments for community banks by the OCC, and audit and accounting decreased due to additional services received in the three months ended March 31, 2023. Federal deposit insurance increased as a result of FDIC increasing the initial base deposit insurance assessment rate, office occupancy increased due to the addition of a new banking facility in Hoopeston, and other expenses increased as a result of an increase in debit card and deposit account expenses.
Income Tax Expense. We recorded a provision for income tax of $243,000 for the three months ended March 31, 2024, compared to a provision for income tax of $202,000 for the three months ended March 31, 2023, reflecting effective tax rates of 25.6% and 22.6%, respectively.
Asset Quality
At March 31, 2024, we had no non-accrual loans. At March 31, 2024, we had one commercial real estate loan in the amount of $252,000 that was delinquent 90 days or greater and still accruing interest.
At March 31, 2024, $3.6 million in loans were classified as substandard, and no loans were classified as doubtful or loss. Loans classified as substandard consisted of $197,000 in one- to four-family loans, $236,000 in multi-family loans, $1.2 million in commercial real estate loans, and $1.9 million in commercial business loans.
At March 31, 2024, watch assets consisted of $77,000 in one-to four-family loans.
Loan Modifications and Troubled Debt Restructurings (“TDRs”). After adopting ASU 2022-02, effective July 1, 2023, we no longer held any TDRs and made no loan modifications for borrowers with financial difficulties in the nine months ended March 31, 2024. Prior to adoption of ASU 2022-02, we had TDRs which included loans for which economic concessions had been granted to borrowers with financial difficulties. The Company periodically modified loans to extend the term or make other concessions to help borrowers stay current on their loans and to avoid foreclosure. At June 30, 2023, we had $215,000 in TDRs.
Foreclosed Assets. At March 31, 2024, we had $7,000 in foreclosed assets compared to $31,000 as of June 30, 2023. Foreclosed assets at March 31, 2024 consisted of one vehicle, while foreclosed assets at June 30, 2023 consisted of $24,000 in residential real estate property and a $7,000 vehicle.
Allowance for Credit Loss Activity
The Company regularly reviews its allowance for credit losses and makes adjustments to its balance based on management’s analysis of the loan portfolio, the amount of non-performing and classified loans, as well as general economic conditions. Although the Company maintains its allowance for credit losses at a level that it considers sufficient to provide for losses, there can be no assurance that future losses will not exceed internal estimates. In addition, the amount of the allowance for credit losses is subject to review by regulatory agencies, which can order the establishment of additional loss provisions. The following table summarizes changes in the allowance for credit losses over the nine-month periods ended March 31, 2024 and 2023:
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Table of Contents
| Nine months ended March 31, |
||||||||
| 2024 | 2023 | |||||||
| Balance, beginning of period |
$ | 7,139 | $ | 7,052 | ||||
| Impact of adopting ASU 2016-13 |
— | 47 | ||||||
| Loans charged off |
||||||||
| Real estate loans: |
||||||||
| One- to four-family |
— | — | ||||||
| Multi-family |
— | — | ||||||
| Commercial |
— | — | ||||||
| HELOC |
— | — | ||||||
| Construction |
— | — | ||||||
| Commercial |
— | (4 | ) | |||||
| Consumer |
(35 | ) | (30 | ) | ||||
|
|
|
|
|
|||||
| Gross charged off loans |
(35 | ) | (34 | ) | ||||
|
|
|
|
|
|||||
| Recoveries of loans previously charged off |
||||||||
| Real estate loans: |
||||||||
| One- to four-family |
3 | 1 | ||||||
| Multi-family |
— | — | ||||||
| Commercial |
— | — | ||||||
| HELOC |
— | — | ||||||
| Construction |
— | — | ||||||
| Commercial |
241 | 18 | ||||||
| Consumer |
8 | 9 | ||||||
|
|
|
|
|
|||||
| Gross recoveries of charged off loans |
252 | 28 | ||||||
|
|
|
|
|
|||||
| Net recoveries (charge offs) |
217 | (6 | ) | |||||
|
|
|
|
|
|||||
| Provision charged to expense |
369 | 442 | ||||||
|
|
|
|
|
|||||
| Balance, end of period |
$ | 7,725 | $ | 7,535 | ||||
|
|
|
|
|
|||||
The allowance for credit losses has been calculated based upon an evaluation of pertinent factors underlying the various types and quality of the Company’s loans. Management considers such factors as the repayment status of a loan, the estimated net fair value of the underlying collateral, the borrower’s intent and ability to repay the loan, local economic conditions, and the Company’s historical loss ratios. The Company maintains the allowance for credit losses through the provisions for credit losses that we charge to income. The Company charges losses on loans against the allowance for credit losses when we believe the collection of loan principal is unlikely. The allowance for credit losses increased $586,000 to $7.7 million at March 31, 2024, from $7.1 million at June 30, 2023. This increase in allowance was primarily the result of an increase in our loan portfolio and was necessary in order to bring the allowance for credit losses to a level that reflects management’s best estimate of the reserve necessary to adequately account for probable losses expected over the remaining contractual life of the loans.
Within each pool, risk elements are evaluated that have specific impacts to the borrowers within the pool. These, along with the general risks and events, and the specific lending policies and procedures by loan type, are analyzed to estimate the qualitative factors used to adjust the historical loss rates. Factors considered by the Company during the evaluation of the overall adequacy of the allowance include historical net loan losses, the level and composition of nonaccrual, past due and loan modifications for borrowers with financial difficulties, trends in volumes and terms of loans, effects of changes in risk selection and underwriting standards or lending practices, lending staff changes, concentrations of credit, industry conditions and the current economic conditions in the region where the Company operates. Management reviews economic factors including the potential for reduced cash flow for commercial operating loans from reduction in sales or increased operating costs, decreased occupancy rates for commercial buildings, reduced levels of home sales for commercial land developments, increased operating costs for businesses, and increased levels of unemployment and bankruptcy impacting consumer’s ability to pay. Each of these economic uncertainties was taken into consideration in developing the level of the reserve, and management has included a qualitative factor within the ACL. In addition, a forecast, using reasonable and supportable future conditions, is prepared that is used to estimate expected changes to existing and historical conditions in the current period.
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Table of Contents
While management believes that our asset quality remains strong, it recognizes that, due to the continued growth in the loan portfolio, and the potential changes in market conditions, our level of nonperforming assets and resulting charge-offs may fluctuate. Higher levels of net charge-offs requiring additional provisions for loan losses could result. Although management uses the best information available, the level of the allowance for loan losses remains an estimate that is subject to significant judgment and short-term change.
Liquidity and Capital Resources
Liquidity is the ability to meet current and future financial obligations of a short-term nature. Our primary sources of funds consist of deposit inflows, loan sales and repayments, borrowings from the Federal Reserve Bank, advances from the Federal Home Loan Bank of Chicago, and maturities of securities. While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and mortgage prepayments are greatly influenced by general interest rates, economic conditions and competition. Our Asset/Liability Management Committee is responsible for establishing and monitoring our liquidity targets and strategies in order to ensure that sufficient liquidity exists for meeting the borrowing needs and deposit withdrawals of our customers as well as unanticipated contingencies. For the three months ended March 31, 2024, the nine months ended March 31, 2024, and the year ended June 30, 2023, our liquidity ratio averaged 25.2%, 26.0% and 29.3% of our total assets, respectively. We believe that we had enough sources of liquidity to satisfy our short- and long-term liquidity needs as of March 31, 2024.
We regularly monitor and adjust our investments in liquid assets based upon our assessment of: (i) expected loan demand; (ii) expected deposit flows; (iii) yields available on interest-earning deposits and securities; and (iv) the objectives of our asset/liability management program. Excess liquid assets are invested generally in interest-earning deposits and short- and medium-term securities.
Our most liquid assets are cash and cash equivalents. The levels of these assets are affected by our operating, financing, lending and investing activities during any given period. At March 31, 2024, cash and cash equivalents totaled $16.1 million. Interest-bearing time deposits which can offer additional sources of liquidity, totaled $750,000 at March 31, 2024.
Our cash flows are derived from operating activities, investing activities and financing activities as reported in our Condensed Consolidated Statement of Cash Flows included in our financial statements. Net cash provided by operating activities were $1.1 million and $1.7 million for the nine months ended March 31, 2024, and 2023, respectively. Net cash used in investing activities consisted primarily of disbursements for loan originations and the purchase of securities and Federal Home Loan Bank stock, offset by net cash provided by principal collections on loans, proceeds from maturing securities, the sale of securities, the redemption of Federal Home Loan Bank stock, and pay downs on mortgage-backed securities. Net cash used in investing activities was $(51.2) million and $(51.5) million for the nine months ended March 31, 2024, and 2023, respectively. Net cash provided by (used in) financing activities consisted primarily of the activity in deposit accounts, FHLB Advances, dividends paid, and stock repurchases. The net cash provided by (used in) financing activities was $55.1 million and $(16.5) million for the nine months ended March 31, 2024, and 2023, respectively.
The Company must also maintain adequate levels of liquidity to ensure the availability of funds to satisfy loan commitments. The Company anticipates that it will have sufficient funds available to meet its current commitments principally through the use of current liquid assets and through its borrowing capacity discussed above. The following table summarizes these commitments at March 31, 2024 and June 30, 2023.
| March 31, 2024 |
June 30, 2023 |
|||||||
| (Dollars in thousands) | ||||||||
| Commitments to fund loans |
$ | 9,137 | $ | 5,081 | ||||
| Lines of credit |
75,952 | 94,159 | ||||||
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Table of Contents
At March 31, 2024, certificates of deposit due within one year of March 31, 2024 totaled $286.7 million, or 42.1% of total deposits. Depending on market conditions, we may be required to pay higher rates on such deposits or other borrowings than we currently pay on the certificates of deposit due on or before March 31, 2024. Moreover, it is our intention as we continue to grow our commercial real estate portfolio, to emphasize lower cost deposit relationships with these commercial loan customers and thereby replace the higher cost certificates with lower cost deposits. We have the ability to attract and retain deposits by adjusting the interest rates offered.
Liquidity management is both a daily and long-term function of business management. If we require funds beyond our ability to generate them internally, borrowing agreements, which provide an additional source of funds, exist with the Federal Home Loan Bank of Chicago, Federal Reserve Discount Window, Federal Reserve Bank Term Funding Program (BTFP) and CIBC Bank USA. Federal Home Loan Bank advances were $96.0 million at March 31, 2024, while we had borrowings of $25.3 million from the Federal Reserve BTFP. At March 31, 2024, we had the ability to borrow up to an additional $57.1 million from the Federal Home Loan Bank of Chicago, we had $14.0 million available on our CIBC Bank, and also had the ability to borrow another $33.6 million from the Federal Reserve based on current collateral pledged.
The Association is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and discretionary actions by regulators that if undertaken, could have a direct material effect on the Association’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Association must meet specific capital guidelines involving quantitative measures of the Association’s assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. The Association’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk-weightings and other factors.
The Basel III regulatory capital framework (the “Basel III Capital Rules”) adopted by U.S. federal regulatory authorities, among other things, (i) establish the capital measure called “Common Equity Tier 1” (“CET1”), (ii) specify that Tier 1 capital consist of CET1 and “Additional Tier 1 Capital” instruments meeting stated requirements, (iii) define CET1 narrowly by requiring that most deductions/adjustments to regulatory capital measures be made to CET1 and not to the other components of capital and (iv) set forth the acceptable scope of deductions/adjustments to the specified capital measures.
In addition, to avoid restrictions on capital distributions, including dividend payments and stock repurchases, or discretionary bonus payments to executives, a covered banking organization must maintain a “capital conservation buffer” of 2.5 percent on top of its minimum risk-based capital requirements. This buffer must consist solely of Tier 1 Common Equity and the buffer applies to all three measurements: Common Equity Tier 1, Tier 1 capital and total capital.
As a result of the Economic Growth, Regulatory Relief, and Consumer Protection Act, the federal banking agencies were required to develop a “Community Bank Leverage Ratio” (the ratio of a bank’s tangible equity capital to average total consolidated assets) for financial institutions with assets of less than $10 billion. A “qualifying community bank” that exceeds this ratio will be deemed to be in compliance with all other capital and leverage requirements, including the capital requirements to be considered “well capitalized” under Prompt Corrective Action statutes. The Community Bank Leverage Ratio is currently set at 9%. The Association opted in to the Community Bank Leverage Ratio in 2020.
As of March 31, 2024, the Association was categorized as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events that management believes have changed the Association’s prompt corrective action category. The Association’s Community Bank Leverage Ratio is presented in the table below.
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Table of Contents
| March 31, 2024 | June 30, 2023 | Minimum to Be Well | ||||||||||
| Actual | Actual | Capitalized | ||||||||||
| Community Bank Leverage Ratio |
9.03 | % | 9.51 | % | 9.00 | % | ||||||
Average Balances and Yields
The following tables set forth average balance sheets, average yields and costs, and certain other information at and for the periods indicated. Yields and costs are presented on an annualized basis. Tax-equivalent yield adjustments have not been made for tax-exempt securities. All average balances are based on month-end balances, which management deems to be representative of the operations of the Company. Non-accrual 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 deferred fees, discounts and premiums that are amortized or accreted to interest income or expense.
| For the Three Months Ended March 31, | ||||||||||||||||||||||||
| 2024 | 2023 | |||||||||||||||||||||||
| Average Balance |
Interest Income/ Expense |
Yield/ Cost |
Average Balance |
Interest Income/ Expense |
Yield/ Cost |
|||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||
| Assets |
||||||||||||||||||||||||
| Total Loans |
$ | 661,492 | $ | 9,273 | 5.61 | % | $ | 581,600 | $ | 6,690 | 4.60 | % | ||||||||||||
| Securities: |
||||||||||||||||||||||||
| U.S. Treasury |
443 | 2 | 1.81 | % | 1,599 | 6 | 1.50 | % | ||||||||||||||||
| U.S. Government and federal agency |
6,562 | 40 | 2.44 | % | 6,490 | 40 | 2.47 | % | ||||||||||||||||
| Mortgage-backed: |
||||||||||||||||||||||||
| GSE-residential |
171,148 | 1,222 | 2.86 | % | 180,953 | 1,200 | 2.65 | % | ||||||||||||||||
| Small Business Administration |
14,358 | 100 | 2.79 | % | 16,137 | 99 | 2.45 | % | ||||||||||||||||
| State and political subdivisions |
3,110 | 23 | 2.96 | % | 3,433 | 26 | 3.03 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total securities |
195,621 | 1,387 | 2.84 | % | 208,612 | 1,371 | 2.63 | % | ||||||||||||||||
| Other |
10,922 | 143 | 5.24 | % | 10,187 | 137 | 5.38 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total interest-earning assets |
868,035 | 10,803 | 4.98 | % | 800,399 | 8,198 | 4.10 | % | ||||||||||||||||
| Non-interest earning assets |
38,536 | 40,952 | ||||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||
| Total assets |
$ | 906,571 | $ | 841,351 | ||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||
| Liabilities and Stockholders’ Equity |
||||||||||||||||||||||||
| Interest-bearing liabilities: |
||||||||||||||||||||||||
| Interest-bearing checking or NOW |
$ | 101,555 | 38 | 0.15 | % | $ | 112,506 | 44 | 0.16 | % | ||||||||||||||
| Savings accounts |
60,914 | 97 | 0.64 | % | 68,783 | 62 | 0.36 | % | ||||||||||||||||
| Money market accounts |
152,149 | 1,159 | 3.05 | % | 178,544 | 783 | 1.75 | % | ||||||||||||||||
| Certificates of deposit |
325,196 | 3,462 | 4.26 | % | 277,691 | 1,612 | 2.32 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
49
Table of Contents
| For the Three Months Ended March 31, | ||||||||||||||||||||||||
| 2024 | 2023 | |||||||||||||||||||||||
| Average Balance |
Interest Income/ Expense |
Yield/ Cost |
Average Balance |
Interest Income/ Expense |
Yield/ Cost |
|||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||
| Total interest-bearing deposits |
639,814 | 4,756 | 2.97 | % | 637,524 | 2,501 | 1.57 | % | ||||||||||||||||
| Borrowings and repurchase agreements |
147,108 | 1,788 | 4.86 | % | 72,801 | 661 | 3.63 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total interest-bearing liabilities |
786,922 | 6,544 | 3.33 | % | 710,325 | 3,162 | 1.78 | % | ||||||||||||||||
| Noninterest-bearing liabilities |
41,829 | 48,554 | ||||||||||||||||||||||
| Other Noninterest-bearing liabilities |
5,798 | 9,712 | ||||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||
| Total liabilities |
834,549 | 768,591 | ||||||||||||||||||||||
| Stockholders’ Equity |
72,022 | 72,760 | ||||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||
| Total liabilities and stockholders’ equity |
$ | 906,571 | $ | 841,351 | ||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||
| Net interest income |
$ | 4,259 | $ | 5,036 | ||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||
| Interest rate spread (1) |
1.65 | % | 2.32 | % | ||||||||||||||||||||
| Net interest margin (2) |
1.96 | % | 2.52 | % | ||||||||||||||||||||
| Net interest-earning assets (3) |
$ | 81,113 | $ | 90,074 | ||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||
| Average interest-earning assets to interest-bearing liabilities |
110 | % | 113 | % | ||||||||||||||||||||
| (1) | Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities. |
| (2) | Net interest margin represents net interest income divided by average total interest-earning assets. |
| (3) | Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities. |
50
Table of Contents
| For the Nine Months Ended March 31, | ||||||||||||||||||||||||
| 2024 | 2023 | |||||||||||||||||||||||
| Average Balance |
Interest Income/ Expense |
Yield/ Cost |
Average Balance |
Interest Income/ Expense |
Yield/ Cost |
|||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||
| Assets |
||||||||||||||||||||||||
| Loans |
$ | 636,955 | $ | 25,708 | 5.38 | % | $ | 559,516 | $ | 18,889 | 4.50 | % | ||||||||||||
| Securities: |
||||||||||||||||||||||||
| U.S. Treasury |
438 | 5 | 1.52 | % | 2,467 | 29 | 1.57 | % | ||||||||||||||||
| U.S. Government and federal agency |
6,503 | 119 | 2.44 | % | 7,314 | 137 | 2.50 | % | ||||||||||||||||
| Mortgage-backed: |
||||||||||||||||||||||||
| GSE-residential |
170,395 | 3,696 | 2.89 | % | 180,118 | 3,590 | 2.66 | % | ||||||||||||||||
| SBA |
14,473 | 304 | 2.80 | % | 16,076 | 292 | 2.42 | % | ||||||||||||||||
| State and political subdivisions |
3,262 | 74 | 3.02 | % | 3,591 | 80 | 2.97 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total securities |
195,071 | 4,198 | 2.87 | % | 209,566 | 4,128 | 2.63 | % | ||||||||||||||||
| Other |
9,896 | 417 | 5.62 | % | 10,764 | 365 | 4.52 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total interest-earning assets |
841,922 | 30,323 | 4.80 | % | 779,846 | 23,382 | 4.00 | % | ||||||||||||||||
| Non-interest earning assets |
39,311 | 41,544 | ||||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||
| Total assets |
$ | 881,233 | $ | 821,390 | ||||||||||||||||||||
| Liabilities and Stockholders’ Equity |
||||||||||||||||||||||||
| Interest-bearing liabilities: |
||||||||||||||||||||||||
| Interest-bearing checking or NOW |
$ | 103,593 | 126 | 0.16 | % | $ | 120,701 | 154 | 0.17 | % | ||||||||||||||
| Savings accounts |
61,487 | 306 | 0.66 | % | 71,950 | 170 | 0.32 | % | ||||||||||||||||
| Money market accounts |
164,858 | 3,715 | 3.00 | % | 171,171 | 1,416 | 1.10 | % | ||||||||||||||||
| Certificates of deposit |
307,753 | 8,780 | 3.80 | % | 258,989 | 2,820 | 1.45 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total interest-bearing deposits |
637,691 | 12,927 | 2.70 | % | 622,811 | 4,560 | 0.98 | % | ||||||||||||||||
| Borrowings and repurchase agreements |
121,337 | 4,166 | 4.58 | % | 65,596 | 1,491 | 3.03 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total interest-bearing liabilities |
759,028 | 17,093 | 3.00 | % | 688,407 | 6,051 | 1.17 | % | ||||||||||||||||
| Noninterest-bearing liabilities |
46,213 | 52,035 | ||||||||||||||||||||||
| Other Noninterest-bearing liabilities |
5,784 | 10,122 | ||||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||
| Total liabilities |
811,025 | 750,564 | ||||||||||||||||||||||
| Stockholders’ equity |
70,208 | 70,826 | ||||||||||||||||||||||
|
|
|
|
|
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| Total liabilities and stockholders’ equity |
$ | 881,233 | $ | 821,390 | ||||||||||||||||||||
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|
|
|
|
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| Net interest income |
$ | 13,230 | $ | 17,331 | ||||||||||||||||||||
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|
|
|
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| For the Nine Months Ended March 31, | ||||||||||||||||||||||||
| 2024 | 2023 | |||||||||||||||||||||||
| Average Balance |
Interest Income/ Expense |
Yield/ Cost |
Average Balance |
Interest Income/ Expense |
Yield/ Cost |
|||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||
| Interest rate spread (1) |
1.80 | % | 2.83 | % | ||||||||||||||||||||
| Net interest margin (2) |
2.10 | % | 2.96 | % | ||||||||||||||||||||
| Net interest-earning assets (3) |
$ | 82,894 | $ | 91,439 | ||||||||||||||||||||
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|
|
|
|
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| Average interest-earning assets to interest-bearing liabilities |
111 | % | 113 | % | ||||||||||||||||||||
| (1) | Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities. |
| (2) | Net interest margin represents net interest income divided by average total interest-earning assets. |
| (3) | Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities. |
Rate/Volume Analysis
The following table presents the effects of changing rates and volumes on our net interest income for the periods indicated. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The total column represents the sum of the prior columns. For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated to the changes due to rate and the changes due to volume in proportion to the relationship of the absolute dollar amounts of change in each.
| Three Months Ended March 31, 2024 vs. 2023 |
Nine Months Ended March 31, 2024 vs. 2023 |
|||||||||||||||||||||||
| Increase (Decrease) Due to |
Total Increase (Decrease) |
Increase (Decrease) Due to |
Total Increase (Decrease) |
|||||||||||||||||||||
| Volume | Rate | Volume | Rate | |||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||
| Interest-earning assets: |
||||||||||||||||||||||||
| Loans |
$ | 994 | $ | 1,589 | $ | 2,583 | $ | 2,826 | $ | 3,993 | $ | 6,819 | ||||||||||||
| Securities |
(377 | ) | 393 | 16 | (403 | ) | 473 | 70 | ||||||||||||||||
| Other |
25 | (19 | ) | 6 | (46 | ) | 98 | 52 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total interest-earning assets |
$ | 642 | $ | 1,963 | $ | 2,605 | $ | 2,377 | $ | 4,564 | $ | 6,941 | ||||||||||||
|
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|
|
|
|
|
|
|
|
|
|
|
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| Interest-bearing liabilities: |
||||||||||||||||||||||||
| Interest-bearing checking or NOW |
$ | (4 | ) | $ | (2 | ) | $ | (6 | ) | $ | (20 | ) | $ | (8 | ) | $ | (28 | ) | ||||||
| Savings accounts |
(44 | ) | 79 | 35 | (42 | ) | 178 | 136 | ||||||||||||||||
| Certificates of deposit |
314 | 1,536 | 1,850 | 620 | 5,340 | 5,960 | ||||||||||||||||||
| Money market accounts |
(708 | ) | 1,084 | 376 | (87 | ) | 2,386 | 2,299 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total interest-bearing deposits |
(442 | ) | 2,697 | 2,255 | 471 | 7,896 | 8,367 | |||||||||||||||||
| Federal Home Loan Bank advances and repurchase agreements |
846 | 281 | 1,127 | 1,670 | 1,005 | 2,675 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total interest-bearing liabilities |
$ | 404 | $ | 2,978 | $ | 3,382 | $ | 2,141 | $ | 8,901 | $ | 11,042 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Change in net interest income |
$ | 238 | $ | (1,015 | ) | $ | (777 | ) | $ | 236 | $ | (4,337 | ) | $ | (4,101 | ) | ||||||||
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Table of Contents
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
An internal interest rate risk analysis is performed at least quarterly to assess the Company’s Earnings at Risk, Capital at Risk, and Value at Risk. As of March 31, 2024 there were no material changes in interest rate risk from the analysis disclosed in the Company’s Form 10-K for the fiscal year ended June 30, 2023, as filed with the Securities and Exchange Commission.
| Item 4. | Controls and Procedures |
An evaluation was performed under the supervision and with the participation of the Company’s management, including the Company’s principal executive officer and principal financial officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities and Exchange Act of 1934, as amended) as of March 31, 2024. Based upon such evaluation, the principal executive officer and principal financial officer concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective for the purpose of ensuring that the information required to be disclosed in the reports that the Company files or submits under the Exchange Act with the Securities and Exchange Commission (the “SEC”) (1) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (2) is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.
During the quarter ended March 31, 2024, there have been no changes in the Company’s internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
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Table of Contents
Part II – Other Information
| Item 1. | Legal Proceedings |
The Association and Company are subject to various legal actions arising in the normal course of business. In the opinion of management, the resolution of these legal actions is not expected to have a material adverse effect on the Association’s or the Company’s financial condition or results of operations.
| Item 1A. | Risk Factors |
In addition to the other information set forth in this report, you should carefully consider the factors discussed below and in “Item1A.- Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended June 30, 2023, which could materially affect our business, financial condition or future results of operations. The risks described in our Annual Report on Form 10-K are not the only risks that we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or results of operations.
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
None.
| Item 3. | Defaults Upon Senior Securities |
None.
| Item 4. | Mine Safety Disclosures |
None.
| Item 5. | Other Information |
None.
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Table of Contents
| Item 6. | Exhibits |
| 31.1 | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| 31.2 | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| 32 | Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
| 101 | Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Condensed Consolidated Balance Sheets as of March 31, 2024 and June 30, 2023, (ii) the Condensed Consolidated Statements of Income for the three and nine months ended March 31, 2024 and 2023, (iii) the Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended March 31, 2024 and 2023, (iv) the Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended March 31, 2024 and 2023, (v) the Condensed Consolidated Statements of Cash Flows for the nine months ended March 31, 2024 and 2023, and (vi) the notes to the Condensed Consolidated Financial Statements.* | |
| * | This information is furnished and not filed for purposes of Section 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934. |
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Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| IF BANCORP, INC. | ||
| Date: May 13, 2024 | /s/ Walter H. Hasselbring III | |
| Walter H. Hasselbring III | ||
| President and Chief Executive Officer | ||
| Date: May 13, 2024 | /s/ Pamela J. Verkler | |
| Pamela J. Verkler | ||
| Senior Executive Vice President and Chief Financial Officer (Principal Financial Officer) | ||
56