We believe our tax policies and practices are critical accounting policies because the
determination of our tax provision and current and deferred tax assets and liabilities have a material impact on our net income and the carrying value of our assets. We believe our tax liabilities and assets are properly recorded in the consolidated
financial statements at June 30, 2020 and no valuation allowance was necessary.
Comparison of Financial Condition at June 30, 2020 and
June 30, 2019
Total assets increased $11.6 million, or 1.6%, to $735.5 million at June 30, 2020 from
$723.9 million at June 30, 2019. The increase was primarily due to a $22.0 million increase in net loans and a $16.1 million increase in investments, partially offset by a $26.1 million decrease in cash and cash equivalents.
Cash and cash equivalents decreased by $26.1 million to $33.5 million at June 30, 2020, from $59.6 million at
June 30, 2019. This decrease was partially the result of a fluctuation in the balance of one large public entity deposit account and the purchase of investment securities. The public entity collects real estate taxes in two installments, due in
June and September, and then makes distributions from the account in early July and September. Amounts received prior to June 30, and subsequently distributed the first week of July were $45.3 million and $55.3 million in 2020 and
Investment securities, consisting entirely of securities available for sale, increased $16.1 million, or 11.0%,
to $162.4 million at June 30, 2020 from $146.3 million at June 30, 2019. We had no held-to-maturity securities at June 30, 2020 or June 30,
Net loans receivable, including loans held for sale, increased by $22.0 million, or 4.5%, to $509.8 million at
June 30, 2020 from $487.8 million at June 30, 2019. The increase in net loans receivable during this period was due primarily to a $23.3 million, or 27.7%, increase in commercial business loans, a $5.9 million, or 36.8%
increase in construction loans, a $1.7 million, or 1.2%, increase in commercial real estate loans, and a $393,000, or 5.5% increase in consumer loans, partially offset by a $8.5 million, or 8.1%, decrease in multi-family loans, a $414,000,
or 0.3%, decrease in one- to four-family loans, and a $387,000, or 4.3%, decrease in home equity lines of credit.
Between June 30, 2019 and June 30, 2020, premises and equipment decreased $513,000 to $10.2 million, accrued interest
receivable decreased $234,000 to $1.9 million, foreclosed assets held for sale decreased $392,000 to $386,000, deferred income taxes decreased $1.4 million, to $630,000, and mortgage servicing rights decreased $138,000 to $715,000, while
Federal Home Loan Bank (FHLB) stock increased $1.9 million to $3.0 million, and other assets increased $220,000 to $634,000. The decrease in premises and equipment was the result of ordinary depreciation, and the decrease in accrued
interest receivable was due to decreases in the average rates of both loans and securities. The decrease in foreclosed assets held for sale was due to the sale of property and the decrease in deferred income taxes was mostly due to an increase in
unrealized gains on the sale of available-for sale securities. The decrease in mortgage servicing rights was the result of a decrease in valuation. The increase in FHLB stock was the result of a higher stock
requirement due to an increased balance of FHLB advances, and the increase in other assets resulted from a year-over-year fluctuation in items in process.
At June 30, 2020, our investment in bank-owned life insurance was $9.3 million, an increase of $273,000 from $9.1 million at
June 30, 2019. 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 the Associations Tier 1 capital plus our allowance for loan losses. At June 30, 2020, our
investment of $9.3 million in bank-owned life insurance was 11.3% of our Tier 1 capital plus our allowance for loan losses.
decreased $5.3 million, or 0.9%, to $601.7 million at June 30, 2020 from $607.0 million at June 30, 2019. Savings, NOW, and money market accounts increased $36.4 million, or 18.6%, to $232.7 million, noninterest
bearing demand accounts increased $7.0 million, or 8.8%, to $87.5 million, certificates of deposit, excluding brokered certificates of deposit, decreased $21.6 million, or 7.4%, to $269.2 million, and brokered certificates of
deposit decreased $27.2 million, or 68.8%, to $12.3 million.
Repurchase agreements increased $1.7 million to
$3.7 million, while advances from the Federal Home Loan Bank of Chicago increased $10.5 million, or 43.8%, to $34.5 million at June 30, 2020 from $24.0 million at June 30, 2019. During the year ended June 30, 2020,
we established a line of credit at CIBC Bank USA, which had a balance of $3.0 million at June 30, 2020.