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- Quarterly Report (10-Q)

Date : 02/14/2012 @ 1:33PM
Source : Edgar (US Regulatory)
Stock : F F D Financial (MM) (FFDF)
Quote : 16.09  0.0 (0.00%) @ 2:05AM
Ffd Financial share price Chart

- Quarterly Report (10-Q)



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549

FORM 10-Q
 
(Mark One)
 
x
QUARTERLY REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended December 31, 2011  
 
OR
 
o
TRANSITION  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from ____________ to _______________
 
Commission File Number: 0-27916  
 
FFD FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
 
Ohio
 
34-1821148
(State or other jurisdiction of incorporation or organization)
 
(IRS Employer Identification No.)

321 North Wooster Avenue, Dover, Ohio  44622
(Address of principal executive offices) (Zip Code)

(330)  364-7777
(Registrant’s telephone number, including area code)

 
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes x                       No   o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes x                       No   o

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

Large accelerated filer o
Accelerated filer o
   
Non-accelerated filer o (Do not check if a smaller reporting company)
Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o                       No   x
 
APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: F ebruary 10, 2012 – 1,016,096 common shares, no par value  

 
1

 

INDEX
 
     
Page
       
PART I
Item 1-
FINANCIAL INFORMATION
 
       
   
Consolidated Statements of Financial Condition
3
       
   
Consolidated Statements of Earnings
4
       
   
Consolidated Statements of Comprehensive Income
5
       
   
Condensed Consolidated Statements of Cash Flows
6
       
   
Notes to Consolidated Financial Statements
7
       
 
Item 2
Management’s Discussion and Analysis of Financial Condition and Results of Operations
24
       
 
Item 3
Qualitative and Quantitative Disclosures about Market Risk
33
       
 
Item 4
Controls and Procedures
34
       
PART II
-
OTHER INFORMATION
35
       
SIGNATURES
36
 
 
2

Index
 
FFD Financial Corporation
 
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
 
(In thousands, except share data)

   
December 31,
   
June 30,
 
ASSETS
 
2011
   
2011
 
   
(Unaudited)
       
             
Cash and due from financial institutions
  $ 1,195     $ 1,352  
Interest-bearing deposits in other financial institutions, including overnight deposits
    21,372       14,944  
Cash and cash equivalents
    22,567       16,296  
                 
Investment securities available for sale
    1,004       6,021  
Mortgage-backed securities available for sale
    11,031       6,257  
Mortgage-backed securities held to maturity,fair value of $49 at December 31, 2011 and $51 at June 30, 2011
    49       51  
Loans receivable – net of allowance of $2,130 and $2,174
    190,529       182,226  
Loans held for sale
    943       -  
Premises and equipment, net
    3,919       3,910  
Federal Home Loan Bank of Cincinnati: stock, at cost
    2,422       2,422  
Loan servicing rights
    709       732  
Accrued interest receivable
    529       515  
Prepaid expenses and other assets
    984       1,106  
                 
Total assets
  $ 234,686     $ 219,536  
                 
LIABILITIES AND SHAREHOLDERS’ EQUITY
               
                 
Deposits
               
Non-interest bearing
  $ 20,045     $ 15,746  
Interest bearing
    179,185       169,297  
Total deposits
    199,230       185,043  
Federal Home Loan Bank advances
    12,949       13,137  
Other borrowed funds
    566       630  
Accrued interest payable
    113       118  
Accrued and deferred federal income tax
    411       62  
Other liabilities
    1,885       1,575  
Total liabilities
    215,154       200,565  
                 
Commitments and contingent liabilities
    -       -  
                 
Shareholders’ equity
               
Preferred stock - authorized 1,000,000 shares without par value; no shares issued
    -       -  
Common stock - authorized 5,000,000 shares without par or stated value; 1,454,750 shares issued
    -       -  
Additional paid-in capital
    8,340       8,334  
Retained earnings
    17,163       16,686  
Accumulated comprehensive income, net
    74       35  
Treasury stock, at cost (438,654 and 443,154 treasury shares at December 31, 2011 and June 30, 2011, respectively)
    (6,045 )     (6,084 )
Total shareholders’ equity
    19,532       18,971  
                 
Total liabilities and shareholders’ equity
  $ 234,686     $ 219,536  

The accompanying notes are an integral part of these statements.

 
3

Index

FFD Financial Corporation
 
CONSOLIDATED STATEMENTS OF EARNINGS
 (In thousands, except per share data)
(Unaudited)
 
   
For the three months
   
For the six months
 
   
ended December 31,
   
ended December 31,
 
   
2011
   
2010
   
2011
   
2010
 
                         
Interest income
                       
Loans, including fees
  $ 2,589     $ 2,616     $ 5,147     $ 5,227  
Mortgage-backed securities
    49       4       81       6  
Investment securities
    8       40       36       97  
Interest-bearing deposits and other
    30       28       58       57  
      2,676       2,688       5,322       5,387  
Interest expense
                               
Deposits
    509       594       1,041       1,304  
Borrowings
    129       152       259       306  
      638       746       1,300       1,610  
                                 
Net interest income
    2,038       1,942       4,022       3,777  
                                 
Provision for losses on loans
    163       346       406       532  
                                 
Net interest income after provision for losses on loans
    1,875       1,596       3,616       3,245  
                                 
Noninterest income
                               
Net gain on sale of loans
    258       275       421       535  
Mortgage servicing loss
    (59 )     (65 )     (60 )     (65 )
Service charges on deposit accounts
    101       86       210       180  
Other
    31       31        57       58  
      331       327       628       708  
Noninterest expense
                               
Employee and director compensation and benefits
    661       626       1,349       1,269  
Occupancy and equipment
    163       141       308       288  
Franchise taxes
    61       67       121       124  
FDIC Insurance Premiums
    18       61       43       124  
Data processing
    96       87       198       180  
ATM processing
    40       33       80       72  
Professional and consulting fees
    86       81       176       135  
Postage and stationery supplies
    51       51       80       85  
Advertising
    71       51       123       90  
Checking account maintenance expense
    52       55       103       109  
Other
    216       186       412       364  
      1,515       1,439       2,993       2,840  
                                 
Income before income taxes
    691       484       1,251       1,113  
                                 
Income tax expense
    237       167       429       382  
                                 
Net Income
  $ 454     $ 317     $ 822     $ 731  
                                 
Earnings per share
                               
Basic
  $ .45     $ .31     $ .81     $ .72  
                                 
Diluted
  $ .45     $ .31     $ .81     $ .72  
                                 
Dividends declared per share
  $ .17     $ . 17     $ .34     $ . 34  

The accompanying notes are an integral part of these statements.

 
4

Index

FFD Financial Corporation
 
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
 (In thousands)
(Unaudited)
 
   
For the three months
   
For the six months
 
   
ended December 31,
   
ended December 31,
 
   
2011
   
2010
   
2011
   
2010
 
                         
Net income
  $ 454     $ 317     $ 822     $ 731  
                                 
Other comprehensive income (loss), net of related tax effects:
                               
Unrealized holding gains (losses) on securities during the period, net of taxes (benefits) of $4, $(64),$21 and $(67), during the respective periods
    7        (126 )     39       (131 )
                                 
Comprehensive income
  $ 461     $ 191     $ 861     $ 600  

The accompanying notes are an integral part of these statements.

 
5

Index

FFD Financial Corporation
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
For the six months ended December 31, 2011 and 2010
(In thousands)
(Unaudited)
 
   
2011
   
2010
 
             
Cash flows from operating activities:
           
Net cash from operating activities
  $ 1,002     $ 5,949  
                 
Cash flows from investing activities:
               
Purchase of investment securities available for sale
    (4,991 )     (8,000 )
Proceeds from maturities/calls of investment securities available for sale
    5,000       6,000  
Principal repayments on mortgage-backed securities
    475       11  
Loan originations and payments, net
    (8,705 )     (2,343 )
Additions to premises and equipment
    (145 )     (35 )
Proceeds from the sale of real estate owned
    -       18  
Net cash from investing activities
    (8,366 )     (4,349 )
                 
Cash flows financing activities:
               
Net change in deposits
    14,187       3,184  
Repayments of Federal Home Loan Bank advances
    (188 )     (282 )
Net change in other borrowed funds
    (64 )     -  
Proceeds from exercise of stock options
    45       6  
Cash dividends paid
    (345 )     (344 )
Net cash from financing activities
    13,635       (2,564 )
                 
Net change in cash and cash equivalents
    6,271       4,164  
                 
Beginning cash and cash equivalents
    16,296       9,034  
                 
Ending cash and cash equivalents
  $ 22,567     $ 13,198  
                 
Supplemental disclosure of cash flow information:
               
Cash paid during the period for:
               
Federal income taxes
  $ 100     $ 375  
                 
Supplemental noncash disclosures:
               
Transfer from loans to repossessed assets
  $ -     $ 18  
                 
Interest paid
  $ 1,305     $ 1,631  

The accompanying notes are an integral part of these statements.

 
6

Index

FFD Financial Corporation

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the six-and three-month periods ended December 31, 2011 and 2010

1.   Basis of Presentation

The accompanying unaudited consolidated financial statements were prepared in accordance with the instructions for Form 10-Q and, therefore, do not include information or footnotes necessary for a complete presentation of financial position, results of operations and cash flows in conformity with United States generally accepted accounting principles.  Accordingly, these financial statements should be read in conjunction with the Consolidated Financial Statements and Notes thereto of FFD Financial Corporation (the “Corporation”) included in the Corporation’s Annual Report on Form 10-K for the year ended June 30, 2011.  However, in the opinion of management, all adjustments (consisting of only normal recurring accruals) which are necessary for a fair presentation of the financial statements have been included.  The results of operations for the three- and six-month periods ended December 31, 2011, are not necessarily indicative of the results which may be expected for the entire fiscal year.

2.   Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Corporation and First Federal Community Bank (the “Bank).  All significant intercompany items have been eliminated.

3.   Earnings Per Share

Basic earnings per share is computed based upon the weighted-average common shares outstanding during the period.  Diluted earnings per common share includes the dilutive effect of additional common shares issuable under the Corporation’s stock option plans.  Stock options for 3,500 shares were not considered in computing diluted earnings per share for each of the three and six months ended December 31, 2011 and 2010 because they were antidilutive.  The computations are as follows:

   
For the three months ended
   
For the six months ended
 
   
December 31,
   
December 31,
 
   
2011
   
2010
   
2011
   
2010
 
                         
Weighted-average common shares outstanding (basic)
    1,016,096       1,011,596       1,015,607       1,011,519  
Dilutive effect of assumed exercise of stock options
    1,832       2,574       2,046       2,585  
Weighted-average common shares outstanding (diluted)
    1,017,928       1,014,170       1,017,653       1,014,104  

4.   Stock Option Plan

The FFD Financial Corporation 1996 Stock Option and Incentive Plan (the “Plan”) expired as to new awards in October of 2006.  Options granted prior to expiration remain exercisable for ten years from the grant date, unless terminated in accordance with the Plan or the applicable award agreement.  In addition, the Corporation has an option plan in which only one director participates.  The director-only plan was adopted in 2002 to permit an option issuance to a new director because the terms of the Plan at the time limited the aggregate number of options available for awards to directors.

 
7

Index

FFD Financial Corporation

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

For the six-and three-month periods ended December 31, 2011 and 2010

4.   Stock Option Plan (continued)

A summary of the activity in the Plan for the six months ended December 31, 2011 follows:
 
               
Weighted
       
         
Weighted
   
average
       
         
average
   
remaining
   
Aggregate
 
         
exercise
   
contractual
   
intrinsic
 
   
Shares
   
price
   
term
   
value
 
                         
Outstanding at beginning of period
    18,820     $ 11.68              
Granted
    -               -        
Exercised
    (4,500 )     10.10                
Forfeited or expired
    -       -                
Outstanding at end of period
    14,320     $ 12.18    
1.2 yrs
    $ 29,055  
                                 
Exercisable at end of period
    14,320     $ 12.18    
1.2 yrs
    $ 29,055  
                                 
Options available for grant
    -                          
 
Information related to the Plan during the six months ended December 31, 2011 and 2010 follows:

   
2011
   
2010
 
             
Intrinsic value of options exercised
  $ 23,850     $ 4,406  
Cash received from options exercised
    45,450       6,281  
Tax benefit from options exercised
    -       -  
 
 
8

Index
 
FFD Financial Corporation

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

For the six-and three-month periods ended December 31, 2011 and 2010
 
5.   Loans

Loans at period end and year end were as follows:

   
December 31,
   
June 30,
 
   
2011
   
2011
 
   
(in thousands)
 
Residential real estate
           
One- to four-family
  $ 73,441     $ 69,689  
Multi-family
    8,071       6,961  
Nonresidential real estate and land
    85,678       81,955  
Commercial loans – secured
    21,604       22,637  
Commercial loans – unsecured
    196       132  
Consumer and other loans
    5,890       6,086  
      194,880       187,460  
                 
Net deferred loan origination costs
    297       293  
Undisbursed portion of loans in process
    (2,518 )     (3,353 )
Allowance for loan losses
    (2,130 )     (2,174 )
                 
Loans, net
  $ 190,529     $ 182,226  

Activity in the allowance for loan losses was as follows:

The following table presents the activity in the allowance for loan losses by portfolio segment for the six months ended December 31, 2011.

   
Residential
   
Nonresidential
   
Commercial
                   
   
real
   
real estate
   
secured and
   
Consumer
             
   
estate
   
and land
   
unsecured
   
and other
   
Unallocated
   
Total
 
   
(in thousands)
 
Allowance for loan losses:
                                   
Beginning balance
  $ 935     $ 861     $ 268     $ 110     $ -     $ 2,174  
Provision for loan losses
    219       154       26       7       -       406  
Loans charged-off
    (298 )     (149 )     -       (3 )     -       (450 )
Recoveries
    -       -       -       -       -       -  
                                                 
Ending balance
  $ 856     $ 866     $ 294     $ 114     $ -     $ 2,130  

The following table presents the activity in the allowance for loan losses by portfolio segment for the three months ended December 31, 2011.

   
Residential
   
Nonresidential
   
Commercial
                   
   
real
   
real estate
   
secured and
   
Consumer
             
   
estate
   
and land
   
unsecured
   
and other
   
Unallocated
   
Total
 
   
(in thousands)
 
Allowance for loan losses:
                                   
Beginning balance
  $ 786     $ 789     $ 278     $ 114     $ -     $ 1,967  
Provision for loan losses
    70       77       16       -       -       163  
Loans charged-off
    -       -       -       -       -       -  
Recoveries
    -       -       -       -       -       -  
                                                 
Ending balance
  $ 856     $ 866     $ 294     $ 114     $ -     $ 2,130  
 
 
9

Index

FFD Financial Corporation

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

For the six-and three-month periods ended December 31, 2011 and 2010

5.   Loans (continued)

   
Three months ended
   
Six months ended
 
   
December 31,
   
December 31,
 
   
2011
   
2010
   
2011
   
2010
 
   
(in thousands)
   
(in thousands)
 
                         
Beginning balance
  $ 1,967     $ 2,102     $ 2,174     $ 1,993  
Provision for loan losses
    163       346       406       532  
Loans charged-off
    -       (17 )     (450 )     (95 )
Recoveries
    -       -       -       1  
Ending balance
  $ 2,130     $ 2,431     $ 2,130     $ 2,431  
 
The following tables present the balance in the allowance for loan losses and loan balances by portfolio segment and based on the impairment method as of December 31, 2011 and June 30, 2011:

   
Residential
   
Nonresidential
   
Commercial
             
   
real
   
real estate
   
secured and
   
Consumer
       
   
estate
   
and land
   
unsecured
   
and other
   
Total
 
December 31, 2011
 
(in thousands)
 
Allowance for loan losses
                             
Ending allowance balance attributable to loans:
                             
Individually evaluated for impairment
  $ 140     $ 131     $ 21     $ -     $ 292  
Collectively evaluated for impairment
    716       735       273       114       1,838  
                                         
Total ending allowance balance
  $ 856     $ 866     $ 294     $ 114     $ 2,130  
                                         
Loans
                                       
Loans individually evaluated for impairment
  $ 1,695     $ 1,037     $ 93     $ -     $ 2,825  
Loans collectively evaluated for impairment
    79,381       83,486       21,042       5,925       189,834  
                                         
Total ending loan balance
  $ 81,076     $ 84,523     $ 21,135     $ 5,925     $ 192,659  

   
Residential
   
Nonresidential
   
Commercial
             
   
real
   
real estate
   
secured and
   
Consumer
       
   
estate
   
and land
   
unsecured
   
and other
   
Total
 
June 30, 2011
 
(in thousands)
 
Allowance for loan losses
                             
Ending allowance balance attributable to loans:
                             
Individually evaluated for impairment
  $ 323     $ 222     $ 23     $ -     $ 568  
Collectively evaluated for impairment
    612       639       245       110       1,606  
                                         
Total ending allowance balance
  $ 935     $ 861     $ 268     $ 110     $ 2,174  
                                         
Loans
                                       
Loans individually evaluated for impairment
  $ 1,802     $ 587     $ 71     $ -     $ 2,460  
Loans collectively evaluated for impairment
    74,707       79,211       21,897       6,125       181,940  
                                         
Total ending loan balance
  $ 76,509     $ 79,798     $ 21,968     $ 6,125     $ 184,400  

The recorded investment in the aforementioned disclosure and the next several disclosures do not include accrued interest receivable and loan origination fees, net.  The recorded investment in loans excludes accrued interest receivable or loan origination fees, net due to immateriality.  Accrued interest receivable for the total loan portfolio is $499,000.

 
10

Index

FFD Financial Corporation

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

For the six-and three-month periods ended December 31, 2011 and 2010

5.   Loans (continued)

Individually impaired loans at period end and year end were as follows:

   
December 31,
   
June 30,
 
   
2011
   
2011
 
   
(in thousands)
 
Period-end impaired loans with no allocated allowance for loan losses
  $ 1,523     $ 886  
Period-end impaired loans with allocated allowance for loan losses
    1,302       1,574  
                 
Total
  $ 2,825     $ 2,460  
                 
Amount of the allowance for loan losses allocated
  $ 292     $ 568  
                 
Period-end impaired loans on nonaccural
  $ 1,581     $ 286  
Period-end impaired loans accruing
    1,244       2,174  
    $ 2,825     $ 2,460  

The following table presents loans individually evaluated for impairment by class of loans as of December 31, 2011:

   
Unpaid
         
Allowance for
 
   
Principal
   
Recorded
   
loan losses
 
   
balance
   
investment
   
allocated
 
   
(in thousands)
 
With no related allowance recorded:
                 
Residential
                 
One- to four-family
  $ 982     $ 979     $ -  
Multi-family
    -       -       -  
Nonresidential real estate and land
    509       503       -  
Commercial loans - secured
    42       41       -  
Commercial loans – unsecured
    -       -       -  
Consumer and other loans
    -       -       -  
Total with no related allowance recorded
  $ 1,533     $ 1,523     $ -  
                         
With an allowance recorded:
                       
Residential
                       
One- to four-family
  $ 909     $ 716     $ 140  
Multi-family
    -       -       -  
Nonresidential real estate and land
    707       534       131  
Commercial loans - secured
    54       52       21  
Commercial loans – unsecured
    -       -       -  
Consumer and other loans
    -       -       -  
Total with an allowance recorded
  $ 1,670     $ 1,302     $ 292  
                         
Total
  $ 3,203     $ 2,825     $ 292  
 
 
11

Index

FFD Financial Corporation

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

For the six-and three-month periods ended December 31, 2011 and 2010

5.   Loans (continued)

The following table presents loans individually evaluated for impairment by class of loans for the six-and three-month periods ended December 31, 2011:

   
For the three months ended
   
For the six months ended
 
   
December 31, 2011
   
December 31, 2011
 
             
   
Average
   
Interest
   
Cash Basis
   
Average
   
Interest
   
Cash Basis
 
   
recorded
   
income
   
interest
   
recorded
   
income
   
interest
 
   
investment
   
recognized
   
recognized
   
investment
   
recognized
   
recognized
 
   
(in thousands)
   
(in thousands)
 
With no related allowance recorded:
                                   
Residential
                                   
One- to four-family
  $ 983     $ 17     $ 17     $ 1,010     $ 28     $ 28  
Multi-family
    -       -       -       -       -       -  
Nonresidential real estate and land
    506       3       3       509       6       6  
Commercial loans - secured
    43       -       -       44       -       -  
Commercial loans – unsecured
    -       -       -       -       -       -  
Consumer and other loans
    -       -       -       -       -       -  
Total with no related allowance recorded
  $ 1,532     $ 20     $ 20     $ 1,563     $ 34     $ 34  
                                                 
With an allowance recorded:
                                               
Residential
                                               
One- to four-family
  $ 747     $ -     $ -     $ 840     $ 3     $ 3  
Multi-family
    -       -       -       -       -       -  
Nonresidential real estate and land
    544       -       -       630       -       -  
Commercial loans - secured
    52       -       -       55       -       -  
Commercial loans – unsecured
    -       -       -       -       -       -  
Consumer and other loans
    -       -       -       -       -       -  
Total with an allowance recorded
  $ 1,343     $ -     $ -     $ 1,525     $ 3     $ 3  
                                                 
Total
  $ 2,875     $ -     $ -     $ 3,088     $ 37     $ 37  
 
 
12

Index
 
FFD Financial Corporation

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

For the six-and three-month periods ended December 31, 2011 and 2010

5.   Loans (continued)

The following table presents loans individually evaluated for impairment by class as of June 30, 2011:

   
Unpaid
         
Allowance for
 
   
principal
   
Recorded
   
loan losses
 
   
balance
   
investment
   
allocated
 
   
(in thousands)
 
With no related allowance recorded:
                 
Residential
                 
One- to four-family
  $ 878     $ 878     $ -  
Multi-family
    -       -       -  
Nonresidential real estate and land
    -       -       -  
Commercial loans - secured
    8       8       -  
Commercial loans – unsecured
    -       -       -  
Consumer and other loans
    -       -       -  
Total with no related allowance recorded
  $ 886     $ 886     $ -  
                         
With an allowance recorded:
                       
Residential
                       
One- to four-family
  $ 933     $ 924     $ 323  
Multi-family
    -       -       -  
Nonresidential real estate and land
    590       587       222  
Commercial loans - secured
    64       63       23  
Commercial loans – unsecured
    -       -       -  
Consumer and other loans
    -       -       -  
Total with an allowance recorded
  $ 1,587     $ 1,574     $ 568  
                         
Total
  $ 2,473     $ 2,460     $ 568  

 At December 31, 2011 and June 30, 2011, there were no loans past due 90 days and still on accrual.

The following table presents information for loans individually evaluated for impairment for the six-and three-month periods ended December 31, 2010:

   
For the three months ended
   
For the six months ended
 
   
December 31, 2010
   
December 31, 2010
 
   
(in thousands)
   
(inthousands0
 
             
Average of individually impaired loans during the period
  $ 2,648     $ 3,074  
Interest income recognized during the impairment
    19       49  
Cash-basis interest income recognized
    19       49  

 
13

Index

FFD Financial Corporation

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

For the six-and three-month periods ended December 31, 2011 and 2010

5.   Loans (continued)

Nonaccrual loans were as follows:

   
December 31,
   
June 30,
 
   
2011
   
2011
 
   
(in thousands)
 
Residential real estate
           
One- to four-family
  $ 875     $ 1,073  
Multi-family
    574       -  
Nonresidential real estate and land
    931       646  
Commercial loans – secured
    86       58  
Commercial loans – unsecured
    -       -  
Consumer and other loans
    12       20  
    $ 2,478     $ 1,797  

Nonaccrual loans include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans.

The following table presents the aging of the recorded investment in past due loans as of December 31, 2011:

      30-59       60-89    
90 or more
                   
   
days
   
days
   
days
   
Total
   
Loans not
       
   
past due
   
past due
   
past due
   
past due
   
past due
   
Total
 
   
(in thousands)
 
Residential real estate
                                       
One- to four-family
  $ 365     $ 187     $ 338     $ 890     $ 72,107     $ 72,997  
Multifamily
    -       -       -       -       8,079       8,079  
Nonresidential real estate and land
    127       57       389       573       83,950       84,523  
Commercial loans – secured
    435       -       86       521       20,418       20,939  
Commercial loans – unsecured
    -       -       9       9       187       196  
Consumer and other loans
    80       9       -       89       5,836       5,925  
                                                 
Total
  $ 1,007     $ 253     $ 822     $ 2,082     $ 190,577     $ 192,659  

The following table presents the aging of the recorded investment in past due loans as of June 30, 2011:

      30-59       60-89    
90 or more
                   
   
days
   
days
   
days
   
Total
   
Loans not
       
   
past due
   
past due
   
past due
   
past due
   
past due
   
Total
 
   
(in thousands)
 
Residential real estate
                                       
One- to four-family
  $ 386     $ 534     $ 300     $ 1,220     $ 68,320     $ 69,540  
Multi-family
    103       -       -       103       6,866       6,969  
Nonresidential real estate and land
    337       146       181       664       79,134       79,798  
Commercial loans – secured
    2       48       53       103       21,733       21,836  
Commercial loans – unsecured
    -       -       -       -       132       132  
Consumer and other loans
    63       28       12       103       6,022       6,125  
                                                 
Total
  $ 891     $ 756     $ 546     $ 2,193     $ 182,207     $ 184,400  

 
14

Index

FFD Financial Corporation

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

For the six-and three-month periods ended December 31, 2011 and 2010

5.   Loans (continued)

Troubled Debt Restructurings:

The Corporation has allocated $142,000 and $125,000 of specific reserves to customers whose loan terms have been modified in troubled debt restructurings as of December 31, 2011 and June 30, 2011.  The Corporation had not committed to lend additional amounts as of December 31, 2011 and June 30, 2011 to customers whose loans were classified as troubled debt restructurings.

During the six-month period ending December 31, 2011, there were three modifications of loans totaling $218,000 that would be considered troubled debt restructurings.  At December 31, 2011 the balance of the loans were $216,000.  The modification of the terms of such loans included one or a combination of the following: a reduction of the stated interest rate of the loan; an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk; or a permanent reduction of the recorded investment in the loan.

All troubled debt restructured loans which were modified prior to June 30, 2011 performed in accordance with their modified terms for the six-month period ending December 31, 2011.

A troubled debt restructured commercial or consumer loan is considered to be in payment default once it is 11 days contractually past due under the modified terms.  A troubled debt restructured residential real estate loan is considered to be in payment default once it is 16 days contractually past due under the modified terms.

In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed under the Corporation’s internal underwriting policy.

At December 31, 2011, one- to four-family troubled debt restructurings totaled $1,117,000 and nonresidential real estate and land troubled debt restructurings totaled $507,000.  There were no commercial or consumer troubled debt restructurings.

Credit Quality Indicators:

The Corporation categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, such as current financial information, historical payment experience, credit documentation, public information and current economic trends, among other factors.  The Corporation analyzes loans individually by classifying the loans as to credit risk.  The Corporation uses the following definitions for risk ratings:

Not rated: Homogeneous one- to four-family real estate loans that have maintained their contractual payments and are not analyzed.

Pass:  Loans that are analyzed but that do not meet the criteria to be considered special mention, substandard or doubtful as defined below.

Special mention:  Loans that have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the Corporation’s credit position at some future date.

Substandard:  Loans that are inadequately protected by the current net worth and paying capacity of the obligor or the collateral pledged, if any.  These loans have a well-defined weakness or weaknesses that jeopardize the collection or liquidation of the debt.  They are characterized by the distinct possibility that the Corporation will sustain some loss if the deficiencies are not corrected.

Doubtful:  Loans that have all the weaknesses inherent of those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable.

 
15

Index

FFD Financial Corporation

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

For the six-and three-month periods ended December 31, 2011 and 2010

5.   Loans (continued)

As of December 31, 2011, and based on the most recent analysis performed, the risk category of loans by class is as follows:

               
Special