Balance Sheet Summary:
The Company experienced balance sheet growth in the first six months of fiscal 2013, with total assets increasing $31.0 million, or 4.2%, to $770.2 million at December 31, 2012, as compared to $739.2 million at June 30, 2012. Balance sheet growth was primarily due to growth in loan balances, funded by deposit growth, reductions in cash equivalent balances, and by increases in securities sold under agreements to repurchase.
Available-for-sale investments increased $2.5 million, or 3.3%, to $77.6 million at December 31, 2012, as compared to $75.1 million at June 30, 2012. Increases in US agency obligations and municipal obligations were partially offset by decreases in mortgage-backed securities. Cash and equivalents were down $16.3 million, redeployed into earning assets, primarily loans.
Loans, net of the allowance for loan losses, increased $36.0 million, or 6.2%, to $619.4 million at December 31, 2012, as compared to $583.5 million at June 30, 2012. Loan balances were up due primarily to increases in commercial real estate and residential (primarily multifamily) real estate loans, partially offset by decreases in equipment and operating lines for agricultural and commercial borrowers, as well as decreases in construction loan balances. The decrease in agricultural operating lines is primarily seasonal and would be expected to continue through the March 31 quarter.
Non-performing loans were $2.2 million, or 0.35% of gross loans, at December 31, 2012, as compared to $2.4 million, or 0.41% of gross loans, at June 30, 2012; non-performing assets were $5.9 million, or 0.77% of total assets, at December 31, 2012, as compared to $4.0 million, or 0.54% of total assets, at June 30, 2012. Our allowance for loan losses at December 31, 2012, totaled $7.9 million, representing 1.26% of gross loans and 359% of non-performing loans, as compared to $7.5 million, or 1.27% of gross loans, and 312% of non-performing loans, at June 30, 2012. The increase in non-performing assets was due primarily to a single relationship which accounted for $2.4 million in foreclosed real estate balances at December 31, 2012; the majority of the foreclosed property value is commercial real estate. (The loan relationship had migrated from classified to non-accrual status during the quarter ended September 30, 2012.) For all impaired loans, the Company has measured impairment under ASC 310-10-35, and management believes the allowance for loan losses at September 30, 2012, is adequate, based on that measurement.