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Document and Entity Information - USD ($)	12 Months Ended
Document and Entity Information - USD ($)	Jun. 30, 2012	Sep. 21, 2012
Document and Entity Information:
Entity Registrant Name	HomeTrust Bancshares, Inc.
Document Type	10-K
Document Period End Date	Jun. 30, 2012
Amendment Flag	false
Entity Central Index Key	0001538263
Current Fiscal Year End Date	--06-30
Entity Filer Category	Non-accelerated Filer
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	FY
Entity Common Stock, Shares Outstanding		21,160,000
Entity Public Float		$ 267,400,000

HomeTrust Bank and Subsidiary -- Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2012	Jun. 30, 2011
Assets
Cash	$ 13,909	$ 12,556
Interest-bearing deposits	210,892	22,115
Certificates of deposit in other banks	108,010	118,846
Securities available for sale	31,335	59,016
Loans held for sale	10,787	4,570
Loans receivable	1,229,045	1,326,517
Allowance for loan losses	(35,100)	(50,140)
Loans, net	1,193,945	1,276,377
Premises and equipment, net	23,106	22,406
Federal Home Loan Bank stock, at cost	6,300	9,630
Accrued interest receivable	6,008	7,119
Real estate owned	16,130	13,857
Deferred income taxes	48,927	48,489
Other assets	50,707	42,662
TOTAL	1,720,056	1,637,643
Liabilities and Stockholders Equity
Deposits	1,466,175	1,264,585
Other borrowings	22,265	145,278
Capital lease obligations	2,024	2,031
Other liabilities	57,107	57,980
Total liabilities	1,547,571	1,469,874
Commitments and contingencies
Retained earnings	140,937	136,410
Additional paid in capital	31,367	31,367
Accumulated other comprehensive income (loss)	181	(8)
Total stockholders' equity	172,485	167,769
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 1,720,056	$ 1,637,643

HomeTrust Bank and Subsidiary -- Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands	Jun. 30, 2012	Jun. 30, 2011
Securities available for sale amortized cost	$ 31,060	$ 59,028

HomeTrust Bank and Subsidiary -- Consolidated Statements of Income (Loss) - USD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2010
Interest and Dividend Income:
Loans	$ 65,656	$ 69,874	$ 67,374
Securities available for sale	413	1,016	1,444
Certificates of deposit and other interest-bearing deposits	1,331	1,135	2,435
Federal Home Loan Bank stock	91	62	47
Total interest and dividend income	67,491	72,087	71,300
Interest Expense:
Deposits	10,244	14,798	19,621
Other borrowings	1,534	5,731	5,996
Total interest expense	11,778	20,529	25,617
Net Interest Income	55,713	51,558	45,683
Provision for Loan Losses	15,600	42,800	38,600
Net Interest Income after Provision for Loan Losses	40,113	8,758	7,083
Noninterest Income:
Service charges on deposit accounts	2,679	2,929	2,986
Mortgage banking income and fees	3,846	3,211	2,692
Gain from sales of securities available for sale		430	191
Gain from business combination		5,844	17,391
Gain on sale of premises and equipment	1,503
Other noninterest income	2,400	4,382	1,292
Total noninterest income	10,428	16,796	24,552
Noninterest Expense:
Salaries and employee benefits	21,679	22,065	26,177
Net occupancy expense	4,975	4,855	4,531
Marketing and advertising	1,546	2,317	1,373
Telephone, postage, and supplies	1,459	1,491	1,385
Deposit insurance premiums	2,097	2,193	2,003
Computer services	1,853	1,785	1,600
Loss on sale and impairment of real estate owned	3,040	3,825	205
Federal Home Loan Bank advance prepayment penalty	2,111	3,988
Other noninterest expense	7,901	11,035	4,897
Total noninterest expense	46,661	53,554	42,171
Income (Loss) Before Income Taxes	3,880	(28,000)	(10,536)
Income Tax Benefit	(647)	(13,263)	(17,577)
Net Income (Loss)	$ 4,527	$ (14,737)	$ 7,041

HomeTrust Bank and Subsidiary -- Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2010
Net income (loss)	$ 4,527	$ (14,737)	$ 7,041
Unrealized holding gains (losses) on securities available for sale:
Reclassification of securities losses (gains) recognized in net income		(538)
Deferred income tax benefit (expense)		183
Gains (losses) arising during the period	286	(404)	285
Deferred income tax expense (benefit)	(97)	137	(97)
Total other comprehensive income (loss)	189	(622)	188
Comprehensive Income (Loss)	$ 4,716	$ (15,359)	$ 7,229

- Definition

The change in equity [net assets] of a business enterprise during a period from transactions and other events and circumstances from non-owner sources which are attributable to the reporting entity. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners, but excludes any and all transactions which are directly or indirectly attributable to that ownership interest in subsidiary equity which is not attributable to the parent.

+ References + Details

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

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+ Details

- Definition

Before tax and reclassification adjustments amount of unrealized holding gain (loss) and transfers on available-for-sale securities.

+ References

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+ Details

HomeTrust Bank and Subsidiary -- Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Thousands	Retained Earnings	Additional Paid In Capital	Accumulated Other Comprehensive Income (Loss)	Total Stockholders' Equity
Balance at start of period at Jun. 30, 2009	$ 144,106		$ 426	$ 144,532
Net income (loss)	7,041			7,041
Additional paid in capital from business combination		$ 23,054		23,054
Other comprehensive income (loss)			188	188
Balance at end of period at Jun. 30, 2010	151,147	23,054	614	174,815
Net income (loss)	(14,737)			(14,737)
Additional paid in capital from business combination		8,313		8,313
Other comprehensive income (loss)			(622)	(622)
Balance at end of period at Jun. 30, 2011	136,410	31,367	(8)	167,769
Net income (loss)	4,527			4,527
Other comprehensive income (loss)			189	189
Balance at end of period at Jun. 30, 2012	$ 140,937	$ 31,367	$ 181	$ 172,485

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

+ Details

HomeTrust Bank and Subsidiary -- Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2010
Operating Activities:
Net income (loss)	$ 4,527	$ (14,737)	$ 7,041
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Provision for loan losses	15,600	42,800	38,600
Depreciation	2,276	2,195	2,115
Deferred income tax benefit	(537)	(11,695)	(13,050)
Net amortization and accretion	(187)	(170)	(72)
Gain on sale of premises and equipment	(1,503)
Loss on sale and impairment of real estate owned	3,040	3,825	205
Gain from sales of securities available for sale		(430)	(191)
Gain from business combination		(5,844)	(17,391)
Gain on sale of loans held for sale	(2,900)	(2,729)	(2,079)
Origination of loans held for sale	(196,708)	(155,090)	(131,632)
Proceeds from sales of loans held for sale	193,391	160,009	143,881
Increase (decrease) in deferred loan fees, net	(853)	(285)	77
Decrease (increase) in accrued interest receivable and other assets	(8,238)	4,211	(4,980)
Decrease (increase) in income taxes receivable	1,304	2,839	(6,967)
Increase (decrease) in other liabilities	(873)	3,820	7,656
Net cash provided by operating activities	8,339	28,719	23,213
Investing Activities:
Purchase of securities available for sale	(12,539)	(35,260)	(16,828)
Proceeds from sales of securities available for sale		8,555	24,916
Proceeds from maturities of securities available for sale	37,332	29,833	22,000
Purchase of certificates of deposit in other banks	(35,816)	(103,057)	(96,314)
Maturities of certificates of deposit in other banks	46,652	83,351	103,491
Principal repayments of mortgage-backed securities	3,067	5,500	7,574
Net redemptions of Federal Home Loan Bank Stock	3,330	1,450
Net decrease (increase) in loans	53,296	(23,195)	(13,112)
Cash received from business combinations		8,190	22,815
Purchase of premises and equipment	(3,218)	(2,399)	(1,542)
Capital improvements to real estate owned	(316)	(696)	(237)
Proceeds from sales of premises and equipment	1,745
Proceeds from sale of real estate owned	9,688	7,925	1,822
Net cash provided by (used in) investing activities	103,221	(19,803)	54,585
Financing Activities:
Net increase (decrease) in deposits	201,590	(111,424)	147,574
Net increase (decrease) in other borrowings	(112,013)	84,356	(147,501)
Repayment of long-term FHLB advances	(11,000)	(64,000)
Decrease in capital lease obligations	(7)	(7)	(7)
Net cash provided by (used in) financing activities	78,570	(91,075)	66
Net Increase (Decrease) in Cash and Cash Equivalents	190,130	(82,159)	77,864
Cash and Cash Equivalents at Beginning of Period	34,671	116,830	38,966
Cash and Cash Equivalents at End of Period	224,801	34,671	116,830
Cash paid during the period for:
Interest	11,981	18,990	25,648
Income taxes	97	52	2,475
Noncash transactions:
Unrealized gain (loss) in value of securities available for sale, net of income taxes	189	(622)	188
Transfers of loans to real estate owned	16,137	13,473	17,857
Loans originated to finance the sale of real estate owned	$ 1,452	6,209	3,611
Business combination:
Assets acquired		105,126	173,216
Liabilities assumed		90,969	132,771
Net assets acquired		$ 14,157	$ 40,445

Summary of Significant Accounting Policies

12 Months Ended

Jun. 30, 2012

Notes

Summary of Significant Accounting Policies

1. Summary of Significant Accounting Policies

Description of Business – HomeTrust Bank (the “Bank”) is a federally chartered savings bank with twenty retail offices located in North Carolina. The current business of HomeTrust Bank is conducted through its seven operating divisions – HomeTrust Bank, Cherryville Federal Bank, Home Savings Bank of Eden, Industrial Federal Bank of Lexington, Shelby Savings Bank, Tryon Federal Bank, and Rutherford County Bank. All divisions operate under a single set of corporate policies and procedures and are recognized as a single banking segment for financial reporting purposes.

The Bank converted from a federally chartered mutual savings bank to a federally chartered stock savings bank effective July 10, 2012 (the “Conversion”). HomeTrust Bancshares, Inc., a Maryland corporation organized by the Bank, acquired all of the capital stock of the Bank issued in the Conversion; the transaction was recorded on a book value basis. The Conversion is discussed further in Note 17.

Accounting Principles – The accounting and reporting policies of HomeTrust Bank and subsidiary (the “Bank”) conform to accounting principles generally accepted in the United States of America (“US GAAP”).

Principles of Consolidation and Subsidiary Activities – The accompanying consolidated financial statements include the accounts of the Bank and its wholly-owned subsidiary, Western North Carolina Service Corporation (“WNCSC”). WNCSC owns office buildings in Asheville, North Carolina that are leased to the Bank. All intercompany items have been eliminated.

Cash Flows – Cash and cash equivalents include cash and interest-bearing deposits with initial terms to maturity of ninety days or less.

Securities – The Bank classifies investment securities as trading, available for sale or held to maturity.

Securities available for sale are carried at fair value. Such securities are used to execute asset/liability management strategies, manage liquidity, and leverage capital, and therefore may be sold prior to maturity. Adjustments for unrealized gains or losses, net of the income tax effect, are made to accumulated other comprehensive income, a separate component of total equity capital.

Securities held to maturity are stated at cost, net of unamortized balances of premiums and discounts. When such securities are purchased, the Bank intends to and has the ability to hold such securities until maturity.

Declines in the fair value of individual securities available for sale or held to maturity below their cost that are other-than-temporary result in write-downs of the individual securities to their fair value. The related write-downs are included in earnings as realized losses. In estimating other-than temporary impairment losses, the Bank considers among other things, (i) the length of time and the extent to which the fair value has been less than cost, (ii) the financial condition and near-term prospects of the issuer, and (iii) the intent and ability of the Bank to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery of the unrealized loss, and in the case of debt securities, whether it is more likely than not that the Bank will be required to sell the security prior to a recovery.

Premiums and discounts are amortized or accreted over the life of the security as an adjustment to yield. Dividend and interest income are recognized when earned. Gains or losses on the sale of securities are recognized on a specific identification, trade date basis.

Loans – Loans are carried at their outstanding principal amount, less unearned income and deferred nonrefundable loan fees, net of certain origination costs. Interest income is recorded as earned on an accrual basis. Net deferred loan origination fees/costs are deferred and amortized to interest income over the life of the related loan. The premium or discount on purchased loans is amortized over the expected life of the loans and is included in interest income.

Loan Segments and Classes

The Bank’s loan portfolio is grouped into two segments (retail consumer loans and commercial loans) and into four classes within each segment. The Bank originates, services, and manages its loans based on these segments and classes. The Bank’s portfolio segments and classes within those segments are subject to risks that could have an adverse impact on the credit quality of the loan portfolio. Management identified the risks described below as significant risks that are generally similar among the loan segments and classes.

Retail Consumer loan segment

The Bank underwrites its retail consumer loans using automated credit scoring and analysis tools. These credit scoring tools take into account factors such as payment history, credit utilization, length of credit history, types of credit currently in use, and recent credit inquiries. To the extent that the loan is secured by collateral, the value of the collateral is also evaluated. Common risks to each class of retail consumer loans include general economic conditions within the Bank’s markets, such as unemployment and potential declines in collateral values, and the personal circumstances of the borrowers. In addition to these common risks for the Bank’s retail consumer loans, various retail consumer loan classes may also have certain risks specific to them.

One to four family and construction and land/lot loans are to individuals and are typically secured by 1-4 family residential property, undeveloped land, and partially developed land in anticipation of pending construction of a personal residence. Significant and rapid declines in real estate values can result in residential mortgage loan borrowers having debt levels in excess of the current market value of the collateral. Recent declines in value have led to unprecedented levels of foreclosures and losses within the banking industry. Construction and land/lot loans often experience delays in completion and cost overruns that exceed the borrower’s financial ability to complete the project. Such cost overruns can routinely result in foreclosure of partially completed and unmarketable collateral.

Home equity lines of credit are often secured by second liens on residential real estate, thereby making such loans particularly susceptible to declining collateral values. A substantial decline in collateral value could render the Bank’s second lien position to be effectively unsecured. Additional risks include lien perfection inaccuracies and disputes with first lien holders that may further weaken collateral positions. Further, the open-end structure of these loans creates the risk that customers may draw on the lines in excess of the collateral value if there have been significant declines since origination.

Consumer loans include loans secured by deposit accounts or personal property such as automobiles, boats, and motorcycles, as well as unsecured consumer debt. The value of underlying collateral within this class is especially volatile due to potential rapid depreciation in values since date of loan origination in excess of principal repayment.

Commercial loan segment

The Bank’s commercial loans are centrally underwritten based primarily on the customer’s ability to generate the required cash flow to service the debt in accordance with the contractual terms and conditions of the loan agreement. The Bank’s commercial lenders and underwriters work to understand the borrower’s businesses and management experiences. The majority of the Bank’s commercial loans are secured by collateral, so collateral values are important to the transaction. In commercial loan transactions where the principals or other parties provide personal guarantees, the Bank’s commercial lenders and underwriters analyze the relative financial strength and liquidity of each guarantor. Risks that are common to the Bank’s commercial loan classes include general economic conditions, demand for the borrowers’ products and services, the personal circumstances of the principals, and reductions in collateral values. In addition to these common risks for the Bank’s commercial loans, the various commercial loan classes also have certain risks specific to them.

Construction and development loans are highly dependent on the supply and demand for commercial real estate in the Bank’s markets as well as the demand for the newly constructed residential homes and lots being developed by the Bank’s commercial loan customers. Prolonged deterioration in demand could result in significant decreases in the underlying collateral values and make repayment of the outstanding loans more difficult for the Bank’s commercial borrowers.

Commercial real estate and commercial and industrial loans are primarily dependent on the ability of the Bank’s commercial loan customers to achieve business results consistent with those projected at loan origination resulting in cash flow sufficient to service the debt. To the extent that a borrower’s actual business results significantly underperform the original projections, the ability of that borrower to service the Bank’s loan on a basis consistent with the contractual terms may be at risk. While these loans and leases are generally secured by real property, personal property, or business assets such as inventory or accounts receivable, it is possible that the liquidation of the collateral will not fully satisfy the obligation.

Municipal leases are primarily made to volunteer fire departments and depend on the tax revenues received from the county or municipality. These leases are mainly secured by vehicles, fire stations, land, or equipment. The underwriting of the municipal leases is based on the cash flows of the fire department as well as projections of income for the future.

Credit Quality Indicators

Loans are monitored for credit quality on a recurring basis and the composition of the loans outstanding by credit quality indicator is provided below. Loan credit quality indicators are developed through review of individual borrowers on an ongoing basis. Generally, loans are monitored for performance on a quarterly basis with the credit quality indicators adjusted as needed. The indicators represent the rating for loans as of the date presented based on the most recent assessment performed. These credit quality indicators are defined as follows:

Pass—A pass rated asset is not adversely classified because it does not display any of the characteristics for adverse classification.

Special Mention—A special mention asset has potential weaknesses that deserve management’s close attention. If left uncorrected, such potential weaknesses may result in deterioration of the repayment prospects or collateral position at some future date. Special mention assets are not adversely classified and do not warrant adverse classification.

Substandard—A substandard asset is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Assets classified as substandard generally have a well-defined weakness, or weaknesses, that jeopardize the liquidation of the debt. These assets are characterized by the distinct possibility of loss if the deficiencies are not corrected.

Doubtful—An asset classified doubtful has all the weaknesses inherent in an asset classified substandard with the added characteristic that the weaknesses make collection or liquidation in full highly questionable and improbable, on the basis of currently existing facts, conditions, and values.

Loss—Assets classified loss are considered uncollectible and of such little value that their continuing to be carried as an asset is not warranted. This classification is not necessarily equivalent to no potential for recovery or salvage value, but rather that it is not appropriate to defer a full write-off even though partial recovery may be effected in the future.

Loans Held for Sale—Loans held for sale are residential mortgages and are valued at the lower of cost or fair value less estimated costs to sell as determined by outstanding commitments from investors on a “best efforts” basis or current investor yield requirements, calculated on the aggregate loan basis. Loans sold are generally sold at par value and sold with servicing released.

Allowance for Loan Losses—The allowance for loan losses is management’s estimate of probable credit losses that are inherent in the Bank’s loan portfolios at the balance sheet date. The allowance increases when the Bank provides for loan losses through charges to operating earnings and when the Bank recovers amounts from loans previously written down or charged off. The allowance decreases when the Bank writes down or charges off loan amounts that are deemed uncollectible.

Management determines the allowance for loan losses based on periodic evaluations that are inherently subjective and require substantial judgment because the evaluations require the use of material estimates that are susceptible to significant change. The Bank generally uses two allowance methodologies that are primarily based on management’s determination as to whether or not a loan is considered to be impaired.

All classified loans above a certain threshold are evaluated for impairment on a loan-by-loan basis and are considered impaired when it is probable, based on current information, that the borrower will be unable to pay contractual interest or principal as required by the loan agreement. Loans that experience insignificant payment delays and payment shortfalls are not necessarily considered impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment history, and the amount of the shortfall relative to the principal and interest owed. Impaired loans are measured at their estimated net realizable value based on either the value of the loan’s expected future cash flows discounted at the loan’s effective interest rate or on the collateral value, net of the estimated costs of disposal, if the loan is collateral dependent. For loans considered impaired, an individual allowance for loan losses is recorded when the loan principal balance exceeds the estimated net realizable value.

For loans not considered impaired, management determines the allowance for loan losses based on estimated loss percentages that are determined by and applied to the various classes of loans that comprise the segments of the Bank’s loan portfolio. The estimated loss percentages by loan class are based on a number of factors that include by class (i) average historical losses over the past two years, (ii) levels and trends in delinquencies, impairments, and net charge-offs, (iii) trends in the volume, terms, and concentrations, (iv) trends in interest rates, (v) effects of changes in the Bank’s risk tolerance, underwriting standards, lending policies, procedures, and practices, and (vi) national and local business and economic conditions.

Future material adjustments to the allowance for loan losses may be necessary due to changing economic conditions or declining collateral values. In addition, regulatory agencies, as an integral part of their examination process, periodically review the Bank’s allowance for loan losses and may require the Bank to make adjustments to the allowance for loan losses based upon judgments that differ significantly from those of management.

Nonperforming Assets—Nonperforming assets can include loans that are past due 90 days or more and continue to accrue interest, loans on which interest is not being accrued, and foreclosed real estate.

Loans Past Due 90 Days or More, Nonaccruing, Impaired, or Restructured—The Bank’s policies related to when loans are placed on nonaccruing status conform to guidelines prescribed by bank regulatory authorities. Generally, the Bank suspends the accrual of interest on loans (i) that are maintained on a cash basis because of the deterioration of the financial condition of the borrower, (ii) for which payment in full of principal or interest is not expected (impaired loans), or (iii) on which principal or interest has been in default for a period of 90 days or more, unless the loan is both well secured and in the process of collection. Under the Bank’s cost recovery method, interest income is subsequently recognized only to the extent cash payments are received in excess of principal due. Loans are returned to accruing status when all principal and interest amounts contractually due are brought current and concern no longer exists as to the future collectability of principal and interest, which is generally confirmed when the loan demonstrates performance for six consecutive months or payment cycles.

Restructured loans to borrowers who are experiencing financial difficulty, and on which the Bank has granted concessions that modify the terms of the loan are accounted for as troubled debt restructurings. These loans remain as troubled debt restructurings until the loan has been paid in full or charged off. The Bank may place these loans on accrual or nonaccrual status depending on the individual facts and circumstances of the borrower. Generally, these loans are put on nonaccrual status until there is adequate performance that evidences the ability of the borrower to make the contractual payments. This period of performance is normally at least six months, and may include performance immediately prior to or after the modification, depending on the specific facts and circumstances of the borrower.

Loan Charge-offs—The Bank charges off loan balances, in whole or in part, when available, verifiable, and documentable information confirms that specific loans, or portions of specific loans, are uncollectible or unrecoverable. For unsecured loans, losses are confirmed when it can be determined that the borrower, or any guarantors, are unwilling or unable to pay the amounts as agreed. When the borrower, or any guarantor, is unwilling or unable to pay the amounts as agreed on a loan secured by collateral and any recovery will be realized upon the sale of the collateral, the loan is deemed to be collateral dependent. Repayments or recoveries for collateral dependent loans are directly affected by the value of the collateral at liquidation. As such, loan repayment can be affected by factors that influence the amount recoverable, the timing of the recovery, or a combination of the two. Such factors include economic conditions that affect the markets in which the loan or its collateral is sold, bankruptcy, repossession and foreclosure laws, and consumer banking regulations. Losses are also confirmed when the loan, or a portion of the loan, is classified as loss resulting from loan reviews conducted by the Bank or its regulatory examiners.

Charge-offs of loans in the commercial loan segment are recognized when the uncollectibility of the loan balance and the inability to recover sufficient value from the sale of any collateral securing the loan is confirmed. The uncollectibility of the loan balance is evidenced by the inability of the commercial borrower to generate cash flows sufficient to repay the loan as agreed causing the loan to become delinquent. For collateral dependent commercial loans, the Bank determines the net realizable value of the collateral based on appraisals, current market conditions, and estimated costs to sell the collateral. For collateral dependent commercial loans where the loan balance, including any accrued interest, net deferred fees or costs, and unamortized premiums or discounts, exceeds the net realizable value of the collateral securing the loan, the deficiency is identified as unrecoverable, is deemed to be a confirmed loss, and is charged off.

Charge-offs of loans in the retail consumer loan segment are generally confirmed and recognized in a manner similar to loans in the commercial loan segment. Secured retail consumer loans that are identified as uncollectible and are deemed to be collateral dependent are confirmed as loss to the extent the net realizable value of the collateral is insufficient to recover the loan balance. Consumer loans not secured by real estate that become 90 cumulative days past due are charged off to the extent that the fair value of any collateral, less estimated costs to sell the collateral, is insufficient to recover the loan balance. Consumer loans secured by residential real estate that become 120 days past due are charged off to the extent that the fair value of the residential real estate securing the loan, less estimated costs to sell the collateral, is insufficient to recover the loan balance. Loans to borrowers in bankruptcy are subject to modification by the bankruptcy court and are charged off to the extent that the fair value of any collateral securing the loan, less estimated costs to sell the collateral, is insufficient to recover the loan balance, unless the Bank expects repayment is likely to occur. Such loans are charged off within 60 days of the receipt of notification from a bankruptcy court or when the loans become 120 days past due, whichever is shorter.

Real Estate Owned—Real estate owned consists of real estate acquired as a result of customers’ loan defaults. Foreclosed real estate is stated at the lower of the related loan balance or the fair value of the property net of the estimated costs of disposal with a charge to the allowance for loan losses upon foreclosure. Any write-downs subsequent to foreclosure are charged against operating earnings. To the extent recoverable, costs relating to the development and improvement of property are capitalized, whereas those costs relating to holding the property are charged to expense.

Premises and Equipment—Premises and equipment are stated at cost less accumulated depreciation. Depreciation is computed using the 150% declining balance method and the straight-line method over the estimated useful lives which range from fifteen to forty years for buildings and three to ten years for furniture, fixtures, and equipment. Maintenance and repair costs are expensed as incurred.

Federal Home Loan Bank Stock—As a requirement for membership, the Bank invests in stock of the Federal Home Loan Bank of Atlanta (“FHLB”). This investment is carried at cost. Due to the redemption provisions of the FHLB, the Bank estimated that fair value equals cost and that this investment was not impaired at June 30, 2012 and 2011.

Business Combinations—Effective July 1, 2009, the Bank adopted a new accounting standard which requires the acquisition method of accounting, formerly referred to as the purchase method, be used for all business combinations. An acquirer must be identified for each business combination, and the acquisition date is the date the acquirer achieves control. The acquisition method of accounting requires the Bank as acquirer to recognize the fair value of assets acquired and liabilities assumed at the acquisition date as well as recognize goodwill or a gain from a bargain purchase, if appropriate. In addition, the Bank recognizes the fair value of the acquired institution’s equity as a separate component to equity capital on the balance sheet as required for business combinations of mutual institutions. Any acquisition-related costs and restructuring costs are recognized as period expenses as incurred. Business combinations are discussed further in Note 2.

Purchased Performing Loans—The Bank accounts for performing loans acquired in business combinations using the contractual cash flows method of recognizing discount accretion based on the acquired loans’ contractual cash flows. Purchased performing loans are recorded are fair value, including a credit discount. The fair value discount is accreted as an adjustment to yield over the estimated lives of the loans. There is no allowance for loan losses established at the acquisition date for purchased performing loans. A provision for loan losses is recorded for any further deterioration in these loans subsequent to the combination.

Purchased Impaired Loans—Purchased loans acquired in a business combination are recorded at estimated fair value on the date of acquisition without the carryover of the related allowance for loan losses. Purchased impaired loans are accounted for under the Receivables topic of the Financial Accounting Standards Board Accounting Standards Codification when the loans have evidence of credit deterioration since origination and it is probable at the date of acquisition that the Bank will not collect all contractually required principal and interest payments. Evidence of credit quality deterioration as of the date of acquisition may include statistics such as past due and nonaccrual status. Purchased impaired loans generally meet the Bank’s definition of nonaccrual status. The difference between contractually required payments at acquisition and the cash flows expected to be collected at acquisition is referred to as the nonaccretable difference which is included in the carrying amount of the loans. Subsequent decreases to the expected cash flows will generally result in a provision for loan losses. Subsequent increases in cash flows result in a reversal of the provision for loan losses to the extent of prior charges, or a reversal of the nonaccretable difference with a positive impact on interest income over the remaining term of the loan. Further, any excess of cash flows expected at acquisition over the estimated fair value is referred to as the accretable yield and is recognized into interest income over the remaining life of the loan when there is a reasonable expectation about the amount and timing of such cash flows.

Additional Paid In Capital—Additional paid in capital consists of capital received from business combinations using the acquisition method of accounting for mutual institutions. See note 2 for a full description of these business combinations.

Income Taxes—The Bank accounts for income taxes using the asset and liability method. 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 and operating loss and tax credit carryforwards. 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 on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced, if necessary, by the amount of such benefits that are not expected to be realized based upon available evidence.

The Bank recognizes interest and penalties accrued relative to unrecognized tax benefits in its respective federal or state income taxes accounts. As of June 30, 2012 and June 30, 2011, there were no accruals for uncertain tax positions and no accruals for interest and penalties. The Bank and its subsidiary file a consolidated United States federal income tax return, as well as separate unconsolidated North Carolina state income tax returns. The Bank’s filed income tax returns are no longer subject to examination by taxing authorities for years before June 30, 2009.

Comprehensive Income (Loss)—Comprehensive income consists of net income (loss) and net unrealized gains (losses) on securities available for sale and is presented in the consolidated statements of comprehensive income (loss).

Derivative Instruments and Hedging—The Bank recognizes all derivatives as either assets or liabilities in the balance sheet, and measures those instruments at fair value. Changes in the fair value of those derivatives are reported in current earnings or other comprehensive income depending on the purpose for which the derivative is held and whether the derivative qualifies for hedge accounting. Loan commitments related to the origination or acquisition of mortgage loans that will be held for sale must be accounted for as derivative instruments. The Bank enters into commitments to originate loans whereby the interest rate on the loan is determined prior to funding (rate lock commitments). The Bank also enters into forward sales commitments for the mortgage loans underlying the rate lock commitments. The fair values of these two derivative financial instruments are collectively insignificant to the consolidated financial statements.

Use of Estimates in Financial Statements—The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Reclassifications—Certain amounts in the 2011 consolidated financial statements have been reclassified to conform to the statement presentation for 2012. Such reclassifications have no effect on net income or retained earnings as previously reported.

Recent Accounting Pronouncements— Accounting Standards Update (“ASU”) 2011-02. In April 2011, the Financial Accounting Standards Board (“FASB”) issued ASU 2011-02, “Receivables (Topic 310): A Creditor’s Determination of Whether a Restructuring Is a Troubled Debt Restructuring.” This ASU provides additional guidance for creditors in determining whether a creditor has granted a concession and whether a debtor is experiencing financial difficulties for purposes of determining whether a restructuring constitutes a troubled debt restructuring. The provisions of this standard were effective for the first interim or annual period beginning on or after June 15, 2011. The Bank’s adoption of this ASU did not have a material effect on its consolidated financial statements.

ASU 2011-03- In April 2011, the FASB issued ASU No. 2011-03, “Reconsideration of Effective Control for Repurchase Agreements.” The ASU amends existing guidance to remove from the assessment of effective control, the criterion requiring the transferor to have the ability to repurchase or redeem the financial assets on substantially the agreed terms, even in the event of default by the transferee and, as well, the collateral maintenance implementation guidance related to that criterion. ASU No. 2011-03 was effective for the Bank’s reporting period beginning on or after December 15, 2011. The guidance applies prospectively to transactions or modification of existing transactions that occur on or after the effective date. The Bank’s adoption of this ASU did not have a material effect on its consolidated financial statements.

ASU 2011-04 – In May 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in US GAAP and International Financial Reporting Standards (“IFRS”). The amendments improve the comparability of fair value measurements presented and disclosed in financial statements prepared in accordance with US GAAP and IFRSs. The effective date is the first interim or annual period beginning on or after December 15, 2011. Early application is not permitted. The adoption of the new guidance did not have a significant impact on the Bank’s consolidated financial statements.

ASU 2011-05 – In June 2011, the FASB issued Accounting Standards Update 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income. The amendments improve the comparability, consistency and transparency of financial reporting to increase the prominence of items reported on other comprehensive income. The effective date is the first interim or annual period beginning on or after December 15, 2011. Early application is permitted. The adoption of the new guidance did not have a significant impact on the Bank’s consolidated financial statements.

ASU 2011-11 – In December, 2011, the FASB issued ASU 2011-11, Disclosures about Offsetting Assets and Liabilities, in an effort to improve comparability between US GAAP and IFRS financial statements with regard to the presentation of offsetting assets and liabilities on the statement of financial position arising from financial and derivative instruments, and repurchase agreements. The ASU establishes additional disclosures presenting the gross amounts of recognized assets and liabilities, offsetting amounts, and the net balance reflected in the statement of financial position. Descriptive information regarding the nature and rights of the offset must also be disclosed. The adoption of the new guidance is not expected to have an impact on the Bank’s consolidated financial statements.

ASU 2011-12 – In December, 2011, the FASB issued ASU 2011-12, Deferral of the Effective Date to the Presentation of Reclassifications of Items out of Accumulated Other Comprehensive Income in Accounting Standards Update 2011-05. In response to stakeholder concerns regarding the operational ramifications of the presentation of these reclassifications for current and previous years, the FASB has deferred the implementation date of this provision to allow time for further consideration. The requirement in ASU 2011- 05, Presentation of Comprehensive Income, for the presentation of a combined statement of comprehensive income or separate, but consecutive, statements of net income and other comprehensive income is still effective for fiscal years and interim periods beginning after December 15, 2011 for public companies, and fiscal years ending after December 15, 2011 for nonpublic companies. The adoption of the new guidance is not expected to have a significant impact on the Bank’s consolidated financial statements.

Business Combinations

12 Months Ended

Jun. 30, 2012

Notes

Business Combinations

2. Business Combinations

Effective October 1, 2010, the Bank completed a business combination with Cherryville Savings and Loan Association (Cherryville) of Cherryville, NC. Cherryville was a mutually-chartered savings bank operating one full service banking office in Gaston County, NC. This combination continued the Bank’s strategy to combine with other institutions to better respond to increasing regulatory burdens while preserving the value and culture of community banks. This business combination was accounted for under the acquisition method of accounting. The acquired assets, assumed liabilities, and identifiable intangible assets were recorded at their respective acquisition date fair values. The Bank recognized $8,313 as the fair value of Cherryville’s equity as a separate component to equity capital as required for business combinations of mutual institutions. In determining this fair value, both the market approach and the income approach were used and weighted as deemed appropriate for the valuation of a mutual institution. The fair value of Cherryville’s equity was less than the fair value of net assets due to its distinct characteristics as a mutual institution and current market conditions that had an overall negative impact on the valuation of financial institutions. As a result, the Bank recorded a gain of $5,844 which represented the excess of the net fair value of assets and liabilities over the fair value of Cherryville’s equity.

The statement of net assets as of the effective date is presented in the following table.

		As of
		October 1, 2010
Net assets acquired at fair value from the business
combination with Cherryville:
Cash and cash equivalents	$	8,190
Investment securities		31,817
Loans, net		59,037
Premises and equipment		760
Other assets		5,112
Core deposit intangible		40
Deposits		(86,460)
Other liabilities		(4,339)
Total identifiable net assets at fair value		14,157
Fair value of the equity of Cherryville		8,313
Gain on business combination	$	5,844

The purchase accounting adjustments related to investments, loans, and deposits are being accreted or amortized into income using methods that approximate a level yield over their respective estimated lives. Purchase accounting adjustments related to core deposit intangibles are being amortized and recorded as noninterest expense over their respective estimated lives using accelerated methods.

The carrying amount of acquired loans from Cherryville as of October 1, 2010 consisted of purchased performing loans and purchased impaired loans as detailed in the following table:

		Purchased		Purchased
		Performing		Impaired		Total
		Loans		Loans		Loans
One to four family loans	$	44,813	$	$2,094	$	$46,907
Commercial real estate loans		7,433		55		7,488
Home equity lines of credit		3,130		202		3,332
Commercial loans		823		205		1,028
Consumer loans		282		-		282
Total	$	56,481	$	$2,556	$	$59,037

The following table presents the purchased performing loans and purchased impaired loans receivable for Cherryville at June 30, 2012, June 30, 2011, and October 1, 2010 (the combination date). The amounts include principal only and do not reflect accrued interest as of the date of the acquisition or beyond:

	Purchased Performing Loans
		June 30,		June 30,		October 1,
		2012		2011		2010
Contractually required principal payments receivable	$	36,770	$	44,987	$	56,445
Fair value adjustment for credit, interest rate, and liquidity		82		85		36
Fair value of purchased loans receivable	$	36,852	$	45,072	$	56,481

	Purchased Impaired Loans
		June 30,		June 30,		October 1,
		2012		2011		2010
Contractually required principal payments receivable	$	1,608	$	2,812	$	2,992
Non-accretable fair value adjustment		(238)		(416)		(436)
Fair value of purchased loans receivable	$	1,370	$	2,396	$	2,556

The Bank has not disclosed any additional information regarding the accretable and non accretable fair value adjustments for the purchased performing and purchased impaired loans above because they are considered immaterial.

Effective January 31, 2010, the Bank completed a business combination with Industrial Federal Savings Bank (Industrial) of Lexington, NC. Industrial was a mutually-chartered savings bank operating three full service banking offices in Davidson County, NC. This business combination was accounted for under the acquisition method of accounting. The acquired assets, assumed liabilities, and identifiable intangible assets were recorded at their respective acquisition date fair values. The Bank recognized $23,054 as the fair value of Industrial’s equity as a separate component to equity capital as required for business combinations of mutual institutions. In determining this fair value, both the market approach and the income approach were used and weighted as deemed appropriate for the valuation of a mutual institution. The fair value of Industrial’s equity was less than the fair value of net assets due to its distinct characteristics as a mutual institution and current market conditions that had an overall negative impact on the valuation of financial institutions. As a result, the Bank recorded a gain of $17,391. The statement of net assets as of the effective date is presented in the following table:

		As of
		January 31, 2010
Net assets acquired at fair value from the business
combination with Industrial:
Cash and cash equivalents	$	22,815
Investment securities		53,237
Loans, net		88,810
Premises and equipment		2,189
Other assets		5,595
Core deposit intangible		570
Deposits		(129,049)
Other liabilities		(3,722)
Total identifiable net assets at fair value		40,445
Fair value of the equity of Industrial		23,054
Gain on business combination	$	17,391

The carrying amount and fair value of acquired loans from Industrial as of January 31, 2010 consisted of the following:

						Fair Value
		Purchased				of Purchased
		Performing		Fair Value		Performing
		Loans		Adjustments		Loans
One to four family loans	$	87,273	$	(1,617)	$	85,656
Multifamily loans		1,179		4		1,183
Commercial real estate loans		856		7		863
Home equity lines of credit		468		36		504
Consumer loans		610		(6)		604
Total	$	90,386	$	(1,576)	$	88,810

The remaining fair value adjustments for loans as of June 30, 2012, and June 30, 2011 were $968 and $1,229, respectively. The Bank did not purchase any material impaired loans related to this business combination with Industrial.

- Definition

The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable).

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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-Section 50
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-URI http://asc.fasb.org/extlink&oid=7659399&loc=d3e1497-128463

Reference 2: http://www.xbrl.org/2003/role/presentationRef
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Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
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Reference 4: http://www.xbrl.org/2003/role/presentationRef
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-URI http://asc.fasb.org/extlink&oid=7488404&loc=d3e7008-128479

Reference 5: http://www.xbrl.org/2003/role/presentationRef
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-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=7659399&loc=d3e1486-128463

Reference 6: http://www.xbrl.org/2003/role/presentationRef
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Reference 7: http://www.xbrl.org/2003/role/presentationRef
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-Topic 805
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-URI http://asc.fasb.org/extlink&oid=6910749&loc=d3e4845-128472

Reference 8: http://www.xbrl.org/2003/role/presentationRef
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Reference 9: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
-Topic 805
-SubTopic 10
-Section 50
-Paragraph 7
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Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 30
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-URI http://asc.fasb.org/extlink&oid=7488404&loc=d3e7000-128479

Reference 11: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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Reference 12: http://www.xbrl.org/2003/role/presentationRef
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Reference 13: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 20
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-URI http://asc.fasb.org/extlink&oid=6910749&loc=d3e4926-128472

Reference 14: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=7488404&loc=d3e6996-128479

Reference 15: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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-SubTopic 10
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=7659399&loc=d3e1383-128463

Reference 16: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Emerging Issues Task Force (EITF)
-Number 88-16
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 17: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 141R
-Paragraph F4
-Subparagraph e
-Appendix F

Reference 18: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 141
-Paragraph 51, 52
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 19: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 141R
-Paragraph 67-73
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

+ Details

Securities Available For Sale

12 Months Ended

Jun. 30, 2012

Notes

Securities Available For Sale

3. Securities Available for Sale

Securities available for sale consist of the following:

	June 30, 2012
		Gross	Gross	Estimated
	Amortized	Unrealized	Unrealized	Fair
	Cost	Gains	Losses	Value
U.S. Government Agencies	$6,102	$ 2	$(2)	$ 6,102
Residential Mortgage-backed
Securities of U.S. Government
Agencies and Government-
Sponsored Enterprises	24,958	286	(11)	25,233
Total	$31,060	$288	$(13)	$31,335

	June 30, 2011
		Gross	Gross	Estimated
	Amortized	Unrealized	Unrealized	Fair
	Cost	Gains	Losses	Value
U.S. Government Agencies	$37,494	$31	$(121)	$37,404
Residential Mortgage-backed
Securities of U.S. Government
Agencies and Government-
Sponsored Enterprises	21,534	131	(53)	21,612
Total	$59,028	$162	$(174)	$59,016

Debt securities available for sale by contractual maturity are shown below. Mortgage-backed securities are not included in the maturity categories because they do not have a single maturity date.

	June 30, 2012
	Amortized	Estimated
	Cost	Fair Value
Due within one year	$6,000	$6,002
Due after one year through five years	102	100
Due after five years through ten years	-	-
Due after ten years	-	-
Mortgage-backed securities	24,958	25,233
Total	$31,060	$31,335

	June 30, 2011
	Amortized	Estimated
	Cost	Fair Value
Due within one year	$8,002	$8,003
Due after one year through five years	18,663	18,642
Due after five years through ten years	6,198	6,140
Due after ten years	4,631	4,619
Mortgage-backed securities	21,534	21,612
Total	$59,028	$59,016

Gross proceeds and gross realized gains and losses from sales of securities recognized in net income follow:

	June 30,
	2012	2011	2010
Gross proceeds from sales of securities	$-	$8,555	$24,916
Gross realized gains from sales of securities	-	443	239
Gross realized losses from sales of securities	-	13	48

Securities available for sale at cost of $15,563 and $10,081 (market value of $15,727 and $10,103) at June 30, 2012 and June 30, 2011, respectively, were pledged as collateral to secure various public deposits and retail repurchase agreements.

The gross unrealized losses and the fair value for securities available for sale aggregated by the length of time that individual securities have been in a continuous unrealized loss position as of June 30, 2012 and June 30, 2011 are as follows:

	June 30, 2012
	Less than 12 Months		12 Months or More		Total
	Fair	Unrealized	Fair	Unrealized	Fair	Unrealized
	Value	Losses	Value	Losses	Value	Losses
U.S. Government Agencies	-	$-	$100	$(2)	$100	$(2)
Residential Mortgage- backed
Securities of U.S.
Government Agencies and
Government-Sponsored
Enterprises	2,908	(8)	100	(3)	3,008	(11)
Total	$2,908	$(8)	$200	$(5)	$3,108	$(13)

	June 30, 2011
	Less than 12 Months		12 Months or More		Total
	Fair	Unrealized	Fair	Unrealized	Fair	Unrealized
	Value	Losses	Value	Losses	Value	Losses
U.S. Government Agencies	$20,304	$(121)	$-	$-	$20,304	$(121)
Residential Mortgage- backed
Securities of U.S.
Government Agencies and
Government-Sponsored
Enterprises	10,278	(52)	63	(1)	10,341	(53)
Total	$30,582	$(173)	$63	$(1)	$30,645	$(174)

The total number of securities with unrealized losses at June 30, 2012 and June 30, 2011 were 22 and 71, respectively. Unrealized losses on securities have not been recognized in income because management has the intent and ability to hold the securities until a recovery of value or maturity, and the decline in fair value is largely due to decreases in market interest rates. The Bank had no other than temporary impairment losses during the years ended June 30, 2012, 2011, or 2010.

The Bank, as a member of the FHLB, is required to maintain an investment in FHLB capital stock. No ready market exists for the FHLB stock and the carrying value approximates its fair value based on the redemption provisions of the FHLB.

- Definition

Tabular disclosure of available-for-sale securities which includes, but is not limited to, changes in the cost basis and fair value, fair value and gross unrealized gain (loss), fair values by type of security, contractual maturity and classification, amortized cost basis, contracts to acquire securities to be accounted for as available-for-sale, debt maturities, transfers to trading, change in net unrealized holding gain (loss) net of tax, continuous unrealized loss position fair value, aggregate losses qualitative disclosures, other than temporary impairment (OTTI) losses or other disclosures related to available for sale securities.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 320
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6957658&loc=d3e62557-112803

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 320
-SubTopic 10
-Section 50
-Paragraph 7
-URI http://asc.fasb.org/extlink&oid=6872113&loc=d3e27337-111563

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 320
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6872113&loc=d3e27198-111563

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 320
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6957658&loc=d3e62586-112803

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 320
-SubTopic 10
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6872113&loc=d3e27161-111563

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 320
-SubTopic 10
-Section 50
-Paragraph 9
-URI http://asc.fasb.org/extlink&oid=6872113&loc=d3e27357-111563

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 320
-SubTopic 10
-Section 50
-Paragraph 6
-URI http://asc.fasb.org/extlink&oid=6872113&loc=d3e27290-111563

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 115
-Paragraph 19, 20, 21
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name FASB Staff Position (FSP)
-Number FAS115-1/124-1
-Paragraph 17
-Subparagraph a, b
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Emerging Issues Task Force (EITF)
-Number 03-1
-Paragraph 21
-Subparagraph a, b
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

+ Details

Loans

12 Months Ended

Jun. 30, 2012

Notes

Loans

4. Loans

Loans consist of the following:

Retail consumer loans:	June 30,
		2012		2011

One to four family	$	620,486	$	610,528
Home equity lines of credit		143,052		156,720
Construction and land/lots		53,572		68,199
Consumer		3,819		4,265
Total retail consumer loans		820,929		839,712
Commercial loans:
Commercial real estate		238,644		269,449
Construction and development		42,362		79,458
Commercial and industrial		14,578		19,250
Municipal leases		115,516		122,921
Total commercial loans		411,100		491,078
Total loans		1,232,029		1,330,790
Less:
Allowance for loan and lease losses		(35,100)		(50,140)
Deferred loan fees, net		(1,860)		(2,713)
Discount on loans from business combination		(1,124)		(1,560)
Loans, net	$	1,193,945		1,276,377

The Bank’s total loans by segment, class, and grade follow:

				Special
		Pass		Mention		Substandard		Doubtful		Loss		Total
June 30, 2012
Retail consumer loans:
One to four family	$	553,457	$	9,305	$	55,338	$	2,366	$	20	$	620,486
Home equity lines of credit		134,959		1,267		5,620		1,204		2		143,052
Construction and land/lots		48,759		704		3,084		1,025		-		53,572
Consumer		3,563		55		159		39		3		3,819
Commercial loans:
Commercial real estate		195,372		16,291		25,958		1,023		-		238,644
Construction and development		20,074		5,739		16,406		142		1		42,362
Commercial and industrial		9,818		1,073		3,527		157		3		14,578
Municipal leases		113,829		633		1,054		-		-		115,516
Total loans	$	1,079,831	$	35,067	$	111,146	$	5,956		29		1,232,029

				Special
		Pass		Mention		Substandard		Doubtful		Loss		Total
June 30, 2011
Retail consumer loans:
One to four family	$	546,232	$	$5,922	$	58,328	$	46	$	-	$	610,528
Home equity lines of credit		147,769		907		7,903		141		-		156,720
Construction and land/lots		60,040		814		7,345		-		-		68,199
Consumer		3,873		115		254		15		8		4,265
Commercial loans:
Commercial real estate		217,701		26,090		25,646		12		-		269,449
Construction and development		28,789		7,070		43,599		-		-		79,458
Commercial and industrial		15,240		1,017		2,836		157		-		19,250
Municipal leases		121,551		547		823		-		-		122,921
Total loans	$	1,141,195	$	$42,482	$	146,734	$	371		8	$	1,330,790

The Bank’s total loans by segment, class, and delinquency status follows:

	Past Due									Total
		30-89 Days		90 Days+		Total		Current		Loans
June 30, 2012
Retail consumer loans:
One to four family	$	10,532	$	11,629	$	22,161	$	598,325	$	620,486
Home equity lines of credit		388		2,613		3,001		140,051		143,052
Construction and land/lots		789		1,405		2,194		51,378		53,572
Consumer		54		35		89		3,730		3,819
Commercial loans:
Commercial real estate		4,188		6,071		10,259		228,385		238,644
Construction and development		331		6,001		6,332		36,030		42,362
Commercial and industrial		155		266		421		14,157		14,578
Municipal leases		-		-		-		115,516		115,516
Total loans	$	16,437	$	28,020	$	44,457	$	1,187,572		1,232,029

	Past Due									Total
		30-89 Days		90 Days+		Total		Current		Loans
June 30, 2012
Retail consumer loans:
One to four family	$	13,569	$	15,082	$	28,651	$	581,877	$	610,528
Home equity lines of credit		824		1,984		2,808		153,912		156,720
Construction and land/lots		594		2,766		3,360		64,839		68,199
Consumer		4		22		26		4,239		4,265
Commercial loans:
Commercial real estate		2,594		8,045		10,639		258,810		269,449
Construction and development		1,511		15,788		17,299		62,159		79,458
Commercial and industrial		19		2		21		19,229		19,250
Municipal leases		-		474		474		122,447		122,921
Total loans	$	19,115	$	44,163	$	63,278	$	1,267,512		1,330,790

The Bank’s recorded investment in loans, by segment and class, that are not accruing interest or are 90 days or more past due and still accruing interest follow:

Retail consumer loans:		June 30, 2012				June 30, 2011
				90 Days + &				90 Days + &
		Nonaccruing		still accruing		Nonaccruing		still accruing

One to four family	$	27,659	$	-	$	17,821	$	-
Home equity lines of credit		4,781		-		2,536		-
Construction and land/lots		3,437		-		2,766		-
Consumer		76		-		23		-
Commercial loans:
Commercial real estate		15,008		-		8,197		-
Construction and development		12,583		-		16,620		-
Commercial and industrial		637		-		40		-
Municipal leases		-		-		474		-
Total loans	$	64,181	$	-	$	48,477		-

An analysis of the allowance for loan losses follows:

		June 30,
		2012		2011		2010
Balance at beginning of period	$	50,140	$	41,713	$	24,996
Provision for loan losses		15,600		42,800		38,600
Charge-offs		(32,812)		(35,330)		(22,120)
Recoveries		2,172		957		237
Balance at end of period	$	35,100	$	50,140	$	41,713

An analysis of the allowance for loan losses by segment follows:

	June 30, 2012			June 30, 2011
	Retail			Retail
	Consumer	Commercial	Total	Consumer	Commercial	Total
Balance at beginning
of period	$23,538	$26,602	$50,140	$14,748	$26,965	$41,713
Provision for loan losses	14,021	1,579	15,600	15,404	27,396	42,800
Charge-offs	(16,749)	(16,063)	(32,812)	(6,835)	(28,495)	(35,330)
Recoveries	362	1,810	2,172	221	736	957
Balance at end of period	$21,172	$13,928	$35,100	$23,538	$26,602	$50,140

During the year ended June 30, 2012, the Bank revised its calculation for the allowance for loan losses to better reflect the risks within each loan class. These enhancements included: 1) dividing the land loan category previously used by the Bank into two classes: retail consumer construction and land/lots loans and commercial construction and development loans; 2) adding new concentration adjustments for Cherryville and Industrial pre-combination loans; and 3) adjusting the qualitative factors on most of the loan classes to better reflect the overall risk in each class as a result of changes in the quantitative factors based on net historical charge-offs. In addition, the Bank changed its impairment methodology per regulatory guidance which increased its charge offs for the year ended June 30, 2012 and decreased the allowance for loan losses for loans individually evaluated for impairment as of June 30, 2012.

The Bank’s ending balances of loans and the related allowance, by segment and class, follows:

	Allowance for Loan Losses						Total Loans Receivable
		Loans						Loans
		individually		Loans				individually		Loans
		evaluated for		Collectively				evaluated for		Collectively
		impairment		Evaluated		Total		impairment		Evaluated		Total
June 30, 2012
Retail consumer loans:
One- to four-family	$	596	$	13,961	$	14,557	$	36,011	$	584,475	$	620,486
Home equity		238		3,293		3,531		4,382		138,670		143,052
Construction and land/lots		68		2,887		2,955		3,772		49,800		53,572
Consumer		2		127		129		3		3,816		3,819
Commercial loans:
Commercial real estate		407		6,047		6,454		20,266		218,378		238,644
Construction and development		154		6,099		6,253		14,389		27,973		42,362
Commercial and industrial		111		204		315		2,965		11,613		14,578
Municipal leases		-		906		906		-		115,516		115,516
Total	$	1,576	$	33,524	$	35,100	$	81,788	$	1,150,241	$	1,232,029

June 30, 2011
Retail consumer loans:
One- to four-family	$	3,240	$	10,868	$	14,108	$	29,319	$	581,209	$	610,528
Home equity		623		3,087		3,710		6,310		150,410		156,720
Construction and land/lots		1,489		4,018		5,507		4,842		63,357		68,199
Consumer		-		213		213		-		4,265		4,265
Commercial loans:
Commercial real estate		1,997		7,430		9,427		21,203		248,246		269,449
Construction and development		10,712		4,887		15,599		41,126		38,332		79,458
Commercial and industrial		176		277		453		2,823		16,427		19,250
Municipal leases		-		1,123		1,123		-		122,921		122,921
Total	$	18,237	$	31,903	$	50,140	$	105,623	$	1,225,167	$	1,330,790

The Bank’s impaired loans and the related allowance, by segment and class, follows:

	Total Impaired Loans
		With a		With No				Related
		Recorded		Recorded				Recorded
		Allowance		Allowance		Total		Allowance
June 30, 2012
Retail consumer loans:
One to four family	$	7,787	$	32,802	$	40,589	$	685
Home equity lines of credit		1,163		4,093		5,256		256
Construction and land/lots		462		3,440		3,902		75
Consumer		73		3		76		4
Commercial loans:
Commercial real estate		2,281		18,214		20,495		413
Construction and development		1,616		13,461		15,077		289
Commercial and industrial		501		2,779		3,280		115
Municipal leases		-		-		-		-
Total impaired loans	$	13,883	$	74,792	$	88,675	$	1,837

June 30, 2011
Retail consumer loans:
One to four family	$	28,467	$	15,297	$	43,764	$	3,748
Home equity lines of credit		3,168		3,680		6,848		646
Construction and land/lots		4,662		2,199		6,861		1,733
Consumer		23		-		23		2
Commercial loans:
Commercial real estate		9,952		12,176		22,128		2,041
Construction and development		25,329		16,412		41,741		10,786
Commercial and industrial		278		2,564		2,842		176
Municipal leases		710		-		710		10
Total impaired loans	$	72,589	$	52,328	$	124,917	$	19,142

The table above includes $6,887 and $19,294, of impaired loans that were not individually evaluated at June 30, 2012 and June 30, 2011, respectively, because these loans did not meet the Bank’s threshold for individual impairment evaluation. The recorded allowance above includes $261 and $905 related to these loans that were not individually evaluated at June 30, 2012 and June 30, 2011, respectively.

The Bank’s average recorded investment in impaired loans, period end unpaid principal balance and interest income recognized on impaired loans follows:

	June 30, 2012			June 30, 2011
	Average	Unpaid	Interest	Average	Unpaid	Interest
	Recorded	Principal	Income	Recorded	Principal	Income
	Investment	Balance	Recognized	Investment	Balance	Recognized
Retail consumer loans:
One to four family	$ 42,829	$ 41,006	$1,799	$ 30,292	$ 32,475	$1,070
Home equity lines of credit	5,531	8,329	208	6,460	7,551	184
Construction and land/lots	4,926	8,244	253	5,567	7,535	142
Consumer	48	98	1	-	-	-
Commercial loans:
Commercial real estate	21,249	25,679	1,184	23,965	29,150	964
Construction and development	26,994	23,070	763	50,623	61,519	1,307
Commercial and industrial	3,138	4,535	218	2,868	3,862	161
Municipal leases	531	-	-	-	-	-
Total loans	$105,246	$110,961	$4,426	$119,775	$142,092	$3,828

The Bank’s loans that were performing under the terms of troubled debt restructurings (TDRs) that were excluded from nonaccruing loans above follow:

	June 30,
	2012	2011
Performing restructured loans included in impaired loans	$20,588	$49,379

For the year ended June 30, 2012, the following table presents a breakdown of the types of concessions made on TDRs by loan class:

	June 30, 2012
			Pre-Modification		Post-Modification
			Outstanding		Outstanding
	Number of		Recorded		Recorded
	Loans		Investment		Investment
Below market interest rate:
Retail consumer:
One to four family	27	$	9,347	$	9,057
Home equity lines of credit	3		83		81
Construction and land/lots	2		175		171
Consumer	-		-		-
Commercial:
Commercial real estate	1		285		280
Construction and development	2		760		254
Commercial and industrial	-		-		-
Municipal leases	-		-		-
Total	35	$	10,650	$	9,843

Extended payment terms:
Retail consumer:
One to four family	15	$	1,784	$	1,738
Home equity lines of credit	2		73		70
Construction and land/lots	-		-		-
Consumer	-		-		-
Commercial:
Commercial real estate	3		965		891
Construction and development	2		2,694		2,694
Commercial and industrial	3		106		100
Municipal leases	-		-		-
Total	25	$	5,622	$	5,493

Other TDRs:
Retail consumer:
One to four family	12	$	2,261	$	2,348
Home equity lines of credit	1		35		35
Construction and land/lots	1		181		170
Consumer	-		-		-
Commercial:
Commercial real estate	7		2,786		2,435
Construction and development	7		2,827		1,704
Commercial and industrial	-		-		-
Municipal leases	-		-		-
Total	28		$8,090		$6,692
Total	88	$	24,362	$	22,028

The following table presents loans that were modified as TDRs within the previous twelve months and for which there was a payment default during the year ended June 30, 2012.

	Year Ended
	June 30, 2012
	Number of		Recorded
	Loans		Investment
Below market interest rate:
Retail consumer:
One to four family	8	$	2,713
Home equity lines of credit	-		-
Construction and land/lots	-		-
Consumer	1		55
Commercial:
Commercial real estate	-		-
Construction and development	-		-
Commercial and industrial	-		-
Municipal leases	-		-
Total	9	$	2,768
Extended payment terms:
Retail consumer:
One to four family	5	$	501
Home equity lines of credit	-		-
Construction and land/lots	-		-
Consumer	-		-
Commercial:
Commercial real estate	-		-
Construction and development	2		2,694
Commercial and industrial	-		-
Municipal leases	-		-
Total	7	$	3,195
Other TDRs:
Retail consumer:
One to four family	3	$	404
Home equity lines of credit	-		-
Construction and land/lots	1		171
Consumer	-		-
Commercial:
Commercial real estate	4		640
Construction and development	1		531
Commercial and industrial	-		-
Municipal leases	-		-
Total	9	$	1,746
Total	25	$	7,709

Other TDRs include TDRs that have a below market interest rate and extended payment terms. The Bank does not typically forgive principal when restructuring troubled debt. In order to comply with the requirements of ASU 2011-02, the Bank reviewed modifications occurring since July 1, 2011 that were previously measured under the subtopic 450-20. From this review, no new TDRs were identified.

- Definition

The entire disclosure for claims held for amounts due a entity, excluding financing receivables. Examples include, but are not limited to, trade accounts receivables, notes receivables, loans receivables. Includes disclosure for allowance for credit losses.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 310
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=7512638&loc=d3e5066-111524

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02.3,4)
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 310
-SubTopic 10
-Section 50
-Paragraph 11
-URI http://asc.fasb.org/extlink&oid=7512638&loc=d3e5162-111524

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08.(k))
-URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690

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-Publisher FASB
-Name Accounting Standards Codification
-Topic 310
-SubTopic 10
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=7512638&loc=d3e5074-111524

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Statement of Position (SOP)
-Number 01-6
-Paragraph 13
-Subparagraph d
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 3, 4
-Article 5

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 03
-Paragraph 7
-Article 9

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 08
-Paragraph k
-Article 4

+ Details

Premises and Equipment

12 Months Ended

Jun. 30, 2012

Notes

Premises and Equipment

5. Premises and Equipment

Premises and equipment consist of the following:

	June 30,
	2012		2011
Land	$	5,720	$	5,219
Land held under capital lease		2,052		2,052
Office buildings		25,855		25,350
Furniture, fixtures and equipment		11,521		11,816
Total		45,148		44,437
Less accumulated depreciation		(22,042)		(22,031)
Premises and equipment, net	$	23,106	$	22,406

- Definition

The entire disclosure for long-lived, physical assets that are used in the normal conduct of business to produce goods and services and not intended for resale. Examples include land, buildings, machinery and equipment, and other types of furniture and equipment including, but not limited to, office equipment, furniture and fixtures, and computer equipment and software. This disclosure may include property plant and equipment accounting policies and methodology, a schedule of property, plant and equipment gross, additions, deletions, transfers and other changes, depreciation, depletion and amortization expense, net, accumulated depreciation, depletion and amortization expense and useful lives, income statement disclosures, assets held for sale and public utility disclosures.

+ References + Details

Accrued Interest Receivable

12 Months Ended

Jun. 30, 2012

Notes

Accrued Interest Receivable

6. Accrued Interest Receivable

Accrued interest receivable consists of the following:

	June 30
	2012	2011
Loans	$5,871	$6,860
Securities available for sale	42	160
Other	95	99
Total	$6,008	$7,119

Deposit Accounts

12 Months Ended

Jun. 30, 2012

Notes

Deposit Accounts

7. Deposit Accounts

Deposit accounts consist of the following:

					Weighted Average Interest Rates
	June 30				June 30
		2012		2011	2012	2011
Noninterest-bearing accounts	$	57,109	$	48,464	0.00%	0.00%
NOW accounts		173,574		155,500	0.19%	0.23%
Money market accounts		257,865		247,010	0.39%	0.66%
Savings accounts		347,669		75,921	0.17%	0.54%
Certificates of deposit		629,958		737,690	1.22%	1.40%
Total	$	1,466,175	$	1,264,585	0.66%	1.00%

Maturities of certificates of deposit are as follows:

	June 30, 2012		June 30, 2011
Within 1 year	$	445,111	$	544,068
1 year to 2 years		87,122		108,839
2 years to 3 years		36,276		29,947
3 years to 4 years		31,046		17,491
4 years to 5 years		30,403		37,345
Total	$	629,958	$	737,690

Certificates of deposit with balances of $100 or greater totaled $302,246 and $378,968 at June 30, 2012 and June 30, 2011, respectively. Generally, deposit amounts in excess of $250,000 are not federally insured.

Interest expense on deposits consists of the following:

	June 30,
		2012		2011		2010
NOW accounts	$	320	$	457	$	546
Money market accounts		1,397		1,852		2,194
Savings accounts		314		508		462
Certificates of deposit		8,213		11,981		16,419
Total	$	10,244	$	14,798	$	19,621

In December 2010, the Bank incurred a loss of approximately $4,500 related to a check kiting scheme by one of its customers. This loss is included in other expense on the consolidated statements of income for June 30, 2011.

- Definition

The entire disclosure for deposit liabilities including data and tables. It may include a description of the entity's deposit liabilities, the aggregate amount of time deposits (including certificates of deposit) in denominations of $100,000 or more at the balance sheet date; the aggregate amount of any demand deposits that have been reclassified as loan balances, such as overdrafts, at the balance sheet date; deposits that are received on terms other than those in the normal course of business, the amount of accrued interest on deposit liabilities; securities, mortgage loans or other financial instruments that serve as collateral for deposits; for time deposits having a remaining term of more than one year, the aggregate amount of maturities for each of the five years following the balance sheet date; and the weighted average interest rate for all deposit liabilities held by the entity.

+ References + Details

Other Borrowings

12 Months Ended

Jun. 30, 2012

Notes

Other Borrowings

8. Other borrowings

Other borrowings consist of the following:

	June 30,
	2012			2011
		Balance	Weighted Average Rate		Balance	Weighted Average Rate
Advances from the Federal Home Loan Bank of Atlanta (FHLB) maturing:
Within one year	$	-	0.00%	$	113,000	0.15%
One year to five years		80	2.00%		11,085	5.99%
Five to ten years		15,000	4.96%		15,000	4.96%
Retail repurchase agreements		7,185	0.24%		6,193	0.43%
Total	$	22,265	3.43%	$	145,278	1.11%

All FHLB advances have fixed rates for the remaining term. All other borrowings have variable interest rates. $15,000 of FHLB advances are subject to calls at par at the option of the FHLB.

Securities available for sale with costs totaling $11,868 and $8,553 (market value of $11,931 and $8,602) were pledged as collateral for the retail repurchase agreements at June 30, 2012 and June 30, 2011. All qualifying first mortgage loans, home equity lines of credit, and FHLB Stock were pledged as collateral to secure the FHLB advances.

In June 2012, the Bank prepaid $11,000 of FHLB advances with maturity dates between February 2016 and March 2016 and a weighted average interest rate of 6.02%. In June 2011, the Bank prepaid $64,000 of FHLB advances with maturity dates between July 2012 and July 2014 and a weighted average interest rate of 4.47%. The Bank incurred prepayment penalties on these transactions of $2,111 and $3,988, respectively, which is disclosed in the consolidated statements of income.

Capital Lease Obligations

12 Months Ended

Jun. 30, 2012

Notes

Capital Lease Obligations

9. Capital lease obligations

The Bank currently leases land for one of its retail office locations under a capital lease. Leases that meet the criteria for capitalization are recorded as assets and the related obligations are reflected as capital lease obligations on the accompanying balance sheets, because the lease has been deemed to have a bargain purchase option. Included in premises and equipment at June 30, 2012 and June 30, 2011 is $2,052 as the capitalized cost of the leased land.

Aggregate future minimum lease payments due under this capital lease obligation are as follows:

Fiscal year ending:		June 30, 2012
2013	$	112
2014		122
2015		123
2016		123
2017-2029		3,052
Total minimum lease payments		3,532
Less: amount representing interest		(1,508)
Present value of net minimum lease payments	$	2,024

Income Taxes

12 Months Ended

Jun. 30, 2012

Notes

Income Taxes

10. Income Taxes

Income tax expense (benefit) consists of:

	June 30,
		2012		2011		2010
Current:
Federal	$	(118)	$	(1,619)	$	(4,410)
State		8		51		62
Total current benefit		(110)		(1,568)		(4,348)
Deferred:
Federal		(769)		(9,664)		(11,238)
State		232		(2,031)		(1,991)
Total deferred benefit		(537)		(11,695)		(13,229)
Total income tax benefit	$	(647)	$	(13,263)	$	(17,577)

Income tax benefit differed from the amounts computed by applying the U.S. federal income tax rate of 34% to pretax income from continuing operations before income taxes as a result of the following:

	Year Ended June 30,
	2012			2011			2010
		$	Rate		$	Rate		$	Rate

Tax at federal income tax rate	$	1,319	34%	$	(9,520)	(34)%	$	(3,582)	(34)%
Increase (decrease) resulting from:
Tax exempt income		(2,136)	(55)		(2,049)	(7)		(2,051)	(20)
Gain from business combination		-	-		(1,987)	(7)		(5,913)	(56)
Change in valuation allowance for deferred tax assets, allocated to income tax expense		28	1		2,028	7		(4,758)	(45)
State tax, net of federal benefit		156	4		(1,306)	(5)		(1,273)	(12)
Other		(14)	(1)		(429)	(1)		-	-
Total	$	(647)	(17)%	$	(13,263)	(47)%	$	(17,577)	(167)%

The sources and tax effects of temporary differences that give rise to significant portions of the deferred tax assets (liabilities) at June 30, 2012 and 2011 are presented below:

		June 30,
		2012		2011
Deferred tax assets:
Alternative minimum tax credit	$	3,422	$	3,481
Allowance for loan losses		13,281		18,996
Deferred compensation and post-retirement benefits		17,067		17,066
Accrued vacation and sick leave		361		578
Impairments on real estate owned		1,177		1,145
Capital loss carryforward		579		899
Net operating loss carryforward		16,920		10,529
Discount from business combination		571		771
Other		896		454
Total gross deferred tax assets		54,274		53,919
Less valuation allowance		(2,570)		(2,542)
Deferred tax assets		51,704		51,377

Deferred tax (liabilities):
Depreciable basis of fixed assets		(1,257)		(1,425)
Deferred loan fees		(546)		(541)
FHLB stock, book basis in excess of tax		(777)		(777)
Unrealized gain on securities available for sale		(93)		-
Other		(104)		(145)
Total gross deferred tax liabilities		(2,777)		(2,888)
Net deferred tax assets	$	48,927	$	48,489

The Bank’s has net operating loss carry forwards of $43.7 million and $25.6 million as of June 30, 2012 and June 30, 2011, respectively, with a recorded tax benefit of $16.9 million and $10.5 million included in deferred tax assets. These loss carryforwards will begin to expire for federal tax purposes as of June 30, 2031.

The valuation allowance for deferred tax assets as of June 30, 2012 and 2011 was $2,570 and $2,542, respectively. The net change in the total valuation allowance for June 30, 2012 and 2011 was $28 and $2,028, respectively, which relates primarily to North Carolina state income taxes due to limitations on state net operating loss carry forwards. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management performed a robust evaluation of the Bank’s deferred tax assets at June 30, 2012 and June 30, 2011. Management considered all available positive and negative evidence including the possibility of future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies, and recent financial performance in making this assessment. Negative evidence considered included the Bank’s pre-tax losses and relatively high net loan chargeoffs during the past several years. Positive evidence considered included the Bank’s history of generating taxable income, no prior history of generating loss carry forwards or expiration of loss carry forwards, its regulatory “well capitalized” status, the long-term nature of the deferred compensation deferred tax asset, its improving credit quality indicators, and its ability to sell its municipal lease portfolio to convert current tax-free income to future taxable income. Based upon this evaluation, management believes there is more positive evidence than negative evidence and it is more likely than not the Bank will realize the benefits of these deductible differences, net of the existing valuation allowances at June 30, 2012 and June 30, 2011. The amount of the deferred tax asset considered realizable, however, could be reduced in the near term if negative trends occur with credit quality and earnings during the carryforward period.

Retained earnings at June 30, 2012 and 2011 include $19,570 representing pre-1988 tax bad debt reserve base year amounts for which no deferred tax liability has been provided since these reserves are not expected to reverse and may never reverse. Circumstances that would require an accrual of a portion or all of this unrecorded tax liability are a failure to meet the definition of a bank, dividend payments in excess of current year or accumulated earnings and profits, or other distributions in dissolution or liquidation of the Bank.

Income tax returns subsequent to 2008 are subject to examination by the taxing authorities.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08.(h))
-URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 15
-URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 9
-URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 109
-Paragraph 136, 172
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 08
-Paragraph h
-Article 4

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 109
-Paragraph 43, 44, 45, 46, 47, 48, 49
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

+ Details

Employee Benefit Plans

12 Months Ended

Jun. 30, 2012

Notes

Employee Benefit Plans

11. Employee Benefit Plans

The Bank has a 401(k) savings/profit-sharing plan for its employees. The Bank matches employee contributions dollar for dollar up to 6% of each employee’s compensation. The Bank may also make discretionary profit sharing contributions for the benefit of all eligible participants as long as total contributions do not exceed applicable limitations. Employees become fully vested in the Bank’s contributions after six years of service. The Bank’s expense for 401(k) contributions to this plan was $320, $450, and $200 for the years ended June 30, 2012, 2011, and 2010, respectively.

Post-retirement health care benefits are provided to certain key officers under the Bank’s Executive Medical Care Plan (“EMCP”). The EMCP is unfunded and is not qualified under the Internal Revenue Code. Plan expense (benefit) for the years ended June 30, 2012, 2011, and 2010 was $197, ($766), and $608, respectively. The decrease in expense for 2011 was due to a change in the cost estimate of the rate of increase of future medical care premiums for certain participants in the plan. Total accrued expenses related to this plan included in other liabilities were $4,846 and $4,755, respectively, as of June 30, 2012 and 2011.

As part of the business combination discussed in Note 2, the Cherryville Federal Savings and Loan Employees’ Pension Plan was terminated effective December 31, 2010. At that date, total assets in this plan were $981 which equaled the lump sum benefits to be paid to participants. Distribution of these benefits was made in December 2011.

Deferred Compensation Agreements

12 Months Ended

Jun. 30, 2012

Notes

Deferred Compensation Agreements

12. Deferred Compensation Agreements

The Bank’s Director Emeritus Plans (“Plans”) provides certain benefits to future Emeritus Directors for providing current advisory services to the Bank. The Plans are unfunded and are not qualified under the Internal Revenue Code. Plan benefits vary by participant and are payable to a designated beneficiary in the event of death. The Bank records an expense based on the present value of expected future benefits. The Plans were revised during 2011 and 2010 to add new participants and change future benefits. These revisions were approved by the Board of Directors. Plan expenses for the years ended June 30, 2012, 2011, and 2010 were $553, $2,369, and $5,108 respectively. Total accrued expenses related to these plans included in other liabilities were $11,700 and $11,731, respectively, as of June 30, 2012 and 2011.

The Bank has deferred compensation agreements with certain members of the Bank’s Board of Directors. The future payments related to these agreements are to be funded with life insurance contracts which are payable to the Bank in the event of the director’s death. For the years ended June 30, 2012, 2011, and 2010 deferred compensation expense including the net cost of the insurance contracts was ($82), $43, and $250, respectively.

The net cash surrender value of the related life insurance policies and deferred compensation liability are detailed below:

	June 30,
	2012	2011
Net cash surrender value of life insurance, included in other assets	$6,533	$6,123
Deferred compensation liability, included in other liabilities	1,931	2,103

Long term deferred compensation and supplemental retirement plans are provided to certain key current and former officers. These plans are unfunded and are not qualified under the Internal Revenue Code. The benefits will vary by participant and are payable to a designated beneficiary in the event of death. These plans were revised during 2011 and 2010 to add new participants and change future benefits. These revisions were approved by the Board of Directors. Plan expenses for the years ended June 30, 2012, 2011, and 2010 were $1,155, $1,681, and $3,608, respectively. Total accrued expenses related to these plans included in other liabilities were $20,386 and $19,931, respectively, as of June 30, 2012 and 2011.

In addition, the Bank has a deferred compensation plan provided to certain officers and directors. The plan allows the participants to defer any of their annual compensation, including bonus payments, up to the maximum allowed for each participant. The plan is unfunded and is not qualified under the Internal Revenue Code. Plan expenses for the years ended June 30, 2012, 2011, and 2010 were $260, $254, and $257 respectively. The total deferred compensation plan payable included in other liabilities was $5,679 and $5,369 June 30, 2012 and 2011.

- Definition

Tabular disclosure of pension and other postretirement benefit arrangements with individual employees, which are generally based on employment contracts between the entity and one or more selected officers or key employees, and which contain a promise by the employer to pay certain amounts at designated future dates, usually including a period after retirement, upon compliance with stipulated requirements. This type of arrangement is distinguished from broader based employee benefit plans as it is usually tailored to the employee. Disclosure also typically includes the amount of related compensation expense recognized during the reporting period and the carrying amount as of the balance sheet date of the related liability.

+ References + Details

Commitments and Contingencies

12 Months Ended

Jun. 30, 2012

Notes

Commitments and Contingencies

13. Commitments and Contingencies

Loan Commitments – Legally binding commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many commitments may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. In the normal course of business, there are various outstanding commitments to extend credit that are not reflected in the consolidated financial statements. At June 30, 2012 and June 30, 2011, respectively, loan commitments (excluding $14,960 and $22,518 of undisbursed portions of construction loans) totaled $44,736 and $45,074 of which $5,322 and $13,625 were variable rate commitments and $39,413 and $31,449 were fixed rate commitments. The fixed rate loans had interest rates ranging from 2.75% to 5.125% at June 30, 2012 and 3.59% to 5.75% at June 30, 2011, and terms ranging from 6 to 30 years. Pre-approved but unused lines of credit (principally second mortgage home equity loans and overdraft protection loans) totaled $154,283 and $173,164. These amounts represent the Bank’s exposure to credit risk, and in the opinion of management have no more than the normal lending risk that the Bank commits to its borrowers. The Bank has freestanding derivative instruments consisting of commitments to originate fixed rate conforming loans and commitments to sell fixed rate conforming loans on a best efforts basis. The fair value of these commitments was not material at June 30, 2012 or June 30, 2011.

The Bank grants construction and permanent loans collateralized primarily by residential and commercial real estate to customers throughout its primary market area. In addition, the Bank grants municipal leases to customers throughout North and South Carolina. The Bank’s loan portfolio can be affected by the general economic conditions within these market areas. Management believes that the Bank has no concentration of credit in the loan portfolio.

Restrictions on Cash – The Bank is required by regulation to maintain a varying cash reserve balance with the Federal Reserve System. The daily average calculated cash reserve required as of June 30, 2012 and 2011 was $1,466 and $8,492, respectively, which was satisfied by vault cash and balances held at the Federal Reserve.

Guarantees – Standby letters of credit obligate the Bank to meet certain financial obligations of its customers, if, under the contractual terms of the agreement, the customers are unable to do so. The financial standby letters of credit issued by the Bank are irrevocable and payment is only guaranteed upon the borrower’s failure to perform its obligations to the beneficiary. Total commitments under standby letters of credit as of June 30, 2012 and June 30, 2011 were $75 and $1,301. The Bank recorded a $375 liability for the current carrying amount of the obligation to perform as guarantor at June 30, 2011. There was no liability recorded for these letters of credit at June 30, 2012.

Litigation – The Bank is involved in legal actions in the normal course of business. Management, based on advice of counsel, does not expect significant losses from current litigation that would be significant to the financial condition of the Bank.

- Definition

The entire disclosure for commitments and contingencies.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
-SubTopic 20
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6449706&loc=d3e16207-108621

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 460
-SubTopic 10
-Section 50
-Paragraph 8
-URI http://asc.fasb.org/extlink&oid=6398077&loc=d3e12565-110249

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 450
-SubTopic 20
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=6952336&loc=d3e14435-108349

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02.25)
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 440
-SubTopic 10
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6394976&loc=d3e25287-109308

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name FASB Interpretation (FIN)
-Number 14
-Paragraph 3
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 5
-Paragraph 9, 10, 11, 12
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

+ Details

Capital

12 Months Ended

Jun. 30, 2012

Notes

Capital

14. Capital

To be categorized as well capitalized, the Bank must maintain various minimum capital ratios established by banking regulators. Failure of the Bank to maintain these minimum capital ratios may be deemed to constitute an unsafe and unsound banking practice and could subject the Bank to regulatory action. In February 2012, the Bank’s primary regulator, the Office of the Comptroller of the Currency (“OCC”), issued to the Bank an Individual Minimum Capital Requirement (“IMCR”) requiring the Bank to maintain a Tier I (leverage) capital to adjusted total assets ratio of at least 7.50% and a total risk-based capital to risk-weighted assets ratio of at least 11.50%. On June 28, 2012, the OCC extended the due date for compliance with the IMCR until July 31, 2012. On August 15, 2012, the Bank received notice that the OCC terminated the IMCR as a result of the Bank’s improved capital position from the Conversion (see note 17). As a result, as of June 30, 2012, the most recent notification from the OCC categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the institution’s category.

The Bank’s capital ratios as of June 30, 2012 and 2011, are presented below:

					To Be Well
					Capitalized Under
			For Capital Adequacy		Prompt Corrective
	Actual		Purposes		Action Provisions
	Amount	Ratio	Amount	Ratio	Amount	Ratio
As of June 30, 2012:
Tier I Capital (to Total Adjusted Assets)	$122,273	7.32%	$66,801	4.00	$83,502	5.00%
Tier I Capital (to Risk-weighted Assets)	$122,273	11.18%	$ -	-%	$65,634	6.00%
Total Risk-based Capital (to Risk-
weighted Assets)	$136,216	12.45%	$87,512	8.00%	$109,390	10.00%

As of June 30, 2011:
Tier I Capital (to Total Adjusted Assets)	$134,884	8.40%	$65,646	4.00%	$80,244	5.00%
Tier I Capital (to Risk-weighted Assets)	$134,884	11.19%	$ -	-%	$72,345	6.00%
Total Risk-based Capital (to Risk-
weighted Assets)	$150,148	12.45%	$98,566	8.00%	$120,574	10.00%

A reconciliation of total equity capital under US GAAP and regulatory capital amounts follows:

	June 30,
	2012	2011
Total equity capital under US GAAP	$172,485	$167,769
Accumulated other comprehensive (income) loss, net of tax	(182)	8
Investment in nonincludable subsidiary	(898)	(738)
Disallowed deferred tax assets	(48,927)	(31,819)
Other	(205)	(336)
Tier I Capital	122,273	134,884
Allowable portion of allowance for loan losses	13,943	15,264
Total Risk-based Capital	$136,216	$150,148

- Definition

The entire disclosure for banks, savings institutions, and credit unions, for regulatory capital requirements imposed by the Federal Reserve System (FRB), the Federal Deposit Insurance Corporation (FDIC), the Office of Thrift Supervision (OTS) or for any state imposed capital requirements, as applicable. The disclosure may include (1) a description of regulatory capital requirements (a) for capital adequacy purposes and (b) established by the prompt corrective action provisions of Section 38 of the Federal Depository Insurance Act; (2) the actual or possible material effects of noncompliance with such requirements; (3) whether the entity is in compliance with the regulatory capital requirements including (a) required and actual ratios and amounts of Tier 1 leverage, Tier 1 risk-based, and total risk-based capital, tangible capital (for savings institutions), and Tier 3 capital for market risk (for certain banks and bank holding companies), (b) factors that may significantly affect capital adequacy; (4) the prompt corrective action category in which the entity was classified as of its most recent notification; (5) whether management believes any conditions or events since notification have changed the entity's category. Also may include additional information that might be disclosed in situations where substantial doubt about the entity's ability to continue as a going concern for a reasonable period of time.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 505
-Section 50
-Paragraph 1G
-URI http://asc.fasb.org/extlink&oid=7881181&loc=SL5958577-112826

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 505
-Section 50
-Paragraph 1C
-URI http://asc.fasb.org/extlink&oid=7881181&loc=SL5958572-112826

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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-URI http://asc.fasb.org/extlink&oid=7881181&loc=d3e65071-112826

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 505
-Section 50
-Paragraph 1E
-URI http://asc.fasb.org/extlink&oid=7881181&loc=SL5958574-112826

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 505
-Section 50
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-URI http://asc.fasb.org/extlink&oid=7881181&loc=SL5958569-112826

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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-Section 50
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-URI http://asc.fasb.org/extlink&oid=7881181&loc=SL5958570-112826

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 505
-Section 50
-Paragraph 1D
-URI http://asc.fasb.org/extlink&oid=7881181&loc=SL5958573-112826

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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-URI http://asc.fasb.org/extlink&oid=7881181&loc=SL5958575-112826

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Audit and Accounting Guide (AAG)
-Number AAG-DEP
-Paragraph 15, 16, 17
-IssueDate 2006-05-01
-Chapter 17
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

+ Details

Fair Value of Financial Instruments

12 Months Ended

Jun. 30, 2012

Notes

Fair Value of Financial Instruments

15. Fair Value of Financial Instruments

The Bank utilizes fair value measurements to record fair value adjustments to certain assets and to determine fair value disclosures. Securities available for sale are recorded at fair value on a recurring basis. Additionally, from time to time, the Bank may be required to record at fair value other assets on a nonrecurring basis, such as impaired loans. These nonrecurring fair value adjustments typically involve application of lower of cost or market accounting or write-downs of individual assets.

Fair Value Hierarchy The Bank groups assets at fair value in three levels, based on the markets in which the assets are traded and the reliability of the assumptions used to determine fair value. These levels are:

Level 1: Valuation is based upon quoted prices for identical instruments traded in active markets.

Level 2: Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.

Level 3: Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques.

Following is a description of valuation methodologies used for assets recorded at fair value. The Bank does not have any liabilities recorded at fair value.

Investment Securities Available for Sale

Securities available for sale are valued on a recurring basis at quoted market prices where available. If quoted market prices are not available, fair values are based on quoted prices of comparable securities. Level 1 securities include those traded on an active exchange, such as the New York Stock Exchange or U.S. Treasury securities that are traded by dealers or brokers in active over-the-counter markets and money market funds. Level 2 securities include mortgage-backed securities and debentures issued by government sponsored enterprises, municipal bonds, and corporate debt securities.

Loans The Bank does not record loans at fair value on a recurring basis. However, from time to time, a loan is considered impaired and an allowance for loan losses is established. Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are considered impaired. Once a loan is identified as individually impaired, the fair value is estimated using one of several methods, including collateral value, market value of similar debt, enterprise value, liquidation value and discounted cash flows. The Bank reviews all impaired loans each quarter to determine if an allowance is necessary. Those impaired loans not requiring an allowance represent loans for which the fair value of the expected repayments or collateral exceed the recorded investments in such loans.

At June 30, 2012 and June 30, 2011, most of the total impaired loans were evaluated based on the fair value of the collateral. For these collateral dependent impaired loans, the Bank obtains updated appraisals at least annually. These appraisals are reviewed for appropriateness and then discounted for estimated closing costs to determine if an allowance is necessary. As part of the quarterly review of impaired loans, the Bank reviews these appraisals to determine if any additional discounts to the fair value are necessary. If a current appraisal is not obtained, the Bank determines whether a discount is needed to the value from the original appraisal based on the decline in value of similar properties with recent appraisals. Impaired loans where an allowance or partial charge off is established require classification in the fair value hierarchy. The Bank records all impaired loans with an allowance as nonrecurring Level 3.

Real Estate Owned

Real estate owned is considered held for sale and is measured and recorded at the lower of cost or fair value less estimated selling costs. Fair value is based upon independent market prices, appraised value of the collateral or management’s estimation of the value of the collateral. The Bank considers all real estate owned carried at fair value as nonrecurring Level 3.

The following table presents financial assets measured at fair value on a recurring basis:

	June 30, 2012
Description	Total	Level 1	Level 2	Level 3
U.S Government Agencies	$ 6,102	$ -	$ 6,102	$ -
Residential Mortgage-backed Securities of U.S. Government Agencies and Government sponsored Enterprises	25,233	-	25,233	-
Total	$ 31,335	$ -	$ 31,335	$ -

	June 30, 2011
Description	Total	Level 1	Level 2	Level 3
U.S Government Agencies	$ 37,404	$ -	$ 37,404	$ -
Residential Mortgage-backed Securities of U.S. Government Agencies and Government sponsored Enterprises	21,612	-	21,612	-
Total	$ 59,016	$ -	$ 59,016	$ -

The following table presents financial assets measured at fair value on a non-recurring basis:

	June 30, 2012
Description	Total	Level 1	Level 2	Level 3
Impaired loans	$ 30,585	$ -	$ -	$ 30,585
Foreclosed real estate	12,093	-	-	12,093
Total	$ 42,678	$ -	$ -	$ 42,678

	June 30, 2011
Description	Total	Level 1	Level 2	Level 3
Impaired loans	$ 34,091	$ -	$ -	$ 34,091
Foreclosed real estate	13,188	-	-	13,188
Total	$ 47,279	$ -	$ -	$ 47,279

Quantitative information about Level 3 fair value measurements are in the table below:

	Fair Value at	Valuation	Unobservable
	June 30, 2012	Techniques	Input	Range
Nonrecurring measurements:
Impaired loans, net	$30,585	Discounted Appraisals	Collateral discounts	5% - 40%
Foreclosed real estate	12,093	Discounted Appraisals	Collateral discounts	10% - 15%

The stated carrying value and estimated fair value amounts of financial instruments as of June 30, 2012 and 2011, are summarized below:

	June 30, 2012
	Carrying	Fair
	Value	Value	Level 1	Level 2	Level 3
Cash and interest-bearing deposits	$224,801	$224,801	$224,801	$-	$ -
Certificates of deposit in other banks	108,010	108,010	-	108,010	-
Securities available for sale	31,335	31,335	-	31,335	-
Loans, net	1,204,732	1,155,429	-	1,105,974	49,455
Loans held for sale	10,787	10,949	-	10,949	-
Federal Home Loan Bank stock	6,300	6,300	6,300	-	-
Accrued interest receivable	6,008	6,008	-	6,008	-
Noninterest-bearing and NOW deposits	230,683	230,683	-	230,683	-
Money market accounts	257,865	257,865	-	257,865	-
Savings accounts	347,669	347,669	-	347,669	-
Certificates of deposit	629,958	634,379	-	634,379	-
Other borrowings	22,265	24,998	-	24,998	-
Accrued interest payable	242	242	-	242	-

	June 30, 2011
	Carrying	Fair
	Value	Value	Level 1	Level 2	Level 3
Cash and interest-bearing deposits	$34,671	$34,671	$34,671	$ -	$ -
Certificates of deposit in other banks	118,846	118,846	-	118,846	-
Securities available for sale	59,016	59,016	-	59,016	-
Loans, net	1,276,377	1,263,036	-	1,228,945	34,091
Loans held for sale	4,570	4,639	-	4,639	-
Federal Home Loan Bank stock	9,630	9,630	9,630	-	-
Accrued interest receivable	7,119	7,119	-	7,119	-
Noninterest-bearing and NOW deposits	203,964	203,964	-	203,964	-
Money market accounts	247,010	247,010	-	247,010	-
Savings accounts	75,921	75,921	-	75,921	-
Certificates of deposit	737,690	751,100	-	751,100	-
Other borrowings	145,278	152,141	-	152,141	-
Accrued interest payable	446	446	-	446	-

The Bank had off-balance sheet financial commitments, which include approximately $213,979 and $240,756 of commitments to originate loans, undisbursed portions of interim construction loans, and unused lines of credit at June 30, 2012 and June 30, 2011 (see Note 13). Since these commitments are based on current rates, the carrying amount approximates the fair value.

Estimated fair values were determined using the following methods and assumptions:

Cash and interest-bearing deposits – The stated amounts approximate fair values as maturities are less than 90 days.

Certificates of deposit in other banks – The stated amounts approximate fair values.

Securities available for sale and investment securities – Fair values are based on quoted market prices where available. If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments.

Loans, net – Fair values for loans are estimated by segregating the portfolio by type of loan and discounting scheduled cash flows using current market interest rates for loans with similar terms and credit quality. A prepayment assumption is used as an estimate of the portion of loans that will be repaid prior to their scheduled maturity. Both the carrying value and estimated fair value amounts are shown net of the allowance for loan losses.

Loans held for sale - The fair value of loans held for sale is determined by outstanding commitments from investors on a “best efforts” basis or current investor yield requirements, calculated on the aggregate loan basis.

Federal Home Loan Bank Stock – No ready market exists for this stock and it has no quoted market value. However, redemption of this stock has historically been at par value. Accordingly, cost is deemed to be a reasonable estimate of fair value.

Deposits – Fair values for demand deposits, money market accounts, and savings accounts are the amounts payable on demand as of June 30, 2012 and 2011. The fair value of certificates of deposit is estimated by discounting the contractual cash flows using current market interest rates for accounts with similar maturities.

Other borrowings – The fair value of advances from the Federal Home Loan Bank is estimated based on current rates for borrowings with similar terms. Fair values for retail repurchase agreements are the amounts payable as of June 30, 2012 and 2011.

Accrued interest receivable and payable – The stated amounts of accrued interest receivable and payable approximate the fair value.

Limitations – Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Bank’s entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Bank’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

Fair value estimates are based on existing on-and-off balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. For example, a significant asset not considered a financial asset is premises and equipment. In addition, tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in any of the estimates.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 820
-SubTopic 10
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=7578670&loc=d3e19207-110258

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Reference 9: http://www.xbrl.org/2003/role/presentationRef
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-Name Statement of Financial Accounting Standard (FAS)
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Reference 10: http://www.xbrl.org/2003/role/presentationRef
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Reference 11: http://www.xbrl.org/2003/role/presentationRef
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Reference 12: http://www.xbrl.org/2003/role/presentationRef
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-Name Statement of Financial Accounting Standard (FAS)
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Reference 13: http://www.xbrl.org/2003/role/presentationRef
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+ Details

Unaudited Interim Financial Information

12 Months Ended

Jun. 30, 2012

Notes

Unaudited Interim Financial Information

16. Unaudited Interim Financial Information

The unaudited statements of income for each of the quarters during the fiscal years ended June 30, 2012 and 2011 are summarized below:

	Three months ended
	June 30, 2012		March 31, 2012		December 31, 2011		September 30, 2011
Interest and dividend income	$	16,388	$	16,648	$	17,248	$	17,207
Interest expense		2,529		2,741		3,129		3,379
Net interest income		13,859		13,907		14,119		13,828
Provision for loan losses		2,000		4,500		3,800		5,300
Net interest income after provision for loan losses		11,859		9,407		10,319		8,528
Noninterest income		2,795		3,908		2,051		1,674
Noninterest expense		13,421		11,598		11,610		10,032
Net income before provision for income taxes		1,233		1,717		760		170
Income tax benefit		(151)		(299)		(83)		(114)
Net income	$	1,384	$	2,016	$	843	$	284

	Three months ended
	June 30, 2011		March 31, 2011		December 31, 2010		September 30, 2010
Interest and dividend income	$	17,507	$	17,554	$	18,895	$	18,131
Interest expense		4,458		4,687		5,396		5,988
Net interest income		13,049		12,867		13,499		12,143
Provision for loan losses		25,200		2,500		11,100		4,000
Net interest income after provision for loan losses		(12,151)		10,367		2,399		8,143
Noninterest income		1,594		1,646		11,664		1,892
Noninterest expense		15,105		12,101		17,215		9,133
Net income before provision for income taxes		(25,662)		(88)		(3,152)		902
Income tax benefit		(8,933)		(730)		(3,458)		(142)
Net income	$	(16,729)	$	642	$	306	$	1,044

- Definition

The entire disclosure for the quarterly financial data in the annual financial statements. The disclosure may include a tabular presentation of financial information for each fiscal quarter for the current and previous year, including revenues, gross profit, income or loss before extraordinary items and earnings per share data. It also includes an indication if the information in the note is unaudited, comments on the aggregate effect of year-end adjustments, and an explanation of matters or transactions that affect comparability or are pertinent to an understanding of the information furnished.

+ References + Details

Subsequent Events

12 Months Ended

Jun. 30, 2012

Notes

Subsequent Events

17. Subsequent events

On July 10, 2012, in accordance with a Plan of Conversion (“Plan”) adopted by its Board of Directors and as approved by its depositors and borrower members, the Bank converted from a federally chartered mutual savings bank to a federally chartered stock savings bank, and became the wholly-owned subsidiary of HomeTrust Bancshares, Inc., (the “Company”), a unitary savings and loan holding company registered with the Board of Governors of the Federal Reserve System. In connection with the Conversion, the Company issued an aggregate of 21,160,000 shares of common stock at an offering price of $10.00 per share for gross proceeds of $211.6 million. The Company received $208.4 million in net proceeds from the stock offering of which $104.2 million or 50% of the net proceeds were contributed to the Bank at Conversion.

Pursuant to the Plan, the Bank’s Board of Directors adopted an employee stock ownership plan (“ESOP”), which subscribed for 5% of the common stock sold in the offering or 1,058,000 shares. As provided for in the Plan, the Bank also established a liquidation account in the amount of retained earnings as of December 31, 2011. The liquidation account will be maintained for the benefits of eligible savings account holders as of November 30, 2010 and supplemental eligible account holders as of March 31, 2012 who maintain deposit accounts in the Bank after Conversion. The Conversion will be accounted for as a change in corporate form with the historic basis of the Bank’s assets, liabilities, and equity unchanged as a result.