Note

– Loans

Major classifications of loans were as follows:

	December 31, 2019			June 30, 2019
Commercial	$	76,307		$	80,453
Commercial real estate:
Construction		16,226			16,120
Other		216,224			195,269
1 – 4 Family residential real estate:
Owner occupied		61,424			55,941
Non-owner occupied		15,101			14,517
Construction		4,730			1,931
Consumer		6,461			5,150
Subtotal		396,473			369,381
Net Deferred loan fees and costs		(80	)		(206	)
Allowance for loan losses		(4,095	)		(3,788	)
Net Loans	$	392,298		$	365,387

The following table presents the activity in the allowance for loan losses by portfolio segment for the

three

months ended

December 31, 2019:

					1-4 Family
			Commercial		Residential
			Real		Real
	Commercial		Estate		Estate		Consumer			Total

Allowance for loan losses:
Beginning balance	$	649	$	2,645	$	550	$	65		$	3,909
Provision for loan losses		117		6		64		(2	)		185
Loans charged-off		—		—		—		(7	)		(7	)
Recoveries		—		1		1		6			8
Total ending allowance balance	$	766	$	2,652	$	615	$	62		$	4,095

The following table presents the activity in the allowance for loan losses by portfolio segment for the

six

months ended

December 31, 2019:

					1-4 Family
			Commercial		Residential
			Real		Real
	Commercial		Estate		Estate		Consumer			Total

Allowance for loan losses:
Beginning balance	$	660	$	2,575	$	494	$	59		$	3,788
Provision for loan losses		106		75		120		14			315
Loans charged-off		—		—		—		(23	)		(23	)
Recoveries		—		2		1		12			15
Total ending allowance balance	$	766	$	2,652	$	615	$	62		$	4,095

The following table presents the activity in the allowance for loan losses by portfolio segment for the

three

months ended

December 31, 2018:

						1-4 Family
			Commercial			Residential
			Real			Real
	Commercial		Estate			Estate			Consumer			Total

Allowance for loan losses:
Beginning balance	$	602	$	2,378		$	507		$	51		$	3,538
Provision for loan losses		20		(793	)		(12	)		10			(775	)
Loans charged-off		—		(55	)		—			(14	)		(69	)
Recoveries		—		867			1			7			875
Total ending allowance balance	$	622	$	2,397		$	496		$	54		$	3,569

The following table presents the activity in the allowance for loan losses by portfolio segment for the

six

months ended

December 31, 2018:

						1-4 Family
			Commercial			Residential
			Real			Real
	Commercial		Estate			Estate			Consumer			Total

Allowance for loan losses:
Beginning balance	$	586	$	2,277		$	499		$	60		$	3,422
Provision for loan losses		36		(693	)		(7	)		4			(660	)
Loans charged-off		—		(55	)		—			(21	)		(76	)
Recoveries		—		868			4			11			883
Total ending allowance balance	$	622	$	2,397		$	496		$	54		$	3,569

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of

December 31, 2019.

Included in the recorded investment in loans is

$862

of accrued interest receivable.

					1-4 Family
			Commercial		Residential
			Real		Real
	Commercial		Estate		Estate		Consumer		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	2	$	7	$	—	$	—	$	9
Collectively evaluated for impairment		764		2,645		615		62		4,086
Total ending allowance balance	$	766	$	2,652	$	615	$	62	$	4,095

Recorded investment in loans:
Loans individually evaluated for impairment	$	163	$	638	$	258	$	—	$	1,059
Loans collectively evaluated for impairment		76,253		231,791		81,666		6,486		396,196
Total ending loans balance	$	76,416	$	232,429	$	81,924	$	6,486	$	397,255

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of

June 30, 2019.

Included in the recorded investment in loans is

$891

of accrued interest receivable.

					1-4 Family
			Commercial		Residential
			Real		Real
	Commercial		Estate		Estate		Consumer		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	2	$	7	$	—	$	—	$	9
Collectively evaluated for impairment		658		2,568		494		59		3,779
Total ending allowance balance	$	660	$	2,575	$	494	$	59	$	3,788

Recorded investment in loans:
Loans individually evaluated for impairment	$	174	$	658	$	357	$	—	$	1,189
Loans collectively evaluated for impairment		80,413		210,709		72,591		5,164		368,877
Total ending loans balance	$	80,587	$	211,367	$	72,948	$	5,164	$	370,066

The following table presents information related to unpaid principal balance, recorded investment and interest income associated with loans individually evaluated for impairment by class of loans as of

December 31, 2019

and for the

six

months ended

December 31, 2019:

	As of December 31, 2019						Six Months ended December 31, 2019
	Unpaid				Allowance for Loan		Average		Interest		Cash Basis
	Principal		Recorded		Losses		Recorded		Income		Interest
	Balance		Investment		Allocated		Investment		Recognized		Recognized
With no related allowance recorded:
Commercial real estate:
Other	$	496		421	$	—	$	303	$	87	$	87
1-4 Family residential real estate:
Owner occupied		42		10		—		25		7		7
Non-owner occupied		290		248		—		254		—		—
With an allowance recorded:
Commercial real estate:
Other		215		217		7		219		6		6
Commercial		162		163		2		167		5		5
Total	$	1,205	$	1,059	$	9	$	968	$	105	$	105

The following table presents information related to average recorded investment and interest income associated with loans individually evaluated for impairment by class of loans for the

three

months ended

December 31, 2019:

	Average		Interest		Cash Basis
	Recorded		Income		Interest
	Investment		Recognized		Recognized
With no related allowance recorded:
Commercial real estate:
Other	$	244	$	1	$	1
1-4 Family residential real estate:
Owner occupied		10		—		—
Non-owner occupied		250		—		—
With an allowance recorded:
Commercial real estate:
Other		218		3		3
Commercial		165		2		2
Total	$	887	$	6	$	6

June 30, 2019

and for the

six

months ended

December 31, 2018:

	As of June 30, 2019						Six Months ended December 31, 2018
	Unpaid				Allowance for Loan		Average		Interest		Cash Basis
	Principal		Recorded		Losses		Recorded		Income		Interest
	Balance		Investment		Allocated		Investment		Recognized		Recognized
With no related allowance recorded:
Commercial	$	—	$	—	$	—	$	92	$	3	$	3
Commercial real estate:
Other		580		436		—		1,255		19		19
1-4 Family residential real estate:
Owner occupied		124		93		—		98		—		—
Non-owner occupied		297		264		—		287		—		—
With an allowance recorded:
Commercial real estate:
Other		221		222		7		229		7		7
Commercial		173		174		2		—		—		—
Total	$	1,395	$	1,189	$	9	$	1,961	$	29	$	29

The following table presents information related to average recorded investment and interest income associated with loans individually evaluated for impairment by class of loans for the

three

months ended

December 31, 2018:

	Average		Interest		Cash Basis
	Recorded		Income		Interest
	Investment		Recognized		Recognized
With no related allowance recorded:
Commercial	$	113	$	2	$	2
Commercial real estate:
Other		1,140		8		8
1-4 Family residential real estate:
Owner occupied		97		—		—
Non-owner occupied		283		—		—
With an allowance recorded:
Commercial real estate:
Other		227		4		4
Total	$	1,860	$	14	$	14

The following table presents the recorded investment in non-accrual and loans past due over

days still on accrual by class of loans as of

December 31, 2019

and

June 30, 2019:

	December 31, 2019				June 30, 2019
			Loans Past Due				Loans Past Due
			Over 90 Days				Over 90 Days
			Still				Still
	Non-accrual		Accruing		Non-accrual		Accruing
Commercial real estate:
Other	$	176	$	191	$	436	$	—
1 – 4 Family residential:
Owner occupied		3		—		85		—
Non-owner occupied		248		—		264		—
Total	$	427	$	191	$	785	$	—

Non-accrual loans and loans past due

days still on accrual include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans.

The following table presents the aging of the recorded investment in past due loans as of

December 31, 2019

by class of loans:

	Days Past Due
	30 - 59		60 - 89		90 Days or		Total		Loans Not
	Days		Days		Greater		Past Due		Past Due		Total
Commercial	$	—	$	—	$	—	$	—	$	76,416	$	76,416
Commercial real estate:
Construction		—		—		—		—		16,205		16,205
Other		—		6		191		197		216,027		216,224
1-4 Family residential:
Owner occupied		342		3		—		345		61,670		62,015
Non-owner occupied		—		—		—		—		15,106		15,106
Construction		1		—		—		1		4,802		4,803
Consumer		14		—		—		14		6,472		6,486
Total	$	357	$	9	$	191	$	557	$	396,698	$	397,255

The above table of past due loans includes the recorded investment in non-accrual loans of

in the

days category and

$418

in the loans

not

past due category.

The following table presents the aging of the recorded investment in past due loans as of

June 30, 2019

by class of loans:

	Days Past Due
	30 - 59		60 - 89		90 Days or		Total		Loans Not
	Days		Days		Greater		Past Due		Past Due		Total
Commercial	$	—	$	—	$	—	$	—	$	80,587	$	80,587
Commercial real estate:
Construction		—		—		—		—		16,075		16,075
Other		199		—		—		199		195,093		195,292
1-4 Family residential:
Owner occupied		40		—		80		120		56,347		56,467
Non-owner occupied		—		—		—		—		14,518		14,518
Construction		—		—		—		—		1,963		1,963
Consumer		1		—		—		1		5,163		5,164
Total	$	240	$	—	$	80	$	320	$	369,746	$	370,066

The above table of past due loans includes the recorded investment in non-accrual loans of

$198

in the

days,

$80

in the

days or greater category and

$507

in the loans

not

past due category.

Troubled Debt Restructurings

(TDR)

The Corporation has certain loans that have been modified in order to maximize collection of loan balances. A modified loan is classified as a TDR if, for economic reasons, management grants a concession to the original terms and conditions of the loan to a borrower who is experiencing financial difficulties that it would

not

have otherwise considered.

December 31, 2019

and

June 30, 2019,

the Corporation had

$689

and

$725,

respectively, of loans classified as TDRs which are included in impaired loans above. As of

December 31, 2019,

the Corporation had

not

committed to lend any additional funds to customers with outstanding loans that were classified as troubled debt restructurings. As of

June 30, 2019,

the Corporation had committed to lend an additional

to customers with outstanding loans that were classified as troubled debt restructurings. At

December 31, 2019

and

June 30, 2019,

the Corporation had

of specific reserves allocated to these loans.

During the

three

and

six

-month periods ended

December 31, 2019

and

2018,

there were

loan modifications completed that were classified as troubled debt restructurings. There were

charge offs from troubled debt restructurings that were completed during the

three

and

six

-month periods ended

December 31, 2019

and

2018.

There were

loans classified as troubled debt restructurings for which there was a payment default within

months following the modification during the

three

and

six

-month periods ended

December 31, 2019

and

2018.

A loan is considered in payment default once it is

days contractually past due under the modified terms.

Credit Quality Indicators:

The Corporation categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, current economic trends and other relevant information. The Corporation analyzes loans individually by classifying the loans as to credit risk. This analysis includes loans with a total outstanding loan relationship greater than

$100

and non-homogeneous loans, such as commercial and commercial real estate loans. Management monitors the loans on an ongoing basis for any changes in the borrower’s ability to service their debt and affirms the risk ratings for the loans and leases in their respective portfolio on an annual basis. The Corporation uses the following definitions for risk ratings:

Special Mention.

Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses

may

result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

Substandard.

Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are

not

corrected.

Doubtful.

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

Loans

not

meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans. Loans listed as

not

rated are either less than

$100

or are included in groups of homogeneous loans. These loans are evaluated based on delinquency status, which are disclosed in the previous table within this footnote. Based on the most recent analysis performed, the recorded investment by risk category of loans by class of loans was as follows:

	As of December 31, 2019
			Special						Not
	Pass		Mention		Substandard		Doubtful		Rated
Commercial	$	71,131	$	552	$	4,450	$	—	$	283
Commercial real estate:
Construction		16,205		—		—		—		—
Other		202,871		7,376		4,574		176		1,227
1-4 Family residential real estate:
Owner occupied		2,049		—		22		3		59,941
Non-owner occupied		14,129		195		235		248		299
Construction		456		—		—		—		4,347
Consumer		17		—		—		—		6,469
Total	$	306,858	$	8,123	$	9,281	$	427	$	72,566

As of

June 30, 2019,

and based on the most recent analysis performed, the recorded investment by risk category of loans by class of loans is as follows:

	As of June 30, 2019
			Special						Not
	Pass		Mention		Substandard		Doubtful		Rated
Commercial	$	74,393	$	4,942	$	1,012	$	—	$	240
Commercial real estate:
Construction		16,075		—		—		—		—
Other		179,952		8,071		5,337		436		1,496
1-4 Family residential real estate:
Owner occupied		2,245		—		24		5		54,193
Non-owner occupied		13,413		205		318		263		319
Construction		—		—		—		—		1,963
Consumer		32		—		—		—		5,132
Total	$	286,110	$	13,218	$	6,691	$	704	$	63,343