Loans Receivable

3 Months Ended

Sep. 30, 2022

Loans Receivable [Abstract]

Loans Receivable

3. Loans Receivable

Loans receivable are summarized as follows:

	September 30, 2022			June 30, 2022
	(In Thousands)
Loans Secured by Mortgages on Real Estate
One-to-Four Family Residential	$	126,511		$	120,014
Commercial		141,465			127,589
Multi-Family Residential		28,618			30,411
Land		22,752			22,127
Construction		26,913			27,884
Equity and Second Mortgage		1,630			1,587
Equity Lines of Credit		18,965			17,831
Total Mortgage Loans		366,854			347,443
Commercial Loans		43,868			44,487
Consumer Loans
Loans on Savings Accounts		209			266
Other Consumer Loans		497			439
Total Consumer Other Loans		706			705
Total Loans		411,428			392,635
Less:  Allowance for Loan Losses		(4,844	)		(4,451	)
Unamortized Loan Fees		(211	)		(311	)
Net Loans Receivable	$	406,373		$	387,873

Following is a summary of changes in the allowance for loan losses:

	September 30, 2022			June 30, 2022
	(In Thousands)
Balance - Beginning of Period	$	4,451		$	4,122
Provision for Loan Losses		418			336
Loan Charge-Offs		(26	)		(31	)
Recoveries		1			24
Balance - End of Period	$	4,844		$	4,451

Credit Quality Indicators

The Company segregates loans into risk categories based on the pertinent information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors.  The Company analyzes loans individually by classifying the loans according to credit risk. Once a loan has been classified as substandard or identified as special mention, management will conduct a quarterly review to evaluate the level of deterioration, improvement, and impairment, if any, as well as assign the appropriate risk category. The delinquent loan report is monitored monthly to determine if any loan needs to be evaluated for classification or impairment.

Loans excluded from the scope of the quarterly review process above are generally identified as pass credits until: (a) they become past due; (b) management becomes aware of deterioration in the credit worthiness of the borrower; or (c) the customer contacts the Company for a modification.  In these circumstances, the loan is specifically evaluated for potential classification and the need to allocate reserves or charge-off. All loans greater than 90 days past due are generally placed on nonaccrual status. The Company uses the following definitions for risk ratings:

Pass - Loans classified as pass are well protected by the current net worth or paying capacity of the obligor or by the fair value, less costs to acquire and sell the underlying collateral in a timely manner.

Pass Watch - Loans are considered marginal, meaning some weakness has been identified which could cause future impairment of repayment. However, these relationships are currently protected from any apparent loss by collateral.

Special Mention - Loans identified 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 Bank’s credit position at some future date.

Substandard - Loans classified as substandard are inadequately protected by the current net worth and payment 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 Bank 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.

Loss - This classification includes those loans which are considered uncollectible and of such little value that their continuance as loans is not warranted.  Even though partial recovery may be possible in the future, it is not practical or desirable to defer writing off these basically worthless loans.  Accordingly, these loans are charged-off before period end.

The following tables present the grading of loans, segregated by class of loans, as of September 30, 2022 and June 30, 2022:

September 30, 2022	Pass and Pass Watch		Special Mention		Substandard		Doubtful		Total
	(In Thousands)
Real Estate Loans:
One-to-Four Family Residential	$	124,041	$	348	$	2,122	$	-	$	126,511
Commercial		137,098		2,652		1,715		-		141,465
Multi-Family Residential		28,618		-		-		-		28,618
Land		22,752		-		-		-		22,752
Construction		26,913		-		-		-		26,913
Equity and Second Mortgage		1,630		-		-		-		1,630
Equity Lines of Credit		18,965		-		-		-		18,965
Commercial Loans		43,868		-		-		-		43,868
Consumer Loans		706		-		-		-		706
Total	$	404,591	$	3,000	$	3,837	$	-	$	411,428

June 30, 2022	Pass and Pass Watch		Special Mention		Substandard		Doubtful		Total
	(In Thousands)
Real Estate Loans:
One-to-Four Family Residential	$	117,464	$	352	$	2,198	$	-	$	120,014
Commercial		123,292		2,548		1,749		-		127,589
Multi-Family Residential		30,411		-		-		-		30,411
Land		22,127		-		-		-		22,127
Construction		27,884		-		-		-		27,884
Equity and Second Mortgage		1,587		-		-		-		1,587
Equity Lines of Credit		17,831		-		-		-		17,831
Commercial Loans		44,275		212		-		-		44,487
Consumer Loans		705		-		-		-		705
Total	$	385,576	$	3,112	$	3,947	$	-	$	392,635

Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when contractually due.  Loans that experience insignificant payment delays or payment shortfalls are generally not classified as impaired.  On a case-by-case basis, management determines the significance of payment delays and payment shortfalls, taking into consideration all of the circumstances related to the loan, including the length of the payment delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed.

The following tables present an aging analysis of past due loans, segregated by class of loans, as of September 30, 2022 and June 30, 2022:

September 30, 2022	30-59 Days Past Due		60-89 Days Past Due		90 Days or More		Total Past Due		Current		Total Loans Receivable		Recorded Investment > 90 Days and Accruing
	(In Thousands)
Real Estate Loans:
One-to-Four Family Residential	$	191	$	655	$	1,850	$	2,696	$	123,815	$	126,511	$	-
Commercial		-		-		-		-		141,465		141,465		-
Multi-Family Residential		-		-		-		-		28,618		28,618		-
Land		-		-		-		-		22,752		22,752		-
Construction		-		-		-		-		26,913		26,913		-
Equity and Second Mortgage		-		-		-		-		1,630		1,630		-
Equity Lines of Credit		-		-		-		-		18,965		18,965		-
Commercial Loans		-		208		-		208		43,660		43,868		-
Consumer Loans		-		-		-		-		706		706		-
Total	$	191	$	863	$	1,850	$	2,904	$	408,524	$	411,428	$	-

June 30, 2022	30-59 Days Past Due		60-89 Days Past Due		90 Days or More		Total Past Due		Current		Total Loans Receivable		Recorded Investment > 90 Days and Accruing
	(In Thousands)
Real Estate Loans:
One-to-Four Family Residential	$	-	$	1,923	$	387	$	2,310	$	117,704	$	120,014	$	26
Commercial		-		-		-		-		127,589		127,589		-
Multi-Family Residential		-		-		-		-		30,411		30,411		-
Land		-		-		-		-		22,127		22,127		-
Construction		-		-		-		-		27,884		27,884		-
Equity and Second Mortgage		-		-		-		-		1,587		1,587		-
Equity Lines of Credit		24		-		-		24		17,807		17,831		-
Commercial Loans		-		-		-		-		44,487		44,487		-
Consumer Loans		-		-		-		-		705		705		-
Total	$	24	$	1,923	$	387	$	2,334	$	390,301	$	392,635	$	26

There was no interest income recognized on non-accrual loans during the three months ended September 30, 2022 or the year ended June 30, 2022. If the non-accrual loans had been accruing interest at their original contracted rates, gross interest income that would have been recorded for the three months ended September 30, 2022 and the year ended June 30, 2022 was approximately $2,000 and $54,000, respectively.

The change in the allowance for loan losses by loan portfolio class and recorded investment in loans for the three months ended September 30, 2022 and year ended June 30, 2022 was as follows:

	Real Estate Loans
September 30, 2022	1-4 Family Residential		Commercial		Multi- Family			Land		Construction			Home Equity Loans and Lines of Credit			Commercial Loans			Consumer Loans		Total
								(In Thousands)
Allowance for loan losses:
Beginning Balances	$	1,367	$	1,295	$	357		$	305	$	282		$	197		$	646		$	2	$	4,451
Charge-Offs		-		-		-			-		-			(26	)		-			-		(26	)
Recoveries		1		-		-			-		-			-			-			-		1
Current Provision		139		342		(86	)		13		(8	)		51			(33	)		-		418
Ending Balances	$	1,507	$	1,637	$	271		$	318	$	274		$	222		$	613		$	2	$	4,844
Evaluated for Impairment:
Individually		222		127		-			-		-			-			132			-		481
Collectively		1,285		1,510		271			318		274			222			481			2		4,363
Loans Receivable:
Ending Balances – Total	$	126,511	$	141,465	$	28,618		$	22,752	$	26,913		$	20,595		$	43,868		$	706	$	411,428
Ending Balances:
Evaluated for Impairment:
Individually		2,471		4,159		-			-		-			-			208			-		6,838
Collectively	$	124,040	$	137,306	$	28,618		$	22,752	$	26,913		$	20,595		$	43,660		$	706	$	404,590

	Real Estate Loans
June 30, 2022	1-4 Family Residential			Commercial			Multi- Family		Land			Construction		Other			Commercial Loans		Consumer Loans			Total
									(In Thousands)
Allowance for loan losses:
Beginning Balances	$	894		$	1,630		$	346	$	407		$	160	$	193		$	489	$	3		$	4,122
Charge-Offs		(8	)		(6	)		-		-			-		(17	)		-		-			(31	)
Recoveries		4			-			-		-			-		20			-		-			24
Current Provision		477			(329	)		11		(102	)		122		1			157		(1	)		336
Ending Balances	$	1,367		$	1,295		$	357	$	305		$	282	$	197		$	646	$	2		$	4,451
Evaluated for Impairment:
Individually		106			129			-		-			-		-			38		-			273
Collectively		1,261			1,166			357		305			282		197			608		2			4,178
Loans Receivable:
Ending Balances – Total	$	120,014		$	127,589		$	30,411	$	22,127		$	27,884	$	19,418		$	44,487	$	705		$	392,635
Ending Balances:
Evaluated for Impairment:
Individually		2,550			1,749			-		-			-		-			2,760		-			7,059
Collectively	$	117,464		$	125,840		$	30,411	$	22,127		$	27,884	$	19,418		$	41,727	$	705		$	385,576

The following tables present loans individually evaluated for impairment, segregated by class of loans, as of September 30, 2022 and June 30, 2022:

September 30, 2022	Unpaid Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Average Recorded Investment
	(In Thousands)
Real Estate Loans:
One-to-Four Family Residential	$	2,471	$	161	$	2,310	$	2,471	$	222	$	2,512
Commercial		1,715		-		1,715		1,715		127		1,732
Multi-Family Residential		-		-		-		-		-		-
Land		-		-		-		-		-		-
Construction		-		-		-		-		-		-
Equity and Second Mortgage		-		-		-		-		-		-
Equity Lines of Credit		-		-		-		-		-		-
Commercial Loans		2,652		-		2,652		2,652		132		2,698
Consumer Loans		-		-		-		-		-		-
Total	$	6,838	$	161	$	6,677	$	6,838	$	481	$	6,942

June 30, 2022	Unpaid Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Average Recorded Investment
	(In Thousands)
Real Estate Loans:
One-to-Four Family Residential	$	2,550	$	163	$	2,387	$	2,550	$	106	$	3,032
Commercial		1,749		-		1,749		1,749		129		1,811
Multi-Family Residential		-		-		-		-		-		-
Land		-		-		-		-		-		-
Construction		-		-		-		-		-		-
Equity and Second Mortgage		-		-		-		-		-		-
Equity Lines of Credit		-		-		-		-		-		-
Commercial Loans		2,760		212		2,548		2,760		38		2,880
Consumer Loans		-		-		-		-		-		-
Total	$	7,059	$	375	$	6,684	$	7,059	$	273	$	7,723

The Bank has no commitments to loan additional funds to borrowers whose loans were previously in non-accrual status. As of September 30, 2022, there were no residential loans in the process of foreclosure.

A troubled debt restructuring (“TDR”) is a restructuring of a debt made by the Company to a debtor for economic or legal reasons related to the debtor’s financial difficulties that it would not otherwise consider.  The Company grants the concession in an attempt to protect as much of its investment as possible.

Information about the Company’s TDRs is as follows (in thousands):

	September 30, 2022
	Current		Past Due Greater Than 30 Days		Nonaccrual TDRs		Total TDRs
One-to-Four Family	$	-	$	1,751	$	1,751	$	1,751
Commercial Loans		-		208		-		208

	June 30, 2022
	Current		Past Due Greater Than 30 Days		Nonaccrual TDRs		Total TDRs
One-to-Four Family	$	-	$	1,818	$	1,818	$	1,818
Commercial Loans		212		-		212		212

For purposes of the determination of an allowance for loan losses on these TDRs, as an identified TDR, the Company considers a loss probable on the loan and, as a result, the loan is reviewed for specific impairment in accordance with the Company’s allowance for loan loss methodology.  If it is determined losses are probable on such TDRs, either because of delinquency or other credit quality indicator, the Company establishes specific reserves for these loans.  As of September 30, 2022, there were no commitments to lend additional funds to debtors owing sums to the Company whose terms have been modified in TDRs. The Company had no TDR that has subsequently defaulted in the last 12 months. There was one loan secured by real estate in foreclosure.