10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended December 31, 2016
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from ____________________ to ____________________

Commission File No. 333-202707

Equitable Financial Corp.

(Exact name of registrant as specified in its charter)

Maryland	32-0467709
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)
113 North Locust Street
Grand Island, NE	68801
(Address of principal executive offices)	(Zip Code)

(308) 382-3136

(Registrant’s telephone number, including area code)

N/A

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes ☒ No ☐

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

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes ☐ No  ☒

Shares of the Registrant’s common stock, par value $0.01 per share, 3,477,227 issued and 3,390,702 outstanding as of February 10, 2017.

EQUITABLE FINANCIAL CORP.

FORM 10-Q

INDEX

		Page
Part I.  Financial Information
Item 1.	Financial Statements	3
	Consolidated Balance Sheets	3
	Consolidated Statements of Income	4
	Consolidated Statements of Comprehensive Income	5
	Consolidated Statement of Changes in Stockholders’ Equity	6
	Consolidated Statements of Cash Flows	7
	Notes to Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	41
Item 4.	Controls and Procedures	41
Part II.  Other Information
Item 1.	Legal Proceedings	42
Item 1A.	Risk Factors	42
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	42
Item 3.	Defaults upon Senior Securities	42
Item 4.	Mine Safety Disclosures	42
Item 5.	Other Information	42
Item 6.	Exhibits	43
Signatures		43

2

PART I – FINANCIAL INFORMATION

Item 1.  Financial Statements

Equitable Financial Corp. and Subsidiary

Consolidated Balance Sheets

	(Unaudited)
	December 31, 2016		June 30, 2016
Assets
Cash and due from financial institutions	$	4,467,747	$	2,567,296
Interest-earning deposits		—		12,380,000
		4,467,747		14,947,296
Securities available-for-sale		1,466,399		664,755
Securities held-to-maturity		752,844		781,740
Federal Home Loan Bank stock, at cost		231,100		229,900
Loans, net of allowance for loan losses of $3,238,000 and $2,947,000, respectively		213,322,493		198,309,920
Premises and equipment, net		5,488,753		5,274,461
Foreclosed assets, net		461,847		461,847
Accrued interest receivable		1,335,961		1,147,467
Deferred taxes, net		1,431,007		1,416,093
Other assets		2,223,517		1,853,698
Total assets	$	231,181,668	$	225,087,177
Liabilities and Stockholders’ Equity
Liabilities:
Noninterest-bearing deposits	$	25,880,529	$	24,296,166
Interest-bearing deposits		162,392,981		162,666,186
		188,273,510		186,962,352
Federal funds purchased		3,008,000		—
Federal Home Loan Bank Borrowings		2,000,000		—
Advance payments from borrowers for taxes and insurance		440,676		387,166
Accrued interest payable and other liabilities		1,072,181		1,198,850
Total liabilities		194,794,367		188,548,368
Common stock in ESOP subject to contingent repurchase obligation		658,122		564,723
Stockholders’ equity:
Common stock, $0.01 par value, 25,000,000 shares authorized 3,477,227 shares issued and 3,390,702 and 3,477,157 shares outstanding at December 31, 2016 and June 30, 2016, respectively		33,907		34,771
Additional paid-in capital		26,013,927		26,844,426
Retained earnings		11,814,435		11,239,913
Unearned ESOP shares		(1,176,840)		(1,246,045)
Shares reserved for stock compensation		(274,957)		(338,332)
Accumulated other comprehensive income/(loss) net of tax		(23,171)		4,076
Reclassification of ESOP shares		(658,122)		(564,723)
Total stockholders’ equity		35,729,179		35,974,086
Total liabilities and stockholders’ equity	$	231,181,668	$	225,087,177

See Notes to Consolidated Financial Statements.

3

Equitable Financial Corp. and Subsidiary

Consolidated Statements of Income

(Unaudited)

	For the three months ended				For the six months ended
	December 31, 2016		December 31, 2015		December 31, 2016		December 31, 2015
Interest income:
Loans	$	2,241,684	$	2,035,329	$	4,435,932	$	4,113,552
Securities		10,353		21,007		19,083		60,966
Other		3,983		11,804		16,375		18,599
Total interest income		2,256,020		2,068,140		4,471,390		4,193,117
Interest expense:
Deposits		265,795		258,286		532,180		505,772
Other		624		209		762		444
Total interest expense		266,419		258,495		532,942		506,216
Net interest income		1,989,601		1,809,645		3,938,448		3,686,901
Provision for loan losses		169,109		84,401		321,873		157,345
Net interest income after provision for loan losses		1,820,492		1,725,244		3,616,575		3,529,556
Noninterest income:
Service charges on deposit accounts		150,372		138,077		317,568		285,456
Brokerage fee income		206,790		156,353		385,237		313,538
Gain on sale of loans		255,254		196,863		491,718		413,062
Other loan fees		72,455		72,073		151,303		139,568
Other income		36,431		48,782		68,301		73,284
Total noninterest income		721,302		612,148		1,414,127		1,224,908
Noninterest expense:
Salaries and employee benefits		1,129,214		1,072,049		2,313,000		2,263,748
Director and committee fees		40,393		38,592		80,785		81,050
Data processing fees		146,043		129,858		286,693		257,377
Occupancy and equipment		224,157		212,382		482,530		431,700
Regulatory fees and deposit insurance premium		29,582		48,124		83,199		99,763
Advertising and public relations		47,281		53,675		95,172		115,753
Insurance and bond premiums		23,820		23,912		47,744		51,764
Professional fees		140,415		152,337		257,733		327,634
Supplies, telephone and postage		71,875		68,737		132,090		135,965
Other expenses		157,831		159,568		327,053		297,581
Total noninterest expense		2,010,611		1,959,234		4,105,999		4,062,335
Income before income taxes		531,183		378,158		924,703		692,129
Income tax expense		(221,719)		(156,034)		(350,181)		(195,027)
Net income	$	309,464	$	222,124	$	574,522	$	497,102
Basic earnings per share	$	0.09	$	0.07	$	0.17	$	0.15
Diluted earnings per share	$	0.09	$	0.07	$	0.17	$	0.15

See Notes to Consolidated Financial Statements.

4

Equitable Financial Corp. and Subsidiary

Consolidated Statements of Comprehensive Income

(Unaudited)

	For the three months ended				For the six months ended
	December 31, 2016		December 31, 2015		December 31, 2016		December 31, 2015
Net income	$	309,464	$	222,124	$	574,522	$	497,102
Other comprehensive income:
Unrealized gain/(loss) on securities available-for-sale, net of tax		(26,089)		(1,428)		(27,247)		1,945
Comprehensive income	$	283,375	$	220,696	$	547,275	$	499,047

See Notes to Consolidated Financial Statements.

5

Equitable Financial Corp. and Subsidiary

Consolidated Statement of Changes in Stockholders’ Equity

For the six months ended December 31, 2016

(Unaudited)

									Shares		Accumulated		Amount
									Reserved for		Other		Reclassified
	Common		Additional		Retained		Unearned		Stock		Comprehensive		on ESOP
	Stock		Paid-in Capital		Earnings		ESOP Shares		Compensation		Income		Shares		Total
Balance, June 30, 2016	$	34,771	$	26,844,426	$	11,239,913	$	(1,246,045)	$	(338,332)	$	4,076	$	(564,723)	$	35,974,086
Net Income						574,522										574,522
Other comprehensive loss												(27,247)				(27,247)
Release of 7,932 unearned ESOP shares				2,130				69,205								71,335
Stock compensation expense				(34,236)						63,375						29,139
Stock Buyback		(864)		(798,393)												(799,257)
Reclassification due to release and changes in fair value of common stock in ESOP subject to contingent repurchase obligation of ESOP shares														(93,399)		(93,399)
Balance, December 31, 2016	$	33,907	$	26,013,927	$	11,814,435	$	(1,176,840)	$	(274,957)	$	(23,171)	$	(658,122)	$	35,729,179

See Notes to Consolidated Financial Statements.

6

Equitable Financial Corp. and Subsidiary

Consolidated Statements of Cash Flows

(Unaudited)

	For the six months ended
	December 31, 2016		December 31, 2015
Cash Flows from Operating Activities:
Net income	$	574,522	$	497,102
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		167,890		173,977
Federal Home Loan Bank stock dividends		(1,200)		(1,600)
ESOP expense		71,335		39,290
Stock compensation expense		29,139		44,546
Amortization of deferred loan origination costs, net		259,989		219,645
Amortization of premiums and discounts		6,799		8,066
Gain on sale of loans		(491,718)		(413,062)
Loss on sale of foreclosed assets		—		9,728
Loss on disposal of premises and equipment		1,207		50,293
Provision for loan losses		321,873		157,345
Deferred taxes		(878)		124,994
Loans originated for sale		(19,126,779)		(16,110,552)
Proceeds from sale of loans		19,376,441		16,420,589
Loss on investment in partnership		34,832		21,000
Changes in:
Accrued interest receivable		(188,494)		(30,420)
Other assets		(230,088)		(112,188)
Accrued interest payable and other liabilities		(141,669)		(627,614)
Net cash provided by operating activities		663,201		471,139
Cash Flows from Investing Activities:
Net change in loans		(15,511,942)		(11,694,276)
Proceeds from sale of foreclosed assets, net		—		3,000
Proceeds from maturity of time deposits with financial institutions		—		500,000
Securities available-for-sale:
Proceeds from calls and principal repayments		136,838		97,991
Purchases		(985,400)		(469,253)
Securities held-to-maturity:
Proceeds from calls and principal repayments		27,732		2,470,587
Purchase of premises and equipment		(383,389)		(85,046)
Net cash used in investing activities		(16,716,161)		(9,176,997)

(Continued)

7

Equitable Financial Corp. and Subsidiary

Consolidated Statements of Cash Flows (Continued)

(Unaudited)

	For the six months ended
	December 31, 2016		December 31, 2015
Cash Flows from Financing Activities:
Net change in deposits	$	1,311,158	$	11,466,148
Net change in federal funds purchased		3,008,000		—
Proceeds from Federal Home Loan Bank borrowings		2,000,000		—
Net change in advance payments from borrowers for taxes and insurance		53,510		6,582
Stock Buyback		(799,257)		—
Purchase of ESOP Shares		—		(951,912)
Expenses and return of proceeds in advance of offering		—		(2,555,176)
Net cash provided by financing activities		5,573,411		7,965,642
Decrease in cash and cash equivalents		(10,479,549)		(740,216)
Cash and Cash Equivalents:
Beginning		14,947,296		21,512,653
Ending	$	4,467,747	$	20,772,437
Supplemental Cash Flow Information:
Interest paid on deposits and borrowings	$	536,618	$	504,042
Income taxes paid	$	162,879	$	145,156

See Notes to Consolidated Financial Statements.

8

Equitable Financial Corp. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

Note 1.Basis of Presentation

The accompanying consolidated financial statements of Equitable Financial Corp. (the “Company”) and its wholly owned subsidiary Equitable Bank (the “Bank”) have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and in accordance with SEC rules and regulations. Accordingly, the statements do not include all the information and footnotes required by GAAP for complete financial statements. These interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto that were included in the Company’s annual report for the year ended June 30, 2016.  The consolidated balance sheet of the Company as of June 30, 2016 has been derived from the audited consolidated balance sheet of the company as of that date.  All significant intercompany transactions are eliminated in consolidation.  In the opinion of the Company’s management, all adjustments necessary (i) for a fair presentation of the financial statements for the interim periods included herein and (ii) to make such financial statements not misleading have been made and are of a normal and recurring nature. Interim results are not necessarily indicative of results for a full year.

In preparing the financial statements, management is required to make estimates and assumptions that affect the recorded 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 for the period.  Actual results could differ from those estimates.  For further information with respect to significant accounting policies followed by the Company in preparation of the financial statements, refer to the Company’s annual report for the year ended June 30, 2016.  

The Bank is a federally chartered stock savings bank and a member of the Federal Home Loan Bank (“FHLB”) system. The Bank maintains insurance on deposit accounts with the Deposit Insurance Fund of the Federal Deposit Insurance Corporation (“FDIC”).  

Note 2.Stock Conversion

On July 8, 2015, Equitable Financial, MHC, the Company’s former federally chartered mutual holding company, consummated its mutual-to-stock conversion, and the Company consummated its initial stock offering. In the Offering, the Company sold 1,983,160 shares of its common stock, par value $0.01 per share, at $8.00 per share in a subscription offering and community offering, including 118,989 shares, equal to 6.0% of the shares sold in the offering, to the Equitable Bank employee stock ownership plan.

In accordance with applicable federal conversion regulations, at the time of the completion of our mutual-to-stock conversion, we established a liquidation account in an amount equal to the Company’s total equity as of the latest balance sheet date in the final prospectus used in the Conversion. Each eligible account holder or supplemental account holder is entitled to a proportionate share of this liquidation account in the event of a complete liquidation of the Bank, and only in such event. This share will be reduced if the eligible account holder’s or supplemental account holder’s deposit balance falls below the amounts on the date of record as of any June 30 and will cease to exist if the account is closed. The liquidation account will never be increased despite any increase after Conversion in the related deposit balance.

Following completion of the Conversion, the Bank may not declare, pay a dividend on, or repurchase any of its capital stock of the Bank, if the effect thereof would cause retained earnings to be reduced below the liquidation account amount or regulatory capital requirements.

Note 3.New Accounting Pronouncements

In January 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities. The amendments in this Update address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The amendments in this Update are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. This ASU is not expected to have a material impact on the Company’s consolidated financial statements.

9

Equitable Financial Corp. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

On February 25, 2016, the FASB issued ASU 2016-02, intended to improve financial reporting about leasing transactions. The ASU is effective for the Company with the interim period beginning January 1, 2019. We are currently evaluating the effect of this proposal to our financial statements.

In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting. The purpose of this Update is to simplify the accounting for share-based payment award transactions. ASU 2016-09 is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. This ASU is not expected to have a material impact on the Company’s consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments. The purpose of this Update is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity. The Update replaces the current incurred loss methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. This ASU is expected to have an impact on the Company’s consolidated financial statements. The Company is currently evaluating the effect this will have on its financial statements.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows; Classification of Certain Cash Receipts and Cash Payments.  The purpose of this Update is to address existing diversity in practice related to specific cash flow issues.  This Update will be effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years.  The Company does not expect this ASU to have a material impact on the Company’s consolidated financial statements.

In October 2016, the FASB issued ASU 2016-16, Intra-Entity Transfers of Assets Other Than Inventory.  The purpose of this Update is to improve the accounting for income tax consequences of intra-entity transfers of assets other than inventory.  The Company does not expect this ASU to have a material impact on the Company’s consolidated financial statements.

Note 4.Securities

The fair value of securities available-for-sale and the related gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) are as follows:

			Gross		Gross
	Amortized		Unrealized		Unrealized
December 31, 2016	Cost		Gains		Losses		Fair Value
U.S. Government-sponsored agencies securities	$	985,693	$	—	$	(31,926)	$	953,767
Residential mortgage-backed securities		515,814		—		(3,182)		512,632
	$	1,501,507	$	—	$	(35,108)	$	1,466,399

			Gross		Gross
	Amortized		Unrealized		Unrealized
June 30, 2016	Cost		Gains		Losses		Fair Value
Residential mortgage-backed securities	$	658,579	$	6,176	$	—	$	664,755

10

Equitable Financial Corp. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

The carrying amount, unrecognized gross gains and losses, and fair value of securities held-to-maturity are as follows:

			Gross		Gross
	Amortized		Unrealized		Unrealized
December 31, 2016	Cost		Gains		Losses		Fair Value
Residential mortgage-backed securities	$	152,183	$	11,381	$	—	$	163,564
Municipal securities		600,661		—		(483)		600,178
	$	752,844	$	11,381	$	(483)	$	763,742

			Gross		Gross
	Amortized		Unrealized		Unrealized
June 30, 2016	Cost		Gains		Losses		Fair Value
Residential mortgage-backed securities	$	180,035	$	15,281	$	—	$	195,316
Municipal securities		601,705		4,093		—		605,798
	$	781,740	$	19,374	$	—	$	801,114

Securities available-for-sale and held-to-maturity consist of investments in bonds securitized by U.S. Government sponsored agencies, local municipal securities and mortgage-backed securities securitized by the Government National Mortgage Association.

The contractual maturities of the residential mortgage-backed securities at December 31, 2016 are not disclosed because the securities are not due at a single maturity date.  Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Approximately $400,000 in municipal securities will mature in the year ending June 30, 2019 with the remaining balance maturing in the year ending June 30, 2020.  Approximately $985,000 of U.S. Government sponsored agency bonds will mature in the year ending June 30, 2023.

There were no sales of securities for the six months ended December 31, 2016 and 2015.

The duration of gross unrealized losses is not disclosed as such amounts are immaterial to the consolidated financial statements. The Company has not recognized other-than-temporary impairment on any securities for the six months ended December 31, 2016 and 2015.

Note 5.Loans

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off are stated at their outstanding unpaid principal balances, less an allowance for loan losses, premiums and discounts on loans purchased, and net deferred loan fees/costs. Interest income on loans is recognized over the term of the loan and is calculated using the simple interest method on principal amounts outstanding. Direct loan origination fees and costs are generally being deferred and the net amounts amortized as an adjustment of the related loan's yield. The Company generally amortizes these amounts over the contractual life. Direct loan origination fees and costs related to loans sold to unrelated third parties are recognized as income or expense in the current consolidated statement of income.

The Company’s portfolio segments are as follows:

· Commercial

· Agricultural

· Residential real estate

· Other

The Company’s classes of loans are as follows:

· Commercial – operating

11

Equitable Financial Corp. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

· Commercial – real estate

· Agricultural – operating

· Agricultural – real estate

· Residential real estate – 1-4 family

· Residential real estate – home equity

· Other – construction and land

· Other – consumer

Loans are as follows:

	December 31, 2016		June 30, 2016
Commercial:
Operating	$	17,483,861	$	15,355,676
Real estate		70,692,064		67,698,929
Agricultural:
Operating		23,829,863		22,942,560
Real estate		29,837,096		24,965,541
Residential real estate:
1-4 family		42,573,310		40,309,797
Home equity		10,584,086		12,644,624
Other:
Construction and land		17,080,113		13,210,393
Consumer		3,865,950		3,566,917
Total loans		215,946,343		200,694,437
Deferred loan origination costs, net		614,150		562,483
Allowance for loan losses		(3,238,000)		(2,947,000)
		(2,623,850)		(2,384,517)
Loans, net	$	213,322,493	$	198,309,920

For all portfolio segments, the allowance for loan losses is maintained at the level considered adequate by management of the Company to provide for losses that are probable. The allowance is increased by provisions charged to operating expense and reduced by net charge-offs. Subsequent recoveries, if any, are credited to the allowance. In determining the adequacy of the allowance balance, the Company makes continuous evaluations of the loan portfolio and related off-balance sheet commitments, considers current economic conditions, historical loan loss experience, review of specific problem loans and other factors.

Changes in the allowance for loan losses, by portfolio segment are summarized as follows:

					Residential
	Commercial		Agricultural		Real Estate		Other		Total
	For the three months ended December 31, 2016
Balance, beginning	$	1,393,510	$	802,000	$	617,000	$	243,000	$	3,055,510
Provision charged to expense		59,608		46,000		17,252		46,249		169,109
Recoveries		14,882		—		842		238		15,962
Loans charged off		—		—		(94)		(2,487)		(2,581)
Balance, ending	$	1,468,000	$	848,000	$	635,000	$	287,000	$	3,238,000

12

Equitable Financial Corp. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

					Residential
	Commercial		Agricultural		Real Estate		Other		Total
	For the three months ended December 31, 2015
Balance, beginning	$	1,140,000	$	726,000	$	669,000	$	149,000	$	2,684,000
Provision charged to expense		36,906		22,000		2,775		22,720		84,401
Recoveries		49,358		—		225		1,002		50,585
Loans charged off		(1,264)		—		—		(722)		(1,986)
Balance, ending	$	1,225,000	$	748,000	$	672,000	$	172,000	$	2,817,000

					Residential
	Commercial		Agricultural		Real Estate		Other		Total
	For the six months ended December 31, 2016
Balance, beginning	$	1,337,000	$	738,000	$	655,000	$	217,000	$	2,947,000
Provision charged to expense		156,311		110,000		(20,973)		76,535		321,873
Recoveries		22,556		—		1,067		1,202		24,825
Loans charged off		(47,867)		—		(94)		(7,737)		(55,698)
Balance, ending	$	1,468,000		848,000		635,000		287,000	$	3,238,000

					Residential
	Commercial		Agricultural		Real Estate		Other		Total
	For the six months ended December 31, 2015
Balance, beginning	$	1,124,000	$	697,000	$	644,000	$	118,000	$	2,583,000
Provision charged to expense		27,554		51,000		27,316		51,475		157,345
Recoveries		74,710		—		684		4,394		79,788
Loans charged off		(1,264)		—		—		(1,869)		(3,133)
Balance, ending	$	1,225,000		748,000		672,000		172,000	$	2,817,000

For commercial loans, agricultural loans, and construction and land loans the allowance for estimated losses on loans consists of specific and general components.

The specific component relates to loans that are classified as impaired, as defined below. For those loans that are classified as impaired, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan.

For commercial loans, agricultural loans, and construction and land loans, a loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as 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 record and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a case-by-case basis by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent.

The general component consists of quantitative and qualitative factors and covers non-impaired loans. The quantitative factors are based on historical charge-off experience. The qualitative factors are determined based on an assessment of internal and/or external influences on credit quality that are not fully reflected in the historical loss data. The Company’s credit quality indicator for all loans excluding commercial loans is past due or performance status.  The Company’s credit quality indicator for commercial loans is internal risk ratings.

13

Equitable Financial Corp. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

For residential real estate loans and consumer and other loans, these large groups of smaller balance homogenous loans are collectively evaluated for impairment. In estimating the allowance for loan losses for these loans, the Company applies quantitative and qualitative factors on a portfolio segment basis. Quantitative factors are based on historical charge-off experience and qualitative factors are based on an assessment of internal and/or external influences on credit quality that are not fully reflected in the historical loss data. Accordingly, the Company generally does not separately identify individual residential real estate loans and/or consumer loans for impairment disclosures, unless such loans are the subject of a restructuring agreement due to financial difficulties of the borrower.

Troubled debt restructures are considered impaired loans and are subject to the same allowance methodology as described above for impaired loans by portfolio segment.

The allowance for loan losses, by impairment evaluation and portfolio segment is summarized as follows:

					Residential
	Commercial		Agricultural		Real Estate		Other		Total
	December 31, 2016
Allowance for loans individually evaluated for impairment	$	11,626	$	13,857	$	24,598	$	—	$	50,081
Allowance for loans collectively evaluated for impairment		1,456,374		834,143		610,402		287,000		3,187,919
	$	1,468,000	$	848,000	$	635,000	$	287,000	$	3,238,000
Loans individually evaluated for impairment	$	970,493	$	873,661	$	3,656,124	$	25,623	$	5,525,901
Loans collectively evaluated for impairment		87,205,432		52,793,298		49,501,272		20,920,440		210,420,442
	$	88,175,925	$	53,666,959	$	53,157,396	$	20,946,063	$	215,946,343

					Residential
	Commercial		Agricultural		Real Estate		Other		Total
	June 30, 2016
Allowance for loans individually evaluated for impairment	$	34,975	$	—	$	17,828	$	—	$	52,803
Allowance for loans collectively evaluated for impairment		1,302,025		738,000		637,172		217,000		2,894,197
	$	1,337,000	$	738,000	$	655,000	$	217,000	$	2,947,000
Loans individually evaluated for impairment	$	227,824	$	885,757	$	3,726,602	$	3,194	$	4,843,377
Loans collectively evaluated for impairment		82,826,781		47,022,344		49,227,819		16,774,116		195,851,060
	$	83,054,605	$	47,908,101	$	52,954,421	$	16,777,310	$	200,694,437

Generally, for all classes of loans, loans are considered past due when contractual payments are delinquent for 31 days or greater.

For all classes of loans, loans will generally be placed on nonaccrual status when the loan has become greater than 90 days past due; or when management believes, after considering collection efforts and other factors, that the borrower’s financial condition is such that collection of interest is doubtful.

When a loan is placed on nonaccrual status, payments received will be applied to the principal balance. However, interest may be taken on a cash basis in the event the loan is fully secured and the risk of loss is minimal.  Previously recorded but uncollected interest on a loan placed in nonaccrual status is accounted for as follows:  if the previously accrued but uncollected interest and the principal amount of the loan is protected by sound collateral value based upon a current, independent qualified appraisal, such interest may remain on the Company’s books. If such interest is not so protected, it is considered a loss with the amount thereof recorded in the current year being reversed against current interest income, and the amount recorded in the prior year being charged against the allowance for possible loan losses.

14

Equitable Financial Corp. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

For all classes of loans, nonaccrual loans may be restored to accrual status provided the following criteria are met:

· The loan is current, and all principal and interest amounts contractually due have been made

· The loan is well secured and in the process of collection

· Prospects for future principal and interest payments are not in doubt

The aging in terms of unpaid principal balance of the loan portfolio, by classes of loans is summarized as follows:

							> 90 days
			31-60 days		61-90 days		Past Due				Non accrual
	Current		Past Due		Past Due		(Nonaccrual)		Total		Loans
	December 31, 2016
Classes of loans:
Commercial:
Operating	$	17,360,973	$	37,061	$	85,827	$	—	$	17,483,861	$	114,735
Real estate		69,851,952		801,888		—		38,224		70,692,064		708,695
Agricultural:
Operating		23,829,863		—		—		—		23,829,863		6,848
Real estate		29,837,096		—		—		—		29,837,096		836,509
Residential real estate:
1-4 family		41,268,998		644,411		625,437		34,464		42,573,310		704,394
Home equity		10,556,417		—		9,996		17,673		10,584,086		38,486
Other:
Construction and land		16,851,230		228,883		—		—		17,080,113		—
Consumer		3,860,203		5,747		—		—		3,865,950		2,542
	$	213,416,732	$	1,717,990	$	721,260	$	90,361	$	215,946,343	$	2,412,209

							> 90 days
			31-60 days		61-90 days		Past Due					Non accrual
	Current		Past Due		Past Due		(Nonaccrual)		Total			Loans
	June 30, 2016
Classes of loans:
Commercial:
Operating	$	15,256,328	$	99,348	$	—	$	—	$	15,355,676	$	97,294
Real estate		67,606,842		—		—		92,087		67,698,929		92,087
Agricultural:
Operating		22,318,246		624,314		—		—		22,942,560		6,848
Real estate		24,965,541		—		—		—		24,965,541		877,909
Residential real estate:
1-4 family		38,428,793		1,823,353		23,736		33,915		40,309,797		688,454
Home equity		12,644,624		—		—		—		12,644,624		29,807
Other:
Construction and land		13,210,393		—		—		—		13,210,393		—
Consumer		3,563,221		1,294		—		2,402		3,566,917		7,248
	$	197,993,988	$	2,548,309	$	23,736	$	128,404	$	200,694,437	$	1,799,647

For commercial, agriculture, and construction and land loans, the Company utilizes the following internal risk rating scale:

Highest Quality (rating 1) -- Loans represent a credit extension of the highest quality. Excellent liquidity, management and character in an industry with favorable conditions. High quality financial information, history of strong cash flows and superior collateral including readily marketable assets, prime real estate, U.S. government securities, U.S.

15

Equitable Financial Corp. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

government agencies, highly rated municipal bonds, insured savings accounts, and insured certificates of deposit drawn on high-quality financial institutions.

Good Quality (rating 2) -- Loans which have a sound primary and secondary source of repayment. Strong to good liquidity, management and character in an industry with favorable conditions. Good quality financial information and margins of cash flow coverage is consistently good. Loans may be unsecured, secured by quality (but less readily marketable) assets, high quality real estate or traded stocks, lower grade municipal bonds (which must still be investment grade), and uninsured certificates of deposit on other financial institutions may also be included in this grade.

Acceptable Quality (rating 3) -- Loans where the borrower is a reasonable credit risk and demonstrates the ability to repay the debt from normal business operations. Good liquidity, management and character in an industry that is more sensitive to external factors. Alternative sources of refinancing may be less available in periods of uncertain economic conditions. Term debt is moderate but cash flow margins fall within bank policy guidelines. Quality of financial information is adequate but is not as detailed and sophisticated as information found on higher-grade loans. Secured by business assets that conform to usual lending parameters for margin and eligibility or real estate that is deemed to be of satisfactory quality in an area that may not be prime but still within viable economic centers.

Fair Quality (rating 4) -- Loans where the borrower is a reasonable credit risk but shows a more erratic earnings history (a loss may have been realized in the past four years). Liquidity is limited and primary repayment is susceptible to unfavorable external factors. Industry characteristics are generally stable. Borrower is more highly leveraged with increased levels of term debt. Cash flow margins remain adequate but may not fall within the policy guidelines. Quality of financial information is adequate and interim reporting may be required. Secured by business assets with an adequate collateral margin or real estate that is of fair quality and location. Property may have limited alternative uses and may be considered a "special use" facility.

Special Mention (rating 5) -- Loans in this category have the potential for developing weaknesses that deserve extra attention from the account manager and other management personnel. If the developing weakness is not corrected or mitigated, the ability of the borrower to repay the Company's debt in the future may deteriorate. This grade should not be assigned to loans that bear certain peculiar risks normally associated with the type of financing involved, unless circumstances have caused the risk to increase to a level higher than would have been acceptable when the credit was originally approved. If a loan's actual, not potential, weakness or problems are clearly evident and significant it should generally be graded in one of the following grade categories.

Substandard (rating 6) -- Loans and other credit extensions are considered to be inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. These loans, even if apparently protected by collateral value, have a well-defined weakness or weaknesses that jeopardize the liquidation of debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Loss potential, while existing in the aggregate amount of substandard loans, does not have to exist in individual loans classified substandard.

Doubtful (rating 7) -- Loans and other credit extensions have all the weaknesses inherent in those graded "6" 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. The possibility of loss is extremely high, but because of certain important and reasonably specific pending factors, which may work to the advantage and strengthening of the loan, its classification as an estimated loss is deferred until its more exact status may be determined. Pending factors include: proposed merger, acquisition, or liquidation actions; capital injection; perfecting liens on collateral and refinancing plans. Loans in this classification should be placed in non-accrual status, with collections applied to principal.

Loss (rating 8) -- Loans are considered uncollectible and cannot be justified as a viable asset of the Bank. This classification does not mean the loan has absolutely no recovery value. However, it is not prudent to delay writing off this loan even though partial recovery may be obtained in the future.

16

Equitable Financial Corp. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

For commercial, agricultural and construction and land loans or credit relationships with aggregate exposure greater than $250,000, a loan review is required within 12 months of the most recent credit review. The reviews are completed in enough detail to, at a minimum, validate the risk rating. Additionally, the reviews shall determine whether any documentation exceptions exist, appropriate written analysis is included in the loan file, and whether credit policies have been properly adhered to.

For each class of loans, the following summarizes the unpaid principal balance by credit quality indicator as of:

									Other —
	Commercial —		Commercial —		Agricultural —		Agricultural —		Construction
	Operating		Real Estate		Operating		Real Estate		and Land		Total
	December 31, 2016
Internally assigned risk rating:
Highest Quality (rating 1)	$	—	$	—	$	604,225	$	326,045	$	—	$	930,270
Good Quality (rating 2)		214,078		6,899,308		6,173,404		3,937,872		2,882,261		20,106,923
Acceptable Quality (rating 3)		8,301,675		32,586,766		7,128,873		15,428,309		8,163,286		71,608,909
Fair Quality (rating 4)		8,779,440		28,308,128		7,940,517		9,293,361		6,034,566		60,356,012
Special Mention (rating 5)		—		—		1,960,692		—		—		1,960,692
Substandard (rating 6)		188,668		2,897,862		22,152		851,509		—		3,960,191
Doubtful (rating 7)		—		—		—		—		—		—
Loss (rating 8)		—		—		—		—		—		—
	$	17,483,861	$	70,692,064	$	23,829,863	$	29,837,096	$	17,080,113	$	158,922,997

									Other —
	Commercial —		Commercial —		Agricultural —		Agricultural —		Construction
	Operating		Real Estate		Operating		Real Estate		and Land		Total
	June 30, 2016
Internally assigned risk rating:
Highest Quality (rating 1)	$	—	$	—	$	484,813	$	348,011	$	—	$	832,824
Good Quality (rating 2)		213,824		4,923,002		5,510,208		6,173,479		1,993,567		18,814,080
Acceptable Quality (rating 3)		7,732,341		33,606,696		5,992,063		9,729,301		6,675,761		63,736,162
Fair Quality (rating 4)		7,294,630		28,578,771		9,604,176		7,836,841		4,541,065		57,855,483
Special Mention (rating 5)		—		—		829,738		—		—		829,738
Substandard (rating 6)		114,881		590,460		521,562		877,909		—		2,104,812
Doubtful (rating 7)		—		—		—		—		—		—
Loss (rating 8)		—		—		—		—		—		—
	$	15,355,676	$	67,698,929	$	22,942,560	$	24,965,541	$	13,210,393	$	144,173,099

	Residential RE —		Residential RE —		Other —
	1-4 Family		Home Equity		Consumer		Total
	December 31, 2016
Delinquency status*:
Performing	$	41,077,291	$	10,545,599	$	3,857,661	$	55,480,551
Nonperforming		1,496,019		38,487		8,289		1,542,795
	$	42,573,310	$	10,584,086	$	3,865,950	$	57,023,346

	Residential RE —		Residential RE —		Other —
	1-4 Family		Home Equity		Consumer		Total
	June 30, 2016
Delinquency status*:
Performing	$	37,832,838	$	12,614,817	$	3,558,375	$	54,006,030
Nonperforming		2,476,959		29,807		8,542		2,515,308
	$	40,309,797	$	12,644,624	$	3,566,917	$	56,521,338

17

Equitable Financial Corp. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

*Performing loans are those which are accruing and less than 31 days past due. Nonperforming loans are those on nonaccrual and accruing loans that are greater than or equal to 31 days past due.

At December 31, 2016 and June 30, 2016, the Company had no loans greater than 90 days past due and still accruing.

For commercial, agricultural, and construction and land loans, the Company’s credit quality indicator is internally assigned risk ratings. Each loan is assigned a risk rating upon origination. The risk rating is reviewed every 12 months, at a minimum, and on an as needed basis depending on the specific circumstances of the loan.

For residential real estate and consumer loans, the Company’s credit quality indicator is performance determined by delinquency status. Delinquency status is updated daily by the Company’s loan system.

18

Equitable Financial Corp. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

Loans, by classes of loans, considered to be impaired are summarized as follows:

			Unpaid
	Recorded		Principal		Related
	Investment		Balance		Allowance
	December 31, 2016
Classes of loans:
Impaired loans with no specific allowance recorded:
Commercial:
Operating	$	206,058	$	203,635	$	—
Real estate		670,629		670,471		—
Agricultural:
Operating		22,566		22,152		—
Real estate		428,260		380,453		—
Residential real estate:
1-4 family		3,081,233		3,067,135		—
Home equity		8,731		8,716		—
Other:
Consumer		26,389		25,623		—
		4,443,866		4,378,185		—
Impaired loans with specific allowance recorded:
Commercial:
Operating		58,444		58,163		4,910
Real estate		48,046		38,224		6,716
Agricultural:
Real estate		497,224		471,056		13,857
Residential real estate:
1-4 family		576,891		562,600		23,692
Home equity		17,964		17,673		906
		1,198,569		1,147,716		50,081
Total impaired loans:
Commercial:
Operating		264,502		261,798		4,910
Real estate		718,675		708,695		6,716
Agricultural:
Operating		22,566		22,152		—
Real estate		925,484		851,509		13,857
Residential real estate:
1-4 family		3,658,124		3,629,735		23,692
Home equity		26,695		26,389		906
Other:
Consumer		26,389		25,623		—
	$	5,642,435	$	5,525,901	$	50,081

19

Equitable Financial Corp. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

			Unpaid
	Recorded		Principal		Related
	Investment		Balance		Allowance
	June 30, 2016
Classes of loans:
Impaired loans with no specific allowance recorded:
Commercial:
Operating	$	88,902	$	87,497	$	—
Agricultural:
Operating		8,009		7,848		—
Real estate		925,288		877,909		—
Residential real estate:
1-4 family		3,330,310		3,320,028		—
Home equity		59,336		59,123		—
Other:
Consumer		3,756		3,194		—
		4,415,601		4,355,599		—
Impaired loans with specific allowance recorded:
Commercial:
Operating		48,302		48,240		4,824
Real estate		114,837		92,087		30,151
Residential real estate:
1-4 family		330,997		329,623		16,913
Home equity		17,882		17,828		915
		512,018		487,778		52,803
Total impaired loans:
Commercial:
Operating		137,204		135,737		4,824
Real estate		114,837		92,087		30,151
Agricultural:
Operating		8,009		7,848		—
Real estate		925,288		877,909		—
Residential real estate:
1-4 family		3,661,307		3,649,651		16,913
Home equity		77,218		76,951		915
Other:
Consumer		3,756		3,194		—
	$	4,927,619	$	4,843,377	$	52,803

20

Equitable Financial Corp. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

Impaired loans, for which no allowance has been provided as of December 31, 2016 and June 30, 2016, have adequate collateral, based on management’s current estimates.

	For the three months ended
	December 31, 2016				December 31, 2015
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
	Investment		Recognized		Investment		Recognized
Classes of loans:
Impaired loans with no specific allowance recorded:
Commercial:
Operating	$	190,581	$	2,611	$	275,575	$	4,445
Real estate		335,315		2,375		182,423		—
Agricultural:
Operating		48,507		3,328		8,396		108
Real estate		432,437		135		868,712		13,054
Residential real estate:
1-4 family		3,103,372		36,162		4,053,483		63,044
Home equity		8,936		150		61,772		983
Other:
Consumer		27,440		270		10,571		90
		4,146,588		45,031		5,460,932		81,724
Impaired loans with specific allowance recorded:
Commercial:
Operating		59,569		606		288,647		574
Real estate		47,765		—		—		—
Agricultural:
Operating		—		—		208,128		14,843
Real estate		493,981		—		—		—
Residential real estate:
1-4 family		577,070		3,551		—		—
Home equity		17,944		156		20,218		196
		1,196,329		4,313		516,993		15,613
Total impaired loans:
Commercial:
Operating		250,150		3,217		564,222		5,019
Real estate		383,080		2,375		182,423		—
Agricultural:
Operating		48,507		3,328		216,524		14,951
Real estate		926,418		135		868,712		13,054
Residential real estate:
1-4 family		3,680,442		39,713		4,053,483		63,044
Home equity		26,880		306		81,990		1,179
Other:
Consumer		27,440		270		10,571		90
	$	5,342,917	$	49,344	$	5,977,925	$	97,337

21

Equitable Financial Corp. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

	For the six months ended
	December 31, 2016				December 31, 2015
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
	Investment		Recognized		Investment		Recognized
Classes of loans:
Impaired loans with no specific allowance recorded:
Commercial:
Operating	$	178,100	$	4,115	$	276,207	$	7,130
Real estate		335,315		2,375		183,969		2,331
Agricultural:
Operating		47,927		3,328		9,043		234
Real estate		442,515		363		856,291		14,233
Residential real estate:
1-4 family		3,116,634		75,183		4,032,597		112,943
Home equity		9,137		309		62,416		2,092
Other:
Consumer		27,972		642		11,351		265
		4,157,600		86,315		5,431,874		139,228
Impaired loans with specific allowance recorded:
Commercial:
Operating		53,373		1,122		287,802		1,799
Real estate		47,489		—		—		—
Agricultural:
Operating		—		—		212,537		14,843
Real estate		490,390		—		—		—
Residential real estate:
1-4 family		576,135		5,759		—		—
Home equity		17,923		388		20,178		840
		1,185,310		7,269		520,517		17,482
Total impaired loans:
Commercial:
Operating		231,473		5,237		564,009		8,929
Real estate		382,804		2,375		183,969		2,331
Agricultural:
Operating		47,927		3,328		221,580		15,077
Real estate		932,905		363		856,291		14,233
Residential real estate:
1-4 family		3,692,769		80,942		4,032,597		112,943
Home equity		27,060		697		82,594		2,932
Other:
Consumer		27,972		642		11,351		265
	$	5,342,910	$	93,584	$	5,952,391	$	156,710

The Company's troubled debt restructuring as of December 31, 2016 and June 30, 2016 were not material to the consolidated financial statements.

22

Equitable Financial Corp. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

Note 6.Borrowings

Our borrowings consist primarily of advances from Federal home Loan Bank of Topeka.   At December 31, 2016, we had access to additional Federal Home Loan Bank advances up to $40.3 million. To the extent such borrowings have different terms to repricing than our deposits, they can change our interest rate risk profile.

The following table sets forth information concerning balances and interest rates on our advances at December 31, 2016.  At and during the period ended December 31, 2015 there were no advances outstanding.

	At or For the
		Six Months Ended
	December 31, 2016
	(Dollars in thousands)
Federal Home Loan Bank Advances:
Maximum outstanding at any month end	$	2,000
Balance at the end of period		2,000
Average balance during period		666
Weighted average interest rate at the end of period		0.72	%
Weighted average interest rate during period		0.72	%

Note 7.Regulatory Matters

The Bank is subject to regulatory capital requirements administered by the federal banking agencies.  Failure to meet minimum capital requirements can initiate certain mandatory — and possibly additional discretionary — actions by regulators that, if undertaken, could have a direct material effect on the Company’s consolidated financial statements.  Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices.  The Bank’s capital amounts and classification are also subject to qualitative judgments by regulators about components, risk weightings, and other factors.

The prompt corrective action regulations provide five classifications, including well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition.  If only adequately capitalized, regulatory approval is required to accept brokered deposits.  If undercapitalized, capital distributions are limited, as is asset growth and expansion, and plans for capital restoration are required.  Management believes, as of December 31, 2016, that the Bank meets all capital adequacy requirements to which it is subject.

23

Equitable Financial Corp. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

Actual capital levels and minimum required levels for the Bank were:

									Minimum
									Required to Be
									Well Capitalized
					Minimum Required for				Under Prompt
					Capital Adequacy				Corrective Action
					Purposes				Provisions
(Dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio
December 31, 2016
Total capital (to risk-weighted assets)	$	29,945	13.9	%	$	17,227	8.0	%	$	21,534	10.0	%
Common equity Tier 1 capital (to risk-weighted assets)		27,245	12.7	%		9,690	4.5	%		13,997	6.5	%
Tier 1 (core) capital (to risk-weighted assets)		27,245	12.7	%		12,920	6.0	%		17,227	8.0	%
Tier 1 (core) capital (to adjusted total assets)		27,245	12.0	%		9,108	4.0	%		11,384	5.0	%
June 30, 2016
Total capital (to risk-weighted assets)	$	28,977	14.7	%	$	15,805	8.0	%	$	19,757	10.0	%
Common equity Tier 1 capital (to risk-weighted		26,500	13.4	%		8,891	4.5	%		12,842	6.5	%
Tier 1 (core) capital (to risk-weighted assets)		26,500	13.4	%		11,854	6.0	%		15,805	8.0	%
Tier 1 (core) capital (to adjusted total assets)		26,500	11.6	%		9,114	4.0	%		11,393	5.0	%

Federal regulations require the Bank to comply with a Qualified Thrift Lender (“QTL”) test, which requires that 65% of assets be maintained in housing-related finance and other specified assets.  If the QTL test is not met, limits are placed on growth, branching, new investment, FHLB advances, and dividends or the institution must convert to a commercial bank charter.  Management believes the QTL test has been met.

In July 2013, the Federal Reserve Board and the Federal Deposit Insurance Corporation issued final rules implementing the Basel III regulatory capital framework and related Dodd-Frank Wall Street Reform and Consumer Protection Act changes. The rules revised minimum capital requirements and adjusted prompt corrective action thresholds. The final rules revised the regulatory capital elements, added a new common equity Tier 1 capital ratio, increased the minimum Tier 1 capital ratio requirement, and implemented a new capital conservation buffer. The rules also permitted certain banking organizations to retain, through a one-time election, the existing treatment for accumulated other comprehensive income. Management chose the one-time election to retain the existing treatment. The final rules took effect for community banks on January 1, 2015, subject to a transition period for certain parts of the rules.

Note 8.Employee Benefit Plan

The Company has a 401(k) and profit sharing plan (the “Plans”) covering substantially all employees.  Annual contributions to the Plans are made at the discretion of and determined by the Board of Directors.  Participant interests are vested over a period from one to five years of service.  Contributions were made of $56,532 and $44,138 for the six months ended December 31, 2016 and 2015.

On November 8, 2005, the Company adopted an employee stock ownership plan (the “ESOP”) for the benefit of substantially all employees.  The ESOP borrowed $1,292,620 from the Company and used those funds to acquire 129,262 shares of the Company’s stock in connection with the reorganization at a price of $10.00 per share.

On July 8, 2015, the ESOP borrowed $951,912 from the Company and used the funds to acquire 118,989 shares of the Company’s stock in connection with the stock offering at a price of $8.00 per share.

Shares purchased by the ESOP with the loan proceeds are held in a suspense account and are allocated to ESOP participants on a pro rata basis as principal and interest payments are made by the ESOP to the Company.  The loan is secured by shares purchased with the loan proceeds and will be repaid by the ESOP with funds from the Company’s discretionary contributions to the ESOP and earnings on ESOP assets.  Annual principal and interest payments from the

24

Equitable Financial Corp. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

note dated November 8, 2005 are approximately $145,000 until maturity at December 31, 2019.  Annual principal and interest payments from the note dated July 8, 2015 are approximately $65,000 until maturity at July 8, 2035.

As shares are released from collateral, the Company will report compensation expense equal to the current market price of the shares and the shares will become outstanding for earnings-per-share computations.  Dividends on allocated ESOP shares reduce retained earnings; dividends on unearned ESOP shares reduce accrued interest.  Because participants may require the Company to purchase their ESOP shares upon termination of their employment, the fair value of all earned and allocated ESOP shares may become a liability.

The ESOP has a plan year-end of December 31.  The Company recorded compensation expense of $71,335 and $39,290 for the six months ended December 31, 2016 and 2015, respectively.

Shares held by the ESOP were as follows:

	December 31, 2016		June 30, 2016
Allocated shares		70,244		71,803
Shares allocated to be released		15,864		7,932
Unearned ESOP shares		142,768		150,700
Total ESOP shares		228,876		230,435
Fair value of unearned ESOP shares	$	1,413,403	$	1,252,317
Fair value of allocated shares subject to repurchase obligation	$	658,122	$	564,723

The Company approved the Equitable Financial Corp. 2006 Equity Incentive Plan (“2006 Plan”) in November 2006 and the Equitable Financial Corp. 2016 Equity Incentive Plan (“2016 Plan”) in November 2016. Both plans provide for awards of stock options and restricted stock to officers, employees and directors.  The cost of the plan is based on the fair value of the awards at the grant date.  The fair value of stock is based on the closing price of the Company’s stock on the grant date.  The cost of the awards are being recognized over the five-year vesting periods during which participants are required to provide services in exchange for the awards.  As of December 31, 2016 the 2006 plan has terminated.

The maximum number of shares authorized under the 2016 Plan is 198,316 stock options and 79,326 shares of restricted stock to employees and directors.  As of December 31, 2016 no stock options or restricted stock have been awarded.

Restricted stock awards are accounted for as fixed grants using the fair value of the Company’s stock at the time of the grant.  Unvested restricted stock awards may not be disposed of or transferred during the vesting period.  Restricted stock awards carry with them the right to receive dividends.

25

Equitable Financial Corp. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

The table below represents the restricted stock award activity for the period shown:

	Service-Based		Weighted
	Stock		Grant Date
	Awards		Fair Value
Non-vested at July 1, 2015		43,094		4.02
Conversion for stock offering		3,907		—
Granted		4,900		8.53
Vested		(6,297)		4.93
Non-vested at December 31, 2015		45,604		4.02
Non-vested at July 1, 2016		39,281		4.32
Vested		(7,294)		5.40
Non-vested at December 31, 2016		31,987		4.32

Note 9.Earnings per Share

Amounts reported in earnings per share reflect earnings available to common stockholders for the period divided by the weighted average number of shares of common stock outstanding during the year.  Diluted earnings per share is calculated by dividing earnings available to common stockholders for the period by the sum of the weighted average common shares outstanding and the weighted average dilutive shares.

The following table presents a reconciliation of the components used to compute basic earnings per share for the six months ended December 31, 2016 and 2015:

	For the three months ended				For the six months ended
	December 31,				December 31,
	2016		2015		2016		2015
Weighted average common shares outstanding		3,284,562		3,261,989		3,286,340		3,258,318
Net income available to common stockholders	$	309,464	$	222,124	$	574,522	$	497,102
Basic earnings per share	$	0.09	$	0.07	$	0.17	$	0.15

The following table presents a reconciliation of the components used to compute diluted earnings per share for the six months ended December 31, 2016 and 2015:

	For the three months ended				For the six months ended
	December 31,				December 31,
	2016		2015		2016		2015
Weighted average common shares outstanding		3,284,562		3,261,989		3,286,340		3,258,318
Weighted average of net additional shares from restricted stock awards		17,552		23,567		16,801		24,829
Weighted average number of shares outstanding		3,302,114		3,285,556		3,303,141		3,283,147
Net income available to common stockholders	$	309,464	$	222,124	$	574,522	$	497,102
Diluted earnings per share	$	0.09	$	0.07	$	0.17	$	0.15

26

Equitable Financial Corp. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

Note 10.Fair Value Measurements

The Fair Value Measurements and Disclosures Topic of the FASB Accounting Standards Codification defines fair value, establishes a framework for measuring fair value and requires disclosure of fair value measurements.  The fair value hierarchy set forth in the Topic is as follows:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

There were no transfers between levels during the six months ended December 31, 2016, nor were there any changes in valuation techniques used for assets or liabilities measured at fair value at December 31, 2016.

Assets and liabilities recorded at fair value on a recurring basis: A description of the valuation methodologies used for assets and liabilities measured at fair value on a recurring basis, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below:

Securities Available-for-Sale — Where quoted prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. Level 1 securities would include highly liquid government bonds and exchange traded equities. If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics, or discounted cash flow. Level 2 securities would include U.S. agency securities, mortgage-backed agency securities, obligations of states and political subdivisions and certain corporate, asset backed and other securities. In certain cases where there is limited activity or less transparency around inputs to the valuation, securities are classified within Level 3 of the valuation hierarchy.

The following tables summarize assets and liabilities measured at fair value on a recurring basis as of December 31, 2016 and June 30, 2016, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

	Fair Value Measurement at December 31, 2016 Using
			Quoted Prices in				Significant
			Active Markets for		Significant Other		Unobservable
			Identical Assets		Observable Inputs		Inputs
	Total		Level 1		Level 2		Level 3
Assets
Securities available-for-sale	$	1,466,399	$	—	$	1,466,399	$	—

	Fair Value Measurement at June 30, 2016 Using
			Quoted Prices in				Significant
			Active Markets for		Significant Other		Unobservable
			Identical Assets		Observable Inputs		Inputs
	Total		Level 1		Level 2		Level 3
Assets
Securities available-for-sale	$	664,755	$	—	$	664,755	$	—

Assets and liabilities recorded at fair value on a nonrecurring basis:  A description of the valuation methodologies used for assets and liabilities measured at fair value on a nonrecurring basis, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below.

Impaired Loans — From time to time, a loan is considered impaired and an allowance for credit losses is established.  The specific reserves for collateral dependent impaired loans are based on the fair value of the collateral

27

Equitable Financial Corp. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

less estimated costs to sell. The fair value of collateral was determined based on appraisals. In some cases, adjustments were made to the appraised values due to various factors including age of the appraisal, age of comparables included in the appraisal, and known changes in the market and in the collateral.  When significant adjustments were based on unobservable inputs, the resulting fair value measurement has been categorized as a Level 3 measurement.

Foreclosed Assets — Foreclosed assets are carried at estimated fair value of the property, less disposal costs.  The fair value of the property is determined based upon appraisals.  As with impaired loans, if significant adjustments are made to the appraised value, based on unobservable inputs, the resulting fair value measurement has been categorized as a Level 3 measurement.

At December 31, 2016 and June 30, 2016 the fair value of impaired loans and foreclosed assets were immaterial.

The Financial Instruments Topic of the FASB Accounting Standards Codification requires disclosure of fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate that value.  Fair value is determined under the framework discussed above.  The Topic excludes all nonfinancial instruments from its disclosure requirements.  Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the Company.  The following methods and assumptions used in estimating fair value disclosure for financial instruments are described below:

Cash and due from financial institutions — For cash and due from financial institutions, the current carrying amount is a reasonable estimate of fair value.

Interest-earning deposits — For interest-earning deposits, the current carrying amount is a reasonable estimate of fair value.

Securities — The fair value of securities is determined using quoted prices, when available in an active market.  If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics, or a discounted cash flows model.

Federal Home Loan Bank stock — For restricted equity securities, the carrying value approximates fair value.

Loans, net — The fair value of fixed rate loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities.  The fair value of variable rate loans approximates carrying value.

Deposits — The carrying value of noninterest-bearing deposits approximates fair value.  The fair value of fixed rate deposits is estimated by discounting the future cash flows using the current rates for the same remaining maturities.

Federal funds purchased — For federal funds purchased, the carrying value approximates fair value.  As of June 30, 2016 the Company did not have any federal funds purchased.

Federal Home Loan Bank borrowings — The estimated fair value of fixed rate advances from the FHLB is determined by discounting the future cash flows of existing advances using rates currently available on advances from the FHLB having similar characteristics.  Adjustable rate advances’ carrying value approximates fair value.  As of June 30, 2016 the Company did not have any FHLB borrowings.

Accrued interest — The carrying amounts of accrued interest approximate fair value.

Off-balance sheet items — The fair value of off-balance-sheet items is based on current fees or cost that would be charged to enter into or terminate such arrangements.  There were not considered material and are not presented in the below tables.

28

Equitable Financial Corp. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

The estimated fair value of financial instruments is as follows:

	Fair Value	Carrying		Estimated
December 31, 2016	Hierarchy Level	Amount		Fair Value
Financial assets:
Cash and due from financial institutions	Level 1	$	4,467,747	$	4,468,000
Securities available-for-sale	See previous table		1,466,399		1,466,000
Securities held-to-maturity	Level 2		752,844		764,000
Federal Home Loan Bank stock	Level 1		231,100		231,000
Loans, net	Level 2		213,322,493		211,197,122
Accrued interest receivable	Level 1		1,335,961		1,336,000
Financial liabilities:
Noninterest-bearing deposits	Level 2		25,880,529		25,881,000
Interest-bearing deposits	Level 2		162,392,981		166,145,649
Federal funds purchased	Level 1		3,008,000		3,008,000
Federal Home Loan Bank Borrowings	Level 2		2,000,000		2,000,000
Accrued interest payable and other liabilities	Level 1		1,072,181		1,072,000

	Fair Value	Carrying		Estimated
June 30, 2016	Hierarchy Level	Amount		Fair Value
Financial assets:
Cash and due from financial institutions	Level 1	$	14,947,296	$	14,947,000
Securities available-for-sale	See previous table		664,755		665,000
Securities held-to-maturity	Level 2		781,740		801,000
Federal Home Loan Bank stock	Level 1		229,900		230,000
Loans, net	Level 2		198,309,920		198,000,000
Accrued interest receivable	Level 1		1,147,467		1,147,000
Financial liabilities:
Noninterest-bearing deposits	Level 2		24,296,166		24,296,000
Interest-bearing deposits	Level 2		162,666,186		170,276,000
Accrued interest payable and other liabilities	Level 1		1,198,850		1,199,000

Note 11.Accumulated Other Comprehensive Income/(Loss)

Accumulated other comprehensive income components were as follows:

	December 31, 2016		June 30, 2016
Unrealized holding gains/(losses) on securities available-for-sale	$	(35,108)	$	6,176
Tax expense		11,937		(2,100)
	$	(23,171)	$	4,076

Note 12.Income Taxes

	Three months ended
	December 31, 2016		December 31, 2015
Provision computed at the statutory federal tax rate	$	(180,602)	$	(128,574)
State income taxes, net of federal tax		(15,715)		(12,726)
Release of unearned EOSP shares and stock awards		2,355		6,537
Nondeductible expenses		(2,066)		(2,212)
Other		(25,691)		(19,059)
	$	(221,719)	$	(156,034)

29

Equitable Financial Corp. and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

	Six months ended
	December 31, 2016		December 31, 2015
Provision computed at the statutory federal tax rate	$	(314,399)	$	(235,324)
State income taxes, net of federal tax		(27,755)		(24,712)
Release of unearned EOSP shares and stock awards		5,547		8,483
Nondeductible expenses		(3,714)		(4,202)
Valuation allowance adjustment		—		79,000
Other		(9,860)		(18,272)
	$	(350,181)	$	(195,027)

Note 13.Stock Buyback

The Company announced a stock repurchase plan on October 7, 2016 whereby the Company could repurchase up to 173,857 shares of its common stock, or approximately 5% of the then current outstanding shares.  There were 86,455 shares of the Company’s common stock repurchased by the Company during the six months ended December 31, 2016, and there were 87,402 shares yet to be repurchased under the plan as of December 31, 2016. 

The following table provides information regarding the Company’s purchase of its common stock during the six months ended December 31, 2016:

				Total Number of
				Shares Purchased	Maximum Number of
			Weighted	as Part of Publicly	Shares that May Yet Be
	Total Number of	Average Price		Announced Plans	Purchased Under the
Period	Shares Purchased	Paid Per Share		or Programs	Plans or Programs
10/1/16 - 10/31/16	—	$	—	—	173,857
11/1/16 - 11/30/16	60,000		9.07	60,000	113,857
12/1/16 - 12/31/16	26,455		9.57	86,455	87,402
Total	86,455	$	9.22	86,455

Note

30

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Management’s discussion and analysis of financial condition and results of operations at December 31, 2016 and for the three and six months ended December 31, 2016 and 2015 is intended to assist in understanding the financial condition and results of operations of the Company.  The information contained in this section should be read in conjunction with the unaudited consolidated financial statements and the notes thereto, appearing in Part I, Item 1 of this report.  All references herein to the “Company”, “we”, “us”, or similar terms refer to Equitable Financial Corp. and its subsidiary.

Forward-Looking Statements

This Form 10-Q contains forward-looking statements, which can be identified by the use of words such as “estimate,” “project,” “believe,” “intend,” “anticipate,” “plan,” “seek,” “expect” and words of similar meaning. These forward-looking statements include, but are not limited to:

· Statements of our goals, intentions and expectations;

· Statements regarding our business plans, prospects, growth and operating strategies;

· Statements regarding the quality of our loan and investment portfolios; and

· Estimates of our risks and future costs and benefits.

These forward-looking statements are based on current beliefs and expectations of our management and are inherently subject to significant business, economic, regulatory and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change.

The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements:

· General economic conditions, either nationally or in our market areas, that are worse than expected;

· Competition among depository and other financial institutions;

· Inflation and changes in the interest rate environment that reduce our margins and yields or reduce the fair value of financial instruments;

· Our success in continuing to emphasize agricultural and commercial loans;

· Changes in consumer spending, borrowing and savings habits;

· Our ability to enter new markets successfully and capitalize on growth opportunities;

· Our ability to successfully integrate acquired branches or entities;

· Adverse changes in the securities markets;

· Changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees and capital requirements;

· Changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board, the Securities and Exchange Commission or the Public Company Accounting Oversight Board;

· Changes in our organization, compensation and benefit plans;

· Our ability to retain key employees;

· Changes in the level of government support for housing finance;

31

· Significant increases in our loan losses; and

· Changes in the financial condition, results of operations or future prospects of issuers of securities that we own.

Because of these and other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements.

Overview

We are a Nebraska-based community bank headquartered in Grand Island, Nebraska, with full-service branch offices in Grand Island, Omaha and North Platte, Nebraska.  For most of our history as a community bank, which dates back to 1882, we have operated as a traditional thrift institution, focusing on the origination of one- to four-family residential real estate loans.  In the past 10 years, however, we have expanded our lending focus and now offer a wide range of loans to commercial businesses, agricultural borrowers and consumers – in addition to our traditional residential loan products.  We also invest in securities, primarily U.S. government agency securities, municipal bonds and mortgage-backed securities.  In addition, we offer insurance and investment products and services from locations in Grand Island, Omaha and North Platte.

Our results of operations depend primarily on our net interest income.  Net interest income is the difference between the interest income we earn on our interest-earning assets and the interest we pay on our interest-bearing liabilities.  Our results of operations also are affected by our provisions for loan losses, non-interest income and non-interest expense.  Non-interest income currently consists primarily of service fees, rental income, gain on sales of loans and other income.  Non-interest expense currently consists primarily of expenses related to compensation and employee benefits, occupancy, data processing, advertising and promotion, professional and regulatory, federal deposit insurance premiums, net loss on other real estate owned, write-downs, sales and other operating expenses.  Our results of operations also may be affected significantly by general and local economic and competitive conditions, changes in market interest rates, governmental policies and actions of regulatory authorities.

Critical Accounting Policies

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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.  By their nature, changes in these assumptions and estimates could significantly affect our financial position or results of operations.  Actual results could differ from those estimates.

On April 5, 2012, the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) was signed into law.  The JOBS Act contains provisions that, among other things, reduce certain reporting requirements for qualifying public companies.  As an “emerging growth company” we may delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies.  We intend to take advantage of the benefits of this extended transition period.  Accordingly, our financial statements may not be comparable to companies that comply with such new or revised accounting standards.

Discussed below are selected critical accounting policies that are of particular significance to us:

Allowance for Loan Losses.  The allowance for loan losses is a valuation allowance for probable losses inherent in the loan portfolio.  We evaluate the need to establish allowances against losses on loans on aquarterly basis.  When additional allowances are necessary, a provision for loan losses is charged to earnings.  An allowance for loan losses is maintained at a level considered necessary to provide for loan losses based upon an evaluation of known and inherent losses in the loan portfolio.  In determining the allowance for loan losses, we consider the losses inherent in the loan portfolio and changes in the nature and volume of the loan activities, along with the local economic and real estate market conditions.  We utilize a two-tier approach: (1) establishment of specific reserves for impaired loans, and (2) establishment of a general valuation allowance for the remainder of the loan portfolio.  We maintain a loan review system which allows for a periodic review of the loan portfolio and the early identification of impaired loans.  One- to four-family residential real estate loans and consumer installment loans are considered to be homogeneous and, therefore, are not separately

32

evaluated for impairment unless they are considered troubled debt restructurings.  A loan is considered to be a troubled debt restructuring when, to maximize the recovery of the loan we modify the borrower’s existing loan terms and conditions in response to financial difficulties experienced by the borrower.

In establishing specific reserves for impaired loans, we take into consideration, among other things, payment status, collateral value and the probability of collecting scheduled principal and interest payments when due.   Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired.  Management determines the significance of payment delays and shortfalls on a case-by case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length and reason for the delay, the borrower’s prior payment record and the amount of shortfall in relation to what is owed.  A loan is deemed to be impaired when, based on current information and events, it is probable that we will be unable to collect all amounts when due according to the contractual terms of the loan agreement.  All loans identified as impaired are evaluated individually.  We do not aggregate such loans for evaluation purposes.  Loan impairment is measured based on the present value of expected future cash flows discounted at the loan’s effective interest rate or, as a practical expedient, at the loan’s observable market price or the fair value of the collateral if the loan is collateral dependent.  Payments received on impaired loans are generally applied first to principal and then to interest.

The general valuation allowance is based upon a combination of factors including, but not limited to, actual loan loss rates, composition of the loan portfolio, current economic conditions and management’s judgment.  Regardless of the extent of the analysis of customer performance, portfolio evaluations, trends or risk management processes established, certain inherent, but undetected losses are probable within the loan portfolio.  This is due to several factors including inherent delays in obtaining information regarding a customer’s financial condition or changes in their financial condition, the judgmental nature of individual loan evaluations, collateral assessments and the interpretation of economic trends, and the sensitivity of assumptions utilized to establish allocated allowances for homogeneous groups of loans among other factors.  These other risk factors are continually reviewed and revised by management using relevant information available at the time of the evaluation.

Although we believe that we use the best information available to recognize losses on loans and establish the allowance for loan losses, future additions to the allowance may be necessary based on estimates that are susceptible to change as a result of changes in economic conditions and other factors.  In addition, the OCC, as an integral part of its examination process, periodically reviews the adequacy of our allowance for loan losses.  That agency may require us to recognize additions to the allowance based on its judgments about information available to it at the time of its examination.

Deferred Income Taxes.  We use the asset and liability method of accounting for income taxes.  Under this 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.  If currently available information raises doubt as to the realization of the deferred tax assets, a valuation allowance is established.  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.  We exercise significant judgment in evaluating the amount and timing of recognition of the resulting tax assets and liabilities.  These judgments require us to make projections of future taxable income.  The judgments and estimates we make in determining our deferred tax assets are inherently subjective and are reviewed on a continual basis as regulatory and business factors change.  Any reduction in estimated future taxable income may require us to record a valuation allowance against our deferred tax assets.  A valuation allowance that results in additional income tax expense in the period in which it is recognized would negatively affect earnings.  Management believes, based upon current facts, that it is more likely than not that there will be sufficient taxable income in future years to realize the deferred tax assets.

Fair Value Measurements.  We use our best judgment in estimating fair value measurements of the Bank’s financial instruments; however, there are inherent weaknesses in any estimation technique.  We utilize various assumptions and valuation techniques to determine fair value, including, but not limited to cash flows, discount rates, rate of return, adjustments for nonperformance and liquidity, quoted market prices, and appraisals.  The fair value estimates are not necessarily indicative of the actual amounts that could have been realized in a sale transaction on the dates indicated.  The estimated fair value amounts have not been re-evaluated or updated subsequent to the respective reporting dates.  As such, the estimated fair values subsequent to the respective dates may be different than the amounts reported.

33

Comparison of Financial Condition at December 31, 2016 and June 30, 2016

Assets.  Total assets at December 31, 2016 were $231.2 million, an increase of $6.1 million, or 2.7%, from $225.1 million at June 30, 2016.  This increase is primarily due to an increase in securities available-for-sale and net loans.  Securities available-for-sale increased $801,000, or 120.5% to $1.5 million at December 31, 2016 from $665,000 at June 30, 2016.  This increase was related to the purchase of one security.  Net loans increased $15.0 million, or 7.6%, to $213.3 million at December 31, 2016 from $198.3 million at June 30, 2016.  These increases were offset by a decrease in cash of $10.4 million, or 69.8%, to $4.5 million at December 31, 2016 from $14.9 million at June 30, 2016.  This decrease was a result of deploying cash to fund securities purchased  and loans advanced.

Nonperforming Assets and Allowance for Loan Losses.  We had non-performing assets of $2.9 million, or 1.3% of total assets as of December 31, 2016 and $2.3 million, or 1.0% of total assets as of June 30, 2016.  The allowance for loan losses totaled $3.2 million at December 31, 2016 and $2.9 million at June 30, 2016.  This represents a ratio of the allowance for loan losses to gross loans receivable of 1.5% at December 31, 2016 and June 30, 2016.  The allowance for loan losses to non-performing loans was 110.3% at December 31, 2016 and 126.1% at June 30, 2016. 

Deposits. Total deposits increased $1.3 million, or 0.7%, to $188.3 million at December 31, 2016 from $187.0 million at June 30, 2016.  The increase in total deposits was primarily attributable to a $1.6 million increase in noninterest-bearing demand accounts.

Stockholders’ Equity. Total stockholder’s equity decreased $245,000, or 0.7% to $35.7 million at December 31, 2016 from $36.0 million at June 30, 2016.  The decrease was a result of the stock buyback.  The decrease, offset in part by the net income earned during the six months ended December 31, 2016.

Comparison of Operating Results for the Three Months Ended December 31, 2016 and 2015

General. Net income for the three months ended December 31, 2016 was $309,000. This represented an increase of $87,000, or 39.2%, from net income of $222,000 for the three months ended December 31, 2015.

Interest Income. Total interest income for the three months ended December 31, 2016 increased $188,000, or 9.0%, to $2.3 million, from $2.1 million for the three months ended December 31, 2015.  The increase in interest income was due to an increase in interest income in loans, partially offset by a decrease in interest income on securities and other interest income.

Interest income from loans increased $207,000, or 10.2%, to $2.2 million for the three months ended December 31, 2016 from $2.0 million for the three months ended December 31, 2015.  The increase in interest income from loans was due primarily to an increase of $23.3 million in average loan balances.  Average loan balances were $210.4 million for the three months ended December 31, 2016 compared to $187.1 million for the three months ended December 31, 2015.  The increase in our average loan balance was primarily due to increased loan demand, primarily attributable to improved economic conditions in our market areas and growth in commercial loans originated in all branches.  The average yield on loans decreased 9 basis points to 4.26% during the three months ended December 31, 2016 from 4.35% for the three months ended December 31, 2015.

Other interest income decreased $18,000, or 54.5%, to $15,000 for the three months ended December 31, 2016 from $33,000 for the three months ended December 31, 2015.  This decrease was primarily due to a decrease in average balances of interest-earning deposits and securities. 

Interest Expense.   Interest expense increased $8,000, or 3.1%, to $266,000 for the three months ended December 31, 2016 from $258,000 for the three months ended December 31, 2015.  This increase was due to an increase in interest expense on deposit accounts from increased average balances.  Average balances for the three months ended December 31, 2016 were $163.7 million compared to $162.7 million for the three months ended December 31, 2015. 

Net Interest Income. Net interest income increased $180,000, or 9.9%, to $2.0 million for the three months ended December 31, 2016 from $1.8 million for the three months ended December 31, 2015.  Average interest-earning assets were $215.5 million for the three months ended December 31, 2016 and $206.7 million for the three months ended December 31, 2015, while the average yield was 4.19% and 4.00% for the respective periods.  Our net interest spread increased 18 basis points for the three months ended December 31, 2016 to 3.55% from 3.37% for the three months ended

34

December 31, 2015. Our net interest margin increased 19 basis points to 3.69% for the three months ended December 31, 2016 from 3.50% for the three months ended December 31, 2015.  The ratio of average interest-earning assets to average interest-bearing liabilities increased 320 basis points to 130.3% for the three months ended December 31, 2016 from 127.1% for the three months ended December 31, 2015.

Provision for Loan Losses.   We establish provisions for loan losses, which are charged to operations, at a level management believes is appropriate to absorb probable incurred credit losses in the loan portfolio.  In evaluating the level of the allowance for loan losses, management considers historical loss experience, the types of loans and the amount of loans in the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, and prevailing economic conditions.  This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available or as future events change.  Based on our evaluation of these factors, we recorded a provision for loan losses of $169,000 and $84,000 for the three months ended December 31, 2016 and 2015, respectively.  The provision for loan losses for the three months ended December 31, 2016 and 2015 was primarily a result of loan growth.  The allowance for loan losses was $3.2 million, or 1.5% of loans outstanding at December 31, 2016 compared to $2.9 million, or 1.5% of loans outstanding at December 31, 2015.  The non-performing assets to total assets ratio at December 31, 2016 was 1.3% as compared to 1.0% at December 31, 2015.  The level of the allowance is based on estimates and the ultimate losses may vary from estimates.

Management assesses the allowance for loan losses on a quarterly basis and makes provisions for loan losses as necessary in order to maintain the adequacy of the allowance.  While management uses available information to recognize losses on loans, future loan loss provisions may be necessary based on changes in economic conditions.  In addition, various regulatory agencies, as an integral part of their examination process, periodically review the allowance for loan losses and may request to recognize additional provisions based on their judgment of information available to them at the time of their examination. The allowance for loan losses as of December 31, 2016 was maintained at a level that represents management’s best estimate of inherent losses in the loan portfolio, such losses were both probable and reasonably estimable.

Non-Interest Income. Non-interest income increased $109,000, or 17.8% to $721,000 for the three months ended December 31, 2016 from $612,000 for the three months December 31, 2015.  Increases were recorded in service charges on deposit accounts, brokerage fee income, and gain on sale of loans.  Service charges on deposit accounts increased $12,000, or 8.7% to $150,000 for the three months ended December 31, 2016 from $138,000 for the three months ended December 31, 2015.  Brokerage fee income increased $51,000, or 32.7%, to $207,000 for the three months ended December 31, 2016 from $156,000 for the three months ended December 31, 2015.  Gain on sale of loans increased $58,000, or 29.4%, to $255,000 for the three months ended December 31, 2016 from $197,000 for the three months ended December 31, 2015.  These increases are attributable to increased activity.  Offsetting these increases was a decrease in other income of $13,000, or 26.5%, to $36,000 for the three months ended December 31, 2016 from $49,000 for the three months ended December 31, 2015.

Non-Interest Expense. Total non-interest expense was $2.0 million for the three months ended December 31, 2016 and 2015.  Increases were realized in salaries and employee benefits, directors and committee fees, data processing fees, occupancy and equipment, and supplies, telephone and postage.  Offsetting these increases was a decrease in regulatory fees and deposit insurance premiums, advertising and public relations, insurance and bond premiums, and professional fees.

Income Tax Expense. For the three months ended December 31, 2016, income tax expense was $222,000 compared to $156,000 for the three months ended December 31, 2015.  The effective tax rate for the three months December 31, 2016 was 41.8% compared to 41.2% for the three months ended December 31, 2015.     

Comparison of Operating Results for the Six Months Ended December 31, 2016 and 2015

General. Net income for the six months ended December 31, 2016 was $575,000.  This represents an increase of $78,000, or 15.7%, from net income of $497,000 for the six months ended December 31, 2015.

Interest Income. Total interest income for the six months ended December 31, 2016 increased $278,000, or 6.6%, to $4.5 million for the six months ended December 31, 2016 from $4.2 million for the six months ended December 31, 2015.   This increase was attributable to an increase in loan interest income offset in part by a decrease in securities interest income.    

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Interest income from loans increased $323,000, or 7.9%, to $4.4 million for the six months ended December 31, 2016 from $4.1 million for the same period in 2015.  The increase in interest income from loans was due primarily to an increase of $22.4 million in average loan balances.  Average loan balances were $207.8 million for the six months ended December 31, 2016 compared to $185.4 million for the six months ended December 31, 2015.  The increase in our average loan balance was primarily due to increased loan demand, primarily attributable to improved economic conditions in our market areas and growth in commercial loans originated in all branches.  The average yield on loans decreased 17 basis points to 4.27% during the six months ended December 31, 2016 from 4.44% for the six months ended December 31, 2015.

Other interest income decreased $45,000, or 56.3%, to $35,000 for the six months ended December 31, 2016 from $80,000 for the six months ended December 31, 2015.  This decrease was primarily due to a decrease in average balances of interest-earning deposits and securities.  The yield realized on securities also decreased.

Interest Expense.   Interest expense increased $27,000, or 5.3%, to $533,000 for the six months ended December 31, 2016 from $506,000 for the six months ended December 31, 2015.  This increase was due to an increase in interest expense on deposit accounts from increased average balances.  Average balances for the six months ended December 31, 2016 were $163.6 million compared to $156.2 million for the six months ended December 31, 2015. 

Net Interest Income. Net interest income increased $251,000, or 6.8%, to $3.9 million for the six months ended December 31, 2016 from $3.7 million for the six months ended December 31, 2015.  Average interest-earning assets were $214.9 million for the six months ended December 31, 2016 and $202.1 million for the six months ended December 31, 2015, while the average yield was 4.16% and 4.15% for the respective periods.  Our net interest spread increased 1 basis point for the six months ended December 31, 2016 to 3.51% from 3.50% for the six months ended December 31, 2015. Our net interest margin increased 1 basis point to 3.66% for the six months ended December 31, 2016 from 3.65% for the six months ended December 31, 2015.  The ratio of average interest-earning assets to average interest-bearing liabilities increased 130 basis points to 130.7% for the six months ended December 31, 2016 from 129.4% for the six months ended December 31, 2015.

Provision for Loan Losses.   We establish provisions for loan losses, which are charged to operations, at a level management believes is appropriate to absorb probable incurred credit losses in the loan portfolio.  In evaluating the level of the allowance for loan losses, management considers historical loss experience, the types of loans and the amount of loans in the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, and prevailing economic conditions.  This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available or as future events change.  Based on our evaluation of these factors, we recorded a provision for loan losses of $322,000 and $157,000 for the six months ended December 31, 2016 and 2015, respectively.  The provision for loan losses for the six months ended December 31, 2016 and 2015 was primarily a result of loan growth.  The allowance for loan losses was $3.2 million, or 1.5% of loans outstanding at December 31, 2016 compared to $2.9 million, or 1.5% of loans outstanding at December 31, 2015.  The non-performing assets to total assets ratio at December 31, 2016 was 1.2% as compared to 0.9% at December 31, 2015.  The level of the allowance is based on estimates and the ultimate losses may vary from estimates.

Management assesses the allowance for loan losses on a quarterly basis and makes provisions for loan losses as necessary in order to maintain the adequacy of the allowance.  While management uses available information to recognize losses on loans, future loan loss provisions may be necessary based on changes in economic conditions.  In addition, various regulatory agencies, as an integral part of their examination process, periodically review the allowance for loan losses and may request to recognize additional provisions based on their judgment of information available to them at the time of their examination. The allowance for loan losses as of December 31, 2016 was maintained at a level that represents management’s best estimate of inherent losses in the loan portfolio, such losses were both probable and reasonably estimable.

Non-Interest Income. Non-interest income increased $189,000, or 15.4% to $1.4 million for the six months ended December 31, 2016 from $1.2 million for the six months December 31, 2015.  Increases were recorded in service charges on deposit accounts of $33,000, brokerage fee income of $71,000, gain on sale of loans of $79,000 and other loan fees of $11,000.  These increases were related to increased activity in all areas.

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Non-Interest Expense. Total non-interest expense was $4.1 million in the six months ended December 31, 2016 and $4.1 million for the six months ended December 31, 2015.  Increases occurred in salaries and employee benefits, data processing fees, occupancy and equipment and other expenses.  Offsetting these increases were decreases in regulatory fees and deposit insurance premiums, advertising and public relations, insurance and bond premiums, and professional fees.

Income Tax Expense. For the six months ended December 31, 2016 income tax expense was $350,000 compared to $195,000 for the six months ended December 31, 2015.  The effective tax rate for the six months ended December 31, 2016 was 37.8% compared to 28.2% for the six months ended December 31, 2015.  During the six months ended December 31, 2015 a reversal of an income tax valuation allowance was recorded for $79,000.  This caused a decrease in the effective tax rate.  There was no such entry during the six months ended December 31, 2016.

37

Analysis of Net Interest Income

The following table sets forth average balance sheets, average yields and costs and certain other information for the periods indicated.  No tax equivalent adjustments were made.  All average balances are monthly average balances.  Non-accruing loans have been included in the table as loans carrying a zero yield.

	For the Three Months Ended December 31,
	2016					2015
	Average		Interest			Average		Interest
	Outstanding		Earned/			Outstanding		Earned/
	Balance		Paid		Yield/Cost	Balance		Paid		Yield/Cost
	(Dollars in thousands)
Interest-earning assets:
Interest-earning deposits in other financial institutions	$	2,898	$	4	0.55%	$	16,977	$	13	0.31%
Securities		1,943		10	2.06%		2,398		19	3.17%
Loans receivable		210,404		2,241	4.26%		187,143		2,035	4.35%
FHLB common stock		231		1	1.73%		228		1	1.75%
Total interest-earning assets		215,476		2,256	4.19%		206,746		2,068	4.00%
Total noninterest-earning assets		14,536					13,627
Total assets	$	230,012				$	220,373
Interest-bearing liabilities:
Savings accounts	$	15,195	$	9	0.24%	$	17,332	$	10	0.23%
NOW accounts		42,753		39	0.36%		42,517		43	0.40%
Money market accounts		64,294		118	0.73%		57,362		97	0.68%
Certificates of deposit		41,436		100	0.97%		45,453		108	0.95%
Total deposits		163,678		266	0.65%		162,664		258	0.63%
Federal funds purchased		1,003		—	0.00%		—		—	0.00%
FHLB advances		667		—	0.00%		—		—	0.00%
Total interest-bearing liabilities		165,348		266	0.64%		162,664		258	0.63%
Noninterest-bearing demand deposits - checking accounts		26,731					18,623
Other liabilities		1,682					7,342
Total liabilities		193,761					188,629
Stockholders' equity		36,251					31,744
Total liabilities and stockholders' equity	$	230,012				$	220,373
Net interest income			$	1,990				$	1,810
Net interest rate spread					3.55%					3.37%
Net interest-earning assets	$	50,128				$	44,082
Net interest margin					3.69%					3.50%
Average interest-earning assets to average interest-bearing liabilities					130.32%					127.10%

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	For the Six Months Ended December 31,
	2016					2015
	Average		Interest			Average		Interest
	Outstanding		Earned/			Outstanding		Earned/
	Balance		Paid		Yield/Cost	Balance		Paid		Yield/Cost
	(Dollars in thousands)
Interest-earning assets:
Interest-earning deposits in other financial institutions	$	5,220		16	0.61%	$	13,416	$	21	0.31%
Securities		1,669		18	2.16%		3,098		57	3.68%
Loans receivable		207,780		4,436	4.27%		185,388		4,113	4.44%
FHLB common stock		230		1	0.87%		227		2	1.76%
Total interest-earning assets		214,899		4,471	4.16%		202,129		4,193	4.15%
Total noninterest-earning assets		13,849					14,033
Total assets	$	228,748				$	216,162
Interest-bearing liabilities:
Savings accounts	$	15,153	$	19	0.25%	$	13,550	$	16	0.24%
NOW accounts		42,630		81	0.38%		41,578		83	0.40%
Money market accounts		63,736		231	0.72%		54,901		186	0.68%
Certificates of deposit		42,096		202	0.96%		46,150		221	0.96%
Total deposits		163,615		533	0.65%		156,179		506	0.65%
Federal funds purchased		501		—	0.00%		—		—	—
FHLB advances		333		—	0.00%		—		—	—
Total interest-bearing liabilities		164,449		533	0.65%		156,179		506	0.65%
Noninterest-bearing demand deposits - checking accounts		26,385					22,131
Other liabilities		1,699					7,150
Total liabilities		192,533					185,460
Stockholders' equity		36,215					30,702
Total liabilities and stockholders' equity	$	228,748				$	216,162
Net interest income			$	3,938				$	3,687
Net interest rate spread					3.51%					3.50%
Net interest-earning assets	$	50,450				$	45,950
Net interest margin					3.66%					3.65%
Average interest-earning assets to average interest-bearing liabilities					130.68%					129.42%

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Rate/Volume Analysis

The following table presents the dollar amount of changes in interest income and interest expense for major components of interest-earning assets and interest-bearing liabilities.  It distinguishes between the changes related to outstanding balances and those due to the changes in interest rates.  For each category of interest-earning assets and interest-bearing liabilities, information is provided on changes attributable to (i) changes in volume (i.e., changes in volume multiplied by old rate) and (ii) changes in rate (i.e., changes in rate multiplied by old volume).  For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately to the change due to volume and the change due to rate.

	Three Months Ended						Six Months Ended
	December 31, 2016 vs. 2015						December 31, 2016 vs. 2015
	Increase (Decrease)				Total		Increase (Decrease)				Total
	Due to				Increase		Due to				Increase
	Volume		Rate		(Decrease)		Volume		Rate		(Decrease)
	(Dollars in thousands)
Interest-earning assets:
Interest-earning deposits in other financial institutions	$	(15)	$	6	$	(9)	$	(18)	$	13	$	(5)
Securities		(3)		(6)		(9)		(20)		(19)		(39)
FHLB Stock		—		—		—		—		(1)		(1)
Loans receivable		249		(43)		206		485		(162)		323
Total interest-earning assets		231		(43)		188		447		(169)		278
Interest-bearing liabilities:
Savings accounts		(1)		—		(1)		3		—		3
NOW accounts		1		(5)		(4)		2		(4)		(2)
Money market accounts		13		8		21		33		12		45
Certificates of deposit		(9)		1		(8)		(19)		—		(19)
Total interest-bearing liabilities		4		4		8		19		8		27
Change in net interest income	$	227	$	(47)	$	180	$	428	$	(177)	$	251

Liquidity and Capital Resources

We maintain liquid assets at levels we consider adequate to meet our liquidity needs.  Liquid assets, which include cash and cash equivalents and securities available-for-sale, totaled $5.9 million, or 2.6% of total assets at December 31, 2016, as compared to $15.6 million, or 6.9% of total assets, at June 30, 2016.   We adjust our liquidity levels to fund deposit outflows, pay real estate taxes on mortgage loans, repay our borrowings and to fund loan commitments.  We also adjust liquidity as appropriate to meet asset and liability management objectives.

Our primary sources of liquidity are deposits, amortization and prepayment of loans and mortgage-backed securities, maturities of investment securities and other short-term investments, and earnings and funds provided from operations.  While scheduled principal repayments on loans and mortgage-backed securities are a relatively predictable source of funds, deposit flows and loan prepayments are greatly influenced by general interest rates, economic conditions, and competition.  We set the interest rates on our deposits to maintain a desired level of total deposits.  In addition, we invest excess funds in short-term interest-earning investments and other assets, which provide liquidity to meet lending requirements.  Short-term interest-earning deposits with the FHLB of Topeka and Midwest Independent Bank amounted to $240,000 at December 31, 2016 and $12.4 million at June 30, 2016.

A significant portion of our liquidity consists of securities classified as available-for-sale and cash and cash equivalents, which are a product of our operating, investing and financing activities.  Our primary sources of cash are net income, principal repayments on loans and mortgage-backed securities, and increases in deposit accounts, along with advances from the FHLB of Topeka.

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Liquidity management is both a daily and long-term function of business management.  If we require funds beyond our ability to generate them internally, borrowing agreements exist with the FHLB which provides an additional source of funds.

Our cash flows are comprised of three classifications: cash flows from operating activities, investing activities, and financing activities.  Net cash provided by operating activities was $663,000 and $471,000 for the six months ended December 31, 2016 and 2015, respectively.  Net cash used by investing activities, which consists primarily of disbursements for loan originations and the purchase of securities, offset by principal collections on loans, proceeds from sales, calls, and maturities of securities and proceeds from the pay downs on mortgage-backed securities, was $16.7 million and $9.2 million for the six months ended December 31, 2016 and 2015, respectively.  The Company purchased $985,000 and $469,000 of securities classified as available-for-sale during the six months ended December 31, 2016 and 2015, respectively.  For the six months ended December 31, 2016, net cash provided by financing activities was $5.6 million and $8.0 million for the six months ended December 31, 2016 and 2015, respectively.

Off-Balance-Sheet Arrangements.  In the normal course of operations, we engage in a variety of financial transactions that, in accordance with generally accepted accounting principles are not recorded in our financial statements.  These transactions involve, to varying degrees, elements of credit, interest rate and liquidity risk.  Such transactions are used primarily to manage customers’ requests for funding and take the form of loan commitments, unused lines of credit and standby letters of credit.

For the six months ended December 31, 2016, we did not engage in any off-balance sheet transactions, other than loan origination commitments, unused lines of credit and standby letters of credit in the normal course of our lending activities.

Recent Accounting Pronouncements

For information with respect to recent accounting pronouncements that are applicable to the Company, please see Note 3 of the notes to the Company’s consolidated financial statements, beginning on page 9.

Effect of Inflation and Changing Prices

The unaudited consolidated financial statements and related data presented herein have been prepared in accordance with accounting principles generally accepted in the United States of America, which generally require the measurement of financial position and operating results in terms of historical dollars, without considering changes in relative purchasing power over time due to inflation.  Unlike most industrial companies, virtually all of the Company’s assets and liabilities are monetary in nature.  As a result, interest rates generally have a more significant impact on the Company’s performance than does the effect of inflation.  Interest rates do not necessarily move in the same direction or in the same magnitude as the prices of goods and services, because such prices are affected by inflation to a larger extent than interest rates.

Item 3.Quantitative and Qualitative Disclosures About Market Risk.

This item is not applicable because we are a smaller reporting company.

Item 4.Controls and Procedures

As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s principal executive officer and principal financial officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures.  Based on this evaluation, the Company’s principal executive officer and principal financial officer concluded that the Company’s disclosure controls and procedures are effective.  In addition, there have been no changes in the Company’s internal control over financial reporting during the quarter ended December 31, 2016 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II – OTHER INFORMATION

Item 1.Legal Proceedings.

At December 31, 2016, there were no material legal proceedings to which the Company is a party or of which any of its property is subject.  From time to time, the Company is a party to various legal proceedings incident to its business.

Item 1A.Risk Factors.

This item is not applicable because we are a smaller reporting company.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds.

(a) Not applicable.

(b) Not applicable.

(c) The following table sets forth information concerning purchases made by the Company of its common stock for each month in the quarter end December 31, 2016:

				Total Number of
				Shares Purchased	Maximum Number of
			Weighted	as Part of Publicly	Shares that May Yet Be
	Total Number of	Average Price		Announced Plans	Purchased Under the
Period	Shares Purchased	Paid Per Share		or Programs	Plans or Programs
10/1/16 - 10/31/16	—	$	—	—	173,857
11/1/16 - 11/30/16	60,000		9.07	60,000	113,857
12/1/16 - 12/31/16	26,455		9.57	86,455	87,402
Total	86,455	$	9.22	86,455

The Company announced a stock repurchase plan on October 7, 2016 whereby the Company can repurchase up to 173,857 shares of its common stock, or approximately 5% of the then current outstanding shares.

Item 3.Defaults Upon Senior Securities.

None.

Item 4.Mine Safety Disclosures.

Not applicable.

Item 5.Other Information.

None.

42

Item 6.Exhibits.

2.1	Plan of Conversion and Reorganization (Incorporated by reference to Exhibit 2.1 to the Company’s Registration Statement on Form S-1, file no. 333-202707, originally filed on March 12, 2015)
3.1	Articles of Incorporation of Equitable Financial Corp. (Incorporated by reference to Exhibit 3.1 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2015, file no. 001-37489, filed on September 23, 2015)
3.2	Bylaws of Equitable Financial Corp. (Incorporated by reference to Exhibit 3.2 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2015, file no. 001-37489, filed on September 23, 2015)
4	Form of Common Stock Certificate of Equitable Financial Corp.  (Incorporated by reference to Exhibit 4 to the Company’s Registration Statement on Form S-1, file no. 333-202707, originally filed on March 12, 2015, as amended)
31.1	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101	The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2016, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statement of Changes in Stockholders’ Equity, (v) the Consolidated Statements of Cash Flows and (vi) the Notes to Consolidated Financial Statements.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	EQUITABLE FINANCIAL CORP.
Dated: February 10, 2017	By:	/s/ Thomas E. Gdowski
		Thomas E. Gdowski
		President and CEO
Dated:  February 10, 2017	By:	/s/ Darcy M. Ray
		Darcy M. Ray
		CFO

43

EXHIBIT INDEX

Exhibit Number	Description
2.1	Plan of Conversion and Reorganization (Incorporated by reference to Exhibit 2.1 to the Company’s Registration Statement on Form S-1, file no. 333-202707, originally filed on March 12, 2015)
3.1	Articles of Incorporation of Equitable Financial Corp. (Incorporated by reference to Exhibit 3.1 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2015, file no. 001-37489 filed on September 23, 2015)
3.2	Bylaws of Equitable Financial Corp. (Incorporated by reference to Exhibit 3.2 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2015, file no. 001-37489 filed on September 23, 2015)
4	Form of Common Stock Certificate of Equitable Financial Corp.  (Incorporated by reference to Exhibit 4 to the Company’s Registration Statement on Form S-1, file no. 333-202707, originally filed on March 12, 2015, as amended)
31.1	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101	The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2016, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statement of Changes in Stockholders’ Equity, (v) the Consolidated Statements of Cash Flows and (vi) the Notes to Consolidated Financial Statements.

44

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Thomas E. Gdowski, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Equitable Financial Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a. designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c. disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal period that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: February 10, 2017	/s/ Thomas E. Gdowski
		Thomas E. Gdowski
		President and CEO
		(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Darcy M. Ray, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Equitable Financial Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a. designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c. disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal period that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: February 10, 2017	/s/ Darcy M. Ray
		Darcy M. Ray
		CFO
		(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Equitable Financial Corp. (the “Company”) on Form 10-Q for the quarter ended December 31, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Thomas E. Gdowski, President and CEO of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: February 10, 2017	/s/ Thomas E. Gdowski
	Thomas E. Gdowski
	President and CEO
	(Principal Executive Officer)

EX-32.2

Exhibit 32.2 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Equitable Financial Corp. (the “Company”) on Form 10-Q for the quarter ended December 31, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Darcy M. Ray,  Vice President of Finance and Controller of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.1

Dated: February 10, 2017	/s/ Darcy M. Ray
		Darcy M. Ray
		CFO
		(Principal Financial Officer)

XML

Document and Entity Information - shares	6 Months Ended
	Dec. 31, 2016	Feb. 10, 2017
Document and Entity Information
Entity Registrant Name	Equitable Financial Corp.
Entity Central Index Key	0001635626
Document Type	10-Q
Document Period End Date	Dec. 31, 2016
Amendment Flag	false
Current Fiscal Year End Date	--06-30
Entity Current Reporting Status	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		3,390,702
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q2

XML

Consolidated Balance Sheets - USD ($)	Dec. 31, 2016	Jun. 30, 2016
Assets
Cash and due from financial institutions	$ 4,467,747	$ 2,567,296
Interest-earning deposits		12,380,000
Total cash and due from financial institutions and interest-earning deposits	4,467,747	14,947,296
Securities available-for-sale	1,466,399	664,755
Securities held-to-maturity	752,844	781,740
Federal Home Loan Bank stock, at cost	231,100	229,900
Loans, net of allowance for loan losses of $3,238,000 and $2,947,000, respectively	213,322,493	198,309,920
Premises and equipment, net	5,488,753	5,274,461
Foreclosed assets, net	461,847	461,847
Accrued interest receivable	1,335,961	1,147,467
Deferred taxes, net	1,431,007	1,416,093
Other assets	2,223,517	1,853,698
Total assets	231,181,668	225,087,177
Liabilities:
Noninterest-bearing deposits	25,880,529	24,296,166
Interest-bearing deposits	162,392,981	162,666,186
Total deposits	188,273,510	186,962,352
Federal funds purchased	3,008,000
Federal Home Loan Bank borrowings	2,000,000
Advance payments from borrowers for taxes and insurance	440,676	387,166
Accrued interest payable and other liabilities	1,072,181	1,198,850
Total liabilities	194,794,367	188,548,368
Common stock in ESOP subject to contingent repurchase obligation	658,122	564,723
Stockholders’ equity:
Common stock, $0.01 par value, 25,000,000 shares authorized 3,477,227 shares issued and 3,390,702 and 3,477,157 shares outstanding at December 31, 2016 and June 30, 2016, respectively	33,907	34,771
Additional paid-in capital	26,013,927	26,844,426
Retained earnings	11,814,435	11,239,913
Unearned ESOP Shares	(1,176,840)	(1,246,045)
Shares reserved for stock compensation	(274,957)	(338,332)
Accumulated other comprehensive income, net of tax	(23,171)	4,076
Reclassification of ESOP shares	(658,122)	(564,723)
Total stockholders' equity	35,729,179	35,974,086
Total liabilities and stockholders' equity	$ 231,181,668	$ 225,087,177

XML

Consolidated Balance Sheets (Parenthetical) - USD ($)	Dec. 31, 2016	Jun. 30, 2016
Condensed Consolidated Statements of Financial Condition
Allowance for loan losses	$ 3,238,000	$ 2,947,000
Common Stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common Stock, shares authorized	25,000,000	25,000,000
Common Stock, shares issued	3,477,227	3,477,227
Common Stock, shares outstanding	3,390,702	3,477,157

XML

Consolidated Statements of Income - USD ($)	3 Months Ended		6 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015
Interest income:
Loans	$ 2,241,684	$ 2,035,329	$ 4,435,932	$ 4,113,552
Securities	10,353	21,007	19,083	60,966
Other	3,983	11,804	16,375	18,599
Total interest income	2,256,020	2,068,140	4,471,390	4,193,117
Interest expense:
Deposits	265,795	258,286	532,180	505,772
Other	624	209	762	444
Total interest expense	266,419	258,495	532,942	506,216
Net interest income	1,989,601	1,809,645	3,938,448	3,686,901
Provision for loan losses	169,109	84,401	321,873	157,345
Net interest income after provision for loan losses	1,820,492	1,725,244	3,616,575	3,529,556
Noninterest income:
Service charges on deposit accounts	150,372	138,077	317,568	285,456
Brokerage fee income	206,790	156,353	385,237	313,538
Gain on sale of loans	255,254	196,863	491,718	413,062
Other loan fees	72,455	72,073	151,303	139,568
Other income	36,431	48,782	68,301	73,284
Total noninterest income	721,302	612,148	1,414,127	1,224,908
Noninterest expense:
Salaries and employee benefits	1,129,214	1,072,049	2,313,000	2,263,748
Director and committee fees	40,393	38,592	80,785	81,050
Data processing fees	146,043	129,858	286,693	257,377
Occupancy and equipment	224,157	212,382	482,530	431,700
Regulatory fees and deposit insurance premium	29,582	48,124	83,199	99,763
Advertising and public relations	47,281	53,675	95,172	115,753
Insurance and surety bond premiums	23,820	23,912	47,744	51,764
Professional fees	140,415	152,337	257,733	327,634
Supplies, telephone and postage	71,875	68,737	132,090	135,965
Other expenses	157,831	159,568	327,053	297,581
Total noninterest expense	2,010,611	1,959,234	4,105,999	4,062,335
Income before income taxes	531,183	378,158	924,703	692,129
Income tax expense	(221,719)	(156,034)	(350,181)	(195,027)
Net income	$ 309,464	$ 222,124	$ 574,522	$ 497,102
Basic earnings per share (in dollars per share)	$ 0.09	$ 0.07	$ 0.17	$ 0.15
Diluted earnings per share (in dollars per share)	$ 0.09	$ 0.07	$ 0.17	$ 0.15

XML

Consolidated Statements of Comprehensive Income - USD ($)	3 Months Ended		6 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015
Condensed Consolidated Statements of Comprehensive Income
Net income	$ 309,464	$ 222,124	$ 574,522	$ 497,102
Other comprehensive income:
Unrealized gain (loss) on securities available-for-sale, net of tax	(26,089)	(1,428)	(27,247)	1,945
Comprehensive income	$ 283,375	$ 220,696	$ 547,275	$ 499,047

XML

Consolidated Statement of Changes in Stockholders' Equity - 6 months ended Dec. 31, 2016 - USD ($)	Common Equity	Additional Paid In Capital	Retained Earnings	Unearned ESOP Shares	Shares Reserved for Stock Compensation	Accumulated Other Comprehensive Income.	Amount Reclassified on ESOP Shares	Total
BALANCE at Jun. 30, 2016	$ 34,771	$ 26,844,426	$ 11,239,913	$ (1,246,045)	$ (338,332)	$ 4,076	$ (564,723)	$ 35,974,086
Increase (Decrease) in Stockholders' Equity
Net Income			574,522					574,522
Other comprehensive loss						(27,247)		(27,247)
Release of unearned ESOP shares		2,130		69,205				71,335
Stock compensation expense		(34,236)			63,375			29,139
Stock Buyback	(864)	(798,393)						(799,257)
Reclassification due to release and changes in fair value of common stock in ESOP subject to contingent repurchase obligation of ESOP shares							(93,399)	(93,399)
BALANCE at Dec. 31, 2016	$ 33,907	$ 26,013,927	$ 11,814,435	$ (1,176,840)	$ (274,957)	$ (23,171)	$ (658,122)	$ 35,729,179

XML

Consolidated Statement of Changes in Stockholders' Equity (Parenthetical)	6 Months Ended
	Dec. 31, 2016 shares
Condensed Consolidated Statements of Changes in Stockholders' Equity
Release of unearned ESOP shares (in shares)	7,932

XML

Consolidated Statements of Cash Flows - USD ($)	6 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Cash Flows from Operating Activities:
Net income	$ 574,522	$ 497,102
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	167,890	173,977
Federal Home Loan Bank stock dividends	(1,200)	(1,600)
ESOP expense	71,335	39,290
Stock compensation expense	29,139	44,546
Amortization of deferred loan origination costs, net	259,989	219,645
Amortization of premiums and discounts	6,799	8,066
Gain on sale of loans	(491,718)	(413,062)
Loss on sale of foreclosed assets		9,728
Loss on disposal of premises and equipment	1,207	50,293
Provision for loan losses	321,873	157,345
Deferred taxes	(878)	124,994
Loans originated for sale	(19,126,779)	(16,110,552)
Proceeds from sale of loans	19,376,441	16,420,589
Loss on investment in partnership	34,832	21,000
Changes in:
Accrued interest receivable	(188,494)	(30,420)
Other assets	(230,088)	(112,188)
Accrued interest payable and other liabilities	(141,669)	(627,614)
Net cash provided by operating activities	663,201	471,139
Cash Flows from Investing Activities:
Net change in loans	(15,511,942)	(11,694,276)
Proceeds from sale of foreclosed assets, net		3,000
Proceeds from maturity of time deposits with financial institutions		500,000
Securities available-for-sale:
Proceeds from calls and principal repayments	136,838	97,991
Purchases	(985,400)	(469,253)
Securities held-to-maturity:
Proceeds from calls and principal repayments	27,732	2,470,587
Purchase of premises and equipment	(383,389)	(85,046)
Net cash used in investing activities	(16,716,161)	(9,176,997)
Cash Flows from Financing Activities:
Net change in deposits	1,311,158	11,466,148
Net change in federal funds purchased	3,008,000
Proceeds from Federal Home Loan Bank borrowings	2,000,000
Net change in advance payments from borrowers for taxes and insurance	53,510	6,582
Stock Buyback	(799,257)
Purchase of ESOP Shares		(951,912)
Expenses and return of proceeds in advance of offering		(2,555,176)
Net cash provided/(used) by financing activities	5,573,411	7,965,642
Decrease in cash and cash equivalents	(10,479,549)	(740,216)
Cash and Cash Equivalents:
Beginning	14,947,296	21,512,653
Ending	4,467,747	20,772,437
Supplemental Cash Flow Information:
Interest paid on deposits and borrowings	536,618	504,042
Income taxes paid	$ 162,879	$ 145,156

XML

Basis of Presentation

6 Months Ended

Dec. 31, 2016

Basis of Presentation

Basis of Presentation

Note 1.Basis of Presentation

The accompanying consolidated financial statements of Equitable Financial Corp. (the “Company”) and its wholly owned subsidiary Equitable Bank (the “Bank”) have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and in accordance with SEC rules and regulations. Accordingly, the statements do not include all the information and footnotes required by GAAP for complete financial statements. These interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto that were included in the Company’s annual report for the year ended June 30, 2016.  The consolidated balance sheet of the Company as of June 30, 2016 has been derived from the audited consolidated balance sheet of the company as of that date.  All significant intercompany transactions are eliminated in consolidation.  In the opinion of the Company’s management, all adjustments necessary (i) for a fair presentation of the financial statements for the interim periods included herein and (ii) to make such financial statements not misleading have been made and are of a normal and recurring nature. Interim results are not necessarily indicative of results for a full year.

In preparing the financial statements, management is required to make estimates and assumptions that affect the recorded 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 for the period.  Actual results could differ from those estimates.  For further information with respect to significant accounting policies followed by the Company in preparation of the financial statements, refer to the Company’s annual report for the year ended June 30, 2016.

The Bank is a federally chartered stock savings bank and a member of the Federal Home Loan Bank (“FHLB”) system. The Bank maintains insurance on deposit accounts with the Deposit Insurance Fund of the Federal Deposit Insurance Corporation (“FDIC”).

XML

Stock Conversion

6 Months Ended

Dec. 31, 2016

Stock Conversion

Stock Conversion

Note 2.Stock Conversion

On July 8, 2015, Equitable Financial, MHC, the Company’s former federally chartered mutual holding company, consummated its mutual-to-stock conversion, and the Company consummated its initial stock offering. In the Offering, the Company sold 1,983,160 shares of its common stock, par value $0.01 per share, at $8.00 per share in a subscription offering and community offering, including 118,989 shares, equal to 6.0% of the shares sold in the offering, to the Equitable Bank employee stock ownership plan.

In accordance with applicable federal conversion regulations, at the time of the completion of our mutual-to-stock conversion, we established a liquidation account in an amount equal to the Company’s total equity as of the latest balance sheet date in the final prospectus used in the Conversion. Each eligible account holder or supplemental account holder is entitled to a proportionate share of this liquidation account in the event of a complete liquidation of the Bank, and only in such event. This share will be reduced if the eligible account holder’s or supplemental account holder’s deposit balance falls below the amounts on the date of record as of any June 30 and will cease to exist if the account is closed. The liquidation account will never be increased despite any increase after Conversion in the related deposit balance.

Following completion of the Conversion, the Bank may not declare, pay a dividend on, or repurchase any of its capital stock of the Bank, if the effect thereof would cause retained earnings to be reduced below the liquidation account amount or regulatory capital requirements.

XML

New Accounting Pronouncements

6 Months Ended

Dec. 31, 2016

New Accounting Pronouncements

New Accounting Pronouncements

Note 3.New Accounting Pronouncements

In January 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities. The amendments in this Update address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The amendments in this Update are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. This ASU is not expected to have a material impact on the Company’s consolidated financial statements.

On February 25, 2016, the FASB issued ASU 2016-02, intended to improve financial reporting about leasing transactions. The ASU is effective for the Company with the interim period beginning January 1, 2019. We are currently evaluating the effect of this proposal to our financial statements.

In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting. The purpose of this Update is to simplify the accounting for share-based payment award transactions. ASU 2016-09 is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. This ASU is not expected to have a material impact on the Company’s consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments. The purpose of this Update is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity. The Update replaces the current incurred loss methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. This ASU is expected to have an impact on the Company’s consolidated financial statements. The Company is currently evaluating the effect this will have on its financial statements.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows; Classification of Certain Cash Receipts and Cash Payments.  The purpose of this Update is to address existing diversity in practice related to specific cash flow issues.  This Update will be effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years.  The Company does not expect this ASU to have a material impact on the Company’s consolidated financial statements.

In October 2016, the FASB issued ASU 2016-16, Intra-Entity Transfers of Assets Other Than Inventory.  The purpose of this Update is to improve the accounting for income tax consequences of intra-entity transfers of assets other than inventory.  The Company does not expect this ASU to have a material impact on the Company’s consolidated financial statements.

XML

Securities

6 Months Ended

Dec. 31, 2016

Securities

Securities

Note 4.Securities

The fair value of securities available-for-sale and the related gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) are as follows:

			Gross		Gross
	Amortized		Unrealized		Unrealized
December 31, 2016	Cost		Gains		Losses		Fair Value
U.S. Government-sponsored agencies securities	$	985,693	$	—	$	(31,926)	$	953,767
Residential mortgage-backed securities		515,814		—		(3,182)		512,632
	$	1,501,507	$	—	$	(35,108)	$	1,466,399

			Gross		Gross
	Amortized		Unrealized		Unrealized
June 30, 2016	Cost		Gains		Losses		Fair Value
Residential mortgage-backed securities	$	658,579	$	6,176	$	—	$	664,755

The carrying amount, unrecognized gross gains and losses, and fair value of securities held-to-maturity are as follows:

			Gross		Gross
	Amortized		Unrealized		Unrealized
December 31, 2016	Cost		Gains		Losses		Fair Value
Residential mortgage-backed securities	$	152,183	$	11,381	$	—	$	163,564
Municipal securities		600,661		—		(483)		600,178
	$	752,844	$	11,381	$	(483)	$	763,742

			Gross		Gross
	Amortized		Unrealized		Unrealized
June 30, 2016	Cost		Gains		Losses		Fair Value
Residential mortgage-backed securities	$	180,035	$	15,281	$	—	$	195,316
Municipal securities		601,705		4,093		—		605,798
	$	781,740	$	19,374	$	—	$	801,114

Securities available-for-sale and held-to-maturity consist of investments in bonds securitized by U.S. Government sponsored agencies, local municipal securities and mortgage-backed securities securitized by the Government National Mortgage Association.

The contractual maturities of the residential mortgage-backed securities at December 31, 2016 are not disclosed because the securities are not due at a single maturity date.  Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Approximately $400,000 in municipal securities will mature in the year ending June 30, 2019 with the remaining balance maturing in the year ending June 30, 2020.  Approximately $985,000 of U.S. Government sponsored agency bonds will mature in the year ending June 30, 2023.

There were no sales of securities for the six months ended December 31, 2016 and 2015.

The duration of gross unrealized losses is not disclosed as such amounts are immaterial to the consolidated financial statements. The Company has not recognized other-than-temporary impairment on any securities for the six months ended December 31, 2016 and 2015.

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Loans

6 Months Ended

Dec. 31, 2016

Loans

Loans

Note 5.Loans

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off are stated at their outstanding unpaid principal balances, less an allowance for loan losses, premiums and discounts on loans purchased, and net deferred loan fees/costs. Interest income on loans is recognized over the term of the loan and is calculated using the simple interest method on principal amounts outstanding. Direct loan origination fees and costs are generally being deferred and the net amounts amortized as an adjustment of the related loan's yield. The Company generally amortizes these amounts over the contractual life. Direct loan origination fees and costs related to loans sold to unrelated third parties are recognized as income or expense in the current consolidated statement of income.

The Company’s portfolio segments are as follows:

· Commercial

· Agricultural

· Residential real estate

· Other

The Company’s classes of loans are as follows:

· Commercial – operating

· Commercial – real estate

· Agricultural – operating

· Agricultural – real estate

· Residential real estate – 1-4 family

· Residential real estate – home equity

· Other – construction and land

· Other – consumer

Loans are as follows:

	December 31, 2016		June 30, 2016
Commercial:
Operating	$	17,483,861	$	15,355,676
Real estate		70,692,064		67,698,929
Agricultural:
Operating		23,829,863		22,942,560
Real estate		29,837,096		24,965,541
Residential real estate:
1-4 family		42,573,310		40,309,797
Home equity		10,584,086		12,644,624
Other:
Construction and land		17,080,113		13,210,393
Consumer		3,865,950		3,566,917
Total loans		215,946,343		200,694,437
Deferred loan origination costs, net		614,150		562,483
Allowance for loan losses		(3,238,000)		(2,947,000)
		(2,623,850)		(2,384,517)
Loans, net	$	213,322,493	$	198,309,920

For all portfolio segments, the allowance for loan losses is maintained at the level considered adequate by management of the Company to provide for losses that are probable. The allowance is increased by provisions charged to operating expense and reduced by net charge-offs. Subsequent recoveries, if any, are credited to the allowance. In determining the adequacy of the allowance balance, the Company makes continuous evaluations of the loan portfolio and related off-balance sheet commitments, considers current economic conditions, historical loan loss experience, review of specific problem loans and other factors.

Changes in the allowance for loan losses, by portfolio segment are summarized as follows:

					Residential
	Commercial		Agricultural		Real Estate		Other		Total
	For the three months ended December 31, 2016
Balance, beginning	$	1,393,510	$	802,000	$	617,000	$	243,000	$	3,055,510
Provision charged to expense		59,608		46,000		17,252		46,249		169,109
Recoveries		14,882		—		842		238		15,962
Loans charged off		—		—		(94)		(2,487)		(2,581)
Balance, ending	$	1,468,000	$	848,000	$	635,000	$	287,000	$	3,238,000

					Residential
	Commercial		Agricultural		Real Estate		Other		Total
	For the three months ended December 31, 2015
Balance, beginning	$	1,140,000	$	726,000	$	669,000	$	149,000	$	2,684,000
Provision charged to expense		36,906		22,000		2,775		22,720		84,401
Recoveries		49,358		—		225		1,002		50,585
Loans charged off		(1,264)		—		—		(722)		(1,986)
Balance, ending	$	1,225,000	$	748,000	$	672,000	$	172,000	$	2,817,000

					Residential
	Commercial		Agricultural		Real Estate		Other		Total
	For the six months ended December 31, 2016
Balance, beginning	$	1,337,000	$	738,000	$	655,000	$	217,000	$	2,947,000
Provision charged to expense		156,311		110,000		(20,973)		76,535		321,873
Recoveries		22,556		—		1,067		1,202		24,825
Loans charged off		(47,867)		—		(94)		(7,737)		(55,698)
Balance, ending	$	1,468,000		848,000		635,000		287,000	$	3,238,000

					Residential
	Commercial		Agricultural		Real Estate		Other		Total
	For the six months ended December 31, 2015
Balance, beginning	$	1,124,000	$	697,000	$	644,000	$	118,000	$	2,583,000
Provision charged to expense		27,554		51,000		27,316		51,475		157,345
Recoveries		74,710		—		684		4,394		79,788
Loans charged off		(1,264)		—		—		(1,869)		(3,133)
Balance, ending	$	1,225,000		748,000		672,000		172,000	$	2,817,000

For commercial loans, agricultural loans, and construction and land loans the allowance for estimated losses on loans consists of specific and general components.

The specific component relates to loans that are classified as impaired, as defined below. For those loans that are classified as impaired, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan.

For commercial loans, agricultural loans, and construction and land loans, a loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as 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 record and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a case-by-case basis by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent.

The general component consists of quantitative and qualitative factors and covers non-impaired loans. The quantitative factors are based on historical charge-off experience. The qualitative factors are determined based on an assessment of internal and/or external influences on credit quality that are not fully reflected in the historical loss data. The Company’s credit quality indicator for all loans excluding commercial loans is past due or performance status.  The Company’s credit quality indicator for commercial loans is internal risk ratings.

For residential real estate loans and consumer and other loans, these large groups of smaller balance homogenous loans are collectively evaluated for impairment. In estimating the allowance for loan losses for these loans, the Company applies quantitative and qualitative factors on a portfolio segment basis. Quantitative factors are based on historical charge-off experience and qualitative factors are based on an assessment of internal and/or external influences on credit quality that are not fully reflected in the historical loss data. Accordingly, the Company generally does not separately identify individual residential real estate loans and/or consumer loans for impairment disclosures, unless such loans are the subject of a restructuring agreement due to financial difficulties of the borrower.

Troubled debt restructures are considered impaired loans and are subject to the same allowance methodology as described above for impaired loans by portfolio segment.

The allowance for loan losses, by impairment evaluation and portfolio segment is summarized as follows:

					Residential
	Commercial		Agricultural		Real Estate		Other		Total
	December 31, 2016
Allowance for loans individually evaluated for impairment	$	11,626	$	13,857	$	24,598	$	—	$	50,081
Allowance for loans collectively evaluated for impairment		1,456,374		834,143		610,402		287,000		3,187,919
	$	1,468,000	$	848,000	$	635,000	$	287,000	$	3,238,000
Loans individually evaluated for impairment	$	970,493	$	873,661	$	3,656,124	$	25,623	$	5,525,901
Loans collectively evaluated for impairment		87,205,432		52,793,298		49,501,272		20,920,440		210,420,442
	$	88,175,925	$	53,666,959	$	53,157,396	$	20,946,063	$	215,946,343

					Residential
	Commercial		Agricultural		Real Estate		Other		Total
	June 30, 2016
Allowance for loans individually evaluated for impairment	$	34,975	$	—	$	17,828	$	—	$	52,803
Allowance for loans collectively evaluated for impairment		1,302,025		738,000		637,172		217,000		2,894,197
	$	1,337,000	$	738,000	$	655,000	$	217,000	$	2,947,000
Loans individually evaluated for impairment	$	227,824	$	885,757	$	3,726,602	$	3,194	$	4,843,377
Loans collectively evaluated for impairment		82,826,781		47,022,344		49,227,819		16,774,116		195,851,060
	$	83,054,605	$	47,908,101	$	52,954,421	$	16,777,310	$	200,694,437

Generally, for all classes of loans, loans are considered past due when contractual payments are delinquent for 31 days or greater.

For all classes of loans, loans will generally be placed on nonaccrual status when the loan has become greater than 90 days past due; or when management believes, after considering collection efforts and other factors, that the borrower’s financial condition is such that collection of interest is doubtful.

When a loan is placed on nonaccrual status, payments received will be applied to the principal balance. However, interest may be taken on a cash basis in the event the loan is fully secured and the risk of loss is minimal.  Previously recorded but uncollected interest on a loan placed in nonaccrual status is accounted for as follows:  if the previously accrued but uncollected interest and the principal amount of the loan is protected by sound collateral value based upon a current, independent qualified appraisal, such interest may remain on the Company’s books. If such interest is not so protected, it is considered a loss with the amount thereof recorded in the current year being reversed against current interest income, and the amount recorded in the prior year being charged against the allowance for possible loan losses.

For all classes of loans, nonaccrual loans may be restored to accrual status provided the following criteria are met:

· The loan is current, and all principal and interest amounts contractually due have been made

· The loan is well secured and in the process of collection

· Prospects for future principal and interest payments are not in doubt

The aging in terms of unpaid principal balance of the loan portfolio, by classes of loans is summarized as follows:

							> 90 days
			31-60 days		61-90 days		Past Due				Non accrual
	Current		Past Due		Past Due		(Nonaccrual)		Total		Loans
	December 31, 2016
Classes of loans:
Commercial:
Operating	$	17,360,973	$	37,061	$	85,827	$	—	$	17,483,861	$	114,735
Real estate		69,851,952		801,888		—		38,224		70,692,064		708,695
Agricultural:
Operating		23,829,863		—		—		—		23,829,863		6,848
Real estate		29,837,096		—		—		—		29,837,096		836,509
Residential real estate:
1-4 family		41,268,998		644,411		625,437		34,464		42,573,310		704,394
Home equity		10,556,417		—		9,996		17,673		10,584,086		38,486
Other:
Construction and land		16,851,230		228,883		—		—		17,080,113		—
Consumer		3,860,203		5,747		—		—		3,865,950		2,542
	$	213,416,732	$	1,717,990	$	721,260	$	90,361	$	215,946,343	$	2,412,209

							> 90 days
			31-60 days		61-90 days		Past Due					Non accrual
	Current		Past Due		Past Due		(Nonaccrual)		Total			Loans
	June 30, 2016
Classes of loans:
Commercial:
Operating	$	15,256,328	$	99,348	$	—	$	—	$	15,355,676	$	97,294
Real estate		67,606,842		—		—		92,087		67,698,929		92,087
Agricultural:
Operating		22,318,246		624,314		—		—		22,942,560		6,848
Real estate		24,965,541		—		—		—		24,965,541		877,909
Residential real estate:
1-4 family		38,428,793		1,823,353		23,736		33,915		40,309,797		688,454
Home equity		12,644,624		—		—		—		12,644,624		29,807
Other:
Construction and land		13,210,393		—		—		—		13,210,393		—
Consumer		3,563,221		1,294		—		2,402		3,566,917		7,248
	$	197,993,988	$	2,548,309	$	23,736	$	128,404	$	200,694,437	$	1,799,647

For commercial, agriculture, and construction and land loans, the Company utilizes the following internal risk rating scale:

Highest Quality (rating 1) -- Loans represent a credit extension of the highest quality. Excellent liquidity, management and character in an industry with favorable conditions. High quality financial information, history of strong cash flows and superior collateral including readily marketable assets, prime real estate, U.S. government securities, U.S. government agencies, highly rated municipal bonds, insured savings accounts, and insured certificates of deposit drawn on high-quality financial institutions.

Good Quality (rating 2) -- Loans which have a sound primary and secondary source of repayment. Strong to good liquidity, management and character in an industry with favorable conditions. Good quality financial information and margins of cash flow coverage is consistently good. Loans may be unsecured, secured by quality (but less readily marketable) assets, high quality real estate or traded stocks, lower grade municipal bonds (which must still be investment grade), and uninsured certificates of deposit on other financial institutions may also be included in this grade.

Acceptable Quality (rating 3) -- Loans where the borrower is a reasonable credit risk and demonstrates the ability to repay the debt from normal business operations. Good liquidity, management and character in an industry that is more sensitive to external factors. Alternative sources of refinancing may be less available in periods of uncertain economic conditions. Term debt is moderate but cash flow margins fall within bank policy guidelines. Quality of financial information is adequate but is not as detailed and sophisticated as information found on higher-grade loans. Secured by business assets that conform to usual lending parameters for margin and eligibility or real estate that is deemed to be of satisfactory quality in an area that may not be prime but still within viable economic centers.

Fair Quality (rating 4) -- Loans where the borrower is a reasonable credit risk but shows a more erratic earnings history (a loss may have been realized in the past four years). Liquidity is limited and primary repayment is susceptible to unfavorable external factors. Industry characteristics are generally stable. Borrower is more highly leveraged with increased levels of term debt. Cash flow margins remain adequate but may not fall within the policy guidelines. Quality of financial information is adequate and interim reporting may be required. Secured by business assets with an adequate collateral margin or real estate that is of fair quality and location. Property may have limited alternative uses and may be considered a "special use" facility.

Special Mention (rating 5) -- Loans in this category have the potential for developing weaknesses that deserve extra attention from the account manager and other management personnel. If the developing weakness is not corrected or mitigated, the ability of the borrower to repay the Company's debt in the future may deteriorate. This grade should not be assigned to loans that bear certain peculiar risks normally associated with the type of financing involved, unless circumstances have caused the risk to increase to a level higher than would have been acceptable when the credit was originally approved. If a loan's actual, not potential, weakness or problems are clearly evident and significant it should generally be graded in one of the following grade categories.

Substandard (rating 6) -- Loans and other credit extensions are considered to be inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. These loans, even if apparently protected by collateral value, have a well-defined weakness or weaknesses that jeopardize the liquidation of debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Loss potential, while existing in the aggregate amount of substandard loans, does not have to exist in individual loans classified substandard.

Doubtful (rating 7) -- Loans and other credit extensions have all the weaknesses inherent in those graded "6" 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. The possibility of loss is extremely high, but because of certain important and reasonably specific pending factors, which may work to the advantage and strengthening of the loan, its classification as an estimated loss is deferred until its more exact status may be determined. Pending factors include: proposed merger, acquisition, or liquidation actions; capital injection; perfecting liens on collateral and refinancing plans. Loans in this classification should be placed in non-accrual status, with collections applied to principal.

Loss (rating 8) -- Loans are considered uncollectible and cannot be justified as a viable asset of the Bank. This classification does not mean the loan has absolutely no recovery value. However, it is not prudent to delay writing off this loan even though partial recovery may be obtained in the future.

For commercial, agricultural and construction and land loans or credit relationships with aggregate exposure greater than $250,000, a loan review is required within 12 months of the most recent credit review. The reviews are completed in enough detail to, at a minimum, validate the risk rating. Additionally, the reviews shall determine whether any documentation exceptions exist, appropriate written analysis is included in the loan file, and whether credit policies have been properly adhered to.

For each class of loans, the following summarizes the unpaid principal balance by credit quality indicator as of:

									Other —
	Commercial —		Commercial —		Agricultural —		Agricultural —		Construction
	Operating		Real Estate		Operating		Real Estate		and Land		Total
	December 31, 2016
Internally assigned risk rating:
Highest Quality (rating 1)	$	—	$	—	$	604,225	$	326,045	$	—	$	930,270
Good Quality (rating 2)		214,078		6,899,308		6,173,404		3,937,872		2,882,261		20,106,923
Acceptable Quality (rating 3)		8,301,675		32,586,766		7,128,873		15,428,309		8,163,286		71,608,909
Fair Quality (rating 4)		8,779,440		28,308,128		7,940,517		9,293,361		6,034,566		60,356,012
Special Mention (rating 5)		—		—		1,960,692		—		—		1,960,692
Substandard (rating 6)		188,668		2,897,862		22,152		851,509		—		3,960,191
Doubtful (rating 7)		—		—		—		—		—		—
Loss (rating 8)		—		—		—		—		—		—
	$	17,483,861	$	70,692,064	$	23,829,863	$	29,837,096	$	17,080,113	$	158,922,997

									Other —
	Commercial —		Commercial —		Agricultural —		Agricultural —		Construction
	Operating		Real Estate		Operating		Real Estate		and Land		Total
	June 30, 2016
Internally assigned risk rating:
Highest Quality (rating 1)	$	—	$	—	$	484,813	$	348,011	$	—	$	832,824
Good Quality (rating 2)		213,824		4,923,002		5,510,208		6,173,479		1,993,567		18,814,080
Acceptable Quality (rating 3)		7,732,341		33,606,696		5,992,063		9,729,301		6,675,761		63,736,162
Fair Quality (rating 4)		7,294,630		28,578,771		9,604,176		7,836,841		4,541,065		57,855,483
Special Mention (rating 5)		—		—		829,738		—		—		829,738
Substandard (rating 6)		114,881		590,460		521,562		877,909		—		2,104,812
Doubtful (rating 7)		—		—		—		—		—		—
Loss (rating 8)		—		—		—		—		—		—
	$	15,355,676	$	67,698,929	$	22,942,560	$	24,965,541	$	13,210,393	$	144,173,099

	Residential RE —		Residential RE —		Other —
	1-4 Family		Home Equity		Consumer		Total
	December 31, 2016
Delinquency status*:
Performing	$	41,077,291	$	10,545,599	$	3,857,661	$	55,480,551
Nonperforming		1,496,019		38,487		8,289		1,542,795
	$	42,573,310	$	10,584,086	$	3,865,950	$	57,023,346

	Residential RE —		Residential RE —		Other —
	1-4 Family		Home Equity		Consumer		Total
	June 30, 2016
Delinquency status*:
Performing	$	37,832,838	$	12,614,817	$	3,558,375	$	54,006,030
Nonperforming		2,476,959		29,807		8,542		2,515,308
	$	40,309,797	$	12,644,624	$	3,566,917	$	56,521,338

*Performing loans are those which are accruing and less than 31 days past due. Nonperforming loans are those on nonaccrual and accruing loans that are greater than or equal to 31 days past due.

At December 31, 2016 and June 30, 2016, the Company had no loans greater than 90 days past due and still accruing.

For commercial, agricultural, and construction and land loans, the Company’s credit quality indicator is internally assigned risk ratings. Each loan is assigned a risk rating upon origination. The risk rating is reviewed every 12 months, at a minimum, and on an as needed basis depending on the specific circumstances of the loan.

For residential real estate and consumer loans, the Company’s credit quality indicator is performance determined by delinquency status. Delinquency status is updated daily by the Company’s loan system.

Loans, by classes of loans, considered to be impaired are summarized as follows:

			Unpaid
	Recorded		Principal		Related
	Investment		Balance		Allowance
	December 31, 2016
Classes of loans:
Impaired loans with no specific allowance recorded:
Commercial:
Operating	$	206,058	$	203,635	$	—
Real estate		670,629		670,471		—
Agricultural:
Operating		22,566		22,152		—
Real estate		428,260		380,453		—
Residential real estate:
1-4 family		3,081,233		3,067,135		—
Home equity		8,731		8,716		—
Other:
Consumer		26,389		25,623		—
		4,443,866		4,378,185		—
Impaired loans with specific allowance recorded:
Commercial:
Operating		58,444		58,163		4,910
Real estate		48,046		38,224		6,716
Agricultural:
Real estate		497,224		471,056		13,857
Residential real estate:
1-4 family		576,891		562,600		23,692
Home equity		17,964		17,673		906
		1,198,569		1,147,716		50,081
Total impaired loans:
Commercial:
Operating		264,502		261,798		4,910
Real estate		718,675		708,695		6,716
Agricultural:
Operating		22,566		22,152		—
Real estate		925,484		851,509		13,857
Residential real estate:
1-4 family		3,658,124		3,629,735		23,692
Home equity		26,695		26,389		906
Other:
Consumer		26,389		25,623		—
	$	5,642,435	$	5,525,901	$	50,081

			Unpaid
	Recorded		Principal		Related
	Investment		Balance		Allowance
	June 30, 2016
Classes of loans:
Impaired loans with no specific allowance recorded:
Commercial:
Operating	$	88,902	$	87,497	$	—
Agricultural:
Operating		8,009		7,848		—
Real estate		925,288		877,909		—
Residential real estate:
1-4 family		3,330,310		3,320,028		—
Home equity		59,336		59,123		—
Other:
Consumer		3,756		3,194		—
		4,415,601		4,355,599		—
Impaired loans with specific allowance recorded:
Commercial:
Operating		48,302		48,240		4,824
Real estate		114,837		92,087		30,151
Residential real estate:
1-4 family		330,997		329,623		16,913
Home equity		17,882		17,828		915
		512,018		487,778		52,803
Total impaired loans:
Commercial:
Operating		137,204		135,737		4,824
Real estate		114,837		92,087		30,151
Agricultural:
Operating		8,009		7,848		—
Real estate		925,288		877,909		—
Residential real estate:
1-4 family		3,661,307		3,649,651		16,913
Home equity		77,218		76,951		915
Other:
Consumer		3,756		3,194		—
	$	4,927,619	$	4,843,377	$	52,803

Impaired loans, for which no allowance has been provided as of December 31, 2016 and June 30, 2016, have adequate collateral, based on management’s current estimates.

	For the three months ended
	December 31, 2016				December 31, 2015
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
	Investment		Recognized		Investment		Recognized
Classes of loans:
Impaired loans with no specific allowance recorded:
Commercial:
Operating	$	190,581	$	2,611	$	275,575	$	4,445
Real estate		335,315		2,375		182,423		—
Agricultural:
Operating		48,507		3,328		8,396		108
Real estate		432,437		135		868,712		13,054
Residential real estate:
1-4 family		3,103,372		36,162		4,053,483		63,044
Home equity		8,936		150		61,772		983
Other:
Consumer		27,440		270		10,571		90
		4,146,588		45,031		5,460,932		81,724
Impaired loans with specific allowance recorded:
Commercial:
Operating		59,569		606		288,647		574
Real estate		47,765		—		—		—
Agricultural:
Operating		—		—		208,128		14,843
Real estate		493,981		—		—		—
Residential real estate:
1-4 family		577,070		3,551		—		—
Home equity		17,944		156		20,218		196
		1,196,329		4,313		516,993		15,613
Total impaired loans:
Commercial:
Operating		250,150		3,217		564,222		5,019
Real estate		383,080		2,375		182,423		—
Agricultural:
Operating		48,507		3,328		216,524		14,951
Real estate		926,418		135		868,712		13,054
Residential real estate:
1-4 family		3,680,442		39,713		4,053,483		63,044
Home equity		26,880		306		81,990		1,179
Other:
Consumer		27,440		270		10,571		90
	$	5,342,917	$	49,344	$	5,977,925	$	97,337

	For the six months ended
	December 31, 2016				December 31, 2015
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
	Investment		Recognized		Investment		Recognized
Classes of loans:
Impaired loans with no specific allowance recorded:
Commercial:
Operating	$	178,100	$	4,115	$	276,207	$	7,130
Real estate		335,315		2,375		183,969		2,331
Agricultural:
Operating		47,927		3,328		9,043		234
Real estate		442,515		363		856,291		14,233
Residential real estate:
1-4 family		3,116,634		75,183		4,032,597		112,943
Home equity		9,137		309		62,416		2,092
Other:
Consumer		27,972		642		11,351		265
		4,157,600		86,315		5,431,874		139,228
Impaired loans with specific allowance recorded:
Commercial:
Operating		53,373		1,122		287,802		1,799
Real estate		47,489		—		—		—
Agricultural:
Operating		—		—		212,537		14,843
Real estate		490,390		—		—		—
Residential real estate:
1-4 family		576,135		5,759		—		—
Home equity		17,923		388		20,178		840
		1,185,310		7,269		520,517		17,482
Total impaired loans:
Commercial:
Operating		231,473		5,237		564,009		8,929
Real estate		382,804		2,375		183,969		2,331
Agricultural:
Operating		47,927		3,328		221,580		15,077
Real estate		932,905		363		856,291		14,233
Residential real estate:
1-4 family		3,692,769		80,942		4,032,597		112,943
Home equity		27,060		697		82,594		2,932
Other:
Consumer		27,972		642		11,351		265
	$	5,342,910	$	93,584	$	5,952,391	$	156,710

The Company's troubled debt restructuring as of December 31, 2016 and June 30, 2016 were not material to the consolidated financial statements.

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Borrowings

6 Months Ended

Dec. 31, 2016

Borrowings

Borrowings

Note 6.Borrowings

Our borrowings consist primarily of advances from Federal home Loan Bank of Topeka.   At December 31, 2016, we had access to additional Federal Home Loan Bank advances up to $40.3 million. To the extent such borrowings have different terms to repricing than our deposits, they can change our interest rate risk profile.

The following table sets forth information concerning balances and interest rates on our advances at December 31, 2016.  At and during the period ended December 31, 2015 there were no advances outstanding.

	At or For the
		Six Months Ended
	December 31, 2016
	(Dollars in thousands)
Federal Home Loan Bank Advances:
Maximum outstanding at any month end	$	2,000
Balance at the end of period		2,000
Average balance during period		666
Weighted average interest rate at the end of period		0.72	%
Weighted average interest rate during period		0.72	%

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Regulatory Matters

6 Months Ended

Dec. 31, 2016

Regulatory Matters

Regulatory Matters

Note 7.Regulatory Matters

The Bank is subject to regulatory capital requirements administered by the federal banking agencies.  Failure to meet minimum capital requirements can initiate certain mandatory — and possibly additional discretionary — actions by regulators that, if undertaken, could have a direct material effect on the Company’s consolidated financial statements.  Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices.  The Bank’s capital amounts and classification are also subject to qualitative judgments by regulators about components, risk weightings, and other factors.

The prompt corrective action regulations provide five classifications, including well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition.  If only adequately capitalized, regulatory approval is required to accept brokered deposits.  If undercapitalized, capital distributions are limited, as is asset growth and expansion, and plans for capital restoration are required.  Management believes, as of December 31, 2016, that the Bank meets all capital adequacy requirements to which it is subject.

Actual capital levels and minimum required levels for the Bank were:

									Minimum
									Required to Be
									Well Capitalized
					Minimum Required for				Under Prompt
					Capital Adequacy				Corrective Action
					Purposes				Provisions
(Dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio
December 31, 2016
Total capital (to risk-weighted assets)	$	29,945	13.9	%	$	17,227	8.0	%	$	21,534	10.0	%
Common equity Tier 1 capital (to risk-weighted assets)		27,245	12.7	%		9,690	4.5	%		13,997	6.5	%
Tier 1 (core) capital (to risk-weighted assets)		27,245	12.7	%		12,920	6.0	%		17,227	8.0	%
Tier 1 (core) capital (to adjusted total assets)		27,245	12.0	%		9,108	4.0	%		11,384	5.0	%
June 30, 2016
Total capital (to risk-weighted assets)	$	28,977	14.7	%	$	15,805	8.0	%	$	19,757	10.0	%
Common equity Tier 1 capital (to risk-weighted		26,500	13.4	%		8,891	4.5	%		12,842	6.5	%
Tier 1 (core) capital (to risk-weighted assets)		26,500	13.4	%		11,854	6.0	%		15,805	8.0	%
Tier 1 (core) capital (to adjusted total assets)		26,500	11.6	%		9,114	4.0	%		11,393	5.0	%

Federal regulations require the Bank to comply with a Qualified Thrift Lender (“QTL”) test, which requires that 65% of assets be maintained in housing-related finance and other specified assets.  If the QTL test is not met, limits are placed on growth, branching, new investment, FHLB advances, and dividends or the institution must convert to a commercial bank charter.  Management believes the QTL test has been met.

In July 2013, the Federal Reserve Board and the Federal Deposit Insurance Corporation issued final rules implementing the Basel III regulatory capital framework and related Dodd-Frank Wall Street Reform and Consumer Protection Act changes. The rules revised minimum capital requirements and adjusted prompt corrective action thresholds. The final rules revised the regulatory capital elements, added a new common equity Tier 1 capital ratio, increased the minimum Tier 1 capital ratio requirement, and implemented a new capital conservation buffer. The rules also permitted certain banking organizations to retain, through a one-time election, the existing treatment for accumulated other comprehensive income. Management chose the one-time election to retain the existing treatment. The final rules took effect for community banks on January 1, 2015, subject to a transition period for certain parts of the rules.

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Employee Benefit Plan

6 Months Ended

Dec. 31, 2016

Employee Benefit Plan

Employee Benefit Plan

Note 8.Employee Benefit Plan

The Company has a 401(k) and profit sharing plan (the “Plans”) covering substantially all employees.  Annual contributions to the Plans are made at the discretion of and determined by the Board of Directors.  Participant interests are vested over a period from one to five years of service.  Contributions were made of $56,532 and $44,138 for the six months ended December 31, 2016 and 2015.

On November 8, 2005, the Company adopted an employee stock ownership plan (the “ESOP”) for the benefit of substantially all employees.  The ESOP borrowed $1,292,620 from the Company and used those funds to acquire 129,262 shares of the Company’s stock in connection with the reorganization at a price of $10.00 per share.

On July 8, 2015, the ESOP borrowed $951,912 from the Company and used the funds to acquire 118,989 shares of the Company’s stock in connection with the stock offering at a price of $8.00 per share.

Shares purchased by the ESOP with the loan proceeds are held in a suspense account and are allocated to ESOP participants on a pro rata basis as principal and interest payments are made by the ESOP to the Company.  The loan is secured by shares purchased with the loan proceeds and will be repaid by the ESOP with funds from the Company’s discretionary contributions to the ESOP and earnings on ESOP assets.  Annual principal and interest payments from the note dated November 8, 2005 are approximately $145,000 until maturity at December 31, 2019.  Annual principal and interest payments from the note dated July 8, 2015 are approximately $65,000 until maturity at July 8, 2035.

As shares are released from collateral, the Company will report compensation expense equal to the current market price of the shares and the shares will become outstanding for earnings-per-share computations.  Dividends on allocated ESOP shares reduce retained earnings; dividends on unearned ESOP shares reduce accrued interest.  Because participants may require the Company to purchase their ESOP shares upon termination of their employment, the fair value of all earned and allocated ESOP shares may become a liability.

The ESOP has a plan year-end of December 31.  The Company recorded compensation expense of $71,335 and $39,290 for the six months ended December 31, 2016 and 2015, respectively.

Shares held by the ESOP were as follows:

	December 31, 2016		June 30, 2016
Allocated shares		70,244		71,803
Shares allocated to be released		15,864		7,932
Unearned ESOP shares		142,768		150,700
Total ESOP shares		228,876		230,435
Fair value of unearned ESOP shares	$	1,413,403	$	1,252,317
Fair value of allocated shares subject to repurchase obligation	$	658,122	$	564,723

The Company approved the Equitable Financial Corp. 2006 Equity Incentive Plan (“2006 Plan”) in November 2006 and the Equitable Financial Corp. 2016 Equity Incentive Plan (“2016 Plan”) in November 2016. Both plans provide for awards of stock options and restricted stock to officers, employees and directors.  The cost of the plan is based on the fair value of the awards at the grant date.  The fair value of stock is based on the closing price of the Company’s stock on the grant date.  The cost of the awards are being recognized over the five-year vesting periods during which participants are required to provide services in exchange for the awards.  As of December 31, 2016 the 2006 plan has terminated.

The maximum number of shares authorized under the 2016 Plan is 198,316 stock options and 79,326 shares of restricted stock to employees and directors.  As of December 31, 2016 no stock options or restricted stock have been awarded.

Restricted stock awards are accounted for as fixed grants using the fair value of the Company’s stock at the time of the grant.  Unvested restricted stock awards may not be disposed of or transferred during the vesting period.  Restricted stock awards carry with them the right to receive dividends.

The table below represents the restricted stock award activity for the period shown:

	Service-Based		Weighted
	Stock		Grant Date
	Awards		Fair Value
Non-vested at July 1, 2015		43,094		4.02
Conversion for stock offering		3,907		—
Granted		4,900		8.53
Vested		(6,297)		4.93
Non-vested at December 31, 2015		45,604		4.02
Non-vested at July 1, 2016		39,281		4.32
Vested		(7,294)		5.40
Non-vested at December 31, 2016		31,987		4.32

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Earnings per Share

6 Months Ended

Dec. 31, 2016

Earnings per Share

Earnings per Share

Note 9.Earnings per Share

Amounts reported in earnings per share reflect earnings available to common stockholders for the period divided by the weighted average number of shares of common stock outstanding during the year.  Diluted earnings per share is calculated by dividing earnings available to common stockholders for the period by the sum of the weighted average common shares outstanding and the weighted average dilutive shares.

The following table presents a reconciliation of the components used to compute basic earnings per share for the six months ended December 31, 2016 and 2015:

	For the three months ended				For the six months ended
	December 31,				December 31,
	2016		2015		2016		2015
Weighted average common shares outstanding		3,284,562		3,261,989		3,286,340		3,258,318
Net income available to common stockholders	$	309,464	$	222,124	$	574,522	$	497,102
Basic earnings per share	$	0.09	$	0.07	$	0.17	$	0.15

The following table presents a reconciliation of the components used to compute diluted earnings per share for the six months ended December 31, 2016 and 2015:

	For the three months ended				For the six months ended
	December 31,				December 31,
	2016		2015		2016		2015
Weighted average common shares outstanding		3,284,562		3,261,989		3,286,340		3,258,318
Weighted average of net additional shares from restricted stock awards		17,552		23,567		16,801		24,829
Weighted average number of shares outstanding		3,302,114		3,285,556		3,303,141		3,283,147
Net income available to common stockholders	$	309,464	$	222,124	$	574,522	$	497,102
Diluted earnings per share	$	0.09	$	0.07	$	0.17	$	0.15

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Fair Value Measurements

6 Months Ended

Dec. 31, 2016

Fair Value Measurements

Fair Value Measurements

Note 10.Fair Value Measurements

The Fair Value Measurements and Disclosures Topic of the FASB Accounting Standards Codification defines fair value, establishes a framework for measuring fair value and requires disclosure of fair value measurements.  The fair value hierarchy set forth in the Topic is as follows:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

There were no transfers between levels during the six months ended December 31, 2016, nor were there any changes in valuation techniques used for assets or liabilities measured at fair value at December 31, 2016.

Assets and liabilities recorded at fair value on a recurring basis: A description of the valuation methodologies used for assets and liabilities measured at fair value on a recurring basis, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below:

Securities Available-for-Sale — Where quoted prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. Level 1 securities would include highly liquid government bonds and exchange traded equities. If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics, or discounted cash flow. Level 2 securities would include U.S. agency securities, mortgage-backed agency securities, obligations of states and political subdivisions and certain corporate, asset backed and other securities. In certain cases where there is limited activity or less transparency around inputs to the valuation, securities are classified within Level 3 of the valuation hierarchy.

The following tables summarize assets and liabilities measured at fair value on a recurring basis as of December 31, 2016 and June 30, 2016, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

	Fair Value Measurement at December 31, 2016 Using
			Quoted Prices in				Significant
			Active Markets for		Significant Other		Unobservable
			Identical Assets		Observable Inputs		Inputs
	Total		Level 1		Level 2		Level 3
Assets
Securities available-for-sale	$	1,466,399	$	—	$	1,466,399	$	—

	Fair Value Measurement at June 30, 2016 Using
			Quoted Prices in				Significant
			Active Markets for		Significant Other		Unobservable
			Identical Assets		Observable Inputs		Inputs
	Total		Level 1		Level 2		Level 3
Assets
Securities available-for-sale	$	664,755	$	—	$	664,755	$	—

Assets and liabilities recorded at fair value on a nonrecurring basis:  A description of the valuation methodologies used for assets and liabilities measured at fair value on a nonrecurring basis, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below.

Impaired Loans — From time to time, a loan is considered impaired and an allowance for credit losses is established.  The specific reserves for collateral dependent impaired loans are based on the fair value of the collateral less estimated costs to sell. The fair value of collateral was determined based on appraisals. In some cases, adjustments were made to the appraised values due to various factors including age of the appraisal, age of comparables included in the appraisal, and known changes in the market and in the collateral.  When significant adjustments were based on unobservable inputs, the resulting fair value measurement has been categorized as a Level 3 measurement.

Foreclosed Assets — Foreclosed assets are carried at estimated fair value of the property, less disposal costs.  The fair value of the property is determined based upon appraisals.  As with impaired loans, if significant adjustments are made to the appraised value, based on unobservable inputs, the resulting fair value measurement has been categorized as a Level 3 measurement.

At December 31, 2016 and June 30, 2016 the fair value of impaired loans and foreclosed assets were immaterial.

The Financial Instruments Topic of the FASB Accounting Standards Codification requires disclosure of fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate that value.  Fair value is determined under the framework discussed above.  The Topic excludes all nonfinancial instruments from its disclosure requirements.  Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the Company.  The following methods and assumptions used in estimating fair value disclosure for financial instruments are described below:

Cash and due from financial institutions — For cash and due from financial institutions, the current carrying amount is a reasonable estimate of fair value.

Interest-earning deposits — For interest-earning deposits, the current carrying amount is a reasonable estimate of fair value.

Securities — The fair value of securities is determined using quoted prices, when available in an active market.  If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics, or a discounted cash flows model.

Federal Home Loan Bank stock — For restricted equity securities, the carrying value approximates fair value.

Loans, net — The fair value of fixed rate loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities.  The fair value of variable rate loans approximates carrying value.

Deposits — The carrying value of noninterest-bearing deposits approximates fair value.  The fair value of fixed rate deposits is estimated by discounting the future cash flows using the current rates for the same remaining maturities.

Federal funds purchased — For federal funds purchased, the carrying value approximates fair value.  As of June 30, 2016 the Company did not have any federal funds purchased.

Federal Home Loan Bank borrowings — The estimated fair value of fixed rate advances from the FHLB is determined by discounting the future cash flows of existing advances using rates currently available on advances from the FHLB having similar characteristics.  Adjustable rate advances’ carrying value approximates fair value.  As of June 30, 2016 the Company did not have any FHLB borrowings.

Accrued interest — The carrying amounts of accrued interest approximate fair value.

Off-balance sheet items — The fair value of off-balance-sheet items is based on current fees or cost that would be charged to enter into or terminate such arrangements.  There were not considered material and are not presented in the below tables.

The estimated fair value of financial instruments is as follows:

	Fair Value	Carrying		Estimated
December 31, 2016	Hierarchy Level	Amount		Fair Value
Financial assets:
Cash and due from financial institutions	Level 1	$	4,467,747	$	4,468,000
Securities available-for-sale	See previous table		1,466,399		1,466,000
Securities held-to-maturity	Level 2		752,844		764,000
Federal Home Loan Bank stock	Level 1		231,100		231,000
Loans, net	Level 2		213,322,493		211,197,122
Accrued interest receivable	Level 1		1,335,961		1,336,000
Financial liabilities:
Noninterest-bearing deposits	Level 2		25,880,529		25,881,000
Interest-bearing deposits	Level 2		162,392,981		166,145,649
Federal funds purchased	Level 1		3,008,000		3,008,000
Federal Home Loan Bank Borrowings	Level 2		2,000,000		2,000,000
Accrued interest payable and other liabilities	Level 1		1,072,181		1,072,000

	Fair Value	Carrying		Estimated
June 30, 2016	Hierarchy Level	Amount		Fair Value
Financial assets:
Cash and due from financial institutions	Level 1	$	14,947,296	$	14,947,000
Securities available-for-sale	See previous table		664,755		665,000
Securities held-to-maturity	Level 2		781,740		801,000
Federal Home Loan Bank stock	Level 1		229,900		230,000
Loans, net	Level 2		198,309,920		198,000,000
Accrued interest receivable	Level 1		1,147,467		1,147,000
Financial liabilities:
Noninterest-bearing deposits	Level 2		24,296,166		24,296,000
Interest-bearing deposits	Level 2		162,666,186		170,276,000
Accrued interest payable and other liabilities	Level 1		1,198,850		1,199,000

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Accumulated Other Comprehensive Income

6 Months Ended

Dec. 31, 2016

Accumulated Other Comprehensive Income

Accumulated Other Comprehensive Income

Note 11.Accumulated Other Comprehensive Income/(Loss)

Accumulated other comprehensive income components were as follows:

	December 31, 2016		June 30, 2016
Unrealized holding gains/(losses) on securities available-for-sale	$	(35,108)	$	6,176
Tax expense		11,937		(2,100)
	$	(23,171)	$	4,076

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Income Taxes

6 Months Ended

Dec. 31, 2016

Income Taxes

Income Taxes

Note 12.Income Taxes

	Three months ended
	December 31, 2016		December 31, 2015
Provision computed at the statutory federal tax rate	$	(180,602)	$	(128,574)
State income taxes, net of federal tax		(15,715)		(12,726)
Release of unearned EOSP shares and stock awards		2,355		6,537
Nondeductible expenses		(2,066)		(2,212)
Other		(25,691)		(19,059)
	$	(221,719)	$	(156,034)

	Six months ended
	December 31, 2016		December 31, 2015
Provision computed at the statutory federal tax rate	$	(314,399)	$	(235,324)
State income taxes, net of federal tax		(27,755)		(24,712)
Release of unearned EOSP shares and stock awards		5,547		8,483
Nondeductible expenses		(3,714)		(4,202)
Valuation allowance adjustment		—		79,000
Other		(9,860)		(18,272)
	$	(350,181)	$	(195,027)

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Stock Buyback

6 Months Ended

Dec. 31, 2016

Stock Buyback

Stock Buyback

Note 13.Stock Buyback

The Company announced a stock repurchase plan on October 7, 2016 whereby the Company could repurchase up to 173,857 shares of its common stock, or approximately 5% of the then current outstanding shares.  There were 86,455 shares of the Company’s common stock repurchased by the Company during the six months ended December 31, 2016, and there were 87,402 shares yet to be repurchased under the plan as of December 31, 2016. 

The following table provides information regarding the Company’s purchase of its common stock during the six months ended December 31, 2016:

				Total Number of
				Shares Purchased	Maximum Number of
			Weighted	as Part of Publicly	Shares that May Yet Be
	Total Number of	Average Price		Announced Plans	Purchased Under the
Period	Shares Purchased	Paid Per Share		or Programs	Plans or Programs
10/1/16 - 10/31/16	—	$	—	—	173,857
11/1/16 - 11/30/16	60,000		9.07	60,000	113,857
12/1/16 - 12/31/16	26,455		9.57	86,455	87,402
Total	86,455	$	9.22	86,455

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Securities (Tables)

6 Months Ended

Dec. 31, 2016

Securities

Schedule of securities available-for-sale

			Gross		Gross
	Amortized		Unrealized		Unrealized
December 31, 2016	Cost		Gains		Losses		Fair Value
U.S. Government-sponsored agencies securities	$	985,693	$	—	$	(31,926)	$	953,767
Residential mortgage-backed securities		515,814		—		(3,182)		512,632
	$	1,501,507	$	—	$	(35,108)	$	1,466,399

			Gross		Gross
	Amortized		Unrealized		Unrealized
June 30, 2016	Cost		Gains		Losses		Fair Value
Residential mortgage-backed securities	$	658,579	$	6,176	$	—	$	664,755

Schedule of securities held-to-maturity

			Gross		Gross
	Amortized		Unrealized		Unrealized
December 31, 2016	Cost		Gains		Losses		Fair Value
Residential mortgage-backed securities	$	152,183	$	11,381	$	—	$	163,564
Municipal securities		600,661		—		(483)		600,178
	$	752,844	$	11,381	$	(483)	$	763,742

			Gross		Gross
	Amortized		Unrealized		Unrealized
June 30, 2016	Cost		Gains		Losses		Fair Value
Residential mortgage-backed securities	$	180,035	$	15,281	$	—	$	195,316
Municipal securities		601,705		4,093		—		605,798
	$	781,740	$	19,374	$	—	$	801,114

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Loans (Tables)

6 Months Ended

Dec. 31, 2016

Loans

Summary of loans

	December 31, 2016		June 30, 2016
Commercial:
Operating	$	17,483,861	$	15,355,676
Real estate		70,692,064		67,698,929
Agricultural:
Operating		23,829,863		22,942,560
Real estate		29,837,096		24,965,541
Residential real estate:
1-4 family		42,573,310		40,309,797
Home equity		10,584,086		12,644,624
Other:
Construction and land		17,080,113		13,210,393
Consumer		3,865,950		3,566,917
Total loans		215,946,343		200,694,437
Deferred loan origination costs, net		614,150		562,483
Allowance for loan losses		(3,238,000)		(2,947,000)
		(2,623,850)		(2,384,517)
Loans, net	$	213,322,493	$	198,309,920

Summary of changes in the allowance for loan losses by portfolio segment

					Residential
	Commercial		Agricultural		Real Estate		Other		Total
	For the three months ended December 31, 2016
Balance, beginning	$	1,393,510	$	802,000	$	617,000	$	243,000	$	3,055,510
Provision charged to expense		59,608		46,000		17,252		46,249		169,109
Recoveries		14,882		—		842		238		15,962
Loans charged off		—		—		(94)		(2,487)		(2,581)
Balance, ending	$	1,468,000	$	848,000	$	635,000	$	287,000	$	3,238,000

					Residential
	Commercial		Agricultural		Real Estate		Other		Total
	For the three months ended December 31, 2015
Balance, beginning	$	1,140,000	$	726,000	$	669,000	$	149,000	$	2,684,000
Provision charged to expense		36,906		22,000		2,775		22,720		84,401
Recoveries		49,358		—		225		1,002		50,585
Loans charged off		(1,264)		—		—		(722)		(1,986)
Balance, ending	$	1,225,000	$	748,000	$	672,000	$	172,000	$	2,817,000

					Residential
	Commercial		Agricultural		Real Estate		Other		Total
	For the six months ended December 31, 2016
Balance, beginning	$	1,337,000	$	738,000	$	655,000	$	217,000	$	2,947,000
Provision charged to expense		156,311		110,000		(20,973)		76,535		321,873
Recoveries		22,556		—		1,067		1,202		24,825
Loans charged off		(47,867)		—		(94)		(7,737)		(55,698)
Balance, ending	$	1,468,000		848,000		635,000		287,000	$	3,238,000

					Residential
	Commercial		Agricultural		Real Estate		Other		Total
	For the six months ended December 31, 2015
Balance, beginning	$	1,124,000	$	697,000	$	644,000	$	118,000	$	2,583,000
Provision charged to expense		27,554		51,000		27,316		51,475		157,345
Recoveries		74,710		—		684		4,394		79,788
Loans charged off		(1,264)		—		—		(1,869)		(3,133)
Balance, ending	$	1,225,000		748,000		672,000		172,000	$	2,817,000

Summary of allowance for loan losses by impairment evaluation and portfolio segment

					Residential
	Commercial		Agricultural		Real Estate		Other		Total
	December 31, 2016
Allowance for loans individually evaluated for impairment	$	11,626	$	13,857	$	24,598	$	—	$	50,081
Allowance for loans collectively evaluated for impairment		1,456,374		834,143		610,402		287,000		3,187,919
	$	1,468,000	$	848,000	$	635,000	$	287,000	$	3,238,000
Loans individually evaluated for impairment	$	970,493	$	873,661	$	3,656,124	$	25,623	$	5,525,901
Loans collectively evaluated for impairment		87,205,432		52,793,298		49,501,272		20,920,440		210,420,442
	$	88,175,925	$	53,666,959	$	53,157,396	$	20,946,063	$	215,946,343

					Residential
	Commercial		Agricultural		Real Estate		Other		Total
	June 30, 2016
Allowance for loans individually evaluated for impairment	$	34,975	$	—	$	17,828	$	—	$	52,803
Allowance for loans collectively evaluated for impairment		1,302,025		738,000		637,172		217,000		2,894,197
	$	1,337,000	$	738,000	$	655,000	$	217,000	$	2,947,000
Loans individually evaluated for impairment	$	227,824	$	885,757	$	3,726,602	$	3,194	$	4,843,377
Loans collectively evaluated for impairment		82,826,781		47,022,344		49,227,819		16,774,116		195,851,060
	$	83,054,605	$	47,908,101	$	52,954,421	$	16,777,310	$	200,694,437

Summary of aging in terms of unpaid balance of the loan portfolio by classes of loans

							> 90 days
			31-60 days		61-90 days		Past Due				Non accrual
	Current		Past Due		Past Due		(Nonaccrual)		Total		Loans
	December 31, 2016
Classes of loans:
Commercial:
Operating	$	17,360,973	$	37,061	$	85,827	$	—	$	17,483,861	$	114,735
Real estate		69,851,952		801,888		—		38,224		70,692,064		708,695
Agricultural:
Operating		23,829,863		—		—		—		23,829,863		6,848
Real estate		29,837,096		—		—		—		29,837,096		836,509
Residential real estate:
1-4 family		41,268,998		644,411		625,437		34,464		42,573,310		704,394
Home equity		10,556,417		—		9,996		17,673		10,584,086		38,486
Other:
Construction and land		16,851,230		228,883		—		—		17,080,113		—
Consumer		3,860,203		5,747		—		—		3,865,950		2,542
	$	213,416,732	$	1,717,990	$	721,260	$	90,361	$	215,946,343	$	2,412,209

							> 90 days
			31-60 days		61-90 days		Past Due					Non accrual
	Current		Past Due		Past Due		(Nonaccrual)		Total			Loans
	June 30, 2016
Classes of loans:
Commercial:
Operating	$	15,256,328	$	99,348	$	—	$	—	$	15,355,676	$	97,294
Real estate		67,606,842		—		—		92,087		67,698,929		92,087
Agricultural:
Operating		22,318,246		624,314		—		—		22,942,560		6,848
Real estate		24,965,541		—		—		—		24,965,541		877,909
Residential real estate:
1-4 family		38,428,793		1,823,353		23,736		33,915		40,309,797		688,454
Home equity		12,644,624		—		—		—		12,644,624		29,807
Other:
Construction and land		13,210,393		—		—		—		13,210,393		—
Consumer		3,563,221		1,294		—		2,402		3,566,917		7,248
	$	197,993,988	$	2,548,309	$	23,736	$	128,404	$	200,694,437	$	1,799,647

Summary of unpaid principal balance by credit quality indicator

									Other —
	Commercial —		Commercial —		Agricultural —		Agricultural —		Construction
	Operating		Real Estate		Operating		Real Estate		and Land		Total
	December 31, 2016
Internally assigned risk rating:
Highest Quality (rating 1)	$	—	$	—	$	604,225	$	326,045	$	—	$	930,270
Good Quality (rating 2)		214,078		6,899,308		6,173,404		3,937,872		2,882,261		20,106,923
Acceptable Quality (rating 3)		8,301,675		32,586,766		7,128,873		15,428,309		8,163,286		71,608,909
Fair Quality (rating 4)		8,779,440		28,308,128		7,940,517		9,293,361		6,034,566		60,356,012
Special Mention (rating 5)		—		—		1,960,692		—		—		1,960,692
Substandard (rating 6)		188,668		2,897,862		22,152		851,509		—		3,960,191
Doubtful (rating 7)		—		—		—		—		—		—
Loss (rating 8)		—		—		—		—		—		—
	$	17,483,861	$	70,692,064	$	23,829,863	$	29,837,096	$	17,080,113	$	158,922,997

									Other —
	Commercial —		Commercial —		Agricultural —		Agricultural —		Construction
	Operating		Real Estate		Operating		Real Estate		and Land		Total
	June 30, 2016
Internally assigned risk rating:
Highest Quality (rating 1)	$	—	$	—	$	484,813	$	348,011	$	—	$	832,824
Good Quality (rating 2)		213,824		4,923,002		5,510,208		6,173,479		1,993,567		18,814,080
Acceptable Quality (rating 3)		7,732,341		33,606,696		5,992,063		9,729,301		6,675,761		63,736,162
Fair Quality (rating 4)		7,294,630		28,578,771		9,604,176		7,836,841		4,541,065		57,855,483
Special Mention (rating 5)		—		—		829,738		—		—		829,738
Substandard (rating 6)		114,881		590,460		521,562		877,909		—		2,104,812
Doubtful (rating 7)		—		—		—		—		—		—
Loss (rating 8)		—		—		—		—		—		—
	$	15,355,676	$	67,698,929	$	22,942,560	$	24,965,541	$	13,210,393	$	144,173,099

	Residential RE —		Residential RE —		Other —
	1-4 Family		Home Equity		Consumer		Total
	December 31, 2016
Delinquency status*:
Performing	$	41,077,291	$	10,545,599	$	3,857,661	$	55,480,551
Nonperforming		1,496,019		38,487		8,289		1,542,795
	$	42,573,310	$	10,584,086	$	3,865,950	$	57,023,346

	Residential RE —		Residential RE —		Other —
	1-4 Family		Home Equity		Consumer		Total
	June 30, 2016
Delinquency status*:
Performing	$	37,832,838	$	12,614,817	$	3,558,375	$	54,006,030
Nonperforming		2,476,959		29,807		8,542		2,515,308
	$	40,309,797	$	12,644,624	$	3,566,917	$	56,521,338

Summary of loans, by classes of loans, considered to be impaired

			Unpaid
	Recorded		Principal		Related
	Investment		Balance		Allowance
	December 31, 2016
Classes of loans:
Impaired loans with no specific allowance recorded:
Commercial:
Operating	$	206,058	$	203,635	$	—
Real estate		670,629		670,471		—
Agricultural:
Operating		22,566		22,152		—
Real estate		428,260		380,453		—
Residential real estate:
1-4 family		3,081,233		3,067,135		—
Home equity		8,731		8,716		—
Other:
Consumer		26,389		25,623		—
		4,443,866		4,378,185		—
Impaired loans with specific allowance recorded:
Commercial:
Operating		58,444		58,163		4,910
Real estate		48,046		38,224		6,716
Agricultural:
Real estate		497,224		471,056		13,857
Residential real estate:
1-4 family		576,891		562,600		23,692
Home equity		17,964		17,673		906
		1,198,569		1,147,716		50,081
Total impaired loans:
Commercial:
Operating		264,502		261,798		4,910
Real estate		718,675		708,695		6,716
Agricultural:
Operating		22,566		22,152		—
Real estate		925,484		851,509		13,857
Residential real estate:
1-4 family		3,658,124		3,629,735		23,692
Home equity		26,695		26,389		906
Other:
Consumer		26,389		25,623		—
	$	5,642,435	$	5,525,901	$	50,081

			Unpaid
	Recorded		Principal		Related
	Investment		Balance		Allowance
	June 30, 2016
Classes of loans:
Impaired loans with no specific allowance recorded:
Commercial:
Operating	$	88,902	$	87,497	$	—
Agricultural:
Operating		8,009		7,848		—
Real estate		925,288		877,909		—
Residential real estate:
1-4 family		3,330,310		3,320,028		—
Home equity		59,336		59,123		—
Other:
Consumer		3,756		3,194		—
		4,415,601		4,355,599		—
Impaired loans with specific allowance recorded:
Commercial:
Operating		48,302		48,240		4,824
Real estate		114,837		92,087		30,151
Residential real estate:
1-4 family		330,997		329,623		16,913
Home equity		17,882		17,828		915
		512,018		487,778		52,803
Total impaired loans:
Commercial:
Operating		137,204		135,737		4,824
Real estate		114,837		92,087		30,151
Agricultural:
Operating		8,009		7,848		—
Real estate		925,288		877,909		—
Residential real estate:
1-4 family		3,661,307		3,649,651		16,913
Home equity		77,218		76,951		915
Other:
Consumer		3,756		3,194		—
	$	4,927,619	$	4,843,377	$	52,803

Impaired loans, for which no allowance has been provided as of December 31, 2016 and June 30, 2016, have adequate collateral, based on management’s current estimates.

	For the three months ended
	December 31, 2016				December 31, 2015
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
	Investment		Recognized		Investment		Recognized
Classes of loans:
Impaired loans with no specific allowance recorded:
Commercial:
Operating	$	190,581	$	2,611	$	275,575	$	4,445
Real estate		335,315		2,375		182,423		—
Agricultural:
Operating		48,507		3,328		8,396		108
Real estate		432,437		135		868,712		13,054
Residential real estate:
1-4 family		3,103,372		36,162		4,053,483		63,044
Home equity		8,936		150		61,772		983
Other:
Consumer		27,440		270		10,571		90
		4,146,588		45,031		5,460,932		81,724
Impaired loans with specific allowance recorded:
Commercial:
Operating		59,569		606		288,647		574
Real estate		47,765		—		—		—
Agricultural:
Operating		—		—		208,128		14,843
Real estate		493,981		—		—		—
Residential real estate:
1-4 family		577,070		3,551		—		—
Home equity		17,944		156		20,218		196
		1,196,329		4,313		516,993		15,613
Total impaired loans:
Commercial:
Operating		250,150		3,217		564,222		5,019
Real estate		383,080		2,375		182,423		—
Agricultural:
Operating		48,507		3,328		216,524		14,951
Real estate		926,418		135		868,712		13,054
Residential real estate:
1-4 family		3,680,442		39,713		4,053,483		63,044
Home equity		26,880		306		81,990		1,179
Other:
Consumer		27,440		270		10,571		90
	$	5,342,917	$	49,344	$	5,977,925	$	97,337

	For the six months ended
	December 31, 2016				December 31, 2015
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
	Investment		Recognized		Investment		Recognized
Classes of loans:
Impaired loans with no specific allowance recorded:
Commercial:
Operating	$	178,100	$	4,115	$	276,207	$	7,130
Real estate		335,315		2,375		183,969		2,331
Agricultural:
Operating		47,927		3,328		9,043		234
Real estate		442,515		363		856,291		14,233
Residential real estate:
1-4 family		3,116,634		75,183		4,032,597		112,943
Home equity		9,137		309		62,416		2,092
Other:
Consumer		27,972		642		11,351		265
		4,157,600		86,315		5,431,874		139,228
Impaired loans with specific allowance recorded:
Commercial:
Operating		53,373		1,122		287,802		1,799
Real estate		47,489		—		—		—
Agricultural:
Operating		—		—		212,537		14,843
Real estate		490,390		—		—		—
Residential real estate:
1-4 family		576,135		5,759		—		—
Home equity		17,923		388		20,178		840
		1,185,310		7,269		520,517		17,482
Total impaired loans:
Commercial:
Operating		231,473		5,237		564,009		8,929
Real estate		382,804		2,375		183,969		2,331
Agricultural:
Operating		47,927		3,328		221,580		15,077
Real estate		932,905		363		856,291		14,233
Residential real estate:
1-4 family		3,692,769		80,942		4,032,597		112,943
Home equity		27,060		697		82,594		2,932
Other:
Consumer		27,972		642		11,351		265
	$	5,342,910	$	93,584	$	5,952,391	$	156,710

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Borrowings (Tables)

6 Months Ended

Dec. 31, 2016

Borrowings

Schedule of balances and interest rates of advances

	At or For the
		Six Months Ended
	December 31, 2016
	(Dollars in thousands)
Federal Home Loan Bank Advances:
Maximum outstanding at any month end	$	2,000
Balance at the end of period		2,000
Average balance during period		666
Weighted average interest rate at the end of period		0.72	%
Weighted average interest rate during period		0.72	%

XML

Regulatory Matters (Tables)

6 Months Ended

Dec. 31, 2016

Regulatory Matters

Summary of bank's actual capital levels and minimum required levels

									Minimum
									Required to Be
									Well Capitalized
					Minimum Required for				Under Prompt
					Capital Adequacy				Corrective Action
					Purposes				Provisions
(Dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio
December 31, 2016
Total capital (to risk-weighted assets)	$	29,945	13.9	%	$	17,227	8.0	%	$	21,534	10.0	%
Common equity Tier 1 capital (to risk-weighted assets)		27,245	12.7	%		9,690	4.5	%		13,997	6.5	%
Tier 1 (core) capital (to risk-weighted assets)		27,245	12.7	%		12,920	6.0	%		17,227	8.0	%
Tier 1 (core) capital (to adjusted total assets)		27,245	12.0	%		9,108	4.0	%		11,384	5.0	%
June 30, 2016
Total capital (to risk-weighted assets)	$	28,977	14.7	%	$	15,805	8.0	%	$	19,757	10.0	%
Common equity Tier 1 capital (to risk-weighted		26,500	13.4	%		8,891	4.5	%		12,842	6.5	%
Tier 1 (core) capital (to risk-weighted assets)		26,500	13.4	%		11,854	6.0	%		15,805	8.0	%
Tier 1 (core) capital (to adjusted total assets)		26,500	11.6	%		9,114	4.0	%		11,393	5.0	%

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Employee Benefit Plan (Tables)

6 Months Ended

Dec. 31, 2016

Employee Benefit Plan

Summary of ESOP shares

	December 31, 2016		June 30, 2016
Allocated shares		70,244		71,803
Shares allocated to be released		15,864		7,932
Unearned ESOP shares		142,768		150,700
Total ESOP shares		228,876		230,435
Fair value of unearned ESOP shares	$	1,413,403	$	1,252,317
Fair value of allocated shares subject to repurchase obligation	$	658,122	$	564,723

Schedule of restricted stock award activity

	Service-Based		Weighted
	Stock		Grant Date
	Awards		Fair Value
Non-vested at July 1, 2015		43,094		4.02
Conversion for stock offering		3,907		—
Granted		4,900		8.53
Vested		(6,297)		4.93
Non-vested at December 31, 2015		45,604		4.02
Non-vested at July 1, 2016		39,281		4.32
Vested		(7,294)		5.40
Non-vested at December 31, 2016		31,987		4.32

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Earnings per Share (Tables)

6 Months Ended

Dec. 31, 2016

Earnings per Share

Schedule of reconciliation of the components used to compute basic earnings per share

	For the three months ended				For the six months ended
	December 31,				December 31,
	2016		2015		2016		2015
Weighted average common shares outstanding		3,284,562		3,261,989		3,286,340		3,258,318
Net income available to common stockholders	$	309,464	$	222,124	$	574,522	$	497,102
Basic earnings per share	$	0.09	$	0.07	$	0.17	$	0.15

Schedule of reconciliation of the components used to compute diluted earnings per share

	For the three months ended				For the six months ended
	December 31,				December 31,
	2016		2015		2016		2015
Weighted average common shares outstanding		3,284,562		3,261,989		3,286,340		3,258,318
Weighted average of net additional shares from restricted stock awards		17,552		23,567		16,801		24,829
Weighted average number of shares outstanding		3,302,114		3,285,556		3,303,141		3,283,147
Net income available to common stockholders	$	309,464	$	222,124	$	574,522	$	497,102
Diluted earnings per share	$	0.09	$	0.07	$	0.17	$	0.15

XML

Fair Value Measurements (Tables)

6 Months Ended

Dec. 31, 2016

Fair Value Measurements

Summary of fair value of assets and liabilities measured on a recurring basis

	Fair Value Measurement at December 31, 2016 Using
			Quoted Prices in				Significant
			Active Markets for		Significant Other		Unobservable
			Identical Assets		Observable Inputs		Inputs
	Total		Level 1		Level 2		Level 3
Assets
Securities available-for-sale	$	1,466,399	$	—	$	1,466,399	$	—

	Fair Value Measurement at June 30, 2016 Using
			Quoted Prices in				Significant
			Active Markets for		Significant Other		Unobservable
			Identical Assets		Observable Inputs		Inputs
	Total		Level 1		Level 2		Level 3
Assets
Securities available-for-sale	$	664,755	$	—	$	664,755	$	—

Schedule of carrying and estimated fair value of financial instruments

	Fair Value	Carrying		Estimated
December 31, 2016	Hierarchy Level	Amount		Fair Value
Financial assets:
Cash and due from financial institutions	Level 1	$	4,467,747	$	4,468,000
Securities available-for-sale	See previous table		1,466,399		1,466,000
Securities held-to-maturity	Level 2		752,844		764,000
Federal Home Loan Bank stock	Level 1		231,100		231,000
Loans, net	Level 2		213,322,493		211,197,122
Accrued interest receivable	Level 1		1,335,961		1,336,000
Financial liabilities:
Noninterest-bearing deposits	Level 2		25,880,529		25,881,000
Interest-bearing deposits	Level 2		162,392,981		166,145,649
Federal funds purchased	Level 1		3,008,000		3,008,000
Federal Home Loan Bank Borrowings	Level 2		2,000,000		2,000,000
Accrued interest payable and other liabilities	Level 1		1,072,181		1,072,000

	Fair Value	Carrying		Estimated
June 30, 2016	Hierarchy Level	Amount		Fair Value
Financial assets:
Cash and due from financial institutions	Level 1	$	14,947,296	$	14,947,000
Securities available-for-sale	See previous table		664,755		665,000
Securities held-to-maturity	Level 2		781,740		801,000
Federal Home Loan Bank stock	Level 1		229,900		230,000
Loans, net	Level 2		198,309,920		198,000,000
Accrued interest receivable	Level 1		1,147,467		1,147,000
Financial liabilities:
Noninterest-bearing deposits	Level 2		24,296,166		24,296,000
Interest-bearing deposits	Level 2		162,666,186		170,276,000
Accrued interest payable and other liabilities	Level 1		1,198,850		1,199,000

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Accumulated Other Comprehensive Income (Tables)

6 Months Ended

Dec. 31, 2016

Accumulated Other Comprehensive Income

Schedule of components of accumulated other comprehensive income

	December 31, 2016		June 30, 2016
Unrealized holding gains/(losses) on securities available-for-sale	$	(35,108)	$	6,176
Tax expense		11,937		(2,100)
	$	(23,171)	$	4,076

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Income Taxes (Tables)

6 Months Ended

Dec. 31, 2016

Income Taxes

Schedule of reconciliation of the provision for income taxes

	Three months ended
	December 31, 2016		December 31, 2015
Provision computed at the statutory federal tax rate	$	(180,602)	$	(128,574)
State income taxes, net of federal tax		(15,715)		(12,726)
Release of unearned EOSP shares and stock awards		2,355		6,537
Nondeductible expenses		(2,066)		(2,212)
Other		(25,691)		(19,059)
	$	(221,719)	$	(156,034)

	Six months ended
	December 31, 2016		December 31, 2015
Provision computed at the statutory federal tax rate	$	(314,399)	$	(235,324)
State income taxes, net of federal tax		(27,755)		(24,712)
Release of unearned EOSP shares and stock awards		5,547		8,483
Nondeductible expenses		(3,714)		(4,202)
Valuation allowance adjustment		—		79,000
Other		(9,860)		(18,272)
	$	(350,181)	$	(195,027)

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Stock Buyback (Tables)

6 Months Ended

Dec. 31, 2016

Stock Buyback

Common stock purchased during the period

				Total Number of
				Shares Purchased	Maximum Number of
			Weighted	as Part of Publicly	Shares that May Yet Be
	Total Number of	Average Price		Announced Plans	Purchased Under the
Period	Shares Purchased	Paid Per Share		or Programs	Plans or Programs
10/1/16 - 10/31/16	—	$	—	—	173,857
11/1/16 - 11/30/16	60,000		9.07	60,000	113,857
12/1/16 - 12/31/16	26,455		9.57	86,455	87,402
Total	86,455	$	9.22	86,455

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Stock Conversion (Details) - $ / shares	Jul. 08, 2015	Dec. 31, 2016	Jun. 30, 2016
Stock Conversion
Sale of common stock, par value under Stock Conversion (in dollars per share)		$ 0.01	$ 0.01
Stock conversion between Equitable Financial Corp, Equitable MHC and Equitable Bank
Stock Conversion
Sale of common stock under Stock Conversion (in shares)	1,983,160
Sale of common stock, par value under Stock Conversion (in dollars per share)	$ 0.01
Subscription price of common stock under Stock Conversion (in dollars per share)	$ 8.00
Sale of common stock to employee stock ownership plan under Stock Conversion	118,989
Percentage of shares sold to employee stock ownership plan from total shares sold in initial stock offering under Stock Conversion	6.00%

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Securities (Details) - USD ($)	6 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Jun. 30, 2016
Amortized cost and estimated fair value of investments in debt and equity securities
Investment securities available-for-sale, amortized cost	$ 1,501,507
Available-for-sale Securities, Accumulated Gross Unrealized Loss, before Tax	(35,108)
Securities available-for-sale	1,466,399		$ 664,755
Investment securities held-to-maturity, amortized cost	752,844		781,740
Investment securities held-to-maturity , gross unrealized gains	11,381		19,374
Investment securities held-to-maturity , gross unrealized losses	(483)
Investment securities held-to-maturity, estimated fair value	763,742		801,114
Available-for-sale Securities, Debt Maturities, Single Maturity Date [Abstract]
Securities sold	0	$ 0
Residential mortgage-backed securities
Amortized cost and estimated fair value of investments in debt and equity securities
Investment securities available-for-sale, amortized cost	515,814		658,579
Investment securities available-for-sale , gross unrealized gain			6,176
Available-for-sale Securities, Accumulated Gross Unrealized Loss, before Tax	(3,182)
Securities available-for-sale	512,632		664,755
Investment securities held-to-maturity, amortized cost	152,183		180,035
Investment securities held-to-maturity , gross unrealized gains	11,381		15,281
Investment securities held-to-maturity, estimated fair value	163,564		195,316
Municipal bonds
Amortized cost and estimated fair value of investments in debt and equity securities
Investment securities held-to-maturity, amortized cost	600,661		601,705
Investment securities held-to-maturity , gross unrealized gains			4,093
Investment securities held-to-maturity , gross unrealized losses	(483)
Investment securities held-to-maturity, estimated fair value	600,178		$ 605,798
Available-for-sale Securities, Debt Maturities, Single Maturity Date [Abstract]
Held-to-maturity securities maturing in the year ending June 30, 2020	400,000
U.S. Government-sponsored agencies securities
Amortized cost and estimated fair value of investments in debt and equity securities
Investment securities available-for-sale, amortized cost	985,693
Available-for-sale Securities, Accumulated Gross Unrealized Loss, before Tax	(31,926)
Securities available-for-sale	953,767
Available-for-sale Securities, Debt Maturities, Single Maturity Date [Abstract]
Bonds maturing in the year ending June 30, 2023	$ 985,000

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Loans (Details) - USD ($)	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015
Loans disclosures
Total loans	$ 215,946,343		$ 200,694,437
Deferred loan origination costs, net	614,150		562,483
Allowance for loan losses	(3,238,000)	$ (3,055,510)	(2,947,000)	$ (2,817,000)	$ (2,684,000)	$ (2,583,000)
Deferred loan origination costs and allowance	(2,623,850)		(2,384,517)
Loans, net	213,322,493		198,309,920
Commercial
Loans disclosures
Total loans	88,175,925		83,054,605
Allowance for loan losses	(1,468,000)	(1,393,510)	(1,337,000)	(1,225,000)	(1,140,000)	(1,124,000)
Commercial | Operating
Loans disclosures
Total loans	17,483,861		15,355,676
Commercial | Real Estate
Loans disclosures
Total loans	70,692,064		67,698,929
Agricultural
Loans disclosures
Total loans	53,666,959		47,908,101
Allowance for loan losses	(848,000)	(802,000)	(738,000)	(748,000)	(726,000)	(697,000)
Agricultural | Operating
Loans disclosures
Total loans	23,829,863		22,942,560
Agricultural | Real Estate
Loans disclosures
Total loans	29,837,096		24,965,541
Residential
Loans disclosures
Total loans	53,157,396		52,954,421
Allowance for loan losses	(635,000)	(617,000)	(655,000)	(672,000)	(669,000)	(644,000)
Residential | 1 - 4 family
Loans disclosures
Total loans	42,573,310		40,309,797
Residential | Consumer - Home equity and lines of credit
Loans disclosures
Total loans	10,584,086		12,644,624
Other
Loans disclosures
Total loans	20,946,063		16,777,310
Allowance for loan losses	(287,000)	$ (243,000)	(217,000)	$ (172,000)	$ (149,000)	$ (118,000)
Other | Construction and land
Loans disclosures
Total loans	17,080,113		13,210,393
Other | Consumer - Personal
Loans disclosures
Total loans	$ 3,865,950		$ 3,566,917

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Loans - Allowance for Loan Losses (Details) - USD ($)	3 Months Ended		6 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015
Allowance for loan losses:
Balance, beginning	$ 3,055,510	$ 2,684,000	$ 2,947,000	$ 2,583,000
Provision charged to expense	169,109	84,401	321,873	157,345
Recoveries	15,962	50,585	24,825	79,788
Loans charged off	(2,581)	(1,986)	(55,698)	(3,133)
Balance, ending	3,238,000	2,817,000	3,238,000	2,817,000
Commercial
Allowance for loan losses:
Balance, beginning	1,393,510	1,140,000	1,337,000	1,124,000
Provision charged to expense	59,608	36,906	156,311	27,554
Recoveries	14,882	49,358	22,556	74,710
Loans charged off		(1,264)	(47,867)	(1,264)
Balance, ending	1,468,000	1,225,000	1,468,000	1,225,000
Agricultural
Allowance for loan losses:
Balance, beginning	802,000	726,000	738,000	697,000
Provision charged to expense	46,000	22,000	110,000	51,000
Balance, ending	848,000	748,000	848,000	748,000
Residential
Allowance for loan losses:
Balance, beginning	617,000	669,000	655,000	644,000
Provision charged to expense	17,252	2,775	(20,973)	27,316
Recoveries	842	225	1,067	684
Loans charged off	(94)		(94)
Balance, ending	635,000	672,000	635,000	672,000
Other
Allowance for loan losses:
Balance, beginning	243,000	149,000	217,000	118,000
Provision charged to expense	46,249	22,720	76,535	51,475
Recoveries	238	1,002	1,202	4,394
Loans charged off	(2,487)	(722)	(7,737)	(1,869)
Balance, ending	$ 287,000	$ 172,000	$ 287,000	$ 172,000

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Loans - Impairment Evaluation (Details) - USD ($)	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015
Allowance for loan losses:
Allowance for loans individually evaluated for impairment	$ 50,081		$ 52,803
Allowance for loans collectively evaluated for impairment	3,187,919		2,894,197
Total Allowance	3,238,000	$ 3,055,510	2,947,000	$ 2,817,000	$ 2,684,000	$ 2,583,000
Loan balances
Loans individually evaluated for impairment	5,525,901		4,843,377
Loans collectively evaluated for impairment	210,420,442		195,851,060
Total loans	215,946,343		200,694,437
Commercial
Allowance for loan losses:
Allowance for loans individually evaluated for impairment	11,626		34,975
Allowance for loans collectively evaluated for impairment	1,456,374		1,302,025
Total Allowance	1,468,000	1,393,510	1,337,000	1,225,000	1,140,000	1,124,000
Loan balances
Loans individually evaluated for impairment	970,493		227,824
Loans collectively evaluated for impairment	87,205,432		82,826,781
Total loans	88,175,925		83,054,605
Agricultural
Allowance for loan losses:
Allowance for loans individually evaluated for impairment	13,857
Allowance for loans collectively evaluated for impairment	834,143		738,000
Total Allowance	848,000	802,000	738,000	748,000	726,000	697,000
Loan balances
Loans individually evaluated for impairment	873,661		885,757
Loans collectively evaluated for impairment	52,793,298		47,022,344
Total loans	53,666,959		47,908,101
Residential
Allowance for loan losses:
Allowance for loans individually evaluated for impairment	24,598		17,828
Allowance for loans collectively evaluated for impairment	610,402		637,172
Total Allowance	635,000	617,000	655,000	672,000	669,000	644,000
Loan balances
Loans individually evaluated for impairment	3,656,124		3,726,602
Loans collectively evaluated for impairment	49,501,272		49,227,819
Total loans	53,157,396		52,954,421
Other
Allowance for loan losses:
Allowance for loans collectively evaluated for impairment	287,000		217,000
Total Allowance	287,000	$ 243,000	217,000	$ 172,000	$ 149,000	$ 118,000
Loan balances
Loans individually evaluated for impairment	25,623		3,194
Loans collectively evaluated for impairment	20,920,440		16,774,116
Total loans	$ 20,946,063		$ 16,777,310

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Loans - Aging Unpaid Principal (Details) - USD ($)	Dec. 31, 2016	Jun. 30, 2016
Summary of aging in terms of unpaid principal balance
Current	$ 213,416,732	$ 197,993,988
Total loans	215,946,343	200,694,437
Nonaccrual Loans	2,412,209	1,799,647
31 to 60 Days Past Due
Summary of aging in terms of unpaid principal balance
Financing Receivable Past Due	1,717,990	2,548,309
61 to 90 Days Past Due
Summary of aging in terms of unpaid principal balance
Financing Receivable Past Due	721,260	23,736
Greater than 90 Days Past Due
Summary of aging in terms of unpaid principal balance
Financing Receivable Past Due	90,361	128,404
Commercial
Summary of aging in terms of unpaid principal balance
Total loans	88,175,925	83,054,605
Commercial | Operating
Summary of aging in terms of unpaid principal balance
Current	17,360,973	15,256,328
Total loans	17,483,861	15,355,676
Nonaccrual Loans	114,735	97,294
Commercial | Operating | 31 to 60 Days Past Due
Summary of aging in terms of unpaid principal balance
Financing Receivable Past Due	37,061	99,348
Commercial | Operating | 61 to 90 Days Past Due
Summary of aging in terms of unpaid principal balance
Financing Receivable Past Due	85,827
Commercial | Real Estate
Summary of aging in terms of unpaid principal balance
Current	69,851,952	67,606,842
Total loans	70,692,064	67,698,929
Nonaccrual Loans	708,695	92,087
Commercial | Real Estate | 31 to 60 Days Past Due
Summary of aging in terms of unpaid principal balance
Financing Receivable Past Due	801,888
Commercial | Real Estate | Greater than 90 Days Past Due
Summary of aging in terms of unpaid principal balance
Financing Receivable Past Due	38,224	92,087
Agricultural
Summary of aging in terms of unpaid principal balance
Total loans	53,666,959	47,908,101
Agricultural | Operating
Summary of aging in terms of unpaid principal balance
Current	23,829,863	22,318,246
Total loans	23,829,863	22,942,560
Nonaccrual Loans	6,848	6,848
Agricultural | Operating | 31 to 60 Days Past Due
Summary of aging in terms of unpaid principal balance
Financing Receivable Past Due		624,314
Agricultural | Real Estate
Summary of aging in terms of unpaid principal balance
Current	29,837,096	24,965,541
Total loans	29,837,096	24,965,541
Nonaccrual Loans	836,509	877,909
Residential
Summary of aging in terms of unpaid principal balance
Total loans	53,157,396	52,954,421
Residential | 1 - 4 family
Summary of aging in terms of unpaid principal balance
Current	41,268,998	38,428,793
Total loans	42,573,310	40,309,797
Nonaccrual Loans	704,394	688,454
Residential | 1 - 4 family | 31 to 60 Days Past Due
Summary of aging in terms of unpaid principal balance
Financing Receivable Past Due	644,411	1,823,353
Residential | 1 - 4 family | 61 to 90 Days Past Due
Summary of aging in terms of unpaid principal balance
Financing Receivable Past Due	625,437	23,736
Residential | 1 - 4 family | Greater than 90 Days Past Due
Summary of aging in terms of unpaid principal balance
Financing Receivable Past Due	34,464	33,915
Residential | Consumer - Home equity and lines of credit
Summary of aging in terms of unpaid principal balance
Current	10,556,417	12,644,624
Total loans	10,584,086	12,644,624
Nonaccrual Loans	38,486	29,807
Residential | Consumer - Home equity and lines of credit | 61 to 90 Days Past Due
Summary of aging in terms of unpaid principal balance
Financing Receivable Past Due	9,996
Residential | Consumer - Home equity and lines of credit | Greater than 90 Days Past Due
Summary of aging in terms of unpaid principal balance
Financing Receivable Past Due	17,673
Other
Summary of aging in terms of unpaid principal balance
Total loans	20,946,063	16,777,310
Other | Construction and land
Summary of aging in terms of unpaid principal balance
Current	16,851,230	13,210,393
Total loans	17,080,113	13,210,393
Other | Construction and land | 31 to 60 Days Past Due
Summary of aging in terms of unpaid principal balance
Financing Receivable Past Due	228,883
Other | Consumer - Personal
Summary of aging in terms of unpaid principal balance
Current	3,860,203	3,563,221
Total loans	3,865,950	3,566,917
Nonaccrual Loans	2,542	7,248
Other | Consumer - Personal | 31 to 60 Days Past Due
Summary of aging in terms of unpaid principal balance
Financing Receivable Past Due	$ 5,747	1,294
Other | Consumer - Personal | Greater than 90 Days Past Due
Summary of aging in terms of unpaid principal balance
Financing Receivable Past Due		$ 2,402

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Loans - Credit Quality (Details) - USD ($)	6 Months Ended
	Dec. 31, 2016	Jun. 30, 2016
Unpaid principal balance by credit quality indicator
Unpaid principal balance	$ 215,946,343	$ 200,694,437
Performing Financing Receivable Maximum Days Past Due	31 days
Nonperforming Financing Receivable Minimum Days Past Due	31 days
Maximum aggregate exposure not requiring a loan review within 12 months of most recent credit review	$ 250,000
Commercial and Agricultural
Unpaid principal balance by credit quality indicator
Unpaid principal balance	$ 158,922,997	144,173,099
Financing Receivable Risk Rating Minimum Review Period	12 months
Commercial
Unpaid principal balance by credit quality indicator
Unpaid principal balance	$ 88,175,925	83,054,605
Commercial | Operating
Unpaid principal balance by credit quality indicator
Unpaid principal balance	17,483,861	15,355,676
Commercial | Real Estate
Unpaid principal balance by credit quality indicator
Unpaid principal balance	70,692,064	67,698,929
Agricultural
Unpaid principal balance by credit quality indicator
Unpaid principal balance	53,666,959	47,908,101
Agricultural | Operating
Unpaid principal balance by credit quality indicator
Unpaid principal balance	23,829,863	22,942,560
Agricultural | Real Estate
Unpaid principal balance by credit quality indicator
Unpaid principal balance	29,837,096	24,965,541
Residential Real Estate and Other Combined
Unpaid principal balance by credit quality indicator
Unpaid principal balance	57,023,346	56,521,338
Residential
Unpaid principal balance by credit quality indicator
Unpaid principal balance	53,157,396	52,954,421
Residential | 1 - 4 family
Unpaid principal balance by credit quality indicator
Unpaid principal balance	42,573,310	40,309,797
Residential | Consumer - Home equity and lines of credit
Unpaid principal balance by credit quality indicator
Unpaid principal balance	10,584,086	12,644,624
Other
Unpaid principal balance by credit quality indicator
Unpaid principal balance	20,946,063	16,777,310
Other | Construction and land
Unpaid principal balance by credit quality indicator
Unpaid principal balance	17,080,113	13,210,393
Other | Consumer - Personal
Unpaid principal balance by credit quality indicator
Unpaid principal balance	3,865,950	3,566,917
Highest Quality (rating 1) | Commercial and Agricultural
Unpaid principal balance by credit quality indicator
Unpaid principal balance	930,270	832,824
Highest Quality (rating 1) | Agricultural | Operating
Unpaid principal balance by credit quality indicator
Unpaid principal balance	604,225	484,813
Highest Quality (rating 1) | Agricultural | Real Estate
Unpaid principal balance by credit quality indicator
Unpaid principal balance	326,045	348,011
Good Quality (rating 2) | Commercial and Agricultural
Unpaid principal balance by credit quality indicator
Unpaid principal balance	20,106,923	18,814,080
Good Quality (rating 2) | Commercial | Operating
Unpaid principal balance by credit quality indicator
Unpaid principal balance	214,078	213,824
Good Quality (rating 2) | Commercial | Real Estate
Unpaid principal balance by credit quality indicator
Unpaid principal balance	6,899,308	4,923,002
Good Quality (rating 2) | Agricultural | Operating
Unpaid principal balance by credit quality indicator
Unpaid principal balance	6,173,404	5,510,208
Good Quality (rating 2) | Agricultural | Real Estate
Unpaid principal balance by credit quality indicator
Unpaid principal balance	3,937,872	6,173,479
Good Quality (rating 2) | Other | Construction and land
Unpaid principal balance by credit quality indicator
Unpaid principal balance	2,882,261	1,993,567
Acceptable Quality (rating 3) | Commercial and Agricultural
Unpaid principal balance by credit quality indicator
Unpaid principal balance	71,608,909	63,736,162
Acceptable Quality (rating 3) | Commercial | Operating
Unpaid principal balance by credit quality indicator
Unpaid principal balance	8,301,675	7,732,341
Acceptable Quality (rating 3) | Commercial | Real Estate
Unpaid principal balance by credit quality indicator
Unpaid principal balance	32,586,766	33,606,696
Acceptable Quality (rating 3) | Agricultural | Operating
Unpaid principal balance by credit quality indicator
Unpaid principal balance	7,128,873	5,992,063
Acceptable Quality (rating 3) | Agricultural | Real Estate
Unpaid principal balance by credit quality indicator
Unpaid principal balance	15,428,309	9,729,301
Acceptable Quality (rating 3) | Other | Construction and land
Unpaid principal balance by credit quality indicator
Unpaid principal balance	8,163,286	6,675,761
Fair Quality (rating 4) | Commercial and Agricultural
Unpaid principal balance by credit quality indicator
Unpaid principal balance	60,356,012	57,855,483
Fair Quality (rating 4) | Commercial | Operating
Unpaid principal balance by credit quality indicator
Unpaid principal balance	8,779,440	7,294,630
Fair Quality (rating 4) | Commercial | Real Estate
Unpaid principal balance by credit quality indicator
Unpaid principal balance	28,308,128	28,578,771
Fair Quality (rating 4) | Agricultural | Operating
Unpaid principal balance by credit quality indicator
Unpaid principal balance	7,940,517	9,604,176
Fair Quality (rating 4) | Agricultural | Real Estate
Unpaid principal balance by credit quality indicator
Unpaid principal balance	9,293,361	7,836,841
Fair Quality (rating 4) | Other | Construction and land
Unpaid principal balance by credit quality indicator
Unpaid principal balance	6,034,566	4,541,065
Special Mention | Commercial and Agricultural
Unpaid principal balance by credit quality indicator
Unpaid principal balance	1,960,692	829,738
Special Mention | Agricultural | Operating
Unpaid principal balance by credit quality indicator
Unpaid principal balance	1,960,692	829,738
Substandard | Commercial and Agricultural
Unpaid principal balance by credit quality indicator
Unpaid principal balance	3,960,191	2,104,812
Substandard | Commercial | Operating
Unpaid principal balance by credit quality indicator
Unpaid principal balance	188,668	114,881
Substandard | Commercial | Real Estate
Unpaid principal balance by credit quality indicator
Unpaid principal balance	2,897,862	590,460
Substandard | Agricultural | Operating
Unpaid principal balance by credit quality indicator
Unpaid principal balance	22,152	521,562
Substandard | Agricultural | Real Estate
Unpaid principal balance by credit quality indicator
Unpaid principal balance	851,509	877,909
Performing | Residential Real Estate and Other Combined
Unpaid principal balance by credit quality indicator
Unpaid principal balance	55,480,551	54,006,030
Performing | Residential | 1 - 4 family
Unpaid principal balance by credit quality indicator
Unpaid principal balance	41,077,291	37,832,838
Performing | Residential | Consumer - Home equity and lines of credit
Unpaid principal balance by credit quality indicator
Unpaid principal balance	10,545,599	12,614,817
Performing | Other | Consumer - Personal
Unpaid principal balance by credit quality indicator
Unpaid principal balance	3,857,661	3,558,375
Nonperforming | Residential Real Estate and Other Combined
Unpaid principal balance by credit quality indicator
Unpaid principal balance	1,542,795	2,515,308
Nonperforming | Residential | 1 - 4 family
Unpaid principal balance by credit quality indicator
Unpaid principal balance	1,496,019	2,476,959
Nonperforming | Residential | Consumer - Home equity and lines of credit
Unpaid principal balance by credit quality indicator
Unpaid principal balance	38,487	29,807
Nonperforming | Other | Consumer - Personal
Unpaid principal balance by credit quality indicator
Unpaid principal balance	$ 8,289	$ 8,542

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Loans - Impaired (Details) - USD ($)	3 Months Ended		6 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015	Jun. 30, 2016
Impaired loans with no specific allowance recorded:
Recorded Investment	$ 4,443,866		$ 4,443,866		$ 4,415,601
Unpaid Principal Balance	4,378,185		4,378,185		4,355,599
Average Recorded Investment	4,146,588	$ 5,460,932	4,157,600	$ 5,431,874
Interest Income Recognized	45,031	81,724	86,315	139,228
Impaired loans with specific allowance recorded:
Recorded Investment	1,198,569		1,198,569		512,018
Unpaid Principal Balance	1,147,716		1,147,716		487,778
Related Allowance	50,081		50,081		52,803
Average Recorded Investment	1,196,329	516,993	1,185,310	520,517
Interest Income Recognized	4,313	15,613	7,269	17,482
Total impaired loans:
Recorded Investment	5,642,435		5,642,435		4,927,619
Unpaid Principal Balance	5,525,901		5,525,901		4,843,377
Related Allowance	50,081		50,081		52,803
Average Recorded Investment	5,342,917	5,977,925	5,342,910	5,952,391
Interest Income Recognized	49,344	97,337	93,584	156,710
Commercial | Operating
Impaired loans with no specific allowance recorded:
Recorded Investment	206,058		206,058		88,902
Unpaid Principal Balance	203,635		203,635		87,497
Average Recorded Investment	190,581	275,575	178,100	276,207
Interest Income Recognized	2,611	4,445	4,115	7,130
Impaired loans with specific allowance recorded:
Recorded Investment	58,444		58,444		48,302
Unpaid Principal Balance	58,163		58,163		48,240
Related Allowance	4,910		4,910		4,824
Average Recorded Investment	59,569	288,647	53,373	287,802
Interest Income Recognized	606	574	1,122	1,799
Total impaired loans:
Recorded Investment	264,502		264,502		137,204
Unpaid Principal Balance	261,798		261,798		135,737
Related Allowance	4,910		4,910		4,824
Average Recorded Investment	250,150	564,222	231,473	564,009
Interest Income Recognized	3,217	5,019	5,237	8,929
Commercial | Real Estate
Impaired loans with no specific allowance recorded:
Recorded Investment	670,629		670,629
Unpaid Principal Balance	670,471		670,471
Average Recorded Investment	335,315	182,423	335,315	183,969
Interest Income Recognized	2,375		2,375	2,331
Impaired loans with specific allowance recorded:
Recorded Investment	48,046		48,046		114,837
Unpaid Principal Balance	38,224		38,224		92,087
Related Allowance	6,716		6,716		30,151
Average Recorded Investment	47,765		47,489
Total impaired loans:
Recorded Investment	718,675		718,675		114,837
Unpaid Principal Balance	708,695		708,695		92,087
Related Allowance	6,716		6,716		30,151
Average Recorded Investment	383,080	182,423	382,804	183,969
Interest Income Recognized	2,375		2,375	2,331
Agricultural | Operating
Impaired loans with no specific allowance recorded:
Recorded Investment	22,566		22,566		8,009
Unpaid Principal Balance	22,152		22,152		7,848
Average Recorded Investment	48,507	8,396	47,927	9,043
Interest Income Recognized	3,328	108	3,328	234
Impaired loans with specific allowance recorded:
Average Recorded Investment		208,128		212,537
Interest Income Recognized		14,843		14,843
Total impaired loans:
Recorded Investment	22,566		22,566		8,009
Unpaid Principal Balance	22,152		22,152		7,848
Average Recorded Investment	48,507	216,524	47,927	221,580
Interest Income Recognized	3,328	14,951	3,328	15,077
Agricultural | Real Estate
Impaired loans with no specific allowance recorded:
Recorded Investment	428,260		428,260		925,288
Unpaid Principal Balance	380,453		380,453		877,909
Average Recorded Investment	432,437	868,712	442,515	856,291
Interest Income Recognized	135	13,054	363	14,233
Impaired loans with specific allowance recorded:
Recorded Investment	497,224		497,224
Unpaid Principal Balance	471,056		471,056
Related Allowance	13,857		13,857
Average Recorded Investment	493,981		490,390
Total impaired loans:
Recorded Investment	925,484		925,484		925,288
Unpaid Principal Balance	851,509		851,509		877,909
Related Allowance	13,857		13,857
Average Recorded Investment	926,418	868,712	932,905	856,291
Interest Income Recognized	135	13,054	363	14,233
Residential | 1 - 4 family
Impaired loans with no specific allowance recorded:
Recorded Investment	3,081,233		3,081,233		3,330,310
Unpaid Principal Balance	3,067,135		3,067,135		3,320,028
Average Recorded Investment	3,103,372	4,053,483	3,116,634	4,032,597
Interest Income Recognized	36,162	63,044	75,183	112,943
Impaired loans with specific allowance recorded:
Recorded Investment	576,891		576,891		330,997
Unpaid Principal Balance	562,600		562,600		329,623
Related Allowance	23,692		23,692		16,913
Average Recorded Investment	577,070		576,135
Interest Income Recognized	3,551		5,759
Total impaired loans:
Recorded Investment	3,658,124		3,658,124		3,661,307
Unpaid Principal Balance	3,629,735		3,629,735		3,649,651
Related Allowance	23,692		23,692		16,913
Average Recorded Investment	3,680,442	4,053,483	3,692,769	4,032,597
Interest Income Recognized	39,713	63,044	80,942	112,943
Residential | Consumer - Home equity and lines of credit
Impaired loans with no specific allowance recorded:
Recorded Investment	8,731		8,731		59,336
Unpaid Principal Balance	8,716		8,716		59,123
Average Recorded Investment	8,936	61,772	9,137	62,416
Interest Income Recognized	150	983	309	2,092
Impaired loans with specific allowance recorded:
Recorded Investment	17,964		17,964		17,882
Unpaid Principal Balance	17,673		17,673		17,828
Related Allowance	906		906		915
Average Recorded Investment	17,944	20,218	17,923	20,178
Interest Income Recognized	156	196	388	840
Total impaired loans:
Recorded Investment	26,695		26,695		77,218
Unpaid Principal Balance	26,389		26,389		76,951
Related Allowance	906		906		915
Average Recorded Investment	26,880	81,990	27,060	82,594
Interest Income Recognized	306	1,179	697	2,932
Other | Consumer - Personal
Impaired loans with no specific allowance recorded:
Recorded Investment	26,389		26,389		3,756
Unpaid Principal Balance	25,623		25,623		3,194
Average Recorded Investment	27,440	10,571	27,972	11,351
Interest Income Recognized	270	90	642	265
Total impaired loans:
Recorded Investment	26,389		26,389		3,756
Unpaid Principal Balance	25,623		25,623		$ 3,194
Average Recorded Investment	27,440	10,571	27,972	11,351
Interest Income Recognized	$ 270	$ 90	$ 642	$ 265

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Borrowings (Details) - USD ($)	6 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Federal Home Loan Bank Borrowings
Advances from Federal Home Loan Banks	$ 2,000,000	$ 0
Maximum outstanding at any month end	2,000,000
Average balance during period	$ 666,000
Weighted average interest rate at the end of period	0.72%
Weighted average interest rate during period	0.72%
Federal Home Loan Bank of Topeka
Federal Home Loan Bank Borrowings
Amount of available advances	$ 40,300,000

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Regulatory Matters (Details) - USD ($)	Dec. 31, 2016	Jun. 30, 2016
Compliance with regulatory capital requirements under banking regulations
Total capital (to risk weighted assets), amount	$ 29,945	$ 28,977
Total capital (to risk weighted assets), as a percent	13.90%	14.70%
Tier 1 (core) capital (to risk weighted assets), amount	$ 27,245	$ 26,500
Tier 1 (core) capital (to risk weighted assets), as a percent	12.70%	13.40%
Tier 1 (core) capital (to adjusted total assets), amount	$ 27,245	$ 26,500
Tier 1 (core) capital (to adjusted total assets), as a percent	12.00%	11.60%
Minimum Required for Capital Adequacy Purposes
Total capital (to risk weighted assets), amount	$ 17,227	$ 15,805
Total capital (to risk weighted assets), as a percent	8.00%	8.00%
Tier 1 (core) capital (to risk weighted assets), amount	$ 12,920	$ 11,854
Tier 1 (core) capital (to risk weighted assets), as a percent	6.00%	6.00%
Tier 1 (core) capital (to adjusted total assets), amount	$ 9,108	$ 9,114
Tier 1 (core) capital (to adjusted total assets), as a percent	4.00%	4.00%
Minimum Required to Be Well Capitalized Under Prompt Corrective Action Provisions
Total capital (to risk weighted assets), amount	$ 21,534	$ 19,757
Total capital (to risk weighted assets), as a percent	10.00%	10.00%
Tier 1 (core) capital (to risk weighted assets), amount	$ 17,227	$ 15,805
Tier 1 (core) capital (to risk weighted assets), as a percent	8.00%	8.00%
Tier 1 (core) capital (to adjusted total assets), amount	$ 11,384	$ 11,393
Tier 1 (core) capital (to adjusted total assets), as a percent	5.00%	5.00%
Common Equity
Compliance with regulatory capital requirements under banking regulations
Tier 1 (core) capital (to risk weighted assets), amount	$ 27,245	$ 26,500
Tier 1 (core) capital (to risk weighted assets), as a percent	12.70%	13.40%
Minimum Required for Capital Adequacy Purposes
Tier 1 (core) capital (to risk weighted assets), amount	$ 9,690	$ 8,891
Tier 1 (core) capital (to risk weighted assets), as a percent	4.50%	4.50%
Minimum Required to Be Well Capitalized Under Prompt Corrective Action Provisions
Tier 1 (core) capital (to risk weighted assets), amount	$ 13,997	$ 12,842
Tier 1 (core) capital (to risk weighted assets), as a percent	6.50%	6.50%

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Employee Benefit Plan - 401K (Details) - USD ($)	6 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Employee Benefit Plan
401(k) and profit sharing plans, minimum vesting period	1 year
401(k) and profit sharing plans, maximum vesting period	5 years
Company contributions to the 401(k) and profit sharing plans	$ 56,532	$ 44,138

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Employee Benefit Plan - ESOP (Details) - USD ($)			6 Months Ended		12 Months Ended
	Jul. 08, 2015	Nov. 08, 2005	Dec. 31, 2016	Dec. 31, 2015	Jun. 30, 2016
Employee stock ownership plan ("ESOP")
Funds borrowed by the ESOP from the Company	$ 951,912	$ 1,292,620
Company stock acquired by the ESOP (in shares)	118,989	129,262
Price of Company stock acquired by the ESOP (in dollars per share)	$ 8.00	$ 10.00
Annual principal and interest payments to be made by the ESOP	$ 65,000			$ 145,000
Compensation expense			$ 71,335	$ 39,290
Shares held by the ESOP
Allocated shares (in shares)			70,244		71,803
Shares allocated to be released			15,864		7,932
Unearned ESOP shares (in shares)			142,768		150,700
Total ESOP shares (in shares)			228,876		230,435
Fair value of unearned ESOP shares			$ 1,413,403		$ 1,252,317
Fair value of allocated shares subject to repurchase obligation			$ 658,122		$ 564,723

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Employee Benefit Plan - Shares Awarded (Details) - $ / shares	6 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Restricted stock
Service-Based Stock Awards
Non-vested at beginning of the year (in shares)	39,281	43,094
Conversion for stock offering (in shares)		3,907
Granted (in shares)		4,900
Vested (in shares)	(7,294)	(6,297)
Non-vested at end of the year (in share)	31,987	45,604
Weighted Grant Date Fair Value
Non-vested at beginning of the year (in dollars per share)	$ 4.32	$ 4.02
Granted (in dollars per share)		8.53
Vested (in dollars per share)	5.40	4.93
Non-vested at end of the year (in dollars per share)	$ 4.32	$ 4.02
2006 Equity Incentive Plan
Share-based compensation
Award vesting period	5 years
2016 Equity Incentive Plan | Stock options
Share-based compensation
Number of shares that may be awarded to employees and directors under the plan	198,316
Number of shares awarded	0
2016 Equity Incentive Plan | Restricted stock
Share-based compensation
Number of shares that may be awarded to employees and directors under the plan	79,326
Number of shares awarded	0

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Earnings per Share - Basic (Details) - USD ($)	3 Months Ended		6 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015
Components of basic earnings per share:
Weighted average common shares outstanding	3,284,562	3,261,989	3,286,340	3,258,318
Net income available to common stockholders	$ 309,464	$ 222,124	$ 574,522	$ 497,102
Basic earnings per share (in dollars per share)	$ 0.09	$ 0.07	$ 0.17	$ 0.15

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Earnings per Share - Diluted (Details) - USD ($)	3 Months Ended		6 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015
Components of diluted earnings per share:
Weighted average common shares outstanding	3,284,562	3,261,989	3,286,340	3,258,318
Dilutive effect of net additional shares from restricted stock awards	17,552	23,567	16,801	24,829
Weighted average number of shares outstanding	3,302,114	3,285,556	3,303,141	3,283,147
Net income available to common stockholders	$ 309,464	$ 222,124	$ 574,522	$ 497,102
Diluted earnings per share (in dollars per share)	$ 0.09	$ 0.07	$ 0.17	$ 0.15

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Fair Value Measurements (Details) - USD ($)	Dec. 31, 2016	Jun. 30, 2016
Assets and Liabilities Measured on Recurring Basis
Fair value asset transfers from Level 1 to Level 2	$ 0
Fair value asset transfers from Level 2 to Level 1	0
Fair value liability transfers from Level 1 to Level 2	0
Fair value liability transfers from Level 2 to Level 1	0
Assets:
Securities available-for-sale	1,466,399	$ 664,755
Recurring
Assets:
Securities available-for-sale	1,466,399	664,755
Recurring | Level 2
Assets:
Securities available-for-sale	$ 1,466,399	$ 664,755

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Fair Value Measurements - Financial Instruments (Details) - USD ($)	Dec. 31, 2016	Jun. 30, 2016
Financial assets:
Cash and due from financial institutions	$ 4,467,747	$ 2,567,296
Securities available-for-sale	1,466,399	664,755
Securities held-to-maturity	763,742	801,114
Federal Home Loan Bank stock	231,100	229,900
Loans, net	213,322,493	198,309,920
Accrued interest receivable	1,335,961	1,147,467
Financial liabilities:
Noninterest-bearing deposits	25,880,529	24,296,166
Interest-bearing deposits	162,392,981	162,666,186
Federal funds purchased	3,008,000
Federal Home Loan Bank borrowings	2,000,000
Accrued interest payable and other liabilities	1,072,181	1,198,850
Carrying Amount | Level 1
Financial assets:
Cash and due from financial institutions	4,467,747	14,947,296
Federal Home Loan Bank stock	231,100	229,900
Accrued interest receivable	1,335,961	1,147,467
Financial liabilities:
Federal funds purchased	3,008,000
Accrued interest payable and other liabilities	1,072,181	1,198,850
Carrying Amount | Level 2
Financial assets:
Securities available-for-sale	1,466,399	664,755
Securities held-to-maturity	752,844	781,740
Loans, net	213,322,493	198,309,920
Financial liabilities:
Noninterest-bearing deposits	25,880,529	24,296,166
Interest-bearing deposits	162,392,981	162,666,186
Federal Home Loan Bank borrowings	2,000,000
Estimated Fair Value | Level 1
Financial assets:
Cash and due from financial institutions	4,468,000	14,947,000
Federal Home Loan Bank stock	231,000	230,000
Accrued interest receivable	1,336,000	1,147,000
Financial liabilities:
Federal funds purchased	3,008,000
Accrued interest payable and other liabilities	1,072,000	1,199,000
Estimated Fair Value | Level 2
Financial assets:
Securities available-for-sale	1,466,000	665,000
Securities held-to-maturity	764,000	801,000
Loans, net	211,197,122	198,000,000
Financial liabilities:
Noninterest-bearing deposits	25,881,000	24,296,000
Interest-bearing deposits	166,145,649	$ 170,276,000
Federal Home Loan Bank borrowings	$ 2,000,000

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Accumulated Other Comprehensive Income (Details) - USD ($)	6 Months Ended	12 Months Ended
	Dec. 31, 2016	Jun. 30, 2016
Accumulated Other Comprehensive Income
Unrealized holding gains/(losses) on securities available-for-sale	$ (35,108)	$ 6,176
Tax expense	11,937	(2,100)
Total accumulated other comprehensive income	$ (23,171)	$ 4,076

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Income Taxes - Reconciliation (Details) - USD ($)	3 Months Ended		6 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015
Effective Income Tax Rate Reconciliation, Amount [Abstract]
Provision computed at the statutory federal tax rate	$ (180,602)	$ (128,574)	$ (314,399)	$ (235,324)
State income taxes, net of federal tax	(15,715)	(12,726)	(27,755)	(24,712)
Release of unearned EOSP shares and stock awards	2,355	6,537	5,547	8,483
Nondeductible expenses	(2,066)	(2,212)	(3,714)	(4,202)
Valuation allowance adjustment				79,000
Other	(25,691)	(19,059)	(9,860)	(18,272)
Total income tax expense	$ (221,719)	$ (156,034)	$ (350,181)	$ (195,027)

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Stock Buyback (Details) - Common Stock - $ / shares		1 Months Ended		3 Months Ended
	Oct. 07, 2016	Dec. 31, 2016	Nov. 30, 2016	Dec. 31, 2016	Oct. 31, 2016
Common stock purchased during the period:
Shares purchased		26,455	60,000	86,455
Average price paid per share		$ 9.57	$ 9.07	$ 9.22
Stock Repurchase Plan
Common stock purchased during the period:
Current shares outstanding (as a percentage)	5.00%
Shares purchased		86,455	60,000	86,455
Maximum number of shares that may yet be purchased		87,402	113,857	87,402	173,857