10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

____________

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2018

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________ to _____________

Commission file number 001-37676

PB Bancorp, Inc.

(Exact name of registrant as specified in its charter)

Maryland	47-5150586
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

40 Main Street, Putnam, Connecticut 06260

(Address of principal executive offices)

(Zip Code)

(860) 928-6501

(Issuer’s telephone number)

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 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.

x YES ¨ NO

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

x YES ¨ NO

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

Large accelerated filer         ¨                                                    Accelerated filer                  ¨

Non-accelerated filer           x                                                   Smaller reporting company x

Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.                          ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)  ¨ YES x NO

As of February 1, 2019, there were 7,448,491 shares of the registrant’s common stock outstanding.

PB Bancorp, Inc.

Table of Contents

		Page No.
Part I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Consolidated Balance Sheets at December 31, 2018 and June 30, 2018.	1
	Consolidated Statements of Net Income for the three and six months ended December 31, 2018 and 2017	2
	Consolidated Statements of Comprehensive Income for the three and six months ended December 31, 2018 and 2017	3
	Consolidated Statements of Changes in Stockholders’ Equity for the six months ended December 31, 2018 and 2017	4
	Consolidated Statements of Cash Flows for the six months ended December 31, 2018 and 2017	5
	Notes to Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41
Item 4.	Controls and Procedures	41

Part II.	OTHER INFORMATION
Item 1.	Legal Proceedings	41
Item 1A.	Risk Factors	41
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41
Item 3.	Defaults Upon Senior Securities	42
Item 4.	Mine Safety Disclosures	42
Item 5.	Other Information	42
Item 6.	Exhibits	42
SIGNATURES		43

Part I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

PB Bancorp, Inc.

Consolidated Balance Sheets

(Unaudited)

	December 31,			June 30,
	2018			2018
	(in thousands except share data)
ASSETS
Cash and due from depository institutions	$	4,296		$	4,465
Interest-bearing demand deposits with other banks		1,036			5,637
Total cash and cash equivalents		5,332			10,102
Securities available-for-sale, at fair value		41,274			46,546
Securities held-to-maturity (fair value of $71,188 as of December 31, 2018 and $81,828 as of June 30, 2018)		71,925			82,816
Federal Home Loan Bank stock, at cost		4,206			4,206
Loans		371,482			355,213
Less: Allowance for loan losses		(2,864	)		(2,943	)
Net loans		368,618			352,270
Premises and equipment, net		3,114			3,253
Accrued interest receivable		1,538			1,361
Other real estate owned		1,297			1,381
Goodwill		6,912			6,912
Bank-owned life insurance		13,091			12,912
Net deferred tax asset		481			1,691
Other assets		2,599			1,938
Total assets	$	520,387		$	525,388
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits
Non-interest-bearing	$	72,115		$	71,428
Interest-bearing		293,820			300,157
Total deposits		365,935			371,585
Mortgagors' escrow accounts		3,062			3,123
Federal Home Loan Bank advances		62,172			63,199
Securities sold under agreements to repurchase		3,310			664
Other liabilities		2,622			2,528
Total liabilities		437,101			441,099
Stockholders' Equity
Preferred stock, 50,000,000 shares authorized,  $0.01 par value, no shares issued and outstanding		-			-
Common stock, 100,000,000 shares authorized, $0.01 par value, 7,448,491 and 7,624,474 shares issued and outstanding at December 31, 2018 and June 30, 2018, respectively.		74			76
Additional paid-in capital		58,513			60,329
Retained earnings		29,854			28,822
Accumulated other comprehensive loss		(963	)		(522	)
Unearned ESOP shares		(3,219	)		(3,293	)
Unearned stock awards		(973	)		(1,123	)
Total stockholders' equity		83,286			84,289
Total liabilities and stockholders' equity	$	520,387		$	525,388

See accompanying notes to consolidated financial statements.

1

PB Bancorp, Inc.

Consolidated Statements of Net Income

(Unaudited)

	Three months ended					Six months ended
	December 31,					December 31,
	2018			2017		2018			2017
	(in thousands, except per share data)
Interest and dividend income:
Interest and fees on loans	$	3,731		$	3,307	$	7,306		$	6,484
Interest and dividends on investments		816			945		1,681			1,935
Other		70			53		114			61
Total interest and dividend income		4,617			4,305		9,101			8,480
Interest expense:
Deposits and escrow		577			460		1,134			906
Borrowed funds		304			344		608			701
Total interest expense		881			804		1,742			1,607
Net interest and dividend income		3,736			3,501		7,359			6,873
(Credit) provision for loan losses		-			-		(600	)		175
Net interest and dividend income after (credit) provision for loan losses		3,736			3,501		7,959			6,698
Non-interest income:
Total other-than-temporary impairment losses on debt securities		(135	)		-		(135	)		(2	)
Portion of losses recognized in other comprehensive income		131			-		131			1
Net impairment losses recognized in earnings		(4	)		-		(4	)		(1	)
Fees for services		488			478		958			961
Mortgage banking activities		7			-		12			4
Net commissions from brokerage services		21			35		45			80
Income from bank-owned life insurance		90			90		179			179
Gain (loss) on sales of other real estate owned, net		86			66		107			(47	)
Legal settlement		15			155		15			155
Other income		32			34		92			66
Total non-interest income		735			858		1,404			1,397
Non-interest expense:
Compensation and benefits		1,946			1,842		3,874			3,654
Occupancy and equipment		290			298		600			595
Data processing		293			273		590			506
LAN/WAN network		22			30		46			65
Advertising and marketing		46			57		80			99
FDIC deposit insurance		35			39		74			79
Other real estate owned		21			61		85			122
Write-down of other real estate owned		-			8		91			14
Other		520			483		938			898
Total non-interest expense		3,173			3,091		6,378			6,032
Income before income tax expense		1,298			1,268		2,985			2,063
Income tax expense		208			477		504			688
NET INCOME	$	1,090		$	791	$	2,481		$	1,375
Earnings per common share:
Basic	$	0.15		$	0.11	$	0.34		$	0.19
Diluted	$	0.15		$	0.11	$	0.34		$	0.19

See accompanying notes to consolidated financial statements.

2

PB Bancorp, Inc.

Consolidated Statements of Comprehensive Income

(Unaudited)

	Three months ended						Six Months Ended
	December 31,						December 31,
	2018			2017			2018			2017
	(in thousands)
Net income	$	1,090		$	791		$	2,481		$	1,375
Other comprehensive loss:
Net unrealized holding losses on available-for-sale securities		(292	)		(285	)		(428	)		(185	)
Reclassification adjustment for losses realized in income on available-for-sale securities (1)		4			-			4			1
Non-credit portion of other-than-temporary losses on available-for-sale securities		(131	)		-			(131	)		(1	)
Other comprehensive loss before tax		(419	)		(285	)		(555	)		(185	)
Income tax benefit related to other comprehensive loss		85			98			114			64
Other comprehensive loss net of tax		(334	)		(187	)		(441	)		(121	)
Total comprehensive income	$	756		$	604		$	2,040		$	1,254

(1) Reported in net impairment losses recognized in earnings included in non-interest income on the consolidated statements of net income. There were no income tax benefits associated with the reclassification adjustments.

See accompanying notes to consolidated financial statements.

3

PB Bancorp, Inc.

Consolidated Statements of Changes in Stockholders’ Equity for the Six Months Ended December 31, 2018 and 2017

(Unaudited)

	Common Stock			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Unearned ESOP Shares			Unearned Stock Awards			Total Stockholders' Equity
	(dollars in thousands, except per share data)
Balances at June 30, 2017	$	78		$	62,243		$	27,195		$	(117	)	$	(3,439	)	$	(1,423	)	$	84,537
Comprehensive income		-			-			1,375			(121	)		-			-			1,254
Cash dividends declared and paid ($0.09 per share)		-			-			(701	)		-			-			-			(701	)
ESOP shares committed to be released (9,009 shares)		-			21			-			-			73			-			94
Common stock repurchased (55,000 shares)		-			(572	)		-			-			-			-			(572	)
Share-based compensation expense		-			74			-			-			-			150			224
Balances at December 31, 2017	$	78		$	61,766		$	27,869		$	(238	)	$	(3,366	)	$	(1,273	)	$	84,836
Balances at June 30, 2018	$	76		$	60,329		$	28,822		$	(522	)	$	(3,293	)	$	(1,123	)	$	84,289
Comprehensive income		-			-			2,481			(441	)		-			-			2,040
Cash dividends declared and paid ($0.19 per share)		-			-			(1,449	)		-			-			-			(1,449	)
ESOP shares committed to be released (9,009 shares)		-			30			-			-			74			-			104
Common stock repurchased (175,983 shares)		(2	)		(1,925	)		-			-			-			-			(1,927	)
Share-based compensation expense		-			79			-			-			-			150			229
Balances at December 31, 2018	$	74		$	58,513		$	29,854		$	(963	)	$	(3,219	)	$	(973	)	$	83,286

See accompanying notes to consolidated financial statements.

4

PB Bancorp, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

	For the six months
	ended December 31,
	2018			2017
	(in thousands)
Cash flows from operating activities
Net income	$	2,481		$	1,375
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of securities premiums, net		234			282
Impairment losses on securities		4			1
Amortization of deferred loan costs, net		135			116
(Credit) provision for loan losses		(600	)		175
(Gain) loss on sale of other real estate owned, net		(107	)		47
Write-down of other real estate owned		91			14
Loss on sale of premises and equipment		1			1
Depreciation and amortization - premises and equipment		166			163
Amortization - software		4			5
Increase in accrued interest receivable and other assets		(842	)		(20	)
Income from bank-owned life insurance		(179	)		(179	)
Increase in other liabilities		94			142
Share-based compensation expense		229			224
Deferred tax expense		1,324			262
ESOP expense		104			94
Net cash provided by operating activities		3,139			2,702
Cash flows from investing activities
Proceeds from calls, pay downs and maturities of available-for-sale securities		4,609			5,673
Proceeds from calls, pay downs and maturities of held-to-maturity securities		10,761			16,346
Purchase of Federal Home Loan Bank stock		-			(133	)
Net loan principal originations		(16,787	)		(10,313	)
Loan purchases		-			(19,699	)
Recoveries of loans previously charged off		582			32
Proceeds from sale of other real estate owned		422			587
Capital expenditures - premises and equipment		(28	)		(59	)
Net cash used in investing activities		(441	)		(7,566	)
Cash flows from financing activities
Net decrease in deposit accounts		(5,650	)		(3,443	)
Net decrease in mortgagors' escrow accounts		(61	)		(63	)
Proceeds from issuance of long-term Federal Home Loan Bank advances		-			19,730
Repayment of long-term Federal Home Loan Bank advances		(1,027	)		(13,004	)
Change in short term Federal Home Loan Bank advances, net		-			6,000
Net increase in securities sold under agreements to repurchase		2,646			1,294
Cash dividends paid on common stock		(1,449	)		(701	)
Common stock repurchased		(1,927	)		(572	)
Net cash (used in) provided by financing activities		(7,468	)		9,241
Net (decrease) increase in cash and cash equivalents		(4,770	)		4,377
Cash and cash equivalents at beginning of year		10,102			10,173
Cash and cash equivalents at end of period	$	5,332		$	14,550
Supplemental disclosures
Cash paid during the period for:
Interest	$	1,700		$	1,594
Income taxes		1			370
Loans transferred to other real estate owned		322			144

See accompanying notes to consolidated financial statements.

5

PB Bancorp, Inc.

Notes to Consolidated Financial Statements

(Unaudited)

NOTE 1 – Organization

PB Bancorp, Inc. (the “Company”) is a Maryland corporation incorporated in 2015 to be the successor to PSB Holdings, Inc. upon completion of the second-step mutual-to-stock conversion (the “Conversion”) of Putnam Bancorp, MHC (the “MHC”), the top tier mutual holding company of PSB Holdings, Inc.   PSB Holdings, Inc. was the former mid-tier holding company for Putnam Bank (the “Bank”).  Prior to completion of the Conversion, a majority of the shares of common stock of PSB Holdings, Inc. were owned by the MHC.  In conjunction with the Conversion, the MHC and PSB Holdings, Inc. merged into the Company and the Company became PSB Holdings, Inc.’s successor.  The Conversion was completed on January 7, 2016.  The Company raised gross proceeds of $33.7 million in the related stock offering.  Concurrent with the completion of the stock offering, each share of PSB Holdings, Inc. stock owned by public stockholders (stockholders other than the MHC) was exchanged for 1.1907 shares of Company common stock.  The Conversion was accounted for as a capital raising transaction by entities under common control.  The historical financial results of the MHC were immaterial to the results of the Company and therefore the net assets of the MHC were reflected as an increase to stockholders’ equity.  

NOTE 2 – Basis of Presentation

The accompanying unaudited consolidated interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements and the instructions to Form 10-Q, and accordingly do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, the accompanying unaudited consolidated financial statements reflect all adjustments necessary, consisting of only normal recurring accruals and the elimination of all significant intercompany accounts, to present fairly the financial position, results of operations and cash flows of the Company for the periods presented. The interim results of operations are not necessarily indicative of the operating results to be expected for future periods, including the fiscal year ending June 30, 2019. These financial statements should be read in conjunction with the 2018 consolidated financial statements and notes thereto included in PB Bancorp, Inc.’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (‘’SEC’’) on September 21, 2018.

NOTE 3 – Recent Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842), which supersedes the requirements in Topic 840, Leases. The objective of Topic 842 is to establish the principles that lessees and lessors shall apply to report useful information to users of financial statements about the amount, timing, and uncertainty of cash flows arising from a lease. The core principle of Topic 842 is that a lessee should recognize the assets and liabilities that arise from leases. The amendments in this Update are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application of the amendments in this Update is permitted for all entities. It is expected that assets and liabilities will increase based on the present value of remaining lease payments for leases in place at the adoption date; however, based on the current level of long-term leases in place, this is not expected to be material to the Company’s results of operations or financial position.

6

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326), which requires entities to measure all expected credit losses for certain financial assets (such as loans and held-to-maturity securities) held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts.  Entities will now use forward-looking information to better form their credit loss estimates.  The ASU also requires enhanced disclosures to help financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an entity’s portfolio. The amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early application will be permitted for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018.  Management is currently working to implement these requirements to determine the potential impact on the Company’s consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.  The amendments in this update simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test.  Instead, an entity will be required to perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity will recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized will not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity will consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable.  For public business entities, the amendments are effective for annual and any interim goodwill impairment tests in fiscal years beginning after December 15, 2020.  Early adoption is permitted.  We do not expect the application of this guidance to have a material impact on our consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820), which amends the disclosure requirements by adding, changing, or removing certain disclosures about recurring or non-recurring fair value measurements. This ASU will be effective for public business entities for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The adoption of this update will not have a significant impact on the consolidated financial statements.

NOTE 4 - Critical Accounting Policies

Critical accounting policies are those that involve significant judgments and assumptions by management that have, or could have, a material impact on our income or the carrying value of our assets. Our critical accounting policies are those related to the allowance for loan losses, realizability of deferred income taxes, valuation of goodwill and the impairment of securities.

Allowance for Loan Losses. The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to earnings. Loan losses are charged against the allowance when management believes the uncollectability of a loan balance is confirmed.

The allowance for loan losses is evaluated on a quarterly basis by management. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. The allowance consists of general, specific and unallocated components, as further described below.

General component

The general component of the allowance for loan losses is based on historical loss experience adjusted for qualitative factors stratified by the following loan segments: residential real estate, commercial real estate, residential construction, commercial and consumer/other. Management uses a rolling average of historical losses based on a time frame appropriate to capture relevant loss data for each loan segment. This historical loss factor is adjusted for the following qualitative factors: levels/trends in delinquencies; trends in volume and terms of loans; concentrations; changes in lending policies and procedures; experience/ability/depth of lending management and staff; loan rating migration; the effect of other external factors; changes in the value of underlying collateral; changes in the loan review system and national and local economic trends and conditions. The Company calculates historical losses using a five-year rolling average, which is considered indicative of the risk in the Company’s current loan portfolio. There were no changes in the Company’s policies or methodology pertaining to the general component of the allowance for loan losses through December 31, 2018.

7

The qualitative factors are determined based on the various risk characteristics of each loan segment. Risk characteristics relevant to each portfolio segment are as follows:

Residential real estate - The Company does not originate loans with a loan-to-value ratio greater than 100% and does not originate subprime loans. Loans originated with a loan-to-value ratio greater than 80% generally require private mortgage insurance. All loans in this segment are collateralized by owner-occupied residential real estate and repayment is dependent on the credit quality of the individual borrower. The overall health of the economy, including unemployment rates and housing prices, will have an effect on the credit quality in this segment.

Commercial real estate - Loans in this segment are primarily income-producing properties throughout New England. The underlying cash flows generated by the properties are adversely impacted by a downturn in the economy as evidenced by increased vacancy rates, which in turn, will have an effect on the credit quality in this segment. Management obtains rent rolls annually and continually monitors the cash flows of these loans.

Residential Construction – Loans in this segment include speculative real estate development loans for which payment is derived from sale of the property. Credit risk is affected by the accuracy of estimated costs to complete the project, cost overruns, time to sell at an adequate price, and market conditions.

Commercial – Loans in this segment are made to businesses and are generally secured by assets of the business. Repayment is expected from the cash flows of the business. A weakened economy, and resultant decreased consumer spending, will have an effect on the credit quality in this segment.

Consumer/other - Loans in this segment are generally unsecured and repayment is dependent on the credit quality of the individual borrower.

Specific component

The specific component relates to loans that are classified as impaired. Impairment is measured on a loan by loan basis by either the present value of expected future cash flows discounted at the loan’s effective interest rate or the fair value of the collateral if the loan is collateral dependent or foreclosure is probable. An allowance is established when the discounted cash flows (or collateral value) of the impaired loan is lower than the carrying value of that loan. Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, the Company does not separately identify individual consumer/other and residential real estate loans for impairment disclosures, unless such loans are non-accrual or subject to a troubled debt restructuring (“TDR”) agreement.

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.

The Company periodically may agree to modify the contractual terms of loans. When a loan is modified and a concession is made to a borrower experiencing financial difficulty, the modification is considered a TDR. All TDRs are classified as impaired.

8

Unallocated component

An unallocated component is maintained to cover uncertainties that could affect management’s estimate of probable losses. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and general reserves in the portfolio.

Goodwill. Goodwill is measured as the excess of the cost of a business acquisition over the sum of the amounts assigned to identifiable tangible and intangible assets acquired less liabilities assumed. Goodwill is not amortized but is subject to a review of qualitative factors annually or more frequently if circumstances warrant, to determine if an impairment test is required. If required, the Company uses the following two-step approach for reviewing goodwill for impairment:

The first step (“Step 1”) is used to identify potential impairment, and involves comparing the reporting unit’s (the consolidated Company) estimated fair value to its carrying amount, including goodwill. If the estimated fair value of the reporting unit exceeds its carrying amount, goodwill is not deemed to be impaired. Should the carrying amount of the reporting unit exceed its estimated fair value, an indicator of impairment is deemed to exist and a second step is performed to measure the amount of such impairment, if any. The second step (“Step 2”) involves calculating the implied fair value of goodwill. The implied fair value of goodwill is determined in a manner similar to how the amount of goodwill is determined in a business combination (i.e. by measuring the excess of the estimated fair value, as determined in Step 1, over the aggregate estimated fair values of the individual assets, liabilities, and identifiable intangibles as of the impairment testing date). If the implied fair value of goodwill exceeds the carrying amount of goodwill assigned to the reporting unit, no impairment exists. If the carrying amount of goodwill exceeds the implied fair value of the goodwill, an impairment loss is recorded in an amount equal to such excess. An impairment loss cannot exceed the carrying amount of goodwill, and the loss (write-down) establishes a new carrying amount for the goodwill. Subsequent reversal of goodwill impairment losses is not permitted. Application of the goodwill impairment test requires significant judgments including estimation of future cash flows, which are dependent on internal forecasts, estimation of the long-term rate of growth, the period over which cash flows will occur, and determination of our cost of capital. Changes in these estimates and assumptions could materially affect the determination of fair value and/or conclusions related to goodwill impairment.

See Note 3 – Recent Accounting Pronouncements for future changes to the accounting treatment of goodwill.

Other-Than-Temporary Impairment of Securities. Each reporting period, the Company evaluates all securities classified as available-for-sale or held-to-maturity, with a decline in fair value below the amortized cost of the investment to determine whether or not the impairment is deemed to be other-than-temporary (“OTTI”).

OTTI is required to be recognized if (1) the Company intends to sell the security; (2) it is “more likely than not” that the Company will be required to sell the security before recovery of its amortized cost basis; or (3) for debt securities, the present value of expected cash flows is not sufficient to recover the entire amortized cost basis. Marketable equity securities are evaluated for OTTI based on the severity and duration of the impairment and, if deemed to be other than temporary, the declines in fair value are reflected in earnings as realized losses. For impaired debt securities that the Company intends to sell, or more likely than not will be required to sell, the full amount of the depreciation is recognized as OTTI through earnings. For all other impaired debt securities, credit-related OTTI is recognized through earnings and non-credit related OTTI is recognized in other comprehensive income/loss, net of applicable taxes.

Income Taxes. The Company recognizes income taxes under the asset and liability method. Under this method, deferred tax assets and liabilities are established for the temporary differences between the accounting basis and the tax basis of the Company’s assets and liabilities at enacted rates expected to be in effect when the amounts related to such temporary differences are realized or settled. A valuation allowance is established against deferred tax assets when, based upon the available evidence including historical and projected taxable income, it is more likely than not that some or all of the deferred tax assets will not be realized.

9

On December 22, 2017, the President signed into law the Tax Cuts and Jobs Act (the “Act”). The Act includes a number of changes in existing tax law impacting businesses including, among other things, a permanent reduction in the corporate income tax rate from 34% to 21%, effective on January 1, 2018. As a result of this rate reduction, the Company revalued its net deferred tax asset as of December 22, 2017 resulting in a reduction in the value of the net deferred tax asset of $211,000, which was recorded as additional tax expense in the Company’s consolidated statements for the three months ended December 31, 2017. Included in the additional tax expense is $47,000 related to net unrealized losses on securities available-for-sale. The accounting treatment effectively stranded $47,000 of deferred tax items in accumulated other comprehensive income. The Company has developed a reasonable estimate of the other provisions of the Act in determining the current year income tax provision.

In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (“AOCI”), which allows a reclassification from AOCI to retained earnings to eliminate the stranded tax effects resulting from the Act. As permitted, the Company early adopted the ASU and recorded a $47,000 increase in retained earnings and corresponding decrease in AOCI as of January 1, 2018.

Management has discussed the development and selection of these critical accounting policies with the Audit Committee.

10

NOTE 5 – Earnings Per Share (EPS)

Basic earnings per share is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period. The rights to dividends on unvested options/awards are non-forfeitable, therefore the unvested awards/options are considered outstanding in the computation of basic earnings per share. Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company. For purposes of computing diluted EPS, the treasury stock method is used.

The following information was used in the computation of EPS on both a basic and diluted basis for the three and six months ended December 31, 2018 and 2017:

	Three months ended December 31,				Six months ended December 31,
	2018		2017		2018		2017
Net income	$	1,090,000	$	791,000	$	2,481,000	$	1,375,000
Weighted average common shares applicable to basic EPS		7,198,456		7,354,602		7,208,317		7,364,606
Effect of dilutive potential common shares		-		-		4,306		-
Weighted average common shares applicable to diluted EPS		7,198,456		7,354,602		7,212,623		7,364,606
Earnings per share:
Basic	$	0.15	$	0.11	$	0.34	$	0.19
Diluted	$	0.15	$	0.11	$	0.34	$	0.19

For the three months ended December 31, 2018, options to purchase 387,330 shares were outstanding but not included in the computation of earnings per share because they were anti-dilutive. For the six months ended December 31, 2018, there were no anti-dilutive options not being included in the computation of diluted earnings per share.

11

NOTE 6 – Investment Securities

The carrying value, estimated fair values, and gross unrealized gains and losses of investment securities by maturity and type are as follows:

	Amortized		Gross Unrealized					Fair
	Cost Basis		Gains		(Losses)			Value
	(in thousands)
December 31, 2018:
Available-for-sale:
Debt securities:
U.S. government and government-sponsored securities:
After ten years	$	2,849	$	-	$	(84	)	$	2,765
Corporate bonds:
Due from five through ten years		3,999		-		(474	)		3,525
U.S. Government-sponsored and guaranteed mortgage-backed securities:
From one through five years		5,942		-		(87	)		5,855
From five through ten years		1,273		-		(32	)		1,241
After ten years		15,711		111		(343	)		15,479
		22,926		111		(462	)		22,575
Non-agency mortgage-backed securities:
Due after ten years		2,726		419		(373	)		2,772
Total debt securities		32,500		530		(1,393	)		31,637
Other securities:
Auction rate preferred:
Due from five through ten years		8,000		-		(358	)		7,642
After ten years		2,000		-		(5	)		1,995
		10,000		-		(363	)		9,637
Total available-for-sale securities	$	42,500	$	530	$	(1,756	)	$	41,274
Held-to-maturity:
U.S. government and government-sponsored securities:
Due in one year or less	$	2,997	$	-	$	(14	)	$	2,983
From one through five years		2,986		21		(14	)		2,993
After ten years		4,576		-		(201	)		4,375
		10,559		21		(229	)		10,351
State agency and municipal obligations
From one through five years		443		-		(11	)		432
U.S. Government-sponsored and guaranteed mortgage-backed securities:
Due from one through five years		624		4		(5	)		623
From five through ten years		10,790		8		(249	)		10,549
After ten years		49,509		430		(706	)		49,233
		60,923		442		(960	)		60,405
Total held-to-maturity securities	$	71,925	$	463	$	(1,200	)	$	71,188

12

	Amortized		Gross Unrealized					Fair
	Cost Basis		Gains		(Losses)			Value
	(in thousands)
June 30, 2018:
Available-for-sale:
Debt securities:
U.S. government and government-sponsored securities:
Due in one year or less	$	1,000	$	-	$	(4	)	$	996
After ten years		3,419		-		(87	)		3,332
		4,419		-		(91	)		4,328
Corporate bonds:
Due from five through ten years		1,999		-		(129	)		1,870
After ten years		2,000		-		(140	)		1,860
		3,999		-		(269	)		3,730
U.S. Government-sponsored and guaranteed mortgage-backed securities:
Due from one through five years		3,135		-		(125	)		3,010
From five through ten years		4,919		-		(95	)		4,824
After ten years		17,688		135		(406	)		17,417
		25,742		135		(626	)		25,251
Non-agency mortgage-backed securities:
Due after ten years		3,057		483		(303	)		3,237
Total debt securities		37,217		618		(1,289	)		36,546
Other securities:
Auction rate preferred:
Due from five through ten years		8,000		-		-			8,000
After ten years		2,000		-		-			2,000
		10,000		-		-			10,000
Total available-for-sale securities	$	47,217	$	618	$	(1,289	)	$	46,546
Held-to-maturity:
U.S. government and government-sponsored securities:
Due in one year or less	$	2,001	$	-	$	(9	)	$	1,992
From one through five years		4,976		25		(33	)		4,968
After ten years		4,796		-		(189	)		4,607
		11,773		25		(231	)		11,567
State agency and municipal obligations
Due from one through five years		446		-		(14	)		432
U.S. Government-sponsored and guaranteed mortgage-backed securities:
Due from one through five years		846		5		(8	)		843
From five through ten years		12,123		14		(384	)		11,753
After ten years		57,628		518		(913	)		57,233
		70,597		537		(1,305	)		69,829
Total held-to-maturity securities	$	82,816	$	562	$	(1,550	)	$	81,828

There were no sales of available-for-sale securities for the three and six months ended December 31, 2018 or 2017. Gains and losses on the sales of securities are recorded on the trade date and are determined using the specific identification method. There were other-than-temporary impairment charges on available-for-sale securities of $4,000 realized in income during the three and six months ended December 31, 2018. The write-downs included total other-than-temporary impairment losses on non-agency mortgage-backed securities of $135,000, net of $131,000 recognized in other comprehensive loss, before taxes. There were no other-than temporary impairment losses during the three months ended December 31, 2017 and $1,000 in other-than impairment losses during the six months ended December 31, 2017. The write-downs included total other-than-temporary impairment losses on non-agency mortgage-backed securities of $2,000, net of $1,000 recognized in other comprehensive loss, before taxes.

13

The following is a summary of the estimated fair value and related unrealized losses segregated by category and length of time that individual securities have been in a continuous unrealized loss position at:

	Less than 12 months				12 months or more				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
	(in thousands)
December 31, 2018:
Available-for-sale:
U.S. Government and government-sponsored securities	$	-	$	-	$	2,765	$	84	$	2,765	$	84
Corporate bonds		-		-		3,525		474		3,525		474
U.S. Government-sponsored and guaranteed mortgage-backed securities		2,441		13		16,334		449		18,775		462
Other securities		4,637		363		-		-		4,637		363
Total temporarily impaired available-for-sale		7,078		376		22,624		1,007		29,702		1,383
Held-to-maturity:
U.S. Government and government-sponsored securities		995		5		8,351		224		9,346		229
State and political subdivisions		-		-		432		11		432		11
U.S. Government-sponsored and guaranteed mortgage-backed securities		3,155		40		40,191		920		43,346		960
Total temporarily impaired held-to-maturity		4,150		45		48,974		1,155		53,124		1,200
Other-than-temporarily impaired debt securities (1):
Non-agency mortgage-backed securities		280		6		979		367		1,259		373
Total temporarily-impaired and other- than-temporarily impaired securities	$	11,508	$	427	$	72,577	$	2,529	$	84,085	$	2,956

	Less than 12 months				12 months or more				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
	(in thousands)
June 30, 2018:
Available-for-sale:
U.S. Government and government-sponsored securities	$	-	$	-	$	4,328	$	91	$	4,328	$	91
Corporate bonds		-		-		3,730		269		3,730		269
U.S. Government-sponsored and guaranteed mortgage-backed securities		7,331		123		14,914		503		22,245		626
Total temporarily impaired available-for-sale		7,331		123		22,972		863		30,303		986
Held-to-maturity:
U.S. Government and government-sponsored securities		5,956		42		4,606		189		10,562		231
State and political subdivisions		432		14		-		-		432		14
U.S. Government-sponsored and guaranteed mortgage-backed securities		34,387		708		16,880		597		51,267		1,305
Total temporarily impaired held-to-maturity		40,775		764		21,486		786		62,261		1,550
Other-than-temporarily impaired debt securities (1):
Non-agency mortgage-backed securities		-		-		1,134		303		1,134		303
Total temporarily-impaired and other- than-temporarily impaired securities	$	48,106	$	887	$	45,592	$	1,952	$	93,698	$	2,839

(1) Includes other-than-temporary impaired available-for-sale debt securities in which a portion of the other-than-temporary impairment loss remains in accumulated other comprehensive loss.

14

Management evaluates securities for OTTI at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation.

At December 31, 2018, there were 91 individual investment securities with aggregate depreciation of 3.4% from the Company’s amortized cost basis. Management has the intent and ability to hold these securities until cost recovery occurs and considers these declines to be temporary.

The unrealized losses on the Company’s investment in U.S. Government-sponsored agency bonds and U.S. government-guaranteed and government-sponsored residential mortgage-backed securities were primarily caused by interest rate fluctuations. These investments are guaranteed or sponsored by the U.S. government or an agency thereof. Accordingly, it is expected that the securities would not be settled at a price less than the par value of the investment. Because the decline in market value is attributable to changes in interest rates and not to credit quality, and because the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost bases, which may be maturity, the Company does not consider these investments to be other-than-temporarily impaired at December 31, 2018.

The Company’s unrealized losses on investments in corporate bonds and other securities relate to investments in companies within the financial services sector. As of December 31, 2018, the Company had three investments in corporate single-issuer trust preferred securities (TRUPs) with a total book value of $4.0 million and total fair value of $3.5 million, all of which were classified as available-for-sale. The single-issuer trust preferred investments are evaluated for other-than-temporary impairment by performing a present value of cash flows calculation each quarter. None of the issuers have deferred interest payments or announced the intention to defer interest payments. The Company believes the decline in fair value is related to the spread over three-month LIBOR, on which the quarterly interest payments are based, as the spread over LIBOR being received is significantly lower than current market spreads. Management concluded the impairment of these investments was considered temporary and asserts that the Company does not have the intent to sell these investments and that it is more likely than not it will not have to sell the investments before recovery of their cost bases which may be at maturity.

At December 31, 2018, there was one state and political subdivision security that had an unrealized loss of 2.5% from the Company’s amortized cost basis. We believe the unrealized loss was primarily caused by interest rate fluctuations. This security is guaranteed by a school district located in Texas. Because the decline in market value is attributable to changes in interest rates and not to credit quality, and because the Company does not intend to sell the investment and it is not more likely than not that the Company will be required to sell the investments before recovery of its amortized cost basis, which may be at maturity, the Company does not consider this investment to be other-than-temporarily impaired at December 31, 2018.

For the three and six months ended December 31, 2018, there was $4,000 in other-than-temporary impairment losses recognized in earnings. The other-than-temporary impairment losses were on non-agency mortgage-backed securities. The Company estimates the portion of possible loss attributable to credit loss using a discounted cash flow model. Significant inputs include the estimated cash flows of the underlying loans based on key assumptions, such as default rate, loss severity and prepayment rate. Assumptions can vary widely from security to security, and are influenced by such factors as loan interest rate, geographical location of the borrower, borrower characteristics and collateral type. The present value of the expected cash flows is compared to the Company’s amortized cost basis to determine if there was a credit-related impairment loss. Based on the expected cash flows derived from the model, the Company expects to recover the remaining unrealized losses on these securities.

15

The following table represents a roll-forward of the amount of credit losses on debt securities for which a portion of other-than-temporary impairment was recognized in other comprehensive loss:

	Six months ended
	December 31,
	2018		2017
	(in thousands)
Balance at beginning of period	$	15,983	$	15,982
Additional credit losses on securities for which an other-than-temporary impairment charge was previously recorded		4		1
Balance at end of period	$	15,987	$	15,983

NOTE 7 – Loans

The following table sets forth the composition of our loan portfolio at December 31, 2018 and June 30, 2018:

	December 31,			June 30,
	2018			2018
	(in thousands)
Real Estate:
Residential (1)	$	229,313		$	236,880
Commercial		127,308			101,647
Residential construction		937			2,217
Commercial		11,815			12,215
Consumer and other		793			831
Total loans		370,166			353,790
Net deferred loan costs		1,316			1,423
Allowance for loan losses		(2,864	)		(2,943	)
Loans, net	$	368,618		$	352,270

(1) Residential real estate loans include one-to four-family mortgage loans, second mortgage loans, and home equity lines of credit.

Credit Quality Information

The Company utilizes a nine grade internal loan rating system as follows:

Loans rated 1 - 5 are considered “pass” rated loans with low to average risk.

Loans rated 6 are considered “special mention.” These loans are starting to show signs of potential weakness and are being closely monitored by management.

Loans rated 7 are considered “substandard.” Generally, a loan is considered substandard if it is inadequately protected by the current net worth and paying capacity of the obligors and/or the collateral pledged. There is a distinct possibility that the Company will sustain some loss if the weakness is not corrected.

16

Loans rated 8 are considered “doubtful.” Loans classified as doubtful have all the weaknesses inherent in those classified substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, highly questionable and improbable.

Loans rated 9 are considered uncollectible (“loss”) and of such little value that their continuance as loans is not warranted.

On an annual basis, or more often if needed, the Company formally reviews the ratings on all commercial real estate, construction and commercial loans. Annually, the Company engages an independent third-party to review a significant portion of loans within these segments. Management uses the results of these reviews as part of its annual review process. Credit quality for residential real estate and consumer/other loans is determined by monitoring loan payment history and ongoing communications with the borrower.

The following table presents the Company’s loan classes by internally assigned grades at December 31, 2018 and June 30, 2018:

	Residential		Commercial		Residential				Consumer
	Real Estate		Real Estate		Construction		Commercial		and other		Total
	(in thousands)
December 31, 2018
Grade:
Pass	$	225,838	$	125,279	$	937	$	10,804	$	793	$	363,651
Special Mention		-		512		-		-		-		512
Substandard		3,475		1,517		-		1,011		-		6,003
Doubtful		-		-		-		-		-		-
Loss		-		-		-		-		-		-
Total	$	229,313	$	127,308	$	937	$	11,815	$	793	$	370,166
June 30, 2018
Grade:
Pass	$	232,919	$	98,626	$	2,217	$	11,157	$	830	$	345,749
Special Mention		2		698		-		1,058		-		1,758
Substandard		3,959		2,323		-		-		1		6,283
Doubtful		-		-		-		-		-		-
Loss		-		-		-		-		-		-
Total	$	236,880	$	101,647	$	2,217	$	12,215	$	831	$	353,790

There were no material modifications deemed to be troubled debt restructures for the six months ended December 31, 2018 and 2017.

There were no material troubled debt restructurings that subsequently defaulted (defined as 30 or more days past due subsequent to restructuring) within one year of modification during the three and six months ended December 31, 2018 and 2017.

17

NOTE 8 – Non-performing Assets, Past Due and Impaired Loans

The table below sets forth the amounts and categories of non-performing assets at the dates indicated:

	At  December 31,			At June 30,
	2018			2018
	(Dollars in thousands)
Non-accrual loans:
Real Estate:
Residential	$	3,475		$	3,959
Commercial		406			432
Consumer		-			1
Total non-accrual loans		3,881			4,392
Accruing loans past due 90 days or more		-			32
Total non-performing loans		3,881			4,424
Other real estate owned		1,297			1,381
Total non-performing assets	$	5,178		$	5,805
Total non-performing loans to total loans		1.05	%		1.25	%
Total non-performing assets to total assets		1.00	%		1.10	%

Management is focused on working with borrowers and guarantors to resolve non-accrual loans by restructuring or liquidating assets when prudent. Many of our commercial relationships are secured by development loans, in particular condominiums which have experienced a significant reduction in demand. The Company reviews the strength of the guarantors; requires face to face discussions and offers restructuring suggestions that provide the borrowers with short term relief and exit strategies. The Company obtains a current appraisal on all real estate secured loans that are 180 days or more past due if the appraisal on file is older than one year. If the determination is made that there is the potential for collateral shortfall, an allocated reserve will be assigned to the loan for the expected deficiency. It is the policy of the Company to charge off or write down loans or other assets when, in the opinion of the Credit Committee and Loan Review, the ultimate amount recoverable is less than the carrying value, or the collection of the amount is expected to be unduly prolonged. The level of non-performing assets is expected to fluctuate in response to changing economic and market conditions, and the relative sizes of the respective loan portfolios, along with management’s degree of success in resolving problem assets.

18

The following table sets forth information regarding past due loans at December 31, 2018 and June 30, 2018:

					90 days
	30–59 Days		60–89 Days		or Greater		Total
	Past Due		Past Due		Past Due		Past Due
	(in thousands)
At December 31, 2018
Real Estate:
Residential	$	1,627	$	146	$	510	$	2,283
Commercial		2,027		-		121		2,148
Consumer and other		2		-		-		2
Total	$	3,656	$	146	$	631	$	4,433
At June 30, 2018
Real Estate:
Residential	$	50	$	238	$	1,119	$	1,407
Commercial		-		-	$	124		124
Consumer and other		4		-		-		4
Total	$	54	$	238	$	1,243	$	1,535

The following is a summary of information pertaining to impaired loans at December 31, 2018 and June 30, 2018, none of which had a valuation allowance:

	At December 31, 2018				At June 30, 2018
			Unpaid				Unpaid
	Recorded		Principal		Recorded		Principal
	Investment		Balance		Investment		Balance
	(in thousands)
Real Estate:
Residential	$	2,062	$	2,208	$	2,732	$	2,870
Commercial		406		469		1,230		1,914
Total impaired loans	$	2,468	$	2,677	$	3,962	$	4,784

19

The following is a summary of additional information pertaining to impaired loans:

	Three months ended						Three months ended
	December 31, 2018						December 31, 2017
	Average		Interest		Interest Income		Average		Interest		Interest Income
	Recorded		Income		Recognized		Recorded		Income		Recognized
	Investment		Recognized		on Cash Basis		Investment		Recognized		on Cash Basis
	(in thousands)
Real Estate:
Residential	$	2,177	$	22	$	19	$	2,093	$	8	$	3
Commercial		411		-		-		1,291		22		-
Total impaired loans	$	2,588	$	22	$	19	$	3,384	$	30	$	3

	Six months ended						Six months ended
	December 31, 2018						December 31, 2017
	Average		Interest		Interest Income		Average		Interest		Interest Income
	Recorded		Income		Recognized		Recorded		Income		Recognized
	Investment		Recognized		on Cash Basis		Investment		Recognized		on Cash Basis
	(in thousands)
Real Estate:
Residential	$	2,362	$	39	$	33	$	2,149	$	16	$	7
Commercial		684		7		-		1,303		45		-
Total impaired loans	$	3,046	$	46	$	33	$	3,452	$	61	$	7

20

NOTE 9 – Allowance for Loan Losses

An analysis of the allowance for loan losses for the three and six months ended December 31, 2018 and 2017 is as follows:

	Residential			Commercial			Residential						Consumer
	Real Estate			Real Estate			Construction			Commercial			and Other			Unallocated			Total
	(in thousands)
Three months ended
December 31, 2018
Beginning balance	$	1,488		$	1,094		$	7		$	77		$	131		$	109		$	2,906
Charge-offs		(42	)		-			-			-			(12	)		-			(54	)
Recoveries		3			-			-			4			5			-			12
(Credit) provision		16			102			(2	)		29			(92	)		(53	)		-
Ending Balance	$	1,465		$	1,196		$	5		$	110		$	32		$	56		$	2,864
Three months ended
December 31, 2017
Beginning balance	$	1,432		$	1,232		$	7		$	80		$	148		$	61		$	2,960
Charge-offs		-			-			-			-			(13	)		-			(13	)
Recoveries		9			-			-			3			6			-			18
(Credit) provision		(24	)		(17	)		2			(4	)		(10	)		53			-
Ending Balance	$	1,417		$	1,215		$	9		$	79		$	131		$	114		$	2,965
Six months ended
December 31, 2018
Beginning balance	$	1,385		$	1,194		$	14		$	80		$	135		$	135		$	2,943
Charge-offs		(42	)		-			-			-			(19	)		-			(61	)
Recoveries		8			560			-			6			8			-			582
(Credit) provision		114			(558	)		(9	)		24			(92	)		(79	)		(600	)
Ending Balance	$	1,465		$	1,196		$	5		$	110		$	32		$	56		$	2,864
Six months ended
December 31, 2017
Beginning balance	$	1,359		$	1,164		$	6		$	76		$	86		$	89		$	2,780
Charge-offs		-			-			-			-			(22	)		-			(22	)
Recoveries		17			-			-			6			9			-			32
(Credit) provision		41			51			3			(3	)		58			25			175
Ending Balance	$	1,417		$	1,215		$	9		$	79		$	131		$	114		$	2,965

21

Further information pertaining to the allowance for loan losses at December 31, 2018 and June 30, 2018 is as follows:

	Residential		Commercial		Residential				Consumer
	Real Estate		Real Estate		Construction		Commercial		and Other		Unallocated		Total
	(in thousands)
At December 31, 2018
Amount of allowance for loan losses for impaired loans	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Amount of allowance for loan losses for
non-impaired loans	$	1,465	$	1,196	$	5	$	110	$	32	$	56	$	2,864
Impaired loans	$	2,062	$	406	$	-	$	-	$	-	$	-	$	2,468
Non-impaired loans	$	227,251	$	126,902	$	937	$	11,815	$	793	$	-	$	367,698
At June 30, 2018
Amount of allowance for loan losses for impaired loans	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Amount of allowance for loan losses for
non-impaired loans	$	1,385	$	1,194	$	14	$	80	$	135	$	135	$	2,943
Impaired loans	$	2,732	$	1,230	$	-	$	-	$	-	$	-	$	3,962
Non-impaired loans	$	234,148	$	100,417	$	2,217	$	12,215	$	831	$	-	$	349,828

22

NOTE 10 – Stock-Based Incentive Plan

In February 2017, stockholders of the Company approved the PB Bancorp, Inc. 2017 Stock-Based Incentive Plan (the “Incentive Plan”). Under the Incentive Plan, the Company may grant up to 453,267 stock options and 181,306 shares of restricted stock to its employees, officers and directors for an aggregate amount of up to 634,573 shares of the Company’s common stock for issuance upon the grant or exercise of awards. Both incentive stock options and non-statutory stock options may be granted under the Incentive Plan.

There were no stock options or awards granted during the six months ended December 31, 2018 and 2017.

Both stock option and restricted stock awards granted to date vest at 20% per year beginning on the first anniversary of the date of the grant.

Stock options are considered common stock equivalents for the purpose of computing earnings per share on a diluted basis. Restricted stock awards have non-forfeitable dividend rights, and are considered participating securities outstanding for the purpose of computing basic earnings per share.

The Company has recorded share-based compensation expense related to outstanding stock option and restricted stock awards based upon the fair value at the date of grant over the vesting period of such awards on a straight-line basis. The fair value of each restricted stock allocation, based on the market price at the date of grant, is recorded to unearned stock awards. Compensation expense related to unearned restricted shares is amortized to compensation and benefits expense over the vesting period of the restricted stock awards, adjusted by actual forfeitures. The fair value of each stock option award is estimated on the date of grant using the Black-Scholes option pricing method which includes several assumptions such as volatility, expected dividends, expected term and risk-free rate for each stock option award. The Company recorded share-based compensation expense in connection with the stock option and restricted stock awards for the three months ended December 31, 2018 of $111,000 and for the six months ended December 31, 2018 of $229,000. The Company recorded share-based compensation expense in connection with the stock option and restricted stock awards for the three months ended December 31, 2017 of $112,000 and for the six months ended December 31, 2017 of $224,000.

NOTE 11 – Accumulated Other Comprehensive Loss

Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income. Although certain changes in assets and liabilities are reported as a separate component of the equity section of the consolidated balance sheets, such items are components of accumulated other comprehensive loss.

The components of accumulated other comprehensive loss and related tax effects are as follows:

	December 31,			June 30,
	2018			2018
	(in thousands)
Net unrealized loss on securities available-for-sale	$	(1,226	)	$	(671	)
Tax effect		263			149
Accumulated other comprehensive loss	$	(963	)	$	(522	)

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NOTE 12 – FAIR VALUE MEASUREMENTS

The Company groups its assets measured at fair value in three levels, based on the markets in which the assets are traded and the reliability of the assumptions used to determine fair value as follows:

Level 1 – Valuations for assets traded in active exchange markets, such as the New York Stock Exchange. Valuations are obtained from readily available pricing sources for market transactions involving identical assets.

Level 2 – Valuations for assets traded in less active dealer or broker markets. Valuations are obtained from third party pricing services for identical or comparable assets.

Level 3 – Valuations for assets that are derived from other methodologies, including option pricing models, discounted cash flow models and similar techniques, and not based on market exchange, dealer, or broker traded transactions. Level 3 valuations incorporate certain assumptions and projections in determining the fair value assigned to such assets.

The level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. A description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below. These valuation methodologies were applied to all of the Company’s assets carried at fair value for December 31, 2018 and June 30, 2018.

The Company’s mortgage-backed securities and other debt securities available-for-sale are generally classified within Level 2 of the fair value hierarchy. For these securities, we obtain fair value measurements from independent pricing services, which are not adjusted by management. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U. S. treasury yield curve, trading levels, market consensus prepayment speeds, credit information and the instrument’s terms and conditions.

Level 3 is for positions that are not traded in active markets or are subject to transfer restrictions, valuations are adjusted to reflect illiquidity and/or non-transferability, and such adjustments are generally based on available market evidence. In the absence of such evidence, management’s best estimate is used. Subsequent to inception, management only changes Level 3 inputs and assumptions when corroborated by evidence such as transactions in similar instruments, completed or pending third-party transactions in the underlying investment or comparable entities, subsequent rounds of financing, recapitalization and other transactions across the capital structure, offerings in the equity or debt markets, and changes in financial ratios or cash flows. Level 3 assets consisted of available-for-sale auction-rate trust preferred securities (ARPs).  All dividends are current. The Company has the ability and intent to hold these securities for the time necessary to collect the expected cash flows.

The fair value of impaired loans and other real estate owned is based on the underlying collateral if repayment is expected solely from the collateral. Collateral values are estimated using Level 3 inputs based upon appraisals of similar properties obtained from a third party and adjusted by management as needed.

The Company did not have any transfers of assets between levels of the fair value hierarchy during the six months ended December 31, 2018.

24

The following summarizes assets measured at fair value on a recurring basis at December 31, 2018 and June 30, 2018:

	Total Fair
	Value		Level 1		Level 2		Level 3
	(in thousands)
At December 31, 2018
Securities available-for-sale:
U.S. government and government-sponsored securities	$	2,765	$	-	$	2,765	$	-
Corporate bonds		3,525		-		3,525		-
U.S. Government-sponsored and guaranteed mortgage-backed securities		22,575		-		22,575		-
Non-agency mortgage-backed securities		2,772		-		2,772		-
Other securities		9,637		-		-		9,637
Total	$	41,274	$	-	$	31,637	$	9,637
At June 30, 2018
Securities available-for-sale:
U.S. government and government-sponsored securities	$	4,328	$	-	$	4,328	$	-
Corporate bonds		3,730		-		3,730		-
U.S. Government-sponsored and guaranteed mortgage-backed securities		25,251		-		25,251		-
Non-agency mortgage-backed securities		3,237		-		3,237		-
Other securities		10,000		-		-		10,000
Total	$	46,546	$	-	$	36,546	$	10,000

There were no changes in level 3 assets measured at fair value for the six months ended December 31, 2018 and 2017.

25

The following summarizes assets measured at fair value on a non-recurring basis and the adjustments to the carrying value at and for the three and six months ended December 31, 2018 and 2017:

									Total Losses		Total Losses
									for the three		for the six
	Total Fair								months ended		months ended
	Value		Level 1		Level 2		Level 3		December 31, 2018		December 31, 2018
At December 31, 2018
Impaired loans	$	223	$	-	$	-	$	223	$	38	$	38
Other real estate owned		494		-		-		494		-		63
	$	717	$	-	$	-	$	717	$	38	$	101

									Total Losses		Total Losses
									for the three		for the six
	Total Fair								months ended		months ended
	Value		Level 1		Level 2		Level 3		December 31, 2017		December 31, 2017
	(in thousands)
At June 30, 2018
Impaired loans	$	160	$	-	$	-	$	160	$	-	$	-
Other real estate owned		110		-		-		110		8		9
	$	270	$	-	$	-	$	270	$	8	$	9

The amount of other real estate owned represents the carrying value for which write-downs are based on the estimated fair value of the property.

Fair value estimates are made at a specific point in time, based on relevant market information and information about the asset. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular asset. Because a market may not readily exist for a significant portion of the Company’s asset, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

There were no liabilities measured at fair value on a recurring or non-recurring basis at December 31, 2018 or June 30, 2018.

26

The following methods and assumptions were used by the Company in estimating fair value disclosures of its financial instruments:

Cash and Cash Equivalents. The carrying amounts of cash and cash equivalents approximate fair values based on the short-term nature of the assets.

Investment Securities Held-to-Maturity and FHLBB Stock. The fair value of securities held-to-maturity is estimated based on quoted market prices, where available. If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments or available market evidence. Ownership of Federal Home Loan Bank of Boston (“FHLBB”) stock is restricted to member banks; therefore, the stock is not traded. The estimated fair value of FHLBB stock is equal to its carrying value, which represents the price at which the FHLBB is obligated to redeem its stock.

Loans. For valuation purposes, the loan portfolio was segregated into its significant categories, which are residential, commercial real estate, residential construction, commercial and consumer and other loans. These categories were further segregated, where appropriate, into components based on significant financial characteristics such as type of interest rate (fixed or adjustable). Fair values were estimated for each component using assumptions developed by management and a valuation model provided by a third party specialist.

The fair values of residential, commercial real estate, residential construction, commercial and consumer and other loans were estimated by discounting the anticipated cash flows from the respective portfolios. Estimates of the timing and amount of these cash flows considered factors such as future loan prepayments. The discount rates reflected current market rates for loans with similar terms to borrowers of similar credit quality. The fair value of home equity lines of credit was based on the outstanding loan balances. Fair values for non-performing loans are estimated using discounted cash flow analyses or underlying collateral values, where applicable.

Deposits and Mortgagors’ Escrow. The fair value of deposits with no stated maturity such as demand deposits, NOW, regular savings, and money market deposit accounts and mortgagors’ escrow accounts, is equal to the amount payable on demand. The fair value estimates do not include the benefit that results from the generally lower cost of funding provided by the deposit liabilities compared to the cost of borrowing funds in the market. The fair value estimate of time deposits is based on the discounted value of contractual cash flows. The discount rate is estimated using the rates currently offered for deposits having similar remaining maturities.

Federal Home Loan Bank Advances. The fair values of the Company’s Federal Home Loan Bank advances are estimated using discounted cash flow analyses based on the current incremental borrowing rates in the market for similar types of borrowing arrangements.

Securities Sold Under Agreements to Repurchase. The Company enters into overnight repurchase agreements with its customers. Since these agreements are short-term instruments, the fair value of these agreements approximates their recorded balance. The Company also secures term repurchase agreements through other financial institutions. The fair value of these agreements are determined by discounting the anticipated future cash payments using rates currently available to the Bank for debt with similar terms and remaining maturities.

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

Off-Balance Sheet Instruments. The fair value of off-balance-sheet mortgage lending commitments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standing. In the case of the commitments discussed in Note 14, the fair value equals the carrying amounts which are not significant.

Summary of Fair Values of Financial Instruments. The estimated fair values, and related carrying amounts, of the Company’s financial instruments are as follows. Certain financial instruments and all nonfinancial instruments are exempt from disclosure requirements. Accordingly, the aggregate fair value amounts presented herein do not represent the underlying fair value of the Company.

27

The following table presents the carrying amount and estimated fair values of the Company’s financial instruments, all of which are held or issued for purposes other than trading, as of December 31, 2018 and June 30, 2018:

	December , 2018
	Carrying		Fair Value Hierarchy						Total Fair
	Amount		Level 1		Level 2		Level 3		Value
	(in thousands)
Financial assets:
Cash and cash equivalents	$	5,332	$	5,332	$	-	$	-	$	5,332
Securities available-for-sale		41,274		-		31,637		9,637		41,274
Securities held-to-maturity		71,925		-		71,188		-		71,188
Federal Home Loan Bank stock		4,206		-		-		4,206		4,206
Loans, net		368,618		-		-		353,355		353,355
Accrued interest receivable		1,538		-		-		1,538		1,538
Financial liabilities:
Deposits		365,935		-		-		366,566		366,566
Mortgagors' escrow accounts		3,062		-		-		3,062		3,062
Federal Home Loan Bank advances		62,172		-		61,699		-		61,699
Securities sold under agreements to repurchase		3,310		-		3,310		-		3,310
Accrued interest payable		200		-		-		200		200

	June 30, 2018
	Carrying		Fair Value Hierarchy						Total Fair
	Amount		Level 1		Level 2		Level 3		Value
	(in thousands)
Financial assets:
Cash and cash equivalents	$	10,102	$	10,102	$	-	$	-	$	10,102
Securities available-for-sale		46,546		-		36,546		10,000		46,546
Securities held-to-maturity		82,816		-		81,828		-		81,828
Federal Home Loan Bank stock		4,206		-		-		4,206		4,206
Loans, net		352,270		-		-		346,511		346,511
Accrued interest receivable		1,361		-		-		1,361		1,361
Financial liabilities:
Deposits		371,585		-		-		372,563		372,563
Mortgagors' escrow accounts		3,123		-		-		3,123		3,123
Federal Home Loan Bank advances		63,199		-		62,428		-		62,428
Securities sold under agreements to repurchase		664		-		664		-		664
Accrued interest payable		158		-		-		158		158

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NOTE 13 – Subsequent Events

On January 2, 2019, the Board of Directors of PB Bancorp, Inc. declared a quarterly cash dividend of $0.07 per share for stockholders of record as of January 16, 2019, which is payable on January 30, 2019.

NOTE 14 – Commitments to Extend Credit

The Company is party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit. These commitments involve, to varying degrees, elements of credit and interest rate risk in excess of the amounts recognized in the consolidated balance sheets.

The contractual amounts of outstanding commitments were as follows:

	December 31,		June 30,
	2018		2018
	(in thousands)
Commitments to extend credit:
Loan commitments	$	4,056	$	3,594
Unadvanced construction loans		8,585		8,822
Unadvanced lines of credit		19,762		18,881
Standby letters of credit		395		395
Outstanding commitments	$	32,798	$	31,692

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

The following analysis discusses changes in the financial condition at December 31, 2018 and June 30, 2018 and results of operations for the three and six months ended December 31, 2018 and 2017, and should be read in conjunction with the Company’s Consolidated Financial Statements (unaudited) and the notes thereto, appearing in Part I, Item 1 of this quarterly report. These financial statements should be read in conjunction with the 2018 Consolidated Financial Statements and notes thereto included in PB Bancorp, Inc.’s Annual Report on Form 10-K filed with the SEC on September 21, 2018.

Forward-Looking Statements

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. PB Bancorp intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and is including this statement for purposes of these safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe future plans, strategies and expectations of PB Bancorp, are generally identified by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project,” or similar expressions. PB Bancorp’s ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on the operations of PB Bancorp and its subsidiary include, but are not limited to, changes in: interest rates, general economic conditions, legislation and regulations, real estate values, monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve Board, the quality and composition of the loan and investment portfolios, demand for loan products, cyber-attacks, computer viruses and other technological risks that may breach the security of our websites or other systems to obtain unauthorized access to confidential information, destroy data or disable our systems; deposit flows, competition, demand for financial services in PB Bancorp’s market area, the effect of any federal government shutdown and accounting principles and guidelines. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Further information concerning PB Bancorp and its business, including additional factors that could materially affect PB Bancorp financial results, is included in PB Bancorp’s filings with the Securities and Exchange Commission, including the risk factors included in PB Bancorp’s Annual Report on Form 10-K filed with the SEC on September 21, 2018.

29

Except as required by applicable law and regulation, the Company does not undertake – and specifically disclaims any obligation – to publicly release the results of any revisions that may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

Overview

Our profitability is highly dependent on our net interest income, which is the difference between our interest income on interest-earning assets, such as loans and securities, and our interest expense on interest-bearing liabilities, such as deposits and borrowed funds.

Our net income increased $299,000, or 37.8%, to $1.1 million, or $0.15 per basic and diluted share for the three months ended December 31, 2018, compared to net income of $791,000, or $0.11 per basic and diluted share for the three months ended December 31, 2017. This was due primarily to an increase in net interest income of $235,000, or 6.7% to $3.7 million for the three months ended December 31, 2018 from $3.5 million for the three months ended December 31, 2017, while non-interest income decreased $123,000, or 14.3% to $735,000, for the three months ended December 31, 2018 from $858,000 for the three months ended December 31, 2017.  Non-interest expense increased $82,000, or 2.7% to $3.2 million for the three months ended December 31, 2018 from $3.1 million for the three months ended December 31, 2017. Income tax expense decreased $269,000, or 56.4% to $208,000 for the three months ended December 31, 2018 from $477,000 for the three months ended December 31, 2017. This was a result of the Tax Cuts and Jobs Act being signed into law on December 22, 2017. The effective tax rate was 16.0% for the three months ended December 31, 2018 compared to 37.6% for the three months ended December 31, 2017. The Company revalued its net deferred tax asset as of December 22, 2017 resulting in a reduction in the value of the net deferred tax asset of $211,000, which was recorded as additional tax expense in the Company’s consolidated statements of net income for the three and six months ended December 31, 2017 and a reduction in the federal tax rate.

Our net income increased $1.1 million, or 80.4%, to $2.5 million, or $0.34 per basic and diluted share for the six months ended December 31, 2018, compared to net income of $1.4 million, or $0.19 per basic and diluted share for the six months ended December 31, 2017. This was due primarily to a decrease of $775,000 in the provision for loan losses. The Company recorded a credit for loan losses of $600,000 for the six months ended December 31, 2018 compared to a $175,000 provision for loan losses for the six months ended December 31, 2017. Net interest income increased $486,000, or 7.1% to $7.4 million for the six months ended December 31, 2018 from $6.9 million for the six months ended December 31, 2017, while non-interest income remained unchanged at $1.4 million for the six months ended December 31, 2018 and December 31, 2017. Non-interest expense increased $346,000, or 5.7% to $6.4 million for the six months ended December 31, 2018 from $6.0 million for the six months ended December 31, 2017. Income tax expense decreased $184,000, or 26.7% to $504,000 for the six months ended December 31, 2018 from $688,000 for the six months ended December 31, 2017. The effective tax rate was 16.9% for the six months ended December 31, 2018 compared to 33.3% for the three months ended December 31, 2017.

An increase in interest rates will present us with a challenge in managing our interest rate risk. As a general matter, our interest-bearing liabilities reprice or mature more quickly than our interest-earning assets, which can result in interest expense increasing more rapidly than increases in interest income as interest rates increase. Therefore, increases in interest rates may adversely affect our net interest income, which in turn would likely have an adverse effect on our results of operations. As described in “Market Risk,” we expect that our net interest income and our net portfolio value would decrease as a result of an instantaneous increase in interest rates. We use a variety of strategies to help manage interest rate risk, as described in “Market Risk”.

Unlike larger financial institutions that are more geographically diversified, our profitability depends primarily on the general economic conditions in Eastern Connecticut and the Rhode Island and Massachusetts communities adjacent to Windham County, Connecticut. Local economic conditions have a significant impact on our commercial real estate and construction and consumer loans, the ability of the borrowers to repay these loans and the value of the collateral securing these loans. In addition, changes in economic conditions could result in increased actual losses or increased losses inherent in our loan portfolio, either of which could require us to significantly increase the level of our provision for loan losses.

30

Comparison of Financial Condition at December 31, 2018 and June 30, 2018

Assets

Total assets were $520.4 million at December 31, 2018, a decrease of $5.0 million, or 1.0%, from $525.4 million at June 30, 2018. Cash and cash equivalents decreased $4.8 million, or 47.2%, to $5.3 million at December 31, 2018 compared to $10.1 million at June 30, 2018. Investments in held-to-maturity securities decreased $10.9 million, or 13.2%, to $71.9 million at December 31, 2018 compared to $82.8 million at June 30, 2018 and investments in available-for-sale securities decreased $5.3 million, or 11.3%, to $41.3 million at December 31, 2018 compared to $46.5 million at June 30, 2018. The Company continues to use excess cash, as well as cash flows from investments to assist in funding higher yielding loan growth. Net loans outstanding increased $16.3 million, or 4.6%, to $368.6 million at December 31, 2018 from $352.3 million at June 30, 2018. The increase in loans was primarily due to a $25.7 million, or 25.2%, increase in commercial real estate loans to $127.3 million at December 31, 2018 from $101.6 million at June 30, 2018. This was partially offset by a decrease in residential loans of $7.6 million, or 3.2% to $229.3 million at December 31, 2018 from $236.9 million at June 30, 2018.

Allowance for Loan Losses

The table below indicates the relationship between the allowance for loan losses, total loans outstanding and non-performing loans at December 31, 2018 and June 30, 2018. For additional information, see “Comparison of Operating Results for the three and six months ended December 31, 2018 and 2017 – Provision for Loan Losses.”

	December 31,			June 30,
	2018			2018
	(Dollars in thousands)
Allowance for loan losses	$	2,864		$	2,943
Total loans		370,166			353,790
Non-performing loans		3,881			4,424
Allowance/total loans		0.77	%		0.83	%
Allowance/non-performing loans		73.8	%		66.5	%

Liabilities

Total liabilities decreased $4.0 million, or 0.9%, to $437.1 million at December 31, 2018 from $441.1 million at June 30, 2018. Total deposits decreased $5.7 million, or 1.5%, to $365.9 million at December 31, 2018 from $371.6 million at June 30, 2018. We experienced an increase in non-interest-bearing deposits of $687,000, or 1.0% to $72.1 million at December 31, 2018 compared to $71.4 million at June 30, 2018. Interest-bearing deposits decreased $6.3 million, or 2.1% to $293.8 million at December 31, 2018 compared to $300.2 million at June 30, 2018. Total Federal Home Loan Bank borrowings decreased $1.0 million, or 1.6%, to $62.2 million at December 31, 2018 from $63.2 million at June 30, 2018. Securities sold under agreements to repurchase increased $2.6 million, or 398.5% to $3.3 million at December 31, 2018 compared to $664,000 at June 30, 2018.

Stockholders’ Equity

Total stockholders’ equity decreased $1.0 million, or 1.2%, to $83.3 million at December 31, 2018 from $84.3 million at June 30, 2018. The decrease was primarily due to repurchasing 175,983 shares at an average cost of $10.95 per share, or $1.9 million. This completed the Company’s second buyback plan. Dividends paid during the six months ended December 31, 2018 were $1.4 million. This was partially offset by net income of $2.5 million during the six months ended December 31, 2018.

31

Comparison of Operating Results for the Three and Six Months Ended December 31, 2018 and 2017

Interest and Dividend Income. Interest and dividend income increased $312,000, or 7.2% to $4.6 million for the three months ended December 31, 2018 compared to $4.3 million for the three months ended December 31, 2017. The average balance of interest-earning assets decreased $10.8 million, or 2.1% to $490.7 million for the three months ended December 31, 2018 from $501.5 million for the three months ended December 31, 2017. The average yield on interest-earning assets increased to 3.73% for the three months ended December 31, 2018 from 3.41% for the three months ended December 31, 2017 as a result of increases in market interest rates.

Interest income on loans increased $424,000, or 12.8% to $3.7 million for the three months ended December 31, 2018 compared to $3.3 million for the three months ended December 31, 2017. This was due to an increase in average loans outstanding and an increase in yield. The average balance of loans increased $23.6 million, or 7.0% to $360.6 million for the three months ended December 31, 2018 from $337.0 million for the three months ended December 31, 2017. The yield on average loans increased 21 basis points to 4.10% for the three months ended December 31, 2018 from 3.89% for the three months ended December 31, 2017 as a result of increases in market interest rates.

Interest and dividend income on investments decreased $129,000, or 13.7% to $816,000 for the three months ended December 31, 2018 compared to $945,000 for the three months ended December 31, 2017. This was due to a decrease in the average balance of investments of $35.6 million, or 22.6% to $122.1 million for the three months ended December 31, 2018 from $157.7 million for the three months ended December 31, 2017. This was partially offset by an increase in yield of 27 basis points to 2.65% for the three months ended December 31, 2018 from 2.38% for the three months ended December 31, 2017 as a result of increases in market interest rates.

Interest and dividend income increased $621,000, or 7.3% to $9.1 million for the six months ended December 31, 2018 compared to $8.5 million for the six months ended December 31, 2017. The average balance of interest-earning assets decreased $7.3 million, or 1.5% to $492.3 million for the six months ended December 31, 2018 from $499.6 million for the six months ended December 31, 2017. The average yield on interest-earning assets increased to 3.67% for the six months ended December 31, 2018 from 3.37% for the six months ended December 31, 2017 as a result of increases in market interest rates.

Interest income on loans increased $822,000, or 12.7% to $7.3 million for the six months ended December 31, 2018 compared to $6.5 million for the six months ended December 31, 2017. This was due to an increase in average loans outstanding and an increase in yield. The average balance of loans increased $26.8 million, or 8.1% to $357.0 million for the six months ended December 31, 2018 from $330.2 million for the six months ended December 31, 2017. The yield on average loans increased 16 basis points to 4.06% for the six months ended December 31, 2018 from 3.90% for the six months ended December 31, 2017 as a result of increases in market interest rates.

Interest and dividend income on investments decreased $254,000, or 13.1% to $1.7 million for the six months ended December 31, 2018 compared to $1.9 million for the six months ended December 31, 2017. This was due to a decrease in the average balance of investments of $38.0 million, or 23.2% to $126.0 million for the six months ended December 31, 2018 from $164.0 million for the six months ended December 31, 2017. This was partially offset by an increase in yield of 31 basis points to 2.65% for the six months ended December 31, 2018 from 2.34% for the six months ended December 31, 2017 as a result of increases in market interest rates.

Interest Expense. Interest expense increased $77,000, or 9.6% to $881,000 for the three months ended December 31, 2018 compared to $804,000 for the three months ended December 31, 2017. Total average interest-bearing liabilities decreased $12.2 million, or 3.3% to $361.2 million for the three months ended December 31, 2018 compared to $373.4 million for the three months ended December 31, 2017. The cost of average interest-bearing liabilities increased to 0.97% for the three months ended December 31, 2018 compared to 0.85% for the three months ended December 31, 2017.

Interest expense on deposits increased by $117,000, or 25.4%, to $577,000 for the three months ended December 31, 2018 from $460,000 for the three months ended December 31, 2017. Interest expense on time deposits increased $108,000, or 30.3%, to $465,000 for the three months ended December 31, 2018 from $357,000 for the three months ended December 31, 2017. The cost of interest-bearing deposits increased to 0.77% for the three months ended December 31, 2018 from 0.62% for the three months ended December 31, 2017 as we increased the rates we pay on deposits to remain competitive in our market areas.

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Interest expense on borrowings decreased by $40,000, or 11.6%, to $304,000 for the three months ended December 31, 2018 from $344,000 for the three months ended December 31, 2017. The rate paid on borrowings increased 17 basis points to 1.88% for the three months ended December 31, 2018 from 1.71% for the three months ended December 31, 2017. Average borrowings decreased $15.7 million, or 19.7%, to $64.1 million for the three months ended December 31, 2018 from $79.8 million for the three months ended December 31, 2017. Average Federal Home Loan Bank advances decreased $15.0 million, or 19.5%, to $62.3 million for the three months ended December 31, 2018 from $77.3 million for the three months ended December 31, 2017. We have been able to fund loan growth, in part, with an increase in deposits. The average rate on Federal Home Loan Bank advances increased 17 basis points to 1.93% for the three months ended December 31, 2018 from 1.76% for the three months ended December 31, 2017. Average other borrowed money decreased $654,000, or 26.1%, to $1.8 million for the three months ended December 31, 2018 from $2.5 million for the three months ended December 31, 2017.

Interest expense increased $135,000, or 8.4% to $1.7 million for the six months ended December 31, 2018 compared to $1.6 million for the six months ended December 31, 2017. Total average interest-bearing liabilities decreased $7.6 million, or 2.1% to $363.5 million for the six months ended December 31, 2018 compared to $371.1 million for the six months ended December 31, 2017. The cost of average interest-bearing liabilities increased to 0.95% for the six months ended December 31, 2018 compared to 0.86% for the six months ended December 31, 2017.

Interest expense on deposits increased by $228,000, or 25.2%, to $1.1 million for the six months ended December 31, 2018 from $906,000 for the six months ended December 31, 2017. Interest expense on time deposits increased $213,000, or 30.5%, to $912,000 for the six months ended December 31, 2018 from $699,000 for the six months ended December 31, 2017. The cost of interest-bearing deposits increased to 0.75% for the six months ended December 31, 2018 from 0.61% for the six months ended December 31, 2017 as we increased the rates we pay on deposits to remain competitive in our market areas.

Interest expense on borrowings decreased by $93,000, or 13.3%, to $608,000 for the six months ended December 31, 2018 from $701,000 for the six months ended December 31, 2017. The rate paid on borrowings increased eight basis points to 1.86% for the six months ended December 31, 2018 from 1.78% for the six months ended December 31, 2017. Average borrowings decreased $13.6 million, or 17.4%, to $64.7 million for the six months ended December 31, 2018 from $78.3 million for the six months ended December 31, 2017. Average Federal Home Loan Bank advances decreased $13.3 million, or 17.6%, to $62.4 million for the six months ended December 31, 2018 from $75.7 million for the six months ended December 31, 2017. We have been able to fund loan growth, in part, with an increase in deposits. The average rate on Federal Home Loan Bank advances increased ten basis points to 1.93% for the six months ended December 31, 2018 from 1.83% for the six months ended December 31, 2017. Average other borrowed money decreased $304,000, or 11.4%, to $2.4 million for the six months ended December 31, 2018 from $2.7 million for the six months ended December 31, 2017.

Net Interest Income. Net interest income increased $235,000, or 6.7%, to $3.7 million for the three months ended December 31, 2018 from $3.5 million for the three months ended December 31, 2017. Our interest rate spread increased to 2.76% for the three months ended December 31, 2018 from 2.56% for the three months ended December 31, 2017 and our net interest-earning assets increased $1.4 million, or 1.1%. Our net interest margin increased to 3.02% for the three months ended December 31, 2018 from 2.77% for the three months ended December 31, 2017.

Net interest income increased $486,000, or 7.1%, to $7.4 million for the six months ended December 31, 2018 from $6.9 million for the six months ended December 31, 2017. Our interest rate spread increased to 2.72% for the six months ended December 31, 2018 from 2.51% for the six months ended December 31, 2017 and our net interest-earning assets increased $366,000, or 0.3%. Our net interest margin increased to 2.97% for the six months ended December 31, 2018 from 2.73% for the six months ended December 31, 2017.

Provision for Loan Losses. There was no provision for loan losses for the three months ended December 31, 2018 and December 31, 2017. This was primarily due to improvement in our net charge-off trends and was partially offset by the increase in loans outstanding.

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There was a credit provision for loan losses of $600,000 for the six months ended December 31, 2018 compared to a provision for loan loss of $175,000 for the six months ended December 31, 2017. This was due primarily to $521,000 in net recoveries for the six months ended December 31, 2018.

Non-interest Income. Non-interest income decreased $123,000, or 14.3%, to $735,000 for the three months ended December 31, 2018 compared to $858,000 for the three months ended December 31, 2017. This was primarily due to a decrease in legal settlement income of $140,000 to $15,000 for the three months ended December 31, 2018 compared to $155,000 for the three months ended December 31, 2017.

Non-interest income was $1.4 million for the six months ended December 31, 2018 and 2017. This included an increase of $154,000 in net gains on other real estate owned sales and a decrease in legal settlement income of $140,000 during the six months ended December 31, 2018.

Non-interest Expense. Non-interest expense increased $82,000, or 2.7% to $3.2 million for the three months ended December 31, 2018 from $3.1 million for the three months ended December 31, 2017. Salaries and benefits expense increased $104,000, or 5.6% to $1.9 million for the three months ended December 31, 2018 from $1.8 million for the three months ended December 31, 2017. This was primarily due to an increase in salary expense of $67,000. Occupancy and equipment expense decreased $8,000, or 2.7% to $290,000 for the three months ended December 31, 2018 from $298,000 for the three months ended December 31, 2017. All other non-interest expense, consisting primarily of data processing expense, Federal Deposit Insurance Corporation deposit insurance, professional fees and marketing expense decreased by $14,000, or 1.5%, to $937,000 for the three months ended December 31, 2018 from $951,000 for the three months ended December 31, 2017.

Non-interest expense increased $346,000, or 5.7% to $6.4 million for the six months ended December 31, 2018 from $6.0 million for the six months ended December 31, 2017. Salaries and benefits expense increased $220,000, or 6.0% to $3.9 million for the six months ended December 31, 2018 from $3.7 million for the six months ended December 31, 2017. This was primarily due to increases in salary expense of $98,000 and $96,000 in incentive compensation. All other non-interest expense, consisting primarily of data processing expense, Federal Deposit Insurance Corporation deposit insurance, professional fees and marketing expense increased by $121,000, or 6.8%, to $1.9 million for the six months ended December 31, 2018 from $1.8 million for the six months ended December 31, 2017. This was primarily due to increases in service bureau expense of $84,000 and other real estate owned write-downs of $77,000. This was partially offset by a decrease of $37,000 in other real estate owned expense.

Tax Expense. Income tax expense decreased by $269,000, or 56.4% to $208,000 for the three months ended December 31, 2018 from $477,000 for the three months ended December 31, 2017. Tax expense for the three months ended December 31, 2017 included a charge of $211,000 to our deferred tax expense because of the reduced corporate tax rate included in the Tax Cuts and Jobs Act enacted on December 22, 2017. Our effective tax rate was 16.0% for the three months ended December 31, 2018 compared to 37.6% for the three months ended December 31, 2017. Tax expense is based on a year-to-date basis at a forecasted effective rate. The effective tax rates differed from the statutory tax rate due to the dividends-received deduction applicable to certain securities in our investment portfolio, tax-exempt municipal income and non-taxable bank-owned life insurance income and the reduced corporate tax rate included in the Tax Cuts and Jobs Act enacted on December 22, 2017. The Company revalued its net deferred tax asset as of December 22, 2017 resulting in a reduction in the value of the net deferred tax asset of $211,000, which was recorded as additional tax expense in the Company’s consolidated statements as of and for the three and six months ended December 31, 2017.

Income tax expense decreased by $184,000, or 26.7% to $504,000 for the six months ended December 31, 2018 from $688,000 for the six months ended December 31, 2017. Our effective tax rate was 16.9% for the six months ended December 31, 2018 compared to 33.3% for the six months ended December 31, 2017. Tax expense is based on a year-to-date basis at a forecasted effective rate. The effective tax rates differed from the statutory tax rate due to the dividends-received deduction applicable to certain securities in our investment portfolio, tax-exempt municipal income and non-taxable bank-owned life insurance income and the reduced corporate tax rate included in the Tax Cuts and Jobs Act enacted on December 22, 2017.

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Average Balances and Yields

The following table sets forth average balance sheets, average yields and costs, and certain other information for the periods indicated. No tax-equivalent yield adjustments were made, as the effect thereof was not material. All average balances are daily average balances. Non-accrual loans were included in the computation of average balances, but have been reflected in the table as loans carrying a zero yield. The yields set forth below include the effect of deferred fees, discounts and premiums that are amortized or accreted to interest income or expense. Yields and costs are annualized.

	For the Three Months Ended December 31,
	2018							2017
	Average		Interest		Yield/			Average		Interest		Yield/
	Balance		Income/Expense		Cost			Balance		Income/Expense		Cost
	(Dollars in thousands)
Interest-earning assets:
Investment securities	$	122,109	$	816		2.65	%	$	157,703	$	945		2.38	%
Loans		360,607		3,731		4.10	%		336,998		3,307		3.89	%
Other earning assets		8,023		70		3.46	%		6,812		53		3.09	%
Total interest-earning assets		490,739		4,617		3.73	%		501,513		4,305		3.41	%
Non-interest-earning assets		30,650							30,767
Total assets	$	521,389						$	532,280
Interest-bearing liabilities:
NOW accounts	$	75,142		72		0.38	%	$	81,008		75		0.37	%
Savings accounts		85,916		17		0.08	%		82,774		18		0.09	%
Money market accounts		21,798		23		0.42	%		20,570		10		0.19	%
Time deposits		114,207		465		1.62	%		109,158		357		1.30	%
Total interest-bearing deposits		297,063		577		0.77	%		293,510		460		0.62	%
FHLB advances		62,278		303		1.93	%		77,336		343		1.76	%
Other borrowed money		1,854		1		0.21	%		2,508		1		0.16	%
Total other borowed money		64,132		304		1.88	%		79,844		344		1.71	%
Total interest-bearing liabilities		361,195		881		0.97	%		373,354		804		0.85	%
Non-interest-bearing demand deposits		70,789							70,012
Other non-interest-bearing liabilities		4,303							4,068
Capital accounts		85,102							84,846
Total liabilities and capital accounts	$	521,389						$	532,280
Net interest income			$	3,736						$	3,501
Interest rate spread						2.76	%						2.56	%
Net interest-earning assets	$	129,544						$	128,159
Net interest margin						3.02	%						2.77	%
Average earning assets to average interest-bearing liabilities						135.87	%						134.33	%

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	For the Six Months Ended December 31,
	2018							2017
	Average		Interest		Yield/			Average		Interest		Yield/
	Balance		Income/Expense		Cost			Balance		Income/Expense		Cost
	(Dollars in thousands)
Interest-earning assets:
Investment securities	$	126,013	$	1,681		2.65	%	$	163,974	$	1,935		2.34	%
Loans		357,041		7,306		4.06	%		330,189		6,484		3.90	%
Other earning assets		9,224		114		2.45	%		5,398		61		2.24	%
Total interest-earning assets		492,278		9,101		3.67	%		499,561		8,480		3.37	%
Non-interest-earning assets		28,544							28,998
Total assets	$	520,822						$	528,559
Interest-bearing liabilities:
NOW accounts	$	77,132		146		0.38	%	$	80,948		152		0.37	%
Savings accounts		85,210		35		0.08	%		82,573		35		0.08	%
Money market accounts		22,179		41		0.37	%		21,015		20		0.19	%
Time deposits		114,211		912		1.58	%		108,240		699		1.28	%
Total interest-bearing deposits		298,732		1,134		0.75	%		292,776		906		0.61	%
FHLB advances		62,359		607		1.93	%		75,660		699		1.83	%
Other borrowed money		2,374		1		0.08	%		2,678		2		0.15	%
Total other borrowed money		64,733		608		1.86	%		78,338		701		1.78	%
Total interest-bearing liabilities		363,465		1,742		0.95	%		371,114		1,607		0.86	%
Non-interest-bearing demand deposits		70,287							70,675
Other non-interest-bearing liabilities		2,154							2,009
Capital accounts		84,916							84,761
Total liabilities and capital accounts	$	520,822						$	528,559
Net interest income			$	7,359						$	6,873
Interest rate spread						2.72	%						2.51	%
Net interest-earning assets	$	128,813						$	128,447
Net interest margin						2.97	%						2.73	%
Average earning assets to average interest-bearing liabilities						135.44	%						134.61	%

The following table sets forth the effects of changing rates and volumes on our net interest income for the periods indicated. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The net column represents the sum of the prior columns. For purposes of the table, changes attributable to changes in both rate and volume that cannot be segregated have been allocated proportionately based on the changes due to rate and the changes due to volume.

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	For the Three Months Ended December 31, 2018
	Compared to the Three Months Ended December 31, 2017
	Increase (Decrease) Due to change in
INTEREST INCOME	Rate			Volume			Net
	(In thousands)
Investment securities	$	521		$	(650	)	$	(129	)
Loans		185			239			424
Other interest-earning assets		7			10			17
TOTAL INTEREST INCOME		713			(401	)		312
INTEREST EXPENSE
NOW accounts		12			(15	)		(3	)
Savings accounts		(5	)		4			(1	)
Money market accounts		12			1			13
Time deposits		91			17			108
FHLB advances		160			(200	)		(40	)
Other borrowed money		1			(1	)		-
TOTAL INTEREST EXPENSE		271			(194	)		77
CHANGE IN NET INTEREST INCOME	$	442		$	(207	)	$	235

	For the Six Months Ended December 31, 2018
	Compared to the Six Months Ended December 31, 2017
	Increase (Decrease) Due to change in
INTEREST INCOME	Rate			Volume			Net
	(In thousands)
Investment securities	$	553		$	(807	)	$	(254	)
Loans		279			543			822
Other interest-earning assets		6			47			53
TOTAL INTEREST INCOME		838			(217	)		621
INTEREST EXPENSE
NOW accounts		2			(8	)		(6	)
Savings accounts		(2	)		2			-
Money market accounts		20			1			21
Time deposits		172			41			213
FHLB advances		96			(188	)		(92	)
Other borrowed money		(1	)		-			(1	)
TOTAL INTEREST EXPENSE		287			(152	)		135
CHANGE IN NET INTEREST INCOME	$	551		$	(65	)	$	486

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Market Risk, Liquidity and Capital Resources

Market Risk

The majority of our assets and liabilities are monetary in nature. Consequently, our most significant form of market risk is interest rate risk (“IRR”). Our assets, consisting primarily of mortgage loans, have longer maturities than our liabilities, consisting primarily of deposits and other borrowings. As a result, a principal part of our business strategy is to manage IRR and reduce the exposure of our net interest income (“NII”) to changes in market interest rates. Accordingly, our Board of Directors has established an Asset/Liability Management Committee, which is responsible for evaluating the IRR inherent in our assets and liabilities, for determining the level of risk that is appropriate given our business strategy, operating environment, capital, liquidity and performance objectives, and for managing this risk consistent with the guidelines approved by the Board of Directors. With the assistance of an IRR management consultant, the committee monitors the level of IRR on a regular basis and generally meets at least on a quarterly basis to review our asset/liability policies and IRR position.

We have sought to manage our IRR in order to minimize the exposure of our earnings and capital to changes in interest rates. As part of our ongoing asset/liability management, we currently use the following strategies to manage our IRR: (i) using alternative funding sources, such as advances from the Federal Home Loan Bank of Boston, to “match fund” certain investments and/or loans; (ii) continued emphasis on increasing core deposits; (iii) offering adjustable rate and shorter-term home equity loans, commercial real estate loans, construction loans and commercial and industrial loans; (iv) offering a variety of consumer loans, which typically have shorter-terms; and (v) investing in mortgage-backed securities with variable rates or fixed rates with shorter durations. Shortening the average maturity of our interest-earning assets by increasing our investments in shorter-term loans and securities, as well as loans and securities with variable rates of interest, helps to better match the maturities and interest rates of our assets and liabilities, thereby reducing the exposure of our NII to changes in market interest rates.

Net interest income at-risk measures the risk of a decline in earnings due to potential short-term and long- term changes in interest rates. The table below represents an analysis of our IRR as measured by the estimated changes in NII, resulting from an instantaneous and sustained parallel shift in the yield curve (+100 and +200 basis points) at December 31, 2018 and June 30, 2018.

Net Interest Income At-Risk
	Estimated Increase (Decrease)			Estimated Increase (Decrease)
Change in Interest Rates	in NII			in NII
(Basis Points)	December 31, 2018			June 30, 2018
+200		(0.60	)%		0.20	%
+100		1.00	%		1.40	%
-100		(3.70	)%		(4.50	)%
- 200		(9.00	)%		(10.40	)%

Net Portfolio Value Simulation Analysis. We compute the amounts by which the net present value of our cash flow from assets, liabilities and off-balance sheet items (the institution’s net portfolio value or “NPV”) would change in the event of a range of assumed changes in market interest rates. Given the current low level of market interest rates, we do not prepare a net portfolio value calculation for an interest rate decrease of greater than 100 basis points. A basis point equals one-hundredth of one percent, and 200 basis points equals two percent, an increase in interest rates from 3% to 5% would mean, for example, a 200 basis point increase in the “Change in Interest Rates” column below.

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The tables below set forth, at December 31, 2018, the estimated changes in our net portfolio value that would result from the designated instantaneous changes in the United States Treasury yield curve based on information produced by an external consultant. This data is for Putnam Bank only and does not include any yield curve changes in the assets of PB Bancorp, Inc.

									NPV as a Percentage of Present
									Value of Assets (3)
			Estimated Increase (Decrease) in
Change in			NPV									Increase
Interest Rates	Estimated											(Decrease)
(basis points) (1)	NPV (2)		Amount			Percent			NPV Ratio (4)			(basis points)
+300	$	62,334	$	(20,707	)		-24.94	%		13.60	%		(290	)
+200	$	69,672	$	(13,369	)		-16.10	%		14.70	%		(180	)
+100	$	77,279	$	(5,762	)		-6.94	%		15.80	%		(70	)
0	$	83,041	$	-			0.00	%		16.50	%		0
-100	$	85,894	$	2,853			3.44	%		16.70	%		20
-200	$	87,148	$	4,107			4.95	%		16.50	%		0

(1) Assumes an instantaneous uniform change in interest rates at all maturities.

(2) NPV is the discounted present value of expected cash flows from assets, liabilities and off-balance sheet contracts.

(3) Present value of assets represents the discounted present value of incoming cash flows on interest-earning assets.

(4) NPV ratio represents NPV divided by the present value of assets.

The preceding analyses do not represent actual forecasts and should not be relied upon as being indicative of expected operating results. These hypothetical estimates are based upon numerous assumptions, which are subject to change, including: the nature and timing of interest rate levels including the yield curve shape, prepayments on loans and securities, deposit decay rates, pricing decisions on loans and deposits, reinvestment/replacement of asset and liability cash flows, and others. Also, as market conditions vary prepayment/refinancing levels will likely deviate from those assumed, the varying impact of interest rate changes on caps and floors embedded in adjustable rate loans, early withdrawal of deposits, changes in product preferences, and other internal/external variables.

Liquidity

The term liquidity refers to the ability of the Company and the Bank to meet current and future short-term financial obligations. The Company and the Bank further define liquidity as the ability to generate adequate amounts of cash to fund loan originations, deposit withdrawals and operating expenses. Liquidity management is both a daily and long-term function of business management. The Bank’s primary sources of liquidity are deposits, scheduled amortization and prepayments of loan principal and mortgage-related securities, and Federal Home Loan Bank of Boston borrowings. The Bank can borrow funds from the Federal Home Loan Bank of Boston based on eligible collateral of loans and securities. The Bank had Federal Home Loan Bank of Boston borrowings as of December 31, 2018 of $62.2 million, with unused borrowing capacity of $51.2 million. The Bank has an internal limit of wholesale borrowings to total assets ratio of 30.0%. As of December 31, 2018, the ratio of wholesale borrowings to total assets was 14.0%.

The Bank’s primary investing activities are the origination of loans and the purchase of investment securities. During the six months ended December 31, 2018, the Bank’s loan originations net of principal collections were $16.8 million compared to loan originations net of principal collections of $10.3 million for the six months ended December 31, 2017. There were no security purchases during the six months ended December 31, 2018 and 2017. There were no loan purchases for the six months ended December 31, 2018 compared to $19.7 million in loan purchases for the six months ended December 31, 2017.

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Loan repayments and maturing investment securities are a relatively predictable source of funds. However, deposit flows, calls of investment securities and prepayments of loans and mortgage-backed securities are strongly influenced by interest rates, general and economic conditions and competition in the marketplace. These factors reduce the predictability of the timing of these sources of funds. Deposit flows are affected by the level of interest rates, by the interest rates and products offered by competitors and by other factors. The Bank monitors its liquidity position frequently and anticipates that it will have sufficient funds to meet its current funding commitments.

Certificates of deposit totaled $114.2 million at December 31, 2018. The Bank relies on competitive rates, customer service and long-standing relationships with customers to retain deposits. Based on the Bank’s experience with deposit retention and current retention strategies, management believes that, although it is not possible to predict with certainty future terms and conditions upon renewal, a significant portion of such deposits will remain with the Bank.

Federal banking regulations require a minimum ratio of common equity Tier 1 capital to risk-weighted assets of 4.5%, a minimum ratio of Tier 1 capital to risk-weighted assets of 6% and a minimum leverage ratio of 4% for all banking organizations. Additionally, community banking institutions must maintain a capital conservation buffer of common equity Tier 1 capital, Tier 1 capital or Total capital in an amount greater than 2.5% of total risk-weighted assets to avoid being subject to limitations on capital distributions and discretionary bonuses. The capital conservation buffer was fully phased in effective January 1, 2019. With the Bank’s capital levels remaining characterized as “well-capitalized” throughout the phase in periods.  Due to our asset size, the Company is not subject to capital requirements.

As of December 31, 2018, the most recent notification from the Federal Reserve Bank of Boston, categorized the Bank as “well-capitalized” under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes would change our category. The following table shows the Bank’s required minimum capital ratios in order to be considered well-capitalized and the actual capital ratios as of December 31, 2018 and June 30, 2018.

	Required			Actual		Actual
	Ratio			Amount		Ratio
				(in thousands)
December 31, 2018
Tier 1 Leverage		5.00	%	$	64,910		12.75	%
Common Equity Tier 1 Capital		6.50		$	64,910		18.01
Tier 1 Risk-based Capital		8.00		$	64,910		18.01
Total Capital		10.00			67,813		18.81
June 30, 2018
Tier 1 Leverage		5.00	%	$	62,797		12.16	%
Common Equity Tier 1 Capital		6.50			62,797		18.19
Tier 1 Risk-based Capital		8.00			62,797		18.19
Total Capital		10.00			65,779		19.05

Off-Balance Sheet Arrangements

In addition to 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, lines of credit, and letters of credit.

For the six months ended December 31, 2018, we engaged in no off-balance sheet transactions reasonably likely to have a material effect on our financial condition, results of operations or cash flows.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

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

Item 4. Controls and Procedures

Under the supervision and with the participation of PB Bancorp, Inc.’s management, including its Chief Executive Officer and Chief Financial Officer, PB Bancorp, Inc. evaluated the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15(d)-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, PB Bancorp’s disclosure controls and procedures were effective.

There has been no change in PB Bancorp, Inc.’s internal control over financial reporting in connection with the quarterly evaluation that occurred during PB Bancorp, Inc.’s last fiscal quarter that has materially affected, or is reasonably likely to materially affect, PB Bancorp, Inc.’s internal control over financial reporting.

Part II. – OTHER INFORMATION

Item 1. Legal Proceedings – Not applicable

Item 1A. Risk Factors – Not applicable to smaller reporting companies

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

a) Not applicable

b) Not applicable

c) The following table shows the Company’s repurchase of its common stock for the three months ended December 31, 2018.

					Total Number of
					Shares Purchased		Maximum Number of
	Total Number		Average Price		as Part of Publicly		Shares that May Yet Be
	of Shares		Paid per Share		Announced Plans		Purchased Under Plans
Period	Purchased		Share		or Programs (1)		or Programs (1)
October 1, 2018 through October 31, 2018		0	$	-		0		174,983
November 1, 2018 through November 30, 2018		0		-		0		174,983
December 1, 2018 through December 31, 2018		174,983		10.95		174,983		0
		174,983	$	10.95		174,983		0

On April 4, 2018, the Company adopted a second stock-repurchase program. Under the repurchase program, the Company may repurchase up to 193,012 shares of its common stock, or approximately 2.5% of the current outstanding shares On December 31, 2018, PB Bancorp, Inc. (the “Company”) completed its second stock repurchase program. Under the repurchase program, the Company repurchased 193,012 shares of its common stock at an average price of $10.91 per share.

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Item 3. Defaults Upon Senior Securities – Not applicable

Item 4. Mine Safety Disclosures – Not Applicable

Item 5. Other Information - Not Applicable

Item 6. Exhibits

Exhibits

10.1	Change in Control Agreement by and between PB Bancorp, Inc., Putnam Bank and Thomas A. Borner.
10.2	Change in Control Agreement by and between PB Bancorp, Inc., Putnam Bank and Robert J. Halloran, Jr.
31.1	Chief Executive Officer Certification pursuant to 17 CFR 240.13a-14 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Chief Financial Officer Certification pursuant to 17 CFR 240.13a-14 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Chief Executive Officer Certification pursuant to 18 U.S.C. Section 1350.
32.2	Chief Financial Officer Certification pursuant to 18 U.S.C. Section 1350.
101	The following materials from PB Bancorp’s Quarterly Report on Form 10-Q for the three and six months ended December 31, 2018, formatted in XBRL: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income (Loss), (iv) the Consolidated Statements of Changes in Stockholders’ Equity, (v) the Consolidated Statements of Cash Flows and (vi) the Notes to Consolidated Financial Statements.

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SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	PB BANCORP, INC.
	(Registrant)
Date:   February 12, 2019		/s/ Thomas A. Borner
		Thomas A. Borner
		President and Chief Executive Officer
Date:   February 12, 2019		/s/ Robert J. Halloran, Jr.
		Robert J. Halloran, Jr.
		Executive Vice President, Chief Financial Officer and Treasurer

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EX-10.1

Exhibit 10.1

CHANGE IN CONTROL AGREEMENT

This Change in Control Agreement (“Agreement”) is made as of the 19th day of December, 2018 by and between PB Bancorp, Inc., a Maryland corporation (the “Company”), its wholly-owned subsidiary, Putnam Bank (the “Bank” and, together with the Company, the “Employers”) and Thomas Borner (the “Executive”).

1.           Purpose. The Company considers it essential to the best interests of its stockholders to promote and preserve the continuous employment of key management personnel. The Board of Directors of the Company (the “Board”) recognizes that, as is the case with many corporations, the possibility of a Change in Control (as defined in Section 2 hereof) exists and that such possibility, and the uncertainty and questions that it may raise among management, may result in the departure or distraction of key management personnel to the detriment of the Company and its stockholders. Therefore, the Board has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of the Employers’ key management, including the Executive, to their assigned duties without distraction arising from the possibility of a Change in Control. Nothing in this Agreement shall be construed as creating an express or implied contract of employment and, except as otherwise agreed in writing between the Executive and the Employers, the Executive shall not have any right to be retained in the employ of the Employers.

2.           Change in Control. A “Change in Control” shall be deemed to have occurred upon the occurrence of any one of the following events:

(a)          Merger: The Company or the Bank merges into or consolidates with another entity, or merges another bank or corporation into the Company or the Bank, and as a result, less than a majority of the combined voting power of the resulting corporation immediately after the merger or consolidation is held by persons who were stockholders of the Company or the Bank immediately before the merger or consolidation;

(b)          Acquisition of Significant Share Ownership: A person or persons acting in concert has or have become the beneficial owner of 25% or more of a class of the Company’s or the Bank’s securities having the right to vote in an election of the board of the directors (“Voting Securities”); provided, however, this clause (b) shall not apply to beneficial ownership of the Company’s or the Bank’s voting shares held in a fiduciary capacity by an entity of which the Company directly or indirectly beneficially owns 50% or more of its outstanding Voting Securities;

(c)          Change in Board Composition: During any period of two consecutive years, individuals who constitute the Board or the Bank’s board of directors at the beginning of the two-year period cease for any reason to constitute at least a majority of the Board or the Bank’s board of directors; provided, however, that for purposes of this clause (c), each director who is first elected by the Board (or first nominated by the Board for election by the stockholders) by a vote of at least two-thirds (2/3) of the directors who were directors at the beginning of the two-year period shall be deemed to have also been a director at the beginning of such period or who is appointed as a director as a result of a directive, supervisory agreement or order issued by the primary federal regulator of the Company or the Bank or by the Federal Deposit Insurance Corporation shall be deemed to have also been a director at the beginning of such period; or

(d)           Sale of Assets: The Company or the Bank sells to a third party all or substantially all of its assets.

3.           Terminating Event. A “Terminating Event” shall mean any of the events provided in this Section 3:

(a)          Termination by the Employers. Termination by either of the Employers of the employment of the Executive with the Employers for any reason other than for Cause, death or Disability. For purposes of this Agreement, “Cause” shall mean the Executive’s personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, material breach of the Company’s Code of Business Conduct and Ethics, material violation of the Sarbanes-Oxley requirements for officers of public companies that in the reasonable opinion of the Board will likely cause substantial financial harm or substantial injury to the reputation of the Bank, willfully engaging in actions that in the reasonable opinion of the Board will likely cause substantial financial harm or substantial injury to the business reputation of the Bank, intentional failure to perform stated duties, willful violation of any law, rule or regulation (other than routine traffic violations or similar offenses) or final cease-and-desist order, or material breach of any provision of this Agreement.

A Terminating Event shall not be deemed to have occurred pursuant to this Section 3(a) solely as a result of the Executive being an employee of any direct or indirect successor to the business or assets of the Employers, rather than continuing as an employee of the Employers following a Change in Control. For purposes hereof, the Executive will be considered “Disabled” if, as a result of the Executive’s incapacity due to physical or mental illness, the Executive shall have been absent from his/her duties to the Employers on a full-time basis for 180 calendar days in the aggregate in any 12-month period.

(a)          Termination by the Executive for Good Reason. Termination by the Executive of the Executive’s employment with the Employers for Good Reason. For purposes of this Agreement, “Good Reason” shall mean that the Executive has complied with the “Good Reason Process” (hereinafter defined) following, the occurrence of any of the following events:

(i)          a material diminution in the Executive’s base compensation;

(ii)         a material diminution in the Executive’s authority, duties or responsibilities; or

(iii)        a change in the geographic location at which the Executive must perform his/her duties that is more than thirty-five (35) miles from the location of the Executive’s principal workplace on the date of this Agreement.

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“Good Reason Process” shall mean that (i) the Executive reasonably determines in good faith that a “Good Reason” condition has occurred; (ii) the Executive notifies the Employers in writing of the first occurrence of the Good Reason condition within 60 days of the first occurrence of such condition; (iii) the Executive cooperates in good faith with the Employers’ efforts, for a period not less than 30 days following such notice (the “Cure Period”), to remedy the condition; (iv) notwithstanding such efforts, the Good Reason condition continues to exist; and (v) the Executive terminates his/her employment within 60 days after the end of the Cure Period. If the Employers cure the Good Reason condition during the Cure Period, Good Reason shall be deemed not to have occurred.

4.           Change in Control Payment. In the event a Terminating Event occurs within 12 months after a Change in Control, subject to the Executive signing a separation agreement containing, among other provisions, a general release of claims in favor of the Employers and related persons and entities, confidentiality, return of property and non-disparagement, in a form and manner satisfactory to the Employers (the “Separation Agreement and Release”) and the Separation Agreement and Release becoming irrevocable, all within 60 days after the Date of Termination, then the Employers shall pay the Executive a lump sum amount in cash equal to THREE times the Executive’s annual base salary in effect immediately prior to the Terminating Event (or the Executive’s annual base salary in effect immediately prior to the Change in Control, if higher). The amount payable under this Section 4 shall be paid within 60 days after the Date of Termination; provided, however, that if the 60-day period begins in one calendar year and ends in a second calendar year, such payment shall be paid or commence to be paid in the second calendar year by the last day of such 60-day period.

5.           Additional Limitation.

(a)          Anything in this Agreement to the contrary notwithstanding, in the event that the amount of any compensation, payment or distribution by the Employers to or for the benefit of the Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, calculated in a manner consistent with Section 280G of the Code and the applicable regulations thereunder (the “Aggregate Payments”), would be subject to the excise tax imposed by Section 4999 of the Code, then the Aggregate Payments shall be reduced (but not below zero) so that the sum of all of the Aggregate Payments shall be $1.00 less than the amount at which the Executive becomes subject to the excise tax imposed by Section 4999 of the Code; provided that such reduction shall only occur if it would result in the Executive receiving a higher After Tax Amount (as defined below) than the Executive would receive if the Aggregate Payments were not subject to such reduction. In such event, the Aggregate Payments shall be reduced in the following order, in each case, in reverse chronological order beginning with the Aggregate Payments that are to be paid the furthest in time from consummation of the transaction that is subject to Section 280G of the Code: (1) cash payments not subject to Section 409A of the Code; (2) cash payments subject to Section 409A of the Code; (3) equity-based payments and acceleration; and (4) non-cash forms of benefits; provided that in the case of all the foregoing Aggregate Payments all amounts or payments that are not subject to calculation under Treas. Reg. §1.280G-1, Q&A-24(b) or (c) shall be reduced before any amounts that are subject to calculation under Treas. Reg. §1.280G-1, Q&A-24(b) or (c).

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(b)          For purposes of this Section 5, the “After Tax Amount” means the amount of the Aggregate Payments less all federal, state, and local income, excise and employment taxes imposed on the Executive as a result of the Executive’s receipt of the Aggregate Payments. For purposes of determining the After Tax Amount, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation applicable to individuals for the calendar year in which the determination is to be made, and state and local income taxes at the highest marginal rates of individual taxation in each applicable state and locality, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.

(c)          The determination as to whether a reduction in the Aggregate Payments shall be made pursuant to Section 5(a) shall be made by a nationally recognized accounting firm selected by the Employers (the “Accounting Firm”), which shall provide detailed supporting calculations both to the Employers and the Executive within 15 business days of the Date of Termination, if applicable, or at such earlier time as is reasonably requested by the Employers or the Executive. Any determination by the Accounting Firm shall be binding upon the Employers and the Executive.

6.           Section 409A.

(a)          Anything in this Agreement to the contrary notwithstanding, if at the time of the Executive’s “separation from service” within the meaning of Section 409A of the Code, the Employers determine that the Executive is a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code, then to the extent any payment or benefit that the Executive becomes entitled to under this Agreement on account of the Executive’s separation from service would be considered deferred compensation subject to the 20 percent additional tax imposed pursuant to Section 409A(a) of the Code as a result of the application of Section 409A(a)(2)(B)(i) of the Code, such payment shall not be payable and such benefit shall not be provided until the date that is the earlier of (A) six months and one day after the Executive’s separation from service, or (B) the Executive’s death.

(b)          The parties intend that this Agreement will be administered in accordance with Section 409A of the Code. To the extent that any provision of this Agreement is ambiguous as to its compliance with Section 409A of the Code, the provision shall be read in such a manner so that all payments hereunder comply with Section 409A of the Code. The parties agree that this Agreement may be amended, as reasonably requested by either party, and as may be necessary to fully comply with Section 409A of the Code and all related rules and regulations in order to preserve the payments and benefits provided hereunder without additional cost to either party.

(c)          All in-kind benefits provided and expenses eligible for reimbursement under this Agreement shall be provided by the Employers or incurred by the Executive during the time periods set forth in this Agreement. All reimbursements shall be paid as soon as administratively practicable, but in no event shall any reimbursement be paid after the last day of the taxable year following the taxable year in which the expense was incurred. The amount of in-kind benefits provided or reimbursable expenses incurred in one taxable year shall not affect the in-kind benefits to be provided or the expenses eligible for reimbursement in any other taxable year. Such right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit.

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(d)          To the extent that any payment or benefit described in this Agreement constitutes “non-qualified deferred compensation” under Section 409A of the Code, and to the extent that such payment or benefit is payable upon the Executive’s termination of employment, then such payments or benefits shall be payable only upon the Executive’s “separation from service.” The determination of whether and when a separation from service has occurred shall be made in accordance with the presumptions set forth in Treasury Regulation Section 1.409A-1(h).

(e)          The Employers make no representation or warranty and shall have no liability to the Executive or any other person if any provisions of this Agreement are determined to constitute deferred compensation subject to Section 409A of the Code but do not satisfy an exemption from, or the conditions of, such Section.

7.           Term. This Agreement shall take effect on the date first set forth above and shall terminate upon the earlier of (a) the termination of the Executive’s employment for any reason prior to a Change in Control, (b) the termination of the Executive’s employment with the Employers after a Change in Control for any reason other than the occurrence of a Terminating Event, or (c) the date which is 12 months after a Change in Control if the Executive is still employed by the Employers.

8.           Withholding. All payments made by the Employers to the Executive under this Agreement shall be net of any tax or other amounts required to be withheld by the Employers under applicable law.

9.           Notice and Date of Termination.

(a)          Notice of Termination. After a Change in Control and during the term of this Agreement, any purported termination of the Executive’s employment (other than by reason of death) shall be communicated by written Notice of Termination from one party hereto to the other party hereto in accordance with this Section 9. For purposes of this Agreement, a “Notice of Termination” shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon.

(b)          Date of Termination. “Date of Termination” shall mean: (i) if the Executive’s employment is terminated by his/her death, the date of the Executive’s death; (ii) if the Executive’s employment is terminated on account of Executive’s Disability or by the Employers with or without Cause, the date on which Notice of Termination is given; (iii) if the Executive’s employment is terminated by the Executive without Good Reason, 30 days after the date on which a Notice of Termination is given, and (iv) if the Executive’s employment is terminated by the Executive with Good Reason, the date on which a Notice of Termination is given after the end of the Cure Period. Notwithstanding the foregoing, in the event that the Executive gives a Notice of Termination to the Employers, the Employers may unilaterally accelerate the Date of Termination and such acceleration shall not result in a termination by the Employers for purposes of this Agreement.

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10.         No Mitigation. The Employers agree that, if the Executive’s employment by the Employers is terminated during the term of this Agreement, the Executive is not required to seek other employment or to attempt in any way to reduce any amounts payable to the Executive by the Employers pursuant to Section 4 hereof. Further, the amount of any payment provided for in this Agreement shall not be reduced by any compensation earned by the Executive as the result of employment by another employer, by retirement benefits, by offset against any amount claimed to be owed by the Executive to the Employers or otherwise.

11.         Arbitration of Disputes. Any controversy or claim arising out of or relating to this Agreement or the breach thereof or otherwise arising out of the Executive’s employment or the termination of that employment (including, without limitation, any claims of unlawful employment discrimination whether based on age or otherwise) shall, to the fullest extent permitted by law, be settled by arbitration in any forum and form agreed upon by the parties or, in the absence of such an agreement, under the auspices of the American Arbitration Association (“AAA”) in Putnam, Connecticut in accordance with the Employment Dispute Resolution Rules of the AAA, including, but not limited to, the rules and procedures applicable to the selection of arbitrators. In the event that any person or entity other than the Executive or the Employers may be a party with regard to any such controversy or claim, such controversy or claim shall be submitted to arbitration subject to such other person or entity’s agreement. Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. This Section 11 shall be specifically enforceable. Notwithstanding the foregoing, this Section 11 shall not preclude either party from pursuing a court action for the sole purpose of obtaining a temporary restraining order or a preliminary injunction in circumstances in which such relief is appropriate; provided that any other relief shall be pursued through an arbitration proceeding pursuant to this Section 11.

12.         Consent to Jurisdiction. To the extent that any court action is permitted consistent with or to enforce Section 11 of this Agreement, the parties hereby consent to the jurisdiction of the Superior Court of the State of Connecticut and the United States District Court for the District of Connecticut. Accordingly, with respect to any such court action, the Executive (a) submits to the personal jurisdiction of such courts; (b) consents to service of process; and (c) waives any other requirement (whether imposed by statute, rule of court, or otherwise) with respect to personal jurisdiction or service of process.

13.         Protected Disclosures.  The Executive understands that nothing contained in this Agreement or any other agreement limits the Executive’s ability to communicate with any federal, state or local governmental agency or commission, including to provide documents or other information, without notice to the Employers.  The Executive also understands that nothing in this Agreement or any other agreement limits the Executive’s ability to share compensation information concerning the Executive or others, except that this does not permit the Executive to disclose compensation information concerning others that the Executive obtains because the Executive’s job responsibilities require or allow access to such information.

14.         Defend Trade Secrets Act of 2016.  The Executive understands that pursuant to the federal Defend Trade Secrets Act of 2016, the Executive shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that (a) is made (i) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (b) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal

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15.         Integration. This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes in all respects all prior agreements between the parties concerning such subject matter.

16.         Successor to the Executive. This Agreement shall inure to the benefit of and be enforceable by the Executive’s personal representatives, executors, administrators, heirs, distributees, devisees and legatees. In the event of the Executive’s death after a Terminating Event but prior to the completion by the Employers of all payments due him/her under this Agreement, the Employers shall continue such payments to the Executive’s beneficiary designated in writing to the Employers prior to the Executive’s death (or to his/her estate, if the Executive fails to make such designation).

17.         Enforceability. If any portion or provision of this Agreement (including, without limitation, any portion or provision of any Section of this Agreement) shall to any extent be declared illegal or unenforceable by a court of competent jurisdiction, then the remainder of this Agreement, or the application of such portion or provision in circumstances other than those as to which it is so declared illegal or unenforceable, shall not be affected thereby, and each portion and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law.

18.         Waiver. No waiver of any provision hereof shall be effective unless made in writing and signed by the waiving party. The failure of any party to require the performance of any term or obligation of this Agreement, or the waiver by any party of any breach of this Agreement, shall not prevent any subsequent enforcement of such term or obligation or be deemed a waiver of any subsequent breach.

19.         Notices. Any notices, requests, demands and other communications provided for by this Agreement shall be sufficient if in writing and delivered in person or sent by a nationally recognized overnight currier service of by registered or certified mail, postage prepaid, return receipt requested, to the Executive at the last address the Executive has filed in writing with the Employers, or to the Employers at their main office, attention of the Board of Directors.

20.         Amendment. This Agreement may be amended or modified only by a written instrument signed by the Executive and by a duly authorized representative of the Employers.

21.         Effect on Other Plans. An election by the Executive to resign after a Change in Control under the provisions of this Agreement shall not be deemed a voluntary termination of employment by the Executive for the purpose of interpreting the provisions of any of the Employers’ benefit plans, programs or policies. Nothing in this Agreement shall be construed to limit the rights of the Executive under the Employers’ benefit plans, programs or policies except as otherwise provided in Section 5 hereof, and except that the Executive shall have no rights to any severance benefits under any Employer severance pay plan. In the event that the Executive is party to an employment agreement with the Company and/or the Bank providing for change in control payments or benefits, the Executive may receive payment under this Agreement only and not both. The Executive shall make such an election in the event of a Change in Control.

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22.         Governing Law. This is a Connecticut contract and shall be construed under and be governed in all respects by the laws of the State of Connecticut, without giving effect to the conflict of laws principles of such State. With respect to any disputes concerning federal law, such disputes shall be determined in accordance with the law as it would be interpreted and applied by the United States Court of Appeals for the Second Circuit.

23.         Successor to Employers. The Employers shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Employers expressly to assume and agree to perform this Agreement to the same extent that the Employers would be required to perform it if no succession had taken place. Failure of the Employers to obtain an assumption of this Agreement at or prior to the effectiveness of any succession shall be a material breach of this Agreement.

24.         Allocation of Obligations Between Employers. The obligations of the Employers under this Agreement are intended to be the joint and several obligations of the Bank and the Company, and the Employers shall, as between themselves, allocate these obligations in a manner agreed upon by them.

25.            Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be taken to be an original; but such counterparts shall together constitute one and the same document.

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IN WITNESS WHEREOF, the parties have executed this Agreement effective on the date and year first above written.

PB BANCORP, INC.
By:	/s/ Charles H. Puffer
	Name: Charles H. Puffer
	Title: Chairman of the Board of Directors

PUTNAM BANK
By:	/s/ Charles H. Puffer
	Name: Charles H. Puffer
	Title: Chairman of the Board of Directors

EXECUTIVE

/s/ Thomas Borner

Thomas Borner, President and Chief Executive Officer

[Signature Page to Change in Control Agreement]

EX-10.2

Exhibit 10.2

CHANGE IN CONTROL AGREEMENT

This Change in Control Agreement (“Agreement”) is made as of the 19th day of December, 2018 by and between PB Bancorp, Inc., a Maryland corporation (the “Company”), its wholly-owned subsidiary, Putnam Bank (the “Bank” and, together with the Company, the “Employers”) and Robert J. Halloran, Jr. (the “Executive”).

1.          Purpose. The Company considers it essential to the best interests of its stockholders to promote and preserve the continuous employment of key management personnel. The Board of Directors of the Company (the “Board”) recognizes that, as is the case with many corporations, the possibility of a Change in Control (as defined in Section 2 hereof) exists and that such possibility, and the uncertainty and questions that it may raise among management, may result in the departure or distraction of key management personnel to the detriment of the Company and its stockholders. Therefore, the Board has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of the Employers’ key management, including the Executive, to their assigned duties without distraction arising from the possibility of a Change in Control. Nothing in this Agreement shall be construed as creating an express or implied contract of employment and, except as otherwise agreed in writing between the Executive and the Employers, the Executive shall not have any right to be retained in the employ of the Employers.

2.          Change in Control. A “Change in Control” shall be deemed to have occurred upon the occurrence of any one of the following events:

(a)          Merger: The Company or the Bank merges into or consolidates with another entity, or merges another bank or corporation into the Company or the Bank, and as a result, less than a majority of the combined voting power of the resulting corporation immediately after the merger or consolidation is held by persons who were stockholders of the Company or the Bank immediately before the merger or consolidation;

(b)          Acquisition of Significant Share Ownership: A person or persons acting in concert has or have become the beneficial owner of 25% or more of a class of the Company’s or the Bank’s securities having the right to vote in an election of the board of the directors (“Voting Securities”); provided, however, this clause (b) shall not apply to beneficial ownership of the Company’s or the Bank’s voting shares held in a fiduciary capacity by an entity of which the Company directly or indirectly beneficially owns 50% or more of its outstanding Voting Securities;

(c)          Change in Board Composition: During any period of two consecutive years, individuals who constitute the Board or the Bank’s board of directors at the beginning of the two-year period cease for any reason to constitute at least a majority of the Board or the Bank’s board of directors; provided, however, that for purposes of this clause (c), each director who is first elected by the Board (or first nominated by the Board for election by the stockholders) by a vote of at least two-thirds (2/3) of the directors who were directors at the beginning of the two-year period shall be deemed to have also been a director at the beginning of such period or who is appointed as a director as a result of a directive, supervisory agreement or order issued by the primary federal regulator of the Company or the Bank or by the Federal Deposit Insurance Corporation shall be deemed to have also been a director at the beginning of such period; or

(d)          Sale of Assets: The Company or the Bank sells to a third party all or substantially all of its assets.

3.          Terminating Event. A “Terminating Event” shall mean any of the events provided in this Section 3:

(a)          Termination by the Employers. Termination by either of the Employers of the employment of the Executive with the Employers for any reason other than for Cause, death or Disability. For purposes of this Agreement, “Cause” shall mean the Executive’s personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, material breach of the Company’s Code of Business Conduct and Ethics, material violation of the Sarbanes-Oxley requirements for officers of public companies that in the reasonable opinion of the Board will likely cause substantial financial harm or substantial injury to the reputation of the Bank, willfully engaging in actions that in the reasonable opinion of the Board will likely cause substantial financial harm or substantial injury to the business reputation of the Bank, intentional failure to perform stated duties, willful violation of any law, rule or regulation (other than routine traffic violations or similar offenses) or final cease-and-desist order, or material breach of any provision of this Agreement.

A Terminating Event shall not be deemed to have occurred pursuant to this Section 3(a) solely as a result of the Executive being an employee of any direct or indirect successor to the business or assets of the Employers, rather than continuing as an employee of the Employers following a Change in Control. For purposes hereof, the Executive will be considered “Disabled” if, as a result of the Executive’s incapacity due to physical or mental illness, the Executive shall have been absent from his/her duties to the Employers on a full-time basis for 180 calendar days in the aggregate in any 12-month period.

(a)          Termination by the Executive for Good Reason. Termination by the Executive of the Executive’s employment with the Employers for Good Reason. For purposes of this Agreement, “Good Reason” shall mean that the Executive has complied with the “Good Reason Process” (hereinafter defined) following, the occurrence of any of the following events:

(i)          a material diminution in the Executive’s base compensation;

(ii)         a material diminution in the Executive’s authority, duties or responsibilities; or

(iii)        a change in the geographic location at which the Executive must perform his/her duties that is more than thirty-five (35) miles from the location of the Executive’s principal workplace on the date of this Agreement.

2

“Good Reason Process” shall mean that (i) the Executive reasonably determines in good faith that a “Good Reason” condition has occurred; (ii) the Executive notifies the Employers in writing of the first occurrence of the Good Reason condition within 60 days of the first occurrence of such condition; (iii) the Executive cooperates in good faith with the Employers’ efforts, for a period not less than 30 days following such notice (the “Cure Period”), to remedy the condition; (iv) notwithstanding such efforts, the Good Reason condition continues to exist; and (v) the Executive terminates his/her employment within 60 days after the end of the Cure Period. If the Employers cure the Good Reason condition during the Cure Period, Good Reason shall be deemed not to have occurred.

4.          Change in Control Payment. In the event a Terminating Event occurs within 12 months after a Change in Control, subject to the Executive signing a separation agreement containing, among other provisions, a general release of claims in favor of the Employers and related persons and entities, confidentiality, return of property and non-disparagement, in a form and manner satisfactory to the Employers (the “Separation Agreement and Release”) and the Separation Agreement and Release becoming irrevocable, all within 60 days after the Date of Termination, then the Employers shall pay the Executive a lump sum amount in cash equal to TWO times the Executive’s annual base salary in effect immediately prior to the Terminating Event (or the Executive’s annual base salary in effect immediately prior to the Change in Control, if higher). The amount payable under this Section 4 shall be paid within 60 days after the Date of Termination; provided, however, that if the 60-day period begins in one calendar year and ends in a second calendar year, such payment shall be paid or commence to be paid in the second calendar year by the last day of such 60-day period.

5.          Additional Limitation.

(a)          Anything in this Agreement to the contrary notwithstanding, in the event that the amount of any compensation, payment or distribution by the Employers to or for the benefit of the Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, calculated in a manner consistent with Section 280G of the Code and the applicable regulations thereunder (the “Aggregate Payments”), would be subject to the excise tax imposed by Section 4999 of the Code, then the Aggregate Payments shall be reduced (but not below zero) so that the sum of all of the Aggregate Payments shall be $1.00 less than the amount at which the Executive becomes subject to the excise tax imposed by Section 4999 of the Code; provided that such reduction shall only occur if it would result in the Executive receiving a higher After Tax Amount (as defined below) than the Executive would receive if the Aggregate Payments were not subject to such reduction. In such event, the Aggregate Payments shall be reduced in the following order, in each case, in reverse chronological order beginning with the Aggregate Payments that are to be paid the furthest in time from consummation of the transaction that is subject to Section 280G of the Code: (1) cash payments not subject to Section 409A of the Code; (2) cash payments subject to Section 409A of the Code; (3) equity-based payments and acceleration; and (4) non-cash forms of benefits; provided that in the case of all the foregoing Aggregate Payments all amounts or payments that are not subject to calculation under Treas. Reg. §1.280G-1, Q&A-24(b) or (c) shall be reduced before any amounts that are subject to calculation under Treas. Reg. §1.280G-1, Q&A-24(b) or (c).

3

(b)          For purposes of this Section 5, the “After Tax Amount” means the amount of the Aggregate Payments less all federal, state, and local income, excise and employment taxes imposed on the Executive as a result of the Executive’s receipt of the Aggregate Payments. For purposes of determining the After Tax Amount, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation applicable to individuals for the calendar year in which the determination is to be made, and state and local income taxes at the highest marginal rates of individual taxation in each applicable state and locality, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.

(c)          The determination as to whether a reduction in the Aggregate Payments shall be made pursuant to Section 5(a) shall be made by a nationally recognized accounting firm selected by the Employers (the “Accounting Firm”), which shall provide detailed supporting calculations both to the Employers and the Executive within 15 business days of the Date of Termination, if applicable, or at such earlier time as is reasonably requested by the Employers or the Executive. Any determination by the Accounting Firm shall be binding upon the Employers and the Executive.

6.          Section 409A.

(a)          Anything in this Agreement to the contrary notwithstanding, if at the time of the Executive’s “separation from service” within the meaning of Section 409A of the Code, the Employers determine that the Executive is a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code, then to the extent any payment or benefit that the Executive becomes entitled to under this Agreement on account of the Executive’s separation from service would be considered deferred compensation subject to the 20 percent additional tax imposed pursuant to Section 409A(a) of the Code as a result of the application of Section 409A(a)(2)(B)(i) of the Code, such payment shall not be payable and such benefit shall not be provided until the date that is the earlier of (A) six months and one day after the Executive’s separation from service, or (B) the Executive’s death.

(b)          The parties intend that this Agreement will be administered in accordance with Section 409A of the Code. To the extent that any provision of this Agreement is ambiguous as to its compliance with Section 409A of the Code, the provision shall be read in such a manner so that all payments hereunder comply with Section 409A of the Code. The parties agree that this Agreement may be amended, as reasonably requested by either party, and as may be necessary to fully comply with Section 409A of the Code and all related rules and regulations in order to preserve the payments and benefits provided hereunder without additional cost to either party.

(c)          All in-kind benefits provided and expenses eligible for reimbursement under this Agreement shall be provided by the Employers or incurred by the Executive during the time periods set forth in this Agreement. All reimbursements shall be paid as soon as administratively practicable, but in no event shall any reimbursement be paid after the last day of the taxable year following the taxable year in which the expense was incurred. The amount of in-kind benefits provided or reimbursable expenses incurred in one taxable year shall not affect the in-kind benefits to be provided or the expenses eligible for reimbursement in any other taxable year. Such right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit.

4

(d)          To the extent that any payment or benefit described in this Agreement constitutes “non-qualified deferred compensation” under Section 409A of the Code, and to the extent that such payment or benefit is payable upon the Executive’s termination of employment, then such payments or benefits shall be payable only upon the Executive’s “separation from service.” The determination of whether and when a separation from service has occurred shall be made in accordance with the presumptions set forth in Treasury Regulation Section 1.409A-1(h).

(e)          The Employers make no representation or warranty and shall have no liability to the Executive or any other person if any provisions of this Agreement are determined to constitute deferred compensation subject to Section 409A of the Code but do not satisfy an exemption from, or the conditions of, such Section.

7.          Term. This Agreement shall take effect on the date first set forth above and shall terminate upon the earlier of (a) the termination of the Executive’s employment for any reason prior to a Change in Control, (b) the termination of the Executive’s employment with the Employers after a Change in Control for any reason other than the occurrence of a Terminating Event, or (c) the date which is 12 months after a Change in Control if the Executive is still employed by the Employers.

8.          Withholding. All payments made by the Employers to the Executive under this Agreement shall be net of any tax or other amounts required to be withheld by the Employers under applicable law.

9.          Notice and Date of Termination.

(a)          Notice of Termination. After a Change in Control and during the term of this Agreement, any purported termination of the Executive’s employment (other than by reason of death) shall be communicated by written Notice of Termination from one party hereto to the other party hereto in accordance with this Section 9. For purposes of this Agreement, a “Notice of Termination” shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon.

(b)          Date of Termination. “Date of Termination” shall mean: (i) if the Executive’s employment is terminated by his/her death, the date of the Executive’s death; (ii) if the Executive’s employment is terminated on account of Executive’s Disability or by the Employers with or without Cause, the date on which Notice of Termination is given; (iii) if the Executive’s employment is terminated by the Executive without Good Reason, 30 days after the date on which a Notice of Termination is given, and (iv) if the Executive’s employment is terminated by the Executive with Good Reason, the date on which a Notice of Termination is given after the end of the Cure Period. Notwithstanding the foregoing, in the event that the Executive gives a Notice of Termination to the Employers, the Employers may unilaterally accelerate the Date of Termination and such acceleration shall not result in a termination by the Employers for purposes of this Agreement.

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10.         No Mitigation. The Employers agree that, if the Executive’s employment by the Employers is terminated during the term of this Agreement, the Executive is not required to seek other employment or to attempt in any way to reduce any amounts payable to the Executive by the Employers pursuant to Section 4 hereof. Further, the amount of any payment provided for in this Agreement shall not be reduced by any compensation earned by the Executive as the result of employment by another employer, by retirement benefits, by offset against any amount claimed to be owed by the Executive to the Employers or otherwise.

11.         Arbitration of Disputes. Any controversy or claim arising out of or relating to this Agreement or the breach thereof or otherwise arising out of the Executive’s employment or the termination of that employment (including, without limitation, any claims of unlawful employment discrimination whether based on age or otherwise) shall, to the fullest extent permitted by law, be settled by arbitration in any forum and form agreed upon by the parties or, in the absence of such an agreement, under the auspices of the American Arbitration Association (“AAA”) in Putnam, Connecticut in accordance with the Employment Dispute Resolution Rules of the AAA, including, but not limited to, the rules and procedures applicable to the selection of arbitrators. In the event that any person or entity other than the Executive or the Employers may be a party with regard to any such controversy or claim, such controversy or claim shall be submitted to arbitration subject to such other person or entity’s agreement. Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. This Section 11 shall be specifically enforceable. Notwithstanding the foregoing, this Section 11 shall not preclude either party from pursuing a court action for the sole purpose of obtaining a temporary restraining order or a preliminary injunction in circumstances in which such relief is appropriate; provided that any other relief shall be pursued through an arbitration proceeding pursuant to this Section 11.

12.         Consent to Jurisdiction. To the extent that any court action is permitted consistent with or to enforce Section 11 of this Agreement, the parties hereby consent to the jurisdiction of the Superior Court of the State of Connecticut and the United States District Court for the District of Connecticut. Accordingly, with respect to any such court action, the Executive (a) submits to the personal jurisdiction of such courts; (b) consents to service of process; and (c) waives any other requirement (whether imposed by statute, rule of court, or otherwise) with respect to personal jurisdiction or service of process.

13.         Protected Disclosures.  The Executive understands that nothing contained in this Agreement or any other agreement limits the Executive’s ability to communicate with any federal, state or local governmental agency or commission, including to provide documents or other information, without notice to the Employers.  The Executive also understands that nothing in this Agreement or any other agreement limits the Executive’s ability to share compensation information concerning the Executive or others, except that this does not permit the Executive to disclose compensation information concerning others that the Executive obtains because the Executive’s job responsibilities require or allow access to such information.

14.         Defend Trade Secrets Act of 2016.  The Executive understands that pursuant to the federal Defend Trade Secrets Act of 2016, the Executive shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that (a) is made (i) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (b) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal

6

15.         Integration. This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes in all respects all prior agreements between the parties concerning such subject matter.

16.         Successor to the Executive. This Agreement shall inure to the benefit of and be enforceable by the Executive’s personal representatives, executors, administrators, heirs, distributees, devisees and legatees. In the event of the Executive’s death after a Terminating Event but prior to the completion by the Employers of all payments due him/her under this Agreement, the Employers shall continue such payments to the Executive’s beneficiary designated in writing to the Employers prior to the Executive’s death (or to his/her estate, if the Executive fails to make such designation).

17.         Enforceability. If any portion or provision of this Agreement (including, without limitation, any portion or provision of any Section of this Agreement) shall to any extent be declared illegal or unenforceable by a court of competent jurisdiction, then the remainder of this Agreement, or the application of such portion or provision in circumstances other than those as to which it is so declared illegal or unenforceable, shall not be affected thereby, and each portion and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law.

18.         Waiver. No waiver of any provision hereof shall be effective unless made in writing and signed by the waiving party. The failure of any party to require the performance of any term or obligation of this Agreement, or the waiver by any party of any breach of this Agreement, shall not prevent any subsequent enforcement of such term or obligation or be deemed a waiver of any subsequent breach.

19.         Notices. Any notices, requests, demands and other communications provided for by this Agreement shall be sufficient if in writing and delivered in person or sent by a nationally recognized overnight currier service of by registered or certified mail, postage prepaid, return receipt requested, to the Executive at the last address the Executive has filed in writing with the Employers, or to the Employers at their main office, attention of the Board of Directors.

20.         Amendment. This Agreement may be amended or modified only by a written instrument signed by the Executive and by a duly authorized representative of the Employers.

21.         Effect on Other Plans. An election by the Executive to resign after a Change in Control under the provisions of this Agreement shall not be deemed a voluntary termination of employment by the Executive for the purpose of interpreting the provisions of any of the Employers’ benefit plans, programs or policies. Nothing in this Agreement shall be construed to limit the rights of the Executive under the Employers’ benefit plans, programs or policies except as otherwise provided in Section 5 hereof, and except that the Executive shall have no rights to any severance benefits under any Employer severance pay plan. In the event that the Executive is party to an employment agreement with the Company and/or the Bank providing for change in control payments or benefits, the Executive may receive payment under this Agreement only and not both. The Executive shall make such an election in the event of a Change in Control.

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22.         Governing Law. This is a Connecticut contract and shall be construed under and be governed in all respects by the laws of the State of Connecticut, without giving effect to the conflict of laws principles of such State. With respect to any disputes concerning federal law, such disputes shall be determined in accordance with the law as it would be interpreted and applied by the United States Court of Appeals for the Second Circuit.

23.         Successor to Employers. The Employers shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Employers expressly to assume and agree to perform this Agreement to the same extent that the Employers would be required to perform it if no succession had taken place. Failure of the Employers to obtain an assumption of this Agreement at or prior to the effectiveness of any succession shall be a material breach of this Agreement.

24.         Allocation of Obligations Between Employers. The obligations of the Employers under this Agreement are intended to be the joint and several obligations of the Bank and the Company, and the Employers shall, as between themselves, allocate these obligations in a manner agreed upon by them.

25.        Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be taken to be an original; but such counterparts shall together constitute one and the same document.

8

IN WITNESS WHEREOF, the parties have executed this Agreement effective on the date and year first above written.

PB BANCORP, INC.
By:	/s/ Charles H. Puffer
	Name: Charles H. Puffer
	Title: Chairman of the Board of Directors
PUTNAM BANK
By:	/s/ Charles H. Puffer
	Name: Charles H. Puffer
	Title: Chairman of the Board of Directors

EXECUTIVE

/s/ Robert J. Halloran, Jr.

Robert J. Halloran, Jr., Executive Vice President, Treasurer and Chief Financial Officer

[Signature Page to Change in Control Agreement]

EX-31.1

EXHIBIT 31.1

CHIEF EXECUTIVE OFFICER CERTIFICATION PURSUANT TO 17 CFR 240.13a-14

I, Thomas A. Borner, certify that:

1.           I have reviewed this Quarterly Report on Form 10-Q of PB Bancorp, Inc.;

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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) 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)          Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)          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

(d)          Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

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.

Date: February 12, 2019

/s/  Thomas A. Borner

Thomas A. Borner

President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CHIEF FINANCIAL OFFICER CERTIFICATION PURSUANT TO 17 CFR 240.13a-14

I, Robert J. Halloran, Jr., certify that:

1.           I have reviewed this Quarterly Report on Form 10-Q of PB Bancorp, Inc.;

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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) 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)          Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)          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

(d)          Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

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.

Date: February 12, 2019

/s/  Robert J. Halloran, Jr.

Robert J. Halloran, Jr.,

Executive Vice President, Chief Financial Officer and Treasurer

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 PB Bancorp, Inc. (the “Company”) on Form 10-Q for the period ended December 31, 2018 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Thomas A. Borner, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350 that to the best of my knowledge:

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

2.    The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods covered by the report.

February 12, 2019

/s/  Thomas A. Borner

Thomas A. Borner

President and Chief 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 PB Bancorp, Inc. (the “Company”) on Form 10-Q for the period ended December 31, 2018 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Robert J. Halloran, Jr., Executive Vice President, Chief Financial Officer and Treasurer of the Company, certify, pursuant to 18 U.S.C. Section 1350 that to the best of my knowledge:

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

2.    The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods covered by the report.

February 12, 2019

/s/  Robert J. Halloran, Jr.

Robert J. Halloran, Jr.

Executive Vice President, Chief Financial Officer and Treasurer

XML

Document and Entity Information - shares	6 Months Ended
	Dec. 31, 2018	Feb. 01, 2019
Document and Entity Information [Abstract]
Entity Registrant Name	PB Bancorp, Inc.
Entity Central Index Key	0001652106
Trading Symbol	pbbi
Current Fiscal Year End Date	--06-30
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		7,448,491
Document Type	10-Q
Document Period End Date	Dec. 31, 2018
Amendment Flag	false
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q2
Entity Small Business	true
Entity Emerging Growth Company	false

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2018	Jun. 30, 2018
ASSETS
Cash and due from depository institutions	$ 4,296	$ 4,465
Interest-bearing demand deposits with other banks	1,036	5,637
Total cash and cash equivalents	5,332	10,102
Securities available-for-sale, at fair value	41,274	46,546
Securities held-to-maturity (fair value of $71,188 as of December 31, 2018 and $81,828 as of June 30, 2018)	71,925	82,816
Federal Home Loan Bank stock, at cost	4,206	4,206
Loans	371,482	355,213
Less: Allowance for loan losses	(2,864)	(2,943)
Net loans	368,618	352,270
Premises and equipment, net	3,114	3,253
Accrued interest receivable	1,538	1,361
Other real estate owned	1,297	1,381
Goodwill	6,912	6,912
Bank-owned life insurance	13,091	12,912
Net deferred tax asset	481	1,691
Other assets	2,599	1,938
Total assets	520,387	525,388
Deposits
Non-interest-bearing	72,115	71,428
Interest-bearing	293,820	300,157
Total deposits	365,935	371,585
Mortgagors' escrow accounts	3,062	3,123
Federal Home Loan Bank advances	62,172	63,199
Securities sold under agreements to repurchase	3,310	664
Other liabilities	2,622	2,528
Total liabilities	437,101	441,099
Stockholders' Equity
Preferred stock, 50,000,000 shares authorized, $0.01 par value, no shares issued and outstanding
Common stock, 100,000,000 shares authorized, $0.01 par value, 7,448,491 and 7,624,474 shares issued and outstanding at December 31, 2018 and June 30, 2018, respectively.	74	76
Additional paid-in capital	58,513	60,329
Retained earnings	29,854	28,822
Accumulated other comprehensive loss	(963)	(522)
Unearned ESOP shares	(3,219)	(3,293)
Unearned stock awards	(973)	(1,123)
Total stockholders' equity	83,286	84,289
Total liabilities and stockholders' equity	$ 520,387	$ 525,388

XML

Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands	Dec. 31, 2018	Jun. 30, 2018
Statement Of Financial Position [Abstract]
Investments in held-to-maturity securities, fair value (in dollars)	$ 71,188	$ 81,828
Preferred stock, shares authorized	50,000,000	50,000,000
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, shares authorized	100,000,000	100,000,000
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares issued	7,448,491	7,624,474
Common stock, shares outstanding	7,448,491	7,624,474

XML

Consolidated Statements of Net Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2018	Dec. 31, 2017
Interest and dividend income:
Interest and fees on loans	$ 3,731	$ 3,307	$ 7,306	$ 6,484
Interest and dividends on investments	816	945	1,681	1,935
Other	70	53	114	61
Total interest and dividend income	4,617	4,305	9,101	8,480
Interest expense:
Deposits and escrow	577	460	1,134	906
Borrowed funds	304	344	608	701
Total interest expense	881	804	1,742	1,607
Net interest and dividend income	3,736	3,501	7,359	6,873
(Credit) provision for loan losses	0	0	(600)	175
Net interest and dividend income after (credit) provision for loan losses	3,736	3,501	7,959	6,698
Non-interest income:
Total other-than-temporary impairment losses on debt securities	(135)		(135)	(2)
Portion of losses recognized in other comprehensive income	131		131	1
Net impairment losses recognized in earnings	(4)		(4)	(1)
Net commissions from brokerage services	21	35	45	80
Income from bank-owned life insurance	90	90	179	179
Gain (loss) on sales of other real estate owned, net	86	66	107	(47)
Legal settlement	15	155	15	155
Other income	32	34	92	66
Total non-interest income	735	858	1,404	1,397
Non-interest expense:
Compensation and benefits	1,946	1,842	3,874	3,654
Occupancy and equipment	290	298	600	595
Data processing	293	273	590	506
LAN/WAN network	22	30	46	65
Advertising and marketing	46	57	80	99
FDIC deposit insurance	35	39	74	79
Other real estate owned	21	61	85	122
Write-down of other real estate owned		8	91	14
Other	520	483	938	898
Total non-interest expense	3,173	3,091	6,378	6,032
Income before income tax expense	1,298	1,268	2,985	2,063
Income tax expense	208	477	504	688
NET INCOME	$ 1,090	$ 791	$ 2,481	$ 1,375
Earnings per common share:
Basic (in dollars per share)	$ 0.15	$ 0.11	$ 0.34	$ 0.19
Diluted (in dollars per share)	$ 0.15	$ 0.11	$ 0.34	$ 0.19
Fees for services
Non-interest income:
Fees for services mortgage banking activities	$ 488	$ 478	$ 958	$ 961
Mortgage banking activities
Non-interest income:
Fees for services mortgage banking activities	$ 7		$ 12	$ 4

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Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2018	Dec. 31, 2017
Comprehensive Income (Loss), Net Of Tax, Attributable To Parent [Abstract]
Net income		$ 1,090	$ 791	$ 2,481	$ 1,375
Other comprehensive loss:
Net unrealized holding losses on available-for-sale securities		(292)	(285)	(428)	(185)
Reclassification adjustment for losses realized in income on available-for-sale securities	[1]	4	0	4	1
Non-credit portion of other-than-temporary losses on available-for-sale securities		(131)		(131)	(1)
Other comprehensive loss before tax		(419)	(285)	(555)	(185)
Income tax benefit related to other comprehensive loss		85	98	114	64
Other comprehensive loss net of tax		(334)	(187)	(441)	(121)
Total comprehensive income		$ 756	$ 604	$ 2,040	$ 1,254

[1] Reported in net impairment losses recognized in earnings included in non-interest income on the consolidated statements of net income. There were no income tax benefits associated with the reclassification adjustments.

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Consolidated Statements of Changes in Stockholders' Equity (Unaudited) - USD ($) $ in Thousands	Common Stock	Additional Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Loss	Unearned ESOP Shares	Unearned Stock Awards	Total
Balance at Jun. 30, 2017	$ 78	$ 62,243	$ 27,195	$ (117)	$ (3,439)	$ (1,423)	$ 84,537
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Comprehensive income			1,375	(121)			1,254
Cash dividends declared and paid ($0.09 and $0.19 per share for December 31, 2017 and 2018 respectively)			(701)				(701)
ESOP shares committed to be released (9,009 and 9,009 shares for December 31, 2017 and 2018 respectively)		21			73		94
Common stock repurchased (55,000 and 175,983 shares for December 31, 2017 and 2018 respectively)		(572)					(572)
Share-based compensation expense		74				150	224
Balance at Dec. 31, 2017	78	61,766	27,869	(238)	(3,366)	(1,273)	84,836
Balance at Jun. 30, 2018	76	60,329	28,822	(522)	(3,293)	(1,123)	84,289
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Comprehensive income			2,481	(441)			2,040
Cash dividends declared and paid ($0.09 and $0.19 per share for December 31, 2017 and 2018 respectively)			(1,449)				(1,449)
ESOP shares committed to be released (9,009 and 9,009 shares for December 31, 2017 and 2018 respectively)		30			74		104
Common stock repurchased (55,000 and 175,983 shares for December 31, 2017 and 2018 respectively)	(2)	(1,925)					(1,927)
Share-based compensation expense		79				150	229
Balance at Dec. 31, 2018	$ 74	$ 58,513	$ 29,854	$ (963)	$ (3,219)	$ (973)	$ 83,286

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Consolidated Statements of Changes in Stockholders' Equity (Parentheticals) (Unaudited) - $ / shares	6 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Statement Of Stockholders' Equity [Abstract]
Cash dividend declared (in dollars per share)	$ 0.19	$ 0.09
Number of ESOP shares committed to be released	9,009	9,009
Shares of common stock repurchased	175,983	55,000

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Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Cash flows from operating activities
Net income	$ 2,481	$ 1,375
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of securities premiums, net	234	282
Impairment losses on securities	4	1
Amortization of deferred loan costs, net	135	116
(Credit) provision for loan losses	(600)	175
(Gain) loss on sale of other real estate owned, net	(107)	47
Write-down of other real estate owned	91	14
Loss on sale of premises and equipment	1	1
Depreciation and amortization - premises and equipment	166	163
Amortization - software	4	5
Increase in accrued interest receivable and other assets	(842)	(20)
Income from bank-owned life insurance	(179)	(179)
Increase in other liabilities	94	142
Share-based compensation expense	229	224
Deferred tax expense	1,324	262
ESOP expense	104	94
Net cash provided by operating activities	3,139	2,702
Cash flows from investing activities
Proceeds from calls, pay downs and maturities of available-for-sale securities	4,609	5,673
Proceeds from calls, pay downs and maturities of held-to-maturity securities	10,761	16,346
Purchase of Federal Home Loan Bank stock		(133)
Net loan principal originations	(16,787)	(10,313)
Loan purchases		(19,699)
Recoveries of loans previously charged off	582	32
Proceeds from sale of other real estate owned	422	587
Capital expenditures - premises and equipment	(28)	(59)
Net cash used in investing activities	(441)	(7,566)
Cash flows from financing activities
Net decrease in deposit accounts	(5,650)	(3,443)
Net decrease in mortgagors' escrow accounts	(61)	(63)
Proceeds from issuance of long-term Federal Home Loan Bank advances		19,730
Repayment of long-term Federal Home Loan Bank advances	(1,027)	(13,004)
Change in short term Federal Home Loan Bank advances, net		6,000
Net increase in securities sold under agreements to repurchase	2,646	1,294
Cash dividends paid on common stock	(1,449)	(701)
Common stock repurchased	(1,927)	(572)
Net cash (used in) provided by financing activities	(7,468)	9,241
Net (decrease) increase in cash and cash equivalents	(4,770)	4,377
Cash and cash equivalents at beginning of year	10,102	10,173
Cash and cash equivalents at end of period	5,332	14,550
Cash paid during the period for:
Interest	1,700	1,594
Income taxes	1	370
Loans transferred to other real estate owned	$ 322	$ 144

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Organization

6 Months Ended

Dec. 31, 2018

Organization, Consolidation and Presentation Of Financial Statements [Abstract]

Organization

NOTE 1 – Organization

PB Bancorp, Inc. (the “Company”) is a Maryland corporation incorporated in 2015 to be the successor to PSB Holdings, Inc. upon completion of the second-step mutual-to-stock conversion (the “Conversion”) of Putnam Bancorp, MHC (the “MHC”), the top tier mutual holding company of PSB Holdings, Inc.   PSB Holdings, Inc. was the former mid-tier holding company for Putnam Bank (the “Bank”).  Prior to completion of the Conversion, a majority of the shares of common stock of PSB Holdings, Inc. were owned by the MHC.  In conjunction with the Conversion, the MHC and PSB Holdings, Inc. merged into the Company and the Company became PSB Holdings, Inc.’s successor.  The Conversion was completed on January 7, 2016.  The Company raised gross proceeds of $33.7 million in the related stock offering.  Concurrent with the completion of the stock offering, each share of PSB Holdings, Inc. stock owned by public stockholders (stockholders other than the MHC) was exchanged for 1.1907 shares of Company common stock.  The Conversion was accounted for as a capital raising transaction by entities under common control.  The historical financial results of the MHC were immaterial to the results of the Company and therefore the net assets of the MHC were reflected as an increase to stockholders’ equity.

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Basis of Presentation

6 Months Ended

Dec. 31, 2018

Accounting Policies [Abstract]

Basis of Presentation

NOTE 2 – Basis of Presentation

The accompanying unaudited consolidated interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements and the instructions to Form 10-Q, and accordingly do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, the accompanying unaudited consolidated financial statements reflect all adjustments necessary, consisting of only normal recurring accruals and the elimination of all significant intercompany accounts, to present fairly the financial position, results of operations and cash flows of the Company for the periods presented. The interim results of operations are not necessarily indicative of the operating results to be expected for future periods, including the fiscal year ending June 30, 2019. These financial statements should be read in conjunction with the 2018 consolidated financial statements and notes thereto included in PB Bancorp, Inc.’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (‘’SEC’’) on September 21, 2018.

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Recent Accounting Pronouncements

6 Months Ended

Dec. 31, 2018

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

Recent Accounting Pronouncements

NOTE 3 – Recent Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842), which supersedes the requirements in Topic 840, Leases. The objective of Topic 842 is to establish the principles that lessees and lessors shall apply to report useful information to users of financial statements about the amount, timing, and uncertainty of cash flows arising from a lease. The core principle of Topic 842 is that a lessee should recognize the assets and liabilities that arise from leases. The amendments in this Update are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application of the amendments in this Update is permitted for all entities. It is expected that assets and liabilities will increase based on the present value of remaining lease payments for leases in place at the adoption date; however, based on the current level of long-term leases in place, this is not expected to be material to the Company’s results of operations or financial position.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326), which requires entities to measure all expected credit losses for certain financial assets (such as loans and held-to-maturity securities) held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts.  Entities will now use forward-looking information to better form their credit loss estimates.  The ASU also requires enhanced disclosures to help financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an entity’s portfolio. The amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early application will be permitted for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018.  Management is currently working to implement these requirements to determine the potential impact on the Company’s consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.  The amendments in this update simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test.  Instead, an entity will be required to perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity will recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized will not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity will consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable.  For public business entities, the amendments are effective for annual and any interim goodwill impairment tests in fiscal years beginning after December 15, 2020.  Early adoption is permitted.  We do not expect the application of this guidance to have a material impact on our consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820), which amends the disclosure requirements by adding, changing, or removing certain disclosures about recurring or non-recurring fair value measurements. This ASU will be effective for public business entities for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The adoption of this update will not have a significant impact on the consolidated financial statements.

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Critical Accounting Policies

6 Months Ended

Dec. 31, 2018

Accounting Policies [Abstract]

Critical Accounting Policies

Note 4 - Critical Accounting Policies

Critical accounting policies are those that involve significant judgments and assumptions by management that have, or could have, a material impact on our income or the carrying value of our assets. Our critical accounting policies are those related to the allowance for loan losses, realizability of deferred income taxes, valuation of goodwill and the impairment of securities.

Allowance for Loan Losses. The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to earnings. Loan losses are charged against the allowance when management believes the uncollectability of a loan balance is confirmed.

The allowance for loan losses is evaluated on a quarterly basis by management. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. The allowance consists of general, specific and unallocated components, as further described below.

General component

The general component of the allowance for loan losses is based on historical loss experience adjusted for qualitative factors stratified by the following loan segments: residential real estate, commercial real estate, residential construction, commercial and consumer/other. Management uses a rolling average of historical losses based on a time frame appropriate to capture relevant loss data for each loan segment. This historical loss factor is adjusted for the following qualitative factors: levels/trends in delinquencies; trends in volume and terms of loans; concentrations; changes in lending policies and procedures; experience/ability/depth of lending management and staff; loan rating migration; the effect of other external factors; changes in the value of underlying collateral; changes in the loan review system and national and local economic trends and conditions. The Company calculates historical losses using a five-year rolling average, which is considered indicative of the risk in the Company’s current loan portfolio. There were no changes in the Company’s policies or methodology pertaining to the general component of the allowance for loan losses through December 31, 2018. 

The qualitative factors are determined based on the various risk characteristics of each loan segment. Risk characteristics relevant to each portfolio segment are as follows:

Residential real estate - The Company does not originate loans with a loan-to-value ratio greater than 100% and does not originate subprime loans. Loans originated with a loan-to-value ratio greater than 80% generally require private mortgage insurance. All loans in this segment are collateralized by owner-occupied residential real estate and repayment is dependent on the credit quality of the individual borrower. The overall health of the economy, including unemployment rates and housing prices, will have an effect on the credit quality in this segment.

Commercial real estate - Loans in this segment are primarily income-producing properties throughout New England. The underlying cash flows generated by the properties are adversely impacted by a downturn in the economy as evidenced by increased vacancy rates, which in turn, will have an effect on the credit quality in this segment. Management obtains rent rolls annually and continually monitors the cash flows of these loans.

Residential Construction – Loans in this segment include speculative real estate development loans for which payment is derived from sale of the property. Credit risk is affected by the accuracy of estimated costs to complete the project, cost overruns, time to sell at an adequate price, and market conditions.

Commercial – Loans in this segment are made to businesses and are generally secured by assets of the business. Repayment is expected from the cash flows of the business. A weakened economy, and resultant decreased consumer spending, will have an effect on the credit quality in this segment.

Consumer/other - Loans in this segment are generally unsecured and repayment is dependent on the credit quality of the individual borrower.

Specific component

The specific component relates to loans that are classified as impaired. Impairment is measured on a loan by loan basis by either the present value of expected future cash flows discounted at the loan’s effective interest rate or the fair value of the collateral if the loan is collateral dependent or foreclosure is probable. An allowance is established when the discounted cash flows (or collateral value) of the impaired loan is lower than the carrying value of that loan. Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, the Company does not separately identify individual consumer/other and residential real estate loans for impairment disclosures, unless such loans are non-accrual or subject to a troubled debt restructuring (“TDR”) agreement.

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.

The Company periodically may agree to modify the contractual terms of loans. When a loan is modified and a concession is made to a borrower experiencing financial difficulty, the modification is considered a TDR. All TDRs are classified as impaired.

Unallocated component

An unallocated component is maintained to cover uncertainties that could affect management’s estimate of probable losses. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and general reserves in the portfolio.

Goodwill. Goodwill is measured as the excess of the cost of a business acquisition over the sum of the amounts assigned to identifiable tangible and intangible assets acquired less liabilities assumed. Goodwill is not amortized but is subject to a review of qualitative factors annually or more frequently if circumstances warrant, to determine if an impairment test is required. If required, the Company uses the following two-step approach for reviewing goodwill for impairment:

The first step (“Step 1”) is used to identify potential impairment, and involves comparing the reporting unit’s (the consolidated Company) estimated fair value to its carrying amount, including goodwill. If the estimated fair value of the reporting unit exceeds its carrying amount, goodwill is not deemed to be impaired. Should the carrying amount of the reporting unit exceed its estimated fair value, an indicator of impairment is deemed to exist and a second step is performed to measure the amount of such impairment, if any. The second step (“Step 2”) involves calculating the implied fair value of goodwill. The implied fair value of goodwill is determined in a manner similar to how the amount of goodwill is determined in a business combination (i.e. by measuring the excess of the estimated fair value, as determined in Step 1, over the aggregate estimated fair values of the individual assets, liabilities, and identifiable intangibles as of the impairment testing date). If the implied fair value of goodwill exceeds the carrying amount of goodwill assigned to the reporting unit, no impairment exists. If the carrying amount of goodwill exceeds the implied fair value of the goodwill, an impairment loss is recorded in an amount equal to such excess. An impairment loss cannot exceed the carrying amount of goodwill, and the loss (write-down) establishes a new carrying amount for the goodwill. Subsequent reversal of goodwill impairment losses is not permitted. Application of the goodwill impairment test requires significant judgments including estimation of future cash flows, which are dependent on internal forecasts, estimation of the long-term rate of growth, the period over which cash flows will occur, and determination of our cost of capital. Changes in these estimates and assumptions could materially affect the determination of fair value and/or conclusions related to goodwill impairment.

See Note 3 – Recent Accounting Pronouncements for future changes to the accounting treatment of goodwill.

Other-Than-Temporary Impairment of Securities. Each reporting period, the Company evaluates all securities classified as available-for-sale or held-to-maturity, with a decline in fair value below the amortized cost of the investment to determine whether or not the impairment is deemed to be other-than-temporary (“OTTI”).

OTTI is required to be recognized if (1) the Company intends to sell the security; (2) it is “more likely than not” that the Company will be required to sell the security before recovery of its amortized cost basis; or (3) for debt securities, the present value of expected cash flows is not sufficient to recover the entire amortized cost basis. Marketable equity securities are evaluated for OTTI based on the severity and duration of the impairment and, if deemed to be other than temporary, the declines in fair value are reflected in earnings as realized losses. For impaired debt securities that the Company intends to sell, or more likely than not will be required to sell, the full amount of the depreciation is recognized as OTTI through earnings. For all other impaired debt securities, credit-related OTTI is recognized through earnings and non-credit related OTTI is recognized in other comprehensive income/loss, net of applicable taxes.

Income Taxes. The Company recognizes income taxes under the asset and liability method. Under this method, deferred tax assets and liabilities are established for the temporary differences between the accounting basis and the tax basis of the Company’s assets and liabilities at enacted rates expected to be in effect when the amounts related to such temporary differences are realized or settled. A valuation allowance is established against deferred tax assets when, based upon the available evidence including historical and projected taxable income, it is more likely than not that some or all of the deferred tax assets will not be realized.

On December 22, 2017, the President signed into law the Tax Cuts and Jobs Act (the “Act”). The Act includes a number of changes in existing tax law impacting businesses including, among other things, a permanent reduction in the corporate income tax rate from 34% to 21%, effective on January 1, 2018. As a result of this rate reduction, the Company revalued its net deferred tax asset as of December 22, 2017 resulting in a reduction in the value of the net deferred tax asset of $211,000, which was recorded as additional tax expense in the Company’s consolidated statements for the three months ended December 31, 2017. Included in the additional tax expense is $47,000 related to net unrealized losses on securities available-for-sale. The accounting treatment effectively stranded $47,000 of deferred tax items in accumulated other comprehensive income. The Company has developed a reasonable estimate of the other provisions of the Act in determining the current year income tax provision.

In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (“AOCI”), which allows a reclassification from AOCI to retained earnings to eliminate the stranded tax effects resulting from the Act. As permitted, the Company early adopted the ASU and recorded a $47,000 increase in retained earnings and corresponding decrease in AOCI as of January 1, 2018.

Management has discussed the development and selection of these critical accounting policies with the Audit Committee.

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Earnings Per Share (EPS)

6 Months Ended

Dec. 31, 2018

Earnings Per Share [Abstract]

Earnings Per Share (EPS)

NOTE 5 – Earnings Per Share (EPS)

Basic earnings per share is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period. The rights to dividends on unvested options/awards are non-forfeitable, therefore the unvested awards/options are considered outstanding in the computation of basic earnings per share. Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company. For purposes of computing diluted EPS, the treasury stock method is used.

The following information was used in the computation of EPS on both a basic and diluted basis for the three and six months ended December 31, 2018 and 2017:

	Three months ended December 31,				Six months ended December 31,
	2018		2017		2018		2017
Net income	$	1,090,000	$	791,000	$	2,481,000	$	1,375,000
Weighted average common shares applicable to basic EPS		7,198,456		7,354,602		7,208,317		7,364,606
Effect of dilutive potential common shares		-		-		4,306		-
Weighted average common shares applicable to diluted EPS		7,198,456		7,354,602		7,212,623		7,364,606
Earnings per share:
Basic	$	0.15	$	0.11	$	0.34	$	0.19
Diluted	$	0.15	$	0.11	$	0.34	$	0.19

For the three months ended December 31, 2018, options to purchase 387,330 shares were outstanding but not included in the computation of earnings per share because they were anti-dilutive. For the six months ended December 31, 2018, there were no anti-dilutive options not being included in the computation of diluted earnings per share.

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Investment Securities

6 Months Ended

Dec. 31, 2018

Investments, Debt and Equity Securities [Abstract]

Investment Securities

NOTE 6 – Investment Securities

The carrying value, estimated fair values, and gross unrealized gains and losses of investment securities by maturity and type are as follows:

	Amortized		Gross Unrealized					Fair
	Cost Basis		Gains		(Losses)			Value
	(in thousands)
December 31, 2018:
Available-for-sale:
Debt securities:
U.S. government and government-sponsored securities:
After ten years	$	2,849	$	-	$	(84	)	$	2,765
Corporate bonds:
Due from five through ten years		3,999		-		(474	)		3,525
U.S. Government-sponsored and guaranteed mortgage-backed securities:
From one through five years		5,942		-		(87	)		5,855
From five through ten years		1,273		-		(32	)		1,241
After ten years		15,711		111		(343	)		15,479
		22,926		111		(462	)		22,575
Non-agency mortgage-backed securities:
Due after ten years		2,726		419		(373	)		2,772
Total debt securities		32,500		530		(1,393	)		31,637
Other securities:
Auction rate preferred:
Due from five through ten years		8,000		-		(358	)		7,642
After ten years		2,000		-		(5	)		1,995
		10,000		-		(363	)		9,637
Total available-for-sale securities	$	42,500	$	530	$	(1,756	)	$	41,274
Held-to-maturity:
U.S. government and government-sponsored securities:
Due in one year or less	$	2,997	$	-	$	(14	)	$	2,983
From one through five years		2,986		21		(14	)		2,993
After ten years		4,576		-		(201	)		4,375
		10,559		21		(229	)		10,351
State agency and municipal obligations
From one through five years		443		-		(11	)		432
U.S. Government-sponsored and guaranteed mortgage-backed securities:
Due from one through five years		624		4		(5	)		623
From five through ten years		10,790		8		(249	)		10,549
After ten years		49,509		430		(706	)		49,233
		60,923		442		(960	)		60,405
Total held-to-maturity securities	$	71,925	$	463	$	(1,200	)	$	71,188

	Amortized		Gross Unrealized					Fair
	Cost Basis		Gains		(Losses)			Value
	(in thousands)
June 30, 2018:
Available-for-sale:
Debt securities:
U.S. government and government-sponsored securities:
Due in one year or less	$	1,000	$	-	$	(4	)	$	996
After ten years		3,419		-		(87	)		3,332
		4,419		-		(91	)		4,328
Corporate bonds:
Due from five through ten years		1,999		-		(129	)		1,870
After ten years		2,000		-		(140	)		1,860
		3,999		-		(269	)		3,730
U.S. Government-sponsored and guaranteed mortgage-backed securities:
Due from one through five years		3,135		-		(125	)		3,010
From five through ten years		4,919		-		(95	)		4,824
After ten years		17,688		135		(406	)		17,417
		25,742		135		(626	)		25,251
Non-agency mortgage-backed securities:
Due after ten years		3,057		483		(303	)		3,237
Total debt securities		37,217		618		(1,289	)		36,546
Other securities:
Auction rate preferred:
Due from five through ten years		8,000		-		-			8,000
After ten years		2,000		-		-			2,000
		10,000		-		-			10,000
Total available-for-sale securities	$	47,217	$	618	$	(1,289	)	$	46,546
Held-to-maturity:
U.S. government and government-sponsored securities:
Due in one year or less	$	2,001	$	-	$	(9	)	$	1,992
From one through five years		4,976		25		(33	)		4,968
After ten years		4,796		-		(189	)		4,607
		11,773		25		(231	)		11,567
State agency and municipal obligations
Due from one through five years		446		-		(14	)		432
U.S. Government-sponsored and guaranteed mortgage-backed securities:
Due from one through five years		846		5		(8	)		843
From five through ten years		12,123		14		(384	)		11,753
After ten years		57,628		518		(913	)		57,233
		70,597		537		(1,305	)		69,829
Total held-to-maturity securities	$	82,816	$	562	$	(1,550	)	$	81,828

There were no sales of available-for-sale securities for the three and six months ended December 31, 2018 or 2017. Gains and losses on the sales of securities are recorded on the trade date and are determined using the specific identification method. There were other-than-temporary impairment charges on available-for-sale securities of $4,000 realized in income during the three and six months ended December 31, 2018. The write-downs included total other-than-temporary impairment losses on non-agency mortgage-backed securities of $135,000, net of $131,000 recognized in other comprehensive loss, before taxes. There were no other-than temporary impairment losses during the three months ended December 31, 2017 and $1,000 in other-than impairment losses during the six months ended December 31, 2017. The write-downs included total other-than-temporary impairment losses on non-agency mortgage-backed securities of $2,000, net of $1,000 recognized in other comprehensive loss, before taxes.

The following is a summary of the estimated fair value and related unrealized losses segregated by category and length of time that individual securities have been in a continuous unrealized loss position at:

	Less than 12 months				12 months or more				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
	(in thousands)
December 31, 2018:
Available-for-sale:
U.S. Government and government-sponsored securities	$	-	$	-	$	2,765	$	84	$	2,765	$	84
Corporate bonds		-		-		3,525		474		3,525		474
U.S. Government-sponsored and guaranteed mortgage-backed securities		2,441		13		16,334		449		18,775		462
Other securities		4,637		363		-		-		4,637		363
Total temporarily impaired available-for-sale		7,078		376		22,624		1,007		29,702		1,383
Held-to-maturity:
U.S. Government and government-sponsored securities		995		5		8,351		224		9,346		229
State and political subdivisions		-		-		432		11		432		11
U.S. Government-sponsored and guaranteed mortgage-backed securities		3,155		40		40,191		920		43,346		960
Total temporarily impaired held-to-maturity		4,150		45		48,974		1,155		53,124		1,200
Other-than-temporarily impaired debt securities (1):
Non-agency mortgage-backed securities		280		6		979		367		1,259		373
Total temporarily-impaired and other- than-temporarily impaired securities	$	11,508	$	427	$	72,577	$	2,529	$	84,085	$	2,956

	Less than 12 months				12 months or more				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
	(in thousands)
June 30, 2018:
Available-for-sale:
U.S. Government and government-sponsored securities	$	-	$	-	$	4,328	$	91	$	4,328	$	91
Corporate bonds		-		-		3,730		269		3,730		269
U.S. Government-sponsored and guaranteed mortgage-backed securities		7,331		123		14,914		503		22,245		626
Total temporarily impaired available-for-sale		7,331		123		22,972		863		30,303		986
Held-to-maturity:
U.S. Government and government-sponsored securities		5,956		42		4,606		189		10,562		231
State and political subdivisions		432		14		-		-		432		14
U.S. Government-sponsored and guaranteed mortgage-backed securities		34,387		708		16,880		597		51,267		1,305
Total temporarily impaired held-to-maturity		40,775		764		21,486		786		62,261		1,550
Other-than-temporarily impaired debt securities (1):
Non-agency mortgage-backed securities		-		-		1,134		303		1,134		303
Total temporarily-impaired and other- than-temporarily impaired securities	$	48,106	$	887	$	45,592	$	1,952	$	93,698	$	2,839

(1) Includes other-than-temporary impaired available-for-sale debt securities in which a portion of the other-than-temporary impairment loss remains in accumulated other comprehensive loss.

Management evaluates securities for OTTI at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation.

At December 31, 2018, there were 91 individual investment securities with aggregate depreciation of 3.4% from the Company’s amortized cost basis. Management has the intent and ability to hold these securities until cost recovery occurs and considers these declines to be temporary.

The unrealized losses on the Company’s investment in U.S. Government-sponsored agency bonds and U.S. government-guaranteed and government-sponsored residential mortgage-backed securities were primarily caused by interest rate fluctuations. These investments are guaranteed or sponsored by the U.S. government or an agency thereof. Accordingly, it is expected that the securities would not be settled at a price less than the par value of the investment. Because the decline in market value is attributable to changes in interest rates and not to credit quality, and because the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost bases, which may be maturity, the Company does not consider these investments to be other-than-temporarily impaired at December 31, 2018.

The Company’s unrealized losses on investments in corporate bonds and other securities relate to investments in companies within the financial services sector. As of December 31, 2018, the Company had three investments in corporate single-issuer trust preferred securities (TRUPs) with a total book value of $4.0 million and total fair value of $3.5 million, all of which were classified as available-for-sale. The single-issuer trust preferred investments are evaluated for other-than-temporary impairment by performing a present value of cash flows calculation each quarter. None of the issuers have deferred interest payments or announced the intention to defer interest payments. The Company believes the decline in fair value is related to the spread over three-month LIBOR, on which the quarterly interest payments are based, as the spread over LIBOR being received is significantly lower than current market spreads. Management concluded the impairment of these investments was considered temporary and asserts that the Company does not have the intent to sell these investments and that it is more likely than not it will not have to sell the investments before recovery of their cost bases which may be at maturity.

At December 31, 2018, there was one state and political subdivision security that had an unrealized loss of 2.5% from the Company’s amortized cost basis. We believe the unrealized loss was primarily caused by interest rate fluctuations. This security is guaranteed by a school district located in Texas. Because the decline in market value is attributable to changes in interest rates and not to credit quality, and because the Company does not intend to sell the investment and it is not more likely than not that the Company will be required to sell the investments before recovery of its amortized cost basis, which may be at maturity, the Company does not consider this investment to be other-than-temporarily impaired at December 31, 2018.

For the three and six months ended December 31, 2018, there was $4,000 in other-than-temporary impairment losses recognized in earnings. The other-than-temporary impairment losses were on non-agency mortgage-backed securities. The Company estimates the portion of possible loss attributable to credit loss using a discounted cash flow model. Significant inputs include the estimated cash flows of the underlying loans based on key assumptions, such as default rate, loss severity and prepayment rate. Assumptions can vary widely from security to security, and are influenced by such factors as loan interest rate, geographical location of the borrower, borrower characteristics and collateral type. The present value of the expected cash flows is compared to the Company’s amortized cost basis to determine if there was a credit-related impairment loss. Based on the expected cash flows derived from the model, the Company expects to recover the remaining unrealized losses on these securities.

The following table represents a roll-forward of the amount of credit losses on debt securities for which a portion of other-than-temporary impairment was recognized in other comprehensive loss:

	Six months ended
	December 31,
	2018		2017
	(in thousands)
Balance at beginning of period	$	15,983	$	15,982
Additional credit losses on securities for which an other-than-temporary impairment charge was previously recorded		4		1
Balance at end of period	$	15,987	$	15,983

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Loans

6 Months Ended

Dec. 31, 2018

Accounts, Notes, Loans and Financing Receivable, Gross, Allowance, and Net [Abstract]

Loans

NOTE 7 – Loans

The following table sets forth the composition of our loan portfolio at December 31, 2018 and June 30, 2018:

	December 31,			June 30,
	2018			2018
	(in thousands)
Real Estate:
Residential (1)	$	229,313		$	236,880
Commercial		127,308			101,647
Residential construction		937			2,217
Commercial		11,815			12,215
Consumer and other		793			831
Total loans		370,166			353,790
Net deferred loan costs		1,316			1,423
Allowance for loan losses		(2,864	)		(2,943	)
Loans, net	$	368,618		$	352,270

(1) Residential real estate loans include one-to four-family mortgage loans, second mortgage loans, and home equity lines of credit.

Credit Quality Information

The Company utilizes a nine grade internal loan rating system as follows:

Loans rated 1 - 5 are considered “pass” rated loans with low to average risk.

Loans rated 6 are considered “special mention.” These loans are starting to show signs of potential weakness and are being closely monitored by management.

Loans rated 7 are considered “substandard.” Generally, a loan is considered substandard if it is inadequately protected by the current net worth and paying capacity of the obligors and/or the collateral pledged. There is a distinct possibility that the Company will sustain some loss if the weakness is not corrected.

Loans rated 8 are considered “doubtful.” Loans classified as doubtful have all the weaknesses inherent in those classified substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, highly questionable and improbable.

Loans rated 9 are considered uncollectible (“loss”) and of such little value that their continuance as loans is not warranted.

On an annual basis, or more often if needed, the Company formally reviews the ratings on all commercial real estate, construction and commercial loans. Annually, the Company engages an independent third-party to review a significant portion of loans within these segments. Management uses the results of these reviews as part of its annual review process. Credit quality for residential real estate and consumer/other loans is determined by monitoring loan payment history and ongoing communications with the borrower.

The following table presents the Company’s loan classes by internally assigned grades at December 31, 2018 and June 30, 2018:

	Residential		Commercial		Residential				Consumer
	Real Estate		Real Estate		Construction		Commercial		and other		Total
	(in thousands)
December 31, 2018
Grade:
Pass	$	225,838	$	125,279	$	937	$	10,804	$	793	$	363,651
Special Mention		-		512		-		-		-		512
Substandard		3,475		1,517		-		1,011		-		6,003
Doubtful		-		-		-		-		-		-
Loss		-		-		-		-		-		-
Total	$	229,313	$	127,308	$	937	$	11,815	$	793	$	370,166
June 30, 2018
Grade:
Pass	$	232,919	$	98,626	$	2,217	$	11,157	$	830	$	345,749
Special Mention		2		698		-		1,058		-		1,758
Substandard		3,959		2,323		-		-		1		6,283
Doubtful		-		-		-		-		-		-
Loss		-		-		-		-		-		-
Total	$	236,880	$	101,647	$	2,217	$	12,215	$	831	$	353,790

There were no material modifications deemed to be troubled debt restructures for the six months ended December 31, 2018 and 2017.

There were no material troubled debt restructurings that subsequently defaulted (defined as 30 or more days past due subsequent to restructuring) within one year of modification during the three and six months ended December 31, 2018 and 2017.

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Non-performing Assets, Past Due and Impaired Loans

6 Months Ended

Dec. 31, 2018

Non Performing Assets [Abstract]

Non-performing Assets, Past Due and Impaired Loans

NOTE 8 – Non-performing Assets, Past Due and Impaired Loans

The table below sets forth the amounts and categories of non-performing assets at the dates indicated:

	At  December 31,			At June 30,
	2018			2018
	(Dollars in thousands)
Non-accrual loans:
Real Estate:
Residential	$	3,475		$	3,959
Commercial		406			432
Consumer		-			1
Total non-accrual loans		3,881			4,392
Accruing loans past due 90 days or more		-			32
Total non-performing loans		3,881			4,424
Other real estate owned		1,297			1,381
Total non-performing assets	$	5,178		$	5,805
Total non-performing loans to total loans		1.05	%		1.25	%
Total non-performing assets to total assets		1.00	%		1.10	%

Management is focused on working with borrowers and guarantors to resolve non-accrual loans by restructuring or liquidating assets when prudent. Many of our commercial relationships are secured by development loans, in particular condominiums which have experienced a significant reduction in demand. The Company reviews the strength of the guarantors; requires face to face discussions and offers restructuring suggestions that provide the borrowers with short term relief and exit strategies. The Company obtains a current appraisal on all real estate secured loans that are 180 days or more past due if the appraisal on file is older than one year. If the determination is made that there is the potential for collateral shortfall, an allocated reserve will be assigned to the loan for the expected deficiency. It is the policy of the Company to charge off or write down loans or other assets when, in the opinion of the Credit Committee and Loan Review, the ultimate amount recoverable is less than the carrying value, or the collection of the amount is expected to be unduly prolonged. The level of non-performing assets is expected to fluctuate in response to changing economic and market conditions, and the relative sizes of the respective loan portfolios, along with management’s degree of success in resolving problem assets.

The following table sets forth information regarding past due loans at December 31, 2018 and June 30, 2018:

					90 days
	30–59 Days		60–89 Days		or Greater		Total
	Past Due		Past Due		Past Due		Past Due
	(in thousands)
At December 31, 2018
Real Estate:
Residential	$	1,627	$	146	$	510	$	2,283
Commercial		2,027		-		121		2,148
Consumer and other		2		-		-		2
Total	$	3,656	$	146	$	631	$	4,433
At June 30, 2018
Real Estate:
Residential	$	50	$	238	$	1,119	$	1,407
Commercial		-		-	$	124		124
Consumer and other		4		-		-		4
Total	$	54	$	238	$	1,243	$	1,535

The following is a summary of information pertaining to impaired loans at December 31, 2018 and June 30, 2018, none of which had a valuation allowance:

	At December 31, 2018				At June 30, 2018
			Unpaid				Unpaid
	Recorded		Principal		Recorded		Principal
	Investment		Balance		Investment		Balance
	(in thousands)
Real Estate:
Residential	$	2,062	$	2,208	$	2,732	$	2,870
Commercial		406		469		1,230		1,914
Total impaired loans	$	2,468	$	2,677	$	3,962	$	4,784

The following is a summary of additional information pertaining to impaired loans:

	Three months ended						Three months ended
	December 31, 2018						December 31, 2017
	Average		Interest		Interest Income		Average		Interest		Interest Income
	Recorded		Income		Recognized		Recorded		Income		Recognized
	Investment		Recognized		on Cash Basis		Investment		Recognized		on Cash Basis
	(in thousands)
Real Estate:
Residential	$	2,177	$	22	$	19	$	2,093	$	8	$	3
Commercial		411		-		-		1,291		22		-
Total impaired loans	$	2,588	$	22	$	19	$	3,384	$	30	$	3

	Six months ended						Six months ended
	December 31, 2018						December 31, 2017
	Average		Interest		Interest Income		Average		Interest		Interest Income
	Recorded		Income		Recognized		Recorded		Income		Recognized
	Investment		Recognized		on Cash Basis		Investment		Recognized		on Cash Basis
	(in thousands)
Real Estate:
Residential	$	2,362	$	39	$	33	$	2,149	$	16	$	7
Commercial		684		7		-		1,303		45		-
Total impaired loans	$	3,046	$	46	$	33	$	3,452	$	61	$	7

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Allowance for Loan Losses

6 Months Ended

Dec. 31, 2018

Receivables [Abstract]

Allowance for Loan Losses

NOTE 9 – Allowance for Loan Losses

An analysis of the allowance for loan losses for the three and six months ended December 31, 2018 and 2017 is as follows:

	Residential			Commercial			Residential						Consumer
	Real Estate			Real Estate			Construction			Commercial			and Other			Unallocated			Total
	(in thousands)
Three months ended
December 31, 2018
Beginning balance	$	1,488		$	1,094		$	7		$	77		$	131		$	109		$	2,906
Charge-offs		(42	)		-			-			-			(12	)		-			(54	)
Recoveries		3			-			-			4			5			-			12
(Credit) provision		16			102			(2	)		29			(92	)		(53	)		-
Ending Balance	$	1,465		$	1,196		$	5		$	110		$	32		$	56		$	2,864
Three months ended
December 31, 2017
Beginning balance	$	1,432		$	1,232		$	7		$	80		$	148		$	61		$	2,960
Charge-offs		-			-			-			-			(13	)		-			(13	)
Recoveries		9			-			-			3			6			-			18
(Credit) provision		(24	)		(17	)		2			(4	)		(10	)		53			-
Ending Balance	$	1,417		$	1,215		$	9		$	79		$	131		$	114		$	2,965
Six months ended
December 31, 2018
Beginning balance	$	1,385		$	1,194		$	14		$	80		$	135		$	135		$	2,943
Charge-offs		(42	)		-			-			-			(19	)		-			(61	)
Recoveries		8			560			-			6			8			-			582
(Credit) provision		114			(558	)		(9	)		24			(92	)		(79	)		(600	)
Ending Balance	$	1,465		$	1,196		$	5		$	110		$	32		$	56		$	2,864
Six months ended
December 31, 2017
Beginning balance	$	1,359		$	1,164		$	6		$	76		$	86		$	89		$	2,780
Charge-offs		-			-			-			-			(22	)		-			(22	)
Recoveries		17			-			-			6			9			-			32
(Credit) provision		41			51			3			(3	)		58			25			175
Ending Balance	$	1,417		$	1,215		$	9		$	79		$	131		$	114		$	2,965

Further information pertaining to the allowance for loan losses at December 31, 2018 and June 30, 2018 is as follows:

	Residential		Commercial		Residential				Consumer
	Real Estate		Real Estate		Construction		Commercial		and Other		Unallocated		Total
	(in thousands)
At December 31, 2018
Amount of allowance for loan losses for impaired loans	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Amount of allowance for loan losses for
non-impaired loans	$	1,465	$	1,196	$	5	$	110	$	32	$	56	$	2,864
Impaired loans	$	2,062	$	406	$	-	$	-	$	-	$	-	$	2,468
Non-impaired loans	$	227,251	$	126,902	$	937	$	11,815	$	793	$	-	$	367,698
At June 30, 2018
Amount of allowance for loan losses for impaired loans	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Amount of allowance for loan losses for
non-impaired loans	$	1,385	$	1,194	$	14	$	80	$	135	$	135	$	2,943
Impaired loans	$	2,732	$	1,230	$	-	$	-	$	-	$	-	$	3,962
Non-impaired loans	$	234,148	$	100,417	$	2,217	$	12,215	$	831	$	-	$	349,828

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Stock-Based Incentive Plan

6 Months Ended

Dec. 31, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Incentive Plan

NOTE 10 – Stock-Based Incentive Plan

In February 2017, stockholders of the Company approved the PB Bancorp, Inc. 2017 Stock-Based Incentive Plan (the “Incentive Plan”). Under the Incentive Plan, the Company may grant up to 453,267 stock options and 181,306 shares of restricted stock to its employees, officers and directors for an aggregate amount of up to 634,573 shares of the Company’s common stock for issuance upon the grant or exercise of awards. Both incentive stock options and non-statutory stock options may be granted under the Incentive Plan.

There were no stock options or awards granted during the six months ended December 31, 2018 and 2017.

Both stock option and restricted stock awards granted to date vest at 20% per year beginning on the first anniversary of the date of the grant.

Stock options are considered common stock equivalents for the purpose of computing earnings per share on a diluted basis. Restricted stock awards have non-forfeitable dividend rights, and are considered participating securities outstanding for the purpose of computing basic earnings per share.

The Company has recorded share-based compensation expense related to outstanding stock option and restricted stock awards based upon the fair value at the date of grant over the vesting period of such awards on a straight-line basis. The fair value of each restricted stock allocation, based on the market price at the date of grant, is recorded to unearned stock awards. Compensation expense related to unearned restricted shares is amortized to compensation and benefits expense over the vesting period of the restricted stock awards, adjusted by actual forfeitures. The fair value of each stock option award is estimated on the date of grant using the Black-Scholes option pricing method which includes several assumptions such as volatility, expected dividends, expected term and risk-free rate for each stock option award. The Company recorded share-based compensation expense in connection with the stock option and restricted stock awards for the three months ended December 31, 2018 of $111,000 and for the six months ended December 31, 2018 of $229,000. The Company recorded share-based compensation expense in connection with the stock option and restricted stock awards for the three months ended December 31, 2017 of $112,000 and for the six months ended December 31, 2017 of $224,000.

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Accumulated Other Comprehensive Loss

6 Months Ended

Dec. 31, 2018

Accumulated Other Comprehensive Income (Loss), Net Of Tax [Abstract]

Accumulated Other Comprehensive Loss

NOTE 11 – Accumulated Other Comprehensive Loss

Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income. Although certain changes in assets and liabilities are reported as a separate component of the equity section of the consolidated balance sheets, such items are components of accumulated other comprehensive loss.

The components of accumulated other comprehensive loss and related tax effects are as follows:

	December 31,			June 30,
	2018			2018
	(in thousands)
Net unrealized loss on securities available-for-sale	$	(1,226	)	$	(671	)
Tax effect		263			149
Accumulated other comprehensive loss	$	(963	)	$	(522	)

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FAIR VALUE MEASURMENTS

6 Months Ended

Dec. 31, 2018

Fair Value Disclosures [Abstract]

FAIR VALUE MEASURMENTS

NOTE 12 – FAIR VALUE MEASUREMENTS

The Company groups its assets measured at fair value in three levels, based on the markets in which the assets are traded and the reliability of the assumptions used to determine fair value as follows:

Level 1 – Valuations for assets traded in active exchange markets, such as the New York Stock Exchange. Valuations are obtained from readily available pricing sources for market transactions involving identical assets.

Level 2 – Valuations for assets traded in less active dealer or broker markets. Valuations are obtained from third party pricing services for identical or comparable assets.

Level 3 – Valuations for assets that are derived from other methodologies, including option pricing models, discounted cash flow models and similar techniques, and not based on market exchange, dealer, or broker traded transactions. Level 3 valuations incorporate certain assumptions and projections in determining the fair value assigned to such assets.

The level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. A description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below. These valuation methodologies were applied to all of the Company’s assets carried at fair value for December 31, 2018 and June 30, 2018.

The Company’s mortgage-backed securities and other debt securities available-for-sale are generally classified within Level 2 of the fair value hierarchy. For these securities, we obtain fair value measurements from independent pricing services, which are not adjusted by management. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U. S. treasury yield curve, trading levels, market consensus prepayment speeds, credit information and the instrument’s terms and conditions.

Level 3 is for positions that are not traded in active markets or are subject to transfer restrictions, valuations are adjusted to reflect illiquidity and/or non-transferability, and such adjustments are generally based on available market evidence. In the absence of such evidence, management’s best estimate is used. Subsequent to inception, management only changes Level 3 inputs and assumptions when corroborated by evidence such as transactions in similar instruments, completed or pending third-party transactions in the underlying investment or comparable entities, subsequent rounds of financing, recapitalization and other transactions across the capital structure, offerings in the equity or debt markets, and changes in financial ratios or cash flows. Level 3 assets consisted of available-for-sale auction-rate trust preferred securities (ARPs).  All dividends are current. The Company has the ability and intent to hold these securities for the time necessary to collect the expected cash flows.

The fair value of impaired loans and other real estate owned is based on the underlying collateral if repayment is expected solely from the collateral. Collateral values are estimated using Level 3 inputs based upon appraisals of similar properties obtained from a third party and adjusted by management as needed.

The Company did not have any transfers of assets between levels of the fair value hierarchy during the six months ended December 31, 2018.

The following summarizes assets measured at fair value on a recurring basis at December 31, 2018 and June 30, 2018:

	Total Fair
	Value		Level 1		Level 2		Level 3
	(in thousands)
At December 31, 2018
Securities available-for-sale:
U.S. government and government-sponsored securities	$	2,765	$	-	$	2,765	$	-
Corporate bonds		3,525		-		3,525		-
U.S. Government-sponsored and guaranteed mortgage-backed securities		22,575		-		22,575		-
Non-agency mortgage-backed securities		2,772		-		2,772		-
Other securities		9,637		-		-		9,637
Total	$	41,274	$	-	$	31,637	$	9,637
At June 30, 2018
Securities available-for-sale:
U.S. government and government-sponsored securities	$	4,328	$	-	$	4,328	$	-
Corporate bonds		3,730		-		3,730		-
U.S. Government-sponsored and guaranteed mortgage-backed securities		25,251		-		25,251		-
Non-agency mortgage-backed securities		3,237		-		3,237		-
Other securities		10,000		-		-		10,000
Total	$	46,546	$	-	$	36,546	$	10,000

There were no changes in level 3 assets measured at fair value for the six months ended December 31, 2018 and 2017.

The following summarizes assets measured at fair value on a non-recurring basis and the adjustments to the carrying value at and for the three and six months ended December 31, 2018 and 2017:

									Total Losses		Total Losses
									for the three		for the six
	Total Fair								months ended		months ended
	Value		Level 1		Level 2		Level 3		December 31, 2018		December 31, 2018
At December 31, 2018
Impaired loans	$	223	$	-	$	-	$	223	$	38	$	38
Other real estate owned		494		-		-		494		-		63
	$	717	$	-	$	-	$	717	$	38	$	101

									Total Losses		Total Losses
									for the three		for the six
	Total Fair								months ended		months ended
	Value		Level 1		Level 2		Level 3		December 31, 2017		December 31, 2017
	(in thousands)
At June 30, 2018
Impaired loans	$	160	$	-	$	-	$	160	$	-	$	-
Other real estate owned		110		-		-		110		8		9
	$	270	$	-	$	-	$	270	$	8	$	9

The amount of other real estate owned represents the carrying value for which write-downs are based on the estimated fair value of the property.

Fair value estimates are made at a specific point in time, based on relevant market information and information about the asset. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular asset. Because a market may not readily exist for a significant portion of the Company’s asset, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

There were no liabilities measured at fair value on a recurring or non-recurring basis at December 31, 2018 or June 30, 2018. 

The following methods and assumptions were used by the Company in estimating fair value disclosures of its financial instruments:

Cash and Cash Equivalents. The carrying amounts of cash and cash equivalents approximate fair values based on the short-term nature of the assets.

Investment Securities Held-to-Maturity and FHLBB Stock. The fair value of securities held-to-maturity is estimated based on quoted market prices, where available. If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments or available market evidence. Ownership of Federal Home Loan Bank of Boston (“FHLBB”) stock is restricted to member banks; therefore, the stock is not traded. The estimated fair value of FHLBB stock is equal to its carrying value, which represents the price at which the FHLBB is obligated to redeem its stock.

Loans. For valuation purposes, the loan portfolio was segregated into its significant categories, which are residential, commercial real estate, residential construction, commercial and consumer and other loans. These categories were further segregated, where appropriate, into components based on significant financial characteristics such as type of interest rate (fixed or adjustable). Fair values were estimated for each component using assumptions developed by management and a valuation model provided by a third party specialist.

The fair values of residential, commercial real estate, residential construction, commercial and consumer and other loans were estimated by discounting the anticipated cash flows from the respective portfolios. Estimates of the timing and amount of these cash flows considered factors such as future loan prepayments. The discount rates reflected current market rates for loans with similar terms to borrowers of similar credit quality. The fair value of home equity lines of credit was based on the outstanding loan balances. Fair values for non-performing loans are estimated using discounted cash flow analyses or underlying collateral values, where applicable.

Deposits and Mortgagors’ Escrow. The fair value of deposits with no stated maturity such as demand deposits, NOW, regular savings, and money market deposit accounts and mortgagors’ escrow accounts, is equal to the amount payable on demand. The fair value estimates do not include the benefit that results from the generally lower cost of funding provided by the deposit liabilities compared to the cost of borrowing funds in the market. The fair value estimate of time deposits is based on the discounted value of contractual cash flows. The discount rate is estimated using the rates currently offered for deposits having similar remaining maturities.

Federal Home Loan Bank Advances. The fair values of the Company’s Federal Home Loan Bank advances are estimated using discounted cash flow analyses based on the current incremental borrowing rates in the market for similar types of borrowing arrangements.

Securities Sold Under Agreements to Repurchase. The Company enters into overnight repurchase agreements with its customers. Since these agreements are short-term instruments, the fair value of these agreements approximates their recorded balance. The Company also secures term repurchase agreements through other financial institutions. The fair value of these agreements are determined by discounting the anticipated future cash payments using rates currently available to the Bank for debt with similar terms and remaining maturities.

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

Off-Balance Sheet Instruments. The fair value of off-balance-sheet mortgage lending commitments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standing. In the case of the commitments discussed in Note 14, the fair value equals the carrying amounts which are not significant.

Summary of Fair Values of Financial Instruments. The estimated fair values, and related carrying amounts, of the Company’s financial instruments are as follows. Certain financial instruments and all nonfinancial instruments are exempt from disclosure requirements. Accordingly, the aggregate fair value amounts presented herein do not represent the underlying fair value of the Company.

The following table presents the carrying amount and estimated fair values of the Company’s financial instruments, all of which are held or issued for purposes other than trading, as of December 31, 2018 and June 30, 2018:

	December , 2018
	Carrying		Fair Value Hierarchy						Total Fair
	Amount		Level 1		Level 2		Level 3		Value
	(in thousands)
Financial assets:
Cash and cash equivalents	$	5,332	$	5,332	$	-	$	-	$	5,332
Securities available-for-sale		41,274		-		31,637		9,637		41,274
Securities held-to-maturity		71,925		-		71,188		-		71,188
Federal Home Loan Bank stock		4,206		-		-		4,206		4,206
Loans, net		368,618		-		-		353,355		353,355
Accrued interest receivable		1,538		-		-		1,538		1,538
Financial liabilities:
Deposits		365,935		-		-		366,566		366,566
Mortgagors' escrow accounts		3,062		-		-		3,062		3,062
Federal Home Loan Bank advances		62,172		-		61,699		-		61,699
Securities sold under agreements to repurchase		3,310		-		3,310		-		3,310
Accrued interest payable		200		-		-		200		200

	June 30, 2018
	Carrying		Fair Value Hierarchy						Total Fair
	Amount		Level 1		Level 2		Level 3		Value
	(in thousands)
Financial assets:
Cash and cash equivalents	$	10,102	$	10,102	$	-	$	-	$	10,102
Securities available-for-sale		46,546		-		36,546		10,000		46,546
Securities held-to-maturity		82,816		-		81,828		-		81,828
Federal Home Loan Bank stock		4,206		-		-		4,206		4,206
Loans, net		352,270		-		-		346,511		346,511
Accrued interest receivable		1,361		-		-		1,361		1,361
Financial liabilities:
Deposits		371,585		-		-		372,563		372,563
Mortgagors' escrow accounts		3,123		-		-		3,123		3,123
Federal Home Loan Bank advances		63,199		-		62,428		-		62,428
Securities sold under agreements to repurchase		664		-		664		-		664
Accrued interest payable		158		-		-		158		158

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Subsequent Events

6 Months Ended

Dec. 31, 2018

Subsequent Events [Abstract]

Subsequent Events

NOTE 13 – Subsequent Events

On January 2, 2019, the Board of Directors of PB Bancorp, Inc. declared a quarterly cash dividend of $0.07 per share for stockholders of record as of January 16, 2019, which is payable on January 30, 2019.

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Commitments to Extend Credit

6 Months Ended

Dec. 31, 2018

Commitments To Extend Credit [Abstract]

Commitments to Extend Credit

NOTE 14 – Commitments to Extend Credit

The Company is party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit. These commitments involve, to varying degrees, elements of credit and interest rate risk in excess of the amounts recognized in the consolidated balance sheets.

The contractual amounts of outstanding commitments were as follows:

	December 31,		June 30,
	2018		2018
	(in thousands)
Commitments to extend credit:
Loan commitments	$	4,056	$	3,594
Unadvanced construction loans		8,585		8,822
Unadvanced lines of credit		19,762		18,881
Standby letters of credit		395		395
Outstanding commitments	$	32,798	$	31,692

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Critical Accounting Policies (Policies)

6 Months Ended

Dec. 31, 2018

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

Allowance for Loan Losses

Allowance for Loan Losses. The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to earnings. Loan losses are charged against the allowance when management believes the uncollectability of a loan balance is confirmed.

The allowance for loan losses is evaluated on a quarterly basis by management. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. The allowance consists of general, specific and unallocated components, as further described below.

General component

The general component of the allowance for loan losses is based on historical loss experience adjusted for qualitative factors stratified by the following loan segments: residential real estate, commercial real estate, residential construction, commercial and consumer/other. Management uses a rolling average of historical losses based on a time frame appropriate to capture relevant loss data for each loan segment. This historical loss factor is adjusted for the following qualitative factors: levels/trends in delinquencies; trends in volume and terms of loans; concentrations; changes in lending policies and procedures; experience/ability/depth of lending management and staff; loan rating migration; the effect of other external factors; changes in the value of underlying collateral; changes in the loan review system and national and local economic trends and conditions. The Company calculates historical losses using a five-year rolling average, which is considered indicative of the risk in the Company’s current loan portfolio. There were no changes in the Company’s policies or methodology pertaining to the general component of the allowance for loan losses through December 31, 2018. 

The qualitative factors are determined based on the various risk characteristics of each loan segment. Risk characteristics relevant to each portfolio segment are as follows:

Residential real estate - The Company does not originate loans with a loan-to-value ratio greater than 100% and does not originate subprime loans. Loans originated with a loan-to-value ratio greater than 80% generally require private mortgage insurance. All loans in this segment are collateralized by owner-occupied residential real estate and repayment is dependent on the credit quality of the individual borrower. The overall health of the economy, including unemployment rates and housing prices, will have an effect on the credit quality in this segment.

Commercial real estate - Loans in this segment are primarily income-producing properties throughout New England. The underlying cash flows generated by the properties are adversely impacted by a downturn in the economy as evidenced by increased vacancy rates, which in turn, will have an effect on the credit quality in this segment. Management obtains rent rolls annually and continually monitors the cash flows of these loans.

Residential Construction – Loans in this segment include speculative real estate development loans for which payment is derived from sale of the property. Credit risk is affected by the accuracy of estimated costs to complete the project, cost overruns, time to sell at an adequate price, and market conditions.

Commercial – Loans in this segment are made to businesses and are generally secured by assets of the business. Repayment is expected from the cash flows of the business. A weakened economy, and resultant decreased consumer spending, will have an effect on the credit quality in this segment.

Consumer/other - Loans in this segment are generally unsecured and repayment is dependent on the credit quality of the individual borrower.

Specific component

The specific component relates to loans that are classified as impaired. Impairment is measured on a loan by loan basis by either the present value of expected future cash flows discounted at the loan’s effective interest rate or the fair value of the collateral if the loan is collateral dependent or foreclosure is probable. An allowance is established when the discounted cash flows (or collateral value) of the impaired loan is lower than the carrying value of that loan. Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, the Company does not separately identify individual consumer/other and residential real estate loans for impairment disclosures, unless such loans are non-accrual or subject to a troubled debt restructuring (“TDR”) agreement.

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.

The Company periodically may agree to modify the contractual terms of loans. When a loan is modified and a concession is made to a borrower experiencing financial difficulty, the modification is considered a TDR. All TDRs are classified as impaired.

Unallocated component

An unallocated component is maintained to cover uncertainties that could affect management’s estimate of probable losses. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and general reserves in the portfolio.

Goodwill

Goodwill. Goodwill is measured as the excess of the cost of a business acquisition over the sum of the amounts assigned to identifiable tangible and intangible assets acquired less liabilities assumed. Goodwill is not amortized but is subject to a review of qualitative factors annually or more frequently if circumstances warrant, to determine if an impairment test is required. If required, the Company uses the following two-step approach for reviewing goodwill for impairment:

The first step (“Step 1”) is used to identify potential impairment, and involves comparing the reporting unit’s (the consolidated Company) estimated fair value to its carrying amount, including goodwill. If the estimated fair value of the reporting unit exceeds its carrying amount, goodwill is not deemed to be impaired. Should the carrying amount of the reporting unit exceed its estimated fair value, an indicator of impairment is deemed to exist and a second step is performed to measure the amount of such impairment, if any. The second step (“Step 2”) involves calculating the implied fair value of goodwill. The implied fair value of goodwill is determined in a manner similar to how the amount of goodwill is determined in a business combination (i.e. by measuring the excess of the estimated fair value, as determined in Step 1, over the aggregate estimated fair values of the individual assets, liabilities, and identifiable intangibles as of the impairment testing date). If the implied fair value of goodwill exceeds the carrying amount of goodwill assigned to the reporting unit, no impairment exists. If the carrying amount of goodwill exceeds the implied fair value of the goodwill, an impairment loss is recorded in an amount equal to such excess. An impairment loss cannot exceed the carrying amount of goodwill, and the loss (write-down) establishes a new carrying amount for the goodwill. Subsequent reversal of goodwill impairment losses is not permitted. Application of the goodwill impairment test requires significant judgments including estimation of future cash flows, which are dependent on internal forecasts, estimation of the long-term rate of growth, the period over which cash flows will occur, and determination of our cost of capital. Changes in these estimates and assumptions could materially affect the determination of fair value and/or conclusions related to goodwill impairment.

See Note 3 – Recent Accounting Pronouncements for future changes to the accounting treatment of goodwill.

Other-Than-Temporary Impairment of Securities

Other-Than-Temporary Impairment of Securities. Each reporting period, the Company evaluates all securities classified as available-for-sale or held-to-maturity, with a decline in fair value below the amortized cost of the investment to determine whether or not the impairment is deemed to be other-than-temporary (“OTTI”).

OTTI is required to be recognized if (1) the Company intends to sell the security; (2) it is “more likely than not” that the Company will be required to sell the security before recovery of its amortized cost basis; or (3) for debt securities, the present value of expected cash flows is not sufficient to recover the entire amortized cost basis. Marketable equity securities are evaluated for OTTI based on the severity and duration of the impairment and, if deemed to be other than temporary, the declines in fair value are reflected in earnings as realized losses. For impaired debt securities that the Company intends to sell, or more likely than not will be required to sell, the full amount of the depreciation is recognized as OTTI through earnings. For all other impaired debt securities, credit-related OTTI is recognized through earnings and non-credit related OTTI is recognized in other comprehensive income/loss, net of applicable taxes.

Income Taxes

Income Taxes. The Company recognizes income taxes under the asset and liability method. Under this method, deferred tax assets and liabilities are established for the temporary differences between the accounting basis and the tax basis of the Company’s assets and liabilities at enacted rates expected to be in effect when the amounts related to such temporary differences are realized or settled. A valuation allowance is established against deferred tax assets when, based upon the available evidence including historical and projected taxable income, it is more likely than not that some or all of the deferred tax assets will not be realized.

On December 22, 2017, the President signed into law the Tax Cuts and Jobs Act (the “Act”). The Act includes a number of changes in existing tax law impacting businesses including, among other things, a permanent reduction in the corporate income tax rate from 34% to 21%, effective on January 1, 2018. As a result of this rate reduction, the Company revalued its net deferred tax asset as of December 22, 2017 resulting in a reduction in the value of the net deferred tax asset of $211,000, which was recorded as additional tax expense in the Company’s consolidated statements for the three months ended December 31, 2017. Included in the additional tax expense is $47,000 related to net unrealized losses on securities available-for-sale. The accounting treatment effectively stranded $47,000 of deferred tax items in accumulated other comprehensive income. The Company has developed a reasonable estimate of the other provisions of the Act in determining the current year income tax provision.

In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (“AOCI”), which allows a reclassification from AOCI to retained earnings to eliminate the stranded tax effects resulting from the Act. As permitted, the Company early adopted the ASU and recorded a $47,000 increase in retained earnings and corresponding decrease in AOCI as of January 1, 2018.

Management has discussed the development and selection of these critical accounting policies with the Audit Committee.

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Earnings Per Share (EPS) (Tables)

6 Months Ended

Dec. 31, 2018

Earnings Per Share [Abstract]

Schedule of computation of EPS on basic and diluted basis

	Three months ended December 31,				Six months ended December 31,
	2018		2017		2018		2017
Net income	$	1,090,000	$	791,000	$	2,481,000	$	1,375,000
Weighted average common shares applicable to basic EPS		7,198,456		7,354,602		7,208,317		7,364,606
Effect of dilutive potential common shares		-		-		4,306		-
Weighted average common shares applicable to diluted EPS		7,198,456		7,354,602		7,212,623		7,364,606
Earnings per share:
Basic	$	0.15	$	0.11	$	0.34	$	0.19
Diluted	$	0.15	$	0.11	$	0.34	$	0.19

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Investment Securities (Tables)

6 Months Ended

Dec. 31, 2018

Investments, Debt and Equity Securities [Abstract]

Schedule of carrying value and estimated fair values of investment securities by maturity

	Amortized		Gross Unrealized					Fair
	Cost Basis		Gains		(Losses)			Value
	(in thousands)
December 31, 2018:
Available-for-sale:
Debt securities:
U.S. government and government-sponsored securities:
After ten years	$	2,849	$	-	$	(84	)	$	2,765
Corporate bonds:
Due from five through ten years		3,999		-		(474	)		3,525
U.S. Government-sponsored and guaranteed mortgage-backed securities:
From one through five years		5,942		-		(87	)		5,855
From five through ten years		1,273		-		(32	)		1,241
After ten years		15,711		111		(343	)		15,479
		22,926		111		(462	)		22,575
Non-agency mortgage-backed securities:
Due after ten years		2,726		419		(373	)		2,772
Total debt securities		32,500		530		(1,393	)		31,637
Other securities:
Auction rate preferred:
Due from five through ten years		8,000		-		(358	)		7,642
After ten years		2,000		-		(5	)		1,995
		10,000		-		(363	)		9,637
Total available-for-sale securities	$	42,500	$	530	$	(1,756	)	$	41,274
Held-to-maturity:
U.S. government and government-sponsored securities:
Due in one year or less	$	2,997	$	-	$	(14	)	$	2,983
From one through five years		2,986		21		(14	)		2,993
After ten years		4,576		-		(201	)		4,375
		10,559		21		(229	)		10,351
State agency and municipal obligations
From one through five years		443		-		(11	)		432
U.S. Government-sponsored and guaranteed mortgage-backed securities:
Due from one through five years		624		4		(5	)		623
From five through ten years		10,790		8		(249	)		10,549
After ten years		49,509		430		(706	)		49,233
		60,923		442		(960	)		60,405
Total held-to-maturity securities	$	71,925	$	463	$	(1,200	)	$	71,188

	Amortized		Gross Unrealized					Fair
	Cost Basis		Gains		(Losses)			Value
	(in thousands)
June 30, 2018:
Available-for-sale:
Debt securities:
U.S. government and government-sponsored securities:
Due in one year or less	$	1,000	$	-	$	(4	)	$	996
After ten years		3,419		-		(87	)		3,332
		4,419		-		(91	)		4,328
Corporate bonds:
Due from five through ten years		1,999		-		(129	)		1,870
After ten years		2,000		-		(140	)		1,860
		3,999		-		(269	)		3,730
U.S. Government-sponsored and guaranteed mortgage-backed securities:
Due from one through five years		3,135		-		(125	)		3,010
From five through ten years		4,919		-		(95	)		4,824
After ten years		17,688		135		(406	)		17,417
		25,742		135		(626	)		25,251
Non-agency mortgage-backed securities:
Due after ten years		3,057		483		(303	)		3,237
Total debt securities		37,217		618		(1,289	)		36,546
Other securities:
Auction rate preferred:
Due from five through ten years		8,000		-		-			8,000
After ten years		2,000		-		-			2,000
		10,000		-		-			10,000
Total available-for-sale securities	$	47,217	$	618	$	(1,289	)	$	46,546
Held-to-maturity:
U.S. government and government-sponsored securities:
Due in one year or less	$	2,001	$	-	$	(9	)	$	1,992
From one through five years		4,976		25		(33	)		4,968
After ten years		4,796		-		(189	)		4,607
		11,773		25		(231	)		11,567
State agency and municipal obligations
Due from one through five years		446		-		(14	)		432
U.S. Government-sponsored and guaranteed mortgage-backed securities:
Due from one through five years		846		5		(8	)		843
From five through ten years		12,123		14		(384	)		11,753
After ten years		57,628		518		(913	)		57,233
		70,597		537		(1,305	)		69,829
Total held-to-maturity securities	$	82,816	$	562	$	(1,550	)	$	81,828

Schedule of securities in a continuous unrealized loss position

	Less than 12 months				12 months or more				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
	(in thousands)
December 31, 2018:
Available-for-sale:
U.S. Government and government-sponsored securities	$	-	$	-	$	2,765	$	84	$	2,765	$	84
Corporate bonds		-		-		3,525		474		3,525		474
U.S. Government-sponsored and guaranteed mortgage-backed securities		2,441		13		16,334		449		18,775		462
Other securities		4,637		363		-		-		4,637		363
Total temporarily impaired available-for-sale		7,078		376		22,624		1,007		29,702		1,383
Held-to-maturity:
U.S. Government and government-sponsored securities		995		5		8,351		224		9,346		229
State and political subdivisions		-		-		432		11		432		11
U.S. Government-sponsored and guaranteed mortgage-backed securities		3,155		40		40,191		920		43,346		960
Total temporarily impaired held-to-maturity		4,150		45		48,974		1,155		53,124		1,200
Other-than-temporarily impaired debt securities (1):
Non-agency mortgage-backed securities		280		6		979		367		1,259		373
Total temporarily-impaired and other- than-temporarily impaired securities	$	11,508	$	427	$	72,577	$	2,529	$	84,085	$	2,956

	Less than 12 months				12 months or more				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
	(in thousands)
June 30, 2018:
Available-for-sale:
U.S. Government and government-sponsored securities	$	-	$	-	$	4,328	$	91	$	4,328	$	91
Corporate bonds		-		-		3,730		269		3,730		269
U.S. Government-sponsored and guaranteed mortgage-backed securities		7,331		123		14,914		503		22,245		626
Total temporarily impaired available-for-sale		7,331		123		22,972		863		30,303		986
Held-to-maturity:
U.S. Government and government-sponsored securities		5,956		42		4,606		189		10,562		231
State and political subdivisions		432		14		-		-		432		14
U.S. Government-sponsored and guaranteed mortgage-backed securities		34,387		708		16,880		597		51,267		1,305
Total temporarily impaired held-to-maturity		40,775		764		21,486		786		62,261		1,550
Other-than-temporarily impaired debt securities (1):
Non-agency mortgage-backed securities		-		-		1,134		303		1,134		303
Total temporarily-impaired and other- than-temporarily impaired securities	$	48,106	$	887	$	45,592	$	1,952	$	93,698	$	2,839

(1) Includes other-than-temporary impaired available-for-sale debt securities in which a portion of the other-than-temporary impairment loss remains in accumulated other comprehensive loss.

Schedule of amount of credit losses on debt securities

	Six months ended
	December 31,
	2018		2017
	(in thousands)
Balance at beginning of period	$	15,983	$	15,982
Additional credit losses on securities for which an other-than-temporary impairment charge was previously recorded		4		1
Balance at end of period	$	15,987	$	15,983

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Loans (Tables)

6 Months Ended

Dec. 31, 2018

Accounts, Notes, Loans and Financing Receivable, Gross, Allowance, and Net [Abstract]

Schedule of composition of loan portfolio

	December 31,			June 30,
	2018			2018
	(in thousands)
Real Estate:
Residential (1)	$	229,313		$	236,880
Commercial		127,308			101,647
Residential construction		937			2,217
Commercial		11,815			12,215
Consumer and other		793			831
Total loans		370,166			353,790
Net deferred loan costs		1,316			1,423
Allowance for loan losses		(2,864	)		(2,943	)
Loans, net	$	368,618		$	352,270

(1) Residential real estate loans include one-to four-family mortgage loans, second mortgage loans, and home equity lines of credit.

Schedule of the loan classes by internally assigned grades

	Residential		Commercial		Residential				Consumer
	Real Estate		Real Estate		Construction		Commercial		and other		Total
	(in thousands)
December 31, 2018
Grade:
Pass	$	225,838	$	125,279	$	937	$	10,804	$	793	$	363,651
Special Mention		-		512		-		-		-		512
Substandard		3,475		1,517		-		1,011		-		6,003
Doubtful		-		-		-		-		-		-
Loss		-		-		-		-		-		-
Total	$	229,313	$	127,308	$	937	$	11,815	$	793	$	370,166
June 30, 2018
Grade:
Pass	$	232,919	$	98,626	$	2,217	$	11,157	$	830	$	345,749
Special Mention		2		698		-		1,058		-		1,758
Substandard		3,959		2,323		-		-		1		6,283
Doubtful		-		-		-		-		-		-
Loss		-		-		-		-		-		-
Total	$	236,880	$	101,647	$	2,217	$	12,215	$	831	$	353,790

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Non-performing Assets, Past Due and Impaired Loans (Tables)

6 Months Ended

Dec. 31, 2018

Non Performing Assets [Abstract]

Schedule of non performing assets

	At  December 31,			At June 30,
	2018			2018
	(Dollars in thousands)
Non-accrual loans:
Real Estate:
Residential	$	3,475		$	3,959
Commercial		406			432
Consumer		-			1
Total non-accrual loans		3,881			4,392
Accruing loans past due 90 days or more		-			32
Total non-performing loans		3,881			4,424
Other real estate owned		1,297			1,381
Total non-performing assets	$	5,178		$	5,805
Total non-performing loans to total loans		1.05	%		1.25	%
Total non-performing assets to total assets		1.00	%		1.10	%

Schedule of past due loans

					90 days
	30–59 Days		60–89 Days		or Greater		Total
	Past Due		Past Due		Past Due		Past Due
	(in thousands)
At December 31, 2018
Real Estate:
Residential	$	1,627	$	146	$	510	$	2,283
Commercial		2,027		-		121		2,148
Consumer and other		2		-		-		2
Total	$	3,656	$	146	$	631	$	4,433
At June 30, 2018
Real Estate:
Residential	$	50	$	238	$	1,119	$	1,407
Commercial		-		-	$	124		124
Consumer and other		4		-		-		4
Total	$	54	$	238	$	1,243	$	1,535

Schedule of information pertaining to impaired loans

	At December 31, 2018				At June 30, 2018
			Unpaid				Unpaid
	Recorded		Principal		Recorded		Principal
	Investment		Balance		Investment		Balance
	(in thousands)
Real Estate:
Residential	$	2,062	$	2,208	$	2,732	$	2,870
Commercial		406		469		1,230		1,914
Total impaired loans	$	2,468	$	2,677	$	3,962	$	4,784

	Three months ended						Three months ended
	December 31, 2018						December 31, 2017
	Average		Interest		Interest Income		Average		Interest		Interest Income
	Recorded		Income		Recognized		Recorded		Income		Recognized
	Investment		Recognized		on Cash Basis		Investment		Recognized		on Cash Basis
	(in thousands)
Real Estate:
Residential	$	2,177	$	22	$	19	$	2,093	$	8	$	3
Commercial		411		-		-		1,291		22		-
Total impaired loans	$	2,588	$	22	$	19	$	3,384	$	30	$	3

	Six months ended						Six months ended
	December 31, 2018						December 31, 2017
	Average		Interest		Interest Income		Average		Interest		Interest Income
	Recorded		Income		Recognized		Recorded		Income		Recognized
	Investment		Recognized		on Cash Basis		Investment		Recognized		on Cash Basis
	(in thousands)
Real Estate:
Residential	$	2,362	$	39	$	33	$	2,149	$	16	$	7
Commercial		684		7		-		1,303		45		-
Total impaired loans	$	3,046	$	46	$	33	$	3,452	$	61	$	7

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Allowance for Loan Losses (Tables)

6 Months Ended

Dec. 31, 2018

Receivables [Abstract]

Schedule of analysis of the allowance for loan losses

	Residential			Commercial			Residential						Consumer
	Real Estate			Real Estate			Construction			Commercial			and Other			Unallocated			Total
	(in thousands)
Three months ended
December 31, 2018
Beginning balance	$	1,488		$	1,094		$	7		$	77		$	131		$	109		$	2,906
Charge-offs		(42	)		-			-			-			(12	)		-			(54	)
Recoveries		3			-			-			4			5			-			12
(Credit) provision		16			102			(2	)		29			(92	)		(53	)		-
Ending Balance	$	1,465		$	1,196		$	5		$	110		$	32		$	56		$	2,864
Three months ended
December 31, 2017
Beginning balance	$	1,432		$	1,232		$	7		$	80		$	148		$	61		$	2,960
Charge-offs		-			-			-			-			(13	)		-			(13	)
Recoveries		9			-			-			3			6			-			18
(Credit) provision		(24	)		(17	)		2			(4	)		(10	)		53			-
Ending Balance	$	1,417		$	1,215		$	9		$	79		$	131		$	114		$	2,965
Six months ended
December 31, 2018
Beginning balance	$	1,385		$	1,194		$	14		$	80		$	135		$	135		$	2,943
Charge-offs		(42	)		-			-			-			(19	)		-			(61	)
Recoveries		8			560			-			6			8			-			582
(Credit) provision		114			(558	)		(9	)		24			(92	)		(79	)		(600	)
Ending Balance	$	1,465		$	1,196		$	5		$	110		$	32		$	56		$	2,864
Six months ended
December 31, 2017
Beginning balance	$	1,359		$	1,164		$	6		$	76		$	86		$	89		$	2,780
Charge-offs		-			-			-			-			(22	)		-			(22	)
Recoveries		17			-			-			6			9			-			32
(Credit) provision		41			51			3			(3	)		58			25			175
Ending Balance	$	1,417		$	1,215		$	9		$	79		$	131		$	114		$	2,965

	Residential		Commercial		Residential				Consumer
	Real Estate		Real Estate		Construction		Commercial		and Other		Unallocated		Total
	(in thousands)
At December 31, 2018
Amount of allowance for loan losses for impaired loans	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Amount of allowance for loan losses for
non-impaired loans	$	1,465	$	1,196	$	5	$	110	$	32	$	56	$	2,864
Impaired loans	$	2,062	$	406	$	-	$	-	$	-	$	-	$	2,468
Non-impaired loans	$	227,251	$	126,902	$	937	$	11,815	$	793	$	-	$	367,698
At June 30, 2018
Amount of allowance for loan losses for impaired loans	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Amount of allowance for loan losses for
non-impaired loans	$	1,385	$	1,194	$	14	$	80	$	135	$	135	$	2,943
Impaired loans	$	2,732	$	1,230	$	-	$	-	$	-	$	-	$	3,962
Non-impaired loans	$	234,148	$	100,417	$	2,217	$	12,215	$	831	$	-	$	349,828

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Accumulated Other Comprehensive Loss (Tables)

6 Months Ended

Dec. 31, 2018

Accumulated Other Comprehensive Income (Loss), Net Of Tax [Abstract]

Schedule of accumulated other comprehensive loss

	December 31,			June 30,
	2018			2018
	(in thousands)
Net unrealized loss on securities available-for-sale	$	(1,226	)	$	(671	)
Tax effect		263			149
Accumulated other comprehensive loss	$	(963	)	$	(522	)

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FAIR VALUE MEASURMENTS (Tables)

6 Months Ended

Dec. 31, 2018

Fair Value Disclosures [Abstract]

Schedule of summary of assets measured at fair value on a recurring basis

	Total Fair
	Value		Level 1		Level 2		Level 3
	(in thousands)
At December 31, 2018
Securities available-for-sale:
U.S. government and government-sponsored securities	$	2,765	$	-	$	2,765	$	-
Corporate bonds		3,525		-		3,525		-
U.S. Government-sponsored and guaranteed mortgage-backed securities		22,575		-		22,575		-
Non-agency mortgage-backed securities		2,772		-		2,772		-
Other securities		9,637		-		-		9,637
Total	$	41,274	$	-	$	31,637	$	9,637
At June 30, 2018
Securities available-for-sale:
U.S. government and government-sponsored securities	$	4,328	$	-	$	4,328	$	-
Corporate bonds		3,730		-		3,730		-
U.S. Government-sponsored and guaranteed mortgage-backed securities		25,251		-		25,251		-
Non-agency mortgage-backed securities		3,237		-		3,237		-
Other securities		10,000		-		-		10,000
Total	$	46,546	$	-	$	36,546	$	10,000

Schedule of assets measured at fair value on a non-recurring basis and the adjustments to the carrying value

									Total Losses		Total Losses
									for the three		for the six
	Total Fair								months ended		months ended
	Value		Level 1		Level 2		Level 3		December 31, 2018		December 31, 2018
At December 31, 2018
Impaired loans	$	223	$	-	$	-	$	223	$	38	$	38
Other real estate owned		494		-		-		494		-		63
	$	717	$	-	$	-	$	717	$	38	$	101

									Total Losses		Total Losses
									for the three		for the six
	Total Fair								months ended		months ended
	Value		Level 1		Level 2		Level 3		December 31, 2017		December 31, 2017
	(in thousands)
At June 30, 2018
Impaired loans	$	160	$	-	$	-	$	160	$	-	$	-
Other real estate owned		110		-		-		110		8		9
	$	270	$	-	$	-	$	270	$	8	$	9

Schedule of estimated fair value of financial instruments which are held or issued for purposes other than trading

	December , 2018
	Carrying		Fair Value Hierarchy						Total Fair
	Amount		Level 1		Level 2		Level 3		Value
	(in thousands)
Financial assets:
Cash and cash equivalents	$	5,332	$	5,332	$	-	$	-	$	5,332
Securities available-for-sale		41,274		-		31,637		9,637		41,274
Securities held-to-maturity		71,925		-		71,188		-		71,188
Federal Home Loan Bank stock		4,206		-		-		4,206		4,206
Loans, net		368,618		-		-		353,355		353,355
Accrued interest receivable		1,538		-		-		1,538		1,538
Financial liabilities:
Deposits		365,935		-		-		366,566		366,566
Mortgagors' escrow accounts		3,062		-		-		3,062		3,062
Federal Home Loan Bank advances		62,172		-		61,699		-		61,699
Securities sold under agreements to repurchase		3,310		-		3,310		-		3,310
Accrued interest payable		200		-		-		200		200

	June 30, 2018
	Carrying		Fair Value Hierarchy						Total Fair
	Amount		Level 1		Level 2		Level 3		Value
	(in thousands)
Financial assets:
Cash and cash equivalents	$	10,102	$	10,102	$	-	$	-	$	10,102
Securities available-for-sale		46,546		-		36,546		10,000		46,546
Securities held-to-maturity		82,816		-		81,828		-		81,828
Federal Home Loan Bank stock		4,206		-		-		4,206		4,206
Loans, net		352,270		-		-		346,511		346,511
Accrued interest receivable		1,361		-		-		1,361		1,361
Financial liabilities:
Deposits		371,585		-		-		372,563		372,563
Mortgagors' escrow accounts		3,123		-		-		3,123		3,123
Federal Home Loan Bank advances		63,199		-		62,428		-		62,428
Securities sold under agreements to repurchase		664		-		664		-		664
Accrued interest payable		158		-		-		158		158

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Commitments to Extend Credit (Tables)

6 Months Ended

Dec. 31, 2018

Commitments To Extend Credit [Abstract]

Schedule of contractual amounts of outstanding commitments

	December 31,		June 30,
	2018		2018
	(in thousands)
Commitments to extend credit:
Loan commitments	$	4,056	$	3,594
Unadvanced construction loans		8,585		8,822
Unadvanced lines of credit		19,762		18,881
Standby letters of credit		395		395
Outstanding commitments	$	32,798	$	31,692

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Organization (Detail Textuals) $ in Millions	Jan. 07, 2016 USD ($) shares
Organization, Consolidation and Presentation Of Financial Statements [Abstract]
Gross proceeds from common stock offering | $	$ 33.7
Number of share exchanged for stock offering | shares	1.1907

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Critical Accounting Policies (Detail Textuals) - USD ($)	1 Months Ended		6 Months Ended
	Feb. 28, 2018	Dec. 22, 2017	Dec. 31, 2018
Accounting Policies [Line Items]
Additional tax expense due to remeasurement of deferred tax assets		$ 211,000
Additional tax expense of net unrealized losses on securities available-for-sale		$ 47,000
Increase in retained earnings and corresponding decrease in AOCI	$ 47,000
Year - 2017
Accounting Policies [Line Items]
Statutory federal income tax rate			34.00%
Year - 2018
Accounting Policies [Line Items]
Statutory federal income tax rate			21.00%

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Earnings Per Share (EPS) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2018	Dec. 31, 2017
Earnings Per Share [Abstract]
Net income	$ 1,090	$ 791	$ 2,481	$ 1,375
Weighted average common shares applicable to basic EPS	7,198,456	7,354,602	7,208,317	7,364,606
Effect of dilutive potential common shares	0	0	4,306	0
Weighted average common shares applicable to diluted EPS (in shares)	7,198,456	7,354,602	7,212,623	7,364,606
Earnings per share:
Basic (in dollars per share)	$ 0.15	$ 0.11	$ 0.34	$ 0.19
Diluted (in dollars per share)	$ 0.15	$ 0.11	$ 0.34	$ 0.19

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Earnings Per Share (EPS) (Detail Textuals)	3 Months Ended
	Dec. 31, 2018 shares
Earnings Per Share [Abstract]
Antidilutive securities excluded from computation of earnings per share, amount	387,330

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Investment Securities - The amortized cost of securities unrealized gains and losses and their fair values by maturity (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Jun. 30, 2018
Available-for-sale debt securities
Available-for-sale securities, amortized cost basis	$ 32,500	$ 37,217
Available-for-sale securities, Gross Unrealized Gains	530	618
Available-for-sale securities, Gross Unrealized (Losses)	(1,393)	(1,289)
Available-for-sale securities, Fair Value	31,637	36,546
U.S. Government and government-sponsored securities
Available-for-sale debt securities
Due in one year or less, Amortized Cost		1,000
Due in one year or less, Gross Unrealized Gains		0
Due in one year or less, Gross Unrealized (Losses)		(4)
Due in one year or less, Fair Value		996
After ten years, Amortized Cost	2,849	3,419
After ten years, Gross Unrealized Gains	0	0
After ten years, Gross Unrealized (Losses)	(84)	(87)
After ten years, Fair Value	2,765	3,332
Available-for-sale securities, amortized cost basis		4,419
Available-for-sale securities, Gross Unrealized Gains		0
Available-for-sale securities, Gross Unrealized (Losses)		(91)
Available-for-sale securities, Fair Value		4,328
Corporate bonds
Available-for-sale debt securities
Due from five through ten years, Amortised Cost	3,999	1,999
Due from five through ten years, Gross Unrealized Gains	0	0
Due from five through ten years, Gross Unrealized (Losses)	(474)	(129)
Due from five through ten years, Fair Value	3,525	1,870
After ten years, Amortized Cost		2,000
After ten years, Gross Unrealized Gains		0
After ten years, Gross Unrealized (Losses)		(140)
After ten years, Fair Value		1,860
Available-for-sale securities, amortized cost basis		3,999
Available-for-sale securities, Gross Unrealized Gains		0
Available-for-sale securities, Gross Unrealized (Losses)		(269)
Available-for-sale securities, Fair Value		3,730
U.S. Government sponsored and guaranteed mortgage-backed securities
Available-for-sale debt securities
Due from one through five years, Amortized Cost	5,942	3,135
Due from one through five years, Gross Unrealized Gains	0	0
Due from one through five years, Gross Unrealized (Losses)	(87)	(125)
Due from one through five years, Fair Value	5,855	3,010
Due from five through ten years, Amortised Cost	1,273	4,919
Due from five through ten years, Gross Unrealized Gains	0	0
Due from five through ten years, Gross Unrealized (Losses)	(32)	(95)
Due from five through ten years, Fair Value	1,241	4,824
After ten years, Amortized Cost	15,711	17,688
After ten years, Gross Unrealized Gains	111	135
After ten years, Gross Unrealized (Losses)	(343)	(406)
After ten years, Fair Value	15,479	17,417
Available-for-sale securities, amortized cost basis	22,926	25,742
Available-for-sale securities, Gross Unrealized Gains	111	135
Available-for-sale securities, Gross Unrealized (Losses)	(462)	(626)
Available-for-sale securities, Fair Value	22,575	25,251
Non-agency mortgage-backed securities
Available-for-sale debt securities
After ten years, Amortized Cost	2,726	3,057
After ten years, Gross Unrealized Gains	419	483
After ten years, Gross Unrealized (Losses)	(373)	(303)
After ten years, Fair Value	$ 2,772	$ 3,237

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Investment Securities - The amortized cost of securities unrealized gains and losses and their fair values by maturity (Details 1) - Auction rate preferred - USD ($) $ in Thousands	Dec. 31, 2018	Jun. 30, 2018
Debt and Equity Securities, FV-NI [Line Items]
Due from five through ten years, Amortized Cost	$ 8,000	$ 8,000
Due from five through ten years, Gross Unrealized Gains	0	0
Due from five through ten years, Gross Unrealized (Losses)	(358)	0
Due from five through ten years, Fair Value	7,642	8,000
After ten years, Amortized Cost	2,000	2,000
After ten years, Gross Unrealized Gains	0	0
After ten years, Gross Unrealized (Losses)	(5)	0
After ten years, Fair Value	1,995	2,000
Amortized Cost Basis	10,000	10,000
Gross Unrealized (Gain)	0	0
Gross Unrealized (Losses)	(363)	0
Fair Value	$ 9,637	$ 10,000

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Investment Securities - The amortized cost of securities unrealized gains and losses and their fair values by maturity (Details 2) - USD ($) $ in Thousands	Dec. 31, 2018	Jun. 30, 2018
Investments, Debt and Equity Securities [Abstract]
Amortized Cost Basis	$ 42,500	$ 47,217
Gross Unrealized Gains	530	618
Gross Unrealized (Losses)	(1,756)	(1,289)
Fair Value	$ 41,274	$ 46,546

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Investment Securities - The amortized cost of securities unrealized gains and losses and their fair values by maturity (Details 3) - USD ($) $ in Thousands	Dec. 31, 2018	Jun. 30, 2018
Debt Securities, Held-to-maturity [Abstract]
Held-to-maturity securities, amortized cost basis	$ 71,925	$ 82,816
Held-to-maturity securities, Gross Unrealized Gains	463	562
Held-to-maturity securities, Gross Unrealized (Losses)	(1,200)	(1,550)
Held-to-maturity securities, Fair Value	71,188	81,828
U.S. Government and government-sponsored securities
Debt Securities, Held-to-maturity [Abstract]
Due in one year or less, amortized cost basis	2,997	2,001
Due in one year or less, Gross Unrealized Gains	0	0
Due in one year or less, Gross Unrealized (Losses)	(14)	(9)
Due in one year or less, Fair Value	2,983	1,992
From one through five years, Amortized Cost Basis	2,986	4,976
From one through five years, Gross Unrealized Gains	21	25
From one through five years, Gross Unrealized (Losses)	(14)	(33)
From one through five years, fair value	2,993	4,968
After ten years, Amortized Cost Basis	4,576	4,796
After ten years, Gross Unrealized Gains	0	0
After ten years, Gross Unrealized (Losses)	(201)	(189)
After ten years gross, fair value	4,375	4,607
Held-to-maturity securities, amortized cost basis	10,559	11,773
Held-to-maturity securities, Gross Unrealized Gains	21	25
Held-to-maturity securities, Gross Unrealized (Losses)	(229)	(231)
Held-to-maturity securities, Fair Value	10,351	11,567
State agency and municipal obligations
Debt Securities, Held-to-maturity [Abstract]
From one through five years, Amortized Cost Basis	443	446
From one through five years, Gross Unrealized Gains	0	0
From one through five years, Gross Unrealized (Losses)	(11)	(14)
From one through five years, fair value	432	432
U.S. Government sponsored and guaranteed mortgage-backed securities
Debt Securities, Held-to-maturity [Abstract]
From one through five years, Amortized Cost Basis	624	846
From one through five years, Gross Unrealized Gains	4	5
From one through five years, Gross Unrealized (Losses)	(5)	(8)
From one through five years, fair value	623	843
From five through ten years, Amortized Cost Basis	10,790	12,123
From five through ten years, Gross Unrealized Gains	8	14
From five through ten years, Gross Unrealized (Losses)	(249)	(384)
From five through ten years, fair value	10,549	11,753
After ten years, Amortized Cost Basis	49,509	57,628
After ten years, Gross Unrealized Gains	430	518
After ten years, Gross Unrealized (Losses)	(706)	(913)
After ten years gross, fair value	49,233	57,233
Held-to-maturity securities, amortized cost basis	60,923	70,597
Held-to-maturity securities, Gross Unrealized Gains	442	537
Held-to-maturity securities, Gross Unrealized (Losses)	(960)	(1,305)
Held-to-maturity securities, Fair Value	$ 60,405	$ 69,829

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Investment Securities - The aggregate fair value and unrealized losses on securities that have been in a continuous unrealized loss position (Details 4) - USD ($) $ in Thousands	Dec. 31, 2018	Jun. 30, 2018
Debt Securities, Available-for-sale [Line Items]
Less than 12 months, Fair Value	$ 7,078	$ 7,331
Less than 12 months, Unrealized Loss	376	123
12 months or more, Fair Value	22,624	22,972
12 months or more, Unrealized Loss	1,007	863
Total, Fair Value	29,702	30,303
Total, Unrealized Loss	1,383	986
U.S. Government and government-sponsored securities
Debt Securities, Available-for-sale [Line Items]
Less than 12 months, Fair Value	0	0
Less than 12 months, Unrealized Loss	0	0
12 months or more, Fair Value	2,765	4,328
12 months or more, Unrealized Loss	84	91
Total, Fair Value	2,765	4,328
Total, Unrealized Loss	84	91
Corporate bonds
Debt Securities, Available-for-sale [Line Items]
Less than 12 months, Fair Value	0	0
Less than 12 months, Unrealized Loss	0	0
12 months or more, Fair Value	3,525	3,730
12 months or more, Unrealized Loss	474	269
Total, Fair Value	3,525	3,730
Total, Unrealized Loss	474	269
U.S. Government-sponsored and guaranteed mortgage-backed securities
Debt Securities, Available-for-sale [Line Items]
Less than 12 months, Fair Value	2,441	7,331
Less than 12 months, Unrealized Loss	13	123
12 months or more, Fair Value	16,334	14,914
12 months or more, Unrealized Loss	449	503
Total, Fair Value	18,775	22,245
Total, Unrealized Loss	462	$ 626
Other securities
Debt Securities, Available-for-sale [Line Items]
Less than 12 months, Fair Value	4,637
Less than 12 months, Unrealized Loss	363
12 months or more, Fair Value	0
12 months or more, Unrealized Loss	0
Total, Fair Value	4,637
Total, Unrealized Loss	$ 363

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Investment Securities - The aggregate fair value and unrealized losses on securities that have been in a continuous unrealized loss position (Details 5) - USD ($) $ in Thousands	Dec. 31, 2018	Jun. 30, 2018
Schedule of Held-to-maturity Securities [Line Items]
Less than 12 months, Fair Value	$ 4,150	$ 40,775
Less than 12 months, Unrealized Loss	45	764
12 months or more, Fair Value	48,974	21,486
12 months or more, Unrealized Loss	1,155	786
Total, Fair Value	53,124	62,261
Total, Unrealized Loss	1,200	1,550
U.S. Government and government-sponsored securities
Schedule of Held-to-maturity Securities [Line Items]
Less than 12 months, Fair Value	995	5,956
Less than 12 months, Unrealized Loss	5	42
12 months or more, Fair Value	8,351	4,606
12 months or more, Unrealized Loss	224	189
Total, Fair Value	9,346	10,562
Total, Unrealized Loss	229	231
State and political subdivisions
Schedule of Held-to-maturity Securities [Line Items]
Less than 12 months, Fair Value	0	432
Less than 12 months, Unrealized Loss	0	14
12 months or more, Fair Value	432	0
12 months or more, Unrealized Loss	11	0
Total, Fair Value	432	432
Total, Unrealized Loss	11	14
U.S. Government sponsored and guaranteed mortgage-backed securities
Schedule of Held-to-maturity Securities [Line Items]
Less than 12 months, Fair Value	3,155	34,387
Less than 12 months, Unrealized Loss	40	708
12 months or more, Fair Value	40,191	16,880
12 months or more, Unrealized Loss	920	597
Total, Fair Value	43,346	51,267
Total, Unrealized Loss	$ 960	$ 1,305

XML

Investment Securities - The aggregate fair value and unrealized losses on securities that have been in a continuous unrealized loss position (Details 6) - Non-agency mortgage-backed securities - USD ($) $ in Thousands		Dec. 31, 2018	Jun. 30, 2018
Schedule Of Debt Securities [Line Items]
Less than 12 months, Fair Value	[1]	$ 280	$ 0
Less than 12 months, Unrealized Loss	[1]	6	0
12 months or more, Fair Value	[1]	979	1,134
12 months or more, Unrealized Loss	[1]	367	303
Total, Fair Value	[1]	1,259	1,134
Total, Unrealized Loss	[1]	$ 373	$ 303

[1] Includes other-than-temporary impaired available-for-sale debt securities in which a portion of the other-than-temporary impairment loss remains in accumulated other comprehensive loss.

XML

Investment Securities - The aggregate fair value and unrealized losses on securities that have been in a continuous unrealized loss position (Details 7) - USD ($) $ in Thousands	Dec. 31, 2018	Jun. 30, 2018
Investments, Debt and Equity Securities [Abstract]
Less than 12 months, Fair Value	$ 11,508	$ 48,106
Less than 12 months, Unrealized Loss	427	887
12 months or more, Fair Value	72,577	45,592
12 months or more, Unrealized Loss	2,529	1,952
Total, Fair Value	84,085	93,698
Total, Unrealized Loss	$ 2,956	$ 2,839

XML

Investment Securities - Activity related to the credit component recognized in earnings on debt securities (Details 8) - USD ($) $ in Thousands	6 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Roll Forward]
Balance at beginning of period	$ 15,983	$ 15,982
Additional credit losses on securities for which an other-than-temporary impairment charge was previously recorded	4	1
Balance at end of period	$ 15,987	$ 15,983

XML

Investment Securities (Detail Textuals)	3 Months Ended	6 Months Ended
	Dec. 31, 2018 USD ($) Security	Dec. 31, 2018 USD ($) Security	Dec. 31, 2017 USD ($)
Schedule Of Available For Sale Securities And Held To Maturity Securities [Line Items]
Other-than-temporary impairment charges on available-for-sale securities	$ 4,000	$ 4,000	$ 1,000
Number of individual investment securities with unrealized losses | Security	91	91
Percentage of amortized cost basis as aggregate depreciation of investment securities		3.40%
Other than temporary impairment losses on non-agency mortgage-backed securities		$ 135,000	2,000
Other-than-temporary impairment losses on other comprehensive loss		$ 131,000	$ 1,000
State and political subdivisions
Schedule Of Available For Sale Securities And Held To Maturity Securities [Line Items]
Percentage of amortized cost basis as aggregate depreciation of investment securities		2.50%
Number of available for sale securities with unrealized losses | Security		1

XML

Investment Securities (Detail Textuals 1) $ in Thousands	Dec. 31, 2018 USD ($) Security	Jun. 30, 2018 USD ($)
Schedule Of Available For Sale Securities And Held To Maturity Securities [Line Items]
Book value of available-for-sale securities	$ 42,500	$ 47,217
Fair Value	$ 41,274	$ 46,546
Trust Preferred Securities
Schedule Of Available For Sale Securities And Held To Maturity Securities [Line Items]
Number of investments in trust preferred securities | Security	3
Book value of available-for-sale securities	$ 4,000
Fair Value	$ 3,500

XML

Loans - Summary of loans (Details) - USD ($) $ in Thousands		Dec. 31, 2018	Jun. 30, 2018
Loans and Leases Receivable Disclosure [Line Items]
Total loans		$ 370,166	$ 353,790
Net deferred loan costs		1,316	1,423
Allowance for loan losses		(2,864)	(2,943)
Loans, net		368,618	352,270
Real Estate | Residential
Loans and Leases Receivable Disclosure [Line Items]
Total loans	[1]	229,313	236,880
Real Estate | Commercial
Loans and Leases Receivable Disclosure [Line Items]
Total loans		127,308	101,647
Real Estate | Residential construction
Loans and Leases Receivable Disclosure [Line Items]
Total loans		937	2,217
Commercial
Loans and Leases Receivable Disclosure [Line Items]
Total loans		11,815	12,215
Consumer and Other
Loans and Leases Receivable Disclosure [Line Items]
Total loans		$ 793	$ 831

[1] Residential real estate loans include one-to four-family mortgage loans, second mortgage loans, and home equity lines of credit.

XML

Loans - Loans by risk rating (Details 1) - USD ($) $ in Thousands		Dec. 31, 2018	Jun. 30, 2018
Financing Receivable, Recorded Investment [Line Items]
Total loans		$ 370,166	$ 353,790
Pass
Financing Receivable, Recorded Investment [Line Items]
Total loans		363,651	345,749
Special Mention
Financing Receivable, Recorded Investment [Line Items]
Total loans		512	1,758
Substandard
Financing Receivable, Recorded Investment [Line Items]
Total loans		6,003	6,283
Doubtful
Financing Receivable, Recorded Investment [Line Items]
Total loans		0	0
Loss
Financing Receivable, Recorded Investment [Line Items]
Total loans		0	0
Real Estate | Residential
Financing Receivable, Recorded Investment [Line Items]
Total loans	[1]	229,313	236,880
Real Estate | Residential | Pass
Financing Receivable, Recorded Investment [Line Items]
Total loans		225,838	232,919
Real Estate | Residential | Special Mention
Financing Receivable, Recorded Investment [Line Items]
Total loans		0	2
Real Estate | Residential | Substandard
Financing Receivable, Recorded Investment [Line Items]
Total loans		3,475	3,959
Real Estate | Residential | Doubtful
Financing Receivable, Recorded Investment [Line Items]
Total loans		0	0
Real Estate | Residential | Loss
Financing Receivable, Recorded Investment [Line Items]
Total loans		0	0
Real Estate | Commercial
Financing Receivable, Recorded Investment [Line Items]
Total loans		127,308	101,647
Real Estate | Commercial | Pass
Financing Receivable, Recorded Investment [Line Items]
Total loans		125,279	98,626
Real Estate | Commercial | Special Mention
Financing Receivable, Recorded Investment [Line Items]
Total loans		512	698
Real Estate | Commercial | Substandard
Financing Receivable, Recorded Investment [Line Items]
Total loans		1,517	2,323
Real Estate | Commercial | Doubtful
Financing Receivable, Recorded Investment [Line Items]
Total loans		0	0
Real Estate | Commercial | Loss
Financing Receivable, Recorded Investment [Line Items]
Total loans		0	0
Real Estate | Residential construction
Financing Receivable, Recorded Investment [Line Items]
Total loans		937	2,217
Real Estate | Residential construction | Pass
Financing Receivable, Recorded Investment [Line Items]
Total loans		937	2,217
Real Estate | Residential construction | Special Mention
Financing Receivable, Recorded Investment [Line Items]
Total loans		0	0
Real Estate | Residential construction | Substandard
Financing Receivable, Recorded Investment [Line Items]
Total loans		0	0
Real Estate | Residential construction | Doubtful
Financing Receivable, Recorded Investment [Line Items]
Total loans		0	0
Real Estate | Residential construction | Loss
Financing Receivable, Recorded Investment [Line Items]
Total loans		0	0
Commercial
Financing Receivable, Recorded Investment [Line Items]
Total loans		11,815	12,215
Commercial | Pass
Financing Receivable, Recorded Investment [Line Items]
Total loans		10,804	11,157
Commercial | Special Mention
Financing Receivable, Recorded Investment [Line Items]
Total loans		0	1,058
Commercial | Substandard
Financing Receivable, Recorded Investment [Line Items]
Total loans		1,011	0
Commercial | Doubtful
Financing Receivable, Recorded Investment [Line Items]
Total loans		0	0
Commercial | Loss
Financing Receivable, Recorded Investment [Line Items]
Total loans		0	0
Consumer and Other
Financing Receivable, Recorded Investment [Line Items]
Total loans		793	831
Consumer and Other | Pass
Financing Receivable, Recorded Investment [Line Items]
Total loans		793	830
Consumer and Other | Special Mention
Financing Receivable, Recorded Investment [Line Items]
Total loans		0	0
Consumer and Other | Substandard
Financing Receivable, Recorded Investment [Line Items]
Total loans		0	1
Consumer and Other | Doubtful
Financing Receivable, Recorded Investment [Line Items]
Total loans		0	0
Consumer and Other | Loss
Financing Receivable, Recorded Investment [Line Items]
Total loans		$ 0	$ 0

[1] Residential real estate loans include one-to four-family mortgage loans, second mortgage loans, and home equity lines of credit.

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Non-performing Assets, Past Due and Impaired Loans (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Jun. 30, 2018
Non Accrual Loans [Abstract]
Total non-accrual loans	$ 3,881	$ 4,392
Accruing loans past due 90 days or more	0	32
Total non-performing loans	3,881	4,424
Other real estate owned	1,297	1,381
Total non-performing assets	$ 5,178	$ 5,805
Total non-performing loans to total loans	1.05%	1.25%
Total non-performing assets to total assets	1.00%	1.10%
Real Estate | Residential
Non Accrual Loans [Abstract]
Total non-accrual loans	$ 3,475	$ 3,959
Real Estate | Commercial
Non Accrual Loans [Abstract]
Total non-accrual loans	406	432
Consumer
Non Accrual Loans [Abstract]
Total non-accrual loans	$ 0	$ 1

XML

Non-performing Assets, Past Due and Impaired Loans (Details 1) - USD ($) $ in Thousands	Dec. 31, 2018	Jun. 30, 2018
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	$ 4,433	$ 1,535
30-59 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	3,656	54
60-89 DaysPast Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	146	238
90 days or Greater Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	631	1,243
Real Estate | Residential
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	2,283	1,407
Real Estate | Residential | 30-59 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	1,627	50
Real Estate | Residential | 60-89 DaysPast Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	146	238
Real Estate | Residential | 90 days or Greater Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	510	1,119
Real Estate | Commercial
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	2,148	124
Real Estate | Commercial | 30-59 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	2,027	0
Real Estate | Commercial | 60-89 DaysPast Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	0	0
Real Estate | Commercial | 90 days or Greater Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	121	124
Consumer and Other
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	2	4
Consumer and Other | 30-59 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	2	4
Consumer and Other | 60-89 DaysPast Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	0	0
Consumer and Other | 90 days or Greater Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	$ 2	$ 0

XML

Non-performing Assets, Past Due and Impaired Loans (Details 2) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Jun. 30, 2018
Financing Receivable, Impaired [Line Items]
Impaired loans without valuation allowance, Recorded investment	$ 2,468		$ 2,468		$ 3,962
Impaired loans without valuation allowance, Unpaid principal balance	2,677		2,677		4,784
Impaired loans without valuation allowance, Average Recorded investment	2,588	$ 3,384	3,046	$ 3,452
Impaired loans without valuation allowance, Interest Income Recognized	22	30	46	61
Impaired loans without valuation allowance, Interest Income Recognized on Cash Basis	19	3	33	7
Real Estate | Residential
Financing Receivable, Impaired [Line Items]
Impaired loans without valuation allowance, Recorded investment	2,062		2,062		2,732
Impaired loans without valuation allowance, Unpaid principal balance	2,208		2,208		2,870
Impaired loans without valuation allowance, Average Recorded investment	2,177	2,093	2,362	2,149
Impaired loans without valuation allowance, Interest Income Recognized	22	8	39	16
Impaired loans without valuation allowance, Interest Income Recognized on Cash Basis	19	3	33	7
Real Estate | Commercial
Financing Receivable, Impaired [Line Items]
Impaired loans without valuation allowance, Recorded investment	406		406		1,230
Impaired loans without valuation allowance, Unpaid principal balance	469		469		$ 1,914
Impaired loans without valuation allowance, Average Recorded investment	411	1,291	684	1,303
Impaired loans without valuation allowance, Interest Income Recognized	0	22	7	45
Impaired loans without valuation allowance, Interest Income Recognized on Cash Basis	$ 0	$ 0	$ 0	$ 0

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Allowance for Loan Losses (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2018	Dec. 31, 2017
Allowance for loan losses:
Beginning balance	$ 2,906	$ 2,960	$ 2,943	$ 2,780
Charge-offs	(54)	(13)	(61)	(22)
Recoveries	12	18	582	32
(Credit) provision	0	0	(600)	175
Ending Balance	2,864	2,965	2,864	2,965
Real Estate | Residential
Allowance for loan losses:
Beginning balance	1,488	1,432	1,385	1,359
Charge-offs	(42)	0	(42)	0
Recoveries	3	9	8	17
(Credit) provision	16	(24)	114	41
Ending Balance	1,465	1,417	1,465	1,417
Real Estate | Commercial
Allowance for loan losses:
Beginning balance	1,094	1,232	1,194	1,164
Charge-offs	0	0	0	0
Recoveries	0	0	560	0
(Credit) provision	102	(17)	(558)	51
Ending Balance	1,196	1,215	1,196	1,215
Real Estate | Residential Construction
Allowance for loan losses:
Beginning balance	7	7	14	6
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
(Credit) provision	(2)	2	(9)	3
Ending Balance	5	9	5	9
Commercial
Allowance for loan losses:
Beginning balance	77	80	80	76
Charge-offs	0	0	0	0
Recoveries	4	3	6	6
(Credit) provision	29	(4)	24	(3)
Ending Balance	110	79	110	79
Consumer and Other
Allowance for loan losses:
Beginning balance	131	148	135	86
Charge-offs	(12)	(13)	(19)	(22)
Recoveries	5	6	8	9
(Credit) provision	(92)	(10)	(92)	58
Ending Balance	32	131	32	131
Unallocated
Allowance for loan losses:
Beginning balance	109	61	135	89
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
(Credit) provision	(53)	53	(79)	25
Ending Balance	$ 56	$ 114	$ 56	$ 114

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Allowance for Loan Losses - Summary of impaired and non-impaired loans and allowance for loan losses (Details 1) - USD ($) $ in Thousands		Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017
Financing Receivable, Allowance for Credit Losses [Line Items]
Ending balance : Amount of allowance for loan losses for Impaired/ Non-impaired loans		$ 2,864	$ 2,906	$ 2,943	$ 2,965	$ 2,960	$ 2,780
Loans: Ending balance Impaired loans/Non-impaired loans		370,166		353,790
Impaired loan receivables
Financing Receivable, Allowance for Credit Losses [Line Items]
Ending balance : Amount of allowance for loan losses for Impaired/ Non-impaired loans		0		0
Loans: Ending balance Impaired loans/Non-impaired loans		2,468		3,962
Non-impaired loan receivables
Financing Receivable, Allowance for Credit Losses [Line Items]
Ending balance : Amount of allowance for loan losses for Impaired/ Non-impaired loans		2,864		2,943
Loans: Ending balance Impaired loans/Non-impaired loans		367,698		349,828
Real Estate | Residential
Financing Receivable, Allowance for Credit Losses [Line Items]
Ending balance : Amount of allowance for loan losses for Impaired/ Non-impaired loans		1,465	1,488	1,385	1,417	1,432	1,359
Loans: Ending balance Impaired loans/Non-impaired loans	[1]	229,313		236,880
Real Estate | Residential | Impaired loan receivables
Financing Receivable, Allowance for Credit Losses [Line Items]
Ending balance : Amount of allowance for loan losses for Impaired/ Non-impaired loans		0		0
Loans: Ending balance Impaired loans/Non-impaired loans		2,062		2,732
Real Estate | Residential | Non-impaired loan receivables
Financing Receivable, Allowance for Credit Losses [Line Items]
Ending balance : Amount of allowance for loan losses for Impaired/ Non-impaired loans		1,465		1,385
Loans: Ending balance Impaired loans/Non-impaired loans		227,251		234,148
Real Estate | Commercial
Financing Receivable, Allowance for Credit Losses [Line Items]
Ending balance : Amount of allowance for loan losses for Impaired/ Non-impaired loans		1,196	1,094	1,194	1,215	1,232	1,164
Loans: Ending balance Impaired loans/Non-impaired loans		127,308		101,647
Real Estate | Commercial | Impaired loan receivables
Financing Receivable, Allowance for Credit Losses [Line Items]
Ending balance : Amount of allowance for loan losses for Impaired/ Non-impaired loans		0		0
Loans: Ending balance Impaired loans/Non-impaired loans		406		1,230
Real Estate | Commercial | Non-impaired loan receivables
Financing Receivable, Allowance for Credit Losses [Line Items]
Ending balance : Amount of allowance for loan losses for Impaired/ Non-impaired loans		1,196		1,194
Loans: Ending balance Impaired loans/Non-impaired loans		126,902		100,417
Real Estate | Residential Construction
Financing Receivable, Allowance for Credit Losses [Line Items]
Ending balance : Amount of allowance for loan losses for Impaired/ Non-impaired loans		5	7	14	9	7	6
Loans: Ending balance Impaired loans/Non-impaired loans		937		2,217
Real Estate | Residential Construction | Impaired loan receivables
Financing Receivable, Allowance for Credit Losses [Line Items]
Ending balance : Amount of allowance for loan losses for Impaired/ Non-impaired loans		0		0
Loans: Ending balance Impaired loans/Non-impaired loans		0		0
Real Estate | Residential Construction | Non-impaired loan receivables
Financing Receivable, Allowance for Credit Losses [Line Items]
Ending balance : Amount of allowance for loan losses for Impaired/ Non-impaired loans		5		14
Loans: Ending balance Impaired loans/Non-impaired loans		937		2,217
Commercial
Financing Receivable, Allowance for Credit Losses [Line Items]
Ending balance : Amount of allowance for loan losses for Impaired/ Non-impaired loans		110	77	80	79	80	76
Loans: Ending balance Impaired loans/Non-impaired loans		11,815		12,215
Commercial | Impaired loan receivables
Financing Receivable, Allowance for Credit Losses [Line Items]
Ending balance : Amount of allowance for loan losses for Impaired/ Non-impaired loans		0		0
Loans: Ending balance Impaired loans/Non-impaired loans		0		0
Commercial | Non-impaired loan receivables
Financing Receivable, Allowance for Credit Losses [Line Items]
Ending balance : Amount of allowance for loan losses for Impaired/ Non-impaired loans		110		80
Loans: Ending balance Impaired loans/Non-impaired loans		11,815		12,215
Consumer and Other
Financing Receivable, Allowance for Credit Losses [Line Items]
Ending balance : Amount of allowance for loan losses for Impaired/ Non-impaired loans		32	131	135	131	148	86
Loans: Ending balance Impaired loans/Non-impaired loans		793		831
Consumer and Other | Impaired loan receivables
Financing Receivable, Allowance for Credit Losses [Line Items]
Ending balance : Amount of allowance for loan losses for Impaired/ Non-impaired loans		0		0
Loans: Ending balance Impaired loans/Non-impaired loans		0		0
Consumer and Other | Non-impaired loan receivables
Financing Receivable, Allowance for Credit Losses [Line Items]
Ending balance : Amount of allowance for loan losses for Impaired/ Non-impaired loans		32		135
Loans: Ending balance Impaired loans/Non-impaired loans		793		831
Unallocated
Financing Receivable, Allowance for Credit Losses [Line Items]
Ending balance : Amount of allowance for loan losses for Impaired/ Non-impaired loans		56	$ 109	135	$ 114	$ 61	$ 89
Unallocated | Impaired loan receivables
Financing Receivable, Allowance for Credit Losses [Line Items]
Ending balance : Amount of allowance for loan losses for Impaired/ Non-impaired loans		0		0
Loans: Ending balance Impaired loans/Non-impaired loans		0		0
Unallocated | Non-impaired loan receivables
Financing Receivable, Allowance for Credit Losses [Line Items]
Ending balance : Amount of allowance for loan losses for Impaired/ Non-impaired loans		56		135
Loans: Ending balance Impaired loans/Non-impaired loans		$ 0		$ 0

[1] Residential real estate loans include one-to four-family mortgage loans, second mortgage loans, and home equity lines of credit.

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Stock-Based Incentive Plan (Detail Textuals) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Feb. 28, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation	$ 111	$ 112	$ 229	$ 224
Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum number of stock options and restricted stock authorized					634,573
Vesting percentage of stock awards granted	20.00%
Incentive Plan | Employee Stock Option | Employees, Officers And Directors
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum number of stock options and restricted stock authorized					453,267
Incentive Plan | Restricted Stock | Employees, Officers And Directors
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum number of stock options and restricted stock authorized					181,306

XML

ACCUMULATED OTHER COMPREHENSIVE INCOME/LOSS - Components of accumulated other comprehensive loss and related tax effects (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Jun. 30, 2018
Accumulated Other Comprehensive Income (Loss), Net Of Tax [Abstract]
Net unrealized loss on securities available-for-sale	$ (1,226)	$ (671)
Tax effect	263	149
Accumulated other comprehensive loss	$ (963)	$ (522)

XML

FAIR VALUE MEASURMENTS - Assets measured at fair value on a recurring basis (Details) - Fair Value, Measurements, Recurring - USD ($) $ in Thousands	Dec. 31, 2018	Jun. 30, 2018
Available-for-sale:
Assets measured at fair value	$ 41,274	$ 46,546
U.S. government and government-sponsored securities
Available-for-sale:
Assets measured at fair value	2,765	4,328
Corporate bonds
Available-for-sale:
Assets measured at fair value	3,525	3,730
U.S. Government-sponsored and guaranteed mortgage-backed securities
Available-for-sale:
Assets measured at fair value	22,575	25,251
Non-agency mortgage-backed securities
Available-for-sale:
Assets measured at fair value	2,772	3,237
Other securities
Available-for-sale:
Assets measured at fair value	9,637	10,000
Level 1
Available-for-sale:
Assets measured at fair value	0	0
Level 1 | U.S. government and government-sponsored securities
Available-for-sale:
Assets measured at fair value	0	0
Level 1 | Corporate bonds
Available-for-sale:
Assets measured at fair value	0	0
Level 1 | U.S. Government-sponsored and guaranteed mortgage-backed securities
Available-for-sale:
Assets measured at fair value	0	0
Level 1 | Non-agency mortgage-backed securities
Available-for-sale:
Assets measured at fair value	0	0
Level 1 | Other securities
Available-for-sale:
Assets measured at fair value	0	0
Level 2
Available-for-sale:
Assets measured at fair value	31,637	36,546
Level 2 | U.S. government and government-sponsored securities
Available-for-sale:
Assets measured at fair value	2,765	4,328
Level 2 | Corporate bonds
Available-for-sale:
Assets measured at fair value	3,525	3,730
Level 2 | U.S. Government-sponsored and guaranteed mortgage-backed securities
Available-for-sale:
Assets measured at fair value	22,575	25,251
Level 2 | Non-agency mortgage-backed securities
Available-for-sale:
Assets measured at fair value	2,772	3,237
Level 2 | Other securities
Available-for-sale:
Assets measured at fair value	0	0
Level 3
Available-for-sale:
Assets measured at fair value	9,637	10,000
Level 3 | U.S. government and government-sponsored securities
Available-for-sale:
Assets measured at fair value	0	0
Level 3 | Corporate bonds
Available-for-sale:
Assets measured at fair value	0	0
Level 3 | U.S. Government-sponsored and guaranteed mortgage-backed securities
Available-for-sale:
Assets measured at fair value	0	0
Level 3 | Non-agency mortgage-backed securities
Available-for-sale:
Assets measured at fair value	0	0
Level 3 | Other securities
Available-for-sale:
Assets measured at fair value	$ 9,637	$ 10,000

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FAIR VALUE MEASURMENTS - Assets measured at fair value on a non-recurring basis and the adjustments to the carrying value (Details 1) - Fair value measurements non recurring basis - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Jun. 30, 2018
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value	$ 717		$ 717
Total Losses	38	$ 8	101	$ 9
Impaired loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value	223		223		$ 160
Total Losses	38	0	38	0
Other real estate owned
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value	494		494
Total Losses	0	$ 8	63	$ 9
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value	0		0
Level 1 | Impaired loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value	0		0		0
Level 1 | Other real estate owned
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value	0		0
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value	0		0
Level 2 | Impaired loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value	0		0		0
Level 2 | Other real estate owned
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value	0		0
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value	717		717
Level 3 | Impaired loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value	223		223		$ 160
Level 3 | Other real estate owned
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value	$ 494		$ 494

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FAIR VALUE MEASURMENTS - Company's financial instruments, all of which are held or issued for purposes other than trading (Details 2) - USD ($) $ in Thousands	Dec. 31, 2018	Jun. 30, 2018
Financial assets:
Securities available-for-sale	$ 41,274	$ 46,546
Securities held-to-maturity	71,188	81,828
Accrued interest receivable	1,538	1,361
Financial liabilities:
Mortgagors' escrow accounts	3,062	3,123
Carrying Amount
Financial assets:
Cash and cash equivalents	5,332	10,102
Securities available-for-sale	41,274	46,546
Securities held-to-maturity	71,925	82,816
Federal Home Loan Bank stock	4,206	4,206
Loans, net	368,618	352,270
Accrued interest receivable	1,538	1,361
Financial liabilities:
Deposits	365,935	371,585
Mortgagors' escrow accounts	3,062	3,123
Federal Home Loan Bank advances	62,172	63,199
Securities sold under agreements to repurchase	3,310	664
Accrued interest payable	200	158
Fair Value
Financial assets:
Cash and cash equivalents	5,332	10,102
Securities available-for-sale	41,274	46,546
Securities held-to-maturity	71,188	81,828
Federal Home Loan Bank stock	4,206	4,206
Loans, net	353,355	346,511
Accrued interest receivable	1,538	1,361
Financial liabilities:
Deposits	366,566	372,563
Mortgagors' escrow accounts	3,062	3,123
Federal Home Loan Bank advances	61,699	62,428
Securities sold under agreements to repurchase	3,310	664
Accrued interest payable	200	158
Level 1
Financial assets:
Cash and cash equivalents	5,332	10,102
Securities available-for-sale	0	0
Securities held-to-maturity	0	0
Federal Home Loan Bank stock	0	0
Loans, net	0	0
Accrued interest receivable	0	0
Financial liabilities:
Deposits	0	0
Mortgagors' escrow accounts	0	0
Federal Home Loan Bank advances	0	0
Securities sold under agreements to repurchase	0	0
Accrued interest payable	0	0
Level 2
Financial assets:
Cash and cash equivalents	0	0
Securities available-for-sale	31,637	36,546
Securities held-to-maturity	71,188	81,828
Federal Home Loan Bank stock	0	0
Loans, net	0	0
Accrued interest receivable	0	0
Financial liabilities:
Deposits	0	0
Mortgagors' escrow accounts	0	0
Federal Home Loan Bank advances	61,699	62,428
Securities sold under agreements to repurchase	3,310	664
Accrued interest payable	0	0
Level 3
Financial assets:
Cash and cash equivalents	0	0
Securities available-for-sale	9,637	10,000
Securities held-to-maturity	0	0
Federal Home Loan Bank stock	4,206	4,206
Loans, net	353,355	346,511
Accrued interest receivable	1,538	1,361
Financial liabilities:
Deposits	366,566	372,563
Mortgagors' escrow accounts	3,062	3,123
Federal Home Loan Bank advances	0	0
Securities sold under agreements to repurchase	0	0
Accrued interest payable	$ 200	$ 158

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Subsequent Events (Detail Textuals) - $ / shares	Jan. 02, 2019	Dec. 31, 2018	Dec. 31, 2017
Subsequent Event [Line Items]
Cash dividend declared (in dollars per share)		$ 0.19	$ 0.09
Subsequent Event
Subsequent Event [Line Items]
Dividends payable declared date	Jan. 02, 2019
Cash dividend declared (in dollars per share)	$ 0.07
Dividends payable record date	Jan. 16, 2019
Dividends payable date	Jan. 30, 2019

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Commitments to Extend Credit (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Jun. 30, 2018
Commitments to extend credit:
Outstanding commitments	$ 32,798	$ 31,692
Loan commitments
Commitments to extend credit:
Outstanding commitments	4,056	3,594
Unadvanced construction loans
Commitments to extend credit:
Outstanding commitments	8,585	8,822
Unadvanced lines of credit
Commitments to extend credit:
Outstanding commitments	19,762	18,881
Standby letters of credit
Commitments to extend credit:
Outstanding commitments	$ 395	$ 395