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 March 31, 2018

OR

___ 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   0-23406

Southern Missouri Bancorp, Inc.

(Exact name of registrant as specified in its charter)

Missouri	43-1665523
(State or jurisdiction of incorporation)	(IRS employer id. no.)

2991 Oak Grove Road       Poplar Bluff, MO            63901

(Address of principal executive offices)           (Zip code)

(573) 778-1800

Registrant's telephone number, including area code

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes X No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data file required to be submitted and posted pursuant to Rule 405 of regulation S-T (§232.405 of this chapter) during the proceeding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes X No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act (check one):

Large accelerated filer Accelerated filer X Non-accelerated filer Smaller reporting company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12 b-2 of the Exchange Act)

Yes No X

Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date:

Class	Outstanding at May 9, 2018
Common Stock, Par Value $.01	8,992,584 Shares

SOUTHERN MISSOURI BANCORP, INC.

FORM 10-Q

INDEX

PART I.	Financial Information	PAGE NO.
Item 1.	Condensed Consolidated Financial Statements
	-      Condensed Consolidated Balance Sheets	3
	-      Condensed Consolidated Statements of Income	4
	-      Condensed Consolidated Statements of Comprehensive Income	5
	-      Condensed Consolidated Statements of Cash Flows	6
	-      Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of    Operations	33
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	49
Item 4.	Controls and Procedures	51
PART II.	OTHER INFORMATION	52
Item 1.	Legal Proceedings	52
Item 1a.	Risk Factors	52
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	52
Item 3.	Defaults upon Senior Securities	52
Item 4.	Mine Safety Disclosures	52
Item 5.	Other Information	52
Item 6.	Exhibits	53
	-     Signature Page	54
	-     Certifications	55

PART I:  Item 1:  Condensed Consolidated Financial Statements

SOUTHERN MISSOURI BANCORP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

MARCH 31, 2018 AND JUNE 30, 2017

(dollars in thousands)	March 31, 2018			June 30, 2017
Assets	(unaudited)
Cash and cash equivalents	$	30,781		$	30,786
Interest-bearing time deposits		1,949			747
Available for sale securities		146,127			144,416
Stock in FHLB of Des Moines		4,535			3,547
Stock in Federal Reserve Bank of St. Louis		3,196			2,357
Loans receivable, net of allowance for loan losses of     $17,263 and $15,538 at March 31, 2018 and      June 30, 2017, respectively		1,522,445			1,397,730
Accrued interest receivable		7,128			6,769
Premises and equipment, net		55,495			54,167
Bank owned life insurance – cash surrender value		37,188			34,329
Goodwill		13,080			8,631
Other intangible assets, net		7,133			6,759
Prepaid expenses and other assets		20,736			17,474
Total assets	$	1,849,793		$	1,707,712
Liabilities and Stockholders' Equity
Deposits	$	1,574,337		$	1,455,597
Securities sold under agreements to repurchase		3,769			10,212
Advances from FHLB of Des Moines		50,850			43,637
Note payable		3,000			3,000
Accounts payable and other liabilities		5,282			6,417
Accrued interest payable		1,138			918
Subordinated debt		14,921			14,848
Total liabilities		1,653,297			1,534,629
Common stock, $.01 par value; 12,000,000 shares authorized;     8,993,084 and 8,591,363 shares issued, respectively,      at March 31, 2018 and June 30, 2017		90			86
Additional paid-in capital		83,360			70,101
Retained earnings		114,888			102,369
Accumulated other comprehensive income (loss)		(1,842	)		527
Total stockholders' equity		196,496			173,083
Total liabilities and stockholders' equity	$	1,849,793		$	1,707,712

See Notes to Condensed Consolidated Financial Statements

3

SOUTHERN MISSOURI BANCORP, INC

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

FOR THE THREE- AND NINE- MONTH PERIODS ENDED MARCH 31, 2018 AND 2017 (Unaudited)

	Three months ended				Nine months ended
	March 31,				March 31,
	2018		2017		2018		2017
(dollars in thousands except per share data)
INTEREST INCOME:
Loans	$	18,337	$	14,067	$	54,029	$	42,546
Investment securities		573		483		1,659		1,489
Mortgage-backed securities		453		392		1,297		1,087
Other interest-earning assets		22		13		42		21
Total interest income		19,385		14,955		57,027		45,143
INTEREST EXPENSE:
Deposits		3,281		2,111		9,169		6,086
Securities sold under agreements to repurchase		8		25		29		77
Advances from FHLB of Des Moines		199		224		709		924
Note payable		30		-		87		-
Subordinated debt		192		163		552		476
Total interest expense		3,710		2,523		10,546		7,563
NET INTEREST INCOME		15,675		12,432		46,481		37,580
PROVISION FOR LOAN LOSSES		550		376		2,060		1,957
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES		15,125		12,056		44,421		35,623
NONINTEREST INCOME:
Deposit account charges and related fees		1,112		959		3,442		2,853
Bank card interchange income		948		699		2,722		2,103
Loan late charges		92		136		310		321
Loan servicing fees		162		67		489		196
Other loan fees		544		279		1,174		835
Net realized gains on sale of loans		196		108		618		621
Net realized gains on sale of AFS securities		254		-		292		-
Earnings on bank owned life insurance		235		503		702		924
Other income		327		174		567		346
Total noninterest income		3,870		2,925		10,316		8,199
NONINTEREST EXPENSE:
Compensation and benefits		6,040		5,086		17,396		14,386
Occupancy and equipment, net		2,554		2,080		7,241		6,101
Deposit insurance premiums		151		172		422		493
Legal and professional fees		354		260		899		788
Advertising		283		277		885		759
Postage and office supplies		178		155		552		432
Intangible amortization		364		228		1,061		684
Bank card network expense		387		271		1,127		824
Other operating expense		1,616		1,035		3,618		2,960
Total noninterest expense		11,927		9,564		33,201		27,427
INCOME BEFORE INCOME TAXES		7,068		5,417		21,536		16,395
INCOME TAXES		1,810		1,463		6,245		4,556
NET INCOME	$	5,258	$	3,954	$	15,291	$	11,839
Basic earnings per common share	$	0.60	$	0.53	$	1.77	$	1.59
Diluted earnings per common share	$	0.60	$	0.53	$	1.77	$	1.59
Dividends per common share	$	0.11	$	0.10	$	0.33	$	0.30

See Notes to Condensed Consolidated Financial Statements

4

SOUTHERN MISSOURI BANCORP, INC

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE- AND NINE- MONTH PERIODS ENDED MARCH 31, 2018 AND 2017 (Unaudited)

	Three months ended						Nine months ended
	March 31,						March 31,
	2018			2017			2018			2017
(dollars in thousands)
Net income	$	5,258		$	3,954		$	15,291		$	11,839
Other comprehensive income:
Unrealized gains (losses) on securities available-for-sale		(1,416	)		571			(2,754	)		(3,060	)
Less:  reclassification adjustment for realized gains                  included in net income		254			-			292			-
Unrealized gains (losses) on available-for-sale securities for                  which a portion of an other-than-temporary impairment                   has been recognized in income		(265	)		81			(213	)		61
Tax benefit (expense)		465			(241	)		890			1,110
Total other comprehensive income (loss)		(1,470	)		411			(2,369	)		(1,889	)
Comprehensive income	$	3,788		$	4,365		$	12,922		$	9,950

See Notes to Condensed Consolidated Financial Statements

5

SOUTHERN MISSOURI BANCORP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE-MONTH PERIODS ENDED MARCH 31, 2018 AND 2017 (Unaudited)

	Nine months ended March 31,
(dollars in thousands)	2018			2017
Cash Flows From Operating Activities:
Net income	$	15,291		$	11,839
Items not requiring (providing) cash:
Depreciation		2,334			2,241
Gain on disposal of fixed assets		(199	)		(9	)
Stock option and stock grant expense		221			243
Amortization of intangible assets		1,061			684
Amortization of purchase accounting adjustments		(1,353	)		(798	)
Increase in cash surrender value of bank owned life insurance		(702	)		(924	)
Gain on sale of foreclosed assets		(83	)		(36	)
Provision for loan losses		2,060			1,957
Gains realized on sale of AFS securities		(292	)		-
Net amortization of premiums and discounts on securities		763			781
Originations of loans held for sale		(21,831	)		(24,878	)
Proceeds from sales of loans held for sale		21,497			25,589
Gain on sales of loans held for sale		(618	)		(621	)
Changes in:
Accrued interest receivable		67			246
Prepaid expenses and other assets		7,049			1,336
Accounts payable and other liabilities		(2,953	)		(797	)
Deferred income taxes		(1,280	)		241
Accrued interest payable		197			74
Net cash provided by operating activities		21,229			17,168
Cash flows from investing activities:
Net increase in loans		(58,019	)		(92,694	)
Net change in interest-bearing deposits		249			225
Proceeds from maturities of available for sale securities		17,842			18,235
Proceeds from sales of available for sale securities		8,166			-
Net (purchases) redemptions of Federal Home Loan Bank stock		(630	)		2,146
Net purchases of Federal Reserve  Bank of Saint Louis stock		(839	)		(14	)
Purchases of available-for-sale securities		(25,891	)		(26,839	)
Purchases of premises and equipment		(1,971	)		(1,925	)
Net cash paid for acquisitions		(1,501	)		-
Investments in state & federal tax credits		(5,086	)		(1,661	)
Proceeds from sale of fixed assets		1,918			11
Proceeds from sale of foreclosed assets		1,088			742
Proceeds from BOLI claim		-			848
Net cash used in investing activities		(64,674	)		(100,926	)
Cash flows from financing activities:
Net increase in demand deposits and savings accounts		83,422			94,952
Net (decrease) increase in certificates of deposits		(32,830	)		56,972
Net decrease in securities sold under agreements to repurchase		(6,443	)		(9,185	)
Proceeds from Federal Home Loan Bank advances		1,372,930			946,455
Repayments of Federal Home Loan Bank advances		(1,370,930	)		(1,004,805	)
Exercise of stock options		128			61
Dividends paid on common stock		(2,837	)		(2,236	)
Net cash provided by financing activities		43,440			82,214
Decrease in cash and cash equivalents		(5	)		(1,544	)
Cash and cash equivalents at beginning of period		30,786			22,554
Cash and cash equivalents at end of period	$	30,781		$	21,010
Supplemental disclosures of cash flow information:
Noncash investing and financing activities:
Conversion of loans to foreclosed real estate	$	1,694		$	707
Conversion of foreclosed real estate to loans		112			95
Conversion of loans to repossessed assets		46			62
Cash paid during the period for:
Interest (net of interest credited)	$	2,331		$	2,538
Income taxes		1,080			2,832

See Notes to Condensed Consolidated Financial Statements

6

SOUTHERN MISSOURI BANCORP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 1:  Basis of Presentation

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Securities and Exchange Commission (SEC) Regulation S-X. Accordingly, they 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, all material adjustments (consisting only of normal recurring accruals) considered necessary for a fair presentation have been included. The consolidated balance sheet of the Company as of June 30, 2017, has been derived from the audited consolidated balance sheet of the Company as of that date. Operating results for the three- and nine- month period ended March 31, 2018, are not necessarily indicative of the results that may be expected for the entire fiscal year. For additional information, refer to the audited consolidated financial statements included in the Company's June 30, 2017, Form 10-K, which was filed with the SEC.

The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Southern Bank. All significant intercompany accounts and transactions have been eliminated in consolidation.

Note 2:  Organization and Summary of Significant Accounting Policies

Organization. Southern Missouri Bancorp, Inc., a Missouri corporation (the Company) was organized in 1994 and is the parent company of Southern Bank (the Bank). Substantially all of the Company's consolidated revenues are derived from the operations of the Bank, and the Bank represents substantially all of the Company's consolidated assets and liabilities.  SB Real Estate Investments, LLC is a wholly-owned subsidiary of the Bank formed to hold Southern Bank Real Estate Investments, LLC.  Southern Bank Real Estate Investments, LLC is a REIT which is controlled by SB Real Estate Investments, LLC, but which has other preferred shareholders in order to meet the requirements to be a REIT.  At March 31, 2018, assets of the REIT were approximately $439 million, and consisted primarily of loan participations acquired from the Bank.

The Bank is primarily engaged in providing a full range of banking and financial services to individuals and corporate customers in its market areas. The Bank and Company are subject to competition from other financial institutions. The Bank and Company are subject to regulation by certain federal and state agencies and undergo periodic examinations by those regulatory authorities.

Basis of Financial Statement Presentation. The financial statements of the Company have been prepared in conformity with accounting principles generally accepted in the United States of America and general practices within the banking industry. In the normal course of business, the Company encounters two significant types of risk: economic and regulatory. Economic risk is comprised of interest rate risk, credit risk, and market risk. The Company is subject to interest rate risk to the degree that its interest-bearing liabilities reprice on a different basis than its interest-earning assets. Credit risk is the risk of default on the Company's investment or loan portfolios resulting from the borrowers' inability or unwillingness to make contractually required payments. Market risk reflects changes in the value of the investment portfolio, collateral underlying loans receivable, and the value of the Company's investments in real estate.

Principles of Consolidation. The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, the Bank. All significant intercompany accounts and transactions have been eliminated.

Use of Estimates. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for loan losses, estimated fair values of purchased loans, other-than-temporary impairments (OTTI), and fair value of financial instruments.

7

Cash and Cash Equivalents.For purposes of reporting cash flows, cash and cash equivalents includes cash, due from depository institutions and interest-bearing deposits in other depository institutions with original maturities of three months or less. Interest-bearing deposits in other depository institutions were $6.0 million and $6.7 million at March 31, 2018 and June 30, 2017, respectively. The deposits are held in various commercial banks in amounts not exceeding the FDIC's deposit insurance limits, as well as at the Federal Reserve and the Federal Home Loan Bank of Des Moines.

Interest-bearing Time Deposits.  Interest bearing deposits in banks mature within eight years and are carried at cost, less fair value discounts on acquired time deposits.

Available for Sale Securities.Available for sale securities, which include any security for which the Company has no immediate plan to sell but which may be sold in the future, are carried at fair value. Unrealized gains and losses, net of tax, are reported in accumulated other comprehensive income (loss), a component of stockholders' equity. All securities have been classified as available for sale.

Premiums and discounts on debt securities are amortized or accreted as adjustments to income over the estimated life of the security using the level yield method. Realized gains or losses on the sale of securities is based on the specific identification method. The fair value of securities is based on quoted market prices or dealer quotes. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities.

The Company does not invest in collateralized mortgage obligations that are considered high risk.

When the Company does not intend to sell a debt security, and it is more likely than not the Company will not have to sell the security before recovery of its cost basis, it recognizes the credit component of an other-than-temporary impairment of a debt security in earnings and the remaining portion in other comprehensive income. As a result of this guidance, the Company's consolidated balance sheet as of the dates presented reflects the full impairment (that is, the difference between the security's amortized cost basis and fair value) on debt securities that the Company intends to sell or would more likely than not be required to sell before the expected recovery of the amortized cost basis. For available-for-sale debt securities that management has no intent to sell and believes that it more likely than not will not be required to sell prior to recovery, only the credit loss component of the impairment is recognized in earnings, while the noncredit loss is recognized in accumulated other comprehensive loss. The credit loss component recognized in earnings is identified as the amount of principal cash flows not expected to be received over the remaining term of the security as projected based on cash flow projections.

Federal Home Loan Bank and Federal Reserve Bank Stock. The Bank is a member of the Federal Home Loan Bank (FHLB) system, and the Federal Reserve Bank of St. Louis. Capital stock of the FHLB and the Federal Reserve is a required investment based upon a predetermined formula and is carried at cost.

Loans. Loans are generally stated at unpaid principal balances, less the allowance for loan losses, unamortized discounts on acquired loans, and net deferred loan origination fees.

Interest on loans is accrued based upon the principal amount outstanding. The accrual of interest on loans is discontinued when, in management's judgment, the collectability of interest or principal in the normal course of business is doubtful. The Company complies with regulatory guidance which indicates that loans should be placed in nonaccrual status when 90 days past due, unless the loan is both well-secured and in the process of collection. A loan that is "in the process of collection" may be subject to legal action or, in appropriate circumstances, through other collection efforts reasonably expected to result in repayment or restoration to current status in the near future. A loan is considered delinquent when a payment has not been made by the contractual due date. Interest income previously accrued but not collected at the date a loan is placed on nonaccrual status is reversed against interest income. Cash receipts on a nonaccrual loan are applied to principal and interest in accordance with its contractual terms unless full payment of principal is not expected, in which case cash receipts, whether designated as principal or interest, are applied as a reduction of the carrying value of the loan. A nonaccrual loan is generally returned to accrual status when principal and interest payments are current, full collectability of principal and interest is reasonably assured, and a consistent record of performance has been demonstrated.

The allowance for losses on loans represents management's best estimate of losses probable in the existing loan portfolio. The allowance for losses on loans is increased by the provision for losses on loans charged to expense and reduced by loans charged off, net of recoveries. Loans are charged off in the period deemed uncollectible, based on

8

management's analysis of expected cash flows (for non-collateral dependent loans) or collateral value (for collateral-dependent loans). Subsequent recoveries of loans previously charged off, if any, are credited to the allowance when received. The provision for losses on loans is determined based on management's assessment of several factors: reviews and evaluations of specific loans, changes in the nature and volume of the loan portfolio, current economic conditions and the related impact on specific borrowers and industry groups, historical loan loss experience, the level of classified and nonperforming loans and the results of regulatory examinations.

Loans are considered impaired if, 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. Depending on a particular loan's circumstances, we measure impairment of a loan based upon either the present value of expected future cash flows discounted at the loan's effective interest rate, the loan's observable market price, or the fair value of the collateral less estimated costs to sell if the loan is collateral dependent. Valuation allowances are established for collateral-dependent impaired loans for the difference between the loan amount and fair value of collateral less estimated selling costs. For impaired loans that are not collateral dependent, a valuation allowance is established for the difference between the loan amount and the present value of expected future cash flows discounted at the historical effective interest rate or the observable market price of the loan. Impairment losses are recognized through an increase in the required allowance for loan losses. Cash receipts on loans deemed impaired are recorded based on the loan's separate status as a nonaccrual loan or an accrual status loan.

Some loans are accounted for in accordance with ASC 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality. For these loans ("purchased credit impaired loans"), the Company recorded a fair value discount and began carrying them at book value less their face amount (see Note 4). For these loans, we determined the contractual amount and timing of undiscounted principal and interest payments (the "undiscounted contractual cash flows"), and estimated the amount and timing of undiscounted expected principal and interest payments, including expected prepayments (the "undiscounted expected cash flows"). Under acquired impaired loan accounting, the difference between the undiscounted contractual cash flows and the undiscounted expected cash flows is the nonaccretable difference. The nonaccretable difference is an estimate of the loss exposure of principal and interest related to the purchased credit impaired loans, and the amount is subject to change over time based on the performance of the loans. The carrying value of purchased credit impaired loans is initially determined as the discounted expected cash flows. The excess of expected cash flows at acquisition over the initial fair value of the purchased credit impaired loans is referred to as the "accretable yield" and is recorded as interest income over the estimated life of the acquired loans using the level-yield method, if the timing and amount of the future cash flows is reasonably estimable. The carrying value of purchased credit impaired loans is reduced by payments received, both principal and interest, and increased by the portion of the accretable yield recognized as interest income. Subsequent to acquisition, the Company evaluates the purchased credit impaired loans on a quarterly basis. Increases in expected cash flows compared to those previously estimated increase the accretable yield and are recognized as interest income prospectively. Decreases in expected cash flows compared to those previously estimated decrease the accretable yield and may result in the establishment of an allowance for loan losses and a provision for loan losses. Purchased credit impaired loans are generally considered accruing and performing loans, as the loans accrete interest income over the estimated life of the loan when expected cash flows are reasonably estimable. Accordingly, purchased credit impaired loans that are contractually past due are still considered to be accruing and performing as long as there is an expectation that the estimated cash flows will be received. If the timing and amount of cash flows is not reasonably estimable, the loans may be classified as nonaccrual loans.

Loan fees and certain direct loan origination costs are deferred, and the net fee or cost is recognized as an adjustment to interest income using the interest method over the contractual life of the loans.

Foreclosed Real Estate. Real estate acquired by foreclosure or by deed in lieu of foreclosure is initially recorded at fair value less estimated selling costs. Costs for development and improvement of the property are capitalized.

Valuations are periodically performed by management, and an allowance for losses is established by a charge to operations if the carrying value of a property exceeds its estimated fair value, less estimated selling costs.

Loans to facilitate the sale of real estate acquired in foreclosure are discounted if made at less than market rates. Discounts are amortized over the fixed interest period of each loan using the interest method.

Premises and Equipment. Premises and equipment are stated at cost less accumulated depreciation and include expenditures for major betterments and renewals. Maintenance, repairs, and minor renewals are expensed as incurred. When property is retired or sold, the retired asset and related accumulated depreciation are removed from

9

the accounts and the resulting gain or loss taken into income. The Company reviews property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If such assets are considered to be impaired, the impairment loss recognized is measured by the amount by which the carrying amount exceeds the fair value of the assets.

Depreciation is computed by use of straight-line and accelerated methods over the estimated useful lives of the assets. Estimated lives are generally seven to forty years for premises, three to seven years for equipment, and three years for software.

Bank Owned Life Insurance. Bank owned life insurance policies are reflected in the consolidated balance sheets at the estimated cash surrender value.  Changes in the cash surrender value of these policies, as well as a portion of the insurance proceeds received, are recorded in noninterest income in the consolidated statements of income.

Goodwill. The Company's goodwill is evaluated annually for impairment or more frequently if impairment indicators are present.  A qualitative assessment is performed to determine whether the existence of events or circumstances leads to a determination that it is more likely than not the fair value is less than the carrying amount, including goodwill.  If, based on the evaluation, it is determined to be more likely than not that the fair value is less than the carrying value, then goodwill is tested further for impairment.  If the implied fair value of goodwill is lower than its carrying amount, a goodwill impairment is indicated and goodwill is written down to its implied fair value.  Subsequent increases in goodwill value are not recognized in the financial statements.

Intangible Assets.  The Company's intangible assets at March 31, 2018 included gross core deposit intangibles of $10.6 million with $4.8 million accumulated amortization, gross other identifiable intangibles of $3.8 million with accumulated amortization of $3.8 million, and FHLB mortgage servicing rights of $1.4 million.  At June 30, 2017, the Company's intangible assets included gross core deposit intangibles of $9.2 million with $3.8 million accumulated amortization, gross other identifiable intangibles of $3.8 million with accumulated amortization of $3.8 million, and FHLB mortgage servicing rights of $1.3 million. The Company's core deposit intangible assets are being amortized using the straight line method, over periods ranging from five to seven years, with amortization expense expected to be approximately $396,000 in the remainder of fiscal 2018, $1.3 million in fiscal 2019, $1.2 million in fiscal 2020, $716,000 in fiscal 2021, $674,000 in fiscal 2022, and $1.5 million thereafter.

Income Taxes. The Company accounts for income taxes in accordance with income tax accounting guidance (ASC 740, Income Taxes). The income tax accounting guidance results in two components of income tax expense: current and deferred. Current income tax expense reflects taxes to be paid or refunded for the current period by applying the provisions of the enacted tax law to the taxable income or excess of deductions over revenues. The Company determines deferred income taxes using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is based on the tax effects of the differences between the book and tax bases of assets and liabilities, and enacted changes in tax rates and laws are recognized in the period in which they occur.

Deferred income tax expense results from changes in deferred tax assets and liabilities between periods. Deferred tax assets are recognized if it is more likely than not, based on the technical merits, that the tax position will be realized or sustained upon examination. The term more likely than not means a likelihood of more than 50 percent; the terms examined and upon examination also include resolution of the related appeals or litigation processes, if any. A tax position that meets the more-likely-than-not recognition threshold is initially and subsequently measured as the largest amount of tax benefit that has a greater than 50 percent likelihood of being realized upon settlement with a taxing authority that has full knowledge of all relevant information. The determination of whether or not a tax position has met the more-likely-than-not recognition threshold considers the facts, circumstances, and information available at the reporting date and is subject to management's judgment. Deferred tax assets are reduced by a valuation allowance if, based on the weight of evidence available, it is more likely than not that some portion or all of a deferred tax asset will not be realized.

The Company recognizes interest and penalties on income taxes as a component of income tax expense.

The Company files consolidated income tax returns with its subsidiaries.

Incentive Plan.The Company accounts for its Equity Incentive Plan (EIP) and Omnibus Incentive Plan (OIP) in accordance with ASC 718, "Share-Based Payment." Compensation expense is based on the market price of the Company's stock on the date the shares are granted and is recorded over the vesting period. The difference between the aggregate purchase price and the fair value on the date the shares are considered earned represents a tax benefit to the Company that is recorded as an adjustment to income tax expense.

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Outside Directors' Retirement.The Bank has entered into a retirement agreement with most outside directors since April 1994. The directors' retirement agreements provide that non-employee directors shall receive, upon termination of service on the Board on or after age 60, other than termination for cause, a benefit in equal annual installments over a five year period. The benefit will be based upon the product of the participant's vesting percentage and the total Board fees paid to the participant during the calendar year preceding termination of service on the Board. The vesting percentage shall be determined based upon the participant's years of service on the Board, whether before or after the reorganization date.

In the event that the participant dies before collecting any or all of the benefits, the Bank shall pay the participant's beneficiary. No benefits shall be payable to anyone other than the beneficiary, and shall terminate on the death of the beneficiary.

Stock Options. Compensation cost is measured based on the grant-date fair value of the equity instruments issued, and recognized over the vesting period during which an employee provides service in exchange for the award.

Earnings Per Share.Basic earnings per share available to common stockholders is computed using the weighted-average number of common shares outstanding. Diluted earnings per share available to common stockholders includes the effect of all weighted-average dilutive potential common shares (stock options and warrants) outstanding during each period.

Comprehensive Income. Comprehensive income consists of net income and other comprehensive income, net of applicable income taxes. Other comprehensive income includes unrealized appreciation (depreciation) on available-for-sale securities, unrealized appreciation (depreciation) on available-for-sale securities for which a portion of an other-than-temporary impairment has been recognized in income, and changes in the funded status of defined benefit pension plans.

Transfers Between Fair Value Hierarchy Levels.  Transfers in and out of Level 1 (quoted market prices), Level 2 (other significant observable inputs) and Level 3 (significant unobservable inputs) are recognized on the period ending date.

The following paragraphs summarize the impact of new accounting pronouncements:

In February 2018, the FASB issued ASU 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220):  Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.  This ASU provides financial statement preparers with an option to reclassify stranded tax effects within AOCI to retained earnings in each period in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act (or portion thereof) are recorded. This standard is effective for all organizations for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The Company elected to early adopt ASU 2018-02 and, as a result, reclassified $65,497 from accumulated other comprehensive income to retained earnings as of December 31, 2017.

In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Subtopic 718): Scope of Modification Accounting.  The amendments in ASU 2017-09 provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718.  Under the new guidance, an entity should account for the effects of a modification unless all of the following are the same immediately before and after the change: (1) the fair value of the modified award, (2) the vesting conditions of the modified award, and (3) the classification of the modified award as either an equity or liability instrument.  ASU 2017-09 is effective for the fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, and should be applied prospectively to awards modified on or after the adoption date.  Management does not expect the adoption of this guidance to have a material impact on the Company's consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash payments.  The Update provides guidance on how certain cash receipts and payments are presented and classified in the statement of cash flows, with the objective of reducing the diversity in practice.  The Update addresses eight specific cash flow issues.  For public companies, the ASU is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, and should be applied retrospectively.  Management is evaluating the impact of the new guidance, but does not expect the adoption of this guidance to have a material impact on the Company's consolidated financial statements.

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In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326).  The Update amends guidance on reporting credit losses for assets held at amortized cost basis and available for sale debt securities. For assets held at amortized cost basis, Topic 326 eliminates the probable initial recognition threshold in current GAAP and, instead, requires an entity to reflect its current estimate of all expected credit losses. The Update affects loans, debt securities, trade receivables, net investments in leases, off balance sheet credit exposures, and any other financial assets not excluded from the scope that have the contractual right to receive cash.  For public companies, the ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.  Early adoption is available beginning after December 15, 2018, including interim periods within those fiscal years. Adoption will be applied on a modified retrospective basis, through a cumulative-effect adjustment to retained earnings. Management is evaluating the impact, if any, this new guidance will have on the Company's consolidated financial statements, but cannot yet reasonably estimate the impact of adoption.  The Company has formed a working group of key personnel responsible for the allowance for loan losses estimate and has initiated its evaluation of the data and systems requirements of adoption of the Update.  The group has determined that purchasing third party software will be the most effective method to comply with the requirements, and has evaluated several outside vendors.  The group expects to provide a recommendation of which software would work best for the Company before the end of this fiscal year, June 30, 2018.

In February 2016, the FASB issued ASU 2016-02, "Leases," to revise the accounting related to lease accounting.  Under the new guidance, a lessee is required to record a right-of-use (ROU) asset and a lease liability on the balance sheet for all leases with terms longer than 12 months.   The ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.  Adoption of the standard requires the use of a modified retrospective transition approach for all periods presented at the time of adoption.  Management is evaluating the impact of the new guidance, but does not expect the adoption of this guidance to have a material impact on the Company's consolidated financial statements.

In January 2016, the FASB issued ASU 2016-01, "Recognition and Measurement of Financial Assets and Financial Liabilities," to generally require equity investments be measured at fair value with changes in fair value recognized in net income, simplify the impairment assessment of equity investments without readily-determinable fair value, and change disclosure and presentation requirements regarding financial instruments and other comprehensive income, and clarify that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity's other deferred tax assets. In February 2018, the FASB issued ASU 2018-03, Technical Corrections and Improvements to Financial Instruments – Overall (Subtopic 825-10).  The amendments in ASU 2018-03 make technical corrections to certain aspects of ASU 2016-01 on recognition of financial assets and financial liabilities.  For public entities, the guidance in ASU 2016-01 and amendments in ASU 2018-03 are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Management is evaluating the new guidance, but does not expect the adoption of this guidance to have a material impact on the Company's consolidated financial statements.

In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606):  Deferral of the Effective Date, which deferred the effective date of ASU 2014-09.  In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606): Summary and Amendments that Create Revenue from Contracts with Customers (Topic 606) and Other Assets and Deferred Costs—Contracts with Customers (Subtopic 340-40). The guidance in ASU 2014-09 supersedes the revenue recognition requirements in ASC Topic 605, Revenue Recognition, and most industry-specific guidance throughout the industry topics of the codification.  In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, to clarify two aspects of Topic 606- performance obligations and the licensing implementation guidance.  Neither of the two updates changed the core principle of the guidance in Topic 606.  In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers (Topic 606), to provide narrow-scope improvements and practical expedients to ASU 2015-14.  For public companies, the original Update was to be effective for interim and annual periods beginning after December 15, 2016.  The current ASU states that the provisions of ASU 2014-09 should be applied to annual reporting periods, including interim periods, beginning after December 15, 2017.  The Company does not expect the new standard to result in a material change to our accounting for revenue because the majority of our financial instruments are not within the scope of Topic 606, however, it may result in new disclosure requirements.

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Note 3:  Securities

The amortized cost, gross unrealized gains, gross unrealized losses, and approximate fair value of securities available for sale consisted of the following:

	March 31, 2018
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Fair
(dollars in thousands)	Cost		Gains		Losses			Value
Investment and mortgage backed securities:
U.S. government-sponsored enterprises (GSEs)	$	11,504	$	-	$	(120	)	$	11,384
State and political subdivisions		51,457		395		(555	)		51,297
Other securities		5,291		76		(235	)		5,132
Mortgage-backed: GSE residential		80,313		1		(2,000	)		78,314
Total investments and mortgage-backed securities	$	148,565	$	472	$	(2,910	)	$	146,127

	June 30, 2017
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Fair
(dollars in thousands)	Cost		Gains		Losses			Value
Investment and mortgage backed securities:
U.S. government-sponsored enterprises (GSEs)	$	10,433	$	17	$	(12	)	$	10,438
State and political subdivisions		49,059		1,046		(127	)		49,978
Other securities		6,017		306		(598	)		5,725
Mortgage-backed GSE residential		78,088		490		(303	)		78,275
Total investments and mortgage-backed securities	$	143,597	$	1,859	$	(1,040	)	$	144,416

The amortized cost and estimated fair value of investment and mortgage-backed securities, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without penalties.

	March 31, 2018
	Amortized		Estimated
(dollars in thousands)	Cost		Fair Value
Within one year	$	4,762	$	4,759
After one year but less than five years		20,065		19,944
After five years but less than ten years		23,277		23,243
After ten years		20,148		19,867
Total investment securities		68,252		67,813
Mortgage-backed securities		80,313		78,314
Total investments and mortgage-backed securities	$	148,565	$	146,127

The carrying value of investment and mortgage-backed securities pledged as collateral to secure public deposits and securities sold under agreements to repurchase amounted to $116.1 million at March 31, 2018 and $114.1 million at June 30, 2017.  The securities pledged consist of marketable securities, including $7.4 million and $6.5 million of U.S. Government and Federal Agency Obligations, $40.8 million and $50.5 million of Mortgage-Backed Securities, $28.3 million and $19.9 million of Collateralized Mortgage Obligations, $39.2 million and $36.8 million of State and Political Subdivisions Obligations, and $400,000 and $400,000 of Other Securities at March 31, 2018 and June 30, 2017, respectively.

Gains of $344,391 and $395,843 were recognized from sales of available-for-sale securities in the three- and nine- month periods ended March 31, 2018.  Losses of $ 89,996 and $104,341 were recognized from sales of available-for-sale securities in the three- and nine- month periods ended March 31, 2018.  There were no sales of available-for-sale securities in the three- and nine- month periods ended March 31, 2017.

The following tables show our investments' gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at March 31, 2018 and June 30, 2017:

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	March 31, 2018
	Less than 12 months				12 months or more				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
(dollars in thousands)
U.S. government-sponsored enterprises (GSEs)	$	7,943	$	65	$	2,443	$	55	$	10,386	$	120
Obligations of state and political subdivisions		19,157		292		8,215		263		27,372		555
Other securities		985		7		1,069		228		2,054		235
Mortgage-backed securities		57,193		1,185		21,015		815		78,208		2,000
Total investments and mortgage-backed securities	$	85,278	$	1,549	$	32,742	$	1,361	$	118,020	$	2,910

	June 30, 2017
	Less than 12 months				12 months or more				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
(dollars in thousands)
U.S. government-sponsored enterprises (GSEs)	$	6,457	$	12	$	-	$	-	$	6,457	$	12
Obligations of state and political subdivisions		12,341		127		256		-		12,597		127
Other securities		-		-		1,160		598		1,160		598
Mortgage-backed securities		29,836		267		2,285		36		32,121		303
Total investments and mortgage-backed securities	$	48,634	$	406	$	3,701	$	634	$	52,335	$	1,040

Other securities.  At March 31, 2018, there were two pooled trust preferred securities with an estimated fair value of $750,000 and unrealized losses of $221,000 in a continuous unrealized loss position for twelve months or more. These unrealized losses were primarily due to the long-term nature of the pooled trust preferred securities and a reduced demand for these securities, and concerns regarding the financial institutions that issued the underlying trust preferred securities. Rules adopted by the federal banking agencies in December 2013 to implement Section 619 of the Dodd-Frank Act (the "Volcker Rule") generally prohibit banking entities from engaging in proprietary trading and from investing in, sponsoring, or having certain relationships with a hedge fund or private equity fund. The pooled trust preferred securities owned by the Company were included in a January 2014 listing of securities which the agencies considered to be grandfathered with regard to these prohibitions; as such, banking entities are permitted to retain their interest in these securities, provided the interest was acquired on or before December 10, 2013, unless acquired pursuant to a merger or acquisition.

The March 31, 2018, cash flow analysis for these two securities indicated it is probable the Company will receive all contracted principal and related interest projected. The cash flow analysis used in making this determination was based on anticipated default, recovery, and prepayment rates, and the resulting cash flows were discounted based on the yield spread anticipated at the time the securities were purchased. Other inputs include the actual collateral attributes, which include credit ratings and other performance indicators of the underlying financial institutions, including profitability, capital ratios, and asset quality. Assumptions for these two securities included annualized prepayments of 1.4 to 1.6 percent; no recoveries on currently deferred issuers; new deferrals of 40 to 50 basis points annually; and eventual recoveries of nine percent of new deferrals.

One of these two securities has continued to receive cash interest payments in full since our purchase; the other security received principal-in-kind (PIK), in lieu of cash interest, for a period of time following the recession and financial crisis which began in 2008, but resumed cash interest payments during fiscal 2014. Our cash flow analysis indicates that cash interest payments are expected to continue for the securities. Because the Company does not intend to sell these securities and it is not more-likely-than-not that the Company will be required to sell these securities prior to recovery of their amortized cost basis, which may be maturity, the Company does not consider these investments to be other-than-temporarily impaired at March 31, 2018.

The Company does not believe any other individual unrealized loss as of March 31, 2018, represents OTTI. However, the Company could be required to recognize OTTI losses in future periods with respect to its available for sale investment securities portfolio. The amount and timing of any additional OTTI will depend on the decline in the underlying cash flows of the securities. Should the impairment of any of these securities become other-than-temporary, the cost basis of the investment will be reduced and the resulting loss recognized in the period the other-than-temporary impairment is identified.

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Credit losses recognized on investments. As described above, one of the Company's investments in trust preferred securities experienced fair value deterioration due to credit losses, but is not otherwise other-than-temporarily impaired. During fiscal 2009, the Company adopted ASC 820, formerly FASB Staff Position 157-4, "Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly."  The following table provides information about the trust preferred security for which only a credit loss was recognized in income and other losses are recorded in other comprehensive income (loss) for the nine-month periods ended March 31, 2018 and 2017.

	Accumulated Credit Losses
	Nine-Month Period Ended
(dollars in thousands)	March 31,
	2018			2017
Credit losses on debt securities held
Beginning of period	$	340		$	352
Additions related to OTTI losses not previously recognized		-			-
Reductions due to sales		(333	)		-
Reductions due to change in intent or likelihood of sale		-			-
Additions related to increases in previously-recognized OTTI losses		-			-
Reductions due to increases in expected cash flows		(7	)		(9	)
End of period	$	-		$	343

Note 4:  Loans and Allowance for Loan Losses

Classes of loans are summarized as follows:

(dollars in thousands)	March 31, 2018			June 30, 2017
Real Estate Loans:
Residential	$	457,825		$	442,463
Construction		115,589			106,782
Commercial		693,606			603,922
Consumer loans		71,941			63,651
Commercial loans		255,317			247,184
		1,594,278			1,464,002
Loans in process		(54,571	)		(50,740	)
Deferred loan fees, net		1			6
Allowance for loan losses		(17,263	)		(15,538	)
Total loans	$	1,522,445		$	1,397,730

The Company's lending activities consist of origination of loans secured by mortgages on one- to four-family residences and commercial and agricultural real estate, construction loans on residential and commercial properties, commercial and agricultural business loans and consumer loans. The Company has also occasionally purchased loan participation interests originated by other lenders and secured by properties generally located in the states of Missouri and Arkansas.

Residential Mortgage Lending.  The Company actively originates loans for the acquisition or refinance of one- to four-family residences.  This category includes both fixed-rate and adjustable-rate mortgage ("ARM") loans amortizing over periods of up to 30 years, and the properties securing such loans may be owner-occupied or non-owner-occupied.  Single-family residential loans do not generally exceed 90% of the lower of the appraised value or purchase price of the secured property.  Substantially all of the one- to four-family residential mortgage originations in the Company's portfolio are located within the Company's primary lending area.

The Company also originates loans secured by multi-family residential properties that are often located outside the Company's primary lending area but made to borrowers who operate within the primary market area.  The majority of the multi-family residential loans that are originated by the Bank are amortized over periods generally up to 25 years, with balloon maturities typically up to ten years. Both fixed and adjustable interest rates are offered and it is typical for the Company to include an interest rate "floor" and "ceiling" in the loan agreement. Generally, multi-family residential loans do not exceed 85% of the lower of the appraised value or purchase price of the secured property.

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Commercial Real Estate Lending. The Company actively originates loans secured by commercial real estate including land (improved, unimproved, and farmland), strip shopping centers, retail establishments and other businesses. These properties are typically owned and operated by borrowers headquartered within the Company's primary lending area, however, the property may be located outside our primary lending area.

Most commercial real estate loans originated by the Company are based on amortization schedules of up to 25 years with monthly principal and interest payments. Generally, the interest rate received on these loans is fixed for a maturity for up to seven years, with a balloon payment due at maturity. Alternatively, for some loans, the interest rate adjusts at least annually after an initial period up to seven years. The Company typically includes an interest rate "floor" in the loan agreement. Generally, improved commercial real estate loan amounts do not exceed 80% of the lower of the appraised value or the purchase price of the secured property. Agricultural real estate terms offered differ slightly, with amortization schedules of up to 25 years with an 80% loan-to-value ratio, or 30 years with a 75% loan-to-value ratio.

Construction Lending. The Company originates real estate loans secured by property or land that is under construction or development. Construction loans originated by the Company are generally secured by mortgage loans for the construction of owner occupied residential real estate or to finance speculative construction secured by residential real estate, land development, or owner-operated or non-owner occupied commercial real estate. During construction, these loans typically require monthly interest-only payments and have maturities ranging from six to twelve months. Once construction is completed, loans may be converted to permanent status with monthly payments using amortization schedules of up to 30 years on residential and generally up to 25 years on commercial real estate.

While the Company typically utilizes maturity periods ranging from 6 to 12 months to closely monitor the inherent risks associated with construction loans for these loans, weather conditions, change orders, availability of materials and/or labor, and other factors may contribute to the lengthening of a project, thus necessitating the need to renew the construction loan at the balloon maturity.  Such extensions are typically executed in incremental three month periods to facilitate project completion.  The Company's average term of construction loans is approximately eight months.  During construction, loans typically require monthly interest only payments which may allow the Company an opportunity to monitor for early signs of financial difficulty should the borrower fail to make a required monthly payment.  Additionally, during the construction phase, the Company typically obtains interim inspections completed by an independent third party.  This monitoring further allows the Company opportunity to assess risk.  At March 31, 2018 construction loans outstanding included 62 loans, totaling $12.4 million, for which a modification had been agreed to.  At June 30, 2017, construction loans outstanding included 50 loans, totaling $10.3 million, for which a modification had been agreed to. All modifications were solely for the purpose of extending the maturity date due to conditions described above.  None of these modifications were executed due to financial difficulty on the part of the borrower and, therefore, were not accounted for as TDRs.

Consumer Lending. The Company offers a variety of secured consumer loans, including home equity, direct and indirect automobile loans, second mortgages, mobile home loans and loans secured by deposits. The Company originates substantially all of its consumer loans in its primary lending area. Usually, consumer loans are originated with fixed rates for terms of up to five years, with the exception of home equity lines of credit, which are variable, tied to the prime rate of interest and are for a period of ten years.

Home equity lines of credit (HELOCs) are secured with a deed of trust and are issued up to 100% of the appraised or assessed value of the property securing the line of credit, less the outstanding balance on the first mortgage and are typically issued for a term of ten years. Interest rates on the HELOCs are generally adjustable. Interest rates are based upon the loan-to-value ratio of the property with better rates given to borrowers with more equity.

Automobile loans originated by the Company include both direct loans and a smaller amount of loans originated by auto dealers. The Company generally pays a negotiated fee back to the dealer for indirect loans. Typically, automobile loans are made for terms of up to 60 months for new and used vehicles. Loans secured by automobiles have fixed rates and are generally made in amounts up to 100% of the purchase price of the vehicle.

Commercial Business Lending. The Company's commercial business lending activities encompass loans with a variety of purposes and security, including loans to finance accounts receivable, inventory, equipment and operating lines of credit, including agricultural production and equipment loans. The Company offers both fixed and adjustable rate commercial business loans. Generally, commercial loans secured by fixed assets are amortized over periods up to five years, while commercial operating lines of credit or agricultural production lines are generally for a one year period.

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The following tables present the balance in the allowance for loan losses and the recorded investment in loans (excluding loans in process and deferred loan fees) based on portfolio segment and impairment methods as of March 31, 2018 and June 30, 2017, and activity in the allowance for loan losses for the three- and nine-month periods ended March 31, 2018 and 2017:

	At period end and for the nine months ended March 31, 2018
	Residential			Construction			Commercial
(dollars in thousands)	Real Estate			Real Estate			Real Estate			Consumer			Commercial			Total
Allowance for loan losses:
Balance, beginning of period	$	3,230		$	964		$	7,068		$	757		$	3,519		$	15,538
Provision charged to expense		(110	)		(15	)		1,627			169			389			2,060
Losses charged off		(170	)		-			(41	)		(118	)		(22	)		(351	)
Recoveries		2			-			1			6			7			16
Balance, end of period	$	2,952		$	949		$	8,655		$	814		$	3,893		$	17,263
Ending Balance: individually             evaluated for impairment	$	-		$	-		$	410		$	-		$	340		$	750
Ending Balance: collectively             evaluated for impairment	$	2,952		$	949		$	8,245		$	814		$	3,553		$	16,513
Ending Balance: loans acquired             with deteriorated credit quality	$	-		$	-		$	-		$	-		$	-		$	-
Loans:
Ending Balance: individually             evaluated for impairment	$	-		$	-		$	699		$	-		$	580		$	1,279
Ending Balance: collectively             evaluated for impairment	$	454,614		$	59,715		$	685,282		$	71,941		$	252,271		$	1,523,823
Ending Balance: loans acquired             with deteriorated credit quality	$	3,211		$	1,303		$	7,625		$	-		$	2,466		$	14,605

	For the three months ended March 31, 2018
	Residential			Construction		Commercial
(dollars in thousands)	Real Estate			Real Estate		Real Estate			Consumer			Commercial			Total
Allowance for loan losses:
Balance, beginning of period	$	3,286		$	886	$	8,303		$	828		$	3,564		$	16,867
Provision charged to expense		(243	)		63		356			44			330			550
Losses charged off		(92	)		-		(6	)		(60	)		(1	)		(159	)
Recoveries		1			-		2			2			-			5
Balance, end of period	$	2,952		$	949	$	8,655		$	814		$	3,893		$	17,263

	At period end and for the nine months ended March 31, 2017
	Residential			Construction			Commercial
(dollars in thousands)	Real Estate			Real Estate			Real Estate			Consumer			Commercial			Total
Allowance for loan losses:
Balance, beginning of period	$	3,247		$	1,091		$	5,711		$	738		$	3,004		$	13,791
Provision charged to expense		246			(162	)		1,405			16			452			1,957
Losses charged off		(201	)		(31	)		(4	)		(50	)		(337	)		(623	)
Recoveries		7			1			18			9			30			65
Balance, end of period	$	3,299		$	899		$	7,130		$	713		$	3,149		$	15,190
Ending Balance: individually             evaluated for impairment	$	-		$	-		$	-		$	-		$	-		$	-
Ending Balance: collectively             evaluated for impairment	$	3,299		$	899		$	7,130		$	713		$	3,149		$	15,190
Ending Balance: loans acquired             with deteriorated credit quality	$	-		$	-		$	-		$	-		$	-		$	-

17

	For the three months ended March 31, 2017
	Residential			Construction		Commercial
(dollars in thousands)	Real Estate			Real Estate		Real Estate			Consumer			Commercial			Total
Allowance for loan losses:
Balance, beginning of period	$	3,472		$	891	$	6,851		$	756		$	3,022		$	14,992
Provision charged to expense		(70	)		8		280			(35	)		193			376
Losses charged off		(104	)		-		(4	)		(11	)		(67	)		(186	)
Recoveries		1			-		3			3			1			8
Balance, end of period	$	3,299		$	899	$	7,130		$	713		$	3,149		$	15,190

	At June 30, 2017
	Residential		Construction		Commercial
(dollars in thousands)	Real Estate		Real Estate		Real Estate		Consumer		Commercial		Total
Allowance for loan losses:
Balance, end of period	$	3,230	$	964	$	7,068	$	757	$	3,519	$	15,538
Ending Balance: individually             evaluated for impairment	$	-	$	-	$	-	$	-	$	-	$	-
Ending Balance: collectively             evaluated for impairment	$	3,230	$	964	$	7,068	$	757	$	3,519	$	15,538
Ending Balance: loans acquired             with deteriorated credit quality	$	-	$	-	$	-	$	-	$	-	$	-
Loans:
Ending Balance: individually             evaluated for impairment	$	-	$	-	$	-	$	-	$	-	$	-
Ending Balance: collectively             evaluated for impairment	$	438,981	$	54,704	$	592,427	$	63,651	$	243,369	$	1,393,132
Ending Balance: loans acquired             with deteriorated credit quality	$	3,482	$	1,338	$	11,495	$	-	$	3,815	$	20,130

Management's opinion as to the ultimate collectability of loans is subject to estimates regarding future cash flows from operations and the value of property, real and personal, pledged as collateral. These estimates are affected by changing economic conditions and the economic prospects of borrowers.

The allowance for loan losses is maintained at a level that, in management's judgment, is adequate to cover probable credit losses inherent in the loan portfolio at the balance sheet date. 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 an amount is determined to be uncollectible, based on management's analysis of expected cash flow (for non-collateral-dependent loans) or collateral value (for collateral-dependent loans). Subsequent recoveries, if any, are credited to the allowance.

The allowance for loan losses is evaluated on a regular basis by management and is based upon management's periodic review of the collectability of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower's ability to repay, estimated value of any underlying collateral and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.

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

Under the Company's methodology, loans are first segmented into 1) those comprising large groups of smaller-balance homogeneous loans, including single-family mortgages and installment loans, which are collectively evaluated for impairment, and 2) all other loans which are individually evaluated. Those loans in the second category are further segmented utilizing a defined grading system which involves categorizing loans by severity of risk based on conditions that may affect the ability of the borrowers to repay their debt, such as current financial information, collateral valuations, historical payment experience, credit documentation, public information, and current trends.

18

The loans subject to credit classification represent the portion of the portfolio subject to the greatest credit risk and where adjustments to the allowance for losses on loans as a result of provision and charge offs are most likely to have a significant impact on operations.

A periodic review of selected credits (based on loan size and type) is conducted to identify loans with heightened risk or probable losses and to assign risk grades.  The primary responsibility for this review rests with loan administration personnel.  This review is supplemented with periodic examinations of both selected credits and the credit review process by the Company's internal audit function and applicable regulatory agencies.  The information from these reviews assists management in the timely identification of problems and potential problems and provides a basis for deciding whether the credit represents a probable loss or risk that should be recognized.

The Company considers, as the primary quantitative factor in its allowance methodology, average net charge offs over the most recent twelve-month period.  The Company also reviews average net charge offs over the most recent five-year period.

A loan is considered impaired when, based on current information and events, it is probable that the scheduled payments of principal or interest will not be able to be collected when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower's prior payment record and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan-by-loan basis for commercial and agricultural loans by either the present value of expected future cash flows discounted at the loan's effective interest rate, the loan's obtainable market price or the fair value of the collateral if the loan is collateral dependent.

Groups of loans with similar risk characteristics are collectively evaluated for impairment based on the group's historical loss experience adjusted for changes in trends, conditions and other relevant factors that affect repayment of the loans. Accordingly, individual consumer and residential loans are not separately identified for impairment measurements, unless such loans are the subject of a restructuring agreement due to financial difficulties of the borrower.

The general component covers non-impaired loans and is based on quantitative and qualitative factors. The loan portfolio is stratified into homogeneous groups of loans that possess similar loss characteristics and an appropriate loss ratio adjusted for qualitative factors is applied to the homogeneous pools of loans to estimate the incurred losses in the loan portfolio.

Included in the Company's loan portfolio are certain loans accounted for in accordance with ASC 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality. These loans were written down at acquisition to an amount estimated to be collectible. As a result, certain ratios regarding the Company's loan portfolio and credit quality cannot be used to compare the Company to peer companies or to compare the Company's current credit quality to prior periods. The ratios particularly affected by accounting under ASC 310-30 include the allowance for loan losses as a percentage of loans, nonaccrual loans, and nonperforming assets, and nonaccrual loans and nonperforming loans as a percentage of total loans.

The following tables present the credit risk profile of the Company's loan portfolio (excluding loans in process and deferred loan fees) based on rating category and payment activity as of March 31, 2018 and June 30, 2017. These tables include purchased credit impaired loans, which are reported according to risk categorization after acquisition based on the Company's standards for such classification:

	March 31, 2018
	Residential		Construction		Commercial
(dollars in thousands)	Real Estate		Real Estate		Real Estate		Consumer		Commercial
Pass	$	450,857	$	60,984	$	679,521	$	71,722	$	251,426
Watch		4,305		-		7,261		118		436
Special Mention		146		-		932		29		74
Substandard		2,517		34		5,193		72		2,199
Doubtful		-		-		699		-		1,182
Total	$	457,825	$	61,018	$	693,606	$	71,941	$	255,317

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	June 30, 2017
	Residential		Construction		Commercial
(dollars in thousands)	Real Estate		Real Estate		Real Estate		Consumer		Commercial
Pass	$	438,222	$	55,825	$	588,385	$	63,320	$	240,864
Watch		772		-		9,253		123		2,003
Special Mention		148		-		926		30		84
Substandard		3,321		217		5,358		178		3,631
Doubtful		-		-		-		-		602
Total	$	442,463	$	56,042	$	603,922	$	63,651	$	247,184

The above amounts include purchased credit impaired loans. At March 31, 2018, purchased credit impaired loans comprised $8.1 million of credits rated "Pass"; $3.1 million of credits rated "Watch"; none rated "Special Mention"; $3.4 million of credits rated "Substandard"; and none rated "Doubtful". At June 30, 2017,  purchased credit impaired loans accounted for $10.2 million of credits rated "Pass"; $5.0 million of credits  rated "Watch"; none rated "Special Mention"; $4.9 million of credits rated "Substandard"; and none rated "Doubtful".

Credit Quality Indicators.  The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends among other factors.  The Company analyzes loans individually by classifying the loans as to credit risk.  This analysis is performed on all loans at origination, and is updated on a quarterly basis for loans risk rated Special Mention, Substandard, or Doubtful.  In addition, lending relationships of $1 million or more, exclusive of any consumer or owner-occupied residential loan, are subject to an annual credit analysis which is prepared by the loan administration department and presented to a loan committee with appropriate lending authority. A sample of lending relationships in excess of $2.5 million are subject to an independent loan review annually, in order to verify risk ratings.  The Company uses the following definitions for risk ratings:

Watch – Loans classified as watch exhibit weaknesses that require more than usual monitoring. Issues may include deteriorating financial condition, payments made after due date but within 30 days, adverse industry conditions or management problems.

Special Mention – Loans classified as special mention exhibit signs of further deterioration but still generally make payments within 30 days. This is a transitional rating and loans should typically not be rated Special Mention for more than 12 months.

Substandard – Loans classified as substandard possess weaknesses that jeopardize the ultimate collection of the principal and interest outstanding. These loans exhibit continued financial losses, ongoing delinquency, overall poor financial condition, and insufficient collateral. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful – Loans classified as doubtful have all the weaknesses of substandard loans, and have deteriorated to the level that there is a high probability of substantial loss.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be Pass rated loans.

The following tables present the Company's loan portfolio aging analysis (excluding loans in process and deferred loan fees) as of March 31, 2018 and June 30, 2017.  These tables include purchased credit impaired loans, which are reported according to aging analysis after acquisition based on the Company's standards for such classification:

	March 31, 2018
					Greater Than								Greater Than 90
	30-59 Days		60-89 Days		90 Days		Total				Total Loans		Days Past Due
(dollars in thousands)	Past Due		Past Due		Past Due		Past Due		Current		Receivable		and Accruing
Real Estate Loans:
Residential	$	1,372	$	2,098	$	1,261	$	4,731	$	453,094	$	457,825	$	-
Construction		-		-		-		-		61,018		61,018		-
Commercial		275		769		446		1,490		692,116		693,606		-
Consumer loans		446		62		156		664		71,277		71,941		-
Commercial loans		93		211		34		338		254,979		255,317		-
Total loans	$	2,186	$	3,140	$	1,897	$	7,223	$	1,532,484	$	1,539,707	$	-

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	June 30, 2017
					Greater Than								Greater Than 90
	30-59 Days		60-89 Days		90 Days		Total				Total Loans		Days Past Due
(dollars in thousands)	Past Due		Past Due		Past Due		Past Due		Current		Receivable		and Accruing
Real Estate Loans:
Residential	$	1,491	$	148	$	676	$	2,315	$	440,148	$	442,463	$	59
Construction		35		-		-		35		56,007		56,042		-
Commercial		700		-		711		1,411		602,511		603,922		-
Consumer loans		216		16		134		366		63,285		63,651		13
Commercial loans		144		53		426		623		246,561		247,184		329
Total loans	$	2,586	$	217	$	1,947	$	4,750	$	1,408,512	$	1,413,262	$	401

At March 31, 2018 and June 30, 2017, there were no purchased credit impaired loans that were greater than 90 days past due.

A loan is considered impaired, in accordance with the impairment accounting guidance (ASC 310-10-35-16), when based on current information and events, it is probable the Company will be unable to collect all amounts due from the borrower in accordance with the contractual terms of the loan. Impaired loans include nonperforming loans, as well as performing loans modified in troubled debt restructurings where concessions have been granted to borrowers experiencing financial difficulties. These concessions could include a reduction in the interest rate on the loan, payment extensions, forgiveness of principal, forbearance or other actions intended to maximize collection.

The tables below present impaired loans (excluding loans in process and deferred loan fees) as of March 31, 2018 and June 30, 2017. These tables include purchased credit impaired loans. Purchased credit impaired loans are those for which it was deemed probable, at acquisition, that the Company would be unable to collect all contractually required payments receivable. In an instance where, subsequent to the acquisition, the Company determines it is probable, for a specific loan, that cash flows received will exceed the amount previously expected, the Company will recalculate the amount of accretable yield in order to recognize the improved cash flow expectation as additional interest income over the remaining life of the loan. These loans, however, will continue to be reported as impaired loans. In an instance where, subsequent to the acquisition, the Company determines it is probable, for a specific loan, that cash flows received will be less than the amount previously expected, the Company will allocate a specific allowance under the terms of ASC 310-10-35.

	March 31, 2018
	Recorded		Unpaid Principal		Specific
(dollars in thousands)	Balance		Balance		Allowance
Loans without a specific valuation allowance:
Residential real estate	$	3,827	$	4,474	$	-
Construction real estate		1,336		1,604		-
Commercial real estate		14,090		15,463		-
Consumer loans		27		27		-
Commercial loans		2,911		3,539		-
Loans with a specific valuation allowance:
Residential real estate	$	-	$	-	$	-
Construction real estate		-		-		-
Commercial real estate		699		699		410
Consumer loans		-		-		-
Commercial loans		580		580		340
Total:
Residential real estate	$	3,827	$	4,474	$	-
Construction real estate	$	1,336	$	1,604	$	-
Commercial real estate	$	14,789	$	16,162	$	410
Consumer loans	$	27	$	27	$	-
Commercial loans	$	3,491	$	4,119	$	340

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	June 30, 2017
	Recorded		Unpaid Principal		Specific
(dollars in thousands)	Balance		Balance		Allowance
Loans without a specific valuation allowance:
Residential real estate	$	3,811	$	4,486	$	-
Construction real estate		1,373		1,695		-
Commercial real estate		14,935		16,834		-
Consumer loans		1		1		-
Commercial loans		4,302		4,990		-
Loans with a specific valuation allowance:
Residential real estate	$	-	$	-	$	-
Construction real estate		-		-		-
Commercial real estate		-		-		-
Consumer loans		-		-		-
Commercial loans		-		-		-
Total:
Residential real estate	$	3,811	$	4,486	$	-
Construction real estate	$	1,373	$	1,695	$	-
Commercial real estate	$	14,935	$	16,834	$	-
Consumer loans	$	1	$	1	$	-
Commercial loans	$	4,302	$	4,990	$	-

The above amounts include purchased credit impaired loans. At March 31, 2018, purchased credit impaired loans comprised $14.6 million of impaired loans without a specific valuation allowance.  At June 30, 2017, purchased credit impaired loans comprised $20.1 million of impaired loans without a specific valuation allowance.

The following tables present information regarding interest income recognized on impaired loans:

	For the three-month period ended
	March 31, 2018
	Average
(dollars in thousands)	Investment in			Interest Income
	Impaired Loans			Recognized
Residential Real Estate		$	3,322		$	45
Construction Real Estate			1,312			43
Commercial Real Estate			8,532			436
Consumer Loans			-			-
Commercial Loans			2,855			44
Total Loans		$	16,021		$	568

	For the three-month period ended
	March 31, 2017
	Average
(dollars in thousands)	Investment in		Interest Income
	Impaired Loans		Recognized
Residential Real Estate	$	2,857	$	22
Construction Real Estate		1,362		38
Commercial Real Estate		9,513		146
Consumer Loans		-		-
Commercial Loans		889		19
Total Loans	$	14,621	$	225

22

	For the nine-month period ended
	March 31, 2018
	Average
(dollars in thousands)	Investment in		Interest Income
	Impaired Loans		Recognized
Residential Real Estate	$	3,395	$	172
Construction Real Estate		1,323		122
Commercial Real Estate		9,905		987
Consumer Loans		-		-
Commercial Loans		3,328		153
Total Loans	$	17,951	$	1,434

	For the nine-month period ended
	March 31, 2017
	Average
(dollars in thousands)	Investment in		Interest Income
	Impaired Loans		Recognized
Residential Real Estate	$	2,893	$	73
Construction Real Estate		1,378		109
Commercial Real Estate		9,681		513
Consumer Loans		-		-
Commercial Loans		957		56
Total Loans	$	14,909	$	751

Interest income on impaired loans recognized on a cash basis in the three- and nine-month periods ended March 31, 2018 and 2017, was immaterial.

For the three- and nine-month periods ended March 31, 2018, the amount of interest income recorded for impaired loans that represented a change in the present value of cash flows attributable to the passage of time was approximately $334,000 and $594,000, respectively, as compared to $56,000 and $217,000, respectively, for the three- and nine-month periods ended March 31, 2017.

The following table presents the Company's nonaccrual loans at March 31, 2018 and June 30, 2017. The table excludes performing troubled debt restructurings.

(dollars in thousands)	March 31, 2018		June 30, 2017
Residential real estate	$	3,026	$	1,263
Construction real estate		34		35
Commercial real estate		1,970		960
Consumer loans		231		158
Commercial loans		957		409
Total loans	$	6,218	$	2,825

At March 31, 2018, purchased credit impaired loans comprised $1.0 million of nonaccrual loans.   At June 30, 2017, there were no purchased credit impaired loans on nonaccrual.

Included in certain loan categories in the impaired loans are troubled debt restructurings (TDRs), where economic concessions have been granted to borrowers who have experienced financial difficulties. These concessions typically result from our loss mitigation activities, and could include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance, or other actions. Certain TDRs are classified as nonperforming at the time of restructuring and typically are returned to performing status after considering the borrower's sustained repayment performance for a reasonable period of at least six months.

When loans and leases are modified into a TDR, the Company evaluates any possible impairment similar to other impaired loans based on the present value of expected future cash flows, discounted at the contractual interest rate of the original loan or lease agreement, and uses the current fair value of the collateral, less selling costs, for collateral dependent loans. If the Company determines that the value of the modified loan is less than the recorded investment in the loan (net of previous charge-offs, deferred loan fees or costs, and unamortized premium or discount),

23

impairment is recognized through an allowance estimate or a charge-off to the allowance. In periods subsequent to modification, the Company evaluates all TDRs, including those that have payment defaults, for possible impairment and recognizes impairment through the allowance.

During the three- and nine-month periods ended March 31, 2018 and 2017, certain loans modified were classified as TDRs. They are shown, segregated by class, in the table below:

	For the three-month periods ended
	March 31, 2018				March 31, 2017
(dollars in thousands)	Number of		Recorded		Number of		Recorded
	modifications		Investment		modifications		Investment
Residential real estate		4	$	305		1	$	40
Construction real estate		-		-		-		-
Commercial real estate		1		55		-		-
Consumer loans		2		27		1		15
Commercial loans		2		64		-		-
Total		9	$	451		2	$	55

	For the nine-month periods ended
	March 31, 2018				March 31, 2017
(dollars in thousands)	Number of		Recorded		Number of		Recorded
	modifications		Investment		modifications		Investment
Residential real estate		4	$	305		1	$	40
Construction real estate		-		-		1		36
Commercial real estate		1		55		4		2,250
Consumer loans		2		27		3		16
Commercial loans		2		64		1		2
Total		9	$	451		10	$	2,344

Performing loans classified as TDRs and outstanding at March 31, 2018 and June 30, 2017, segregated by class, are shown in the table below. Nonperforming TDRs are shown as nonaccrual loans.

	March 31, 2018				June 30, 2017
(dollars in thousands)	Number of		Recorded		Number of		Recorded
	modifications		Investment		modifications		Investment
Residential real estate		12	$	809		10	$	1,756
Construction real estate		-		-		-		-
Commercial real estate		13		8,101		13		5,206
Consumer loans		2		26		-		-
Commercial loans		8		2,911		6		3,946
Total		35	$	11,847		29	$	10,908

Note 5: Accounting for Certain Loans Acquired in a Transfer

The Company acquired loans in transfers during the fiscal years ended June 30, 2011, June 30, 2015 and June 30, 2017.  At acquisition, certain transferred loans evidenced deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected.

Loans purchased with evidence of credit deterioration since origination and for which it is probable that all contractually required payments will not be collected are considered to be credit impaired. Evidence of credit quality deterioration as of the purchase date may include information such as past-due and nonaccrual status, borrower credit scores and recent loan to value percentages. Purchased credit-impaired loans are accounted for under the accounting guidance for loans and debt securities acquired with deteriorated credit quality (ASC 310-30) and initially measured at fair value, which includes estimated future credit losses expected to be incurred over the life of the loan. Accordingly, an allowance for credit losses related to these loans is not carried over and recorded at the acquisition date. Management estimated the cash flows expected to be collected at acquisition using our internal risk models, which incorporate the estimate of current key assumptions, such as default rates, severity and prepayment speeds.

24

The carrying amount of those loans is included in the balance sheet amounts of loans receivable at March 31, 2018 and June 30, 2017. The amount of these loans is shown below:

(dollars in thousands)	March 31, 2018		June 30, 2017
Residential real estate	$	3,859	$	4,158
Construction real estate		1,570		1,660
Commercial real estate		8,999		13,394
Consumer loans		-		-
Commercial loans		3,094		4,502
Outstanding balance	$	17,522	$	23,714
Carrying amount, net of fair value adjustment of$2,917 and $3,584 at March 31, 2018, and     June 30, 2017, respectively	$	14,605	$	20,130

Accretable yield, or income expected to be collected, is as follows:

	For the three-month period ended
(dollars in thousands)	March 31, 2018			March 31, 2017
Balance at beginning of period	$	607		$	626
Additions		-			-
Accretion		(334	)		(56	)
Reclassification from nonaccretable difference		335			61
Disposals		-			-
Balance at end of period	$	608		$	631

	For the nine-month period ended
(dollars in thousands)	March 31, 2018			March 31, 2017
Balance at beginning of period	$	609		$	656
Additions		-			-
Accretion		(594	)		(217	)
Reclassification from nonaccretable difference		593			192
Disposals		-			-
Balance at end of period	$	608		$	631

During the three-and nine-month periods ended March 31, 2018 and 2017, the Company did not increase or reverse the allowance for loan losses related to these purchased credit impaired loans.

Note 6:  Deposits

Deposits are summarized as follows:

(dollars in thousands)	March 31, 2018		June 30, 2017
Non-interest bearing accounts	$	196,914	$	186,203
NOW accounts		580,790		479,488
Money market deposit accounts		117,597		105,599
Savings accounts		152,023		147,247
Certificates		527,013		537,060
Total Deposit Accounts	$	1,574,337	$	1,455,597

25

Note 7:  Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share:

	Three months ended				Nine months ended
	March 31,				March 31,
	2018		2017		2018		2017
(dollars in thousands except per share data)
Net income available to common shareholders	$	5,258	$	3,954	$	15,291	$	11,839
Average Common shares – outstanding basic		8,762,344		7,450,041		8,647,593		7,442,525
Stock options under treasury stock method		13,062		28,626		12,790		25,976
Average Common shares – outstanding diluted		8,775,406		7,478,667		8,660,383		7,468,501
Basic earnings per common share	$	0.60	$	0.53	$	1.77	$	1.59
Diluted earnings per common share	$	0.60	$	0.53	$	1.77	$	1.59

At March 31, 2018 and 2017, no options outstanding had an exercise price exceeding the market price.

Note 8: Income Taxes

The Company and its subsidiary files income tax returns in the U.S. Federal jurisdiction and various states. The Company is no longer subject to U.S. federal and state examinations by tax authorities for fiscal years before 2011. The Company recognized no interest or penalties related to income taxes.

The Company's income tax provision is comprised of the following components:

	For the three-month period ended					For the nine-month periods ended
(dollars in thousands)	March 31, 2018			March 31, 2017		March 31, 2018			March 31, 2017
Income taxes
Current	$	2,864		$	1,457	$	7,525		$	4,316
Deferred		(1,054	)		6		(1,280	)		240
Total income tax provision	$	1,810		$	1,463	$	6,245		$	4,556

The components of net deferred tax assets are summarized as follows:

(dollars in thousands)	March 31, 2018		June 30, 2017
Deferred tax assets:
Provision for losses on loans	$	4,193	$	5,563
Accrued compensation and benefits		618		1,068
Other-than-temporary impairment on             available for sale securities		-		128
NOL carry forwards acquired		286		513
Minimum Tax Credit		130		130
Unrealized loss on other real estate		124		131
Unrealized loss on available for sale securities		585		-
Other		407		-
Total deferred tax assets		6,343		7,533
Deferred tax liabilities:
Purchase accounting adjustments		946		1,193
Depreciation		1,100		2,734
FHLB stock dividends		130		203
Prepaid expenses		128		213
Unrealized gain on available for sale securities		-		295
Other		270		991
Total deferred tax liabilities		2,574		5,629
Net deferred tax asset	$	3,769	$	1,904

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As of March 31, 2018 and June 30, 2017, the Company had approximately $1.3 million and $2.7 million in federal and state net operating loss carryforwards, respectively, which were acquired in the July 2009 acquisition of Southern Bank of Commerce, the February 2014 acquisition of Citizens State Bankshares of Bald Knob, Inc. and the August 2014 acquisition of Peoples Service Company, and the June 2017 acquisition of Tammcorp, Inc. (Capaha Bank).  The amount reported is net of the IRC Sec. 382 limitation, or state equivalent, related to utilization of net operating loss carryforwards of acquired corporations. Unless otherwise utilized, the net operating losses will begin to expire in 2027.

A reconciliation of income tax expense at the statutory rate to the Company's actual income tax is shown below:

	For the three-month period ended						For the nine-month periods ended
(dollars in thousands)	March 31, 2018			March 31, 2017			March 31, 2018			March 31, 2017
Tax at statutory rate	$	1,986		$	1,896		$	6,052		$	5,738
Increase (reduction) in taxes       resulting from:
Nontaxable municipal income		(115	)		(124	)		(341	)		(385	)
State tax, net of Federal benefit		287			52			530			160
Cash surrender value of                   Bank-owned life insurance		(66	)		(176	)		(197	)		(323	)
Tax credit benefits		(224	)		(81	)		(672	)		(267	)
Tax benefits realized on acquisition		-			-			-			-
Adjustment of deferred tax asset                   for enacted changes in tax laws		-			-			1,124			-
Other, net		(58	)		(104	)		(251	)		(367	)
Actual provision	$	1,810		$	1,463		$	6,245		$	4,556

For the three and nine month periods ended March 31, 2018, income tax expense at the statutory rate was calculated using a 28.1% annual effective tax rate (AETR), compared to 35.0% for the three and nine month periods ended March 31, 2017, as a result of the Tax Cuts and Jobs Act ("Tax Act") signed into law December 22, 2017. The Tax Act ultimately reduces the corporate Federal income tax rate for the Company from 35% to 21%, and for the current fiscal year ending June 30, 2018, the Company is administratively subject to a 28.1% AETR.  U. S. GAAP requires that the impact of the provisions of the Tax Act be accounted for in the period of enactment and the income tax effects of the Tax Act were recognized in the Company's financial statements for the quarter ended December 31, 2017, and for the nine-month period ended March 31, 2018.  The Tax Act is complex and requires significant detailed analysis.  During the preparation of the Company's June 30, 2018 income tax returns, additional adjustments related to enactment of the Tax Act may be identified.  We do not currently expect significant adjustments will be necessary, but any further adjustments identified will be recognized in accordance with guidance contained in Staff Accounting Bulletin No. 118 from the U. S. Securities and Exchange Commission.

Note 9:  401(k) Retirement Plan

The Bank has a 401(k) retirement plan that covers substantially all eligible employees.  The Bank made a safe harbor matching contribution to the Plan of up to 4% of eligible compensation, depending upon the percentage of eligible pay deferred into the plan by the employee, and also made additional, discretionary profit-sharing contributions for fiscal 2017; for fiscal 2018, the Company has maintained the safe harbor matching contribution of up to 4%, and expects to continue to make additional, discretionary profit-sharing contributions.   During the three- and nine-month periods ended March 31, 2018, retirement plan expenses recognized for the Plan totaled approximately $331,000 and $883,000, respectively, as compared to $230,000 and $677,000, respectively, for the same periods of the prior fiscal year.  Employee deferrals and safe harbor contributions are fully vested.  Profit-sharing or other contributions vest over a period of five years.

Note 10:  Subordinated Debt

Southern Missouri Statutory Trust I issued $7.0 million of Floating Rate Capital Securities (the "Trust Preferred Securities") with a liquidation value of $1,000 per share in March 2004. The securities are due in 30 years, are now redeemable at par, and bear interest at a floating rate based on LIBOR. At March 31, 2018, the current rate was 4.93%. The securities represent undivided beneficial interests in the trust, which was established by the Company for the purpose of issuing the securities. The Trust Preferred Securities were sold in a private transaction exempt from registration under the Securities Act of 1933, as amended (the "Act") and have not been registered under the Act.  The securities may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

Southern Missouri Statutory Trust I used the proceeds from the sale of the Trust Preferred Securities to purchase Junior Subordinated Debentures of the Company. The Company used its net proceeds for working capital and investment in its subsidiaries.

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In connection with its October 2013 acquisition of Ozarks Legacy Community Financial, Inc. (OLCF), the Company assumed $3.1 million in floating rate junior subordinated debt securities. The debt securities had been issued in June 2005 by OLCF in connection with the sale of trust preferred securities, bear interest at a floating rate based on LIBOR, are now redeemable at par, and mature in 2035. The carrying value of the debt securities was approximately $2.6 million at March 31, 2018, and $2.6 million at June 30, 2017.

In connection with its August 2014 acquisition of Peoples Service Company, Inc. (PSC), the Company assumed $6.5 million in floating rate junior subordinated debt securities. The debt securities had been issued in 2005 by PSC's subsidiary bank holding company, Peoples Banking Company, in connection with the sale of trust preferred securities, bear interest at a floating rate based on LIBOR, are now redeemable at par, and mature in 2035. The carrying value of the debt securities was approximately $5.1 million at March 31, 2018, and $5.0 million at June 30, 2017.

Note 11:  Fair Value Measurements

ASC Topic 820, Fair Value Measurements, defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Topic 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

Level 1          Quoted prices in active markets for identical assets or liabilities

Level 2          Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in active markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities

Level 3          Unobservable inputs supported by little or no market activity that are significant to the fair value of the assets or liabilities

Recurring Measurements. The following table presents the fair value measurements of assets  recognized in the accompanying balance sheets measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall at March 31, 2018 and June 30, 2017:

	Fair Value Measurements at March 31, 2018, Using:
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(dollars in thousands)	Fair Value		(Level 1)		(Level 2)		(Level 3)
U.S. government sponsored enterprises (GSEs)	$	11,384	$	-	$	11,384	$	-
State and political subdivisions		51,297		-		51,297		-
Other securities		5,132		-		5,132		-
Mortgage-backed GSE residential		78,314		-		78,314		-

	Fair Value Measurements at June 30, 2017, Using:
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(dollars in thousands)	Fair Value		(Level 1)		(Level 2)		(Level 3)
U.S. government sponsored enterprises (GSEs)	$	10,438	$	-	$	10,438	$	-
State and political subdivisions		49,978		-		49,978		-
Other securities		5,725		-		5,725		-
Mortgage-backed GSE residential		78,275		-		78,275		-

Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets, as well as the general classification of such assets pursuant to the valuation hierarchy. There have been no significant changes in the valuation techniques during the period ended March 31, 2018.

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Available-for-sale Securities. When quoted market prices are available in an active market, securities are classified within Level 1. The Company does not have Level 1 securities. If quoted market prices are not available, then fair values are estimated using pricing models, or quoted prices of securities with similar characteristics. For these securities, our Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond's terms and conditions, among other things. Level 2 securities include U.S. Government-sponsored enterprises, state and political subdivisions, other securities, mortgage-backed GSE residential securities and mortgage-backed other U.S. Government agencies. In certain cases where Level 1 or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy.

Nonrecurring Measurements. The following tables present the fair value measurement of assets measured at fair value on a nonrecurring basis and the level within the ASC 820 fair value hierarchy in which the fair value measurements fell at March 31, 2018 and June 30, 2017:

	Fair Value Measurements at March 31, 2018, Using:
			Quoted Prices in
			Active Markets for		Significant Other		Significant
			Identical Assets		Observable Inputs		Unobservable Inputs
(dollars in thousands)	Fair Value		(Level 1)		(Level 2)		(Level 3)
Impaired loans (collateral dependent)	$	529	$	-	$	-	$	529
Foreclosed and repossessed assets held for sale	$	4,142	$	-	$	-	$	4,142

	Fair Value Measurements at June 30, 2017, Using:
			Quoted Prices in
			Active Markets for		Significant Other		Significant
			Identical Assets		Observable Inputs		Unobservable Inputs
(dollars in thousands)	Fair Value		(Level 1)		(Level 2)		(Level 3)
Foreclosed and repossessed assets held for sale	$	3,100	$	-	$	-	$	3,100

The following table presents gains and (losses) recognized on assets measured on a non-recurring basis for the nine-month periods ended March 31, 2018 and 2017:

	For the nine months ended
(dollars in thousands)	March 31, 2018			March 31, 2017
Impaired loans (collateral dependent)	$	(750	)	$	-
Foreclosed and repossessed assets held for sale		(164	)		(254	)
Total (losses) gains on assets measured on a non-recurring basis	$	(914	)	$	(254	)

The following is a description of valuation methodologies and inputs used for assets measured at fair value on a nonrecurring basis and recognized in the accompanying consolidated balance sheets, as well as the general classification of such assets and liabilities pursuant to the valuation hierarchy. For assets classified within Level 3 of fair value hierarchy, the process used to develop the reported fair value process is described below.

Impaired Loans (Collateral Dependent). A collateral dependent loan is considered to be impaired when it is probable that all of the principal and interest due may not be collected according to its contractual terms. Generally, when a collateral dependent loan is considered impaired, the amount of reserve required is measured based on the fair value of the underlying collateral. The Company makes such measurements on all material collateral dependent loans deemed impaired using the fair value of the collateral for collateral dependent loans. The fair value of collateral used by the Company is determined by obtaining an observable market price or by obtaining an appraised value from an independent, licensed or certified appraiser, using observable market data. This data includes information such as selling price of similar properties and capitalization rates of similar properties sold within the market, expected future cash flows or earnings of the subject property based on current market expectations, and other relevant factors. In addition, management applies selling and other discounts to the underlying collateral value to determine the fair value. If an appraised value is not available, the fair value of the collateral dependent impaired loan is determined by an adjusted appraised value including unobservable cash flows.

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On a quarterly basis, loans classified as special mention, substandard, doubtful, or loss are evaluated including the loan officer's review of the collateral and its current condition, the Company's knowledge of the current economic environment in the market where the collateral is located, and the Company's recent experience with real estate in the area. The date of the appraisal is also considered in conjunction with the economic environment and any decline in the real estate market since the appraisal was obtained.  For all loan types, updated appraisals are obtained if considered necessary.  In instances where the economic environment has worsened and/or the real estate market declined since the last appraisal, a higher distressed sale discount would be applied to the appraised value.

The Company records collateral dependent impaired loans based on nonrecurring Level 3 inputs. If a collateral dependent loan's fair value, as estimated by the Company, is less than its carrying value, the Company either records a charge-off of the portion of the loan that exceeds the fair value or establishes a specific reserve as part of the allowance for loan losses.  There were no loans measured at fair value on a nonrecurring basis at June 30, 2017.

Foreclosed and Repossessed Assets Held for Sale. Foreclosed and repossessed assets held for sale are valued at the time the loan is foreclosed upon or collateral is repossessed and the asset is transferred to foreclosed or repossessed assets held for sale. The value of the asset is based on third party or internal appraisals, less estimated costs to sell and appropriate discounts, if any. The appraisals are generally discounted based on current and expected market conditions that may impact the sale or value of the asset and management's knowledge and experience with similar assets. Such discounts typically may be significant and result in a Level 3 classification of the inputs for determining fair value of these assets. Foreclosed and repossessed assets held for sale are continually evaluated for additional impairment and are adjusted accordingly if impairment is identified.

Unobservable (Level 3) Inputs. The following table presents quantitative information about unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements.

(dollars in thousands)	Fair value atMarch 31, 2018		Valuation technique	Unobservable inputs	Range of inputs applied			Weighted-average inputs applied
Nonrecurring Measurements
Impaired loans (collateral dependent)	$	529	Internal Valuation	Discount to reflect realizable value		n/a
Foreclosed and repossessed assets	$	4,142	Third party appraisal	Marketability discount		0.0% - 78.4	%		33.8	%

(dollars in thousands)	Fair value at June 30, 2017		Valuation technique	Unobservable inputs	Range of inputs applied			Weighted-average inputs applied
Nonrecurring Measurements
Foreclosed and repossessed assets	$	3,100	Third party appraisal	Marketability discount		0.0% - 66.4	%		40.6	%

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Fair Value of Financial Instruments. The following table presents estimated fair values of the Company's financial instruments not reported at fair value and the level within the fair value hierarchy in which the fair value measurements fell at March 31, 2018 and June 30, 2017.

	March 31, 2018
			Quoted Prices
			in Active				Significant
			Markets for		Significant Other		Unobservable
	Carrying		Identical Assets		Observable Inputs		Inputs
(dollars in thousands)	Amount		(Level 1)		(Level 2)		(Level 3)
Financial assets
Cash and cash equivalents	$	30,781	$	30,781	$	-	$	-
Interest-bearing time deposits		1,949		-		1,949		-
Stock in FHLB		4,535		-		4,535		-
Stock in Federal Reserve Bank of St. Louis		3,196		-		3,196		-
Loans receivable, net		1,522,445		-		-		1,514,486
Accrued interest receivable		7,128		-		7,128		-
Financial liabilities
Deposits		1,574,337		1,047,533		-		525,233
Securities sold under agreements to          repurchase		3,769		-		3,769		-
Advances from FHLB		50,850		40,500		10,392		-
Note Payable		3,000		-		-		3,000
Accrued interest payable		1,138		-		1,138		-
Subordinated debt		14,921		-		-		13,545
Unrecognized financial instruments (net of contract amount)
Commitments to originate loans		-		-		-		-
Letters of credit		-		-		-		-
Lines of credit		-		-		-		-

	June 30, 2017
			Quoted Prices
			in Active				Significant
			Markets for		Significant Other		Unobservable
	Carrying		Identical Assets		Observable Inputs		Inputs
(dollars in thousands)	Amount		(Level 1)		(Level 2)		(Level 3)
Financial assets
Cash and cash equivalents	$	30,786	$	30,786	$	-	$	-
Interest-bearing time deposits		747		-		747		-
Stock in FHLB		3,547		-		3,547		-
Stock in Federal Reserve Bank of St. Louis		2,357		-		2,357		-
Loans receivable, net		1,397,730		-		-		1,394,164
Accrued interest receivable		6,769		-		6,769		-
Financial liabilities
Deposits		1,455,597		918,553		-		536,266
Securities sold under agreements to          repurchase		10,212		-		10,212		-
Advances from FHLB		43,637		20,000		23,781		-
Note Payable		3,000		-		-		3,000
Accrued interest payable		918		-		918		-
Subordinated debt		14,848		-		-		11,984
Unrecognized financial instruments (net of contract amount)
Commitments to originate loans		-		-		-		-
Letters of credit		-		-		-		-
Lines of credit		-		-		-		-

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The following methods and assumptions were used in estimating the fair values of financial instruments:

Cash and cash equivalents and interest-bearing time deposits are valued at their carrying amounts, which approximates book value. Stock in FHLB and the Federal Reserve Bank of St. Louis is valued at cost, which approximates fair value. Fair value of loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. Loans with similar characteristics are aggregated for purposes of the calculations. The carrying amounts of accrued interest approximate their fair values.

The fair value of fixed-maturity time deposits is estimated using a discounted cash flow calculation that applies the rates currently offered for deposits of similar remaining maturities. Non-maturity deposits and securities sold under agreements are valued at their carrying value, which approximates fair value. Fair values of advances from the FHLB and note payable are estimated by discounting maturities using an estimate of the current market for similar instruments. The fair value of subordinated debt is estimated using rates currently available to the Company for debt with similar terms and maturities. The fair value of commitments to originate loans is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. For fixed-rate loan commitments, fair value also considers the difference between current levels of interest rates and committed rates. The fair value of letters of credit and lines of credit are based on fees currently charged for similar agreements or on the estimated cost to terminate or otherwise settle the obligations with the counterparties at the reporting date.

Note 12:  Acquisitions

On February 23, 2018, the Company completed its acquisition of Southern Missouri Bancshares, Inc. ("Bancshares"), and its wholly-owned subsidiary, Southern Missouri Bank of Marshfield ("SMB-Marshfield"), in a stock and cash transaction. The conversion of data systems took place on March 17, 2018. The Company acquired SMB-Marshfield primarily for the purpose of conducting commercial banking activities in markets where it believes the Company's business model will perform well, and for the long-term value of its core deposit franchise. Through March 31, 2018, the Company incurred a total $638,000 of third-party acquisition-related costs with $458,000 and $613,000 being included in noninterest expense in the Company's consolidated statement of income for the three- and nine- months ended March 31, 2018, respectively.   The goodwill of $4.4 million arising from the acquisition consists largely of synergies and economies of scale expected from combining the operations of the Company and SMB-Marshfield. Total goodwill was assigned to the acquisition of the bank holding company.

The following table summarizes the consideration paid for Bancshares and SMB-Marshfield, and the amounts of assets acquired and liabilities assumed recognized at the acquisition date:

Cash	$	3,860
Common stock, at fair value		12,955
Total consideration	$	16,815
Recognized amounts of identifiable assets acquired
and liabilities assumed
Cash and cash equivalents	$	2,359
Interest bearing time deposits		1,450
Investment securities		5,557
Loans		68,258
Premises and equipment		3,409
BOLI		2,271
Identifiable intangible assets		1,345
Miscellaneous other assets		1,897
Deposits		(68,152	)
FHLB Advances		(5,344	)
Miscellaneous other liabilities		(683	)
Total identifiable net assets		12,367
Goodwill	$	4,448

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PART I:  Item 2:  Management's Discussion and Analysis of Financial Condition and Results of Operations

SOUTHERN MISSOURI BANCORP, INC.

General

Southern Missouri Bancorp, Inc. (Southern Missouri or Company) is a Missouri corporation and owns all of the outstanding stock of Southern Bank (the Bank). The Company's earnings are primarily dependent on the operations of the Bank. As a result, the following discussion relates primarily to the operations of the Bank. The Bank's deposit accounts are generally insured up to a maximum of $250,000 by the Deposit Insurance Fund (DIF), which is administered by the Federal Deposit Insurance Corporation (FDIC). At March 31, 2018, the Bank operated from its headquarters, 38 full-service branch offices, and three limited-service branch offices.  The Bank owns the office building and related land in which its headquarters are located, and 36 of its other branch offices.  The remaining five branches are either leased or partially owned.

The significant accounting policies followed by Southern Missouri Bancorp, Inc. and its wholly owned subsidiaries for interim financial reporting are consistent with the accounting policies followed for annual financial reporting. All adjustments, which are of a normal recurring nature and are in the opinion of management necessary for a fair statement of the results for the periods reported, have been included in the accompanying consolidated condensed financial statements.

The consolidated balance sheet of the Company as of June 30, 2017, has been derived from the audited consolidated balance sheet of the Company as of that date. Certain information and note disclosures normally included in the Company's annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Form 10-K annual report filed with the Securities and Exchange Commission.

Management's discussion and analysis of financial condition and results of operations is intended to assist in understanding the financial condition and results of operations of the Company. The information contained in this section should be read in conjunction with the unaudited consolidated financial statements and accompanying notes. The following discussion reviews the Company's condensed consolidated financial condition at March 31, 2018, and results of operations for the three- and nine-month periods ended March 31, 2018 and 2017.

Forward Looking Statements

This document contains statements about the Company and its subsidiaries which we believe are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may include, without limitation, statements with respect to anticipated future operating and financial performance, growth opportunities, interest rates, cost savings and funding advantages expected or anticipated to be realized by management. Words such as "may," "could," "should," "would," "believe," "anticipate," "estimate," "expect," "intend," "plan" and similar expressions are intended to identify these forward‑looking statements. Forward-looking statements by the Company and its management are based on beliefs, plans, objectives, goals, expectations, anticipations, estimates and intentions of management and are not guarantees of future performance. The important factors we discuss below, as well as other factors discussed under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" and identified in this filing and in our other filings with the SEC and those presented elsewhere by our management from time to time, could cause actual results to differ materially from those indicated by the forward-looking statements made in this document:

· expected cost savings, synergies and other benefits from our merger and acquisition activities, including our recently completed acquisitions, might not be realized within the anticipated time frames or at all, and costs or difficulties relating to integration matters, including but not limited to customer and employee retention, might be greater than expected;

· the strength of the United States economy in general and the strength of the local economies in which we conduct operations;

· fluctuations in interest rates and in real estate values;

· monetary and fiscal policies of the Board of Governors of the Federal Reserve System (the "Federal Reserve Board") and the U.S. Government and other governmental initiatives affecting the financial services industry;

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· the risks of lending and investing activities, including changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for loan losses;

· our ability to access cost-effective funding;

· the timely development of and acceptance of our new products and services and the perceived overall value of these products and services by users, including the features, pricing and quality compared to competitors' products and services;

· fluctuations in real estate values and both residential and commercial real estate markets, as well as agricultural business conditions;

· demand for loans and deposits in our market area;

· legislative or regulatory changes or changes in the application or interpretation of laws or regulations by regulatory agencies or tax authorities that adversely affect our business;

· changes in accounting principles, policies, or guidelines, or changes in deferred tax asset and liability activity;

· results of examinations of us by our regulators, including the possibility that our regulators may, among other things, require us to increase our reserve for loan losses or to write-down assets;

· the impact of technological changes; and

· our success at managing the risks involved in the foregoing.

The Company disclaims any obligation to update or revise any forward-looking statements based on the occurrence of future events, the receipt of new information, or otherwise.

Critical Accounting Policies

Accounting principles generally accepted in the United States of America are complex and require management to apply significant judgments to various accounting, reporting and disclosure matters. Management of the Company must use assumptions and estimates to apply these principles where actual measurement is not possible or practical. For a complete discussion of the Company's significant accounting policies, see "Notes to the Consolidated Financial Statements" in the Company's 2017 Annual Report. Certain policies are considered critical because they are highly dependent upon subjective or complex judgments, assumptions and estimates. Changes in such estimates may have a significant impact on the financial statements. Management has reviewed the application of these policies with the Audit Committee of the Company's Board of Directors. For a discussion of applying critical accounting policies, see "Critical Accounting Policies" beginning on page 53 in the Company's 2017 Annual Report.

Executive Summary

Our results of operations depend primarily on our net interest margin, which is directly impacted by the interest rate environment. The net interest margin represents interest income earned on interest-earning assets (primarily real estate loans, commercial and agricultural loans, and the investment portfolio), less interest expense paid on interest-bearing liabilities (primarily interest-bearing transaction accounts, certificates of deposit, savings and money market deposit accounts, repurchase agreements, and borrowed funds), as a percentage of average interest-earning assets. Net interest margin is directly impacted by the spread between long-term interest rates and short-term interest rates, as our interest-earning assets, particularly those with initial terms to maturity or repricing greater than one year, generally price off longer term rates while our interest-bearing liabilities generally price off shorter term interest rates. This difference in longer term and shorter term interest rates is often referred to as the steepness of the yield curve. A steep yield curve – in which the difference in interest rates between short term and long term periods is relatively large – could be beneficial to our net interest income, as the interest rate spread between our interest-earning assets and interest-bearing liabilities would be larger. Conversely, a flat or flattening yield curve, in which the difference in rates between short term and long term periods is relatively small or shrinking, or an inverted yield curve, in which short term rates exceed long term rates, could have an adverse impact on our net interest income, as our interest rate spread could decrease.

Our results of operations may also be affected significantly by general and local economic and competitive conditions, particularly those with respect to changes in market interest rates, government policies and actions of regulatory authorities.

During the first nine months of fiscal 2018, we grew our balance sheet by $142.1 million. Balance sheet growth was primarily attributable to the acquisition of Southern Missouri Bancshares, Inc., and its subsidiary, Southern Missouri Bank of Marshfield (the SMB-Marshfield Acquisition), in which the Company acquired assets totaling $86.2 million, at fair value. Loans, net of the allowance for loan losses, increased $124.7 million, which included $68.3 million, at fair

34

value, added through the SMB-Marshfield Acquisition. Available-for-sale (AFS) securities increased $1.7 million, and cash equivalents and time deposits increased a combined $1.2 million. Deposits increased $118.7 million, which included $68.2 million, at fair value, assumed in the SMB-Marshfield Acquisition. During the current fiscal year, the Company has seen an increase of $73.4 million in public unit deposits (including $7.7 million from the SMB-Marshfield Acquisition), a $50.4 reduction in traditional brokered certificates of deposit, and a $2.5 million decrease in brokered nonmaturity deposits. This discussion of brokered deposits excludes those originated through reciprocal arrangements, as our reciprocal brokered deposits are primarily originated by our public unit depositors and utilized as an alternative to pledging securities against those deposits. Securities sold under agreements to repurchase decreased $6.4 million, and advances from the Federal Home Loan Bank (FHLB) increased $7.2 million.  At March 31, 2018, the balance of term advances the Company assumed in the SMB-Marshfield Acquisition was $4.8 million (at fair value).  Additionally, the Company utilized overnight funding to provide for loan growth in excess of deposit growth, and to allow brokered deposits to mature without renewal. Equity increased $23.4 million, attributable to common stock issued in the SMB-Marshfield Acquisition and retention of net income, partially offset by dividends paid on common stock and a decrease in other comprehensive income.

Net income for the first nine months of fiscal 2018 was $15.3 million, an increase of $3.5 million, or 29.2% as compared to the same period of the prior fiscal year. Compared to the year-ago period, the Company's increase in net income was the result of increases in net interest income and noninterest income, partially offset by increases in noninterest expense, provision for income taxes, and provision for loan losses. Diluted net income available to common shareholders was $1.77 per share for the first nine months of fiscal 2018, as compared to $1.59 per share for the same period of the prior fiscal year. For the first nine months of fiscal 2018, net interest income increased $8.9 million, or 23.7%; noninterest income increased $2.1 million, or 25.8%; noninterest expense increased $5.8 million, or 21.0%; provision for income taxes increased $1.7 million, or 37.1%; and provision for loan losses increased $103,000, or 5.3%, as compared to the same period of the prior fiscal year. For more information see "Results of Operations."

Interest rates during the first nine months of fiscal 2018 generally moved higher, but the curve was flatter, with less spread between shorter- and longer-term rates. Early in the period, long term rates moved down notably, and then for a period of time after mid-September, generally increased less than shorter-term rates, before moving up at a faster pace in January and February. At March 31, 2018, as compared to June 30, 2017, the yield on two-year treasuries moved up from 1.38% to 2.27 %; the yield on five-year treasuries moved up from 1.89% to 2.68%; the yield on ten-year treasuries moved up from 2.31% to 2.74%; and the yield on 30-year treasuries moved up from 2.84% to 2.97%. As compared to the first nine months of the prior fiscal year, our average yield on earning assets increased by 19 basis points, helped in part by discount accretion recognized on recent acquisitions, but also as we originated and renewed loans at higher market rates reflecting recent increases by the Federal Reserve's Open Market Committee (FOMC) (see "Results of Operations: Comparison of the three- and nine-month periods ended March 31, 2018 and 2017 – Net Interest Income"). The FOMC twice increased targeted overnight rates by 25 basis points each in December 2017 and March 2018, in addition to a total of 75 basis points between December 2016 and June 2017, just prior to the beginning of the Company's fiscal year. In December 2015, the FOMC began the current increasing rate cycle, increasing targeted overnight rates by 25 basis points, which was the first increase since the financial crisis which began in 2008. The Company has considered the measured increase in market interest rates to generally be favorable, however, the flattening yield curve is concerning. Our average cost of interest-bearing deposits increased by 17 basis points when comparing the current fiscal year to date with the same period of the prior fiscal year.

Our net interest margin increased eight basis points when comparing the first nine months of fiscal 2018 to the same period of the prior fiscal year. The improvement was attributable primarily to higher yields noted above, partially offset by an increased cost of funds. Net interest income resulting from the accretion of the discount (and a smaller premium on acquired time deposits) attributable to the Peoples Acquisition and the Capaha Acquisition in the first nine months of fiscal 2018 totaled $1.9 million, as compared to $1.1 million in the first nine months of fiscal 2017. In the current period, this component of net interest income contributed 16 basis points to the net interest margin, an increase from a contribution of 11 basis points in the year-ago period. The dollar impact of this component of net interest income has generally been declining each sequential quarter as assets from the Peoples Acquisition mature or prepay; however, the closing of the Capaha Acquisition in mid-June 2017 resulted in additional accretion in the current fiscal year, while resolution of particular acquired impaired credits also resulted in recognition of further discount accretion.  Impact to the net interest margin as a result of the SMB-Marshfield Acquisition is expected to be significantly less, by comparison.

The Company's net income is also affected by the level of its noninterest income and noninterest expenses. Non-interest income generally consists primarily of deposit account service charges, bank card interchange income, loan-related fees, earnings on bank-owned life insurance, gains on sales of loans, and other general operating income. Noninterest expenses consist primarily of compensation and employee benefits, occupancy-related expenses, deposit insurance assessments, professional fees, advertising, postage and office expenses, insurance, bank card network

35

expenses, the amortization of intangible assets, and other general operating expenses. During the nine-month period ended March 31, 2018, noninterest income increased $2.1 million, or 25.8%, as compared to the same period of the prior fiscal year, attributable primarily to bank card interchange income, deposit account service charges, other loan fees (including loan prepayment penalties), loan servicing fees, and gains realized on the sale of AFS securities, partially offset by the inclusion in the prior year period's results of a non-recurring benefit related to bank-owned life insurance, with no comparable activity in the current period. Much of the increase in noninterest income was attributable to the Capaha Acquisition, which closed late in the fourth quarter of fiscal 2017, and increased our number of account holders and loans serviced. Items especially impacted by that acquisition include bank card interchange income, deposit account service charges, and loan servicing fees. Noninterest expense for the nine-month period ended March 31, 2018, increased $5.8 million, or 21.0%, as compared to the same period of the prior fiscal year. The increase was due mostly to increases in compensation and benefits and occupancy expenses, amortization of core deposit intangibles, and bank card network expenses, all which were attributable in part to the Capaha Acquisition, which increased our staffing, number of locations, account holders, and included the recognition of a core deposit intangible. Charges related to merger and acquisition activity totaled $776,000 in the current fiscal year to date, as compared to $173,000 in the same period of the prior fiscal year.

We expect, over time, to continue to grow our assets through the origination and occasional purchase of loans, and purchases of investment securities. The primary funding for this asset growth is expected to come from retail deposits, brokered funding, and short- and long-term FHLB borrowings. We have grown and intend to continue to grow deposits by offering desirable deposit products for our current customers and by attracting new depository relationships. We will also continue to explore strategic expansion opportunities in market areas that we believe will be attractive to our business model.

Comparison of Financial Condition at March 31, 2018 and June 30, 2017

The Company experienced balance sheet growth in the first nine months of fiscal 2018, with total assets of $1.8 billion at March 31, 2018, reflecting an increase of $142.1 million, or 8.3%, as compared to June 30, 2017. Asset growth consisted mostly of the SMB-Marshfield Acquisition and organic loan growth.

AFS securities were $146.1 million at March 31, 2018, an increase of $1.7 million, or 1.2%, as compared to June 30, 2017. The increase was attributable primarily to approximately $5.6 million in securities acquired in the SMB-Marshfield Acquisition, partially offset by municipal securities which matured or were called. Cash equivalents and time deposits were a combined $32.7 million, an increase of $1.2 million, or 3.8%, as compared to June 30, 2017.

Loans, net of the allowance for loan losses, were $1.5 billion at March 31, 2018, an increase of $124.7 million, or 8.9%, as compared to June 30, 2017. The increase was attributable in large part to the SMB-Marshfield Acquisition, which added loans totaling $68.3 million at fair value. Inclusive of these acquired loans, our portfolio saw growth in commercial real estate loans, residential real estate loans, consumer loans, commercial loans, and drawn balances in construction loans. Commercial real estate loan growth was mostly attributable to increases in loans secured by nonresidential properties and agricultural real estate. Residential real estate loan growth was attributable to growth in loans secured by one- to four-family residential properties, partially offset by a decline in loans secured by multifamily properties. The increase in commercial loan balances was attributable primarily to growth in commercial & industrial lending, partially offset by paydowns in agricultural operating loans.

Deposits were $1.6 billion at March 31, 2018, an increase of $118.7 million, or 8.2%, as compared to June 30, 2017. Deposit growth was attributable in large part to the SMB-Marshfield Acquisition, which added deposits of $68.2 million at fair value. Inclusive of these assumed deposits, our deposit balances saw growth in interest-bearing transaction accounts, money market deposit accounts, and noninterest-bearing transaction accounts, while certificate of deposit balances declined. Since June 30, 2017, the Company's public unit deposits increased by $73.4 million (including $7.7 million from the SMB-Marshfield Acquisition), brokered certificates of deposit decreased $50.4 million, and brokered nonmaturity deposits decreased $2.5 million. Our discussion of brokered deposits excludes those brokered deposits originated through reciprocal arrangements, as our reciprocal brokered deposits are primarily originated by our public unit depositors and utilized as an alternative to pledging securities against those deposits. The average loan-to-deposit ratio for the first nine months of fiscal 2018 was 97.7% as compared to 102.0% for the same period of the prior fiscal year.

FHLB advances were $50.9 million at March 31, 2018, an increase of $7.2 million, or 16.5%, as compared to June 30, 2017.  At March 31, 2018, the balance of term advances the Company assumed in the SMB-Marshfield Acquisition was $4.8 million (at fair value).  Additionally, the Company utilized overnight funding to provide for loan growth in excess of deposit growth and to allow brokered deposits to

36

mature without renewal. Securities sold under agreements to repurchase totaled $3.8 million at March 31, 2018, a decrease of $6.4 million, or 63.1%, as compared to June 30, 2017, as we continued to encourage larger customers to migrate from this product to a reciprocal brokered deposit arrangement. At both dates, the full balance of repurchase agreements was due to local small business and government counterparties.

The Company's stockholders' equity was $196.5 million at March 31, 2018, an increase of $23.4 million, or 13.5%, as compared to June 30, 2017. The increase was attributable to common stock issued in the SMB-Marshfield Acquisition and retention of net income, partially offset by payment of dividends on common stock and a decrease in accumulated other comprehensive income.

Average Balance Sheet, Interest, and Average Yields and Rates for the Three- and Nine-Month Periods Ended

March 31, 2018 and 2017

The tables below present certain information regarding our financial condition and net interest income for the three- and nine-month periods ended March 31, 2018 and 2017. The tables present the annualized average yield on interest-earning assets and the annualized average cost of interest-bearing liabilities. We derived the yields and costs by dividing annualized income or expense by the average balance of interest-earning assets and interest-bearing liabilities, respectively, for the periods shown. Yields on tax-exempt obligations were not computed on a tax equivalent basis.

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	Three-month period ended								Three-month period ended
	March 31, 2018								March 31, 2017
(dollars in thousands)	Average Balance			Interest and Dividends		Yield/ Cost (%)			Average Balance			Interest and Dividends		Yield/ Cost (%)
Interest earning assets:
Mortgage loans (1)	$	1,212,045		$	14,628		4.83		$	979,796		$	11,210		4.58
Other loans (1)		301,629			3,709		4.92			241,846			2,857		4.73
Total net loans		1,513,674			18,337		4.85			1,221,642			14,067		4.61
Mortgage-backed securities		80,264			453		2.26			74,949			392		2.09
Investment securities (2)		79,611			573		2.88			66,274			483		2.92
Other interest earning assets		3,898			22		2.30			1,896			13		2.74
Total interest earning assets (1)		1,677,447			19,385		4.62			1,364,761			14,955		4.38
Other noninterest earning assets (3)		144,828			-					119,437			-
Total assets	$	1,822,275		$	19,385				$	1,484,198		$	14,955
Interest bearing liabilities:
Savings accounts	$	151,056			188		0.50		$	120,891			96		0.32
NOW accounts		570,133			1,167		0.82			446,193			788		0.71
Money market deposit accounts		118,624			205		0.69			90,833			75		0.33
Certificates of deposit		528,422			1,721		1.30			441,402			1,152		1.04
Total interest bearing deposits		1,368,235			3,281		0.96			1,099,319			2,111		0.77
Borrowings:
Securities sold under agreements       to repurchase		3,611			8		0.85			24,053			25		0.42
FHLB advances		40,268			199		1.98			71,405			224		1.25
Note Payable		3,000			30		4.05			-			-		-
Subordinated debt		14,909			192		5.15			14,812			163		4.40
Total interest bearing liabilities		1,430,023			3,710		1.04			1,209,589			2,523		0.83
Noninterest bearing demand deposits		195,880			-					138,667			-
Other noninterest bearing liabilities		7,871			-					3,480			-
Total liabilities		1,633,774			3,710					1,351,736			2,523
Stockholders' equity		188,501			-					132,462			-
Total liabilities and                stockholders' equity	$	1,822,275		$	3,710				$	1,484,198		$	2,523
Net interest income				$	15,675							$	12,432
Interest rate spread (4)							3.58	%							3.55	%
Net interest margin (5)							3.74	%							3.64	%
Ratio of average interest-earning assets to average interest-bearing liabilities		117.30	%							112.83	%

(1)	Calculated net of deferred loan fees, loan discounts and loans-in-process. Non-accrual loans are not included in average loans.
(2)	Includes FHLB and Federal Reserve Bank of St. Louis membership stock and related cash dividends.
(3)	Includes average balances for fixed assets and BOLI of $54.3 million and $35.2 million, respectively, for the three-month period ended March 31, 2018, as compared to $46.4 million and $30.3 million, respectively, for the same period of the prior fiscal year.
(4)	Interest rate spread represents the difference between the average rate on interest-earning assets and the average cost of interest-bearing liabilities.
(5)	Net interest margin represents annualized net interest income divided by average interest-earning assets.

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	Nine-month period ended								Nine-month period ended
	March 31, 2018								March 31, 2017
(dollars in thousands)	Average Balance			Interest and Dividends		Yield/ Cost (%)			Average Balance			Interest and Dividends		Yield/ Cost (%)
Interest earning assets:
Mortgage loans (1)	$	1,169,909		$	42,320		4.82		$	961,536		$	33,747		4.68
Other loans (1)		301,052			11,709		5.19			243,902			8,799		4.81
Total net loans		1,470,961			54,029		4.90			1,205,438			42,546		4.71
Mortgage-backed securities		79,127			1,297		2.19			71,248			1,087		2.03
Investment securities (2)		77,823			1,659		2.84			67,283			1,489		2.95
Other interest earning assets		3,065			42		1.85			3,742			21		0.73
Total interest earning assets (1)		1,630,976			57,027		4.66			1,347,711			45,143		4.47
Other noninterest earning assets (3)		142,384			-					119,333			-
Total assets	$	1,773,360		$	57,027				$	1,467,044		$	45,143
Interest bearing liabilities:
Savings accounts	$	147,269			532		0.48		$	118,245			281		0.32
NOW accounts		522,638			3,141		0.80			417,807			2,264		0.72
Money market deposit accounts		113,192			526		0.62			83,194			190		0.30
Certificates of deposit		530,981			4,970		1.25			426,547			3,351		1.05
Total interest bearing deposits		1,314,080			9,169		0.93			1,045,793			6,086		0.78
Borrowings:
Securities sold under agreements       to repurchase		5,896			29		0.66			25,033			77		0.41
FHLB advances		55,376			709		1.71			109,449			924		1.13
Note Payable		3,000			87		3.88			-			-		-
Subordinated debt		14,884			552		4.94			14,788			476		4.29
Total interest bearing liabilities		1,393,236			10,546		1.01			1,195,063			7,563		0.84
Noninterest bearing demand deposits		192,079			-					136,579			-
Other noninterest bearing liabilities		7,300			-					5,477			-
Total liabilities		1,592,615			10,546					1,337,119			7,563
Stockholders' equity		180,745			-					129,925			-
Total liabilities and                stockholders' equity	$	1,773,360		$	10,546				$	1,467,044		$	7,563
Net interest income				$	46,481							$	37,580
Interest rate spread (4)							3.65	%							3.63	%
Net interest margin (5)							3.80	%							3.72	%
Ratio of average interest-earning assets to average interest-bearing liabilities		117.06	%							112.77	%

(1)	Calculated net of deferred loan fees, loan discounts and loans-in-process. Non-accrual loans are not included in average loans.
(2)	Includes FHLB and Federal Reserve Bank of St. Louis membership stock and related cash dividends.
(3)	Includes average balances for fixed assets and BOLI of $54.1 million and $34.7 million, respectively, for the nine-month period ended March 31, 2018, as compared to $46.6 million and $30.3 million, respectively, for the same period of the prior fiscal year.
(4)	Interest rate spread represents the difference between the average rate on interest-earning assets and the average cost of interest-bearing liabilities.
(5)	Net interest margin represents annualized net interest income divided by average interest-earning assets.

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Rate/Volume Analysis

The following table sets forth the effects of changing rates and volumes on the Company's net interest income for the three- and nine-month periods ended March 31, 2018, compared to the three- and nine-month periods ended March 31, 2017. Information is provided with respect to (i) effects on interest income and expense attributable to changes in volume (changes in volume multiplied by the prior rate), (ii) effects on interest income and expense attributable to change in rate (changes in rate multiplied by prior volume), and (iii) changes in rate/volume (change in rate multiplied by change in volume).

	Three-month period ended March 31, 2018
	Compared to three-month period ended March 31, 2017
	Increase (Decrease) Due to
(dollars in thousands)							Rate/
	Rate			Volume			Volume			Net
Interest-earnings assets:
Loans receivable (1)	$	721		$	3,365		$	184		$	4,270
Mortgage-backed securities		32			28			1			61
Investment securities (2)		(7	)		97			-			90
Other interest-earning deposits		(3	)		13			(1	)		9
Total net change in income on
interest-earning assets		743			3,503			184			4,430
Interest-bearing liabilities:
Deposits		548			493			129			1,170
Securities sold under
agreements to repurchase		26			(21	)		(22	)		(17	)
Subordinated debt		28			1			-			29
Note Payable		-			-			30			30
FHLB advances		128			(98	)		(55	)		(25	)
Total net change in expense on
interest-bearing liabilities		730			375			82			1,187
Net change in net interest income	$	13		$	3,128		$	102		$	3,243

	Nine-month period ended March 31, 2018
	Compared to nine-month period ended March 31, 2017
	Increase (Decrease) Due to
(dollars in thousands)							Rate/
	Rate			Volume			Volume			Net
Interest-earnings assets:
Loans receivable (1)	$	1,721		$	9,376		$	386		$	11,483
Mortgage-backed securities		83			120			7			210
Investment securities (2)		(54	)		233			(9	)		170
Other interest-earning deposits		30			(4	)		(5	)		21
Total net change in income on
interest-earning assets		1,780			9,725			379			11,884
Interest-bearing liabilities:
Deposits		1,233			1,525			325			3,083
Securities sold under
agreements to repurchase		47			(59	)		(36	)		(48	)
FHLB advances		473			(458	)		(230	)		(215	)
Note payable		-			-			87			87
Subordinated debt		71			3			2			76
Total net change in expense on
interest-bearing liabilities		1,824			1,011			148			2,983
Net change in net interest income	$	(44	)	$	8,714		$	231		$	8,901

(1)	Does not include interest on loans placed on nonaccrual status.
(2)	Does not include dividends earned on equity securities.

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Results of Operations – Comparison of the three-month periods ended March 31, 2018 and 2017

General. Net income for the three-month period ended March 31, 2018, was $5.3 million, an increase of $1.3 million, or 33.0%, as compared to the same period of the prior fiscal year.  The increase was attributable to increases in net interest income and noninterest income, partially offset by increases in noninterest expense, provision for income taxes, and provision for loan losses. Net income for the three-month period ended March 31, 2018, was negatively impacted by non-recurring charges related to the SMB-Marshfield Acquisition, and positively impacted by gains realized on the sale of AFS securities and fixed assets.

For the three-month period ended March 31, 2018, basic and fully-diluted net income per share were both $0.60, as compared to $0.53 under both measures for the same period of the prior fiscal year, which represented an increase of $0.07, or 13.2%. Our annualized return on average assets for the three-month period ended March 31, 2018, was 1.15%, as compared to 1.07% for the same period of the prior fiscal year. Our return on average common stockholders' equity for the three-month period March 31, 2018, was 11.2%, as compared to 11.9% in the same period of the prior fiscal year.

Net Interest Income. Net interest income for the three-month period ended March 31, 2018, was $15.7 million, an increase of $3.2 million, or 26.1%, as compared to the same period of the prior fiscal year. The increase was attributable to a 22.9% increase in the average balance of interest-earning assets, combined with an increase in net interest margin to 3.74% in the current three-month period, from 3.64% in the three-month period a year ago. Our net interest margin is determined by dividing annualized net interest income by total average interest-earning assets.

Loan discount accretion and deposit premium amortization related to the Peoples Acquisition decreased to $113,000 for the three-month period ended March 31, 2018, as compared to $216,000 for the same period of the prior fiscal year. Loan discount accretion and deposit premium amortization related to the Capaha Acquisition resulted in an additional $429,000 in net interest income for the three-month period ended March 31, 2018, with no comparable item in the same period a year ago. Combined, these components of net interest income contributed 13 basis points to net interest margin in the three-month period ended March 31, 2018, as compared to a contribution of six basis points for the same period of the prior fiscal year. The dollar impact of this component of net interest income has generally been declining each sequential quarter as assets from the Peoples Acquisition mature or prepay, however, the Capaha Acquisition will contribute additional net interest income during fiscal 2018, with no comparable items from fiscal 2017 periods. Also, additional interest income was recognized in the current quarter due to the resolution of specific purchased credit impaired loans from the Capaha Acquisition.  Net interest income and the impact to net interest margin from discount accretion recognized as a result of the SMB-Marshfield Acquisition is expected to be significantly less, by comparison.

For the three-month period ended March 31, 2018, our net interest spread was 3.58%, as compared to 3.55% in the three-month period a year ago. The increase in net interest rate spread, compared to the same period a year ago, resulted from a 24 basis point increase in the average yield on interest-earning assets, partially offset by a 21 basis point increase in the average cost of interest-bearing liabilities.

Interest Income. Total interest income for the three-month period ended March 31, 2018, was $19.4 million, an increase of $4.4 million, or 29.6%, as compared to the same period of the prior fiscal year. The increase was attributed to a 22.9% increase in the average balance of interest-earning assets, combined with a 24 basis point increase in the average yield earned on interest-earning assets, as compared to the same period of the prior fiscal year. Increased average interest-earning balances were attributable primarily to loan portfolio growth, which was due in part to the Capaha Acquisition, along with organic growth, and the SMB-Marshfield Acquisition. Investment balances also increased, due in part to the Capaha Acquisition. The increase in the average yield on interest-earning assets was attributable primarily to originations and renewals of loans at higher market rates, the increase in loan discount accretion, discussed above, as well as a slight shift in the earning asset mix towards the loan portfolio.

Interest Expense. Total interest expense for the three-month period ended March 31, 2018, was $3.7 million, an increase of $1.2 million, or 47.0%, as compared to the same period of the prior fiscal year. The increase was attributable to a 21 basis point increase in the average cost of interest-bearing liabilities, combined with an 18.2% increase in the average balance of interest-bearing liabilities, as compared to the same period of the prior fiscal year. Increased average interest-bearing balances were attributable primarily to deposit growth, which was due in part to the Capaha Acquisition, along with organic deposit growth, and the SMB-Marshfield Acquisition. Average FHLB advance balances decreased, as did securities sold under agreements to repurchase. The increase in the average cost of interest-bearing liabilities was attributed primarily to an increased cost to originate or renew certificates of deposit, increased overnight and short-term FHLB borrowing rates, increased rates paid on money market deposit accounts and savings accounts, and increased rates paid on interest-bearing transaction accounts.

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Provision for Loan Losses. The provision for loan losses for the three-month period ended March 31, 2018, was $550,000, as compared to $376,000 in the same period of the prior fiscal year. As a percentage of average loans outstanding, the provision for loan losses in the current three-month period represented a charge of 0.15% (annualized), while the Company recorded net charge offs during the period of 0.04% (annualized). During the same period of the prior fiscal year, provision for loan losses as a percentage of average loans outstanding represented a charge of 0.12% (annualized), while the Company recorded net charge offs of 0.06% (annualized). (See "Critical Accounting Policies", "Allowance for Loan Loss Activity" and "Nonperforming Assets").

Noninterest Income. The Company's noninterest income, including securities gains, for the three-month period ended March 31, 2018, was $3.9 million, an increase of $945,000, or 32.3%, as compared to the same period of the prior fiscal year. In the current period, gains on the sale of AFS securities totaled $254,000, and gains on the sale of fixed assets totaled $188,000, with no comparable activity in the year ago period. The year-ago period included a non-recurring benefit of $302,000 related to bank-owned life insurance, with no comparable activity in the current period. Otherwise, the increase was attributable primarily to other loan fees (including loan prepayment penalties), bank card interchange income, deposit account service charges, loan servicing fees, and gains on sales of residential real estate loans originated for that purpose, partially offset by a decrease in loan late charges collected. Increases in deposit account service charges, bank card interchange income, and loan servicing income were attributable primarily to the additional account holders and loans serviced following the June 2017 Capaha Acquisition.

Noninterest Expense. Noninterest expense for the three-month period ended March 31, 2018, was $11.9 million, an increase of $2.4 million, or 24.7%, as compared to the same period of the prior fiscal year. The increase was attributable primarily to increases in compensation and benefits and occupancy expenses, as a result of the Company's larger staff and number of facilities following the June 2017 Capaha Acquisition. Expenses related to merger and acquisition activity in the current three-month period totaled $443,000, compared to $73,000 in similar charges in the same period a year ago, accounting for much of the increase noted in legal and professional fees, data processing, and other expenses. Additionally, noninterest expense increased compared to the same quarter a year ago as the Company amortized new core deposit intangibles related to the 2017 Capaha Acquisition and the 2018 SMB-Marshfield Acquisition, and experienced higher bankcard network expenses. The efficiency ratio for the three-month period ended March 31, 2018, was 61.8%, as compared to 62.3% in the same period of the prior fiscal year.

Income Taxes. The income tax provision for the three-month period ended March 31, 2018, was $1.8 million, an increase of $347,000, or 23.7%, as compared to the same period of the prior fiscal year, attributable to higher pre-tax income, partially offset by a decrease in the effective tax rate, to 25.6%, from 27.0% in the year-ago period. The lower effective tax rate was attributed primarily to the December 2017 enactment of the Tax Cuts and Jobs Act (the "Tax Act"), lowering the Company's annual effective tax rate ("AETR") applied to pre-tax income for our fiscal year which ends June 30, 2018. The Company previously projected an effective tax rate for the second half of fiscal 2018 of 24 to 26 percent, assuming it maintains a consistent level of tax-advantaged activity and investment relative to its pre-tax income. For fiscal 2019, assuming a consistent level of tax-advantaged activity and investment relative to the Company's pre-tax income, it would expect an effective tax rate of 18 to 20 percent.

Results of Operations – Comparison of the nine-month periods ended March 31, 2018 and 2017

General. Net income for the nine-month period ended March 31, 2018, was $15.3 million, an increase of $3.5 million, or 29.2%, as compared to the same period of the prior fiscal year.  The increase was attributable to increases in net interest income and noninterest income, partially offset by increases in noninterest expense, provision for income taxes, and provision for loan losses.

For the nine-month period ended March 31, 2018, basic and fully-diluted net income per share were both $1.77, as compared to $1.59 under both measures for the same period of the prior fiscal year, which represented increases of $0.18, or 11.3%. Our annualized return on average assets for the nine-month period ended March 31, 2018, was 1.15%, as compared to 1.08% for the same period of the prior fiscal year. Our return on average common stockholders' equity for the nine-month period ended March 31, 2018, was 11.3%, as compared to 12.2% in the same period of the prior fiscal year.

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Net Interest Income. Net interest income for the nine-month period ended March 31, 2018, was $46.5 million, an increase of $8.9 million, or 23.7%, as compared to the same period of the prior fiscal year. The increase was attributable to a 21.0% increase in the average balance of interest-earning assets, combined with an increase in net interest margin to 3.80% in the current nine-month period, from 3.72% in the nine-month period a year ago. Our net interest margin is determined by dividing annualized net interest income by total average interest-earning assets.

Loan discount accretion and deposit premium amortization related to the Peoples Acquisition decreased to $905,000 for the nine-month period ended March 31, 2018, as compared to $1.1 million for the same period of the prior fiscal year. Loan discount accretion and deposit premium amortization related to the Capaha Acquisition resulted in an additional $1.0 million in net interest income for the nine-month period ended March 31, 2018, with no comparable item in the same period a year ago. Combined, these components of net interest income contributed 16 basis points to net interest margin in the nine-month period ended March 31, 2018, as compared to a contribution of 11 basis points for the same period of the prior fiscal year. The dollar impact of this component of net interest income has generally been declining each sequential quarter as assets from the Peoples Acquisition mature or prepay, however, the Capaha Acquisition is contributing additional net interest income during fiscal 2018, with no comparable items from fiscal 2017 periods. Also, additional net interest income was recognized during the quarters ended March 31, 2018; December 31, 2017; and September 30, 2016, due to the resolution of specific purchased credit impaired loans.  Net interest income and the impact to net interest margin from discount accretion recognized as a result of the SMB-Marshfield Acquisition is expected to be significantly less, by comparison.

For the nine-month period ended March 31, 2018, our net interest spread was 3.65%, as compared to 3.63% in the nine-month period a year ago. The increase in net interest rate spread, compared to the same period a year ago, resulted from a 19 basis point increase in the average yield on interest-earning assets, partially offset by a 17 basis point increase in the average cost of interest-bearing liabilities.

Interest Income. Total interest income for the nine-month period ended March 31, 2018, was $57.0 million, an increase of $11.9 million, or 26.3%, as compared to the same period of the prior fiscal year. The increase was attributed to a 21.0% increase in the average balance of interest-earning assets, combined with a 19 basis point increase in the average yield earned on interest-earning assets, as compared to the same period of the prior fiscal year. Increased average interest-earning balances were attributable primarily to loan portfolio growth, which was due in part to the Capaha Acquisition, along with organic growth. Investment balances also increased, due in part to the Capaha Acquisition. The increase in the average yield on interest-earning assets was attributable primarily to originations and renewals of loans at higher market rates, the increase in loan discount accretion, discussed above, as well as a slight shift in the earning asset mix towards the loan portfolio.

Interest Expense. Total interest expense for the nine-month period ended March 31, 2018, was $10.5 million, an increase of $3.0 million, or 39.4%, as compared to the same period of the prior fiscal year. The increase was attributable to a 17 basis point increase in the average cost of interest-bearing liabilities, combined with a 16.6% increase in the average balance of interest-bearing liabilities, as compared to the same period of the prior fiscal year. Increased average interest-bearing balances were attributable primarily to deposit growth, which was due in part to the Capaha Acquisition, along with organic deposit growth. Average FHLB advance balances decreased, as did securities sold under agreements to repurchase. The increase in the average cost of interest-bearing liabilities was attributed primarily to an increased cost to originate or renew certificates of deposit, increased overnight and short-term FHLB borrowing rates, increased rates paid on money market deposit accounts and savings accounts, and increased rates paid on interest-bearing transaction accounts.

Provision for Loan Losses. The provision for loan losses for the nine-month period ended March 31, 2018, was $2.1 million, as compared to $2.0 million in the same period of the prior fiscal year. As a percentage of average loans outstanding, the provision for loan losses in the current nine-month period represented a charge of 0.19% (annualized), while the Company recorded net charge offs during the period of 0.03% (annualized). During the same period of the prior fiscal year, provision for loan losses as a percentage of average loans outstanding represented a charge of 0.22% (annualized), while the Company recorded net charge offs of 0.06% (annualized). (See "Critical Accounting Policies", "Allowance for Loan Loss Activity" and "Nonperforming Assets").

Noninterest Income. The Company's noninterest income, including securities gains, for the nine-month period ended March 31, 2018, was $10.3 million, an increase of $2.1 million, or 25.8%, as compared to the same period of the prior fiscal year. The increase was attributable primarily to bank card interchange income, deposit account service charges, other loan fees (including loan prepayment penalties), loan servicing fees, and realized gains on sales of securities. Increases in bank card interchange income, deposit account service charges, and loan servicing income were attributable primarily to the additional account holders and loans serviced following the June 2017 Capaha Acquisition.

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Noninterest Expense. Noninterest expense for the nine-month period ended March 31, 2018, was $33.2 million, an increase of $5.8 million, or 21.0%, as compared to the same period of the prior fiscal year. The increase was attributable primarily to increases in compensation and benefits and occupancy expenses, as a result of the Company's larger staff and number of facilities following the June 2017 Capaha Acquisition. Expenses related to merger and acquisition activity in the current nine-month period totaled $776,000, compared to $173,000 in similar charges in the same period a year ago, accounting for much of the increase noted in legal and professional fees, data processing, and other expenses. Additionally, noninterest expense increased compared to the same period a year ago as the Company amortized new core deposit intangibles related to the 2017 Capaha Acquisition and the 2018 SMB-Marshfield Acquisition, and experienced higher bankcard network expenses. The efficiency ratio for the nine-month period ended March 31, 2018, was 58.8%, as compared to 59.9% in the same period of the prior fiscal year.

Income Taxes. The income tax provision for the nine-month period ended March 31, 2018, was $6.2 million, an increase of $1.7 million, or 37.1%, as compared to the same period of the prior fiscal year, attributable primarily to higher pre-tax income, combined with an increase in the effective tax rate, to 29.0%, from 27.8%. The higher effective tax rate was attributed primarily to the December enactment of the Tax Act, which negatively impacted after-tax earnings by requiring a revaluation of the Company's net deferred tax asset ("DTA"), partially offset by a reduction in the Company's AETR applied to pre-tax income for the first nine months of fiscal 2018. Specifically, the revaluation of the DTA increased provision for income taxes by approximately $1.1 million. If the Company maintains a consistent level of tax-advantaged activity and investment relative to its pre-tax income, it would expect an effective tax rate for the fourth quarter of fiscal 2018 of 24 to 26 percent, and for the full year fiscal 2018 of 27 to 29 percent, which includes the impact of the DTA revaluation. For fiscal 2019, assuming a consistent level of tax-advantaged activity and investment relative to the Company's pre-tax income, it would expect an effective tax rate of 18 to 20 percent.

Allowance for Loan Loss Activity

The Company regularly reviews its allowance for loan losses and makes adjustments to its balance based on management's analysis of the loan portfolio, the amount of non-performing and classified loans, as well as general economic conditions. Although the Company maintains its allowance for loan losses at a level that it considers sufficient to provide for losses, there can be no assurance that future losses will not exceed internal estimates. In addition, the amount of the allowance for loan losses is subject to review by regulatory agencies, which can order the establishment of additional loss provision. The following table summarizes changes in the allowance for loan losses over the three- and nine-month periods ended March 31, 2018 and 2017:

	For the three months ended						For the nine months ended
	March 31,						March 31,
(dollars in thousands)	2018			2017			2018			2017
Balance, beginning of period	$	16,867		$	14,992		$	15,538		$	13,791
Loans charged off:
Residential real estate		(92	)		(104	)		(170	)		(201	)
Construction		-			-			-			(31	)
Commercial business		(1	)		(67	)		(22	)		(337	)
Commercial real estate		(6	)		(4	)		(41	)		(4	)
Consumer		(60	)		(11	)		(118	)		(50	)
Gross charged off loans		(159	)		(186	)		(351	)		(623	)
Recoveries of loans previously charged off:
Residential real estate		1			1			2			7
Construction		-			-			-			1
Commercial business		-			1			7			30
Commercial real estate		2			3			1			18
Consumer		2			3			6			9
Gross recoveries of charged off loans		5			8			16			65
Net (charge offs) recoveries		(154	)		(178	)		(335	)		(558	)
Provision charged to expense		550			376			2,060			1,957
Balance, end of period	$	17,263		$	15,190		$	17,263		$	15,190

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The allowance for loan losses has been calculated based upon an evaluation of pertinent factors underlying the various types and quality of the Company's loans. Management considers such factors as the repayment status of a loan, the estimated net fair value of the underlying collateral, the borrower's intent and ability to repay the loan, local economic conditions, and the Company's historical loss ratios. We maintain the allowance for loan losses through the provision for loan losses that we charge to income. We charge losses on loans against the allowance for loan losses when we believe the collection of loan principal is unlikely. The allowance for loan losses increased $1.7 million to $17.3 million at March 31, 2018, from $15.5 million at June 30, 2017, primarily due to growth in the loan portfolio, as the increase was deemed appropriate in order to bring the allowance for loan losses to a level that reflects management's estimate of the incurred loss in the Company's loan portfolio at March 31, 2018.

At March 31, 2018, the Company had loans of $11.9 million, or 0.77% of total  loans, adversely classified ($10.0 million classified "substandard"; $1.9 classified "doubtful"), as compared to loans of $13.3 million, or 0.94% of total loans, adversely classified ($12.7 million classified "substandard"; $602,000 classified "doubtful") at June 30, 2017, and $9.8 million, or 0.79% of total loans, adversely classified ($9.8 million classified "substandard"; none classified "doubtful") at March 31, 2017. Classified loans were generally comprised of loans secured by commercial and residential real estate loans, while a smaller amount of commercial operating loans and consumer loans were also classified. All loans were classified due to concerns as to the borrowers' ability to continue to generate sufficient cash flows to service the debt. Of our classified loans, the Company had ceased recognition of interest on loans with a carrying value of $4.0 million at March 31, 2018.

As indicated in Note 4 to the condensed consolidated financial statements, the Company's total past due loans increased from $4.8 million at June 30, 2017, to $7.2 million at March 31, 2018. The increase is attributable primarily to loans secured by residential real estate.  Also noted in Note 4 to the condensed consolidated financial statements, the Company's nonperforming loans, which includes nonaccrual loans and loans 90 or more days past due and still accruing, increased from $3.2 million at June 30, 2017, to $6.2 million at March 31, 2018. The increase in nonperforming loans was attributable primarily to two relationships with loans moved to nonaccrual status: a $1.7 million relationship secured by commercial collateral, agricultural real estate, and commercial real estate, which has deteriorated relatively recently; and a $1.0 million multifamily relationship which has been considered a classified asset for approximately four years. The remainder of the increase is attributable to a number of consumer loans, secured primarily by residential real estate.

In its quarterly evaluation of the adequacy of its allowance for loan losses, the Company employs historical data including past due percentages, charge offs, and recoveries for the previous five years for each loan category. The Company's allowance methodology considers the most recent twelve-month period's average net charge offs and uses this information as one of the primary factors for evaluation of allowance adequacy. Average net charge offs are calculated as net charge offs by portfolio type for the period as a percentage of the average balance of respective portfolio type over the same period.

The following table sets forth the Company's historical net charge offs as of March 31, 2018 and June 30, 2017:

	March 31, 2018			June 30, 2017
	Net charge offs –			Net charge offs –
Portfolio segment	12-month historical			12-month historical
Real estate loans:
Residential		0.03	%		0.04	%
Construction		0.00	%		0.05	%
Commercial		0.01	%		0.00	%
Consumer loans		0.20	%		0.16	%
Commercial loans		0.01	%		0.13	%

Additionally, in its quarterly evaluation of the adequacy of the allowance for loan losses, the Company evaluates changes in the financial condition of individual borrowers; changes in local, regional, and national economic conditions; the Company's historical loss experience; and changes in market conditions for property pledged to the Company as collateral. The Company has identified specific qualitative factors that address these issues and subjectively assigns a percentage to each factor. Qualitative factors are reviewed quarterly and may be adjusted as necessary to reflect improving or declining trends. At March 31, 2018, these qualitative factors included:

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· Changes in lending policies

· National, regional, and local economic conditions

· Changes in mix and volume of portfolio

· Experience, ability, and depth of lending management and staff

· Entry to new markets

· Levels and trends of delinquent, nonaccrual, special mention and

· Classified loans

· Concentrations of credit

· Changes in collateral values

· Agricultural economic conditions

· Regulatory risk

The qualitative factors are applied to the allowance for loan losses based upon the following percentages by loan type:

Portfolio segment	Qualitative factorapplied at interim periodended March 31, 2018			Qualitative factorapplied at fiscal year ended June 30, 2017
Real estate loans:
Residential		0.63	%		0.73	%
Construction		1.63	%		1.73	%
Commercial		1.29	%		1.33	%
Consumer loans		1.30	%		1.36	%
Commercial loans		1.34	%		1.37	%

At March 31, 2018, the amount of our allowance for loan losses attributable to these qualitative factors was approximately $14.8 million, as compared to $13.8 million at June 30, 2017, primarily due to loan growth. The relatively small change in qualitative factors applied was attributable to management's assessment that risks represented by the qualitative factors were little changed, on balance.  Higher levels of net charge offs requiring additional provision for loan losses could result. Although management uses the best information available, the level of the allowance for loan losses remains an estimate that is subject to significant judgment and short-term change.

Nonperforming Assets

The ratio of nonperforming assets to total assets and nonperforming loans to net loans receivable is another measure of asset quality. Nonperforming assets of the Company include nonaccruing loans, accruing loans delinquent/past maturity 90 days or more, and assets which have been acquired as a result of foreclosure or deed-in-lieu of foreclosure. The table below summarizes changes in the Company's level of nonperforming assets over selected time periods:

(dollars in thousands)	March 31, 2018		June 30, 2017		March 31, 2017
Nonaccruing loans:
Residential real estate	$	3,026	$	1,263	$	1,515
Construction		34		35		36
Commercial real estate		1,970		960		1,102
Consumer		231		158		44
Commercial business		957		409		372
Total		6,218		2,825		3,069
Loans 90 days past due accruing interest:
Residential real estate		-		59		59
Construction		-		-		-
Commercial real estate		-		-		41
Consumer		-		13		34
Commercial business		-		329		-
Total		-		401		134
Total nonperforming loans		6,218		3,226		3,203
Foreclosed assets held for sale:
Real estate owned		4,067		3,014		3,296
Other nonperforming assets		75		86		37
Total nonperforming assets	$	10,360	$	6,326	$	6,536

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At March 31, 2018, troubled debt restructurings (TDRs) totaled $13.1 million, of which $1.3 million was considered nonperforming and is included in the nonaccrual loan total above. The remaining $11.8 million in TDRs have complied with the modified terms for a reasonable period of time and are therefore considered by the Company to be accrual status loans. In general, these loans were subject to classification as TDRs at March 31, 2018, on the basis of guidance under ASU No. 2011-02, which indicates that the Company may not consider the borrower's effective borrowing rate on the old debt immediately before the restructuring in determining whether a concession has been granted. At June 30, 2017, TDRs totaled $11.2 million, of which $338,000 was considered nonperforming and is included in the nonaccrual loan total above. The remaining $10.9 million in TDRs at June 30, 2017, had complied with the modified terms for a reasonable period of time and were therefore considered by the Company to be accrual status loans.

At March 31, 2018, nonperforming assets totaled $10.4 million, as compared to $6.3 million at June 30, 2017, and $6.5 million at March 31, 2017. The increase in nonperforming assets from fiscal year end was comprised mainly of nonaccrual loans (see "Allowance for Loan Loss Activity").

Liquidity Resources

The term "liquidity" refers to our ability to generate adequate amounts of cash to fund loan originations, loans purchases, deposit withdrawals and operating expenses. Our primary sources of funds include deposit growth, securities sold under agreements to repurchase, FHLB advances, brokered deposits, amortization and prepayment of loan principal and interest, investment maturities and sales, and funds provided by our operations. While the scheduled loan repayments and maturing investments are relatively predictable, deposit flows, FHLB advance redemptions, and loan and security prepayment rates are significantly influenced by factors outside of the Bank's control, including interest rates, general and local economic conditions and competition in the marketplace. The Bank relies on FHLB advances and brokered deposits as additional sources for funding cash or liquidity needs.

The Company uses its liquid resources principally to satisfy its ongoing cash requirements, which include funding loan commitments, funding maturing certificates of deposit and deposit withdrawals, maintaining liquidity, funding maturing or called FHLB advances, purchasing investments, and meeting operating expenses.

At March 31, 2018, the Company had outstanding commitments and approvals to extend credit of approximately $272.4 million (including $197.7 million in unused lines of credit) in mortgage and non-mortgage loans. These commitments and approvals are expected to be funded through existing cash balances, cash flow from normal operations and, if needed, advances from the FHLB or the Federal Reserve's discount window. At March 31, 2018, the Bank had pledged residential real estate loan portfolios and a significant portion of its commercial real estate loan portfolios with the FHLB for available credit of approximately $328.8 million, of which $50.9 million had been advanced, (additionally, letters of credit totaling $4.1 million had been issued on the Bank's behalf in order to secure public unit funding).  The Bank has the ability to pledge several other loan portfolios, including, for example, its commercial and home equity loans, which could provide additional collateral for additional borrowings; in total, FHLB borrowings are generally limited to 35% of bank assets, or $619.0 million, subject to available collateral. Also, at March 31, 2018, the Bank had pledged a total of $215.0 million in loans secured by farmland and agricultural production loans to the Federal Reserve, providing access to $144.1 million in primary credit borrowings from the Federal Reserve's discount window. Management believes its liquid resources will be sufficient to meet the Company's liquidity needs.

Regulatory Capital

The Company and Bank are subject to various regulatory capital requirements administered by the Federal banking agencies.  Failure to meet minimum capital requirements can result in certain mandatory—and possibly additional discretionary – actions by regulators that, if undertaken, could have a direct material effect on the Company's financial statements.  Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and Bank must meet specific capital guidelines that involve quantitative measures of the Company and the Bank's assets, liabilities, and certain off-balance sheet items as calculated under U.S. GAAP, regulatory reporting requirements and regulatory capital standards.  The Company's and Bank's capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.  Furthermore, the Company's and Bank's regulators could require adjustments to regulatory capital not reflected in the condensed consolidated financial statements.

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Quantitative measures established by regulatory capital standards to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios (set forth in the table below) of total capital, Tier 1 capital (as defined), and common equity Tier 1 capital (as defined) to risk-weighted assets (as defined) and of Tier 1 capital (as defined) to average total assets (as defined). Management believes, as of March 31, 2018 and June 30, 2017, that the Company and the Bank met all capital adequacy requirements to which they are subject.

In July 2013, the Federal banking agencies announced their approval of the final rule to implement the Basel III regulatory reforms, among other changes required by the Dodd-Frank Wall Street Reform and Consumer Protection Act. The approved rule included a new minimum ratio of common equity Tier 1 (CET1) capital of 4.5%, raised the minimum ratio of Tier 1 capital to risk-weighted assets from 4.0% to 6.0%, and included a minimum leverage ratio of 4.0% for all banking institutions. The phase-in of the enhanced capital requirements for banking organizations such as the Company and the Bank began January 1, 2015. Additionally, the rule created a capital conservation buffer of 2.5% of risk-weighted assets, and prohibited banking organizations from making distributions or discretionary bonus payments during any quarter if its eligible retained income is negative, if the capital conservation buffer is not maintained. This new capital conservation buffer requirement began phasing in beginning in January 2016 at 0.625% of risk-weighted assets and increases by that amount each year until fully implemented in January 2019. Other changes included revised risk-weighting of some assets, stricter limitations on mortgage servicing assets and deferred tax assets, and replacement of the ratings-based approach to risk weight securities.

As of March 31, 2018, the most recent notification from the Federal banking agencies categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized the Bank must maintain minimum total risk-based, Tier 1 risk-based, common equity Tier 1 risk-based, and Tier 1 leverage ratios as set forth in the table. There are no conditions or events since that notification that management believes have changed the Bank's category.

The tables below summarize the Company and Bank's actual and required regulatory capital:

	Actual					For Capital Adequacy Purposes					To Be Well Capitalized Under Prompt Corrective Action Provisions
As of March 31, 2018	Amount		Ratio			Amount		Ratio			Amount		Ratio
(dollars in thousands)
Total Capital (to Risk-Weighted Assets)
Consolidated	$	216,315		13.44	%	$	128,724		8.00	%		n/a		n/a
Southern Bank		209,188		13.00	%		128,724		8.00	%		160,905		10.00	%
Tier I Capital (to Risk-Weighted Assets)
Consolidated		197,727		12.29	%		96,543		6.00	%		n/a		n/a
Southern Bank		190,600		11.85	%		96,543		6.00	%		128,724		8.00	%
Tier I Capital (to Average Assets)
Consolidated		197,727		10.94	%		72,294		4.00	%		n/a		n/a
Southern Bank		190,600		10.74	%		70,958		4.00	%		88,697		5.00	%
Common Equity Tier I Capital (to Risk-     Weighted Assets)
Consolidated		183,411		11.40	%		72,407		4.50	%		n/a		n/a
Southern Bank		190,600		11.85	%		72,407		4.50	%		104,588		6.50	%

	Actual					For Capital Adequacy Purposes					To Be Well Capitalized Under Prompt Corrective Action Provisions
As of June 30, 2017	Amount		Ratio			Amount		Ratio			Amount		Ratio
(dollars in thousands)
Total Capital (to Risk-Weighted Assets)
Consolidated	$	194,322		12.84	%	$	121,086		8.00	%		n/a		n/a
Southern Bank		183,906		12.15	%		121,118		8.00	%		151,397		10.00	%
Tier I Capital (to Risk-Weighted Assets)
Consolidated		177,679		11.74	%		90,815		6.00	%		n/a		n/a
Southern Bank		167,263		11.05	%		90,838		6.00	%		121,118		8.00	%
Tier I Capital (to Average Assets)
Consolidated		177,679		11.66	%		60,975		4.00	%		n/a		n/a
Southern Bank		167,263		10.98	%		60,949		4.00	%		76,187		5.00	%
Common Equity Tier I Capital (to Risk-     Weighted Assets)
Consolidated		163,626		10.81	%		68,111		4.50	%		n/a		n/a
Southern Bank		167,263		11.05	%		68,129		4.50	%		98,408		6.50	%

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PART I:  Item 3:  Quantitative and Qualitative Disclosures About Market Risk

SOUTHERN MISSOURI BANCORP, INC.

Asset and Liability Management and Market Risk

The goal of the Company's asset/liability management strategy is to manage the interest rate sensitivity of both interest-earning assets and interest-bearing liabilities in order to maximize net interest income without exposing the Bank to an excessive level of interest rate risk. The Company employs various strategies intended to manage the potential effect that changing interest rates may have on future operating results. The primary asset/liability management strategy has been to focus on matching the anticipated re-pricing intervals of interest-earning assets and interest-bearing liabilities. At times, however, depending on the level of general interest rates, the relationship between long- and short-term interest rates, market conditions and competitive factors, the Company may determine to increase its interest rate risk position somewhat in order to maintain its net interest margin.

In an effort to manage the interest rate risk resulting from fixed rate lending, the Bank has utilized longer term FHLB advances (with maturities up to ten years), subject to early redemptions and fixed terms. Other elements of the Company's current asset/liability strategy include (i) increasing originations of commercial business, commercial real estate, agricultural operating lines, and agricultural real estate loans, which typically provide higher yields and shorter repricing periods, but inherently increase credit risk; (ii) actively soliciting less rate-sensitive deposits, including aggressive use of the Company's "rewards checking" product, and (iii) offering competitively-priced money market accounts and CDs with maturities of up to five years. The degree to which each segment of the strategy is achieved will affect profitability and exposure to interest rate risk.

The Company continues to originate long-term, fixed-rate residential loans. During the first nine months of fiscal year 2018, fixed rate 1- to 4-family residential loan production totaled $45.8 million, as compared to $45.0 million during the same period of the prior fiscal year. At March 31, 2018, the fixed rate residential loan portfolio was $167.9 million with a weighted average maturity of 100 months, as compared to $139.6 million at March 31, 2017, with a weighted average maturity of 108 months. The Company originated $26.5 million in adjustable-rate 1- to 4-family residential loans during the nine-month period ended March 31, 2018, as compared to $25.4 million during the same period of the prior fiscal year. At March 31, 2018, fixed rate loans with remaining maturities in excess of 10 years totaled $38.5 million, or 2.5% of net loans receivable, as compared to $37.8 million, or 3.1% of net loans receivable at March 31, 2017. The Company originated $190.3 million in fixed rate commercial and commercial real estate loans during the nine-month period ended March 31, 2018, as compared to $193.2 million during the same period of the prior fiscal year.  The Company also originated $65.4 million in adjustable rate commercial and commercial real estate loans during the nine-month period ended March 31, 2018, as compared to $68.7 million during the same period of the prior fiscal year. At March 31, 2018, adjustable-rate home equity lines of credit increased to $37.9 million, as compared to $26.8 million at March 31, 2017. At March 31, 2018, the Company's investment portfolio had an expected weighted-average life of 4.2 years, compared to 4.1 years at March 31, 2017. Management continues to focus on customer retention, customer satisfaction, and offering new products to customers in order to increase the Company's amount of less rate-sensitive deposit accounts.

49

Interest Rate Sensitivity Analysis

The following table sets forth as of March 31, 2018, management's estimates of the projected changes in net portfolio value ("NPV") in the event of 100, 200, and 300 basis point ("bp") instantaneous and permanent increases, and 100, 200, and 300 basis point instantaneous and permanent decreases in market interest rates. Dollar amounts are expressed in thousands.

March 31, 2018
									NPV as Percentage of
	Net Portfolio								PV of Assets
Change in Rates	Value		Change			% Change			NPV Ratio			Change
+300 bp	$	167,539	$	(26,549	)		-14	%		9.56	%		-0.99	%
+200 bp		176,914		(17,174	)		-9	%		9.93	%		-0.62	%
+100 bp		186,018		(8,070	)		-4	%		10.27	%		-0.28	%
0 bp		194,088		-			-			10.55	%		0.00	%
-100 bp		206,742		12,654			7	%		11.05	%		0.50	%
-200 bp		236,596		42,508			22	%		12.42	%		1.87	%
-300 bp		259,327		65,239			34	%		13.45	%		2.91	%
June 30, 2017
									NPV as Percentage of
	Net Portfolio								PV of Assets
Change in Rates	Value		Change			% Change			NPV Ratio			Change
+300 bp	$	146,140	$	(26,692	)		-15	%		8.99	%		-1.13	%
+200 bp		154,473		(18,359	)		-11	%		9.35	%		-0.77	%
+100 bp		162,804		(10,027	)		-6	%		9.70	%		-0.42	%
0 bp		172,832		-			-			10.12	%		0.00	%
-100 bp		189,720		16,888			10	%		10.91	%		0.79	%
-200 bp		209,964		37,133			21	%		11.91	%		1.79	%
-300 bp		215,014		42,182			24	%		12.16	%		2.04	%

Computations of prospective effects of hypothetical interest rate changes are based on an internally generated model using actual maturity and repricing schedules for the Bank's loans and deposits, and are based on numerous assumptions, including relative levels of market interest rates, loan repayments and deposit run-offs, and should not be relied upon as indicative of actual results. Further, the computations do not contemplate any actions the Bank may undertake in response to changes in interest rates.

Management cannot predict future interest rates or their effect on the Bank's NPV in the future. Certain shortcomings are inherent in the method of analysis presented in the computation of NPV. For example, although certain assets and liabilities may have similar maturities or periods to repricing, they may react in differing degrees to changes in market interest rates. Additionally, certain assets, such as adjustable-rate loans, have an initial fixed rate period typically from one to seven years and over the remaining life of the asset changes in the interest rate are restricted. In addition, the proportion of adjustable-rate loans in the Bank's portfolios could decrease in future periods due to refinancing activity if market interest rates remain steady in the future. Further, in the event of a change in interest rates, prepayment and early withdrawal levels could deviate significantly from those assumed in the table. Finally, the ability of many borrowers to service their adjustable-rate debt may decrease in the event of an interest rate increase.

The Bank's Board of Directors (the "Board") is responsible for reviewing the Bank's asset and liability policies. The Board's Asset/Liability Committees meets monthly to review interest rate risk and trends, as well as liquidity and capital ratios and requirements. The Bank's management is responsible for administering the policies and determinations of the Boards with respect to the Bank's asset and liability goals and strategies.

50

PART I:  Item 4:  Controls and Procedures

SOUTHERN MISSOURI BANCORP, INC.

An evaluation of Southern Missouri Bancorp's disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities and Exchange Act of 1934, as amended, (the "Act")) as of March 31, 2018, was carried out under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, and several other members of our senior management. The Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2018, the Company's disclosure controls and procedures were effective in ensuring that the information required to be disclosed by the Company in the reports it files or submits under the Act is (i) accumulated and communicated to management (including the Chief Executive and Financial Officer) in a timely manner, and (ii) recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Act) that occurred during the quarter ended March 31, 2018, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

The Company does not expect that its disclosures and procedures will prevent all errors and all fraud. A control procedure, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control procedure are met. Because of the inherent limitations in all control procedures, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any control procedure also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control procedure, misstatements due to error or fraud may occur and not be detected.

51

PART II: Other Information

SOUTHERN MISSOURI BANCORP, INC.

Item 1:  Legal Proceedings

In the opinion of management, the Company is not a party to any pending claims or lawsuits that are expected to have a material effect on the Company's financial condition or operations. Periodically, there have been various claims and lawsuits involving the Company mainly as a defendant, such as claims to enforce liens, condemnation proceedings on properties in which the Company holds security interests, claims involving the making and servicing of real property loans and other issues incident to the Bank's business. Aside from such pending claims and lawsuits, which are incident to the conduct of the Company's ordinary business, the Company is not a party to any material pending legal proceedings that would have a material effect on the financial condition or operations of the Company.

Item 1a:  Risk Factors

There have been no material changes to the risk factors set forth in Part I, Item 1A of the Company's Annual Report on Form 10-K for the year ended June 30, 2017.

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

Period	Total Number of Shares (or Units) Purchased	Average Price Paid per Share (or Unit)	Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet be Purchased Under the Plans or Program
1/1/2018 thru 1/31/2018	-	-	-	-
2/1/2018 thru 2/28/2018	-	-	-	-
3/1/2018 thru 3/31/2018	-	-	-	-
Total	-	-	-	-

Item 3:  Defaults upon Senior Securities

Not applicable

Item 4:  Mine Safety Disclosures

Not applicable

Item 5:  Other Information

None

52

Item 6:  Exhibits

(a)  Exhibits
	3.1(i)	Articles of Incorporation of the Registrant (filed as an exhibit to the Registrant's Annual Report on Form 10-KSB for the fiscal year ended June 30, 1999 and incorporated herein by reference)
	3.1(i)A	Amendment to Articles of Incorporation of Southern Missouri increasing the authorized capital stock of Southern Missouri (filed as an exhibit to Southern Missouri's Current Report on Form 8-K filed on November 21, 2016 and incorporated herein by reference)
	3.1(ii)	Certificate of Designation for the Registrant's Senior Non-Cumulative Perpetual Preferred Stock, Series A (filed as an exhibit to the Registrant's Current Report on Form 8-K filed on July 26, 2011 and incorporated herein by reference)
	3.2	Bylaws of the Registrant (filed as an exhibit to the Registrant's Current Report on Form 8-K filed on December 6, 2007 and incorporated herein by reference)
	10	Material Contracts:
		1.	2017 Omnibus Incentive Plan (attached to the Registrant's definitive proxy statement filed on September 26, 2017 and incorporated herein by reference)
		2.	2008 Equity Incentive Plan (attached to the Registrant's definitive proxy statement filed on September 19, 2008 and incorporated herein by reference)
		3.	2003 Stock Option and Incentive Plan (attached to the Registrant's definitive proxy statement filed on September 17, 2003 and incorporated herein by reference)
		4.	1994 Stock Option and Incentive Plan (attached to the Registrant's definitive proxy statement filed on October 21, 1994 and incorporated herein by reference)"P"
		5.	Management Recognition and Development Plan (attached to the Registrant's definitive proxy statement filed on October 21, 1994 and incorporated herein by reference)"P"
		6.	Employment Agreements
			(i)	Employment Agreement with Greg A. Steffens (files as an exhibit to the Registrant's Annual Report on Form 10-KSB for the year ended June 30, 1999)
		7.	Director's Retirement Agreements
			(i)	Director's Retirement Agreement with Sammy A. Schalk (filed as an exhibit to the Registrant's Quarterly Report on Form 10-QSB for the quarter ended December 31, 2000 and incorporated herein by reference)
			(ii)	Director's Retirement Agreement with Ronnie D. Black (filed as an exhibit to the Registrant's Quarterly Report on Form 10-QSB for the quarter ended December 31, 2000 and incorporated herein by reference)
			(iii)	Director's Retirement Agreement with L. Douglas Bagby (filed as an exhibit to the Registrant's Quarterly Report on Form 10-QSB for the quarter ended December 31, 2000 and incorporated herein by reference)
			(iv)	Director's Retirement Agreement with Rebecca McLane Brooks (filed as an exhibit to the Registrant's Quarterly Report on Form 10-QSB for the quarter ended December 31, 2004 and incorporated herein by reference)
			(v)	Director's Retirement Agreement with Charles R. Love (filed as an exhibit to the Registrant's Quarterly Report on Form 10-QSB for the quarter ended December 31, 2004 and incorporated herein by reference)
			(vi)	Director's Retirement Agreement with Dennis C. Robison (filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q for the quarter ended December 31, 2008 and incorporated herein by reference)
			(vii)	Director's Retirement Agreement with David J. Tooley (filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q for the quarter ended December 31, 2011 and incorporated herein by reference)
			(viii)	Director's Retirement Agreement with Todd E. Hensley (filed as an exhibit to the Registrant's Annual Report on Form 10-K for the year ended June 30, 2015 and incorporated herein by reference)
		8.	Tax Sharing Agreement (filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2015 and incorporated herein by reference)
	31.1	Rule 13a-14(a)/15-d14(a) Certifications
	31.2	Rule 13a-14(a)/15-d14(a) Certifications
	32	Section 1350 Certifications

53

SIGNATURES

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

	SOUTHERN MISSOURI BANCORP, INC. Registrant
Date:  May 10, 2018	/s/ Greg A. Steffens
	Greg A. Steffens
	President & Chief Executive Officer
	(Principal Executive Officer)
Date:  May 10, 2018	/s/ Matthew T. Funke
	Matthew T. Funke
	Executive Vice President & Chief Financial Officer
	(Principal Financial and Accounting Officer)

54

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Greg A. Steffens, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Southern Missouri 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 officers 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 we 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 changes in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.

5. The registrant's other certifying officers 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 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:   May 10, 2018	By:	/s/ Greg A. Steffens
		Greg A. Steffens
		President & Chief Executive Officer
		(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Matthew T. Funke, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Southern Missouri 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 officers 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 we 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 changes in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.

5. The registrant's other certifying officers 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 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:   May 10, 2018	By:	/s/ Matthew T. Funke
		Matthew T. Funke
		Executive Vice President & Chief Financial Officer
		(Principal Financial Officer)

EX-32

Exhibit 32

CERTIFICATION

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned hereby certifies in his capacity as an officer of Southern Missouri Bancorp, Inc. (the "Company") that the quarterly report of the Company on Form 10-Q for the quarter ended March 31, 2018, fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended, and that the information contained in such 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 presented in the financial statements included in such report.

Date:   May 10, 2018	By:	/s/ Greg A. Steffens
		Greg A. Steffens
		President & Chief Executive Officer
		(Principal Executive Officer)

Date:   May 10, 2018	By:	/s/ Matthew T.  Funke
		Matthew T. Funke
		Executive Vice President & Chief Financial Officer
		(Principal Financial Officer)

XML

Document and Entity Information - $ / shares		9 Months Ended
	May 09, 2018	Mar. 31, 2018
Details
Registrant Name		Southern Missouri Bancorp, Inc.
Registrant CIK		0000916907
SEC Form		10-Q
Period End date		Mar. 31, 2018
Fiscal Year End		--06-30
Trading Symbol		SMBC
Tax Identification Number (TIN)		431665523
Number of common stock shares outstanding	8,992,584
Filer Category		Accelerated Filer
Current with reporting		Yes
Voluntary filer		No
Well-known Seasoned Issuer		No
Amendment Flag		false
Document Fiscal Year Focus		2018
Document Fiscal Period Focus		Q3
Entity Incorporation, State Country Name		Missouri
Entity Address, Address Line One		2991 Oak Grove Road
Entity Address, City or Town		Poplar Bluff
Entity Address, State or Province		MO
Entity Address, Postal Zip Code		63901
City Area Code		573
Local Phone Number		778-1800
Entity Listing, Par Value Per Share	$ 0.01

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2018	Jun. 30, 2017
Details
Cash and cash equivalents	$ 30,781	$ 30,786
Interest-bearing Domestic Deposit, Time Deposits	1,949	747
Available-for-sale Securities	146,127	144,416
Federal Home Loan Bank Stock	4,535	3,547
Federal Reserve Bank Stock	3,196	2,357
Loans Receivable, Net	1,522,445	1,397,730
Interest Receivable	7,128	6,769
Property, Plant and Equipment, Net	55,495	54,167
Bank Owned Life Insurance	37,188	34,329
Goodwill	13,080	8,631
Other Intangible Assets, Net	7,133	6,759
Prepaid Expense and Other Assets	20,736	17,474
Total assets	1,849,793	1,707,712
Liabilities and Stockholders' Equity
Deposits	1,574,337	1,455,597
Securities Sold under Agreements to Repurchase	3,769	10,212
Advances from Federal Home Loan Banks	50,850	43,637
Notes Payable	3,000	3,000
Accounts Payable and Other Accrued Liabilities	5,282	6,417
Interest Payable, Current	1,138	918
Subordinated Debt	14,921	14,848
Total current liabilities	1,653,297	1,534,629
Total liabilities and shareholders' deficit	1,849,793	1,707,712
Common shares	90	86
Additional paid-in capital	83,360	70,101
Retained Earnings, Unappropriated	114,888	102,369
Accumulated Other Comprehensive Income (Loss), Net of Tax	(1,842)	527
Stockholders' Equity Attributable to Parent	$ 196,496	$ 173,083

XML

Condensed Consolidated Balance Sheets - Parenthetical - USD ($) $ in Thousands	Mar. 31, 2018	Jun. 30, 2017
Details
Loans and Leases Receivable, Allowance	$ 17,263	$ 15,538
Common Stock, Par or Stated Value Per Share	$ 0.01	$ 0.01
Common Stock, Shares Authorized	12,000,000	12,000,000
Common Stock, Shares, Issued	8,993,084	8,591,363

XML

Condensed Consolidated Statements of Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2018	Mar. 31, 2017
Interest and Dividend Income, Operating
Interest and Fee Income, Loans and Leases	$ 18,337	$ 14,067	$ 54,029	$ 42,546
Interest Income, Securities, Operating, Taxable	573	483	1,659	1,489
Interest Income, Securities, Mortgage Backed	453	392	1,297	1,087
Other Interest and Dividend Income	22	13	42	21
Interest and Dividend Income, Operating	19,385	14,955	57,027	45,143
Interest Expense
Interest Expense, Deposits	3,281	2,111	9,169	6,086
Interest Expense, Securities Sold under Agreements to Repurchase	8	25	29	77
Interest Expense, Federal Home Loan Bank and Federal Reserve Bank Advances, Long-term	199	224	709	924
Interest Expense Note Payable	30	0	87	0
Subordinated debt	192	163	552	476
Interest Expense	3,710	2,523	10,546	7,563
Interest Income (Expense), Net	15,675	12,432	46,481	37,580
Provision for Loan and Lease Losses	550	376	2,060	1,957
Interest Income (Expense), after Provision for Loan Loss	15,125	12,056	44,421	35,623
Noninterest Income
Fees and Commissions, Depositor Accounts	1,112	959	3,442	2,853
Interest and Fee Income, Loans, Consumer Installment, Credit Card	948	699	2,722	2,103
Fees and Commissions, Other	92	136	310	321
Bank Servicing Fees	162	67	489	196
Banking Fees and Commissions	544	279	1,174	835
Gain (Loss) on Sales of Loans, Net	196	108	618	621
Bank Owned Life Insurance Income	235	503	702	924
Noninterest Income, Other	327	174	567	346
Noninterest Income	3,870	2,925	10,316	8,199
Net realized gains on sale of AFS securities	254	0	292	0
Noninterest Expense
Employee Benefits and Share-based Compensation	6,040	5,086	17,396	14,386
Occupancy, Net	2,554	2,080	7,241	6,101
Federal Deposit Insurance Corporation Premium Expense	151	172	422	493
Professional Fees	354	260	899	788
Advertising Expense	283	277	885	759
Supplies and Postage Expense	178	155	552	432
Amortization of Intangible Assets	364	228	1,061	684
Bank Card Network Expense	387	271	1,127	824
Other Noninterest Expense	1,616	1,035	3,618	2,960
Noninterest Expense	11,927	9,564	33,201	27,427
Income (Loss) from Continuing Operations before Income Taxes, Domestic	7,068	5,417	21,536	16,395
Income Taxes Paid, Net	1,810	1,463	6,245	4,556
Net Income (Loss) Attributable to Parent	$ 5,258	$ 3,954	$ 15,291	$ 11,839
Basic earnings per common share	$ 0.60	$ 0.53	$ 1.77	$ 1.59
Diluted earnings per common share	0.60	0.53	1.77	1.59
Dividends per common share	$ 0.11	$ 0.10	$ 0.33	$ 0.30

XML

Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2018	Mar. 31, 2017
Details
Net Income (Loss) Attributable to Parent	$ 5,258	$ 3,954	$ 15,291	$ 11,839
Other Comprehensive Income (Loss), Tax
Available-for-sale Securities, Gross Unrealized Gain	(1,416)	571	(2,754)	(3,060)
Less: reclassification adjustment for realized gains included in net income	254	0	292	0
Other than Temporary Impairment Losses, Investments, Portion Recognized in Earnings, Net, Available-for-sale Securities	(265)	81	(213)	61
Income Tax Expense (Benefit)	465	(241)	890	1,110
Other Comprehensive Income (Loss), Tax	(1,470)	411	(2,369)	(1,889)
Comprehensive Income (Loss), Net of Tax, Attributable to Parent	$ 3,788	$ 4,365	$ 12,922	$ 9,950

XML

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Cash flows from operating activities:
Net Income (Loss) Attributable to Parent	$ 15,291	$ 11,839
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	2,334	2,241
Gain (Loss) on Disposal of Fixed Assets	(199)	(9)
Stock Option and Stock Grant Expense	221	243
Amortization of Intangible Assets	1,061	684
Amortization of Purchase Accounting Adjustments	(1,353)	(798)
Life Insurance, Corporate or Bank Owned, Change in Value	(702)	(924)
Gain (Loss on Sale of Foreclosed Assets	(83)	(36)
Provision for Loan and Lease Losses	2,060	1,957
Available-for-sale Securities, Gross Realized Gains	(292)	0
Accretion (Amortization) of Discounts and Premiums, Investments	763	781
Payments for Origination of Mortgage Loans Held-for-sale	(21,831)	(24,878)
Proceeds from Sale of Loans Held-for-sale	21,497	25,589
Gain on Sales of Loans Held for Sale	(618)	(621)
Changes in
Increase (Decrease) in Accrued Interest Receivable, Net	67	246
Increase (Decrease) in Prepaid Expense and Other Assets	7,049	1,336
Increase (Decrease) in Accounts Payable and Other Operating Liabilities	(2,953)	(797)
Increase (Decrease) in Deferred Income Taxes	(1,280)	241
Increase (Decrease) in Interest Payable, Net	197	74
Net cash used in operating activities	21,229	17,168
Cash flows from investing activities:
Increase (Decrease) in Other Loans	(58,019)	(92,694)
Net Change Interest-bearing Deposits, Domestic	249	225
Proceeds from Maturities, Prepayments and Calls of Available-for-sale Securities	17,842	18,235
Proceeds from Sale of Available-for-sale Securities	8,166	0
Payments for (Proceeds from) Federal Home Loan Bank Stock	(630)	2,146
Payments for (Proceeds from) Federal Reserve Bank Stock	(839)	(14)
Payments to Acquire Available-for-sale Securities	(25,891)	(26,839)
Payments to Acquire Property, Plant, and Equipment	(1,971)	(1,925)
Net cash paid for acquisitions	(1,501)	0
Investment Tax Credit	(5,086)	(1,661)
Proceeds from Sale of Productive Assets	1,918	11
Proceeds from Sale of Foreclosed Assets	1,088	742
Proceeds from Life Insurance Policy	0	848
Net cash used in investing activities	(64,674)	(100,926)
Cash flows from financing activities:
Increase (Decrease) in Demand Deposits	83,422	94,952
Increase (Decrease) in Time Deposits	(32,830)	56,972
Increase (Decrease) in Federal Funds Purchased and Securities Sold under Agreements to Repurchase, Net	(6,443)	(9,185)
Proceeds from Federal Home Loan Bank Advances	1,372,930	946,455
Repayments of Federal Home Loan Bank Borrowings	(1,370,930)	(1,004,805)
Dividends, Common Stock, Paid-in-kind	(2,837)	(2,236)
Net cash provided by financing activities	43,440	82,214
Common stock issued expense	128	61
Net increase (decrease) in cash	(5)	(1,544)
Cash and cash equivalents	30,786	22,554
Cash and cash equivalents	30,781	21,010
Cash Flow, Noncash Investing and Financing Activities Disclosure
Debt Conversion, Original Debt, Amount	1,694	707
Conversion of Foreclosed Real Estate to Loans	112	95
Conversion of Loans to Repossessed Assets	46	62
Cash Paid During the Period For
Interest Paid, Net	2,331	2,538
Income Taxes Paid	$ 1,080	$ 2,832

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Note 1: Basis of Presentation

9 Months Ended

Mar. 31, 2018

Notes

Note 1: Basis of Presentation

Note 1:  Basis of Presentation

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Securities and Exchange Commission (SEC) Regulation S-X. Accordingly, they 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, all material adjustments (consisting only of normal recurring accruals) considered necessary for a fair presentation have been included. The consolidated balance sheet of the Company as of June 30, 2017, has been derived from the audited consolidated balance sheet of the Company as of that date. Operating results for the three- and nine- month period ended March 31, 2018, are not necessarily indicative of the results that may be expected for the entire fiscal year. For additional information, refer to the audited consolidated financial statements included in the Company’s June 30, 2017, Form 10-K, which was filed with the SEC.

The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Southern Bank. All significant intercompany accounts and transactions have been eliminated in consolidation.

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Note 2: Organization and Summary of Significant Accounting Policies

9 Months Ended

Mar. 31, 2018

Notes

Note 2: Organization and Summary of Significant Accounting Policies

Note 2:  Organization and Summary of Significant Accounting Policies

Organization. Southern Missouri Bancorp, Inc., a Missouri corporation (the Company) was organized in 1994 and is the parent company of Southern Bank (the Bank). Substantially all of the Company’s consolidated revenues are derived from the operations of the Bank, and the Bank represents substantially all of the Company’s consolidated assets and liabilities.  SB Real Estate Investments, LLC is a wholly-owned subsidiary of the Bank formed to hold Southern Bank Real Estate Investments, LLC.  Southern Bank Real Estate Investments, LLC is a REIT which is controlled by SB Real Estate Investments, LLC, but which has other preferred shareholders in order to meet the requirements to be a REIT.  At March 31, 2018, assets of the REIT were approximately $439 million, and consisted primarily of loan participations acquired from the Bank.

The Bank is primarily engaged in providing a full range of banking and financial services to individuals and corporate customers in its market areas. The Bank and Company are subject to competition from other financial institutions. The Bank and Company are subject to regulation by certain federal and state agencies and undergo periodic examinations by those regulatory authorities.

Basis of Financial Statement Presentation. The financial statements of the Company have been prepared in conformity with accounting principles generally accepted in the United States of America and general practices within the banking industry. In the normal course of business, the Company encounters two significant types of risk: economic and regulatory. Economic risk is comprised of interest rate risk, credit risk, and market risk. The Company is subject to interest rate risk to the degree that its interest-bearing liabilities reprice on a different basis than its interest-earning assets. Credit risk is the risk of default on the Company’s investment or loan portfolios resulting from the borrowers’ inability or unwillingness to make contractually required payments. Market risk reflects changes in the value of the investment portfolio, collateral underlying loans receivable, and the value of the Company’s investments in real estate.

Principles of Consolidation. The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, the Bank. All significant intercompany accounts and transactions have been eliminated.

Use of Estimates. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for loan losses, estimated fair values of purchased loans, other-than-temporary impairments (OTTI), and fair value of financial instruments.

Cash and Cash Equivalents. For purposes of reporting cash flows, cash and cash equivalents includes cash, due from depository institutions and interest-bearing deposits in other depository institutions with original maturities of three months or less. Interest-bearing deposits in other depository institutions were $6.0 million and $6.7 million at March 31, 2018 and June 30, 2017, respectively. The deposits are held in various commercial banks in amounts not exceeding the FDIC’s deposit insurance limits, as well as at the Federal Reserve and the Federal Home Loan Bank of Des Moines.

Interest-bearing Time Deposits.  Interest bearing deposits in banks mature within eight years and are carried at cost, less fair value discounts on acquired time deposits.

Available for Sale Securities. Available for sale securities, which include any security for which the Company has no immediate plan to sell but which may be sold in the future, are carried at fair value. Unrealized gains and losses, net of tax, are reported in accumulated other comprehensive income (loss), a component of stockholders’ equity. All securities have been classified as available for sale.

Premiums and discounts on debt securities are amortized or accreted as adjustments to income over the estimated life of the security using the level yield method. Realized gains or losses on the sale of securities is based on the specific identification method. The fair value of securities is based on quoted market prices or dealer quotes. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities.

The Company does not invest in collateralized mortgage obligations that are considered high risk.

When the Company does not intend to sell a debt security, and it is more likely than not the Company will not have to sell the security before recovery of its cost basis, it recognizes the credit component of an other-than-temporary impairment of a debt security in earnings and the remaining portion in other comprehensive income. As a result of this guidance, the Company’s consolidated balance sheet as of the dates presented reflects the full impairment (that is, the difference between the security’s amortized cost basis and fair value) on debt securities that the Company intends to sell or would more likely than not be required to sell before the expected recovery of the amortized cost basis. For available-for-sale debt securities that management has no intent to sell and believes that it more likely than not will not be required to sell prior to recovery, only the credit loss component of the impairment is recognized in earnings, while the noncredit loss is recognized in accumulated other comprehensive loss. The credit loss component recognized in earnings is identified as the amount of principal cash flows not expected to be received over the remaining term of the security as projected based on cash flow projections.

Federal Home Loan Bank and Federal Reserve Bank Stock. The Bank is a member of the Federal Home Loan Bank (FHLB) system, and the Federal Reserve Bank of St. Louis. Capital stock of the FHLB and the Federal Reserve is a required investment based upon a predetermined formula and is carried at cost.

Loans. Loans are generally stated at unpaid principal balances, less the allowance for loan losses, unamortized discounts on acquired loans, and net deferred loan origination fees.

Interest on loans is accrued based upon the principal amount outstanding. The accrual of interest on loans is discontinued when, in management’s judgment, the collectability of interest or principal in the normal course of business is doubtful. The Company complies with regulatory guidance which indicates that loans should be placed in nonaccrual status when 90 days past due, unless the loan is both well-secured and in the process of collection. A loan that is “in the process of collection” may be subject to legal action or, in appropriate circumstances, through other collection efforts reasonably expected to result in repayment or restoration to current status in the near future. A loan is considered delinquent when a payment has not been made by the contractual due date. Interest income previously accrued but not collected at the date a loan is placed on nonaccrual status is reversed against interest income. Cash receipts on a nonaccrual loan are applied to principal and interest in accordance with its contractual terms unless full payment of principal is not expected, in which case cash receipts, whether designated as principal or interest, are applied as a reduction of the carrying value of the loan. A nonaccrual loan is generally returned to accrual status when principal and interest payments are current, full collectability of principal and interest is reasonably assured, and a consistent record of performance has been demonstrated.

The allowance for losses on loans represents management’s best estimate of losses probable in the existing loan portfolio. The allowance for losses on loans is increased by the provision for losses on loans charged to expense and reduced by loans charged off, net of recoveries. Loans are charged off in the period deemed uncollectible, based on management’s analysis of expected cash flows (for non-collateral dependent loans) or collateral value (for collateral-dependent loans). Subsequent recoveries of loans previously charged off, if any, are credited to the allowance when received. The provision for losses on loans is determined based on management’s assessment of several factors: reviews and evaluations of specific loans, changes in the nature and volume of the loan portfolio, current economic conditions and the related impact on specific borrowers and industry groups, historical loan loss experience, the level of classified and nonperforming loans and the results of regulatory examinations.

Loans are considered impaired if, 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. Depending on a particular loan’s circumstances, we measure impairment of a loan based upon either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s observable market price, or the fair value of the collateral less estimated costs to sell if the loan is collateral dependent. Valuation allowances are established for collateral-dependent impaired loans for the difference between the loan amount and fair value of collateral less estimated selling costs. For impaired loans that are not collateral dependent, a valuation allowance is established for the difference between the loan amount and the present value of expected future cash flows discounted at the historical effective interest rate or the observable market price of the loan. Impairment losses are recognized through an increase in the required allowance for loan losses. Cash receipts on loans deemed impaired are recorded based on the loan’s separate status as a nonaccrual loan or an accrual status loan.

Some loans are accounted for in accordance with ASC 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality. For these loans (“purchased credit impaired loans”), the Company recorded a fair value discount and began carrying them at book value less their face amount (see Note 4). For these loans, we determined the contractual amount and timing of undiscounted principal and interest payments (the “undiscounted contractual cash flows”), and estimated the amount and timing of undiscounted expected principal and interest payments, including expected prepayments (the “undiscounted expected cash flows”). Under acquired impaired loan accounting, the difference between the undiscounted contractual cash flows and the undiscounted expected cash flows is the nonaccretable difference. The nonaccretable difference is an estimate of the loss exposure of principal and interest related to the purchased credit impaired loans, and the amount is subject to change over time based on the performance of the loans. The carrying value of purchased credit impaired loans is initially determined as the discounted expected cash flows. The excess of expected cash flows at acquisition over the initial fair value of the purchased credit impaired loans is referred to as the “accretable yield” and is recorded as interest income over the estimated life of the acquired loans using the level-yield method, if the timing and amount of the future cash flows is reasonably estimable. The carrying value of purchased credit impaired loans is reduced by payments received, both principal and interest, and increased by the portion of the accretable yield recognized as interest income. Subsequent to acquisition, the Company evaluates the purchased credit impaired loans on a quarterly basis. Increases in expected cash flows compared to those previously estimated increase the accretable yield and are recognized as interest income prospectively. Decreases in expected cash flows compared to those previously estimated decrease the accretable yield and may result in the establishment of an allowance for loan losses and a provision for loan losses. Purchased credit impaired loans are generally considered accruing and performing loans, as the loans accrete interest income over the estimated life of the loan when expected cash flows are reasonably estimable. Accordingly, purchased credit impaired loans that are contractually past due are still considered to be accruing and performing as long as there is an expectation that the estimated cash flows will be received. If the timing and amount of cash flows is not reasonably estimable, the loans may be classified as nonaccrual loans.

Loan fees and certain direct loan origination costs are deferred, and the net fee or cost is recognized as an adjustment to interest income using the interest method over the contractual life of the loans.

Foreclosed Real Estate. Real estate acquired by foreclosure or by deed in lieu of foreclosure is initially recorded at fair value less estimated selling costs. Costs for development and improvement of the property are capitalized.

Valuations are periodically performed by management, and an allowance for losses is established by a charge to operations if the carrying value of a property exceeds its estimated fair value, less estimated selling costs.

Loans to facilitate the sale of real estate acquired in foreclosure are discounted if made at less than market rates. Discounts are amortized over the fixed interest period of each loan using the interest method.

Premises and Equipment. Premises and equipment are stated at cost less accumulated depreciation and include expenditures for major betterments and renewals. Maintenance, repairs, and minor renewals are expensed as incurred. When property is retired or sold, the retired asset and related accumulated depreciation are removed from the accounts and the resulting gain or loss taken into income. The Company reviews property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If such assets are considered to be impaired, the impairment loss recognized is measured by the amount by which the carrying amount exceeds the fair value of the assets.

Depreciation is computed by use of straight-line and accelerated methods over the estimated useful lives of the assets. Estimated lives are generally seven to forty years for premises, three to seven years for equipment, and three years for software.

Bank Owned Life Insurance. Bank owned life insurance policies are reflected in the consolidated balance sheets at the estimated cash surrender value.  Changes in the cash surrender value of these policies, as well as a portion of the insurance proceeds received, are recorded in noninterest income in the consolidated statements of income.

Goodwill. The Company’s goodwill is evaluated annually for impairment or more frequently if impairment indicators are present.  A qualitative assessment is performed to determine whether the existence of events or circumstances leads to a determination that it is more likely than not the fair value is less than the carrying amount, including goodwill.  If, based on the evaluation, it is determined to be more likely than not that the fair value is less than the carrying value, then goodwill is tested further for impairment.  If the implied fair value of goodwill is lower than its carrying amount, a goodwill impairment is indicated and goodwill is written down to its implied fair value.  Subsequent increases in goodwill value are not recognized in the financial statements.

Intangible Assets.  The Company’s intangible assets at March 31, 2018 included gross core deposit intangibles of $10.6 million with $4.8 million accumulated amortization, gross other identifiable intangibles of $3.8 million with accumulated amortization of $3.8 million, and FHLB mortgage servicing rights of $1.4 million.  At June 30, 2017, the Company’s intangible assets included gross core deposit intangibles of $9.2 million with $3.8 million accumulated amortization, gross other identifiable intangibles of $3.8 million with accumulated amortization of $3.8 million, and FHLB mortgage servicing rights of $1.3 million. The Company’s core deposit intangible assets are being amortized using the straight line method, over periods ranging from five to seven years, with amortization expense expected to be approximately $396,000 in the remainder of fiscal 2018, $1.3 millionin fiscal 2019, $1.2 million in fiscal 2020, $716,000 in fiscal 2021,$674,000 in fiscal 2022, and $1.5 million thereafter.

Income Taxes. The Company accounts for income taxes in accordance with income tax accounting guidance (ASC 740, Income Taxes). The income tax accounting guidance results in two components of income tax expense: current and deferred. Current income tax expense reflects taxes to be paid or refunded for the current period by applying the provisions of the enacted tax law to the taxable income or excess of deductions over revenues. The Company determines deferred income taxes using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is based on the tax effects of the differences between the book and tax bases of assets and liabilities, and enacted changes in tax rates and laws are recognized in the period in which they occur.

Deferred income tax expense results from changes in deferred tax assets and liabilities between periods. Deferred tax assets are recognized if it is more likely than not, based on the technical merits, that the tax position will be realized or sustained upon examination. The term more likely than not means a likelihood of more than 50 percent; the terms examined and upon examination also include resolution of the related appeals or litigation processes, if any. A tax position that meets the more-likely-than-not recognition threshold is initially and subsequently measured as the largest amount of tax benefit that has a greater than 50 percent likelihood of being realized upon settlement with a taxing authority that has full knowledge of all relevant information. The determination of whether or not a tax position has met the more-likely-than-not recognition threshold considers the facts, circumstances, and information available at the reporting date and is subject to management’s judgment. Deferred tax assets are reduced by a valuation allowance if, based on the weight of evidence available, it is more likely than not that some portion or all of a deferred tax asset will not be realized.

The Company recognizes interest and penalties on income taxes as a component of income tax expense.

The Company files consolidated income tax returns with its subsidiaries.

Incentive Plan. The Company accounts for its Equity Incentive Plan (EIP) and Omnibus Incentive Plan (OIP) in accordance with ASC 718, “Share-Based Payment.” Compensation expense is based on the market price of the Company’s stock on the date the shares are granted and is recorded over the vesting period. The difference between the aggregate purchase price and the fair value on the date the shares are considered earned represents a tax benefit to the Company that is recorded as an adjustment to income tax expense.

Outside Directors’ Retirement. The Bank has entered into a retirement agreement with most outside directors since April 1994. The directors’ retirement agreements provide that non-employee directors shall receive, upon termination of service on the Board on or after age 60, other than termination for cause, a benefit in equal annual installments over a five year period. The benefit will be based upon the product of the participant’s vesting percentage and the total Board fees paid to the participant during the calendar year preceding termination of service on the Board. The vesting percentage shall be determined based upon the participant’s years of service on the Board, whether before or after the reorganization date.

In the event that the participant dies before collecting any or all of the benefits, the Bank shall pay the participant’s beneficiary. No benefits shall be payable to anyone other than the beneficiary, and shall terminate on the death of the beneficiary.

Stock Options. Compensation cost is measured based on the grant-date fair value of the equity instruments issued, and recognized over the vesting period during which an employee provides service in exchange for the award.

Earnings Per Share. Basic earnings per share available to common stockholders is computed using the weighted-average number of common shares outstanding. Diluted earnings per share available to common stockholders includes the effect of all weighted-average dilutive potential common shares (stock options and warrants) outstanding during each period.

Comprehensive Income. Comprehensive income consists of net income and other comprehensive income, net of applicable income taxes. Other comprehensive income includes unrealized appreciation (depreciation) on available-for-sale securities, unrealized appreciation (depreciation) on available-for-sale securities for which a portion of an other-than-temporary impairment has been recognized in income, and changes in the funded status of defined benefit pension plans.

Transfers Between Fair Value Hierarchy Levels.  Transfers in and out of Level 1 (quoted market prices), Level 2 (other significant observable inputs) and Level 3 (significant unobservable inputs) are recognized on the period ending date.

The following paragraphs summarize the impact of new accounting pronouncements: 

In February 2018, the FASB issued ASU 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220):  Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.  This ASU provides financial statement preparers with an option to reclassify stranded tax effects within AOCI to retained earnings in each period in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act (or portion thereof) are recorded. This standard is effective for all organizations for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The Company elected to early adopt ASU 2018-02 and, as a result, reclassified $65,497 from accumulated other comprehensive income to retained earnings as of December 31, 2017.

In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Subtopic 718): Scope of Modification Accounting.  The amendments in ASU 2017-09 provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718.  Under the new guidance, an entity should account for the effects of a modification unless all of the following are the same immediately before and after the change: (1) the fair value of the modified award, (2) the vesting conditions of the modified award, and (3) the classification of the modified award as either an equity or liability instrument.  ASU 2017-09 is effective for the fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, and should be applied prospectively to awards modified on or after the adoption date.  Management does not expect the adoption of this guidance to have a material impact on the Company’s consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash payments.  The Update provides guidance on how certain cash receipts and payments are presented and classified in the statement of cash flows, with the objective of reducing the diversity in practice.  The Update addresses eight specific cash flow issues.  For public companies, the ASU is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, and should be applied retrospectively.  Management is evaluating the impact of the new guidance, but does not expect the adoption of this guidance to have a material impact on the Company’s consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326).  The Update amends guidance on reporting credit losses for assets held at amortized cost basis and available for sale debt securities. For assets held at amortized cost basis, Topic 326 eliminates the probable initial recognition threshold in current GAAP and, instead, requires an entity to reflect its current estimate of all expected credit losses. The Update affects loans, debt securities, trade receivables, net investments in leases, off balance sheet credit exposures, and any other financial assets not excluded from the scope that have the contractual right to receive cash.  For public companies, the ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.  Early adoption is available beginning after December 15, 2018, including interim periods within those fiscal years. Adoption will be applied on a modified retrospective basis, through a cumulative-effect adjustment to retained earnings. Management is evaluating the impact, if any, this new guidance will have on the Company’s consolidated financial statements, but cannot yet reasonably estimate the impact of adoption.  The Company has formed a working group of key personnel responsible for the allowance for loan losses estimate and has initiated its evaluation of the data and systems requirements of adoption of the Update.  The group has determined that purchasing third party software will be the most effective method to comply with the requirements, and has evaluated several outside vendors.  The group expects to provide a recommendation of which software would work best for the Company before the end of this fiscal year, June 30, 2018.   

In February 2016, the FASB issued ASU 2016-02, “Leases,” to revise the accounting related to lease accounting.  Under the new guidance, a lessee is required to record a right-of-use (ROU) asset and a lease liability on the balance sheet for all leases with terms longer than 12 months.   The ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.  Adoption of the standard requires the use of a modified retrospective transition approach for all periods presented at the time of adoption.  Management is evaluating the impact of the new guidance, but does not expect the adoption of this guidance to have a material impact on the Company’s consolidated financial statements.

In January 2016, the FASB issued ASU 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities,” to generally require equity investments be measured at fair value with changes in fair value recognized in net income, simplify the impairment assessment of equity investments without readily-determinable fair value, and change disclosure and presentation requirements regarding financial instruments and other comprehensive income, and clarify that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. In February 2018, the FASB issued ASU 2018-03, Technical Corrections and Improvements to Financial Instruments – Overall (Subtopic 825-10).  The amendments in ASU 2018-03 make technical corrections to certain aspects of ASU 2016-01 on recognition of financial assets and financial liabilities.  For public entities, the guidance in ASU 2016-01 and amendments in ASU 2018-03 are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Management is evaluating the new guidance, but does not expect the adoption of this guidance to have a material impact on the Company’s consolidated financial statements.

In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606):  Deferral of the Effective Date, which deferred the effective date of ASU 2014-09.  In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606): Summary and Amendments that Create Revenue from Contracts with Customers (Topic 606) and Other Assets and Deferred Costs—Contracts with Customers (Subtopic 340-40). The guidance in ASU 2014-09 supersedes the revenue recognition requirements in ASC Topic 605, Revenue Recognition, and most industry-specific guidance throughout the industry topics of the codification.  In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, to clarify two aspects of Topic 606- performance obligations and the licensing implementation guidance.  Neither of the two updates changed the core principle of the guidance in Topic 606.  In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers (Topic 606), to provide narrow-scope improvements and practical expedients to ASU 2015-14.  For public companies, the original Update was to be effective for interim and annual periods beginning after December 15, 2016.  The current ASU states that the provisions of ASU 2014-09 should be applied to annual reporting periods, including interim periods, beginning after December 15, 2017.  The Company does not expect the new standard to result in a material change to our accounting for revenue because the majority of our financial instruments are not within the scope of Topic 606, however, it may result in new disclosure requirements..

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Note 3: Securities

9 Months Ended

Mar. 31, 2018

Notes

Note 3: Securities

Note 3:  Securities

The amortized cost, gross unrealized gains, gross unrealized losses, and approximate fair value of securities available for sale consisted of the following:

	March 31, 2018
		Gross	Gross	Estimated
	Amortized	Unrealized	Unrealized	Fair
(dollars in thousands)	Cost	Gains	Losses	Value
Investment and mortgage backed securities:
U.S. government-sponsored enterprises (GSEs)	$11,504	$-	$(120)	$11,384
State and political subdivisions	51,457	395	(555)	51,297
Other securities	5,291	76	(235)	5,132
Mortgage-backed: GSE residential	80,313	1	(2,000)	78,314
Total investments and mortgage-backed securities	$148,565	$472	$(2,910)	$146,127

	June 30, 2017
		Gross	Gross	Estimated
	Amortized	Unrealized	Unrealized	Fair
(dollars in thousands)	Cost	Gains	Losses	Value
Investment and mortgage backed securities:
U.S. government-sponsored enterprises (GSEs)	$10,433	$17	$(12)	$10,438
State and political subdivisions	49,059	1,046	(127)	49,978
Other securities	6,017	306	(598)	5,725
Mortgage-backed GSE residential	78,088	490	(303)	78,275
Total investments and mortgage-backed securities	$143,597	$1,859	$(1,040)	$144,416

The amortized cost and estimated fair value of investment and mortgage-backed securities, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without penalties.

	March 31, 2018
	Amortized	Estimated
(dollars in thousands)	Cost	Fair Value
Within one year	$4,762	$4,759
After one year but less than five years	20,065	19,944
After five years but less than ten years	23,277	23,243
After ten years	20,148	19,867
Total investment securities	68,252	67,813
Mortgage-backed securities	80,313	78,314
Total investments and mortgage-backed securities	$148,565	$146,127

The carrying value of investment and mortgage-backed securities pledged as collateral to secure public deposits and securities sold under agreements to repurchase amounted to $116.1 million at March 31, 2018 and $114.1 million at June 30, 2017.  The securities pledged consist of marketable securities, including $7.4 million and $6.5 million of U.S. Government and Federal Agency Obligations, $40.8 million and $50.5 million of Mortgage-Backed Securities, $28.3 million and $19.9 million of Collateralized Mortgage Obligations, $39.2 million and $36.8 million of State and Political Subdivisions Obligations, and $400,000 and $400,000 of Other Securities at March 31, 2018 and June 30, 2017, respectively.

Gains of $344,391 and $395,843 were recognized from sales of available-for-sale securities in the three- and nine- month periods ended March 31, 2018.  Losses of $89,996 and $104,341 were recognized from sales of available-for-sale securities in the three- and nine- month periods ended March 31, 2018.  There were no sales of available-for-sale securities in the three- and nine- month periods ended March 31, 2017.

The following tables show our investments’ gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at March 31, 2018 and June 30, 2017:

	March 31, 2018
	Less than 12 months		12 months or more		Total
		Unrealized		Unrealized		Unrealized
	Fair Value	Losses	Fair Value	Losses	Fair Value	Losses
(dollars in thousands)
U.S. government-sponsored enterprises (GSEs)	$7,943	$65	$2,443	$55	$10,386	$120
Obligations of state and political subdivisions	19,157	292	8,215	263	27,372	555
Other securities	985	7	1,069	228	2,054	235
Mortgage-backed securities	57,193	1,185	21,015	815	78,208	2,000
Total investments and mortgage-backed securities	$85,278	$1,549	$32,742	$1,361	$118,020	$2,910

	June 30, 2017
	Less than 12 months		12 months or more		Total
		Unrealized		Unrealized		Unrealized
	Fair Value	Losses	Fair Value	Losses	Fair Value	Losses
(dollars in thousands)
U.S. government-sponsored enterprises (GSEs)	$6,457	$12	$-	$-	$6,457	$12
Obligations of state and political subdivisions	12,341	127	256	-	12,597	127
Other securities	-	-	1,160	598	1,160	598
Mortgage-backed securities	29,836	267	2,285	36	32,121	303
Total investments and mortgage-backed securities	$48,634	$406	$3,701	$634	$52,335	$1,040

Other securities.  At March 31, 2018, there were 2 pooled trust preferred securities with an estimated fair value of $750,000 and unrealized losses of $221,000 in a continuous unrealized loss position for twelve months or more. These unrealized losses were primarily due to the long-term nature of the pooled trust preferred securities and a reduced demand for these securities, and concerns regarding the financial institutions that issued the underlying trust preferred securities. Rules adopted by the federal banking agencies in December 2013 to implement Section 619 of the Dodd-Frank Act (the “Volcker Rule”) generally prohibit banking entities from engaging in proprietary trading and from investing in, sponsoring, or having certain relationships with a hedge fund or private equity fund. The pooled trust preferred securities owned by the Company were included in a January 2014 listing of securities which the agencies considered to be grandfathered with regard to these prohibitions; as such, banking entities are permitted to retain their interest in these securities, provided the interest was acquired on or before December 10, 2013, unless acquired pursuant to a merger or acquisition.

The March 31, 2018, cash flow analysis for these two securities indicated it is probable the Company will receive all contracted principal and related interest projected. The cash flow analysis used in making this determination was based on anticipated default, recovery, and prepayment rates, and the resulting cash flows were discounted based on the yield spread anticipated at the time the securities were purchased. Other inputs include the actual collateral attributes, which include credit ratings and other performance indicators of the underlying financial institutions, including profitability, capital ratios, and asset quality. Assumptions for these two securities included annualized prepayments of 1.4 to 1.6 percent; no recoveries on currently deferred issuers; new deferrals of 40 to 50 basis points annually; and eventual recoveries of nine percent of new deferrals.

One of these two securities has continued to receive cash interest payments in full since our purchase; the other security received principal-in-kind (PIK), in lieu of cash interest, for a period of time following the recession and financial crisis which began in 2008, but resumed cash interest payments during fiscal 2014. Our cash flow analysis indicates that cash interest payments are expected to continue for the securities. Because the Company does not intend to sell these securities and it is not more-likely-than-not that the Company will be required to sell these securities prior to recovery of their amortized cost basis, which may be maturity, the Company does not consider these investments to be other-than-temporarily impaired at March 31, 2018.

The Company does not believe any other individual unrealized loss as of March 31, 2018, represents OTTI. However, the Company could be required to recognize OTTI losses in future periods with respect to its available for sale investment securities portfolio. The amount and timing of any additional OTTI will depend on the decline in the underlying cash flows of the securities. Should the impairment of any of these securities become other-than-temporary, the cost basis of the investment will be reduced and the resulting loss recognized in the period the other-than-temporary impairment is identified.

Credit losses recognized on investments. As described above, one of the Company’s investments in trust preferred securities experienced fair value deterioration due to credit losses, but is not otherwise other-than-temporarily impaired. During fiscal 2009, the Company adopted ASC 820, formerly FASB Staff Position 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly.”  The following table provides information about the trust preferred security for which only a credit loss was recognized in income and other losses are recorded in other comprehensive income (loss) for the nine-month periods ended March 31, 2018 and 2017.

	Accumulated Credit Losses
	Nine-Month Period Ended
(dollars in thousands)	March 31,
	2018	2017
Credit losses on debt securities held
Beginning of period	$340	$352
Additions related to OTTI losses not previously recognized	-	-
Reductions due to sales	(333)	-
Reductions due to change in intent or likelihood of sale	-	-
Additions related to increases in previously-recognized OTTI losses	-	-
Reductions due to increases in expected cash flows	(7)	(9)
End of period	$-	$343

XML

Note 4: Loans and Allowance for Loan Losses

9 Months Ended

Mar. 31, 2018

Notes

Note 4: Loans and Allowance for Loan Losses

Note 4:  Loans and Allowance for Loan Losses

Classes of loans are summarized as follows:

(dollars in thousands)	March 31, 2018	June 30, 2017
Real Estate Loans:
Residential	$457,825	$442,463
Construction	115,589	106,782
Commercial	693,606	603,922
Consumer loans	71,941	63,651
Commercial loans	255,317	247,184
	1,594,278	1,464,002
Loans in process	(54,571)	(50,740)
Deferred loan fees, net	1	6
Allowance for loan losses	(17,263)	(15,538)
Total loans	$1,522,445	$1,397,730

The Company’s lending activities consist of origination of loans secured by mortgages on one- to four-family residences and commercial and agricultural real estate, construction loans on residential and commercial properties, commercial and agricultural business loans and consumer loans. The Company has also occasionally purchased loan participation interests originated by other lenders and secured by properties generally located in the states of Missouri and Arkansas.

Residential Mortgage Lending.  The Company actively originates loans for the acquisition or refinance of one- to four-family residences.  This category includes both fixed-rate and adjustable-rate mortgage (“ARM”) loans amortizing over periods of up to 30 years, and the properties securing such loans may be owner-occupied or non-owner-occupied.  Single-family residential loans do not generally exceed 90% of the lower of the appraised value or purchase price of the secured property.  Substantially all of the one- to four-family residential mortgage originations in the Company’s portfolio are located within the Company’s primary lending area.

The Company also originates loans secured by multi-family residential properties that are often located outside the Company’s primary lending area but made to borrowers who operate within the primary market area.  The majority of the multi-family residential loans that are originated by the Bank are amortized over periods generally up to 25 years, with balloon maturities typically up to ten years. Both fixed and adjustable interest rates are offered and it is typical for the Company to include an interest rate “floor” and “ceiling” in the loan agreement. Generally, multi-family residential loans do not exceed 85% of the lower of the appraised value or purchase price of the secured property.

Commercial Real Estate Lending. The Company actively originates loans secured by commercial real estate including land (improved, unimproved, and farmland), strip shopping centers, retail establishments and other businesses. These properties are typically owned and operated by borrowers headquartered within the Company’s primary lending area, however, the property may be located outside our primary lending area.

Most commercial real estate loans originated by the Company are based on amortization schedules of up to 25 years with monthly principal and interest payments. Generally, the interest rate received on these loans is fixed for a maturity for up to seven years, with a balloon payment due at maturity. Alternatively, for some loans, the interest rate adjusts at least annually after an initial period up to seven years. The Company typically includes an interest rate “floor” in the loan agreement. Generally, improved commercial real estate loan amounts do not exceed 80% of the lower of the appraised value or the purchase price of the secured property. Agricultural real estate terms offered differ slightly, with amortization schedules of up to 25 years with an 80% loan-to-value ratio, or 30 years with a 75% loan-to-value ratio.

Construction Lending. The Company originates real estate loans secured by property or land that is under construction or development. Construction loans originated by the Company are generally secured by mortgage loans for the construction of owner occupied residential real estate or to finance speculative construction secured by residential real estate, land development, or owner-operated or non-owner occupied commercial real estate. During construction, these loans typically require monthly interest-only payments and have maturities ranging from six to twelve months. Once construction is completed, loans may be converted to permanent status with monthly payments using amortization schedules of up to 30 years on residential and generally up to 25 years on commercial real estate.

While the Company typically utilizes maturity periods ranging from 6 to 12 months to closely monitor the inherent risks associated with construction loans for these loans, weather conditions, change orders, availability of materials and/or labor, and other factors may contribute to the lengthening of a project, thus necessitating the need to renew the construction loan at the balloon maturity.  Such extensions are typically executed in incremental three month periods to facilitate project completion.  The Company’s average term of construction loans is approximately eight months.  During construction, loans typically require monthly interest only payments which may allow the Company an opportunity to monitor for early signs of financial difficulty should the borrower fail to make a required monthly payment.  Additionally, during the construction phase, the Company typically obtains interim inspections completed by an independent third party.  This monitoring further allows the Company opportunity to assess risk.  At March 31, 2018 construction loans outstanding included 62 loans, totaling $12.4 million, for which a modification had been agreed to.  At June 30, 2017, construction loans outstanding included 50 loans, totaling $10.3 million, for which a modification had been agreed to. All modifications were solely for the purpose of extending the maturity date due to conditions described above.  None of these modifications were executed due to financial difficulty on the part of the borrower and, therefore, were not accounted for as TDRs.

Consumer Lending. The Company offers a variety of secured consumer loans, including home equity, direct and indirect automobile loans, second mortgages, mobile home loans and loans secured by deposits. The Company originates substantially all of its consumer loans in its primary lending area. Usually, consumer loans are originated with fixed rates for terms of up to five years, with the exception of home equity lines of credit, which are variable, tied to the prime rate of interest and are for a period of ten years.

Home equity lines of credit (HELOCs) are secured with a deed of trust and are issued up to 100% of the appraised or assessed value of the property securing the line of credit, less the outstanding balance on the first mortgage and are typically issued for a term of ten years. Interest rates on the HELOCs are generally adjustable. Interest rates are based upon the loan-to-value ratio of the property with better rates given to borrowers with more equity.

Automobile loans originated by the Company include both direct loans and a smaller amount of loans originated by auto dealers. The Company generally pays a negotiated fee back to the dealer for indirect loans. Typically, automobile loans are made for terms of up to 60 months for new and used vehicles. Loans secured by automobiles have fixed rates and are generally made in amounts up to 100% of the purchase price of the vehicle.

Commercial Business Lending. The Company’s commercial business lending activities encompass loans with a variety of purposes and security, including loans to finance accounts receivable, inventory, equipment and operating lines of credit, including agricultural production and equipment loans. The Company offers both fixed and adjustable rate commercial business loans. Generally, commercial loans secured by fixed assets are amortized over periods up to five years, while commercial operating lines of credit or agricultural production lines are generally for a one year period.

The following tables present the balance in the allowance for loan losses and the recorded investment in loans (excluding loans in process and deferred loan fees) based on portfolio segment and impairment methods as of March 31, 2018 and June 30, 2017, and activity in the allowance for loan losses for the three- and nine-month periods ended March 31, 2018 and 2017:

	At period end and for the nine months ended March 31, 2018
	Residential	Construction	Commercial
(dollars in thousands)	Real Estate	Real Estate	Real Estate	Consumer	Commercial	Total
Allowance for loan losses:
Balance, beginning of period	$3,230	$964	$7,068	$757	$3,519	$15,538
Provision charged to expense	(110)	(15)	1,627	169	389	2,060
Losses charged off	(170)	-	(41)	(118)	(22)	(351)
Recoveries	2	-	1	6	7	16
Balance, end of period	$2,952	$949	$8,655	$814	$3,893	$17,263
Ending Balance: individually     evaluated for impairment	$-	$-	$410	$-	$340	$750
Ending Balance: collectively     evaluated for impairment	$2,952	$949	$8,245	$814	$3,553	$16,513
Ending Balance: loans acquired     with deteriorated credit quality	$-	$-	$-	$-	$-	$-
Loans:
Ending Balance: individually     evaluated for impairment	$-	$-	$699	$-	$580	$1,279
Ending Balance: collectively     evaluated for impairment	$454,614	$59,715	$685,282	$71,941	$252,271	$1,523,823
Ending Balance: loans acquired     with deteriorated credit quality	$3,211	$1,303	$7,625	$-	$2,466	$14,605

	For the three months ended March 31, 2018
	Residential	Construction	Commercial
(dollars in thousands)	Real Estate	Real Estate	Real Estate	Consumer	Commercial	Total
Allowance for loan losses:
Balance, beginning of period	$3,286	$886	$8,303	$828	$3,564	$16,867
Provision charged to expense	(243)	63	356	44	330	550
Losses charged off	(92)	-	(6)	(60)	(1)	(159)
Recoveries	1	-	2	2	-	5
Balance, end of period	$2,952	$949	$8,655	$814	$3,893	$17,263

	At period end and for the nine months ended  March 31, 2017
	Residential	Construction	Commercial
(dollars in thousands)	Real Estate	Real Estate	Real Estate	Consumer	Commercial	Total
Allowance for loan losses:
Balance, beginning of period	$3,247	$1,091	$5,711	$738	$3,004	$13,791
Provision charged to expense	246	(162)	1,405	16	452	1,957
Losses charged off	(201)	(31)	(4)	(50)	(337)	(623)
Recoveries	7	1	18	9	30	65
Balance, end of period	$3,299	$899	$7,130	$713	$3,149	$15,190
Ending Balance: individually     evaluated for impairment	$-	$-	$-	$-	$-	$-
Ending Balance: collectively     evaluated for impairment	$3,299	$899	$7,130	$713	$3,149	$15,190
Ending Balance: loans acquired     with deteriorated credit quality	$-	$-	$-	$-	$-	$-

	For the three months ended March 31, 2017
	Residential	Construction	Commercial
(dollars in thousands)	Real Estate	Real Estate	Real Estate	Consumer	Commercial	Total
Allowance for loan losses:
Balance, beginning of period	$3,472	$891	$6,851	$756	$3,022	$14,992
Provision charged to expense	(70)	8	280	(35)	193	376
Losses charged off	(104)	-	(4)	(11)	(67)	(186)
Recoveries	1	-	3	3	1	8
Balance, end of period	$3,299	$899	$7,130	$713	$3,149	$15,190

	At June 30, 2017
	Residential	Construction	Commercial
(dollars in thousands)	Real Estate	Real Estate	Real Estate	Consumer	Commercial	Total
Allowance for loan losses:
Balance, end of period	$3,230	$964	$7,068	$757	$3,519	$15,538
Ending Balance: individually     evaluated for impairment	$-	$-	$-	$-	$-	$-
Ending Balance: collectively     evaluated for impairment	$3,230	$964	$7,068	$757	$3,519	$15,538
Ending Balance: loans acquired     with deteriorated credit quality	$-	$-	$-	$-	$-	$-
Loans:
Ending Balance: individually     evaluated for impairment	$-	$-	$-	$-	$-	$-
Ending Balance: collectively     evaluated for impairment	$438,981	$54,704	$592,427	$63,651	$243,369	$1,393,132
Ending Balance: loans acquired     with deteriorated credit quality	$3,482	$1,338	$11,495	$-	$3,815	$20,130

Management’s opinion as to the ultimate collectability of loans is subject to estimates regarding future cash flows from operations and the value of property, real and personal, pledged as collateral. These estimates are affected by changing economic conditions and the economic prospects of borrowers.

The allowance for loan losses is maintained at a level that, in management’s judgment, is adequate to cover probable credit losses inherent in the loan portfolio at the balance sheet date. 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 an amount is determined to be uncollectible, based on management’s analysis of expected cash flow (for non-collateral-dependent loans) or collateral value (for collateral-dependent loans). Subsequent recoveries, if any, are credited to the allowance.

The allowance for loan losses is evaluated on a regular basis by management and is based upon management’s periodic review of the collectability of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.

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

Under the Company’s methodology, loans are first segmented into 1) those comprising large groups of smaller-balance homogeneous loans, including single-family mortgages and installment loans, which are collectively evaluated for impairment, and 2) all other loans which are individually evaluated. Those loans in the second category are further segmented utilizing a defined grading system which involves categorizing loans by severity of risk based on conditions that may affect the ability of the borrowers to repay their debt, such as current financial information, collateral valuations, historical payment experience, credit documentation, public information, and current trends. The loans subject to credit classification represent the portion of the portfolio subject to the greatest credit risk and where adjustments to the allowance for losses on loans as a result of provision and charge offs are most likely to have a significant impact on operations.

A periodic review of selected credits (based on loan size and type) is conducted to identify loans with heightened risk or probable losses and to assign risk grades.  The primary responsibility for this review rests with loan administration personnel.  This review is supplemented with periodic examinations of both selected credits and the credit review process by the Company’s internal audit function and applicable regulatory agencies.  The information from these reviews assists management in the timely identification of problems and potential problems and provides a basis for deciding whether the credit represents a probable loss or risk that should be recognized.

The Company considers, as the primary quantitative factor in its allowance methodology, average net charge offs over the most recent twelve-month period.  The Company also reviews average net charge offs over the most recent five-year period.

A loan is considered impaired when, based on current information and events, it is probable that the scheduled payments of principal or interest will not be able to be collected when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan-by-loan basis for commercial and agricultural loans by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price or the fair value of the collateral if the loan is collateral dependent.

Groups of loans with similar risk characteristics are collectively evaluated for impairment based on the group’s historical loss experience adjusted for changes in trends, conditions and other relevant factors that affect repayment of the loans. Accordingly, individual consumer and residential loans are not separately identified for impairment measurements, unless such loans are the subject of a restructuring agreement due to financial difficulties of the borrower.

The general component covers non-impaired loans and is based on quantitative and qualitative factors. The loan portfolio is stratified into homogeneous groups of loans that possess similar loss characteristics and an appropriate loss ratio adjusted for qualitative factors is applied to the homogeneous pools of loans to estimate the incurred losses in the loan portfolio.

Included in the Company’s loan portfolio are certain loans accounted for in accordance with ASC 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality. These loans were written down at acquisition to an amount estimated to be collectible. As a result, certain ratios regarding the Company’s loan portfolio and credit quality cannot be used to compare the Company to peer companies or to compare the Company’s current credit quality to prior periods. The ratios particularly affected by accounting under ASC 310-30 include the allowance for loan losses as a percentage of loans, nonaccrual loans, and nonperforming assets, and nonaccrual loans and nonperforming loans as a percentage of total loans.

The following tables present the credit risk profile of the Company’s loan portfolio (excluding loans in process and deferred loan fees) based on rating category and payment activity as of March 31, 2018 and June 30, 2017. These tables include purchased credit impaired loans, which are reported according to risk categorization after acquisition based on the Company’s standards for such classification:

	March 31, 2018
	Residential	Construction	Commercial
(dollars in thousands)	Real Estate	Real Estate	Real Estate	Consumer	Commercial
Pass	$450,857	$60,984	$679,521	$71,722	$251,426
Watch	4,305	-	7,261	118	436
Special Mention	146	-	932	29	74
Substandard	2,517	34	5,193	72	2,199
Doubtful	-	-	699	-	1,182
Total	$457,825	$61,018	$693,606	$71,941	$255,317

	June 30, 2017
	Residential	Construction	Commercial
(dollars in thousands)	Real Estate	Real Estate	Real Estate	Consumer	Commercial
Pass	$438,222	$55,825	$588,385	$63,320	$240,864
Watch	772	-	9,253	123	2,003
Special Mention	148	-	926	30	84
Substandard	3,321	217	5,358	178	3,631
Doubtful	-	-	-	-	602
Total	$442,463	$56,042	$603,922	$63,651	$247,184

The above amounts include purchased credit impaired loans. At March 31, 2018, purchased credit impaired loans comprised $8.1 million of credits rated “Pass”; $3.1 million of credits rated “Watch”; none rated “Special Mention”; $3.4 million of credits rated “Substandard”; and none rated “Doubtful”. At June 30, 2017,  purchased credit impaired loans accounted for $10.2 million of credits rated “Pass”; $5.0 million of credits  rated “Watch”; none rated “Special Mention”; $4.9 million of credits rated “Substandard”; and none rated “Doubtful”.

Credit Quality Indicators.  The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends among other factors.  The Company analyzes loans individually by classifying the loans as to credit risk.  This analysis is performed on all loans at origination, and is updated on a quarterly basis for loans risk rated Special Mention, Substandard, or Doubtful.  In addition, lending relationships of $1 million or more, exclusive of any consumer or owner-occupied residential loan, are subject to an annual credit analysis which is prepared by the loan administration department and presented to a loan committee with appropriate lending authority. A sample of lending relationships in excess of $2.5 million are subject to an independent loan review annually, in order to verify risk ratings.  The Company uses the following definitions for risk ratings:

Watch – Loans classified as watch exhibit weaknesses that require more than usual monitoring. Issues may include deteriorating financial condition, payments made after due date but within 30 days, adverse industry conditions or management problems.

Special Mention – Loans classified as special mention exhibit signs of further deterioration but still generally make payments within 30 days. This is a transitional rating and loans should typically not be rated Special Mention for more than 12 months.

Substandard – Loans classified as substandard possess weaknesses that jeopardize the ultimate collection of the principal and interest outstanding. These loans exhibit continued financial losses, ongoing delinquency, overall poor financial condition, and insufficient collateral. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful – Loans classified as doubtful have all the weaknesses of substandard loans, and have deteriorated to the level that there is a high probability of substantial loss.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be Pass rated loans.

The following tables present the Company’s loan portfolio aging analysis (excluding loans in process and deferred loan fees) as of March 31, 2018 and June 30, 2017.  These tables include purchased credit impaired loans, which are reported according to aging analysis after acquisition based on the Company’s standards for such classification:

	March 31, 2018
			Greater Than				Greater Than 90
	30-59 Days	60-89 Days	90 Days	Total		Total Loans	Days Past Due
(dollars in thousands)	Past Due	Past Due	Past Due	Past Due	Current	Receivable	and Accruing
Real Estate Loans:
Residential	$1,372	$2,098	$1,261	$4,731	$453,094	$457,825	$-
Construction	-	-	-	-	61,018	61,018	-
Commercial	275	769	446	1,490	692,116	693,606	-
Consumer loans	446	62	156	664	71,277	71,941	-
Commercial loans	93	211	34	338	254,979	255,317	-
Total loans	$2,186	$3,140	$1,897	$7,223	$1,532,484	$1,539,707	$-

	June 30, 2017
			Greater Than				Greater Than 90
	30-59 Days	60-89 Days	90 Days	Total		Total Loans	Days Past Due
(dollars in thousands)	Past Due	Past Due	Past Due	Past Due	Current	Receivable	and Accruing
Real Estate Loans:
Residential	$1,491	$148	$676	$2,315	$440,148	$442,463	$59
Construction	35	-	-	35	56,007	56,042	-
Commercial	700	-	711	1,411	602,511	603,922	-
Consumer loans	216	16	134	366	63,285	63,651	13
Commercial loans	144	53	426	623	246,561	247,184	329
Total loans	$2,586	$217	$1,947	$4,750	$1,408,512	$1,413,262	$401

At March 31, 2018 and June 30, 2017, there were no purchased credit impaired loans that were greater than 90 days past due.

A loan is considered impaired, in accordance with the impairment accounting guidance (ASC 310-10-35-16), when based on current information and events, it is probable the Company will be unable to collect all amounts due from the borrower in accordance with the contractual terms of the loan. Impaired loans include nonperforming loans, as well as performing loans modified in troubled debt restructurings where concessions have been granted to borrowers experiencing financial difficulties. These concessions could include a reduction in the interest rate on the loan, payment extensions, forgiveness of principal, forbearance or other actions intended to maximize collection.

The tables below present impaired loans (excluding loans in process and deferred loan fees) as of March 31, 2018 and June 30, 2017. These tables include purchased credit impaired loans. Purchased credit impaired loans are those for which it was deemed probable, at acquisition, that the Company would be unable to collect all contractually required payments receivable. In an instance where, subsequent to the acquisition, the Company determines it is probable, for a specific loan, that cash flows received will exceed the amount previously expected, the Company will recalculate the amount of accretable yield in order to recognize the improved cash flow expectation as additional interest income over the remaining life of the loan. These loans, however, will continue to be reported as impaired loans. In an instance where, subsequent to the acquisition, the Company determines it is probable, for a specific loan, that cash flows received will be less than the amount previously expected, the Company will allocate a specific allowance under the terms of ASC 310-10-35.

	March 31, 2018
	Recorded	Unpaid Principal	Specific
(dollars in thousands)	Balance	Balance	Allowance
Loans without a specific valuation allowance:
Residential real estate	$3,827	$4,474	$-
Construction real estate	1,336	1,604	-
Commercial real estate	14,090	15,463	-
Consumer loans	27	27	-
Commercial loans	2,911	3,539	-
Loans with a specific valuation allowance:
Residential real estate	$-	$-	$-
Construction real estate	-	-	-
Commercial real estate	699	699	410
Consumer loans	-	-	-
Commercial loans	580	580	340
Total:
Residential real estate	$3,827	$4,474	$-
Construction real estate	$1,336	$1,604	$-
Commercial real estate	$14,789	$16,162	$410
Consumer loans	$27	$27	$-
Commercial loans	$3,491	$4,119	$340

	June 30, 2017
	Recorded	Unpaid Principal	Specific
(dollars in thousands)	Balance	Balance	Allowance
Loans without a specific valuation allowance:
Residential real estate	$3,811	$4,486	$-
Construction real estate	1,373	1,695	-
Commercial real estate	14,935	16,834	-
Consumer loans	1	1	-
Commercial loans	4,302	4,990	-
Loans with a specific valuation allowance:
Residential real estate	$-	$-	$-
Construction real estate	-	-	-
Commercial real estate	-	-	-
Consumer loans	-	-	-
Commercial loans	-	-	-
Total:
Residential real estate	$3,811	$4,486	$-
Construction real estate	$1,373	$1,695	$-
Commercial real estate	$14,935	$16,834	$-
Consumer loans	$1	$1	$-
Commercial loans	$4,302	$4,990	$-

The above amounts include purchased credit impaired loans. At March 31, 2018, purchased credit impaired loans comprised $14.6 million of impaired loans without a specific valuation allowance.  At June 30, 2017, purchased credit impaired loans comprised $20.1 million of impaired loans without a specific valuation allowance.

The following tables present information regarding interest income recognized on impaired loans:

	For the three-month period ended
	March 31, 2018
	Average
(dollars in thousands)	Investment in	Interest Income
	Impaired Loans	Recognized
Residential Real Estate	$3,322	$45
Construction Real Estate	1,312	43
Commercial Real Estate	8,532	436
Consumer Loans	-	-
Commercial Loans	2,855	44
Total Loans	$16,021	$568

	For the three-month period ended
	March 31, 2017
	Average
(dollars in thousands)	Investment in	Interest Income
	Impaired Loans	Recognized
Residential Real Estate	$2,857	$22
Construction Real Estate	1,362	38
Commercial Real Estate	9,513	146
Consumer Loans	-	-
Commercial Loans	889	19
Total Loans	$14,621	$225

	For the nine-month period ended
	March 31, 2018
	Average
(dollars in thousands)	Investment in	Interest Income
	Impaired Loans	Recognized
Residential Real Estate	$3,395	$172
Construction Real Estate	1,323	122
Commercial Real Estate	9,905	987
Consumer Loans	-	-
Commercial Loans	3,328	153
Total Loans	$17,951	$1,434

	For the nine-month period ended
	March 31, 2017
	Average
(dollars in thousands)	Investment in	Interest Income
	Impaired Loans	Recognized
Residential Real Estate	$2,893	$73
Construction Real Estate	1,378	109
Commercial Real Estate	9,681	513
Consumer Loans	-	-
Commercial Loans	957	56
Total Loans	$14,909	$751

Interest income on impaired loans recognized on a cash basis in the three- and nine-month periods ended March 31, 2018 and 2017, was immaterial.

For the three- and nine-month periods ended March 31, 2018, the amount of interest income recorded for impaired loans that represented a change in the present value of cash flows attributable to the passage of time was approximately $334,000 and $594,000, respectively, as compared to $56,000 and $217,000, respectively, for the three- and nine-month periods ended March 31, 2017.

The following table presents the Company’s nonaccrual loans at March 31, 2018 and June 30, 2017. The table excludes performing troubled debt restructurings.

(dollars in thousands)	March 31, 2018	June 30, 2017
Residential real estate	$3,026	$1,263
Construction real estate	34	35
Commercial real estate	1,970	960
Consumer loans	231	158
Commercial loans	957	409
Total loans	$6,218	$2,825

 At March 31, 2018, purchased credit impaired loans comprised $1.0 million of nonaccrual loans.   At June 30, 2017, there were no purchased credit impaired loans on nonaccrual.

Included in certain loan categories in the impaired loans are troubled debt restructurings (TDRs), where economic concessions have been granted to borrowers who have experienced financial difficulties. These concessions typically result from our loss mitigation activities, and could include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance, or other actions. Certain TDRs are classified as nonperforming at the time of restructuring and typically are returned to performing status after considering the borrower’s sustained repayment performance for a reasonable period of at least six months.

When loans and leases are modified into a TDR, the Company evaluates any possible impairment similar to other impaired loans based on the present value of expected future cash flows, discounted at the contractual interest rate of the original loan or lease agreement, and uses the current fair value of the collateral, less selling costs, for collateral dependent loans. If the Company determines that the value of the modified loan is less than the recorded investment in the loan (net of previous charge-offs, deferred loan fees or costs, and unamortized premium or discount), impairment is recognized through an allowance estimate or a charge-off to the allowance. In periods subsequent to modification, the Company evaluates all TDRs, including those that have payment defaults, for possible impairment and recognizes impairment through the allowance.

During the three- and nine-month periods ended March 31, 2018 and 2017, certain loans modified were classified as TDRs. They are shown, segregated by class, in the table below:

	For the three-month periods ended
	March 31, 2018		March 31, 2017
	Number of	Recorded	Number of	Recorded
(dollars in thousands)	modifications	Investment	modifications	Investment
Residential real estate	4	$305	1	$40
Construction real estate	-	-	-	-
Commercial real estate	1	55	-	-
Consumer loans	2	27	1	15
Commercial loans	2	64	-	-
Total	9	$451	2	$55

	For the nine-month periods ended
	March 31, 2018		March 31, 2017
	Number of	Recorded	Number of	Recorded
(dollars in thousands)	modifications	Investment	modifications	Investment
Residential real estate	4	$305	1	$40
Construction real estate	-	-	1	36
Commercial real estate	1	55	4	2,250
Consumer loans	2	27	3	16
Commercial loans	2	64	1	2
Total	9	$451	10	$2,344

Performing loans classified as TDRs and outstanding at March 31, 2018 and June 30, 2017, segregated by class, are shown in the table below. Nonperforming TDRs are shown as nonaccrual loans.

	March 31, 2018		June 30, 2017
	Number of	Recorded	Number of	Recorded
(dollars in thousands)	modifications	Investment	modifications	Investment
Residential real estate	12	$809	10	$1,756
Construction real estate	-	-	-	-
Commercial real estate	13	8,101	13	5,206
Consumer loans	2	26	-	-
Commercial loans	8	2,911	6	3,946
Total	35	$11,847	29	$10,908

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Note 5: Accounting For Certain Loans Acquired in A Transfer

9 Months Ended

Mar. 31, 2018

Notes

Note 5: Accounting For Certain Loans Acquired in A Transfer

Note 5: Accounting for Certain Loans Acquired in a Transfer

The Company acquired loans in transfers during the fiscal years ended June 30, 2011, June 30, 2015 and June 30, 2017.  At acquisition, certain transferred loans evidenced deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected.

Loans purchased with evidence of credit deterioration since origination and for which it is probable that all contractually required payments will not be collected are considered to be credit impaired. Evidence of credit quality deterioration as of the purchase date may include information such as past-due and nonaccrual status, borrower credit scores and recent loan to value percentages. Purchased credit-impaired loans are accounted for under the accounting guidance for loans and debt securities acquired with deteriorated credit quality (ASC 310-30) and initially measured at fair value, which includes estimated future credit losses expected to be incurred over the life of the loan. Accordingly, an allowance for credit losses related to these loans is not carried over and recorded at the acquisition date. Management estimated the cash flows expected to be collected at acquisition using our internal risk models, which incorporate the estimate of current key assumptions, such as default rates, severity and prepayment speeds.

The carrying amount of those loans is included in the balance sheet amounts of loans receivable at March 31, 2018 and June 30, 2017. The amount of these loans is shown below: 

(dollars in thousands)	March 31, 2018	June 30, 2017
Residential real estate	$3,859	$4,158
Construction real estate	1,570	1,660
Commercial real estate	8,999	13,394
Consumer loans	-	-
Commercial loans	3,094	4,502
Outstanding balance	$17,522	$23,714
Carrying amount, net of fair value adjustment of      $2,917 and $3,584 at March 31, 2018, and      June 30, 2017, respectively	$14,605	$20,130

Accretable yield, or income expected to be collected, is as follows:

	For the three-month period ended
(dollars in thousands)	March 31, 2018	March 31, 2017
Balance at beginning of period	$607	$626
Additions	-	-
Accretion	(334)	(56)
Reclassification from nonaccretable difference	335	61
Disposals	-	-
Balance at end of period	$608	$631

	For the nine-month period ended
(dollars in thousands)	March 31, 2018	March 31, 2017
Balance at beginning of period	$609	$656
Additions	-	-
Accretion	(594)	(217)
Reclassification from nonaccretable difference	593	192
Disposals	-	-
Balance at end of period	$608	$631

During the three-and nine-month periods ended March 31, 2018 and 2017, the Company did not increase or reverse the allowance for loan losses related to these purchased credit impaired loans.

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Note 6: Deposits

9 Months Ended

Mar. 31, 2018

Notes

Note 6: Deposits

Note 6:  Deposits

Deposits are summarized as follows:

(dollars in thousands)	March 31, 2018	June 30, 2017
Non-interest bearing accounts	$196,914	$186,203
NOW accounts	580,790	479,488
Money market deposit accounts	117,597	105,599
Savings accounts	152,023	147,247
Certificates	527,013	537,060
Total Deposit Accounts	$1,574,337	$1,455,597

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Note 7: Earnings Per Share

9 Months Ended

Mar. 31, 2018

Notes

Note 7: Earnings Per Share

Note 7:  Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share:

	Three months ended		Nine months ended
	March 31,		March 31,
	2018	2017	2018	2017
(dollars in thousands except per share data)
Net income available to common shareholders	$5,258	$3,954	$15,291	$11,839
Average Common shares – outstanding basic	8,762,344	7,450,041	8,647,593	7,442,525
Stock options under treasury stock method	13,062	28,626	12,790	25,976
Average Common shares – outstanding diluted	8,775,406	7,478,667	8,660,383	7,468,501
Basic earnings per common share	$0.60	$0.53	$1.77	$1.59
Diluted earnings per common share	$0.60	$0.53	$1.77	$1.59

At March 31, 2018 and 2017, no options outstanding had an exercise price exceeding the market price.

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Note 8: Income Taxes

9 Months Ended

Mar. 31, 2018

Notes

Note 8: Income Taxes

Note 8: Income Taxes  

The Company and its subsidiary files income tax returns in the U.S. Federal jurisdiction and various states. The Company is no longer subject to U.S. federal and state examinations by tax authorities for fiscal years before 2011. The Company recognized no interest or penalties related to income taxes.

The Company’s income tax provision is comprised of the following components:

	For the three-month period ended		For the nine-month periods ended
(dollars in thousands)	March 31, 2018	March 31, 2017	March 31, 2018	March 31, 2017
Income taxes
Current	$2,864	$1,457	$7,525	$4,316
Deferred	(1,054)	6	(1,280)	240
Total income tax provision	$1,810	$1,463	$6,245	$4,556

The components of net deferred tax assets are summarized as follows:

(dollars in thousands)	March 31, 2018	June 30, 2017
Deferred tax assets:
Provision for losses on loans	$4,193	$5,563
Accrued compensation and benefits	618	1,068
Other-than-temporary impairment on             available for sale securities	-	128
NOL carry forwards acquired	286	513
Minimum Tax Credit	130	130
Unrealized loss on other real estate	124	131
Unrealized loss on available for sale securities	585	-
Other	407	-
Total deferred tax assets	6,343	7,533
Deferred tax liabilities:
Purchase accounting adjustments	946	1,193
Depreciation	1,100	2,734
FHLB stock dividends	130	203
Prepaid expenses	128	213
Unrealized gain on available for sale securities	-	295
Other	270	991
Total deferred tax liabilities	2,574	5,629
Net deferred tax asset	$3,769	$1,904

 As of March 31, 2018and June 30, 2017, the Company had approximately $1.3 million and $2.7 million in federal and state net operating loss carryforwards, respectively, which were acquired in the July 2009 acquisition of Southern Bank of Commerce, the February 2014 acquisition of Citizens State Bankshares of Bald Knob, Inc. and the August 2014 acquisition of Peoples Service Company, and the June 2017 acquisition of Tammcorp, Inc. (Capaha Bank).  The amount reported is net of the IRC Sec. 382 limitation, or state equivalent, related to utilization of net operating loss carryforwards of acquired corporations. Unless otherwise utilized, the net operating losses will begin to expire in 2027.

A reconciliation of income tax expense at the statutory rate to the Company’s actual income tax is shown below:

	For the three-month period ended		For the nine-month periods ended
(dollars in thousands)	March 31, 2018	March 31, 2017	March 31, 2018	March 31, 2017
Tax at statutory rate	$1,986	$1,896	$6,052	$5,738
Increase (reduction) in taxes   resulting from:
Nontaxable municipal income	(115)	(124)	(341)	(385)
State tax, net of Federal benefit	287	52	530	160
Cash surrender value of       Bank-owned life insurance	(66)	(176)	(197)	(323)
Tax credit benefits	(224)	(81)	(672)	(267)
Tax benefits realized on acquisition	-	-	-	-
Adjustment of deferred tax asset       for enacted changes in tax laws	-	-	1,124	-
Other, net	(58)	(104)	(251)	(367)
Actual provision	$1,810	$1,463	$6,245	$4,556

For the three and nine month periods ended March 31, 2018, income tax expense at the statutory rate was calculated using a 28.1% annual effective tax rate (AETR), compared to 35.0% for the three and nine month periods ended March 31, 2017, as a result of the Tax Cuts and Jobs Act ("Tax Act") signed into law December 22, 2017. The Tax Act ultimately reduces the corporate Federal income tax rate for the Company from 35% to 21%, and for the current fiscal year ending June 30, 2018, the Company is administratively subject to a 28.1% AETR.  U. S. GAAP requires that the impact of the provisions of the Tax Act be accounted for in the period of enactment and the income tax effects of the Tax Act were recognized in the Company’s financial statements for the quarter ended December 31, 2017, and for the nine-month period ended March 31, 2018.  The Tax Act is complex and requires significant detailed analysis.  During the preparation of the Company's June 30, 2018 income tax returns, additional adjustments related to enactment of the Tax Act may be identified.  We do not currently expect significant adjustments will be necessary, but any further adjustments identified will be recognized in accordance with guidance contained in Staff Accounting Bulletin No. 118 from the U. S. Securities and Exchange Commission.

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Note 9: 401(k) Retirement Plan

9 Months Ended

Mar. 31, 2018

Notes

Note 9: 401(k) Retirement Plan

Note 9:  401(k) Retirement Plan

The Bank has a 401(k) retirement plan that covers substantially all eligible employees.  The Bank made a safe harbor matching contribution to the Plan of up to 4% of eligible compensation, depending upon the percentage of eligible pay deferred into the plan by the employee, and also made additional, discretionary profit-sharing contributions for fiscal 2017; for fiscal 2018, the Company has maintained the safe harbor matching contribution of up to 4%, and expects to continue to make additional, discretionary profit-sharing contributions.   During the three- and nine-month periods ended March 31, 2018, retirement plan expenses recognized for the Plan totaled approximately $331,000 and $883,000, respectively, as compared to $230,000 and $677,000, respectively, for the same periods of the prior fiscal year.  Employee deferrals and safe harbor contributions are fully vested.  Profit-sharing or other contributions vest over a period of five years.

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Note 10: Subordinated Debt

9 Months Ended

Mar. 31, 2018

Notes

Note 10: Subordinated Debt

Note 10:  Subordinated Debt

Southern Missouri Statutory Trust I issued $7.0 million of Floating Rate Capital Securities (the “Trust Preferred Securities”) with a liquidation value of $1,000 per share in March 2004. The securities are due in 30 years, are now redeemable at par, and bear interest at a floating rate based on LIBOR. At March 31, 2018, the current rate was 4.93%. The securities represent undivided beneficial interests in the trust, which was established by the Company for the purpose of issuing the securities. The Trust Preferred Securities were sold in a private transaction exempt from registration under the Securities Act of 1933, as amended (the “Act”) and have not been registered under the Act.  The securities may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

Southern Missouri Statutory Trust I used the proceeds from the sale of the Trust Preferred Securities to purchase Junior Subordinated Debentures of the Company. The Company used its net proceeds for working capital and investment in its subsidiaries.

In connection with its October 2013 acquisition of Ozarks Legacy Community Financial, Inc. (OLCF), the Company assumed $3.1 million in floating rate junior subordinated debt securities. The debt securities had been issued in June 2005 by OLCF in connection with the sale of trust preferred securities, bear interest at a floating rate based on LIBOR, are now redeemable at par, and mature in 2035. The carrying value of the debt securities was approximately $2.6 million at March 31, 2018, and $2.6 million at June 30, 2017.

In connection with its August 2014 acquisition of Peoples Service Company, Inc. (PSC), the Company assumed $6.5 million in floating rate junior subordinated debt securities. The debt securities had been issued in 2005 by PSC’s subsidiary bank holding company, Peoples Banking Company, in connection with the sale of trust preferred securities, bear interest at a floating rate based on LIBOR, are now redeemable at par, and mature in 2035. The carrying value of the debt securities was approximately $5.1 million at March 31, 2018, and $5.0 million at June 30, 2017.

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Note 11: Fair Value Measurements

9 Months Ended

Mar. 31, 2018

Notes

Note 11: Fair Value Measurements

Note 11:  Fair Value Measurements

ASC Topic 820, Fair Value Measurements, defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Topic 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

Level 1   Quoted prices in active markets for identical assets or liabilities

Level 2   Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in active markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities

Level 3   Unobservable inputs supported by little or no market activity that are significant to the fair value of the assets or liabilities

Recurring Measurements. The following table presents the fair value measurements of assets  recognized in the accompanying balance sheets measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall at March 31, 2018 and June 30, 2017:

	Fair Value Measurements at March 31, 2018, Using:
		Quoted Prices in Active Markets for Identical Assets	Significant Other Observable Inputs	Significant Unobservable Inputs
(dollars in thousands)	Fair Value	(Level 1)	(Level 2)	(Level 3)
U.S. government sponsored enterprises (GSEs)	$11,384	$-	$11,384	$-
State and political subdivisions	51,297	-	51,297	-
Other securities	5,132	-	5,132	-
Mortgage-backed GSE residential	78,314	-	78,314	-

	Fair Value Measurements at June 30, 2017, Using:
		Quoted Prices in Active Markets for Identical Assets	Significant Other Observable Inputs	Significant Unobservable Inputs
(dollars in thousands)	Fair Value	(Level 1)	(Level 2)	(Level 3)
U.S. government sponsored enterprises (GSEs)	$10,438	$-	$10,438	$-
State and political subdivisions	49,978	-	49,978	-
Other securities	5,725	-	5,725	-
Mortgage-backed GSE residential	78,275	-	78,275	-

Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets, as well as the general classification of such assets pursuant to the valuation hierarchy. There have been no significant changes in the valuation techniques during the period ended March 31, 2018.

Available-for-sale Securities. When quoted market prices are available in an active market, securities are classified within Level 1. The Company does not have Level 1 securities. If quoted market prices are not available, then fair values are estimated using pricing models, or quoted prices of securities with similar characteristics. For these securities, our Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and conditions, among other things. Level 2 securities include U.S. Government-sponsored enterprises, state and political subdivisions, other securities, mortgage-backed GSE residential securities and mortgage-backed other U.S. Government agencies. In certain cases where Level 1 or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy.

Nonrecurring Measurements.  The following tables present the fair value measurement of assets measured at fair value on a nonrecurring basis and the level within the ASC 820 fair value hierarchy in which the fair value measurements fell at March 31, 2018 and June 30, 2017:

	Fair Value Measurements at March 31, 2018, Using:
		Quoted Prices in
		Active Markets for	Significant Other	Significant
		Identical Assets	Observable Inputs	Unobservable Inputs
(dollars in thousands)	Fair Value	(Level 1)	(Level 2)	(Level 3)
Impaired loans (collateral dependent)	$529	$-	$-	$529
Foreclosed and repossessed assets held for sale	$4,142	$-	$-	$4,142

	Fair Value Measurements at June 30, 2017, Using:
		Quoted Prices in
		Active Markets for	Significant Other	Significant
		Identical Assets	Observable Inputs	Unobservable Inputs
(dollars in thousands)	Fair Value	(Level 1)	(Level 2)	(Level 3)
Foreclosed and repossessed assets held for sale	$3,100	$-	$-	$3,100

The following table presents gains and (losses) recognized on assets measured on a non-recurring basis for the nine-month periods ended March 31, 2018 and 2017:

	For the nine months ended
(dollars in thousands)	March 31, 2018	March 31, 2017
Impaired loans (collateral dependent)	$(750)	$-
Foreclosed and repossessed assets held for sale	(164)	(254)
Total (losses) gains on assets measured on a non-recurring basis	$(914)	$(254)

The following is a description of valuation methodologies and inputs used for assets measured at fair value on a nonrecurring basis and recognized in the accompanying consolidated balance sheets, as well as the general classification of such assets and liabilities pursuant to the valuation hierarchy. For assets classified within Level 3 of fair value hierarchy, the process used to develop the reported fair value process is described below.

Impaired Loans (Collateral Dependent). A collateral dependent loan is considered to be impaired when it is probable that all of the principal and interest due may not be collected according to its contractual terms. Generally, when a collateral dependent loan is considered impaired, the amount of reserve required is measured based on the fair value of the underlying collateral. The Company makes such measurements on all material collateral dependent loans deemed impaired using the fair value of the collateral for collateral dependent loans. The fair value of collateral used by the Company is determined by obtaining an observable market price or by obtaining an appraised value from an independent, licensed or certified appraiser, using observable market data. This data includes information such as selling price of similar properties and capitalization rates of similar properties sold within the market, expected future cash flows or earnings of the subject property based on current market expectations, and other relevant factors. In addition, management applies selling and other discounts to the underlying collateral value to determine the fair value. If an appraised value is not available, the fair value of the collateral dependent impaired loan is determined by an adjusted appraised value including unobservable cash flows.

On a quarterly basis, loans classified as special mention, substandard, doubtful, or loss are evaluated including the loan officer’s review of the collateral and its current condition, the Company’s knowledge of the current economic environment in the market where the collateral is located, and the Company’s recent experience with real estate in the area. The date of the appraisal is also considered in conjunction with the economic environment and any decline in the real estate market since the appraisal was obtained.  For all loan types, updated appraisals are obtained if considered necessary.  In instances where the economic environment has worsened and/or the real estate market declined since the last appraisal, a higher distressed sale discount would be applied to the appraised value.

The Company records collateral dependent impaired loans based on nonrecurring Level 3 inputs. If a collateral dependent loan’s fair value, as estimated by the Company, is less than its carrying value, the Company either records a charge-off of the portion of the loan that exceeds the fair value or establishes a specific reserve as part of the allowance for loan losses.  There were no loans measured at fair value on a nonrecurring basis at June 30, 2017.

Foreclosed and Repossessed Assets Held for Sale. Foreclosed and repossessed assets held for sale are valued at the time the loan is foreclosed upon or collateral is repossessed and the asset is transferred to foreclosed or repossessed assets held for sale. The value of the asset is based on third party or internal appraisals, less estimated costs to sell and appropriate discounts, if any. The appraisals are generally discounted based on current and expected market conditions that may impact the sale or value of the asset and management’s knowledge and experience with similar assets. Such discounts typically may be significant and result in a Level 3 classification of the inputs for determining fair value of these assets. Foreclosed and repossessed assets held for sale are continually evaluated for additional impairment and are adjusted accordingly if impairment is identified.

Unobservable (Level 3) Inputs. The following table presents quantitative information about unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements.

(dollars in thousands)	Fair value at March 31, 2018	Valuation technique	Unobservable inputs	Range of inputs applied	Weighted-average inputs applied
Nonrecurring Measurements
Impaired loans (collateral dependent)	$529	Internal Valuation	Discount to reflect realizable value	n/a	0.0%
Foreclosed and repossessed assets	$4,142	Third party appraisal	Marketability discount	0.0% - 78.4%	33.8%

(dollars in thousands)	Fair value at June 30, 2017	Valuation technique	Unobservable inputs	Range of inputs applied	Weighted-average inputs applied
Nonrecurring Measurements
Foreclosed and repossessed assets	$3,100	Third party appraisal	Marketability discount	0.0% - 66.4%	40.6%

Fair Value of Financial Instruments. The following table presents estimated fair values of the Company’s financial instruments not reported at fair value and the level within the fair value hierarchy in which the fair value measurements fell at March 31, 2018 and June 30, 2017.

	March 31, 2018
		Quoted Prices
		in Active		Significant
		Markets for	Significant Other	Unobservable
	Carrying	Identical Assets	Observable Inputs	Inputs
(dollars in thousands)	Amount	(Level 1)	(Level 2)	(Level 3)
Financial assets
Cash and cash equivalents	$30,781	$30,781	$-	$-
Interest-bearing time deposits	1,949	-	1,949	-
Stock in FHLB	4,535	-	4,535	-
Stock in Federal Reserve Bank of St. Louis	3,196	-	3,196	-
Loans receivable, net	1,522,445	-	-	1,514,486
Accrued interest receivable	7,128	-	7,128	-
Financial liabilities
Deposits	1,574,337	1,047,533	-	525,233
Securities sold under agreements to     repurchase	3,769	-	3,769	-
Advances from FHLB	50,850	40,500	10,392	-
Note Payable	3,000	-	-	3,000
Accrued interest payable	1,138	-	1,138	-
Subordinated debt	14,921	-	-	13,545
Unrecognized financial instruments (net of contract amount)
Commitments to originate loans	-	-	-	-
Letters of credit	-	-	-	-
Lines of credit	-	-	-	-

	June 30, 2017
		Quoted Prices
		in Active		Significant
		Markets for	Significant Other	Unobservable
	Carrying	Identical Assets	Observable Inputs	Inputs
(dollars in thousands)	Amount	(Level 1)	(Level 2)	(Level 3)
Financial assets
Cash and cash equivalents	$30,786	$30,786	$-	$-
Interest-bearing time deposits	747	-	747	-
Stock in FHLB	3,547	-	3,547	-
Stock in Federal Reserve Bank of St. Louis	2,357	-	2,357	-
Loans receivable, net	1,397,730	-	-	1,394,164
Accrued interest receivable	6,769	-	6,769	-
Financial liabilities
Deposits	1,455,597	918,553	-	536,266
Securities sold under agreements to     repurchase	10,212	-	10,212	-
Advances from FHLB	43,637	20,000	23,781	-
Note Payable	3,000	-	-	3,000
Accrued interest payable	918	-	918	-
Subordinated debt	14,848	-	-	11,984
Unrecognized financial instruments (net of contract amount)
Commitments to originate loans	-	-	-	-
Letters of credit	-	-	-	-
Lines of credit	-	-	-	-

The following methods and assumptions were used in estimating the fair values of financial instruments:

Cash and cash equivalents and interest-bearing time deposits are valued at their carrying amounts, which approximates book value. Stock in FHLB and the Federal Reserve Bank of St. Louis is valued at cost, which approximates fair value. Fair value of loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. Loans with similar characteristics are aggregated for purposes of the calculations. The carrying amounts of accrued interest approximate their fair values.

The fair value of fixed-maturity time deposits is estimated using a discounted cash flow calculation that applies the rates currently offered for deposits of similar remaining maturities. Non-maturity deposits and securities sold under agreements are valued at their carrying value, which approximates fair value. Fair values of advances from the FHLB and note payable are estimated by discounting maturities using an estimate of the current market for similar instruments. The fair value of subordinated debt is estimated using rates currently available to the Company for debt with similar terms and maturities. The fair value of commitments to originate loans is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. For fixed-rate loan commitments, fair value also considers the difference between current levels of interest rates and committed rates. The fair value of letters of credit and lines of credit are based on fees currently charged for similar agreements or on the estimated cost to terminate or otherwise settle the obligations with the counterparties at the reporting date.

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Note 12: Business Combinations

9 Months Ended

Mar. 31, 2018

Notes

Note 12: Business Combinations

Note 12:  Acquisitions

On February 23, 2018, the Company completed its acquisition of Southern Missouri Bancshares, Inc. (“Bancshares”), and its wholly-owned subsidiary, Southern Missouri Bank of Marshfield (“SMB-Marshfield”), in a stock and cash transaction. The conversion of data systems took place on March 17, 2018. The Company acquired SMB-Marshfield primarily for the purpose of conducting commercial banking activities in markets where it believes the Company’s business model will perform well, and for the long-term value of its core deposit franchise. Through March 31, 2018, the Company incurred a total $638,000 of third-party acquisition-related costs with $458,000 and $613,000 being included in noninterest expense in the Company's consolidated statement of income for the three- and nine- months ended March 31, 2018, respectively.   The goodwill of $4.4 million arising from the acquisition consists largely of synergies and economies of scale expected from combining the operations of the Company and SMB-Marshfield. Total goodwill was assigned to the acquisition of the bank holding company.

The following table summarizes the consideration paid for Bancshares and SMB-Marshfield, and the amounts of assets acquired and liabilities assumed recognized at the acquisition date:

Cash	$3,860
Common stock, at fair value	12,955
Total consideration	$16,815
Recognized amounts of identifiable assets acquired
and liabilities assumed
Cash and cash equivalents	$2,359
Interest bearing time deposits	1,450
Investment securities	5,557
Loans	68,258
Premises and equipment	3,409
BOLI	2,271
Identifiable intangible assets	1,345
Miscellaneous other assets	1,897
Deposits	(68,152)
FHLB Advances	(5,344)
Miscellaneous other liabilities	(683)
Total identifiable net assets	12,367
Goodwill	$4,448

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Note 2: Organization and Summary of Significant Accounting Policies: Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies (Policies)

9 Months Ended

Mar. 31, 2018

Policies

Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies

Organization. Southern Missouri Bancorp, Inc., a Missouri corporation (the Company) was organized in 1994 and is the parent company of Southern Bank (the Bank). Substantially all of the Company’s consolidated revenues are derived from the operations of the Bank, and the Bank represents substantially all of the Company’s consolidated assets and liabilities.  SB Real Estate Investments, LLC is a wholly-owned subsidiary of the Bank formed to hold Southern Bank Real Estate Investments, LLC.  Southern Bank Real Estate Investments, LLC is a REIT which is controlled by SB Real Estate Investments, LLC, but which has other preferred shareholders in order to meet the requirements to be a REIT.  At March 31, 2018, assets of the REIT were approximately $439 million, and consisted primarily of loan participations acquired from the Bank.

The Bank is primarily engaged in providing a full range of banking and financial services to individuals and corporate customers in its market areas. The Bank and Company are subject to competition from other financial institutions. The Bank and Company are subject to regulation by certain federal and state agencies and undergo periodic examinations by those regulatory authorities.

Basis of Financial Statement Presentation. The financial statements of the Company have been prepared in conformity with accounting principles generally accepted in the United States of America and general practices within the banking industry. In the normal course of business, the Company encounters two significant types of risk: economic and regulatory. Economic risk is comprised of interest rate risk, credit risk, and market risk. The Company is subject to interest rate risk to the degree that its interest-bearing liabilities reprice on a different basis than its interest-earning assets. Credit risk is the risk of default on the Company’s investment or loan portfolios resulting from the borrowers’ inability or unwillingness to make contractually required payments. Market risk reflects changes in the value of the investment portfolio, collateral underlying loans receivable, and the value of the Company’s investments in real estate.

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Note 2: Organization and Summary of Significant Accounting Policies: Principles of Consolidation Policy (Policies)

9 Months Ended

Mar. 31, 2018

Policies

Principles of Consolidation Policy

Principles of Consolidation. The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, the Bank. All significant intercompany accounts and transactions have been eliminated.

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Note 2: Organization and Summary of Significant Accounting Policies: Use of Estimates Policy (Policies)

9 Months Ended

Mar. 31, 2018

Policies

Use of Estimates Policy

Use of Estimates. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for loan losses, estimated fair values of purchased loans, other-than-temporary impairments (OTTI), and fair value of financial instruments.

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Note 2: Organization and Summary of Significant Accounting Policies: Cash and Cash Equivalents, Policy (Policies)

9 Months Ended

Mar. 31, 2018

Policies

Cash and Cash Equivalents, Policy

Cash and Cash Equivalents. For purposes of reporting cash flows, cash and cash equivalents includes cash, due from depository institutions and interest-bearing deposits in other depository institutions with original maturities of three months or less. Interest-bearing deposits in other depository institutions were $6.0 million and $6.7 million at March 31, 2018 and June 30, 2017, respectively. The deposits are held in various commercial banks in amounts not exceeding the FDIC’s deposit insurance limits, as well as at the Federal Reserve and the Federal Home Loan Bank of Des Moines.

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Note 2: Organization and Summary of Significant Accounting Policies: Interest-bearing Time Deposits (Policies)

9 Months Ended

Mar. 31, 2018

Policies

Interest-bearing Time Deposits

Interest-bearing Time Deposits.  Interest bearing deposits in banks mature within eight years and are carried at cost, less fair value discounts on acquired time deposits.

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Note 2: Organization and Summary of Significant Accounting Policies: Marketable Securities, Policy (Policies)

9 Months Ended

Mar. 31, 2018

Policies

Marketable Securities, Policy

Available for Sale Securities. Available for sale securities, which include any security for which the Company has no immediate plan to sell but which may be sold in the future, are carried at fair value. Unrealized gains and losses, net of tax, are reported in accumulated other comprehensive income (loss), a component of stockholders’ equity. All securities have been classified as available for sale.

Premiums and discounts on debt securities are amortized or accreted as adjustments to income over the estimated life of the security using the level yield method. Realized gains or losses on the sale of securities is based on the specific identification method. The fair value of securities is based on quoted market prices or dealer quotes. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities.

The Company does not invest in collateralized mortgage obligations that are considered high risk.

When the Company does not intend to sell a debt security, and it is more likely than not the Company will not have to sell the security before recovery of its cost basis, it recognizes the credit component of an other-than-temporary impairment of a debt security in earnings and the remaining portion in other comprehensive income. As a result of this guidance, the Company’s consolidated balance sheet as of the dates presented reflects the full impairment (that is, the difference between the security’s amortized cost basis and fair value) on debt securities that the Company intends to sell or would more likely than not be required to sell before the expected recovery of the amortized cost basis. For available-for-sale debt securities that management has no intent to sell and believes that it more likely than not will not be required to sell prior to recovery, only the credit loss component of the impairment is recognized in earnings, while the noncredit loss is recognized in accumulated other comprehensive loss. The credit loss component recognized in earnings is identified as the amount of principal cash flows not expected to be received over the remaining term of the security as projected based on cash flow projections.

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Note 2: Organization and Summary of Significant Accounting Policies: Federal Home Loan Bank and Federal Reserve Bank Stock (Policies)

9 Months Ended

Mar. 31, 2018

Policies

Federal Home Loan Bank and Federal Reserve Bank Stock

Federal Home Loan Bank and Federal Reserve Bank Stock. The Bank is a member of the Federal Home Loan Bank (FHLB) system, and the Federal Reserve Bank of St. Louis. Capital stock of the FHLB and the Federal Reserve is a required investment based upon a predetermined formula and is carried at cost.

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Note 2: Organization and Summary of Significant Accounting Policies: Loans Policy (Policies)

9 Months Ended

Mar. 31, 2018

Policies

Loans Policy

Loans. Loans are generally stated at unpaid principal balances, less the allowance for loan losses, unamortized discounts on acquired loans, and net deferred loan origination fees.

Interest on loans is accrued based upon the principal amount outstanding. The accrual of interest on loans is discontinued when, in management’s judgment, the collectability of interest or principal in the normal course of business is doubtful. The Company complies with regulatory guidance which indicates that loans should be placed in nonaccrual status when 90 days past due, unless the loan is both well-secured and in the process of collection. A loan that is “in the process of collection” may be subject to legal action or, in appropriate circumstances, through other collection efforts reasonably expected to result in repayment or restoration to current status in the near future. A loan is considered delinquent when a payment has not been made by the contractual due date. Interest income previously accrued but not collected at the date a loan is placed on nonaccrual status is reversed against interest income. Cash receipts on a nonaccrual loan are applied to principal and interest in accordance with its contractual terms unless full payment of principal is not expected, in which case cash receipts, whether designated as principal or interest, are applied as a reduction of the carrying value of the loan. A nonaccrual loan is generally returned to accrual status when principal and interest payments are current, full collectability of principal and interest is reasonably assured, and a consistent record of performance has been demonstrated.

The allowance for losses on loans represents management’s best estimate of losses probable in the existing loan portfolio. The allowance for losses on loans is increased by the provision for losses on loans charged to expense and reduced by loans charged off, net of recoveries. Loans are charged off in the period deemed uncollectible, based on management’s analysis of expected cash flows (for non-collateral dependent loans) or collateral value (for collateral-dependent loans). Subsequent recoveries of loans previously charged off, if any, are credited to the allowance when received. The provision for losses on loans is determined based on management’s assessment of several factors: reviews and evaluations of specific loans, changes in the nature and volume of the loan portfolio, current economic conditions and the related impact on specific borrowers and industry groups, historical loan loss experience, the level of classified and nonperforming loans and the results of regulatory examinations.

Loans are considered impaired if, 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. Depending on a particular loan’s circumstances, we measure impairment of a loan based upon either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s observable market price, or the fair value of the collateral less estimated costs to sell if the loan is collateral dependent. Valuation allowances are established for collateral-dependent impaired loans for the difference between the loan amount and fair value of collateral less estimated selling costs. For impaired loans that are not collateral dependent, a valuation allowance is established for the difference between the loan amount and the present value of expected future cash flows discounted at the historical effective interest rate or the observable market price of the loan. Impairment losses are recognized through an increase in the required allowance for loan losses. Cash receipts on loans deemed impaired are recorded based on the loan’s separate status as a nonaccrual loan or an accrual status loan.

Some loans are accounted for in accordance with ASC 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality. For these loans (“purchased credit impaired loans”), the Company recorded a fair value discount and began carrying them at book value less their face amount (see Note 4). For these loans, we determined the contractual amount and timing of undiscounted principal and interest payments (the “undiscounted contractual cash flows”), and estimated the amount and timing of undiscounted expected principal and interest payments, including expected prepayments (the “undiscounted expected cash flows”). Under acquired impaired loan accounting, the difference between the undiscounted contractual cash flows and the undiscounted expected cash flows is the nonaccretable difference. The nonaccretable difference is an estimate of the loss exposure of principal and interest related to the purchased credit impaired loans, and the amount is subject to change over time based on the performance of the loans. The carrying value of purchased credit impaired loans is initially determined as the discounted expected cash flows. The excess of expected cash flows at acquisition over the initial fair value of the purchased credit impaired loans is referred to as the “accretable yield” and is recorded as interest income over the estimated life of the acquired loans using the level-yield method, if the timing and amount of the future cash flows is reasonably estimable. The carrying value of purchased credit impaired loans is reduced by payments received, both principal and interest, and increased by the portion of the accretable yield recognized as interest income. Subsequent to acquisition, the Company evaluates the purchased credit impaired loans on a quarterly basis. Increases in expected cash flows compared to those previously estimated increase the accretable yield and are recognized as interest income prospectively. Decreases in expected cash flows compared to those previously estimated decrease the accretable yield and may result in the establishment of an allowance for loan losses and a provision for loan losses. Purchased credit impaired loans are generally considered accruing and performing loans, as the loans accrete interest income over the estimated life of the loan when expected cash flows are reasonably estimable. Accordingly, purchased credit impaired loans that are contractually past due are still considered to be accruing and performing as long as there is an expectation that the estimated cash flows will be received. If the timing and amount of cash flows is not reasonably estimable, the loans may be classified as nonaccrual loans.

Loan fees and certain direct loan origination costs are deferred, and the net fee or cost is recognized as an adjustment to interest income using the interest method over the contractual life of the loans.

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Note 2: Organization and Summary of Significant Accounting Policies: Foreclosed Real Estate Policy (Policies)

9 Months Ended

Mar. 31, 2018

Policies

Foreclosed Real Estate Policy

Foreclosed Real Estate. Real estate acquired by foreclosure or by deed in lieu of foreclosure is initially recorded at fair value less estimated selling costs. Costs for development and improvement of the property are capitalized.

Valuations are periodically performed by management, and an allowance for losses is established by a charge to operations if the carrying value of a property exceeds its estimated fair value, less estimated selling costs.

Loans to facilitate the sale of real estate acquired in foreclosure are discounted if made at less than market rates. Discounts are amortized over the fixed interest period of each loan using the interest method.

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Note 2: Organization and Summary of Significant Accounting Policies: Property, Plant and Equipment, Policy (Policies)

9 Months Ended

Mar. 31, 2018

Policies

Property, Plant and Equipment, Policy

Premises and Equipment. Premises and equipment are stated at cost less accumulated depreciation and include expenditures for major betterments and renewals. Maintenance, repairs, and minor renewals are expensed as incurred. When property is retired or sold, the retired asset and related accumulated depreciation are removed from the accounts and the resulting gain or loss taken into income. The Company reviews property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If such assets are considered to be impaired, the impairment loss recognized is measured by the amount by which the carrying amount exceeds the fair value of the assets.

Depreciation is computed by use of straight-line and accelerated methods over the estimated useful lives of the assets. Estimated lives are generally seven to forty years for premises, three to seven years for equipment, and three years for software.

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Note 2: Organization and Summary of Significant Accounting Policies: Bank Owned Life Insurance Policy (Policies)

9 Months Ended

Mar. 31, 2018

Policies

Bank Owned Life Insurance Policy

Bank Owned Life Insurance. Bank owned life insurance policies are reflected in the consolidated balance sheets at the estimated cash surrender value.  Changes in the cash surrender value of these policies, as well as a portion of the insurance proceeds received, are recorded in noninterest income in the consolidated statements of income.

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Note 2: Organization and Summary of Significant Accounting Policies: Goodwill Policy (Policies)

9 Months Ended

Mar. 31, 2018

Policies

Goodwill Policy

Goodwill. The Company’s goodwill is evaluated annually for impairment or more frequently if impairment indicators are present.  A qualitative assessment is performed to determine whether the existence of events or circumstances leads to a determination that it is more likely than not the fair value is less than the carrying amount, including goodwill.  If, based on the evaluation, it is determined to be more likely than not that the fair value is less than the carrying value, then goodwill is tested further for impairment.  If the implied fair value of goodwill is lower than its carrying amount, a goodwill impairment is indicated and goodwill is written down to its implied fair value.  Subsequent increases in goodwill value are not recognized in the financial statements.

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Note 2: Organization and Summary of Significant Accounting Policies: Intangible Assets, Finite-Lived, Policy (Policies)

9 Months Ended

Mar. 31, 2018

Policies

Intangible Assets, Finite-Lived, Policy

Intangible Assets.  The Company’s intangible assets at March 31, 2018 included gross core deposit intangibles of $10.6 million with $4.8 million accumulated amortization, gross other identifiable intangibles of $3.8 million with accumulated amortization of $3.8 million, and FHLB mortgage servicing rights of $1.4 million.  At June 30, 2017, the Company’s intangible assets included gross core deposit intangibles of $9.2 million with $3.8 million accumulated amortization, gross other identifiable intangibles of $3.8 million with accumulated amortization of $3.8 million, and FHLB mortgage servicing rights of $1.3 million. The Company’s core deposit intangible assets are being amortized using the straight line method, over periods ranging from five to seven years, with amortization expense expected to be approximately $396,000 in the remainder of fiscal 2018, $1.3 millionin fiscal 2019, $1.2 million in fiscal 2020, $716,000 in fiscal 2021,$674,000 in fiscal 2022, and $1.5 million thereafter.

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Note 2: Organization and Summary of Significant Accounting Policies: Income Tax, Policy (Policies)

9 Months Ended

Mar. 31, 2018

Policies

Income Tax, Policy

Income Taxes. The Company accounts for income taxes in accordance with income tax accounting guidance (ASC 740, Income Taxes). The income tax accounting guidance results in two components of income tax expense: current and deferred. Current income tax expense reflects taxes to be paid or refunded for the current period by applying the provisions of the enacted tax law to the taxable income or excess of deductions over revenues. The Company determines deferred income taxes using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is based on the tax effects of the differences between the book and tax bases of assets and liabilities, and enacted changes in tax rates and laws are recognized in the period in which they occur.

Deferred income tax expense results from changes in deferred tax assets and liabilities between periods. Deferred tax assets are recognized if it is more likely than not, based on the technical merits, that the tax position will be realized or sustained upon examination. The term more likely than not means a likelihood of more than 50 percent; the terms examined and upon examination also include resolution of the related appeals or litigation processes, if any. A tax position that meets the more-likely-than-not recognition threshold is initially and subsequently measured as the largest amount of tax benefit that has a greater than 50 percent likelihood of being realized upon settlement with a taxing authority that has full knowledge of all relevant information. The determination of whether or not a tax position has met the more-likely-than-not recognition threshold considers the facts, circumstances, and information available at the reporting date and is subject to management’s judgment. Deferred tax assets are reduced by a valuation allowance if, based on the weight of evidence available, it is more likely than not that some portion or all of a deferred tax asset will not be realized.

The Company recognizes interest and penalties on income taxes as a component of income tax expense.

The Company files consolidated income tax returns with its subsidiaries.

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Note 2: Organization and Summary of Significant Accounting Policies: Share-based Compensation, Option and Incentive Plans Policy (Policies)

9 Months Ended

Mar. 31, 2018

Policies

Share-based Compensation, Option and Incentive Plans Policy

Incentive Plan. The Company accounts for its Equity Incentive Plan (EIP) and Omnibus Incentive Plan (OIP) in accordance with ASC 718, “Share-Based Payment.” Compensation expense is based on the market price of the Company’s stock on the date the shares are granted and is recorded over the vesting period. The difference between the aggregate purchase price and the fair value on the date the shares are considered earned represents a tax benefit to the Company that is recorded as an adjustment to income tax expense.

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Note 2: Organization and Summary of Significant Accounting Policies: Outside Directors Retirement Plan Policy (Policies)

9 Months Ended

Mar. 31, 2018

Policies

Outside Directors Retirement Plan Policy

Outside Directors’ Retirement. The Bank has entered into a retirement agreement with most outside directors since April 1994. The directors’ retirement agreements provide that non-employee directors shall receive, upon termination of service on the Board on or after age 60, other than termination for cause, a benefit in equal annual installments over a five year period. The benefit will be based upon the product of the participant’s vesting percentage and the total Board fees paid to the participant during the calendar year preceding termination of service on the Board. The vesting percentage shall be determined based upon the participant’s years of service on the Board, whether before or after the reorganization date.

In the event that the participant dies before collecting any or all of the benefits, the Bank shall pay the participant’s beneficiary. No benefits shall be payable to anyone other than the beneficiary, and shall terminate on the death of the beneficiary.

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Note 2: Organization and Summary of Significant Accounting Policies: Stock Options Policy (Policies)

9 Months Ended

Mar. 31, 2018

Policies

Stock Options Policy

Stock Options. Compensation cost is measured based on the grant-date fair value of the equity instruments issued, and recognized over the vesting period during which an employee provides service in exchange for the award.

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Note 2: Organization and Summary of Significant Accounting Policies: Earnings Per Share, Policy (Policies)

9 Months Ended

Mar. 31, 2018

Policies

Earnings Per Share, Policy

Earnings Per Share. Basic earnings per share available to common stockholders is computed using the weighted-average number of common shares outstanding. Diluted earnings per share available to common stockholders includes the effect of all weighted-average dilutive potential common shares (stock options and warrants) outstanding during each period.

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Note 2: Organization and Summary of Significant Accounting Policies: Comprehensive Income, Policy (Policies)

9 Months Ended

Mar. 31, 2018

Policies

Comprehensive Income, Policy

Comprehensive Income. Comprehensive income consists of net income and other comprehensive income, net of applicable income taxes. Other comprehensive income includes unrealized appreciation (depreciation) on available-for-sale securities, unrealized appreciation (depreciation) on available-for-sale securities for which a portion of an other-than-temporary impairment has been recognized in income, and changes in the funded status of defined benefit pension plans.

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Note 2: Organization and Summary of Significant Accounting Policies: Fair Value Transfer Policy (Policies)

9 Months Ended

Mar. 31, 2018

Policies

Fair Value Transfer Policy

Transfers Between Fair Value Hierarchy Levels.  Transfers in and out of Level 1 (quoted market prices), Level 2 (other significant observable inputs) and Level 3 (significant unobservable inputs) are recognized on the period ending date.

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Note 2: Organization and Summary of Significant Accounting Policies: New Accounting Pronouncements (Policies)

9 Months Ended

Mar. 31, 2018

Policies

New Accounting Pronouncements

The following paragraphs summarize the impact of new accounting pronouncements: 

In February 2018, the FASB issued ASU 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220):  Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.  This ASU provides financial statement preparers with an option to reclassify stranded tax effects within AOCI to retained earnings in each period in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act (or portion thereof) are recorded. This standard is effective for all organizations for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The Company elected to early adopt ASU 2018-02 and, as a result, reclassified $65,497 from accumulated other comprehensive income to retained earnings as of December 31, 2017.

In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Subtopic 718): Scope of Modification Accounting.  The amendments in ASU 2017-09 provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718.  Under the new guidance, an entity should account for the effects of a modification unless all of the following are the same immediately before and after the change: (1) the fair value of the modified award, (2) the vesting conditions of the modified award, and (3) the classification of the modified award as either an equity or liability instrument.  ASU 2017-09 is effective for the fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, and should be applied prospectively to awards modified on or after the adoption date.  Management does not expect the adoption of this guidance to have a material impact on the Company’s consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash payments.  The Update provides guidance on how certain cash receipts and payments are presented and classified in the statement of cash flows, with the objective of reducing the diversity in practice.  The Update addresses eight specific cash flow issues.  For public companies, the ASU is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, and should be applied retrospectively.  Management is evaluating the impact of the new guidance, but does not expect the adoption of this guidance to have a material impact on the Company’s consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326).  The Update amends guidance on reporting credit losses for assets held at amortized cost basis and available for sale debt securities. For assets held at amortized cost basis, Topic 326 eliminates the probable initial recognition threshold in current GAAP and, instead, requires an entity to reflect its current estimate of all expected credit losses. The Update affects loans, debt securities, trade receivables, net investments in leases, off balance sheet credit exposures, and any other financial assets not excluded from the scope that have the contractual right to receive cash.  For public companies, the ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.  Early adoption is available beginning after December 15, 2018, including interim periods within those fiscal years. Adoption will be applied on a modified retrospective basis, through a cumulative-effect adjustment to retained earnings. Management is evaluating the impact, if any, this new guidance will have on the Company’s consolidated financial statements, but cannot yet reasonably estimate the impact of adoption.  The Company has formed a working group of key personnel responsible for the allowance for loan losses estimate and has initiated its evaluation of the data and systems requirements of adoption of the Update.  The group has determined that purchasing third party software will be the most effective method to comply with the requirements, and has evaluated several outside vendors.  The group expects to provide a recommendation of which software would work best for the Company before the end of this fiscal year, June 30, 2018.   

In February 2016, the FASB issued ASU 2016-02, “Leases,” to revise the accounting related to lease accounting.  Under the new guidance, a lessee is required to record a right-of-use (ROU) asset and a lease liability on the balance sheet for all leases with terms longer than 12 months.   The ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.  Adoption of the standard requires the use of a modified retrospective transition approach for all periods presented at the time of adoption.  Management is evaluating the impact of the new guidance, but does not expect the adoption of this guidance to have a material impact on the Company’s consolidated financial statements.

In January 2016, the FASB issued ASU 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities,” to generally require equity investments be measured at fair value with changes in fair value recognized in net income, simplify the impairment assessment of equity investments without readily-determinable fair value, and change disclosure and presentation requirements regarding financial instruments and other comprehensive income, and clarify that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. In February 2018, the FASB issued ASU 2018-03, Technical Corrections and Improvements to Financial Instruments – Overall (Subtopic 825-10).  The amendments in ASU 2018-03 make technical corrections to certain aspects of ASU 2016-01 on recognition of financial assets and financial liabilities.  For public entities, the guidance in ASU 2016-01 and amendments in ASU 2018-03 are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Management is evaluating the new guidance, but does not expect the adoption of this guidance to have a material impact on the Company’s consolidated financial statements.

In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606):  Deferral of the Effective Date, which deferred the effective date of ASU 2014-09.  In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606): Summary and Amendments that Create Revenue from Contracts with Customers (Topic 606) and Other Assets and Deferred Costs—Contracts with Customers (Subtopic 340-40). The guidance in ASU 2014-09 supersedes the revenue recognition requirements in ASC Topic 605, Revenue Recognition, and most industry-specific guidance throughout the industry topics of the codification.  In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, to clarify two aspects of Topic 606- performance obligations and the licensing implementation guidance.  Neither of the two updates changed the core principle of the guidance in Topic 606.  In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers (Topic 606), to provide narrow-scope improvements and practical expedients to ASU 2015-14.  For public companies, the original Update was to be effective for interim and annual periods beginning after December 15, 2016.  The current ASU states that the provisions of ASU 2014-09 should be applied to annual reporting periods, including interim periods, beginning after December 15, 2017.  The Company does not expect the new standard to result in a material change to our accounting for revenue because the majority of our financial instruments are not within the scope of Topic 606, however, it may result in new disclosure requirements..

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Note 3: Securities: Repurchase Agreements, Collateral, Policy (Policies)

9 Months Ended

Mar. 31, 2018

Policies

Repurchase Agreements, Collateral, Policy

The carrying value of investment and mortgage-backed securities pledged as collateral to secure public deposits and securities sold under agreements to repurchase amounted to $116.1 million at March 31, 2018 and $114.1 million at June 30, 2017.  The securities pledged consist of marketable securities, including $7.4 million and $6.5 million of U.S. Government and Federal Agency Obligations, $40.8 million and $50.5 million of Mortgage-Backed Securities, $28.3 million and $19.9 million of Collateralized Mortgage Obligations, $39.2 million and $36.8 million of State and Political Subdivisions Obligations, and $400,000 and $400,000 of Other Securities at March 31, 2018 and June 30, 2017, respectively.

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Note 3: Securities: Other Securities Policy (Policies)

9 Months Ended

Mar. 31, 2018

Policies

Other Securities Policy

Other securities.  At March 31, 2018, there were 2 pooled trust preferred securities with an estimated fair value of $750,000 and unrealized losses of $221,000 in a continuous unrealized loss position for twelve months or more. These unrealized losses were primarily due to the long-term nature of the pooled trust preferred securities and a reduced demand for these securities, and concerns regarding the financial institutions that issued the underlying trust preferred securities. Rules adopted by the federal banking agencies in December 2013 to implement Section 619 of the Dodd-Frank Act (the “Volcker Rule”) generally prohibit banking entities from engaging in proprietary trading and from investing in, sponsoring, or having certain relationships with a hedge fund or private equity fund. The pooled trust preferred securities owned by the Company were included in a January 2014 listing of securities which the agencies considered to be grandfathered with regard to these prohibitions; as such, banking entities are permitted to retain their interest in these securities, provided the interest was acquired on or before December 10, 2013, unless acquired pursuant to a merger or acquisition.

The March 31, 2018, cash flow analysis for these two securities indicated it is probable the Company will receive all contracted principal and related interest projected. The cash flow analysis used in making this determination was based on anticipated default, recovery, and prepayment rates, and the resulting cash flows were discounted based on the yield spread anticipated at the time the securities were purchased. Other inputs include the actual collateral attributes, which include credit ratings and other performance indicators of the underlying financial institutions, including profitability, capital ratios, and asset quality. Assumptions for these two securities included annualized prepayments of 1.4 to 1.6 percent; no recoveries on currently deferred issuers; new deferrals of 40 to 50 basis points annually; and eventual recoveries of nine percent of new deferrals.

One of these two securities has continued to receive cash interest payments in full since our purchase; the other security received principal-in-kind (PIK), in lieu of cash interest, for a period of time following the recession and financial crisis which began in 2008, but resumed cash interest payments during fiscal 2014. Our cash flow analysis indicates that cash interest payments are expected to continue for the securities. Because the Company does not intend to sell these securities and it is not more-likely-than-not that the Company will be required to sell these securities prior to recovery of their amortized cost basis, which may be maturity, the Company does not consider these investments to be other-than-temporarily impaired at March 31, 2018.

The Company does not believe any other individual unrealized loss as of March 31, 2018, represents OTTI. However, the Company could be required to recognize OTTI losses in future periods with respect to its available for sale investment securities portfolio. The amount and timing of any additional OTTI will depend on the decline in the underlying cash flows of the securities. Should the impairment of any of these securities become other-than-temporary, the cost basis of the investment will be reduced and the resulting loss recognized in the period the other-than-temporary impairment is identified.

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Note 3: Securities: Credit Losses Recognized on Investments Policy (Policies)

9 Months Ended

Mar. 31, 2018

Policies

Credit Losses Recognized on Investments Policy

Credit losses recognized on investments. As described above, one of the Company’s investments in trust preferred securities experienced fair value deterioration due to credit losses, but is not otherwise other-than-temporarily impaired. During fiscal 2009, the Company adopted ASC 820, formerly FASB Staff Position 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly.”  The following table provides information about the trust preferred security for which only a credit loss was recognized in income and other losses are recorded in other comprehensive income (loss) for the nine-month periods ended March 31, 2018 and 2017.

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Note 4: Loans and Allowance for Loan Losses: Residential Mortgage Lending Policy (Policies)

9 Months Ended

Mar. 31, 2018

Policies

Residential Mortgage Lending Policy

Residential Mortgage Lending.  The Company actively originates loans for the acquisition or refinance of one- to four-family residences.  This category includes both fixed-rate and adjustable-rate mortgage (“ARM”) loans amortizing over periods of up to 30 years, and the properties securing such loans may be owner-occupied or non-owner-occupied.  Single-family residential loans do not generally exceed 90% of the lower of the appraised value or purchase price of the secured property.  Substantially all of the one- to four-family residential mortgage originations in the Company’s portfolio are located within the Company’s primary lending area.

The Company also originates loans secured by multi-family residential properties that are often located outside the Company’s primary lending area but made to borrowers who operate within the primary market area.  The majority of the multi-family residential loans that are originated by the Bank are amortized over periods generally up to 25 years, with balloon maturities typically up to ten years. Both fixed and adjustable interest rates are offered and it is typical for the Company to include an interest rate “floor” and “ceiling” in the loan agreement. Generally, multi-family residential loans do not exceed 85% of the lower of the appraised value or purchase price of the secured property.

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Note 4: Loans and Allowance for Loan Losses: Commercial Real Estate Lending Policy (Policies)

9 Months Ended

Mar. 31, 2018

Policies

Commercial Real Estate Lending Policy

Commercial Real Estate Lending. The Company actively originates loans secured by commercial real estate including land (improved, unimproved, and farmland), strip shopping centers, retail establishments and other businesses. These properties are typically owned and operated by borrowers headquartered within the Company’s primary lending area, however, the property may be located outside our primary lending area.

Most commercial real estate loans originated by the Company are based on amortization schedules of up to 25 years with monthly principal and interest payments. Generally, the interest rate received on these loans is fixed for a maturity for up to seven years, with a balloon payment due at maturity. Alternatively, for some loans, the interest rate adjusts at least annually after an initial period up to seven years. The Company typically includes an interest rate “floor” in the loan agreement. Generally, improved commercial real estate loan amounts do not exceed 80% of the lower of the appraised value or the purchase price of the secured property. Agricultural real estate terms offered differ slightly, with amortization schedules of up to 25 years with an 80% loan-to-value ratio, or 30 years with a 75% loan-to-value ratio.

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Note 4: Loans and Allowance for Loan Losses: Construction Lending Policy (Policies)

9 Months Ended

Mar. 31, 2018

Policies

Construction Lending Policy

Construction Lending. The Company originates real estate loans secured by property or land that is under construction or development. Construction loans originated by the Company are generally secured by mortgage loans for the construction of owner occupied residential real estate or to finance speculative construction secured by residential real estate, land development, or owner-operated or non-owner occupied commercial real estate. During construction, these loans typically require monthly interest-only payments and have maturities ranging from six to twelve months. Once construction is completed, loans may be converted to permanent status with monthly payments using amortization schedules of up to 30 years on residential and generally up to 25 years on commercial real estate.

While the Company typically utilizes maturity periods ranging from 6 to 12 months to closely monitor the inherent risks associated with construction loans for these loans, weather conditions, change orders, availability of materials and/or labor, and other factors may contribute to the lengthening of a project, thus necessitating the need to renew the construction loan at the balloon maturity.  Such extensions are typically executed in incremental three month periods to facilitate project completion.  The Company’s average term of construction loans is approximately eight months.  During construction, loans typically require monthly interest only payments which may allow the Company an opportunity to monitor for early signs of financial difficulty should the borrower fail to make a required monthly payment.  Additionally, during the construction phase, the Company typically obtains interim inspections completed by an independent third party.  This monitoring further allows the Company opportunity to assess risk.  At March 31, 2018 construction loans outstanding included 62 loans, totaling $12.4 million, for which a modification had been agreed to.  At June 30, 2017, construction loans outstanding included 50 loans, totaling $10.3 million, for which a modification had been agreed to. All modifications were solely for the purpose of extending the maturity date due to conditions described above.  None of these modifications were executed due to financial difficulty on the part of the borrower and, therefore, were not accounted for as TDRs.

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Note 4: Loans and Allowance for Loan Losses: Consumer Lending Policy (Policies)

9 Months Ended

Mar. 31, 2018

Policies

Consumer Lending Policy

Consumer Lending. The Company offers a variety of secured consumer loans, including home equity, direct and indirect automobile loans, second mortgages, mobile home loans and loans secured by deposits. The Company originates substantially all of its consumer loans in its primary lending area. Usually, consumer loans are originated with fixed rates for terms of up to five years, with the exception of home equity lines of credit, which are variable, tied to the prime rate of interest and are for a period of ten years.

Home equity lines of credit (HELOCs) are secured with a deed of trust and are issued up to 100% of the appraised or assessed value of the property securing the line of credit, less the outstanding balance on the first mortgage and are typically issued for a term of ten years. Interest rates on the HELOCs are generally adjustable. Interest rates are based upon the loan-to-value ratio of the property with better rates given to borrowers with more equity.

Automobile loans originated by the Company include both direct loans and a smaller amount of loans originated by auto dealers. The Company generally pays a negotiated fee back to the dealer for indirect loans. Typically, automobile loans are made for terms of up to 60 months for new and used vehicles. Loans secured by automobiles have fixed rates and are generally made in amounts up to 100% of the purchase price of the vehicle.

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Note 4: Loans and Allowance for Loan Losses: Commercial Business Lending Policy (Policies)

9 Months Ended

Mar. 31, 2018

Policies

Commercial Business Lending Policy

Commercial Business Lending. The Company’s commercial business lending activities encompass loans with a variety of purposes and security, including loans to finance accounts receivable, inventory, equipment and operating lines of credit, including agricultural production and equipment loans. The Company offers both fixed and adjustable rate commercial business loans. Generally, commercial loans secured by fixed assets are amortized over periods up to five years, while commercial operating lines of credit or agricultural production lines are generally for a one year period.

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Note 3: Securities: Schedule of Available for Sale Securities (Tables)

9 Months Ended

Mar. 31, 2018

Tables/Schedules

Schedule of Available for Sale Securities

	March 31, 2018
		Gross	Gross	Estimated
	Amortized	Unrealized	Unrealized	Fair
(dollars in thousands)	Cost	Gains	Losses	Value
Investment and mortgage backed securities:
U.S. government-sponsored enterprises (GSEs)	$11,504	$-	$(120)	$11,384
State and political subdivisions	51,457	395	(555)	51,297
Other securities	5,291	76	(235)	5,132
Mortgage-backed: GSE residential	80,313	1	(2,000)	78,314
Total investments and mortgage-backed securities	$148,565	$472	$(2,910)	$146,127

	June 30, 2017
		Gross	Gross	Estimated
	Amortized	Unrealized	Unrealized	Fair
(dollars in thousands)	Cost	Gains	Losses	Value
Investment and mortgage backed securities:
U.S. government-sponsored enterprises (GSEs)	$10,433	$17	$(12)	$10,438
State and political subdivisions	49,059	1,046	(127)	49,978
Other securities	6,017	306	(598)	5,725
Mortgage-backed GSE residential	78,088	490	(303)	78,275
Total investments and mortgage-backed securities	$143,597	$1,859	$(1,040)	$144,416

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Note 3: Securities: Contractual Obligation, Fiscal Year Maturity Schedule (Tables)

9 Months Ended

Mar. 31, 2018

Tables/Schedules

Contractual Obligation, Fiscal Year Maturity Schedule

	March 31, 2018
	Amortized	Estimated
(dollars in thousands)	Cost	Fair Value
Within one year	$4,762	$4,759
After one year but less than five years	20,065	19,944
After five years but less than ten years	23,277	23,243
After ten years	20,148	19,867
Total investment securities	68,252	67,813
Mortgage-backed securities	80,313	78,314
Total investments and mortgage-backed securities	$148,565	$146,127

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Note 3: Securities: Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value (Tables)

9 Months Ended

Mar. 31, 2018

Tables/Schedules

Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value

	March 31, 2018
	Less than 12 months		12 months or more		Total
		Unrealized		Unrealized		Unrealized
	Fair Value	Losses	Fair Value	Losses	Fair Value	Losses
(dollars in thousands)
U.S. government-sponsored enterprises (GSEs)	$7,943	$65	$2,443	$55	$10,386	$120
Obligations of state and political subdivisions	19,157	292	8,215	263	27,372	555
Other securities	985	7	1,069	228	2,054	235
Mortgage-backed securities	57,193	1,185	21,015	815	78,208	2,000
Total investments and mortgage-backed securities	$85,278	$1,549	$32,742	$1,361	$118,020	$2,910

	June 30, 2017
	Less than 12 months		12 months or more		Total
		Unrealized		Unrealized		Unrealized
	Fair Value	Losses	Fair Value	Losses	Fair Value	Losses
(dollars in thousands)
U.S. government-sponsored enterprises (GSEs)	$6,457	$12	$-	$-	$6,457	$12
Obligations of state and political subdivisions	12,341	127	256	-	12,597	127
Other securities	-	-	1,160	598	1,160	598
Mortgage-backed securities	29,836	267	2,285	36	32,121	303
Total investments and mortgage-backed securities	$48,634	$406	$3,701	$634	$52,335	$1,040

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Note 3: Securities: Other than Temporary Impairment, Credit Losses Recognized in Earnings (Tables)

9 Months Ended

Mar. 31, 2018

Tables/Schedules

Other than Temporary Impairment, Credit Losses Recognized in Earnings

	Accumulated Credit Losses
	Nine-Month Period Ended
(dollars in thousands)	March 31,
	2018	2017
Credit losses on debt securities held
Beginning of period	$340	$352
Additions related to OTTI losses not previously recognized	-	-
Reductions due to sales	(333)	-
Reductions due to change in intent or likelihood of sale	-	-
Additions related to increases in previously-recognized OTTI losses	-	-
Reductions due to increases in expected cash flows	(7)	(9)
End of period	$-	$343

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Note 4: Loans and Allowance for Loan Losses: Schedule of Accounts, Notes, Loans and Financing Receivable (Tables)

9 Months Ended

Mar. 31, 2018

Tables/Schedules

Schedule of Accounts, Notes, Loans and Financing Receivable

Classes of loans are summarized as follows:

(dollars in thousands)	March 31, 2018	June 30, 2017
Real Estate Loans:
Residential	$457,825	$442,463
Construction	115,589	106,782
Commercial	693,606	603,922
Consumer loans	71,941	63,651
Commercial loans	255,317	247,184
	1,594,278	1,464,002
Loans in process	(54,571)	(50,740)
Deferred loan fees, net	1	6
Allowance for loan losses	(17,263)	(15,538)
Total loans	$1,522,445	$1,397,730

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Note 4: Loans and Allowance for Loan Losses: Schedule of balance in the allowance for loan losses and recorded investment (Tables)

9 Months Ended

Mar. 31, 2018

Tables/Schedules

Schedule of balance in the allowance for loan losses and recorded investment

	At period end and for the nine months ended March 31, 2018
	Residential	Construction	Commercial
(dollars in thousands)	Real Estate	Real Estate	Real Estate	Consumer	Commercial	Total
Allowance for loan losses:
Balance, beginning of period	$3,230	$964	$7,068	$757	$3,519	$15,538
Provision charged to expense	(110)	(15)	1,627	169	389	2,060
Losses charged off	(170)	-	(41)	(118)	(22)	(351)
Recoveries	2	-	1	6	7	16
Balance, end of period	$2,952	$949	$8,655	$814	$3,893	$17,263
Ending Balance: individually     evaluated for impairment	$-	$-	$410	$-	$340	$750
Ending Balance: collectively     evaluated for impairment	$2,952	$949	$8,245	$814	$3,553	$16,513
Ending Balance: loans acquired     with deteriorated credit quality	$-	$-	$-	$-	$-	$-
Loans:
Ending Balance: individually     evaluated for impairment	$-	$-	$699	$-	$580	$1,279
Ending Balance: collectively     evaluated for impairment	$454,614	$59,715	$685,282	$71,941	$252,271	$1,523,823
Ending Balance: loans acquired     with deteriorated credit quality	$3,211	$1,303	$7,625	$-	$2,466	$14,605

	For the three months ended March 31, 2018
	Residential	Construction	Commercial
(dollars in thousands)	Real Estate	Real Estate	Real Estate	Consumer	Commercial	Total
Allowance for loan losses:
Balance, beginning of period	$3,286	$886	$8,303	$828	$3,564	$16,867
Provision charged to expense	(243)	63	356	44	330	550
Losses charged off	(92)	-	(6)	(60)	(1)	(159)
Recoveries	1	-	2	2	-	5
Balance, end of period	$2,952	$949	$8,655	$814	$3,893	$17,263

	At period end and for the nine months ended  March 31, 2017
	Residential	Construction	Commercial
(dollars in thousands)	Real Estate	Real Estate	Real Estate	Consumer	Commercial	Total
Allowance for loan losses:
Balance, beginning of period	$3,247	$1,091	$5,711	$738	$3,004	$13,791
Provision charged to expense	246	(162)	1,405	16	452	1,957
Losses charged off	(201)	(31)	(4)	(50)	(337)	(623)
Recoveries	7	1	18	9	30	65
Balance, end of period	$3,299	$899	$7,130	$713	$3,149	$15,190
Ending Balance: individually     evaluated for impairment	$-	$-	$-	$-	$-	$-
Ending Balance: collectively     evaluated for impairment	$3,299	$899	$7,130	$713	$3,149	$15,190
Ending Balance: loans acquired     with deteriorated credit quality	$-	$-	$-	$-	$-	$-

	For the three months ended March 31, 2017
	Residential	Construction	Commercial
(dollars in thousands)	Real Estate	Real Estate	Real Estate	Consumer	Commercial	Total
Allowance for loan losses:
Balance, beginning of period	$3,472	$891	$6,851	$756	$3,022	$14,992
Provision charged to expense	(70)	8	280	(35)	193	376
Losses charged off	(104)	-	(4)	(11)	(67)	(186)
Recoveries	1	-	3	3	1	8
Balance, end of period	$3,299	$899	$7,130	$713	$3,149	$15,190

	At June 30, 2017
	Residential	Construction	Commercial
(dollars in thousands)	Real Estate	Real Estate	Real Estate	Consumer	Commercial	Total
Allowance for loan losses:
Balance, end of period	$3,230	$964	$7,068	$757	$3,519	$15,538
Ending Balance: individually     evaluated for impairment	$-	$-	$-	$-	$-	$-
Ending Balance: collectively     evaluated for impairment	$3,230	$964	$7,068	$757	$3,519	$15,538
Ending Balance: loans acquired     with deteriorated credit quality	$-	$-	$-	$-	$-	$-
Loans:
Ending Balance: individually     evaluated for impairment	$-	$-	$-	$-	$-	$-
Ending Balance: collectively     evaluated for impairment	$438,981	$54,704	$592,427	$63,651	$243,369	$1,393,132
Ending Balance: loans acquired     with deteriorated credit quality	$3,482	$1,338	$11,495	$-	$3,815	$20,130

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Note 4: Loans and Allowance for Loan Losses: Financing Receivable Credit Quality Indicators (Tables)

9 Months Ended

Mar. 31, 2018

Tables/Schedules

Financing Receivable Credit Quality Indicators

	March 31, 2018
	Residential	Construction	Commercial
(dollars in thousands)	Real Estate	Real Estate	Real Estate	Consumer	Commercial
Pass	$450,857	$60,984	$679,521	$71,722	$251,426
Watch	4,305	-	7,261	118	436
Special Mention	146	-	932	29	74
Substandard	2,517	34	5,193	72	2,199
Doubtful	-	-	699	-	1,182
Total	$457,825	$61,018	$693,606	$71,941	$255,317

	June 30, 2017
	Residential	Construction	Commercial
(dollars in thousands)	Real Estate	Real Estate	Real Estate	Consumer	Commercial
Pass	$438,222	$55,825	$588,385	$63,320	$240,864
Watch	772	-	9,253	123	2,003
Special Mention	148	-	926	30	84
Substandard	3,321	217	5,358	178	3,631
Doubtful	-	-	-	-	602
Total	$442,463	$56,042	$603,922	$63,651	$247,184

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Note 4: Loans and Allowance for Loan Losses: Schedule of Loan Portfolio Aging Analysis (Tables)

9 Months Ended

Mar. 31, 2018

Tables/Schedules

Schedule of Loan Portfolio Aging Analysis

The following tables present the Company’s loan portfolio aging analysis (excluding loans in process and deferred loan fees) as of March 31, 2018 and June 30, 2017.  These tables include purchased credit impaired loans, which are reported according to aging analysis after acquisition based on the Company’s standards for such classification:

	March 31, 2018
			Greater Than				Greater Than 90
	30-59 Days	60-89 Days	90 Days	Total		Total Loans	Days Past Due
(dollars in thousands)	Past Due	Past Due	Past Due	Past Due	Current	Receivable	and Accruing
Real Estate Loans:
Residential	$1,372	$2,098	$1,261	$4,731	$453,094	$457,825	$-
Construction	-	-	-	-	61,018	61,018	-
Commercial	275	769	446	1,490	692,116	693,606	-
Consumer loans	446	62	156	664	71,277	71,941	-
Commercial loans	93	211	34	338	254,979	255,317	-
Total loans	$2,186	$3,140	$1,897	$7,223	$1,532,484	$1,539,707	$-

	June 30, 2017
			Greater Than				Greater Than 90
	30-59 Days	60-89 Days	90 Days	Total		Total Loans	Days Past Due
(dollars in thousands)	Past Due	Past Due	Past Due	Past Due	Current	Receivable	and Accruing
Real Estate Loans:
Residential	$1,491	$148	$676	$2,315	$440,148	$442,463	$59
Construction	35	-	-	35	56,007	56,042	-
Commercial	700	-	711	1,411	602,511	603,922	-
Consumer loans	216	16	134	366	63,285	63,651	13
Commercial loans	144	53	426	623	246,561	247,184	329
Total loans	$2,586	$217	$1,947	$4,750	$1,408,512	$1,413,262	$401

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Note 4: Loans and Allowance for Loan Losses: Schedule of Impaired Loans (Tables)

9 Months Ended

Mar. 31, 2018

Tables/Schedules

Schedule of Impaired Loans

	March 31, 2018
	Recorded	Unpaid Principal	Specific
(dollars in thousands)	Balance	Balance	Allowance
Loans without a specific valuation allowance:
Residential real estate	$3,827	$4,474	$-
Construction real estate	1,336	1,604	-
Commercial real estate	14,090	15,463	-
Consumer loans	27	27	-
Commercial loans	2,911	3,539	-
Loans with a specific valuation allowance:
Residential real estate	$-	$-	$-
Construction real estate	-	-	-
Commercial real estate	699	699	410
Consumer loans	-	-	-
Commercial loans	580	580	340
Total:
Residential real estate	$3,827	$4,474	$-
Construction real estate	$1,336	$1,604	$-
Commercial real estate	$14,789	$16,162	$410
Consumer loans	$27	$27	$-
Commercial loans	$3,491	$4,119	$340

	June 30, 2017
	Recorded	Unpaid Principal	Specific
(dollars in thousands)	Balance	Balance	Allowance
Loans without a specific valuation allowance:
Residential real estate	$3,811	$4,486	$-
Construction real estate	1,373	1,695	-
Commercial real estate	14,935	16,834	-
Consumer loans	1	1	-
Commercial loans	4,302	4,990	-
Loans with a specific valuation allowance:
Residential real estate	$-	$-	$-
Construction real estate	-	-	-
Commercial real estate	-	-	-
Consumer loans	-	-	-
Commercial loans	-	-	-
Total:
Residential real estate	$3,811	$4,486	$-
Construction real estate	$1,373	$1,695	$-
Commercial real estate	$14,935	$16,834	$-
Consumer loans	$1	$1	$-
Commercial loans	$4,302	$4,990	$-

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Note 4: Loans and Allowance for Loan Losses: Schedule of Interest Income Recognized on Impaired Loans (Tables)

9 Months Ended

Mar. 31, 2018

Tables/Schedules

Schedule of Interest Income Recognized on Impaired Loans

	For the three-month period ended
	March 31, 2018
	Average
(dollars in thousands)	Investment in	Interest Income
	Impaired Loans	Recognized
Residential Real Estate	$3,322	$45
Construction Real Estate	1,312	43
Commercial Real Estate	8,532	436
Consumer Loans	-	-
Commercial Loans	2,855	44
Total Loans	$16,021	$568

	For the three-month period ended
	March 31, 2017
	Average
(dollars in thousands)	Investment in	Interest Income
	Impaired Loans	Recognized
Residential Real Estate	$2,857	$22
Construction Real Estate	1,362	38
Commercial Real Estate	9,513	146
Consumer Loans	-	-
Commercial Loans	889	19
Total Loans	$14,621	$225

	For the nine-month period ended
	March 31, 2018
	Average
(dollars in thousands)	Investment in	Interest Income
	Impaired Loans	Recognized
Residential Real Estate	$3,395	$172
Construction Real Estate	1,323	122
Commercial Real Estate	9,905	987
Consumer Loans	-	-
Commercial Loans	3,328	153
Total Loans	$17,951	$1,434

	For the nine-month period ended
	March 31, 2017
	Average
(dollars in thousands)	Investment in	Interest Income
	Impaired Loans	Recognized
Residential Real Estate	$2,893	$73
Construction Real Estate	1,378	109
Commercial Real Estate	9,681	513
Consumer Loans	-	-
Commercial Loans	957	56
Total Loans	$14,909	$751

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Note 4: Loans and Allowance for Loan Losses: Schedule of Financing Receivables, Non Accrual Status (Tables)

9 Months Ended

Mar. 31, 2018

Tables/Schedules

Schedule of Financing Receivables, Non Accrual Status

(dollars in thousands)	March 31, 2018	June 30, 2017
Residential real estate	$3,026	$1,263
Construction real estate	34	35
Commercial real estate	1,970	960
Consumer loans	231	158
Commercial loans	957	409
Total loans	$6,218	$2,825

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Note 4: Loans and Allowance for Loan Losses: Schedule of Debtor Troubled Debt Restructuring, Current Period (Tables)

9 Months Ended

Mar. 31, 2018

Tables/Schedules

Schedule of Debtor Troubled Debt Restructuring, Current Period

	For the three-month periods ended
	March 31, 2018		March 31, 2017
	Number of	Recorded	Number of	Recorded
(dollars in thousands)	modifications	Investment	modifications	Investment
Residential real estate	4	$305	1	$40
Construction real estate	-	-	-	-
Commercial real estate	1	55	-	-
Consumer loans	2	27	1	15
Commercial loans	2	64	-	-
Total	9	$451	2	$55

	For the nine-month periods ended
	March 31, 2018		March 31, 2017
	Number of	Recorded	Number of	Recorded
(dollars in thousands)	modifications	Investment	modifications	Investment
Residential real estate	4	$305	1	$40
Construction real estate	-	-	1	36
Commercial real estate	1	55	4	2,250
Consumer loans	2	27	3	16
Commercial loans	2	64	1	2
Total	9	$451	10	$2,344

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Note 4: Loans and Allowance for Loan Losses: Performing Loans Classified as Troubled Debt Restructuring Loans (Tables)

9 Months Ended

Mar. 31, 2018

Tables/Schedules

Performing Loans Classified as Troubled Debt Restructuring Loans

	March 31, 2018		June 30, 2017
	Number of	Recorded	Number of	Recorded
(dollars in thousands)	modifications	Investment	modifications	Investment
Residential real estate	12	$809	10	$1,756
Construction real estate	-	-	-	-
Commercial real estate	13	8,101	13	5,206
Consumer loans	2	26	-	-
Commercial loans	8	2,911	6	3,946
Total	35	$11,847	29	$10,908

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Note 5: Accounting For Certain Loans Acquired in A Transfer: Schedule of Acquired Loans with Credit Deterioration (Tables)

9 Months Ended

Mar. 31, 2018

Tables/Schedules

Schedule of Acquired Loans with Credit Deterioration

(dollars in thousands)	March 31, 2018	June 30, 2017
Residential real estate	$3,859	$4,158
Construction real estate	1,570	1,660
Commercial real estate	8,999	13,394
Consumer loans	-	-
Commercial loans	3,094	4,502
Outstanding balance	$17,522	$23,714
Carrying amount, net of fair value adjustment of      $2,917 and $3,584 at March 31, 2018, and      June 30, 2017, respectively	$14,605	$20,130

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Note 5: Accounting For Certain Loans Acquired in A Transfer: Schedule of Acquired Loans in Transfer Accretable Yield (Tables)

9 Months Ended

Mar. 31, 2018

Tables/Schedules

Schedule of Acquired Loans in Transfer Accretable Yield

	For the three-month period ended
(dollars in thousands)	March 31, 2018	March 31, 2017
Balance at beginning of period	$607	$626
Additions	-	-
Accretion	(334)	(56)
Reclassification from nonaccretable difference	335	61
Disposals	-	-
Balance at end of period	$608	$631

	For the nine-month period ended
(dollars in thousands)	March 31, 2018	March 31, 2017
Balance at beginning of period	$609	$656
Additions	-	-
Accretion	(594)	(217)
Reclassification from nonaccretable difference	593	192
Disposals	-	-
Balance at end of period	$608	$631

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Note 6: Deposits: Schedule of Deposit Liabilities (Tables)

9 Months Ended

Mar. 31, 2018

Tables/Schedules

Schedule of Deposit Liabilities

(dollars in thousands)	March 31, 2018	June 30, 2017
Non-interest bearing accounts	$196,914	$186,203
NOW accounts	580,790	479,488
Money market deposit accounts	117,597	105,599
Savings accounts	152,023	147,247
Certificates	527,013	537,060
Total Deposit Accounts	$1,574,337	$1,455,597

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Note 7: Earnings Per Share: Schedule of Earnings Per Share, Basic and Diluted (Tables)

9 Months Ended

Mar. 31, 2018

Tables/Schedules

Schedule of Earnings Per Share, Basic and Diluted

	Three months ended		Nine months ended
	March 31,		March 31,
	2018	2017	2018	2017
(dollars in thousands except per share data)
Net income available to common shareholders	$5,258	$3,954	$15,291	$11,839
Average Common shares – outstanding basic	8,762,344	7,450,041	8,647,593	7,442,525
Stock options under treasury stock method	13,062	28,626	12,790	25,976
Average Common shares – outstanding diluted	8,775,406	7,478,667	8,660,383	7,468,501
Basic earnings per common share	$0.60	$0.53	$1.77	$1.59
Diluted earnings per common share	$0.60	$0.53	$1.77	$1.59

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Note 8: Income Taxes: Schedule of Effective Income Tax Rate Reconciliation (Tables)

9 Months Ended

Mar. 31, 2018

Tables/Schedules

Schedule of Effective Income Tax Rate Reconciliation

	For the three-month period ended		For the nine-month periods ended
(dollars in thousands)	March 31, 2018	March 31, 2017	March 31, 2018	March 31, 2017
Income taxes
Current	$2,864	$1,457	$7,525	$4,316
Deferred	(1,054)	6	(1,280)	240
Total income tax provision	$1,810	$1,463	$6,245	$4,556

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Note 8: Income Taxes: Schedule of Deferred Tax Assets and Liabilities (Tables)

9 Months Ended

Mar. 31, 2018

Tables/Schedules

Schedule of Deferred Tax Assets and Liabilities

(dollars in thousands)	March 31, 2018	June 30, 2017
Deferred tax assets:
Provision for losses on loans	$4,193	$5,563
Accrued compensation and benefits	618	1,068
Other-than-temporary impairment on             available for sale securities	-	128
NOL carry forwards acquired	286	513
Minimum Tax Credit	130	130
Unrealized loss on other real estate	124	131
Unrealized loss on available for sale securities	585	-
Other	407	-
Total deferred tax assets	6,343	7,533
Deferred tax liabilities:
Purchase accounting adjustments	946	1,193
Depreciation	1,100	2,734
FHLB stock dividends	130	203
Prepaid expenses	128	213
Unrealized gain on available for sale securities	-	295
Other	270	991
Total deferred tax liabilities	2,574	5,629
Net deferred tax asset	$3,769	$1,904

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Note 8: Income Taxes: Schedule of Reconciliation of Income Tax Expense at the Statutory Rate to Actual Income Tax (Tables)

9 Months Ended

Mar. 31, 2018

Tables/Schedules

Schedule of Reconciliation of Income Tax Expense at the Statutory Rate to Actual Income Tax

	For the three-month period ended		For the nine-month periods ended
(dollars in thousands)	March 31, 2018	March 31, 2017	March 31, 2018	March 31, 2017
Tax at statutory rate	$1,986	$1,896	$6,052	$5,738
Increase (reduction) in taxes   resulting from:
Nontaxable municipal income	(115)	(124)	(341)	(385)
State tax, net of Federal benefit	287	52	530	160
Cash surrender value of       Bank-owned life insurance	(66)	(176)	(197)	(323)
Tax credit benefits	(224)	(81)	(672)	(267)
Tax benefits realized on acquisition	-	-	-	-
Adjustment of deferred tax asset       for enacted changes in tax laws	-	-	1,124	-
Other, net	(58)	(104)	(251)	(367)
Actual provision	$1,810	$1,463	$6,245	$4,556

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Note 11: Fair Value Measurements: Fair Value, Assets Measured on Recurring Basis (Tables)

9 Months Ended

Mar. 31, 2018

Tables/Schedules

Fair Value, Assets Measured on Recurring Basis

	Fair Value Measurements at March 31, 2018, Using:
		Quoted Prices in Active Markets for Identical Assets	Significant Other Observable Inputs	Significant Unobservable Inputs
(dollars in thousands)	Fair Value	(Level 1)	(Level 2)	(Level 3)
U.S. government sponsored enterprises (GSEs)	$11,384	$-	$11,384	$-
State and political subdivisions	51,297	-	51,297	-
Other securities	5,132	-	5,132	-
Mortgage-backed GSE residential	78,314	-	78,314	-

	Fair Value Measurements at June 30, 2017, Using:
		Quoted Prices in Active Markets for Identical Assets	Significant Other Observable Inputs	Significant Unobservable Inputs
(dollars in thousands)	Fair Value	(Level 1)	(Level 2)	(Level 3)
U.S. government sponsored enterprises (GSEs)	$10,438	$-	$10,438	$-
State and political subdivisions	49,978	-	49,978	-
Other securities	5,725	-	5,725	-
Mortgage-backed GSE residential	78,275	-	78,275	-

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Note 11: Fair Value Measurements: Fair Value Measurements, Nonrecurring (Tables)

9 Months Ended

Mar. 31, 2018

Tables/Schedules

Fair Value Measurements, Nonrecurring

	Fair Value Measurements at March 31, 2018, Using:
		Quoted Prices in
		Active Markets for	Significant Other	Significant
		Identical Assets	Observable Inputs	Unobservable Inputs
(dollars in thousands)	Fair Value	(Level 1)	(Level 2)	(Level 3)
Impaired loans (collateral dependent)	$529	$-	$-	$529
Foreclosed and repossessed assets held for sale	$4,142	$-	$-	$4,142

	Fair Value Measurements at June 30, 2017, Using:
		Quoted Prices in
		Active Markets for	Significant Other	Significant
		Identical Assets	Observable Inputs	Unobservable Inputs
(dollars in thousands)	Fair Value	(Level 1)	(Level 2)	(Level 3)
Foreclosed and repossessed assets held for sale	$3,100	$-	$-	$3,100

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Note 11: Fair Value Measurements: Gains (Losses) Recognized on Assets Measured on a Nonrecurring Basis (Tables)

9 Months Ended

Mar. 31, 2018

Tables/Schedules

Gains (Losses) Recognized on Assets Measured on a Nonrecurring Basis

	For the nine months ended
(dollars in thousands)	March 31, 2018	March 31, 2017
Impaired loans (collateral dependent)	$(750)	$-
Foreclosed and repossessed assets held for sale	(164)	(254)
Total (losses) gains on assets measured on a non-recurring basis	$(914)	$(254)

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Note 11: Fair Value Measurements: Fair Value Inputs, Assets, Quantitative Information (Tables)

9 Months Ended

Mar. 31, 2018

Tables/Schedules

Fair Value Inputs, Assets, Quantitative Information

(dollars in thousands)	Fair value at March 31, 2018	Valuation technique	Unobservable inputs	Range of inputs applied	Weighted-average inputs applied
Nonrecurring Measurements
Impaired loans (collateral dependent)	$529	Internal Valuation	Discount to reflect realizable value	n/a	0.0%
Foreclosed and repossessed assets	$4,142	Third party appraisal	Marketability discount	0.0% - 78.4%	33.8%

(dollars in thousands)	Fair value at June 30, 2017	Valuation technique	Unobservable inputs	Range of inputs applied	Weighted-average inputs applied
Nonrecurring Measurements
Foreclosed and repossessed assets	$3,100	Third party appraisal	Marketability discount	0.0% - 66.4%	40.6%

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Note 11: Fair Value Measurements: Schedule of Financial Instruments (Tables)

9 Months Ended

Mar. 31, 2018

Tables/Schedules

Schedule of Financial Instruments

	March 31, 2018
		Quoted Prices
		in Active		Significant
		Markets for	Significant Other	Unobservable
	Carrying	Identical Assets	Observable Inputs	Inputs
(dollars in thousands)	Amount	(Level 1)	(Level 2)	(Level 3)
Financial assets
Cash and cash equivalents	$30,781	$30,781	$-	$-
Interest-bearing time deposits	1,949	-	1,949	-
Stock in FHLB	4,535	-	4,535	-
Stock in Federal Reserve Bank of St. Louis	3,196	-	3,196	-
Loans receivable, net	1,522,445	-	-	1,514,486
Accrued interest receivable	7,128	-	7,128	-
Financial liabilities
Deposits	1,574,337	1,047,533	-	525,233
Securities sold under agreements to     repurchase	3,769	-	3,769	-
Advances from FHLB	50,850	40,500	10,392	-
Note Payable	3,000	-	-	3,000
Accrued interest payable	1,138	-	1,138	-
Subordinated debt	14,921	-	-	13,545
Unrecognized financial instruments (net of contract amount)
Commitments to originate loans	-	-	-	-
Letters of credit	-	-	-	-
Lines of credit	-	-	-	-

	June 30, 2017
		Quoted Prices
		in Active		Significant
		Markets for	Significant Other	Unobservable
	Carrying	Identical Assets	Observable Inputs	Inputs
(dollars in thousands)	Amount	(Level 1)	(Level 2)	(Level 3)
Financial assets
Cash and cash equivalents	$30,786	$30,786	$-	$-
Interest-bearing time deposits	747	-	747	-
Stock in FHLB	3,547	-	3,547	-
Stock in Federal Reserve Bank of St. Louis	2,357	-	2,357	-
Loans receivable, net	1,397,730	-	-	1,394,164
Accrued interest receivable	6,769	-	6,769	-
Financial liabilities
Deposits	1,455,597	918,553	-	536,266
Securities sold under agreements to     repurchase	10,212	-	10,212	-
Advances from FHLB	43,637	20,000	23,781	-
Note Payable	3,000	-	-	3,000
Accrued interest payable	918	-	918	-
Subordinated debt	14,848	-	-	11,984
Unrecognized financial instruments (net of contract amount)
Commitments to originate loans	-	-	-	-
Letters of credit	-	-	-	-
Lines of credit	-	-	-	-

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Note 12: Business Combinations: Schedule of Business Acquisitions, by Acquisition (Tables)

9 Months Ended

Mar. 31, 2018

Tables/Schedules

Schedule of Business Acquisitions, by Acquisition

Cash	$3,860
Common stock, at fair value	12,955
Total consideration	$16,815
Recognized amounts of identifiable assets acquired
and liabilities assumed
Cash and cash equivalents	$2,359
Interest bearing time deposits	1,450
Investment securities	5,557
Loans	68,258
Premises and equipment	3,409
BOLI	2,271
Identifiable intangible assets	1,345
Miscellaneous other assets	1,897
Deposits	(68,152)
FHLB Advances	(5,344)
Miscellaneous other liabilities	(683)
Total identifiable net assets	12,367
Goodwill	$4,448

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Note 2: Organization and Summary of Significant Accounting Policies: Cash and Cash Equivalents, Policy (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Jun. 30, 2017
Details
Cash Due and Interest-Bearing Deposits in Other Depository Institutions	$ 6,000	$ 6,700

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Note 2: Organization and Summary of Significant Accounting Policies: Intangible Assets, Finite-Lived, Policy (Details) - USD ($) $ in Thousands	9 Months Ended
	Mar. 31, 2018	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2017
Details
Finite-Lived Core Deposits, Gross	$ 10,600						$ 9,200
Finite-Lived Intangible Assets, Accumulated Amortization	4,800						3,800
Other Finite-Lived Intangible Assets, Gross	3,800						3,800
Gross Other Identifiable Intangibles Accumulated Amortization	3,800						3,800
FHLB Mortgage Servicing Rights	$ 1,400						$ 1,300
Core Deposits and Intangible Assets, Remaining Amortization Period	periods ranging from five to seven years
Finite-Lived Intangible Assets, Amortization Expense, Remainder of Fiscal Year		$ 674	$ 716	$ 1,200	$ 1,300	$ 396
Finite-Lived Intangible Assets, Amortization Expense, after Year Five		$ 1,500

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Note 3: Securities: Schedule of Available for Sale Securities (Details) - Investment and mortgage backed securities - USD ($) $ in Thousands	Mar. 31, 2018	Jun. 30, 2017
Available-for-sale Securities, Amortized Cost Basis	$ 148,565	$ 143,597
Available for sale Securities Gross Unrealized Gain	472	1,859
Available For Sale Securities Gross Unrealized Losses	(2,910)	(1,040)
Available-for-sale Securities Estimated Fair Value	146,127	144,416
US Government-sponsored Enterprises Debt Securities
Available-for-sale Securities, Amortized Cost Basis	11,504	10,433
Available for sale Securities Gross Unrealized Gain	0	17
Available For Sale Securities Gross Unrealized Losses	(120)	(12)
Available-for-sale Securities Estimated Fair Value	11,384	10,438
US States and Political Subdivisions Debt Securities
Available-for-sale Securities, Amortized Cost Basis	51,457	49,059
Available for sale Securities Gross Unrealized Gain	395	1,046
Available For Sale Securities Gross Unrealized Losses	(555)	(127)
Available-for-sale Securities Estimated Fair Value	51,297	49,978
Other Securities
Available-for-sale Securities, Amortized Cost Basis	5,291	6,017
Available for sale Securities Gross Unrealized Gain	76	306
Available For Sale Securities Gross Unrealized Losses	(235)	(598)
Available-for-sale Securities Estimated Fair Value	5,132	5,725
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises
Available-for-sale Securities, Amortized Cost Basis	80,313	78,088
Available for sale Securities Gross Unrealized Gain	1	490
Available For Sale Securities Gross Unrealized Losses	(2,000)	(303)
Available-for-sale Securities Estimated Fair Value	$ 78,314	$ 78,275

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Note 3: Securities: Contractual Obligation, Fiscal Year Maturity Schedule (Details) $ in Thousands	Mar. 31, 2018 USD ($)
Details
Available-for-sale Securities, Debt Maturities, Next Twelve Months, Amortized Cost Basis	$ 4,762
Available-for-sale Securities, Debt Maturities, Next Twelve Months, Fair Value	4,759
Available-for-sale Securities, Debt Maturities, Year Two Through Five, Amortized Cost Basis	20,065
Available-for-sale Securities, Debt Maturities, Year Two Through Five, Fair Value	19,944
Available-for-sale Securities, Debt Maturities, Year Six Through Ten, Amortized Cost Basis	23,277
Available-for-sale Securities, Debt Maturities, Year Six Through Ten, Fair Value	23,243
Available-for-sale Securities, Debt Maturities, after Ten Years, Amortized Cost Basis	20,148
Available-for-sale Securities, Debt Maturities, after Ten Years, Fair Value	19,867
Debt and equity securities amortized cost	68,252
Debt and equity securities fair value	67,813
Mortgage-backed securities GSE residential amortized cost	80,313
Mortgage-backed securities GSE residential fair value	78,314
Available-for-sale Securities, Debt Maturities, without Single Maturity Date, Amortized Cost Basis	148,565
Available-for-sale Securities, Debt Maturities, without Single Maturity Date, Fair Value	$ 146,127

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Note 3: Securities: Repurchase Agreements, Collateral, Policy (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Jun. 30, 2017
Assets Sold under Agreements to Repurchase, Carrying Amount	$ 116,100	$ 114,100
US Government and Federal Agency Obligations
Assets Sold under Agreements to Repurchase, Carrying Amount	7,400	6,500
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises
Assets Sold under Agreements to Repurchase, Carrying Amount	40,800	50,500
Collateralized Mortgage Obligations
Assets Sold under Agreements to Repurchase, Carrying Amount	28,300	19,900
US States and Political Subdivisions Debt Securities
Assets Sold under Agreements to Repurchase, Carrying Amount	39,200	36,800
Other Securities
Assets Sold under Agreements to Repurchase, Carrying Amount	$ 400	$ 400

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Note 3: Securities: Gain (loss) on sales of available for sale securities (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2018	Mar. 31, 2017
Details
Gain Recognized from Sales of Available-for-Sale Securities	$ 344,391		$ 395,843
Loss Recognized from Sales of Available-for-Sale Securities	$ 89,996		$ 104,341
Sales of available-for-sale securities		$ 0		$ 0

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Note 3: Securities: Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Jun. 30, 2017
Investment and mortgage backed securities
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	$ 85,278	$ 48,634
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss	1,549	406
Available-for-sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	32,742	3,701
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss	1,361	634
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	118,020	52,335
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	2,910	1,040
US Government-sponsored Enterprises Debt Securities
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	7,943	6,457
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss	65	12
Available-for-sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	2,443	0
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss	55	0
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	10,386	6,457
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	120	12
US States and Political Subdivisions Debt Securities
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	19,157	12,341
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss	292	127
Available-for-sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	8,215	256
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss	263	0
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	27,372	12,597
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	555	127
Other Debt Obligations
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	985	0
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss	7	0
Available-for-sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	1,069	1,160
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss	228	598
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	2,054	1,160
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	235	598
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	57,193	29,836
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss	1,185	267
Available-for-sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	21,015	2,285
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss	815	36
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	78,208	32,121
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	$ 2,000	$ 303

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Note 3: Securities: Other Securities Policy: Pooled Trust Preferred Securities (Details) $ in Thousands	Mar. 31, 2018 USD ($)
Details
Number of Pooled Trust Preferred Securities	2
Fair Value of Pooled Trust Preferred Securities Held	$ 750
Unrealized Losses on Pooled Trust Preferred Securities in a Continuous Unrealized Loss Position for 12 Months or More	$ 221

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Note 3: Securities: Other than Temporary Impairment, Credit Losses Recognized in Earnings (Details) - USD ($) $ in Thousands	9 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Other than Temporary Impairment, Credit Losses Recognized in Earnings, Additions, Additional Credit Losses	$ 0	$ 0
Other than Temporary Impairment, Credit Losses Recognized in Earnings, Reductions, Securities Sold	(333)	0
Other than Temporary Impairment, Credit Losses Recognized in Earnings, Reductions, Change in Status	0	0
Other than temporary impairment credit losses additions related to increases in previously recognized losses	0	0
Other than Temporary Impairment, Credit Losses Recognized in Earnings, Reductions, Cash Flows	(7)	(9)
Beginning of period
Other Than Temporary Impairment Credit Losses Recognized In Earnings Credit Losses On Debt Securities Held	340	352
End of period
Other Than Temporary Impairment Credit Losses Recognized In Earnings Credit Losses On Debt Securities Held	$ 0	$ 343

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Note 4: Loans and Allowance for Loan Losses: Schedule of Accounts, Notes, Loans and Financing Receivable (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Jun. 30, 2017
Loans Receivable, Net	$ 1,522,445	$ 1,397,730
Consumer Loan
Loans Receivable, Net	71,941	63,651
Commercial Loan
Loans Receivable, Net	255,317	247,184
Loans Receivable Gross
Loans Receivable, Net	1,594,278	1,464,002
Loans in process
Loans Receivable, Net	(54,571)	(50,740)
Deferred loan fees, net
Loans Receivable, Net	1	6
Allowance for Loan and Lease Losses
Loans Receivable, Net	(17,263)	(15,538)
Loans Receivable Net
Loans Receivable, Net	1,522,445	1,397,730
Residential Mortgage
Loans Receivable, Net	457,825	442,463
Construction Real Estate
Loans Receivable, Net	115,589	106,782
Commercial Real Estate
Loans Receivable, Net	$ 693,606	$ 603,922

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Note 4: Loans and Allowance for Loan Losses: Construction Lending Policy: Construction Loans Modified for other than TDR (Details) - Construction Loans $ in Thousands	Mar. 31, 2018 USD ($)	Jun. 30, 2017 USD ($)
Number of Loans Modified for Other Than TDR	62	50
Amount of Loans Modified for Other Than TDR	$ 12,400	$ 10,300

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Note 4: Loans and Allowance for Loan Losses: Schedule of balance in the allowance for loan losses and recorded investment (Details) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
	Jun. 30, 2017	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2018	Mar. 31, 2017
Residential Mortgage
Provision for Loan Losses Expensed		$ (243)	$ (70)	$ (110)	$ 246
Allowance for Loan and Lease Losses, Write-offs		(92)	(104)	(170)	(201)
Allowance for Doubtful Accounts Receivable, Recoveries		1	1	2	7
Residential Mortgage | Beginning of period
Allowance for loan losses	$ 3,230	3,286	3,472	3,230	3,247
Residential Mortgage | End of period
Allowance for loan losses		2,952	3,299	2,952	3,299
Financing Receivable, Allowance for Credit Losses, Individually Evaluated for Impairment	0	0	0	0	0
Financing Receivable, Allowance for Credit Losses, Collectively Evaluated for Impairment	3,230	2,952	3,299	2,952	3,299
Financing Receivables Allowance for Credit Losses Acquired with Deteriorated Credit Quality	0			0	0
Financing Receivable, Individually Evaluated for Impairment	0	0		0
Financing Receivable, Collectively Evaluated for Impairment	438,981	454,614		454,614
Financing Receivables Acquired with Deteriorated Credit Quality	3,482			3,211
Construction Loan Payable
Provision for Loan Losses Expensed		63	8	(15)	(162)
Allowance for Loan and Lease Losses, Write-offs		0	0	0	(31)
Allowance for Doubtful Accounts Receivable, Recoveries		0	0	0	1
Construction Loan Payable | Beginning of period
Allowance for loan losses	964	886	891	964	1,091
Construction Loan Payable | End of period
Allowance for loan losses		949	899	949	899
Financing Receivable, Allowance for Credit Losses, Individually Evaluated for Impairment	0	0	0	0	0
Financing Receivable, Allowance for Credit Losses, Collectively Evaluated for Impairment	964	949	899	949	899
Financing Receivables Allowance for Credit Losses Acquired with Deteriorated Credit Quality	0			0	0
Financing Receivable, Individually Evaluated for Impairment	0	0		0
Financing Receivable, Collectively Evaluated for Impairment	54,704	59,715		59,715
Financing Receivables Acquired with Deteriorated Credit Quality	1,338			1,303
Commercial Real Estate
Provision for Loan Losses Expensed		356	280	1,627	1,405
Allowance for Loan and Lease Losses, Write-offs		(6)	(4)	(41)	(4)
Allowance for Doubtful Accounts Receivable, Recoveries		2	3	1	18
Commercial Real Estate | Beginning of period
Allowance for loan losses	7,068	8,303	6,851	7,068	5,711
Commercial Real Estate | End of period
Allowance for loan losses		8,655	7,130	8,655	7,130
Financing Receivable, Allowance for Credit Losses, Individually Evaluated for Impairment	0	410	0	410	0
Financing Receivable, Allowance for Credit Losses, Collectively Evaluated for Impairment	7,068	8,245	7,130	8,245	7,130
Financing Receivables Allowance for Credit Losses Acquired with Deteriorated Credit Quality	0			0	0
Financing Receivable, Individually Evaluated for Impairment	0	699		699
Financing Receivable, Collectively Evaluated for Impairment	592,427	685,282		685,282
Financing Receivables Acquired with Deteriorated Credit Quality	11,495			7,625
Consumer Loan
Provision for Loan Losses Expensed		44	(35)	169	16
Allowance for Loan and Lease Losses, Write-offs		(60)	(11)	(118)	(50)
Allowance for Doubtful Accounts Receivable, Recoveries		2	3	6	9
Consumer Loan | Beginning of period
Allowance for loan losses	757	828	756	757	738
Consumer Loan | End of period
Allowance for loan losses		814	713	814	713
Financing Receivable, Allowance for Credit Losses, Individually Evaluated for Impairment	0	0	0	0	0
Financing Receivable, Allowance for Credit Losses, Collectively Evaluated for Impairment	757	814	713	814	713
Financing Receivables Allowance for Credit Losses Acquired with Deteriorated Credit Quality	0			0	0
Financing Receivable, Individually Evaluated for Impairment	0	0		0
Financing Receivable, Collectively Evaluated for Impairment	63,651	71,941		71,941
Financing Receivables Acquired with Deteriorated Credit Quality	0			0
Commercial Loan
Provision for Loan Losses Expensed		330	193	389	452
Allowance for Loan and Lease Losses, Write-offs		(1)	(67)	(22)	(337)
Allowance for Doubtful Accounts Receivable, Recoveries		0	1	7	30
Commercial Loan | Beginning of period
Allowance for loan losses	3,519	3,564	3,022	3,519	3,004
Commercial Loan | End of period
Allowance for loan losses		3,893	3,149	3,893	3,149
Financing Receivable, Allowance for Credit Losses, Individually Evaluated for Impairment	0	340	0	340	0
Financing Receivable, Allowance for Credit Losses, Collectively Evaluated for Impairment	3,519	3,553	3,149	3,553	3,149
Financing Receivables Allowance for Credit Losses Acquired with Deteriorated Credit Quality	0			0	0
Financing Receivable, Individually Evaluated for Impairment	0	580		580
Financing Receivable, Collectively Evaluated for Impairment	243,369	252,271		252,271
Financing Receivables Acquired with Deteriorated Credit Quality	3,815			2,466
Total loans
Provision for Loan Losses Expensed		550	376	2,060	1,957
Allowance for Loan and Lease Losses, Write-offs		(159)	(186)	(351)	(623)
Allowance for Doubtful Accounts Receivable, Recoveries		5	8	16	65
Total loans | Beginning of period
Allowance for loan losses	15,538	16,867	14,992	15,538	13,791
Total loans | End of period
Allowance for loan losses		17,263	15,190	17,263	15,190
Financing Receivable, Allowance for Credit Losses, Individually Evaluated for Impairment	0	750	0	750	0
Financing Receivable, Allowance for Credit Losses, Collectively Evaluated for Impairment	15,538	16,513	$ 15,190	16,513	15,190
Financing Receivables Allowance for Credit Losses Acquired with Deteriorated Credit Quality	0			0	$ 0
Financing Receivable, Individually Evaluated for Impairment	0	1,279		1,279
Financing Receivable, Collectively Evaluated for Impairment	1,393,132	$ 1,523,823		1,523,823
Financing Receivables Acquired with Deteriorated Credit Quality	$ 20,130			$ 14,605

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Note 4: Loans and Allowance for Loan Losses: Financing Receivable Credit Quality Indicators (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Jun. 30, 2017
Residential Mortgage | Pass
Financing Receivable Credit Quality Indicators	$ 450,857	$ 438,222
Residential Mortgage | Watch
Financing Receivable Credit Quality Indicators	4,305	772
Residential Mortgage | Special Mention
Financing Receivable Credit Quality Indicators	146	148
Residential Mortgage | Substandard
Financing Receivable Credit Quality Indicators	2,517	3,321
Residential Mortgage | Doubtful
Financing Receivable Credit Quality Indicators	0	0
Residential Mortgage | Total by Credit Quality Indicator
Financing Receivable Credit Quality Indicators	457,825	442,463
Construction Loan Payable | Pass
Financing Receivable Credit Quality Indicators	60,984	55,825
Construction Loan Payable | Watch
Financing Receivable Credit Quality Indicators	0	0
Construction Loan Payable | Special Mention
Financing Receivable Credit Quality Indicators	0	0
Construction Loan Payable | Substandard
Financing Receivable Credit Quality Indicators	34	217
Construction Loan Payable | Doubtful
Financing Receivable Credit Quality Indicators	0	0
Construction Loan Payable | Total by Credit Quality Indicator
Financing Receivable Credit Quality Indicators	61,018	56,042
Commercial Real Estate | Pass
Financing Receivable Credit Quality Indicators	679,521	588,385
Commercial Real Estate | Watch
Financing Receivable Credit Quality Indicators	7,261	9,253
Commercial Real Estate | Special Mention
Financing Receivable Credit Quality Indicators	932	926
Commercial Real Estate | Substandard
Financing Receivable Credit Quality Indicators	5,193	5,358
Commercial Real Estate | Doubtful
Financing Receivable Credit Quality Indicators	699	0
Commercial Real Estate | Total by Credit Quality Indicator
Financing Receivable Credit Quality Indicators	693,606	603,922
Consumer Loan | Pass
Financing Receivable Credit Quality Indicators	71,722	63,320
Consumer Loan | Watch
Financing Receivable Credit Quality Indicators	118	123
Consumer Loan | Special Mention
Financing Receivable Credit Quality Indicators	29	30
Consumer Loan | Substandard
Financing Receivable Credit Quality Indicators	72	178
Consumer Loan | Doubtful
Financing Receivable Credit Quality Indicators	0	0
Consumer Loan | Total by Credit Quality Indicator
Financing Receivable Credit Quality Indicators	71,941	63,651
Commercial Loan | Pass
Financing Receivable Credit Quality Indicators	251,426	240,864
Commercial Loan | Watch
Financing Receivable Credit Quality Indicators	436	2,003
Commercial Loan | Special Mention
Financing Receivable Credit Quality Indicators	74	84
Commercial Loan | Substandard
Financing Receivable Credit Quality Indicators	2,199	3,631
Commercial Loan | Doubtful
Financing Receivable Credit Quality Indicators	1,182	602
Commercial Loan | Total by Credit Quality Indicator
Financing Receivable Credit Quality Indicators	$ 255,317	$ 247,184

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Note 4: Loans and Allowance for Loan Losses: Purchased Credit Impaired Loans Credit Quality Indicators (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Jun. 30, 2017
Pass
Purchased Credit Impaired Loans	$ 8,100	$ 10,200
Watch
Purchased Credit Impaired Loans	3,100	5,000
Special Mention
Purchased Credit Impaired Loans	0
Substandard
Purchased Credit Impaired Loans	3,400	4,900
Doubtful
Purchased Credit Impaired Loans	$ 0	$ 0

XML

Note 4: Loans and Allowance for Loan Losses (Details) - USD ($) $ in Thousands	9 Months Ended
	Mar. 31, 2018	Jun. 30, 2017
Financing Receivable, Credit Quality, Additional Information	lending relationships of $1 million or more, exclusive of any consumer or owner-occupied residential loan, are subject to an annual credit analysis which is prepared by the loan administration department and presented to a loan committee with appropriate lending authority. A sample of lending relationships in excess of $2.5 million are subject to an independent loan review annually, in order to verify risk ratings
Loans without a specific valuation allowance
Purchased Credit Impaired Loans	$ 14,600	$ 20,100

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Note 4: Loans and Allowance for Loan Losses: Schedule of Loan Portfolio Aging Analysis (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Jun. 30, 2017
Financing Receivables, 30 to 59 Days Past Due | Residential Mortgage
Financing Receivable Recorded Investment	$ 1,372	$ 1,491
Financing Receivables, 30 to 59 Days Past Due | Construction Loan Payable
Financing Receivable Recorded Investment	0	35
Financing Receivables, 30 to 59 Days Past Due | Commercial Real Estate
Financing Receivable Recorded Investment	275	700
Financing Receivables, 30 to 59 Days Past Due | Consumer Loan
Financing Receivable Recorded Investment	446	216
Financing Receivables, 30 to 59 Days Past Due | Commercial Loan
Financing Receivable Recorded Investment	93	144
Financing Receivables, 30 to 59 Days Past Due | Total loans
Financing Receivable Recorded Investment	2,186	2,586
Financing Receivables, 60 to 89 Days Past Due | Residential Mortgage
Financing Receivable Recorded Investment	2,098	148
Financing Receivables, 60 to 89 Days Past Due | Construction Loan Payable
Financing Receivable Recorded Investment	0	0
Financing Receivables, 60 to 89 Days Past Due | Commercial Real Estate
Financing Receivable Recorded Investment	769	0
Financing Receivables, 60 to 89 Days Past Due | Consumer Loan
Financing Receivable Recorded Investment	62	16
Financing Receivables, 60 to 89 Days Past Due | Commercial Loan
Financing Receivable Recorded Investment	211	53
Financing Receivables, 60 to 89 Days Past Due | Total loans
Financing Receivable Recorded Investment	3,140	217
Financing Receivables, Equal to Greater than 90 Days Past Due | Residential Mortgage
Financing Receivable Recorded Investment	1,261	676
Financing Receivables, Equal to Greater than 90 Days Past Due | Construction Loan Payable
Financing Receivable Recorded Investment	0	0
Financing Receivables, Equal to Greater than 90 Days Past Due | Commercial Real Estate
Financing Receivable Recorded Investment	446	711
Financing Receivables, Equal to Greater than 90 Days Past Due | Consumer Loan
Financing Receivable Recorded Investment	156	134
Financing Receivables, Equal to Greater than 90 Days Past Due | Commercial Loan
Financing Receivable Recorded Investment	34	426
Financing Receivables, Equal to Greater than 90 Days Past Due | Total loans
Financing Receivable Recorded Investment	1,897	1,947
Nonperforming Financial Instruments | Residential Mortgage
Financing Receivable Recorded Investment	4,731	2,315
Nonperforming Financial Instruments | Construction Loan Payable
Financing Receivable Recorded Investment	0	35
Nonperforming Financial Instruments | Commercial Real Estate
Financing Receivable Recorded Investment	1,490	1,411
Nonperforming Financial Instruments | Consumer Loan
Financing Receivable Recorded Investment	664	366
Nonperforming Financial Instruments | Commercial Loan
Financing Receivable Recorded Investment	338	623
Nonperforming Financial Instruments | Total loans
Financing Receivable Recorded Investment	7,223	4,750
Financing Receivables Current | Residential Mortgage
Financing Receivable Recorded Investment	453,094	440,148
Financing Receivables Current | Construction Loan Payable
Financing Receivable Recorded Investment	61,018	56,007
Financing Receivables Current | Commercial Real Estate
Financing Receivable Recorded Investment	692,116	602,511
Financing Receivables Current | Consumer Loan
Financing Receivable Recorded Investment	71,277	63,285
Financing Receivables Current | Commercial Loan
Financing Receivable Recorded Investment	254,979	246,561
Financing Receivables Current | Total loans
Financing Receivable Recorded Investment	1,532,484	1,408,512
Performing Financial Instruments | Residential Mortgage
Financing Receivable Recorded Investment	457,825	442,463
Performing Financial Instruments | Construction Loan Payable
Financing Receivable Recorded Investment	61,018	56,042
Performing Financial Instruments | Commercial Real Estate
Financing Receivable Recorded Investment	693,606	603,922
Performing Financial Instruments | Consumer Loan
Financing Receivable Recorded Investment	71,941	63,651
Performing Financial Instruments | Commercial Loan
Financing Receivable Recorded Investment	255,317	247,184
Performing Financial Instruments | Total loans
Financing Receivable Recorded Investment	1,539,707	1,413,262
Financing Receivables Greater Than 90 Days Past Due and Still Accruing | Residential Mortgage
Financing Receivable Recorded Investment	0	59
Financing Receivables Greater Than 90 Days Past Due and Still Accruing | Construction Loan Payable
Financing Receivable Recorded Investment	0	0
Financing Receivables Greater Than 90 Days Past Due and Still Accruing | Commercial Real Estate
Financing Receivable Recorded Investment	0	0
Financing Receivables Greater Than 90 Days Past Due and Still Accruing | Consumer Loan
Financing Receivable Recorded Investment	0	13
Financing Receivables Greater Than 90 Days Past Due and Still Accruing | Commercial Loan
Financing Receivable Recorded Investment	0	329
Financing Receivables Greater Than 90 Days Past Due and Still Accruing | Total loans
Financing Receivable Recorded Investment	$ 0	$ 401

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Note 4: Loans and Allowance for Loan Losses: Schedule of Impaired Loans (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Jun. 30, 2017
Consumer Loan
Impaired Financing Receivable, with No Related Allowance, Recorded Investment	$ 27	$ 1
Impaired Financing Receivable, with No Related Allowance, Unpaid Principal Balance	27	1
Impaired Financing Receivable With No Related Allowance Specific Allowance	0	0
Impaired Financing Receivable, with Related Allowance, Recorded Investment	0	0
Impaired Financing Receivable, with Related Allowance, Unpaid Principal Balance	0	0
Impaired Financing Receivable With Related Allowance Specific Allowance	0	0
Impaired Financing Receivable With and Without Related Allowance Recorded Investment	27	1
Impaired Financial Receivable With and Without Related Allowance Unpaid Principal Balance	27	1
Impaired Financing Receivable With and Without Related Allowance Specific Allowance	0	0
Commercial Loan
Impaired Financing Receivable, with No Related Allowance, Recorded Investment	2,911	4,302
Impaired Financing Receivable, with No Related Allowance, Unpaid Principal Balance	3,539	4,990
Impaired Financing Receivable With No Related Allowance Specific Allowance	0	0
Impaired Financing Receivable, with Related Allowance, Recorded Investment	580	0
Impaired Financing Receivable, with Related Allowance, Unpaid Principal Balance	580	0
Impaired Financing Receivable With Related Allowance Specific Allowance	340	0
Impaired Financing Receivable With and Without Related Allowance Recorded Investment	3,491	4,302
Impaired Financial Receivable With and Without Related Allowance Unpaid Principal Balance	4,119	4,990
Impaired Financing Receivable With and Without Related Allowance Specific Allowance	340	0
Residential Mortgage
Impaired Financing Receivable, with No Related Allowance, Recorded Investment	3,827	3,811
Impaired Financing Receivable, with No Related Allowance, Unpaid Principal Balance	4,474	4,486
Impaired Financing Receivable With No Related Allowance Specific Allowance	0	0
Impaired Financing Receivable, with Related Allowance, Recorded Investment	0	0
Impaired Financing Receivable, with Related Allowance, Unpaid Principal Balance	0	0
Impaired Financing Receivable With Related Allowance Specific Allowance	0	0
Impaired Financing Receivable With and Without Related Allowance Recorded Investment	3,827	3,811
Impaired Financial Receivable With and Without Related Allowance Unpaid Principal Balance	4,474	4,486
Impaired Financing Receivable With and Without Related Allowance Specific Allowance	0	0
Construction Real Estate
Impaired Financing Receivable, with No Related Allowance, Recorded Investment	1,336	1,373
Impaired Financing Receivable, with No Related Allowance, Unpaid Principal Balance	1,604	1,695
Impaired Financing Receivable With No Related Allowance Specific Allowance	0	0
Impaired Financing Receivable, with Related Allowance, Recorded Investment	0	0
Impaired Financing Receivable, with Related Allowance, Unpaid Principal Balance	0	0
Impaired Financing Receivable With Related Allowance Specific Allowance	0	0
Impaired Financing Receivable With and Without Related Allowance Recorded Investment	1,336	1,373
Impaired Financial Receivable With and Without Related Allowance Unpaid Principal Balance	1,604	1,695
Impaired Financing Receivable With and Without Related Allowance Specific Allowance	0	0
Commercial Real Estate
Impaired Financing Receivable, with No Related Allowance, Recorded Investment	14,090	14,935
Impaired Financing Receivable, with No Related Allowance, Unpaid Principal Balance	15,463	16,834
Impaired Financing Receivable With No Related Allowance Specific Allowance	0	0
Impaired Financing Receivable, with Related Allowance, Recorded Investment	699	0
Impaired Financing Receivable, with Related Allowance, Unpaid Principal Balance	699	0
Impaired Financing Receivable With Related Allowance Specific Allowance	410	0
Impaired Financing Receivable With and Without Related Allowance Recorded Investment	14,789	14,935
Impaired Financial Receivable With and Without Related Allowance Unpaid Principal Balance	16,162	16,834
Impaired Financing Receivable With and Without Related Allowance Specific Allowance	$ 410	$ 0

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Note 4: Loans and Allowance for Loan Losses: Schedule of Interest Income Recognized on Impaired Loans (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2018	Mar. 31, 2017
Residential Mortgage
Impaired Financing Receivable, Average Recorded Investment	$ 3,322	$ 2,857	$ 3,395	$ 2,893
Impaired Financing Receivable Interest Income Recognized	45	22	172	73
Construction Real Estate
Impaired Financing Receivable, Average Recorded Investment	1,312	1,362	1,323	1,378
Impaired Financing Receivable Interest Income Recognized	43	38	122	109
Commercial Real Estate
Impaired Financing Receivable, Average Recorded Investment	8,532	9,513	9,905	9,681
Impaired Financing Receivable Interest Income Recognized	436	146	987	513
Consumer Loan
Impaired Financing Receivable, Average Recorded Investment	0	0	0	0
Impaired Financing Receivable Interest Income Recognized	0	0	0	0
Commercial Loan
Impaired Financing Receivable, Average Recorded Investment	2,855	889	3,328	957
Impaired Financing Receivable Interest Income Recognized	44	19	153	56
Total loans
Impaired Financing Receivable, Average Recorded Investment	16,021	14,621	17,951	14,909
Impaired Financing Receivable Interest Income Recognized	$ 568	$ 225	$ 1,434	$ 751

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Note 4: Loans and Allowance for Loan Losses: Schedule of Financing Receivables, Non Accrual Status (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Jun. 30, 2017
Residential Mortgage
Loans and Leases Receivable, Nonperforming, Nonaccrual of Interest	$ 3,026	$ 1,263
Construction Real Estate
Loans and Leases Receivable, Nonperforming, Nonaccrual of Interest	34	35
Commercial Real Estate
Loans and Leases Receivable, Nonperforming, Nonaccrual of Interest	1,970	960
Consumer Loan
Loans and Leases Receivable, Nonperforming, Nonaccrual of Interest	231	158
Commercial Loan
Loans and Leases Receivable, Nonperforming, Nonaccrual of Interest	957	409
Total loans
Loans and Leases Receivable, Nonperforming, Nonaccrual of Interest	$ 6,218	$ 2,825

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Note 4: Loans and Allowance for Loan Losses: Purchased Credit Impaired Loans Nonaccrual (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Jun. 30, 2017
Included in Nonaccrual Loans
Purchased Credit Impaired Loans	$ 1,000	$ 0

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Note 4: Loans and Allowance for Loan Losses: Schedule of Debtor Troubled Debt Restructuring, Current Period (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2018 USD ($)	Mar. 31, 2017 USD ($)	Mar. 31, 2018 USD ($)	Mar. 31, 2017 USD ($)
Residential Mortgage
Financing Receivable, Modifications, Number of Contracts	4	1	4	1
Financing Receivable, Modifications, Pre-Modification Recorded Investment	$ 305	$ 40	$ 305	$ 40
Construction Real Estate
Financing Receivable, Modifications, Number of Contracts	0	0	0	1
Financing Receivable, Modifications, Pre-Modification Recorded Investment	$ 0	$ 0	$ 0	$ 36
Commercial Real Estate
Financing Receivable, Modifications, Number of Contracts	1	0	1	4
Financing Receivable, Modifications, Pre-Modification Recorded Investment	$ 55	$ 0	$ 55	$ 2,250
Consumer Loan
Financing Receivable, Modifications, Number of Contracts	2	1	2	3
Financing Receivable, Modifications, Pre-Modification Recorded Investment	$ 27	$ 15	$ 27	$ 16
Commercial Loan
Financing Receivable, Modifications, Number of Contracts	2	0	2	1
Financing Receivable, Modifications, Pre-Modification Recorded Investment	$ 64	$ 0	$ 64	$ 2
Total loans
Financing Receivable, Modifications, Number of Contracts	9	2	9	10
Financing Receivable, Modifications, Pre-Modification Recorded Investment	$ 451	$ 55	$ 451	$ 2,344

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Note 4: Loans and Allowance for Loan Losses: Performing Loans Classified as Troubled Debt Restructuring Loans (Details) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Mar. 31, 2018 USD ($)	Mar. 31, 2017	Mar. 31, 2018	Mar. 31, 2017	Jun. 30, 2018	Jun. 30, 2017 USD ($)
Residential Mortgage
Financing Receivable, Modifications, Number of Contracts	4	1	4	1
Construction Real Estate
Financing Receivable, Modifications, Number of Contracts	0	0	0	1
Commercial Real Estate
Financing Receivable, Modifications, Number of Contracts	1	0	1	4
Consumer Loan
Financing Receivable, Modifications, Number of Contracts	2	1	2	3
Commercial Loan
Financing Receivable, Modifications, Number of Contracts	2	0	2	1
Total loans
Financing Receivable, Modifications, Number of Contracts	9	2	9	10
Performing Financial Instruments | Residential Mortgage
Financing Receivable, Modifications, Number of Contracts	12				10
Financing Receivable, Modifications, Post-Modification Recorded Investment	$ 809					$ 1,756
Performing Financial Instruments | Construction Real Estate
Financing Receivable, Modifications, Number of Contracts	0				0
Financing Receivable, Modifications, Post-Modification Recorded Investment	$ 0					0
Performing Financial Instruments | Commercial Real Estate
Financing Receivable, Modifications, Number of Contracts	13				13
Financing Receivable, Modifications, Post-Modification Recorded Investment	$ 8,101					5,206
Performing Financial Instruments | Consumer Loan
Financing Receivable, Modifications, Number of Contracts	2				0
Financing Receivable, Modifications, Post-Modification Recorded Investment	$ 26					0
Performing Financial Instruments | Commercial Loan
Financing Receivable, Modifications, Number of Contracts	8				6
Financing Receivable, Modifications, Post-Modification Recorded Investment	$ 2,911					3,946
Performing Financial Instruments | Total loans
Financing Receivable, Modifications, Number of Contracts	35				29
Financing Receivable, Modifications, Post-Modification Recorded Investment	$ 11,847					$ 10,908

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Note 5: Accounting For Certain Loans Acquired in A Transfer: Schedule of Acquired Loans with Credit Deterioration (Details) - USD ($) $ in Thousands		Mar. 31, 2018	Jun. 30, 2017
Construction Real Estate
Certain Loans and Debt Securities Acquired in Transfer, Allowance for Credit Losses Due to Subsequent Impairment		$ 1,570	$ 1,660
Commercial Real Estate
Certain Loans and Debt Securities Acquired in Transfer, Allowance for Credit Losses Due to Subsequent Impairment		8,999	13,394
Consumer Loan
Certain Loans and Debt Securities Acquired in Transfer, Allowance for Credit Losses Due to Subsequent Impairment		0	0
Commercial Loan
Certain Loans and Debt Securities Acquired in Transfer, Allowance for Credit Losses Due to Subsequent Impairment		3,094	4,502
Outstanding balance
Certain Loans and Debt Securities Acquired in Transfer, Allowance for Credit Losses Due to Subsequent Impairment		17,522	23,714
Carrying Amount Of Acquired Loans Net
Certain Loans and Debt Securities Acquired in Transfer, Allowance for Credit Losses Due to Subsequent Impairment	[1]	14,605	20,130
Residential Mortgage
Certain Loans and Debt Securities Acquired in Transfer, Allowance for Credit Losses Due to Subsequent Impairment		$ 3,859	$ 4,158

[1] Fair value adjustment of $2,917 and 3,584 at March 31, 2018 and June 30, 2017, respectively.

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Note 5: Accounting For Certain Loans Acquired in A Transfer: Schedule of Acquired Loans in Transfer Accretable Yield (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2018	Mar. 31, 2017
Certain Loans Acquired In Transfer Accretable Yield Additions	$ 0	$ 0	$ 0	$ 0
Certain Loans Acquired In Transfer Accretable Yield Accretion	(334)	(56)	(594)	(217)
Certain Loans Acquired In Transfer Accretable Yield Reclassification from Nonaccretable Difference	335	61	593	192
Certain Loans Acquired In Transfer Accretable Yield Disposals	0	0	0	0
Beginning of period
Certain Loans Acquired In Transfer Accretable Yield	607	626	609	656
End of period
Certain Loans Acquired In Transfer Accretable Yield	$ 608	$ 631	$ 608	$ 631

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Note 6: Deposits: Schedule of Deposit Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Jun. 30, 2017
Details
Noninterest-bearing Deposit Liabilities	$ 196,914	$ 186,203
Deposits, Negotiable Order of Withdrawal (NOW)	580,790	479,488
Deposits, Money Market Deposits	117,597	105,599
Deposits, Savings Deposits	152,023	147,247
Interest-bearing Domestic Deposit, Certificates of Deposits	527,013	537,060
Deposits, Domestic	$ 1,574,337	$ 1,455,597

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Note 7: Earnings Per Share: Schedule of Earnings Per Share, Basic and Diluted (Details) - $ / shares	3 Months Ended		9 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2018	Mar. 31, 2017
Details
Weighted Average Number of Shares Outstanding, Basic	8,762,344	7,450,041	8,647,593	7,442,525
Stock options under treasury stock method	13,062	28,626	12,790	25,976
Weighted Average Number of Shares Outstanding, Diluted	8,775,406	7,478,667	8,660,383	7,468,501
Basic earnings per common share	$ 0.60	$ 0.53	$ 1.77	$ 1.59
Diluted earnings per common share	$ 0.60	$ 0.53	$ 1.77	$ 1.59

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Note 8: Income Taxes: Schedule of Effective Income Tax Rate Reconciliation (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2018	Mar. 31, 2017
Details
Current Income Tax Expense (Benefit)	$ 2,864	$ 1,457	$ 7,525	$ 4,316
Deferred Income Taxes and Tax Credits	(1,054)	6	(1,280)	240
Income tax provision, total	$ 1,810	$ 1,463	$ 6,245	$ 4,556

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Note 8: Income Taxes: Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Jun. 30, 2017
Details
Deferred Tax Assets Provision for Losses on Loans	$ 4,193	$ 5,563
Deferred Tax Assets Accrued Compensation and Benefits	618	1,068
Deferred Tax Assets Other-than-Temporary Impairment on Available for Sale Securities	0	128
Deferred Tax Assets NOL Carry Forwards Acquired	286	513
Deferred Tax Assets, Tax Credit Carryforwards, Alternative Minimum Tax	130	130
Deferred Tax Assets Unrealized Loss on Other Real Estate	124	131
Unrealized loss on available for sale securities	585	0
Other	407	0
Deferred Tax Assets, Gross	6,343	7,533
Deferred tax liabilities purchase accounting adjustments	946	1,193
Deferred Tax Liabilities Depreciation	1,100	2,734
Deferred Tax Liabilities FHLB Stock Dividends	130	203
Deferred Tax Liabilities, Prepaid Expenses	128	213
Deferred Tax Liabilities, Unrealized Gains on Trading Securities	0	295
Deferred Tax Liabilities, Other	270	991
Deferred Tax Liabilities, Net	2,574	5,629
Deferred Tax Assets, Net of Valuation Allowance	$ 3,769	$ 1,904

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Note 8: Income Taxes: Federal and State Operating Loss Carryforwards (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Jun. 30, 2017
Federal
Deferred Tax Assets, Operating Loss Carryforwards	$ 1,300
State
Deferred Tax Assets, Operating Loss Carryforwards		$ 2,700

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Note 8: Income Taxes: Schedule of Reconciliation of Income Tax Expense at the Statutory Rate to Actual Income Tax (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2018	Mar. 31, 2017
Effective Income Tax Rate Reconciliation at Federal Statutory Income Tax Rate, Amount	$ 1,986	$ 1,896	$ 6,052	$ 5,738
Income Tax Expense, Actual	1,810	1,463	6,245	4,556
Increase (decrease) in taxes
Nontaxable Municipal Income	(115)	(124)	(341)	(385)
Current State and Local Tax Expense (Benefit)	287	52	530	160
Cash Surrender Value Of Bank-owned Life Insurance	(66)	(176)	(197)	(323)
Tax Credit Benefits	(224)	(81)	(672)	(267)
Tax Credit Benefits Realized on Acquisition	0	0	0	0
Adjustment of deferred tax asset for enacted changes in tax laws	0	0	1,124	0
Taxes, Other	$ (58)	$ (104)	$ (251)	$ (367)

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Note 8: Income Taxes (Details)	3 Months Ended		9 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2017
Details
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent	28.10%	35.00%	35.00%

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Note 9: 401(k) Retirement Plan: 401(k) Retirement Plan (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2018	Mar. 31, 2017
Details
Defined Contribution Plan, Administrative Expense	$ 331	$ 230	$ 883	$ 677

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Note 11: Fair Value Measurements: Fair Value, Assets Measured on Recurring Basis (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Jun. 30, 2017
US Government-sponsored Enterprises Debt Securities
Assets, Fair Value Disclosure, Recurring	$ 11,384	$ 10,438
US States and Political Subdivisions Debt Securities
Assets, Fair Value Disclosure, Recurring	51,297	49,978
Other Debt Obligations
Assets, Fair Value Disclosure, Recurring	5,132	5,725
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises
Assets, Fair Value Disclosure, Recurring	$ 78,314	$ 78,275

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Note 11: Fair Value Measurements: Fair Value Measurements, Nonrecurring (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Jun. 30, 2017
Impaired loans (collateral dependent)
Assets, Fair Value Disclosure, Nonrecurring	$ 529
Foreclosed and repossessed assets held for sale
Assets, Fair Value Disclosure, Nonrecurring	$ 4,142	$ 3,100

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Note 11: Fair Value Measurements: Gains (Losses) Recognized on Assets Measured on a Nonrecurring Basis (Details) - USD ($) $ in Thousands	9 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Impaired loans (collateral dependent)
Gains (losses) recognized on assets measured on a non-recurring basis	$ (750)	$ 0
Foreclosed and repossessed assets held for sale
Gains (losses) recognized on assets measured on a non-recurring basis	(164)	(254)
Total Gains Losses on Assets Measured on a Nonrecurring Basis
Gains (losses) recognized on assets measured on a non-recurring basis	$ (914)	$ (254)

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Note 11: Fair Value Measurements: Fair Value Inputs, Assets, Quantitative Information (Details) - Fair Value, Inputs, Level 3 - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2018	Jun. 30, 2017
Impaired loans (collateral dependent)
Fair Value Asset Liability Measured On Nonrecurring Basis With Unobservable Inputs	$ 529
Impaired loans (collateral dependent) | Internal Valuation
Fair Value Measurements Nonrecurring Valuation Technique	Internal Valuation
Impaired loans (collateral dependent) | Internal Valuation | Discount to reflect realizable value
Fair Value Measurements Nonrecurring Unobservable Inputs	Discount to reflect realizable value
Fair Value Measurements Nonrecurring Range of discounts Applied	n/a
Fair Value Measurements Nonrecurring Weighted Average Discount Applied	0.0%
Foreclosed and Repossessed Assets
Fair Value Asset Liability Measured On Nonrecurring Basis With Unobservable Inputs	$ 4,142	$ 3,100
Foreclosed and Repossessed Assets | Third party appraisal
Fair Value Measurements Nonrecurring Valuation Technique	Third party appraisal	Third party appraisal
Foreclosed and Repossessed Assets | Third party appraisal | Marketability discount
Fair Value Measurements Nonrecurring Unobservable Inputs	Marketability discount	Marketability discount
Fair Value Measurements Nonrecurring Range of discounts Applied	0.0% - 78.4%	0.0% - 66.4%
Fair Value Measurements Nonrecurring Weighted Average Discount Applied	33.8%	40.6%

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Note 11: Fair Value Measurements: Schedule of Financial Instruments (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Jun. 30, 2017
Letter of Credit
Financial Instruments Owned Carrying Amount	$ 0	$ 0
Line of Credit
Financial Instruments Owned Carrying Amount	0	0
Financial Assets | Cash and Cash Equivalents
Financial Instruments Owned Carrying Amount	30,781	30,786
Financial Assets | Interest-bearing time deposits
Financial Instruments Owned Carrying Amount	1,949	747
Financial Assets | Investment in Federal Home Loan Bank Stock
Financial Instruments Owned Carrying Amount	4,535	3,547
Financial Assets | Investment In Stock Of Federal Reserve Bank Of St Louis
Financial Instruments Owned Carrying Amount	3,196	2,357
Financial Assets | Loans Receivable
Financial Instruments Owned Carrying Amount	1,522,445	1,397,730
Financial Assets | Accrued interest receivable
Financial Instruments Owned Carrying Amount	7,128	6,769
Financial Liabilities | Deposits
Financial Instruments Owned Carrying Amount	1,574,337	1,455,597
Financial Liabilities | Securities Sold under Agreements to Repurchase
Financial Instruments Owned Carrying Amount	3,769	10,212
Financial Liabilities | Federal Home Loan Bank Advances
Financial Instruments Owned Carrying Amount	50,850	43,637
Financial Liabilities | Note Payable
Financial Instruments Owned Carrying Amount	3,000	3,000
Financial Liabilities | Accrued interest payable
Financial Instruments Owned Carrying Amount	1,138	918
Financial Liabilities | Subordinated Debt
Financial Instruments Owned Carrying Amount	14,921	14,848
Commitments to Extend Credit
Financial Instruments Owned Carrying Amount	$ 0	$ 0

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Note 12: Business Combinations (Details) $ in Thousands	9 Months Ended
	Mar. 31, 2018 USD ($)
Details
Business Acquisition, Name of Acquired Entity	Southern Missouri Bancshares, Inc. (“Bancshares”), and its wholly-owned subsidiary, Southern Missouri Bank of Marshfield
Business Acquisition, Description of Acquired Entity	The Company acquired SMB-Marshfield primarily for the purpose of conducting commercial banking activities in markets where it believes the Company’s business model will perform well, and for the long-term value of its core deposit franchise.
Business Acquisition, Transaction Costs	$ 638

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Note 12: Business Combinations: Schedule of Business Acquisitions, by Acquisition (Details) $ in Thousands	Feb. 23, 2018 USD ($)
Identifiable net assets
Business Combination, Consideration Transferred	$ 12,367
Identifiable net assets | Loans Receivable Gross
Business Combination, Consideration Transferred	68,258
Identifiable net assets | Total Consideration
Business Combination, Consideration Transferred	16,815
Identifiable net assets | Deposits
Business Combination, Consideration Transferred	(68,152)
Identifiable net assets | Federal Home Loan Bank Advances
Business Combination, Consideration Transferred	(5,344)
Identifiable net assets | Miscellaneous other liabilities
Business Combination, Consideration Transferred	(683)
Identifiable net assets | Common stock, at fair value
Business Combination, Consideration Transferred	12,955
Identifiable net assets | Cash
Business Combination, Consideration Transferred	3,860
Identifiable net assets | Other than Securities Investment
Business Combination, Consideration Transferred	5,557
Cash and Cash Equivalents
Business Combination, Consideration Transferred	2,359
Interest-bearing time deposits
Business Combination, Consideration Transferred	1,450
Property, Plant and Equipment
Business Combination, Consideration Transferred	3,409
Bank Owned Life Insurance
Business Combination, Consideration Transferred	2,271
Indefinite-lived Intangible Assets
Business Combination, Consideration Transferred	1,345
Miscellaneous other assets
Business Combination, Consideration Transferred	1,897
Goodwill
Business Combination, Consideration Transferred	$ 4,448