Note 3 - Loans

9 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

Note

3

– Loans

Major classifications of loans were as follows:

	March 31, 2017			June 30, 2016
Commercial	$	45,291		$	43,156
Commercial real estate:
Construction		9,493			7,755
Other		155,859			152,766
1 – 4 Family residential real estate:
Owner occupied		40,201			31,091
Non-owner occupied		14,811			14,438
Construction		1,895			1,269
Consumer		4,775			5,803
Subtotal		272,325			256,278
Allowance for loan losses		(3,371	)		(3,566	)
Net Loans	$	268,954		$	252,712

Loans presented above are net of deferred loan fees and costs of

$308

and

$360

for

March

31,

2017

and

June

30,

2016,

respectively.

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

three

months ended

March

31,

2017:

					1-4 Family
			Commercial		Residential
			Real		Real
	Commercial		Estate		Estate		Consumer			Total
Allowance for loan losses:
Beginning balance	$	497	$	2,100	$	465	$	61		$	3,123
Provision for loan losses		25		195		15		20			255
Loans charged-off		—		—		—		(20	)		(20	)
Recoveries		—		—		7		6			13
Total ending allowance balance	$	522	$	2,295	$	487	$	67		$	3,371

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

nine

months ended

March

31,

2017:

						1-4 Family
			Commercial			Residential
			Real			Real
	Commercial		Estate			Estate			Consumer			Total
Allowance for loan losses:
Beginning balance	$	505	$	2,518		$	402		$	141		$	3,566
Provision for loan losses		16		477			93			(55	)		531
Loans charged-off		—		(700	)		(44	)		(32	)		(776	)
Recoveries		1		—			36			13			50
Total ending allowance balance	$	522	$	2,295		$	487		$	67		$	3,371

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

three

months ended

March

31,

2016:

					1-4 Family
			Commercial		Residential
			Real		Real
	Commercial		Estate		Estate			Consumer			Total
Allowance for loan losses:
Beginning balance	$	397	$	1,728	$	307		$	123		$	2,555
Provision for loan losses		61		52		17			—			130
Loans charged-off		—		—		(18	)		(7	)		(25	)
Recoveries		—		—		—			3			3
Total ending allowance balance	$	458	$	1,780	$	306		$	119		$	2,663

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

nine

months ended

March

31,

2016:

						1-4 Family
			Commercial			Residential
			Real			Real
	Commercial		Estate			Estate			Consumer			Total
Allowance for loan losses:
Beginning balance	$	316	$	1,660		$	289		$	167		$	2,432
Provision for loan losses		142		125			155			(8	)		414
Loans charged-off		—		(5	)		(138	)		(58	)		(201	)
Recoveries		—		—			—			18			18
Total ending allowance balance	$	458	$	1,780		$	306		$	119		$	2,663

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

March

31,

2017.

Included in the recorded investment in loans is

$592

of accrued interest receivable.

					1-4 Family
			Commercial		Residential
			Real		Real
	Commercial		Estate		Estate		Consumer		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	4	$	330	$	2	$	—	$	336
Collectively evaluated for impairment		518		1,965		485		67		3,035
Total ending allowance balance	$	522	$	2,295	$	487	$	67	$	3,371
Recorded investment in loans:
Loans individually evaluated for impairment	$	4	$	3,303	$	397	$	—	$	3,704
Loans collectively evaluated for impairment		45,387		162,379		56,660		4,787		269,213
Total ending loans balance	$	45,391	$	165,682	$	57,057	$	4,787	$	272,917

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

June

30,

2016.

Included in the recorded investment in loans is

$549

of accrued interest receivable.

					1-4 Family
			Commercial		Residential
			Real		Real
	Commercial		Estate		Estate		Consumer		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	—	$	868	$	6	$	—	$	874
Collectively evaluated for impairment		505		1,650		396		141		2,692
Total ending allowance balance	$	505	$	2,518	$	402	$	141	$	3,566
Recorded investment in loans:
Loans individually evaluated for impairment	$	1,029	$	5,105	$	758	$	—	$	6,892
Loans collectively evaluated for impairment		42,219		155,734		46,166		5,816		249,935
Total ending loans balance	$	43,248	$	160,839		46,924	$	5,816	$	256,827

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

March

31,

2017

and for the

nine

months ended

March

31,

2017:

	As of March 31, 2017						Nine Months ended March 31, 2017
	Unpaid				Allowance for		Average		Interest		Cash Basis
	Principal		Recorded		Loan Losses		Recorded		Income		Interest
	Balance		Investment		Allocated		Investment		Recognized		Recognized
With no related allowance recorded:
Commercial	$	—	$	—	$	—	$	220	$	80	$	80
Commercial real estate:
Construction		6		5		—		115		6		6
Other		1,857		969		—		1,026		105		105
1-4 Family residential real estate:
Owner occupied		188		188		—		124		—		—
Non-owner occupied		193		192		—		202		—		—
With an allowance recorded:
Commercial		4		4		4		6		—		—
Commercial real estate:
Other		2,334		2,329		330		1,936		18		18
1-4 Family residential real estate:
Owner occupied		17		17		2		126		4		4
Total	$	4,599	$	3,704	$	336	$	3,755	$	213	$	213

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

three

months ended

March

31,

2017:

	Average		Interest		Cash Basis
	Recorded		Income		Interest
	Investment		Recognized		Recognized
With no related allowance recorded:
Commercial real estate:
Construction	$	6	$	—	$	—
Other		917		—		—
1-4 Family residential real estate:
Owner occupied		119		—		—
Non-owner occupied		195		—		—
With an allowance recorded:
Commercial		4		—		—
Commercial real estate:
Other		1,747		3		3
1-4 Family residential real estate:
Owner occupied		101		1		1
Total	$	3,089	$	4	$	4

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

June

30,

2016

and for the

nine

months ended

March

31,

2016:

	As of June 30, 2016						Nine Months ended March 31, 2016
	Unpaid				Allowance for		Average		Interest		Cash Basis
	Principal		Recorded		Loan Losses		Recorded		Income		Interest
	Balance		Investment		Allocated		Investment		Recognized		Recognized
With no related allowance recorded:
Commercial	$	1,033	$	1,029	$	—	$	—	$	—	$	—
Commercial real estate:
Construction		386		384		—		18		—		—
Other		2,121		2,106		—		2,164		—		—
1-4 Family residential real estate:
Owner occupied		175		174		—		280		1		1
Non-owner occupied		722		407		—		413		—		—
With an allowance recorded:
Commercial real estate:
Other		2,802		2,615		868		1,026		26		26
1-4 Family residential real estate:
Owner occupied		177		177		6		156		5		5
Non-owner occupied		—		—		—		153		4		4
Total	$	7,416	$	6,892	$	874	$	4,210	$	36	$	36

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

three

months ended

March

31,

2016:

	Average		Interest		Cash Basis
	Recorded		Income		Interest
	Investment		Recognized		Recognized
With no related allowance recorded:
Commercial real estate:
Construction	$	20	$	—	$	—
Other		2,183		—		—
1-4 Family residential real estate:
Owner occupied		294		1		1
Non-owner occupied		557		—		—
With an allowance recorded:
Commercial real estate:
Other		1,111		8		8
1-4 Family residential real estate:
Owner occupied		159		1		1
Total	$	4,324	$	10	$	10

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

90

days still on accrual by class of loans as of

March

31,

2017

and

June

30,

2016:

	March 31, 2017				June 30, 2016
			Loans Past Due				Loans Past Due
			Over 90 Days				Over 90 Days
			Still				Still
	Non-accrual		Accruing		Non-accrual		Accruing
Commercial	$	41	$	—	$	1,009	$	—
Commercial real estate:
Construction		6		—		384		—
Other		3,054		—		4,000		—
1 – 4 Family residential:
Owner occupied		91		—		234		—
Non-owner occupied		193		—		407		—
Consumer		—		5		—		—
Total	$	3,385	$	5	$	6,034	$	—

Non-accrual loans and loans past due

90

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

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

March

31,

2017

by class of loans:

	Days Past Due
	30 - 59		60 - 89		90 Days or		Total		Loans Not
	Days		Days		Greater		Past Due		Past Due		Total
Commercial	$	88	$	—	$	41	$	129	$	45,262	$	45,391
Commercial real estate:
Construction		—		—		—		—		9,508		9,508
Other		253		1,762		831		2,846		153,328		156,174
1-4 Family residential:
Owner occupied		11		1		74		86		40,220		40,306
Non-owner occupied		—		—		—		—		14,851		14,851
Construction		—		—		—		—		1,900		1,900
Consumer		—		5		5		10		4,777		4,787
Total	$	352	$	1,768	$	951	$	3,071	$	269,846	$	272,917

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

$100

in the

30

-

59

days category,

$1,762

in the

60

-

89

days category,

$947

in the

90

days or greater category and

$576

in the loans not past due category.

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

June

30,

2016

by class of loans:

	Days Past Due
	30 - 59		60 - 89		90 Days or		Total		Loans Not
	Days		Days		Greater		Past Due		Past Due		Total
Commercial	$	123	$	—	$	—	$	123	$	43,125	$	43,248
Commercial real estate:
Construction		—		—		—		—		7,764		7,764
Other		59		—		2,110		2,169		150,906		153,075
1-4 Family residential:
Owner occupied		15		—		218		233		30,947		31,180
Non-owner occupied		—		—		196		196		14,278		14,474
Construction		—		—		—		—		1,270		1,270
Consumer		7		—		—		7		5,809		5,816
Total	$	204	$	—	$	2,524	$	2,728	$	254,099	$	256,827

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

$2,524

in the

90

days or greater category and

$3,510

in the loans not past due category.

Troubled Debt Restructurings:

As of

March

31,

2017,

the recorded investment of loans classified as troubled debt restructurings was

$357

with

$31

of specific reserves allocated to these loans. As of

March

31,

2017,

the Corporation had

not

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

June

30,

2016,

the recorded investment of loans classified as troubled debt restructurings was

$3,529

with

$43

of specific reserves allocated to these loans. As of

June

30,

2016,

the Corporation had committed to lend an additional

$207

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

During the

three

and

nine

months ended

March

31,

2017

and

2016

there were

no

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

no

charge offs from troubled debt restructurings that were completed during the

three

and

nine

month periods ended

March

31,

2017

and

2016.

There were

no

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

12

months following the modification during the

three

and

nine

month periods ended

March

31,

2017

and

2016.

A loan is considered to be in payment default once it is

90

days contractually past due under the modified terms.

Credit Quality Indicators:

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

$100

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

Special Mention.

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

may

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

Substandard.

Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful.

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

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans. Loans listed as not rated are either less than

$100

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

	As of March 31, 2017
			Special						Not
	Pass		Mention		Substandard		Doubtful		Rated
Commercial	$	43,574	$	1,075	$	85	$	4	$	653
Commercial real estate:
Construction		8,646		811		—		6		45
Other		145,086		6,499		1,097		3,054		438
1-4 Family residential real estate:
Owner occupied		2,648		—		12		17		37,629
Non-owner occupied		14,091		175		265		193		127
Construction		860		—		—		—		1,040
Consumer		127		—		—		—		4,660
Total	$	215,032	$	8,560	$	1,459	$	3,274	$	44,592

	As of June 30, 2016
			Special						Not
	Pass		Mention		Substandard		Doubtful		Rated
Commercial	$	35,243	$	6,190	$	1,162	$	—	$	653
Commercial real estate:
Construction		7,305		—		384		—		75
Other		144,101		2,482		4,026		2,150		316
1-4 Family residential real estate:
Owner occupied		3,506		72		349		47		27,206
Non-owner occupied		12,999		406		486		196		387
Construction		235		—		—		—		1,035
Consumer		210		—		6		—		5,600
Total	$	203,599	$	9,150	$	6,413	$	2,393	$	35,272