Note

– Loans

Major classifications of loans were as follows:

	September 30, 2018			June 30, 2018
Commercial	$	62,242		$	60,995
Commercial real estate:
Construction		4,568			5,394
Other		191,096			183,383
1 – 4 Family residential real estate:
Owner occupied		49,573			47,433
Non-owner occupied		14,775			15,516
Construction		1,825			1,171
Consumer		4,856			4,873
Subtotal		328,935			318,765
Net Deferred loan fees and costs		(253	)		(256	)
Allowance for loan losses		(3,538	)		(3,422	)
Net Loans	$	325,144		$	315,087

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

three

months ended

September 30, 2018:

					1-4 Family
			Commercial		Residential
			Real		Real
	Commercial		Estate		Estate		Consumer			Total

Allowance for loan losses:
Beginning balance	$	586	$	2,277	$	499	$	60		$	3,422
Provision for loan losses		16		100		5		(6	)		115
Loans charged-off		—		—		—		(7	)		(7	)
Recoveries		—		1		3		4			8
Total ending allowance balance	$	602	$	2,378	$	507	$	51		$	3,538

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

three

months ended

September 30, 2017:

					1-4 Family
			Commercial		Residential
			Real		Real
	Commercial		Estate		Estate		Consumer			Total
Allowance for loan losses:
Beginning balance	$	518	$	2,038	$	473	$	57		$	3,086
Provision for loan losses		52		25		—		13			90
Loans charged-off		—		—		—		(3	)		(3	)
Recoveries		2		18		—		1			21
Total ending allowance balance	$	572	$	2,081	$	473	$	68		$	3,194

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

September 30, 2018.

Included in the recorded investment in loans is

$859

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	$	—	$	29	$	—	$	—	$	29
Collectively evaluated for impairment		602		2,349		507		51		3,509
Total ending allowance balance	$	602	$	2,378	$	507	$	51	$	3,538

Recorded investment in loans:
Loans individually evaluated for impairment	$	87	$	1,606	$	388	$	—	$	2,081
Loans collectively evaluated for impairment		62,238		194,132		66,229		4,861		327,460
Total ending loans balance	$	62,325	$	195,738	$	66,617	$	4,861	$	329,541

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, 2018.

Included in the recorded investment in loans is

$732

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	$	—	$	29	$	—	$	—	$	29
Collectively evaluated for impairment		586		2,248		499		60		3,393
Total ending allowance balance	$	586	$	2,277	$	499	$	60	$	3,422

Recorded investment in loans:
Loans individually evaluated for impairment	$	100	$	1,562	$	398	$	—	$	2,060
Loans collectively evaluated for impairment		60,979		187,191		64,135		4,876		317,181
Total ending loans balance	$	61,079	$	188,753	$	64,533	$	4,876	$	319,241

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

September 30, 2018

and for the

three

months ended

September 30, 2018:

(Dollars in thousands, except per share amounts)

	As of September 30, 2018						Three Months ended September 30, 2018
	Unpaid				Allowance for Loan		Average		Interest		Cash Basis
	Principal		Recorded		Losses		Recorded		Income		Interest
	Balance		Investment		Allocated		Investment		Recognized		Recognized
With no related allowance recorded:
Commercial	$	87	$	87	$	—	$	71	$	1	$	1
Commercial real estate:
Other		1,499		1,376		—		1,369		11		11
1-4 Family residential real estate:
Owner occupied		129		99		—		99		—		—
Non-owner occupied		309		289		—		292		—		—
With an allowance recorded:
Commercial real estate:
Other		228		230		29		231		3		3
Total	$	2,252	$	2,081	$	29	$	2,062	$	15	$	15

June 30, 2018

and for the

three

months ended

September 30, 2017:

	As of June 30, 2018						Three Months ended September 30, 2017
	Unpaid				Allowance for Loan		Average		Interest		Cash Basis
	Principal		Recorded		Losses		Recorded		Income		Interest
	Balance		Investment		Allocated		Investment		Recognized		Recognized
With no related allowance recorded:
Commercial	$	100	$	100	$	—	$	114	$	2	$	2
Commercial real estate:
Other		1,330		1,330		—		1,053		10		10
1-4 Family residential real estate:
Owner occupied		101		101		—		102		—		—
Non-owner occupied		297		297		—		327		—		—
With an allowance recorded:
Commercial real estate:
Other		231		232		29		343		—		—
Total	$	2,059	$	2,060	$	29	$	1,939	$	12	$	12

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

days still on accrual by class of loans as of

September 30, 2018

and

June 30, 2018:

	September 30, 2018				June 30, 2018
			Loans Past Due				Loans Past Due
			Over 90 Days				Over 90 Days
			Still				Still
	Non-accrual		Accruing		Non-accrual		Accruing
Commercial	$	—	$	—	$	—	$	—
Commercial real estate:
Other		675		—		702		—
1 – 4 Family residential:
Owner occupied		89		1		90		—
Non-owner occupied		289		—		298		—
Total	$	1,053	$	1	$	1,090	$	—

Non-accrual loans and loans past due

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

September 30, 2018

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	$	—	$	—	$	—	$	—	$	62,325	$	62,325
Commercial real estate:
Construction		—		—		—		—		4,555		4,555
Other		15		—		219		234		190,949		191,183
1-4 Family residential:
Owner occupied		49		—		81		130		49,875		50,005
Non-owner occupied		—		—		—		—		14,775		14,775
Construction		—		—		—		—		1,837		1,837
Consumer		11		3		—		14		4,847		4,861
Total	$	75	$	3	$	300	$	378	$	329,163	$	329,541

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

$24

in the

–

days category,

$299

in the

days or greater category and

$730

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, 2018

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	$	—	$	—	$	—	$	—	$	61,079	$	61,079
Commercial real estate:
Construction		—		—		—		—		5,386		5,386
Other		238		—		—		238		183,129		183,367
1-4 Family residential:
Owner occupied		11		—		80		91		47,738		47,829
Non-owner occupied		—		—		—		—		15,514		15,514
Construction		—		—		—		—		1,190		1,190
Consumer		7		—		—		7		4,869		4,876
Total	$	256	$	—	$	80	$	336	$	318,905	$	319,241

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

$249

in the

days,

$80

in the

days or greater category and

$761

in the loans

not

past due category.

Troubled Debt Restructurings

(TDR)

The Corporation has certain loans that have been modified in order to maximize collection of loan balances. A modified loan is classified as a TDR if, for economic reasons, management grants a concession to the original terms and conditions of the loan to a borrower who is experiencing financial difficulties that it would

not

have otherwise considered.

September 30, 2018

and

June 30, 2018,

the Corporation had

$1,318

and

$1,269,

respectively, of loans classified as TDRs which are included in impaired loans above. As of

September 30, 2018

and

June 30, 2018,

the Corporation had committed to lend an additional

$38

and

$174,

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

September 30, 2018

and

June 30, 2018,

the Corporation had

$29

of specific reserves allocated to these loans.

During the

three

-month periods ended

September 30, 2018

and

2017,

there were

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

charge offs from troubled debt restructurings that were completed during the

three

-month periods ended

September 30, 2018

and

2017.

There were

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

months following the modification during the

three

-month periods ended

September 30, 2018

and

2017.

A loan is considered in payment default once it is

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 affirms 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 September 30, 2018
			Special						Not
	Pass		Mention		Substandard		Doubtful		Rated
Commercial	$	60,364	$	428	$	1,080	$	—	$	453
Commercial real estate:
Construction		4,555		—		—		—		—
Other		180,579		6,793		2,177		675		959
1-4 Family residential real estate:
Owner occupied		2,375		95		27		9		47,499
Non-owner occupied		13,438		192		410		289		446
Construction		695		—		—		—		1,142
Consumer		80		—		—		—		4,781
Total	$	262,086	$	7,508	$	3,694	$	973	$	55,280

	As of June 30, 2018
			Special						Not
	Pass		Mention		Substandard		Doubtful		Rated
Commercial	$	59,214	$	288	$	1,162	$	—	$	415
Commercial real estate:
Construction		5,386		—		—		—		—
Other		172,471		7,061		1,878		702		1,255
1-4 Family residential real estate:
Owner occupied		2,577		—		27		11		45,214
Non-owner occupied		14,025		195		417		298		579
Construction		8		—		—		—		1,182
Consumer		93		—		—		—		4,783
Total	$	253,774	$	7,544	$	3,484	$	1,011	$	53,428