Note

– Loans

Major classifications of loans were as follows:

	December 31, 2018			June 30, 2018
Commercial	$	64,162		$	60,995
Commercial real estate:
Construction		6,303			5,394
Other		189,635			183,383
1 – 4 Family residential real estate:
Owner occupied		51,641			47,433
Non-owner occupied		14,613			15,516
Construction		2,426			1,171
Consumer		5,019			4,873
Subtotal		333,799			318,765
Net Deferred loan fees and costs		(237	)		(256	)
Allowance for loan losses		(3,569	)		(3,422	)
Net Loans	$	329,993		$	315,087

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

three

months ended

December 31, 2018:

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

Allowance for loan losses:
Beginning balance	$	602	$	2,378		$	507		$	51		$	3,538
Provision for loan losses		20		(793	)		(12	)		10			(775	)
Loans charged-off		—		(55	)		—			(14	)		(69	)
Recoveries		—		867			1			7			875
Total ending allowance balance	$	622	$	2,397		$	496		$	54		$	3,569

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

six

months ended

December 31, 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		36		(693	)		(7	)		4			(660	)
Loans charged-off		—		(55	)		—			(21	)		(76	)
Recoveries		—		868			4			11			883
Total ending allowance balance	$	622	$	2,397		$	496		$	54		$	3,569

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

three

months ended

December 31, 2017:

						1-4 Family
				Commercial		Residential
				Real		Real
	Commercial			Estate		Estate			Consumer			Total
Allowance for loan losses:
Beginning balance	$	572		$	2,081	$	473		$	68		$	3,194
Provision for loan losses		(17	)		57		20			—			60
Loans charged-off		—			—		(33	)		(5	)		(38	)
Recoveries		—			6		1			2			9
Total ending allowance balance	$	555		$	2,144	$	461		$	65		$	3,225

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

six

months ended

December 31, 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		35		82		20			13			150
Loans charged-off		—		—		(33	)		(8	)		(41	)
Recoveries		2		24		1			3			30
Total ending allowance balance	$	555	$	2,144	$	461		$	65		$	3,225

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

December 31, 2018.

Included in the recorded investment in loans is

$784

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	$	—	$	7	$	—	$	—	$	7
Collectively evaluated for impairment		622		2,390		496		54		3,562
Total ending allowance balance	$	622	$	2,397	$	496	$	54	$	3,569

Recorded investment in loans:
Loans individually evaluated for impairment	$	114	$	1,379	$	377	$	—	$	1,870
Loans collectively evaluated for impairment		64,120		194,547		68,785		5,024		332,476
Total ending loans balance	$	64,234	$	195,926	$	69,162	$	5,024	$	334,346

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

December 31, 2018

and for the

six

months ended

December 31, 2018:

	As of December 31, 2018						Six Months ended December 31, 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	$	112	$	114	$	—	$	92	$	3	$	3
Commercial real estate:
Other		1,340		1,153		—		1,255		19		19
1-4 Family residential real estate:
Owner occupied		127		97		—		98		—		—
Non-owner occupied		304		280		—		287		—		—
With an allowance recorded:
Commercial real estate:
Other		225		226		7		229		7		7
Total	$	2,108	$	1,870	$	7	$	1,961	$	29	$	29

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

December 31, 2018:

	Average		Interest		Cash Basis
	Recorded		Income		Interest
	Investment		Recognized		Recognized
With no related allowance recorded:
Commercial	$	113	$	2	$	2
Commercial real estate:
Other		1,140		8		8
1-4 Family residential real estate:
Owner occupied		97		—		—
Non-owner occupied		283		—		—
With an allowance recorded:
Commercial real estate:
Other		227		4		4
Total	$	1,860	$	14	$	14

June 30, 2018

and for the

six

months ended

December 31, 2017:

	As of June 30, 2018						Six Months ended December 31, 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	$	—	$	117	$	3	$	3
Commercial real estate:
Other		1,330		1,330		—		1,057		16		16
1-4 Family residential real estate:
Owner occupied		101		101		—		80		—		—
Non-owner occupied		297		297		—		322		—		—
With an allowance recorded:
Commercial real estate:
Other		231		232		29		337		5		5
Total	$	2,059	$	2,060	$	29	$	1,913	$	24	$	24

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

December 31, 2017:

	Average		Interest		Cash Basis
	Recorded		Income		Interest
	Investment		Recognized		Recognized
With no related allowance recorded:
Commercial	$	120	$	1	$	1
Commercial real estate:
Other		1,061		6		6
1-4 Family residential real estate:
Owner occupied		318		—		—
Non-owner occupied		58		—		—
With an allowance recorded:
Commercial real estate:
Other		330		5		5
Total	$	1,887	$	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

December 31, 2018

and

June 30, 2018:

	December 31, 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 real estate:
Other	$	531	$	—	$	702	$	—
1 – 4 Family residential:
Owner occupied		88		—		90		—
Non-owner occupied		280		—		298		—
Total	$	899	$	—	$	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

December 31, 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	$	—	$	—	$	—	$	—	$	64,234	$	64,234
Commercial real estate:
Construction		—		—		—		—		6,281		6,281
Other		—		26		104		130		189,515		189,645
1-4 Family residential:
Owner occupied		180		—		80		260		51,843		52,103
Non-owner occupied		—		—		—		—		14,611		14,611
Construction		—		—		—		—		2,448		2,448
Consumer		—		—		—		—		5,024		5,024
Total	$	180	$	26	$	184	$	390	$	333,956	$	334,346

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

$184

in the

days or greater category and

$715

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.

December 31, 2018

and

June 30, 2018,

the Corporation had

$1,251

and

$1,269,

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

December 31, 2018

and

June 30, 2018,

the Corporation had committed to lend an additional

$112

and

$174,

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

December 31, 2018

and

June 30, 2018,

the Corporation had

and

$29,

respectively, of specific reserves allocated to these loans.

During the

three

and

six

-month periods ended

December 31, 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

and

six

-month periods ended

December 31, 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

and

six

-month periods ended

December 31, 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 December 31, 2018
			Special						Not
	Pass		Mention		Substandard		Doubtful		Rated
Commercial	$	62,251	$	525	$	1,054	$	—	$	404
Commercial real estate:
Construction		6,281		—		—		—		—
Other		174,444		11,507		2,048		531		1,115
1-4 Family residential real estate:
Owner occupied		2,490		92		25		8		49,488
Non-owner occupied		13,369		188		332		280		442
Construction		693		—		—		—		1,755
Consumer		43		—		—		—		4,981
Total	$	259,571	$	12,312	$	3,459	$	819	$	58,185

	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