Note

– Loans

Major classifications of loans were as follows:

	March 31, 2020			June 30, 2019
Commercial	$	85,848		$	80,453
Commercial real estate:
Construction		16,673			16,120
Other		229,329			195,269
1 – 4 Family residential real estate:
Owner occupied		87,631			55,941
Non-owner occupied		19,391			14,517
Construction		7,417			1,931
Consumer		21,563			5,150
Subtotal		467,852			369,381
Net Deferred loan fees and costs		(48	)		(206	)
Allowance for loan losses		(4,468	)		(3,788	)
Net Loans	$	463,336		$	365,387

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

three

months ended

March 31, 2020:

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

Allowance for loan losses:
Beginning balance	$	766	$	2,652	$	615	$	62		$	4,095
Provision for loan losses		25		203		116		101			445
Loans charged-off		—		—		—		(91	)		(91	)
Recoveries		—		1		1		17			19
Total ending allowance balance	$	791	$	2,856	$	732	$	89		$	4,468

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

nine

months ended

March 31, 2020:

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

Allowance for loan losses:
Beginning balance	$	660	$	2,575	$	494	$	59		$	3,788
Provision for loan losses		131		278		236		115			760
Loans charged-off		—		—		—		(114	)		(114	)
Recoveries		—		3		2		29			34
Total ending allowance balance	$	791	$	2,856	$	732	$	89		$	4,468

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

three

months ended

March 31, 2019:

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

Allowance for loan losses:
Beginning balance	$	622	$	2,397		$	496	$	54		$	3,569
Provision for loan losses		—		102			5		(2	)		105
Loans charged-off		—		(25	)		—		(9	)		(34	)
Recoveries		—		7			2		7			16
Total ending allowance balance	$	622	$	2,481		$	503	$	50		$	3,656

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

nine

months ended

March 31, 2019:

						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		(591	)		(2	)		2			(555	)
Loans charged-off		—		(80	)		—			(30	)		(110	)
Recoveries		—		875			6			18			899
Total ending allowance balance	$	622	$	2,481		$	503		$	50		$	3,656

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, 2020.

Included in the recorded investment in loans is

$1,045

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	$	1	$	8	$	—	$	—	$	9
Acquired loans collectively evaluated for impairment		—		13		37		—		50
Originated loans collectively evaluated for impairment		790		2,835		695		89		4,409
Total ending allowance balance	$	791	$	2,856	$	732	$	89	$	4,468

Recorded investment in loans:
Loans individually evaluated for impairment	$	177	$	1,063	$	284	$	—	$	1,524
Acquired loans collectively evaluated for impairment		1,527		9,462		27,562		13,519		52,070
Originated loans collectively evaluated for impairment		84,275		235,513		87,363		8,104		415,255
Total ending loans balance	$	85,979	$	246,038	$	115,209	$	21,623	$	468,849

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, 2019.

Included in the recorded investment in loans is

$891

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	$	2	$	7	$	—	$	—	$	9
Collectively evaluated for impairment		658		2,568		494		59		3,779
Total ending allowance balance	$	660	$	2,575	$	494	$	59	$	3,788

Recorded investment in loans:
Loans individually evaluated for impairment	$	174	$	658	$	357	$	—	$	1,189
Loans collectively evaluated for impairment		80,413		210,709		72,591		5,164		368,877
Total ending loans balance	$	80,587	$	211,367	$	72,948	$	5,164	$	370,066

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

March 31, 2020

and for the

nine

months ended

March 31, 2020:

	As of March 31, 2020						Nine Months ended March 31, 2020
	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	$	21	$	21	$	—	$	5	$	—	$	—
Commercial real estate:
Other		933		846		—		415		88		88
1-4 Family residential real estate:
Owner occupied		79		42		—		27		7		7
Non-owner occupied		288		242		—		251		—		—
With an allowance recorded:
Commercial		155		156		1		164		7		7
Commercial real estate:
Other		214		217		8		218		10		10
Total	$	1,690	$	1,524	$	9	$	1,080	$	112	$	112

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, 2020:

	Average		Interest		Cash Basis
	Recorded		Income		Interest
	Investment		Recognized		Recognized
With no related allowance recorded:
Commercial	$	14	$	—	$	—
Commercial real estate:
Other		641		1		1
1-4 Family residential real estate:
Owner occupied		31		—		—
Non-owner occupied		244		—		—
With an allowance recorded:
Commercial		158		2		2
Commercial real estate:
Other		216		4		4
Total	$	1,304	$	7	$	7

June 30, 2019

and for the

nine

months ended

March 31, 2019:

	As of June 30, 2019						Nine Months ended March 31, 2019
	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	$	5	$	5
Commercial real estate:
Other		580		436		—		1,176		28		28
1-4 Family residential real estate:
Owner occupied		124		93		—		98		—		—
Non-owner occupied		297		264		—		283		—		—
With an allowance recorded:
Commercial real estate:
Other		221		222		7		227		10		10
Commercial		173		174		2		—		—		—
Total	$	1,395	$	1,189	$	9	$	1,884	$	43	$	43

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, 2019:

	Average		Interest		Cash Basis
	Recorded		Income		Interest
	Investment		Recognized		Recognized
With no related allowance recorded:
Commercial	$	116	$	2	$	2
Commercial real estate:
Other		1,019		9		9
1-4 Family residential real estate:
Owner occupied		96		—		—
Non-owner occupied		275		—		—
With an allowance recorded:
Commercial real estate:
Other		224		3		3
Total	$	1,730	$	14	$	14

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

March 31, 2020

and

June 30, 2019:

	March 31, 2020				June 30, 2019
			Loans Past Due				Loans Past Due
			Over 90 Days				Over 90 Days
			Still				Still
	Non-accrual		Accruing		Non-accrual		Accruing
Commercial	$	22	$	—	$	—	$	—
Commercial real estate:
Other		797		—		436		—
1 – 4 Family residential:
Owner occupied		36		—		85		—
Non-owner occupied		242		—		264		—
Consumer		—		13		—		—
Total	$	1,097	$	13	$	785	$	—

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

March 31, 2020

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	$	—	$	21	$	—	$	21	$	85,958	$	85,979
Commercial real estate:
Construction		—		—		—		—		16,656		16,656
Other		1,126		4		628		1,758		227,624		229,382
1-4 Family residential:
Owner occupied		722		15		35		772		87,538		88,310
Non-owner occupied		—		—		—		—		19,402		19,402
Construction		—		—		—		—		7,497		7,497
Consumer		248		62		13		323		21,300		21,623
Total	$	2,096	$	102	$	676	$	2,874	$	465,975	$	468,849

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

$27

in the

days category,

$663

in the

days or greater category and

$407

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, 2019

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	$	—	$	—	$	—	$	—	$	80,587	$	80,587
Commercial real estate:
Construction		—		—		—		—		16,075		16,075
Other		199		—		—		199		195,093		195,292
1-4 Family residential:
Owner occupied		40		—		80		120		56,347		56,467
Non-owner occupied		—		—		—		—		14,518		14,518
Construction		—		—		—		—		1,963		1,963
Consumer		1		—		—		1		5,163		5,164
Total	$	240	$	—	$	80	$	320	$	369,746	$	370,066

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

$198

in the

days,

$80

in the

days or greater category and

$507

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 that are classified as TDRs. A modified loan is usually 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. In response to COVID-

19,

March 22, 2020

the Corporation adopted a loan modification program to assist borrowers impacted by the virus. The program is available to most borrowers whose loan was

not

past due on

March 22, 2020,

the date this loan modification program was adopted. The program offers principal and interest payment deferrals for up to

days or interest only payments for up to

days. Interest will be deferred but will continue to accrue during the deferment period and the maturity date on amortizing loans will be extended by the number of months the payment was deferred. Consistent with issued regulatory guidance, modifications made under this program in response to COVID-

will

not

be classified as TDRs. As of

March 31, 2020,

there were

commercial loans with an outstanding balance of

$16,116,

five

mortgage loans with an outstanding balance of

$307

and

consumer loans with an outstanding balance of

$252

that were granted

days of payment deferrals under the loan modification program that was adopted in response to COVID-

that are

not

classified as TDRs.

As of

March 31, 2020

and

June 30, 2019,

the Corporation had

$673

and

$725,

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

March 31, 2020,

the Corporation had

not

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

June 30, 2019,

the Corporation had committed to lend an additional

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

March 31, 2020

and

June 30, 2019,

the Corporation had

of specific reserves allocated to these loans.

During the

three

and

nine

-month periods ended

March 31, 2020,

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

nine

-month periods ended

March 31, 2020.

During the

three

-month period ended

March 31, 2019,

the terms of a loan to

one

borrower were modified as a troubled debt restructuring. The modification of the terms of the loan included a combination of forgiveness of a portion of the principal amount owed, which resulted in a reduction in the monthly payment amount. The following table presents loans by class modified as troubled debt restructurings that occurred during the period ended

March 31, 2019:

			Pre-Modification		Post-Modification
	Number of		Outstanding Recorded		Outstanding Recorded
	Loans		Investment		Investment
Commercial real estate:
Other		1	$	161	$	59
Total		1	$	161	$	59

The troubled debt restructuring described above increased the allowance for loan losses and resulted in a charge-off of

$80

during the period ended

March 31, 2019.

There were

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

months following the modification during the

three

and

nine

-month periods ended

March 31, 2020

and

2019.

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 pass rated loans. Loans listed as

not

rated are either less than

$100

or are included in groups of homogeneous loans. Generally,

Family Residential and Consumer loans are

not

risk rated, except when collateral is used for a business purpose. 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, 2020
			Special						Not
	Pass		Mention		Substandard		Doubtful		Rated
Commercial	$	81,123	$	186	$	4,348	$	21	$	301
Commercial real estate:
Construction		16,656		—		—		—		—
Other		219,075		2,573		5,205		797		1,732
1-4 Family residential real estate:
Owner occupied		1,971		—		334		2		86,003
Non-owner occupied		18,444		190		229		242		297
Construction		1,683		—		—		—		5,814
Consumer		76		—		—		—		21,547
Total	$	339,028	$	2,949	$	10,116	$	1,062	$	115,694

As of

June 30, 2019,

and based on the most recent analysis performed, the recorded investment by risk category of loans by class of loans is as follows:

	As of June 30, 2019
			Special						Not
	Pass		Mention		Substandard		Doubtful		Rated
Commercial	$	74,393	$	4,942	$	1,012	$	—	$	240
Commercial real estate:
Construction		16,075		—		—		—		—
Other		179,952		8,071		5,337		436		1,496
1-4 Family residential real estate:
Owner occupied		2,245		—		24		5		54,193
Non-owner occupied		13,413		205		318		263		319
Construction		—		—		—		—		1,963
Consumer		32		—		—		—		5,132
Total	$	286,110	$	13,218	$	6,691	$	704	$	63,343