Note

–

Loans

Major classifications of loans were as follows:

	March 31, 2021			June 30, 2020
Commercial	$	131,079		$	158,667
Commercial real estate:
Construction		4,030			16,235
Other		258,421			229,029
1 – 4 Family residential real estate:
Owner occupied		108,288			90,494
Non-owner occupied		19,528			19,370
Construction		7,771			9,344
Consumer		26,002			21,334
Subtotal		555,119			544,473
Net deferred loan fees and costs		(1,982	)		(1,612	)
Allowance for loan losses		(6,076	)		(5,678	)
Net Loans	$	547,061		$	537,183

The commercial loan category in the above table includes PPP loans of

$65,492

as of

March 31, 2021

and

$66,606

as of

June 30, 2020

and a mortgage loan warehouse line of credit to another financial institution with an outstanding balance of

$7,121

as of

March 31, 2021

and

$32,869

as of

June 30, 2020.

The outstanding balance of the warehouse line of credit can fluctuate significantly based on the other financial institution's funding needs.

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

three

months ended

March 31, 2021:

						1-4 Family
			Commercial			Residential
			Real			Real
	Commercial		Estate			Estate			Consumer			Total
Allowance for loan losses:
Beginning balance	$	858	$	3,817		$	1,028		$	209		$	5,912
Provision for loan losses		79		(109	)		166			49			185
Loans charged-off		—		—			(4	)		(39	)		(43	)
Recoveries		—		1			1			20			22
Total ending allowance balance	$	937	$	3,709		$	1,191		$	239		$	6,076

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

nine

months ended

March 31, 2021:

						1-4 Family
				Commercial		Residential
				Real		Real
	Commercial			Estate		Estate			Consumer			Total
Allowance for loan losses:
Beginning balance	$	947		$	3,623	$	989		$	119		$	5,678
Provision for loan losses		12			83		205			145			445
Loans charged-off		(22	)		—		(4	)		(95	)		(121	)
Recoveries		—			3		1			70			74
Total ending allowance balance	$	937		$	3,709	$	1,191		$	239		$	6,076

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 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, 2021.

Included in the recorded investment in loans is

$1,289

of accrued interest receivable.

					1-4 Family
			Commercial		Residential
			Real		Real
	Commercial		Estate		Estate		Consumer		Total
Ending allowance for loan losses balance attributable to loans:
Individually evaluated for impairment	$	1	$	—	$	4	$	—	$	5
Acquired loans collectively evaluated for impairment		—		99		79		—		178
Originated loans collectively evaluated for impairment		936		3,610		1,108		239		5,893
Total ending allowance balance	$	937	$	3,709	$	1,191	$	239	$	6,076

Recorded investment in loans:
Loans individually evaluated for impairment	$	446	$	936	$	692	$	—	$	2,074
Acquired loans collectively evaluated for impairment		907		7,766		22,067		7,671		38,411
Originated loans collectively evaluated for impairment		128,064		253,673		113,849		18,355		513,941
Total ending loans balance	$	129,417	$	262,375	$	136,608	$	26,026	$	554,426

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, 2020.

Included in the recorded investment in loans is

$1,936

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	$	28	$	6	$	—	$	—	$	34
Acquired loans collectively evaluated for impairment		—		103		94		—		197
Originated loans collectively evaluated for impairment		919		3,514		895		119		5,447
Total ending allowance balance	$	947	$	3,623	$	989	$	119	$	5,678

Recorded investment in loans:
Loans individually evaluated for impairment	$	179	$	1,045	$	699	$	—	$	1,923
Acquired loans collectively evaluated for impairment		1,095		8,072		27,252		12,550		48,969
Originated loans collectively evaluated for impairment		156,054		236,840		92,168		8,843		493,905
Total ending loans balance	$	157,328	$	245,957	$	120,119	$	21,393	$	544,797

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, 2021

and for the

nine

months ended

March 31, 2021:

	As of March 31, 2021						Nine Months ended March 31, 2021
	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	$	422	$	306	$	—	$	77	$	—	$	—
Commercial real estate:
Other		1,073		936		—		893		6		6
1-4 Family residential real estate:
Owner occupied		498		456		—		577		11		11
Non-owner occupied		270		209		—		220		—		—
With an allowance recorded:
Commercial		139		140		1		154		6		6
Commercial real estate:
Other		—		—		—		160		7		7
1-4 Family residential real estate:
Owner occupied		29		27		4		13		—		—
Total	$	2,431	$	2,074	$	5	$	2,094	$	30	$	30

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, 2021:

	Average		Interest		Cash Basis
	Recorded		Income		Interest
	Investment		Recognized		Recognized
With no related allowance recorded:
Commercial	$	308	$	—	$	—
Commercial real estate:
Other		941		2		2
1-4 Family residential real estate:
Owner occupied		473		—		—
Non-owner occupied		211		—		—
With an allowance recorded:
Commercial		142		2		2
Commercial real estate:
Other		68		1		1
1-4 Family residential real estate:
Owner occupied		29		—		—
Total	$	2,172	$	5	$	5

June 30, 2020

and for the

nine

months ended

March 31, 2020:

	As of June 30, 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	$	—	$	—	$	—	$	5		—		—
Commercial real estate:
Other		922		836		—		415		88		88
1-4 Family residential real estate:
Owner occupied		604		463		—		27		7		7
Non-owner occupied		284		236		—		251		—		—
With an allowance recorded:
Commercial		176		179		28		164		7		7
Commercial real estate:
Other		209		209		6		218		10		10
Total	$	2,195	$	1,923	$	34	$	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

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, 2021

and

June 30, 2020:

	March 31, 2021				June 30, 2020
			Loans Past Due				Loans Past Due
			Over 90 Days				Over 90 Days
			Still				Still
	Non-accrual		Accruing		Non-accrual		Accruing
Commercial	$	306	$	—	$	21	$	—
Commercial real estate:
Other		888		—		785		—
1 – 4 Family residential:
Owner occupied		480		—		143		29
Non-owner occupied		209		—		236		—
Consumer		—		—		—		12
Total	$	1,883	$	—	$	1,185	$	41

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, 2021

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	$	—	$	—	$	—	$	—	$	129,417	$	129,417
Commercial real estate:
Construction		—		—		—		—		3,982		3,982
Other		—		—		629		629		257,764		258,393
1-4 Family residential:
Owner occupied		28		—		238		266		108,956		109,222
Non-owner occupied		—		—		—		—		19,529		19,529
Construction		—		—		—		—		7,857		7,857
Consumer		43		36		—		79		25,947		26,026
Total	$	71	$	36	$	867	$	974	$	553,452	$	554,426

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

$867

in the

days or greater category and

$1,016

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, 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	$	157,307	$	157,328
Commercial real estate:
Construction		—		—		—		—		16,241		16,241
Other		—		2		628		630		229,086		229,716
1-4 Family residential:
Owner occupied		—		—		172		172		91,102		91,274
Non-owner occupied		—		—		—		—		19,410		19,410
Construction		—		—		—		—		9,435		9,435
Consumer		127		49		12		188		21,205		21,393
Total	$	127	$	51	$	833	$	1,011	$	543,786	$	544,797

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

in the

days,

$792

in the

days or greater category and

$391

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. Borrowers are eligible for an additional

days of payment deferrals if situations warrant a need for an extension. 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, 2021,

borrowers with an aggregate outstanding balance of

$89

are in payment deferral status under this loan modification program.

As of

March 31, 2021

and

June 30, 2020,

the Corporation had

$706

and

$974,

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

March 31, 2021

and

June 30, 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

March 31, 2021

and

June 30, 2020,

the Corporation had

and

$12,

respectively, of specific reserve allocated to these loans.

During the

three

- and

nine

-month periods ended

March 31, 2021

and

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, 2021

and

2020.

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, 2021

and

2020.

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, 2021
			Special						Not
	Pass		Mention		Substandard		Doubtful		Rated
Commercial	$	128,281	$	295	$	292	$	306	$	243
Commercial real estate:
Construction		3,982		—		—		—		—
Other		247,040		4,739		4,789		888		937
1-4 Family residential real estate:
Owner occupied		1,461		—		17		480		107,264
Non-owner occupied		18,673		167		203		209		277
Construction		1,752		—		—		—		6,105
Consumer		791		—		—		—		25,235
Total	$	401,980	$	5,201	$	5,301	$	1,883	$	140,061

As of

June 30, 2020,

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, 2020
			Special						Not
	Pass		Mention		Substandard		Doubtful		Rated
Commercial	$	152,911	$	143	$	3,979	$	21	$	274
Commercial real estate:
Construction		16,241		—		—		—		—
Other		220,311		1,469		5,378		785		1,773
1-4 Family residential real estate:
Owner occupied		2,419		—		334		—		88,521
Non-owner occupied		18,435		186		223		236		330
Construction		3,234		—		—		—		6,201
Consumer		153		—		—		—		21,240
Total	$	413,704	$	1,798	$	9,914	$	1,042	$	118,339