Note 5. Loans

Loans are as follows:

	March 31, 2015			June 30, 2014
Commercial:
Operating	$	14,302,362		$	18,138,426
Real estate	54,255,897			45,289,372
Agricultural:
Operating	23,387,279			24,883,737
Real estate	17,959,974			19,677,197
Residential real estate:
1-4 family	38,495,495			34,020,587
Home equity	10,011,986			9,669,142
Other:
Construction and land	5,423,011			5,043,990
Consumer	2,955,364			2,795,609

Total loans	166,791,368			159,518,060


Deferred loan origination costs, net	547,314			565,380
Allowance for loan losses	(2,414,000		)	(2,574,000		)

	(1,866,686		)	(2,008,620		)


Loans, net	$	164,924,682		$	157,509,440

Changes in the allowance for loan losses, by portfolio segment are summarized as follows:

							Residential
	Commercial			Agricultural			Real Estate			Other			Total
	For the nine months ended March 31, 2015
Balance, beginning	$	1,237,000		$	646,000		$	586,000		$	105,000		$	2,574,000
Provision charged to expense	224,463			(57,000		)	42,767			(921,067		)	(710,837		)
Recoveries	20,118			-			13,233			931,930			965,281

	1,481,581			589,000			642,000			115,863			2,828,444
Loans charged off	(405,581		)	-			-			(8,863		)	(414,444		)

Balance, ending	$	1,076,000		$	589,000		$	642,000		$	107,000		$	2,414,000


							Residential
	Commercial			Agricultural			Real Estate			Other			Total

	For the year ended June 30, 2014

Balance, beginning	$	1,010,000		$	451,000		$	718,000		$	114,000		$	2,293,000
Provision charged to expense	(541,858		)	195,000			(122,746		)	(211,565		)	(681,169		)
Recoveries	834,235			-			1,600			216,555			1,052,390

	1,302,377			646,000			596,854			118,990			2,664,221
Loans charged off	(65,377		)	-			(10,854		)	(13,990		)	(90,221		)

Balance, ending	$	1,237,000		$	646,000		$	586,000		$	105,000		$	2,574,000

The allowance for loan losses, by impairment evaluation and portfolio segment is summarized as follows:

					Residential
	Commercial		Agricultural		Real Estate		Other		Total
	March 31, 2015
Allowance for loans individually evaluated for impairment	$	5,810	$	-	$	53,777	$	-	$	59,587
Allowance for loans collectively evaluated for impairment	1,070,190		589,000		588,223		107,000		2,354,413

	$	1,076,000	$	589,000	$	642,000	$	107,000	$	2,414,000


Loans individually evaluated for impairment	$	569,541	$	441,125	$	3,900,765	$	8,656	$	4,920,087
Loans collectively evaluated for impairment	67,988,718		40,906,128		44,606,716		8,369,719		161,871,281

	$	68,558,259	$	41,347,253	$	48,507,481	$	8,378,375	$	166,791,368


Allowance as a percentage of loans individually evaluated for impairment	1.02%		0.00%		1.38%		0.00%		1.21%
Allowance as a percentage of loans collectively evaluated for impairment	1.57%		1.44%		1.32%		1.28%		1.45%
Allowance as a percentage of total loans evaluated for impairment	1.57%		1.42%		1.32%		1.28%		1.45%

					Residential
	Commercial		Agricultural		Real Estate		Other		Total

	June 30, 2014

Allowance for loans individually evaluated for impairment	$	270,272	$	-	$	52,197	$	-	$	322,469
Allowance for loans collectively evaluated for impairment	966,728		646,000		533,803		105,000		2,251,531

	$	1,237,000	$	646,000	$	586,000	$	105,000	$	2,574,000


Loans individually evaluated for impairment	$	792,682	$	-	$	4,286,736	$	12,500	$	5,091,918
Loans collectively evaluated for impairment	62,635,116		44,560,934		39,402,993		7,827,099		154,426,142

	$	63,427,798	$	44,560,934	$	43,689,729	$	7,839,599	$	159,518,060


Allowance as a percentage of loans individually evaluated for impairment	34.10%		0.00%		1.22%		0.00%		6.33%
Allowance as a percentage of loans collectively evaluated for impairment	1.54%		1.45%		1.35%		1.34%		1.46%
Allowance as a percentage of total loans evaluated for impairment	1.95%		1.45%		1.34%		1.34%		1.61%

The aging in terms of unpaid principal balance of the loan portfolio, by classes of loans is summarized as follows:

							> 90 days
			31-60 days		61-90 days		Past Due
	Current		Past Due		Past Due		(Nonaccrual)		Total
	March 31, 2015
Classes of loans:
Commercial:
Operating	$	14,302,362	$	-	$	-	$	-	$	14,302,362
Real estate	54,217,673		-		-		38,224		54,255,897
Agricultural:
Operating	23,387,279		-		-		-		23,387,279
Real estate	17,959,974		-		-		-		17,959,974
Residential real estate:
1-4 family	38,428,836		-		-		66,659		38,495,495
Home equity	9,996,757		15,229		-		-		10,011,986
Other:
Construction and land	5,423,011		-		-		-		5,423,011
Consumer	2,902,522		52,842		-		-		2,955,364

	$	166,618,414	$	68,071	$	-	$	104,883	$	166,791,368


As a percentage of total loan portfolio	99.90%		0.04%		0.00%		0.06%		100.00%

							> 90 days
			31-60 days		61-90 days		Past Due
	Current		Past Due		Past Due		(Nonaccrual)		Total
	June 30, 2014
Classes of loans:
Commercial:
Operating	$	18,027,590	$	4,298	$	-	$	106,538	$	18,138,426
Real estate	45,051,510		-		199,638		38,224		45,289,372
Agricultural:
Operating	24,883,737		-		-		-		24,883,737
Real estate	19,677,197		-		-		-		19,677,197
Residential real estate:
1-4 family	33,537,729		64,279		348,817		69,762		34,020,587
Home equity	9,652,522		16,620		-		-		9,669,142
Other:
Construction and land	5,043,990		-		-		-		5,043,990
Consumer	2,795,309		300		-		-		2,795,609

	$	158,669,584	$	85,497	$	548,455	$	214,524	$	159,518,060


As a percentage of total loan portfolio	99.48%		0.05%		0.34%		0.13%		100.00%

For each class of loans, the following summarizes the unpaid principal balance by credit quality indicator as of:

	Commercial		Commercial		Agricultural		Agricultural
	– Operating		– Real Estate		– Operating		– Real Estate		Total
	March 31, 2015
Internally assigned risk rating:
Highest Quality (rating 1)	$	19,600	$	-	$	340,015	$	-	$	359,615
Good Quality (rating 2)	372,992		5,830,735		8,921,625		5,342,168		20,467,520
Acceptable Quality (rating 3)	7,703,807		33,577,523		7,275,067		7,799,552		56,355,949
Fair Quality (rating 4)	5,846,014		13,023,996		6,838,973		4,388,728		30,097,711
Special Mention (rating 5)	-		-		-		-		-
Substandard (rating 6)	359,949		1,823,643		11,599		429,526		2,624,717
Doubtful (rating 7)	-		-		-		-		-
Loss (rating 8)	-		-		-		-		-

	$	14,302,362	$	54,255,897	$	23,387,279	$	17,959,974	$	109,905,512

	Commercial		Commercial		Agricultural		Agricultural
	– Operating		– Real Estate		– Operating		– Real Estate		Total
	June 30, 2014
Internally assigned risk rating:
Highest Quality (rating 1)	$	27,495	$	-	$	648,226	$	199,200	$	874,921
Good Quality (rating 2)	237,591		6,635,611		3,246,964		5,254,390		15,374,556
Acceptable Quality (rating 3)	9,012,508		22,943,545		6,998,671		8,915,336		47,870,060
Fair Quality (rating 4)	7,384,634		14,477,642		13,989,876		5,308,271		41,160,423
Special Mention (rating 5)	-		51,909		-		-		51,909
Substandard (rating 6)	1,476,198		1,180,665		-		-		2,656,863
Doubtful (rating 7)	-		-		-		-		-
Loss (rating 8)	-		-		-		-		-

	$	18,138,426	$	45,289,372	$	24,883,737	$	19,677,197	$	107,988,732

	Residential RE		Residential RE		Other – Construction		Other –
	– 1-4 Family		– Home Equity		and Land		Consumer		Total
	March 31, 2015
Delinquency status*:
Performing	$	37,983,825	$	9,976,639	$	5,423,011	$	2,895,813	$	56,279,288
Nonperforming	511,670		35,347		-		59,551		606,568

	$	38,495,495	$	10,011,986	$	5,423,011	$	2,955,364	$	56,885,856



	Residential RE		Residential RE		Other – Construction		Other –
	– 1-4 Family		– Home Equity		and Land		Consumer		Total

	June 30, 2014

Delinquency status*:
Performing	$	33,537,729	$	9,652,522	$	5,043,990	$	2,795,309	$	51,029,550
Nonperforming	482,858		16,620		-		300		499,778

	$	34,020,587	$	9,669,142	$	5,043,990	$	2,795,609	$	51,529,328

* Performing loans are those which are accruing and less than 31 days past due. Nonperforming loans are those on nonaccrual and accruing loans that are greater than or equal to 31 days past due.

For commercial loans and agricultural loans, the Company’s credit quality indicator is internally assigned risk ratings. Each commercial loan is assigned a risk rating upon origination. The risk rating is reviewed every 12 months, at a minimum, and on as needed basis depending on the specific circumstances of the loan.

For residential real estate and other loans, the Company’s credit quality indicator is performance determined by delinquency status. Delinquency status is updated daily by the Company’s loan system.

Loans, by classes of loans, considered to be impaired are summarized as follows:

			Unpaid				Average
	Recorded		Principal		Related		Recorded		Income
	Investment		Balance		Allowance		Investment		Recognized
	March 31, 2015
Classes of loans:
Impaired loans with no specific allowance recorded:
Commercial:
Operating	$	290,647	$	288,577	$	-	$	313,206	$	13,121
Real estate	229,586		222,863		-		236,802		11,005
Agricultural:
Operating	11,621		11,599		-		13,490		515
Real estate	432,837		429,526		-		388,916		15,700
Residential real estate:
1-4 family	3,756,194		3,749,543		-		3,843,756		156,154
Home equity	64,576		64,445		-		66,004		3,150
Other:
Consumer	9,082		8,656		-		10,489		455

	4,794,543		4,775,209		-		4,872,663		200,100


Impaired loans with specific
allowance recorded:
Commercial:
Operating	58,182		58,101		5,810		60,738		2,287
Residential real estate:
1-4 family	71,389		66,659		33,659		69,958		349
Home equity	20,253		20,118		20,118		20,925		979

	149,824		144,878		59,587		151,621		3,615


Total impaired loans:
Commercial:
Operating	348,829		346,678		5,810		373,944		15,408
Real estate	229,586		222,863		-		236,802		11,005
Agricultural:
Operating	11,621		11,599		-		13,490		515
Real estate	432,837		429,526		-		388,916		15,700
Residential real estate:
1-4 family	3,827,583		3,816,202		33,659		3,913,714		156,503
Home equity	84,829		84,563		20,118		86,929		4,129
Other:
Consumer	9,082		8,656		-		10,489		455

	$	4,944,367	$	4,920,087	$	59,587	$	5,024,284	$	203,715

			Unpaid				Average		Interest
	Recorded		Principal		Related		Recorded		Income
	Investment		Balance		Allowance		Investment		Recognized
	June 30, 2014
Classes of loans:
Impaired loans with no specific allowance recorded:
Commercial:
Operating	$	55,800	$	54,649	$	-	$	224,952	$	5,062
Real estate	199,149		199,638		-		99,575		13,025
Residential real estate:
1-4 family	3,196,754		3,189,520		-		3,676,200		164,138
Home equity	67,339		67,308		-		69,425		4,586
Other:
Consumer	12,484		12,500		-		12,623		1,029

	3,531,526		3,523,615		-		4,082,775		187,840


Impaired loans with specific
allowance recorded:
Commercial:
Operating	541,203		538,395		270,272		431,108		23,252
Residential real estate:
1-4 family	1,011,629		1,008,328		30,617		1,062,152		59,431
Home equity	21,644		21,580		21,580		22,523		1,769

	1,574,476		1,568,303		322,469		1,515,783		84,452


Total impaired loans:
Commercial:
Operating	597,003		593,044		270,272		656,060		28,314
Real estate	199,149		199,638		-		99,575		13,025
Residential real estate:
1-4 family	4,208,383		4,197,848		30,617		4,738,352		223,569
Home equity	88,983		88,888		21,580		91,948		6,355
Other:
Consumer	12,484		12,500		-		12,623		1,029

	$	5,106,002	$	5,091,918	$	322,469	$	5,598,558	$	272,292

Impaired loans, for which no allowance has been provided as of March 31, 2015 and June 30, 2014, have adequate collateral, based on management’s current estimates.

The following summarizes the number and recorded investment of troubled debt restructurings (“TDRs”) as of:

		March 31, 2015
	Number	Recorded
	of TDRs	Investment
Concession – Extension of maturity:
Commercial:
Operating	6	$	328,741
Real estate	1	185,322
Agricultural:
Real estate	1	230,997
Residential real estate:
1-4 family	36	1,552,177
Home equity	4	64,576
Other:
Consumer	2	9,082

	50	$	2,370,895


Concession – Reduction of interest rate below market:
Residential real estate:
1-4 family	49	$	2,181,078
Home equity	1	20,253

	50	$	2,201,331


Total:
Commercial:
Operating	6	$	328,741
Real estate	1	185,322
Agricultural:
Real estate	1	230,997
Residential real estate:
1-4 family	85	3,733,255
Home equity	5	84,829
Other:
Consumer	2	9,082

	100	$	4,572,226

		June 30, 2014
	Number	Recorded
	of TDRs	Investment
Concession – Extension of maturity:
Commercial:
Operating	6	$	163,537
Real estate	1	199,149
Residential real estate:
1-4 family	35	1,811,371
Home equity	4	67,339
Other:
Consumer	3	12,484

	49	$	2,253,880


Concession – Reduction of interest rate below market:
Commercial:
Operating	1	$	356,142
Residential real estate:
1-4 family	52	2,365,351
Home equity	1	21,644

	54	$	2,743,137


Total:
Commercial:
Operating	7	$	519,679
Real estate	1	199,149
Residential real estate:
1-4 family	87	4,176,722
Home equity	5	88,983
Other:
Consumer	3	12,484

	103	$	4,997,017

The following summarizes the number and investment in TDRs, by type of concession, that were restructured:

	Number	Recorded
For the nine months ended March 31, 2015	of TDRs	Investment
Concession – Extension of maturity:
Commercial:
Operating	3	$	287,161
Agricultural:
Real Estate	1	230,997
Residential real estate:
1-4 family	1	58,701

	5	$	576,859



Total:
Commercial:
Operating	3	$	287,161
Agricultural:
Real Estate	1	230,997
Residential real estate:
1-4 family	1	58,701

	5	$	576,859



	Number	Recorded
For the nine months ended March 31, 2014	of TDRs	Investment

Concession – Extension of maturity:
Commercial:
Real Estate	1	$	200,192
Other:
Consumer	1	30,000

	2	$	230,192


Total:
Commercial:
Real Estate	1	$	200,192
Other:
Consumer	1	30,000

	2	$	230,192

	Number	Recorded
For the year ended June 30, 2014	of TDRs	Investment
Concession – Extension of maturity:
Commercial:
Real estate	1	$	199,149

	1	$	199,149



Total:
Commercial:
Real estate	1	$	199,149

	1	$	199,149