In 2015, the Company completed a merger with CMS Bancorp and its wholly owned subsidiary, CMS Bank. References to acquired loans in this note pertain only to those loans acquired as part of the merger.

The following tables present the activity in the allowance for loan losses by portfolio segment for the three and nine months ended March 31, 2020 and 2019 (in thousands):

	Three Months Ended March 31, 2020
	Beginning Allowance		Provision (credit)			Charge-offs			Recoveries		Ending Allowance
Originated:
Residential	$	352	$	102		$	-		$	3	$	457
Commercial		4,568		1,099			-			125		5,792
Construction		273		173			-			-		446
Commercial loans		953		600			-			-		1,553
Home equity lines of credit		60		23			-			2		85
Consumer and overdrafts		10		11			(9	)		1		13
Total	$	6,216	$	2,008		$	(9	)	$	131	$	8,346

	Three Months Ended March 31, 2019
	Beginning Allowance		Provision (credit)			Charge-offs			Recoveries		Ending Allowance
Originated:
Residential	$	379	$	8		$	-		$	2	$	389
Commercial		3,261		(26	)		-			-		3,235
Construction		258		(58	)		-			-		200
Commercial loans		880		69			-			2		951
Home equity lines of credit		82		(8	)		-			-		74
Consumer and overdrafts		10		6			(11	)		2		7
Acquired:
Residential		73		16			-			-		89
Total	$	4,943	$	7		$	(11	)	$	6	$	4,945

	Nine Months Ended March 31, 2020
	Beginning Allowance		Provision (credit)			Charge-offs			Recoveries		Ending Allowance
Originated:
Residential	$	363	$	86		$	-		$	8	$	457
Commercial		3,853		1,814			-			125		5,792
Construction		159		287			-			-		446
Commercial loans		1,130		573			(150	)		-		1,553
Home equity lines of credit		65		10			-			10		85
Consumer and installment loans		11		37			(42	)		7		13
Acquired:
Residential		83		(52	)		(31	)		-		-
Total	$	5,664	$	2,755		$	(223	)	$	150	$	8,346

	Nine Months Ended March 31, 2019
	Beginning Allowance		Provision (credit)			Charge-offs			Recoveries		Ending Allowance
Originated:
Residential	$	386	$	(4	)	$	-		$	7	$	389
Commercial		3,073		276			(114	)		-		3,235
Construction		505		(401	)		-			96		200
Commercial loans		780		169			-			2		951
Home equity lines of credit		80		(6	)		-			-		74
Consumer and installment loans		7		21			(27	)		6		7
Acquired:
Residential		73		16			-			-		89
Total	$	4,904	$	71		$	(141	)	$	111	$	4,945

The following tables present the balance in the allowance for loan losses and the recorded investment in loans, excluding net deferred fees and accrued interest, by portfolio segment, and based on impairment method as of March 31, 2020 and June 30, 2019 (in thousands):

	March 31, 2020
	Loans								Allowance for Loan Losses
	Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Acquired With Deteriorated Credit Quality		Total		Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Acquired With Deteriorated Credit Quality		Total
Residential	$	2,458	$	263,478	$	748	$	266,684	$	118	$	339	$	-	$	457
Commercial		-		774,501		877		775,378		-		5,792		-		5,792
Construction		-		24,929		-		24,929		-		446		-		446
Commercial loans		1,960		126,909		-		128,869		1		1,552		-		1,553
Home equity lines of credit		349		30,502		143		30,994		4		81		-		85
Consumer and overdrafts		-		444		-		444		-		13		-		13
Total	$	4,767	$	1,220,763	$	1,768	$	1,227,298	$	123	$	8,223	$	-	$	8,346

	June 30, 2019
	Loans								Allowance for Loan Losses
	Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Acquired With Deteriorated Credit Quality		Total		Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Acquired With Deteriorated Credit Quality		Total
Residential	$	1,774	$	262,124	$	1,269	$	265,167	$	130	$	233	$	83	$	446
Commercial		1,418		649,088		890		651,396		-		3,853		-		3,853
Construction		-		13,231		-		13,231		-		159		-		159
Commercial loans		2,016		131,598		-		133,614		39		1,091		-		1,130
Home equity lines of credit		689		32,359		156		33,204		4		61		-		65
Consumer and overdrafts		-		365		-		365		-		11		-		11
Total	$	5,897	$	1,088,765	$	2,315	$	1,096,977	$	173	$	5,408	$	83	$	5,664

The following tables present information related to loans individually evaluated for impairment (excluding loans acquired with deteriorated credit quality) by portfolio segment as of March 31, 2020 and June 30, 2019 (in thousands):


	March 31, 2020
	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses
With no related allowance recorded:
Residential	$	2,131	$	2,024	$	-
Commercial loans		2,105		1,934		-
Home equity lines of credit		389		338		-
With an allowance recorded:
Residential		373		434		118
Commercial loans		26		26		1
Home equity lines of credit		11		11		4
Total	$	5,035	$	4,767	$	123

	June 30, 2019
	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses
With no related allowance recorded:
Residential	$	1,061	$	1,028	$	-
Commercial		1,471		1,418		-
Commercial loans		2,007		1,836		-
Home equity lines of credit		750		678		-
With an allowance recorded:
Residential		723		746		130
Commercial loans		180		180		39
Home equity lines of credit		11		11		4
Total	$	6,203	$	5,897	$	173

The tables below present the average recorded investment and interest income recognized on loans individually evaluated for impairment, by portfolio segment, for the three and nine months ended March 31, 2020 and 2019 (in thousands):

	Three months ended					Three months ended
	March 31, 2020					March 31, 2019
	Average Recorded Investment		Interest Income Recognized			Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Residential	$	2,060	$	13		$	1,317	$	9
Commercial		485		9			1,408		11
Commercial loans		1,932		51			1,862		42
Home equity lines of credit		403		7			616		-
With an allowance recorded:
Residential		435		4			750		4
Commercial loans		38		-			39		-
Home equity lines of credit		11		(6	)		87		-
Total	$	5,364	$	78		$	6,079	$	66

	Nine Months Ended					Nine Months Ended
	March 31, 2020					March 31, 2019
	Average Recorded Investment		Interest Income Recognized			Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Residential	$	2,050	$	40		$	1,516	$	20
Commercial		946		149			1,494		37
Construction		-		-			2,131		138
Commercial loans		2,015		154			628		9
Home equity lines of credit		574		20			-		-
With an allowance recorded:
Residential		437		11			752		11
Construction		-		-			1,130		-
Commercial loans		42		1			40		1
Home equity lines of credit		11		-			88		-
Total	$	6,075	$	375		$	7,779	$	216

The following table presents the recorded investment in nonaccrual loans and in loans past due over 90 days and still on accrual status, by portfolio segment, as of March 31, 2020 and June 30, 2019 (in thousands):

					Loans Past Due Over 90 Days
	Nonaccrual				and Still Accruing
	March 31,		June 30,		March 31,		June 30,
	2020		2019		2020		2019
Originated:
Residential	$	1,242	$	536	$	-	$	-
Commercial loans		-		150		-		-
Home equity lines of credit		42		383		-		-
Consumer and overdrafts		-		-		-		1
Acquired:
Residential		222		795		-		-
Commercial		-		568		-		-
Home equity lines of credit		296		294		-		-
Total	$	1,802	$	2,726	$	-	$	1

Nonperforming loans include both smaller-balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans. The table above excludes acquired loans that are accounted for as purchased credit impaired loans totaling $404,000 and $501,000 as of March 31, 2020 and June 30, 2019, respectively. Such loans are excluded because the loans are in pools that are considered performing. The discounts arising from recording these loans at fair value upon acquisition were due in part to credit quality and the accretable yield is being recognized as interest income over the life of the loans based on expected cash flows.

The following tables present the aging of the recorded investment in past due loans by portfolio segment as of March 31, 2020 and June 30, 2019 (in thousands):

	March 31, 2020
	30-59		60-89		90 Days or
	Days Past		Days Past		More Past		Total Past
	Due		Due		Due		Due		Current		Total
Originated:
Residential	$	58	$	-	$	576	$	634	$	225,823	$	226,457
Commercial		-		-		-		-		733,781		733,781
Construction		-		-		-		-		24,929		24,929
Commercial loans		252		-		-		252		128,431		128,683
Home equity lines of credit		75		12		30		117		27,738		27,855
Consumer and overdrafts		-		-		-		-		427		427
Total originated		385		12		606		1,003		1,141,129		1,142,132
Acquired:
Residential		288		214		221		723		39,504		40,227
Commercial		-		-		-		-		41,597		41,597
Commercial loans		-		-		-		-		186		186
Home equity lines of credit		59		-		317		376		2,763		3,139
Consumer and overdrafts		-		-		-		-		17		17
Total acquired		347		214		538		1,099		84,067		85,166
Total	$	732	$	226	$	1,144	$	2,102	$	1,225,196	$	1,227,298

	June 30, 2019
	30-59		60-89		90 Days or
	Days Past		Days Past		More Past		Total Past
	Due		Due		Due		Due		Current		Total
Originated:
Residential	$	-	$	-	$	86	$	86	$	217,970	$	218,056
Commercial		-		-		-		-		600,675		600,675
Construction		-		-		-		-		13,231		13,231
Commercial loans		-		150		-		150		133,286		133,436
Home equity lines of credit		344		-		312		656		28,767		29,423
Consumer and overdrafts		-		-		1		1		348		349
Total originated		344		150		399		893		994,277		995,170
Acquired:
Residential		220		116		709		1,045		46,066		47,111
Commercial		-		-		568		568		50,153		50,721
Commercial loans		-		-		-		-		178		178
Home equity lines of credit		-		67		296		363		3,418		3,781
Consumer and overdrafts		-		-		-		-		16		16
Total acquired		220		183		1,573		1,976		99,831		101,807
Total	$	564	$	333	$	1,972	$	2,869	$	1,094,108	$	1,096,977

The terms of certain loans have been modified as troubled debt restructurings. The modification of the terms of such loans included one or a combination of the following: a reduction of the stated interest rate of the loan; an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk; or a permanent reduction of the recorded investment in the loan. All troubled debt restructurings are considered impaired loans.

As of March 31, 2020 and June 30, 2019, the Company had 16 and 14 loans, respectively, classified as troubled debt restructurings totaling $3.3 million and $4.1 million, including $3.0 million and $3.2 million, respectively, of loans still accruing interest. The Company has allocated $123,000 and $135,000, of specific reserves to customers whose loan terms have been modified in troubled debt restructurings as of March 31, 2020 and June 30, 2019, respectively. As of March 31, 2020, the Company has committed to lend an additional $25,000 to customers with outstanding loans that are classified as troubled debt restructurings.

The Company has modified one and two commercial loans in troubled debt restructurings during the three and nine months ended March 31, 2020, respectively. These loans had a carrying amount as of March 31, 2020 of $156,000. The Company modified two loans with a total carrying amount of $428,000, one residential mortgage and one home equity line of credit, in troubled debt restructurings during the nine months ended March 31, 2019. The Company did not modify any loans during the three months ended March 31, 2019.

The Company had one troubled debt restructuring, a residential mortgage with a carrying amount of $370,000 as of March 31, 2020, default in the nine months ended March 31, 2020 that was modified in the twelve months prior to default, with no such defaults occurring in the three months ended March 31, 2020. This default did not result in a charge-off nor an increase to the allowance for loan losses. The Company had no troubled debt restructurings for which there was a payment default in the three or nine months ended March 31, 2019, that were modified in the twelve months prior to default.

In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed under the Company’s internal underwriting policy.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law. Section 4013 of the CARES Act, “Temporary Relief From Troubled Debt Restructurings,” provides banks the option to temporarily suspend certain requirements under U.S. GAAP related to troubled debt restructurings (“TDR”) for a limited period of time to account for the effects of COVID-19. Additionally, on April 7, 2020, the banking agencies, including the Board of Governors of the Federal Reserve System and the Federal Deposit Insurance Corporation, issued a statement, “Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working With Customers Affected by the Coronavirus (Revised)” (“Interagency Statement”), to encourage banks to work prudently with borrowers and to describe the agencies’ interpretation of how accounting rules under ASC 310-40, “Troubled Debt Restructurings by Creditors,” apply to certain COVID-19-related modifications.

In accordance with emergency regulations promulgated by New York State Department of Financial Services, financial institutions are required to provide payment accommodations, which may include payment deferrals, to any consumer and small businesses who can demonstrate financial hardship caused by COVID-19. As of May 4, 2020, the Company has granted loan payment deferrals for 97 residential mortgage loans and home equity line of credit totaling $27.0 million, as well as deferrals for 196 commercial mortgage, commercial loan and construction loans totaling $136.4 million. In accordance with the CARES Act and Interagency Statement, these modifications are not considered troubled debt restructurings. All payment deferrals were granted subsequent to March 31, 2020.

The Company 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, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis includes non-homogeneous loans, such as commercial and commercial real estate loans. This analysis is performed on a monthly basis. The Company utilizes the same grading process for acquired loans as it does for originated loans. The Company 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 and loans in groups of homogenous loans are considered to be pass rated loans. These loans are monitored based on delinquency and performance. Based on the most recent analysis performed, the risk category of loans by portfolio segment is as follows (in thousands):

	March 31, 2020
	Pass		Special Mention		Substandard		Total
Originated:
Residential	$	224,719	$	481	$	1,257	$	226,457
Commercial		733,449		332		-		733,781
Construction		24,929		-		-		24,929
Commercial loans		123,174		3,986		1,523		128,683
Home equity lines of credit		27,382		406		67		27,855
Consumer and overdrafts		427		-		-		427
Total originated		1,134,080		5,205		2,847		1,142,132
Acquired:
Residential		39,171		201		855		40,227
Commercial		40,720		-		877		41,597
Commercial loans		186		-		-		186
Home equity lines of credit		2,700		58		381		3,139
Consumer and overdrafts		17		-		-		17
Total acquired		82,794		259		2,113		85,166
Total	$	1,216,874	$	5,464	$	4,960	$	1,227,298

	June 30, 2019
	Pass		Special Mention		Substandard		Total
Originated:
Residential	$	216,438	$	1,071	$	547	$	218,056
Commercial		600,216		339		120		600,675
Construction		13,231		-		-		13,231
Commercial loans		123,361		6,423		3,652		133,436
Home equity lines of credit		28,996		67		360		29,423
Consumer and overdrafts		349		-		-		349
Total originated		982,591		7,900		4,679		995,170
Acquired:
Residential		44,959		211		1,941		47,111
Commercial		45,726		3,537		1,458		50,721
Commercial loans		178		-		-		178
Home equity lines of credit		3,331		68		382		3,781
Consumer and overdrafts		16		-		-		16
Total acquired		94,210		3,816		3,781		101,807
Total	$	1,076,801	$	11,716	$	8,460	$	1,096,977

The Company has acquired loans for which there was, at acquisition, evidence of deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected. The carrying amount of those loans as of March 31, 2020 and June 30, 2019 is as follows (in thousands):

The allowance for loan losses on purchased credit impaired loans decreased $0 and $83,000 during the three and nine months ended March 31, 2020, respectively.

Accretable yield, or income expected to be collected, for acquired loans is as follows (in thousands):