10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

☒      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended June 30, 2020

OR

☐      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to

Commission File Number: 000-56049

TEB Bancorp, Inc.

(Exact Name of Registrant as Specified in its Charter)

Maryland	83-2040340
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

2290 North Mayfair Road, Wauwatosa, Wisconsin	53226
(Address of principal executive offices)	(Zip code)

(414) 476-6434

(Registrant’s telephone number including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
None

Securities registered pursuant to Section 12(g) of the Act: Common stock, par value $0.01 per share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ☐   No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.

Yes ☐   No ☒

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒   No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit such files). Yes ☒   No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐   No ☒

The aggregate value of the voting and non-voting common stock held by non-affiliates of the registrant, computed by reference to the closing price of the common stock of $8.50 as of December 31, 2019 (the last business day of the Registrant’s most recently completed second fiscal quarter) was $21.8 million.

As of October 1, 2020 there were 2,624,343 shares outstanding of the registrant’s common stock.

DOCUMENTS INCORPORATED BY REFERENCE

1.  Portions of the Proxy Statement for the 2020 Annual Meeting of Stockholders. (Part III)

TABLE OF CONTENTS

		PAGE
PART I		1
ITEM 1.	Business	1
ITEM 1A.	Risk Factors	34
ITEM 1B.	Unresolved Staff Comments	34
ITEM 2.	Properties	34
ITEM 3.	Legal Proceedings	35
ITEM 4.	Mine Safety Disclosures	35
PART II		35
ITEM 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	35
ITEM 6.	Selected Financial Data	36
ITEM 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	39
ITEM 7A.	Quantitative and Qualitative Disclosures About Market Risk	52
ITEM 8.	Financial Statements and Supplementary Data	52
ITEM 9.	Changes In and Disagreements With Accountants on Accounting and Financial Disclosure	52
ITEM 9A.	Controls and Procedures	52
ITEM 9B.	Other Information	53
PART III		54
ITEM 10.	Directors, Executive Officers and Corporate Governance	54
ITEM 11.	Executive Compensation	54
ITEM 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	54
ITEM 13.	Certain Relationships and Related Transactions, and Director Independence	54
ITEM 14.	Principal Accountant Fees and Services	54
PART IV		55
ITEM 15.	Exhibits and Financial Statement Schedules	55
ITEM 16.	Form 10-K Summary	55
SIGNATURES		56

PART I

ITEM 1. Business

Forward Looking Statements

This annual report contains forward-looking statements, which can be identified by the use of words such as “estimate,” “project,” “believe,” “intend,” “anticipate,” “assume,” “plan,” “seek,” “expect,” “will,” “may,” “should,” “indicate,” “would,” “contemplate,” “continue,” “potential,” “target” and words of similar meaning. These forward-looking statements include, but are not limited to:

● statements of our goals, intentions and expectations;

● statements regarding our business plans, prospects, growth and operating strategies;

● statements regarding the quality of our loan and investment portfolios; and

● estimates of our risks and future costs and benefits.

These forward-looking statements are based on current beliefs and expectations of our management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. Accordingly, you should not place undue reliance on such statements. We are under no duty to and do not take any obligation to update any forward-looking statements after the date of this annual report.

The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements:

● general economic conditions, either nationally or in our market areas, that are worse than expected;

● changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for loan losses;

● our ability to access cost-effective funding;

● fluctuations in real estate values and both residential and commercial real estate market conditions;

● demand for loans and deposits in our market area;

● our ability to implement and change our business strategies;

● competition among depository and other financial institutions;

● inflation and changes in the interest rate environment that reduce our margins and yields, our mortgage banking revenues, the fair value of financial instruments or our level of loan originations, or prepayments on loans we have made and make;

● adverse changes in the securities or secondary mortgage markets;

● changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees and capital requirements;

● changes in the quality or composition of our loan or investment portfolios;

● technological changes that may be more difficult or expensive than expected, or the failure or breaches of information technology security systems;

● the inability of third-party providers to perform as expected;

● our ability to manage market risk, credit risk and operational risk in the current economic environment;

● our ability to enter new markets successfully and capitalize on growth opportunities;

● our ability to successfully integrate into our operations any assets, liabilities, customers, systems and management personnel we may acquire and our ability to realize related revenue synergies and cost savings within expected time frames, and any goodwill charges related thereto;

● changes in consumer spending, borrowing and savings habits;

● changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board, the Securities and Exchange Commission or the Public Company Accounting Oversight Board;

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● our ability to retain key employees;

● the effects of any federal government shutdown;

● changes in the financial condition, results of operations or future prospects of issuers of securities that we own; and

● the effect of the COVID-19 pandemic on the Company’s credit quality, revenue, and business operations.

The COVID-19 pandemic has caused significant economic dislocation in the United States as many state and local governments ordered non-essential businesses to close and residents to shelter in place at home. While jurisdictions in which we operate have gradually allowed the reopening of businesses and other organizations and removed the sheltering restrictions, it is premature to assess whether doing so will result in a meaningful increase in economic activity and the impact of such actions on further COVID-19 cases. Given its ongoing and dynamic nature, it is difficult to predict the full impact of the COVID-19 outbreak on our business. The extent of such impact will depend on future developments, which are highly uncertain, including when the coronavirus can be controlled and abated. As a result of the COVID-19 pandemic and the related adverse local and national economic consequences, our forward-looking statements are subject to the following risks, uncertainties and assumptions:

● Demand for our products and services may decline;

● If the economy is unable to substantially and successfully reopen, and high levels of unemployment continue for an extended period of time, loan delinquencies, problem assets, and foreclosures may increase;

● Collateral for loans, especially real estate, may decline in value;

● Our allowance for credit losses on loans and leases may increase if borrowers experience financial difficulties;

● The net worth and liquidity of loan guarantors may decline;

● As a result of the decline in the Federal Reserve’s target federal funds rate to near 0%, the yield on our assets may decline to a greater extent than the decline in our cost of interest-bearing liabilities;

● A material decrease in net income or a net loss over several quarters could result in the elimination of or a decrease in the rate of our quarterly cash dividend;

● Our cyber security risks are increased as a result of an increase in the number of employees working remotely; and

● FDIC premiums may increase if the agency experiences additional resolution costs.

Because of these and other uncertainties, our future results may be materially different from the results indicated by these forward-looking statements.

TEB Bancorp, Inc.

TEB Bancorp, Inc., a Maryland corporation that was organized in 2018, is a bank holding company headquartered in Wauwatosa, Wisconsin. TEB Bancorp, Inc.’s common stock is traded on the OTC Pink Marketplace under the symbol “TBBA.” TEB Bancorp, Inc. conducts its operations primarily through its wholly owned subsidiary, The Equitable Bank, S.S.B., a Wisconsin-chartered savings bank (“The Equitable Bank”). TEB Bancorp, Inc. manages its operations as one unit, and thus does not have separate operating segments. At June 30, 2020, TEB Bancorp, Inc. had total assets of $305.5 million, net loans of $237.3 million, deposits of $256.1 million, and stockholders’ equity of $23.5 million.

TEB Bancorp, Inc. was formed as part of the mutual holding company reorganization of The Equitable Bank, S.S.B., which was completed in April 2019. In connection with the reorganization, TEB Bancorp, Inc. sold 1,309,547 shares of common stock to the public at $10.00 per share, representing 49.9% of its outstanding shares of common stock. TEB MHC has been organized as a mutual holding company under the laws of the State of Wisconsin and owns the remaining 50.1% of the outstanding common stock of TEB Bancorp, Inc.

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The executive offices of TEB Bancorp, Inc. are located at 2290 North Mayfair Road, Wauwatosa, Wisconsin 53226, and its telephone number is (414) 476-6434. Our website address is www.tebbancorp.com. Information on our website is not and should not be considered a part of this annual report.

TEB Bancorp, Inc. is subject to comprehensive regulation and examination by the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”).

TEB MHC

TEB MHC was formed as a Wisconsin mutual holding company and will, for as long as it is in existence, own a majority of the outstanding shares of TEB Bancorp, Inc.’s common stock.

TEB MHC’s principal assets are the common stock of TEB Bancorp, Inc. it received in the reorganization and offering and $100,000 cash in initial capitalization, which was contributed from the net proceeds of the stock offering. Presently, the only business activity of TEB MHC is owning a majority of TEB Bancorp, Inc.’s common stock. TEB MHC is authorized, however, to engage in any other business activities that are permissible for mutual holding companies under state and federal law, including investing in loans and securities.

The Equitable Bank, S.S.B.

The Equitable Bank is a Wisconsin-chartered savings bank headquartered in Wauwatosa, Wisconsin. The Equitable Bank was originally chartered in 1927 as a Wisconsin-chartered mutual building and loan association under the name The Equitable Savings Building and Loan Association. In 1990, we changed our name to “The Equitable Bank, S.S.B.” and in 1993 we converted to a Wisconsin-chartered mutual savings bank.

We conduct our business from our main office and five branch offices, which are located in Milwaukee, Racine and Waukesha Counties, Wisconsin, and a loan production office, which is located in Ozaukee County, Wisconsin. Our primary market area is broadly defined as the Milwaukee, Wisconsin metropolitan area, which is geographically located in the southeast corner of the state. Our primary market area for deposits includes the communities in which we maintain our banking office locations, while our primary lending market area is broader, and also includes Ozaukee County, where we maintain our loan production office, as well as Washington County, Wisconsin, which borders both Ozaukee County and Waukesha County.

Our business consists primarily of taking deposits from the general public and investing those deposits, together with funds generated from operations, in one- to four-family residential real estate loans (both owner occupied and non-owner occupied), multifamily residential real estate loans and commercial real estate loans, and, to a lesser extent, consumer loans (primarily home equity lines of credit), construction, land and development loans, and commercial and industrial loans. Subject to market conditions, we expect to increase our focus on originating multifamily residential real estate, owner-occupied commercial real estate and non-owner occupied one- to four-family residential real estate loans in an effort to further diversify our overall loan portfolio, increase the overall yield earned on our loans and assist in managing interest rate risk. We also invest in securities, which have historically consisted primarily of obligations of states and political subdivisions. We offer a variety of deposit accounts, including checking accounts, savings accounts and certificate of deposit accounts. We borrow funds, primarily from the Federal Home Loan Bank of Chicago, to fund our operations as necessary.

The Equitable Bank is subject to comprehensive regulation and examination by the Wisconsin Department of Financial Institutions (the “WDFI”) and the Federal Deposit Insurance Corporation.

Our executive office is located at 2290 North Mayfair Road, Wauwatosa, Wisconsin 53226, and our telephone number at this address is (414) 476-6434.

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Mutual Holding Company Ownership Structure

Public stockholders own a minority of the outstanding shares of TEB Bancorp, Inc.’s common stock. As a result, stockholders other than TEB MHC are not be able to exercise voting control over most matters put to a vote of stockholders. TEB MHC owns a majority of TEB Bancorp, Inc.’s common stock and, through its board of directors, is able to exercise voting control over most matters put to a vote of stockholders. The same directors and officers who manage The Equitable Bank also manage TEB Bancorp, Inc. and TEB MHC. The board of directors of TEB MHC must ensure that the interests of depositors of The Equitable Bank (as members of TEB MHC) are represented and considered in matters put to a vote of stockholders of TEB Bancorp, Inc. Therefore, TEB MHC may take action that the public stockholders believe to be contrary to their interests. For example, TEB MHC may exercise its voting control to defeat a stockholder nominee for election to the board of directors of TEB Bancorp, Inc.

In addition, stockholders are not able to force a merger or second-step conversion transaction without the consent of TEB MHC since such transactions also require the approval of a majority of all of the outstanding voting stock of TEB Bancorp, Inc., which can only be achieved if TEB MHC voted to approve such transactions. Some stockholders may desire a sale or merger transaction, since stockholders typically receive a premium for their shares, or a second-step conversion transaction, since, on a fully converted basis, most full stock institutions tend to trade at higher multiples than mutual holding companies. Stockholders could, however, prevent a second-step conversion or the implementation of equity incentive plans as under current regulations and policies, such matters also require the separate approval of the stockholders other than TEB MHC.

Market Area

We conduct our business from our main office and five branch offices, which are located in Milwaukee, Racine and Waukesha Counties, Wisconsin, and a loan production office, which is located in Ozaukee County, Wisconsin. Our primary market area is broadly defined as the Milwaukee, Wisconsin metropolitan area, which is geographically located in the southeast corner of the state. Our primary market area for deposits includes the communities in which we maintain our banking office locations, while our primary lending market area is broader, and also includes Ozaukee County, where we maintain our loan production office, as well as Washington County, Wisconsin, which borders both Ozaukee County and Waukesha County. The following discusses the demographics of the counties where our offices are located.

According to information from S&P Global Market Intelligence as of August 2020, from 2015 to 2020, the population decreased in Milwaukee County by 1.5%, and experienced increases in Racine, Waukesha and Ozaukee Counties of 1.1%, 2.5% and 2.9%, respectively, compared to 1.2% for Wisconsin and 3.4% for the United States as a whole. Projections indicate that through 2025, the population will remain fairly stable in Milwaukee County, with modest increases (less than 2.5%) for Racine, Waukesha and Ozaukee Counties, as well as for Wisconsin, compared to projected United States population growth of more than 3%. Trends in numbers of households in our market area, Wisconsin and the United States as a whole were consistent with trends in population, and projections for the numbers of households are also consistent with the projections for population changes.

The median household income for 2020 was $52,205, $67,125, $90,164 and $89,895 for Milwaukee, Racine, Waukesha and Ozaukee Counties, respectively, compared to $65,076 in Wisconsin and $66,010 for the United States as a whole. By 2025, the projected annual growth rates in median household income are expected to be 2.2%, 2.1%, 1.7% and 1.9% in Milwaukee, Racine, Waukesha and Ozaukee Counties, respectively, compared to 2.0% for Wisconsin and 1.9% for the United States as a whole.

Unemployment rates as of June 2020 and 2019 are set forth in the following table.

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Region	June 2020		June 2019
United States	11.1	%	3.8	%
Wisconsin	8.5	%	3.5	%
Milwaukee County	11.5	%	4.3	%
Racine County	9.3	%	4.1	%
Waukesha County	8.0	%	3.3	%
Ozaukee County	7.9	%	3.3	%

While our primary market area has a diversified local economy, for 2020, in each of Milwaukee, Racine, Waukesha and Ozaukee Counties, as well as the State of Wisconsin, the three largest employment sectors consisted of education/healthcare/social services, the service sector and manufacturing, with manufacturing being the largest employment sector in Racine County.

We believe that we have developed products and services that will meet the financial needs of our current and future customer base; however, we plan, and believe it is necessary, to expand the range of products and services that we offer to be more competitive in our market area. Our marketing strategies focus on the strength of our knowledge of local consumer and small business markets, as well as expanding relationships with current customers and reaching out to develop new, profitable business relationships.

Competition

We face competition within our market area both in making loans and attracting deposits. Our market area has a concentration of financial institutions that include large money center and regional banks, community banks and credit unions. We also face competition from savings institutions, mortgage banking firms, consumer finance companies and, with respect to deposits, from money market funds, brokerage firms, mutual funds and insurance companies. As of June 30, 2020 (the most recent date for which data is available), our market share of deposits represented 0.40% of Federal Deposit Insurance Corporation-insured deposits in Milwaukee County, ranking us 17th in market share of deposits out of 29 institutions operating in the county. In addition, as of that date, our market share of deposits represented 0.53% of Federal Deposit Insurance Corporation-insured deposits in Racine County, ranking us 14th in market share of deposits out of 14 institutions operating in the county, and our market share of deposits represented 0.14% of Federal Deposit Insurance Corporation-insured deposits in Waukesha County, ranking us 32nd in market share of deposits out of 34 institutions operating in the county.

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Loan Portfolio Composition. The following table sets forth the composition of our loan portfolio by type of loan at the dates indicated. Included with the loans described in the table below, at June 30, 2020, we had $18.7 million of loans held for sale, $3.4 million of loans in process and $184,000 of deferred loan fees.

	At June 30,												At September 30,
	2020				2019				2018				2017				2016
	Amount		Percent		Amount		Percent		Amount		Percent		Amount		Percent		Amount		Percent
	(Dollars in thousands)
Construction, land and development	$	4,598	1.93	%	$	4,319	1.65	%	$	4,845	1.83	%	$	3,455	1.31	%	$	3,215	1.25	%
One- to four-family owner occupied residential		100,506	42.11			124,846	47.80			122,599	46.21			119,847	45.40			114,722	44.50
One- to four-family non-owner occupied residential		21,213	8.89			20,969	8.03			23,837	8.98			22,837	8.65			22,517	8.73
Multifamily		76,444	32.03			73,246	28.05			71,101	26.80			60,883	23.07			58,532	22.71
Commercial real estate		23,794	9.97			26,362	10.09			29,451	11.10			42,127	15.96			43,829	17.00
Commercial and industrial		3,177	1.33			1,648	0.63			2,112	0.79			1,881	0.71			1,380	0.54
Consumer and installment (1)		8,921	3.74			9,777	3.74			11,378	4.3			12,922	4.90			13,588	5.27
		238,653	100.00	%		261,167	100.00	%		265,323	100.00	%		263,952	100.00	%		257,783	100.00	%
Less:
Allowance for losses		(1,353)				(1,294)				(1,324)				(1,879)				(4,482)
Total loans	$	237,300			$	259,873			$	263,999			$	262,073			$	253,301

(1) Includes home equity loans and lines of credit, which totaled $8.4 million at June 30, 2020.

Contractual Maturities. The following tables set forth the contractual maturities of our total loan portfolio at June 30, 2020. Demand loans, loans having no stated repayment schedule or maturity, and overdraft loans are reported as being due in one year or less. The tables present contractual maturities and do not reflect repricing or the effect of prepayments. Actual maturities may differ.

					One- to Four-
			One- to Four-		Family Non-
	Construction,		Family Owner		Owner
	Land and		Occupied		Occupied
June 30, 2020	Development		Residential		Residential		Multifamily
	(In thousands)
Amounts due in:
One year or less	$	1,461	$	—	$	1,819	$	4,304
More than one to five years		1,320		198		7,240		57,261
More than five years		1,817		100,308		12,154		14,879
Total	$	4,598	$	100,506	$	21,213	$	76,444

	Commercial		Commercial		Consumer and
June 30, 2020	Real Estate		and Industrial		Installment		Total
	(In thousands)
Amounts due in:
One year or less	$	6,108	$	1,527	$	686	$	15,905
More than one to five years		6,189		1,607		210		74,025
More than five years		11,497		43		8,025		148,723
Total	$	23,794	$	3,177	$	8,921	$	238,653

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The following table sets forth our fixed and adjustable-rate loans at June 30, 2020 that are contractually due after June 30, 2021. Our balloon loans are included as fixed-rate loans for purposes of this table.

	Due After June 30, 2021
	Fixed		Adjustable		Total
	(In thousands)
Construction, land and development	$	1,320	$	1,817	$	3,137
One- to four-family owner occupied residential		19,774		80,732		100,506
One- to four-family non-owner occupied residential		10,256		9,138		19,394
Multifamily		62,861		9,279		72,140
Commercial real estate		6,838		10,848		17,686
Commercial and industrial		1,650		—		1,650
Consumer and installment		434		7,801		8,235
Total loans	$	103,133	$	119,615	$	222,748

The following describes our most significant categories of loan types at June 30, 2020.

One- to Four-Family Real Estate Loans – Owner Occupied. At June 30, 2020, $100.5 million, or 42.1% of our total loan portfolio, consisted of owner-occupied one- to four-family residential real estate loans. We offer adjustable-rate owner-occupied residential real estate loans with maturities up to 30 years that include an initial introductory rate period of up to 10 years. Our adjustable-rate owner-occupied residential real estate loans have a competitive initial rate. After the initial fixed period (ranging between one to ten years) the rate will adjust to a predetermined margin plus the current index based on the 1 Year LIBOR. The rate adjustments are limited to 2.0% for the first change with subsequent adjustments every six months limited to 1.0%. The lifetime cap is limited to 6.0% over the initial rate.

Consistent with our strategy to increase our noninterest income while managing interest rate risk, we have historically sold substantially all of our fixed-rate owner-occupied, “conforming” (as described below) one- to four-family real estate loans, with the majority made up of 30-year fixed-rate loans. The loans are closed in our name, and are then sold to our investors who provide Fannie Mae and Freddie Mac conventional products as well as FHA and VA government loans. The loans are typically purchased and funded by the investors within 30 days of the originations. We earn interest income on the loans until they are purchased.

One- to four-family, owner-occupied residential real estate loans are generally underwritten according to Fannie Mae or Freddie Mac guidelines, and we refer to loans that conform to such guidelines as “conforming loans.” We generally originate one- to four-family owner-occupied real estate loans in amounts up to the maximum conforming loan limits as established by Fannie Mae, which is generally $510,400 for single-family homes in our market area. However, loans in excess of $510,400 (which are referred to as “jumbo loans”) may be originated and sold on a servicing released basis as well. We retain the majority of “jumbo loans” in our loan portfolio. We generally underwrite jumbo loans in accordance to our portfolio underwriting guidelines. At June 30, 2020, the average size of our one- to four-family, owner-occupied residential real estate loans originated for our portfolio was $171,000.

Generally, we originate loans with loan-to-value ratios of up to 80% but we also originate loans with loan-to-value ratios of up to 97%. Any loans we originate with loan-to-value ratios in excess of 80% require private mortgage insurance.

We do not offer “interest only” mortgage loans on permanent one- to four-family residential properties (where the borrower pays interest for an initial period, after which the loan converts to a fully amortizing loan). We do not offer loans that provide for negative amortization of principal, such as “Option ARM” loans, where the borrower can pay less than the interest owed on the loan, resulting in an increased principal balance during the life of the loan. We do not offer “subprime loans” (loans that generally target borrowers with weakened credit histories typically characterized by payment delinquencies, previous charge-offs, judgments, bankruptcies, or borrowers with questionable repayment capacity as evidenced by low credit scores or high debt-burden ratios) or Alt-A loans (traditionally defined as loans having less than full documentation).

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One- to Four-Family Real Estate Loans – Non-Owner Occupied. At June 30, 2020, $21.2 million, or 8.9% of our total loan portfolio, consisted of one- to four-family non-owner occupied real estate loans. Our real estate underwriting policies provide that such loans may be made in amounts of up to 80% of the appraised value of the property. Our one- to four-family non-owner occupied real estate loans generally have adjustable rates with 30-year terms and a fixed initial rate ranging between three to seven years. Our adjustable-rate mortgages one- to four-family non-owner occupied real estate loans have a competitive initial rate that typically resets to an applicable margin with an adjustment every six months, up to 2% over the 1 Year LIBOR Rate after the initial three-, five- or seven-year fixed period with a lifetime rate cap of 14.50%.

We generally target one- to four-family non-owner occupied loans with balances up to $250,000. At June 30, 2020, our average one- to four-family non-owner occupied real estate loan was $115,000. Virtually all of our one- to four-family non-owner occupied real estate loans are secured by properties located in our primary lending area.

When originating one- to four-family non-owner occupied real estate loans, we consider the net operating income of the property, the borrower’s expertise and credit history, the global cash flow of the borrowers and the value of the underlying property. We generally require that the properties securing these real estate loans have debt service coverage ratios (the ratio of earnings before debt service to debt service) of at least 1.00x, using 75% of estimated or actual rents against principal, interest, taxes and insurance (PITI) for one and two unit properties, and at least 1.00x using 70% of estimated or actual rents against PITI for three or four unit properties.

Generally, one- to four-family real estate loans made to business entities require the principals to execute the loan agreements in their individual capacity through personal guarantees, as well as signing on behalf of such business entity.

Once a borrower exceeds $1.0 million in loans, we require one- to four-family non-owner occupied loan borrowers to provide annually updated financial statements and federal tax returns. Additionally, these borrowers with larger exposure are subject to underwriting standards similar to multifamily loans, which include a global debt service requirement of 1.20x.

Multifamily Real Estate Loans. At June 30, 2020 multifamily real estate loans were $76.4 million, or 32.0%, of our total loan portfolio. We originate individual multifamily real estate loans to experienced, growing small- and mid-size owners and investors in our market areas. Our multifamily real estate loans are generally secured by properties consisting of five to 40 rental units within our market. However, due to the highly competitive nature and the limited inventory in our market, we have expanded beyond our market, but within the State of Wisconsin, for multifamily opportunities without compromising credit quality.

We originate balloon loans with a variety of fixed-rate periods, typically up to seven years, with amortization terms up 25 years, although we will provide amortization terms up to 30 years on an exception basis. Interest rates and payments on our balloon loans are typically determined based on our internal pricing requirements and the current competitive market. Multifamily real estate loan amounts generally do not exceed 75% of the property’s appraised value at the time the loan is originated. We require each property to meet a minimum debt service ratio of 1.20x (calculated as net operating income divided by debt service). In addition, each borrowing entity must meet a global debt service ratio of 1.20x. We require multifamily real estate borrowers with loans in excess of $500,000 to submit annual financial statements including federal tax returns (both business and personal), personal financial statement for each borrower/guarantor and an updated rent roll for each property. Properties with a loan in excess of $300,000 are subject to bi-annual inspections to verify appropriate maintenance is being performed.

Commercial Real Estate Loans. In recent years, we have sought to increase our originations of owner-occupied commercial real estate loans, and we have limited our originations of non-owner occupied commercial real estate loans. At June 30, 2020, we had $23.8 million in commercial real estate loans, representing 10.0% of our total loan portfolio, and $3.2 million in commercial and industrial loans, representing 1.3% of our total loan portfolio. Most of our commercial real estate loans are balloon loans with a three-, five- or seven-year initial term and a 25-year amortization period. The maximum loan-to-value ratio of our commercial real estate loans is generally 75%. These loans are secured by traditional commercial property types including industrial, office, retail and warehouse/storage facilities.

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We consider a number of factors in originating commercial real estate loans. We evaluate the qualifications and financial condition of the borrower, including credit history, profitability and expertise, as well as the value and condition of the property securing the loan. We require each property to meet a minimum debt service ratio of 1.20x (calculated as net operating income divided by debt service). In addition, each borrowing entity must meet a global debt service ratio of 1.20x. When evaluating the qualifications of the borrower, we consider the financial resources of the borrower, the borrower’s experience in owning or managing similar property and the borrower’s payment history with us and other financial institutions. In evaluating the property securing the loan, the factors we consider include the strength and stability of the net operating income of the mortgaged property and the ratio of the loan amount to the appraised value of the mortgaged property, along with our assessing any environmental concerns associated with the property. The significant majority of our commercial real estate loans are appraised by outside independent appraisers approved by the board of directors. Under applicable regulations, we are only required to obtain independent appraisals on commercial real estate loans in amounts greater than $500,000 for non-owner-occupied properties and $1.0 million for owner-occupied properties, and any decision not to obtain an outside, independent appraisal is made in accordance with these regulations. Personal guarantees are generally obtained from any principals of the underlying borrowing entity having a 25% or greater ownership/membership interest. We require all commercial real estate borrowers having an overall loan exposure of $500,000 or greater to provide annually updated financial statements and federal tax returns, which are used to conduct an annual review of the relationship.

Home Equity Loans and Lines of Credit. At June 30, 2020, home equity loans and lines of credit (which we categorize as consumer loans) totaled $18.1 million, with $8.7 million in outstanding balances. This total consisted of $338,000 of home equity loans and $8.4 million of home equity lines of credit. The underwriting standards utilized for home equity lines of credit include a determination of the applicant’s credit history, an assessment of the applicant’s ability to meet existing obligations and payments on the proposed loan and the value of the collateral securing the loan. Home equity lines of credit are offered with a loan-to-value ratio up to 80%. However, we offer special programs to borrowers who satisfy certain underwriting criteria (such as having an additional banking relationship) with loan-to-value ratios of up to 85%. Our home equity loans and lines of credit are generally 10-year balloon loans. Our home equity lines of credit have adjustable rates of interest which are indexed to the prime rate, as reported in The Wall Street Journal.

Loan Underwriting Risks

Commercial Real Estate and Multifamily Real Estate Loans. Loans secured by commercial and multifamily real estate generally have larger balances and involve a greater degree of risk than one- to four-family residential real estate loans. The primary concerns in commercial and multifamily real estate lending are the borrower’s creditworthiness and the feasibility and cash flow potential of the project. Payments on loans secured by income properties often depend on successful operation and management of the properties. As a result, repayment of such loans may be subject, to a greater extent than residential real estate loans, to adverse conditions in the real estate market or the economy. To monitor cash flows on income properties, we require borrowers and loan guarantors to provide annual financial statements on commercial real estate loans. In reaching a decision on whether to make a commercial or multifamily real estate loan, we consider and review a global cash flow analysis of the borrower and consider the net operating income of the property, the borrower’s expertise, credit history and profitability and the value of the underlying property. A Phase I environmental site assessment is obtained when the possibility exists that hazardous materials may have existed on the site, or the site may have been impacted by adjoining properties that handled hazardous materials.

If we foreclose on a commercial or multifamily real estate loan, the marketing and liquidation period to convert the real estate asset to cash can be lengthy with substantial holding costs. In addition, vacancies, deferred maintenance, repairs and market stigma can result in prospective buyers expecting sale price concessions to offset their real or perceived economic losses for the time it takes them to return the property to profitability. Depending on the individual circumstances, initial charge-offs and subsequent losses on commercial and multifamily real estate loans can be unpredictable and substantial.

One- to Four-Family Non-Owner Occupied Residential Real Estate Loans. One- to four-family non-owner occupied residential real estate loans are subject to some of the same risks as our commercial real estate and multifamily real estate loans, in that they depend on the borrower’s creditworthiness and the feasibility and cash flow potential of the

9

project. Such loans are also subject to similar risks with respect to foreclosures and subsequent operations of the property and resale.

Construction, Land and Development Loans. Our construction loans are based upon estimates of costs and values associated with the completed project. Underwriting is focused on the borrowers’ financial strength, credit history and demonstrated ability to produce a quality product and effectively market and manage their operations.

Construction lending involves additional risks when compared with permanent lending because funds are advanced upon the security of the project, which is of uncertain value prior to its completion. Because of the uncertainties inherent in estimating construction costs, as well as the market value of the completed project and the effects of governmental regulation of real property, it is relatively difficult to evaluate accurately the total funds required to complete a project and the related loan-to-value ratio. In addition, generally during the term of a construction loan, interest may be funded by the borrower or disbursed from an interest reserve set aside from the construction loan budget. These loans often involve the disbursement of substantial funds with repayment primarily dependent on the success of the ultimate project and the ability of the borrower to sell or lease the property or obtain permanent take-out financing, rather than the ability of the borrower or guarantor to repay principal and interest. If the appraised value of a completed project proves to be overstated, we may have inadequate security for the repayment of the loan upon completion of construction of the project and may incur a loss.

Balloon Loans. Although balloon mortgage loans may reduce to an extent our vulnerability to changes in market interest rates because they may reprice at the end of the term, subject to renegotiation of rate and terms at maturity, the ability of the borrower to renew or repay the loan and the marketability of the underlying collateral may be adversely affected if real estate values decline prior to the expiration of the term of the loan or in a rising interest rate environment.

Adjustable-Rate Loans. While we anticipate that adjustable-rate loans will better offset the adverse effects of an increase in interest rates as compared to fixed-rate loans, an increased monthly payment required of adjustable-rate loan borrowers in a rising interest rate environment could cause an increase in delinquencies and defaults. The marketability of the underlying collateral also may be adversely affected in a high interest rate environment.

Originations, Purchases and Sales of Loans

Residential lending activities are conducted by salaried and commissioned loan personnel operating at our main and branch office locations and our loan production office. Loans we originate are underwritten pursuant to our policies and procedures. Loans originated with the intent for sale are also underwritten pursuant to secondary market guidelines. Our ability to originate fixed-rate loans, adjustable-rate loans or balloon loans depends on relative customer demand for such loans, which can be affected by current and expected future levels of market interest rates. We originate residential real estate loans through our loan originators, marketing efforts, our customer base, walk-in customers and referrals from real estate brokers, builders, accountants and financial advisors.

Commercial lending activities are conducted by salaried commercial lenders operating primarily out of our main location. All loans originated by us are underwritten pursuant to our policies and procedures. Our commercial loans are typically fixed-rate balloon loans with terms between three and seven years, with loan rates dependent on current and expected future levels of market interest rates. Commercial and multifamily lending are sourced primarily through loan originator contacts, networking and marketing efforts, our customer base and referrals from real estate brokers, accountants and financial advisors.

We currently sell a significant majority of the fixed-rate one- to four-family residential real estate loans we originate on the secondary market. The loans are closed in our name, and are then sold to our investors who provide Fannie Mae and Freddie Mac conventional products as well as FHA and VA government loans. During the year ended June 30, 2020, we originated $355.3 million of one- to four-family residential real estate loans and sold $334.9 million, and during the year ended June 30, 2019, we originated $116.8 million of one- to four-family residential real estate loans and sold $105.3 million.

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Loan Approval Procedures and Authority

Pursuant to applicable law, the aggregate amount of loans that we are permitted to make to any one borrower or a group of related borrowers is generally limited to 20% of our capital. This limit may be increased to 50% of capital for loans secured by certain assets. At June 30, 2020, based on the 20% limitation, our loans-to-one-borrower limit was approximately $5.8 million. On the same date, we had three borrowers with outstanding balances in excess of this amount; such loans were originated when we had higher levels of capital, and, as such, are deemed to comply with our loans-to-one-borrower limit. At June 30, 2020, our largest loan relationship with one borrower was for $7.8 million, which was secured by a mix of commercial real estate retail and office buildings, with the underlying loans performing in accordance with their original terms on that date.

Our lending is subject to written underwriting standards and origination procedures. Decisions on loan applications are made on the basis of detailed applications submitted by the prospective borrower, credit histories that we obtain, and property valuations (consistent with our appraisal policy) prepared by outside independent licensed appraisers approved by our board of directors as well as internal evaluations, where permitted by regulations. The loan applications are designed primarily to determine the borrower’s ability to repay the requested loan, and the more significant items on the application are verified through use of credit reports, bank statements and tax returns.

All loan approval amounts are based on the aggregate loans, including total balances of outstanding loans and the proposed loan to the individual borrower and any related entity. Subject to our underwriting procedures, each of our Chairman of the Board, Vice Chairman and our President and Chief Executive Officer has individual authorization to approve certain residential loans up to $1.0 million, or aggregate exposure up to $2.0 million. Any residential loan above $2.0 million, and any commercial loan up to $2.0 million, requires Loan Committee approval. Our Loan Committee consists of our Chairman of the Board, our Vice Chairman, our President and Chief Executive Officer, our Chief Credit Officer and our Vice President of Loan Operations. Commercial loans above $2.0 million require board approval and any commercial borrowing relationship exceeding $3.0 million requires board approval for all subsequent loans.

Delinquencies and Asset Quality

Delinquency Procedures. Our loss recovery process for delinquent loans does not provide a set formula for all borrowers; rather, we tailor our recovery efforts based on the borrower’s credit history with The Equitable Bank, their other account relationships with The Equitable Bank, their current employment situation and other individual circumstances. Our loan recovery specialists contact delinquent borrowers through telephone calls and/or mailing notices, typically beginning when a loan payment becomes 17 days past due. We may request receivership for delinquent loans that are 120 or more days past due, or we can initiate foreclosure procedures at that time if approved by our Chairman of the Board or President and Chief Executive Officer. Alternatively, we may determine that it is in the best interests of The Equitable Bank to work further with the borrower to arrange a workout plan.

Loans Past Due and Non-Performing Assets. Loans are reviewed on a regular basis. Management determines that a loan is impaired or non-performing when it is probable at least a portion of the loan will not be collected in accordance with the original terms due to a deterioration in the financial condition of the borrower or the value of the underlying collateral if the loan is collateral dependent. When a loan is determined to be impaired, the measurement of the loan in the allowance for loan losses is based on present value of expected future cash flows, except that all collateral-dependent loans are measured for impairment based on the fair value of the collateral. Non-accrual loans are loans for which collectability is questionable and, therefore, interest on such loans will no longer be recognized on an accrual basis. All loans that become 90 days or more delinquent are placed on non-accrual status unless the loan is well secured and in the process of collection. When loans are placed on non-accrual status, unpaid accrued interest is fully reversed, and further income is recognized only to the extent received on a cash basis or cost recovery method.

When we acquire real estate as a result of foreclosure, the real estate is classified as real estate owned. Initially, the real estate owned is recorded at the fair value less costs to sell. Then after foreclosure, each foreclosed real estate parcel is carried at the lower of carrying amount or fair value, less estimated costs to sell. Soon after acquisition, we order a new appraisal to determine the current market value of the property. Any excess of the recorded value of the loan satisfied over the market value of the property is charged against the allowance for loan losses, or, if the existing allowance is

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inadequate, charged to expense of the current period. After acquisition, all costs incurred in maintaining the property are expensed. Costs relating to the development and improvement of the property, however, are capitalized to the extent of estimated fair value less estimated costs to sell.

A loan is classified as a troubled debt restructuring if, for economic or legal reasons related to the borrower’s financial difficulties, we grant a concession to the borrower that we would not otherwise consider. This usually includes a modification of loan terms, such as a reduction of the interest rate to below market terms, capitalizing past due interest or extending the maturity date and possibly a partial forgiveness of the principal amount due. Interest income on restructured loans is accrued after the borrower demonstrates the ability to pay under the restructured terms through a sustained period of repayment performance, which is generally six consecutive months.

Delinquent Loans. The following tables set forth our loan delinquencies, including non-accrual loans, by type and amount at the dates indicated.

	At June 30,
	2020						2019						2018
	30-59		60-89		90 Days		30-59		60-89		90 Days		30-59		60-89		90 Days
	Days		Days		or More		Days		Days		or More		Days		Days		or More
	Past Due		Past Due		Past Due		Past Due		Past Due		Past Due		Past Due		Past Due		Past Due
	(In thousands)
Construction, land and development	$	69	$	—	$	—	$	—	$	—	$	—	$	75	$	—	$	87
One- to four-family owner occupied residential		1,275		114		966		2,129		450		1,203		2,075		—		924
One- to four-family non-owner occupied residential		—		—		57		104		—		—		—		—		95
Multifamily		—		—		—		—		—		—		—		—		—
Commercial real estate		—		—		189		—		—		194		—		—		199
Commercial and industrial		—		—		—		—		—		—		—		—		—
Consumer and installment		64		—		129		72		25		128		91		—		139
Total	$	1,408	$	114	$	1,341	$	2,305	$	475	$	1,525	$	2,241	$	—	$	1,444

	At September 30,
	2017						2016
	30-59		60-89		90 Days		30-59		60-89		90 Days
	Days		Days		or More		Days		Days		or More
	Past Due		Past Due		Past Due		Past Due		Past Due		Past Due
	(In thousands)
Construction, land and development	$	116	$	—	$	—	$	119	$	—	$	—
One- to four-family owner occupied residential		1,346		38		1,225		1,948		223		1,208
One- to four-family non-owner occupied residential		—		—		95		—		21		129
Multifamily		—		—		—		—		—		—
Commercial real estate		158		—		203		168		—		6,461
Commercial and industrial		—		—		—		—		—		—
Consumer and installment		34		—		242		87		15		—
Total	$	1,654	$	38	$	1,765	$	2,322	$	259	$	7,798

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Non-Performing Assets. The following table sets forth information regarding our non-performing assets. Non-accrual loans include non-accruing troubled debt restructurings of $0, $0, $0, $0, $6.4 million, and $147,000 as of June 30, 2020, 2019 and 2018, September 30, 2017, and 2016, respectively. Troubled debt restructurings include loans for which either a portion of interest or principal has been forgiven, or loans modified at interest rates materially less than current market rates.

	At June 30,									At September 30,
	2020			2019			2018			2017			2016
	(Dollars in thousands)
Non-accrual loans:
Construction, land and development	$	—		$	—		$	87		$	—		$	—
One- to four-family owner occupied residential		966			1,203			924			1,225			1,208
One- to four-family non-owner occupied residential		57			—			95			95			129
Multifamily		—			—			—			—			—
Commercial real estate		189			194			199			203			6,461
Commercial and industrial		—			—			—			—			—
Consumer and installment		129			128			139			242			—
Total non-accrual loans		1,341			1,525			1,444			1,765			7,798
Accruing loans past due 90 days or more		—			—			—			—			—
Real estate owned:
Construction, land and development		434			909			1,114			1,278			1,753
One- to four-family owner occupied residential		—			384			88			136			243
One- to four-family non-owner occupied residential		—			—			—			—			—
Multifamily		—			—			—			—			—
Commercial real estate		1,854			2,787			2,741			2,957			—
Commercial and industrial		—			—			—			—			—
Consumer and installment		—			—			14			—			—
Total real estate owned		2,288			4,080			3,957			4,371			1,996
Total non-performing assets	$	3,629		$	5,605		$	5,401		$	6,136		$	9,794
Total accruing troubled debt restructured loans	$	196		$	—		$	—		$	1,408		$	2,592
Total non-performing loans to total loans		0.56	%		0.58	%		0.54	%		0.67	%		3.03	%
Total non-performing assets to total assets		1.19	%		1.80	%		1.72	%		1.99	%		3.22	%

Interest income that would have been recorded for the fiscal year ended June 30, 2020 had non-accruing loans been current according to their original terms amounted to $50,000. We recognized $21,000 of interest income for these loans for the fiscal year ended June 30, 2020. In addition, interest income that would have been recorded for the fiscal year ended June 30, 2020 had accruing troubled debt restructurings been current according to their original terms, amounted to $0. We recognized no interest income for these loans for the fiscal year ended June 30, 2020.

Classified Assets. Federal regulations provide for the classification of loans and other assets, such as debt and equity securities considered to be of lesser quality, as “substandard,” “doubtful” or “loss.” An asset is considered “substandard” if it is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. “Substandard” assets include those characterized by the “distinct possibility” that the insured institution will sustain “some loss” if the deficiencies are not corrected. Assets classified as “doubtful” have all of the weaknesses inherent in

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those classified “substandard,” with the added characteristic that the weaknesses present make “collection or liquidation in full,” on the basis of currently existing facts, conditions, and values, “highly questionable and improbable.” Assets classified as “loss” are those considered “uncollectible” and of such little value that their continuance as assets without the establishment of a specific loss allowance is not warranted. Assets which do not currently expose the insured institution to sufficient risk to warrant classification in one of the aforementioned categories but possess weaknesses are designated as “special mention” by our management.

When an insured institution classifies problem assets as either substandard or doubtful, it may establish general allowances in an amount deemed prudent by management to cover probable accrued losses. General allowances represent loss allowances which have been established to cover probable accrued losses associated with lending activities, but which, unlike specific allowances, have not been allocated to particular problem assets. When an insured institution classifies problem assets as “loss,” it is required either to establish a specific allowance for losses equal to 100% of that portion of the asset so classified or to charge-off such amount. An institution’s determination as to the classification of its assets and the amount of its valuation allowances is subject to review by the regulatory authorities, which may require the establishment of additional general or specific loss allowances.

On the basis of our review of our assets, our classified and special mention assets at the dates indicated were as follows:

	At June 30,
	2020		2019
	(In thousands)
Substandard assets - not accruing	$	3,440	$	5,369
Doubtful assets		—		—
Loss assets		116		76
Total classified assets	$	3,629	$	5,605
Special mention assets	$	8,119	$	8,120

During the year ended June 30, 2020, classified assets improved by $2.0 million year over year. Activities having the largest impact on the balances include $989,000 in charge-offs on OREO properties, net proceeds from OREO sales of $1.1 million, and two residential loan upgrades to pass from classified totaling $345,000. In addition, we classified $456,000 in assets consisting of six residential real estate loans.

Allowance for Loan Losses

The allowance for loan losses is maintained at a level which, in management’s judgment, is adequate to absorb probable credit losses inherent in the loan portfolio. The amount of the allowance is based on management’s evaluation of the collectability of the loan portfolio, including the nature of the portfolio, credit concentrations, trends in historical loss experience, specific impaired loans, and economic conditions, including the impact of COVID-19. Allowances for impaired loans are generally determined based on collateral values or the present value of estimated cash flows. Because of uncertainties associated with regional economic conditions, collateral values, and future cash flows on impaired loans, it is reasonably possible that management’s estimate of probable credit losses inherent in the loan portfolio and the related allowance may change materially in the near-term. The allowance is increased by a provision for loan losses, which is charged to expense and reduced by full and partial charge-offs, net of recoveries. Changes in the allowance relating to impaired loans are charged or credited to the provision for loan losses. Management’s periodic evaluation of the adequacy of the allowance is based on various factors, including, but not limited to, management’s ongoing review and grading of loans, facts and issues related to specific loans, historical loan loss and delinquency experience, trends in past due and non-accrual loans, existing risk characteristics of specific loans or loan pools, changes in the nature, volume and terms of loans, the fair value of underlying collateral, changes in lending personnel, current economic conditions and other qualitative and quantitative factors which could affect potential credit losses.

In addition, the WDFI and the Federal Deposit Insurance Corporation periodically review our allowance for loan losses and as a result of such reviews, we may have to adjust our allowance for loan losses or recognize further loan charge-offs.

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The following table sets forth activity in our allowance for loan losses for the periods indicated.

	At or for the						At or for the						At or for the
	Years Ended						Nine Months Ended						Years Ended
	June 30,						June 30,						September 30,
	2020			2019			2018			2017			2017			2016
	(Dollars in thousands)
Allowance at beginning of period	$	1,294		$	1,324		$	1,879		$	4,482		$	4,482		$	2,586
Provision for loan losses		135			—			425			—			—			2,125
Charge offs:
Construction, land and development		—			—			—			—			—			65
One- to four-family owner occupied residential		58			—			54			8			14			90
One- to four-family non-owner occupied residential		—			44			—			18			18			5
Multifamily		—			—			—			—			—			—
Commercial real estate		—			—			980			2,610			2,639			—
Commercial and industrial		—			—			—			—			—			99
Consumer and installment		45			16			1			2			4			155
Total charge-offs		103			60			1,035			2,638			2,675			414
Recoveries:
Construction, land and development		—			—			30			9			12			90
One- to four-family owner occupied residential		5			29			18			27			34			79
One- to four-family non-owner occupied residential		—			—			1			9			9			4
Multifamily		—			—			—			1			1			—
Commercial real estate		—			—			4			8			11			—
Commercial and industrial		—			—			—			—			—			4
Consumer and installment		22			1			2			4			5			8
Total recoveries		27			30			55			58			72			185
Net (charge-offs) recoveries		(76)			(30)			(980)			(2,580)			(2,603)			(229)
Allowance at end of period	$	1,353		$	1,294		$	1,324		$	1,902		$	1,879		$	4,482
Allowance to non-performing loans		100.91	%		84.86	%		91.68	%		130.32	%		106.47	%		57.47	%
Allowance to total loans outstanding at the end of the period		0.57	%		0.50	%		0.50	%		0.73	%		0.71	%		1.74	%
Net (charge-offs) recoveries to average loans outstanding during the period		(0.03)	%		(0.01)	%		(0.51)	%(1)		(1.32)	% (1)		(1.00)	%		(0.09)	%

(1) Annualized.

Allocation of Allowance for Loan Losses. The following tables set forth the allowance for loan losses allocated by loan category and the percent of the allowance in each category to the total allocated allowance at the dates indicated. The allowance for loan losses allocated to each category is not necessarily indicative of future losses in any particular category and does not restrict the use of the allowance to absorb losses in other categories.

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	At June 30,
	2020						2019						2018
			Percent of		Percent of				Percent of		Percent of				Percent of		Percent of
			Allowance		Loans in				Allowance		Loans in				Allowance		Loans in
			in Category		Each				in Category		Each				in Category		Each
	Allowance		to Total		Category to		Allowance		to Total		Category to		Allowance		to Total		Category to
	for Loan		Allocated		Total		for Loan		Allocated		Total		for Loan		Allocated		Total
	Losses		Allowance		Loans		Losses		Allowance		Loans		Losses		Allowance		Loans
	(Dollars in thousands)
Construction, land and development	$	14	1.13	%	1.93	%	$	4	0.40	%	1.65	%	$	5	0.38	%	1.82	%
One- to four-family owner occupied residential		356	28.74		42.11			68	6.27		47.80			7	0.54		46.21
One- to four-family non-owner occupied residential		77	6.21		8.89			27	2.47		8.03			71	5.42		8.98
Multifamily		287	23.16		32.03			110	10.19		28.05			71	5.42		26.80
Commercial real estate		400	32.28		9.97			796	73.86		10.10			953	72.78		11.10
Commercial and industrial		8	0.65		1.33			3	0.31		0.63			104	7.95		0.80
Consumer and installment		97	7.83		3.74			70	6.50		3.74			98	7.49		4.29
Total allocated allowance		1,239	100.00	%	100.00	%		1,078	100.00	%	100.00	%		1,309	100.00	%	100.00	%
Unallocated		114						216						15
Total	$	1,353					$	1,294					$	1,324

	At September 30,
	2017						2016
			Percent of						Percent of
			Allowance		Percent of				Allowance		Percent of
			in Category		Loans in				in Category		Loans in
	Allowance		to Total		Each		Allowance		to Total		Each
	for Loan		Allocated		Category to		for Loan		Allocated		Category to
	Losses		Allowance		Total Loans		Losses		Allowance		Total Loans
Construction, land and development	$	84	5.81	%	1.31	%	$	93	2.10	%	1.25	%
One- to four-family owner occupied residential		54	3.71		45.40			228	5.17		44.50
One- to four-family non-owner occupied residential		121	8.39		8.65			399	9.03		8.73
Multifamily		61	4.21		23.07			74	1.67		22.71
Commercial real estate		885	61.25		15.96			3,431	77.63		17.00
Commercial and industrial		76	5.26		0.71			56	1.27		0.54
Consumer and installment		164	11.37		4.90			139	3.13		5.27
Total allocated allowance		1,445	100.00	%	100.00	%		4,420	100.00	%	100.00	%
Unallocated		434						62
Total	$	1,879					$	4,482

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Investment Activities

General. The goals of our investment policies are to provide liquidity, manage interest-rate risk, maximize our rate of return and manage asset quality diversification. Subject to loan demand and our interest rate risk analysis, we will increase the balance of our investment securities portfolio when we have excess liquidity.

All of our investment securities are held by Equitable Investment Corp., a Nevada corporation that is a wholly-owned subsidiary of The Equitable Bank. Like many Wisconsin financial institutions, we established a Nevada subsidiary to hold our investment securities due to favorable state tax treatment. Although the favorable tax treatment is no longer applicable, we maintain the structure because of the expertise provided by the investment manager. Equitable Investment Corp.’s investment policy was adopted by its board of directors (consisting primarily of executive officers of The Equitable Bank) and is reviewed annually by its board of directors. Equitable Investment Corp.’s current investment policy permits, with certain limitations, investments in: U.S. Treasury obligations; securities issued by U.S. government agencies or government sponsored enterprises including mortgage-backed securities and collateralized mortgage obligations issued by Fannie Mae, Ginnie Mae and Freddie Mac; state and municipal obligations and bonds; money market funds and certificates of deposit; and corporate debt and securities.

Because Equitable Investment Corp. is our wholly owned subsidiary, we have incorporated Equitable Investment Corp.’s investment policy into our policies, and we have adopted general guidelines with respect to the types of investments that can be made by Equitable Investment Corp., including targeted guidelines on amounts of municipal investments, agency securities, collateralized mortgage obligations and corporate debt.

At June 30, 2020, our investment portfolio consisted primarily of obligations issued by states and political subdivisions, and Federal Home Loan Bank of Chicago stock. At June 30, 2020, we owned $1.3 million of Federal Home Loan Bank of Chicago stock. As a member of Federal Home Loan Bank of Chicago, we are required to purchase stock in the Federal Home Loan Bank of Chicago, which stock is carried at cost and classified as restricted equity securities.

The following table sets forth the amortized cost and estimated fair value of our available for sale securities portfolio at the dates indicated. At the dates indicated, we did not hold any securities as held to maturity.

	At June 30,
	2020				2019				2018
			Estimated				Estimated				Estimated
	Amortized		Fair		Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value		Cost		Value
	(In thousands)
Obligations of states and political subdivisions	$	17,563	$	18,005	$	18,720	$	18,878	$	19,847	$	19,426
Mortgage-backed securities		1,372		1,444		1,065		1,106		1,162		1,158
Certificates of deposit		800		849		555		558		330		322
Total	$	19,735	$	20,298	$	20,340	$	20,542	$	21,339	$	20,906

As of June 30, 2020, we had no securities of issuers that exceeded 10% of our total equity as of that date.

Portfolio Maturities and Yields. The composition and maturities of the investment securities portfolio at June 30, 2020, are summarized in the following table. Maturities are based on the final contractual payment dates, and do not reflect the effect of scheduled principal repayments, prepayments, or early redemptions that may occur. All of our securities at June 30, 2020, were taxable securities.

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					More than One Year				More than Five Years
	One Year or Less				through Five Years				through Ten Years				More than Ten Years				Total
			Weighted				Weighted				Weighted				Weighted						Weighted
	Amortized		Average		Amortized		Average		Amortized		Average		Amortized		Average		Amortized		Fair		Average
	Cost		Yield		Cost		Yield		Cost		Yield		Cost		Yield		Cost		Value		Yield
	(Dollars in thousands)
U.S. Government sponsored enterprises	$	871	3.41	%	$	9,919	3.11	%	$	4,833	3.11	%	$	1,940	2.81	%	$	17,563	$	18,005	3.09	%
Mortgage-backed securities		—				—				1,372	3.35	%		—				1,372		1,444	3.35	%
Certificates of deposit		—				800	2.49	%		—				—				800		849	2.49	%
Total	$	871	3.41	%	$	10,719	3.06	%	$	6,205	3.16	%	$	1,940	2.81	%	$	19,735	$	20,298	3.08	%

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Sources of Funds

General. Deposits have traditionally been our primary source of funds for use in lending and investment activities. We also use borrowings to supplement cash flow needs, lengthen the maturities of liabilities for interest rate risk purposes and to manage the cost of funds, and have increased our use of borrowings in recent periods. In addition, we receive funds from scheduled loan payments, investment maturities, loan prepayments, retained earnings and income on earning assets. While scheduled loan payments and income on earning assets are relatively stable sources of funds, deposit inflows and outflows can vary widely and are influenced by prevailing interest rates, market conditions and levels of competition.

Deposits. Our deposits are generated primarily from our primary market area. We offer a selection of deposit accounts, including savings accounts, checking accounts, certificates of deposit and individual retirement accounts. Deposit account terms vary, with the principal differences being the minimum balance required, the amount of time the funds must remain on deposit and the interest rate. Interest rates paid, maturity terms, service fees and withdrawal penalties are established on a periodic basis. Deposit rates and terms are based primarily on current operating strategies and market rates, liquidity requirements, rates paid by competitors and growth goals.

We rely upon personalized customer service, long-standing relationships with customers, a thorough and user-friendly internet website, and the favorable image of The Equitable Bank in the community to attract and retain deposits. We also seek to obtain deposits from our commercial loan customers.

The flow of deposits is influenced significantly by general economic conditions, changes in money market and other prevailing interest rates and competition. The ability to attract and maintain deposits and the rates paid on these deposits, has been and will continue to be significantly affected by market conditions.

The following table sets forth the distribution of total deposits by account type at the dates indicated.

	At June 30,
	2020						2019						2018
					Average						Average						Average
	Amount		Percent		Rate		Amount		Percent		Rate		Amount		Percent		Rate
	(Dollars in thousands)
Non-interest bearing accounts	$	39,235	15.32	%	—	%	$	28,914	12.33	%	—	%	$	16,125	6.60	%	—	%
Interest-bearing demand		54,393	21.24		0.06	%		48,500	20.67		0.04	%		48,403	19.80		0.06	%
Interest-bearing savings and NOW accounts		75,398	29.45		0.08	%		70,386	30.01		0.08	%		81,998	33.54		0.09	%
Certificates of deposit		87,046	33.99		1.84	%		86,761	36.99		1.80	%		97,937	40.06		1.26	%
Total	$	256,072	100.00	%	0.83	%	$	234,561	100.00	%	0.70	%	$	244,463	100.00	%	0.54	%

As of June 30, 2020, the aggregate amount of all our certificates of deposit in amounts greater than or equal to $250,000 was $9.4 million. The following table sets forth the maturity of these certificates as of June 30, 2020.

	At
	June 30, 2020
	(In thousands)
Maturity Period:
Three months or less	$	2,263
Over three through six months		1,292
Over six through twelve months		719
Over twelve months		5,104
Total	$	9,378

Borrowings. As of June 30, 2020, we had a master contract agreement with the Federal Home Loan Bank of Chicago pursuant to which we could borrow $130.8 million. At June 30, 2020, we had Federal Home Loan Bank of Chicago

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advances totaling $9.0 million. In addition, we have a $5.0 million line of credit with U.S. Bank. No amount was outstanding on this line of credit at June 30, 2020.

The following table sets forth information concerning balances and interest rates on borrowings at the dates and for the periods indicated.

	At or For the						At or For the
	Year Ended						Nine Months
	June 30,						Ended June 30,
	2020			2019			2018			2017
	(Dollars in thousands)
Balance outstanding at end of period	$	9,000		$	44,200		$	46,000		$	6,500
Weighted average interest rate at the end of period		0.34	%		2.49	%		1.92	%		1.20	%
Maximum amount of borrowings outstanding at any month end during the period	$	36,000		$	61,700		$	46,000		$	6,500
Average balance outstanding during the period	$	23,300		$	46,756		$	29,758		$	1,678
Weighted average interest rate during the period		1.71	%		2.47	%		1.59	%		0.89	%

Subsidiary Activities

The Equitable Bank currently has two active subsidiaries. Equitable Investment Corp. is a Nevada corporation that holds all of the investment securities of The Equitable Bank. Equity Credit Corp. is a corporation that holds an asset of bank-owned real estate that had been taken into ownership by The Equitable Bank in February of 2010.

Personnel

As of June 30, 2020, we had 89 full-time employees and 27 part-time employees. Our employees are not represented by any collective bargaining group. Management believes that we have good working relations with our employees.

TAXATION

The Equitable Bank, TEB MHC and TEB Bancorp, Inc. are subject to federal and state income taxation in the same general manner as other corporations, with some exceptions discussed below. The following discussion of federal and state taxation is intended only to summarize material income tax matters and is not a comprehensive description of the tax rules applicable to TEB MHC, TEB Bancorp, Inc. and The Equitable Bank.

Our federal and state tax returns have not been audited for the past five years.

Federal Taxation

Method of Accounting. For federal income tax purposes, The Equitable Bank currently reports its income and expenses on the accrual method of accounting and uses a tax year ending September 30 for filing its federal income tax returns. TEB Bancorp, Inc. and The Equitable Bank file a consolidated federal income tax return. The Small Business Protection Act of 1996 eliminated the use of the mutual savings bank bad debt reserve method of calculating the tax return bad debt deduction. For taxable years beginning after 1995, The Equitable Bank has been subject to the same bad debt reserve rules as commercial banks. It currently utilizes the specific charge-off method under Section 582(a) of the Internal Revenue Code.

Minimum Tax. For tax years beginning before 2018, the Internal Revenue Code imposed an alternative minimum tax (“AMT”) at a rate of 20% on a base of regular taxable income plus certain tax preferences, less an exemption amount, referred to as “alternative minimum taxable income.” The alternative minimum tax is payable to the extent tax computed this way exceeds tax computed by applying the regular tax rates to regular taxable income. Net operating losses can, in general, offset no more than 90% of alternative minimum taxable income. Prior payments of alternative minimum tax create AMT credits that may be used to offset as credits against regular tax liabilities in future years. In addition, these

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AMT credits are refundable for any taxable year beginning after 2017 and before 2021 in an amount equal to 50% (100% in the case of taxable years beginning in 2021) of the excess of the minimum tax credit for the taxable year over the amount of the credit allowable for the year against regular tax liability. As of June 30, 2020, The Equitable Bank has $31,000 of minimum tax credit carryforward to utilize in the future. The credit is not subject to expiration.

Net Operating Loss Carryovers. For losses originated in taxable years beginning before 2018, a financial institution may generally carry back federal net operating losses to the preceding two taxable years and forward to the succeeding 20 taxable years. At June 30, 2020, The Equitable Bank had approximately $31.5 million of federal net operating loss carryforwards.

Capital Loss Carryovers. A corporation cannot recognize capital losses in excess of capital gains generated. Generally, a financial institution may carry back capital losses to the preceding three taxable years and forward to the succeeding five taxable years. Any capital loss carryback or carryover is treated as a short-term capital loss for the year to which it is carried. As such, it is grouped with any other capital losses for the year to which it is carried and is used to offset any capital gains. Any unutilized loss carryforward remaining after the five-year carryover period is not deductible. At June 30, 2020, The Equitable Bank had no capital loss carryovers.

Corporate Dividends. TEB Bancorp, Inc. may generally exclude from its income 100% of dividends received from The Equitable Bank as a member of the same affiliated group of corporations.

State Taxation

As a Maryland business corporation, TEB Bancorp, Inc. is required to file an annual report with and pay franchise taxes to the state of Maryland.

TEB MHC and TEB Bancorp, Inc. are subject to the Wisconsin corporate franchise (income) tax. The State of Wisconsin imposes a corporate franchise tax of 7.9% on the combined taxable income of the members of a consolidated income tax group.

In general, Wisconsin net business losses may be carried forward to the succeeding 20 taxable years. However, losses originated in taxable years beginning before 2009 may be carried forward to tax years beginning before 2032. At June 30, 2020, The Equitable Bank had approximately $47.5 million of Wisconsin net business loss carryforwards.

SUPERVISION AND REGULATION

General

As a state savings bank, The Equitable Bank is subject to examination, supervision and regulation, primarily by the WDFI and by the Federal Deposit Insurance Corporation. The state and federal systems of regulation and supervision establish a comprehensive framework of activities in which The Equitable Bank may engage and is intended primarily for the protection of depositors and the Federal Deposit Insurance Corporation’s Deposit Insurance Fund, and not for the protection of security holders.

The Equitable Bank is also regulated to a lesser extent by the Board of Governors of the Federal Reserve System, or the “Federal Reserve Board,” which governs the reserves to be maintained against deposits and other matters. In addition, The Equitable Bank is a member of and owns stock in the Federal Home Loan Bank of Chicago, which is one of the 11 regional banks in the Federal Home Loan Bank System.

As a bank holding company, TEB Bancorp, Inc. is subject to examination and supervision by, and be required to file certain reports with, the Federal Reserve Board. TEB Bancorp, Inc. is also subject to the rules and regulations of the Securities and Exchange Commission under the federal securities laws, and certain state securities laws.

Set forth below are certain material regulatory requirements that are applicable to The Equitable Bank and TEB Bancorp, Inc. This description of statutes and regulations is not intended to be a complete description of such statutes

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and regulations and their effects on The Equitable Bank and TEB Bancorp, Inc. Any change in these laws or regulations, whether by Congress or the applicable regulatory agencies, could have a material adverse impact on TEB Bancorp, Inc., The Equitable Bank and their operations.

Consent Order

In 2010, we entered into a Consent Order with the WDFI and the Federal Deposit Insurance Corporation, which was subsequently amended in 2012. The amended Consent Order was aimed at strengthening our management and enhancing board participation, increasing our regulatory capital and improving asset quality and our budget process. Among other things, the amended Consent Order required us to achieve, within 90 days of February 15, 2012, minimum capital ratios of (1) Tier 1 capital as a percentage of total assets (which is currently considered Tier 1 leverage capital as a percentage of total average assets under existing capital regulations) of 8.00% and (2) total capital as a percentage of risk-weighted assets (which is currently total risk-based capital as a percentage of risk-weighted assets under existing capital regulations) of 12.00%.

The amended Consent Order was terminated by the WDFI and the Federal Deposit Insurance Corporation on June 19, 2019.

Troubled Condition Status

The Equitable Bank was previously designated as being in “Troubled Condition” under the rules and regulations of the Federal Deposit Insurance Corporation. As a result of this designation, we were required to notify the Federal Deposit Insurance Corporation at least 30 days prior to the addition or replacement of a board member, or the employment or change in responsibilities of anyone who is, who will become, or performs the duties of a senior executive officer. Furthermore, we were required to file an application with, and receive the consent of, the Federal Deposit Insurance Corporation, prior to our entering into any agreement to pay and prior to making certain severance payments to our directors, officers and employees.

Other Events

On June 14, 2019, The Equitable Bank entered into a written agreement with the WDFI and the FDIC. On August 4, 2020, the written agreement with WDFI and the FDIC was terminated.

At June 30, 2020, our Tier 1 leverage capital as a percentage of total average assets was 9.30% and our total risk-based capital as a percentage of risk-weighted assets was 15.02%.

The Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”)

The CARES Act, which became law on March 27, 2020, provided over $2 trillion to combat the coronavirus (“COVID-19”) and stimulate the economy. The law had several provisions relevant to financial institutions, including:

● Allowing institutions not to characterize loan modifications relating to the COVID-19 pandemic as a troubled debt restructuring and also allowing them to suspend the corresponding impairment determination for accounting purposes.

● Temporarily reducing the Community Bank Leverage Ratio (the “CBLR”) to 8%. This law also states that if a qualifying community bank falls below the CBLR, it “shall have a reasonable grace period to satisfy” the CBLR. This provision terminates on the earlier of December 31, 2020 or the date the President declares that the coronavirus emergency is terminated.

● The ability of a borrower of a federally backed mortgage loan (VA, FHA, USDA, Freddie and Fannie) experiencing financial hardship due, directly or indirectly, to the COVID-19 pandemic to request forbearance from paying their mortgage by submitting a request to the borrower’s servicer affirming their financial hardship during the COVID-19 emergency. Such a forbearance will be granted for up to 180 days, which can be

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extended for an additional 180-day period upon the request of the borrower. During that time, no fees, penalties or interest beyond the amounts scheduled or calculated as if the borrower made all contractual payments on time and in full under the mortgage contract will accrue on the borrower’s account. Except for vacant or abandoned property, the servicer of a federally backed mortgage is prohibited from taking any foreclosure action, including any eviction or sale action, for not less than the 60-day period beginning March 18, 2020.

● The ability of a borrower of a multi-family federally backed mortgage loan that was current as of February 1, 2020, to submit a request for forbearance to the borrower’s servicer affirming that the borrower is experiencing financial hardship during the COVID-19 emergency. A forbearance will be granted for up to 30 days, which can be extended for up to two additional 30-day periods upon the request of the borrower. During the time of the forbearance, the multifamily borrower cannot evict or initiate the eviction of a tenant or charge any late fees, penalties or other charges to a tenant for late payment of rent. Additionally, a multifamily borrower that receives a forbearance may not require a tenant to vacate a dwelling unit before a date that is 30 days after the date on which the borrower provides the tenant notice to vacate and may not issue a notice to vacate until after the expiration of the forbearance.

The Paycheck Protection Program

The CARES Act provides approximately $350 billion to fund loans to eligible small businesses through the Small Business Administration’s (“SBA”) 7(a) loan guaranty program. These loans will be 100% federally guaranteed (principal and interest) through December 31, 2020. An eligible business can apply for a Paycheck Protection Program (“PPP”) loan up to 2.5 times its average monthly “payroll costs" limited to a loan amount of $10.0 million. The proceeds of the loan can be used for payroll (excluding individual employee compensation over $100,000 per year), mortgage, interest, rent, insurance, utilities and other qualifying expenses. PPP loans will have: (a) an interest rate of 1.0%, (b) a two-year loan term to maturity; and (c) principal and interest payments deferred for six months from the date of disbursement. The SBA will guarantee 100% of the PPP loans made to eligible borrowers. The entire principal amount of the borrower’s PPP loan, including any accrued interest, is eligible to be reduced by the loan forgiveness amount under the PPP so long as employee and compensation levels of the business are maintained and 75% of the loan proceeds are used for payroll expenses, with the remaining 25% of the loan proceeds used for other qualifying expenses.

Intrastate and Interstate Merger and Branching Activities

Wisconsin Law and Regulation. Any Wisconsin savings bank meeting certain requirements may, upon approval of the WDFI, establish one or more branch offices in the state of Wisconsin and the states of Illinois, Indiana, Iowa, Kentucky, Michigan, Minnesota, Missouri, and Ohio. In addition, upon WDFI approval, a Wisconsin savings bank may establish a branch office in any other state as the result of a merger or consolidation.

Federal Law and Regulation. The Interstate Banking Act permits the federal banking agencies to, under certain circumstances, approve acquisition transactions between banks located in different states, regardless of whether an acquisition would be prohibited under state law. The Interstate Banking Act, as amended, authorizes de novo branching into another state at locations at which banks chartered by the host state could establish a branch.

Loans and Investments

Wisconsin Law and Regulations. Under Wisconsin law and regulation, The Equitable Bank is authorized to make, invest in, sell, purchase, participate or otherwise deal in mortgage loans or interests in mortgage loans without geographic restriction, including loans made on the security of residential and commercial property. Wisconsin savings banks also may lend funds on a secured or unsecured basis for business, commercial or agricultural purposes, provided the total of all such loans does not exceed 20% of the savings bank’s total assets, unless the WDFI authorizes a greater amount. Loans are subject to certain other limitations, including percentage restrictions based on total assets.

Wisconsin savings banks may invest funds in certain types of debt and equity securities, including obligations of federal, state and local governments and agencies. Subject to prior approval of the WDFI, compliance with capital requirements and certain other restrictions, Wisconsin savings banks may invest in residential housing development projects.

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Wisconsin savings banks may also invest in service corporations or subsidiaries with the prior approval of the WDFI, subject to certain restrictions.

Wisconsin savings banks may make loans and extensions of credit, both direct and indirect, to one borrower in amounts up to 20% of the savings bank’s capital plus an additional 5% for loans fully secured by readily marketable collateral. In addition, and notwithstanding the 20% of capital and additional 5% of capital limitations set forth above, Wisconsin savings banks may make loans to one borrower, or a related group of borrowers, for any purpose in an amount not to exceed $500,000, or to develop domestic residential housing units in an amount not to exceed the lesser of $30 million or 30% of the savings bank’s capital, subject to certain conditions. At June 30, 2020, The Equitable Bank had three borrowers with outstanding balances in excess of the loans-to-one borrower limit; such loans were originated when we had higher levels of capital, and, as such, are deemed to comply with our loans-to-one-borrower limit.

Federal Law and Regulation. Federal Deposit Insurance Corporation regulations also govern the equity investments of The Equitable Bank and, notwithstanding Wisconsin law and regulations, such regulations prohibit The Equitable Bank from making certain equity investments and generally limit The Equitable Bank’s equity investments to those that are permissible for national banks and their subsidiaries. Also, under Federal Deposit Insurance Corporation regulations, The Equitable Bank must obtain prior Federal Deposit Insurance Corporation approval before directly, or indirectly through a majority-owned subsidiary, engaging “as principal” in any activity that is not permissible for a national bank unless certain exceptions apply. The activity regulations provide that state banks that meet applicable minimum capital requirements would be permitted to engage in certain activities that are not permissible for national banks, including certain real estate and securities activities conducted through subsidiaries. The Federal Deposit Insurance Corporation will not approve an activity that it determines presents a significant risk to the Federal Deposit Insurance Corporation insurance fund. The current activities of The Equitable Bank and its subsidiaries are permissible under applicable federal regulations.

Loans to, and other transactions with, affiliates of The Equitable Bank, such as TEB Bancorp, Inc., are restricted by the Federal Reserve Act and regulations issued by the Federal Reserve Board thereunder. See “—Transactions with Affiliates and Insiders” below.

Lending Standards

Wisconsin Law and Regulation. Wisconsin law and regulations issued by the WDFI impose on Wisconsin savings banks certain fairness in lending requirements and prohibit savings banks from discriminating against a loan applicant based upon the applicant’s physical condition, developmental disability, sex, marital status, race, color, creed, national origin, religion or ancestry.

Federal Law and Regulation. The federal banking agencies have adopted uniform regulations prescribing standards for extensions of credit that are secured by liens on interests in real estate or made for the purpose of financing the construction of a building or other improvements to real estate. Under the joint regulations adopted by the federal banking agencies, all insured depository institutions, such as The Equitable Bank, must adopt and maintain written policies that establish appropriate limits and standards for extensions of credit that are secured by liens or interests in real estate or are made for the purpose of financing permanent improvements to real estate. These policies must establish loan portfolio diversification standards, prudent underwriting standards (including loan-to-value limits) that are clear and measurable, loan administration procedures, and loan documentation, approval and reporting requirements. The real estate lending policies must reflect consideration of the Interagency Guidelines for Real Estate Lending Policies that have been adopted by the federal bank regulators.

The Interagency Guidelines, among other things, require a depository institution to establish internal loan-to-value limits for real estate loans that are not in excess of the following supervisory limits:

● for loans secured by raw land, 65% of the value of the collateral;

● for land development loans (i.e., loans for the purpose of improving unimproved property prior to the erection of structures), the supervisory loan-to-value limit is 75%;

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● for loans for the construction of commercial, over four-family or other non-residential property, the supervisory limit is 80%;

● for loans for the construction of one- to four-family properties, the supervisory limit is 85%; and

● for loans secured by other improved property (e.g., farmland, completed commercial property and other income-producing property, including non-owner occupied, one- to four-family property), the supervisory limit is 85%.

Although no supervisory loan-to-value limit has been established for permanent mortgages on owner-occupied, one- to four-family or home equity loans, the Interagency Guidelines state that for any such loan with a loan-to-value ratio that equals or exceeds 90% at origination, an institution should require appropriate credit enhancement in the form of either mortgage insurance or readily marketable collateral.

Deposits

Wisconsin Law and Regulation. Under Wisconsin law, The Equitable Bank is permitted to establish deposit accounts and accept deposits. The Equitable Bank’s board of directors, or its designee, determines the rate and amount of interest to be paid on or credited to deposit accounts subject to Federal Deposit Insurance Corporation limitations.

Deposit Insurance

Wisconsin Law and Regulation. Under Wisconsin law, The Equitable Bank is required to obtain and maintain insurance on its deposits from a deposit insurance corporation. The deposits of The Equitable Bank are insured up to the applicable limits by the Federal Deposit Insurance Corporation.

Federal Law and Regulation. The Equitable Bank is a member of the Deposit Insurance Fund, which is administered by the Federal Deposit Insurance Corporation. The Equitable Bank’s deposit accounts are insured by the Federal Deposit Insurance Corporation, generally up to a maximum of $250,000 per depositor.

The Federal Deposit Insurance Corporation imposes deposit insurance assessment against all insured depository institutions. An institution’s assessment rate depends upon the perceived risk of the institution to the Deposit Insurance Fund, with institutions deemed less risky paying lower rates. Currently, assessments for institutions of less than $10 billion of total assets are based on financial measures and supervisory ratings derived from statistical models estimating the probability of failure within three years. That system was effective in 2016 and replaces a system under which each institution was assigned to a risk category. Assessment rates (inclusive of possible adjustments) currently range from 1.5 to 30 basis points of each institution’s total assets less tangible capital. The current scale, also effective in 2016, is a reduction from the previous range of 2.5 to 45 basis points. The Federal Deposit Insurance Corporation may increase or decrease the range of assessments uniformly, except that no adjustment can deviate more than two basis points from the base assessment rate without notice and comment rulemaking. The existing system represents a change, required by the Dodd-Frank Act, from the Federal Deposit Insurance Corporation’s prior practice of basing the assessment on an institution’s aggregate deposits.

The Federal Deposit Insurance Corporation has the authority to increase insurance assessments. A significant increase in insurance premiums would have an adverse effect on the operating expenses and results of operations of The Equitable Bank. We cannot predict what deposit insurance assessment rates will be in the future.

Insurance of deposits may be terminated by the Federal Deposit Insurance Corporation upon a finding that an institution has engaged in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations or has violated any applicable law, regulation, rule, order or condition imposed by the Federal Deposit Insurance Corporation. We do not know of any practice, condition or violation that might lead to termination of deposit insurance at The Equitable Bank.

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In addition to the Federal Deposit Insurance Corporation assessments, the Financing Corporation (FICO) is authorized to impose and collect, with the approval of the Federal Deposit Insurance Corporation, assessments for anticipated payments, issuance costs and custodial fees on bonds issued by the FICO in the 1980s to recapitalize the former Federal Savings and Loan Insurance Corporation. The bonds issued by the FICO matured in 2019.

Capital Requirements

Wisconsin Law and Regulation. Wisconsin savings banks are required to maintain a minimum capital to assets ratio of 6% and must maintain total capital necessary to ensure the continuation of insurance of deposit accounts by the Federal Deposit Insurance Corporation. If the WDFI determines that the financial condition, history, management or earning prospects of a savings bank are not adequate, the WDFI may require a higher minimum capital level for the savings bank. If a Wisconsin savings bank’s capital ratio falls below the required level, the WDFI may direct the savings bank to adhere to a specific written plan established by the WDFI to correct the savings bank’s capital deficiency, as well as a number of other restrictions on the savings bank’s operations, including a prohibition on the payment of dividends. At June 30, 2020, The Equitable Bank’s net worth ratio, as calculated under Wisconsin law DFI-SB 1.03(9), was 7.7%.

Federal Law and Regulation. Federal regulations require Federal Deposit Insurance Corporation insured depository institutions to meet several minimum capital standards:  a common equity Tier 1 capital to risk-based assets ratio of 4.5%, a Tier 1 capital to risk-based assets ratio of 6.0%, a total capital to risk-based assets of 8.0%, and a 4.0% Tier 1 capital to total assets leverage ratio. The existing capital requirements were effective January 1, 2015 and are the result of a final rule implementing regulatory amendments based on recommendations of the Basel Committee on Banking Supervision and certain requirements of the Dodd-Frank Act.

Common equity Tier 1 capital is generally defined as common stockholders’ equity and retained earnings. Tier 1 capital is generally defined as common equity Tier 1 and additional Tier 1 capital. Additional Tier 1 capital includes certain noncumulative perpetual preferred stock and related surplus and minority interests in equity accounts of consolidated subsidiaries. Total capital includes Tier 1 capital (common equity Tier 1 capital plus additional Tier 1 capital) and Tier 2 capital. Tier 2 capital is comprised of capital instruments and related surplus, meeting specified requirements, and may include cumulative preferred stock and long-term perpetual preferred stock, mandatory convertible securities, intermediate preferred stock and subordinated debt. Also included in Tier 2 capital is the allowance for loan and lease losses limited to a maximum of 1.25% of risk-weighted assets and, for institutions that have exercised an opt-out election regarding the treatment of Accumulated Other Comprehensive Income (“AOCI”), up to 45% of net unrealized gains on available-for-sale equity securities with readily determinable fair market values. Institutions that have not exercised the AOCI opt-out have AOCI incorporated into common equity Tier 1 capital (including unrealized gains and losses on available-for-sale-securities). The Equitable Bank exercised its AOCI opt-out election. Calculation of all types of regulatory capital is subject to deductions and adjustments specified in the regulations.

In determining the amount of risk-weighted assets for purposes of calculating risk-based capital ratios, all assets, including certain off-balance sheet assets (e.g., recourse obligations, direct credit substitutes, residual interests) are multiplied by a risk weight factor assigned by the regulations based on the risks believed inherent in the type of asset. Higher levels of capital are required for asset categories believed to present greater risk. For example, a risk weight of 0% is assigned to cash and U.S. government securities, a risk weight of 50% is generally assigned to prudently underwritten first lien one- to four-family residential real estate loans, a risk weight of 100% is assigned to commercial and consumer loans, a risk weight of 150% is assigned to certain past due loans and a risk weight of between 0% to 600% is assigned to permissible equity interests, depending on certain specified factors.

In addition to establishing the minimum regulatory capital requirements, the regulations limit capital distributions and certain discretionary bonus payments to management if the institution does not hold a “capital conservation buffer” consisting of 2.5% of common equity Tier 1 capital to risk-weighted asset above the amount necessary to meet its minimum risk-based capital requirements. The capital conservation buffer requirement was phased in beginning January 1, 2016 at 0.625% of risk-weighted assets and increased each year until fully implemented at 2.5% on January 1, 2019.

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In assessing an institution’s capital adequacy, the Federal Deposit Insurance Corporation takes into consideration, not only these numeric factors, but qualitative factors as well, including the bank’s exposure to interest rate risk. The Federal Deposit Insurance Corporation has the authority to establish higher capital requirements for individual institutions where deemed necessary due to a determination that an institution’s capital level is, or is likely to become, inadequate in light of particular circumstances.

As a result of the recently enacted Economic Growth, Regulatory Relief, and Consumer Protection Act, the federal banking agencies are required to develop a “Community Bank Leverage Ratio” (the ratio of a bank’s tangible equity capital to average total consolidated assets) for financial institutions with assets of less than $10 billion. A “qualifying community bank” that exceeds this ratio will be deemed to be in compliance with all other capital and leverage requirements, including the capital requirements to be considered “well capitalized” under Prompt Corrective Action statutes. The community bank leverage ratio was established at 9% Tier 1 capital to total average assets, effective January 1, 2020. A qualifying bank may opt in and out of the community bank leverage ratio framework on its quarterly call report. A bank that ceases to meet any qualifying criteria is provided with a two-quarter grace period to comply with the community bank leverage ratio requirements or the general capital regulations by the federal regulators.

Section 4012 of the Coronavirus Aid, Relief and Economic Security Act of 2020 required that the community bank leverage ratio be temporarily lowered to 8%. The federal regulators issued a rule making the lower ratio effective April 23, 2020. The rules also established a two-quarter grace period for a qualifying community bank whose leverage ratio falls below the 8% community bank leverage ratio requirement so long as the bank maintains a leverage ratio of 7% or greater. Another rule was issued to transition back to the 9% community bank leverage ratio, increasing the ratio to 8.5% for calendar year 2021 and to 9% thereafter.

The Equitable Bank is “well capitalized” for regulatory capital purposes.

Safety and Soundness Standards

Each federal banking agency, including the Federal Deposit Insurance Corporation, has adopted guidelines establishing general standards relating to internal controls, internal audit systems, loan documentation, credit underwriting, interest rate exposure, asset growth, asset quality, earnings and compensation, fees and benefits, and information security. In general, the guidelines require, among other things, appropriate systems and practices to identify and manage the risks and exposures specified in the guidelines. The guidelines prohibit excessive compensation as an unsafe and unsound practice and describe compensation as excessive when the amounts paid are unreasonable or disproportionate to the services performed by an executive officer, employee, director, or principal shareholder.

Prompt Corrective Regulatory Action

Federal bank regulatory authorities are required to take “prompt corrective action” with respect to institutions that do not meet minimum capital requirements. For these purposes, the statute establishes five capital categories: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized. Under the regulations, as amended effective January 1, 2015 to incorporate the previously mentioned amendments to the regulatory capital requirements, a bank is deemed to be (i) “well capitalized” if it has total risk-based capital of 10.0% or more, has a Tier 1 risk-based capital ratio of 8.0% or more, has a Tier 1 leverage capital ratio of 5.0% or more and a common equity Tier 1 ratio of 6.5% or more, and is not subject to any written capital order or directive; (ii) “adequately capitalized” if it has a total risk-based capital ratio of 8.0% or more, a Tier 1 risk-based capital ratio of 6.0% or more, a Tier 1 leveraged capital ratio of 4.0% or more and a common equity Tier 1 ratio of 4.5% or more, and does not meet the definition of “well capitalized”; (iii) “undercapitalized” if it has a total risk-based capital ratio that is less than 8.0%, a Tier 1 risk-based capital ratio that is less than 6.0%, a Tier 1 leverage capital ratio that is less than 4.0% or a common equity Tier 1 ratio of less than 4.5%; (iv) “significantly undercapitalized” if it has a total risk-based capital ratio that is less than 6.0% and a Tier 1 risk-based capital ratio that is less than 4.0% or a common equity Tier 1 ratio of less than 3.0%; and (v) “critically undercapitalized” if it has a ratio of tangible equity to total assets that is equal to or less than 2.0%.

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Federal law and regulations also specify circumstances under which a federal banking agency may reclassify a well-capitalized institution as adequately capitalized and may require an institution classified as less than well capitalized to comply with supervisory actions as if it were in the next lower category (except that the Federal Deposit Insurance Corporation may not reclassify a significantly undercapitalized institution as critically undercapitalized).

The Federal Deposit Insurance Corporation may order savings banks that have insufficient capital to take corrective actions. For example, a savings bank that is categorized as “undercapitalized” is subject to growth limitations and is required to submit a capital restoration plan, and a holding company that controls such a savings bank is required to guarantee that the savings bank complies with the restoration plan. A “significantly undercapitalized” savings bank may be subject to additional restrictions. Savings banks deemed by the Federal Deposit Insurance Corporation to be “critically undercapitalized” would be subject to the appointment of a receiver or conservator.

The Equitable Bank is considered “well capitalized” for regulatory capital purposes.

Dividends

Under Wisconsin law and applicable regulations, a Wisconsin savings bank that meets its regulatory capital requirements may declare dividends on capital stock based upon net profits, provided that its paid-in surplus equals its capital stock. In addition, prior WDFI approval is required before dividends exceeding 50% of net profits for any calendar year may be declared and before a stock dividend may be declared out of retained earnings.

The Federal Deposit Insurance Corporation has the authority to prohibit The Equitable Bank from paying dividends if, in its opinion, the payment of dividends would constitute an unsafe or unsound practice in light of the financial condition of The Equitable Bank. Institutions may not pay dividends if they would be “undercapitalized” following payment of the dividend within the meaning of the prompt corrective action regulations.

Liquidity and Reserves

Wisconsin Law and Regulation. Under WDFI regulations, all Wisconsin savings banks are required to maintain a certain amount of their assets as liquid assets, consisting of cash and certain types of investments. The exact amount of assets a savings bank is required to maintain as liquid assets is set by the WDFI, but generally ranges from 4% to 15% of the savings bank’s average daily balance of net withdrawable accounts plus short-term borrowings (the “Required Liquidity Ratio”). At June 30, 2020, The Equitable Bank’s Required Liquidity Ratio was 8%, and The Equitable Bank was in compliance with this requirement. In addition, 50% of the liquid assets maintained by a Wisconsin savings bank must consist of “primary liquid assets,” which are defined to include securities issued by the United States Government, United States Government agencies or the state of Wisconsin or a subdivision thereof, and cash. At June 30, 2020, The Equitable Bank was in compliance with this requirement.

Federal Law and Regulation. Under federal law and regulations, The Equitable Bank is required to maintain sufficient liquidity to ensure safe and sound banking practices. Regulation D, promulgated by the Federal Reserve Board, imposes reserve requirements on all depository institutions, including The Equitable Bank, which maintain transaction accounts or non-personal time deposits. Checking accounts, NOW accounts, Super NOW checking accounts, and certain other types of accounts that permit payments or transfers to third parties fall within the definition of transaction accounts and are subject to Regulation D reserve requirements, as are any non-personal time deposits (including certain money market deposit accounts) at a savings institution. For 2019, a depository institution was required to maintain average daily reserves equal to 3% on the first $124.2 million of transaction accounts, plus 10% of that portion of total transaction accounts in excess of $124.2 million. The first $16.3 million of otherwise reservable balances (subject to adjustment by the Federal Reserve Board) is exempt from the reserve requirements. For 2020, all reserve requirements have been reduced to 0%. Savings institutions have authority to borrow from the Federal Reserve’s “discount window,” but Federal Reserve policy generally requires savings institutions to exhaust all other sources before borrowing from the Federal Reserve. This policy has been updated as a result of COVID-19 such that all other sources need not be exhausted before borrowing from the Federal Reserve. As of June 30, 2020, The Equitable Bank met its Regulation D reserve requirements.

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Transactions with Affiliates and Insiders

Wisconsin Law and Regulation. Under Wisconsin law, a savings bank may not make a loan to a person owning 10% or more of its stock, an affiliated person (including a director, officer, the spouse of either and a member of the immediate family of such person who is living in the same residence), agent, or attorney of the savings bank, either individually or as an agent or partner of another, except as under the rules of the WDFI and regulations of the Federal Deposit Insurance Corporation. In addition, unless the prior approval of the WDFI is obtained, a savings bank may not purchase, lease or acquire a site for an office building or an interest in real estate from an affiliated person, including a shareholder owning more than 10% of its capital stock, or from any firm, corporation, entity or family in which an affiliated person or 10% shareholder has a direct or indirect interest.

Federal Law and Regulation. Sections 23A and 23B of the Federal Reserve Act govern transactions between an insured savings bank, such as The Equitable Bank, and any of its affiliates, including TEB Bancorp, Inc. The Federal Reserve Board has adopted Regulation W, which comprehensively implements and interprets Sections 23A and 23B, in part by codifying prior Federal Reserve Board interpretations under Sections 23A and 23B.

An affiliate of a savings bank is any company or entity that controls, is controlled by or is under common control with the savings bank. A subsidiary of a savings bank that is not also a depository institution or a “financial subsidiary” under federal law is not treated as an affiliate of the savings bank for the purposes of Sections 23A and 23B; however, the Federal Deposit Insurance Corporation has the discretion to treat subsidiaries of a savings bank as affiliates on a case-by-case basis. Sections 23A and 23B limit the extent to which a savings bank or its subsidiaries may engage in “covered transactions” with any one affiliate to an amount equal to 10% of the savings bank’s capital stock and surplus, and limit all such transactions with all affiliates to an amount equal to 20% of such capital stock and surplus. The term “covered transaction” includes the making of loans, purchase of assets, issuance of guarantees and other similar types of transactions. Most loans and other extensions of credit by a savings bank to any of its affiliates must be secured by collateral in amounts ranging from 100% to 130% of the loan amounts, depending on the type of collateral. In addition, any affiliate transactions by a savings bank must be on terms that are substantially the same, or at least as favorable, to the savings bank as those that would be provided to a non-affiliate, and be consistent with safe and sound banking practices.

A savings bank’s loans to its executive officers, directors, any owner of more than 10% of its stock (each, an insider) and any of certain entities affiliated with any such person (an insider’s related interest) are subject to the conditions and limitations imposed by Section 22(h) of the Federal Reserve Act and the Federal Reserve Board’s Regulation O thereunder. Under these restrictions, the aggregate amount of the loans to any insider and the insider’s related interests may not exceed the loans-to-one-borrower limit applicable to national banks (which is generally 15% of capital and surplus). Aggregate loans by a savings bank to its insiders and insiders’ related interests in the aggregate may not exceed the savings bank’s unimpaired capital and unimpaired surplus. With certain exceptions, loans to an executive officer, other than loans for the education of the officer’s children and certain loans secured by the officer’s primary residence, may not exceed the greater of $25,000 or 2.5% of the savings bank’s unimpaired capital and unimpaired surplus, but in no event more than $100,000. Regulation O also requires that any proposed loan to an insider or a related interest of that insider be approved in advance by a majority of the board of directors of the savings bank, with any interested director not participating in the voting, if such loan, when aggregated with any existing loans to that insider and the insider’s related interests, would exceed either $500,000 or the greater of $25,000 or 5% of the savings bank’s unimpaired capital and surplus. Generally, such loans must be made on substantially the same terms as, and follow credit underwriting procedures that are no less stringent than, those that are prevailing at the time for comparable transactions with other persons and must not present more than a normal risk of collectability.

An exception to the requirement for non-preferable terms is made for extensions of credit made pursuant to a benefit or compensation plan of a bank that is widely available to employees of the savings bank and that does not give any preference to insiders of the bank over other employees of the bank. For a description of The Equitable Bank’s employee loan program for full-time employees, see “Management—Transactions with Related Persons.”

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Transactions Between Bank Customers and Affiliates

Wisconsin savings banks, such as The Equitable Bank, are subject to the prohibitions on certain tying arrangements. Subject to certain exceptions, a savings bank is prohibited from extending credit to or offering any other service to a customer, or fixing or varying the consideration for such extension of credit or service, on the condition that such customer obtain some additional service from the institution or certain of its affiliates or not obtain services of a competitor of the institution.

Examinations and Assessments

The Equitable Bank is required to file periodic reports with and is subject to periodic examinations by the WDFI and the Federal Deposit Insurance Corporation. Federal regulations require annual on-site examinations for all depository institutions except certain well-capitalized and highly rated institutions with assets of less than $1 billion, which are examined every 18 months. Recent legislation extended the asset threshold for the 18-month examination cycle to $3 billion of assets. The Equitable Bank is required to pay examination fees and annual assessments to fund its supervision.

Customer Privacy

Under Wisconsin and federal law and regulations, savings banks, such as The Equitable Bank, are required to develop and maintain privacy policies relating to information on its customers, restrict access to and establish procedures to protect customer data. Applicable privacy regulations further restrict the sharing of non-public customer data with non-affiliated parties if the customer requests.

Community Reinvestment Act

Under the Community Reinvestment Act, The Equitable Bank has a continuing and affirmative obligation consistent with its safe and sound operation to help meet the credit needs of its entire community, including low- and moderate-income neighborhoods. The Community Reinvestment Act does not establish specific lending requirements or programs for financial institutions nor does it limit an institution’s discretion to develop the types of products and services that it believes are best suited to its particular community, consistent with the Community Reinvestment Act. The Community Reinvestment Act requires the Federal Deposit Insurance Corporation, in connection with its examination of The Equitable Bank, to assess The Equitable Bank’s record of meeting the credit needs of its community and to take that record into account in the Federal Deposit Insurance Corporation’s evaluation of certain applications by The Equitable Bank. For example, the regulations specify that a bank’s Community Reinvestment Act performance will be considered in its expansion (e.g., branching or merger) proposals and may be the basis for approving, denying or conditioning the approval of an application. As of the date of its most recent regulatory examination, The Equitable Bank was rated “satisfactory” with respect to its Community Reinvestment Act compliance.

Federal Home Loan Bank System

The Federal Home Loan Bank System, consisting of 11 Federal Home Loan Banks, is under the jurisdiction of the Federal Housing Finance Board. The designated duties of the Federal Housing Finance Board are to supervise the Federal Home Loan Banks; ensure that the Federal Home Loan Banks carry out their housing finance mission; ensure that the Federal Home Loan Banks remain adequately capitalized and able to raise funds in the capital markets; and ensure that the Federal Home Loan Banks operate in a safe and sound manner.

The Equitable Bank, as a member of the Federal Home Loan Bank of Chicago, is required to acquire and hold shares of capital stock in the Federal Home Loan Bank of Chicago in specified amounts. The Equitable Bank is in compliance with this requirement with an investment in Federal Home Loan Bank of Chicago stock of $1.3 million at June 30, 2020.

Among other benefits, the Federal Home Loan Banks provide a central credit facility primarily for member institutions. It is funded primarily from proceeds derived from the sale of consolidated obligations of the Federal Home Loan Bank System. It makes advances to members in accordance with policies and procedures established by the Federal Housing

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Finance Board and the board of directors of the Federal Home Loan Bank of Chicago. At June 30, 2020, The Equitable Bank had $9.0 million in advances from the Federal Home Loan Bank of Chicago.

Other Regulations

Interest and other charges collected or contracted for by The Equitable Bank are subject to state usury laws and federal laws concerning interest rates. The Equitable Bank’s operations are also subject to federal laws applicable to credit transactions, such as the:

● Truth-In-Lending Act, governing disclosures of credit terms to consumer borrowers;

● Home Mortgage Disclosure Act, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves;

● Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, creed or other prohibited factors in extending credit;

● Fair Credit Reporting Act, governing the use and provision of information to credit reporting agencies;

● Fair Debt Collection Act, governing the manner in which consumer debts may be collected by collection agencies;

● Truth in Savings Act; and

● rules and regulations of the various federal agencies charged with the responsibility of implementing such federal laws.

The operations of The Equitable Bank also are subject to the:

● Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records;

● Electronic Funds Transfer Act and Regulation E promulgated thereunder, which govern automatic deposits to and withdrawals from deposit accounts and customers’ rights and liabilities arising from the use of automated teller machines and other electronic banking services; and

● Check Clearing for the 21st Century Act (also known as “Check 21”), which gives “substitute checks,” such as digital check images and copies made from that image, the same legal standing as the original paper check; and

● The USA PATRIOT Act, which requires savings associations to, among other things, establish broadened anti-money laundering compliance programs, and due diligence policies and controls to ensure the detection and reporting of money laundering. Such required compliance programs are intended to supplement existing compliance requirements that also apply to financial institutions under the Bank Secrecy Act and the Office of Foreign Assets Control regulations.

Holding Company Regulation

General. TEB Bancorp, Inc. and TEB MHC are bank holding companies within the meaning of the Bank Holding Company of 1956. As such, TEB Bancorp, Inc. and TEB MHC are registered with the Federal Reserve Board and be subject to the regulation, examination, supervision and reporting requirements applicable to bank holding companies. In addition, the Federal Reserve Board has enforcement authority over TEB Bancorp, Inc., TEB MHC and its non-savings

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institution subsidiaries. Among other things, this authority permits the Federal Reserve Board to restrict or prohibit activities that are determined to be a serious risk to the subsidiary savings institution.

Permissible Activities. A bank holding company is generally prohibited from engaging in non-banking activities, or acquiring direct or indirect control of more than 5% of the voting securities of any company engaged in non-banking activities. One of the principal exceptions to this prohibition is for activities found by the Federal Reserve Board to be so closely related to banking or managing or controlling banks as to be a proper incident thereto. Some of the principal activities that the Federal Reserve Board has determined by regulation to be so closely related to banking are: (i) making or servicing loans; (ii) performing certain data processing services; (iii) providing discount brokerage services; (iv) acting as fiduciary, investment or financial advisor; (v) leasing personal or real property; (vi) making investments in corporations or projects designed primarily to promote community welfare; and (vii) acquiring a savings and loan association whose direct and indirect activities are limited to those permitted for bank holding companies.

The Gramm-Leach-Bliley Act of 1999 authorized a bank holding company that meets specified conditions, including being “well capitalized” and “well managed,” to opt to become a “financial holding company” and thereby engage in a broader array of financial activities than previously permitted. Such activities can include insurance underwriting and investment banking.

Capital. Bank holding companies are subject to consolidated regulatory capital requirements, which have historically been similar to, though less stringent than, those of the Federal Deposit Insurance Corporation for The Equitable Bank. The Dodd-Frank Act, however, required the Federal Reserve Board to promulgate consolidated capital requirements for depository institution holding companies that are no less stringent, both quantitatively and in terms of components of capital, than those applicable to institutions themselves. Consolidated regulatory capital requirements identical to those applicable to the subsidiary banks apply to bank holding companies; as is the case with institutions themselves, the capital conservation buffer was phased in between 2016 and 2019. However, the Federal Reserve Board has provided a “Small Bank Holding Company” exception to its consolidated capital requirements, and recent legislation and the related issuance of regulations by the Federal Reserve Board has increased the threshold for the exception to $3.0 billion.

Source of Strength. The Federal Reserve Board has issued regulations requiring that all bank holding companies serve as a source of strength to their subsidiary depository institutions by providing financial, managerial and other support in times of an institution’s distress.

Dividends and Stock Repurchases. The Federal Reserve Board has issued a policy statement regarding the payment of dividends by holding companies. In general, the policy provides that dividends should be paid only out of current earnings and only if the prospective rate of earnings retention by the holding company appears consistent with the organization’s capital needs, asset quality and overall supervisory financial condition. Separate regulatory guidance provides for prior consultation with Federal Reserve Bank staff concerning dividends in certain circumstances such as where the company’s net income for the past four quarters, net of dividends previously paid over that period, is insufficient to fully fund the dividend or the company’s overall rate or earnings retention is inconsistent with the company’s capital needs and overall financial condition. The ability of a bank holding company to pay dividends may be restricted if a subsidiary savings bank becomes undercapitalized.

The regulatory guidance also states that a bank holding company should consult with Federal Reserve Bank supervisory staff prior to redeeming or repurchasing common stock or perpetual preferred stock if the bank holding company is experiencing financial weaknesses or the repurchase or redemption would result in a net reduction, at the end of a quarter, in the amount of such equity instruments outstanding compared with the beginning of the quarter in which the redemption or repurchase occurred.

There is a separate requirement that a bank holding company give the Federal Reserve Board prior written notice of any purchase or redemption of then outstanding equity securities if the gross consideration for the purchase or redemption, when combined with the net consideration paid for all such purchases or redemptions during the preceding 12 months, is equal to 10% or more of the company’s consolidated net worth. The Federal Reserve Board may disapprove such a purchase or redemption if it determines that the proposal would constitute an unsafe and unsound practice, or would violate any law, regulation, Federal Reserve Board order or directive, or any condition imposed by, or written agreement

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with, the Federal Reserve Board. There is an exception to this approval requirement for well-capitalized bank holding companies that meet certain other conditions.

These regulatory policies may affect the ability of TEB Bancorp, Inc. to pay dividends, repurchase shares of common stock or otherwise engage in capital distributions.

Waivers of Dividends by TEB MHC.  TEB Bancorp, Inc. may pay dividends on its common stock to public stockholders. If it does, it is also required to pay dividends to TEB MHC, unless TEB MHC elects to waive the receipt of dividends. Current Federal Reserve Board policy restricts a mutual holding company that is regulated as a bank holding company from waiving the receipt of dividends paid by its subsidiary holding company. Accordingly, it is unlikely that TEB MHC would be able to waive the receipt of dividends paid by TEB Bancorp, Inc.

Change in Control Regulations

Under the Change in Bank Control Act, no person, or group of persons acting in concert, may acquire control of a bank holding company unless the Federal Reserve Board has been given 60 days’ prior written notice and not disapproved the proposed acquisition. The Federal Reserve Board considers several factors in evaluating a notice, including the financial and managerial resources of the acquirer and competitive effects. Control, as defined under the applicable regulations, means the power, directly or indirectly, to direct the management or policies of the company or to vote 25% or more of any class of voting securities of the company. Acquisition of more than 10% of any class of a bank holding company’s voting securities constitutes a rebuttable presumption of control under certain circumstances, including where, as is the case with TEB Bancorp, Inc., the issuer has registered securities under Section 12 of the Securities Exchange Act of 1934.

In addition, federal regulations provide that no company may acquire control (as defined in the Bank Holding Company Act) of a bank holding company without the prior approval of the Federal Reserve Board. Any company that acquires such control becomes a “bank holding company” subject to registration, examination and regulation by the Federal Reserve Board.

Federal Securities Laws

TEB Bancorp, Inc.’s common stock is registered with the Securities and Exchange Commission under the Securities Exchange Act of 1934. TEB Bancorp, Inc. is subject to the information, proxy solicitation, insider trading restrictions and other requirements under the Securities Exchange Act of 1934.

Emerging Growth Company Status

The JOBS Act, which was enacted in 2012, has made numerous changes to the federal securities laws to facilitate access to capital markets. Under the JOBS Act, a company with total annual gross revenues of less than $1.07 billion during its most recently completed fiscal year qualifies as an “emerging growth company.” TEB Bancorp, Inc. qualifies as an emerging growth company under the JOBS Act.

An “emerging growth company” may choose not to hold stockholder votes to approve annual executive compensation (more frequently referred to as “say-on-pay” votes) or executive compensation payable in connection with a merger (more frequently referred to as “say-on-golden parachute” votes). An emerging growth company also is not subject to the requirement that its auditors attest to the effectiveness of the company’s internal control over financial reporting, and can provide scaled disclosure regarding executive compensation; however, TEB Bancorp, Inc. will also not be subject to the auditor attestation requirement or additional executive compensation disclosure so long as it remains a “non-accelerated filer” and a “smaller reporting company,” respectively, under Securities and Exchange Commission regulations (generally less than $75 million and $250 million, respectively, of voting and non-voting equity held by non-affiliates). Finally, an emerging growth company may elect to comply with new or amended accounting pronouncements in the same manner as a private company, but must make such election when the company is first required to file a registration statement. TEB Bancorp, Inc. has elected to comply with new or amended accounting pronouncements in the same manner as a private company.

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A company loses emerging growth company status on the earlier of: (i) the last day of the fiscal year of the company during which it had total annual gross revenues of $1.07 billion or more; (ii) the last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale of common equity securities of the company pursuant to an effective registration statement under the Securities Act of 1933; (iii) the date on which such company has, during the previous three-year period, issued more than $1.07 billion in non-convertible debt; or (iv) the date on which such company is deemed to be a “large accelerated filer” under Securities and Exchange Commission regulations (generally, at least $700 million of voting and non-voting equity held by non-affiliates).

ITEM 1A. Risk Factors

Not applicable, as TEB Bancorp, Inc. is a “smaller reporting company.”

ITEM 1B. Unresolved Staff Comments

None.

ITEM 2. Properties

As of June 30, 2020, the net book value of our office properties was $6.9 million. The following table sets forth information regarding our offices.

			Net Book
	Leased or	Year Acquired	Value of
Location	Owned	or Leased	Real Property
	(In thousands)
Main Office:
2290 N. Mayfair Road Wauwatosa, Wisconsin 53226	Owned	1993	$	1,664
Other Properties:
West Allis
7400 W. Oklahoma Avenue West Allis, Wisconsin 53219	Owned	1992	$	215
Whitefish Bay
705 E. Silver Spring Drive Whitefish Bay, Wisconsin 53217	Leased	2004	$	—
Hales Corner
5225 S. 108th Street Hales Corners, Wisconsin 53130	Owned	1982	$	301
Waterford
701 Trailview Court Waterford, Wisconsin 53185	Owned	2008	$	1,524
Delafield
N15 W30921 Golf Road Delafield, Wisconsin 53018	Owned	2007	$	3,210
Cedarburg (Mortgage Lending Office)
W62 N244 Washington Avenue Suite A-101 Cedarburg, Wisconsin 53012	Leased	2012	$	—

We believe that current facilities are adequate to meet our present and foreseeable needs, subject to possible future expansion.

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ITEM 3. Legal Proceedings

Periodically, we are involved in claims and lawsuits, such as claims to enforce liens, condemnation proceedings on properties in which we hold security interests, claims involving the making and servicing of real property loans and other issues incident to our business. We are not a party to any pending legal proceedings that we believe would have a material adverse effect on our financial condition, results of operations or cash flows.

ITEM 4. Mine Safety Disclosures

Not applicable.

PART II

ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our common stock is traded on the OTC Pink Marketplace under the symbol “TBBA.” As of October 1, 2020, we had 218 stockholders of record (excluding the number of persons or entities holding stock in street name through various brokerage firms), and 2,624,343 shares of common stock outstanding. The following table sets forth market price information for our common stock beginning with the completion of our stock offering. We did not declare a dividend for the period listed.

	Price Per Share
	2020				2019
2020	High		Low		High		Low
Quarter ended June 30,	$	7.49	$	6.35	$	11.00	$	8.76
Quarter ended March 31,	$	8.50	$	6.00		*		*
Quarter ended December 31,	$	9.00	$	8.20		*		*
Quarter ended September 30,	$	9.45	$	8.05		*		*

*Price per share not applicable as no shares were outstanding for that period.

We do not currently intend to pay cash dividends to our stockholders, and no assurances can be given that any such dividends will be paid in the future. The payment and amount of any dividend payments will be subject to statutory and regulatory limitations, and will depend upon a number of factors, including the following: regulatory capital requirements; our financial condition and results of operations; our other uses of funds for the long-term value of stockholders; tax considerations; the ability of mutual holding companies to waive of dividends; and general economic conditions.

We are subject to state law limitations and federal bank regulatory policy on any future payment of dividends. Maryland law generally limits dividends if the corporation would not be able to pay its debts in the usual course of business after giving effect to the dividend or if the corporation’s total assets would be less than the corporation’s total liabilities plus the amount needed to satisfy the preferential rights upon dissolution of stockholders whose preferential rights on dissolution are superior to those receiving the distribution.

The Federal Reserve Board has issued a policy statement providing that dividends should be paid only out of current earnings and only if our prospective rate of earnings retention is consistent with our capital needs, asset quality and overall financial condition. Regulatory guidance also provides for prior regulatory consultation with respect to capital distributions in certain circumstances such as where the holding company’s net income for the past four quarters, net of dividends previously paid over that period, is insufficient to fully fund the dividend or the holding company’s overall rate or earnings retention is inconsistent with its capital needs and overall financial condition. In addition, The Equitable Bank’s ability to pay dividends to TEB Bancorp, Inc. will be limited if The Equitable Bank does not have the capital

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conservation buffer required by regulatory capital rules, which may limit our ability to pay dividends to stockholders. See “Regulation and Supervision—Dividends.”

If TEB Bancorp, Inc. pays dividends to its stockholders, it will likely pay dividends to TEB MHC. The Federal Reserve Board’s current policy restricts the ability of mutual holding companies that are regulated as bank holding companies to waive dividends declared by their subsidiaries. Accordingly, we do not currently anticipate that TEB MHC will waive dividends paid by TEB Bancorp, Inc.

There were no sales of unregistered securities during the quarter ended June 30, 2020.

There were no repurchases of shares of TEB Bancorp, Inc.’s common stock during the quarter ended June 30, 2020.

ITEM 6. Selected Financial Data

The summary information presented below at each date or for each of the periods presented is derived in part from the financial statements of TEB Bancorp, Inc. and The Equitable Bank, S.S.B. The financial condition data at June 30, 2020 and 2019, and the operating data for the fiscal years ended June 30, 2020 and 2019 were derived from the audited consolidated financial statements of TEB Bancorp, Inc. included elsewhere in this annual report. The information at and for the nine months ended June 30, 2018, and June 30, 2017 and for the years ended September 30, 2017, and 2016 was derived in part from audited financial statements that are not included in this annual report. The following information is only a summary, and should be read in conjunction with our consolidated financial statements and notes included in this annual report.

	At June 30,						At September 30,
	2020		2019		2018		2017		2016
	(In thousands)
Selected Financial Condition Data:
Total assets	$	305,475	$	312,248	$	313,424	$	307,840	$	304,613
Cash and cash equivalents		13,106		5,631		6,134		5,618		4,825
Available for sale securities		20,298		20,542		20,906		20,650		23,574
Loans, net of allowance for loan losses		237,300		259,873		263,999		262,073		253,302
Loans held for sale		18,690		7,080		6,416		4,062		9,896
Other real estate owned, net		2,288		4,080		3,957		4,371		1,997
Premises and equipment, net		7,960		8,165		8,252		8,328		8,554
Federal Home Loan Bank stock		1,346		2,061		2,070		1,141		840
Deposits		256,072		234,561		244,463		260,511		277,872
Borrowings		9,000		44,200		46,000		22,700		500
Deferred tax asset valuation allowance		11,046		10,868		10,503		14,353		14,769
Total equity		23,512		24,408		14,102		14,390		13,399

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	For the Years Ended				For the Nine Months				For the Years Ended
	June 30,				Ended June 30,				September 30,
	2020		2019		2018		2017		2017		2016
	(In thousands)
Selected Operating Data:
Interest income	$	11,879	$	12,530	$	8,822	$	8,760	$	11,736	$	11,620
Interest expense		2,222		2,673		1,256		936		1,265		1,165
Net interest income before provision for loan losses		9,657		9,857		7,566		7,824		10,471		10,455
Provision for loan losses		135		—		425		—		—		2,125
Net interest income after provision for loan losses		9,522		9,857		7,141		7,824		10,471		8,330
Non-interest income		6,247		2,598		1,895		1,946		2,612		3,189
Non-interest expenses		14,677		12,909		10,063		9,794		12,871		13,417
Income (loss) before income tax expense (benefit)		1,092		(454)		(1,027)		(24)		212		(1,898)
Income tax expense (benefit)		—		(55)		(425)		—		—		(224)
Net income (loss)	$	1,092	$	(399)	$	(602)	$	(24)	$	212	$	(1,674)

						At or For the Nine
	At or For the Years Ended					Months Ended				At or For the Years Ended
	June 30,					June 30, (1)				September 30,
	2020			2019		2018		2017		2017		2016
Performance Ratios:
Return (loss) on average assets		0.36	%	(0.13)	%	(0.27)	%	(0.01)	%	0.07	%	(0.56)	%
Return (loss) on average equity		4.30	%	(2.5)	%	(5.72)	%	(0.24)	%	1.60	%	(10.54)	%
Interest rate spread (2)		3.36	%	3.37	%	3.57	%	3.65	%	3.68	%	3.71	%
Net interest margin (3)		3.48	%	3.44	%	3.61	%	3.68	%	3.71	%	3.74	%
Non-interest expenses to average assets		4.84	%	4.21	%	4.48	%	4.33	%	4.26	%	4.48	%
Efficiency ratio (4)		92.28	%	103.64	%	106.37	%	100.25	%	98.39	%	98.3	%
Average interest-earning assets to average interest-bearing liabilities		114.57	%	107.59	%	106.10	%	106.35	%	106.15	%	106.18	%
Earnings per share	$	0.42		(0.15)		N/A		N/A		N/A		N/A
Dividend payout ratio		—	%	—		N/A		N/A		N/A		N/A
Capital Ratios:
Average equity to average assets		8.37	%	5.20	%	4.68	%	4.38	%	4.38	%	5.30	%
Tangible capital equity to total assets		7.70	%	7.82	%	4.50	%	4.27	%	4.67	%	4.40	%
Total capital to risk weighted assets		15.02	%	14.01	%	8.90	%	9.10	%	9.24	%	9.26	%
Tier 1 capital to risk weighted assets		14.32	%	13.36	%	8.23	%	8.15	%	8.29	%	8.00	%
Common equity tier 1 capital to risk weighted assets		14.32	%	13.36	%	8.23	%	8.15	%	8.29	%	8.00	%
Tier 1 capital to average assets		9.30	%	8.55	%	5.46	%	5.37	%	5.46	%	5.42	%
Asset Quality Ratios:
Allowance for loan losses as a percentage of total loans		0.57	%	0.50	%	0.50	%	0.73	%	0.71	%	1.74	%
Allowance for loan losses as a percentage of non-performing loans		100.91	%	84.86	%	91.68	%	130.32	%	106.47	%	57.47	%
Net (charge-offs) recoveries to average outstanding loans during the period		(0.03)	%	(0.01)	%	(0.51)	%	(1.78)	%	(1.01)	%	(0.09)	%
Non-performing loans as a percentage of total loans		0.56	%	0.58	%	0.54	%	0.56	%	0.67	%	3.03	%
Non-performing loans as a percentage of total assets		0.44	%	0.49	%	0.46	%	0.48	%	0.57	%	2.56	%
Total non-performing assets as a percentage of total assets		1.19	%	1.80	%	1.72	%	2.06	%	1.99	%	3.22	%
Other:
Number of banking offices		6		6		6		6		6		6
Number of loan production offices		1		1		1		1		1		1
Number of full-time equivalent employees		104		105		106		107		109		107

(1) Annualized.

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(2) Represents the difference between the weighted average yield on average interest-earning assets and the weighted average cost of interest-bearing liabilities.

(3) Represents net interest income as a percentage of average interest-earning assets.

(4) Represents non-interest expenses divided by the sum of net interest income and non-interest income.

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ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This discussion and analysis reflects our consolidated financial statements and other relevant statistical data, and is intended to enhance your understanding of our financial condition and results of operations. The information in this section has been derived from the consolidated financial statements, which appear elsewhere in this annual report. You should read the information in this section in conjunction with the other business and financial information provided in this annual report.

Overview

Total assets decreased $6.8 million, or 2.2%, to $305.5 million at June 30, 2020 from $312.2 million at June 30, 2019, primarily reflecting decreases in loans held for investment offset by increases in cash and cash equivalents and loans held for sale. Total deposits increased $21.5 million, or 9.2%, to $256.1 million at June 30, 2020 from $234.6 million at June 30, 2019. This resulted from an increase in interest-bearing savings and NOW accounts, which increased $5.0 million, or 7.1%, to $75.4 million at June 30, 2020 from $70.4 million at June 30, 2019, and an increase in demand deposits, which increased $16.2 million, or 20.9%, to $93.6 million at June 30, 2020 from $77.4 million at June 30, 2019.

Borrowed funds, consisting solely of Federal Home Loan Bank of Chicago (“FHLB”) advances, decreased $35.2 million, or 79.6%, to $9.0 million at June 30, 2020 from $44.2 million at June 30, 2019. We had to rely on borrowings to fund our operations in prior periods as a result of certificate of deposit runoff, as described below. During the year, deposits increased and assets decreased which allowed us to pay down borrowings.

Net income was $1.1 million for the year ended June 30, 2020, compared to a net loss of $399,000 for the year ended June 30, 2019. The increase in income was due to increases in non-interest income and non-interest expenses during the year ended June 30, 2020, offset by a decrease in net interest income. Net interest income decreased $336,000, or 3.4%, to $9.5 million for the year ended June 30, 2020 from $9.9 million for the year ended June 30, 2019, primarily as a result of a lower average balance of loans. Non-interest income increased by $3.6 million, or 140.5%, to $6.2 million for the year ended June 30, 2020 from $2.6 million for the year ended June 30, 2019, primarily resulting from a $3.6 million, or 236.3%, increase in gain on sales of mortgage loans. Non-interest expenses increased $1.8 million, or 13.7%, to $14.7 million for the year ended June 30, 2020 compared to $12.9 million for the year ended June 30, 2019. The increase in non-interest expenses was due to an increase in compensation and benefits expense and cost of operations for other real estate owned during the year ended June 30, 2020.

In recent periods, prior to the termination of our amended Consent Order, we generally experienced certificate of deposit runoff at maturity because of our inability to pay competitive rates on deposits due to our classification as “adequately capitalized” for regulatory capital purposes, instead funding our operations with borrowings from the FHLB. Our classification as “adequately capitalized” (rather than “well-capitalized”) for regulatory capital purposes restricted our ability to accept, renew or roll over brokered deposits, and further restricted us from paying interest rates on deposits that exceed 75 basis points above national rates, as posted by the Federal Deposit Insurance Corporation. Although we had received a waiver from the Federal Deposit Insurance Corporation that permitted us to use local market area rates instead of national rates as the baseline in determining interest rates we could pay on deposits, this restriction limited our ability to compete for deposits in our market area, based on interest rates, in the market rate environment. As a general matter, our interest-bearing liabilities reprice or mature more quickly than our interest-earning assets, which can result in interest expense increasing more rapidly than increases in interest income as interest rates increase. Therefore, increases in interest rates may adversely affect our net interest income and net economic value, which in turn would likely have an adverse effect on our results of operations. To help manage interest rate risk, we sell longer-term, fixed-rate loans and we intend to diversify our loan portfolio by originating more commercial-related and adjustable-rate loans. See “—Management of Market Risk.”

Change in Fiscal Year

The Equitable Bank changed its fiscal year to June 30 from September 30, effective with the June 30, 2018 fiscal year.

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Summary of Significant Accounting Policies

The discussion and analysis of the financial condition and results of operations are based on our financial statements, which are prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of these financial statements requires management to make estimates and assumptions affecting the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and the reported amounts of income and expenses. We consider the accounting policies discussed below to be significant accounting policies. The estimates and assumptions that we use are based on historical experience and various other factors and are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions, resulting in a change that could have a material impact on the carrying value of our assets and liabilities and our results of operations.

In 2012, the JOBS Act was signed into law. The JOBS Act contains provisions that, among other things, reduce certain reporting requirements for qualifying public companies. As an “emerging growth company” we may delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. We determined to take advantage of the benefits of this extended transition period. Accordingly, our financial statements may not be comparable to companies that comply with such new or revised accounting standards.

The following represent our significant accounting policies:

Allowance for Loan Losses. The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to operations. Loan losses are charged against the allowance when management believes the uncollectability of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance for loan losses. The allowance for loan losses consists of specific reserves on certain impaired loans from analyses developed through specific credit allocations for individual loans. The specific reserve relates to all loans for which the allowance for loan losses is estimated on a loan by loan basis using either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent. The general reserve is based on our historical loss experience along with consideration of certain qualitative factors such as (i) changes in the nature, volume and terms of loans, (ii) changes in lending personnel, (iii) changes in the quality of the loan review function, (iv) changes in nature and volume of past-due, non-accrual and/or classified loans, (v) changes in concentration of credit risk, (vi) changes in economic and industry conditions, (vii) changes in legal and regulatory requirements, (viii) unemployment and inflation statistics, and (ix) changes in underlying collateral values.

There are many factors affecting the allowance for loan losses, some are quantitative while others require qualitative judgment. The allowance for loan losses reflects management’s best estimate of the probable and inherent losses on loans. The adequacy of the allowance for loan losses is reviewed and approved by our board of directors. Allocations of the allowance for loan losses may be made for specific loans, but the entire allowance for loan losses is available for any loan that, in management’s judgment, should be charged-off.

As an integral part of their examination process, various regulatory agencies review the allowance for loan losses as well. Such agencies may require that changes in the allowance for loan losses be recognized when such regulatory credit evaluations differ from those of management based on information available to the regulators at the time of their examinations.

Income Taxes. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

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We recognize the tax effects from an uncertain tax position in the consolidated financial statements only if the position is more likely than not to be sustained on audit, based on the technical merits of the position. We recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the consolidated financial statements is the largest benefit that has a greater than 50% likelihood of being realized, upon ultimate settlement with the relevant tax authority. We recognize interest and penalties accrued or released related to uncertain tax positions in current income tax expense or benefit.

COVID-19 Outbreak

In December 2019, a coronavirus (COVID-19) was reported in China, and, in March 2020, the World Health Organization declared it a pandemic. On March 12, 2020 the President of the United States declared the COVID-19 outbreak in the United States a national emergency. The COVID-19 pandemic has caused significant economic dislocation in the United States as many state and local governments ordered non-essential businesses to close and residents to shelter in place at home. This has resulted in an unprecedented slow-down in economic activity and a related increase in unemployment. Since the COVID-19 outbreak, millions of individuals have filed claims for unemployment, and stock markets have declined in value and in particular bank stocks have significantly declined in value. In response to the COVID-19 outbreak, the Federal Reserve has reduced the benchmark fed funds rate to a target range of 0% to 0.25%, and the yields on 10- and 30-year treasury notes have declined to historic lows. Various state governments and federal agencies are requiring lenders to provide forbearance and other relief to borrowers (e.g., waiving late payment and other fees). The federal banking agencies have encouraged financial institutions to prudently work with affected borrowers and recently passed legislation has provided relief from reporting loan classifications due to modifications related to the COVID-19 outbreak. Certain industries have been particularly hard-hit, including the travel and hospitality industry, the restaurant industry, and the retail industry. The following table shows the Company’s exposure within these hard-hit industries.

Commercial Loan Type	June 30, 2020		Percentage of Portfolio Loans
Restaurant, food service, bar	$	1,852,023	0.78	%
Retail		1,910,969	0.80	%
Hospitality and tourism		—	—	%
	$	3,762,992	1.58	%

The Company’s allowance for loan losses increased $59,000 to $1.4 million at June 30, 2020 compared to $1.3 million at June 30, 2019. Provisions were booked totaling $135,000 during the year ended June 30, 2020, compared to no provision in the year ended June 30, 2019. At June 30, 2020 and June 30, 2019, the allowance for loan losses represented 0.57% and 0.50% of total loans, respectively. In the first quarter of 2020, the Company adjusted the economic risk factor methodology to incorporate the current economic implications and rising unemployment rate from the COVID-19 pandemic, leading to the increase in the allowance for loan losses as a percentage of total loans. In determining its allowance for loan loss level at June 30, 2020, the Company considered the quality and composition of its loan portfolio going into the COVID-19 pandemic as well as economic changes noted during the second quarter of 2020. At March 31, 2020, approximately 99.2% of the Company’s loan portfolio was collateralized by real estate. At June 30, 2020, approximately 98.67% of the Company’s loan portfolio was collateralized by real estate. This decrease was largely due to the new PPP loans originated during the quarter, discussed previously. As of June 30, 2020, approximately 1.6% of the Company’s loan portfolio is to borrowers in the more particularly hard-hit industries (including the restaurant and food service industries, retail industry, and hospitality and tourism industries) and the Company has no international exposure.

Finally, the spread of the COVID-19 has caused us to modify our business practices, including employee travel, employee work locations, and cancellation of physical participation in meetings, events, and conferences. We have many employees working remotely and we may take further actions as may be required by government authorities or that we determine are in the best interests of our employees, customers, and business partners.

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Given the ongoing and dynamic nature of the circumstances, it is difficult to predict the full impact of the COVID-19 outbreak on our business. The extent of such impact will depend on future developments, which are highly uncertain, including when the coronavirus can be controlled and abated and when and how the economy may be reopened. As the result of the COVID-19 pandemic and the related adverse local and national economic consequences, we could be subject to any of the following risks, any of which could have a material, adverse effect on our business, financial condition, liquidity, and results of operations:

● demand for our products and services may decline, making it difficult to grow assets and income;

● if the economy is unable to substantially reopen, and high levels of unemployment continue for an extended period of time, loan delinquencies, problem assets, and foreclosures may increase, resulting in increased charges and reduced income;

● collateral for loans, especially real estate, may decline in value, which could cause loan losses to increase;

● our allowance for loan losses may have to be increased if borrowers experience financial difficulties beyond forbearance periods, which will adversely affect our net income;

● the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us;

● as the result of the decline in the Federal Reserve Board’s target federal funds rate to near 0%, the yield on our assets may decline to a greater extent than the decline in our cost of interest-bearing liabilities, reducing our net interest margin and spread and reducing net income;

● our uninsured investment revenues may decline with continuing market turmoil;

● our cyber security risks are increased as the result of an increase in the number of employees working remotely;

● we rely on third-party vendors for certain services and the unavailability of a critical service due to the COVID-19 outbreak could have an adverse effect on us; and

● Federal Deposit Insurance Corporation premiums may increase if the agency experiences additional resolution costs.

Moreover, our future success and profitability substantially depends on the management skills of our executive officers and directors, many of whom have held officer and director positions with us for many years. The unanticipated loss or unavailability of key employees due to the outbreak could harm our ability to operate our business or execute our business strategy. We may not be successful in finding and integrating suitable successors in the event of key employee loss or unavailability.

Any one or a combination of the factors identified above could negatively impact our business, financial condition, and results of operations and prospects.

The Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, was signed into law on March 27, 2020 and provided over $2.0 trillion in emergency economic relief to individuals and businesses impacted by the COVID-19 pandemic. The CARES Act authorized the Small Business Administration (“SBA”) to temporarily guarantee loans under a new 7(a) loan program call the Paycheck Protection Program (“PPP”). Although we were not already a qualified SBA lender, we enrolled in the PPP by completing the required documentation.

An eligible business can apply for a PPP loan up to the lesser of: (1) 2.5 times its average monthly “payroll costs”; or (2) $10.0 million. PPP loans will have: (a) an interest rate of 1.0%; (b) a two-year loan term to maturity; and (c) principal and interest payments deferred for six months from the date of disbursement. The SBA will guarantee 100% of the PPP loans made to eligible borrowers. The entire principal amount of the borrower’s PPP loan, including any accrued

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interest, is eligible to be reduced by the loan forgiveness amount under the PPP so long as employee and compensation levels of the business are maintained and 60% of the loan proceeds are used for payroll expenses, with the remaining 40% of the loan proceeds used for other qualifying expenses.

As of June 30, 2020, the Company originated 16 PPP loans totaling $1.1 million and generated approximately $35,000 from the processing fees, which have been recognized.

To work with customers impacted by COVID-19, the Company is offering short-term (i.e., three months or less with the potential to extend up to six months, if necessary) loan modifications on a case by case basis to borrowers who were current in their payments at the inception of the loan modification program. Under Section 4013 of the CARES Act, loans less than 30 days past due as of December 31, 2019 are considered current for COVID-19 modifications. A financial institution can then suspend the requirements under GAAP for loan modifications related to COVID-19 that would otherwise be categorized as a TDR, and suspend any determination of a loan modified as a result of COVID-19 as being a TDR, including the requirement to determine impairment for accounting purposes. Financial institutions wishing to utilize this authority must make a policy election, which applies to any COVID-19 modification made between March 1, 2020 and the earlier of either December 31, 2020 or the 60^th day after the end of the COVID-19 national emergency. Similarly, the Financial Accounting Standards Board has confirmed that short-term modifications made on a good faith basis in response to COVID-19 to loan customers who were current prior to any relief are not TDRs. Lastly, prior to the enactment of the CARES Act, the banking regulatory agencies provided guidance as to how certain short-term modifications would not be considered TDRs, and have subsequently confirmed that such guidance could be applicable for loans that do not qualify for favorable accounting treatment under Section 4013 of the CARES Act.

As of June 30, 2020, the Company had modified 87 loans aggregating $28.0 million, primarily consisting of the deferral of principal and interest payments and the extension of the maturity date. Of these modifications, $27.8 million, or 99.3%, were performing in accordance with the accounting treatment under Section 4013 of the CARES Act and therefore did not qualify as TDRs. One loan totaling $196,000 that was modified did not qualify for the favorable accounting treatment under Section 4013 of the CARES Act and therefore is reported as a TDR. Management has evaluated the loan and determined that based on the liquidation value of the collateral, no specific reserve is necessary.

The Company determined to make provisions to the allowance for loan losses totaling $135,000 during the year ended June 30, 2020. The provision increased the allowance as a percentage of total loans from 0.50% as of June 30, 2019 to 0.57% as of June 30, 2020. The Company determined the provisions made in 2020 to be an adequate response to COVID-19 because of an excess in the allowance for loan losses that had accumulated due to the historical loss history showing significant decreases in loss percentages within the non-owner-occupied commercial real estate category as of June 30, 2020. The historical loss percentage decreased from 4.15% as of December 31, 2019 to 1.22% as of June 30, 2020. This reduction created an addition to the general reserve of $589,000 during the first quarter of 2020. In addition to the provisions made in 2020, the Company allocated more than $500,000 across the loan portfolio as part of our qualitative assessment in our allowance for loan loss calculation, primarily in the national and local economic impact factor.

Comparison of Financial Condition at June 30, 2020 and June 30, 2019

Total assets decreased $6.8 million, or 2.2%, to $305.5 million at June 30, 2020 from $312.2 million at June 30, 2019, primarily reflecting decreases in loans held for investment offset by increases in cash and cash equivalents and loans held for sale.

Cash and cash equivalents increased $7.5 million, or 132.8%, to $13.1 million at June 30, 2020 from $5.6 million at June 30, 2019 due to the increased balance in deposit accounts during the year.

Loans held for investment decreased $22.5 million, or 8.6%, to $238.7 million at June 30, 2020 from $261.2 million at June 30, 2019, primarily reflecting a decrease in one- to four-family owner occupied loans of $24.3 million, or 19.5%, to $100.5 million at June 30, 2020 from $124.8 million at June 30, 2019. The decrease in one – to four - family owner occupied loans resulted from increased refinances and loan paydowns. These decreases were partially offset by an

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increase in multifamily loans of $3.2 million, or 4.4%, to $76.4 million at June 30, 2020 from $73.2 million at June 30, 2019.

Loans held for sale increased $11.6 million, or 164.0%, to $18.7 million at June 30, 2020 from $7.1 million at June 30, 2019. We currently sell a majority of the fixed-rate one- to four-family residential real estate loans that we originate. The balances at any month end vary based on the timing and volume of loan originations and sales. The decrease in mortgage interest rates due to COVID-19 resulted in a greater volume of loans originated and sold in the last quarter of the fiscal year ended June 30, 2020.

Total deposits increased $21.5 million, or 9.2%, to $256.1 million at June 30, 2020 from $234.6 million at June 30, 2019. The increase was due to an increase in demand deposits of $16.2 million, or 20.9%, to $93.6 million at June 30, 2020, from $77.4 million at June 30, 2019, an increase in certificates of deposit of $285,000, or 0.3%, to $87.0 million at June 30, 2020 from $86.8 million at June 30, 2019, and an increase in interest-bearing savings and NOW accounts of $5.0 million, or 7.1%, to $75.4 million at June 30, 2020 from $70.4 million at June 30, 2019, due to customary balance fluctuations. Prior to the termination of our amended Consent Order, we generally experienced certificate of deposit runoff at maturity because of our inability to pay competitive rates on deposits due to our classification as “adequately capitalized” for regulatory capital purposes, instead funding our operations with borrowings from the FHLB. Our classification as “adequately capitalized” (rather than “well-capitalized”) for regulatory capital purposes restricted our ability to accept, renew or roll over brokered deposits, and further restricted us from paying interest rates on deposits that exceed 75 basis points above national rates, as posted by the Federal Deposit Insurance Corporation. Although we had received a waiver from the Federal Deposit Insurance Corporation that permitted us to use local market area rates instead of national rates as the baseline in determining interest rates we could pay on deposits, this restriction limited our ability to compete for deposits in our market area.

Borrowed funds, consisting solely of FHLB advances, decreased $35.2 million, or 79.6%, to $9.0 million at June 30, 2020 from $44.2 million at June 30, 2019. During the year deposits increased and assets decreased which allowed us to pay down borrowings.

Total equity decreased $895,000, or 3.7%, to $23.5 million at June 30, 2020 from $24.4 million at June 30, 2019 as a result of an increased loss in the accumulated other comprehensive loss offset by net income in retained earnings. Accumulated other comprehensive loss increased as a result of lower interest rates used to calculate the pension liabilities due to historically low rates and lower gains on the portfolio than were actually projected due to COVID-19.

Average Balance Sheet

The following table sets forth average balance sheets, average yields and costs, and certain other information at and for the periods indicated. No tax-equivalent yield adjustments have been made, as the effects would be immaterial. All average balances are daily average balances. Non-accrual loans were included in the computation of average balances.

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The yields set forth below include the effect of deferred fees, discounts, and premiums that are amortized or accreted to interest income or interest expense. Loan balances exclude loans held for sale.

	For the Year Ended June 30, 2020							For the Year Ended June 30, 2019
	Average							Average
	Outstanding					Average		Outstanding					Average
	Balance			Interest		Yield/Rate		Balance			Interest		Yield/Rate
	(Dollars in thousands)
Interest-earning assets:
Loans	$	249,657		$	11,173	4.48	%	$	261,008		$	11,762	4.51	%
Securities		21,719			604	2.78	%		20,989			591	2.82	%
Federal Home Loan Bank of Chicago stock		1,288			53	4.12	%		2,215			122	5.51	%
Other		4,688			49	1.05	%		2,594			55	2.11	%
Total interest-earning assets		277,352			11,879	4.28	%		286,806			12,530	4.37	%
Non-interest-earning assets		25,971							20,386
Total assets	$	303,323						$	307,192
Interest-bearing liabilities:
Demand deposits	$	49,837			29	0.06	%	$	47,508			28	0.06	%
Savings and NOW deposits		74,453			62	0.08	%		80,994			65	0.08	%
Certificates of deposit		94,481			1,733	1.84	%		90,498			1,407	1.55	%
Total interest-bearing deposits		218,771			1,824	0.83	%		219,000			1,500	0.69	%
Borrowings		23,300			398	1.71	%		47,569			1,173	2.47	%
Other		—			—	—	%		1			—	—	%
Total interest-bearing liabilities		242,071			2,222	0.92	%		266,570			2,673	1.00	%
Non-interest-bearing liabilities		35,852							24,634
Total liabilities		277,923							291,204
Total equity		25,400							15,988
Total liabilities and equity	$	303,323						$	307,192
Net interest income				$	9,657						$	9,857
Net interest rate spread (1)						3.36	%						3.37	%
Net interest-earning assets (2)	$	35,281						$	20,236
Net interest margin (3)						3.48	%						3.44	%
Average interest-earning assets to interest-bearing liabilities		114.57	%						107.59	%

(1) Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities.

(2) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

(3) Net interest margin represents net interest income divided by average total interest-earning assets.

Rate/Volume Analysis

The following table presents the effects of changing rates and volumes on our net interest income for the years indicated. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The total column represents the sum of the prior columns. For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately based on the changes due to rate and the changes due to volume.

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	12 Months Ended June 30, 2020 vs.						12 Months Ended June 30, 2019 vs.
	2019						Nine Months 2018
	Increase (Decrease)				Total		Increase (Decrease)				Total
	Due to				Increase		Due to				Increase
	Volume		Rate		(Decrease)		Volume		Rate		(Decrease)
	(In thousands)
Interest-earning assets:
Loans	$	(508)	$	(81)	$	(589)	$	218	$	3,198	$	3,416
Securities		20		(7)		13		8		151		159
Federal Home Loan Bank of Chicago stock		(38)		(31)		(69)		44		48		92
Other		22		(28)		(6)		24		17		41
Total interest-earning assets		(504)		(147)		(651)		294		3,414		3,708
Interest-bearing liabilities:
Demand deposits		2		(1)		1		—		7		7
Savings and NOW deposits		(6)		2		(4)		(2)		13		11
Certificates of deposit		73		254		327		(194)		778		584
Total interest-bearing deposits		69		255		324		(196)		798		602
Borrowings		(415)		(360)		(775)		434		381		815
Other		—		—		—		—		—		—
Total interest-bearing liabilities		(346)		(105)		(451)		238		1,179		1,417
Change in net interest income	$	(158)	$	(42)	$	(200)	$	56	$	2,235	$	2,291

Comparison of Operating Results for the Years Ended June 30, 2020 and 2019

General. Net income was $1.1 million for the year ended June 30, 2020, compared to net loss of $399,000 for year ended June 30, 2019. The increase in income was due to an increase in non-interest income offset by a decrease in net interest income, described in more detail below.

Interest Income. Interest income decreased $651,000, or 5.2%, to $11.9 million for the year ended June 30, 2020 compared to $12.5 million for the year ended June 30, 2019. Interest income on loans, which is our primary source of interest income, decreased $589,000, or 5.0%, to $11.2 million for the year ended June 30, 2020 compared to $11.8 million for the year ended June 30, 2019. Our annualized average yield on loans decreased three basis points to 4.48% for the year ended June 30, 2020 from 4.51% for the year ended June 30, 2019, reflecting recent decreases in market interest rates. The average balance of loans also decreased by $11.4 million, or 4.3%, to $249.7 million for the year ended June 30, 2020 from $261.0 million for the year ended June 30, 2019.

Interest Expense. Interest expense decreased $450,000, or 16.8%, to $2.2 million for the year ended June 30, 2020 compared to $2.7 million for the year ended June 30, 2019, due to decreases in interest expense on borrowings and deposits.

Interest expense on borrowings decreased $775,000 to $398,000 for the year ended June 30, 2020 from $1.2 million for the year ended June 30, 2019. This decrease resulted from the decreases in both the average balance of borrowings and the average rate we paid on borrowings. The average balance of borrowings decreased $24.3 million to $23.3 million for the year ended June 30, 2020 from $47.6 million for the year ended June 30, 2019, and the annualized average rate we paid on borrowings decreased 76 basis points to 1.71% for the year ended June 30, 2020, from 2.47% for the year ended June 30, 2019. As described above, during the year ended June 30, 2019, we relied on borrowings to fund our operations as a result of certificate of deposit runoff. During the year deposits increased and assets decreased which allowed us to pay down borrowings. The decrease in rates paid on borrowings reflects recent decreases in market interest rates.

Interest expense on deposits increased $324,000, or 21.6%, to $1.8 million for the year ended June 30, 2020 from $1.5 million for the year ended June 30, 2019. Specifically, interest expense on certificates of deposit increased $327,000, or

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23.2%, to $1.7 million for the year ended June 30, 2020 from $1.4 million for the year ended June 30, 2019. This increase resulted from an increase in the annualized average rate we paid on certificates of deposit, which increased 29 basis points to 1.84% for the year ended June 30, 2020 from 1.55% for the year ended June 30, 2019. The increase in rates paid on certificates of deposit reflects increases in market interest rates during 2019 and our ability to compete for deposits after the termination of our amended Consent Order.

Net Interest Income. Net interest income decreased $336,000, or 3.4%, to $9.5 million for the year ended June 30, 2020 from $9.9 million for the year ended June 30, 2019, primarily as a result of the decreased interest income from loans. Our net interest rate spread decreased by one basis points to 3.36% for the year ended June 30, 2020 from 3.37% for the year ended June 30, 2019, and our net interest margin increased by four basis points to 3.48% for the year ended June 30, 2020 from 3.44% for the year ended June 30, 2019, as our cost of borrowings decreased more quickly than the decrease in the yield earned on loans.

Provision for Loan Losses. Provisions for loan losses are charged to operations to establish an allowance for loan losses at a level necessary to absorb known and inherent losses in our loan portfolio that are both probable and reasonably estimable at the date of the financial statements. In evaluating the level of the allowance for loan losses, management analyzes several qualitative loan portfolio risk factors including, but not limited to, management’s ongoing review and grading of loans, facts and issues related to specific loans, historical loan loss and delinquency experience, trends in past due and non-accrual loans, existing risk characteristics of specific loans or loan pools, changes in the nature, volume and terms of loans, the fair value of underlying collateral, changes in lending personnel, current economic conditions and other qualitative and quantitative factors which could affect potential credit losses. See “—Summary of Significant Accounting Policies” for additional information.

After an evaluation of these factors, we recorded a $135,000 provision for the year ended June 30, 2020 and no provision for the year ended June 30, 2019. Our allowance for loan losses increased $59,000, or 4.6%, to $1.4 million at June 30, 2020 from $1.3 milion at June 30, 2019. The allowance for loan losses to total loans increased to at 0.57% at June 30, 2020 and from 0.50% at June 30, 2019, and the allowance for loan losses to non-performing loans increased to 100.91% at June 30, 2020 from 84.86% at June 30, 2019. The increase in the provision for loan losses resulted from COVID-19 as discussed above.

To the best of our knowledge, we have recorded all loan losses that are both probable and reasonable to estimate at June 30, 2020. However, future changes in the factors described above, including, but not limited to, actual loss experience with respect to our loan portfolio, could result in material increases in our provision for loan losses. In addition, the WDFI and the Federal Deposit Insurance Corporation, as an integral part of their examination process, will periodically review our allowance for loan losses, and as a result of such reviews, we may have to adjust our allowance for loan losses.

Non-interest Income. Non-interest income information is as follows.

	Year Ended June 30,				Change
	2020		2019		Amount		Percent
	(Dollars in thousands)
Service fees on deposits	$	430	$	467	$	(37)	(7.9)	%
Service fees on loans		238		276		(38)	(13.8)
Gain on sale of mortgage loans		5,120		1,523		3,597	236.2
Income on sale of uninsured products		321		321		—	—
Gain (loss) on sale of other real estate owned		118		(23)		141	(613.0)
Other		20		34		(14)	(41.2)
Total non-interest income	$	6,247	$	2,598	$	3,649	140.5	%

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Service fees on loans decreased as a result of a decrease in prepayment penalties and late charges collected during the year ending June 30, 2020. Gain on sale of mortgage loans (consisting solely of one- to four-family residential real estate loans) increased as we sold $334.9 million of mortgage loans during the year ended June 30, 2020 compared to $105.3 million of such sales during the nine months ended June 30, 2019. Gain on sale of other real estate owned increased as we made four sales of other real estate during the year ended June 30, 2020 in excess of the principal balance and did not make any sales of other real estate during the year ended June 30, 2019 in excess of the principal balance.

Non-interest Expenses. Non-interest expenses information is as follows.

	Year Ended June 30,				Change
	2020		2019		Amount		Percent
	(Dollars in thousands)
Compensation and benefits	$	8,503	$	7,425	$	1,078	14.5	%
Occupancy		1,969		1,930		39	2.0
Advertising		227		279		(52)	(18.6)
Data processing services		1,096		1,218		(122)	(10.0)
FDIC assessment		112		458		(346)	(75.5)
Cost of operations of other real estate owned		1,047		125		922	737.6
Insurance		156		161		(5)	(3.1)
Professional Fees		489		427		62	14.5
Other		1,078		886		192	21.7
Total non-interest income	$	14,677	$	12,909	$	1,768	13.7	%

Compensation and benefits expense increased primarily as a result of the increased commissions from greater loan volume. FDIC assessment decreased as we received Small Bank Assessment Credits from the FDIC and a lower premium rate. Cost of operations of other real estate owned increased due to a large write off on other real estate loans during the year ending June 30, 2020. Data processing services decreased as we were able to renegotiate the terms of our contract due to our improved financial condition. Professional fee expenses increased for the year ended June 30, 2020 due to the increased costs of audits as a public company. Other expenses increased due the increase in sold loan commsion fees offset due to the increase in loans sold.

Income Tax Expense. We recognized no income tax expense or benefit for the year ended June 30, 2020 due to a full valuation allowance being recorded against the Company’s deferred tax assets. We recognized an income tax benefit of $55,000 for the year ended June 30, 2019.

Management of Market Risk

General. Our most significant form of market risk is interest rate risk because, as a financial institution, the majority of our assets and liabilities are sensitive to changes in interest rates. Therefore, a principal part of our operations is to manage interest rate risk and limit the exposure of our financial condition and results of operations to changes in market interest rates. Our Asset/Liability Management Committee, consisting of members of our senior management, is responsible for evaluating the interest rate risk inherent in our assets and liabilities, for determining the level of risk that is appropriate, given our business strategy, operating environment, capital, liquidity and performance objectives, and for managing this risk consistent with the policy and guidelines approved by our board of directors. The board of directors receives a monthly report from the Asset/Liability Management Committee. We currently utilize a third-party modeling program, prepared on a quarterly basis, to evaluate our sensitivity to changes in interest rates.

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We have sought to manage our interest rate risk in order to minimize the exposure of our earnings and capital to changes in interest rates. The following represent our primary strategies to manage our interest rate risk:

● selling our longer-term, fixed-rate loans into the secondary market;

● limiting our reliance on non-core/wholesale funding sources;

● growing our volume of transaction deposit accounts; and

● diversifying our loan portfolio by adding more commercial-related loans, which typically have shorter maturities and/or balloon payments.

By following these strategies, we believe that we are better positioned to react to increases in market interest rates.

We do not engage in hedging activities, such as engaging in futures, options or swap transactions, or investing in high-risk mortgage derivatives, such as collateralized mortgage obligation residual interests, real estate mortgage investment conduit residual interests or stripped mortgage backed securities.

Net Interest Income. We analyze our sensitivity to changes in interest rates through a net interest income model. Net interest income is the difference between the interest income we earn on our interest-earning assets, such as loans and securities, and the interest we pay on our interest-bearing liabilities, such as deposits and borrowings. We estimate what our net interest income would be for a 12-month period. We then calculate what the net interest income would be for the same period under the assumptions that the United States Treasury yield curve increases or decreases instantaneously by 200 and 400 basis point increments, with changes in interest rates representing immediate and permanent, parallel shifts in the yield curve. A basis point equals one-hundredth of one percent, and 100 basis points equals one percent. An increase in interest rates from 3% to 4% would mean, for example, a 100 basis point increase in the “Change in Interest Rates” column below.

The tables below set forth, as of June 30, 2020 (the latest date for which information is available), the calculation of the estimated changes in our net interest income that would result from the designated immediate changes in the United States Treasury yield curve.

June 30, 2020
Change in Interest Rates	Net Interest Income		Year 1 Change
(basis points) (1)	Year 1 Forecast		from Level
(Dollars in thousands)
+400	$	10,700	12.60	%
+200		10,199	7.33	%
Level		9,502	—	%
(200)		9,057	(4.69)	%
(400)		8,887	(6.48)	%

(1) Assumes an immediate uniform change in interest rates at all maturities.

The table above indicates that at June 30, 2020, in the event of an instantaneous parallel 200 basis point increase in interest rates, we would have experienced a 7.33% increase in net interest income, and in the event of an instantaneous 200 basis point decrease in interest rates, we would have experienced an 4.69% decrease in net interest income. At June 30, 2019 in the event of an instantaneous parallel 200 basis point increase in interest rates, we would have experienced a 2.82% increase in net interest income, and in the event of an instantaneous 200 basis point decrease in interest rates, we would have experienced a 8.69%% decrease in net interest income.

Net Economic Value. We also compute amounts by which the net present value of our assets and liabilities (net economic value or “NEV”) would change in the event of a range of assumed changes in market interest rates. This

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model uses a discounted cash flow analysis and an option-based pricing approach to measure the interest rate sensitivity of net portfolio value. The model estimates the economic value of each type of asset, liability and off-balance sheet contract under the assumptions that the United States Treasury yield curve increases or decreases instantaneously by 200 and 400 basis point increments, with changes in interest rates representing immediate and permanent, parallel shifts in the yield curve.

The tables below set forth, as of June 30, 2020 (the most recent date for which information is available), the calculation of the estimated changes in our NEV that would result from the designated immediate changes in the United States Treasury yield curve.

At June 30, 2020
							NEV as a Percentage of Present
							Value of Assets (3)
Change in
Rates (basis			Estimated Increase (Decrease) in						Increase
Interest points)	Estimated		NEV				NEV		(Decrease)
(1)	NEV (2)		Amount		Percent		Ratio (4)		(basis  points)
(Dollars in thousands)
+400	$	45,701	$	6,662	17.06	%	16.06	%	374
+200		44,882		5,843	14.97	%	14.90	%	257
—		39,039		—	—	%	12.32	%	—
(200)		36,537		(2,502)	(6.41)	%	10.96	%	(136)
(400)		46,393		7,354	18.84	%	13.52	%	120

(1) Assumes an immediate uniform change in interest rates at all maturities.

(2) NEV is the discounted present value of expected cash flows from assets, liabilities and off-balance sheet contracts.

(3) Present value of assets represents the discounted present value of incoming cash flows on interest-earning assets.

(4) NEV Ratio represents NEV divided by the present value of assets.

The table above indicates that at June 30, 2020, in the event of an instantaneous parallel 200 basis point increase in interest rates, we would have experienced a 14.97% increase in net economic value, and in the event of an instantaneous 200 basis point decrease in interest rates, we would have experienced a 6.41% decrease in net economic value. At June 30, 2019 in the event of an instantaneous parallel 200 basis point increase in interest rates, we would have experienced a 0.36% decrease in net economic value, and in the event of an instantaneous 200 basis point decrease in interest rates, we would have experienced a 15.35% decrease in net economic value.

Certain shortcomings are inherent in the methodologies used in the above interest rate risk measurements. Modeling changes require making certain assumptions that may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. In this regard, the net interest income and net economic value tables presented assume that the composition of our interest-sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured and assumes that a particular change in interest rates is reflected uniformly across the yield curve regardless of the duration or repricing of specific assets and liabilities. Accordingly, although the net interest income and NEV tables provide an indication of our interest rate risk exposure at a particular point in time, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates on net interest income and NEV and will differ from actual results. Furthermore, although certain assets and liabilities may have similar maturities or periods to repricing, they may react in different degrees to changes in market interest rates. Additionally, certain assets, such as adjustable-rate loans, have features that restrict changes in interest rates both on a short-term basis and over the life of the asset.

Interest rate risk calculations also may not reflect the fair values of financial instruments. For example, decreases in market interest rates can increase the fair values of our loans, deposits and borrowings.

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Liquidity and Capital Resources

Liquidity describes our ability to meet the financial obligations that arise in the ordinary course of business. Liquidity is primarily needed to meet the borrowing and deposit withdrawal requirements of our customers and to fund current and planned expenditures. Our primary sources of funds are deposits, principal and interest payments on loans and securities, proceeds from the sale of loans, and proceeds from maturities of securities. We also have the ability to borrow from the FHLB and from U.S. Bank. At June 30, 2020, we had an $130.8 million line of credit with the FHLB, and had $9.0 million of borrowings outstanding as of that date, and we also had a $5.0 million line of credit with U.S. Bank, with no borrowings outstanding as of that date.

While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and loan prepayments are greatly influenced by general interest rates, economic conditions, and competition. Our most liquid assets are cash and short-term investments including interest-bearing demand deposits. The levels of these assets are dependent on our operating, financing, lending, and investing activities during any given period.

Our cash flows are comprised of three primary classifications: cash flows from operating activities, investing activities, and financing activities. Net cash provided by (used in) operating activities was $(4.7) million and $(586,000) for the year ended June 30, 2020 and the year ended June 30, 2019. Net cash provided by (used in) investing activities, which consists primarily of disbursements for loan originations and the purchase of securities, offset by principal collections on loans, and proceeds from maturing securities and pay downs on securities, was $26.2 million and $919,000 for the year ended June 30, 2020, and the year ended June 30, 2019. Net cash provided by (used in) financing activities, consisting of activity in deposit accounts, borrowings, and net proceeds from the sale of common stock less initial capitalization of TEB MHC, was $(14.0) million and $(837,000) for the year ended June 30, 2020 and the year ended June 30, 2019.

We are committed to maintaining a strong liquidity position. We monitor our liquidity position on a daily basis. We anticipate that we will have sufficient funds to meet our current funding commitments. Based on our deposit retention experience, current pricing strategy and regulatory restrictions, we anticipate that a substantial portion of maturing time deposits will be retained, and that we can supplement our funding with borrowings in the event that we allow these deposits to run off at maturity.

At June 30, 2020, we exceeded all of our regulatory capital requirements, and we were categorized as well capitalized at June 30, 2020. Management is not aware of any conditions or events since the most recent notification that would change our category.

Off-Balance Sheet Arrangements and Aggregate Contractual Obligations

Commitments. As a financial services provider, we routinely are a party to various financial instruments with off-balance-sheet risks, such as commitments to extend credit and unused lines of credit. While these contractual obligations represent our future cash requirements, a significant portion of commitments to extend credit may expire without being drawn upon. Such commitments are subject to the same credit policies and approval process accorded to loans we make. At June 30, 2020, we had outstanding commitments to originate loans of $15.8 million, and outstanding commitments to sell loans of $106.0 million. We anticipate that we will have sufficient funds available to meet our current lending commitments. Time deposits that are scheduled to mature in one year or less from June 30, 2020 totaled $41.9 million. Management expects that a substantial portion of the maturing time deposits will be renewed. However, if a substantial portion of these deposits is not retained, we may utilize FHLB advances or other borrowings to offset projected portfolio loan production.

Contractual Obligations. In the ordinary course of our operations, we enter into certain contractual obligations. Such obligations include data processing services, operating leases for premises and equipment, agreements with respect to borrowed funds and deposit liabilities.

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Recent Accounting Pronouncements

Please refer to Note 1 to the Financial Statements included as Item 8 in this Annual Report for a description of recent accounting pronouncements that may affect our financial condition and results of operations.

Impact of Inflation and Changing Prices

The financial statements and related data presented herein have been prepared in accordance with U.S. GAAP, which requires the measurement of financial position and operating results in terms of historical dollars without considering changes in the relative purchasing power of money over time due to inflation. The primary impact of inflation on our operations is reflected in increased operating costs. Unlike most industrial companies, virtually all of the assets and liabilities of a financial institution are monetary in nature. As a result, interest rates, generally, have a more significant impact on a financial institution’s performance than does inflation. Interest rates do not necessarily move in the same direction or to the same extent as the prices of goods and services.

ITEM 7A.           Quantitative and Qualitative Disclosures About Market Risk

For information regarding market risk, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations”.

ITEM 8.              Financial Statements and Supplementary Data

The Consolidated Financial Statements, including supplemental data, of TEB Bancorp, Inc. begin on page F-1 of this Annual Report.

ITEM 9.              Changes In and Disagreements With Accountants on Accounting and Financial Disclosure

None.

ITEM 9A.           Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the principal executive officer and principal financial officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective.

Management of TEB Bancorp, Inc. is responsible for establishing and maintaining adequate internal control over financial reporting.

TEB Bancorp, Inc.’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. TEB Bancorp, Inc.’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of TEB Bancorp, Inc.; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of TEB Bancorp, Inc. are being made only in accordance with authorizations of management and directors of TEB Bancorp, Inc.; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of TEB Bancorp, Inc.’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become

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inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

There were no changes made in our internal controls during the quarter ended June 30, 2020 that have materially affected, or are reasonably likely to materially affect, TEB Bancorp, Inc.’s internal control over financial reporting.

ITEM 9B.           Other Information

None.

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PART III

ITEM 10.            Directors, Executive Officers and Corporate Governance

TEB Bancorp, Inc. has adopted a Code of Ethics that applies to its principal executive officer, principal financial officer and principal accounting officer or controller or persons performing similar functions. A copy of the Code is available on TEB Bancorp, Inc.’s website at www.theequitablebank.com under “About Us – Investor Relations – Governance – Governance Documents.”

The information contained under the sections captioned “Proposal I – Election of Directors” in TEB Bancorp, Inc.’s definitive Proxy Statement for the 2020 Annual Meeting of Stockholders (the “Proxy Statement”) is incorporated herein by reference.

ITEM 11.            Executive Compensation

The information contained under the section captioned “Proposal I – Election of Directors – Executive Compensation” in the definitive Proxy Statement is incorporated herein by reference.

ITEM 12.            Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

(a) Securities Authorized for Issuance under Stock-Based Compensation Plans

TEB Bancorp, Inc. has no compensation plans under which equity securities are authorized for issuance.

(b) Security Ownership of Certain Beneficial Owners

The information required by this item is incorporated herein by reference to the section captioned “Voting Securities and Principal Holders” in the Proxy Statement.

(c) Security Ownership of Management

The information required by this item is incorporated herein by reference to the section captioned “Voting Securities and Principal Holders” in the Proxy Statement.

(d) Changes in Control

Management of TEB Bancorp, Inc. knows of no arrangements, including any pledge by any person of securities of TEB Bancorp, Inc., the operation of which may at a subsequent date result in a change in control of the registrant.

ITEM 13.            Certain Relationships and Related Transactions, and Director Independence

The information required by this item is incorporated herein by reference to the sections captioned “Proposal I – Election of Directors – Transactions with Certain Related Persons,” “– Board Independence” and “– Meetings and Committees of the Board of Directors” of the Proxy Statement.

ITEM 14.            Principal Accountant Fees and Services

The information required by this item is incorporated herein by reference to the section captioned “Proposal II – Ratification of Appointment of Independent Registered Public Accounting Firm” of the Proxy Statement.

54

PART IV

ITEM 15.            Exhibits and Financial Statement Schedules

3.1	Articles of Incorporation of TEB Bancorp, Inc. (incorporated by reference to Exhibit 3.1 to the Registration Statement on Form S-1 of TEB Bancorp, Inc. (File No. 333-227307), initially filed with the Securities and Exchange Commission on September 12, 2018)
3.2	Bylaws of TEB Bancorp, Inc. (incorporated by reference to Exhibit 3.2 to the Registration Statement on Form S-1 of TEB Bancorp, Inc. (File No. 333-227307), initially filed with the Securities and Exchange Commission on September 12, 2018)
4.1	Form of Common Stock Certificate of TEB Bancorp, Inc. (incorporated by reference to Exhibit 4 to the Registration Statement on Form S-1 of TEB Bancorp, Inc. (File No. 333-227307), initially filed with the Securities and Exchange Commission on September 12, 2018)
4.2	Descriptions of Registrant’s Securities
21	Subsidiaries of Registrant
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101	The following materials from TEB Bancorp, Inc.’s Annual Report on Form 10-K, formatted in XBRL:  (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income (Loss), (iii) Consolidated Statements of Comprehensive (Loss) Income, (iv) Consolidated Statements of Changes in Stockholders’ Equity, (v) Consolidated Statements of Cash Flows and (vi) Notes to the Consolidated Financial Statements

† Management contract or compensation plan or arrangement.

ITEM 16.            Form 10-K Summary

Not applicable

55

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		TEB BANCORP, INC.
Date: October 1, 2020	By:	/s/ Jennifer L. Provancher
		Jennifer L. Provancher
		President and Chief Executive Officer
		(Duly Authorized Representative)

Pursuant to the requirements of the Securities Exchange of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signatures	Title	Date
/s/ Jennifer L. Provancher	President and Chief Executive Officer	October 1, 2020
Jennifer L. Provancher	(Principal Executive Officer)
/s/ Lauren Poppen	Chief Financial Officer	October 1, 2020
Lauren Poppen	(Principal Financial and Accounting Officer)
/s/ John P. Matter	Chairman of the Board	October 1, 2020
John P. Matter
/s/ Charles R. Pittelkow	Vice Chairman of the Board	October 1, 2020
Charles R. Pittelkow
/s/ Joseph J. Becker	Director	October 1, 2020
Joseph J. Becker
/s/ Christopher C. Conlon	Director	October 1, 2020
Christopher C. Conlon
/s/ Otto R. Radke	Director	October 1, 2020
Otto R. Radke
/s/ Julie A. Taylor	Director	October 1, 2020
Julie A. Taylor

56

Report of Independent Registered Public Accounting Firm	F-2
Consolidated Financial Statements
Consolidated Balance Sheets	F-3
Consolidated Statements of Operations	F-4
Consolidated Statements of Comprehensive Loss	F-5
Consolidated Statements of Changes in Stockholders’ Equity	F-6
Consolidated Statements of Cash Flows	F-7
Notes to the Consolidated Financial Statements	F-8

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of Directors of TEB Bancorp Inc.:

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of TEB Bancorp Inc. (the "Company") as of June 30, 2020 and 2019, the related consolidated statements of operations, comprehensive loss, changes in stockholders’ equity, and cash flows for the years then ended, and the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2020 and 2019, and the results of their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

We have served as the Company’s auditor since 2018.

Milwaukee, Wisconsin

October 1, 2020

Baker Tilly US, LLP trading as Baker Tilly is a member of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities.

F-2

TEB BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	June 30, 2020		June 30, 2019
ASSETS
Cash and due from banks	$	2,763,126	$	4,617,976
Federal funds sold		10,342,915		1,012,794
Cash and cash equivalents		13,106,041		5,630,770
Interest bearing deposits in banks		2,713,164		3,674,015
Available for sale securities - stated at fair value		20,297,595		20,542,118
Loans, less allowance for loan losses of $1,353,427 and $1,293,965 at June 30, 2020 and June 30, 2019, respectively		237,300,478		259,873,403
Loans held for sale		18,690,027		7,079,548
Other real estate owned, net		2,288,255		4,080,401
Premises and equipment, net		7,960,041		8,165,274
Federal Home Loan Bank stock		1,345,500		2,061,000
Accrued interest receivable and other assets		1,773,486		1,141,686
TOTAL ASSETS	$	305,474,587	$	312,248,215
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
Deposits
Demand	$	93,627,648	$	77,414,345
Savings and NOW		75,397,948		70,385,843
Certificates of deposit		87,045,935		86,761,271
Total Deposits		256,071,531		234,561,459
Federal Home Loan Bank borrowings		9,000,000		44,200,000
Advance payments by borrowers for property taxes and insurance		2,882,067		3,197,095
Accrued interest payable and other liabilities		14,008,786		5,882,086
Total Liabilities		281,962,384		287,840,640
STOCKHOLDERS’ EQUITY
Preferred stock ($0.01 par value, 5,000,000 authorized, no shares issued or outstanding as of June 30, 2020 and June 30, 2019, respectively)		—		—
Common stock ($0.01 par value, 20,000,000 authorized, 2,624,343 issued and outstanding as of June 30, 2020 and June 30, 2019)		26,243		26,243
Additional paid in capital		11,319,328		11,319,328
Retained earnings		17,002,468		15,910,369
Accumulated other comprehensive loss		(4,835,836)		(2,848,365)
Total Stockholders’ Equity		23,512,203		24,407,575
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	305,474,587	$	312,248,215

See accompanying notes to consolidated financial statements.

F-3

TEB BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

	For the year		For the year
	ended June 30,		ended June 30,
	2020		2019
INTEREST AND DIVIDEND INCOME
Interest and fees on loans	$	11,173,105	$	11,762,010
Interest and dividends on investment securities		656,909		713,291
Interest on federal funds sold		40,773		44,953
Interest on deposits in banks		8,298		9,903
Total Interest Income		11,879,085		12,530,157
INTEREST EXPENSE
Interest on deposits		1,824,544		1,500,343
Interest on Federal Home Loan Bank borrowings		397,726		1,172,347
Interest on federal funds purchased		308		284
Total Interest Expense		2,222,578		2,672,974
Net interest income before provision for loan losses		9,656,507		9,857,183
Provision for loan losses		135,000		—
Net interest income after provision for loan losses		9,521,507		9,857,183
NON-INTEREST INCOME
Service fees on deposits		429,531		467,394
Service fees on loans		238,133		275,501
Gain on sales of mortgage loans		5,120,325		1,522,595
Income on sale of uninsured products		321,285		321,216
Gain (loss) on sale of other real estate owned		117,657		(23,265)
Other income		20,439		34,445
Total Non-Interest Income		6,247,370		2,597,886
NON-INTEREST EXPENSES
Compensation and benefits		8,503,018		7,425,235
Occupancy		1,969,002		1,930,238
Advertising		227,320		278,701
Data processing services		1,095,609		1,218,325
FDIC assessment		112,418		458,344
Cost of operations for other real estate owned		1,046,646		124,503
Insurance expense		156,312		160,881
Professional fees		488,803		427,483
Other expenses		1,077,650		885,762
Total Non-Interest Expenses		14,676,778		12,909,472
Income (loss) before income taxes		1,092,099		(454,403)
Income tax benefit		—		(55,064)
NET INCOME (LOSS)	$	1,092,099	$	(399,339)
Basic income (loss) per share	$	0.42	$	(0.15)
Diluted income (loss) per share	$	0.42	$	(0.15)

See accompanying notes to consolidated financial statements.

F-4

TEB BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

	For the year		For the year
	ended June 30,		ended June 30,
	2020		2019
Net income (loss)	$	1,092,099	$	(399,339)
Other comprehensive income (loss), net of tax
Unrealized gains/losses on securities
Net unrealized holding gains arising during period		359,589		635,594
Tax effect		—		(55,112)
Change in unfunded pension obligation		(2,347,060)		(1,221,271)
Tax effect		—		—
Other comprehensive loss, net of tax		(1,987,471)		(640,789)
COMPREHENSIVE LOSS	$	(895,372)	$	(1,040,128)

See accompanying notes to consolidated financial statements.

F-5

TEB BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

								Accumulated
				Additional				Other
	Number of	Common		Paid-In		Retained		Comprehensive
	Shares	Stock		Capital		Earnings		Loss		Total
BALANCES - June 30, 2018	—	$	—	$	—	$	16,309,708	$	(2,207,576)	$	14,102,132
Comprehensive loss
Net loss							(399,339)				(399,339)
Other Comprehensive Loss, net of tax									(640,789)		(640,789)
Issuance of common stock, net of issuance costs of $1,649,899 and initial MHC capitalization of $100,000	2,624,343		26,243		11,319,328						11,345,571
BALANCES - June 30, 2019	2,624,343	$	26,243	$	11,319,328	$	15,910,369	$	(2,848,365)	$	24,407,575
Comprehensive loss
Net income							1,092,099				1,092,099
Other Comprehensive Loss, net of tax									(1,987,471)		(1,987,471)
BALANCES - June 30, 2020	2,624,343	$	26,243	$	11,319,328	$	17,002,468	$	(4,835,836)	$	23,512,203

See accompanying notes to consolidated financial statements.

F-6

TEB BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the Year		For the Year
	Ended		Ended
	June 30, 2020		June 30, 2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	1,092,099	$	(399,339)
Adjustments to reconcile net income (loss) to net cash flows used in operating activities
Provision for loan losses		135,000		—
Depreciation		552,952		555,421
Amortization and accretion		60,556		83,120
Origination of mortgage loans held for sale		(334,927,997)		(105,923,418)
Proceeds from sales of mortgage loans held for sale		328,437,843		106,782,850
Gain on sale of mortgage loans held for sale		(5,120,325)		(1,522,595)
(Gain) loss on sale of other real estate owned, net		(117,657)		23,265
Deferred income tax (benefit) expense		—		(334,198)
Income tax valuation allowance		—		364,787
Loss on sale or disposal of assets, net		1,650		—
Changes in assets and liabilities:
Accrued interest receivable and other assets		(631,800)		304,219
Accrued interest payable and other liabilities		5,779,637		(520,181)
Net cash flows used in operating activities		(4,738,042)		(586,069)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from maturities or calls of securities available for sale		3,937,991		1,791,443
Purchase of securities available for sale		(3,394,432)		(875,000)
Change in loans		22,237,069		3,706,548
Change from redemption of FHLB stock		715,500		9,000
Change in interest bearing deposits in banks		960,851		(3,516,556)
Proceeds from sale of other real estate owned		1,158,306		333,387
Charge-offs and (capital expenditures) on other real estate owned		952,353		(61,071)
Proceeds from sale of premises and equipment		8,000
Purchase of premises and equipment, net		(357,369)		(468,269)
Net cash flows provided by investing activities		26,218,269		919,482
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in deposits		21,510,072		(9,902,021)
FHLB advance proceeds		1,087,350,000		1,026,380,000
FHLB advance repayments		(1,122,550,000)		(1,028,180,000)
Change in advance payments by borrowers for property taxes and insurance		(315,028)		(480,339)
Net proceeds from issuance of common stock		—		11,345,571
Net cash flows used in financing activities		(14,004,956)		(836,789)
Net Change in Cash and Cash Equivalents		7,475,271		(503,376)
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR		5,630,770		6,134,146
CASH AND CASH EQUIVALENTS - END OF YEAR	$	13,106,041	$	5,630,770
SUPPLEMENTAL CASH FLOW DISCLOSURES
Cash paid for interest	$	1,830,030	$	1,536,928
Loans transferred to other real estate owned		200,856		418,849

See accompanying notes to consolidated financial statements.

F-7

TEB BANCORP, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the Years Ended June 30, 2020 and 2019

NOTE 1 – Summary of Significant Accounting Policies

Organization

On April 30, 2019, The Equitable Bank, S.S.B. (the “Bank”) converted to a stock savings bank and is now organized in the mutual holding company structure. The Bank issued all of its outstanding stock to a new holding company, TEB Bancorp, Inc. (the “Bancorp”), which sold 1,309,547 shares of common stock to the public at $10.00 per share, representing 49.9% of its outstanding shares of common stock for gross proceeds of approximately $13.1 million. The net proceeds received were approximately $11.4 million after offering costs. TEB Bancorp, Inc. is organized as a corporation under the laws of the State of Maryland. The Bank utilized $100,000 of proceeds received from the offering as initial capitalization of TEB MHC. TEB MHC has been organized as a mutual holding company under the laws of the State of Wisconsin and owns 1,314,796 shares, or 50.1% of the outstanding common stock of TEB Bancorp, Inc.

The costs of the reorganization and the issuing of the common stock totaling $1,649,899 were deferred and deducted from the sales proceeds of the offering.

The Bank is a state-chartered savings bank providing a full range of financial services. The Bank grants commercial, residential and consumer loans, and accepts deposits from customers primarily in the Metropolitan Milwaukee area, which is in southeastern Wisconsin. The Bank is subject to competition from other financial institutions and nonfinancial institutions providing financial products. Additionally, the Bank is subject to the regulations of certain regulatory agencies and undergoes periodic examination by those regulatory agencies.

All depositors who had liquidation rights with respect to the Bank as of the effective date of the reorganization continue to have such rights solely with respect to TEB MHC so long as they continue to hold their deposit accounts with the Bank. In addition, all persons who become depositors of the Bank subsequent to the reorganization will have such liquidation rights with respect to TEB MHC.

At June 30, 2020, the significant assets of TEB Bancorp, Inc. were the capital stock of the Bank and a deposit account held at the Bank. The liabilities of TEB Bancorp, Inc. were insignificant. The Company is subject to the financial reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Company is subject to regulation and examination by the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”).

Principles of Consolidation

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the accounts and operations of TEB Bancorp, Inc. and its wholly-owned subsidiaries, the Bank, Equitable Investment Corp. and Savings Financial Corporation (the “Company”). All significant intercompany accounts and transactions have been eliminated in consolidation.

Emerging Growth Company Status

The Jumpstart Our Business Startups Act (the "JOBS Act"), which was signed into law on April 5, 2012, has made numerous changes to the federal securities laws to facilitate access to capital markets. Under the JOBS Act, a company with total annual gross revenues of less than $1.07 billion during its most recently completed fiscal year qualifies as an "emerging growth company". The Company qualifies as an emerging growth company and believes that it will continue to qualify as an emerging growth company for the foreseeable future.

An emerging growth company may elect to comply with new or amended accounting pronouncements in the same manner as a private company, but must make such election when the company is first required to file a registration

F-8

TEB BANCORP, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the Years Ended June 30, 2020 and 2019

statement. Such an election is irrevocable during the period a company is an emerging growth company. The Company has elected to comply with new or amended accounting pronouncements in the same manner as a private company. Accordingly, the financial statements may not be comparable to the financial statements of companies that comply with such new or revised accounting standards.

Use of Estimates

In preparing the consolidated financial statements in conformity with U.S. GAAP, management of the Company is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated balance sheet and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses, the pension actuarial assumptions, and the valuation of deferred tax assets.

Revenue Recognition

As of July 1, 2019, the Company adopted Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (Topic 606), as well as subsequent ASUs that modified Topic 606. The Company elected to apply the ASU and all related ASUs using the modified retrospective implementation method. The implementation of the guidance had no material impact on the measurement or recognition of revenue of prior periods.

The majority of the Company’s revenue-generating transactions are not subject to ASC 606, including all interest and dividend income generated from financial instruments. Certain noninterest income items, including gain on sales of loans, gain on sales of securities, and other noninterest income have been evaluated and determined to not fall within the scope of ASC 606. Elements of noninterest income that fall within the scope of ASC 606 are as follows:

Service charges and other fees The Company earns fees from its deposit customers for transaction-based, account maintenance, and overdraft services. Management reviewed the deposit account agreements and determined that the agreements can be terminated at any time by either the Company or the account holder. Transaction fees, such as wires and overdraft charges, are settled the day the performance obligation is satisfied. The Company’s monthly service charges and maintenance fees are for services provided to the customer on a monthly basis and are considered a series of servies that have the same pattern of transfer each month. The review of service charges assessed on deposit accounts included the amount of variable consideration that is a part of the monthly charges. It was found that the waiver of service charges due to insufficient funds and dormant account fees is immaterial and would not require a change in the accounting treatment for these fees under the new revenue standards. Recognition of revenue under ASC 606 did not materially change the timing or magnitude of revenue recognition.

Interchange fees Customers use a Bank-issued debit card to purchase goods and services, and the Company earns interchange fees on those transactions, typically a percentage of the sale amount of the transaction. The Company records the amount due when it receives the settlement from the payment network. Payments from the payment network are received and recorded into income on a daily basis. These funds are included in “Service fees on deposits” on the Consolidated Statements of Operations. There are no contingent debit card interchange fees recorded by the Company that could be subject to a clawback in future periods. Recognition of revenue under ASC 606 did not materially change the timing or magnitude of revenue recognition.

Cash and Due From Banks

For purposes of reporting cash flows, cash and cash equivalents include cash and balances due from banks and federal funds sold, all of which mature within 90 days. The Company maintains amounts due from banks, which, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts.

F-9

TEB BANCORP, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the Years Ended June 30, 2020 and 2019

Interest Bearing Deposits in Banks

Interest bearing deposits in banks mature within one year and are carried at cost, which approximates fair value.

Securities

Available for sale securities are stated at fair value and unrealized holding gains and losses on available for sale securities are reported as accumulated other comprehensive income (loss), net of applicable deferred income tax and adjusted for any applicable valuation allowance, a separate component of equity. Available for sale securities are written down to market value through operations if an impairment of value is deemed other than temporary due to credit issues. Gains or losses on the sale of securities, if any, are determined on the specific identification method. Securities transactions are recorded on the trade date.

Loans

Loans are carried at the unpaid principal balance adjusted for deferred loan fees and costs and charge-offs. Loan origination and commitment fees and certain direct loan origination costs are deferred and the net amounts amortized as an adjustment of the related loan’s yield over the contractual life of the related loan.

Interest on loans is accrued on the unpaid principal balances as earned. Loans are normally placed on nonaccrual status when contractually past due 90 days or more as to interest or principal payments. Additionally, whenever management becomes aware of facts or circumstances that may adversely impact the collectability of principal or interest on a loan, it is management’s practice to place such loan on nonaccrual status immediately, rather than delaying such action until the loan becomes 90 days past due. When a loan is placed on nonaccrual, previously accrued and uncollected interest on such loan is reversed, amortization of related loan fees is suspended, and income is recorded only to the extent that loan payments are subsequently received in cash and a determination has been made that the principal balance of the loan is collectible. If collectability of the principal is in doubt, payments received are applied to loan principal.

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status and the probability of collecting scheduled principal and interest payment when due.

A troubled debt restructuring (“TDR”) includes a loan modification where a borrower is experiencing financial difficulty and a concession is granted to that borrower that would not otherwise have been considered except for the borrower’s financial difficulties. TDRs may be on accrual or nonaccrual status based upon the performance of the borrower and management’s assessment of collectability. TDRs placed on nonaccrual may return to accrued status based on performance in accordance with terms of the restructuring, generally six months.

Loans Held for Sale

Loans originated and intended for sale in the secondary market are carried at the lower of cost or estimated market value in the aggregate. Net unrealized losses are recognized through a valuation allowance by charges to operations. All sales are made without recourse.

Allowance for Loan Losses

The allowance for loan losses (“ALL”) is established as losses are estimated to have occurred through a provision for loan losses charged to expense. Loan losses are charged against the ALL when management believes the uncollectability of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the ALL. The ALL consists of specific

F-10

TEB BANCORP, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the Years Ended June 30, 2020 and 2019

reserves on certain impaired loans from analyses developed through specific credit allocations for individual loans. The specific reserve relates to all loans for which the ALL is estimated on a loan by loan basis using either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s observable market price, or the fair value of the collateral if the loan is collateral dependent. The general reserve is based on the Company’s historical loss experience along with consideration of certain qualitative factors such as (i) changes in the nature, volume, and terms of loans, (ii) changes in lending personnel, (iii) changes in the quality of the loan review function, (iv) changes in nature and volume of past-due, nonaccrual, and/or classified loans, (v) changes in concentration of credit risk, (vi) changes in economic and industry conditions, (vii) changes in legal and regulatory requirements, (viii) unemployment and inflation statistics, and (ix) changes in underlying collateral values.

The ALL reflects management’s best estimate of the probable and inherent losses on loans. The adequacy of the ALL is reviewed and approved by the Company’s Board of Directors. Allocations of the ALL may be made for specific loans, but the entire ALL is available for any loan that, in management’s judgment, should be charged-off.

As an integral part of their examination process, various regulatory agencies review the ALL as well. Such agencies may require that changes in the ALL be recognized when such regulatory credit evaluations differ from those of management based on information available to the regulators at the time of their examinations.

Premises and Equipment, Net

Premises and equipment are recorded at cost less accumulated depreciation and amortization. Depreciation and amortization expense is provided on the straight-line method over the estimated useful life of the asset for financial reporting purposes, and the straight-line and accelerated methods for income tax purposes. Amortization of leasehold improvements is provided on the straight-line method over the lesser of the term of the respective lease or the estimated economic life of the improvements.

Other Real Estate Owned, Net

Other real estate owned is initially recorded at the fair market value of the real estate acquired less the estimated costs to sell the real estate at the date title is received, establishing a new cost basis, with any write-down charged to the allowance for loan losses. Costs relating to development or improvement of property are capitalized up to the fair value of the property. Valuations are periodically performed by management and independent third parties and a charge to expense is taken if the carrying value of a property exceeds its fair value less estimated costs to sell. Income and expense related to the operations of other real estate owned is recorded net in “Cost of operations of other real estate owned” as a component of non-interest expenses on the consolidated statements of operations. Gains and losses on the sale of other real estate owned are recorded in “Gain (loss) on sale of other real estate owned” as a component of non-interest income in the consolidated statements of operations.

Federal Home Loan Bank Stock

The Bank is a member of the Federal Home Loan Bank (“FHLB”) of Chicago. Members are required to own a certain amount of FHLB stock based on the Bank’s level of borrowings from the FHLB and other factors, and may invest in additional amounts of FHLB stock. The Bank’s investment in FHLB of Chicago stock meets the minimum amount required by current regulations and is carried at cost, which approximates fair value. FHLB stock is evaluated quarterly for impairment. Based on management’s evaluation, no impairment has been recorded on these securities. Both cash and stock dividends are reported as income.

F-11

TEB BANCORP, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the Years Ended June 30, 2020 and 2019

Defined Benefit Pension Plan

The Bank has a defined benefit pension plan (the “Plan”) covering substantially all of its employees hired prior to March 31, 2012. The benefits are based on years of service and the employee’s average monthly pay received during the five highest consecutive calendar years in the last 10 years of employment under the Plan. Management contributes annually the amounts necessary to provide for defined benefit payments upon retirement or death as determined by the Plan’s actuary. The Plan was frozen effective March 31, 2012 for all employees. No additional benefits are being accrued for active participants after that date and no new participants will be entered into the Plan.

The Bank records annual amounts relating to the Plan based on calculations that incorporate various actuarial and other assumptions including discount rates, mortality, assumed rates of return, compensation increases, and turnover rates. The Bank reviews its assumptions on an annual basis and makes modifications to the assumptions based on current rates and trends where appropriate to do so. The effect of modifications to those assumptions is recorded in accumulated other comprehensive income (loss) and amortized to net periodic pension cost over future periods. The Bank believes that the assumptions utilized in recording its obligations under its plan are reasonable based on its experience and market conditions.

Comprehensive Income (Loss)

U.S. GAAP generally requires that recognized revenue, expenses, gains, and losses be included in income. Although certain changes in assets and liabilities, such as unrealized gains and losses on available for sale securities, are reported as a separate component of the equity section and changes in the funded status of the pension plan, such items, along with net income (loss) are components of comprehensive income (loss).

Income Taxes

The Company accounts for income taxes in accordance with the Financial Accounting Standards Board (FASB) Accounting Standards Codification ("ASC") Topic 740, "Income Taxes." Under this guidance, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

The Company recognizes the tax effects from an uncertain tax position in the consolidated financial statements only if the position is more likely than not to be sustained on audit, based on the technical merits of the position. The Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the consolidated financial statements is the largest benefit that has a greater than 50% likelihood of being realized, upon ultimate settlement with the relevant tax authority. The Company recognizes interest and penalties accrued or released related to uncertain tax positions in current income tax expense or benefit.

Transfers of Financial Assets

Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange

F-12

TEB BANCORP, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the Years Ended June 30, 2020 and 2019

the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.

Advertising

Advertising costs are accrued and expensed in the period incurred.

Off-Balance Sheet Financial Instruments

In the ordinary course of business, the Bank has entered into off-balance-sheet financial instruments consisting of commitments to extend credit, commitments under credit card arrangements, commercial letters of credit and standby letters of credit. Such financial instruments are recorded in the consolidated financial statements when they are funded or related fees are incurred or received.

Significant Events

In December 2019, a coronavirus (COVID-19) was reported in China and on March 12, 2020, the President of the United States declared the COVID-19 outbreak in the United States a national emergency. The COVID-19 pandemic has caused significant economic dislocation as many state and local governments have ordered non-essential businesses to close and residents to shelter in place at home. Given the ongoing and dynamic nature of the circumstances, it is difficult to predict the full impact of the COVID-19 outbreak on our business. The extent of such impact will depend on future developments, which are highly uncertain, including when the coronavirus can be controlled and abated and when and how the economy may be reopened. In order to protect the health of employees and customers, the Company has temporarily limited lobby hours and transitioned as many employees to remote work as possible. Nonetheless, the Company has not incurred any significant disruptions to its business activities.

The Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, was signed into law on March 27, 2020 and provided over $2.0 trillion in emergency economic relief to individuals and businesses impacted by the COVID-19 pandemic. The CARES Act authorized the Small Business Administration (“SBA”) to temporarily guarantee loans under a new 7(a) loan program call the Paycheck Protection Program (“PPP”). Although we were not already a qualified SBA lender, we enrolled in the PPP by completing the required documentation.

An eligible business can apply for a PPP loan up to the greater of: (1) 2.5 times its average monthly “payroll costs”; or (2) $10.0 million. PPP loans will have: (a) an interest rate of 1.0%; (b) a two-year loan term to maturity; and (c) principal and interest payments deferred for six months from the date of disbursement. The SBA will guarantee 100% of the PPP loans made to eligible borrowers. The entire principal amount of the borrower’s PPP loan, including any accrued interest, is eligible to be reduced by the loan forgiveness amount under the PPP so long as employee and compensation levels of the business are maintained and 75% of the loan proceeds are used for payroll expenses, with the remaining 25% of the loan proceeds used for other qualifying expenses. The Company receives a processing fee from the SBA ranging from 1% to 5% depending on the size of the loan, which is offset by a third-party servicing agent fee ranging from 0.25% to 1.0%.

As of June 30. 2020, the Company originated 16 PPP loans totaling $1.1 million and generated approximately $35,000 from the processing fees.

To work with customers impacted by COVID-19, the Company is offering short-term (i.e., three months or less with the potential to extend up to six months, if necessary) loan modifications on a case by case basis to borrowers who were current in their payments at the inception of the loan modification program. Under Section 4013 of the CARES Act, loans less than 30 days past due as of December 31, 2019 are considered current for COVID-19 modifications. A financial institution can then suspend the requirements under U.S. GAAP for loan modifications related to COVID-19

F-13

TEB BANCORP, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the Years Ended June 30, 2020 and 2019

that would otherwise be categorized as a TDR, and suspend any determination of a loan modified as a result of COVID-19 as being a TDR, including the requirement to determine impairment for accounting purposes. Financial institutions wishing to utilize this authority must make a policy election, which applies to any COVID-19 modification made between March 1, 2020 and the earlier of either December 31, 2020 or the 60th day after the end of the COVID-19 national emergency. Similarly, the Financial Accounting Standards Board (“FASB”) has confirmed that short-term modifications made on a good faith basis in response to COVID-19 to loan customers who were current prior to any relief are not TDRs. Lastly, prior to the enactment of the CARES Act, the banking regulatory agencies provided guidance as to how certain short-term modifications would not be considered TDRs, and have subsequently confirmed that such guidance could be applicable for loans that do not qualify for favorable accounting treatment under Section 4013 of the CARES Act.

As of June 30, 2020, the Company had received requests to modify 87 loans aggregating $28.0 million, primarily consisting of the deferral of principal and interest payments and the extension of the maturity date. Of these modifications, $27.8 million, or 99.3%, were performing in accordance with the accounting treatment under Section 4013 of the CARES Act and therefore did not qualify as TDRs. One loan totaling $195,924 did not qualify for the favorable accounting treatment under Section 4013 of the CARES Act and therefore will be reported as a TDR. Management has evaluated the loan and determined that based on the liquidation value of the collateral, no specific reserve will be necessary. Details with respect to loan modification requests are as follows:

Loan Classification	Number of Loans		Balance as of June 30, 2020
Construction, land, development		1	$	46,511
1-4 family owner occupied		48		7,235,772
1-4 family non-owner occupied		17		2,517,746
Multifamily		12		10,576,275
Commercial owner occupied		3		1,518,195
Commercial non-owner occupied		3		6,022,240
Consumer and installment loans		3		42,922
Total loan modification requests		87	$	27,959,661

Subsequent Events

Management has reviewed the Company’s operations for potential disclosure or financial statement impacts related to events occurring after June 30, 2020, but prior to the release of these financial statements. Based on the results of this review, no subsequent event disclosure or financial statement impacts to these financial statements are required as of October 1, 2020.

Reclassification

Certain June 30, 2019 amounts have been reclassified to conform to the June 30, 2020 presentation. The reclassifications had no effect on reported amounts of consolidated net loss or stockholders’ equity.

Recent Accounting Pronouncements

This section provides a summary description of recent ASUs issued by the FASB to the ASC that had or that management expects may have an impact on the consolidated financial statements issued upon adoption. The Company is classified as an emerging growth company and has elected to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Effective dates reflect this election.

F-14

TEB BANCORP, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the Years Ended June 30, 2020 and 2019

Recently Adopted Accounting Pronouncements

In January 2016, the FASB issued ASU 2016-01, “Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.” ASU 2016-01 addresses certain aspects of the recognition, measurement, presentation, and disclosure of financial instruments. Under the new guidance, the Company is no longer required to disclose the fair value of financial instruments measured at amortized cost. The Company has early adopted this ASU beginning July 1, 2019. This ASU did not have a material impact on the Company’s consolidated financial statements.

In March 2017, the FASB issued ASU 2017-07, “Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.” ASU 2017-07 applies to all entities that offer employees defined benefit pension plans, other postretirement benefit plans, or other types of benefits accounted for under Topic 715, Compensation – Retirement Benefits. The amendments require that an employer disaggregate the service cost component from the other components of net benefit cost, with all updates being applied retrospectively. As the Company has historically not had any service cost component within net periodic pension cost, the impact of this ASU on the Company’s consolidated financial statements did not have a material impact.

In May 2016, the FASB issued ASU 2016-12, “Revenue from Contracts with Customers (Topic 606); Narrow-Scope Improvements and Practical Expedients.” ASU 2016-12 is intended to address certain specific issues identified by the FASB-IASB Joint Transition Resource Group for Revenue Recognition with respect to ASU 2014-09, “Revenue from Contracts with Customers (Topic 606).” The updates are effective on a retrospective basis for the annual periods beginning after December 15, 2018, and interim periods within annual reporting periods beginning after December 15, 2019. Based on management’s evaluation under the current guidance, we estimate that substantially all of our interest income and non-interest income will not be impacted by the adoption of these standards, because either the revenue from those contracts with customers is covered by other guidance in U.S. GAAP, or the anticipated revenue recognition outcomes with the adoption of these standards will likely be similar to our current revenue recognition practices. The Company adopted Topic 606 effective July 1, 2019, using the modified retrospective approach. Management did not identify any changes in the timing of revenue recognition when considering the amended accounting guidance, however, the Company has included additional disclosures as required by the guidance.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 320) – Classification of Certain Cash Receipts and Cash Payments.” This ASU adds or clarifies guidance on eight cash flow issues. The Company has retrospectively adopted the provisions of this ASU for its fiscal year beginning July 1, 2019. The adoption of ASU 2016-15 had no impact on its consolidated financial statements.

Recently Issued, But Not Yet Effective Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842).” Topic 842 was subsequently amended by ASU 2018-10, “Codification Improvements to Topic 842, Leases” and ASU 2018-11, “Leases (Topic 842)”. The amendments in this update increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. For leases with a term of 12 months or less, the amendments permit lessees to make an accounting policy election by class of underlying assets not to recognize lease assets and lease liabilities. For finance leases, the amendments in this update require a lessee to (1) recognize a right-of-use asset and lease liability, initially measured at the present value of the lease payments, on the balance sheet; (2) recognize interest on the lease liability separately from amortization of the right-of-use asset in the statement of operations; (3) classify repayments of the principal portion of the lease liability within financing activities and payments of interest on the least liability and variable lease payments within operating activities in the statement of cash flows. For operating leases, the amendments in this update require a lessee to (1) recognized a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, on the balance sheet; (2) recognized a single lease cost, calculated so that the cost of the lease is allocated over the lease term on a generally straight-line basis; (3) classify all cash payments within operating activities in the statement of cash flows. On October 16, 2019, the FASB

F-15

TEB BANCORP, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the Years Ended June 30, 2020 and 2019

approved the proposal to delay the effective date for this standard for private and all other entities. Due to the Company’s extended transition period election, the amendments are effective for fiscal years beginning after December 15, 2020. Early adoption is permitted. The Company’s leases are operating leases and ASU 2016-02 will require the Company to include them in its consolidated balance sheet. The Company’s operating leases are predominately related to real estate. Management is currently evaluating other impacts this guidance will have on the consolidated results of operations, financial presentation, and cash flows of the Company.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326) – Measurement of Credit Losses on Financial Instruments.” Topic 326 was subsequently amended by ASU 2018-19, “Codification Improvements to Topic 326, Financial Instruments – Credit Losses; ASU 2019-04, “Codification Improvements to Topic 326, Financial Instruments – Credit Losses”; and ASU 2019-05, “Financial Instruments – Credit Losses (Topic 326): Targeted Transition Relief.” This ASU replaces the current incurred loss impairment methodology with a methodology that reflected expected credit losses measured at amortized cost and certain other instruments, including loans, held-to-maturity debt securities, net investments in leases, and off-balance-sheet credit exposures. On October 16, 2019, the FASB approved the proposal to delay the effective date for this standard for private and all other entities. Due to the Company’s extended transition period election, the update is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Management is currently evaluating the potential impact on its consolidated results of operations, financial position, and cash flows; however, due to the significant differences in the revised guidance from existing U.S. GAAP, the implementation of this guidance may result in material changes in the Company’s accounting for credit losses on financial instruments.

In March 2017, the FASB issued ASU 2017-08, “Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities.” ASU 2017-08 amends guidance on the amortization period of premiums on certain purchased callable debt securities. The amendments shorten the amortization period of premiums on certain purchased callable debt securities to the earliest call date. ASU 2017-08 is effective for annual periods beginning after December 15, 2019 with early adoption permitted. Management is currently evaluating the potential impact of the new standard on the consolidated results of operations, financial position, and cash flows of the Company.

In August 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement.” ASU 2018-13 modifies the disclosure requirements on fair value measurements in Topic 820, including the removal, modification to, and addition of certain disclosure requirements. This ASU will be effective for fiscal years beginning after December 15, 2019. Early adoption is permitted. This ASU has a minor impact to and simplifies the Company’s fair value disclosures, and no additional impact to the consolidated financial statements is expected.

In August 2018, the FASB issued ASU No. 2018-14, “Compensation – Retirement Benefits – Defined Benefit Plans – General (Subtopic 715-20): Disclosure Framework – Changes to the Disclosure Requirements for Defined Benefit Plans.” ASU 2018-14 applies to all employers that sponsor defined benefit pension or other postretirement plans. The amendments require that an employer disclose an explanation of the reasons for significant gains and losses related to changes in the net benefit obligation for the period. Multiple disclosure requirements are also removed with this amendment, including: (1) the amounts in accumulated other comprehensive income expected to be recognized as components of net periodic benefit cost over the next fiscal year; (2) the amount and timing of plan assets expected to be returned to the employer; (3) related party disclosures about significant transactions between the employer or related parties and the plan; and (4) the effects of a one-percentage-point change in assumed health care cost trend rates on the aggregate of the service and interest cost components of net periodic benefit costs. Additional disclosure requirements contained within Subtopic 715-20 are also clarified. The amendments are effective for fiscal years ending after December 15, 2021. Early adoption is permitted. The adoption of this guidance is not expected to have a material impact on the consolidated results of operations, financial position, or cash flows of the Company.

F-16

TEB BANCORP, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the Years Ended June 30, 2020 and 2019

NOTE 2 – Income (Loss) Per Share

Income (Loss) per share is based on net loss divided by the weighted average number of shares outstanding during the period. Income (Loss) per share is presented for the period for which shares were outstanding.

	Year Ended		Year Ended
	June 30, 2020		June 30, 2019
Net income (loss)	$	1,092,099	$	(399,339)
Basic potential common shares
Weighted average shares outstanding		2,624,343		2,624,343
Basic weighted average shares outstanding		2,624,343		2,624,343
Diluted potential common shares		—		—
Diluted weighted average shares outstanding		2,624,343		2,624,343
Basic earnings (loss) per share	$	0.42		(0.15)
Diluted earnings (loss) per share	$	0.42		(0.15)

NOTE 3 – Fair Value of Financial Instruments

Fair value is the price that would be received to sell an asset or paid to transfer liabilities in an orderly transaction between market participants at the measurement date (exit price) and establishes a framework for measuring fair value.

To determine fair value, the Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The Company is able to classify fair value balances based on the observability of those inputs. The guidance establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy are as follows:

> Level 1 - Fair value is based upon quoted prices (unadjusted) for identical assets or liabilities in active markets. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

> Level 2 - Fair value is based upon quoted prices for similar, but not identical, assets and liabilities in active markets, and other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. This also includes quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability, or inputs that are derived principally from or corroborated by observable market data.

> Level 3 - Fair value is based upon financial models using primarily unobservable inputs. Unobservable inputs reflect the Company’s own assumptions about the assumptions that market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.

A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

F-17

TEB BANCORP, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the Years Ended June 30, 2020 and 2019

Assets

Available for sale securities Where quoted prices for securities are available in an active market, those securities are classified within Level 1 of the valuation hierarchy. If such quoted market prices are not available, then fair values are estimated using pricing models, quoted prices of securities with similar characteristics, or discounted cash flows. Examples of securities with similar characteristics, which would generally be classified within Level 2 of the valuation hierarchy, include certain AAA-rated U.S. government sponsored agency securities, municipal obligations, and mortgage-backed securities. A security using financial models based upon primarily unobservable inputs, such as commercial paper, would generally be classified within Level 3 of the valuation hierarchy.

Loans The Company does not record loans at fair value on a recurring basis. However, from time to time, a loan is considered impaired and an allowance for loan losses may be established. Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are considered impaired. Once a loan is identified as individually impaired, management measures impairment. The fair value of impaired loans is estimated using one of several methods, including collateral value, market value of similar debt, enterprise value, or liquidation value and discounted cash flows. Those impaired loans not requiring an allowance represent loans for which the fair value of the collateral exceeds the recorded investments in such loans and for which carrying amount will remain at amortized cost. Impaired loans where an allowance is established based on the fair value of collateral or expected cash flows require classification in the fair value hierarchy. When the fair value of the collateral is based on an observable market price or a current appraised value, less selling costs, the Company records the impaired loan as a non-recurring Level 3 valuation. At June 30, 2020 and 2019, substantially all of the impaired loans were evaluated based on the fair value of the collateral with adjustments to their appraised values ranging from 5% to 15% for selling costs.

Other real estate owned, net Assets on which the underlying collateral has been repossessed are initially recorded at the fair market value of the real estate acquired less estimated costs to sell, establishing a new cost basis.

Subsequently, other real estate owned is carried at the lower of carrying value or fair value. Fair value is based upon independent market prices, appraised values of the collateral or management’s estimation of the value of the collateral. When the fair value of the collateral is based on an observable market price or a current appraised value, less selling costs, the Company records the repossessed asset as a non-recurring Level 3 valuation. At June 30, 2020 and 2019, substantially all of the other real estate owned was evaluated based on the fair value of the collateral with adjustments to their appraised values ranging from 5% to 15% for selling costs.

The following tables set forth, by level within the fair value hierarchy, the Company’s financial assets that were accounted for at fair value on a recurring and non-recurring basis as of June 30, 2020 and 2019, respectively. According to fair value guidance, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to their fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels.

The following table presents assets measured at fair value on a recurring basis:

	Fair Value as of June 30, 2020
	Level 1		Level 2		Level 3		Total
Securities classified as available for sale:
Obligations of states and political subdivisions	$	—	$	18,005,082	$	—	$	18,005,082
Mortgage-backed securities		—		1,443,643		—		1,443,643
Certificates of deposit		—		848,870		—		848,870
Total	$	—	$	20,297,595	$	—	$	20,297,595

F-18

TEB BANCORP, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the Years Ended June 30, 2020 and 2019

	Fair Value as of June 30, 2019
	Level 1		Level 2		Level 3		Total
Securities classified as available for sale:
Obligations of states and political subdivisions	$	—	$	18,878,383	$	—	$	18,878,383
Mortgage-backed securities		—		1,106,138		—		1,106,138
Certificates of deposit		—		557,597		—		557,597
Total	$	—	$	20,542,118	$	—	$	20,542,118

Assets measured at fair value on non-recurring basis:

	Fair Value as of June 30, 2020
	Level 1		Level 2		Level 3		Total
Impaired loans with a valuation allowance, net	$	—	$	—	$	248,930	$	248,930
Other real estate owned, net		—		—		2,288,255		2,288,255
Total	$	—	$	—	$	2,537,185	$	2,537,185

	Fair Value as of June 30, 2019
	Level 1		Level 2		Level 3		Total
Impaired loans with a valuation allowance, net	$	—	$	—	$	274,750	$	274,750
Other real estate owned, net		—		—		4,080,401		4,080,401
Total	$	—	$	—	$	4,355,151	$	4,355,151

Financial Disclosures about Fair Value of Financial Instruments

Accounting guidance requires disclosures of the estimated fair value of certain financial instruments and the methods and significant assumptions used to estimate their fair values. Certain financial instruments and all non-financial instruments are excluded from the scope of the guidance.

The estimated fair values of financial instruments are as follows:

	June 30, 2020				June 30, 2019
	Carrying Value		Fair Value		Carrying Value		Fair Value
FINANCIAL ASSETS
Cash and cash equivalents	$	13,106,041	$	13,106,041	$	5,630,770	$	5,630,770
Interest bearing deposits in banks	$	2,713,164	$	2,713,164	$	3,674,015	$	3,674,015
Available for sale securities	$	20,297,595	$	20,297,595	$	20,542,118	$	20,542,118
Loans, net	$	237,300,478	$	247,100,558	$	259,873,403	$	256,666,403
Loans held for sale	$	18,690,027	$	18,690,027	$	7,079,548	$	7,079,548
Federal Home Loan Bank stock	$	1,345,500	$	1,345,500	$	2,061,000	$	2,061,000
Accrued interest receivable	$	933,729	$	933,729	$	1,000,098	$	1,000,098
FINANCIAL LIABILITIES
Deposits	$	256,071,531	$	251,928,460	$	234,561,459	$	217,705,000
Federal Home Loan Bank advances	$	9,000,000	$	9,000,000	$	44,200,000	$	44,200,000
Accrued interest payable	$	56,726	$	56,726	$	59,489	$	59,489

The methods and assumptions that were used to estimate the fair value of financial assets and financial liabilities that are measured at fair value on a recurring and non-recurring basis have been previously disclosed. The following methods and assumptions were used to estimate the fair value of other financial instruments for which it is practicable to estimate that value:

F-19

TEB BANCORP, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the Years Ended June 30, 2020 and 2019

Cash and cash equivalents – Due to their short term nature, the carrying amount of cash equivalents approximates fair value and is categorized in level 1 of the fair value hierarchy.

Interest bearing deposits in banks – The carrying amount approximates fair value and is categorized in level 2 of the fair value hierarchy.

Available for sale securities – The fair value is estimated using quoted market prices or by using pricing models and is categorized in level 2 of the fair value hierarchy.

Loans– The fair value of variable rate loans that reprice frequently are based on carrying values. The fair value of other loans is estimated by discounting future cash flows using current rates at which similar loans would be made to borrowers with similar credit ratings and is categorized in level 3 of the fair value hierarchy.

Loans held for sale – Fair value is based on commitments on hand from investors or prevailing market prices and is categorized in level 2 of the fair value hierarchy.

Federal Home Loan Bank stock – No secondary market exists for FHLB stock. The stock is bought and sold at par by the FHLB and management believes the carrying amount approximates fair value and is categorized in level 2 of the fair value hierarchy.

Accrued interest receivable – Due to their short term nature, the carrying amount approximates fair value and is categorized in level 1 of the fair value hierarchy.

Deposits – Fair value of deposits with no stated maturity, such as demand deposits, savings, and money market accounts, by definition, is the amount payable on demand on the reporting date. Fair value of fixed rate time deposits is estimated using discounted cash flows applying interest rates currently offered on similar time deposits. Deposits are categorized in level 3 of the fair value hierarchy.

Federal Home Loan Bank borrowings – The carrying amount approximates fair value and is categorized in level 2 of the fair value hierarchy.

Accrued interest payable – Due to their short term nature, the carrying amount approximates fair value and is categorized in level 1 of the fair value hierarchy.

The estimated fair value of fee income on letters of credit at June 30, 2020 and 2019 is insignificant. Loan commitments on which the committed interest rate is less than the current market rate are also insignificant at June 30, 2020 and 2019.

NOTE 4 – Cash and Due From Banks

The Bank is required to maintain vault cash and reserve balances with Federal Reserve Bank is based upon a percentage of deposits. There was no requirement at June 30, 2020. As of June 30, 2019 the requirement was approximately $1,532,000.

F-20

TEB BANCORP, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the Years Ended June 30, 2020 and 2019

NOTE 5 – Available for Sale Securities

Amortized costs and fair values of available for sale securities are summarized as follows:

	June 30, 2020
			Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses		Fair Value
Obligations of states and political subdivisions	$	17,563,698	$	457,440	$	16,056	$	18,005,082
Mortgage-backed securities		1,371,753		71,890		—		1,443,643
Certificates of deposit		800,000		48,870		—		848,870
	$	19,735,451	$	578,200	$	16,056	$	20,297,595

	June 30, 2019
			Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses		Fair Value
Obligations of states and political subdivisions	$	18,719,370	$	217,627	$	58,614	$	18,878,383
Mortgage-backed securities		1,065,193		40,945		—		1,106,138
Certificates of deposit		555,000		2,597		—		557,597
	$	20,339,563	$	261,169	$	58,614	$	20,542,118

The following tables present the portion of the Company’s available for sale securities portfolio which has gross unrealized losses, reflecting the length of time that individual securities have been in a continuous unrealized loss position:

	June 30, 2020
	Continuous Unrealized				Continuous Unrealized
	Losses Existing for Less				Losses Existing for 12 Months
	Than 12 Months				or Greater				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
Obligations of states and political subdivisions	$	—	$	—	$	693,687	$	16,056	$	693,687	$	16,056

Management does not believe any individual unrealized loss as of June 30, 2020 represents other than temporary impairment. The Company held $693,687, comprised of two securities, in obligations of states and political subdivisions at June 30, 2020 that have an unrealized loss existing for 12 months or greater. Management believes the temporary impairment in fair value was caused by market fluctuations in interest rates. Although these securities are classified as available for sale, management does not have the intent to sell the security and it is more likely than not it will be able to hold the security through a recovery period or until maturity.

	June 30, 2019
	Continuous Unrealized				Continuous Unrealized
	Losses Existing for Less				Losses Existing for 12 Months
	Than 12 Months				or Greater				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
Obligations of states and political subdivisions	$	208,583	$	22	$	2,935,133	$	58,592	$	3,143,716	$	58,614

Management does not believe any individual unrealized loss as of June 30, 2019 represents other than temporary impairment. The Company held $2,935,133, comprised of 12 securities, in obligations of states and political subdivisions at June 30, 2019 that have an unrealized loss existing for 12 months or greater. Management believes the

F-21

TEB BANCORP, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the Years Ended June 30, 2020 and 2019

temporary impairment in fair value was caused by market fluctuations in interest rates. Although these securities are classified as available for sale, management does not have the intent to sell the security and it is more likely than not it will be able to hold the security through a recovery period or until maturity.

The amortized cost and fair value of available for sale securities as of June 30, 2020 are shown below by contractual maturity. Expected maturities of mortgage-backed securities will differ from contractual maturities since the anticipated maturities are not readily determinable.

	Amortized
	Cost		Fair Value
Due in one year or less	$	870,981	$	874,977
Due after one year through 5 years		10,719,389		10,952,874
Due after 5 years through 10 years		4,833,328		5,022,565
Due after 10 years		1,940,000		2,003,536
Subtotal		18,363,698		18,853,952
Mortgage backed securities
Due after one year through 5 years		—		—
Due after 5 years through 10 years		1,371,753		1,443,643
Total	$	19,735,451	$	20,297,595

During the year ended June 30, 2020 and 2019, the Company did not sell any available for sale securities. The Company did not have any available for sale securities pledged at June 30, 2020 and $7,100,000 were pledged at June 30, 2019 as collateral on public deposits and for other purposes as required or permitted by law.

NOTE 6 – Loans

Major classifications of loans are as follows:

	June 30, 2020		June 30, 2019
Construction, land, development	$	4,598,382	$	4,318,845
1-4 family owner occupied		100,506,311		124,845,322
1-4 family non-owner occupied		21,213,680		20,968,812
Multifamily		76,444,156		73,246,392
Commercial owner occupied		6,733,183		8,508,011
Commercial non-owner occupied		20,237,534		19,502,545
Consumer and installment loans		8,920,659		9,777,441
Total loans		238,653,905		261,167,368
Less:
Allowance for loan losses		(1,353,427)		(1,293,965)
Loans, net	$	237,300,478	$	259,873,403

Net deferred loan fees are included within the unpaid principal balances above.

The Company engages in a variety of lending activities, including commercial, residential real estate and consumer transactions. The Company focuses its lending activities on individuals, professionals and small to medium sized businesses. Risks associated with lending activities include economic conditions and changes in interest rates, which can adversely impact both the ability of borrowers to repay their loans and the value of the associated collateral.

F-22

TEB BANCORP, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the Years Ended June 30, 2020 and 2019

Commercial and industrial loans, commercial real estate loans, construction loans and residential real estate loans with a business purpose are generally perceived as having more risk of default than residential real estate loans with a personal purpose and consumer loans. These types of loans involve larger loan balances to a single borrower or groups of related borrowers and are more susceptible to a risk of loss during a downturn in the business cycle. Commercial real estate and residential real estate loans secured for a business purpose are originated primarily within the metropolitan Milwaukee market area at conservative loan-to-value ratios and often backed by the individual guarantees of the borrowers or owners. Repayment of this kind of loan is dependent upon either the ongoing cash flow of the borrowing entity or the resale of or lease of the subject property. Commercial real estate loans may be affected to a greater extent than residential loans by adverse conditions in real estate markets or the economy because commercial real estate borrowers’ ability to repay their loans depends on successful development of their properties, as well as the factors affecting residential real estate borrowers. Commercial and industrial loans may involve greater risk because the availability of funds to repay these loans depends on the successful operation of the borrower’s business. The assets financed are used within the business for its ongoing operation. Repayment of these kinds of loans generally comes from the cash flow of the business or the ongoing conversions of assets, such as accounts receivable and inventory, to cash. Typical collateral for commercial and industrial loans includes the borrower’s accounts receivable, inventory and machinery and equipment.

The Company originates fixed-rate and adjustable-rate real estate-residential mortgage loans for personal purposes that are secured by first liens on the underlying 1-4 family residential properties. Credit risk exposure in this area of lending is minimized by the evaluation of the credit worthiness of the borrower, including debt-to-income ratios, credit scores and adherence to underwriting policies that emphasize conservative loan-to-value ratios of generally no more than 80%. Residential mortgage loans granted in excess of the 80% loan-to-value ratio criterion are generally insured by private mortgage insurance.

The real estate-home equity portfolio primarily consists of variable-rate home equity lines of credit, and to a lesser extent, fixed-rate home equity loans. Risks associated with loans secured by residential properties are generally lower than commercial loans and include general economic risks, such as the strength of the job market, employment stability and the strength of the housing market. Since most loans are secured by a primary or secondary residence, the borrower’s continued employment is the greatest risk to repayment.

The Company offers a variety of loans to individuals for personal and household purposes. Consumer loans are generally considered to have greater risk than first or second mortgages on real estate because they may be unsecured, or, if they are secured, the value of the collateral may be difficult to assess and is more likely to decrease in value than real estate. Credit risk in this portfolio is controlled by conservative underwriting standards that consider debt-to-income levels and the creditworthiness of the borrower and, if secured, collateral values.

Policies have been established that set standards for the maximum commercial real estate loan amount by type of property, loan terms, pricing structures, loan-to-value limits by property type, as well as policies and procedures for granting exceptions to established underwriting standards.

The Company’s residential real estate lending policies require all loans to have viable repayment sources. Residential real estate loans are evaluated for the adequacy of these repayment sources at the time of approval using such factors as credit scores, debt-to-income ratios and collateral values. Home equity loans and lines of credit are generally governed by the same lending policies.

Origination activities for construction real estate loans are similar to those described above for commercial real estate and residential real estate lending.

The Company has purchased loan participations in which they are not the primary lender. At June 30, 2020 and 2019, the aggregate amount of purchased participations was $5.6 million and $9.1 million, respectively. The Company has also participated out portions of loans that exceeded its loans-to-one borrower legal lending limit and for risk diversification. At June 30, 2020 and 2019 the Company had participated out portions of loans with aggregate balances of $9.0 million and $6.9 million, respectively.

F-23

TEB BANCORP, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the Years Ended June 30, 2020 and 2019

Non-performing loans are as follows:

	June 30, 2020		June 30, 2019
Nonaccrual Loans	$	1,341,174	$	1,524,868
Total non-performing loans	$	1,341,174	$	1,524,868
Restructured loans, accruing	$	—	$	—
Total impaired loans	$	1,341,174	$	1,524,868

Impaired loans are as follows as of:

	June 30, 2020
	Construction,		1-4 Family		1-4 Family				Commercial		Commercial
	Land,		Owner		Non-Owner				Owner		Non-Owner		Consumer &
	Development		Occupied		Occupied		Multifamily		Occupied		Occupied		Installment		Total
With related allowance recorded
Recorded investment	$	—	$	161,931	$	—	$	—	$	189,249	$	—	$	103,673	$	454,853
Unpaid principal balance		—		161,931		—		—		189,249		—		103,673		454,853
Related allowance		—		64,780		—		—		79,351		—		61,792		205,923
With no related allowance recorded
Recorded investment	$	—	$	803,803	$	57,574	$	—	$	—	$	—	$	24,944	$	886,321
Unpaid principal balance		—		803,803		57,574		—		—		—		24,944		886,321
Related allowance		—		—		—		—		—		—		—		—
Total
Recorded investment	$	—	$	965,734	$	57,574	$	—	$	189,249	$	—	$	128,617	$	1,341,174
Unpaid principal balance		—		965,734		57,574		—		189,249		—		128,617		1,341,174
Related allowance		—		64,780		—		—		79,351		—		61,792		205,923
Average recorded balance	$	—	$	1,020,175	$	14,948	$	—	$	191,166	$	—	$	132,521	$	1,358,810
Interest income recognized while impaired	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Interest income recognized on a cash basis while impaired		—		16,071		298		—		4,382		—		712		21,463
Total interest on impaired loans	$	—	$	16,071	$	298	$	—	$	4,382	$	—	$	712	$	21,463

Impaired loans are as follows as of:

	June 30, 2019
	Construction,		1-4 Family		1-4 Family				Commercial		Commercial
	Land,		Owner		Non-Owner				Owner		Non-Owner		Consumer and
	Development		Occupied		Occupied		Multifamily		Occupied		Occupied		Installment		Total
With related allowance recorded
Recorded investment	$	—	$	70,608	$	—	$	—	$	193,601	$	—	$	113,856	$	378,065
Unpaid principal balance		—		70,608		—		—		193,601		—		113,856		378,065
Related allowance		—		5,772		—		—		44,564		—		52,979		103,315
With no related allowance recorded
Recorded investment	$	—	$	1,132,648	$	—	$	—	$	—	$	—	$	14,155	$	1,146,803
Unpaid principal balance		—		1,132,648		—		—		—		—		14,155		1,146,803
Related allowance		—		—		—		—		—		—		—		—
Total
Recorded investment	$	—	$	1,203,256	$	—	$	—	$	193,601	$	—	$	128,011	$	1,524,868
Unpaid principal balance		—		1,203,256		—		—		193,601		—		128,011		1,524,868
Related allowance		—		5,772		—		—		44,564		—		52,979		103,315
Average recorded balance	$	19,198	$	865,338	$	21,509	$	—	$	196,182	$	—	$	133,467	$	1,235,694
Interest income recognized while impaired	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Interest income recognized on a cash basis while impaired		353		19,352		288		—		7,917		—		2,894		30,804
Total interest on impaired loans	$	353	$	19,352	$	288	$	—	$	7,917	$	—	$	2,894	$	30,804

F-24

TEB BANCORP, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the Years Ended June 30, 2020 and 2019

Loans are individually evaluated for impairment once a weakness or adverse trend is identified that may jeopardize the repayment of the loan in accordance with the terms of the loan.

The following are the Company’s risk rating definitions:

Pass: Loans in this category are to persons or entities that span from having financial characteristics of unquestioned strength to entities that have potential risks that if left uncorrected could at some point result in deterioration of the Bank’s credit position. Loans in this category are rated “1” through “4” with the lower risk being identified with a lower numerical rating. General characteristics that are monitored include borrower net worth, liquidity and entity profitability.

Special Mention: Loans in this category contain some weakness or potential weakness that if left uncorrected may result in the deterioration of the repayment capacity. Loans in this category are rated as a “5”.

Substandard: Loans in this category exhibit the same characteristics as “5” rated credits and are inadequately protected by the current net worth and paying capacity of the obligor and/or of the collateral pledged as security for the asset. Loans in this category are rated as a “6”.

Real Estate in Judgement: Loans in this category have been placed in non-accrual and the Bank has taken legal action to preserve its position. Loans in this category are rated as a “7”.

The following is a summary of loans by risk rating:

	June 30, 2020
	Construction,		1-4 Family		1-4 Family				Commercial		Commercial
	Land,		Owner		Non-Owner				Owner		Non-Owner		Consumer and
			Occupied		Occupied		Multifamily		Occupied		Occupied		Installment		Total
1-4		4,598,382	$	99,344,653	$	21,156,106	$	76,444,156	$	6,543,934	$	12,313,923	$	8,792,042	$	229,193,196
5		—		195,924		—		—		—		7,923,611		—		8,119,535
6		—		851,208		57,574		—		189,249		—		52,448		1,150,479
7		—		114,526		—		—		—		—		76,169		190,695
Total	$	4,598,382	$	100,506,311	$	21,213,680	$	76,444,156	$	6,733,183	$	20,237,534	$	8,920,659	$	238,653,905

	June 30, 2019
	Construction,		1-4 Family		1-4 Family				Commercial		Commercial
	Land,		Owner		Non-Owner				Owner		Non-Owner		Consumer and
	Development		Occupied		Occupied		Multifamily		Occupied		Occupied		Installment		Total
1-4	$	4,318,845	$	123,642,066	$	20,968,812	$	73,246,392	$	8,314,410	$	11,382,336	$	9,649,430	$	251,522,291
5		—		—		—		—		—		8,120,209		—		8,120,209
6		—		895,442		—		—		193,601		—		128,011		1,217,054
7		—		307,814		—		—		—		—		—		307,814
Total	$	4,318,845	$	124,845,322	$	20,968,812	$	73,246,392	$	8,508,011	$	19,502,545	$	9,777,441	$	261,167,368

The following is a summary of past due loans:

	June 30, 2020
	Construction,		1-4 Family		1-4 Family				Commercial		Commercial
	Land,		Owner		Non-Owner				Owner		Non-Owner		Consumer and
	Development		Occupied		Occupied		Multifamily		Occupied		Occupied		Installment		Total
30‑59 days, accruing	$	69,174	$	1,274,585	$	—	$	—	$	—	$	—	$	63,765	$	1,407,524
60‑89 days, accruing		—		114,338		—		—		—		—		—		114,338
90 days & over or nonaccrual		—		965,734		57,574		—		189,249		—		128,617		1,341,174
Total	$	69,174	$	2,354,657	$	57,574	$	—	$	189,249	$	—	$	192,382	$	2,863,036

F-25

TEB BANCORP, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the Years Ended June 30, 2020 and 2019

	June 30, 2019
	Construction,		1-4 Family		1-4 Family				Commercial		Commercial
	Land,		Owner		Non-Owner				Owner		Non-Owner		Consumer and
	Development		Occupied		Occupied		Multifamily		Occupied		Occupied		Installment		Total
30‑59 days, accruing	$	—	$	2,129,016	$	103,706	$	—	$	—	$	—	$	72,482	$	2,305,204
60‑89 days, accruing		—		450,183		—		—		—		—		25,220		475,403
90 days & over or nonaccrual		—		1,203,256		—		—		193,601		—		128,011		1,524,868
Total	$	—	$	3,782,455	$	103,706	$	—	$	193,601	$	—	$	225,713	$	4,305,475

As of June 30, 2020 and 2019 there were no loans 90 days or over that were not on nonaccrual.

Certain directors and executive officers of the Company, and their related interests, had loans outstanding in the aggregate amounts of $1,080,531 and $1,039,899 at June 30, 2020 and 2019, respectively. During the year ended June 30, 2020, one new loan was made totaling $90,400 and repayments totaled $49,768. During the year ended June 30, 2019, no new loans were made and repayments totaled $40,226. Except for loans with a discounted interest rate made to executive officers pursuant to a program that is available to all Company employees and that complies with applicable banking regulations, these loans were made on substantially the same terms, including collateral, as those prevailing at the same time for comparable transactions with unrelated persons and did not involve more than normal risks of collectability or present other unfavorable features.

TDRs involve the granting of some concession to a distressed borrower resulting in a loan modification such as; payment schedule changes, interest rate reductions, or principal charge-offs. There was one new TDR during the year ending June 30, 2020, totaling $195,924 and no new TDRs during the year ending June 30, 2019. There were no TDRs that defaulted during the period that were modified within the previous year as of June 30, 2020. There were no TDRs as of June 30, 2019. As discussed within Note 1, under Section 4013 of the CARES Act, a financial institution can suspend the requirements under U.S. GAAP for loan modifications related to COVID-19 that would otherwise be categorized as a TDR and suspend any determination of a loan modified as a result of COVID-19 as being a TDR, including the requirement to determine impairment for accounting purposes. Of the loan modification requests received prior to June 30, 2020, one loan totaling $195,924 did not qualify for the favorable accounting treatment under Section 4013 of the CARES Act and therefore is reported as a TDR. Management has evaluated the loan and determined that based on the liquidation value of the collateral, no specific reserve is necessary.

F-26

TEB BANCORP, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the Years Ended June 30, 2020 and 2019

The following is a summary of TDRs as of June 30, 2020:

	Construction,		1-4 Family		1-4 Family				Commercial		Commercial
	Land,		Owner		Non-Owner				Owner		Non-Owner		Consumer &
	Development		Occupied		Occupied		Multifamily		Occupied		Occupied		Installment		Total
Accruing
Beginning balance	$	—	$	—	$	—	$	—	$	—	$		$	—	$	—
Transfer to other loan category		—		—		—		—		—		—		—		—
Principal payments		—		—		—		—		—		—		—		—
Charge-offs		—		—		—		—		—		—		—		—
Sales		—		—		—		—		—		—		—		—
New restructureds		—		195,924		—		—		—		—		—		195,924
Transfers out of TDR status		—		—		—		—		—				—		—
Transfers to foreclosed properties		—		—		—		—		—		—		—		—
Transfers to nonaccrual		—		—		—		—		—		—		—		—
Transfers out of nonaccrual		—		—		—		—		—		—		—		—
Ending balance	$	—	$	195,924	$	—	$	—	$	—	$	—	$	—	$	195,924
Nonaccrual
Beginning balance	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Principal payments		—		—		—		—		—		—		—		—
Charge-offs		—		—		—		—		—		—		—		—
Sales		—		—		—		—		—		—		—		—
Transfers to foreclosed properties		—		—		—		—		—		—		—		—
Transfers from accrual		—		—		—		—		—		—		—		—
Transfers to accrual		—		—		—		—		—		—		—		—
Ending balance	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Totals
Beginning balance	$	—	$	—	$	—	$	—	$	—	$		$	—	$	—
Transfer to other loan category		—		—		—		—		—		—		—		—
Principal payments		—		—		—		—		—		—		—		—
Charge-offs		—		—		—		—		—		—		—		—
Sales		—		—		—		—		—		—		—		—
New restructureds		—		195,924		—		—		—		—		—		195,924
Transfers out of TDR status		—		—		—		—		—				—		—
Transfers to foreclosed properties		—		—		—		—		—		—		—		—
Transfers to nonaccrual		—		—		—		—		—		—		—		—
Transfers from accrual		—		—		—		—		—		—		—		—
Transfers out of nonaccrual		—		—		—		—		—		—		—		—
Ending balance	$	—	$	195,924	$	—	$	—	$	—	$	—	$	—	$	195,924

F-27

TEB BANCORP, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the Years Ended June 30, 2020 and 2019

NOTE 7 – Allowance for Loan Losses

The allowance for loan losses reflected in the accompanying consolidated financial statements represents the allowance available to absorb probable and inherent loan losses in the loan portfolio. An analysis of changes in the allowance is presented in the following tables:

	June 30, 2020
	Construction,		1-4 Family		1-4 Family				Commercial		Commercial
	Land,		Owner		Non-Owner				Owner		Non-Owner
	Development		Occupied		Occupied		Multifamily		Occupied		Occupied		Consumer		Unallocated		Total
Allowance
Balance at 7/1/19	$	4,319	$	67,593	$	26,630	$	109,870	$	61,193	$	738,366	$	70,058	$	215,936	$	1,293,965
Charge-offs		—		(57,572)		—		—		—		—		(45,157)		—		(102,729)
Recoveries		—		5,155		—		—		—		—		22,036		—		27,191
Provision		9,476		341,258		50,590		176,795		34,518		(425,696)		50,375		(102,316)		135,000
Balance at 6/30/20	$	13,795	$	356,434	$	77,220	$	286,665	$	95,711	$	312,670	$	97,312	$	113,620	$	1,353,427
Allowance
Ending balance individually evaluated for impairment	$	—	$	64,780	$	—	$	—	$	79,351	$	—	$	61,792	$	—	$	205,923
Ending balance collectively evaluated for impairment		13,795		291,654		77,220		286,665		16,360		312,670		35,520		113,620		1,147,504
Ending balance	$	13,795	$	356,434	$	77,220	$	286,665	$	95,711	$	312,670	$	97,312	$	113,620	$	1,353,427
Loans
Ending balance individually evaluated for impairment	$	—	$	965,734	$	57,574	$	—	$	189,249	$	—	$	128,617	$	—	$	1,341,174
Ending balance collectively evaluated for impairment		4,598,382		99,540,577		21,156,106		76,444,156		6,543,934		20,237,534		8,792,042		—		237,312,731
Total loans	$	4,598,382	$	100,506,311	$	21,213,680	$	76,444,156	$	6,733,183	$	20,237,534	$	8,920,659	$	—	$	238,653,905
Less allowance	$	13,795	$	356,434	$	77,220	$	286,665	$	95,711	$	312,670	$	97,312	$	113,620	$	1,353,427
Total loans, net	$	4,584,587	$	100,149,877	$	21,136,460	$	76,157,491	$	6,637,472	$	19,924,864	$	8,823,347	$	(113,620)	$	237,300,478

	June 30, 2019
	Construction,		1-4 Family		1-4 Family				Commercial		Commercial				Not
	Land,		Owner		Non-Owner				Owner-		Non-Owner				Specifically
	Development		Occupied		Occupied		Multifamily		Occupied		Occupied		Consumer		Allocated		Total
Allowance
Balance at 7/1/18	$	4,758	$	7,300	$	71,053	$	71,101	$	131,906	$	925,355	$	98,096	$	14,590	$	1,324,159
Charge-offs		—		—		(44,534)		—		—		—		(15,809)		—		(60,343)
Recoveries		—		28,735		—		—		—		—		1,414		—		30,149
Provision		(439)		31,558		111		38,769		(70,713)		(186,989)		(13,643)		201,346		—
Balance at 6/30/19	$	4,319	$	67,593	$	26,630	$	109,870	$	61,193	$	738,366	$	70,058	$	215,936	$	1,293,965
Allowance
Ending balance individually evaluated for impairment	$	—	$	5,772	$	—	$	—	$	44,564	$	—	$	52,979	$	—	$	103,315
Ending balance collectively evaluated for impairment		4,319		61,821		26,630		109,870		16,629		738,366		17,079		215,936		1,190,650
Ending balance	$	4,319	$	67,593	$	26,630	$	109,870	$	61,193	$	738,366	$	70,058	$	215,936	$	1,293,965
Loans
Ending balance individually evaluated for impairment	$	—	$	1,203,256	$	—	$	—	$	193,601	$	—	$	128,011	$	—	$	1,524,868
Ending balance collectively evaluated for impairment		4,318,845		123,642,066		20,968,812		73,246,392		8,314,410		19,502,545		9,649,430		—		259,642,500
Total loans	$	4,318,845	$	124,845,322	$	20,968,812	$	73,246,392	$	8,508,011	$	19,502,545	$	9,777,441	$	—	$	261,167,368
Less allowance	$	4,319	$	67,593	$	26,630	$	109,870	$	61,193	$	738,366	$	70,058	$	215,936	$	1,293,965
Total loans, net	$	4,314,526	$	124,777,729	$	20,942,182	$	73,136,522	$	8,446,818	$	18,764,179	$	9,707,383	$	(215,936)	$	259,873,403

F-28

TEB BANCORP, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the Years Ended June 30, 2020 and 2019

NOTE 8 – Loan Servicing

The unpaid principal balance of loans serviced for others, which is not included in the consolidated financial statements, was $2,696,078 and $2,828,576 at June 30, 2020 and 2019, respectively. The Company maintained no custodial balances at June 30, 2020 and June 30, 2019 in connection with the foregoing loan servicing.

NOTE 9 – Other Real Estate Owned, Net

Other real estate owned properties are summarized as follows:

	June 30, 2020		June 30, 2019
Beginning balance	$	4,080,401	$	3,957,133
Charge offs		(989,205)		(48,110)
Capital expenditures		36,852		109,181
Transfer from loans		200,856		418,849
Sale proceeds		(1,158,306)		(333,387)
Net gain (loss) on sale of other real estate owned		117,657		(23,265)
Other real estate owned, net	$	2,288,255	$	4,080,401

The recorded investment in 1-4 family owner occupied properties that were in process of foreclosure was $190,695 at June 30, 2020 and $307,814 at June 30, 2019. At June 30, 2020, no residential real estate property collateralizing 1-4 family owner occupied properties were included in other real estate owned. At June 30, 2019, legal title for all residential real estate property collateralizing 1-4 family owner occupied properties held in other real estate owned had been transferred to the Company.

NOTE 10 – Premises and Equipment, net

Premises and equipment are stated at cost less accumulated depreciation are summarized as follows:

	June 30, 2020		June 30, 2019
Land	$	2,319,381	$	2,319,381
Office buildings and improvements		10,573,741		10,568,387
Leasehold improvements		470,952		470,951
Furniture and fixtures		6,351,443		6,444,945
		19,715,517		19,803,664
Less: Accumulated depreciation		(11,755,476)		(11,638,390)
Premises and equipment, net	$	7,960,041	$	8,165,274

Depreciation expense amounted to $552,952 and $555,421 for the year ended June 30, 2020 and 2019, respectively.

NOTE 11 – Accrued Interest Receivable and Other Assets

A summary of accrued interest receivable and other assets is as follows:

	June 30, 2020		June 30, 2019
Accrued interest receivable	$	933,729	$	1,000,098
Prepaid expenses and other assets		839,757		141,588
Totals	$	1,773,486	$	1,141,686

F-29

TEB BANCORP, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the Years Ended June 30, 2020 and 2019

NOTE 12 – Deposits

The aggregate amount of certificates of deposit, each with a minimum denomination of $250,000, was approximately $9,377,750 at June 30, 2020 and $9,326,137 at June 30, 2019.

At June 30, 2020, the scheduled maturities of certificates of deposit are as follows:

2021	$	41,893,495
2022		6,314,403
2023		4,708,866
2024		34,060,541
2025		46,698
Thereafter		21,932
	$	87,045,935

The aggregate amount of overdrafts reclassified into loans was $58,121 at June 30, 2020 and $32,565 at June 30, 2019.

Deposits from directors and executive officers of the Company, and their related interests, totaled $914,214 and $639,572 at June 30, 2020 and June 30, 2019, respectively.

NOTE 13– Borrowings

Borrowings consist of the following:

	June 30, 2020		June 30, 2019
FHLB fixed rate advance (2.45%, matured 7/1/19)	$	—	$	7,500,000
FHLB fixed rate advance (2.43%, matured 7/2/19)		—		15,000,000
FHLB fixed rate advance (2.45%, matured 7/3/19)		—		5,000,000
FHLB fixed rate advance (2.43%, matured 7/3/19)		—		8,000,000
FHLB fixed rate advance (2.649%, matured 7/23/19)		—		2,500,000
FHLB fixed rate advance (2.649%, matured 7/24/19)		—		3,100,000
FHLB fixed rate advance (2.647%, matured 7/25/19)		—		3,100,000
FHLB fixed rate advance (0.61%, matures 9/11/20)		5,000,000		—
FHLB fixed rate advance (0.00%, matures 5/3/21)		4,000,000		—
	$	9,000,000	$	44,200,000

The Bank has a master contract agreement with the FHLB, which provides for borrowing up to the maximum $130,801,182 at June 30, 2020. The FHLB provides both fixed and floating rate advances. Fixed rate advances are priced in reference to market rates of interest at the time of the advance, namely the rates that FHLB pays to borrowers at various maturities. Variable rate advances are adjusted at the end of each business day based on the actual Federal Funds rate earned by the FHLB that day. The Bank has an open line of credit with the FHLB with a variable interest rate. The open line of credit matures daily, automatically renewing. The Bank had $0 outstanding on the open line of credit at June 30, 2020 and 2019. Additionally, the Bank had $9,000,000 and $44,200,000 outstanding in term advances at June 30, 2020 and 2019, respectively. FHLB 30-day advances are pre-payable with a two-day notice by the FHLB. The advances are collateralized by a security agreement pledging a portion of the Bank’s 1-4 family and multifamily real estate mortgages with a carrying value of $170,769,631 and $153,925,211 at June 30, 2020 and 2019, respectively.

F-30

TEB BANCORP, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the Years Ended June 30, 2020 and 2019

The Bank has an agreement with U.S. Bank, which provides for borrowing up to the maximum of $5,000,000 at a rate of 0.75%, at June 30, 2020 and June 30, 2019. There were no amounts outstanding as of June 30, 2020 and June 30, 2019. U.S. Bank provides overnight fixed rate advances which are not collateralized as of June 30, 2020 and were collateralized by a security agreement pledging a portion of the Bank’s securities with a par value of approximately $7,100,000 as of June 30, 2019.

NOTE 14 – Income Taxes

The provision for income taxes included in the accompanying consolidated financial statements consists of the following components:

	June 30, 2020		June 30, 2019
Current tax expense (benefit):
Federal	$	(30,589)	$	(73,075)
State		—		(12,578)
		(30,589)		(85,653)
Deferred tax expense (benefit):
Federal		30,589		30,589
State		—		—
		30,589		30,589
Total income tax expense (benefit)	$	—	$	(55,064)

	June 30, 2020		June 30, 2019
Deferred tax assets
Federal net operating loss	$	6,619,829	$	6,858,921
Other real estate owned		683,379		708,259
State loss and contribution		2,963,488		3,050,448
Unrealized loss on available for sale securities				—
Bad debt reserve		368,687		352,489
Pension		719,294		226,412
Other assets		67,370		74,554
Total deferred tax assets		11,422,047		11,271,083
Deferred tax liabilities
Pension				—
Deferred loan fees		(91,078)		(131,008)
Depreciation		(212,240)		(113,769)
FHLB dividends				—
Unrealized gain on available for sale securities		(153,067)		(55,112)
Other liabilities		(66,045)		(72,573)
Total deferred tax liabilities		(522,430)		(372,462)
Valuation allowance		(10,899,617)		(10,868,032)
Net deferred tax asset	$	—	$	30,589

F-31

TEB BANCORP, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the Years Ended June 30, 2020 and 2019

	June 30, 2020				June 30, 2019
			Percent of				Percent of
			Pretax				Pretax
	Amount		Income		Amount		Income
Reconciliation of statutory to effective rates
Federal income taxes at statutory rate	$	229,340	21.00	%	$	(95,425)	21.00	%
Adjustments for
True up of payable(s)		47,207	4.32	%		(78,506)	17.28	%
State income taxes, net of valuation allowance		—	—	%		(12,578)	2.77	%
Federal valuation allowance		(281,400)	(25.77)	%		114,767	(25.26)	%
Other - Net		4,853	0.45	%		16,678	(3.67)	%
Effective income taxes - operations	$	—	0.00	%	$	(55,064)	12.12	%

Deferred tax assets primarily relate to the difference in the allowance for loan losses (and other real estate owned) for book and tax purposes and net operating losses. The Company has federal net operating loss carryforwards of approximately $31.5 million and $32.7 million as of June 30, 2020 and 2019, respectively. The Company has state net operating loss carryforwards of approximately $46.9 million and $47.5 million as of June 30, 2020 and 2019, respectively. The federal losses begin to expire as of September 30, 2029 and the state losses begin to expire as of September 30, 2025. Deferred tax liabilities primarily relate to the difference in loan fees, depreciation on premises and equipment, FHLB stock basis, and prepaid pension costs.

Under U.S. GAAP, a valuation allowance is required to be recognized if it is “more likely than not” that a deferred tax asset will not be realized. The determination of the realizability of the deferred tax assets is highly subjective and dependent on judgment concerning management’s evaluation of both positive and negative evidence, the forecasts of future income, applicable tax planning strategies, and assessments of the current and future economic and business conditions. Management considered both positive and negative evidence regarding the ultimate realizability of the Company’s deferred tax assets. Positive evidence includes the existence of taxes paid in available carryback years as well as the probability that taxable income will be generated in future periods while negative evidence includes losses in the prior year as well as general business and economic trends. At June 30, 2020 and June 30, 2019, management determined that a valuation allowance relating to the Company’s deferred tax asset was necessary. This determination was based largely on the negative evidence represented by cumulative losses in prior years caused by the significant loan loss provisions recorded during recent years associated with our loan portfolio. In addition, general uncertainty surrounding future economic and business conditions have increased the potential volatility and uncertainty of our projected earnings. Therefore, a valuation allowance of $10.9 million and $10.9 million was recorded as of June 30, 2020 and 2019, respectively.

The Company’s policy is to recognize interest and penalties related to uncertain tax positions as components of interest expense and miscellaneous expense, respectively. The Company recognized $0 of interest and penalties related to uncertain tax positions in its Consolidated Statement of Operations during the year ended June 30, 2020 and 2019. The Company had $0 accrued for the payment of interest and penalties related to income tax issues as of June 30, 2020 and 2019.

The Company is no longer subject to U.S. federal income tax examinations by the Internal Revenue Service for years before September 30, 2017. The Company is no longer subject to Wisconsin income tax examinations by the Wisconsin Department of Revenue for the years before September 30, 2016. The Bank is not currently under examination by any taxing jurisdiction.

Under the Internal Revenue Code and Wisconsin Statutes, the Company is permitted to deduct, for tax years beginning before 1996, an annual addition to a reserve for bad debts. This amount differs from the provision for loan losses

F-32

TEB BANCORP, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the Years Ended June 30, 2020 and 2019

recorded for financial accounting purposes. Under prior law, bad debt deductions for income tax purposes were included in taxable income of later years only if the bad debt reserves were used for purposes other than to absorb bad debt losses. Because the Bank did not intend to use the reserve for purposes other than to absorb losses, no deferred income taxes were provided. Retained earnings at June 30, 2020 and 2019, respectively, includes approximately $7,800,000 for which no deferred Federal or state income taxes were provided.

NOTE 15 – Defined Benefit Pension Plan

The following table sets forth the Plan’s funded status and amounts recognized in the Company’s consolidated balance sheets:

	June 30, 2020		June 30, 2019
Change in projected benefit obligation
Projected benefit obligation at beginning of year	$	10,601,032	$	9,453,322
Interest cost		371,932		398,439
Benefits paid		(297,103)		(144,765)
Actuarial loss		1,687,375		894,036
Settlement		—		—
Projected benefit obligation at end of year		12,363,236		10,601,032
Change in plan assets
Fair value of plan assets at beginning of year		9,770,170		9,691,252
Actual return on assets		(204,314)		223,683
Employer contributions		—		—
Expenses paid from trust		—		—
Benefits paid		(297,103)		(144,765)
Fair value of plan assets at end of year		9,268,753		9,770,170
Funded status at end of year	$	(3,094,483)	$	(830,862)

Amounts recognized in the consolidated balance sheets in accrued interest payable and other liabilities consist of:

	June 30, 2020		June 30, 2019
Pension liability	$	(3,094,483)	$	(830,862)

Amounts recognized in accumulated other comprehensive loss consist of:

	June 30, 2020		June 30, 2019
Accumulated pension actuarial loss, net of income tax benefit of $1,522,485 and $1,522,485, respectively	$	4,853,355	$	2,506,295

The accumulated benefit obligation for the Plan was $12,363,236 and $10,601,032 at June 30, 2020 and 2019, respectively.

F-33

TEB BANCORP, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the Years Ended June 30, 2020 and 2019

The components of net periodic pension cost (income) included in compensation and benefits on the statements of operations are as follows:

	June 30, 2020		June 30, 2019
Interest cost	$	371,932	$	398,439
Expected return on plan assets		(671,118)		(672,908)
Amortization of net actuarial loss		215,747		121,990
Net periodic pension income	$	(83,439)	$	(152,479)

For the years ended June 30, 2020 and 2019, actuarial assumptions include an assumed discount rate on benefit obligations of 2.76% and 3.57% respectively, and an expected long-term rate of return of 7.0% for June 30, 2020 and 2019. The expected long-term rate of return for the Plan’s total assets is based on the expected returns of each of the below asset categories, weighted based on the current target allocation for each class. The trustees evaluate whether adjustments are needed based on historical returns to more accurately reflect expectations of future returns. An annual salary increase of 0% was utilized for the year ended June 30, 2020 and 2019.

There were no contributions paid to the Plan during the years ended June 30, 2020 and 2019.

At June 30, 2020, the projected benefit payments for future fiscal years were estimated as follows:

2021	$	3,787,700
2022		142,800
2023		540,600
2024		538,100
2025		1,498,900
2025-2029		4,077,300
	$	10,585,400

At June 30, 2020 and 2019, all Plan assets supporting the Bank’s defined benefit plan are held at fair value and represent Level 1 classified investments.

The percentage of the fair value of total Plan assets for each major category is as follows:

	June 30, 2020		June 30, 2019
Cash Equivalents	0.9	%	5.6	%
Equities
Large Cap	48.6	%	43.0	%
Mid Cap	4.3	%	3.4	%
Small Cap	25.3	%	33.7	%
International	4.0	%	2.1	%
Other	8.3	%	8.5
Alternatives/Multi-Asset	8.6	%	3.7
Fixed Income
Certificates of deposit	—		—	%
Total	100.0	%	100.0	%

F-34

TEB BANCORP, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the Years Ended June 30, 2020 and 2019

The Bank’s investment policies and strategies for the Plan use target allocations for the individual asset categories. Current allocations are all within policy guidelines. The Bank’s investment goals are to maximize returns subject to specific risk management policies.

The Bank anticipates making at least the minimum required contribution in fiscal year 2021.

NOTE 16 – Accumulated Other Comprehensive Loss

The following table sets forth the ending balance in accumulated other comprehensive loss as recorded on the accompanying consolidated balance sheets for each component as of:

	June 30, 2020		June 30, 2019
Accumulated pension actuarial loss	$	(6,375,840)	$	(4,028,780)
Deferred taxes related to accumulated pension actuarial loss		1,522,485		1,522,485
Unrealized net gain on securities available for sale		562,144		202,555
Deferred taxes related to unrealized net gain on securities available for sale		(544,625)		(544,625)
Total accumulated other comprehensive loss	$	(4,835,836)	$	(2,848,365)

The following table sets forth changes in accumulated other comprehensive loss:

	Available for		Defined Benefit
	Sale Securities		Pension Plan		Total
Balance, June 30, 2018	$	(1,591,098)	$	(616,478)	$	(2,207,576)
Other comprehensive (loss) income before reclassifications, net of tax		580,482		(1,343,261)		(762,779)
Amounts reclassified from other comprehensive loss, net of tax		—		121,990		121,990	*
Net current period other comprehensive (loss) income		580,482		(1,221,271)		(640,789)
Balance, June 30, 2019		(1,010,616)		(1,837,749)		(2,848,365)
Other comprehensive (loss) income before reclassifications, net of tax		359,589		(2,562,807)		(2,203,218)
Amounts reclassified from other comprehensive loss, net of tax		—		215,747		215,747	*
Net current period other comprehensive (loss) income		359,589		(2,347,060)		(1,987,471)
Balance, June 30, 2020	$	(651,027)	$	(4,184,809)	$	(4,835,836)

* - These amounts are included in the computation of net periodic pension income.

See Note 15, Defined Benefit Pension Plan, for additional details.

NOTE 17 – Commitments and Contingencies

In the normal course of business, the Company is involved in various legal proceedings. In the opinion of management, any liability resulting from such proceedings would not have a material adverse effect on the consolidated financial statements.

The Company is party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit, financial guarantees and standby letters of credit. They involve, to varying degrees, elements of credit risk in excess of amounts recognized on the consolidated balance sheets.

F-35

TEB BANCORP, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the Years Ended June 30, 2020 and 2019

The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual notional amount of those instruments. The Company uses the same credit policies in making commitments and issuing letters of credit as they do for on-balance-sheet instruments.

A summary of the contract or notional amount of the Company’s exposure to off-balance-sheet risk is as follows:

	June 30, 2020		June 30, 2019
Financial instruments whose contract amounts represent credit risk:
Commitments to extend credit to borrowers	$	15,853,034	$	18,668,750
Sold loan commitments		105,961,238		41,760,875
Credit card commitments		567,763		637,121

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s credit worthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation of the counterparty. Collateral held varies but may include accounts receivable, inventory, property and equipment, and income-producing commercial properties. Credit card commitments are unsecured.

As of June 30, 2020 and June 30, 2019, the Company does not engage in the use of interest rate swaps, futures or option contracts.

NOTE 18 – Concentration of Credit Risk

Practically all of the Company’s loans and commitments have been granted to customers in the Company’s market area, generally Southeastern Wisconsin. Although the Company has a diversified loan portfolio, the ability of its debtors to honor their contracts is dependent on the economic conditions of the counties surrounding the Company. The concentration of credit by type of loan is set forth in Note 6.

NOTE 19 – Regulatory Capital Requirements

The Bank is subject to various regulatory capital requirements administered by the federal and state banking agencies, as prescribed in the BASEL Committee on Banking Supervisor’s Capital Guidance for U.S. banks (“BASEL III rules”).

Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary, actions by regulators that, if undertaken, could have a direct material effect on the Bank’s consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of its assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk-weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the table that follows) of total and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined), Tier 1 Common Equity (as defined), and Tier 1 capital (as defined) to average assets (as defined).

F-36

TEB BANCORP, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the Years Ended June 30, 2020 and 2019

The Bank completed a reorganization and capital raise as of April 30, 2019. The Bank’s capital levels after the capital raise met all capital adequacy requirements to which they were subject under the amended Consent Order and the amended Consent Order was subsequently terminated on June 19, 2019.

Listed below is a comparison of the Bank’s actual capital amounts with the minimum requirements for well capitalized or adequately capitalized banks, as defined by the federal regulatory agencies’ Prompt Corrective Action Rules. Under Basel III rules, the Bank must hold a capital conservation buffer of 2.50% above the adequately capitalized risk-based capital ratios. Failure to maintain the full amount of the buffer will result in restrictions on the Bank’s ability to make discretionary payments.

As a result of the recently enacted Economic Growth, Regulatory Relief, and Consumer Protection Act, the federal banking agencies are required to develop a “Community Bank Leverage Ratio” (the ratio of a bank’s tangible equity capital to average total consolidated assets) for financial institutions with assets of less than $10 billion. A “qualifying community bank” that exceeds this ratio will be deemed to be in compliance with all other capital and leverage requirements, including the capital requirements to be considered “well capitalized” under Prompt Corrective Action statutes. The community bank leverage ratio was established at 9% Tier 1 capital to total average assets, effective January 1, 2020. A qualifying bank may opt in and out of the community bank leverage ratio framework on its quarterly call report. A bank that ceases to meet any qualifying criteria is provided with a two-quarter grace period to comply with the community bank leverage ratio requirements or the general capital regulations by the federal regulators.

Section 4012 of the Coronavirus Aid, Relief and Economic Security Act of 2020 required that the community bank leverage ratio be temporarily lowered to 8%. The federal regulators issued a rule making the lower ratio effective April 23, 2020. The rules also established a two-quarter grace period for a qualifying community bank whose leverage ratio falls below the 8% community bank leverage ratio requirement so long as the bank maintains a leverage ratio of 7% or greater. Another rule was issued to transition back to the 9% community bank leverage ratio, increasing the ratio to 8.5% for calendar year 2021 and to 9% thereafter. The Bank opted into the community bank leverage ratio framework as of March 31, 2020.

As of June 30, 2020 and 2019, the Bank was categorized as well capitalized. To be categorized as well capitalized or adequately capitalized, an institution must maintain minimum total risk-based, Tier I risk-based, Tier I common equity, and Tier 1 leverage ratios as set forth in the following table.

	June 30, 2020
					For Capital Adequacy				To be Considered
	Actual				Purposes				Well Capitalized
	Amount		Ratio		Amount		Ratio		Amount		Ratio
Total capital (to risk weighted assets)	$	28,928,180	15.02	%	$	15,408,708	8.00	%	$	19,260,885	10.00	%
Tier 1 capital (to risk weighted assets)		27,574,753	14.32	%		11,556,531	6.00	%		15,408,708	8.00	%
Common Equity Tier 1 (to risk weighted assets)		27,574,753	14.32	%		8,667,398	4.50	%		12,519,575	6.50	%
Tier 1 capital (to average assets)		27,574,753	9.30	%		11,857,514	4.00	%		14,821,893	5.00	%

F-37

TEB BANCORP, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of and for the Years Ended June 30, 2020 and 2019

	June 30, 2019
					For Capital Adequacy				To be Considered
	Actual				Purposes				Well Capitalized
	Amount		Ratio		Amount		Ratio		Amount		Ratio
Total capital (to risk weighted assets)	$	27,643,843	14.01	%	$	15,780,941	8.00	%	$	19,726,176	10.00	%
Tier 1 capital (to risk weighted assets)		26,349,878	13.36	%		11,835,706	6.00	%		15,780,941	8.00	%
Common Equity Tier 1 (to risk weighted assets)		26,349,878	13.36	%		8,876,779	4.50	%		12,822,015	6.50	%
Tier 1 capital (to average assets)		26,349,878	8.55	%		12,327,357	4.00	%		15,409,197	5.00	%

A Wisconsin state-chartered savings bank is required by state law to maintain minimum net worth in an amount equal to at least 6.0% of its total assets. At June 30, 2019, the Bank’s net worth was $23,501,513 and general loan loss reserve was $1,190,650, totaling 7.9% of total assets, which meets the state of Wisconsin’s minimum net worth requirements. At June 30, 2020, the Bank’s net worth was $22,472,487 and general loan loss reserve was $1,147,504, totaling 7.7% of total assets, which meets the state of Wisconsin’s minimum net worth requirements.

F-38

EX-4.2

Exhibit 4.2

Description of Registrant’s Securities

Unless otherwise indicated or the context otherwise requires, references in this Exhibit 4.2 to “we, “us” and “our” refer collectively to TEB MHC, TEB Bancorp, Inc. and The Equitable Bank, S.S.B. or to any of those entities, depending on the context. In addition, we may refer to The Equitable Bank, S.S.B. as “The Equitable Bank.”

General

TEB Bancorp, Inc. is authorized to issue 20,000,000 shares of common stock having a par value of $0.01 per share and 5,000,000 shares of serial preferred stock, par value of $0.01 per share. Each share of TEB Bancorp, Inc.’s common stock will have the same relative rights as, and will be identical in all respects with, each other share of common stock. All outstanding shares of our common stock are duly authorized, fully paid and nonassessable.

Our board of directors can, without stockholder approval, issue additional shares of common stock, although TEB MHC, so long as it is in existence, must own a majority of TEB Bancorp, Inc.’s outstanding shares of common stock. TEB Bancorp, Inc.’s issuance of additional shares of common stock could dilute the voting strength of the holders of the common stock and may assist management in impeding an unfriendly takeover or attempted change in control. TEB Bancorp, Inc. has no present plans to issue additional shares of common stock.

Common Stock

Distributions. TEB Bancorp, Inc. may pay dividends on its common stock if, after giving effect to such dividends, it would be able to pay its debts in the usual course of business and its total assets would exceed the sum of its total liabilities plus the amount needed to satisfy the preferential rights upon dissolution of stockholders whose preferential rights on dissolution are superior to those receiving the dividends. However, even if TEB Bancorp, Inc.’s assets are less than the amount necessary to satisfy the requirement set forth above, TEB Bancorp, Inc. may pay dividends from: its net earnings for the fiscal year in which the distribution is made; its net earnings for the preceding fiscal year; or the sum of its net earnings for the preceding eight fiscal quarters. The payment of dividends by TEB Bancorp, Inc. is also subject to limitations that are imposed by applicable regulation. The holders of common stock of TEB Bancorp, Inc. will be entitled to receive and share equally in dividends as may be declared by our board of directors out of funds legally available therefor. If TEB Bancorp, Inc. issues shares of preferred stock, the holders thereof may have a priority over the holders of the common stock with respect to dividends.

If TEB Bancorp, Inc. pays dividends to its stockholders, it would likely pay dividends to TEB MHC, unless TEB MHC is permitted by the Federal Reserve Board to waive the receipt of dividends. The Federal Reserve Board’s current policy restricts the ability of mutual holding companies organized as bank holding companies to waive dividends declared by their subsidiaries. Accordingly, because dividends would be required to be paid to TEB MHC along with all other stockholders, the amount of dividends available for all other stockholders would be less than if TEB MHC were permitted to waive the receipt of dividends.

Voting Rights. The holders of common stock of TEB Bancorp, Inc. have exclusive voting rights in TEB Bancorp, Inc. They elect TEB Bancorp, Inc.’s board of directors and act on other matters as are required to be presented to them under Maryland law or as are otherwise presented to them by the board of directors. Generally, each holder of common stock is entitled to one vote per share and does not have any right to cumulate votes in the election of directors. Any person who beneficially owns more than 10% of the then-outstanding shares of TEB Bancorp, Inc.’s common stock, however, is not entitled or permitted to vote any shares of common stock held in excess of the 10% limit. If TEB Bancorp, Inc. issues shares of preferred stock, holders of the preferred stock may also possess voting rights. Certain matters require the approval of 80% of our outstanding common stock.

Liquidation. In the event of any liquidation, dissolution or winding up of The Equitable Bank, TEB Bancorp, Inc., as the holder of 100% of The Equitable Bank’s capital stock, would be entitled to receive all assets of The Equitable Bank available for distribution, after payment or provision for payment of all debts and liabilities of The Equitable Bank, including all deposit accounts and accrued interest thereon. In the event of liquidation, dissolution or winding up of TEB Bancorp, Inc., the holders of its common stock would be entitled to receive, after payment or provision for payment of all its debts and liabilities, all of the assets of TEB Bancorp, Inc. available for distribution. If preferred stock is issued, the holders thereof may have a priority over the holders of the common stock in the event of liquidation or dissolution.

Preemptive Rights. Holders of the common stock of TEB Bancorp, Inc. are not entitled to preemptive rights with respect to any shares that may be issued. The common stock is not subject to redemption.

Preferred Stock

Preferred stock may be issued with such preferences and designations as our board of directors may from time to time determine. Our board of directors can, without stockholder approval, issue preferred stock with voting, dividend, liquidation and conversion rights which could dilute the voting strength of the holders of the common stock and may assist management in impeding an unfriendly takeover or attempted change in control. TEB Bancorp, Inc. has no present plans to issue preferred stock.

Mutual Holding Company Structure

TEB MHC owns a majority of the outstanding common stock of TEB Bancorp, Inc. and, through its board of directors, is able to exercise voting control over virtually all matters put to a vote of stockholders. For example, TEB MHC may exercise its voting control to prevent a sale or merger transaction or to defeat a stockholder nominee for election to the board of directors of TEB Bancorp, Inc. It is not be possible for another entity to acquire TEB Bancorp, Inc. without the consent of TEB MHC. TEB MHC, as long as it remains in the mutual form of organization, will control a majority of the voting stock of TEB Bancorp, Inc.

Federal Law and Regulations

Under the Change in Bank Control Act, no person, or group of persons acting in concert, may acquire control of a bank holding company unless the Federal Reserve Board has been given 60 days’ prior written notice and not disapproved the proposed acquisition. The Federal Reserve Board considers several factors in evaluating a notice, including the financial and managerial resources of the acquirer and competitive effects. Control, as defined under the applicable regulations, means the power, directly or indirectly, to direct the management or policies of the company or to vote 25% or more of any class of voting securities of the company. Acquisition of more than 10% of any class of a bank holding company’s voting securities constitutes a rebuttable presumption of control under certain circumstances, including where, as is the case with TEB Bancorp, Inc., the issuer has registered securities under Section 12 of the Securities Exchange Act of 1934.

In addition, federal regulations provide that no company may acquire control (as defined in the Bank Holding Company Act) of a bank holding company without the prior approval of the Federal Reserve Board. Any company that acquires such control becomes a “bank holding company” subject to registration, examination and regulation by the Federal Reserve Board.

Federal Reserve Board regulations generally prohibit any person from acquiring or making an offer to acquire beneficial ownership of more than 10% of the stock of TEB Bancorp, Inc. or The Equitable Bank without the Federal Reserve Board’s prior approval within a period of three years following TEB Bancorp’s completion of its offering.

Maryland Law and Articles of Incorporation and Bylaws of TEB Bancorp, Inc.

Maryland law, as well as TEB Bancorp, Inc.’s articles of incorporation and bylaws, contain a number of provisions relating to corporate governance and rights of stockholders that may discourage future takeover attempts. As a result, stockholders who might desire to participate in such transactions may not have an opportunity to do so. In addition, these provisions will also render the removal of the board of directors or management of TEB Bancorp, Inc. more difficult.

Directors. The board of directors are divided into three classes. The members of each class are elected for a term of three years and only one class of directors will be elected annually. Thus, it would take at least two annual elections to replace a majority of the board of directors. The bylaws establish qualifications for board members, including restrictions on affiliations with competitors of The Equitable Bank and restrictions based upon prior legal or regulatory violations. Further, the bylaws impose notice and information requirements in connection with the nomination by stockholders of candidates for election to the board of directors or the proposal by stockholders of business to be acted upon at an annual meeting of stockholders. Such notice and information requirements are applicable to all stockholder business proposals and nominations, and are in addition to any requirements under the federal securities laws.

Restrictions on Calling Special Meetings. The bylaws provide that special meetings of stockholders can be called by the president, the chief executive officer, the chairman, by a majority of the whole board of directors or upon the written request of stockholders entitled to cast at least a majority of all votes entitled to vote at the meeting. The board of directors has the sole power to fix (i) the record date for determining stockholders entitled to request a special meeting of stockholders and the record date for determining stockholders entitled to notice of and to vote at the special meeting and (ii) the date, time and place of the special meeting and the means of remote communication, if any, by which stockholders and proxy holders may be considered present in person and may vote at the special meeting.

Prohibition of Cumulative Voting. The articles of incorporation prohibit cumulative voting for the election of directors.

Limitation of Voting Rights. The articles of incorporation provide that in no event will any person who beneficially owns more than 10% of the then-outstanding shares of common stock, be entitled or permitted to vote any of the shares of common stock held in excess of the 10% limit. This provision has been included in the articles of incorporation in reliance on Section 2-507(a) of the Maryland General Corporation Law, which entitles stockholders to one vote for each share of stock unless the articles of incorporation provide for a greater or lesser number of votes per share or limit or deny voting rights.

Restrictions on Removing Directors from Office. The articles of incorporation provide that directors may be removed only for cause, and only by the affirmative vote of the holders of at least two-thirds of the voting power of all of TEB Bancorp, Inc.’s then-outstanding common stock entitled to vote (after giving effect to the limitation on voting rights discussed above in “—Limitation of Voting Rights”).

Forum Selection for Certain Stockholder Lawsuits. TEB Bancorp, Inc.’s articles of incorporation provide that, unless TEB Bancorp, Inc. consents in writing to the selection of an alternative forum, the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of TEB Bancorp, Inc., (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of TEB Bancorp, Inc. to TEB Bancorp, Inc. or TEB Bancorp, Inc.’s stockholders, (iii) any action asserting a claim arising pursuant to any provision of the Maryland General Corporation Law, or (iv) any action asserting a claim governed by the internal affairs doctrine shall be a state or federal court located within the state of Maryland, in all cases subject to the court’s having personal jurisdiction over the indispensable parties named as defendants.

Under the articles of incorporation, any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of TEB Bancorp, Inc. shall be deemed to have notice of and consented to the exclusive forum provisions of the articles of incorporation. The choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors and officers or other employees, which may discourage such lawsuits against us and our directors, officers and other employees.

Because this provision permits claims to be brought in federal courts located in the state of Maryland, this provision would apply to a claim made under the U.S. federal securities laws where there is exclusive federal jurisdiction for such a claim. However, a court may find the choice of forum provision contained in our articles of incorporation to be inapplicable or unenforceable in an action. As a result, we may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect our business and financial condition.

Authorized but Unissued Shares. After the reorganization, TEB Bancorp, Inc. will have authorized but unissued shares of common and preferred stock. See “Description of Capital Stock of TEB Bancorp, Inc.” The articles of incorporation authorize 5,000,000 shares of serial preferred stock. TEB Bancorp, Inc. is authorized to issue preferred stock from time to time in one or more series subject to applicable provisions of law, and the board of directors is authorized to fix the preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends, qualifications and terms and conditions of redemption of the shares of each such series. In the event of a proposed merger, tender offer or other attempt to gain control of TEB Bancorp, Inc. that the board of directors does not approve, it may be possible for the board of directors to authorize the issuance of a series of preferred stock with rights and preferences that would impede the completion of the transaction. An effect of the possible issuance of preferred stock therefore may be to deter a future attempt to gain control of TEB Bancorp, Inc. The board of directors has no present plan or understanding to issue any preferred stock.

Amendments to Articles of Incorporation and Bylaws. Amendments to the articles of incorporation must be approved by the board of directors and by the affirmative vote of at least two-thirds of the outstanding shares of common stock, or by the affirmative vote of a majority of the outstanding shares of common stock if at least two-thirds of the members of the whole board of directors approves such amendment; provided, however, that approval by at least 80% of the outstanding voting stock is generally required to amend the following provisions:

(i)           the limitation on voting rights of persons who directly or indirectly beneficially own more than 10% of the outstanding shares of common stock;

(ii)          the division of the board of directors into three staggered classes;

(iii)         the ability of the board of directors to fill vacancies on the board;

(iv)         the requirement that directors may only be removed for cause and by the affirmative vote of at least two-thirds of the votes eligible to be cast by stockholders;

(v)          the ability of the board of directors to amend and repeal the bylaws;

(vi)         the ability of the board of directors to evaluate a variety of factors in evaluating offers to purchase or otherwise acquire TEB Bancorp, Inc.;

(vii)        the authority of the board of directors to provide for the issuance of preferred stock;

(viii)       the validity and effectiveness of any action lawfully authorized by the affirmative vote of the holders of a majority of the total number of outstanding shares of common stock;

(ix)         the number of stockholders constituting a quorum or required for stockholder consent;

(x)          the indemnification of current and former directors and officers, as well as employees and other agents, by TEB Bancorp, Inc.;

(xi)         the limitation of liability of officers and directors to TEB Bancorp, Inc. for money damages;

(xii)        the inability of stockholders to cumulate their votes in the election of directors;

(xiii)       the advance notice requirements for stockholder proposals and nominations;

(xiv)       The requirement that the forum for certain actions or disputes will be a state or federal court located within the State of Maryland; and

(xv)        the provision of the articles of incorporation requiring approval of at least 80% of the outstanding voting stock to amend the provisions of the articles of incorporation provided in (i) through (xiv) of this list.

The articles of incorporation also provide that the bylaws may be amended by the affirmative vote of a majority of TEB Bancorp, Inc.’s directors or by the affirmative vote of at least 80% of the total votes eligible to be cast by stockholders at a duly constituted meeting of stockholders. Any amendment of this super-majority requirement for amendment of the bylaws would also require the approval of 80% of the total votes eligible to be cast.

The provisions requiring the affirmative vote of 80% of the total eligible votes eligible to be cast for certain stockholder actions have been included in the articles of incorporation of TEB Bancorp, Inc. in reliance on Section 2-104(b)(4) of the Maryland General Corporation Law. Section 2-104(b)(4) permits the articles of incorporation to require a greater proportion of votes than the proportion that would otherwise be required for stockholder action under the Maryland General Corporation Law.

Business Combinations with Interested Stockholders. Under Maryland law, “business combinations” between TEB Bancorp, Inc. and an interested stockholder or an affiliate of an interested stockholder are prohibited for five years after the most recent date on which the interested stockholder becomes an interested stockholder. These business combinations include a merger, consolidation, statutory share exchange or, in circumstances specified in the statute, certain transfers of assets, certain stock issuances and transfers, liquidation plans and reclassifications involving interested stockholders and their affiliates or issuance or reclassification of equity securities. Maryland law defines an interested stockholder as: (i) any person who beneficially owns 10% or more of the voting power of TEB Bancorp, Inc.’s voting stock after the date on which TEB Bancorp, Inc. had 100 or more beneficial owners of its stock; or (ii) an affiliate or associate of TEB Bancorp, Inc. at any time after the date on which TEB Bancorp, Inc. had 100 or more beneficial owners of its stock who, within the two-year period prior to the date in question, was the beneficial owner of 10% or more of the voting power of the then-outstanding voting stock of TEB Bancorp, Inc. A person is not an interested stockholder under the statute if the board of directors approved in advance the transaction by which the person otherwise would have become an interested stockholder. However, in approving a transaction, the board of directors may provide that its approval is subject to compliance, at or after the time of approval, with any terms and conditions determined by the board.

After the five-year prohibition, any business combination between TEB Bancorp, Inc. and an interested stockholder generally must be recommended by the board of directors of TEB Bancorp, Inc. and approved by the affirmative vote of at least: (i) 80% of the votes entitled to be cast by holders of outstanding shares of voting stock of TEB Bancorp, Inc., and (ii) two-thirds of the votes entitled to be cast by holders of voting stock of TEB Bancorp, Inc. other than shares held by the interested stockholder with whom or with whose affiliate the business combination is to be effected or held by an affiliate or associate of the interested stockholder. These super-majority vote requirements do not apply if TEB Bancorp, Inc.’s common stockholders receive a minimum price, as defined under Maryland law, for their shares in the form of cash or other consideration in the same form as previously paid by the interested stockholder for its shares.

Mergers, Consolidations and Sales of Assets. As a result of an election made in TEB Bancorp, Inc.’s articles of incorporation, a merger or consolidation of TEB Bancorp, Inc. requires approval of a majority of all votes entitled to be cast by stockholders. However, no approval by stockholders is required for a merger if:

·the plan of merger does not make an amendment to the articles of incorporation that would be required to be approved by the stockholders;

·each stockholder of the surviving corporation whose shares were outstanding immediately before the effective date of the merger will hold the same number of shares, with identical designations, preferences, limitations, and rights, immediately after; and

·the number of shares of any class or series of stock outstanding immediately after the effective time of the merger will not increase by more than 20% the total number of voting shares outstanding immediately before the merger.

In addition, under certain circumstances the approval of the stockholders shall not be required to authorize a merger with or into a 90% owned subsidiary of TEB Bancorp, Inc.

Under Maryland law, a sale of all or substantially all of TEB Bancorp, Inc.’s assets other than in the ordinary course of business, or a voluntary dissolution of TEB Bancorp, Inc., requires the approval of its board of directors and the affirmative vote of two-thirds of the votes of stockholders entitled to be cast on the matter.

Evaluation of Offers. The articles of incorporation provide that TEB Bancorp, Inc.’s board of directors, when evaluating a transaction that would or may involve a change in control of TEB Bancorp, Inc. (whether by purchases of its securities, merger, consolidation, share exchange, dissolution, liquidation, sale of all or substantially all of its assets, proxy solicitation or otherwise), may, in connection with the exercise of its business judgment in determining what is in the best interests of TEB Bancorp, Inc. and its stockholders and in making any recommendation to the stockholders, give due consideration to all relevant factors, including, but not limited to:

·the economic effect, both immediate and long-term, upon TEB Bancorp, Inc.’s stockholders, including stockholders, if any, who do not participate in the transaction;

·the social and economic effect on the present and future employees, creditors and customers of, and others dealing with, TEB Bancorp, Inc. and its subsidiaries and on the communities in which TEB Bancorp, Inc. and its subsidiaries operate or are located;

·whether the proposal is acceptable based on the historical, current or projected future operating results or financial condition of TEB Bancorp, Inc.;

·whether a more favorable price could be obtained for TEB Bancorp, Inc.’s stock or other securities in the future;

·the reputation and business practices of the other entity to be involved in the transaction and its management and affiliates as they would affect the employees of TEB Bancorp, Inc. and its subsidiaries;

·the future value of the stock or any other securities of TEB Bancorp, Inc. or the other entity to be involved in the proposed transaction;

·any antitrust or other legal and regulatory issues that are raised by the proposal;

·the business and historical, current or expected future financial condition or operating results of the other entity to be involved in the transaction, including, but not limited to, debt service and other existing financial obligations, financial obligations to be incurred in connection with the proposed transaction, and other likely financial obligations of the other entity to be involved in the proposed transaction; and

·the ability of TEB Bancorp, Inc. to fulfill its objectives as a financial institution holding company and the ability of its subsidiary financial institution(s) to fulfill the objectives of a federally insured financial institution under applicable statutes and regulations.

If the board of directors determines that any proposed transaction should be rejected, it may take any lawful action to defeat such transaction.

Purpose and Anti-Takeover Effects of TEB Bancorp, Inc.’s Articles of Incorporation and Bylaws. Our board of directors believes that the provisions described above are prudent and will reduce our vulnerability to takeover attempts and certain other transactions that have not been negotiated with and approved by our board of directors. These provisions also will assist us in the orderly deployment of the offering proceeds into productive assets during the initial period after the stock offering. We believe these provisions are in the best interests of TEB Bancorp, Inc. and its stockholders. Our board of directors believes that it will be in the best position to determine the true value of TEB Bancorp, Inc. and to negotiate more effectively for what may be in the best interests of all our stockholders. Accordingly, our board of directors believes that it is in the best interests of TEB Bancorp, Inc. and all of our stockholders to encourage potential acquirers to negotiate directly with the board of directors and that these provisions will encourage such negotiations and discourage hostile takeover attempts. It is also the view of our board of directors that these provisions should not discourage persons from proposing a merger or other transaction at a price reflective of the true value of TEB Bancorp, Inc. and that is in the best interests of all our stockholders.

Takeover attempts that have not been negotiated with and approved by our board of directors present the risk of a takeover on terms that may be less favorable than might otherwise be available. A transaction that is negotiated and approved by our board of directors, on the other hand, can be carefully planned and undertaken at an opportune time in order to obtain maximum value for our stockholders, with due consideration given to matters such as the management and business of the acquiring corporation.

Although a tender offer or other takeover attempt may be made at a price substantially above the current market price, such offers are sometimes made for less than all of the outstanding shares of a target company. As a result, stockholders may be presented with the alternative of partially liquidating their investment at a time that may be disadvantageous, or retaining their investment in an enterprise that is under different management and whose objectives may not be similar to those of the remaining stockholders.

Despite our belief as to the benefits to stockholders of these provisions of TEB Bancorp, Inc.’s articles of incorporation and bylaws, these provisions also may have the effect of discouraging a future takeover attempt that would not be approved by our board of directors, but pursuant to which stockholders may receive a substantial premium for their shares over then current market prices. As a result, stockholders who might desire to participate in such a transaction may not have any opportunity to do so. Such provisions will also make it more difficult to remove our board of directors and management. We believe, however, that the potential benefits outweigh the possible disadvantages.

Benefit Plans

In addition to the provisions of TEB Bancorp, Inc.’s articles of incorporation and bylaws described above, benefit plans of TEB Bancorp, Inc. and The Equitable Bank that may authorize the issuance of equity to its board of directors, officers and employees adopted in connection with or following the offering contain or may contain provisions which also may discourage hostile takeover attempts which the board of directors of The Equitable Bank might conclude are not in the best interests of TEB Bancorp, Inc. and The Equitable Bank or TEB Bancorp, Inc.’s stockholders.

EX-21

Exhibit 21

Significant Subsidiaries of the Registrant

Name	Percent Ownership		State of Incorporation
The Equitable Bank, S.S.B.	100	%	Wisconsin
Equitable Investment Corp.*	100	%	Nevada
Equity Credit Corp.*	100	%	Wisconsin

*Subsidiary of The Equitable Bank, S.S.B.

EX-31.1

Exhibit 31.1

Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Jennifer L. Provancher, certify that:

1.           I have reviewed this annual report on Form 10-K of TEB Bancorp, Inc.;

2.           Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.           Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.           The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)           Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)           Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)           Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.           The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)           All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)           Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  October 1, 2020	/s/ Jennifer L. Provancher
	Jennifer L. Provancher
	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Lauren Poppen, certify that:

1.           I have reviewed this annual report on Form 10-K of TEB Bancorp, Inc.;

2.           Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.           Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.           The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)           Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)           Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)           Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.           The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)           All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)           Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  October 1, 2020	/s/ Lauren Poppen
	Lauren Poppen
	Chief Financial Officer

EX-32

Exhibit 32

Certification of Chief Executive Officer and Chief Financial Officer

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Jennifer L. Provancher, President and Chief Executive Officer, of TEB Bancorp, Inc. (the “Company”) and Lauren Poppen, Chief Financial Officer of the Company, each certify in his or her capacity as an officer of the Company that they have reviewed the annual report on Form 10-K for the year ended June 30, 2020 (the “Report”) and that to the best of their knowledge:

1.            the Report fully complies with the requirements of Sections 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.            the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:   October 1, 2020	/s/ Jennifer L. Provancher
	Jennifer L. Provancher
	President and Chief Executive Officer

Date:   October 1, 2020	/s/ Lauren Poppen
	Lauren Poppen
	Chief Financial Officer

The purpose of this statement is solely to comply with Title 18, Chapter 63, Section 1350 of the United States Code, as amended by Section 906 of the Sarbanes-Oxley Act of 2002.

A signed original of this written statement required by Section 906 has been provided to TEB Bancorp, Inc. and will be retained by TEB Bancorp, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information - USD ($) $ in Millions	12 Months Ended
	Jun. 30, 2020	Oct. 01, 2020	Dec. 31, 2019
Document and Entity Information
Document Type	10-K
Document Period End Date	Jun. 30, 2020
Entity Registrant Name	TEB Bancorp, Inc.
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Public Float			$ 21.8
Entity Common Stock, Shares Outstanding		2,624,343
Entity Central Index Key	0001751700
Current Fiscal Year End Date	--06-30
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	FY
Amendment Flag	false

XML

CONSOLIDATED BALANCE SHEETS - USD ($)	Jun. 30, 2020	Jun. 30, 2019
ASSETS
Cash and due from banks	$ 2,763,126	$ 4,617,976
Federal funds sold	10,342,915	1,012,794
Cash and cash equivalents	13,106,041	5,630,770
Interest bearing deposits in banks	2,713,164	3,674,015
Available for sale securities - stated at fair value	20,297,595	20,542,118
Loans, less allowance for loan losses of $1,353,427 and $1,293,965 at June 30, 2020 and June 30, 2019, respectively	237,300,478	259,873,403
Loans held for sale	18,690,027	7,079,548
Other real estate owned, net	2,288,255	4,080,401
Premises and equipment, net	7,960,041	8,165,274
Federal Home Loan Bank stock	1,345,500	2,061,000
Accrued interest receivable and other assets	1,773,486	1,141,686
TOTAL ASSETS	305,474,587	312,248,215
Deposits.
Demand	93,627,648	77,414,345
Savings and NOW	75,397,948	70,385,843
Certificates of deposit	87,045,935	86,761,271
Total Deposits	256,071,531	234,561,459
Federal Home Loan Bank borrowings	9,000,000	44,200,000
Advance payments by borrowers for property taxes and insurance	2,882,067	3,197,095
Accrued interest payable and other liabilities	14,008,786	5,882,086
Total Liabilities	281,962,384	287,840,640
STOCKHOLDERS’ EQUITY
Preferred stock ($0.01 par value, 5,000,000 authorized, no shares issued or outstanding as of June 30, 2020 and June 30, 2019, respectively)
Common stock ($0.01 par value, 20,000,000 authorized, 2,624,343 issued and outstanding as of June 30, 2020 and June 30, 2019)	26,243	26,243
Additional paid in capital	11,319,328	11,319,328
Retained earnings	17,002,468	15,910,369
Accumulated other comprehensive loss	(4,835,836)	(2,848,365)
Total Stockholders’ Equity	23,512,203	24,407,575
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$ 305,474,587	$ 312,248,215

XML

CONSOLIDATED BALANCE SHEETS (Parentheticals) - USD ($)	Jun. 30, 2020	Jun. 30, 2019
CONSOLIDATED BALANCE SHEETS
Allowance for loan losses	$ 1,353,427	$ 1,293,965
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	20,000,000	20,000,000
Common stock, shares issued	2,624,343	2,624,343
Common stock, shares outstanding	2,624,343	2,624,343

XML

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)	12 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
INTEREST AND DIVIDEND INCOME
Interest and fees on loans	$ 11,173,105	$ 11,762,010
Interest and dividends on investment securities	656,909	713,291
Interest on federal funds sold	40,773	44,953
Interest on deposits in banks	8,298	9,903
Total Interest Income	11,879,085	12,530,157
INTEREST EXPENSE
Interest on deposits	1,824,544	1,500,343
Interest on Federal Home Loan Bank borrowings	397,726	1,172,347
Interest on federal funds purchased	308	284
Total Interest Expense	2,222,578	2,672,974
Net interest income before provision for loan losses	9,656,507	9,857,183
Provision for loan losses	135,000	0
Net interest income after provision for loan losses	9,521,507	9,857,183
NON-INTEREST INCOME
Service fees on deposits	429,531	467,394
Service fees on loans	238,133	275,501
Gain on sales of mortgage loans	5,120,325	1,522,595
Income on sale of uninsured products	321,285	321,216
Gain (loss) on sale of other real estate owned	117,657	(23,265)
Other income	20,439	34,445
Total Non-Interest Income	6,247,370	2,597,886
NON-INTEREST EXPENSES
Compensation and benefits	8,503,018	7,425,235
Occupancy	1,969,002	1,930,238
Advertising	227,320	278,701
Data processing services	1,095,609	1,218,325
FDIC assessment	112,418	458,344
Cost of operations for other real estate owned	1,046,646	124,503
Insurance expense	156,312	160,881
Professional fees	488,803	427,483
Other expenses	1,077,650	885,762
Total Non-Interest Expenses	14,676,778	12,909,472
Income (loss) before income taxes	1,092,099	(454,403)
Income tax benefit	0	(55,064)
NET INCOME (LOSS)	$ 1,092,099	$ (399,339)
Basic income (loss) per share	$ 0.42	$ (0.15)
Diluted income (loss) per share	$ 0.42	$ (0.15)

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($)	12 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
Net income (loss)	$ 1,092,099	$ (399,339)
Unrealized gains/losses on securities
Net unrealized holding gains arising during period	359,589	635,594
Tax effect	0	(55,112)
Change in unfunded pension obligation	(2,347,060)	(1,221,271)
Tax effect	0	0
Other comprehensive loss, net of tax	(1,987,471)	(640,789)
COMPREHENSIVE LOSS	$ (895,372)	$ (1,040,128)

XML

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY - USD ($)	Common Stock	Additional Paid-In Capital	Retained Earnings	Accumulated Other Comprehensive Loss	Total
BALANCES at Jun. 30, 2018	$ 0	$ 0	$ 16,309,708	$ (2,207,576)	$ 14,102,132
BALANCES (in shares) at Jun. 30, 2018	0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)			(399,339)		(399,339)
Other Comprehensive Loss, net of tax				(640,789)	(640,789)
Issuance of common stock, net of issuance costs of $1,649,899 and initial MHC capitalization of $100,000	$ 26,243	11,319,328			11,345,571
Issuance of common stock, net of issuance costs of $1,649,899 and initial MHC capitalization of $100,000 (in shares)	2,624,343
BALANCES at Jun. 30, 2019	$ 26,243	11,319,328	15,910,369	(2,848,365)	24,407,575
BALANCES (in shares) at Jun. 30, 2019	2,624,343
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)			1,092,099		1,092,099
Other Comprehensive Loss, net of tax				(1,987,471)	(1,987,471)
BALANCES at Jun. 30, 2020	$ 26,243	$ 11,319,328	$ 17,002,468	$ (4,835,836)	$ 23,512,203
BALANCES (in shares) at Jun. 30, 2020	2,624,343

XML

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Parenthetical)	12 Months Ended
	Jun. 30, 2019 USD ($)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
Issuance of common stock, issuance costs	$ 1,649,899
Issuance of common stock, initial MHC capitalization	$ 100,000

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	12 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$ 1,092,099	$ (399,339)
Adjustments to reconcile net income (loss) to net cash flows used in operating activities
Provision for loan losses	135,000	0
Depreciation	552,952	555,421
Amortization and accretion	60,556	83,120
Origination of mortgage loans held for sale	(334,927,997)	(105,923,418)
Proceeds from sales of mortgage loans held for sale	328,437,843	106,782,850
Gain on sale of mortgage loans held for sale	(5,120,325)	(1,522,595)
(Gain) loss on sale of other real estate owned, net	(117,657)	23,265
Deferred income tax (benefit) expense	0	(334,198)
Income tax valuation allowance	0	364,787
Loss on sale or disposal of assets, net	1,650	0
Changes in assets and liabilities:
Accrued interest receivable and other assets	(631,800)	304,219
Accrued interest payable and other liabilities	5,779,637	(520,181)
Net cash flows used in operating activities	(4,738,042)	(586,069)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from maturities or calls of securities available for sale	3,937,991	1,791,443
Purchase of securities available for sale	(3,394,432)	(875,000)
Change in loans	22,237,069	3,706,548
Change from redemption of FHLB stock	715,500	9,000
Change in interest bearing deposits in banks	960,851	(3,516,556)
Proceeds from sale of other real estate owned	1,158,306	333,387
Charge-offs and (capital expenditures) on other real estate owned	952,353	(61,071)
Proceeds from sale of premises and equipment	8,000	0
Purchase of premises and equipment, net	(357,369)	(468,269)
Net cash flows provided by investing activities	26,218,269	919,482
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in deposits	21,510,072	(9,902,021)
FHLB advance proceeds	1,087,350,000	1,026,380,000
FHLB advance repayments	(1,122,550,000)	(1,028,180,000)
Change in advance payments by borrowers for property taxes and insurance	(315,028)	(480,339)
Net proceeds from issuance of common stock	0	11,345,571
Net cash flows used in financing activities	(14,004,956)	(836,789)
Net Change in Cash and Cash Equivalents	7,475,271	(503,376)
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR	5,630,770	6,134,146
CASH AND CASH EQUIVALENTS - END OF YEAR	13,106,041	5,630,770
SUPPLEMENTAL CASH FLOW DISCLOSURES
Cash paid for interest	1,830,030	1,536,928
Loans transferred to other real estate owned	$ 200,856	$ 418,849

XML

Summary of Significant Accounting Policies

12 Months Ended

Jun. 30, 2020

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

NOTE 1 – Summary of Significant Accounting Policies

Organization

On April 30, 2019, The Equitable Bank, S.S.B. (the “Bank”) converted to a stock savings bank and is now organized in the mutual holding company structure. The Bank issued all of its outstanding stock to a new holding company, TEB Bancorp, Inc. (the “Bancorp”), which sold 1,309,547 shares of common stock to the public at $10.00 per share, representing 49.9% of its outstanding shares of common stock for gross proceeds of approximately $13.1 million. The net proceeds received were approximately $11.4 million after offering costs. TEB Bancorp, Inc. is organized as a corporation under the laws of the State of Maryland. The Bank utilized $100,000 of proceeds received from the offering as initial capitalization of TEB MHC. TEB MHC has been organized as a mutual holding company under the laws of the State of Wisconsin and owns 1,314,796 shares, or 50.1% of the outstanding common stock of TEB Bancorp, Inc.

The costs of the reorganization and the issuing of the common stock totaling $1,649,899 were deferred and deducted from the sales proceeds of the offering.

The Bank is a state-chartered savings bank providing a full range of financial services. The Bank grants commercial, residential and consumer loans, and accepts deposits from customers primarily in the Metropolitan Milwaukee area, which is in southeastern Wisconsin. The Bank is subject to competition from other financial institutions and nonfinancial institutions providing financial products. Additionally, the Bank is subject to the regulations of certain regulatory agencies and undergoes periodic examination by those regulatory agencies.

All depositors who had liquidation rights with respect to the Bank as of the effective date of the reorganization continue to have such rights solely with respect to TEB MHC so long as they continue to hold their deposit accounts with the Bank. In addition, all persons who become depositors of the Bank subsequent to the reorganization will have such liquidation rights with respect to TEB MHC.

At June 30, 2020, the significant assets of TEB Bancorp, Inc. were the capital stock of the Bank and a deposit account held at the Bank. The liabilities of TEB Bancorp, Inc. were insignificant. The Company is subject to the financial reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Company is subject to regulation and examination by the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”).

Principles of Consolidation

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the accounts and operations of TEB Bancorp, Inc. and its wholly-owned subsidiaries, the Bank, Equitable Investment Corp. and Savings Financial Corporation (the “Company”). All significant intercompany accounts and transactions have been eliminated in consolidation.

Emerging Growth Company Status

The Jumpstart Our Business Startups Act (the "JOBS Act"), which was signed into law on April 5, 2012, has made numerous changes to the federal securities laws to facilitate access to capital markets. Under the JOBS Act, a company with total annual gross revenues of less than $1.07 billion during its most recently completed fiscal year qualifies as an "emerging growth company". The Company qualifies as an emerging growth company and believes that it will continue to qualify as an emerging growth company for the foreseeable future.

An emerging growth company may elect to comply with new or amended accounting pronouncements in the same manner as a private company, but must make such election when the company is first required to file a registration statement. Such an election is irrevocable during the period a company is an emerging growth company. The Company has elected to comply with new or amended accounting pronouncements in the same manner as a private company. Accordingly, the financial statements may not be comparable to the financial statements of companies that comply with such new or revised accounting standards. 

Use of Estimates

In preparing the consolidated financial statements in conformity with U.S. GAAP, management of the Company is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated balance sheet and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses, the pension actuarial assumptions, and the valuation of deferred tax assets. 

Revenue Recognition

As of July 1, 2019, the Company adopted Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (Topic 606), as well as subsequent ASUs that modified Topic 606. The Company elected to apply the ASU and all related ASUs using the modified retrospective implementation method. The implementation of the guidance had no material impact on the measurement or recognition of revenue of prior periods.

The majority of the Company’s revenue-generating transactions are not subject to ASC 606, including all interest and dividend income generated from financial instruments. Certain noninterest income items, including gain on sales of loans, gain on sales of securities, and other noninterest income have been evaluated and determined to not fall within the scope of ASC 606. Elements of noninterest income that fall within the scope of ASC 606 are as follows:

Service charges and other fees  The Company earns fees from its deposit customers for transaction-based, account maintenance, and overdraft services. Management reviewed the deposit account agreements and determined that the agreements can be terminated at any time by either the Company or the account holder. Transaction fees, such as wires and overdraft charges, are settled the day the performance obligation is satisfied. The Company’s monthly service charges and maintenance fees are for services provided to the customer on a monthly basis and are considered a series of servies that have the same pattern of transfer each month. The review of service charges assessed on deposit accounts included the amount of variable consideration that is a part of the monthly charges. It was found that the waiver of service charges due to insufficient funds and dormant account fees is immaterial and would not require a change in the accounting treatment for these fees under the new revenue standards. Recognition of revenue under ASC 606 did not materially change the timing or magnitude of revenue recognition.

Interchange fees  Customers use a Bank-issued debit card to purchase goods and services, and the Company earns interchange fees on those transactions, typically a percentage of the sale amount of the transaction. The Company records the amount due when it receives the settlement from the payment network. Payments from the payment network are received and recorded into income on a daily basis. These funds are included in “Service fees on deposits” on the Consolidated Statements of Operations. There are no contingent debit card interchange fees recorded by the Company that could be subject to a clawback in future periods. Recognition of revenue under ASC 606 did not materially change the timing or magnitude of revenue recognition.

Cash and Due From Banks

For purposes of reporting cash flows, cash and cash equivalents include cash and balances due from banks and federal funds sold, all of which mature within 90 days. The Company maintains amounts due from banks, which, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts.

Interest Bearing Deposits in Banks

Interest bearing deposits in banks mature within one year and are carried at cost, which approximates fair value.

Securities

Available for sale securities are stated at fair value and unrealized holding gains and losses on available for sale securities are reported as accumulated other comprehensive income (loss), net of applicable deferred income tax and adjusted for any applicable valuation allowance, a separate component of equity. Available for sale securities are written down to market value through operations if an impairment of value is deemed other than temporary due to credit issues. Gains or losses on the sale of securities, if any, are determined on the specific identification method. Securities transactions are recorded on the trade date. 

Loans

Loans are carried at the unpaid principal balance adjusted for deferred loan fees and costs and charge-offs. Loan origination and commitment fees and certain direct loan origination costs are deferred and the net amounts amortized as an adjustment of the related loan’s yield over the contractual life of the related loan.

Interest on loans is accrued on the unpaid principal balances as earned. Loans are normally placed on nonaccrual status when contractually past due 90 days or more as to interest or principal payments. Additionally, whenever management becomes aware of facts or circumstances that may adversely impact the collectability of principal or interest on a loan, it is management’s practice to place such loan on nonaccrual status immediately, rather than delaying such action until the loan becomes 90 days past due. When a loan is placed on nonaccrual, previously accrued and uncollected interest on such loan is reversed, amortization of related loan fees is suspended, and income is recorded only to the extent that loan payments are subsequently received in cash and a determination has been made that the principal balance of the loan is collectible. If collectability of the principal is in doubt, payments received are applied to loan principal.

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status and the probability of collecting scheduled principal and interest payment when due.

A troubled debt restructuring (“TDR”) includes a loan modification where a borrower is experiencing financial difficulty and a concession is granted to that borrower that would not otherwise have been considered except for the borrower’s financial difficulties. TDRs may be on accrual or nonaccrual status based upon the performance of the borrower and management’s assessment of collectability. TDRs placed on nonaccrual may return to accrued status based on performance in accordance with terms of the restructuring, generally six months.

Loans Held for Sale

Loans originated and intended for sale in the secondary market are carried at the lower of cost or estimated market value in the aggregate. Net unrealized losses are recognized through a valuation allowance by charges to operations. All sales are made without recourse. 

Allowance for Loan Losses

The allowance for loan losses (“ALL”) is established as losses are estimated to have occurred through a provision for loan losses charged to expense. Loan losses are charged against the ALL when management believes the uncollectability of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the ALL. The ALL consists of specific reserves on certain impaired loans from analyses developed through specific credit allocations for individual loans. The specific reserve relates to all loans for which the ALL is estimated on a loan by loan basis using either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s observable market price, or the fair value of the collateral if the loan is collateral dependent. The general reserve is based on the Company’s historical loss experience along with consideration of certain qualitative factors such as (i) changes in the nature, volume, and terms of loans, (ii) changes in lending personnel, (iii) changes in the quality of the loan review function, (iv) changes in nature and volume of past-due, nonaccrual, and/or classified loans, (v) changes in concentration of credit risk, (vi) changes in economic and industry conditions, (vii) changes in legal and regulatory requirements, (viii) unemployment and inflation statistics, and (ix) changes in underlying collateral values.

The ALL reflects management’s best estimate of the probable and inherent losses on loans. The adequacy of the ALL is reviewed and approved by the Company’s Board of Directors. Allocations of the ALL may be made for specific loans, but the entire ALL is available for any loan that, in management’s judgment, should be charged-off.

As an integral part of their examination process, various regulatory agencies review the ALL as well. Such agencies may require that changes in the ALL be recognized when such regulatory credit evaluations differ from those of management based on information available to the regulators at the time of their examinations.    

Premises and Equipment, Net

Premises and equipment are recorded at cost less accumulated depreciation and amortization. Depreciation and amortization expense is provided on the straight-line method over the estimated useful life of the asset for financial reporting purposes, and the straight-line and accelerated methods for income tax purposes. Amortization of leasehold improvements is provided on the straight-line method over the lesser of the term of the respective lease or the estimated economic life of the improvements.

Other Real Estate Owned, Net

Other real estate owned is initially recorded at the fair market value of the real estate acquired less the estimated costs to sell the real estate at the date title is received, establishing a new cost basis, with any write-down charged to the allowance for loan losses. Costs relating to development or improvement of property are capitalized up to the fair value of the property. Valuations are periodically performed by management and independent third parties and a charge to expense is taken if the carrying value of a property exceeds its fair value less estimated costs to sell. Income and expense related to the operations of other real estate owned is recorded net in “Cost of operations of other real estate owned” as a component of non-interest expenses on the consolidated statements of operations. Gains and losses on the sale of other real estate owned are recorded in “Gain (loss) on sale of other real estate owned” as a component of non-interest income in the consolidated statements of operations. 

Federal Home Loan Bank Stock

The Bank is a member of the Federal Home Loan Bank (“FHLB”) of Chicago. Members are required to own a certain amount of FHLB stock based on the Bank’s level of borrowings from the FHLB and other factors, and may invest in additional amounts of FHLB stock. The Bank’s investment in FHLB of Chicago stock meets the minimum amount required by current regulations and is carried at cost, which approximates fair value. FHLB stock is evaluated quarterly for impairment. Based on management’s evaluation, no impairment has been recorded on these securities. Both cash and stock dividends are reported as income.

Defined Benefit Pension Plan

The Bank has a defined benefit pension plan (the “Plan”) covering substantially all of its employees hired prior to March 31, 2012. The benefits are based on years of service and the employee’s average monthly pay received during the five highest consecutive calendar years in the last 10 years of employment under the Plan. Management contributes annually the amounts necessary to provide for defined benefit payments upon retirement or death as determined by the Plan’s actuary. The Plan was frozen effective March 31, 2012 for all employees. No additional benefits are being accrued for active participants after that date and no new participants will be entered into the Plan.

The Bank records annual amounts relating to the Plan based on calculations that incorporate various actuarial and other assumptions including discount rates, mortality, assumed rates of return, compensation increases, and turnover rates. The Bank reviews its assumptions on an annual basis and makes modifications to the assumptions based on current rates and trends where appropriate to do so. The effect of modifications to those assumptions is recorded in accumulated other comprehensive income (loss) and amortized to net periodic pension cost over future periods. The Bank believes that the assumptions utilized in recording its obligations under its plan are reasonable based on its experience and market conditions. 

Comprehensive Income (Loss)

U.S. GAAP generally requires that recognized revenue, expenses, gains, and losses be included in income. Although certain changes in assets and liabilities, such as unrealized gains and losses on available for sale securities, are reported as a separate component of the equity section and changes in the funded status of the pension plan, such items, along with net income (loss) are components of comprehensive income (loss). 

Income Taxes

The Company accounts for income taxes in accordance with the Financial Accounting Standards Board (FASB) Accounting Standards Codification ("ASC") Topic 740, "Income Taxes." Under this guidance, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

The Company recognizes the tax effects from an uncertain tax position in the consolidated financial statements only if the position is more likely than not to be sustained on audit, based on the technical merits of the position. The Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the consolidated financial statements is the largest benefit that has a greater than 50% likelihood of being realized, upon ultimate settlement with the relevant tax authority. The Company recognizes interest and penalties accrued or released related to uncertain tax positions in current income tax expense or benefit.

Transfers of Financial Assets

Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity. 

Advertising

Advertising costs are accrued and expensed in the period incurred. 

Off-Balance Sheet Financial Instruments

In the ordinary course of business, the Bank has entered into off-balance-sheet financial instruments consisting of commitments to extend credit, commitments under credit card arrangements, commercial letters of credit and standby letters of credit. Such financial instruments are recorded in the consolidated financial statements when they are funded or related fees are incurred or received. 

Significant Events

In December 2019, a coronavirus (COVID-19) was reported in China and on March 12, 2020, the President of the United States declared the COVID-19 outbreak in the United States a national emergency. The COVID-19 pandemic has caused significant economic dislocation as many state and local governments have ordered non-essential businesses to close and residents to shelter in place at home. Given the ongoing and dynamic nature of the circumstances, it is difficult to predict the full impact of the COVID-19 outbreak on our business. The extent of such impact will depend on future developments, which are highly uncertain, including when the coronavirus can be controlled and abated and when and how the economy may be reopened. In order to protect the health of employees and customers, the Company has temporarily limited lobby hours and transitioned as many employees to remote work as possible. Nonetheless, the Company has not incurred any significant disruptions to its business activities. 

The Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, was signed into law on March 27, 2020 and provided over $2.0 trillion in emergency economic relief to individuals and businesses impacted by the COVID-19 pandemic. The CARES Act authorized the Small Business Administration (“SBA”) to temporarily guarantee loans under a new 7(a) loan program call the Paycheck Protection Program (“PPP”). Although we were not already a qualified SBA lender, we enrolled in the PPP by completing the required documentation.

An eligible business can apply for a PPP loan up to the greater of: (1) 2.5 times its average monthly “payroll costs”; or (2) $10.0 million. PPP loans will have: (a) an interest rate of 1.0%; (b) a two-year loan term to maturity; and (c) principal and interest payments deferred for six months from the date of disbursement. The SBA will guarantee 100% of the PPP loans made to eligible borrowers. The entire principal amount of the borrower’s PPP loan, including any accrued interest, is eligible to be reduced by the loan forgiveness amount under the PPP so long as employee and compensation levels of the business are maintained and 75% of the loan proceeds are used for payroll expenses, with the remaining 25% of the loan proceeds used for other qualifying expenses. The Company receives a processing fee from the SBA ranging from 1% to 5% depending on the size of the loan, which is offset by a third-party servicing agent fee ranging from 0.25% to 1.0%.  

As of June 30. 2020, the Company originated 16 PPP loans totaling $1.1 million and generated approximately $35,000 from the processing fees.

To work with customers impacted by COVID-19, the Company is offering short-term (i.e., three months or less with the potential to extend up to six months, if necessary) loan modifications on a case by case basis to borrowers who were current in their payments at the inception of the loan modification program. Under Section 4013 of the CARES Act, loans less than 30 days past due as of December 31, 2019 are considered current for COVID-19 modifications. A financial institution can then suspend the requirements under U.S. GAAP for loan modifications related to COVID-19 that would otherwise be categorized as a TDR, and suspend any determination of a loan modified as a result of COVID-19 as being a TDR, including the requirement to determine impairment for accounting purposes.  Financial institutions wishing to utilize this authority must make a policy election, which applies to any COVID-19 modification made between March 1, 2020 and the earlier of either December 31, 2020 or the 60th day after the end of the COVID-19 national emergency. Similarly, the Financial Accounting Standards Board (“FASB”) has confirmed that short-term modifications made on a good faith basis in response to COVID-19 to loan customers who were current prior to any relief are not TDRs. Lastly, prior to the enactment of the CARES Act, the banking regulatory agencies provided guidance as to how certain short-term modifications would not be considered TDRs, and have subsequently confirmed that such guidance could be applicable for loans that do not qualify for favorable accounting treatment under Section 4013 of the CARES Act.

As of June 30, 2020, the Company had received requests to modify 87 loans aggregating $28.0 million, primarily consisting of the deferral of principal and interest payments and the extension of the maturity date. Of these modifications, $27.8 million, or 99.3%, were performing in accordance with the accounting treatment under Section 4013 of the CARES Act and therefore did not qualify as TDRs. One loan totaling $195,924 did not qualify for the favorable accounting treatment under Section 4013 of the CARES Act and therefore will be reported as a TDR. Management has evaluated the loan and determined that based on the liquidation value of the collateral, no specific reserve will be necessary. Details with respect to loan modification requests are as follows:

Loan Classification	Number of Loans		Balance as of June 30, 2020
Construction, land, development		1	$	46,511
1-4 family owner occupied		48		7,235,772
1-4 family non-owner occupied		17		2,517,746
Multifamily		12		10,576,275
Commercial owner occupied		3		1,518,195
Commercial non-owner occupied		3		6,022,240
Consumer and installment loans		3		42,922
Total loan modification requests		87	$	27,959,661

Subsequent Events

Management has reviewed the Company’s operations for potential disclosure or financial statement impacts related to events occurring after June 30, 2020, but prior to the release of these financial statements. Based on the results of this review, no subsequent event disclosure or financial statement impacts to these financial statements are required as of October 1, 2020.

Reclassification

Certain June 30, 2019 amounts have been reclassified to conform to the June 30, 2020 presentation. The reclassifications had no effect on reported amounts of consolidated net loss or stockholders’ equity.

Recent Accounting Pronouncements

This section provides a summary description of recent ASUs issued by the FASB to the ASC that had or that management expects may have an impact on the consolidated financial statements issued upon adoption.  The Company is classified as an emerging growth company and has elected to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Effective dates reflect this election.

Recently Adopted Accounting Pronouncements

In January 2016, the FASB issued ASU 2016-01, “Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.” ASU 2016-01 addresses certain aspects of the recognition, measurement, presentation, and disclosure of financial instruments. Under the new guidance, the Company is no longer required to disclose the fair value of financial instruments measured at amortized cost. The Company has early adopted this ASU beginning July 1, 2019. This ASU did not have a material impact on the Company’s consolidated financial statements.

In March 2017, the FASB issued ASU 2017-07, “Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.” ASU 2017-07 applies to all entities that offer employees defined benefit pension plans, other postretirement benefit plans, or other types of benefits accounted for under Topic 715, Compensation – Retirement Benefits. The amendments require that an employer disaggregate the service cost component from the other components of net benefit cost, with all updates being applied retrospectively. As the Company has historically not had any service cost component within net periodic pension cost, the impact of this ASU on the Company’s consolidated financial statements did not have a material impact.

In May 2016, the FASB issued ASU 2016-12, “Revenue from Contracts with Customers (Topic 606); Narrow-Scope Improvements and Practical Expedients.” ASU 2016-12 is intended to address certain specific issues identified by the FASB-IASB Joint Transition Resource Group for Revenue Recognition with respect to ASU 2014-09, “Revenue from Contracts with Customers (Topic 606).” The updates are effective on a retrospective basis for the annual periods beginning after December 15, 2018, and interim periods within annual reporting periods beginning after December 15, 2019. Based on management’s evaluation under the current guidance, we estimate that substantially all of our interest income and non-interest income will not be impacted by the adoption of these standards, because either the revenue from those contracts with customers is covered by other guidance in U.S. GAAP, or the anticipated revenue recognition outcomes with the adoption of these standards will likely be similar to our current revenue recognition practices. The Company adopted Topic 606 effective July 1, 2019, using the modified retrospective approach. Management did not identify any changes in the timing of revenue recognition when considering the amended accounting guidance, however, the Company has included additional disclosures as required by the guidance.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 320) – Classification of Certain Cash Receipts and Cash Payments.” This ASU adds or clarifies guidance on eight cash flow issues. The Company has retrospectively adopted the provisions of this ASU for its fiscal year beginning July 1, 2019. The adoption of ASU 2016-15 had no impact on its consolidated financial statements.

Recently Issued, But Not Yet Effective Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842).” Topic 842 was subsequently amended by ASU 2018-10, “Codification Improvements to Topic 842, Leases” and ASU 2018-11, “Leases (Topic 842)”. The amendments in this update increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. For leases with a term of 12 months or less, the amendments permit lessees to make an accounting policy election by class of underlying assets not to recognize lease assets and lease liabilities. For finance leases, the amendments in this update require a lessee to (1) recognize a right-of-use asset and lease liability, initially measured at the present value of the lease payments, on the balance sheet; (2) recognize interest on the lease liability separately from amortization of the right-of-use asset in the statement of operations; (3) classify repayments of the principal portion of the lease liability within financing activities and payments of interest on the least liability and variable lease payments within operating activities in the statement of cash flows. For operating leases, the amendments in this update require a lessee to (1) recognized a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, on the balance sheet; (2) recognized a single lease cost, calculated so that the cost of the lease is allocated over the lease term on a generally straight-line basis; (3) classify all cash payments within operating activities in the statement of cash flows. On October 16, 2019, the FASB approved the proposal to delay the effective date for this standard for private and all other entities. Due to the Company’s extended transition period election, the amendments are effective for fiscal years beginning after December 15, 2020. Early adoption is permitted. The Company’s leases are operating leases and ASU 2016-02 will require the Company to include them in its consolidated balance sheet. The Company’s operating leases are predominately related to real estate. Management is currently evaluating other impacts this guidance will have on the consolidated results of operations, financial presentation, and cash flows of the Company.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326) – Measurement of Credit Losses on Financial Instruments.” Topic 326 was subsequently amended by ASU 2018-19, “Codification Improvements to Topic 326, Financial Instruments – Credit Losses; ASU 2019-04, “Codification Improvements to Topic 326, Financial Instruments – Credit Losses”; and ASU 2019-05, “Financial Instruments – Credit Losses (Topic 326): Targeted Transition Relief.” This ASU replaces the current incurred loss impairment methodology with a methodology that reflected expected credit losses measured at amortized cost and certain other instruments, including loans, held-to-maturity debt securities, net investments in leases, and off-balance-sheet credit exposures. On October 16, 2019, the FASB approved the proposal to delay the effective date for this standard for private and all other entities. Due to the Company’s extended transition period election, the update is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Management is currently evaluating the potential impact on its consolidated results of operations, financial position, and cash flows; however, due to the significant differences in the revised guidance from existing U.S. GAAP, the implementation of this guidance may result in material changes in the Company’s accounting for credit losses on financial instruments.

In March 2017, the FASB issued ASU 2017-08, “Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities.” ASU 2017-08 amends guidance on the amortization period of premiums on certain purchased callable debt securities. The amendments shorten the amortization period of premiums on certain purchased callable debt securities to the earliest call date. ASU 2017-08 is effective for annual periods beginning after December 15, 2019 with early adoption permitted. Management is currently evaluating the potential impact of the new standard on the consolidated results of operations, financial position, and cash flows of the Company.

In August 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement.” ASU 2018-13 modifies the disclosure requirements on fair value measurements in Topic 820, including the removal, modification to, and addition of certain disclosure requirements. This ASU will be effective for fiscal years beginning after December 15, 2019. Early adoption is permitted. This ASU has a minor impact to and simplifies the Company’s fair value disclosures, and no additional impact to the consolidated financial statements is expected.

In August 2018, the FASB issued ASU No. 2018-14, “Compensation – Retirement Benefits – Defined Benefit Plans – General (Subtopic 715-20): Disclosure Framework – Changes to the Disclosure Requirements for Defined Benefit Plans.” ASU 2018-14 applies to all employers that sponsor defined benefit pension or other postretirement plans. The amendments require that an employer disclose an explanation of the reasons for significant gains and losses related to changes in the net benefit obligation for the period. Multiple disclosure requirements are also removed with this amendment, including: (1) the amounts in accumulated other comprehensive income expected to be recognized as components of net periodic benefit cost over the next fiscal year; (2) the amount and timing of plan assets expected to be returned to the employer; (3) related party disclosures about significant transactions between the employer or related parties and the plan; and (4) the effects of a one-percentage-point change in assumed health care cost trend rates on the aggregate of the service and interest cost components of net periodic benefit costs. Additional disclosure requirements contained within Subtopic 715-20 are also clarified. The amendments are effective for fiscal years ending after December 15, 2021. Early adoption is permitted. The adoption of this guidance is not expected to have a material impact on the consolidated results of operations, financial position, or cash flows of the Company.

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Income (Loss) Per Share

12 Months Ended

Jun. 30, 2020

Income (Loss) Per Share

Income (Loss) Per Share

NOTE 2 – Income (Loss) Per Share

Income (Loss) per share is based on net loss divided by the weighted average number of shares outstanding during the period. Income (Loss) per share is presented for the period for which shares were outstanding.

	Year Ended		Year Ended
	June 30, 2020		June 30, 2019
Net income (loss)	$	1,092,099	$	(399,339)
Basic potential common shares
Weighted average shares outstanding		2,624,343		2,624,343
Basic weighted average shares outstanding		2,624,343		2,624,343
Diluted potential common shares		—		—
Diluted weighted average shares outstanding		2,624,343		2,624,343
Basic earnings (loss) per share	$	0.42		(0.15)
Diluted earnings (loss) per share	$	0.42		(0.15)

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Fair Value of Financial Instruments

12 Months Ended

Jun. 30, 2020

Fair Value of Financial Instruments

Fair Value of Financial Instruments

NOTE 3 – Fair Value of Financial Instruments

Fair value is the price that would be received to sell an asset or paid to transfer liabilities in an orderly transaction between market participants at the measurement date (exit price) and establishes a framework for measuring fair value.

To determine fair value, the Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The Company is able to classify fair value balances based on the observability of those inputs. The guidance establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy are as follows:

>Level 1 - Fair value is based upon quoted prices (unadjusted) for identical assets or liabilities in active markets. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

>Level 2 - Fair value is based upon quoted prices for similar, but not identical, assets and liabilities in active markets, and other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. This also includes quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability, or inputs that are derived principally from or corroborated by observable market data.

>Level 3 - Fair value is based upon financial models using primarily unobservable inputs. Unobservable inputs reflect the Company’s own assumptions about the assumptions that market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.

A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

Assets

Available for sale securities  Where quoted prices for securities are available in an active market, those securities are classified within Level 1 of the valuation hierarchy. If such quoted market prices are not available, then fair values are estimated using pricing models, quoted prices of securities with similar characteristics, or discounted cash flows. Examples of securities with similar characteristics, which would generally be classified within Level 2 of the valuation hierarchy, include certain AAA-rated U.S. government sponsored agency securities, municipal obligations, and mortgage-backed securities. A security using financial models based upon primarily unobservable inputs, such as commercial paper, would generally be classified within Level 3 of the valuation hierarchy.

Loans  The Company does not record loans at fair value on a recurring basis. However, from time to time, a loan is considered impaired and an allowance for loan losses may be established. Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are considered impaired. Once a loan is identified as individually impaired, management measures impairment. The fair value of impaired loans is estimated using one of several methods, including collateral value, market value of similar debt, enterprise value, or liquidation value and discounted cash flows. Those impaired loans not requiring an allowance represent loans for which the fair value of the collateral exceeds the recorded investments in such loans and for which carrying amount will remain at amortized cost. Impaired loans where an allowance is established based on the fair value of collateral or expected cash flows require classification in the fair value hierarchy. When the fair value of the collateral is based on an observable market price or a current appraised value, less selling costs, the Company records the impaired loan as a non-recurring Level 3 valuation. At June 30, 2020 and 2019, substantially all of the impaired loans were evaluated based on the fair value of the collateral with adjustments to their appraised values ranging from 5% to 15% for selling costs.

Other real estate owned, net  Assets on which the underlying collateral has been repossessed are initially recorded at the fair market value of the real estate acquired less estimated costs to sell, establishing a new cost basis.

Subsequently, other real estate owned is carried at the lower of carrying value or fair value. Fair value is based upon independent market prices, appraised values of the collateral or management’s estimation of the value of the collateral. When the fair value of the collateral is based on an observable market price or a current appraised value, less selling costs, the Company records the repossessed asset as a non-recurring Level 3 valuation. At June 30, 2020 and 2019, substantially all of the other real estate owned was evaluated based on the fair value of the collateral with adjustments to their appraised values ranging from 5% to 15% for selling costs.

The following tables set forth, by level within the fair value hierarchy, the Company’s financial assets that were accounted for at fair value on a recurring and non-recurring basis as of June 30, 2020 and 2019, respectively. According to fair value guidance, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to their fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels.

The following table presents assets measured at fair value on a recurring basis:

	Fair Value as of June 30, 2020
	Level 1		Level 2		Level 3		Total
Securities classified as available for sale:
Obligations of states and political subdivisions	$	—	$	18,005,082	$	—	$	18,005,082
Mortgage-backed securities		—		1,443,643		—		1,443,643
Certificates of deposit		—		848,870		—		848,870
Total	$	—	$	20,297,595	$	—	$	20,297,595

	Fair Value as of June 30, 2019
	Level 1		Level 2		Level 3		Total
Securities classified as available for sale:
Obligations of states and political subdivisions	$	—	$	18,878,383	$	—	$	18,878,383
Mortgage-backed securities		—		1,106,138		—		1,106,138
Certificates of deposit		—		557,597		—		557,597
Total	$	—	$	20,542,118	$	—	$	20,542,118

Assets measured at fair value on non-recurring basis:

	Fair Value as of June 30, 2020
	Level 1		Level 2		Level 3		Total
Impaired loans with a valuation allowance, net	$	—	$	—	$	248,930	$	248,930
Other real estate owned, net		—		—		2,288,255		2,288,255
Total	$	—	$	—	$	2,537,185	$	2,537,185

	Fair Value as of June 30, 2019
	Level 1		Level 2		Level 3		Total
Impaired loans with a valuation allowance, net	$	—	$	—	$	274,750	$	274,750
Other real estate owned, net		—		—		4,080,401		4,080,401
Total	$	—	$	—	$	4,355,151	$	4,355,151

Financial Disclosures about Fair Value of Financial Instruments

Accounting guidance requires disclosures of the estimated fair value of certain financial instruments and the methods and significant assumptions used to estimate their fair values. Certain financial instruments and all non-financial instruments are excluded from the scope of the guidance.

The estimated fair values of financial instruments are as follows:

	June 30, 2020				June 30, 2019
	Carrying Value		Fair Value		Carrying Value		Fair Value
FINANCIAL ASSETS
Cash and cash equivalents	$	13,106,041	$	13,106,041	$	5,630,770	$	5,630,770
Interest bearing deposits in banks	$	2,713,164	$	2,713,164	$	3,674,015	$	3,674,015
Available for sale securities	$	20,297,595	$	20,297,595	$	20,542,118	$	20,542,118
Loans, net	$	237,300,478	$	247,100,558	$	259,873,403	$	256,666,403
Loans held for sale	$	18,690,027	$	18,690,027	$	7,079,548	$	7,079,548
Federal Home Loan Bank stock	$	1,345,500	$	1,345,500	$	2,061,000	$	2,061,000
Accrued interest receivable	$	933,729	$	933,729	$	1,000,098	$	1,000,098
FINANCIAL LIABILITIES
Deposits	$	256,071,531	$	251,928,460	$	234,561,459	$	217,705,000
Federal Home Loan Bank advances	$	9,000,000	$	9,000,000	$	44,200,000	$	44,200,000
Accrued interest payable	$	56,726	$	56,726	$	59,489	$	59,489

The methods and assumptions that were used to estimate the fair value of financial assets and financial liabilities that are measured at fair value on a recurring and non-recurring basis have been previously disclosed. The following methods and assumptions were used to estimate the fair value of other financial instruments for which it is practicable to estimate that value:

Cash and cash equivalents – Due to their short term nature, the carrying amount of cash equivalents approximates fair value and is categorized in level 1 of the fair value hierarchy.

Interest bearing deposits in banks – The carrying amount approximates fair value and is categorized in level 2 of the fair value hierarchy.

Available for sale securities – The fair value is estimated using quoted market prices or by using pricing models and is categorized in level 2 of the fair value hierarchy.

Loans– The fair value of variable rate loans that reprice frequently are based on carrying values. The fair value of other loans is estimated by discounting future cash flows using current rates at which similar loans would be made to borrowers with similar credit ratings and is categorized in level 3 of the fair value hierarchy.

Loans held for sale – Fair value is based on commitments on hand from investors or prevailing market prices and is categorized in level 2 of the fair value hierarchy.

Federal Home Loan Bank stock – No secondary market exists for FHLB stock. The stock is bought and sold at par by the FHLB and management believes the carrying amount approximates fair value and is categorized in level 2 of the fair value hierarchy.

Accrued interest receivable – Due to their short term nature, the carrying amount approximates fair value and is categorized in level 1 of the fair value hierarchy.

Deposits – Fair value of deposits with no stated maturity, such as demand deposits, savings, and money market accounts, by definition, is the amount payable on demand on the reporting date. Fair value of fixed rate time deposits is estimated using discounted cash flows applying interest rates currently offered on similar time deposits. Deposits are categorized in level 3 of the fair value hierarchy.

Federal Home Loan Bank borrowings – The carrying amount approximates fair value and is categorized in level 2 of the fair value hierarchy.

Accrued interest payable – Due to their short term nature, the carrying amount approximates fair value and is categorized in level 1 of the fair value hierarchy.

The estimated fair value of fee income on letters of credit at June 30, 2020 and 2019 is insignificant. Loan commitments on which the committed interest rate is less than the current market rate are also insignificant at June 30, 2020 and 2019.

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Cash and Due From Banks

12 Months Ended

Jun. 30, 2020

Cash and Due From Banks

Cash and Due From Banks

NOTE 4 – Cash and Due From Banks

The Bank is required to maintain vault cash and reserve balances with Federal Reserve Bank is based upon a percentage of deposits. There was no requirement at June 30, 2020. As of June 30, 2019 the requirement was approximately $1,532,000.

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Available for Sale Securities

12 Months Ended

Jun. 30, 2020

Available for Sale Securities

Available for Sale Securities

NOTE 5 – Available for Sale Securities

Amortized costs and fair values of available for sale securities are summarized as follows:

	June 30, 2020
			Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses		Fair Value
Obligations of states and political subdivisions	$	17,563,698	$	457,440	$	16,056	$	18,005,082
Mortgage-backed securities		1,371,753		71,890		—		1,443,643
Certificates of deposit		800,000		48,870		—		848,870
	$	19,735,451	$	578,200	$	16,056	$	20,297,595

	June 30, 2019
			Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses		Fair Value
Obligations of states and political subdivisions	$	18,719,370	$	217,627	$	58,614	$	18,878,383
Mortgage-backed securities		1,065,193		40,945		—		1,106,138
Certificates of deposit		555,000		2,597		—		557,597
	$	20,339,563	$	261,169	$	58,614	$	20,542,118

The following tables present the portion of the Company’s available for sale securities portfolio which has gross unrealized losses, reflecting the length of time that individual securities have been in a continuous unrealized loss position:

	June 30, 2020
	Continuous Unrealized				Continuous Unrealized
	Losses Existing for Less				Losses Existing for 12 Months
	Than 12 Months				or Greater				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
Obligations of states and political subdivisions	$	—	$	—	$	693,687	$	16,056	$	693,687	$	16,056

Management does not believe any individual unrealized loss as of June 30, 2020 represents other than temporary impairment. The Company held $693,687, comprised of two securities, in obligations of states and political subdivisions at June 30, 2020 that have an unrealized loss existing for 12 months or greater. Management believes the temporary impairment in fair value was caused by market fluctuations in interest rates. Although these securities are classified as available for sale, management does not have the intent to sell the security and it is more likely than not it will be able to hold the security through a recovery period or until maturity.

	June 30, 2019
	Continuous Unrealized				Continuous Unrealized
	Losses Existing for Less				Losses Existing for 12 Months
	Than 12 Months				or Greater				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
Obligations of states and political subdivisions	$	208,583	$	22	$	2,935,133	$	58,592	$	3,143,716	$	58,614

Management does not believe any individual unrealized loss as of June 30, 2019 represents other than temporary impairment. The Company held $2,935,133, comprised of 12 securities, in obligations of states and political subdivisions at June 30, 2019 that have an unrealized loss existing for 12 months or greater. Management believes the temporary impairment in fair value was caused by market fluctuations in interest rates. Although these securities are classified as available for sale, management does not have the intent to sell the security and it is more likely than not it will be able to hold the security through a recovery period or until maturity.

The amortized cost and fair value of available for sale securities as of June 30, 2020 are shown below by contractual maturity. Expected maturities of mortgage‑backed securities will differ from contractual maturities since the anticipated maturities are not readily determinable.

	Amortized
	Cost		Fair Value
Due in one year or less	$	870,981	$	874,977
Due after one year through 5 years		10,719,389		10,952,874
Due after 5 years through 10 years		4,833,328		5,022,565
Due after 10 years		1,940,000		2,003,536
Subtotal		18,363,698		18,853,952
Mortgage backed securities
Due after one year through 5 years		—		—
Due after 5 years through 10 years		1,371,753		1,443,643
Total	$	19,735,451	$	20,297,595

During the year ended June 30, 2020 and 2019, the Company did not sell any available for sale securities. The Company did not have any available for sale securities pledged at June 30, 2020 and $7,100,000 were pledged at June 30, 2019 as collateral on public deposits and for other purposes as required or permitted by law.

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Loans

12 Months Ended

Jun. 30, 2020

Loans

Loans

NOTE 6 – Loans

Major classifications of loans are as follows:

	June 30, 2020		June 30, 2019
Construction, land, development	$	4,598,382	$	4,318,845
1-4 family owner occupied		100,506,311		124,845,322
1-4 family non-owner occupied		21,213,680		20,968,812
Multifamily		76,444,156		73,246,392
Commercial owner occupied		6,733,183		8,508,011
Commercial non-owner occupied		20,237,534		19,502,545
Consumer and installment loans		8,920,659		9,777,441
Total loans		238,653,905		261,167,368
Less:
Allowance for loan losses		(1,353,427)		(1,293,965)
Loans, net	$	237,300,478	$	259,873,403

Net deferred loan fees are included within the unpaid principal balances above.

The Company engages in a variety of lending activities, including commercial, residential real estate and consumer transactions. The Company focuses its lending activities on individuals, professionals and small to medium sized businesses. Risks associated with lending activities include economic conditions and changes in interest rates, which can adversely impact both the ability of borrowers to repay their loans and the value of the associated collateral.

Commercial and industrial loans, commercial real estate loans, construction loans and residential real estate loans with a business purpose are generally perceived as having more risk of default than residential real estate loans with a personal purpose and consumer loans. These types of loans involve larger loan balances to a single borrower or groups of related borrowers and are more susceptible to a risk of loss during a downturn in the business cycle. Commercial real estate and residential real estate loans secured for a business purpose are originated primarily within the metropolitan Milwaukee market area at conservative loan-to-value ratios and often backed by the individual guarantees of the borrowers or owners. Repayment of this kind of loan is dependent upon either the ongoing cash flow of the borrowing entity or the resale of or lease of the subject property. Commercial real estate loans may be affected to a greater extent than residential loans by adverse conditions in real estate markets or the economy because commercial real estate borrowers’ ability to repay their loans depends on successful development of their properties, as well as the factors affecting residential real estate borrowers. Commercial and industrial loans may involve greater risk because the availability of funds to repay these loans depends on the successful operation of the borrower’s business. The assets financed are used within the business for its ongoing operation. Repayment of these kinds of loans generally comes from the cash flow of the business or the ongoing conversions of assets, such as accounts receivable and inventory, to cash. Typical collateral for commercial and industrial loans includes the borrower’s accounts receivable, inventory and machinery and equipment.

The Company originates fixed-rate and adjustable-rate real estate-residential mortgage loans for personal purposes that are secured by first liens on the underlying 1‑4 family residential properties. Credit risk exposure in this area of lending is minimized by the evaluation of the credit worthiness of the borrower, including debt-to-income ratios, credit scores and adherence to underwriting policies that emphasize conservative loan-to-value ratios of generally no more than 80%. Residential mortgage loans granted in excess of the 80% loan-to-value ratio criterion are generally insured by private mortgage insurance.

The real estate-home equity portfolio primarily consists of variable-rate home equity lines of credit, and to a lesser extent, fixed-rate home equity loans. Risks associated with loans secured by residential properties are generally lower than commercial loans and include general economic risks, such as the strength of the job market, employment stability and the strength of the housing market. Since most loans are secured by a primary or secondary residence, the borrower’s continued employment is the greatest risk to repayment.

The Company offers a variety of loans to individuals for personal and household purposes. Consumer loans are generally considered to have greater risk than first or second mortgages on real estate because they may be unsecured, or, if they are secured, the value of the collateral may be difficult to assess and is more likely to decrease in value than real estate. Credit risk in this portfolio is controlled by conservative underwriting standards that consider debt-to-income levels and the creditworthiness of the borrower and, if secured, collateral values.

Policies have been established that set standards for the maximum commercial real estate loan amount by type of property, loan terms, pricing structures, loan-to-value limits by property type, as well as policies and procedures for granting exceptions to established underwriting standards.

The Company’s residential real estate lending policies require all loans to have viable repayment sources. Residential real estate loans are evaluated for the adequacy of these repayment sources at the time of approval using such factors as credit scores, debt-to-income ratios and collateral values. Home equity loans and lines of credit are generally governed by the same lending policies.

Origination activities for construction real estate loans are similar to those described above for commercial real estate and residential real estate lending.

The Company has purchased loan participations in which they are not the primary lender. At June 30, 2020 and 2019, the aggregate amount of purchased participations was $5.6 million and $9.1 million, respectively. The Company has also participated out portions of loans that exceeded its loans-to-one borrower legal lending limit and for risk diversification. At June 30, 2020 and 2019 the Company had participated out portions of loans with aggregate balances of $9.0 million and $6.9 million, respectively.

Non-performing loans are as follows:

	June 30, 2020		June 30, 2019
Nonaccrual Loans	$	1,341,174	$	1,524,868
Total non-performing loans	$	1,341,174	$	1,524,868
Restructured loans, accruing	$	—	$	—
Total impaired loans	$	1,341,174	$	1,524,868

Impaired loans are as follows as of:

	June 30, 2020
	Construction,		1-4 Family		1-4 Family				Commercial		Commercial
	Land,		Owner		Non-Owner				Owner		Non-Owner		Consumer &
	Development		Occupied		Occupied		Multifamily		Occupied		Occupied		Installment		Total
With related allowance recorded
Recorded investment	$	—	$	161,931	$	—	$	—	$	189,249	$	—	$	103,673	$	454,853
Unpaid principal balance		—		161,931		—		—		189,249		—		103,673		454,853
Related allowance		—		64,780		—		—		79,351		—		61,792		205,923
With no related allowance recorded
Recorded investment	$	—	$	803,803	$	57,574	$	—	$	—	$	—	$	24,944	$	886,321
Unpaid principal balance		—		803,803		57,574		—		—		—		24,944		886,321
Related allowance		—		—		—		—		—		—		—		—
Total
Recorded investment	$	—	$	965,734	$	57,574	$	—	$	189,249	$	—	$	128,617	$	1,341,174
Unpaid principal balance		—		965,734		57,574		—		189,249		—		128,617		1,341,174
Related allowance		—		64,780		—		—		79,351		—		61,792		205,923
Average recorded balance	$	—	$	1,020,175	$	14,948	$	—	$	191,166	$	—	$	132,521	$	1,358,810
Interest income recognized while impaired	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Interest income recognized on a cash basis while impaired		—		16,071		298		—		4,382		—		712		21,463
Total interest on impaired loans	$	—	$	16,071	$	298	$	—	$	4,382	$	—	$	712	$	21,463

Impaired loans are as follows as of:

	June 30, 2019
	Construction,		1-4 Family		1-4 Family				Commercial		Commercial
	Land,		Owner		Non-Owner				Owner		Non-Owner		Consumer and
	Development		Occupied		Occupied		Multifamily		Occupied		Occupied		Installment		Total
With related allowance recorded
Recorded investment	$	—	$	70,608	$	—	$	—	$	193,601	$	—	$	113,856	$	378,065
Unpaid principal balance		—		70,608		—		—		193,601		—		113,856		378,065
Related allowance		—		5,772		—		—		44,564		—		52,979		103,315
With no related allowance recorded
Recorded investment	$	—	$	1,132,648	$	—	$	—	$	—	$	—	$	14,155	$	1,146,803
Unpaid principal balance		—		1,132,648		—		—		—		—		14,155		1,146,803
Related allowance		—		—		—		—		—		—		—		—
Total
Recorded investment	$	—	$	1,203,256	$	—	$	—	$	193,601	$	—	$	128,011	$	1,524,868
Unpaid principal balance		—		1,203,256		—		—		193,601		—		128,011		1,524,868
Related allowance		—		5,772		—		—		44,564		—		52,979		103,315
Average recorded balance	$	19,198	$	865,338	$	21,509	$	—	$	196,182	$	—	$	133,467	$	1,235,694
Interest income recognized while impaired	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Interest income recognized on a cash basis while impaired		353		19,352		288		—		7,917		—		2,894		30,804
Total interest on impaired loans	$	353	$	19,352	$	288	$	—	$	7,917	$	—	$	2,894	$	30,804

Loans are individually evaluated for impairment once a weakness or adverse trend is identified that may jeopardize the repayment of the loan in accordance with the terms of the loan.

The following are the Company’s risk rating definitions:

Pass:  Loans in this category are to persons or entities that span from having financial characteristics of unquestioned strength to entities that have potential risks that if left uncorrected could at some point result in deterioration of the Bank’s credit position. Loans in this category are rated “1” through “4” with the lower risk being identified with a lower numerical rating. General characteristics that are monitored include borrower net worth, liquidity and entity profitability.

Special Mention:  Loans in this category contain some weakness or potential weakness that if left uncorrected may result in the deterioration of the repayment capacity. Loans in this category are rated as a “5”.

Substandard:  Loans in this category exhibit the same characteristics as “5” rated credits and are inadequately protected by the current net worth and paying capacity of the obligor and/or of the collateral pledged as security for the asset. Loans in this category are rated as a “6”.

Real Estate in Judgement:   Loans in this category have been placed in non-accrual and the Bank has taken legal action to preserve its position. Loans in this category are rated as a “7”.

The following is a summary of loans by risk rating:

	June 30, 2020
	Construction,		1-4 Family		1-4 Family				Commercial		Commercial
	Land,		Owner		Non-Owner				Owner		Non-Owner		Consumer and
			Occupied		Occupied		Multifamily		Occupied		Occupied		Installment		Total
1-4		4,598,382	$	99,344,653	$	21,156,106	$	76,444,156	$	6,543,934	$	12,313,923	$	8,792,042	$	229,193,196
5		—		195,924		—		—		—		7,923,611		—		8,119,535
6		—		851,208		57,574		—		189,249		—		52,448		1,150,479
7		—		114,526		—		—		—		—		76,169		190,695
Total	$	4,598,382	$	100,506,311	$	21,213,680	$	76,444,156	$	6,733,183	$	20,237,534	$	8,920,659	$	238,653,905

	June 30, 2019
	Construction,		1-4 Family		1-4 Family				Commercial		Commercial
	Land,		Owner		Non-Owner				Owner		Non-Owner		Consumer and
	Development		Occupied		Occupied		Multifamily		Occupied		Occupied		Installment		Total
1-4	$	4,318,845	$	123,642,066	$	20,968,812	$	73,246,392	$	8,314,410	$	11,382,336	$	9,649,430	$	251,522,291
5		—		—		—		—		—		8,120,209		—		8,120,209
6		—		895,442		—		—		193,601		—		128,011		1,217,054
7		—		307,814		—		—		—		—		—		307,814
Total	$	4,318,845	$	124,845,322	$	20,968,812	$	73,246,392	$	8,508,011	$	19,502,545	$	9,777,441	$	261,167,368

The following is a summary of past due loans:

	June 30, 2020
	Construction,		1-4 Family		1-4 Family				Commercial		Commercial
	Land,		Owner		Non-Owner				Owner		Non-Owner		Consumer and
	Development		Occupied		Occupied		Multifamily		Occupied		Occupied		Installment		Total
30‑59 days, accruing	$	69,174	$	1,274,585	$	—	$	—	$	—	$	—	$	63,765	$	1,407,524
60‑89 days, accruing		—		114,338		—		—		—		—		—		114,338
90 days & over or nonaccrual		—		965,734		57,574		—		189,249		—		128,617		1,341,174
Total	$	69,174	$	2,354,657	$	57,574	$	—	$	189,249	$	—	$	192,382	$	2,863,036

	June 30, 2019
	Construction,		1-4 Family		1-4 Family				Commercial		Commercial
	Land,		Owner		Non-Owner				Owner		Non-Owner		Consumer and
	Development		Occupied		Occupied		Multifamily		Occupied		Occupied		Installment		Total
30‑59 days, accruing	$	—	$	2,129,016	$	103,706	$	—	$	—	$	—	$	72,482	$	2,305,204
60‑89 days, accruing		—		450,183		—		—		—		—		25,220		475,403
90 days & over or nonaccrual		—		1,203,256		—		—		193,601		—		128,011		1,524,868
Total	$	—	$	3,782,455	$	103,706	$	—	$	193,601	$	—	$	225,713	$	4,305,475

As of June 30, 2020 and 2019 there were no loans 90 days or over that were not on nonaccrual.

Certain directors and executive officers of the Company, and their related interests, had loans outstanding in the aggregate amounts of $1,080,531 and $1,039,899 at June 30, 2020 and 2019, respectively. During the year ended June 30, 2020, one new loan was made totaling $90,400 and repayments totaled $49,768. During the year ended June 30, 2019, no new loans were made and repayments totaled $40,226. Except for loans with a discounted interest rate made to executive officers pursuant to a program that is available to all Company employees and that complies with applicable banking regulations, these loans were made on substantially the same terms, including collateral, as those prevailing at the same time for comparable transactions with unrelated persons and did not involve more than normal risks of collectability or present other unfavorable features.

TDRs involve the granting of some concession to a distressed borrower resulting in a loan modification such as; payment schedule changes, interest rate reductions, or principal charge-offs. There was one new TDR during the year ending June 30, 2020, totaling $195,924 and no new TDRs during the year ending June 30, 2019. There were no TDRs that defaulted during the period that were modified within the previous year as of June 30, 2020. There were no TDRs as of June 30, 2019. As discussed within Note 1, under Section 4013 of the CARES Act, a financial institution can suspend the requirements under U.S. GAAP for loan modifications related to COVID-19 that would otherwise be categorized as a TDR and suspend any determination of a loan modified as a result of COVID-19 as being a TDR, including the requirement to determine impairment for accounting purposes. Of the loan modification requests received prior to June 30, 2020, one loan totaling $195,924 did not qualify for the favorable accounting treatment under Section 4013 of the CARES Act and therefore is reported as a TDR. Management has evaluated the loan and determined that based on the liquidation value of the collateral, no specific reserve is necessary.

The following is a summary of TDRs as of June 30, 2020:

	Construction,		1-4 Family		1-4 Family				Commercial		Commercial
	Land,		Owner		Non-Owner				Owner		Non-Owner		Consumer &
	Development		Occupied		Occupied		Multifamily		Occupied		Occupied		Installment		Total
Accruing
Beginning balance	$	—	$	—	$	—	$	—	$	—	$		$	—	$	—
Transfer to other loan category		—		—		—		—		—		—		—		—
Principal payments		—		—		—		—		—		—		—		—
Charge-offs		—		—		—		—		—		—		—		—
Sales		—		—		—		—		—		—		—		—
New restructureds		—		195,924		—		—		—		—		—		195,924
Transfers out of TDR status		—		—		—		—		—				—		—
Transfers to foreclosed properties		—		—		—		—		—		—		—		—
Transfers to nonaccrual		—		—		—		—		—		—		—		—
Transfers out of nonaccrual		—		—		—		—		—		—		—		—
Ending balance	$	—	$	195,924	$	—	$	—	$	—	$	—	$	—	$	195,924
Nonaccrual
Beginning balance	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Principal payments		—		—		—		—		—		—		—		—
Charge-offs		—		—		—		—		—		—		—		—
Sales		—		—		—		—		—		—		—		—
Transfers to foreclosed properties		—		—		—		—		—		—		—		—
Transfers from accrual		—		—		—		—		—		—		—		—
Transfers to accrual		—		—		—		—		—		—		—		—
Ending balance	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Totals
Beginning balance	$	—	$	—	$	—	$	—	$	—	$		$	—	$	—
Transfer to other loan category		—		—		—		—		—		—		—		—
Principal payments		—		—		—		—		—		—		—		—
Charge-offs		—		—		—		—		—		—		—		—
Sales		—		—		—		—		—		—		—		—
New restructureds		—		195,924		—		—		—		—		—		195,924
Transfers out of TDR status		—		—		—		—		—				—		—
Transfers to foreclosed properties		—		—		—		—		—		—		—		—
Transfers to nonaccrual		—		—		—		—		—		—		—		—
Transfers from accrual		—		—		—		—		—		—		—		—
Transfers out of nonaccrual		—		—		—		—		—		—		—		—
Ending balance	$	—	$	195,924	$	—	$	—	$	—	$	—	$	—	$	195,924

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Allowance for Loan Losses

12 Months Ended

Jun. 30, 2020

Allowance for Loan Losses

Allowance for Loan Losses

NOTE 7 – Allowance for Loan Losses

The allowance for loan losses reflected in the accompanying consolidated financial statements represents the allowance available to absorb probable and inherent loan losses in the loan portfolio. An analysis of changes in the allowance is presented in the following tables:

	June 30, 2020
	Construction,		1-4 Family		1-4 Family				Commercial		Commercial
	Land,		Owner		Non-Owner				Owner		Non-Owner
	Development		Occupied		Occupied		Multifamily		Occupied		Occupied		Consumer		Unallocated		Total
Allowance
Balance at 7/1/19	$	4,319	$	67,593	$	26,630	$	109,870	$	61,193	$	738,366	$	70,058	$	215,936	$	1,293,965
Charge-offs		—		(57,572)		—		—		—		—		(45,157)		—		(102,729)
Recoveries		—		5,155		—		—		—		—		22,036		—		27,191
Provision		9,476		341,258		50,590		176,795		34,518		(425,696)		50,375		(102,316)		135,000
Balance at 6/30/20	$	13,795	$	356,434	$	77,220	$	286,665	$	95,711	$	312,670	$	97,312	$	113,620	$	1,353,427
Allowance
Ending balance individually evaluated for impairment	$	—	$	64,780	$	—	$	—	$	79,351	$	—	$	61,792	$	—	$	205,923
Ending balance collectively evaluated for impairment		13,795		291,654		77,220		286,665		16,360		312,670		35,520		113,620		1,147,504
Ending balance	$	13,795	$	356,434	$	77,220	$	286,665	$	95,711	$	312,670	$	97,312	$	113,620	$	1,353,427
Loans
Ending balance individually evaluated for impairment	$	—	$	965,734	$	57,574	$	—	$	189,249	$	—	$	128,617	$	—	$	1,341,174
Ending balance collectively evaluated for impairment		4,598,382		99,540,577		21,156,106		76,444,156		6,543,934		20,237,534		8,792,042		—		237,312,731
Total loans	$	4,598,382	$	100,506,311	$	21,213,680	$	76,444,156	$	6,733,183	$	20,237,534	$	8,920,659	$	—	$	238,653,905
Less allowance	$	13,795	$	356,434	$	77,220	$	286,665	$	95,711	$	312,670	$	97,312	$	113,620	$	1,353,427
Total loans, net	$	4,584,587	$	100,149,877	$	21,136,460	$	76,157,491	$	6,637,472	$	19,924,864	$	8,823,347	$	(113,620)	$	237,300,478

	June 30, 2019
	Construction,		1-4 Family		1-4 Family				Commercial		Commercial				Not
	Land,		Owner		Non-Owner				Owner-		Non-Owner				Specifically
	Development		Occupied		Occupied		Multifamily		Occupied		Occupied		Consumer		Allocated		Total
Allowance
Balance at 7/1/18	$	4,758	$	7,300	$	71,053	$	71,101	$	131,906	$	925,355	$	98,096	$	14,590	$	1,324,159
Charge-offs		—		—		(44,534)		—		—		—		(15,809)		—		(60,343)
Recoveries		—		28,735		—		—		—		—		1,414		—		30,149
Provision		(439)		31,558		111		38,769		(70,713)		(186,989)		(13,643)		201,346		—
Balance at 6/30/19	$	4,319	$	67,593	$	26,630	$	109,870	$	61,193	$	738,366	$	70,058	$	215,936	$	1,293,965
Allowance
Ending balance individually evaluated for impairment	$	—	$	5,772	$	—	$	—	$	44,564	$	—	$	52,979	$	—	$	103,315
Ending balance collectively evaluated for impairment		4,319		61,821		26,630		109,870		16,629		738,366		17,079		215,936		1,190,650
Ending balance	$	4,319	$	67,593	$	26,630	$	109,870	$	61,193	$	738,366	$	70,058	$	215,936	$	1,293,965
Loans
Ending balance individually evaluated for impairment	$	—	$	1,203,256	$	—	$	—	$	193,601	$	—	$	128,011	$	—	$	1,524,868
Ending balance collectively evaluated for impairment		4,318,845		123,642,066		20,968,812		73,246,392		8,314,410		19,502,545		9,649,430		—		259,642,500
Total loans	$	4,318,845	$	124,845,322	$	20,968,812	$	73,246,392	$	8,508,011	$	19,502,545	$	9,777,441	$	—	$	261,167,368
Less allowance	$	4,319	$	67,593	$	26,630	$	109,870	$	61,193	$	738,366	$	70,058	$	215,936	$	1,293,965
Total loans, net	$	4,314,526	$	124,777,729	$	20,942,182	$	73,136,522	$	8,446,818	$	18,764,179	$	9,707,383	$	(215,936)	$	259,873,403

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Loan Servicing

12 Months Ended

Jun. 30, 2020

Loan Servicing

Loan Servicing

NOTE 8 – Loan Servicing

The unpaid principal balance of loans serviced for others, which is not included in the consolidated financial statements, was $2,696,078 and $2,828,576 at June 30, 2020 and 2019, respectively. The Company maintained no custodial balances at June 30, 2020 and June 30, 2019 in connection with the foregoing loan servicing.

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Other Real Estate Owned, Net

12 Months Ended

Jun. 30, 2020

Other Real Estate Owned, Net

Other Real Estate Owned, Net

NOTE 9 – Other Real Estate Owned, Net

Other real estate owned properties are summarized as follows:

	June 30, 2020		June 30, 2019
Beginning balance	$	4,080,401	$	3,957,133
Charge offs		(989,205)		(48,110)
Capital expenditures		36,852		109,181
Transfer from loans		200,856		418,849
Sale proceeds		(1,158,306)		(333,387)
Net gain (loss) on sale of other real estate owned		117,657		(23,265)
Other real estate owned, net	$	2,288,255	$	4,080,401

The recorded investment in 1‑4 family owner occupied properties that were in process of foreclosure was $190,695 at June 30, 2020 and $307,814 at June 30, 2019.  At June 30, 2020, no residential real estate property collateralizing 1-4 family owner occupied properties were included in other real estate owned. At June 30, 2019, legal title for all residential real estate property collateralizing 1‑4 family owner occupied properties held in other real estate owned had been transferred to the Company.

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Premises and Equipment, net

12 Months Ended

Jun. 30, 2020

Premises and Equipment, net

Premises and Equipment, net

NOTE 10 – Premises and Equipment, net

Premises and equipment are stated at cost less accumulated depreciation are summarized as follows:

	June 30, 2020		June 30, 2019
Land	$	2,319,381	$	2,319,381
Office buildings and improvements		10,573,741		10,568,387
Leasehold improvements		470,952		470,951
Furniture and fixtures		6,351,443		6,444,945
		19,715,517		19,803,664
Less: Accumulated depreciation		(11,755,476)		(11,638,390)
Premises and equipment, net	$	7,960,041	$	8,165,274

Depreciation expense amounted to $552,952 and $555,421 for the year ended June 30, 2020 and 2019, respectively.

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Accrued Interest Receivable and Other Assets

12 Months Ended

Jun. 30, 2020

Accrued Interest Receivable and Other Assets

Accrued Interest Receivable and Other Assets

NOTE 11 – Accrued Interest Receivable and Other Assets

A summary of accrued interest receivable and other assets is as follows:

	June 30, 2020		June 30, 2019
Accrued interest receivable	$	933,729	$	1,000,098
Prepaid expenses and other assets		839,757		141,588
Totals	$	1,773,486	$	1,141,686

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Deposits

12 Months Ended

Jun. 30, 2020

Deposits.

Deposits

NOTE 12 – Deposits

The aggregate amount of certificates of deposit, each with a minimum denomination of $250,000, was approximately $9,377,750 at June 30, 2020 and $9,326,137 at June 30, 2019.

At June 30, 2020, the scheduled maturities of certificates of deposit are as follows:

2021	$	41,893,495
2022		6,314,403
2023		4,708,866
2024		34,060,541
2025		46,698
Thereafter		21,932
	$	87,045,935

The aggregate amount of overdrafts reclassified into loans was $58,121 at June 30, 2020 and $32,565 at June 30, 2019.

Deposits from directors and executive officers of the Company, and their related interests, totaled $914,214 and $639,572 at June 30, 2020 and June 30, 2019, respectively.

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Borrowings

12 Months Ended

Jun. 30, 2020

Borrowings

Borrowings

NOTE 13– Borrowings

Borrowings consist of the following:

	June 30, 2020		June 30, 2019
FHLB fixed rate advance (2.45%, matured 7/1/19)	$	—	$	7,500,000
FHLB fixed rate advance (2.43%, matured 7/2/19)		—		15,000,000
FHLB fixed rate advance (2.45%, matured 7/3/19)		—		5,000,000
FHLB fixed rate advance (2.43%, matured 7/3/19)		—		8,000,000
FHLB fixed rate advance (2.649%, matured 7/23/19)		—		2,500,000
FHLB fixed rate advance (2.649%, matured 7/24/19)		—		3,100,000
FHLB fixed rate advance (2.647%, matured 7/25/19)		—		3,100,000
FHLB fixed rate advance (0.61%, matures 9/11/20)		5,000,000		—
FHLB fixed rate advance (0.00%, matures 5/3/21)		4,000,000		—
	$	9,000,000	$	44,200,000

The Bank has a master contract agreement with the FHLB, which provides for borrowing up to the maximum $130,801,182 at June 30, 2020. The FHLB provides both fixed and floating rate advances. Fixed rate advances are priced in reference to market rates of interest at the time of the advance, namely the rates that FHLB pays to borrowers at various maturities. Variable rate advances are adjusted at the end of each business day based on the actual Federal Funds rate earned by the FHLB that day. The Bank has an open line of credit with the FHLB with a variable interest rate. The open line of credit matures daily, automatically renewing. The Bank had $0 outstanding on the open line of credit at June 30, 2020 and 2019. Additionally, the Bank had $9,000,000 and $44,200,000 outstanding in term advances at June 30, 2020 and 2019, respectively. FHLB 30‑day advances are pre-payable with a two-day notice by the FHLB. The advances are collateralized by a security agreement pledging a portion of the Bank’s 1‑4 family and multifamily real estate mortgages with a carrying value of $170,769,631 and $153,925,211 at June 30, 2020 and 2019, respectively.

The Bank has an agreement with U.S. Bank, which provides for borrowing up to the maximum of $5,000,000 at a rate of 0.75%, at June 30, 2020 and June 30, 2019. There were no amounts outstanding as of June 30, 2020 and June 30, 2019. U.S. Bank provides overnight fixed rate advances which are not collateralized as of June 30, 2020 and were collateralized by a security agreement pledging a portion of the Bank’s securities with a par value of approximately $7,100,000 as of June 30, 2019.

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Income Taxes

12 Months Ended

Jun. 30, 2020

Income Taxes

Income Taxes

NOTE 14 – Income Taxes

The provision for income taxes included in the accompanying consolidated financial statements consists of the following components:

	June 30, 2020		June 30, 2019
Current tax expense (benefit):
Federal	$	(30,589)	$	(73,075)
State		—		(12,578)
		(30,589)		(85,653)
Deferred tax expense (benefit):
Federal		30,589		30,589
State		—		—
		30,589		30,589
Total income tax expense (benefit)	$	—	$	(55,064)

	June 30, 2020		June 30, 2019
Deferred tax assets
Federal net operating loss	$	6,619,829	$	6,858,921
Other real estate owned		683,379		708,259
State loss and contribution		2,963,488		3,050,448
Unrealized loss on available for sale securities				—
Bad debt reserve		368,687		352,489
Pension		719,294		226,412
Other assets		67,370		74,554
Total deferred tax assets		11,422,047		11,271,083
Deferred tax liabilities
Pension				—
Deferred loan fees		(91,078)		(131,008)
Depreciation		(212,240)		(113,769)
FHLB dividends				—
Unrealized gain on available for sale securities		(153,067)		(55,112)
Other liabilities		(66,045)		(72,573)
Total deferred tax liabilities		(522,430)		(372,462)
Valuation allowance		(10,899,617)		(10,868,032)
Net deferred tax asset	$	—	$	30,589

	June 30, 2020				June 30, 2019
			Percent of				Percent of
			Pretax				Pretax
	Amount		Income		Amount		Income
Reconciliation of statutory to effective rates
Federal income taxes at statutory rate	$	229,340	21.00	%	$	(95,425)	21.00	%
Adjustments for
True up of payable(s)		47,207	4.32	%		(78,506)	17.28	%
State income taxes, net of valuation allowance		—	—	%		(12,578)	2.77	%
Federal valuation allowance		(281,400)	(25.77)	%		114,767	(25.26)	%
Other - Net		4,853	0.45	%		16,678	(3.67)	%
Effective income taxes - operations	$	—	0.00	%	$	(55,064)	12.12	%

Deferred tax assets primarily relate to the difference in the allowance for loan losses (and other real estate owned) for book and tax purposes and net operating losses. The Company has federal net operating loss carryforwards of approximately $31.5 million and $32.7 million as of June 30, 2020 and 2019, respectively. The Company has state net operating loss carryforwards of approximately $46.9 million and $47.5 million as of June 30, 2020 and 2019, respectively. The federal losses begin to expire as of September 30, 2029 and the state losses begin to expire as of September 30, 2025. Deferred tax liabilities primarily relate to the difference in loan fees, depreciation on premises and equipment, FHLB stock basis, and prepaid pension costs.

Under U.S. GAAP, a valuation allowance is required to be recognized if it is “more likely than not” that a deferred tax asset will not be realized. The determination of the realizability of the deferred tax assets is highly subjective and dependent on judgment concerning management’s evaluation of both positive and negative evidence, the forecasts of future income, applicable tax planning strategies, and assessments of the current and future economic and business conditions. Management considered both positive and negative evidence regarding the ultimate realizability of the Company’s deferred tax assets. Positive evidence includes the existence of taxes paid in available carryback years as well as the probability that taxable income will be generated in future periods while negative evidence includes losses in the prior year as well as general business and economic trends. At June 30, 2020 and June 30, 2019, management determined that a valuation allowance relating to the Company’s deferred tax asset was necessary. This determination was based largely on the negative evidence represented by cumulative losses in prior years caused by the significant loan loss provisions recorded during recent years associated with our loan portfolio. In addition, general uncertainty surrounding future economic and business conditions have increased the potential volatility and uncertainty of our projected earnings. Therefore, a valuation allowance of $10.9 million and $10.9 million was recorded as of June 30, 2020 and 2019, respectively.

The Company’s policy is to recognize interest and penalties related to uncertain tax positions as components of interest expense and miscellaneous expense, respectively. The Company recognized $0 of interest and penalties related to uncertain tax positions in its Consolidated Statement of Operations during the year ended June 30, 2020 and 2019. The Company had $0 accrued for the payment of interest and penalties related to income tax issues as of June 30, 2020 and 2019.

The Company is no longer subject to U.S. federal income tax examinations by the Internal Revenue Service for years before September 30, 2017. The Company is no longer subject to Wisconsin income tax examinations by the Wisconsin Department of Revenue for the years before September 30, 2016. The Bank is not currently under examination by any taxing jurisdiction.

Under the Internal Revenue Code and Wisconsin Statutes, the Company is permitted to deduct, for tax years beginning before 1996, an annual addition to a reserve for bad debts. This amount differs from the provision for loan losses recorded for financial accounting purposes. Under prior law, bad debt deductions for income tax purposes were included in taxable income of later years only if the bad debt reserves were used for purposes other than to absorb bad debt losses. Because the Bank did not intend to use the reserve for purposes other than to absorb losses, no deferred income taxes were provided. Retained earnings at June 30, 2020 and 2019, respectively, includes approximately  $7,800,000 for which no deferred Federal or state income taxes were provided.

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Defined Benefit Pension Plan

12 Months Ended

Jun. 30, 2020

Defined Benefit Pension Plan

Defined Benefit Pension Plan

NOTE 15 – Defined Benefit Pension Plan

The following table sets forth the Plan’s funded status and amounts recognized in the Company’s consolidated balance sheets:

	June 30, 2020		June 30, 2019
Change in projected benefit obligation
Projected benefit obligation at beginning of year	$	10,601,032	$	9,453,322
Interest cost		371,932		398,439
Benefits paid		(297,103)		(144,765)
Actuarial loss		1,687,375		894,036
Settlement		—		—
Projected benefit obligation at end of year		12,363,236		10,601,032
Change in plan assets
Fair value of plan assets at beginning of year		9,770,170		9,691,252
Actual return on assets		(204,314)		223,683
Employer contributions		—		—
Expenses paid from trust		—		—
Benefits paid		(297,103)		(144,765)
Fair value of plan assets at end of year		9,268,753		9,770,170
Funded status at end of year	$	(3,094,483)	$	(830,862)

Amounts recognized in the consolidated balance sheets in accrued interest payable and other liabilities consist of:

	June 30, 2020		June 30, 2019
Pension liability	$	(3,094,483)	$	(830,862)

Amounts recognized in accumulated other comprehensive loss consist of:

	June 30, 2020		June 30, 2019
Accumulated pension actuarial loss, net of income tax benefit of $1,522,485 and $1,522,485, respectively	$	4,853,355	$	2,506,295

The accumulated benefit obligation for the Plan was $12,363,236 and $10,601,032 at June 30, 2020 and 2019, respectively.

The components of net periodic pension cost (income) included in compensation and benefits on the statements of operations are as follows:

	June 30, 2020		June 30, 2019
Interest cost	$	371,932	$	398,439
Expected return on plan assets		(671,118)		(672,908)
Amortization of net actuarial loss		215,747		121,990
Net periodic pension income	$	(83,439)	$	(152,479)

For the years ended June 30, 2020 and 2019, actuarial assumptions include an assumed discount rate on benefit obligations of 2.76% and 3.57% respectively, and an expected long‑term rate of return of 7.0% for June 30, 2020 and 2019. The expected long-term rate of return for the Plan’s total assets is based on the expected returns of each of the below asset categories, weighted based on the current target allocation for each class. The trustees evaluate whether adjustments are needed based on historical returns to more accurately reflect expectations of future returns. An annual salary increase of 0% was utilized for the year ended June 30, 2020 and 2019.

There were no  contributions paid to the Plan during the years ended June 30, 2020 and 2019.

At June 30, 2020, the projected benefit payments for future fiscal years were estimated as follows:

2021	$	3,787,700
2022		142,800
2023		540,600
2024		538,100
2025		1,498,900
2025-2029		4,077,300
	$	10,585,400

At June 30, 2020 and 2019, all Plan assets supporting the Bank’s defined benefit plan are held at fair value and represent Level 1 classified investments.

The percentage of the fair value of total Plan assets for each major category is as follows:

	June 30, 2020		June 30, 2019
Cash Equivalents	0.9	%	5.6	%
Equities
Large Cap	48.6	%	43.0	%
Mid Cap	4.3	%	3.4	%
Small Cap	25.3	%	33.7	%
International	4.0	%	2.1	%
Other	8.3	%	8.5
Alternatives/Multi-Asset	8.6	%	3.7
Fixed Income
Certificates of deposit	—		—	%
Total	100.0	%	100.0	%

The Bank’s investment policies and strategies for the Plan use target allocations for the individual asset categories. Current allocations are all within policy guidelines. The Bank’s investment goals are to maximize returns subject to specific risk management policies.

The Bank anticipates making at least the minimum required contribution in fiscal year 2021.

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Accumulated Other Comprehensive Loss

12 Months Ended

Jun. 30, 2020

Accumulated Other Comprehensive Loss

Accumulated Other Comprehensive Loss

NOTE 16 – Accumulated Other Comprehensive Loss

The following table sets forth the ending balance in accumulated other comprehensive loss as recorded on the accompanying consolidated balance sheets for each component as of:

	June 30, 2020		June 30, 2019
Accumulated pension actuarial loss	$	(6,375,840)	$	(4,028,780)
Deferred taxes related to accumulated pension actuarial loss		1,522,485		1,522,485
Unrealized net gain on securities available for sale		562,144		202,555
Deferred taxes related to unrealized net gain  on securities available for sale		(544,625)		(544,625)
Total accumulated other comprehensive loss	$	(4,835,836)	$	(2,848,365)

The following table sets forth changes in accumulated other comprehensive loss:

	Available for		Defined Benefit
	Sale Securities		Pension Plan		Total
Balance, June 30, 2018	$	(1,591,098)	$	(616,478)	$	(2,207,576)
Other comprehensive (loss) income before reclassifications, net of tax		580,482		(1,343,261)		(762,779)
Amounts reclassified from other comprehensive loss, net of tax		—		121,990		121,990	*
Net current period other comprehensive (loss) income		580,482		(1,221,271)		(640,789)
Balance, June 30, 2019		(1,010,616)		(1,837,749)		(2,848,365)
Other comprehensive (loss) income before reclassifications, net of tax		359,589		(2,562,807)		(2,203,218)
Amounts reclassified from other comprehensive loss, net of tax		—		215,747		215,747	*
Net current period other comprehensive (loss) income		359,589		(2,347,060)		(1,987,471)
Balance, June 30, 2020	$	(651,027)	$	(4,184,809)	$	(4,835,836)

* - These amounts are included in the computation of net periodic pension income.

See Note 15, Defined Benefit Pension Plan, for additional details.

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Commitments and Contingencies

12 Months Ended

Jun. 30, 2020

Commitments and Contingencies

Commitments and Contingencies

NOTE 17 – Commitments and Contingencies

In the normal course of business, the Company is involved in various legal proceedings. In the opinion of management, any liability resulting from such proceedings would not have a material adverse effect on the consolidated financial statements.

The Company is party to financial instruments with off‑balance‑sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit, financial guarantees and standby letters of credit. They involve, to varying degrees, elements of credit risk in excess of amounts recognized on the consolidated balance sheets.

The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual notional amount of those instruments. The Company uses the same credit policies in making commitments and issuing letters of credit as they do for on‑balance‑sheet instruments.

A summary of the contract or notional amount of the Company’s exposure to off‑balance‑sheet risk is as follows:

	June 30, 2020		June 30, 2019
Financial instruments whose contract amounts represent credit risk:
Commitments to extend credit to borrowers	$	15,853,034	$	18,668,750
Sold loan commitments		105,961,238		41,760,875
Credit card commitments		567,763		637,121

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s credit worthiness on a case‑by‑case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation of the counterparty. Collateral held varies but may include accounts receivable, inventory, property and equipment, and income‑producing commercial properties. Credit card commitments are unsecured.

As of June 30, 2020 and June 30, 2019, the Company does not engage in the use of interest rate swaps, futures or option contracts.

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Concentration of Credit Risk

12 Months Ended

Jun. 30, 2020

Concentration of Credit Risk

Concentration of Credit Risk

NOTE 18 – Concentration of Credit Risk

Practically all of the Company’s loans and commitments have been granted to customers in the Company’s market area, generally Southeastern Wisconsin. Although the Company has a diversified loan portfolio, the ability of its debtors to honor their contracts is dependent on the economic conditions of the counties surrounding the Company. The concentration of credit by type of loan is set forth in Note 6.

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Regulatory Capital Requirements

12 Months Ended

Jun. 30, 2020

Regulatory Capital Requirements

Regulatory Capital Requirements

NOTE 19 – Regulatory Capital Requirements

The Bank is subject to various regulatory capital requirements administered by the federal and state banking agencies, as prescribed in the BASEL Committee on Banking Supervisor’s Capital Guidance for U.S. banks (“BASEL III rules”).

Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary, actions by regulators that, if undertaken, could have a direct material effect on the Bank’s consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of its assets, liabilities, and certain off‑balance‑sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk‑weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the table that follows) of total and Tier 1 capital (as defined in the regulations) to risk‑weighted assets (as defined), Tier 1 Common Equity (as defined), and Tier 1 capital (as defined) to average assets (as defined).

The Bank completed a reorganization and capital raise as of April 30, 2019. The Bank’s capital levels after the capital raise met all capital adequacy requirements to which they were subject under the amended Consent Order and the amended Consent Order was subsequently terminated on June 19, 2019.

Listed below is a comparison of the Bank’s actual capital amounts with the minimum requirements for well capitalized or adequately capitalized banks, as defined by the federal regulatory agencies’ Prompt Corrective Action Rules. Under Basel III rules, the Bank must hold a capital conservation buffer of 2.50% above the adequately capitalized risk-based capital ratios. Failure to maintain the full amount of the buffer will result in restrictions on the Bank’s ability to make discretionary payments.

As a result of the recently enacted Economic Growth, Regulatory Relief, and Consumer Protection Act, the federal banking agencies are required to develop a “Community Bank Leverage Ratio” (the ratio of a bank’s tangible equity capital to average total consolidated assets) for financial institutions with assets of less than $10 billion. A “qualifying community bank” that exceeds this ratio will be deemed to be in compliance with all other capital and leverage requirements, including the capital requirements to be considered “well capitalized” under Prompt Corrective Action statutes. The community bank leverage ratio was established at 9% Tier 1 capital to total average assets, effective January 1, 2020. A qualifying bank may opt in and out of the community bank leverage ratio framework on its quarterly call report. A bank that ceases to meet any qualifying criteria is provided with a two-quarter grace period to comply with the community bank leverage ratio requirements or the general capital regulations by the federal regulators.

Section 4012 of the Coronavirus Aid, Relief and Economic Security Act of 2020 required that the community bank leverage ratio be temporarily lowered to 8%. The federal regulators issued a rule making the lower ratio effective April 23, 2020. The rules also established a two-quarter grace period for a qualifying community bank whose leverage ratio falls below the 8% community bank leverage ratio requirement so long as the bank maintains a leverage ratio of 7% or greater. Another rule was issued to transition back to the 9% community bank leverage ratio, increasing the ratio to 8.5% for calendar year 2021 and to 9% thereafter. The Bank opted into the community bank leverage ratio framework as of March 31, 2020.

As of June 30, 2020 and 2019, the Bank was categorized as well capitalized. To be categorized as well capitalized or adequately capitalized, an institution must maintain minimum total risk‑based, Tier I risk‑based, Tier I common equity, and Tier 1 leverage ratios as set forth in the following table.

	June 30, 2020
					For Capital Adequacy				To be Considered
	Actual				Purposes				Well Capitalized
	Amount		Ratio		Amount		Ratio		Amount		Ratio
Total capital (to risk weighted assets)	$	28,928,180	15.02	%	$	15,408,708	8.00	%	$	19,260,885	10.00	%
Tier 1 capital (to risk weighted assets)		27,574,753	14.32	%		11,556,531	6.00	%		15,408,708	8.00	%
Common Equity Tier 1 (to risk weighted assets)		27,574,753	14.32	%		8,667,398	4.50	%		12,519,575	6.50	%
Tier 1 capital (to average assets)		27,574,753	9.30	%		11,857,514	4.00	%		14,821,893	5.00	%

	June 30, 2019
					For Capital Adequacy				To be Considered
	Actual				Purposes				Well Capitalized
	Amount		Ratio		Amount		Ratio		Amount		Ratio
Total capital (to risk weighted assets)	$	27,643,843	14.01	%	$	15,780,941	8.00	%	$	19,726,176	10.00	%
Tier 1 capital (to risk weighted assets)		26,349,878	13.36	%		11,835,706	6.00	%		15,780,941	8.00	%
Common Equity Tier 1 (to risk weighted assets)		26,349,878	13.36	%		8,876,779	4.50	%		12,822,015	6.50	%
Tier 1 capital (to average assets)		26,349,878	8.55	%		12,327,357	4.00	%		15,409,197	5.00	%

A Wisconsin state-chartered savings bank is required by state law to maintain minimum net worth in an amount equal to at least 6.0% of its total assets. At June 30, 2019, the Bank’s net worth was $23,501,513 and general loan loss reserve was $1,190,650, totaling 7.9% of total assets, which meets the state of Wisconsin’s minimum net worth requirements. At June 30, 2020, the Bank’s net worth was  $22,472,487 and general loan loss reserve was $1,147,504, totaling 7.7% of total assets, which meets the state of Wisconsin’s minimum net worth requirements.

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Summary of Significant Accounting Policies (Policies)

12 Months Ended

Jun. 30, 2020

Summary of Significant Accounting Policies

Principles of Consolidation

Principles of Consolidation

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the accounts and operations of TEB Bancorp, Inc. and its wholly-owned subsidiaries, the Bank, Equitable Investment Corp. and Savings Financial Corporation (the “Company”). All significant intercompany accounts and transactions have been eliminated in consolidation.

Emerging Growth Company Status

Emerging Growth Company Status

The Jumpstart Our Business Startups Act (the "JOBS Act"), which was signed into law on April 5, 2012, has made numerous changes to the federal securities laws to facilitate access to capital markets. Under the JOBS Act, a company with total annual gross revenues of less than $1.07 billion during its most recently completed fiscal year qualifies as an "emerging growth company". The Company qualifies as an emerging growth company and believes that it will continue to qualify as an emerging growth company for the foreseeable future.

An emerging growth company may elect to comply with new or amended accounting pronouncements in the same manner as a private company, but must make such election when the company is first required to file a registration statement. Such an election is irrevocable during the period a company is an emerging growth company. The Company has elected to comply with new or amended accounting pronouncements in the same manner as a private company. Accordingly, the financial statements may not be comparable to the financial statements of companies that comply with such new or revised accounting standards.

Use of Estimates

Use of Estimates

In preparing the consolidated financial statements in conformity with U.S. GAAP, management of the Company is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated balance sheet and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses, the pension actuarial assumptions, and the valuation of deferred tax assets.

Revenue Recognition

Revenue Recognition

As of July 1, 2019, the Company adopted Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (Topic 606), as well as subsequent ASUs that modified Topic 606. The Company elected to apply the ASU and all related ASUs using the modified retrospective implementation method. The implementation of the guidance had no material impact on the measurement or recognition of revenue of prior periods.

The majority of the Company’s revenue-generating transactions are not subject to ASC 606, including all interest and dividend income generated from financial instruments. Certain noninterest income items, including gain on sales of loans, gain on sales of securities, and other noninterest income have been evaluated and determined to not fall within the scope of ASC 606. Elements of noninterest income that fall within the scope of ASC 606 are as follows:

Service charges and other fees  The Company earns fees from its deposit customers for transaction-based, account maintenance, and overdraft services. Management reviewed the deposit account agreements and determined that the agreements can be terminated at any time by either the Company or the account holder. Transaction fees, such as wires and overdraft charges, are settled the day the performance obligation is satisfied. The Company’s monthly service charges and maintenance fees are for services provided to the customer on a monthly basis and are considered a series of servies that have the same pattern of transfer each month. The review of service charges assessed on deposit accounts included the amount of variable consideration that is a part of the monthly charges. It was found that the waiver of service charges due to insufficient funds and dormant account fees is immaterial and would not require a change in the accounting treatment for these fees under the new revenue standards. Recognition of revenue under ASC 606 did not materially change the timing or magnitude of revenue recognition.

Interchange fees  Customers use a Bank-issued debit card to purchase goods and services, and the Company earns interchange fees on those transactions, typically a percentage of the sale amount of the transaction. The Company records the amount due when it receives the settlement from the payment network. Payments from the payment network are received and recorded into income on a daily basis. These funds are included in “Service fees on deposits” on the Consolidated Statements of Operations. There are no contingent debit card interchange fees recorded by the Company that could be subject to a clawback in future periods. Recognition of revenue under ASC 606 did not materially change the timing or magnitude of revenue recognition.

Cash and Due From Banks

Cash and Due From Banks

For purposes of reporting cash flows, cash and cash equivalents include cash and balances due from banks and federal funds sold, all of which mature within 90 days. The Company maintains amounts due from banks, which, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts.

Interest Bearing Deposits in Banks

Interest Bearing Deposits in Banks

Interest bearing deposits in banks mature within one year and are carried at cost, which approximates fair value.

Securities

Securities

Available for sale securities are stated at fair value and unrealized holding gains and losses on available for sale securities are reported as accumulated other comprehensive income (loss), net of applicable deferred income tax and adjusted for any applicable valuation allowance, a separate component of equity. Available for sale securities are written down to market value through operations if an impairment of value is deemed other than temporary due to credit issues. Gains or losses on the sale of securities, if any, are determined on the specific identification method. Securities transactions are recorded on the trade date.

Loans

Loans

Loans are carried at the unpaid principal balance adjusted for deferred loan fees and costs and charge-offs. Loan origination and commitment fees and certain direct loan origination costs are deferred and the net amounts amortized as an adjustment of the related loan’s yield over the contractual life of the related loan.

Interest on loans is accrued on the unpaid principal balances as earned. Loans are normally placed on nonaccrual status when contractually past due 90 days or more as to interest or principal payments. Additionally, whenever management becomes aware of facts or circumstances that may adversely impact the collectability of principal or interest on a loan, it is management’s practice to place such loan on nonaccrual status immediately, rather than delaying such action until the loan becomes 90 days past due. When a loan is placed on nonaccrual, previously accrued and uncollected interest on such loan is reversed, amortization of related loan fees is suspended, and income is recorded only to the extent that loan payments are subsequently received in cash and a determination has been made that the principal balance of the loan is collectible. If collectability of the principal is in doubt, payments received are applied to loan principal.

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status and the probability of collecting scheduled principal and interest payment when due.

A troubled debt restructuring (“TDR”) includes a loan modification where a borrower is experiencing financial difficulty and a concession is granted to that borrower that would not otherwise have been considered except for the borrower’s financial difficulties. TDRs may be on accrual or nonaccrual status based upon the performance of the borrower and management’s assessment of collectability. TDRs placed on nonaccrual may return to accrued status based on performance in accordance with terms of the restructuring, generally six months.

Loans Held for Sale

Loans Held for Sale

Loans originated and intended for sale in the secondary market are carried at the lower of cost or estimated market value in the aggregate. Net unrealized losses are recognized through a valuation allowance by charges to operations. All sales are made without recourse.

Allowance for Loan Losses

Allowance for Loan Losses

The allowance for loan losses (“ALL”) is established as losses are estimated to have occurred through a provision for loan losses charged to expense. Loan losses are charged against the ALL when management believes the uncollectability of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the ALL. The ALL consists of specific reserves on certain impaired loans from analyses developed through specific credit allocations for individual loans. The specific reserve relates to all loans for which the ALL is estimated on a loan by loan basis using either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s observable market price, or the fair value of the collateral if the loan is collateral dependent. The general reserve is based on the Company’s historical loss experience along with consideration of certain qualitative factors such as (i) changes in the nature, volume, and terms of loans, (ii) changes in lending personnel, (iii) changes in the quality of the loan review function, (iv) changes in nature and volume of past-due, nonaccrual, and/or classified loans, (v) changes in concentration of credit risk, (vi) changes in economic and industry conditions, (vii) changes in legal and regulatory requirements, (viii) unemployment and inflation statistics, and (ix) changes in underlying collateral values.

The ALL reflects management’s best estimate of the probable and inherent losses on loans. The adequacy of the ALL is reviewed and approved by the Company’s Board of Directors. Allocations of the ALL may be made for specific loans, but the entire ALL is available for any loan that, in management’s judgment, should be charged-off.

As an integral part of their examination process, various regulatory agencies review the ALL as well. Such agencies may require that changes in the ALL be recognized when such regulatory credit evaluations differ from those of management based on information available to the regulators at the time of their examinations.

Premises and Equipment, Net

Premises and Equipment, Net

Premises and equipment are recorded at cost less accumulated depreciation and amortization. Depreciation and amortization expense is provided on the straight-line method over the estimated useful life of the asset for financial reporting purposes, and the straight-line and accelerated methods for income tax purposes. Amortization of leasehold improvements is provided on the straight-line method over the lesser of the term of the respective lease or the estimated economic life of the improvements.

Other Real Estate Owned, Net

Other Real Estate Owned, Net

Other real estate owned is initially recorded at the fair market value of the real estate acquired less the estimated costs to sell the real estate at the date title is received, establishing a new cost basis, with any write-down charged to the allowance for loan losses. Costs relating to development or improvement of property are capitalized up to the fair value of the property. Valuations are periodically performed by management and independent third parties and a charge to expense is taken if the carrying value of a property exceeds its fair value less estimated costs to sell. Income and expense related to the operations of other real estate owned is recorded net in “Cost of operations of other real estate owned” as a component of non-interest expenses on the consolidated statements of operations. Gains and losses on the sale of other real estate owned are recorded in “Gain (loss) on sale of other real estate owned” as a component of non-interest income in the consolidated statements of operations.

Federal Home Loan Bank Stock

Federal Home Loan Bank Stock

The Bank is a member of the Federal Home Loan Bank (“FHLB”) of Chicago. Members are required to own a certain amount of FHLB stock based on the Bank’s level of borrowings from the FHLB and other factors, and may invest in additional amounts of FHLB stock. The Bank’s investment in FHLB of Chicago stock meets the minimum amount required by current regulations and is carried at cost, which approximates fair value. FHLB stock is evaluated quarterly for impairment. Based on management’s evaluation, no impairment has been recorded on these securities. Both cash and stock dividends are reported as income.

Defined Benefit Pension Plan

Defined Benefit Pension Plan

The Bank has a defined benefit pension plan (the “Plan”) covering substantially all of its employees hired prior to March 31, 2012. The benefits are based on years of service and the employee’s average monthly pay received during the five highest consecutive calendar years in the last 10 years of employment under the Plan. Management contributes annually the amounts necessary to provide for defined benefit payments upon retirement or death as determined by the Plan’s actuary. The Plan was frozen effective March 31, 2012 for all employees. No additional benefits are being accrued for active participants after that date and no new participants will be entered into the Plan.

The Bank records annual amounts relating to the Plan based on calculations that incorporate various actuarial and other assumptions including discount rates, mortality, assumed rates of return, compensation increases, and turnover rates. The Bank reviews its assumptions on an annual basis and makes modifications to the assumptions based on current rates and trends where appropriate to do so. The effect of modifications to those assumptions is recorded in accumulated other comprehensive income (loss) and amortized to net periodic pension cost over future periods. The Bank believes that the assumptions utilized in recording its obligations under its plan are reasonable based on its experience and market conditions.

Comprehensive Income (Loss)

Comprehensive Income (Loss)

U.S. GAAP generally requires that recognized revenue, expenses, gains, and losses be included in income. Although certain changes in assets and liabilities, such as unrealized gains and losses on available for sale securities, are reported as a separate component of the equity section and changes in the funded status of the pension plan, such items, along with net income (loss) are components of comprehensive income (loss).

Income Taxes

Income Taxes

The Company accounts for income taxes in accordance with the Financial Accounting Standards Board (FASB) Accounting Standards Codification ("ASC") Topic 740, "Income Taxes." Under this guidance, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

The Company recognizes the tax effects from an uncertain tax position in the consolidated financial statements only if the position is more likely than not to be sustained on audit, based on the technical merits of the position. The Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the consolidated financial statements is the largest benefit that has a greater than 50% likelihood of being realized, upon ultimate settlement with the relevant tax authority. The Company recognizes interest and penalties accrued or released related to uncertain tax positions in current income tax expense or benefit.

Transfers of Financial Assets

Transfers of Financial Assets

Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.

Advertising

Advertising

Advertising costs are accrued and expensed in the period incurred.

Off-Balance Sheet Financial Instruments

Off-Balance Sheet Financial Instruments

In the ordinary course of business, the Bank has entered into off-balance-sheet financial instruments consisting of commitments to extend credit, commitments under credit card arrangements, commercial letters of credit and standby letters of credit. Such financial instruments are recorded in the consolidated financial statements when they are funded or related fees are incurred or received.

Significant Events

Significant Events

In December 2019, a coronavirus (COVID-19) was reported in China and on March 12, 2020, the President of the United States declared the COVID-19 outbreak in the United States a national emergency. The COVID-19 pandemic has caused significant economic dislocation as many state and local governments have ordered non-essential businesses to close and residents to shelter in place at home. Given the ongoing and dynamic nature of the circumstances, it is difficult to predict the full impact of the COVID-19 outbreak on our business. The extent of such impact will depend on future developments, which are highly uncertain, including when the coronavirus can be controlled and abated and when and how the economy may be reopened. In order to protect the health of employees and customers, the Company has temporarily limited lobby hours and transitioned as many employees to remote work as possible. Nonetheless, the Company has not incurred any significant disruptions to its business activities. 

The Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, was signed into law on March 27, 2020 and provided over $2.0 trillion in emergency economic relief to individuals and businesses impacted by the COVID-19 pandemic. The CARES Act authorized the Small Business Administration (“SBA”) to temporarily guarantee loans under a new 7(a) loan program call the Paycheck Protection Program (“PPP”). Although we were not already a qualified SBA lender, we enrolled in the PPP by completing the required documentation.

An eligible business can apply for a PPP loan up to the greater of: (1) 2.5 times its average monthly “payroll costs”; or (2) $10.0 million. PPP loans will have: (a) an interest rate of 1.0%; (b) a two-year loan term to maturity; and (c) principal and interest payments deferred for six months from the date of disbursement. The SBA will guarantee 100% of the PPP loans made to eligible borrowers. The entire principal amount of the borrower’s PPP loan, including any accrued interest, is eligible to be reduced by the loan forgiveness amount under the PPP so long as employee and compensation levels of the business are maintained and 75% of the loan proceeds are used for payroll expenses, with the remaining 25% of the loan proceeds used for other qualifying expenses. The Company receives a processing fee from the SBA ranging from 1% to 5% depending on the size of the loan, which is offset by a third-party servicing agent fee ranging from 0.25% to 1.0%.  

As of June 30. 2020, the Company originated 16 PPP loans totaling $1.1 million and generated approximately $35,000 from the processing fees.

To work with customers impacted by COVID-19, the Company is offering short-term (i.e., three months or less with the potential to extend up to six months, if necessary) loan modifications on a case by case basis to borrowers who were current in their payments at the inception of the loan modification program. Under Section 4013 of the CARES Act, loans less than 30 days past due as of December 31, 2019 are considered current for COVID-19 modifications. A financial institution can then suspend the requirements under U.S. GAAP for loan modifications related to COVID-19 that would otherwise be categorized as a TDR, and suspend any determination of a loan modified as a result of COVID-19 as being a TDR, including the requirement to determine impairment for accounting purposes.  Financial institutions wishing to utilize this authority must make a policy election, which applies to any COVID-19 modification made between March 1, 2020 and the earlier of either December 31, 2020 or the 60th day after the end of the COVID-19 national emergency. Similarly, the Financial Accounting Standards Board (“FASB”) has confirmed that short-term modifications made on a good faith basis in response to COVID-19 to loan customers who were current prior to any relief are not TDRs. Lastly, prior to the enactment of the CARES Act, the banking regulatory agencies provided guidance as to how certain short-term modifications would not be considered TDRs, and have subsequently confirmed that such guidance could be applicable for loans that do not qualify for favorable accounting treatment under Section 4013 of the CARES Act.

As of June 30, 2020, the Company had received requests to modify 87 loans aggregating $28.0 million, primarily consisting of the deferral of principal and interest payments and the extension of the maturity date. Of these modifications, $27.8 million, or 99.3%, were performing in accordance with the accounting treatment under Section 4013 of the CARES Act and therefore did not qualify as TDRs. One loan totaling $195,924 did not qualify for the favorable accounting treatment under Section 4013 of the CARES Act and therefore will be reported as a TDR. Management has evaluated the loan and determined that based on the liquidation value of the collateral, no specific reserve will be necessary. Details with respect to loan modification requests are as follows:

Loan Classification	Number of Loans		Balance as of June 30, 2020
Construction, land, development		1	$	46,511
1-4 family owner occupied		48		7,235,772
1-4 family non-owner occupied		17		2,517,746
Multifamily		12		10,576,275
Commercial owner occupied		3		1,518,195
Commercial non-owner occupied		3		6,022,240
Consumer and installment loans		3		42,922
Total loan modification requests		87	$	27,959,661

Subsequent Events

Subsequent Events

Management has reviewed the Company’s operations for potential disclosure or financial statement impacts related to events occurring after June 30, 2020, but prior to the release of these financial statements. Based on the results of this review, no subsequent event disclosure or financial statement impacts to these financial statements are required as of October 1, 2020.

Reclassification

Reclassification

Certain June 30, 2019 amounts have been reclassified to conform to the June 30, 2020 presentation. The reclassifications had no effect on reported amounts of consolidated net loss or stockholders’ equity.

Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In January 2016, the FASB issued ASU 2016-01, “Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.” ASU 2016-01 addresses certain aspects of the recognition, measurement, presentation, and disclosure of financial instruments. Under the new guidance, the Company is no longer required to disclose the fair value of financial instruments measured at amortized cost. The Company has early adopted this ASU beginning July 1, 2019. This ASU did not have a material impact on the Company’s consolidated financial statements.

In March 2017, the FASB issued ASU 2017-07, “Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.” ASU 2017-07 applies to all entities that offer employees defined benefit pension plans, other postretirement benefit plans, or other types of benefits accounted for under Topic 715, Compensation – Retirement Benefits. The amendments require that an employer disaggregate the service cost component from the other components of net benefit cost, with all updates being applied retrospectively. As the Company has historically not had any service cost component within net periodic pension cost, the impact of this ASU on the Company’s consolidated financial statements did not have a material impact.

In May 2016, the FASB issued ASU 2016-12, “Revenue from Contracts with Customers (Topic 606); Narrow-Scope Improvements and Practical Expedients.” ASU 2016-12 is intended to address certain specific issues identified by the FASB-IASB Joint Transition Resource Group for Revenue Recognition with respect to ASU 2014-09, “Revenue from Contracts with Customers (Topic 606).” The updates are effective on a retrospective basis for the annual periods beginning after December 15, 2018, and interim periods within annual reporting periods beginning after December 15, 2019. Based on management’s evaluation under the current guidance, we estimate that substantially all of our interest income and non-interest income will not be impacted by the adoption of these standards, because either the revenue from those contracts with customers is covered by other guidance in U.S. GAAP, or the anticipated revenue recognition outcomes with the adoption of these standards will likely be similar to our current revenue recognition practices. The Company adopted Topic 606 effective July 1, 2019, using the modified retrospective approach. Management did not identify any changes in the timing of revenue recognition when considering the amended accounting guidance, however, the Company has included additional disclosures as required by the guidance.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 320) – Classification of Certain Cash Receipts and Cash Payments.” This ASU adds or clarifies guidance on eight cash flow issues. The Company has retrospectively adopted the provisions of this ASU for its fiscal year beginning July 1, 2019. The adoption of ASU 2016-15 had no impact on its consolidated financial statements.

Recently Issued, But Not Yet Effective Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842).” Topic 842 was subsequently amended by ASU 2018-10, “Codification Improvements to Topic 842, Leases” and ASU 2018-11, “Leases (Topic 842)”. The amendments in this update increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. For leases with a term of 12 months or less, the amendments permit lessees to make an accounting policy election by class of underlying assets not to recognize lease assets and lease liabilities. For finance leases, the amendments in this update require a lessee to (1) recognize a right-of-use asset and lease liability, initially measured at the present value of the lease payments, on the balance sheet; (2) recognize interest on the lease liability separately from amortization of the right-of-use asset in the statement of operations; (3) classify repayments of the principal portion of the lease liability within financing activities and payments of interest on the least liability and variable lease payments within operating activities in the statement of cash flows. For operating leases, the amendments in this update require a lessee to (1) recognized a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, on the balance sheet; (2) recognized a single lease cost, calculated so that the cost of the lease is allocated over the lease term on a generally straight-line basis; (3) classify all cash payments within operating activities in the statement of cash flows. On October 16, 2019, the FASB approved the proposal to delay the effective date for this standard for private and all other entities. Due to the Company’s extended transition period election, the amendments are effective for fiscal years beginning after December 15, 2020. Early adoption is permitted. The Company’s leases are operating leases and ASU 2016-02 will require the Company to include them in its consolidated balance sheet. The Company’s operating leases are predominately related to real estate. Management is currently evaluating other impacts this guidance will have on the consolidated results of operations, financial presentation, and cash flows of the Company.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326) – Measurement of Credit Losses on Financial Instruments.” Topic 326 was subsequently amended by ASU 2018-19, “Codification Improvements to Topic 326, Financial Instruments – Credit Losses; ASU 2019-04, “Codification Improvements to Topic 326, Financial Instruments – Credit Losses”; and ASU 2019-05, “Financial Instruments – Credit Losses (Topic 326): Targeted Transition Relief.” This ASU replaces the current incurred loss impairment methodology with a methodology that reflected expected credit losses measured at amortized cost and certain other instruments, including loans, held-to-maturity debt securities, net investments in leases, and off-balance-sheet credit exposures. On October 16, 2019, the FASB approved the proposal to delay the effective date for this standard for private and all other entities. Due to the Company’s extended transition period election, the update is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Management is currently evaluating the potential impact on its consolidated results of operations, financial position, and cash flows; however, due to the significant differences in the revised guidance from existing U.S. GAAP, the implementation of this guidance may result in material changes in the Company’s accounting for credit losses on financial instruments.

In March 2017, the FASB issued ASU 2017-08, “Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities.” ASU 2017-08 amends guidance on the amortization period of premiums on certain purchased callable debt securities. The amendments shorten the amortization period of premiums on certain purchased callable debt securities to the earliest call date. ASU 2017-08 is effective for annual periods beginning after December 15, 2019 with early adoption permitted. Management is currently evaluating the potential impact of the new standard on the consolidated results of operations, financial position, and cash flows of the Company.

In August 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement.” ASU 2018-13 modifies the disclosure requirements on fair value measurements in Topic 820, including the removal, modification to, and addition of certain disclosure requirements. This ASU will be effective for fiscal years beginning after December 15, 2019. Early adoption is permitted. This ASU has a minor impact to and simplifies the Company’s fair value disclosures, and no additional impact to the consolidated financial statements is expected.

In August 2018, the FASB issued ASU No. 2018-14, “Compensation – Retirement Benefits – Defined Benefit Plans – General (Subtopic 715-20): Disclosure Framework – Changes to the Disclosure Requirements for Defined Benefit Plans.” ASU 2018-14 applies to all employers that sponsor defined benefit pension or other postretirement plans. The amendments require that an employer disclose an explanation of the reasons for significant gains and losses related to changes in the net benefit obligation for the period. Multiple disclosure requirements are also removed with this amendment, including: (1) the amounts in accumulated other comprehensive income expected to be recognized as components of net periodic benefit cost over the next fiscal year; (2) the amount and timing of plan assets expected to be returned to the employer; (3) related party disclosures about significant transactions between the employer or related parties and the plan; and (4) the effects of a one-percentage-point change in assumed health care cost trend rates on the aggregate of the service and interest cost components of net periodic benefit costs. Additional disclosure requirements contained within Subtopic 715-20 are also clarified. The amendments are effective for fiscal years ending after December 15, 2021. Early adoption is permitted. The adoption of this guidance is not expected to have a material impact on the consolidated results of operations, financial position, or cash flows of the Company.

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Summary of Significant Accounting Policies (Tables)

12 Months Ended

Jun. 30, 2020

Summary of Significant Accounting Policies

Schedule of loan modification request

Loan Classification	Number of Loans		Balance as of June 30, 2020
Construction, land, development		1	$	46,511
1-4 family owner occupied		48		7,235,772
1-4 family non-owner occupied		17		2,517,746
Multifamily		12		10,576,275
Commercial owner occupied		3		1,518,195
Commercial non-owner occupied		3		6,022,240
Consumer and installment loans		3		42,922
Total loan modification requests		87	$	27,959,661

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Income (Loss) Per Share (Tables)

12 Months Ended

Jun. 30, 2020

Income (Loss) Per Share

Schedule of income (loss) per share

	Year Ended		Year Ended
	June 30, 2020		June 30, 2019
Net income (loss)	$	1,092,099	$	(399,339)
Basic potential common shares
Weighted average shares outstanding		2,624,343		2,624,343
Basic weighted average shares outstanding		2,624,343		2,624,343
Diluted potential common shares		—		—
Diluted weighted average shares outstanding		2,624,343		2,624,343
Basic earnings (loss) per share	$	0.42		(0.15)
Diluted earnings (loss) per share	$	0.42		(0.15)

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Fair Value of Financial Instruments (Tables)

12 Months Ended

Jun. 30, 2020

Fair Value of Financial Instruments

Schedule of fair value assets measured on recurring basis

	Fair Value as of June 30, 2020
	Level 1		Level 2		Level 3		Total
Securities classified as available for sale:
Obligations of states and political subdivisions	$	—	$	18,005,082	$	—	$	18,005,082
Mortgage-backed securities		—		1,443,643		—		1,443,643
Certificates of deposit		—		848,870		—		848,870
Total	$	—	$	20,297,595	$	—	$	20,297,595

	Fair Value as of June 30, 2019
	Level 1		Level 2		Level 3		Total
Securities classified as available for sale:
Obligations of states and political subdivisions	$	—	$	18,878,383	$	—	$	18,878,383
Mortgage-backed securities		—		1,106,138		—		1,106,138
Certificates of deposit		—		557,597		—		557,597
Total	$	—	$	20,542,118	$	—	$	20,542,118

Schedule of fair value assets measured on nonrecurring basis

	Fair Value as of June 30, 2020
	Level 1		Level 2		Level 3		Total
Impaired loans with a valuation allowance, net	$	—	$	—	$	248,930	$	248,930
Other real estate owned, net		—		—		2,288,255		2,288,255
Total	$	—	$	—	$	2,537,185	$	2,537,185

	Fair Value as of June 30, 2019
	Level 1		Level 2		Level 3		Total
Impaired loans with a valuation allowance, net	$	—	$	—	$	274,750	$	274,750
Other real estate owned, net		—		—		4,080,401		4,080,401
Total	$	—	$	—	$	4,355,151	$	4,355,151

Schedule of carrying value and estimated fair value of financial instruments

	June 30, 2020				June 30, 2019
	Carrying Value		Fair Value		Carrying Value		Fair Value
FINANCIAL ASSETS
Cash and cash equivalents	$	13,106,041	$	13,106,041	$	5,630,770	$	5,630,770
Interest bearing deposits in banks	$	2,713,164	$	2,713,164	$	3,674,015	$	3,674,015
Available for sale securities	$	20,297,595	$	20,297,595	$	20,542,118	$	20,542,118
Loans, net	$	237,300,478	$	247,100,558	$	259,873,403	$	256,666,403
Loans held for sale	$	18,690,027	$	18,690,027	$	7,079,548	$	7,079,548
Federal Home Loan Bank stock	$	1,345,500	$	1,345,500	$	2,061,000	$	2,061,000
Accrued interest receivable	$	933,729	$	933,729	$	1,000,098	$	1,000,098
FINANCIAL LIABILITIES
Deposits	$	256,071,531	$	251,928,460	$	234,561,459	$	217,705,000
Federal Home Loan Bank advances	$	9,000,000	$	9,000,000	$	44,200,000	$	44,200,000
Accrued interest payable	$	56,726	$	56,726	$	59,489	$	59,489

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Available for Sale Securities (Tables)

12 Months Ended

Jun. 30, 2020

Available for Sale Securities

Schedule of amortized costs and fair values of available for sale securities

	June 30, 2020
			Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses		Fair Value
Obligations of states and political subdivisions	$	17,563,698	$	457,440	$	16,056	$	18,005,082
Mortgage-backed securities		1,371,753		71,890		—		1,443,643
Certificates of deposit		800,000		48,870		—		848,870
	$	19,735,451	$	578,200	$	16,056	$	20,297,595

	June 30, 2019
			Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses		Fair Value
Obligations of states and political subdivisions	$	18,719,370	$	217,627	$	58,614	$	18,878,383
Mortgage-backed securities		1,065,193		40,945		—		1,106,138
Certificates of deposit		555,000		2,597		—		557,597
	$	20,339,563	$	261,169	$	58,614	$	20,542,118

Schedule of available for sale securities portfolio

	June 30, 2020
	Continuous Unrealized				Continuous Unrealized
	Losses Existing for Less				Losses Existing for 12 Months
	Than 12 Months				or Greater				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
Obligations of states and political subdivisions	$	—	$	—	$	693,687	$	16,056	$	693,687	$	16,056

	June 30, 2019
	Continuous Unrealized				Continuous Unrealized
	Losses Existing for Less				Losses Existing for 12 Months
	Than 12 Months				or Greater				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
Obligations of states and political subdivisions	$	208,583	$	22	$	2,935,133	$	58,592	$	3,143,716	$	58,614

Schedule of available for sale securities maturity categories

	Amortized
	Cost		Fair Value
Due in one year or less	$	870,981	$	874,977
Due after one year through 5 years		10,719,389		10,952,874
Due after 5 years through 10 years		4,833,328		5,022,565
Due after 10 years		1,940,000		2,003,536
Subtotal		18,363,698		18,853,952
Mortgage backed securities
Due after one year through 5 years		—		—
Due after 5 years through 10 years		1,371,753		1,443,643
Total	$	19,735,451	$	20,297,595

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Loans (Tables)

12 Months Ended

Jun. 30, 2020

Loans

Schedule of loans receivable

	June 30, 2020		June 30, 2019
Construction, land, development	$	4,598,382	$	4,318,845
1-4 family owner occupied		100,506,311		124,845,322
1-4 family non-owner occupied		21,213,680		20,968,812
Multifamily		76,444,156		73,246,392
Commercial owner occupied		6,733,183		8,508,011
Commercial non-owner occupied		20,237,534		19,502,545
Consumer and installment loans		8,920,659		9,777,441
Total loans		238,653,905		261,167,368
Less:
Allowance for loan losses		(1,353,427)		(1,293,965)
Loans, net	$	237,300,478	$	259,873,403

Schedule of non-performing loans

	June 30, 2020		June 30, 2019
Nonaccrual Loans	$	1,341,174	$	1,524,868
Total non-performing loans	$	1,341,174	$	1,524,868
Restructured loans, accruing	$	—	$	—
Total impaired loans	$	1,341,174	$	1,524,868

Schedule of impaired loans

	June 30, 2020
	Construction,		1-4 Family		1-4 Family				Commercial		Commercial
	Land,		Owner		Non-Owner				Owner		Non-Owner		Consumer &
	Development		Occupied		Occupied		Multifamily		Occupied		Occupied		Installment		Total
With related allowance recorded
Recorded investment	$	—	$	161,931	$	—	$	—	$	189,249	$	—	$	103,673	$	454,853
Unpaid principal balance		—		161,931		—		—		189,249		—		103,673		454,853
Related allowance		—		64,780		—		—		79,351		—		61,792		205,923
With no related allowance recorded
Recorded investment	$	—	$	803,803	$	57,574	$	—	$	—	$	—	$	24,944	$	886,321
Unpaid principal balance		—		803,803		57,574		—		—		—		24,944		886,321
Related allowance		—		—		—		—		—		—		—		—
Total
Recorded investment	$	—	$	965,734	$	57,574	$	—	$	189,249	$	—	$	128,617	$	1,341,174
Unpaid principal balance		—		965,734		57,574		—		189,249		—		128,617		1,341,174
Related allowance		—		64,780		—		—		79,351		—		61,792		205,923
Average recorded balance	$	—	$	1,020,175	$	14,948	$	—	$	191,166	$	—	$	132,521	$	1,358,810
Interest income recognized while impaired	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Interest income recognized on a cash basis while impaired		—		16,071		298		—		4,382		—		712		21,463
Total interest on impaired loans	$	—	$	16,071	$	298	$	—	$	4,382	$	—	$	712	$	21,463

	June 30, 2019
	Construction,		1-4 Family		1-4 Family				Commercial		Commercial
	Land,		Owner		Non-Owner				Owner		Non-Owner		Consumer and
	Development		Occupied		Occupied		Multifamily		Occupied		Occupied		Installment		Total
With related allowance recorded
Recorded investment	$	—	$	70,608	$	—	$	—	$	193,601	$	—	$	113,856	$	378,065
Unpaid principal balance		—		70,608		—		—		193,601		—		113,856		378,065
Related allowance		—		5,772		—		—		44,564		—		52,979		103,315
With no related allowance recorded
Recorded investment	$	—	$	1,132,648	$	—	$	—	$	—	$	—	$	14,155	$	1,146,803
Unpaid principal balance		—		1,132,648		—		—		—		—		14,155		1,146,803
Related allowance		—		—		—		—		—		—		—		—
Total
Recorded investment	$	—	$	1,203,256	$	—	$	—	$	193,601	$	—	$	128,011	$	1,524,868
Unpaid principal balance		—		1,203,256		—		—		193,601		—		128,011		1,524,868
Related allowance		—		5,772		—		—		44,564		—		52,979		103,315
Average recorded balance	$	19,198	$	865,338	$	21,509	$	—	$	196,182	$	—	$	133,467	$	1,235,694
Interest income recognized while impaired	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Interest income recognized on a cash basis while impaired		353		19,352		288		—		7,917		—		2,894		30,804
Total interest on impaired loans	$	353	$	19,352	$	288	$	—	$	7,917	$	—	$	2,894	$	30,804

Schedule of loans by risk rating

	June 30, 2020
	Construction,		1-4 Family		1-4 Family				Commercial		Commercial
	Land,		Owner		Non-Owner				Owner		Non-Owner		Consumer and
			Occupied		Occupied		Multifamily		Occupied		Occupied		Installment		Total
1-4		4,598,382	$	99,344,653	$	21,156,106	$	76,444,156	$	6,543,934	$	12,313,923	$	8,792,042	$	229,193,196
5		—		195,924		—		—		—		7,923,611		—		8,119,535
6		—		851,208		57,574		—		189,249		—		52,448		1,150,479
7		—		114,526		—		—		—		—		76,169		190,695
Total	$	4,598,382	$	100,506,311	$	21,213,680	$	76,444,156	$	6,733,183	$	20,237,534	$	8,920,659	$	238,653,905

	June 30, 2019
	Construction,		1-4 Family		1-4 Family				Commercial		Commercial
	Land,		Owner		Non-Owner				Owner		Non-Owner		Consumer and
	Development		Occupied		Occupied		Multifamily		Occupied		Occupied		Installment		Total
1-4	$	4,318,845	$	123,642,066	$	20,968,812	$	73,246,392	$	8,314,410	$	11,382,336	$	9,649,430	$	251,522,291
5		—		—		—		—		—		8,120,209		—		8,120,209
6		—		895,442		—		—		193,601		—		128,011		1,217,054
7		—		307,814		—		—		—		—		—		307,814
Total	$	4,318,845	$	124,845,322	$	20,968,812	$	73,246,392	$	8,508,011	$	19,502,545	$	9,777,441	$	261,167,368

Schedule of aged analysis of past due loans

	June 30, 2020
	Construction,		1-4 Family		1-4 Family				Commercial		Commercial
	Land,		Owner		Non-Owner				Owner		Non-Owner		Consumer and
	Development		Occupied		Occupied		Multifamily		Occupied		Occupied		Installment		Total
30‑59 days, accruing	$	69,174	$	1,274,585	$	—	$	—	$	—	$	—	$	63,765	$	1,407,524
60‑89 days, accruing		—		114,338		—		—		—		—		—		114,338
90 days & over or nonaccrual		—		965,734		57,574		—		189,249		—		128,617		1,341,174
Total	$	69,174	$	2,354,657	$	57,574	$	—	$	189,249	$	—	$	192,382	$	2,863,036

	June 30, 2019
	Construction,		1-4 Family		1-4 Family				Commercial		Commercial
	Land,		Owner		Non-Owner				Owner		Non-Owner		Consumer and
	Development		Occupied		Occupied		Multifamily		Occupied		Occupied		Installment		Total
30‑59 days, accruing	$	—	$	2,129,016	$	103,706	$	—	$	—	$	—	$	72,482	$	2,305,204
60‑89 days, accruing		—		450,183		—		—		—		—		25,220		475,403
90 days & over or nonaccrual		—		1,203,256		—		—		193,601		—		128,011		1,524,868
Total	$	—	$	3,782,455	$	103,706	$	—	$	193,601	$	—	$	225,713	$	4,305,475

Troubled Debt Restructurings on Financing Receivables [Table Text Block]

	Construction,		1-4 Family		1-4 Family				Commercial		Commercial
	Land,		Owner		Non-Owner				Owner		Non-Owner		Consumer &
	Development		Occupied		Occupied		Multifamily		Occupied		Occupied		Installment		Total
Accruing
Beginning balance	$	—	$	—	$	—	$	—	$	—	$		$	—	$	—
Transfer to other loan category		—		—		—		—		—		—		—		—
Principal payments		—		—		—		—		—		—		—		—
Charge-offs		—		—		—		—		—		—		—		—
Sales		—		—		—		—		—		—		—		—
New restructureds		—		195,924		—		—		—		—		—		195,924
Transfers out of TDR status		—		—		—		—		—				—		—
Transfers to foreclosed properties		—		—		—		—		—		—		—		—
Transfers to nonaccrual		—		—		—		—		—		—		—		—
Transfers out of nonaccrual		—		—		—		—		—		—		—		—
Ending balance	$	—	$	195,924	$	—	$	—	$	—	$	—	$	—	$	195,924
Nonaccrual
Beginning balance	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Principal payments		—		—		—		—		—		—		—		—
Charge-offs		—		—		—		—		—		—		—		—
Sales		—		—		—		—		—		—		—		—
Transfers to foreclosed properties		—		—		—		—		—		—		—		—
Transfers from accrual		—		—		—		—		—		—		—		—
Transfers to accrual		—		—		—		—		—		—		—		—
Ending balance	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Totals
Beginning balance	$	—	$	—	$	—	$	—	$	—	$		$	—	$	—
Transfer to other loan category		—		—		—		—		—		—		—		—
Principal payments		—		—		—		—		—		—		—		—
Charge-offs		—		—		—		—		—		—		—		—
Sales		—		—		—		—		—		—		—		—
New restructureds		—		195,924		—		—		—		—		—		195,924
Transfers out of TDR status		—		—		—		—		—				—		—
Transfers to foreclosed properties		—		—		—		—		—		—		—		—
Transfers to nonaccrual		—		—		—		—		—		—		—		—
Transfers from accrual		—		—		—		—		—		—		—		—
Transfers out of nonaccrual		—		—		—		—		—		—		—		—
Ending balance	$	—	$	195,924	$	—	$	—	$	—	$	—	$	—	$	195,924

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Allowance for Loan Losses (Tables)

12 Months Ended

Jun. 30, 2020

Allowance for Loan Losses

Schedule of allowance for loan losses and recorded investment

	June 30, 2020
	Construction,		1-4 Family		1-4 Family				Commercial		Commercial
	Land,		Owner		Non-Owner				Owner		Non-Owner
	Development		Occupied		Occupied		Multifamily		Occupied		Occupied		Consumer		Unallocated		Total
Allowance
Balance at 7/1/19	$	4,319	$	67,593	$	26,630	$	109,870	$	61,193	$	738,366	$	70,058	$	215,936	$	1,293,965
Charge-offs		—		(57,572)		—		—		—		—		(45,157)		—		(102,729)
Recoveries		—		5,155		—		—		—		—		22,036		—		27,191
Provision		9,476		341,258		50,590		176,795		34,518		(425,696)		50,375		(102,316)		135,000
Balance at 6/30/20	$	13,795	$	356,434	$	77,220	$	286,665	$	95,711	$	312,670	$	97,312	$	113,620	$	1,353,427
Allowance
Ending balance individually evaluated for impairment	$	—	$	64,780	$	—	$	—	$	79,351	$	—	$	61,792	$	—	$	205,923
Ending balance collectively evaluated for impairment		13,795		291,654		77,220		286,665		16,360		312,670		35,520		113,620		1,147,504
Ending balance	$	13,795	$	356,434	$	77,220	$	286,665	$	95,711	$	312,670	$	97,312	$	113,620	$	1,353,427
Loans
Ending balance individually evaluated for impairment	$	—	$	965,734	$	57,574	$	—	$	189,249	$	—	$	128,617	$	—	$	1,341,174
Ending balance collectively evaluated for impairment		4,598,382		99,540,577		21,156,106		76,444,156		6,543,934		20,237,534		8,792,042		—		237,312,731
Total loans	$	4,598,382	$	100,506,311	$	21,213,680	$	76,444,156	$	6,733,183	$	20,237,534	$	8,920,659	$	—	$	238,653,905
Less allowance	$	13,795	$	356,434	$	77,220	$	286,665	$	95,711	$	312,670	$	97,312	$	113,620	$	1,353,427
Total loans, net	$	4,584,587	$	100,149,877	$	21,136,460	$	76,157,491	$	6,637,472	$	19,924,864	$	8,823,347	$	(113,620)	$	237,300,478

	June 30, 2019
	Construction,		1-4 Family		1-4 Family				Commercial		Commercial				Not
	Land,		Owner		Non-Owner				Owner-		Non-Owner				Specifically
	Development		Occupied		Occupied		Multifamily		Occupied		Occupied		Consumer		Allocated		Total
Allowance
Balance at 7/1/18	$	4,758	$	7,300	$	71,053	$	71,101	$	131,906	$	925,355	$	98,096	$	14,590	$	1,324,159
Charge-offs		—		—		(44,534)		—		—		—		(15,809)		—		(60,343)
Recoveries		—		28,735		—		—		—		—		1,414		—		30,149
Provision		(439)		31,558		111		38,769		(70,713)		(186,989)		(13,643)		201,346		—
Balance at 6/30/19	$	4,319	$	67,593	$	26,630	$	109,870	$	61,193	$	738,366	$	70,058	$	215,936	$	1,293,965
Allowance
Ending balance individually evaluated for impairment	$	—	$	5,772	$	—	$	—	$	44,564	$	—	$	52,979	$	—	$	103,315
Ending balance collectively evaluated for impairment		4,319		61,821		26,630		109,870		16,629		738,366		17,079		215,936		1,190,650
Ending balance	$	4,319	$	67,593	$	26,630	$	109,870	$	61,193	$	738,366	$	70,058	$	215,936	$	1,293,965
Loans
Ending balance individually evaluated for impairment	$	—	$	1,203,256	$	—	$	—	$	193,601	$	—	$	128,011	$	—	$	1,524,868
Ending balance collectively evaluated for impairment		4,318,845		123,642,066		20,968,812		73,246,392		8,314,410		19,502,545		9,649,430		—		259,642,500
Total loans	$	4,318,845	$	124,845,322	$	20,968,812	$	73,246,392	$	8,508,011	$	19,502,545	$	9,777,441	$	—	$	261,167,368
Less allowance	$	4,319	$	67,593	$	26,630	$	109,870	$	61,193	$	738,366	$	70,058	$	215,936	$	1,293,965
Total loans, net	$	4,314,526	$	124,777,729	$	20,942,182	$	73,136,522	$	8,446,818	$	18,764,179	$	9,707,383	$	(215,936)	$	259,873,403

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Other Real Estate Owned, Net (Tables)

12 Months Ended

Jun. 30, 2020

Other Real Estate Owned, Net

Summary of other real estate owned properties

	June 30, 2020		June 30, 2019
Beginning balance	$	4,080,401	$	3,957,133
Charge offs		(989,205)		(48,110)
Capital expenditures		36,852		109,181
Transfer from loans		200,856		418,849
Sale proceeds		(1,158,306)		(333,387)
Net gain (loss) on sale of other real estate owned		117,657		(23,265)
Other real estate owned, net	$	2,288,255	$	4,080,401

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Premises and Equipment, net (Tables)

12 Months Ended

Jun. 30, 2020

Premises and Equipment, net

Schedule of premises and equipment

	June 30, 2020		June 30, 2019
Land	$	2,319,381	$	2,319,381
Office buildings and improvements		10,573,741		10,568,387
Leasehold improvements		470,952		470,951
Furniture and fixtures		6,351,443		6,444,945
		19,715,517		19,803,664
Less: Accumulated depreciation		(11,755,476)		(11,638,390)
Premises and equipment, net	$	7,960,041	$	8,165,274

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Accrued Interest Receivable and Other Assets (Tables)

12 Months Ended

Jun. 30, 2020

Accrued Interest Receivable and Other Assets

Summary of accrued interest receivable and other assets

	June 30, 2020		June 30, 2019
Accrued interest receivable	$	933,729	$	1,000,098
Prepaid expenses and other assets		839,757		141,588
Totals	$	1,773,486	$	1,141,686

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Deposits (Tables)

12 Months Ended

Jun. 30, 2020

Deposits.

Schedule of maturities on certificates of deposits

2021	$	41,893,495
2022		6,314,403
2023		4,708,866
2024		34,060,541
2025		46,698
Thereafter		21,932
	$	87,045,935

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Borrowings (Tables)

12 Months Ended

Jun. 30, 2020

Borrowings

Schedule for summary of borrowings

	June 30, 2020		June 30, 2019
FHLB fixed rate advance (2.45%, matured 7/1/19)	$	—	$	7,500,000
FHLB fixed rate advance (2.43%, matured 7/2/19)		—		15,000,000
FHLB fixed rate advance (2.45%, matured 7/3/19)		—		5,000,000
FHLB fixed rate advance (2.43%, matured 7/3/19)		—		8,000,000
FHLB fixed rate advance (2.649%, matured 7/23/19)		—		2,500,000
FHLB fixed rate advance (2.649%, matured 7/24/19)		—		3,100,000
FHLB fixed rate advance (2.647%, matured 7/25/19)		—		3,100,000
FHLB fixed rate advance (0.61%, matures 9/11/20)		5,000,000		—
FHLB fixed rate advance (0.00%, matures 5/3/21)		4,000,000		—
	$	9,000,000	$	44,200,000

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Income Taxes (Tables)

12 Months Ended

Jun. 30, 2020

Income Taxes

Schedule of income tax expense (benefit)

	June 30, 2020		June 30, 2019
Current tax expense (benefit):
Federal	$	(30,589)	$	(73,075)
State		—		(12,578)
		(30,589)		(85,653)
Deferred tax expense (benefit):
Federal		30,589		30,589
State		—		—
		30,589		30,589
Total income tax expense (benefit)	$	—	$	(55,064)

Schedule of net deferred tax asset

	June 30, 2020		June 30, 2019
Deferred tax assets
Federal net operating loss	$	6,619,829	$	6,858,921
Other real estate owned		683,379		708,259
State loss and contribution		2,963,488		3,050,448
Unrealized loss on available for sale securities				—
Bad debt reserve		368,687		352,489
Pension		719,294		226,412
Other assets		67,370		74,554
Total deferred tax assets		11,422,047		11,271,083
Deferred tax liabilities
Pension				—
Deferred loan fees		(91,078)		(131,008)
Depreciation		(212,240)		(113,769)
FHLB dividends				—
Unrealized gain on available for sale securities		(153,067)		(55,112)
Other liabilities		(66,045)		(72,573)
Total deferred tax liabilities		(522,430)		(372,462)
Valuation allowance		(10,899,617)		(10,868,032)
Net deferred tax asset	$	—	$	30,589

Schedule of reconciliation of statutory to effective rates

	June 30, 2020				June 30, 2019
			Percent of				Percent of
			Pretax				Pretax
	Amount		Income		Amount		Income
Reconciliation of statutory to effective rates
Federal income taxes at statutory rate	$	229,340	21.00	%	$	(95,425)	21.00	%
Adjustments for
True up of payable(s)		47,207	4.32	%		(78,506)	17.28	%
State income taxes, net of valuation allowance		—	—	%		(12,578)	2.77	%
Federal valuation allowance		(281,400)	(25.77)	%		114,767	(25.26)	%
Other - Net		4,853	0.45	%		16,678	(3.67)	%
Effective income taxes - operations	$	—	0.00	%	$	(55,064)	12.12	%

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Defined Benefit Pension Plan (Tables)

12 Months Ended

Jun. 30, 2020

Defined Benefit Pension Plan

Schedule of plan's funded status

	June 30, 2020		June 30, 2019
Change in projected benefit obligation
Projected benefit obligation at beginning of year	$	10,601,032	$	9,453,322
Interest cost		371,932		398,439
Benefits paid		(297,103)		(144,765)
Actuarial loss		1,687,375		894,036
Settlement		—		—
Projected benefit obligation at end of year		12,363,236		10,601,032
Change in plan assets
Fair value of plan assets at beginning of year		9,770,170		9,691,252
Actual return on assets		(204,314)		223,683
Employer contributions		—		—
Expenses paid from trust		—		—
Benefits paid		(297,103)		(144,765)
Fair value of plan assets at end of year		9,268,753		9,770,170
Funded status at end of year	$	(3,094,483)	$	(830,862)

Schedule of amounts recognized in the consolidated balance sheets in accrued interest payable and other liabilities and accumulated other comprehensive loss

	June 30, 2020		June 30, 2019
Pension liability	$	(3,094,483)	$	(830,862)

	June 30, 2020		June 30, 2019
Accumulated pension actuarial loss, net of income tax benefit of $1,522,485 and $1,522,485, respectively	$	4,853,355	$	2,506,295

Schedule of components of net periodic pension cost (income) included in compensation and benefits on the statements of operations

	June 30, 2020		June 30, 2019
Interest cost	$	371,932	$	398,439
Expected return on plan assets		(671,118)		(672,908)
Amortization of net actuarial loss		215,747		121,990
Net periodic pension income	$	(83,439)	$	(152,479)

Schedule of projected benefit payments

2021	$	3,787,700
2022		142,800
2023		540,600
2024		538,100
2025		1,498,900
2025-2029		4,077,300
	$	10,585,400

Schedule of percentage of the fair value of total Plan assets

	June 30, 2020		June 30, 2019
Cash Equivalents	0.9	%	5.6	%
Equities
Large Cap	48.6	%	43.0	%
Mid Cap	4.3	%	3.4	%
Small Cap	25.3	%	33.7	%
International	4.0	%	2.1	%
Other	8.3	%	8.5
Alternatives/Multi-Asset	8.6	%	3.7
Fixed Income
Certificates of deposit	—		—	%
Total	100.0	%	100.0	%

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Accumulated Other Comprehensive Loss (Tables)

12 Months Ended

Jun. 30, 2020

Accumulated Other Comprehensive Loss

Schedule of changes in accumulated other comprehensive loss

	June 30, 2020		June 30, 2019
Accumulated pension actuarial loss	$	(6,375,840)	$	(4,028,780)
Deferred taxes related to accumulated pension actuarial loss		1,522,485		1,522,485
Unrealized net gain on securities available for sale		562,144		202,555
Deferred taxes related to unrealized net gain  on securities available for sale		(544,625)		(544,625)
Total accumulated other comprehensive loss	$	(4,835,836)	$	(2,848,365)

Schedule of accumulated other comprehensive loss

	Available for		Defined Benefit
	Sale Securities		Pension Plan		Total
Balance, June 30, 2018	$	(1,591,098)	$	(616,478)	$	(2,207,576)
Other comprehensive (loss) income before reclassifications, net of tax		580,482		(1,343,261)		(762,779)
Amounts reclassified from other comprehensive loss, net of tax		—		121,990		121,990	*
Net current period other comprehensive (loss) income		580,482		(1,221,271)		(640,789)
Balance, June 30, 2019		(1,010,616)		(1,837,749)		(2,848,365)
Other comprehensive (loss) income before reclassifications, net of tax		359,589		(2,562,807)		(2,203,218)
Amounts reclassified from other comprehensive loss, net of tax		—		215,747		215,747	*
Net current period other comprehensive (loss) income		359,589		(2,347,060)		(1,987,471)
Balance, June 30, 2020	$	(651,027)	$	(4,184,809)	$	(4,835,836)

* - These amounts are included in the computation of net periodic pension income.

See Note 15, Defined Benefit Pension Plan, for additional details.

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Commitments and Contingencies (Tables)

12 Months Ended

Jun. 30, 2020

Commitments and Contingencies

Schedule of notional amount of exposure to off-balance-sheet risk

	June 30, 2020		June 30, 2019
Financial instruments whose contract amounts represent credit risk:
Commitments to extend credit to borrowers	$	15,853,034	$	18,668,750
Sold loan commitments		105,961,238		41,760,875
Credit card commitments		567,763		637,121

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Regulatory Capital Requirements (Tables)

12 Months Ended

Jun. 30, 2020

Regulatory Capital Requirements

Schedule of comparison of Bank's actual capital amounts with the minimum requirements for adequately capitalized banks

	June 30, 2020
					For Capital Adequacy				To be Considered
	Actual				Purposes				Well Capitalized
	Amount		Ratio		Amount		Ratio		Amount		Ratio
Total capital (to risk weighted assets)	$	28,928,180	15.02	%	$	15,408,708	8.00	%	$	19,260,885	10.00	%
Tier 1 capital (to risk weighted assets)		27,574,753	14.32	%		11,556,531	6.00	%		15,408,708	8.00	%
Common Equity Tier 1 (to risk weighted assets)		27,574,753	14.32	%		8,667,398	4.50	%		12,519,575	6.50	%
Tier 1 capital (to average assets)		27,574,753	9.30	%		11,857,514	4.00	%		14,821,893	5.00	%

	June 30, 2019
					For Capital Adequacy				To be Considered
	Actual				Purposes				Well Capitalized
	Amount		Ratio		Amount		Ratio		Amount		Ratio
Total capital (to risk weighted assets)	$	27,643,843	14.01	%	$	15,780,941	8.00	%	$	19,726,176	10.00	%
Tier 1 capital (to risk weighted assets)		26,349,878	13.36	%		11,835,706	6.00	%		15,780,941	8.00	%
Common Equity Tier 1 (to risk weighted assets)		26,349,878	13.36	%		8,876,779	4.50	%		12,822,015	6.50	%
Tier 1 capital (to average assets)		26,349,878	8.55	%		12,327,357	4.00	%		15,409,197	5.00	%

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Summary of Significant Accounting Policies (Details) - USD ($)		12 Months Ended
	Apr. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Net proceeds from issuance of common stock		$ 0	$ 11,345,571
Payments Of Initial Capitalization			100,000
Cost of the reorganization and the issuing of the common stock, deferred			$ 1,649,899
Consecutive period for pension plan employee average monthly pay		5 years
Number of years of employment		10 years
TEB MHC
Shares of common stock sold	1,309,547
Price per share	$ 10.00
Percentage of outstanding shares issued	49.90%
Gross proceeds from issuance	$ 13,100,000
Net proceeds from issuance of common stock	11,400,000
Payments Of Initial Capitalization	$ 100,000
Number of shares held by mutual holding company	1,314,796
Percentage of outstanding shares held by mutual holding company	50.10%
Cost of the reorganization and the issuing of the common stock, deferred	$ 1,649,899

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Summary of Significant Accounting Policies - Significant Events (Details)		12 Months Ended
	Mar. 27, 2020	Jun. 30, 2020 USD ($) loan	Jun. 30, 2019 loan
Financing Receivable, Impaired [Line Items]
Number of modified loans requested | loan		87
Amount of modified loans requested		$ 27,959,661
Modified loans requested and performing under Cares Act		$ 27,800,000
Percentage of modifed loans requested and performing under Cares Act		99.30%
TDR's granted during the period | loan		1	0
TDR's outstanding		$ 195,924
Small Business Administration (SBA), CARES Act, Paycheck Protection Program
Financing Receivable, Impaired [Line Items]
Number of loans authorized | loan		16
Amount of loans authorized		$ 1,100,000
Processing Fee Income		$ 35,000
Small Business Administration (SBA), CARES Act, Paycheck Protection Program | Minimum
Financing Receivable, Impaired [Line Items]
Percentage Of Processing Fee Income	1.00%
Percentage Of Third Party Service Fee Payable	0.25%
Small Business Administration (SBA), CARES Act, Paycheck Protection Program | Maximum
Financing Receivable, Impaired [Line Items]
Percentage Of Processing Fee Income	5.00%
Percentage Of Third Party Service Fee Payable	1.00%

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Summary of Significant Accounting Policies - Modified Loan Request (Details)	12 Months Ended
	Jun. 30, 2020 USD ($) loan
Financing Receivable, Recorded Investment [Line Items]
Number of loans | loan	87
Balance | $	$ 27,959,661
Construction, land, development
Financing Receivable, Recorded Investment [Line Items]
Number of loans | loan	1
Balance | $	$ 46,511
1-4 family owner occupied
Financing Receivable, Recorded Investment [Line Items]
Number of loans | loan	48
Balance | $	$ 7,235,772
1-4 family non-owner occupied
Financing Receivable, Recorded Investment [Line Items]
Number of loans | loan	17
Balance | $	$ 2,517,746
Multifamily
Financing Receivable, Recorded Investment [Line Items]
Number of loans | loan	12
Balance | $	$ 10,576,275
Commercial owner occupied
Financing Receivable, Recorded Investment [Line Items]
Number of loans | loan	3
Balance | $	$ 1,518,195
Commercial non-owner occupied
Financing Receivable, Recorded Investment [Line Items]
Number of loans | loan	3
Balance | $	$ 6,022,240
Consumer and installment loans
Financing Receivable, Recorded Investment [Line Items]
Number of loans | loan	3
Balance | $	$ 42,922

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Income (Loss) Per Share (Details) - USD ($)	12 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Income (Loss) Per Share
Net income (loss)	$ 1,092,099	$ (399,339)
Basic potential common shares
Weighted average shares outstanding	2,624,343	2,624,343
Basic weighted average shares outstanding	2,624,343	2,624,343
Diluted potential common shares	0	0
Diluted weighted average shares outstanding	2,624,343	2,624,343
Basic earnings (loss) per share	$ 0.42	$ (0.15)
Diluted earnings (loss) per share	$ 0.42	$ (0.15)

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Fair Value of Financial Instruments - Narrative (Details) - Level 3 - Fair value on non-recurring basis - Measurement Input, Appraised Value [Member]	Jun. 30, 2020	Jun. 30, 2019
Minimum
Fair Value, Option, Quantitative Disclosures [Line Items]
Impaired loans	0.05	0.05
Other real estate owned, net	0.05	0.05
Maximum
Fair Value, Option, Quantitative Disclosures [Line Items]
Impaired loans	0.15	0.15
Other real estate owned, net	0.15	0.15

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Fair Value of Financial Instruments - Recurring (Details) - Fair value on a recurring basis - USD ($)	Jun. 30, 2020	Jun. 30, 2019
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	$ 20,297,595	$ 20,542,118
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	0	0
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	20,297,595	20,542,118
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	0	0
Obligations of states and political subdivisions
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	18,005,082	18,878,383
Obligations of states and political subdivisions | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	0	0
Obligations of states and political subdivisions | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	18,005,082	18,878,383
Obligations of states and political subdivisions | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	0	0
Mortgage-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	1,443,643	1,106,138
Mortgage-backed securities | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	0	0
Mortgage-backed securities | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	1,443,643	1,106,138
Mortgage-backed securities | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	0	0
Certificates of deposit
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	848,870	557,597
Certificates of deposit | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	0	0
Certificates of deposit | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	848,870	557,597
Certificates of deposit | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	$ 0	$ 0

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Fair Value of Financial Instruments - Non-recurring (Details) - USD ($)	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2018
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other real estate owned, net	$ 2,288,255	$ 4,080,401	$ 3,957,133
Fair value on non-recurring basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans with a valuation allowance, net	248,930	274,750
Other real estate owned, net	2,288,255	4,080,401
Total	2,537,185	4,355,151
Fair value on non-recurring basis | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans with a valuation allowance, net	0	0
Other real estate owned, net	0	0
Total	0	0
Fair value on non-recurring basis | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans with a valuation allowance, net	0	0
Other real estate owned, net	0	0
Total	0	0
Fair value on non-recurring basis | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans with a valuation allowance, net	248,930	274,750
Other real estate owned, net	2,288,255	4,080,401
Total	$ 2,537,185	$ 4,355,151

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Fair Value of Financial Instruments - Estimated fair values of financial instruments (Details) - USD ($)	Jun. 30, 2020	Jun. 30, 2019
FINANCIAL ASSETS
Interest bearing deposits in banks	$ 2,713,164	$ 3,674,015
Available for sale securities	20,297,595	20,542,118
Loans, net	237,300,478	259,873,403
Loans held for sale	18,690,027	7,079,548
Federal Home Loan Bank stock	1,345,500	2,061,000
Accrued interest receivable	933,729	1,000,098
FINANCIAL LIABILITIES
Deposits	256,071,531	234,561,459
Federal Home Loan Bank borrowings	9,000,000	44,200,000
Accrued interest payable	14,008,786	5,882,086
Carrying Value
FINANCIAL ASSETS
Cash and cash equivalents	13,106,041	5,630,770
Interest bearing deposits in banks	2,713,164	3,674,015
Available for sale securities	20,297,595	20,542,118
Loans, net	237,300,478	259,873,403
Loans held for sale	18,690,027	7,079,548
Federal Home Loan Bank stock	1,345,500	2,061,000
Accrued interest receivable	933,729	1,000,098
FINANCIAL LIABILITIES
Deposits	256,071,531	234,561,459
Federal Home Loan Bank borrowings	9,000,000	44,200,000
Accrued interest payable	56,726	59,489
Fair Value
FINANCIAL ASSETS
Cash and cash equivalents	13,106,041	5,630,770
Interest bearing deposits in banks	2,713,164	3,674,015
Available for sale securities	20,297,595	20,542,118
Loans, net	247,100,558	256,666,403
Loans held for sale	18,690,027	7,079,548
Federal Home Loan Bank stock	1,345,500	2,061,000
Accrued interest receivable	933,729	1,000,098
FINANCIAL LIABILITIES
Deposits	251,928,460	217,705,000
Federal Home Loan Bank borrowings	9,000,000	44,200,000
Accrued interest payable	$ 56,726	$ 59,489

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Cash and Due From Banks (Details) - USD ($)	Jun. 30, 2020	Jun. 30, 2019
Cash and Due From Banks
Requirements for cash and reserve balances with Federal Reserve Bank deposits	$ 0	$ 1,532,000

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Available for Sale Securities - Amortized costs and fair values (Details) - USD ($)	Jun. 30, 2020	Jun. 30, 2019
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	$ 19,735,451	$ 20,339,563
Gross Unrealized Gains	578,200	261,169
Gross Unrealized Losses	16,056	58,614
Fair Value	20,297,595	20,542,118
Obligations of states and political subdivisions
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	17,563,698	18,719,370
Gross Unrealized Gains	457,440	217,627
Gross Unrealized Losses	16,056	58,614
Fair Value	18,005,082	18,878,383
Mortgage-backed securities
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	1,371,753	1,065,193
Gross Unrealized Gains	71,890	40,945
Gross Unrealized Losses	0	0
Fair Value	1,443,643	1,106,138
Certificates of deposit
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	800,000	555,000
Gross Unrealized Gains	48,870	2,597
Gross Unrealized Losses	0	0
Fair Value	$ 848,870	$ 557,597

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Available for Sale Securities - Unrealized losses (Details) - Obligations of states and political subdivisions	Jun. 30, 2020 USD ($) item	Jun. 30, 2019 USD ($) item
Debt Securities, Available-for-sale [Line Items]
Continuous Unrealized Losses Existing for Less Than 12 Months, Fair Value	$ 0	$ 208,583
Continuous Unrealized Losses Existing for Less Than 12 Months, Unrealized Losses	0	22
Continuous Unrealized Losses Existing for 12 Months or Greater, Fair Value	693,687	2,935,133
Continuous Unrealized Losses Existing for 12 Months or Greater, Unrealized Losses	16,056	58,592
Total, Fair Value	693,687	3,143,716
Total, Unrealized Losses	$ 16,056	$ 58,614
Number of securities with unrealized loss position | item	2	12

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Available for Sale Securities - Contractual maturities (Details) - USD ($)	Jun. 30, 2020	Jun. 30, 2019
Amortized Cost
Due in one year or less	$ 870,981
Due after one year through 5 years	10,719,389
Due after 5 years through 10 years	4,833,328
Due after 10 years	1,940,000
Subtotal	18,363,698
Total	19,735,451	$ 20,339,563
Fair Value
Due in one year or less	874,977
Due after one year through 5 years	10,952,874
Due after 5 years through 10 years	5,022,565
Due after 10 years	2,003,536
Subtotal	18,853,952
Totals	20,297,595	20,542,118
Mortgage-backed securities
Amortized Cost
Due after 5 years through 10 years	1,371,753
Total	1,371,753	1,065,193
Fair Value
Due after 5 years through 10 years	1,443,643
Totals	$ 1,443,643	$ 1,106,138

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Available for Sale Securities - Pledged (Details) - USD ($)	Jun. 30, 2020	Jun. 30, 2019
Available for Sale Securities
Available for sale securities pledged as collateral on public deposits	$ 0	$ 7,100,000

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Loans - Major classifications (Details) - USD ($)	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2018
Loans and Leases Receivable Disclosure [Line Items]
Total loans	$ 238,653,905	$ 261,167,368
Less: allowance for loan losses	(1,353,427)	(1,293,965)	$ (1,324,159)
Total	237,300,478	259,873,403
Construction, land, development
Loans and Leases Receivable Disclosure [Line Items]
Total loans	4,598,382	4,318,845
Less: allowance for loan losses	(13,795)	(4,319)	(4,758)
Total	4,584,587	4,314,526
1-4 family owner occupied
Loans and Leases Receivable Disclosure [Line Items]
Total loans	100,506,311	124,845,322
Less: allowance for loan losses	(356,434)	(67,593)	(7,300)
Total	100,149,877	124,777,729
1-4 family non-owner occupied
Loans and Leases Receivable Disclosure [Line Items]
Total loans	21,213,680	20,968,812
Less: allowance for loan losses	(77,220)	(26,630)	(71,053)
Total	21,136,460	20,942,182
Multifamily
Loans and Leases Receivable Disclosure [Line Items]
Total loans	76,444,156	73,246,392
Less: allowance for loan losses	(286,665)	(109,870)	(71,101)
Total	76,157,491	73,136,522
Commercial owner occupied
Loans and Leases Receivable Disclosure [Line Items]
Total loans	6,733,183	8,508,011
Less: allowance for loan losses	(95,711)	(61,193)	(131,906)
Total	6,637,472	8,446,818
Commercial non-owner occupied
Loans and Leases Receivable Disclosure [Line Items]
Total loans	20,237,534	19,502,545
Less: allowance for loan losses	(312,670)	(738,366)	(925,355)
Total	19,924,864	18,764,179
Consumer and installment loans
Loans and Leases Receivable Disclosure [Line Items]
Total loans	8,920,659	9,777,441
Less: allowance for loan losses	(97,312)	(70,058)	$ (98,096)
Total	$ 8,823,347	$ 9,707,383

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Loans - Non-performing loans (Details) - USD ($)	Jun. 30, 2020	Jun. 30, 2019
Loans
Nonaccrual Loans	$ 1,341,174	$ 1,524,868
Total non-performing loans	1,341,174	1,524,868
Restructured loans, accruing	0	0
Total Impaired Loans	$ 1,341,174	$ 1,524,868

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Loans - Impaired loans (Details) - USD ($)	12 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
With related allowance recorded
Recorded investment	$ 454,853	$ 378,065
Unpaid principal balance	454,853	378,065
Related allowance	205,923	103,315
With no related allowance recorded
Recorded investment	886,321	1,146,803
Unpaid principal balance	886,321	1,146,803
Related allowance	0	0
Total
Recorded investment	1,341,174	1,524,868
Unpaid principal balance	1,341,174	1,524,868
Related allowance	205,923	103,315
Average recorded balance	1,358,810	1,235,694
Interest income recognized while impaired	0	0
Interest income recognized on a cash basis while impaired	21,463	30,804
Total interest on impaired loans	21,463	30,804
Construction, land, development
With related allowance recorded
Recorded investment	0	0
Unpaid principal balance	0	0
Related allowance	0	0
With no related allowance recorded
Recorded investment	0	0
Unpaid principal balance	0	0
Related allowance	0	0
Total
Recorded investment	0	0
Unpaid principal balance	0	0
Related allowance	0	0
Average recorded balance	0	19,198
Interest income recognized while impaired	0	0
Interest income recognized on a cash basis while impaired	0	353
Total interest on impaired loans	0	353
1-4 family owner occupied
With related allowance recorded
Recorded investment	161,931	70,608
Unpaid principal balance	161,931	70,608
Related allowance	64,780	5,772
With no related allowance recorded
Recorded investment	803,803	1,132,648
Unpaid principal balance	803,803	1,132,648
Related allowance	0	0
Total
Recorded investment	965,734	1,203,256
Unpaid principal balance	965,734	1,203,256
Related allowance	64,780	5,772
Average recorded balance	1,020,175	865,338
Interest income recognized while impaired	0	0
Interest income recognized on a cash basis while impaired	16,071	19,352
Total interest on impaired loans	16,071	19,352
1-4 family non-owner occupied
With related allowance recorded
Recorded investment	0	0
Unpaid principal balance	0	0
Related allowance	0	0
With no related allowance recorded
Recorded investment	57,574	0
Unpaid principal balance	57,574	0
Related allowance	0	0
Total
Recorded investment	57,574	0
Unpaid principal balance	57,574	0
Related allowance	0	0
Average recorded balance	14,948	21,509
Interest income recognized while impaired	0	0
Interest income recognized on a cash basis while impaired	298	288
Total interest on impaired loans	298	288
Multifamily
With related allowance recorded
Recorded investment	0	0
Unpaid principal balance	0	0
Related allowance	0	0
With no related allowance recorded
Recorded investment	0	0
Unpaid principal balance	0	0
Related allowance	0	0
Total
Recorded investment	0	0
Unpaid principal balance	0	0
Related allowance	0	0
Average recorded balance	0	0
Interest income recognized while impaired	0	0
Interest income recognized on a cash basis while impaired	0	0
Total interest on impaired loans	0	0
Commercial owner occupied
With related allowance recorded
Recorded investment	189,249	193,601
Unpaid principal balance	189,249	193,601
Related allowance	79,351	44,564
With no related allowance recorded
Recorded investment	0	0
Unpaid principal balance	0	0
Related allowance	0	0
Total
Recorded investment	189,249	193,601
Unpaid principal balance	189,249	193,601
Related allowance	79,351	44,564
Average recorded balance	191,166	196,182
Interest income recognized while impaired	0	0
Interest income recognized on a cash basis while impaired	4,382	7,917
Total interest on impaired loans	4,382	7,917
Commercial non-owner occupied
With related allowance recorded
Recorded investment	0	0
Unpaid principal balance	0	0
Related allowance	0	0
With no related allowance recorded
Recorded investment	0	0
Unpaid principal balance	0	0
Related allowance	0	0
Total
Recorded investment	0	0
Unpaid principal balance	0	0
Related allowance	0	0
Average recorded balance	0	0
Interest income recognized while impaired	0	0
Interest income recognized on a cash basis while impaired	0	0
Total interest on impaired loans	0	0
Consumer and installment loans
With related allowance recorded
Recorded investment	103,673	113,856
Unpaid principal balance	103,673	113,856
Related allowance	61,792	52,979
With no related allowance recorded
Recorded investment	24,944	14,155
Unpaid principal balance	24,944	14,155
Related allowance	0	0
Total
Recorded investment	128,617	128,011
Unpaid principal balance	128,617	128,011
Related allowance	61,792	52,979
Average recorded balance	132,521	133,467
Interest income recognized while impaired	0	0
Interest income recognized on a cash basis while impaired	712	2,894
Total interest on impaired loans	$ 712	$ 2,894

XML

Loans - Risk rating (Details) - USD ($)	Jun. 30, 2020	Jun. 30, 2019
Financing Receivable, Recorded Investment [Line Items]
Total Loans	$ 238,653,905	$ 261,167,368
Construction, land, development
Financing Receivable, Recorded Investment [Line Items]
Total Loans	4,598,382	4,318,845
1-4 family owner occupied
Financing Receivable, Recorded Investment [Line Items]
Total Loans	100,506,311	124,845,322
1-4 family non-owner occupied
Financing Receivable, Recorded Investment [Line Items]
Total Loans	21,213,680	20,968,812
Multifamily
Financing Receivable, Recorded Investment [Line Items]
Total Loans	76,444,156	73,246,392
Commercial owner occupied
Financing Receivable, Recorded Investment [Line Items]
Total Loans	6,733,183	8,508,011
Commercial non-owner occupied
Financing Receivable, Recorded Investment [Line Items]
Total Loans	20,237,534	19,502,545
Consumer and installment loans
Financing Receivable, Recorded Investment [Line Items]
Total Loans	8,920,659	9,777,441
1-4
Financing Receivable, Recorded Investment [Line Items]
Total Loans	229,193,196	251,522,291
1-4 | Construction, land, development
Financing Receivable, Recorded Investment [Line Items]
Total Loans	4,598,382	4,318,845
1-4 | 1-4 family owner occupied
Financing Receivable, Recorded Investment [Line Items]
Total Loans	99,344,653	123,642,066
1-4 | 1-4 family non-owner occupied
Financing Receivable, Recorded Investment [Line Items]
Total Loans	21,156,106	20,968,812
1-4 | Multifamily
Financing Receivable, Recorded Investment [Line Items]
Total Loans	76,444,156	73,246,392
1-4 | Commercial owner occupied
Financing Receivable, Recorded Investment [Line Items]
Total Loans	6,543,934	8,314,410
1-4 | Commercial non-owner occupied
Financing Receivable, Recorded Investment [Line Items]
Total Loans	12,313,923	11,382,336
1-4 | Consumer and installment loans
Financing Receivable, Recorded Investment [Line Items]
Total Loans	8,792,042	9,649,430
5
Financing Receivable, Recorded Investment [Line Items]
Total Loans	8,119,535	8,120,209
5 | Construction, land, development
Financing Receivable, Recorded Investment [Line Items]
Total Loans	0	0
5 | 1-4 family owner occupied
Financing Receivable, Recorded Investment [Line Items]
Total Loans	195,924	0
5 | 1-4 family non-owner occupied
Financing Receivable, Recorded Investment [Line Items]
Total Loans	0	0
5 | Multifamily
Financing Receivable, Recorded Investment [Line Items]
Total Loans	0	0
5 | Commercial owner occupied
Financing Receivable, Recorded Investment [Line Items]
Total Loans	0	0
5 | Commercial non-owner occupied
Financing Receivable, Recorded Investment [Line Items]
Total Loans	7,923,611	8,120,209
5 | Consumer and installment loans
Financing Receivable, Recorded Investment [Line Items]
Total Loans	0	0
6
Financing Receivable, Recorded Investment [Line Items]
Total Loans	1,150,479	1,217,054
6 | Construction, land, development
Financing Receivable, Recorded Investment [Line Items]
Total Loans	0	0
6 | 1-4 family owner occupied
Financing Receivable, Recorded Investment [Line Items]
Total Loans	851,208	895,442
6 | 1-4 family non-owner occupied
Financing Receivable, Recorded Investment [Line Items]
Total Loans	57,574	0
6 | Multifamily
Financing Receivable, Recorded Investment [Line Items]
Total Loans	0	0
6 | Commercial owner occupied
Financing Receivable, Recorded Investment [Line Items]
Total Loans	189,249	193,601
6 | Commercial non-owner occupied
Financing Receivable, Recorded Investment [Line Items]
Total Loans	0	0
6 | Consumer and installment loans
Financing Receivable, Recorded Investment [Line Items]
Total Loans	52,448	128,011
7
Financing Receivable, Recorded Investment [Line Items]
Total Loans	190,695	307,814
7 | Construction, land, development
Financing Receivable, Recorded Investment [Line Items]
Total Loans	0	0
7 | 1-4 family owner occupied
Financing Receivable, Recorded Investment [Line Items]
Total Loans	114,526	307,814
7 | 1-4 family non-owner occupied
Financing Receivable, Recorded Investment [Line Items]
Total Loans	0	0
7 | Multifamily
Financing Receivable, Recorded Investment [Line Items]
Total Loans	0	0
7 | Commercial owner occupied
Financing Receivable, Recorded Investment [Line Items]
Total Loans	0	0
7 | Commercial non-owner occupied
Financing Receivable, Recorded Investment [Line Items]
Total Loans	0	0
7 | Consumer and installment loans
Financing Receivable, Recorded Investment [Line Items]
Total Loans	$ 76,169	$ 0

XML

Loans - Past due loans (Details) - USD ($)	Jun. 30, 2020	Jun. 30, 2019
Loans and Leases Receivable Disclosure [Line Items]
Past due loans	$ 2,863,036	$ 4,305,475
30-59 days, accruing
Loans and Leases Receivable Disclosure [Line Items]
Past due loans	1,407,524	2,305,204
60-89 days, accruing
Loans and Leases Receivable Disclosure [Line Items]
Past due loans	114,338	475,403
90 days & over or nonaccrual
Loans and Leases Receivable Disclosure [Line Items]
Past due loans	1,341,174	1,524,868
Construction, land, development
Loans and Leases Receivable Disclosure [Line Items]
Past due loans	69,174	0
Construction, land, development | 30-59 days, accruing
Loans and Leases Receivable Disclosure [Line Items]
Past due loans	69,174	0
Construction, land, development | 60-89 days, accruing
Loans and Leases Receivable Disclosure [Line Items]
Past due loans	0	0
Construction, land, development | 90 days & over or nonaccrual
Loans and Leases Receivable Disclosure [Line Items]
Past due loans	0	0
1-4 family owner occupied
Loans and Leases Receivable Disclosure [Line Items]
Past due loans	2,354,657	3,782,455
1-4 family owner occupied | 30-59 days, accruing
Loans and Leases Receivable Disclosure [Line Items]
Past due loans	1,274,585	2,129,016
1-4 family owner occupied | 60-89 days, accruing
Loans and Leases Receivable Disclosure [Line Items]
Past due loans	114,338	450,183
1-4 family owner occupied | 90 days & over or nonaccrual
Loans and Leases Receivable Disclosure [Line Items]
Past due loans	965,734	1,203,256
1-4 family non-owner occupied
Loans and Leases Receivable Disclosure [Line Items]
Past due loans	57,574	103,706
1-4 family non-owner occupied | 30-59 days, accruing
Loans and Leases Receivable Disclosure [Line Items]
Past due loans	0	103,706
1-4 family non-owner occupied | 60-89 days, accruing
Loans and Leases Receivable Disclosure [Line Items]
Past due loans	0	0
1-4 family non-owner occupied | 90 days & over or nonaccrual
Loans and Leases Receivable Disclosure [Line Items]
Past due loans	57,574	0
Multifamily
Loans and Leases Receivable Disclosure [Line Items]
Past due loans	0	0
Multifamily | 30-59 days, accruing
Loans and Leases Receivable Disclosure [Line Items]
Past due loans	0	0
Multifamily | 60-89 days, accruing
Loans and Leases Receivable Disclosure [Line Items]
Past due loans	0	0
Multifamily | 90 days & over or nonaccrual
Loans and Leases Receivable Disclosure [Line Items]
Past due loans	0	0
Commercial owner occupied
Loans and Leases Receivable Disclosure [Line Items]
Past due loans	189,249	193,601
Commercial owner occupied | 30-59 days, accruing
Loans and Leases Receivable Disclosure [Line Items]
Past due loans	0	0
Commercial owner occupied | 60-89 days, accruing
Loans and Leases Receivable Disclosure [Line Items]
Past due loans	0	0
Commercial owner occupied | 90 days & over or nonaccrual
Loans and Leases Receivable Disclosure [Line Items]
Past due loans	189,249	193,601
Commercial non-owner occupied
Loans and Leases Receivable Disclosure [Line Items]
Past due loans	0	0
Commercial non-owner occupied | 30-59 days, accruing
Loans and Leases Receivable Disclosure [Line Items]
Past due loans	0	0
Commercial non-owner occupied | 60-89 days, accruing
Loans and Leases Receivable Disclosure [Line Items]
Past due loans	0	0
Commercial non-owner occupied | 90 days & over or nonaccrual
Loans and Leases Receivable Disclosure [Line Items]
Past due loans	0	0
Consumer and installment loans
Loans and Leases Receivable Disclosure [Line Items]
Past due loans	192,382	225,713
Consumer and installment loans | 30-59 days, accruing
Loans and Leases Receivable Disclosure [Line Items]
Past due loans	63,765	72,482
Consumer and installment loans | 60-89 days, accruing
Loans and Leases Receivable Disclosure [Line Items]
Past due loans	0	25,220
Consumer and installment loans | 90 days & over or nonaccrual
Loans and Leases Receivable Disclosure [Line Items]
Past due loans	$ 128,617	$ 128,011

XML

Loans - Additional information (Details)	12 Months Ended
	Jun. 30, 2020 USD ($) loan	Jun. 30, 2019 USD ($) loan
Loans
Aggregate Amount of Purchased Participants	$ 5,600,000	$ 9,100,000
Aggregate Amount of Purchased Participants, Portion	$ 9,000,000	$ 6,900,000
Number of loans past due 90 days or over that were not on nonaccrual | loan	0	0
Loans outstanding to certain directors and executive officers of the Bank	$ 1,080,531	$ 1,039,899
Number of new related party loans | loan	1	0
Related party loan addition	$ 90,400
Repayments of related party loans	$ 49,768	$ 40,226
TDR's granted during the period | loan	1	0
TDR's outstanding	$ 195,924
TDR's defaulted during the period | loan	0

XML

Loans - Summary of TDRs (Details)	12 Months Ended
	Jun. 30, 2020 USD ($)
Loans and Leases Receivable Disclosure [Line Items]
Beginning balance	$ 0
Transfer to other than category	0
Principal payments	0
Charge-offs	0
Sales	0
New restructureds	195,924
Transfers out of TDR status	0
Transfer to foreclosed properties	0
Transfers to nonaccrual	0
Transfers out of nonaccrual	0
Transfers from accrual	0
Ending balance	195,924
Accruing
Loans and Leases Receivable Disclosure [Line Items]
Beginning balance	0
Transfer to other than category	0
Principal payments	0
Charge-offs	0
Sales	0
New restructureds	195,924
Transfers out of TDR status	0
Transfer to foreclosed properties	0
Transfers to nonaccrual	0
Transfers out of nonaccrual	0
Ending balance	195,924
Nonaccrual
Loans and Leases Receivable Disclosure [Line Items]
Beginning balance	0
Principal payments	0
Charge-offs	0
Sales	0
Transfer to foreclosed properties	0
Transfers from accrual	0
Transfers to accrual	0
Ending balance	0
Construction, land, development
Loans and Leases Receivable Disclosure [Line Items]
Beginning balance	0
Transfer to other than category	0
Principal payments	0
Charge-offs	0
Sales	0
New restructureds	0
Transfers out of TDR status	0
Transfer to foreclosed properties	0
Transfers to nonaccrual	0
Transfers out of nonaccrual	0
Transfers from accrual	0
Ending balance	0
Construction, land, development | Accruing
Loans and Leases Receivable Disclosure [Line Items]
Beginning balance	0
Transfer to other than category	0
Principal payments	0
Charge-offs	0
Sales	0
New restructureds	0
Transfers out of TDR status	0
Transfer to foreclosed properties	0
Transfers to nonaccrual	0
Transfers out of nonaccrual	0
Ending balance	0
Construction, land, development | Nonaccrual
Loans and Leases Receivable Disclosure [Line Items]
Beginning balance	0
Principal payments	0
Charge-offs	0
Sales	0
Transfer to foreclosed properties	0
Transfers from accrual	0
Transfers to accrual	0
Ending balance	0
1-4 family owner occupied
Loans and Leases Receivable Disclosure [Line Items]
Beginning balance	0
Transfer to other than category	0
Principal payments	0
Charge-offs	0
Sales	0
New restructureds	195,924
Transfers out of TDR status	0
Transfer to foreclosed properties	0
Transfers to nonaccrual	0
Transfers out of nonaccrual	0
Transfers from accrual	0
Ending balance	195,924
1-4 family owner occupied | Accruing
Loans and Leases Receivable Disclosure [Line Items]
Beginning balance	0
Transfer to other than category	0
Principal payments	0
Charge-offs	0
Sales	0
New restructureds	195,924
Transfers out of TDR status	0
Transfer to foreclosed properties	0
Transfers to nonaccrual	0
Transfers out of nonaccrual	0
Ending balance	195,924
1-4 family owner occupied | Nonaccrual
Loans and Leases Receivable Disclosure [Line Items]
Beginning balance	0
Principal payments	0
Charge-offs	0
Sales	0
Transfer to foreclosed properties	0
Transfers from accrual	0
Transfers to accrual	0
Ending balance	0
1-4 family non-owner occupied
Loans and Leases Receivable Disclosure [Line Items]
Beginning balance	0
Transfer to other than category	0
Principal payments	0
Charge-offs	0
Sales	0
New restructureds	0
Transfers out of TDR status	0
Transfer to foreclosed properties	0
Transfers to nonaccrual	0
Transfers out of nonaccrual	0
Transfers from accrual	0
Ending balance	0
1-4 family non-owner occupied | Accruing
Loans and Leases Receivable Disclosure [Line Items]
Beginning balance	0
Transfer to other than category	0
Principal payments	0
Charge-offs	0
Sales	0
New restructureds	0
Transfers out of TDR status	0
Transfer to foreclosed properties	0
Transfers to nonaccrual	0
Transfers out of nonaccrual	0
Ending balance	0
1-4 family non-owner occupied | Nonaccrual
Loans and Leases Receivable Disclosure [Line Items]
Beginning balance	0
Principal payments	0
Charge-offs	0
Sales	0
Transfer to foreclosed properties	0
Transfers from accrual	0
Transfers to accrual	0
Ending balance	0
Multifamily
Loans and Leases Receivable Disclosure [Line Items]
Beginning balance	0
Transfer to other than category	0
Principal payments	0
Charge-offs	0
Sales	0
New restructureds	0
Transfers out of TDR status	0
Transfer to foreclosed properties	0
Transfers to nonaccrual	0
Transfers out of nonaccrual	0
Transfers from accrual	0
Ending balance	0
Multifamily | Accruing
Loans and Leases Receivable Disclosure [Line Items]
Beginning balance	0
Transfer to other than category	0
Principal payments	0
Charge-offs	0
Sales	0
New restructureds	0
Transfers out of TDR status	0
Transfer to foreclosed properties	0
Transfers to nonaccrual	0
Transfers out of nonaccrual	0
Ending balance	0
Multifamily | Nonaccrual
Loans and Leases Receivable Disclosure [Line Items]
Beginning balance	0
Principal payments	0
Charge-offs	0
Sales	0
Transfer to foreclosed properties	0
Transfers from accrual	0
Transfers to accrual	0
Ending balance	0
Commercial owner occupied
Loans and Leases Receivable Disclosure [Line Items]
Beginning balance	0
Transfer to other than category	0
Principal payments	0
Charge-offs	0
Sales	0
New restructureds	0
Transfers out of TDR status	0
Transfer to foreclosed properties	0
Transfers to nonaccrual	0
Transfers out of nonaccrual	0
Transfers from accrual	0
Ending balance	0
Commercial owner occupied | Accruing
Loans and Leases Receivable Disclosure [Line Items]
Beginning balance	0
Transfer to other than category	0
Principal payments	0
Charge-offs	0
Sales	0
New restructureds	0
Transfers out of TDR status	0
Transfer to foreclosed properties	0
Transfers to nonaccrual	0
Transfers out of nonaccrual	0
Ending balance	0
Commercial owner occupied | Nonaccrual
Loans and Leases Receivable Disclosure [Line Items]
Beginning balance	0
Principal payments	0
Charge-offs	0
Sales	0
Transfer to foreclosed properties	0
Transfers from accrual	0
Transfers to accrual	0
Ending balance	0
Commercial non-owner occupied
Loans and Leases Receivable Disclosure [Line Items]
Beginning balance	0
Transfer to other than category	0
Principal payments	0
Charge-offs	0
Sales	0
New restructureds	0
Transfers out of TDR status	0
Transfer to foreclosed properties	0
Transfers to nonaccrual	0
Transfers out of nonaccrual	0
Transfers from accrual	0
Ending balance	0
Commercial non-owner occupied | Accruing
Loans and Leases Receivable Disclosure [Line Items]
Beginning balance	0
Transfer to other than category	0
Principal payments	0
Charge-offs	0
Sales	0
New restructureds	0
Transfers out of TDR status	0
Transfer to foreclosed properties	0
Transfers to nonaccrual	0
Transfers out of nonaccrual	0
Ending balance	0
Commercial non-owner occupied | Nonaccrual
Loans and Leases Receivable Disclosure [Line Items]
Beginning balance	0
Principal payments	0
Charge-offs	0
Sales	0
Transfer to foreclosed properties	0
Transfers from accrual	0
Transfers to accrual	0
Ending balance	0
Consumer and installment loans
Loans and Leases Receivable Disclosure [Line Items]
Beginning balance	0
Transfer to other than category	0
Principal payments	0
Charge-offs	0
Sales	0
New restructureds	0
Transfers out of TDR status	0
Transfer to foreclosed properties	0
Transfers to nonaccrual	0
Transfers out of nonaccrual	0
Transfers from accrual	0
Ending balance	0
Consumer and installment loans | Accruing
Loans and Leases Receivable Disclosure [Line Items]
Beginning balance	0
Transfer to other than category	0
Principal payments	0
Charge-offs	0
Sales	0
New restructureds	0
Transfers out of TDR status	0
Transfer to foreclosed properties	0
Transfers to nonaccrual	0
Transfers out of nonaccrual	0
Ending balance	0
Consumer and installment loans | Nonaccrual
Loans and Leases Receivable Disclosure [Line Items]
Beginning balance	0
Principal payments	0
Charge-offs	0
Sales	0
Transfer to foreclosed properties	0
Transfers from accrual	0
Transfers to accrual	0
Ending balance	$ 0

XML

Allowance for Loan Losses (Details) - USD ($)	12 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Allowance for Loan and Lease Losses [Roll Forward]
Balance at Beginning	$ 1,293,965	$ 1,324,159
Charge-offs	(102,729)	(60,343)
Recoveries	27,191	30,149
Provision	135,000	0
Balance at Ending	1,353,427	1,293,965
Allowance
Ending balance individually evaluated for impairment			$ 205,923	$ 103,315
Ending balance collectively evaluated for impairment			1,147,504	1,190,650
Ending balance			1,353,427	1,293,965
Loans
Ending balance individually evaluated for impairment			1,341,174	1,524,868
Ending balance collectively evaluated for impairment			237,312,731	259,642,500
Total loans			238,653,905	261,167,368
Less allowance	1,353,427	1,293,965	1,353,427	1,293,965
Total			237,300,478	259,873,403
Construction, land, development
Allowance for Loan and Lease Losses [Roll Forward]
Balance at Beginning	4,319	4,758
Charge-offs	0	0
Recoveries	0	0
Provision	9,476	(439)
Balance at Ending	13,795	4,319
Allowance
Ending balance individually evaluated for impairment			0	0
Ending balance collectively evaluated for impairment			13,795	4,319
Ending balance			13,795	4,319
Loans
Ending balance individually evaluated for impairment			0	0
Ending balance collectively evaluated for impairment			4,598,382	4,318,845
Total loans			4,598,382	4,318,845
Less allowance	13,795	4,319	13,795	4,319
Total			4,584,587	4,314,526
1-4 family owner occupied
Allowance for Loan and Lease Losses [Roll Forward]
Balance at Beginning	67,593	7,300
Charge-offs	(57,572)	0
Recoveries	5,155	28,735
Provision	341,258	31,558
Balance at Ending	356,434	67,593
Allowance
Ending balance individually evaluated for impairment			64,780	5,772
Ending balance collectively evaluated for impairment			291,654	61,821
Ending balance			356,434	67,593
Loans
Ending balance individually evaluated for impairment			965,734	1,203,256
Ending balance collectively evaluated for impairment			99,540,577	123,642,066
Total loans			100,506,311	124,845,322
Less allowance	356,434	67,593	356,434	67,593
Total			100,149,877	124,777,729
1-4 family non-owner occupied
Allowance for Loan and Lease Losses [Roll Forward]
Balance at Beginning	26,630	71,053
Charge-offs	0	(44,534)
Recoveries	0	0
Provision	50,590	111
Balance at Ending	77,220	26,630
Allowance
Ending balance individually evaluated for impairment			0	0
Ending balance collectively evaluated for impairment			77,220	26,630
Ending balance			77,220	26,630
Loans
Ending balance individually evaluated for impairment			57,574	0
Ending balance collectively evaluated for impairment			21,156,106	20,968,812
Total loans			21,213,680	20,968,812
Less allowance	77,220	26,630	77,220	26,630
Total			21,136,460	20,942,182
Multifamily
Allowance for Loan and Lease Losses [Roll Forward]
Balance at Beginning	109,870	71,101
Charge-offs	0	0
Recoveries	0	0
Provision	176,795	38,769
Balance at Ending	286,665	109,870
Allowance
Ending balance individually evaluated for impairment			0	0
Ending balance collectively evaluated for impairment			286,665	109,870
Ending balance			286,665	109,870
Loans
Ending balance individually evaluated for impairment			0	0
Ending balance collectively evaluated for impairment			76,444,156	73,246,392
Total loans			76,444,156	73,246,392
Less allowance	286,665	109,870	286,665	109,870
Total			76,157,491	73,136,522
Commercial owner occupied
Allowance for Loan and Lease Losses [Roll Forward]
Balance at Beginning	61,193	131,906
Charge-offs	0	0
Recoveries	0	0
Provision	34,518	(70,713)
Balance at Ending	95,711	61,193
Allowance
Ending balance individually evaluated for impairment			79,351	44,564
Ending balance collectively evaluated for impairment			16,360	16,629
Ending balance			95,711	61,193
Loans
Ending balance individually evaluated for impairment			189,249	193,601
Ending balance collectively evaluated for impairment			6,543,934	8,314,410
Total loans			6,733,183	8,508,011
Less allowance	95,711	61,193	95,711	61,193
Total			6,637,472	8,446,818
Commercial non-owner occupied
Allowance for Loan and Lease Losses [Roll Forward]
Balance at Beginning	738,366	925,355
Charge-offs	0	0
Recoveries	0	0
Provision	(425,696)	(186,989)
Balance at Ending	312,670	738,366
Allowance
Ending balance individually evaluated for impairment			0	0
Ending balance collectively evaluated for impairment			312,670	738,366
Ending balance			312,670	738,366
Loans
Ending balance individually evaluated for impairment			0	0
Ending balance collectively evaluated for impairment			20,237,534	19,502,545
Total loans			20,237,534	19,502,545
Less allowance	312,670	738,366	312,670	738,366
Total			19,924,864	18,764,179
Consumer and installment loans
Allowance for Loan and Lease Losses [Roll Forward]
Balance at Beginning	70,058	98,096
Charge-offs	(45,157)	(15,809)
Recoveries	22,036	1,414
Provision	50,375	(13,643)
Balance at Ending	97,312	70,058
Allowance
Ending balance individually evaluated for impairment			61,792	52,979
Ending balance collectively evaluated for impairment			35,520	17,079
Ending balance			97,312	70,058
Loans
Ending balance individually evaluated for impairment			128,617	128,011
Ending balance collectively evaluated for impairment			8,792,042	9,649,430
Total loans			8,920,659	9,777,441
Less allowance	97,312	70,058	97,312	70,058
Total			8,823,347	9,707,383
Not Specifically Allocated
Allowance for Loan and Lease Losses [Roll Forward]
Balance at Beginning	215,936	14,590
Charge-offs	0	0
Recoveries	0	0
Provision	(102,316)	201,346
Balance at Ending	113,620	215,936
Allowance
Ending balance individually evaluated for impairment			0	0
Ending balance collectively evaluated for impairment			113,620	215,936
Ending balance			113,620	215,936
Loans
Ending balance individually evaluated for impairment			0	0
Ending balance collectively evaluated for impairment			0	0
Total loans			0	0
Less allowance	$ 113,620	$ 215,936	113,620	215,936
Total			$ (113,620)	$ (215,936)

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Loan Servicing (Details) - USD ($)	Jun. 30, 2020	Jun. 30, 2019
Loan Servicing
Unpaid principal balance of loans serviced for others	$ 2,696,078	$ 2,828,576
Custodial balances maintained by bank	$ 0	$ 0

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Other Real Estate Owned, Net (Details) - USD ($)	12 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Other Real Estate Owned, Net
Beginning balance	$ 4,080,401	$ 3,957,133
Charge offs	(989,205)	(48,110)
Capital expenditures	36,852	109,181
Transfer from loans	200,856	418,849
Sale proceeds	(1,158,306)	(333,387)
Net gain (loss) on sale of other real estate owned	117,657	(23,265)
Other real estate owned, net	$ 2,288,255	$ 4,080,401

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Other Real Estate Owned, Net - Additional Information (Details) - 1-4 family owner occupied	Jun. 30, 2020 USD ($) property	Jun. 30, 2019 USD ($)
Loans and Leases Receivable Disclosure [Line Items]
Mortgage Loans in Process of Foreclosure, Amount | $	$ 190,695	$ 307,814
Residential Real Estate
Loans and Leases Receivable Disclosure [Line Items]
Number of real estate properties | property	0

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Premises and Equipment, net (Details) - USD ($)	Jun. 30, 2020	Jun. 30, 2019
Property, Plant and Equipment [Line Items]
Premises and equipment, Gross	$ 19,715,517	$ 19,803,664
Less: Accumulated depreciation	(11,755,476)	(11,638,390)
Property, Plant and Equipment, Net, Total	7,960,041	8,165,274
Land
Property, Plant and Equipment [Line Items]
Premises and equipment, Gross	2,319,381	2,319,381
Office buildings and improvements
Property, Plant and Equipment [Line Items]
Premises and equipment, Gross	10,573,741	10,568,387
Leasehold improvements
Property, Plant and Equipment [Line Items]
Premises and equipment, Gross	470,952	470,951
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Premises and equipment, Gross	$ 6,351,443	$ 6,444,945

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Premises and Equipment, net - Additional Information (Details) - USD ($)	12 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Premises and Equipment, net
Depreciation expense	$ 552,952	$ 555,421

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Accrued Interest Receivable and Other Assets (Details) - USD ($)	Jun. 30, 2020	Jun. 30, 2019
Accrued Interest Receivable and Other Assets
Accrued interest receivable	$ 933,729	$ 1,000,098
Prepaid expenses and other assets	839,757	141,588
Totals	$ 1,773,486	$ 1,141,686

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Deposits (Details) - USD ($)	Jun. 30, 2020	Jun. 30, 2019
Deposits
2021	$ 41,893,495
2022	6,314,403
2023	4,708,866
2024	34,060,541
2025	46,698
Thereafter	21,932
Total	$ 87,045,935	$ 86,761,271

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Deposits - Additional Information (Details) - USD ($)	Jun. 30, 2020	Jun. 30, 2019
Deposits
Time deposits of $250,000 and greater	$ 9,377,750	$ 9,326,137
Overdrafts reclassified into loans	58,121	32,565
Deposits	256,071,531	234,561,459
Directors and Executive Officers
Deposits
Deposits	$ 914,214	$ 639,572

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Borrowings - Tabular Information (Details) - USD ($)	Jun. 30, 2020	Jun. 30, 2019
Federal Home Loan Bank, Advances [Line Items]
Federal Home Loan Bank borrowings	$ 9,000,000	$ 44,200,000
FHLB fixed rate advance (2.45%, matures 7/1/19)
Federal Home Loan Bank, Advances [Line Items]
Federal Home Loan Bank borrowings	0	7,500,000
FHLB fixed rate advance (2.43%, matures 7/2/19)
Federal Home Loan Bank, Advances [Line Items]
Federal Home Loan Bank borrowings	0	15,000,000
FHLB fixed rate advance (2.45%, matures 7/3/19)
Federal Home Loan Bank, Advances [Line Items]
Federal Home Loan Bank borrowings	0	5,000,000
FHLB fixed rate advance (2.43%, matures 7/3/19)
Federal Home Loan Bank, Advances [Line Items]
Federal Home Loan Bank borrowings	0	8,000,000
FHLB fixed rate advance (2.649%, matures 7/23/19)
Federal Home Loan Bank, Advances [Line Items]
Federal Home Loan Bank borrowings	0	2,500,000
FHLB fixed rate advance (2.649%, matures 7/24/19)
Federal Home Loan Bank, Advances [Line Items]
Federal Home Loan Bank borrowings	0	3,100,000
FHLB fixed rate advance (2.647%, matured 7/25/19)
Federal Home Loan Bank, Advances [Line Items]
Federal Home Loan Bank borrowings	0	3,100,000
FHLB fixed rate advance (0.61%, matures 9/11/20)
Federal Home Loan Bank, Advances [Line Items]
Federal Home Loan Bank borrowings	5,000,000	0
FHLB fixed rate advance (0.00%, matures 5/3/21)
Federal Home Loan Bank, Advances [Line Items]
Federal Home Loan Bank borrowings	$ 4,000,000	$ 0

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Borrowings - Table Narrative (Details)	Jun. 30, 2020	Jun. 30, 2019
FHLB fixed rate advance (2.45%, matures 7/1/19)
Federal Home Loan Bank, Advances [Line Items]
Federal Home Loan Bank, Interest rate		2.45%
FHLB fixed rate advance (2.43%, matures 7/2/19)
Federal Home Loan Bank, Advances [Line Items]
Federal Home Loan Bank, Interest rate		2.43%
FHLB fixed rate advance (2.45%, matures 7/3/19)
Federal Home Loan Bank, Advances [Line Items]
Federal Home Loan Bank, Interest rate		2.45%
FHLB fixed rate advance (2.43%, matures 7/3/19)
Federal Home Loan Bank, Advances [Line Items]
Federal Home Loan Bank, Interest rate		2.43%
FHLB fixed rate advance (2.649%, matures 7/23/19)
Federal Home Loan Bank, Advances [Line Items]
Federal Home Loan Bank, Interest rate		2.649%
FHLB fixed rate advance (2.649%, matures 7/24/19)
Federal Home Loan Bank, Advances [Line Items]
Federal Home Loan Bank, Interest rate		2.649%
FHLB fixed rate advance (2.647%, matured 7/25/19)
Federal Home Loan Bank, Advances [Line Items]
Federal Home Loan Bank, Interest rate		2.647%
FHLB fixed rate advance (0.61%, matures 9/11/20)
Federal Home Loan Bank, Advances [Line Items]
Federal Home Loan Bank, Interest rate	0.61%
FHLB fixed rate advance (0.00%, matures 5/3/21)
Federal Home Loan Bank, Advances [Line Items]
Federal Home Loan Bank, Interest rate	0.00%

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Borrowings - Additional Information (Details) - USD ($)	Jun. 30, 2020	Jun. 30, 2019
Debt Instrument [Line Items]
Federal Home Loan Bank borrowings	$ 9,000,000	$ 44,200,000
Pledged Assets Separately Reported, Other Debt Securities Available-for-sale or Held-for-investment	0	7,100,000
U.S. Bank
Debt Instrument [Line Items]
Maximum line of credit borrowing in master contract agreement	$ 5,000,000	$ 5,000,000
Interest rate	0.75%	0.75%
Line of credit outstanding	$ 0	$ 0
Pledged Assets Separately Reported, Other Debt Securities Available-for-sale or Held-for-investment		7,100,000
Federal Home Loan Bank ("FHLB")
Debt Instrument [Line Items]
Maximum line of credit borrowing in master contract agreement	130,801,182
Line of credit outstanding	0	0
Federal Home Loan Bank borrowings	9,000,000	44,200,000
Collateralized Agreements	$ 170,769,631	$ 153,925,211

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Income Taxes (Details) - USD ($)	12 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Current tax expense (benefit):
Federal	$ (30,589)	$ (73,075)
State	0	(12,578)
Current tax expense (benefit)	(30,589)	(85,653)
Deferred tax expense (benefit):
Federal	30,589	30,589
State	0	0
Deferred tax expense (benefit)	30,589	30,589
Total income tax expense (benefit)	$ 0	$ (55,064)

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Income Taxes - Net deferred tax asset (Details) - USD ($)	Jun. 30, 2020	Jun. 30, 2019
Deferred tax assets
Federal net operating loss	$ 6,619,829	$ 6,858,921
Other real estate owned	683,379	708,259
State loss and contribution	2,963,488	3,050,448
Unrealized loss on available for sale securities	0	0
Bad debt reserve	368,687	352,489
Pension	719,294	226,412
Other assets	67,370	74,554
Total deferred tax assets	11,422,047	11,271,083
Deferred tax liabilities
Pension	0	0
Deferred loan fees	(91,078)	(131,008)
Depreciation	(212,240)	(113,769)
FHLB dividends	0	0
Unrealized gain on available for sale securities	(153,067)	(55,112)
Other liabilities	(66,045)	(72,573)
Total deferred tax liabilities	(522,430)	(372,462)
Valuation allowance	(10,899,617)	(10,868,032)
Net deferred tax asset	$ 0	$ 30,589

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Income Taxes - Reconciliation of statutory to effective rates (Details) - USD ($)	12 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Reconciliation of statutory to effective rates
Federal income taxes at statutory rate	$ 229,340	$ (95,425)
Adjustments for True up of payable(s)	47,207	(78,506)
Adjustments for State income taxes, net of valuation allowance	0	(12,578)
Adjustments for Federal valuation allowance	(281,400)	114,767
Other - Net	4,853	16,678
Total income tax expense (benefit)	$ 0	$ (55,064)
Reconciliation of statutory to effective rates
Federal income taxes at statutory rate (as a Percent)	21.00%	21.00%
Adjustments for True up of payable(s) (as a Percent)	4.32%	17.28%
Adjustments for State income taxes, net of valuation allowance (as a Percent)	0.00%	2.77%
Adjustments for Federal valuation allowance (as a Percent)	(25.77%)	(25.26%)
Effective Income Tax Rate Reconciliation,Other Reconciling Items, Percent	0.45%	(3.67%)
Effective income taxes - operations (as a Percent)	0.00%	12.12%

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Income Taxes - Additional Information (Details) - USD ($)	12 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Operating Loss Carryforwards [Line Items]
Deferred tax assets valuation allowance	$ 10,899,617	$ 10,868,032
Unrecognized tax benefits income tax penalties and interest expense	0	0
Unrecognized tax benefits income tax penalties and interest accrued	0	0
Deferred federal income taxes from proper use of bad debt reserves	0	0
Bad debt deductions for income tax purposes included in retained earnings	7,800,000	7,800,000
Deferred state income taxes from proper use of bad debt reserves	0	0
Domestic Tax Authority
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards	31,500,000	32,700,000
State and Local Jurisdiction
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards	$ 46,900,000	$ 47,500,000

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Defined Benefit Pension Plan - Funded status (Details) - USD ($)	12 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Change in projected benefit obligation
Projected benefit obligation at beginning of year	$ 10,601,032	$ 9,453,322
Interest cost	371,932	398,439
Benefits paid	(297,103)	(144,765)
Actuarial loss	1,687,375	894,036
Projected benefit obligation at end of year	12,363,236	10,601,032
Change in plan assets
Fair value of plan assets at beginning of year	9,770,170	9,691,252
Actual return on assets	(204,314)	223,683
Employer contributions	0	0
Benefits paid	(297,103)	(144,765)
Fair value of plan assets at end of year	9,268,753	9,770,170
Funded status at end of year	$ (3,094,483)	$ (830,862)

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Defined Benefit Pension Plan - Amounts recognized (Details) - USD ($)	Jun. 30, 2020	Jun. 30, 2019
Defined Benefit Pension Plan
Pension liability	$ (3,094,483)	$ (830,862)
Amounts recognized in accumulated other comprehensive loss consist of:
Accumulated pension actuarial loss, net of income tax benefit of $1,522,485 and $1,522,485, respectively	4,853,355	2,506,295
Accumulated pension actuarial loss, net of income tax benefit	$ 1,522,485	$ 1,522,485

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Defined Benefit Pension Plan - Net periodic benefit costs (Details) - USD ($)	12 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Defined Benefit Pension Plan
Interest cost	$ 371,932	$ 398,439
Expected return on plan assets	(671,118)	(672,908)
Amortization of net actuarial loss	215,747	121,990
Net periodic pension income	$ (83,439)	$ (152,479)

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Defined Benefit Pension Plan - Additional information (Details) - USD ($)	12 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Defined Benefit Pension Plan
Assumed discount rate on benefit obligations	2.76%	3.57%
Expected long term rate of return	7.00%	7.00%
Annual salary increase	0.00%	0.00%
Employer contributions	$ 0	$ 0

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Defined Benefit Pension Plan - Projected benefit payments (Details)	Jun. 30, 2020 USD ($)
Defined Benefit Pension Plan
2021	$ 3,787,700
2022	142,800
2023	540,600
2024	538,100
2025	1,498,900
2025-2029	4,077,300
Total	$ 10,585,400

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Defined Benefit Pension Plan - Percentage of fair value (Details)	12 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Defined Benefit Plan Disclosure [Line Items]
Change in Fair Value of Plan Asset, Percentage	100.00%	100.00%
Cash Equivalents
Defined Benefit Plan Disclosure [Line Items]
Change in Fair Value of Plan Asset, Percentage	0.90%	5.60%
Equities - Large Cap
Defined Benefit Plan Disclosure [Line Items]
Change in Fair Value of Plan Asset, Percentage	48.60%	43.00%
Equities - Mid Cap
Defined Benefit Plan Disclosure [Line Items]
Change in Fair Value of Plan Asset, Percentage	4.30%	3.40%
Equities - Small Cap
Defined Benefit Plan Disclosure [Line Items]
Change in Fair Value of Plan Asset, Percentage	25.30%	33.70%
Equities - International
Defined Benefit Plan Disclosure [Line Items]
Change in Fair Value of Plan Asset, Percentage	4.00%	2.10%
Equities - Other
Defined Benefit Plan Disclosure [Line Items]
Change in Fair Value of Plan Asset, Percentage	8.30%	8.50%
Alternatives/Multi-Asset
Defined Benefit Plan Disclosure [Line Items]
Change in Fair Value of Plan Asset, Percentage	8.60%	3.70%

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Accumulated Other Comprehensive Loss (Details) - USD ($)	Jun. 30, 2020	Jun. 30, 2019
Accumulated Other Comprehensive Loss
Accumulated pension actuarial loss	$ (6,375,840)	$ (4,028,780)
Deferred taxes related to accumulated pension actuarial loss	1,522,485	1,522,485
Unrealized net gain on securities available for sale	562,144	202,555
Deferred taxes related to unrealized net gain on securities available for sale	(544,625)	(544,625)
Total accumulated other comprehensive loss	$ (4,835,836)	$ (2,848,365)

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Accumulated Other Comprehensive Loss - Changes in accumulated other comprehensive loss (Details) - USD ($)	12 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
AOCI Attributable to Parent, Net of Tax [Roll Forward]
BALANCES	$ 24,407,575	$ 14,102,132
Other comprehensive loss, net of tax	(1,987,471)	(640,789)
BALANCES	23,512,203	24,407,575
Accumulated Other Comprehensive Loss
AOCI Attributable to Parent, Net of Tax [Roll Forward]
BALANCES	(2,848,365)	(2,207,576)
Other comprehensive (loss) income before reclassifications, net of tax	(2,203,218)	(762,779)
Amounts reclassified from other comprehensive loss, net of tax	215,747	121,990
Other comprehensive loss, net of tax	(1,987,471)	(640,789)
BALANCES	(4,835,836)	(2,848,365)
Available for Sale Securities
AOCI Attributable to Parent, Net of Tax [Roll Forward]
BALANCES	(1,010,616)	(1,591,098)
Other comprehensive (loss) income before reclassifications, net of tax	359,589	580,482
Amounts reclassified from other comprehensive loss, net of tax	0	0
Other comprehensive loss, net of tax	359,589	580,482
BALANCES	(651,027)	(1,010,616)
Defined Benefit Pension Plans
AOCI Attributable to Parent, Net of Tax [Roll Forward]
BALANCES	(1,837,749)	(616,478)
Other comprehensive (loss) income before reclassifications, net of tax	(2,562,807)	(1,343,261)
Amounts reclassified from other comprehensive loss, net of tax	215,747	121,990
Other comprehensive loss, net of tax	(2,347,060)	(1,221,271)
BALANCES	$ (4,184,809)	$ (1,837,749)

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Commitments and Contingencies (Details) - USD ($)	Jun. 30, 2020	Jun. 30, 2019
Commitments to extend credit to borrowers
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Financial instruments whose contract amounts represent credit risk	$ 15,853,034	$ 18,668,750
Sold loan commitments
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Financial instruments whose contract amounts represent credit risk	105,961,238	41,760,875
Credit card commitments
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Financial instruments whose contract amounts represent credit risk	$ 567,763	$ 637,121

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Regulatory Capital Requirements (Details) - USD ($)	Jun. 30, 2020	Jun. 30, 2019
Total capital (to risk weighted assets)
Total capital (to risk weighted assets) Actual Amount	$ 28,928,180	$ 27,643,843
Total capital (to risk weighted assets) Actual Ratio	15.02%	14.01%
Total capital (to risk weighted assets) For Capital Adequacy Purposes Amount	$ 15,408,708	$ 15,780,941
Total capital (to risk weighted assets) For Capital Adequacy Purposes Ratio	8.00%	8.00%
Total capital (to risk weighted assets) To be Capitalized In Accordance with the Consent Order Amount	$ 19,260,885	$ 19,726,176
Total capital (to risk weighted assets) To be Capitalized In Accordance with the Consent Order Ratio	10.00%	10.00%
Tier 1 capital (to risk weighted assets)
Tier 1 capital (to risk weighted assets) Actual Amount	$ 27,574,753	$ 26,349,878
Tier 1 capital (to risk weighted assets) Actual Ratio	14.32%	13.36%
Tier 1 capital (to risk weighted assets) For Capital Adequacy Purposes Amount	$ 11,556,531	$ 11,835,706
Tier 1 capital (to risk weighted assets) For Capital Adequacy Purposes Ratio	6.00%	6.00%
Tier 1 capital (to risk weighted assets) To be Capitalized In Accordance with the Consent Order Amount	$ 15,408,708	$ 15,780,941
Tier 1 capital (to risk weighted assets) To be Capitalized In Accordance with the Consent Order Ratio	8.00%	8.00%
Common Equity Tier 1 (to risk weighted assets)
Common Equity Tier 1 (to risk weighted assets) Actual Amount	$ 27,574,753	$ 26,349,878
Common Equity Tier 1 (to risk weighted assets) Actual Ratio	14.32%	13.36%
Common Equity Tier 1 (to risk weighted assets) For Capital Adequacy Purposes Amount	$ 8,667,398	$ 8,876,779
Common Equity Tier 1 (to risk weighted assets) For Capital Adequacy Purposes Ratio	4.50%	4.50%
Common Equity Tier 1 (to risk weighted assets) To be Capitalized In Accordance with the Consent Order Amount	$ 12,519,575	$ 12,822,015
Common Equity Tier 1 (to risk weighted assets) To be Capitalized In Accordance with the Consent Order Ratio	6.50%	6.50%
Tier 1 capital (to average assets)
Tier 1 capital (to average assets) Actual Amount	$ 27,574,753	$ 26,349,878
Tier 1 capital (to average assets) Actual Ratio	9.30%	8.55%
Tier 1 capital (to average assets) For Capital Adequacy Purposes Amount	$ 11,857,514	$ 12,327,357
Tier 1 capital (to average assets) For Capital Adequacy Purposes Ratio	4.00%	4.00%
Tier 1 capital (to average assets) To be Capitalized In Accordance with the Consent Order Amount	$ 14,821,893	$ 15,409,197
Tier 1 capital (to average assets) To be Capitalized In Accordance with the Consent Order Ratio	5.00%	5.00%

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Regulatory Capital Requirements - Additional Information (Details) - USD ($)	Jun. 30, 2020	Jun. 30, 2019
Regulatory Capital Requirements
Bank's net worth of total assets	$ 22,472,487	$ 23,501,513
General loan loss reserve	$ 1,147,504	$ 1,190,650
Percentage of bank's net worth of total assets	7.70%	7.90%