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Loans

6 Months Ended

Dec. 31, 2022

Note 4- Loans

A summary of loans by major category follows:


	Unaudited
	December 31, 2022		June 30, 2022
Commercial real estate	$	85,612,836	$	80,603,153
Commercial and industrial		7,830,296		8,778,723
Construction		7,412,981		10,582,488
One-to-four-family residential		56,704,945		51,890,948
Multi-family real estate		35,113,319		33,944,903
Consumer		2,083,525		2,100,259
Total loans		194,757,902		187,900,474
Deferred loan fees		(76,455)		(75,552)
Allowance for loan losses		(2,059,471)		(2,195,050)
Loans, net	$	192,621,976	$	185,629,872

The Company maintains a collateral pledge agreement with the FHLB covering secured advances whereby the Company has agreed to retain, free of all other pledges, liens, and encumbrances, commercial and industrial, commercial real estate, and one-to-four family residential loans. The pledged loans are discounted at a factor of 20% to 36% when aggregating the amount of loans required by the pledge agreement. The amount of eligible collateral was $39,779,587 and $37,536,318 as of December 31, 2022 and June 30, 2022, respectively. There was also FHLB stock of $770,273 and $323,000 pledged as of December 31, 2022 and June 30, 2022.

The following tables present the activity in the allowance for loan losses by portfolio segment for the three and six months ended December 31, 2022 and 2021, and the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment based on impairment method as of December 31, 2022 and June 30, 2022:


	Commercial		Commercial				One-to-Four		MultiFamily
	Real Estate		and Industrial		Construction		Residential		Real Estate		Consumer		Unallocated		Total
December 31, 2022
Allowance for credit losses
Balance at beginning of year	$	1,591,644	$	32,701	$	55,029	$	263,951	$	233,371	$	601	$	17,753	$	2,195,050
Charge-offs		(136,753)		—		—		—		—		—		—		(136,753)
Recoveries		—		—		—		—		—		572		—		572
Provisions		109,130		(5,303)		(30,238)		(41,667)		(17,238)		(553)		(14,131)		—
Balance at September 30, 2022		1,564,021		27,398		24,791		222,284		216,133		620		3,622		2,058,869
Charge-offs		—		—		—		—		—		—		—		—
Recoveries		—		—		—		—		—		602		—		602
Provisions		(279,012)		(6,060)		(7,185)		(13,998)		(20,376)		(619)		327,250		—
Balance at December 31, 2022	$	1,285,009	$	21,338	$	17,606	$	208,286	$	195,757	$	603	$	330,872	$	2,059,471


Individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Collectively evaluated for impairment		1,285,009		21,338		17,606		208,286		195,757		603		330,872		2,059,471
Balance at end of period	$	1,285,009	$	21,338	$	17,606	$	208,286	$	195,757	$	603	$	330,872	$	2,059,471

Loans
Individually evaluated for impairment	$	—	$	—	$	—	$	179,173	$	—	$	—	$	—	$	179,173
Collectively evaluated for impairment		85,612,836		7,830,296		7,412,981		56,525,772		35,113,319		2,083,525		—		194,578,729
	$	85,612,836	$	7,830,296	$	7,412,981	$	56,704,945	$	35,113,319	$	2,083,525	$	—	$	194,757,902


	Commercial		Commercial				One-to-Four		MultiFamily
	Real Estate		and Industrial		Construction		Residential		Real Estate		Consumer		Unallocated		Total
June 30, 2022
Individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Collectively evaluated for impairment		1,591,644		32,701		55,029		263,951		233,371		601		17,753		2,195,050
Balance at end of period	$	1,591,644	$	32,701	$	55,029	$	263,951	$	233,371	$	601	$	17,753	$	2,195,050
Loans
Individually evaluated for impairment	$	—	$	—	$	—	$	193,385	$	—	$	—	$	—	$	193,385
Collectively evaluated for impairment		80,603,153		8,778,723		10,582,488		51,697,563		33,944,903		2,100,259				187,707,089
Balance at end of period	$	80,603,153	$	8,778,723	$	10,582,488	$	51,890,948	$	33,944,903	$	2,100,259	$	—	$	187,900,474


	Commercial		Commercial				One-to-Four		MultiFamily
December 31, 2021	Real Estate		and Industrial		Construction		Residential		Real Estate		Consumer		Unallocated		Total
Allowance for credit losses
Balance at beginning of period	$	1,036,301	$	157,533	$	59,649	$	409,395	$	134,216	$	4,896	$	384,192	$	2,186,182
Charge-offs		—		—		—		—		—		—		—		—
Recoveries		—		—		—		—		—		1,124		—		1,124
Provisions		187,549		(89,036)		(9,003)		(53,138)		(47,734)		(102)		11,464		—
Balance at September 30, 2021		1,223,850		68,497		50,646		356,257		86,482		5,918		395,656		2,187,306
Charge-offs		—		—		—		—		—		—		—		—
Recoveries		—		—		—		—		—		1,337		—		1,337
Provisions		64,577		(19,488)		(2,866)		(14,346)		34,871		(1,723)		(61,025)		—
Balance at December 31, 2021	$	1,288,427	$	49,009	$	47,780	$	341,911	$	121,353	$	5,532	$	334,631	$	2,188,643

Individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Collectively evaluated for impairment		1,288,427		49,009		47,780		341,911		121,353		5,532		334,631		2,188,643
Balance at end of period	$	1,288,427	$	49,009	$	47,780	$	341,911	$	121,353	$	5,532	$	334,631	$	2,188,643
Loans
Individually evaluated for impairment	$	217,449	$	—	$	—	$	299,084	$	—	$	—	$	—	$	516,533
Collectively evaluated for impairment		62,815,351		8,901,181		8,098,343		51,381,035		24,615,280		2,254,816		—		158,066,006
Balance at end of period	$	63,032,800	$	8,901,181	$	8,098,343	$	51,680,119	$	24,615,280	$	2,254,816	$	—	$	158,582,539

Credit Quality Indicators

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, collateral adequacy, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis typically includes larger, non-homogeneous loans such as commercial and industrial and commercial real estate loans. This analysis is performed on an ongoing basis as new information is obtained. The Company uses the following definitions for risk ratings:

Pass – Loans classified as pass represent loans that are evaluated and are performing under the stated terms. Pass rated assets are analyzed by the paying capacity, the current net worth, and the value of the loan collateral of the obligor.

Special Mention/Watch – Loans classified as watch possess potential weaknesses that require management attention but do not yet warrant adverse classification. While the status of a loan put on this list may not technically trigger their classification as substandard or doubtful, it is considered a proactive way to identify potential issues and address them before the situation deteriorates further and does result in a loss for the Company.

Substandard – Loans classified as substandard are inadequately protected by the current net worth, paying capacity of the obligor, or by the collateral pledged. Substandard loans must have a well-defined weakness or weaknesses that jeopardize the repayment of the debt as originally contracted. They are characterized by the distinct possibility that the Company will sustain a loss if the deficiencies are not corrected.

Doubtful – Loans classified as doubtful have the weaknesses of those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. Loans in this category are allocated a specific reserve based on the estimated discounted cash flows from the loan (or collateral value less cost to sell for collateral dependent loans) or are charged-off if deemed uncollectible.

Based on the most recent analysis performed, the risk category of loans by class of loans as of December 31, 2022 and June 30, 2022, is as follows:


			Special Mention/
	Pass		Watch		Substandard		Doubtful		Total
December 31, 2022
Commercial real estate	$	84,141,457	$	1,471,379	$	—	$	—	$	85,612,836
Commercial and industrial		7,830,296		—		—		—		7,830,296
Construction		7,412,981		—		—		—		7,412,981
	$	99,384,734	$	1,471,379	$	—	$	—	$	100,856,113


			Special Mention/
	Pass		Watch		Substandard		Doubtful		Total
June 30, 2022
Commercial real estate	$	79,214,378	$	1,388,775	$	—	$	—	$	80,603,153
Commercial and industrial		8,778,723		—		—		—		8,778,723
Construction		10,582,488		—		—		—		10,582,488
	$	98,575,589	$	1,388,775	$	—	$	—	$	99,964,364

Residential real estate and consumer loans are managed on a pool basis due to their homogeneous nature. Loans that are 90 days or more delinquent or are not accruing interest are considered nonperforming. The following table presents the recorded investments in residential real estate and consumer loans by class based on payment activity as of December 31, 2022 and June 30, 2022:


	Performing		Nonperforming		Total
December 31, 2022
One-to-four-family residential	$	56,649,642	$	55,303	$	56,704,945
Multi-family real estate		35,113,319		—		35,113,319
Consumer		2,083,525		—		2,083,525
	$	93,846,486	$	55,303	$	93,901,789


	Performing		Nonperforming		Total
June 30, 2022
One-to-four-family residential	$	51,827,163	$	63,785	$	51,890,948
Multi-family real estate		33,944,903		—		33,944,903
Consumer		2,100,259		—		2,100,259
	$	87,872,325	$	63,785	$	87,936,110

The following tables summarize the aging of the past due loans by loan class within the portfolio segments as of December 31, 2022 and June 30, 2022:


	Still Accruing
	30-59 Days		60-89 Days		Over 90 Days		Nonaccrual
	Past Due		Past Due		Past Due		Balance
December 31, 2022
Commercial real estate	$	—	$	—	$	—	$	—
Commercial and industrial		—		—		—		—
Construction		—		—		—		—
One-to-four-family residential		53,919		69,951		—		55,303
Multi-family real estate		—		—		—		—
Consumer		—		—		—		—
Total	$	53,919	$	69,951	$	—	$	55,303


	Still Accruing
	30-59 Days		60-89 Days		Over 90 Days		Nonaccrual
	Past Due		Past Due		Past Due		Balance
June 30, 2022
Commercial real estate	$	—	$	—	$	—	$	—
Commercial and industrial		—		—		—		—
Construction		—		—		—		—
One-to-four-family residential		70,485		—		50,818		63,785
Multi-family real estate		—		—		—		—
Consumer		—		—		—		—
Total	$	70,485	$	—	$	50,818	$	63,785

Impaired Loans

A loan is considered impaired when based on current information and events, it is probable that the Bank will be unable to collect all amounts due from the borrower in accordance with the contractual terms of the loan.

The following tables summarize individually impaired loans by class of loans as of December 31, 2022 and June 30, 2022 and for the six months and year ended December 31, 2022 and June 30, 2022, respectively:


							For the Six Months Ended
							December 31, 2022
			Unpaid				Average		Interest
	Recorded		Principal		Related		Recorded		Income
	Investment		Balance (1)		Allowance		Investment		Recognized
December 31, 2022
With no related allowance recorded
One-to-four-family residential		179,173		179,173		—		182,876		2,980
	$	179,173	$	179,173	$	—	$	182,876	$	2,980

For the Six Months Ended

December 31, 2022

Unpaid

Average

Interest

Recorded

Principal

Related

Recorded

Income

Investment

Balance (1)

Allowance

Investment

Recognized

With an allowance recorded

Commercial and industrial

—

One-to-four-family residential

—

Consumer

—

(1) Represents the borrower's loan obligation, gross of any previously charged-off amounts.


							For the Year Ended
							June 30, 2022
			Unpaid				Average		Interest
	Recorded		Principal		Related		Recorded		Income
	Investment		Balance (1)		Allowance		Investment		Recognized
June 30, 2022
With no related allowance recorded
One-to-four-family residential	$	193,385	$	193,385	$	—	$	199,080	$	13,428
	$	193,385	$	193,385	$	—	$	199,080	$	13,428

For the Year Ended

June 30, 2022

Unpaid

Average

Interest

Recorded

Principal

Related

Recorded

Income

Investment

Balance (1)

Allowance

Investment

Recognized

With an allowance recorded

Commercial and industrial

—

One-to-four-family residential

—

Consumer

—

(1) Represents the borrower's loan obligation, gross of any previously charged-off amounts.

Impaired loans include loans modified in troubled debt restructurings (TDR) where concessions have been granted to borrowers experiencing financial difficulties. These concessions could include a reduction in the interest rate on the loan, payment extensions, forgiveness of principal, forbearance, or other actions intended to maximize collection.

There were no loans modified as TDRs during the three and six months ended December 31, 2022 and 2021. The Company has made no commitments to lend additional funds on restructured loans.