(In Thousands)	December 31, 2018				June 30, 2018
Mortgage loans:
Single-family		$	312,499		$	314,808
Multi-family			447,033			476,008
Commercial real estate			112,830			109,726
Construction ⁽¹⁾			3,986			3,174
Other			167			167
Commercial business loans ⁽²⁾			455			500
Consumer loans ⁽³⁾			103			109
Total loans held for investment, gross			877,073			904,492

Advance payments of escrows			95			18
Deferred loan costs, net			5,306			5,560
Allowance for loan losses			(7,061	)		(7,385	)
Total loans held for investment, net		$	875,413		$	902,685

The following table sets forth information at December 31, 2018 regarding the dollar amount of loans held for investment that are contractually repricing during the periods indicated, segregated between adjustable rate loans and fixed rate loans. Fixed-rate loans comprised 2% of loans held for investment at both December 31, 2018 and June 30, 2018. Adjustable rate loans having no stated repricing dates that reprice when the index they are tied to reprices (e.g. prime rate index) and checking account overdrafts are reported as repricing within one year. The table does not include any estimate of prepayments which may cause the Corporation's actual repricing experience to differ materially from that shown.

	Adjustable Rate
(In Thousands)	Within One Year		After One Year Through 3 Years		After 3 Years Through 5 Years		After 5 Years Through 10 Years		Fixed Rate		Total
Mortgage loans:
Single-family	$	105,981	$	31,216	$	100,552	$	63,034	$	11,716	$	312,499
Multi-family		129,858		162,154		142,177		12,642		202		447,033
Commercial real estate		41,376		35,953		35,008		—		493		112,830
Construction		2,600		—		—		—		1,386		3,986
Other		—		—		—		—		167		167
Commercial business loans		57		—		—		—		398		455
Consumer loans		103		—		—		—		—		103
Total loans held for investment, gross	$	279,975	$	229,323	$	277,737	$	75,676	$	14,362	$	877,073

The Corporation has developed an internal loan grading system to evaluate and quantify the Bank's loans held for investment portfolio with respect to quality and risk. Management continually evaluates the credit quality of the Corporation's loan portfolio and conducts a quarterly review of the adequacy of the allowance for loan losses using quantitative and qualitative methods. The Corporation has adopted an internal risk rating policy in which each loan is rated for credit quality with a rating of pass, special mention, substandard, doubtful or loss. The two primary components that are used during the loan review process to determine the proper allowance levels are individually evaluated allowances and collectively evaluated allowances. Quantitative loan loss factors are developed by determining the historical loss experience, expected future cash flows, discount rates and collateral fair values, among others. Qualitative loan loss factors are developed by assessing general economic indicators such as gross domestic product, retail sales, unemployment rates, employment growth, California home sales and median California home prices. The Corporation assigns individual factors for the quantitative and qualitative methods for each loan category and each internal risk rating.

The Corporation categorizes all of the loans held for investment into risk categories based on relevant information about the ability of the borrower to service their debt such as current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. A description of the general characteristics of the risk grades is as follows:

▪

Substandard - A substandard loan is inadequately protected by the current sound net worth and paying capacity of the borrower or of the collateral pledged, if any. Loans so classified must have a well-defined weakness, or weaknesses, that may jeopardize the liquidation of the debt. A substandard loan is characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.

	December 31, 2018
(In Thousands)	Single- family		Multi- family		Commercial Real Estate		Construction		Other Mortgage		Commercial Business		Consumer		Total

Pass	$	303,973	$	443,127	$	122,830	$	3,241	$	167	$	399	$	103	$	863,80
Special Mention		1,400		3,906		—		—				—		—		5,306
Substandard		7,126		—		—		745		—		56		—		7,927
Total loans held for investment, gross	$	312,499	$	447,033	$	112,830	$	3,986	$	167	$	455	$	103	$	877,073

	June 30, 2018
(In Thousands)		Single- family		Multi- family		Commercial Real Estate		Construction		Other Mortgage		Commercial Business		Consumer		Total

Pass		$	304,619	$	472,061	$	108,786	$	3,174	$	167	$	430	$	109	$	889,346
Special Mention			2,548		3,947		940		—		—		—		—		7,435
Substandard			7,641		—		—		—		—		70		—		7,711
Total loans held for investment, gross		$	314,808	$	476 008	$	109,726	$	3,174	$	167	$	500	$	109	$	904,492

The allowance for loan losses is maintained at a level sufficient to provide for estimated losses based on evaluating known and inherent risks in the loans held for investment and upon management's continuing analysis of the factors underlying the quality of the loans held for investment. These factors include changes in the size and composition of the loans held for investment, actual loan loss experience, current economic conditions, detailed analysis of individual loans for which full collectability may not be assured, and determination of the realizable value of the collateral securing the loans. The provision (recovery) for (from) the allowance for loan losses is charged (credited) against operations on a quarterly basis, as necessary, to maintain the allowance at appropriate levels. Although management believes it uses the best information available to make such determinations, there can be no assurance that regulators, in reviewing the Corporation's loans held for investment, will not request a significant increase in its allowance for loan losses. Future adjustments to the allowance for loan losses may be necessary and results of operations could be significantly and adversely affected as a result of economic, operating, regulatory, and other conditions beyond the Corporation's control.

Non-performing loans are charged-off to their fair market values in the period the loans, or portion thereof, are deemed uncollectible, generally after the loan becomes 150 days delinquent for real estate secured first trust deed loans and 120 days delinquent for commercial business or real estate secured second trust deed loans. For loans that were modified from their original terms, were re-underwritten and identified in the Corporation's asset quality reports as troubled debt restructurings ("restructured loans"), the charge-off occurs when the loan becomes 90 days delinquent; and where borrowers file bankruptcy, the charge-off occurs when the loan becomes 60 days delinquent. The amount of the charge-off is determined by comparing the loan balance to the estimated fair value of the underlying collateral, less disposition costs, with the loan balance in excess of the estimated fair value charged-off against the allowance for loan losses. The allowance for loan losses for non-performing loans is determined by applying Accounting Standards Codification ("ASC") 310, "Receivables." For restructured loans that are less than 90 days delinquent, the allowance for loan losses are segregated into (a) individually evaluated allowances for those loans with applicable discounted cash flow calculations still in their restructuring period, classified lower than pass, and containing an embedded loss component or (b) collectively evaluated allowances based on the aggregated pooling method. For non-performing loans less than 60 days delinquent where the borrower has filed bankruptcy, the collectively evaluated allowances are assigned based on the aggregated pooling method. For non-performing commercial real estate loans, an individually evaluated allowance is derived based on the loan's discounted cash flow fair value (for restructured loans) or collateral fair value less estimated selling costs and if the fair value is higher than the loan balance, no allowance is required.

(In Thousands)	December 31, 2018			June 30, 2018
Collectively evaluated for impairment:
Mortgage loans:
Single-family		$	2,520		$	2,632
Multi-family			3,280			3,492
Commercial real estate			1,019			1,030
Construction			48			47
Other			3			3
Commercial business loans			17			18
Consumer loans			6			6
Total collectively evaluated allowance			6,893			7,228

Individually evaluated for impairment:
Mortgage loans:
Single-family			159			151
Commercial business loans			9			6
Total individually evaluated allowance			168			157
Total loan loss allowance		$	7,061		$	7,385

	For the Quarters Ended December 31,						For the Six Months Ended December 31,
(Dollars in Thousands)	2018			2017			2018			2017

Allowance at beginning of period	$	7,155		$	8,063		$	7,385		$	8,039

(Recovery) provision for loan losses		(217	)		(11	)		(454	)		158

Recoveries:
Mortgage loans:
Single-family		123			48			155			132
Consumer loans		—			—			1			—
Total recoveries		123			48			156			132

Charge-offs:
Mortgage loans:
Single-family		—			(25	)		(25	)		(254	)
Consumer loans		—			—			(1	)		—
Total charge-offs		—			(25	)		(26	)		(254	)

Net recoveries (charge-offs)		123			23			130			(122	)
Balance at end of period	$	7,061		$	8,075		$	7,061		$	8,075

Allowance for loan losses as a percentage of gross loans held for investment at the end of the period		0.80	%		0.90	%		0.80	%		0.90	%
Net (recoveries) charge-offs as a percentage of average loans receivable, net, during the period (annualized)		(0.05	)%		(0.01	)%		(0.03	)%		0.02	%

	December 31, 2018
(In Thousands)	Current		30-89 Days Past Due		Non-Accrual ⁽¹⁾			Total Loans Held for Investment, Gross

Mortgage loans:
Single-family	$	306,873	$	—		$	5,626		$	312,499
Multi-family		447,033		—			—			447,033
Commercial real estate		112,830		—			—			112,830
Construction		3,241		—			745			3,986
Other		167		—			—			167
Commercial business loans		399		—			56			455
Consumer loans		101		2			—			103
Total loans held for investment, gross	$	870,644	$	2		$	6,427		$	877,073

	June 30, 2018
(In Thousands)	Current		30-89 Days Past Due		Non-Accrual ⁽¹⁾			Total Loans Held for Investment, Gross

Mortgage loans:
Single-family	$	307,863	$	804		$	6,141		$	314,808
Multi-family		476,008		—			—			476,008
Commercial real estate		109,726		—			—			109,726
Construction		3,174		—			—			3,174
Other		167		—			—			167
Commercial business loans		430		—			70			500
Consumer loans		108		1			—			109
Total loans held for investment, gross	$	897,476	$	805		$	6,211		$	904,492

	Quarter Ended December 31, 2018
(In Thousands)	Single- family			Multi- family			Commercial Real Estate			Construction			Other			Commercial Business			Consumer			Total
Allowance for loan losses:
Allowance at beginning of period	$	2,741		$	3,336		$	1,012		$	38		$	3		$	19		$	6		$	7,155
(Recovery) provision for loan losses		(185	)		(56	)		7			10			—			7			—			(217	)
Recoveries		123			—			—			—			—			—			—			123
Charge-offs		—			—			—			—			—			—			—			—
Allowance for loan losses, end of period	$	2,679		$	3,280		$	1,019		$	48		$	3		$	26		$	6		$	7,061

Allowance for loan losses:
Individually evaluated for impairment	$	159		$	—		$	—		$	—		$	—		$	9		$	—		$	168
Collectively evaluated for impairment		2,520			3,280			1,019			48			3			17			6			6,893
Allowance for loan losses, end of period	$	2,679		$	3,280		$	1,019		$	48		$	3		$	26		$	6		$	7,061

Loans held for investment:
Individually evaluated for impairment	$	5,817		$	—		$	—		$	745		$	—		$	56		$	—		$	6,618
Collectively evaluated for impairment		306,682			447,033			112,830			3,241			167			399			103			870,455
Total loans held for investment, gross	$	312,499		$	447,033		$	112,830		$	3,986		$	167		$	455		$	103		$	877,073
Allowance for loan losses as a percentage of gross loans held for investment		0.86	%		0.73	%		0.90	%		1.20	%		1.80	%		5.71	%		5.83	%		0.80	%

	Quarter Ended December 31, 2017
(In Thousands)	Single- family			Multi- family			Commercial Real Estate			Construction			Commercial Business			Consumer			Total
Allowance for loan losses:
Allowance at beginning of period	$	3,579		$	3,431		$	875		$	140		$	31		$	7		$	8,063
(Recovery) provision for loan losses		(299	)		(136	)		58			364			1			1			(11	)
Recoveries		48			—			—			—			—			—			48
Charge-offs		(25	)		—			—			—			—			—			(25	)
Allowance for loan losses, end of period	$	3,303		$	3,295		$	933		$	504		$	32		$	8		$	8,075

Allowance for loan losses:
Individually evaluated for impairment	$	—		$	—		$	—		$	—		$	15		$	—		$	15
Collectively evaluated for impairment		3,303			3,295			933			504			17			8			8,060
Allowance for loan losses, end of period	$	3,303		$	3,295		$	933		$	504		$	32		$	8		$	8,075

Loans held for investment:
Individually evaluated for impairment	$	7,038		$	—		$	—		$	—		$	76		$	—		$	7,114
Collectively evaluated for impairment		306,799			463,786			103,366			7,072			402			144			881,569
Total loans held for investment, gross	$	313,837		$	463,786		$	103,366		$	7,072		$	478		$	144		$	888,683
Allowance for loan losses as a percentage of gross loans held for investment		1.05	%		0.71	%		0.90	%		7.13	%		6.69	%		5.56	%		0.90	%

	Six Months Ended December 31, 2018
(In Thousands)	Single- family			Multi- family			Commercial Real Estate			Construction			Other			Commercial Business			Consumer			Total
Allowance for loan losses:
Allowance at beginning of period	$	2,783		$	3,492		$	1,030		$	47		$	$ 3		$	24		$	6			$	7,385
(Recovery) provision for loan losses		(234	)		(212	)		(11	)		1			—			2			—				(454	)
Recoveries		155			—			—			—			—			—			1				156
Charge-offs		(25	)		—			—			—			—			—			(1	)			(26	)
Allowance for loan losses, end of period	$	2,679		$	3,280		$	1,019		$	48		$	$ 3		$	26		$	6			$	7,061

Allowance for loan losses:
Individually evaluated for impairment	$	159		$	—		$	—		$	—		$	$ —		$	9		$	—			$	168
Collectively evaluated for impairment		2,520			3,280			1,019			48			3			17			6				6,893
Allowance for loan losses, end of period	$	2,679		$	3,280		$	1,019		$	48		$	$ 3		$	26		$	6			$	7,061

Loans held for investment:
Individually evaluated for impairment	$	5,817		$	—		$	—		$	745		$	$ —		$	56		$	—			$	6,618
Collectively evaluated for impairment		306,682			447,033			112,830			3,241			167			399			103				870,455
Total loans held for investment, gross	$	312,499		$	447,033		$	112,830		$	3,986		$	167		$	455		$	103			$	877,073
Allowance for loan losses as a percentage of gross loans held for investment		0.86	%		0.73	%		0.90	%		1.20	%		1.80	%		5.71	%		5.83	%			0.80	%

	Six Months Ended December 31, 2017
(In Thousands)	Single- family			Multi- family			Commercial Real Estate			Construction			Commercial Business			Consumer			Total
Allowance for loan losses:
Allowance at beginning of period	$	3,601		$	3,420		$	879		$	96		$	36		$	7		$	8,039
(Recovery) provision for loan losses		(176	)		(125	)		54			408			(4	)		1			158
Recoveries		132			—			—			—			—			—			132
Charge-offs		(254	)		—			—			—			—			—			(254	)
Allowance for loan losses, end of period	$	3,303		$	3,295		$	933		$	504		$	32		$	8		$	8,075

Allowance for loan losses:
Individually evaluated for impairment	$	—		$	—		$	—		$	—		$	15		$	—		$	15
Collectively evaluated for impairment		3,303			3,295			933			504			17			8			8,060
Allowance for loan losses, end of period	$	3,303		$	3,295		$	933		$	504		$	32		$	8		$	8,075

Loans held for investment:
Individually evaluated for impairment	$	7,038		$	—		$	—		$	—		$	76		$	—		$	7,114
Collectively evaluated for impairment		306,799			463,786			103,366			7,072			402			144			881,569
Total loans held for investment, gross	$	313,837		$	463,786		$	103,366		$	7,072		$	478		$	144		$	888,683
Allowance for loan losses as a percentage of gross loans held for investment		1.05	%		0.71	%		0.90	%		7.13	%		6.69	%		5.56	%		0.90	%

The following tables identify the Corporation's total recorded investment in non-performing loans by type at the dates and for the periods indicated. Generally, a loan is placed on non-accrual status when it becomes 90 days past due as to principal or interest or if the loan is deemed impaired, after considering economic and business conditions and collection efforts, where the borrower's financial condition is such that collection of the contractual principal or interest on the loan is doubtful. In addition, interest income is not recognized on any loan where management has determined that collection is not reasonably assured. A non-performing loan may be restored to accrual status when delinquent principal and interest payments are brought current, the borrower(s) has demonstrated sustained payment performance and future monthly principal and interest payments are expected to be collected on a timely basis. Loans with a related allowance reserve have been individually evaluated for impairment using either a discounted cash flow analysis or, for collateral dependent loans, current appraisals less costs to sell, to establish realizable value. This analysis may identify a specific impairment amount needed or may conclude that no reserve is needed. Loans that are not individually evaluated for impairment are included in pools of homogeneous loans for evaluation of related allowance reserves.

	At December 31, 2018
	Unpaid										Net
	Principal		Related			Recorded					Recorded
(In Thousands)	Balance		Charge-offs			Investment		Allowance ⁽¹⁾			Investment

Mortgage loans:
Single-family:
With a related allowance	$	2,856	$	—		$	2,856	$	(393	)	$	2,463
Without a related allowance ⁽²⁾		3,368		(561	)		2,807		—			2,807
Total single-family		6,224		(561	)		5,663		(393	)		5,270

Construction:
Without a related allowance ⁽³⁾		745		—			745		—			745
Total construction		745		—			745		—			745

Commercial business loans:
With a related allowance		56		—			56		(9	)		47
Total commercial business loans		56		—			56		(9	)		47

Total non-performing loans	$	7,025	$	(561	)	$	6,464	$	(402	)	$	6,062

	At June 30, 2018
	Unpaid										Net
	Principal		Related			Recorded					Recorded
(In Thousands)	Balance		Charge-offs			Investment		Allowance ⁽¹⁾			Investment

Mortgage loans:
Single-family:
With a related allowance	$	1,333	$	—		$	1,333	$	(185	)	$	1,148
Without a related allowance ⁽²⁾		5,569		(724	)		4,845		—			4,845
Total single-family		6,902		(724	)		6,178		(185	)		5,993

Commercial business loans:
With a related allowance		70		—			70		(6	)		64
Total commercial business loans		70		—			70		(6	)		64

Total non-performing loans	$	6,972	$	(724	)	$	6,248	$	(191	)	$	6,057

For the quarters ended December 31, 2018 and 2017, the Corporation's average recorded investment in non-performing loans was $6.6 million and $8.2 million, respectively. The Corporation records payments on non-performing loans utilizing the cash basis or cost recovery method of accounting during the periods when the loans are on non-performing status. For both quarters ended December 31, 2018 and 2017, interest income of $226,000 and $10,000, respectively, was recognized, based on cash receipts from loan payments on non-performing loans and $48,000 and $80,000, respectively, was collected and applied to reduce the loan balances under the cost recovery method.

For the six months ended December 31, 2018 and 2017, the Corporation's average recorded investment in non-performing loans was $6.8 million and $8.4 million, respectively. For the six months ended December 31, 2018 and 2017, interest income of $291,000 and $170,000, respectively, was recognized, based on cash receipts from loan payments on non-performing loans and $104,000 and $174,000, respectively, was collected and applied to reduce the loan balances under the cost recovery method.

	Quarter Ended December 31,
	2018				2017
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
(In Thousands)	Investment		Recognized		Investment		Recognized

Without related allowances:
Mortgage loans:
Single-family	$	3,326	$	189	$	7,301	$	—
Construction		745		—		—		—
		4,071		189		7,301		—

With related allowances:
Mortgage loans:
Single-family		2,487		36		786		8
Commercial business loans		60		1		76		2
		2,547		37		862		10

Total	$	6,618	$	226	$	8,163	$	10

	Six Months Ended December 31,
	2018				2017
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
(In Thousands)	Investment		Recognized		Investment		Recognized

Without related allowances:
Mortgage loans:
Single-family	$	3,963	$	229	$	7,659	$	135
Commercial real estate		—		—		34		13
Construction		496		—		—		496
		4,459		229		7,693		148

With related allowances:
Mortgage loans:
Single-family		2,279		60		608		19
Commercial business loans		64		2		77		3
		2,343		62		685		22

Total	$	6,802	$	291	$	8,378	$	170

For the quarter ended December 31, 2018, no new loans were restructured from their original terms and classified as restructured loans, while one restructured loan was paid off. For the six months ended December 31, 2018, no new loans were restructured from their original terms and classified as restructured loans, while one restructured loan was upgraded to the "pass" category and one restructured loan was paid off. For the quarters and six months ended December 31, 2017, there were no loans that were newly modified from their original terms, re-underwritten or identified in the Corporation's asset quality reports as restructured loans. During the quarters and six months ended December 31, 2018 and 2017, no restructured loans were in default within a 12-month period subsequent to their original restructuring. Additionally, during the quarter and six months ended December 31, 2018, there was one loan whose modification was extended beyond the initial maturity of the modification; while during the quarter and six months ended December 31, 2017, there were no loans whose modification was extended beyond the initial maturity of the modification. At both December 31, 2018 and June 30, 2018, there were no commitments to lend additional funds to those borrowers whose loans were restructured.

As of December 31, 2018, the Corporation held nine restructured loans with a net outstanding balance of $4.2 million: one loan was classified as substandard and remains on accrual status ($1.4 million); and eight loans were classified as substandard on non-accrual status ($2.8 million). As of June 30, 2018, the Corporation held 11 restructured loans with a net outstanding balance of $5.2 million: one loan was classified as special mention on accrual status ($389,000); one loan was classified as substandard on accrual status ($1.4 million); and nine loans were classified as substandard on non-accrual status ($3.4 million). Substandard assets have one or more defined weaknesses and are characterized by the distinct possibility that the Corporation will sustain some loss if the deficiencies are not corrected. Assets that do not currently expose the Corporation to sufficient risk to warrant adverse classification but possess weaknesses are designated as special mention and are closely monitored by the Corporation. As of December 31, 2018 and June 30, 2018, $2.9 million or 70%, and $2.9 million or 56%, respectively, of the restructured loans were current with respect to their modified payment terms.

The Corporation upgrades restructured single-family loans to the pass category if the borrower has demonstrated satisfactory contractual payments for at least six consecutive months; 12 months for those loans that were restructured more than once; and if the borrower has demonstrated satisfactory contractual payments beyond 12 consecutive months, the loan is no longer categorized as a restructured loan. In addition to the payment history described above, multi-family, commercial real estate, construction and commercial business loans must also demonstrate a combination of the following characteristics to be upgraded: satisfactory cash flow, satisfactory guarantor support, and additional collateral support, among others.

To qualify for restructuring, a borrower must provide evidence of their creditworthiness such as, current financial statements, their most recent income tax returns, current paystubs, current W-2s, and most recent bank statements, among other documents, which are then verified by the Corporation. The Corporation re-underwrites the loan with the borrower's updated financial information, new credit report, current loan balance, new interest rate, remaining loan term, updated property value and modified payment schedule, among other considerations, to determine if the borrower qualifies.

		At		At
(In Thousands)	December 31, 2018			June 30, 2018
Restructured loans on non-accrual status:
Mortgage loans:
Single-family		$	2,698	$	3,328
Commercial business loans			47		64
Total			2,745		3,392

Restructured loans on accrual status:
Mortgage loans:
Single-family			1,425		1,788
Total			1,425		1,788

Total restructured loans		$	4,170	$	5,180

	At December 31, 2018
	Unpaid										Net
	Principal		Related			Recorded					Recorded
(In Thousands)	Balance		Charge-offs			Investment		Allowance ⁽¹⁾			Investment

Mortgage loans:
Single-family:
With a related allowance	$	2,214	$	—		$	2,214	$	(124	)	$	2,090
Without a related allowance ⁽²⁾		2,407		(374	)		2,033		—			2,033
Total single-family		4,621		(374	)		4,247		(124	)		4,123

Commercial business loans:
With a related allowance		56		—			56		(9	)		47
Total commercial business loans		56		—			56		(9	)		47

Total restructured loans	$	4,677	$	(374	)	$	4,303	$	(133	)	$	4,170

	At June 30, 2018
	Unpaid										Net
	Principal		Related			Recorded					Recorded
(In Thousands)	Balance		Charge-offs			Investment		Allowance ⁽¹⁾			Investment

Mortgage loans:
Single-family
With a related allowance	$	2,228	$	—		$	2,228	$	(151	)	$	2,077
Without a related allowance ⁽²⁾		3,450		(411	)		3,039		—			3,039
Total single-family		5,678		(411	)		5,267		(151	)		5,116

Commercial business loans:
With a related allowance		70		—			70		(6	)		64
Total commercial business loans		70		—			70		(6	)		64

Total restructured loans	$	5,748	$	(411	)	$	5,337	$	(157	)	$	5,180

During the quarter ended December 31, 2018, no properties were acquired in the settlement of loans, while one previously foreclosed upon property was sold. This compares to the quarter ended December 31, 2017 when one property was acquired in the settlement of loans, while no previously foreclosed upon properties were sold. For the six months ended December 31, 2018, no properties were acquired in the settlement of loans, while two previously foreclosed upon properties were sold. This compares to the six months ended December 31, 2017 when one property was acquired in the settlement of loans, while two previously foreclosed upon properties were sold. As of December 31, 2018, there was no outstanding real estate owned property. This compares to two real estate owned properties located in California with a total net fair value of $906,000 at June 30, 2018. A new appraisal was obtained on each of the properties at the time of foreclosure and fair value was derived by using the lower of the appraised value or the listing price of the property, net of selling costs. Any initial loss was recorded as a charge to the allowance for loan losses before being transferred to real estate owned. Subsequent to transfer to real estate owned, if there is further deterioration in real estate values, specific real estate owned loss reserves are established and charged to the statement of operations. In addition, the Corporation records costs to carry real estate owned as real estate operating expenses as incurred.