4. Loans receivable

The composition of the loan portfolio was as follows:

	September 30,			June 30,
(in thousands)	2017			2017

Residential real estate
One- to four-family	$	196,497		$	197,936
Multi-family		15,067			15,678
Construction		2,320			2,398
Land		901			1,304
Farm		2,368			2,062
Nonresidential real estate		31,104			29,211
Commercial nonmortgage		2,200			2,540
Consumer and other:
Loans on deposits		1,632			1,607
Home equity		6,819			6,853
Automobile		38			42
Unsecured		471			400
		259,417			260,031

Undisbursed portion of loans in process		(2,047	)		(296	)
Deferred loan origination costs		42			42
Allowance for loan losses		(1,554	)		(1,533	)
	$	255,858		$	258,244

The following table presents the activity in the allowance for loan losses by portfolio segment for the three months ended September 30, 2017:

(in thousands)	Beginning balance		Provision for loan losses			Loans charged off			Recoveries		Ending balance

Residential real estate:
One- to four-family	$	773	$	(20	)	$	(18	)	$	39	$	774
Multi-family		243		--			--			--		243
Construction		6		1			--			--		7
Land		4		(2	)		--			--		2
Farm		9		1			--			--		10
Nonresidential real estate		270		14			--			--		284
Commercial nonmortgage		6		1			--			--		7
Consumer and other:
Loans on deposits		4		1			--			--		5
Home equity		17		3			--			--		20
Automobile		--		--			--			--		--
Unsecured		1		1			--			--		2
Unallocated		200		--			--			--		200
Totals	$	1,533	$	--		$	(18	)	$	39	$	1,554

The following table presents the activity in the allowance for loan losses by portfolio segment for the three months ended September 30, 2016:

(in thousands)	Beginning balance		Provision for loan losses			Loans charged off			Recoveries		Ending balance

Residential real estate:
One- to four-family	$	862	$	(16	)	$	(43	)	$	--	$	803
Multi-family		192		16			--			--		208
Construction		5		--			--			--		5
Land		2		--			--			--		2
Farm		3		1			--			--		4
Nonresidential real estate		217		5			--			--		222
Commercial nonmortgage		18		(3	)		--			--		15
Consumer and other:
Loans on deposits		4		--			--			--		4
Home equity		11		1			--			--		12
Automobile		--		--			--			--		--
Unsecured		1		--			--			--		1
Unallocated		200		--			--			--		200
Totals	$	1,515	$	4		$	(43	)	$	--	$	1,476

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio class and based on impairment method as of September 30, 2017. The recorded investment in loans excludes accrued interest receivable and deferred loan costs, net due to immateriality. There were no impaired loans at September 30, 2017, that had a related specific allowance.

September 30, 2017:

	Unpaid Principal Balance and Recorded Investment
(in thousands)	Loans individually evaluated		Loans acquired with deteriorated credit quality		Ending loans balance		Ending allowance attributed to loans		Unallocated allowance		Total allowance

Loans individually evaluated for impairment:
Residential real estate:
One- to four-family	$	3,195	$	1,502	$	4,697	$	--	$	--	$	--
		131		--		131		--		--		--
		3,326		1,502		4,828		--		--		--

Loans collectively evaluated for impairment:
Residential real estate:
One- to four-family					$	191,800	$	774	$	--	$	774
Multi-family						15,067		243		--		243
Construction						2,320		7		--		7
Land						901		2		--		2
Farm						2,368		10		--		10
Nonresidential real estate						30,973		284		--		284
Commercial nonmortgage						2,200		7		--		7
Consumer:
Loans on deposits						1,632		5		--		5
Home equity						6,819		20		--		20
Automobile						38		--		--		--
Unsecured						471		2		--		2
Unallocated						--		--		200		200
						254,589		1,354		200		1,554
					$	259,417	$	1,354	$	200	$	1,554

The following tables present the balance in the allowance for loan losses and the recorded investment in loans by portfolio class and based on impairment method as of June 30, 2017. There were no impaired loans at June 30, 2017, that had a related specific allowance.

June 30, 2017:

	Unpaid Principal Balance and Recorded Investment
(in thousands)	Loans individually evaluated		Loans acquired with deteriorated credit quality		Ending loans balance		Ending allowance attributed to loans		Unallocated allowance		Total allowance

Loans individually evaluated for impairment:
Residential real estate:
One- to four-family	$	3,706	$	1,676	$	5,382	$	--	$	--	$	--
Nonresidential real estate		131		--		131		--		--		--
		3,837		1,676		5,513		--		--		--

Loans collectively evaluated for impairment:
Residential real estate:
One- to four-family					$	192,554	$	773	$	--	$	773
Multi-family						15,678		243		--		243
Construction						2,398		6		--		6
Land						1,304		4		--		4
Farm						2,062		9		--		9
Nonresidential real estate						29,080		270		--		270
Commercial nonmortgage						2,540		6		--		6
Consumer:
Loans on deposits						1,607		4		--		4
Home equity						6,853		17		--		17
Automobile						42		--		--		--
Unsecured						400		1		--		1
Unallocated						--		--		200		200
						254,518		1,333		200		1,533
					$	260,031	$	1,333	$	200	$	1,533

The following table presents loans individually evaluated for impairment by class of loans as of and for the three months ended September 30, 2017 and 2016:

September 30, 2017:

(in thousands)	Unpaid Principal Balance and Recorded Investment		Allowance for Loan Losses Allocated		Average Recorded Investment		Interest Income Recognized		Cash Basis Income Recognized

With no related allowance recorded:
One- to four-family	$	3,195	$	-	$	3,450	$	2	$	2
Nonresidential real estate		131		-		131		-		-
Purchased credit-impaired loans		1,502		-		1,589		30		30
		4,828		-		5,170		32		32
With an allowance recorded:
One- to four-family		-		-		-		-		-
	$	4,828	$	-	$	5,170	$	32	$	32

September 30, 2016:

(in thousands)	Unpaid Principal Balance and Recorded Investment		Allowance for Loan Losses Allocated		Average Recorded Investment		Interest Income Recognized		Cash Basis Income Recognized

With no related allowance recorded:
One- to four-family	$	3,980	$	--	$	3,690	$	2	$	2
Purchased credit-impaired loans		2,091		--		2,201		14		14
		6,071		--		5,891		16		16
With an allowance recorded:
One- to four-family		--		--		--		--		--
	$	6,071	$	--	$	5,891	$	16	$	16

The following tables present the recorded investment in nonaccrual and loans past due over 90 days still on accrual by class of loans as of September 30, 2017 and June 30, 2017:

	September 30, 2017				June 30, 2017
(in thousands)	Nonaccrual		Loans Past Due Over 90 Days Still Accruing		Nonaccrual		Loans Past Due Over 90 Days Still Accruing

One- to four-family residential real estate	$	4,790	$	1,598	$	4,870	$	1,770
Nonresidential real estate and land		150		539		151		--
Consumer		9		22		8		11
	$	4,949	$	2,159	$	5,029	$	1,781

Troubled Debt Restructurings:

A Troubled Debt Restructuring (“TDR”) is the situation where the Bank grants a concession to the borrower that the Banks would not otherwise have considered due to the borrower’s financial difficulties. All TDRs are considered “impaired.” At September 30, 2017 and June 30, 2017, the Company had $1.7 million and $1.5 million of loans classified as TDRs, respectively. Of the TDRs at September 30, 2017, approximately 15.9% were related to the borrower’s completion of Chapter 7 bankruptcy proceedings with no reaffirmation of the debt to the Banks.

The following table summarizes TDR loan modifications that occurred during the three months ended September 30, 2017 and 2016, and their performance, by modification type:

(in thousands)	Troubled Debt Restructurings Performing to Modified Terms		Troubled Debt Restructurings Not Performing to Modified Terms		Total Troubled Debt Restructurings

Three months ended September 30, 2017
Residential real estate:
Terms extended	$	314	$	--	$	314

The Company had no TDRs during the three months ended September 30, 2016. The Company had no allocated specific reserves to customers whose loan terms had been modified in troubled debt restructurings as of September 30, 2017 or at June 30, 2017. The Company had no commitments to lend on loans classified as TDRs at September 30, 2017 or June 30, 2017.

Four TDRs with a carrying value of $136,000 defaulted during the three-month period ended September 30, 2017. The properties were taken into REO and sold. There were no TDRs that defaulted during the three- month period ended September 30, 2016.

The following table presents the aging of the principal balance outstanding in past due loans as of September 30, 2017, by class of loans:

*(in thousands)*	30-89 Days Past Due		90 Days or Greater Past Due		Total Past Due		Loans Not Past Due		Total

Residential real estate:
One-to four-family	$	3,973	$	3,847	$	7,820	$	188,677	$	196,497
Multi-family		--		--		--		15,067		15,067
Construction		--		--		--		2,320		2,320
Land		--		--		--		901		901
Farm		--		539		539		1,829		2,368
Nonresidential real estate		630		133		763		30,341		31,104
Commercial non-mortgage		--		--		--		2,200		2,200
Consumer and other:
Loans on deposits		--		--		--		1,632		1,632
Home equity		3		22		25		6,794		6,819
Automobile		--		--		--		38		38
Unsecured		--		--		--		471		471
Total	$	4,606	$	4,541	$	9,147	$	250,270	$	259,417

The following tables present the aging of the principal balance outstanding in past due loans as of June 30, 2017, by class of loans:

(in thousands)	30-89 Days Past Due		90 Days or Greater Past Due		Total Past Due		Loans Not Past Due		Total

Residential real estate:
One-to four-family	$	5,193	$	4,496	$	9,689	$	188,247	$	197,936
Multi-family		--		--		--		15,678		15,678
Construction		--		--		--		2,398		2,398
Land		--		--		--		1,304		1,304
Farm		539		--		539		1,523		2,062
Nonresidential real estate		635		133		768		28,443		29,211
Commercial nonmortgage		--		--		--		2,540		2,540
Consumer:
Loans on deposits		--		--		--		1,607		1,607
Home equity		17		11		28		6,825		6,853
Automobile		--		--		--		42		42
Unsecured		13		--		13		387		400
Total	$	6,397	$	4,640	$	11,037	$	248,994	$	260,031

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, 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 is performed on an annual basis. The Company uses the following definitions for risk ratings:

Special Mention. Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable.

Loans not meeting the criteria above that are analyzed individually as part of the above-described process are considered to be pass rated loans. Loans listed that are not rated are included in groups of homogeneous loans and are evaluated for credit quality based on performing status. See the aging of past due loan table above. As of September 30, 2017, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

(in thousands)	Pass		Special Mention		Substandard		Doubtful		Not rated

Residential real estate:
One- to four-family	$	--	$	4,569	$	9,998	$	--	$	181,930
Multi-family		14,686		--		381		--		--
Construction		2,320		--		--		--		--
Land		901		--		--		--		--
Farm		1,829		--		539		--		--
Nonresidential real estate		30,954		--		150		--		--
Commercial nonmortgage		2,174		26		--		--		--
Consumer:
Loans on deposits		1,632		--		--		--		--
Home equity		6,819		--		--		--		--
Automobile		38		--		--		--		--
Unsecured		467		--		4		--		--
	$	61,820	$	4,595	$	11,072	$	--	$	181,930

At June 30, 2017, the risk category of loans by class of loans was as follows:

(in thousands)	Pass		Special Mention		Substandard		Doubtful		Not rated

Residential real estate:
One- to four-family	$	--	$	6,110	$	9,883	$	--	$	181,943
Multi-family		14,541		--		1,137		--		--
Construction		2,398		--		--		--		--
Land		1,304		--		--		--		--
Farm		1,523		--		539		--		--
Nonresidential real estate		29,061		--		150		--		--
Commercial nonmortgage		2,513		27		--		--		--
Consumer:
Loans on deposits		1,607		--		--		--		--
Home equity		6,744		93		16		--		--
Automobile		42		--		--		--		--
Unsecured		396		--		4		--		--
	$	60,129	$	6,230	$	11,729	$	--	$	181,943

Purchased Credit Impaired Loans:

The Company purchased loans during fiscal year 2013 for which there was, at acquisition, evidence of deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected. The carrying amount of those loans, net of a purchase credit discount of $388,000 at September 30, 2017 and June 30, 2017, respectively, is as follows:

(in thousands)	September 30, 2017		June 30, 2017

One- to four-family residential real estate	$	1,502	$	1,676
Nonresidential real estate		--		--
Outstanding balance	$	1,502	$	1,676

Accretable yield, or income expected to be collected on loans purchased during fiscal year 2013, is as follows

(in thousands)	Three months ended September 30, 2017			Three months ended September 30, 2016

Balance at beginning of period	$	720		$	981
Accretion of income		(22	)		(46	)
Reclassifications from nonaccretable difference		-			-
Disposals, net of recoveries		1			-
Balance at end of period	$	699		$	935

For those purchased loans disclosed above, the Company made no increase in allowance for loan losses for the year ended June 30, 2017, nor for the three-month period ended September 30, 2017. Neither were any allowance for loan losses reversed during those periods.