4. Loans receivable

The composition of the loan portfolio was as follows:

	September 30,			June 30,
(in thousands)	2018			2018

Residential real estate
One- to four-family	$	205,567		$	206,908
Multi-family		15,143			15,113
Construction		2,514			2,919
Land		692			677
Farm		2,232			2,295
Nonresidential real estate		32,102			32,413
Commercial nonmortgage		1,993			1,917
Consumer and other:
Loans on deposits		1,542			1,470
Home equity		8,118			7,603
Automobile		34			63
Unsecured		515			508
	$	270,452		$	271,886
Allowance for loan losses		(1,571	)		(1,576	)
	$	268,881		$	270,310

The following table presents the activity in the allowance for loan losses by portfolio segment for the three months ended September 30, 2018:

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

Residential real estate:
One- to four-family	$	795	$	22		$	(59	)	$	23	$	781
Multi-family		225		7			--			--		232
Construction		8		(4	)		--			--		4
Land		1		--			--			--		1
Farm		6		--			--			--		6
Nonresidential real estate		321		2			--			--		323
Commercial nonmortgage		3		1			--			--		4
Consumer and other:
Loans on deposits		3		--			--			--		3
Home equity		13		3			--			--		16
Automobile		--		--			--			--		--
Unsecured		1		(20	)		--			20		1
Unallocated		200		--			--			--		200
Totals	$	1,576	$	11		$	(59	)	$	43	$	1,571

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 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, 2018. The recorded investment in loans excludes accrued interest receivable due to immateriality.

September 30, 2018:

*(in thousands)*	Loans individually evaluated		Loans acquired with deteriorated credit quality		Unpaid principal balance and recorded investment		Ending allowance attributed to loans		Unallocated allowance		Total allowance
Loans individually evaluated for impairment:
Residential real estate:
One- to four-family	$	4,232	$	971	$	5,203	$	--	$	--	$	--
Farm		310		--		310		--		--		--
Nonresidential real estate		699		--		699		--		--		--
		5,241		971		6,212		--		--		--

Loans collectively evaluated for impairment:
Residential real estate:
One- to four-family					$	200,364	$	781	$	--	$	781
Multi-family						15,143		232		--		232
Construction						2,514		4		--		4
Land						692		1		--		1
Farm						1,922		6		--		6
Nonresidential real estate						31,403		323		--		323
Commercial nonmortgage						1,993		4		--		4
Consumer:
Loans on deposits						1,542		3		--		3
Home equity						8,118		16		--		16
Automobile						34		--		--		--
Unsecured						515		1		--		1
Unallocated						--		--		200		200
						264,240		1,371		200		1,571
					$	270,452	$	1,371	$	200	$	1,571

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, 2018.

June 30, 2018:

(in thousands)	Loans individually evaluated		Loans acquired with deteriorated credit quality		Unpaid principal balance and recorded investment		Ending allowance attributed to loans		Unallocated allowance		Total allowance
Loans individually evaluated for impairment:
Residential real estate:
One- to four-family	$	2,977	$	1,138	$	4,115	$	--	$	--	$	--
Farm		310		--		310		--		--		--
Nonresidential real estate		122		--		122		--		--		--
		3,409		1,138		4,547		--		--		--

Loans collectively evaluated for impairment:
Residential real estate:
One- to four-family					$	202,793	$	795	$	--	$	795
Multi-family						15,113		225		--		225
Construction						2,919		8		--		8
Land						677		1		--		1
Farm						1,985		6		--		6
Nonresidential real estate						32,291		321		--		321
Commercial nonmortgage						1,917		3		--		3
Consumer:
Loans on deposits						1,470		3		--		3
Home equity						7,603		13		--		13
Automobile						63		--		--		--
Unsecured						508		1		--		1
Unallocated						--		--		200		200
						267,339		1,376		200		1,576
					$	271,886	$	1,376	$	200	$	1,576

The following table presents loans individually evaluated for impairment by class of loans as of and for the three months ended September 30, 2018 and 2017:

September 30, 2018:

(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	$	4,232	$	--	$	3,605	$	16	$	16
Farm		310		--		310		--		--
Nonresidential real estate		699		--		411		--		--
Purchased credit-impaired loans		971		--		1,055		8		8
		6,212		--		5,380		24		24
With an allowance recorded:
One- to four-family		--		--		--		--		--
	$	6,212	$	--	$	5,380	$	24	$	24

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

The following table presents the recorded investment in nonaccrual and loans past due over 90 days still on accrual by class of loans as of September 30, 2018 and June 30, 2018:

	September 30, 2018				June 30, 2018
(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	$	4,475	$	2,771	$	4,210	$	2,419
Multifamily		343		448		--		--
Farm		310		--		310		--
Nonresidential real estate and land		699		27		708		--
Commercial and industrial		7		--		7		--
Consumer		10		7		11		--
	$	5,844	$	3,253	$	5,246	$	2,419

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.” During the three months ended September 30, 2018, a secondary mortgage loan of $219,000 was renewed and an additional $30,000 was loaned to a borrower to finish construction of an 8-plex. The construction project had experienced cost overruns. The Company carries the first mortgage on this project and both the primary and secondary loans are secured by the 8-plex and additional real estate collateral. At September 30, 2018 and June 30, 2018, the Company had $1.9 million and $1.7 million of loans classified as TDRs, respectively. Of the TDRs at September 30, 2018, approximately 33.3% 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, 2018 and 2017, 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, 2018
Residential real estate:
Terms extended	$	249	$	--	$	249

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

The Company had no allocated specific reserves to customers whose loan terms had been modified in troubled debt restructurings as of September 30, 2018 or at June 30, 2018. The Company had no commitments to lend on loans classified as TDRs at September 30, 2018 or June 30, 2018.

No TDRs defaulted during the three-month period ended September 30, 2018. Four TDRs with a carrying value of $136,000 defaulted during the three-month period ended September 30, 2017.

The following table presents the aging of the principal balance outstanding in past due loans as of September 30, 2018, 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	$	2,572	$	4,792	$	7,364	$	198,203	$	205,567
Multi-family		--		448		448		14,695		15,143
Construction		--		--		--		2,514		2,514
Land		--		--		--		692		692
Farm		--		--		--		2,232		2,232
Nonresidential real estate		396		298		694		31,408		32,102
Commercial non-mortgage		--		--		--		1,993		1,993
Consumer and other:
Loans on deposits		--		--		--		1,542		1,542
Home equity		6		12		18		8,100		8,118
Automobile		--		--		--		34		34
Unsecured		3		--		3		512		515
Total	$	2,977	$	5,550	$	8,527	$	261,925	$	270,452

The following tables present the aging of the principal balance outstanding in past due loans as of June 30, 2018, 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	$	3,182	$	4,051	$	7,233	$	199,675	$	206,908
Multi-family		792		--		792		14,321		15,113
Construction		--		--		--		2,919		2,919
Land		--		--		--		677		677
Farm		--		--		--		2,295		2,295
Nonresidential real estate		--		269		269		32,144		32,413
Commercial nonmortgage		--		--		--		1,917		1,917
Consumer:
Loans on deposits		--		--		--		1,470		1,470
Home equity		9		5		14		7,589		7,603
Automobile		--		--		--		63		63
Unsecured		3		--		3		505		508
Total	$	3,986	$	4,325	$	8,311	$	263,575	$	271,886

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, 2018, 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	$	--	$	963	$	9,931	$	--	$	194,673
Multi-family		14,447		--		696		--		--
Construction		2,514		--		--		--		--
Land		692		--		--		--		--
Farm		1,922		--		310		--		--
Nonresidential real estate		31,397		--		705		--		--
Commercial nonmortgage		1,988		--		5		--		--
Consumer:
Loans on deposits		1,542		--		--		--		--
Home equity		7,932		186		--		--		--
Automobile		34		--		--		--		--
Unsecured		512		--		3		--		--
	$	62,980	$	1,149	$	11,650	$	--	$	194,673

At June 30, 2018, 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	$	--	$	1,093	$	10,215	$	--	$	195,600
Multi-family		14,445		--		668		--		--
Construction		2,919		--		--		--		--
Land		677		--		--		--		--
Farm		1,985		--		310		--		--
Nonresidential real estate		31,700		--		713		--		--
Commercial nonmortgage		1,910		--		7		--		--
Consumer:
Loans on deposits		1,470		--		--		--		--
Home equity		7,603		--		--		--		--
Automobile		63		--		--		--		--
Unsecured		506		--		2		--		--
	$	63,278	$	1,093	$	11,915	$	--	$	195,600

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 $375,000 and $383,000 at September 30, 2018 and June 30, 2018, respectively, is as follows:

*(in thousands)*	September 30, 2018		June 30, 2018

One- to four-family residential real estate	$	971	$	1,138

Accretable yield, or income expected to be collected, is as follows

*(in thousands)*	Three months ended September 30, 2018			Twelve months ended June 30, 2018

Balance at beginning of period	$	634		$	720
Accretion of income		(21	)		(86	)
Disposals, net of recoveries		--			--
Balance at end of period	$	613		$	634

For those purchased loans disclosed above, the Company made no increase in allowance for loan losses for the year ended June 30, 2018, nor for the three-month period ended September 30, 2018. Neither were any allowance for loan losses reversed during those periods.