UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM10-Q

[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended~~December~~September ~~31, 2019~~30, 2020

[ ]	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:0-22444


WVS Financial Corp.
(Exact name of registrant as specified in its charter)

Pennsylvania						25-1710500
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification Number)

9001 Perry Highway Pittsburgh, Pennsylvania						15237
(Address of principal executive offices)						(Zip Code)

(412) 364-1911
(Registrant’s telephone number, including area ~~code:~~ ~~(412)364-1911~~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

Common Stock, par value $.01

WVFC

NASDAQ Global Market^SM

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 such reports), and (2) has been subject to such filing requirement for the past 90 days. YES X NO

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of RegulationS-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). YES X NO

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule12b-2 of the Exchange Act.


Large accelerated filer		Accelerated filer
Non-accelerated filer		Smaller reporting company X
		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 is a shell company (as defined in Rule12b-2 of the Exchange Act). YES NOX

Shares outstanding as of ~~February 12,~~November 9, 2020: ~~1,935,641~~1,902,690 shares of Common Stock, $.01 par value.

WVS FINANCIAL CORP. AND SUBSIDIARY

INDEX


PART I.	Financial Information	Page

Item 1.	Financial Statements

	Consolidated Balance Sheet as of ~~December 31, 2019~~September 30, 2020 and June 30, ~~2019~~2020 (Unaudited)	3

	Consolidated Statement of Income for the Three ~~and Six~~ Months Ended ~~December 31,~~September 30, 2020 and 2019 ~~and 2018~~ (Unaudited)	4

	Consolidated Statement of Comprehensive Income ~~(Loss)~~ for the Three ~~and Six~~ Months Ended ~~December 31,~~September 30, 2020 and 2019 ~~and 2018~~ (Unaudited)	5

	Consolidated Statement of Changes in Stockholders’ Equity for the Three ~~and Six~~ Months Ended ~~December 31,~~September 30, 2020 and 2019 ~~and 2018~~ (Unaudited)	6

	Consolidated Statement of Cash Flows for the ~~Six~~Three Months Ended ~~December 31, 2019~~September 30, 2020 and ~~2018~~2019 (Unaudited)	87

	Notes to Unaudited Consolidated Financial Statements	109

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations for the Three ~~and Six~~ Months Ended ~~December 31, 2019~~September 30, 2020	4034

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	4740

Item 4.	Controls and Procedures	5144

PART II.	Other Information	Page

Item 1.	Legal Proceedings	5245
Item 1A.	Risk Factors	5245
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5245
Item 3.	Defaults Upon Senior Securities	5346
Item 4.	Mine Safety Disclosures	5346
Item 5.	Other Information	5346
Item 6.	Exhibits	5346
	Signatures	5447

WVS FINANCIAL CORP. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEET

~~(UNAUDITED)~~

~~(In thousands, except share and per share data)~~

    December 31, 2019         June 30, 2019
Assets

Cash and due from banks
            $       2,766 $       1,849
Interest-earning demand deposits
276 2,530

Total cash and cash equivalents
3,042 4,379
Certificates of deposit
1,591 1,843
Investment securitiesavailable-for-sale (amortized cost of $137,541 and $132,673)
138,060 132,780
Investment securitiesheld-to-maturity (fair value of $3,578 and $4,080)
3,495 3,995
Mortgage-backed securitiesheld-to-maturity (fair value of $104,121 and $108,708)
103,956 108,331
Net loans receivable (allowance for loan losses of $530 and $548)
91,340 90,588
Accrued interest receivable
1,052 1,219
Federal Home Loan Bank (FHLB) stock, at cost
6,974 7,010
Premises and equipment, net
474 346
Bank owned life insurance
4,849 4,789
Deferred tax assets (net)
262 368
Other assets
153 170

TOTAL ASSETS
$  355,248 $  355,818

Liabilities and Stockholders’ Equity

Liabilities:

Deposits

Non-interest-bearing accounts
$    18,113 $    19,770
Interest-earning checking accounts
22,726 23,541
Savings accounts
42,719 43,740
Money market accounts
20,238 19,958
Certificates of deposit
41,888 37,361
Advance payments by borrowers for taxes and insurance
1,447 2,065

Total deposits
147,131 146,435
Federal Home Loan Bank advances: short-term
68,030 70,828
Federal Home Loan Bank advances: long-term – fixed rate
15,000 15,000
Federal Home Loan Bank advances: long-term – variable rate
85,000 85,000
Accrued interest payable
788 823
Other liabilities
1,786 1,683

TOTAL LIABILITIES
317,735 319,769

Stockholders’ equity:

Preferred stock:

5,000,000 shares, no par value per share, authorized; none issued
- -
Common stock:

10,000,000 shares, $.01 par value per share, authorized; 3,805,636 shares issued
38 38
Additionalpaid-in capital
21,568 21,550
Treasury stock: 1,869,995 and 1,862,520 shares at cost, respectively
(28,382 ) (28,269 )
Retained earnings, substantially restricted
45,973 44,807
Accumulated other comprehensive income
347 15
Unallocated Employee Stock Ownership Plan (“ESOP”) shares
(2,031 ) (2,092 )

TOTAL STOCKHOLDERS’ EQUITY
37,513 36,049

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
$  355,248 $  355,818

~~See accompanying notes to unaudited consolidated financial statements.~~
~~WVS FINANCIAL CORP. AND SUBSIDIARY~~
~~CONSOLIDATED STATEMENT OF INCOME~~
~~(UNAUDITED)~~
~~(In thousands, except share and per share data)~~

       Three Months Ended            Six Months Ended
   December 31,    December 31,
   2019 2018    2019 2018
INTEREST AND DIVIDEND INCOME:

Loans, including fees
       $                871     $                825        $                1,754     $              1,628
Investment securities
   997 1,066    2,078 2,088
Mortgage-backed securities
   757 927    1,642 1,816
Certificates of deposit
   15 3    30 5
Interest-earning demand deposits
   1 6    2 9
FHLB Stock
   130 116    252 228




Total interest and dividend income
   2,771 2,943    5,758 5,774




INTEREST EXPENSE:

Deposits
   232 129    482 252
Federal Home Loan Bank advances – long-term – fixed rate
   116 116    232 116
Federal Home Loan Bank advances – long-term – variable rate
   452 526    967 526
Federal Home Loan Bank advances – short-term
   310 437    613 1,345




Total interest expense
   1,110 1,208    2,294 2,239




NET INTEREST INCOME
   1,661 1,735    3,464 3,535
(CREDIT) PROVISION FOR LOAN LOSSES
   (8 ) 14    (18 ) 33




NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES
   1,669 1,721    3,482 3,502




NON-INTEREST INCOME:

Service charges on deposits
   30 26    60 55
Earnings on Bank Owned Life Insurance
   29 30    59 61
Investment securities gains (losses)
   32 -    32 (2 )
Other than temporary impairment (“OTTI”) losses
   (16 ) -    (18 ) -
Portion of gain recognized in other comprehensive Income (before taxes)
   - -    - -




Net impairment loss recognized in earnings
   (16 ) -    (18 ) -
ATM fee income
   36 43    78 85
Other
   11 11    21 21




Totalnon-interest income
   122 110    232 220




NON-INTEREST EXPENSE:

Salaries and employee benefits
   535 565    1,080 1,121
Occupancy and equipment
   57 58    119 �� 126
Data processing
   52 58    109 116
Correspondent bank service charges
   9 7    18 15
Federal deposit insurance premium
   - 22    (23 ) 50
ATM network expense
   18 25    41 62
Other
   199 219    373 365




Totalnon-interest expense
   870 954    1,717 1,855




INCOME BEFORE INCOME TAXES
   921 877    1,997 1,867
INCOME TAX EXPENSE
   194 192    477 435




NET INCOME
   $               727 $               685    $               1,520 $               1,432




EARNINGS PER SHARE:

Basic
   $               0.41 $               0.38    $                 0.86 $                 0.80
Diluted
   $               0.41 $               0.38    $                 0.86 $                 0.80
AVERAGE SHARES OUTSTANDING:

Basic
   1,771,457 1,782,091    1,773,509 1,787,573
Diluted
   1,771,457 1,782,091    1,773,509 1,787,682
~~See accompanying notes to unaudited consolidated financial statements.~~
~~WVS FINANCIAL CORP. AND SUBSIDIARY~~
~~CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)~~
(UNAUDITED)
(In thousands)

       Three Months Ended         Six Months Ended
   December 31, December 31,
   2019 2018 2019 2018
NET INCOME
   $ 727 $ 685 $ 1,520 $ 1,432
OTHER COMPREHENSIVE INCOME (LOSS)

Investment securities available for sale not other-than-temporarily impaired:

Gains (losses) arising during the year
   387 (1,992 ) 444 (1,870 )
Less: Income tax effect
   (81 ) 418 (93 ) 392


   306 (1,574 ) 351 (1,478 )


(Gains) losses recognized in earnings
   (32 ) - (32 ) 2
Less: Income tax effect
   7 - 7 -


   (25 ) - (25 ) 2
Unrealized holdings gains (losses) on securities available for sale not other-than-temporarily impaired, net of tax
   281 (1,574 ) 326 (1,476 )


Investment securities held to maturity other-than-temporarily impaired:

Total losses
   16 - 18 -
Losses recognized in earnings
   16 - 18 -


Gains (losses) recognized in comprehensive income
   - - - -
Income tax effect
   - - - -


   - - - -
Accretion of other comprehensive loss on other-than-temporarily impaired securities held to maturity
   4 12 8 (27 )
Less: Income tax effect
   (1 ) (2 ) (2 ) 6


Unrealized holding (losses) gains on other-than-temporarily impaired securities held to maturity, net of tax
   3 10 6 (21 )


Unrealized holdings gains (losses) on securities, net
   3 10 6 (21 )


Other comprehensive income (loss)
   284 (1,564 ) 332 (1,497 )


COMPREHENSIVE INCOME (LOSS)
         $   1,011       $   (879 )       $   1,852       $   (65 )


~~See accompanying notes to unaudited consolidated financial statements.~~
~~WVS FINANCIAL CORP. AND SUBSIDIARY~~
~~CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY~~
~~(UNAUDITED)~~
~~(In thousands)~~

Common
    Stock     Additional
Paid-in
    Capital     Treasury
    Stock     Retained
Earnings –
    Substantially
Restricted Accumulated
Other
    Comprehensive
Income     Unallocated
ESOP
Shares       Total
Balance September 30, 2019
$     38 $ 21,560 $ (28,382 )   $ 45,423   $   63   $     (2,064 )   $ 36,638
Net income
727 727
Other comprehensive income
284 284
Amortization of unallocated ESOP Shares
8 33 41
Cash dividends declared ($0.10 per share)
(177 ) (177 )

Balance December 31, 2019
$     38   $ 21,568   $ (28,382 )   $ 45,973   $ 347   $ (2,031 )   $ 37,513

Common
    Stock     Additional
Paid-in
    Capital     Treasury
    Stock     Retained
Earnings –
    Substantially
Restricted Accumulated
Other
    Comprehensive
Income     Unallocated
ESOP
Shares       Total
Balance June 30, 2019
$     38   $ 21,550   $ (28,269 )   $ 44,807   $ 15   $ (2,092 )   $ 36,049
Net income
1,520 1,520
Other comprehensive income
332 332
Purchase of treasury stock (7,475 shares)
(113 ) (113 )
Amortization of unallocated ESOP Shares
18 61 79
Cash dividends declared ($0.20 per share)
(354 ) (354 )

Balance December 31, 2019
$     38   $ 21,568   $ (28,382 )   $ 45,973   $    347   $ (2,031 )   $ 37,513

       September 30, 2020         June 30, 2020
Assets

Cash and due from banks
               $       3,804 $       2,488
Interest-earning demand deposits
   7 12


Total cash and cash equivalents
   3,811 2,500
Certificates of deposit
   1,343 1,840
Investment securities available-for-sale (amortized cost of $140,672 and $148,271)
   141,044 147,639
Investment securities held-to-maturity (fair value of $3,613 and $3,622)
   3,495 3,495
Mortgage-backed securities held-to-maturity (fair value of $77,661 and $96,649)
   77,937 97,106
Net loans receivable (allowance for loan losses of $620 and $618)
   91,749 91,032
Accrued interest receivable
   709 744
Federal Home Loan Bank (FHLB) stock, at cost
   5,923 6,564
Premises and equipment, net
   675 574
Bank owned life insurance
   4,935 4,907
Deferred tax assets (net)
   314 548
Other assets
   216 152


TOTAL ASSETS
   $  332,151 $  357,101


Liabilities and Stockholders’ Equity

Liabilities:

Deposits

Non-interest-bearing accounts
   $   22,765 $    22,657
Interest-earning checking
   24,844 25,075
Savings accounts
   44,560 44,541
Money market accounts
   19,994 21,743
Certificates of deposit
   29,865 35,063
Advance payments by borrowers for taxes and insurance
   909 2,256


Total deposits
   142,937 151,335
Federal Home Loan Bank advances: long-term – fixed rate
   15,000 15,000
Federal Home Loan Bank advances: long-term – variable rate
   85,000 85,000
Federal Home Loan Bank advances: short-term
   43,281 59,159
Other short-term borrowings
   5,875 7,000
Accrued interest payable
   314 487
Other liabilities
   1,805 2,207


TOTAL LIABILITIES
   294,212 320,188


Stockholders’ equity:

Preferred stock:

5,000,000 shares, no par value per share, authorized; none issued
   - -
Common stock:

10,000,000 shares, $.01 par value per share, authorized; 3,805,636 shares issued;
   38 38
Additional paid-in capital
   21,578 21,577
Treasury stock: 1,902,946 and 1,898,932 shares at cost, respectively
   (28,827 ) (28,775 )
Retained earnings, substantially restricted
   46,835 46,590
Accumulated other comprehensive income (loss)
   241 (556 )
Unallocated Employee Stock Ownership Plan (“ESOP”) shares
   (1,926 ) (1,961 )


TOTAL STOCKHOLDERS’ EQUITY
   37,939 36,913


TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
   $  332,151 $  357,101


See accompanying notes to unaudited consolidated financial statements.
WVS FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF ~~CHANGES IN STOCKHOLDERS’ EQUITY~~INCOME
(UNAUDITED)
(In ~~thousands)~~
thousands, except per share data)

    Common
Stock Additional
Paid-in
    Capital     Treasury
    Stock     Retained
Earnings –
    Substantially
Restricted Accumulated
Other
    Comprehensive
Loss     Unallocated
ESOP
Shares       Total
Balance September 30, 2018
  $    38   $ 21,525   $ (27,918)   $ 43,400   $    (121)   $    (2,219)   $ 34,705
Net income
685 685
Other comprehensive loss
(1,564 ) (1,564 )
Purchase of treasury stock (23,717 shares)
(340 ) (340 )
Amortization of unallocated ESOP Shares
5 40 45
Cash dividends declared ($0.08 per share)
(144 ) (144 )

Balance December 31, 2018
  $    38   $ 21,530   $ (28,258)   $ 43,941   $    (1,685)   $    (2,179)   $ 33,387

Common
Stock Additional
Paid-in
Capital Treasury
Stock Retained
Earnings –
Substantially
Restricted Accumulated Other
Comprehensive
Loss Unallocated
ESOP
Shares Total
Balance June 30, 2018
  $    38   $ 21,516   $ (27,886)   $ 42,795   $ (188)   $ (2,258)   $ 34,017
Net income
1,432 1,432
Other comprehensive loss
(1,497 ) (1,497 )
Purchase of treasury stock (25,717 shares)
(372 ) (372 )
Amortization of unallocated ESOP Shares
14 79 93
Cash dividends declared ($0.16 per share)
(286 ) (286 )

Balance December 31, 2018
$    38   $ 21,530   $ (28,258)   $ 43,941   $ (1,685)   $ (2,179)   $ 33,387

       Three Months Ended
   September 30,
   2020 2019
INTEREST AND DIVIDEND INCOME:

Loans, including fees
       $                 864     $                 883
Investment securities
   437 1,081
Mortgage-backed securities
   269 885
Certificates of deposit
   6 15
Interest-earning demand deposits
   —   1
FHLB Stock
   89 122


Total interest and dividend income
   1,665 2,987


INTEREST EXPENSE:

Deposits
   104 250
Federal Home Loan Bank advances – long-term – fixed rate
   115 114
Federal Home Loan Bank advances – long-term – variable rate
   71 518
Federal Home Loan Bank advances – short-term
   34 302
Other short-term borrowings
   1 -


Total interest expense
   325 1,184


NET INTEREST INCOME
   1,340 1,803
PROVISION (CREDIT) FOR LOAN LOSSES
   2 (10 )


NET INTEREST INCOME AFTER PROVISION (CREDIT) FOR LOAN LOSSES
   1,338 1,813


NON-INTEREST INCOME:

Service charges on deposits
   22 29
Earnings on Bank Owned Life Insurance
   28 30
Investment securities gains
   25 -

Other than temporary impairment (“OTTI”) losses
   (13 ) (1 )
Portion of loss (gain) recognized in other comprehensive income (before taxes)
   - -


Net impairment loss recognized in earnings
   (13 ) (1 )

ATM fee income
   38 42
Other
   11 10


Total non-interest income
   111 110


NON-INTEREST EXPENSE:

Salaries and employee benefits
   552 �� 545
Occupancy and equipment
   68 63
Data processing
   59 57
Correspondent bank service charges
   9 9
Federal deposit insurance premium
   27 (23 )
ATM Network expense
   21 23
Other
   144 173


Total non-interest expense
   880 847


INCOME BEFORE INCOME TAXES
   569 1,076
INCOME TAX EXPENSE
   149 283


NET INCOME
       $                420     $                793


EARNINGS PER SHARE:

Basic
       $                0.24     $                0.45
Diluted
       $                0.24     $                0.45
AVERAGE SHARES OUTSTANDING:

Basic
   1,748,040 1,775,561
Diluted
   1,748,040 1,775,561
See accompanying notes to unaudited consolidated financial statements.
WVS FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF ~~CASH FLOWS~~COMPREHENSIVE INCOME
(UNAUDITED)
(In thousands)

   Six Months Ended
December 31,
         2019             2018
OPERATING ACTIVITIES

Net income
   $ 1,520 $ 1,432
Adjustments to reconcile net income to cash provided by operating activities:

(Credit) provision for loan losses
   (18 ) 33
Depreciation
   15 29
Net impairment loss recognized in earnings
   18 -
(Gain) loss on sale of investments
   (32 ) 2
Amortization of discounts, premiums and deferred loan costs
   50 111
Amortization of unallocated ESOP shares
   79 93
Deferred income taxes
   18 (27 )
Increase in prepaid/accrued income taxes
   74 33
Earnings on bank owned life insurance
   (59 ) (61 )
Decrease in accrued interest receivable
   167 39
(Decrease) increase in accrued interest payable
   (35 ) 406
Increase in deferred director compensation payable
   25 22
Other, net
   18 22


Net cash provided by operating activities
   1,840 2,134


INVESTING ACTIVITIES

Available-for-sale:

Purchase of investment securities
   (17,324 ) (24,782 )
Proceeds from sale of investments
   9,055 1,364
Proceeds from repayments of investments
   3,330 22,705
Held-to-maturity:

Proceeds from repayments of investments
   500 2,180
Proceeds from repayments of mortgage-backed securities
   4,374 5,918
Purchase of certificates of deposit
   (1,340 ) (1,096 )
Maturities/redemptions of certificates of deposit
   1,593 100
Purchase of loans
   (6,266 ) (5,102 )
Net decrease in net loans receivable
   5,577 1,364
Purchase of FHLB stock
   (6,974 ) (3,043 )
Redemption of FHLB stock
   7,010 3,217
Acquisition of premises and equipment
   (143 ) -


Net cash (used for) provided by investing activities
   (608 ) 2,825


       Three Months Ended
   September 30,
   2020 2019
NET INCOME
   $ 420 $ 793
OTHER COMPREHENSIVE INCOME

Investment securities available for sale not other-than-temporarily impaired:

Gains arising during the year
   1,030 58
Less: Income tax effect
   (216 ) (13 )


   814 45
(Gains) recognized in earnings
   (25 ) -
Less: Income tax effect
   (5 ) -


   (20 ) -
Unrealized holding gains on investment securities available for sale not other-than-temporarily impaired, net of tax
   794 45


Investment securities held to maturity other-than-temporarily impaired:

Total losses
   13 1
Losses recognized in earnings
   13 1


Gains (losses) recognized in comprehensive income
   - -
Income tax effect
   - -


   - -
Accretion of other comprehensive loss on other-than-temporarily impaired securities held to maturity
   4 4
Less: Income tax effect
   (1 ) (1 )


   3 3
Unrealized holding gains (losses) on other-than-temporarily impaired securities held to maturity, net of tax
   3 3


Other comprehensive income
   797 48


COMPREHENSIVE INCOME
         $   1,217       $   841


See accompanying notes to unaudited consolidated financial statements.
WVS FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
(UNAUDITED)
(In thousands, except per share data)
Common
    Stock     Additional
Paid-in
    Capital     Treasury
    Stock     Retained
Earnings –
    Substantially
Restricted Accumulated
Other
    Comprehensive
(Loss) Income     Unallocated
ESOP
Shares       Total
Balance June 30, 2020
$     38 $ 21,577 $ (28,775 )   $ 46,590   $ (556 )   $ (1,961 )   $ 36,913
Net income
420 420
Other comprehensive income
797 797
Purchase of treasury stock (4,014 shares)
(52 ) (52 )
Amortization of unallocated ESOP shares
1 35 36
Cash dividends declared ($0.10 per share)
(175 ) (175 )

Balance September 30, 2020
$     38   $ 21,578   $ (28,827 )   $ 46,835   $ 241   $ (1,926 )   $ 37,939

Common
    Stock     Additional
Paid-in
    Capital     Treasury
    Stock     Retained
Earnings –
    Substantially
Restricted Accumulated
Other
    Comprehensive
Income     Unallocated
ESOP
Shares       Total
Balance June 30, 2019
$     38   $ 21,550   $ (28,269 )   $ 44,807   $ 15   $ (2,092 )   $ 36,049
Net income
793 793
Other comprehensive income
48 48
Purchase of treasury stock (7,475 shares)
(113 ) (113 )
Amortization of unallocated ESOP shares
10 28 38
Cash dividends declared
($0.10 per share)
(177 ) (177 )

Balance September 30, 2019
$     38   $ 21,560   $ (28,382 )   $ 45,423   $ 63   $ (2,064 )   $ 36,638

See accompanying notes to unaudited consolidated financial statements.
WVS FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
(In thousands)
   Three Months Ended
September 30,
         2020             2019
OPERATING ACTIVITIES

Net income
   $ 420 $ 793
Adjustments to reconcile net income to cash (used for) provided by operating activities:

Provision (credit) for loan losses
   2 (10 )
Depreciation
   18 6
Investment securities gains
   (25 ) -
Net impairment loss recognized in earnings
   13 1
Amortization of discounts, premiums and deferred loan fees, net
   8 24
Amortization of unallocated ESOP shares
   36 38
Deferred income taxes
   22 (9 )
(Decrease) increase in accrued income taxes
   (355 ) 94
Earnings on bank owned life insurance
   (28 ) (30 )
Decrease in accrued interest receivable
   35 39
Decrease in accrued interest payable
   (173 ) (26 )
Increase in deferred director compensation payable
   14 12
Other, net
   (125 ) (95 )


Net cash (used for) provided by operating activities
   (138 ) 837


INVESTING ACTIVITIES

Available-for-sale:

Purchases of investment securities
   (12,945 ) (1,965 )
Proceeds from sale of investments
   1,015 -
Proceeds from repayments of investment securities
   19,507 -
Held-to-maturity:

Proceeds from repayments of investment securities
   - 500
Proceeds from repayments of mortgage-backed securities
   19,171 2,024
Purchases of certificates of deposit
   (100 ) (1,092 )
Maturities/redemptions of certificates of deposit
   597 349
Purchase of loans
   (5,248 ) (2,377 )
Net decrease in net loans receivable
   4,558 2,665
Purchase of FHLB stock
   (3,044 ) (2,525 )
Redemption of FHLB stock
   3,685 2,908
Acquisition of premises and equipment
   (119 ) (15 )


Net cash provided by investing activities
   27,077 472


WVS FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
(In thousands)

   Six Months Ended
December 31,    Three Months Ended
September 30,
         2019             2018                2020             2019
FINANCING ACTIVITIES

Net (decrease) increase in transaction and savings accounts
   $ (3,213 ) $ 361    $ (1,853 ) $ 9,613
Net increase (decrease) in certificates of deposit
   4,527 (1,751 )
Net (decrease) increase in certificates of deposit
   (5,198 ) 4,659
Net decrease in advance payments by borrowers for taxes and insurance
   (618 ) (388 )    (1,347 ) (1,083 )
Proceeds from FHLB long-term advances – fixed rate
   - 15,000
Proceeds from FHLB long-term advances – variable rate
   - 85,000
Net decrease in FHLB short-term advances
   (2,798 ) (101,336 )    (15,878 ) (11,274 )
Purchases of treasury stock
   (113 ) (372 )
Repayments of other short-term borrowings
   (1,125 ) —
Purchase of treasury stock
   (52 ) (113 )
Cash dividends paid
   (354 ) (286 )    (175 ) (177 )




Net cash used for financing activities
   (2,569 ) (3,772 )
Net cash (used for) provided by financing activities
   (25,628 ) 1,625




(Decrease) increase in cash and cash equivalents
   (1,337 ) 1,187
Increase in cash and cash equivalents
   1,311 2,934
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD
   4,379 2,441    2,500 4,379




CASH AND CASH EQUIVALENTS AT END OF THE PERIOD
   $ 3,042 $ 3,628    $ 3,811 $ 7,313




SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

Cash paid during the period for:

Interest on deposits and borrowings
   $ 2,329 $ 1,833    $ 498 $ 1,210
Income taxes
   $ 386 $ 430    518 198
Non-cash items:

Educational Improvement Tax Credit
   $ 45 $ 45

See accompanying notes to unaudited consolidated financial statements.
WVS FINANCIAL CORP. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1.
BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions for Form10-Q and therefore do not include information or footnotes necessary for a complete presentation of financial condition, results of operations, and cash flows in conformity with U.S. generally accepted accounting principles (GAAP). However, all adjustments (consisting only of normal recurring adjustments) which, in the opinion of management, are necessary for a fair presentation have been included. The results of operations for the three ~~and six~~ months ended ~~December 31, 2019,~~September 30, 2020, are not necessarily indicative of the results which may be expected for the entire fiscal year.
The coronavirus (COVID-19) pandemic has negatively impacted the global economy, disrupted global supply chains and increased unemployment levels. The resulting temporary closure of many businesses and the implementation of social distancing and sheltering-in-place policies has and may continue to impact many of the Company’s customers. While the full effects of the pandemic remain unknown, the Company is committed to supporting its customers, employees and communities during this difficult time. The Company has given hardship relief assistance to customers, including the consideration of various loan payment deferral and fee waiver options, and encourages customers to reach out for assistance to support their individual circumstances. The pandemic could result in the recognition of credit losses in our loan portfolios and increases in our allowance for credit losses, particularly if businesses remain closed, the impact on the global economy worsens, or more customers draw on their lines of credit or seek additional loans to help finance their businesses. Similarly, because of changing economic and market conditions affecting issuers, we may be required to recognize impairments on the securities we hold. The extent to which the COVID-19 pandemic impacts our business, results of operations, and financial condition, as well as our regulatory capital and liquidity ratios, will depend on future developments, which are highly uncertain and cannot be predicted, including the scope and duration of the pandemic and actions taken by governmental authorities and other third parties in response to the pandemic.
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was signed by the President of the United States. Certain provisions within the CARES Act encourage financial institutions to practice prudent efforts to work with borrowers impacted by COVID-19. Under these provisions, loan modifications deemed to be COVID-19 related would not be considered a troubled debt restructuring (TDR) if the loan was not more than 30 days past due as of December 31, 2019 and the deferral was executed between March 1, 2020 and the earlier of 60 days after the date of termination of the COVID-19 national emergency or December 31, 2020. The banking regulators issued similar guidance, which also clarified that a COVID-19-related modification should not be considered a TDR if the borrower was current on payments at the time the underlying loan modification program was implemented and if the modification is considered to be short-term. As of September 30, 2020, the number of loans in deferral totaled 14 with an aggregate balance of $5.4 million and an aggregate appraised value of $8.9 million. Effective July 1, 2020 these loans were given a twelve month catch-up period to repay any previously due deferred amounts. As of September 30, 2020 all of these loans were current with the terms of their deferral agreements.

2.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 2016, the FASB issued ASU2016-13,Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments(“ASU2016-13”), which changes the impairment model for most financial assets. This ASU is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The underlying premise of the ASU is that financial assets measured at amortized cost should be presented at the net amount expected to be collected, through an
allowance for credit losses that is deducted from the amortized cost basis. The allowance for credit losses should reflect management’s current estimate of credit losses that are expected to occur over the remaining life of a financial asset. The income statement will be effected for the measurement of credit losses for newly recognized financial assets, as well as the expected increases or decreases of expected credit losses that have taken place during the period. ASU2016-13 is effective for annual and interim periods beginning after December 15, 2019, and early adoption is permitted for annual and interim periods beginning after December 15, 2018. With certain exceptions, transition to the new requirements will be through a cumulative effect adjustment to opening retained earnings as of the beginning of the first reporting period in which the guidance is adopted. In November 2019, the FASB issued ASU2019-10,Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842). This Update defers the effective date of ASU2016-13 for SEC filers that are eligible to be smaller reporting companies,non-SEC filers, and all other companies to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. We expect to recognize aone-time cumulative effect adjustment to the allowance for loan losses as of the beginning of the first reporting period in which the new standard is effective, but cannot yet determine the magnitude of any suchone-time adjustment or the overall impact of the new guidance on the consolidated financial statements.
In ~~June 2018, the FASB issued ASU2018-07,~~~~Compensation – Stock Compensation (Topic 718)~~, which simplified the accounting for nonemployee share-based payment transactions. The amendments in this update expand the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. The amendments in this Update improve the following areas of nonemployee share-based payment accounting; (a) the overall measurement objective, (b) the measurement date, (c) awards with performance conditions, (d) classification reassessment of certain equity-classified awards, (e) calculated value (nonpublic entities only), and (f) intrinsic value (nonpublic entities only). The amendments in this Update are effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. This Update is not expected to have a significant impact on the Company’s financial statements.
~~In August 2018, the FASB issued ASU2018-13,~~~~Fair Value Measurement (Topic 820): Disclosure Framework – Changes the Disclosure Requirements for Fair Value Measurements~~. The Update removes the requirement to disclose the amount of and reasons for transfers between Level I and Level II of the fair value hierarchy; the policy for timing of transfers between levels; and the valuation processes for
Level III fair value measurements. The Update requires disclosure of changes in unrealized gains and losses for the period included in other comprehensive income (loss) for recurring Level III fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level III fair value measurements. This Update is effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position or results of operations.
~~In August 2018, the FASB issued ASU2018-14,~~~~Compensation – Retirement Benefits (Topic715-20).~~ This Update amends ASC 715 to add, remove and clarify disclosure requirements related to defined benefit pension and other postretirement plans. The Update eliminates the requirement to disclose the amounts in accumulated other comprehensive income expected to be recognized as part of net periodic benefit cost over the next year. The Update also removes the disclosure requirements for the effects of a~~one-percentage-point~~ change on the assumed health care costs and the effect of this change in rates on service cost, interest cost and the benefit obligation for postretirement health care benefits. This Update is effective for public business entities for fiscal years ending after December 15, 2020, and must be applied on a retrospective basis. For all other entities, this Update is effective for fiscal years ending after December 15, 2021. This standard is not expected to have a significant impact on the Company’s financial position or results of operations.
In November, 2018, the FASB issued ASU2018-19,Codification Improvements to Topic 326, Financial ~~Instruments –~~ Instruments—Credit Losses,which amended the effective date of ASU2016-13 for entities other than public business entities (PBEs), by requiringnon-PBEs to adopt the standard for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Therefore, the revised effective dates of ASU2016-13 for PBEs that are SEC filers will be fiscal years beginning after December 15, 2019, including interim periods within those years, PBEs other than SEC filers will be for fiscal years beginning after December 15, 2020, including interim periods within those years, and all other entities(non-PBEs) will be for fiscal years beginning after December 15, 2021, including interim periods within those years. The ASU also clarifies that receivables arising from operating leases are not within the scope of Subtopic326-20. Rather, impairment of receivables arising from operating leases should be accounted for in accordance with Topic 842,Leases. The effective date and transition requirements for ASU2018-19 are the same as those in ASU2016-13, as amended by ASU2018-19. ~~In November,~~On October 16, 2019, the FASB ~~issued ASU2019-10,~~~~Financial Instruments-Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842)~~~~. The Update defers~~voted to defer the effective date ~~of ASU2016-13~~for ~~SEC filers that are eligible to be~~ASC 326, Financial Instruments – Credit Losses, for smaller reporting ~~companies,non-SEC~~ ~~filers and all other~~ companies to fiscal years beginning after December 15, 2022, ~~including~~and interim periods within those fiscal years. The final ASU is expected to be issued in mid-November. This Update is not expected to have a significant impact on the Company’s financial statements.
In April 2019, the FASB issued ASU2019-04,Codification Improvements to Topic 326, Financial Instruments – Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments,which affects a variety of topics in the Codification and applies to all reporting entities within the scope of the affected accounting guidance.Topic 326, Financial Instruments – Credit Losses amendments are effective for SEC registrants for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. For all other public business entities, the effective date is for fiscal years beginning after December 15, 2020, and for all other entities, the effective date is for fiscal years beginning after December 15, 2021. On October 16, 2019, the FASB voted to defer the effective date for ASC 326, Financial Instruments – Credit Losses, for smaller reporting companies to fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. The final ASU is expected to be issued in mid-November.Topic 815, Derivatives and Hedgingamendments are effective for public business entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods beginning after December 15, 2020. For entities that have adopted the amendments in Update2017-12, the effective date is as of the beginning of the first annual period beginning after the issuance of this Update.Topic 825, Financial Instruments~~amendmentsare~~amendmentsare effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years. ~~In November 2019,~~The Company is currently evaluating the ~~FASB issued ASU2019-10,~~~~Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842)~~~~. This Update defers~~impact the ~~effective date of ASU2016-13~~ ~~for SEC filers that are eligible to be smaller reporting companies,non-SEC~~ ~~filers and all other companies to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Furthermore, the ASU provides aone-year~~ ~~deferral~~adoption of the ~~effective dates~~standard will have on the Company’s financial position or results of ~~the ASUs on derivatives and hedging for companies that are not public business entities. The Company qualifies as a smaller reporting company and does not expect to early adopt these ASUs.~~operations.
In May 2019, the FASB issued ASU2019-05,Financial Instruments – Credit Losses, Topic 326, which allows entities to irrevocably elect the fair value option for certain financial assets previously
measured at amortized cost upon adoption of the new credit losses standard. To be eligible for the transition election, the existing financial asset must otherwise be both within the scope of the new credit losses standard and eligible for applying the fair value option in ASC825-10.3. The election must be applied on aninstrument-by-instrument basis and is not available for eitheravailable-for-sale orheld-to-maturity debt securities. For entities that elect the fair value option, the difference between the carrying amount and the fair value of the financial asset would be recognized through a cumulative-effect adjustment to opening retained earnings as of the date an entity adopted ASU2016-13. Changes in fair value of that financial asset would subsequently be reported in current earnings. For entities that have not yet adopted ASU2016-13, the effective dates and transition requirements are the same as those in ASU2016-13. For entities that have adopted ASU2016-13, ASU2019-05 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted once ASU2016-13 has been adopted. ~~In November~~On October 16, 2019, the FASB ~~issued ASU2019-10,~~voted to defer the effective date for ASC 326,Financial Instruments – Credit Losses ~~(Topic 326)~~, ~~Derivatives and Hedging (Topic 815), and Leases (Topic 842). The Update defers the effective date of ASU2016-13~~for ~~SEC filers that are eligible to be~~ smaller reporting ~~companies,non-SEC~~ ~~filers and all other~~ companies to fiscal years beginning after December 15, 2022, ~~including~~and interim periods within those fiscal years. The final ASU is expected to be issued in mid-November. The Company ~~qualifies as a smaller reporting company and does not expect to early adopt ASU2016-13.~~
~~In July 2019,~~is currently evaluating the ~~FASB issued ASU2019-07,~~~~Codification Updates to SEC Sections, Amendments to SEC Paragraphs Pursuant to SEC Final Rule Releases No.~~ ~~33-10532,~~ ~~Disclosure Update and Simplification, and Nos.33-10231~~ ~~and33-10442,~~ ~~Investment Company Reporting Modernization, and Miscellaneous Updates.~~~~This ASU amends various SEC paragraphs pursuant to~~impact the ~~issuance~~adoption of ~~SEC Final Rule ReleasesNo. 33-10532,~~~~Disclosure Update and Simplification~~~~, and Nos.33-10231~~ ~~and33-10442,~~~~Investment Company Reporting Modernization~~~~. Other miscellaneous updates to agree to~~ the ~~electronic Code~~standard will have on the Company’s financial position or results of ~~Federal Regulations also have been incorporated.~~operations.
In November 2019, the FASB issued ASU2019-08,Compensation – Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606),which requires entities to measure and classify share-based payments to a customer, in accordance with the guidance in ASC 718,Compensation – Stock Compensation. The amendments in that Update expanded the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees and, in doing so, superseded guidance in Subtopic505-50,Equity – Equity-Based Payments to ~~Non~~~~-Employees~~Non-Employees. The amount that would be recorded as a reduction in revenue would be measured based on the grant date fair value of the share-based payment, in accordance with Topic 718. The grant date is the date at which a supplier and customer reach a mutual understanding of the award’s key terms and conditions. The award’s classification and subsequent measurement would be subject to ASC 718 unless the award is modified or the grantee is no longer a customer. For entities that have not yet adopted the amendments in Update2018-07, the amendments in this Update are effective for (1) public business entities in fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, and (2) other than public business entities in fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. For entities that have adopted the amendments in Update2018-07, the amendments in this Update are effective in fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. An entity may early adopt the amendments in this Update, but not before it adopts the amendments in Update2018-07. This Update is not expected to have a significant impact on the Company’s financial statements.
In November 2019, the FASB issued ASU2019-10,Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842). The Update defers the effective dates of ASU2016-13 for SEC filers that are eligible to be smaller reporting companies,non-SEC filers, and all other companies to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. This Update also amends the mandatory effective date for the elimination of Step 2 from the goodwill impairment test under ASUNo. 2017-04,Intangibles – Goodwill and Other
~~(Topic~~ (Topic 350): Simplifying the Test for Goodwill Impairment (Goodwill),to align with those used for credit losses. Furthermore, the ASU provides aone-year deferral of the effective dates of the ASUs on derivatives and hedging and leases for companies that are not public business entities. The Company qualifies as a smaller reporting company and does not expect to early adopt these ASUs.
In November 2019, the FASB issued ASU2019-11,Codification Improvements to Topic 326, Financial ~~Instruments—~~Instruments – Credit Losses, to clarify its new credit impairment guidance in ASC 326, based on implementation issues raised by stakeholders. This Update clarified, among other things, that expected recoveries are to be included in the allowance for credit losses for these financial assets; an accounting policy election can be made to adjust the effective interest rate for existing troubled debt restructurings based on the prepayment assumptions instead of the prepayment assumptions applicable immediately prior to the restructuring event; and extends the practical expedient to exclude accrued interest receivable from all additional relevant disclosures involving amortized cost basis. The effective dates in this Update are the same as those applicable for ASU2019-10. The Company ~~is currently evaluating the impact the adoption of the standard will have on the Company’s financial position or results of operations.~~qualifies as a smaller reporting company and does not expect to early adopt these ASUs.
In December 2019, the FASB issued ASU2019-12,Income Taxes (Topic 740), to simplify the accounting for income taxes, change the accounting for certain tax transactions, and make minor improvements to the codification. This Update provides a policy election to not allocate consolidated income taxes when a member of a consolidated tax return is not subject to income tax and provides guidance to evaluate whether astep-up in tax basis of goodwill relates to a business combination in which book goodwill was recognized or a separate transaction. The Update also changes current guidance for making an ~~intraperiod~~intra-period allocation, if there is a loss in continuing operations and gains outside of continuing operations; determining when a deferred tax liability is recognized after an investor in a foreign entity transitions to or from the equity method of accounting; accounting for tax law changes andyear-to-date losses in interim periods; and determining how to apply the income tax guidance to franchise taxes that are partially based on income. For public business entities, the amendments in this Update are effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2020. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position or results of operations.
In January 2020, the FASB issued ASU 2020-02,Financial Instruments – Credit Losses (Topic 326) and Leases (Topic 842): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 119 and Update to SEC Section on Effective Date Related to Accounting Standards Update No. 2016-02, Leases (Topic 842), February 2020, to add and amend SEC paragraphs in the Accounting Standards Codification to reflect the issuance of SEC Staff Accounting Bulletin No. 119, related to the new credit losses standard, and comments by the SEC staff related to the revised effective date of the new leases standard. This ASU is effective upon issuance. This did not have a significant impact on the Company’s financial statements.
In March 2020, the FASB issued ASU 2020-03,Codification Improvements to Financial Instruments. This ASU was issued to improve and clarify various financial instruments topics, including the current expected credit losses (CECL) standard issued in 2016. The ASU includes seven issues that describe the areas of improvement and the related amendments to GAAP; they are intended to make the standards easier to understand and apply and to eliminate inconsistencies, and they are narrow in scope and are not expected to significantly change practice for most entities. Among its provisions, the ASU clarifies that all entities, other than public business entities that elected the fair value option, are required to provide certain fair value disclosures under ASC 825, Financial Instruments, in both interim and annual financial statements. It also clarifies that the contractual term of a net investment in a lease under Topic 842 should be the contractual term used to measure expected credit losses under Topic 326. Amendments related to ASU 2019-04 are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is not permitted before an entity’s adoption of ASU 2016-01. Amendments related to ASU 2016-13 for entities that have not yet adopted that guidance are effective upon adoption of the amendments in ASU 2016-13. Early adoption is not permitted before an entity’s adoption of ASU 2016-13. Amendments related to ASU 2016-13 for entities that have adopted that guidance are effective for fiscal years beginning after December 15, 2019, including interim periods within those years. Other amendments are effective upon issuance of this ASU. This Update is not expected to have a significant impact on the Company’s financial statements.
In March 2020, the FASB issued ASU 2020-04,Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, March 2020, to provide temporary optional expedients and exceptions to the U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from LIBOR and other interbank offered rates to alternative reference rates, such as Secured Overnight Financing Rate. Entities can elect not to apply certain modification accounting requirements to contracts affected by what the guidance calls reference rate reform, if certain criteria are met. An entity that makes this election would not have to remeasure the contracts at the modification date or reassess a previous accounting determination. Also, entities can elect various optional expedients that would allow them to continue
applying hedge accounting for hedging relationships affected by reference rate reform, if certain criteria are met, and can make a one-time election to sell and/or reclassify held-to-maturity debt securities that reference an interest rate affected by reference rate reform. The amendments in this ASU are effective for all entities upon issuance through December 31, 2022. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position or results of operations.
3.
REVENUE RECOGNITION
Effective July 1, 2018, the Company adopted Accounting Standards Update ASU2014-09,Revenue from contracts with Customers – Topic 606,and all subsequent ASUs that modified ASC 606. The Company has elected to apply the standard to all prior periods presented utilizing the full retrospective approach. The implementation of the new standard had no material impact to the measurement or recognition of revenue of prior periods. Management determined that the primary sources of revenue emanating from interest and dividend income on loans and investments along with noninterest revenue resulting from investment security gains, and earnings on bank owned life insurances are not within the scope of ASC 606. As a result, no changes were made during the period related to these sources of revenue. The main types of noninterest income within the scope of the standard are as follows: Service Charges on deposit ~~accounts—~~accounts - the Company has contracts with its deposit customers where fees are charged if certain parameters are not met. These agreements can be cancelled at any time by either the Company or the deposit customer. Revenue from these transactions is recognized on a monthly basis as the Company has an unconditional right to the fee consideration. The Company also has transaction fees related to specific transactions or activities resulting from a customer request or activity that include overdraft fees, online banking fees, interchange fees, ATM fees and other transaction fees. All of these fees are attributable to specific performance obligations of the Company where the revenue is recognized at a defined point in time upon the completion of the requested service/transaction.

4.
EARNINGS PER SHARE
The following table sets forth the computation of the weighted-average common shares used to calculate basic and diluted earnings per share.

   Three Months Ended    Six Months Ended    Three Months Ended
   December 31,    December 31,    September 30,
           2019                    2018                    2019                    2018                    2020                 2019
Weighted average common shares issued
   3,805,636    3,805,636    3,805,636    3,805,636    3,805,636 3,805,636
Average treasury stock shares
   (1,869,995 )    (1,849,437 )    (1,866,704 )    (1,843,161 )    (1,901,801 ) (1,863,414 )
Average unallocated ESOP shares
   (164,184 )    (174,108 )    (165,423 )    (174,902 )    (155,795 ) (166,661 )










Weighted average common shares and common stock equivalents used to calculate basic earnings per share
   1,771,457    1,782,091    1,773,509    1,787,573    1,748,040 1,775,561
Additional common stock equivalents (stock options) used to calculate diluted earnings per share
   -    -    -    109










Weighted average common shares and common stock equivalents used to calculate diluted earnings per share
   1,771,457    1,782,091    1,773,509    1,787,682    1,748,040 1,775,561










There are no convertible securities that would affect the numerator in calculating basic and diluted earnings per share; therefore, net income as presented on the Consolidated Statement of Income is used.
At December 31, 2019, all options outstanding had expired. At December 31, 2018, there were 27,019 options outstanding with an exercise price of $16.20 which were anti-dilutive for the three month period and dilutive for the six month period.
5.
~~STOCK BASED COMPENSATION DISCLOSURE~~
The Company previously maintained 2008 Stock Incentive Plan (the “Plan”), which was approved by shareholders in October 2008, permitted the grant of stock options or restricted shares to its directors and employees for up to 152,000 shares (up to 38,000 restricted shares may be issued). Option awards were generally granted with an exercise price equal to the market price of the Company’s stock at the date of grant; those option awards generally vested over five years of continuous service and have~~ten-year~~ ~~contractual terms. The Plan expired by its terms in September 2018.~~
During the six month periods ended December 31, 2019 and 2018, the Company recorded no compensation expense related to our share-based compensation awards. As of December 31, 2019, there was no unrecognized compensation cost related to unvested share-based compensation awards granted in fiscal 2009.
~~There were no stock options exercised or issued during the six months ended December 31, 2019 and 2018.~~
6.
INVESTMENT SECURITIES
The amortized cost, gross unrealized gains and losses, and fair values of investments are as follows:

            Gross       Gross                Gross       Gross
          Amortized               Unrealized               Unrealized            Fair               Amortized               Unrealized               Unrealized            Fair
      Cost       Gains       Losses    Value       Cost       Gains       Losses    Value
   (Dollars in Thousands)       (Dollars in Thousands)
December 31, 2019
September 30, 2020
AVAILABLE FOR SALE

Corporate debt securities
   $    109,701    $    524    $    (121 ) $    110,104    $    107,894    $    409    $    (171 ) $    108,132
Foreign debt securities¹
      27,840       126       (10 )    27,956       29,513       154       (19 )    29,648








Commercial paper
      2,998       -       -    2,998
Obligations of states and political subdivisions
      267       -       (1 )    266








Total
   $    137,541    $    650    $    (131 ) $    138,060    $    140,672    $    563    $    (191 ) $    141,044
















            Gross       Gross                Gross       Gross
      Amortized       Unrealized       Unrealized    Fair       Amortized       Unrealized       Unrealized    Fair
      Cost       Gains       Losses    Value       Cost       Gains       Losses    Value
   (Dollars in Thousands)       (Dollars in Thousands)
December 31, 2019
September 30, 2020
HELD TO MATURITY

Obligations of states and political subdivisions
   $    3,495    $    83    $    - $    3,578    $    3,495    $    118    $    - $    3,613
















Total
   $    3,495    $    118    $    - $    3,613








            Gross       Gross
      Amortized       Unrealized       Unrealized    Fair
      Cost       Gains       Losses    Value
      (Dollars in Thousands)
June 30, 2020
AVAILABLE FOR SALE

Corporate debt securities
   $    109,739    $    163    $    (774 ) $    109,128
Foreign debt securities¹
      32,561       42       (63 )    32,540
Commercial paper
      5,971       -       -    5,971








Total
   $    3,495    $    83    $    - $    3,578    $    148,271    $    205    $    (837 ) $    147,639
















¹ U.S. dollar denominated investment-grade corporate bonds of large foreign corporate issuers.
            Gross       Gross                Gross       Gross
          Amortized               Unrealized               Unrealized            Fair               Amortized               Unrealized               Unrealized               Fair
      Cost       Gains       Losses        Value           Cost       Gains       Losses       Value
      (Dollars in Thousands)       (Dollars in Thousands)
June 30, 2019
AVAILABLE FOR SALE

Corporate debt securities
   $    104,760    $    355    $    (207 ) $    104,908
Foreign debt securities¹
      26,583       35       (75 )    26,543
Obligations of states and political subdivisions
      1,330       -       (1 )    1,329








Total
   $    132,673    $    390    $    (283 ) $    132,780








            Gross       Gross
      Amortized       Unrealized       Unrealized    Fair
      Cost       Gains       Losses    Value
      (Dollars in Thousands)
June 30, 2019
June 30, 2020
HELD TO MATURITY

Obligations of states and political subdivisions
   $    3,995    $    85    $    - $    4,080    $    3,495    $    127    $    -    $    3,622
















Total
   $    3,995    $    85    $    - $    4,080    $    3,495    $    127    $    -    $    3,622
















~~Proceeds from sales of investments during the three and six month periods ended December 31, 2019 were $9.1 million and the~~The Company recorded gross realized investment security gains of ~~$32~~$25.3 thousand during ~~these same periods.~~
the quarter ended September 30, 2020. Proceeds from the sales of ~~investments during the six month period ended December 31, 2018 were $1.4~~investment securities totaled $1.0 million ~~and the Company recorded gross realized investment losses of $2 thousand~~ during this same period.
There were no sales of investment securities ~~during~~for the ~~quarter~~three months ended ~~December 31, 2018.~~September 30, 2019.
¹ ~~U.S. dollar denominated investment-grade corporate bonds of large foreign corporate issuers.~~
The amortized cost and fair values of debt securities at ~~December 31, 2019,~~September 30, 2020, by contractual maturity, are shown below. Expected maturities may differ from the contractual maturities because issuers may have the right to call securities prior to their final maturities.

      Due in
one year
or less       Due after
one through
five years       Due after
five through
ten years       Due after
ten years       Total       Due in
one year
or less       Due after
one through
five years       Due after
five through
ten years       Due after
ten years       Total
      (Dollars in Thousands)       (Dollars in Thousands)
AVAILABLE FOR SALE

Amortized cost
   $    17,528    $    119,373    $    640    $    -    $    137,541    $    25,430    $    114,975    $    267    $    -    $    140,672
Fair value
      17,514       119,902       644       -       138,060       25,393       115,385       266       -       141,044
HELD TO MATURITY

Amortized cost
   $    750    $    2,745    $    -    $    -    $    3,495    $    750    $    2,745    $    -    $    -    $    3,495
Fair value
      757       2,821       -       -       3,578       753       2,860       -       -       3,613
At ~~December 31, 2019,~~September 30, 2020 investment securities with amortized ~~cost~~costs of $3.5 million and $51.5 million and fair ~~value~~values of $3.6 million and $51.7 million were pledged to secure borrowings with the Federal Home Loan Bank (“FHLB”).
of Pittsburgh and the Federal Reserve Bank of Cleveland (“FRB”), respectively. Of the securities pledged to the FRB, $45.6 million of amortized cost, and $45.8 million of fair value, was excess collateral. Excess collateral is maintained to support future borrowings and may be withdrawn by the Company at any time.
7.6.
MORTGAGE-BACKED SECURITIES
Mortgage-backed securities (“MBS”) include mortgage pass-through certificates (“PCs”) and collateralized mortgage obligations (“CMOs”). With a pass-through security, investors own an undivided interest in the pool of mortgages that collateralize the PCs. Principal and interest is passed through to the investor as it is generated by the mortgages underlying the pool. PCs and CMOs may be insured or guaranteed by Freddie Mac (“FHLMC”), Fannie Mae (“FNMA”) and the Government National Mortgage Association (“GNMA”). CMOs may also be privately issued with varying degrees of credit enhancements. A CMO reallocates mortgage pool cash flow to a series of bonds (called ~~tranches)~~traunches) with varying stated maturities, estimated average lives, coupon rates and prepayment characteristics.
The Company’s CMO portfolio is comprised of two segments: CMOs backed by U.S. Government Agencies (“Agency CMOs”) and CMOs backed by single-family whole loans not guaranteed by a U.S. Government Agency (“~~private-label~~Private-Label CMOs”).
At ~~December 31, 2019,~~September 30, 2020, the Company’s Agency CMOs totaled ~~$103.2~~$77.4 million as compared to ~~$107.4~~$96.5 million at June 30, ~~2019.~~2020. The Company’s ~~private-label~~Private-Label CMOs totaled ~~$785~~$544 thousand at ~~December 31, 2019~~September 30, 2020 as compared to ~~$883~~$618 thousand at June 30, ~~2019.~~2020. The ~~$4.4~~$19.1 million decrease in the Agency CMO segment of our MBS portfolio was ~~primarily~~ due to repayments on our Agency ~~and private-label~~ CMOs which totaled ~~$4.3 million and $87~~$19.1 million. During the three months ended September 30, 2020, the Company received principal payments totaling $66 thousand ~~respectively.~~on its Private-Label CMOs. At ~~December 31, 2019~~September 30, 2020 and June 30, ~~2019,~~2020, all of the Company’s MBS portfolio ~~including CMOs, were~~was comprised of adjustable or floating rate investments. All of the Company’s floating rate MBS adjust monthly based upon changes in the ~~one month~~one-month London Interbank Offered Rate (“LIBOR”). The Company has no investment in multi-family or commercial real estate based MBS.
Due to prepayments of the underlying loans, and the prepayment characteristics of the CMO ~~tranches,~~traunches, the actual maturities of the Company’s MBS are expected to be substantially less than the scheduled maturities.
The Company retains an independent third party to assist it in the determination of a fair value for its three private-label CMOs. This valuation is meant to be a “Level Three” valuation as defined by ASC Topic 820,Fair Value Measurements and Disclosures. The valuation does not represent the actual terms or prices at which any party could purchase the securities. There is currently no active secondary market for ~~private-label~~Private-Label CMOs and there can be no assurance that any secondary market for ~~private-label~~Private-Label CMOs will develop. The Private-Label CMO portfolio had six previously recorded other-than-temporary impairments at September 30, 2020. During the three months ended September 30, 2020, the Company recorded an additional credit impairment charge of ~~$16~~$13 thousand on its ~~private-label~~Private-Label CMO ~~portfolio during the quarter ended December 31, 2019.~~portfolio.
The Company believes that the data and assumptions used to determine the fair values of its securities are reasonable. The fair value calculations reflect relevant facts and market conditions. Events and conditions occurring after the valuation date could have a material effect on the ~~private-label~~Private-Label CMO segment’s fair value.
The following table sets forth information with respect to the Company’s ~~private-label~~Private-Label CMO portfolio as of ~~December 31, 2019.~~September 30, 2020. At the time of purchase, all of our ~~private-label~~Private-Label CMOs were rated in the highest investment category by at least two ratings agencies.

      At December 31, 2019       At September 30, 2020
      Rating    Amortized
Cost    Fair
  Value²      Life to Date
Impairment
  Recorded in
Earnings       Rating    Book
  Value      Fair
  Value²      Life to Date
Impairment
  Recorded in
Earnings
Cusip #
         Security Description              S&P            Moody’s            Fitch        (in thousands)          Security Description              S&P            Moody’s            Fitch        (in thousands)
126694CP1
   CWHL SER 21 A11    WR    WR    D        $ 449        $ 443            $ 224    CWHL SER 21 A11    WR    WR    D        $ 328        $ 322            $ 271
126694KF4
   CWHL SER 24 A15    NR    NR    D    173    173    51    CWHL SER 24 A15    NR    N/A    D    54    54    60
126694KF4
   CWHL SER 24 A15    NR    NR    D    87    86    101    CWHL SER 24 A15    NR    N/A    D    107    108    120
126694MP0
   CWHL SER 26 1A5    NR    NR    D    76    79    41    CWHL SER 26 1A5    NR    N/A    D    55    57    48












                   $ 785        $ 781            $ 417                    $ 544        $ 541            $ 499












² Fair value estimate provided by the Company’s independent third-party valuation consultant.
The amortized cost and fair values of the Company’s mortgage-backed securities are as follows:

          Amortized
Cost       Gross
    Unrealized
Gains       Gross
    Unrealized
Losses
Fair
    Value



      (Dollars in Thousands)
December 31, 2019

HELD TO MATURITY

Collateralized mortgage obligations:

Agency
   $    103,171    $    761    $    (592 ) $    103,340
Private-label
      785       3       (7 )    781








Total
   $    103,956    $    764    $    (599 ) $    104,121








      Amortized
Cost       Gross
Unrealized
Gains       Gross
Unrealized
Losses
Fair
Value



      (Dollars in Thousands)
June 30, 2019

HELD TO MATURITY

Collateralized mortgage obligations:

Agency
   $    107,448    $    954    $    (570 ) $    107,832
Private-label
      883       5       (12 )    876








Total
   $    108,331    $    959    $    (582 ) $    108,708








² ~~Fair value estimate provided by the Company’s independent third party valuation consultant.~~
          Amortized
Cost       Gross
    Unrealized
Gains       Gross
    Unrealized
Losses    Fair
    Value
      (Dollars in Thousands)
September 30, 2020

HELD TO MATURITY

Collateralized mortgage obligations:

Agency
   $    77,393    $    383    $    (656 ) $    77,120
Private-label
      544       3       (6 )    541








Total
   $    77,937    $    386    $    (662 ) $    77,661








      Amortized
Cost       Gross
Unrealized
Gains       Gross
Unrealized
Losses    Fair
Value
      (Dollars in Thousands)
June 30, 2020

HELD TO MATURITY

Collateralized mortgage obligations:

Agency
   $    96,488    $    486    $    (932 ) $    96,042
Private-label
      618       3       (14 )    607








Total
   $    97,106    $    489    $    (946 ) $    96,649








The amortized cost and fair value of the Company’s mortgage-backed securities at ~~December 31, 2019,~~September 30, 2020, by contractual maturity, are shown below. Expected maturities may differ from the contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

      Due in
     one year
or less       Due after
one through
five years       Due after
  five through
ten years       Due after
    ten years               Total           Due in
     one year
or less       Due after
one through
five years       Due after
  five through
ten years       Due after
    ten years               Total
      (Dollars in Thousands)       (Dollars in Thousands)
HELD TO MATURITY

Amortized cost
   $    -    $    -    $    103    $    103,853    $    103,956    $    -    $    80    $    -    $    77,857    $    77,937
Fair value
      -       -       103       104,018       104,121       -       80       -       77,581       77,661
At ~~December 31, 2019,~~September 30, 2020, mortgage-backed securities with amortized costs of ~~$103.2~~$77.4 million and fair values of ~~$103.3~~$77.1 million were pledged to secure public deposits and borrowings with the FHLB. Of the securities pledged, ~~$8.3~~$7.3 million of fair value was excess collateral. At June 30, ~~2018,~~2020, mortgage-backed securities with an amortized cost of ~~$107.4~~$96.5 million and fair values of ~~$107.8~~$96.0 million, were pledged to secure public deposits and borrowings with the FHLB. Of the securities pledged, ~~$2.4~~$10.0 million of fair value was excess collateral. Excess collateral is maintained to support future borrowings and may be withdrawn by the Company at any time.
8.7.
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
The following tables present the changes in accumulated other comprehensive income (loss) by component, for the three ~~and six~~ months ended ~~December 31, 2019~~September 30, 2020 and ~~2018.~~2019.

   Three Months Ended December 31, 2019
   (Dollars in Thousands – net of tax)
       Unrealized Gains
and Losses on
Available-for-Sale
Securities     Unrealized Gains
and Losses on
Held-to-Maturity
Securities             Total
Beginning Balance – September 30, 2019
     $ 129   $ (66 )   $ 63
Other comprehensive income before reclassifications
   306 3 309
Amounts reclassified from accumulated other comprehensive loss
   (25 ) - (25 )


Net current-period other comprehensive income
   281 3 284


Ending Balance – December 31, 2019
     $ 410   $ (63 )   $ 347


   Six Months Ended December 31, 2019
   (Dollars in Thousands – net of tax)
       Unrealized Gains
and Losses on
Available-for-Sale
Securities     Unrealized Gains
and Losses on
Held-to-Maturity
Securities             Total
Beginning Balance – June 30, 2019
     $ 85   $ (70)   $ 15
Other comprehensive income before reclassifications
   351 6 357
Amounts reclassified from accumulated other comprehensive loss
   (25 ) - (25 )


Net current-period other comprehensive income
   326 6 332


Ending Balance – December 31, 2019
     $ 411   $ (64 )   $ 347


   Three Months Ended December 31, 2018
   (Dollars in Thousands – net of tax)
       Unrealized Gains
and Losses on
Available-for-Sale
Securities     Unrealized Gains
and Losses on
Held-to-Maturity
Securities             Total
Beginning Balance – September 30, 2018
     $ 88   $ (209 )   $ (121)
Other comprehensive income (loss) before reclassifications
   (1,574 ) 10 (1,564 )
Amounts reclassified from accumulated other comprehensive income (loss)
   - - -


Net current-period other comprehensive income (loss)
   (1,574 ) 10 (1,564 )


Ending Balance – December 31, 2018
     $ (1,486 )   $ (199 )   $ (1,685 )


   Six Months Ended December 31, 2018
   (Dollars in Thousands – net of tax)
   Unrealized Gains
and Losses on
     Available-for-Sale
Securities     Unrealized Gains
and Losses on
Held-to-Maturity
Securities             Total
Beginning Balance – June 30, 2018
     $ (10 )   $ (178)   $ (188)
Other comprehensive loss before reclassifications
   (1,478 ) (21 ) (1,499 )
Amounts reclassified from accumulated other comprehensive income
   2 - 2


Net current-period other comprehensive loss
   (1,476 ) (21 ) (1,497 )


Ending Balance – December 31, 2018
     $ (1,486 )   $ (199 )   $ (1,685 )


   Three Months Ended September 30, 2020
   (Dollars in Thousands – net of tax)
       Unrealized Gains
and Losses on
Available-for-Sale
Securities     Unrealized Gains
and Losses on
Held-to-Maturity
Securities             Total
Beginning Balance – June 30, 2020
     $ (499 )   $ (57 )   $ (556 )
Other comprehensive income before reclassifications
   814 - 814
Amounts reclassified from accumulated other comprehensive income (loss)
   (20 ) 3 (17 )


Net current-period other comprehensive income
   794 3 797


Ending Balance – September 30, 2020
     $ 295   $ (54 )   $ 241


   Three Months Ended September 30, 2019
   (Dollars in Thousands – net of tax)
       Unrealized Gains
and Losses on
Available-for-Sale
Securities     Unrealized Gains
and Losses on
Held-to-Maturity
Securities             Total
Beginning Balance – June 30, 2019
     $ 84   $ (69)   $ 15
Other comprehensive income (loss) before reclassifications
   45 - 45
Amounts reclassified from accumulated other comprehensive income (loss)
   - 3 3


Net current-period other comprehensive income (loss)
   45 3 48


Ending Balance – September 30, 2019
     $ 129   $ (66 )   $ 63


9.8.
UNREALIZED LOSSES ON SECURITIES
The following tables show the Company’s gross unrealized losses and fair value, aggregated by category and length of time that the individual securities have been in a continuous unrealized loss position, at ~~December 31, 2019~~September 30, 2020 and June 30, ~~2019.~~2020.

December 31, 2019

September 30, 2020
Less Than Twelve Months Twelve Months or Greater Total

Less Than Twelve Months Twelve Months or Greater Total

Fair
Value

Gross
Unrealized
Losses

Fair
Value

Gross
Unrealized
Losses

Fair
Value

Gross
Unrealized
Losses

Fair
Value

Gross
Unrealized
Losses

Fair
Value

Gross
Unrealized
Losses

Fair
Value

Gross
Unrealized
Losses

(Dollars in Thousands) (Dollars in Thousands)
Corporate debt securities
$ 5,018 $ (4 ) $ 13,950 $ (117 ) $ 18,968 $ (121 ) $ 18,684 $ (95 ) $ 5,737 $ (76 ) $ 24,421 $ (171 )
Foreign debt securities³
3,276 (1 ) 1,994 (9 ) 5,270 (10 ) 4,493 (19 ) - - 4,493 (19 )
Collateralized mortgage Obligations:

Agency
18,954 (214 ) 23,161 (385 ) 42,115 (599 )
Obligations of states and political subdivisions
266 (1 ) - - 266 (1 )
Collateralized mortgage obligations
8,127 (385 ) 25,062 (277 ) 33,189 (662 )

Total
$ 27,248 $ (219 ) $ 39,105 $ (511 ) $ 66,353 $ (730 ) $ 31,570 $ (500 ) $ 30,799 $ (353 ) $ 62,369 $ (853 )

June 30, 2019 June 30, 2020

Less Than Twelve Months Twelve Months or Greater Total Less Than Twelve Months Twelve Months or Greater Total

Fair
Value

Gross
Unrealized
Losses

Fair
Value

Gross
Unrealized
Losses

Fair
Value

Gross
Unrealized
Losses

Fair
Value

Gross
Unrealized
Losses

Fair
Value

Gross
Unrealized
Losses

Fair
Value

Gross
Unrealized
Losses

(Dollars in Thousands)
(Dollars in Thousands)
Corporate debt securities
$ 11,728 $ (86 ) $ 17,077 $ (121 ) $ 28,805 $ (207 ) $ 50,115 $ (509 ) $ 8,550 $ (265 ) $ 58,665 $ (774 )
Foreign debt securities³
2,004 (2 ) 5,699 (73 ) 7,703 (75 )
Obligations of states and political subdivisions
- - 1,329 (1 ) 1,329 (1 )
Collateralized mortgage obligations:

Agency
24,368 (182 ) 18,614 (400 ) 42,982 (582 )
Foreign debt securities³
13,970 (63 ) - - 13,970 (63 )
Collateralized mortgage obligations
13,782 (348 ) 26,919 (598 ) 40,701 (946 )

Total
$ 38,100 $ (270 ) $ 42,719 $ (595 ) $ 80,819 $ (865 ) $ 77,867 $ (920 ) $ 35,469 $ (863 ) $ 113,336 $ (1,783 )

For debt securities, impairment is considered to be other than temporary if an entity (1) intends to sell the security, (2) more likely than not will be required to sell the security before recovering its amortized cost basis, or (3) does not expect to recover the security’s entire amortized cost basis (even if the entity does not intend to sell the security). In addition, impairment is considered to be other than temporary if the present value of cash flows expected to be collected from the debt security is less than the amortized cost basis of the security (any such shortfall is referred to as a credit loss).
The Company evaluates outstandingavailable-for-sale andheld-to-maturity securities in an unrealized loss position (i.e., impaired securities) for other-than-temporary impairment (“OTTI”) on a quarterly basis. In doing so, the Company considers many factors including, but not limited to: the credit ratings assigned to the securities by the Nationally Recognized Statistical Rating Organizations (“~~NRSROs”~~NRSRO”); other indicators of the credit quality of the issuer; the strength of the provider of any guarantees; the length of time and extent that fair value has been less than amortized cost; and whether
³ ~~U.S. dollar denominated investment-grade corporate bonds of large foreign corporate issuers.~~
the Company has the intent to sell the security or more likely than not will be required to sell the security before its anticipated recovery. In the case of its ~~private label~~Private-Label residential ~~MBSs,~~MBS, the Company also considers prepayment speeds, the historical and projected performance of the underlying loans and the credit support provided by the subordinate securities. These evaluations are inherently subjective and consider a number of quantitative and qualitative factors.
³ U.S. dollar denominated investment-grade corporate bonds of large foreign corporate issuers.
The following table presents a roll-forward of the credit loss component of the amortized cost of mortgage-backed securities that we have written down for OTTI and the credit component of the loss that is recognized in earnings. OTTI recognized in earnings for credit impaired mortgage-backed securities is presented as additions in two components based upon whether the current period is the first time the mortgage-backed security was credit-impaired (initial credit impairment) or is not the first time the mortgage-backed security was credit impaired (subsequent credit impairments). The credit loss component is reduced if we sell, intend to sell or believe that we will be required to sell previously credit-impaired mortgage-backed securities. Additionally, the credit loss component is reduced if we receive cash flows in excess of what we expected to receive over the remaining life of the credit impaired mortgage-backed securities, the security matures or is fully written down.

   Three Months Ended Six Months Ended    Three Months Ended
   December 31, December 31,    September 30,
           2019                 2018                 2019                 2018                    2020                    2019
   (Dollars in Thousands)    (Dollars in Thousands)
Beginning balance
   $ 239 $ 236 $ 248 $ 239    $ 311    $ 248
Initial credit impairment
   - - - -    -    -
Subsequent credit impairment
   16 - 18 8    13    1
Reductions for amounts recognized in earnings due to intent or requirement to sell
   - - - -    -    -
Reductions for securities sold
   - - - -    -    -
Reduction for actual realized losses
   (13 ) (7 ) (24 ) (10 )    -    (10 )
Reduction for increase in cash flows expected to be collected
   - - - -    -    -






Ending balance
   $ 242 $ 229 $ 242 $ 229    $ 324    $ 239






During the three months ~~and six months~~ ended ~~December 31, 2019,~~September 30, 2020, the Company recorded a $13 thousand subsequent credit impairment ~~charges of $16 thousand~~charge and ~~$2 thousand, respectively. No~~no non-credit unrealized holding losses to accumulated other comprehensive ~~income were recorded during these same periods.~~income. During the three ~~and six~~ months ended ~~December 31, 2019,~~September 30, 2020, the Company accreted back ~~into~~out of other comprehensive income $3$4 thousand ~~and $6 thousand, respectively~~ (net of income tax effect of $1 ~~thousand and $2 thousand, respectively)~~thousand), based on principal repayments on ~~private-label~~Private-Label CMOs previously identified with OTTI.
In the case of its ~~private-label~~Private-Label residential CMOs that exhibit adverse risk characteristics, the Company employs models to determine the cash flows that it is likely to collect from the securities. These models consider borrower characteristics and the particular attributes of the loans underlying the securities, in conjunction with assumptions about future changes in home prices and interest rates, to predict the likelihood a loan will default and the impact on default frequency, loss severity and remaining credit enhancement. A significant input to these models is the forecast of future housing price changes for the relevant states and metropolitan statistical areas, which are based upon an assessment of the various housing markets. In general, since the ultimate receipt of contractual payments on these securities will depend upon the credit and prepayment performance of the underlying loans and, if needed, the credit enhancements for the senior securities owned by the Company, the Company uses these models to assess whether the credit enhancement associated with each security is sufficient to protect against likely losses of principal and interest on the underlying mortgage loans. The development of the modeling assumptions requires significant judgment.
In conjunction with our adoption of ASC Topic 820 effective June 30, 2009, the Company retained an independent third party to assist it with assessing its investments within the ~~private-label~~Private-Label CMO portfolio. The independent third party utilized certain assumptions for producing the cash flow analyses used in the OTTI assessment. Key assumptions would include interest rates, expected market participant spreads and discount rates, housing prices, projected future delinquency levels and assumed loss rates on any liquidated collateral.
The Company reviewed the independent third party’s assumptions used in the ~~December 31, 2019~~September 30, 2020 OTTI process. Based on the results of this review, the Company deemed the independent third party’s assumptions to be reasonable and adopted them. However, different assumptions could produce materially different results, which could impact the Company’s conclusions as to whether an impairment is considered other-than-temporary and the magnitude of the credit loss. ~~The Company had three private-label CMOs with OTTI at December 31, 2019.~~
If the Company intends to sell an impaired debt security, or more likely than not will be required to sell the security before recovery of its amortized cost basis, the impairment is other-than-temporary and is recognized currently in earnings in an amount equal to the entire difference between fair value and amortized cost. The Company does not anticipate selling its ~~private-label~~Private-Label CMO portfolio, nor does Management believe that the Company will be required to sell these securities before recovery of this amortized cost basis.
In instances in which the Company determines that a credit loss exists but the Company does not intend to sell the security and it is not more likely than not that the Company will be required to sell the security before the anticipated recovery of its remaining amortized cost basis, the OTTI is separated into (1) the amount of the total impairment related to the credit loss and (2) the amount of the total impairment related to all other factors (i.e., the noncredit portion). The amount of the total OTTI related to the credit loss is recognized in earnings and the amount of the total OTTI related to all other factors is recognized in accumulated other comprehensive loss. The total OTTI is presented in the Consolidated Statement of Income with an offset for the amount of the total OTTI that is recognized in accumulated other comprehensive loss. Absent the intent or requirement to sell a security, if a credit loss does not exist, any impairment is considered to be temporary.
Regardless of whether an OTTI is recognized in its entirety in earnings or if the credit portion is recognized in earnings and the noncredit portion is recognized in other comprehensive income (loss), the estimation of fair values has a significant impact on the amount(s) of any impairment that is recorded.
The noncredit portion of any OTTI losses on securities classified asavailable-for-sale is adjusted to fair value with an offsetting adjustment to the carrying value of the security. The fair value adjustment could increase or decrease the carrying value of the security. All of the Company’s ~~private-label~~Private-Label CMOs were originally, and continue to be classified, as held to maturity.
In periods subsequent to the recognition of an OTTI loss, the other-than-temporarily impaired debt security is accounted for as if it had been purchased on the measurement date of the OTTI at an amount equal to the previous amortized cost basis less the credit-related OTTI recognized in earnings. For debt securities for which credit-related OTTI is recognized in earnings, the difference between the new cost basis and the cash flows expected to be collected is accreted into interest income over the remaining life of the security in a prospective manner based on the amount and timing of future estimated cash flows.
The Company had investments in 3738 positions that were temporarily impaired at ~~December 31, 2019.~~September 30, 2020. Based on its analysis, management has concluded that three ~~private-label~~Private-Label CMOs are ~~other-than-temporarily impaired,~~OTTI, while the remaining securities portfolio has experienced unrealized losses and a decrease in fair value due to interest rate volatility, illiquidity in the marketplace, or credit deterioration in the U.S. mortgage markets.
~~10.~~9.
LOANS AND RELATED ALLOWANCE FOR LOAN LOSSES
The following table summarizes the primary segments of the loan portfolio as of ~~December 31, 2019~~September 30, 2020 and June 30, ~~2019.~~2020.

      December 31, 2019    June 30, 2019       September 30, 2020    June 30, 2020

Total
Loans

Individually
evaluated
for
impairment

Collectively
evaluated
for
impairment

Total
Loans

Individually
evaluated
for
impairment

Collectively
evaluated
for
impairment

Total
Loans

Individually
evaluated
for
impairment
      Collectively
evaluated for
impairment
Total
Loans

Individually
evaluated
for
impairment
      Collectively
evaluated for
impairment




      (Dollars in Thousands)       (Dollars in Thousands)
First mortgage loans:

1 – 4 family dwellings
   $    79,778    $ -       $ 79,778       $ 76,789    $ -       $ 76,789    $    79,189    $ -       $ 79,189       $ 78,077    $ -       $ 78,077
Construction
      1,605    -       1,605       2,907    -       2,907       1,789    -       1,789       1,868    -       1,868
Land acquisition & development
      246    -       246       694    -       694       360    -       360       446    -       446
Multi-family dwellings
      2,341    -       2,341       3,123    -       3,123       3,687    -       3,687       3,755    -       3,755
Commercial
      4,284    -       4,284       3,727    -       3,727       4,247    -       4,247       4,132    -       4,132
Consumer Loans

Home equity
      1,095    -       1,095       906    -       906       1,020    -       1,020       1,137    -       1,137
Home equity lines of
credit
      1,910    -       1,910       1,953    -       1,953       1,602    -       1,602       1,729    -       1,729
Other
      112    -       112       112    -       112       61    -       61       79    -       79
Commercial Loans
      6    -       6       418    -       418       17    -       17       11    -       11
























   $    91,377    $             -       $         91,377       $         90,629    $                 -       $             90,629    $    91,972    $             -       $             91,972       $             91,234    $                 -       $             91,234
















Plus: Deferred loan costs
      493                507                397                416
Allowance for loan losses
      (530 )                (548 )                (620 )                (618 )









Total
   $            91,340                $ 90,588             $            91,749                $ 91,032









Impaired loans are loans for which it is probable the Company will not be able to collect all amounts due according to the contractual terms of the loan agreement. The ~~Company~~following loan categories are collectively ~~evaluates~~evaluated for ~~impairment~~impairment. First mortgage loans: 1 – 4 family ~~first mortgage loans~~dwellings and all consumer ~~loans.~~loan categories (home equity, home equity lines of credit, and other). The following loan categories are individually evaluated for ~~impairment: first~~impairment. First mortgage ~~loans –~~loans: construction, land acquisition and development, multi-family dwellings, and commercial. The Company evaluates commercial loans not secured by real property individually for impairment.
The definition of “impaired loans” is not the same as the definition of “nonaccrual loans,” although the two categories overlap. The Company may choose to place a loan on nonaccrual status due to payment delinquency or uncertain collectability, while not classifying the loan as impaired if the loan is not a commercial or commercial real estate loan. Factors considered by management in determining impairment include payment status and collateral value. The amount of impairment for these types of impaired loans is determined by the difference between the present value of the expected cash flows related to the loan, using the original interest rate, and its recorded value, or as a practical expedient in the case of collateralized loans, the difference between the fair value of the collateral and the recorded amount of the loans. When foreclosure is probable, impairment is measured based on the fair value of the collateral.
Loans that experience insignificant payment delays, which are defined as 90 days or less, generally are not classified as impaired. Management determines the significance of payment delays on acase-by-case basis taking into consideration all circumstances surrounding the loan and the borrower, including the length of the delay, the borrower’s prior payment record, and the amount of shortfall in relation to the principal and interest owed.
As of ~~December 31, 2019~~September 30, 2020 and June 30, ~~2019~~2020, there were no loans considered to be ~~impaired.~~
~~Total~~impaired and no nonaccrual ~~loans as of December 31, 2019 and June 30, 2019 and the related interest income recognized for the three and six months ended December 31, 2019 and December 31, 2018 are as follows:~~
        ~~December 31,~~
~~2019~~         ~~June 30,~~
~~2019~~
~~(Dollars in Thousands)~~
~~Principal outstanding~~
~~1 – 4 family dwellings~~
$ - $ ~~225~~
~~Construction~~
- -
~~Land acquisition & development~~
- -
~~Commercial real estate~~
- -
~~Home equity lines of credit~~
- -
~~Total~~
$ - $ ~~225~~

      Three Months Ended    Six Months Ended
        December 31,           December 31,           December 31,           December 31,
      2019       2018       2019       2018
      (Dollars in Thousands)
Average nonaccrual loans

1 – 4 family dwellings
   $    -    $    233    $    93    $    234
Construction
      -       -       -       -
Land acquisition & development
      -       -       -       -
Commercial real estate
      -       -       -       -
Home equity lines of credit
      -       -       -       -








Total
   $    -    $    233    $    93    $    234








Income that would have been recognized
   $    -    $    4    $    6    $    9
Interest income recognized
   $    -    $    3    $    6    $    6
loans. During the quarter ended September 30, 2019, the Company’s onenon-performing asset consisting of a single-family real estate loan was discharged from bankruptcy and ~~was not delinquent at December 31, 2019.~~has been current since that time.
      Three Months Ended
        September 30,           September 30,
      2020       2019
      (Dollars in Thousands)
Average nonaccrual loans

1 – 4 family dwellings
   $    -    $    185
Construction
      -       -
Land acquisition & development
      -       -
Commercial real estate
      -       -
Home equity lines of credit
      -       -




Total
   $    -    $    185




Income that would have been recognized
   $    -    $    2
Interest income recognized
   $    -    $    2
Interest income foregone
   $    -    $    -
The Company’s loan portfolio may also include troubled debt restructurings (“TDRs”), where economic concessions have been granted to borrowers who have experienced or are expected to experience financial difficulties. These concessions typically result from the Company’s loss mitigation activities and could include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance or other actions. Certain TDRs are classified as nonperforming at the time of restructure and may only be returned to performing status after considering the borrower’s sustained repayment performance for a reasonable period, generally six months.
During the three ~~and six~~ months ended ~~December 31,~~September 30, 2020 and 2019, ~~and December 31, 2018,~~ there were no ~~TDRs.~~troubled debt restructurings, and no troubled debt restructurings that subsequently defaulted.
When the Company modifies a loan, management evaluates any possible impairment based on the present value of expected future cash flows, discounted at the contractual interest rate of the original loan agreement, except when the sole (remaining) source of repayment for the loan is the operation or liquidation of the collateral. In these cases, management uses the current fair value of the collateral, less
selling costs, instead of discounted cash flows. If management determines that the value of the modified loan is less than the recorded investment in the loan (net of previous charge-offs, deferred loan fees or costs and unamortized premium or discount), impairment is recognized by segment or class of loan, as applicable, through an allowance estimate or acharge-off to the allowance. Segment and class status is determined by the loan’s classification at origination.
The allowance for loan losses is established through provisions for loan losses charged against income. Loans deemed to be uncollectible are charged against the allowance account. Subsequent recoveries, if any, are credited to the allowance. The allowance is maintained at a level believed adequate by management to absorb estimated potential loan losses. Management’s determination of the adequacy of the allowance is based on periodic evaluations of the loan portfolio considering past experience, current economic conditions, composition of the loan portfolio and other relevant factors. This evaluation is inherently subjective, as it requires material estimates that may be susceptible to significant change.
Effective December 13, 2006, the Federal Deposit Insurance Corporation (“FDIC”), in conjunction with the other federal banking agencies adopted a Revised Interagency Policy Statement on the Allowance for Loan and Lease Losses (“ALLL”). The revised policy statement revised and replaced the
banking agencies’ 1993 policy statement on the ALLL. The revised policy statement provides that an institution must maintain an ALLL at a level that is appropriate to cover estimated credit losses on individually evaluated loans determined to be impaired, as well as estimated credit losses inherent in the remainder of the loan and lease portfolio. The banking agencies also revised the policy to ensure consistency with generally accepted accounting principles (“GAAP”). The revised policy statement updates the previous guidance that describes the responsibilities of the board of directors, management, and bank examiners regarding the ALLL, factors to be considered in the estimation of the ALLL, and the objectives and elements of an effective loan review system.
Federal regulations require that each insured savings institution classify its assets on a regular basis. In addition, in connection with examinations of insured institutions, federal examiners have authority to identify problem assets and, if appropriate, classify them. There are three classifications for problem assets: “substandard”, “doubtful” and “loss”. Substandard assets have one or more defined weaknesses and are characterized by the distinct possibility that the insured institution will sustain some loss if the deficiencies are not corrected. Doubtful assets 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 questionable, and there is a high possibility of loss. An asset classified as loss is considered uncollectible and of such little value that continuance as an asset of the institution is not warranted. Another category designated “asset watch” is also utilized by the Bank for assets which do not currently expose an insured institution to a sufficient degree of risk to warrant classification as substandard, doubtful or loss. Assets classified as substandard or doubtful require the institution to establish general allowances for loan losses. If an asset or portion thereof is classified as loss, the insured institution must either establish specific allowances for loan losses in the amount of 100% of the portion of the asset classified loss, orcharge-off such amount. General loss allowances established to cover possible losses related to assets classified substandard or doubtful may be included in determining an institution’s regulatory capital, while specific valuation allowances for loan losses do not qualify as regulatory capital.
The Company’s general policy is to internally classify its assets on a regular basis and establish prudent general valuation allowances that are adequate to absorb losses that have not been identified but that are inherent in the loan portfolio. The Company maintains general valuation allowances that it believes are adequate to absorb losses in its loan portfolio that are not clearly attributable to specific loans. The Company’s general valuation allowances are within the following general ranges: (1) 0% to 5% of assets subject to special mention; (2) 1.00% to 100% of assets classified substandard; and (3) 50% to 100% of assets classified doubtful. Any loan classified as loss ischarged-off. To further monitor and assess the risk characteristics of the loan portfolio, loan delinquencies are reviewed to consider any developing problem loans. Based upon the procedures in place, considering the Company’s past charge-offs and recoveries and assessing the current risk elements in the portfolio, management believes the allowance for loan losses at ~~December 31, 2019,~~September 30, 2020, is adequate.
The following tables present the classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans as of ~~December 31, 2019~~September 30, 2020 and June 30, ~~2019:~~2020:

Current
30 – 59
  Days Past
Due

60 – 89
  Days Past
Due

  90 Days +
Past Due
Accruing

  90 Days +
Past Due
Non-accrual

Total
Past
Due

Total
Loans

(Dollars in Thousands)
December 31, 2019

First mortgage loans:

1 – 4 family dwellings
$     79,778 $     - $     - $     - $     - $     - $     79,778
Construction
1,605 - - - - - 1,605
Land acquisition & development
246 - - - - - 246
Multi-family dwellings
2,341 - - - - - 2,341
Commercial
4,284 - - - - - 4,284
Consumer Loans:

Home equity
1,095 - - - - - 1,095
Home equity lines of credit
1,910 - - - - - 1,910
Other
112 - - - - - 112
Commercial Loans
6 - - - - - 6

$     91,377 $     - $     - $     - $     - $     - 91,377

Plus: Deferred loan costs
493
  Allowance for loan losses
(530 )

Net Loans Receivable
$     91,340

Current
30 – 59
  Days Past
Due

60 – 89
  Days Past
Due

  90 Days +
Past Due
Accruing

  90 Days +
Past Due
Non-accrual

Total
Past
Due

Total
Loans

(Dollars in Thousands)
June 30, 2019

First mortgage loans:

1 – 4 family dwellings
$     76,564 $     - $     - $     - $     225 $     225 $     76,789
Construction
2,907 - - - - - 2,907
Land acquisition & development
694 - - - - - 694
Multi-family dwellings
3,123 - - - - - 3,123
Commercial
3,727 - - - - - 3,727
Consumer Loans

Home equity
906 - - - - - 906
Home equity lines of credit
1,953 - - - - - 1,953
Other
112 - - - - - 112
Commercial Loans
418 - - - - - 418

$ 90,404 $ - $ - $ - $ 225 $ 225 90,629

Plus: Deferred loan costs
507
  Allowance for loan losses
(548 )

Net Loans Receivable
$     90,588

Current 30 – 59
  Days Past
Due 60 – 89
  Days Past
Due
  90 Days +
Past Due
Accruing

  90 Days +
Past Due
Non-accrual
Total
Past
Due
Total
Loans

(Dollars in Thousands)
September 30, 2020

First mortgage loans:

1 – 4 family dwellings
$     79,189 $     - $     - $     - $     - $     - $     79,189
Construction
1,789 - - - - - 1,789
Land acquisition &
development
360 - - - - 360
Multi-family dwellings
3,687 - - - - - 3,687
Commercial
4,247 - - - - - 4,247
Consumer Loans:

Home equity
1,020 - - - - - 1,020
Home equity lines of credit
1,602 - - - - - 1,602
Other
61 - - - - - 61
Commercial Loans
17 - - - - - 17

$     91,972 $     - $     - $     - $     - $     - 91,972

Deferred loan costs
397
  Allowance for loan losses
(620 )

Net Loans Receivable
$     91,749

Current 30 – 59
  Days Past
Due 60 – 89
  Days Past
Due
  90 Days +
Past Due
Accruing

  90 Days +
Past Due
Non-accrual
Total
Past
Due
Total
Loans

(Dollars in Thousands)
June 30, 2020

First mortgage loans:

1 – 4 family dwellings
$     78,077 $     - $     - $     - $     - $     - $     78,077
Construction
1,868 - - - - - 1,868
Land acquisition & development
446 - - - - - 446
Multi-family dwellings
3,755 - - - - - 3,755
Commercial
4,132 - - - - - 4,132
Consumer Loans

Home equity
1,137 - - - - - 1,137
Home equity lines of credit
1,729 - - - - - 1,729
Other
79 - - - - - 79
Commercial Loans
11 - - - - - 11

$     91,234 $     - $     - $     - $     - $     - 91,234

Deferred loan costs
416
  Allowance for loan losses
(618 )

Net Loans Receivable
$     91,032

Credit quality information
The following tables represent credit exposure by internally assigned grades for the ~~period~~periods ended ~~December 31, 2019~~September 30, 2020 and June 30, ~~2019.~~2020. The grading system analysis estimates the capability of the borrower to repay the contractual obligations of the loan agreements as scheduled or not at all. The Company’s internal credit risk grading system is based on experiences with similarly graded loans.
The Company’s internally assigned grades are as follows:
Pass – loans which are protected by the current net worth and paying capacity of the obligor or by the value of the underlying collateral.
Special Mention – loans where a potential weakness or risk exists, which could cause a more serious problem if not corrected.
Substandard – loans that have a well-defined weakness based on objective evidence and can be characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.
Doubtful – loans classified as doubtful have all the weaknesses inherent in a substandard loan. In addition, these weaknesses make collection or liquidation in full highly questionable and improbable, based on existing circumstances.
Loss – loans classified as loss are considered uncollectible, or of such value that continuance as a loan is not warranted.
The primary credit quality indicator used by management in the 1 – 4 family and consumer loan portfolios is the performance status of the loans. Payment activity is reviewed by Management on a monthly basis to determine how loans are performing. Loans are considered to benon-performing when they become 90 days delinquent, have a history of delinquency, or have other inherent characteristics which Management deems to be weaknesses.
The following tables present the Company’s internally classified construction, land acquisition and development, multi-family residential, commercial real estate and commercial (not secured by real estate) loans at ~~December 31, 2019~~September 30, 2020 and June 30, ~~2019.~~2020.

      December 31, 2019       September 30, 2020
      (Dollars in Thousands)       Construction
Land
Acquisition
&
Development
Loans

Multi-family
Residential

Commercial
Real
Estate
      Commercial
      Construction
Land
Acquisition
&
Development
Loans

Multi-
family
Residential

Commercial
Real
Estate
      Commercial



      (Dollars in Thousands)
Pass
   $    1,605    $    246    $    2,341    $    4,284    $    6    $    1,789    $    360    $    3,687    $    4,247    $    17
Special Mention
      -       -       -       -       -       -       -       -       -       -
Substandard
      -       -       -       -       -       -       -       -       -       -
Doubtful
      -       -       -       -       -       -       -       -       -       -




















Ending Balance
�� $    1,605    $    246    $    2,341    $    4,284    $    6    $    1,789    $    360    $    3,687    $    4,247    $    17




















      June 30, 2019       June 30, 2020
      (Dollars in Thousands)         Construction
Land
Acquisition
&
  Development
Loans

  Multi-family
Residential

  Commercial
Real
Estate
        Commercial
     Construction
Land
Acquisition
&
  Development
Loans

  Multi-family
Residential

  Commercial
Real
Estate
        Commercial



      (Dollars in Thousands)
Pass
   $    2,907    $    694    $    3,123    $    3,727    $    418    $    1,868    $    446    $    3,755    $    4,132    $    11
Special Mention
      -       -       -       -       -       -       -       -       -       -
Substandard
      -       -       -       -       -       -       -       -       -       -
Doubtful
      -       -       -       -       -       -       -       -       -       -




















Ending Balance
   $    2,907    $    694    $    3,123    $    3,727    $    418    $    1,868    $    446    $    3,755    $    4,132    $    11




















The following table presents performing andnon-performing 1 – 4 family residential and consumer loans based on payment activity for the periods ended ~~December 31, 2019~~September 30, 2020 and June 30, ~~2019.~~2020.

      December 31, 2019       September 30, 2020




          1 – 4 Family               Consumer               1 – 4 Family               Consumer




      (Dollars in Thousands)       (Dollars in Thousands)
Performing
       $        79,778    $    3,117        $        79,189    $    2,683
Non-performing
      -       -       -       -








Total
       $                79,778    $                3,117        $        79,189    $    2,683








      June 30, 2019       June 30, 2020




          1 – 4 Family               Consumer               1 – 4 Family               Consumer




      (Dollars in Thousands)       (Dollars in Thousands)
Performing
       $        76,564    $    2,971        $        78,077    $    2,945
Non-performing
      225       -       -       -








Total
       $        76,789    $    2,971        $        78,077    $    2,945








The Company determines its allowance for loan losses in accordance with generally accepted accounting principles. The Company uses a systematic methodology as required by Financial Reporting Release No. 28 and the various Federal Financial Institutions Examination Council guidelines. The Company also endeavors to adhere to SEC Staff Accounting Bulletin No. 102 in connection with loan loss allowance methodology and documentation issues.
Our methodology used to determine the allocated portion of the allowance is as follows. For groups of homogenous loans, we apply a loss rate to the groups’ aggregate balance. Our group loss rate reflects our historical loss experience. We may adjust these group rates to compensate for changes in environmental factors; but our adjustments have not been frequent due to a relatively stablecharge-off experience. The Company also monitors industry loss experience on similar loan portfolio segments. We then identify loans for individual evaluation under ASC Topic 310. If the individually identified loans are performing, we apply a segment specific loss rate adjusted for relevant environmental factors, if necessary, for those loans reviewed individually and considered individually impaired, we use one of the three methods for measuring impairment mandated by ASC Topic 310. Generally, the fair value of collateral is used since our impaired loans are generally real estate based. In connection with the fair value of collateral measurement, the Company generally uses an independent appraisal and determines costs to sell. The Company’s appraisals for
commercial income based loans, such as multi-family and commercial real estate loans, assess value based
upon the operating cash flows of the business as opposed to merely “as built” values. The Company then validates the reasonableness of our calculated allowances by: (1) reviewing trends in loan volume, delinquencies, restructurings and concentrations; (2) reviewing prior period (historical) charge-offs and recoveries; and (3) presenting the results of this process, quarterly, to the Asset Classification Committee and the Savings Bank’s Board of Directors. We then tabulate, format and summarize the current loan loss allowance balance for financial and regulatory reporting purposes.
The Company had no unallocated loss allowance balance at ~~December 31, 2019.~~September 30, 2020.
The allowance for loan losses represents the amount which management estimates is adequate to provide for probable losses inherent in its loan portfolio. The allowance method is used in providing for loan losses. Accordingly, all loan losses are charged to the allowance, and all recoveries are credited to it. The allowance for loan losses is established through a provision for loan losses charged to operations. The provision for loan losses is based on management’s periodic evaluation of individual loans, economic factors, past loan loss experience, changes in the composition and volume of the portfolio, and other relevant factors. The estimates used in determining the adequacy of the allowance for loan losses, including the amounts and timing of future cash flows expected on impaired loans, are particularly susceptible to changes in the near term.
The following tables summarize the primary segments of the allowance for loan losses (“ALLL”), segregated into the amount required for loans individually evaluated for impairment and the amount required for loans collectively evaluated for impairment as of ~~December 31, 2019~~September 30, 2020 and ~~2018.~~2019. Activity in the allowance is presented for the three ~~and six~~ months ended ~~December 31, 2019~~September 30, 2020 and ~~2018.~~2019.

      As of December 31, 2019
      First Mortgage Loans
          1 – 4
    Family      Construction         Land
  Acquisition &
Development
Multi-
  family
     Commercial           Consumer
Loans         Commercial
Loans      Total


      (Dollars in Thousands)
Beginning ALLL Balance at September 30, 2019
   $    412 $    29    $    6 $    17 $    42    $    30    $    2 $    538
Charge-offs
      -    -       -    -    -       -       -    -
Recoveries
      -    -       - ��    -    -       -       -    -
Provisions
      (14 )    8       (2 )    (4 )    3       2       (1 )    (8 )
















Ending ALLL Balance at December 31, 2019
   $    398 $    37    $    4 $    13 $    45    $    32    $    1 $    530
















Individually evaluated for impairment
   $    - $    -    $    - $    - $    -    $    -    $    - $    -
Collectively evaluated for impairment
      398    37       4    13    45       32       1    530
















   $    398 $    37    $    4 $    13 $    45    $    32    $    1 $    530
















As of December 31, 2019       As of September 30, 2020
First Mortgage Loans       First Mortgage Loans
1 – 4
  Family     Construction   Land
  Acquisition &
Development
Multi-
  family
  Commercial     Consumer
Loans   Commercial
Loans   Total             1 – 4
    Family         Construction         Land
  Acquisition &
Development
Multi-
  family
           Commercial           Consumer
Loans      Commercial
Loans         Total



(Dollars in Thousands)       (Dollars in Thousands)
Beginning ALLL Balance at June 30, 2019
$ 405 $ 46 $ 10 $ 17 $ 37 $ 30 $ 3 $ 548
Beginning ALLL Balance at June 30, 2020
   $    449    $    38 $    6    $    26    $    66 $    32 $    1    $    618
Charge-offs
- - - - - - - -       -       -    -       -       -    -    -       -
Recoveries
- - - - - - - -       -       -    -       -       -    -    -       -
Provisions
(7 ) (9 ) (6 ) (4 ) 8 2 (2 ) (18 )       6       (2 )    1       -       (2 )    (2 )    1       2

















Ending ALLL Balance at December 31, 2019
$ 398 $ 37 $ 4 $ 13 $ 45 $ 32 $ 1 $ 530
Ending ALLL Balance at September 30, 2020
   $    455    $    36 $    7    $    26    $    64 $    30 $    2    $    620

















Individually evaluated for impairment
$ - $ - $ - $ - $ - $ - $ - $ -    $    -    $    - $    -    $    -    $    - $    - $    -    $    -
Collectively evaluated for impairment
398 37 4 13 45 32 1 530       455       36    7       26       64    30    2       620

















$ 398 $ 37 $ 4 $ 13 $ 45 $ 32 $ 1 $ 530    $    455    $    36 $    7    $    26    $    64 $    30 $    2    $    620

















As of December 31, 2018 As of September 30, 2019
First Mortgage Loans First Mortgage Loans
1 – 4
  Family     Construction   Land
  Acquisition &
Development Multi-
  family     Commercial     Consumer
Loans   Commercial
Loans   Total   1 – 4
  Family     Construction   Land
  Acquisition &
Development Multi-
  family     Commercial     Consumer
Loans   Commercial
Loans   Total

(Dollars in Thousands) (Dollars in Thousands)
Beginning ALLL Balance at September 30, 2018
$ 363 $ 29 $ 10 $ 18 $ 32 $ 32 $ 3 $ 487
Beginning ALLL Balance at June 30, 2019
$ 405 $ 46 $ 10 $ 17 $ 37 $ 30 $ 3 $ 548
Charge-offs
- - - - - - - - - - - - - - - -
Recoveries
- - - - - - - - - - - - - - - -
Provisions
10 (4 ) - - 7 1 - 14 7 (17 ) (4 ) - 5 - (1 ) (10 )

Ending ALLL Balance at December 31, 2018
$ 373 $ 25 $ 10 $ 18 $ 39 $ 33 $ 3 $ 501
Ending ALLL Balance at September 30, 2019
$ 412 $ 29 $ 6 $ 17 $ 42 $ 30 $ 2 $ 538

Individually evaluated for impairment
$ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -
Collectively evaluated for impairment
373 25 10 18 39 33 3 501 412 29 6 17 42 30 2 538

$ 373 $ 25 $ 10 $ 18 $ 39 $ 33 $ 3 $ 501 $ 412 $ 29 $ 6 $ 17 $ 42 $ 30 $ 2 $ 538

As of December 31, 2018
First Mortgage Loans
1 – 4
  Family     Construction   Land
  Acquisition &
Development Multi-
  family     Commercial     Consumer
Loans   Commercial
Loans   Total

(Dollars in Thousands)
Beginning ALLL Balance at June 30, 2018
$ 356 $ 24 $ - $ 18 $ 35 $ 31 $ 4 $ 468
Charge-offs
- - - - - - - -
Recoveries
- - - - - - - -
Provisions
17 1 10 - 4 2 (1 ) 33

Ending ALLL Balance at December 31, 2018
$ 373 $ 25 $ 10 $ 18 $ 39 $ 33 $ 3 $ 501

Individually evaluated for impairment
$ - $ - $ - $ - $ - $ - $ - $ -
Collectively evaluated for impairment
373 25 10 18 39 33 3 501

$ 373 $ 25 $ 10 $ 18 $ 39 $ 33 $ 3 $ 501

During the three months ~~and six months~~ ended ~~December 31, 2019,~~September 30, 2020 the Company’s ALLL increased by $2 thousand. This increase in the ALLL ~~decreased $8 thousand and $18 thousand, respectively. For the three months ended December 31, 2019, the ALLL associated with the1-4~~ ~~family real estate loan portfolio decreased $14 thousand and~~ was ~~partially offset by~~primarily attributable to an ~~$8 thousand~~ increase in the ALLL associated with ~~construction loans. During~~ the ~~six months ended December 31, 2019, the ALLL associated with~~ 1 -– 4 family real estate loans, construction and land acquisition and development loans decreased by $7 thousand, $9 thousand and $6 thousand, respectively. The primary reason for the changes in the ALLL balances, both in total, and within the identified segments, is changes in applicable loan balances and the return of one~~non-performing~~ ~~loan to performing status.~~
During the three and six months ending December 31, 2018, the ALLL increased $14 thousand and $33 thousand, respectively. For the three months ended December 31, 2018, the ALLL associated with 1 - 4 family real estate loans increased $10 thousand and the ALLL associated with commercial loans increased $7 thousand. These increases weresegment, partially offset by ~~a decrease of $4 thousand~~decreases in the ALLL associated with the construction, commercial real estate and consumer loan ~~segment.~~ segments.
During the ~~six months~~quarter ended ~~December 31, 2018,~~September 30, 2019, the ALLL ~~associated with 1 - 4 family real estate loans,~~decreased $10 thousand primarily due to lower levels of construction and land acquisition and development loans and commercial loans increased by $17 thousand, $10 thousand and $4 thousand, respectively. The primary reason for the changes in the ALLL balances, both in total, and within the identified segments, is changes in applicable loan balances.loans.

~~11.~~10.
FEDERAL HOME LOAN BANK (FHLB) ADVANCES
The following table presents contractual maturities of FHLB long-term advances as of ~~December 31, 2019 and June~~September 30, ~~2019.~~2020.

         Weighted- Stated interest                           Weighted- Stated interest
   Maturity range    average rate range            December 31,       June 30,    Maturity range    average rate range            September 30,       June 30,
Description
         from          to            interest rate ⁴     from     to        2019       2019        from            to            interest rate⁴     from     to        2020       2020
            (Dollars in Thousands)             (Dollars in Thousands)
Fixed
   10/01/20    10/03/22    3.03 % 2.95 % 3.09 % $    15,000    $    15,000    10/01/20    10/03/22    3.03 % 2.95 % 3.09 % $    15,000    $    15,000
Adjustable
   10/01/20    10/01/21    2.02 % 1.85 % 2.16 %    85,000       85,000    10/01/20    10/01/21    0.32 % 0.29 % 0.36 %    85,000       85,000








Total
         $    100,000    $    100,000          $    100,000    $    100,000








⁴ As of September 30, 2020
Maturities of FHLB long-term advances at ~~December 31, 2019,~~September 30, 2020, are summarized as follows:

Maturing During
Fiscal Year Ended
                         June 30:
                    Amount                  Weighted-
      Average
Interest
Rate⁽⁴⁾
      (Dollars in Thousands)
2020
   $    -       -
2021
      65,000       2.04%
2022
      30,000       2.31%
2023
      5,000       3.09%
2024
      -       -



2025 and thereafter
      -



Total
   $    100,000       2.17%



⁴
~~As of December 31, 2019.~~
The adjustable rate advances are not convertible or callable. The FHLB advances are secured by the Company’s FHLB stock, mortgage-backed and investment securities, and loans, and are subject to substantial prepayment penalties.
Maturing During
Fiscal Year Ended
                        June 30:
                    Amount                  Weighted-
      Average
Interest
Rate⁴
      (Dollars in Thousands)
2021
   $    65,000       0.51%
2022
      30,000       0.80%
2023
      5,000       3.09%
2024
      -       -
2025
      -       -
2026 and thereafter
      -       -



Total
   $    100,000       0.73%



The Company also utilized revolving and short-term FHLB advances. Short-term FHLB advances generally mature within 90 days, while revolving FHLB advances may be repaid by the Company without penalty. The following table presents information regarding such advances as of ~~December 31, 2019~~September 30, 2020 and June 30, ~~2019:~~2020:

           December 31,
2019            June 30,
2019            September 30,
2020            June 30,
2020




   (Dollars in Thousands)    (Dollars in Thousands)
FHLB revolving and short-term advances:

Ending balance
$    68,030 $    70,828 $    43,281 $    59,159
Average balance
   55,900    81,556    34,644    58,146
Maximummonth-end balance
   68,030    161,289    43,281    68,030
Average interest rate
   2.19 %    2.45 %    0.39 %    1.57 %
Weighted-average rate
   1.81 %    2.46 %
Weighted-average rate at period end
   0.37 %    0.39 %
At ~~December 31, 2019,~~September 30, 2020, the Company had remaining borrowing capacity with the FHLB of approximately $2.9 million.
The FHLB advances are secured by the Company’s FHLB stock, loans, and mortgage-backed and investment securities held in safekeeping at the FHLB. FHLB advances are subject to substantial prepayment penalties.
11.
OTHER SHORT-TERM BORROWINGS
The ~~Company~~company also ~~has a $5 million unsecured line~~utilized other short-term borrowings comprised of ~~credit with a regional bank. Borrowings under this line~~Federal Reserve Bank of ~~credit generally are repayable~~Cleveland (“FRBC”) discount window borrowings. FRBC discount window borrowings mature within ~~seven days. At December 31, 2019, no~~90 days and may be repaid prior to maturity without penalty, in whole or in part, plus accrued interest. The following table presents information regarding the FRBC borrowings ~~were outstanding on this unsecured line.~~as of September 30, 2020 and June 30, 2020:
FRBC Discount Window Borrowings:

           September 30,
2020            June 30,
2020


   (Dollars in Thousands)
Ending balance
$    5,875 $    7,000
Average balance
   1,262    2,592
Maximum month-end balance
   5,875    24,800
Average interest rate
   0.25 %    0.25 %
Weighted-average rate at period end
   0.25 %    0.25 %
⁴ As of September 30, 2020.
12.
FAIR VALUE MEASUREMENTS
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for an asset or liability in an orderly transaction between market participants at the measurement date. GAAP established a fair value hierarchy that prioritizes the use of inputs used in valuation methodologies into the following three levels:

Level I:
Quoted prices are available in active markets for identical assets or liabilities as of the reported date.
Level II:
Pricing inputs are other than the quoted prices in active markets, which are either directly or indirectly observable as of the reported date. The nature of these assets and liabilities includes items for which quoted prices are available but traded less frequently and items that are fair-valued using other financial instruments, the parameters of which can be directly observed.
Level III:
Assets and liabilities that have little to no pricing observability as of the reported date. These items do not havetwo-way markets and are measured using management’s best estimate of fair value, where the inputs into the determination of fair value require significant management judgment or estimation.
Assets Measured at Fair Value on a Recurring Basis
Investment SecuritiesAvailable-for-Sale
Fair values for securities available for sale are determined by obtaining quoted prices on nationally recognized securities exchanges or matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities, but rather by relying on the securities’ relationship to other benchmark quoted securities. The Company has no Level I or Level III investment securities. Level II investment securities were primarily comprised of investment-grade corporate bonds and U.S. dollar-denominated investment-grade corporate bonds of large foreign issuers.
The following tables present the assets reported on a recurring basis on the Consolidated Balance Sheet at their fair value as of ~~December 31, 2019~~September 30, 2020 and June 30, ~~2019,~~2020, by level within the fair value hierarchy. As required by GAAP, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

      December 31, 2019       September 30, 2020
            Level I                   Level II                   Level III                 Total                   Level I                   Level II                   Level III                   Total
      (Dollars in Thousands)       (Dollars in Thousands)
Assets measured on a recurring basis:

Investment securities – available for sale:

Corporate securities
   $    -    $    110,104    $    -    $    110,104
Corporate debt securities
   $    -    $    108,132    $    -    $    108,132
Foreign debt securities⁵
      -       27,956       -       27,956       -       29,648       -       29,648
Commercial paper
      -       2,998       -       2,998
Obligations of states and political subdivisions
      -       266       -       266
















   $    -    $    138,060    $    -    $    138,060    $    -    $    141,044    $    -    $    141,044
















      June 30, 2019
      Level I       Level II       Level III       Total
      (Dollars in Thousands)
Assets measured on a recurring basis:

Investment securities – available for sale:

Obligations of states and political subdivisions
   $    -    $    1,329    $    -    $    1,329
Corporate securities
      -       104,908       -       104,908
Foreign debt securities⁵
      -       26,543       -       26,543








   $    -    $    132,780    $    -    $    132,780








⁵
U.S. dollar-denominated investment-grade corporate bonds of large foreign corporate issuers.
      June 30, 2020
            Level I                   Level II                   Level III                   Total
      (Dollars in Thousands)
Assets measured on a recurring basis:

Investment securities – available for sale:

Corporate securities
   $    -       $ 109,128    $    -    $    109,128
Foreign debt securities⁵
      -       32,540       -       32,540
Commercial paper
      -       5,971       -       5,971








   $    -       $ 147,639    $    -    $    147,639








13.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts and estimated fair values of financial instruments are as follows:

   December 31, 2019       September 30, 2020
   Carrying
Amount       Fair
Value           Level I               Level II               Level III           Carrying
Amount       Fair
Value           Level I               Level II               Level III
   (Dollars in Thousands)       (Dollars in Thousands)
FINANCIAL ASSETS

Cash and cash equivalents
$    3,042    $    3,042    $    3,042    $    -    $    -    $    3,811    $    3,811    $    3,811    $    -    $    -
Certificates of deposit
   1,591       1,591       1,591       -       -       1,343       1,343       1,343       -       -
Investment securities – held to maturity
   3,495       3,578       -       3,578       -       3,495       3,613       -       3,613       -
Mortgage-backed securities – held to maturity:

Agency
   103,171       103,340       -       103,340       -       77,393       77,120       -       77,120       -
Private-label
   785       781       -       -       781       544       541       -       -       541
Net loans receivable
   91,340       93,414       -       -       93,414       91,749       98,725       -       -       98,725
Accrued interest receivable
   1,052       1,052       1,052       -       -       709       709       709       -       -
FHLB stock
   6,974       6,974       6,974       -       -       5,923       5,923       5,923       -       -
Bank owned life insurance
   4,849       4,849       4,849       -       -       4,935       4,935       4,935       -       -
FINANCIAL LIABILITIES

Deposits:

Non-interest earning checking
$    18,113    $    18,113    $    18,113    $    -    $    -
Non-interest bearing deposits
   $    22,765    $    22,765    $    22,765    $    -    $    -
Interest-earning checking
   22,726       22,726       22,726       -       -       24,844       24,844       24,844       -       -
Savings accounts
   42,719       42,719       42,719       -       -       44,560       44,560       44,560       -       -
Money market accounts
   20,238       20,238       20,238       -       -       19,994       19,994       19,994       -       -
Certificates of deposit
   41,888       41,922       -       -       41,922       29,865       29,998       -       -       29,998
Advance payments by borrowers for taxes and insurance
   1,447       1,447       1,447       -       -       909       909       909       -       -
FHLB advances – fixed rate
   15,000       14,357       -       -       14,357       15,000       14,824       -       -       14,824
FHLB advances – variable rate
   85,000       85,000       85,000       -       -       85,000       85,000       85,000       -       -
FHLB short-term advances
   68,030       68,030       68,030       -       -       43,281       43,281       43,281       -       -
Other short-term advances
      5,875       5,875       5,875       -       -
Accrued interest payable
   788       788       788       -       -       314       314       314       -       -

   June 30, 2019
   Carrying
Amount       Fair
Value           Level I               Level II               Level III
   (Dollars in Thousands)
FINANCIAL ASSETS

Cash and cash equivalents
$    4,379    $    4,379    $    4,379    $    -    $    -
Certificates of deposit
   1,843       1,843       1,843       -       -
Investment securities – held to maturity
   3,995       4,080       -       4,080       -
Mortgage-backed securities – held to maturity:

Agency
   107,448       107,832       -       107,832       -
Private-label
   883       876       -       -       876
Net loans receivable
   90,588       92,062       -       -       92,062
Accrued interest receivable
   1,219       1,219       1,219       -       -
FHLB stock
   7,010       7,010       7,010       -       -
Bank owned life insurance
   4,789       4,789       4,789       -       -
FINANCIAL LIABILITIES

Deposits:

Non-interest earning checking
$    19,770    $    19,770    $    19,770    $    -    $    -
Interest-earning checking
   23,541       23,541       23,541       -       -
Savings accounts
   43,740       43,740       43,740       -       -
Money market accounts
   19,958       19,958       19,958       -       -
Certificates of deposit
   37,361       37,359       -       -       37,359
Advance payments by borrowers for taxes and insurance
   2,065       2,065       2,065       -       -
FHLB advances – fixed rate
   15,000       14,323       -       -       14,323
FHLB advances – variable rate
   85,000       85,000       85,000       -       -
FHLB short-term advances
   70,828       70,828       70,828       -       -
Accrued interest payable
   823       823       823       -       -
⁵ U.S. dollar-denominated investment-grade corporate bonds of large foreign corporate issuers.
      June 30, 2020
      Carrying
Amount       Fair
Value           Level I               Level II               Level III
      (Dollars in Thousands)
FINANCIAL ASSETS

Cash and cash equivalents
   $    2,500    $    2,500    $    2,500    $    -    $    -
Certificates of deposit
      1,840       1,840       1,840       -       -
Investment securities – held to maturity
      3,495       3,622       -       3,622       -
Mortgage-backed securities – held to maturity:

Agency
      96,488       96,042       -       96,042       -
Private-label
      618       607       -       -       607
Net loans receivable
      91,032       98,700       -       -       98,700
Accrued interest receivable
      744       744       744       -       -
FHLB stock
      6,564       6,564       6,564       -       -
Bank owned life insurance
      4,907       4,907       4,907       -       -
FINANCIAL LIABILITIES

Deposits:

Non-interest bearing deposits
   $    22,657    $    22,657    $    22,657    $    -    $    -
Interest-earning checking
      25,075       25,075       25,075       -       -
Savings accounts
      44,541       44,541       44,541       -       -
Money market accounts
      21,743       21,743       21,743       -       -
Certificates of deposit
      35,063       35,237       -       -       35,237
Advance payments by borrowers for taxes and insurance
      2,256       2,256       2,256       -       -
FHLB advances – fixed rate
      15,000       14,818       -       -       14,818
FHLB advances – variable rate
      85,000       85,000       85,000       -       -
FHLB short-term advances
      59,159       59,159       59,159       -       -
Other short-term advances
      7,000       7,000       7,000       -       -
Accrued interest payable
      487       487       487       -       -
All financial instruments included in the above tables, with the exception of net loans receivable, certificates of deposit liabilities, and FHLB advances – fixed rate, are carried at cost, which approximates the fair value of the instruments.
ITEM 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE THREE ~~AND SIX~~ MONTHS ENDED ~~DECEMBER 31, 2019~~SEPTEMBER 30, 2020
FORWARD LOOKING STATEMENTS
In the normal course of business, we, in an effort to help keep our shareholders and the public informed about our operations, may from time to time issue or make certain statements, either in writing or orally, that are or contain forward-looking statements, as that term is defined in the U.S. federal securities laws. Generally, these statements relate to business plans or strategies, projected or anticipated benefits from acquisitions made by or to be made by us, projections involving anticipated revenues, earnings, profitability or other aspects of operating results or other future developments in our affairs or the industry in which we conduct business. Forward-looking statements may be identified by reference to a future period or periods or by the use of forward-looking terminology such as “anticipated,” “believe,” ”expect,” ”intend,” “plan,” “estimate” or similar expressions.
Although we believe that the anticipated results or other expectations reflected in our forward-looking statements are based on reasonable assumptions, we can give no assurance that those results or expectations will be attained. Forward-looking statements involve risks, uncertainties and assumptions (some of which are beyond our control), and as a result actual results may differ materially from those expressed in forward-looking statements. Factors that could cause actual results to differ from forward-looking statements include, but are not limited to, the following, as well as those discussed elsewhere herein:

our investments in our businesses and in related technology could require additional incremental spending, and might not produce expected deposit and loan growth and anticipated contributions to our earnings;

general economic or industry conditions could be less favorable than expected, resulting in a deterioration in credit quality, a change in the allowance for loan losses or a reduced demand for credit orfee-based products and services;
the effects and extent of the coronavirus (COVID-19) pandemic on the global economy, and its impact on the Company’s operations and financial condition, including the granting of various loan payment deferral and fee waivers, the possibility of credit losses in our loan portfolios and increases in our allowance for credit losses as well as possible impairments on the securities we hold;

changes in the interest rate environment could reduce net interest income and could increase credit losses;

the conditions of the securities markets could change, which could adversely affect, among other things, the value or credit quality of our assets, the availability and terms of funding necessary to meet our liquidity needs and our ability to originate loans and leases;

changes in the extensive laws, regulations and policies governing financial holding companies and their subsidiaries could alter our business environment or affect our operations;

the potential need to adapt to industry changes in information technology systems, on which we are highly dependent, could present operational issues or require significant capital spending;

competitive pressures could intensify and affect our profitability, including as a result of continued industry consolidation, the increased availability of financial services fromnon-banks, technological developments such as the internet or bank regulatory reform; and

acts or threats of terrorism and actions taken by the United States or other governments as a result of such acts or threats, including possible military action, could further adversely affect business and economic conditions in the United States generally and in our principal markets, which could have an adverse effect on our financial performance and that of our borrowers and on the financial markets and the price of our common stock.
You should not put undue reliance on any forward-looking statements. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update them in light of new or future events except to the extent required by federal securities laws.
GENERAL
WVS Financial Corp. (the “Company”) is the parent holding company of West View Savings Bank (“West View” or the “Savings Bank”). The Company was organized in July 1993 as a Pennsylvania-chartered unitary bank holding company and acquired 100% of the common stock of the Savings Bank in November 1993.
West View Savings Bank is a Pennsylvania-chartered, FDIC-insured stock savings bank conducting business from six offices in the North Hills suburbs of Pittsburgh. The Savings Bank converted from the mutual to the stock form of ownership in November 1993. The Savings Bank had no subsidiaries at ~~December 31, 2019.~~September 30, 2020.
The operating results of the Company depend primarily upon its net interest income, which is determined by the difference between income on interest-earning assets, principally loans, mortgage-backed securities and investment securities, and interest expense on interest-bearing liabilities, which consist primarily of deposits and borrowings. The Company’s net income is also affected by its provision for loan losses, as well as the level of itsnon-interest income, including loan fees and service charges, and itsnon-interest expenses, such as compensation and employee benefits, income taxes, deposit insurance and occupancy costs.
Effects of COVID-19 Pandemic
The Company’s business is dependent upon the willingness and ability of our employees and clients to conduct banking and other financial transactions. The outbreak of the novel coronavirus (COVID-19) pandemic has negatively impacted the global economy, disrupted global supply chains and increased unemployment levels. While the full effects of the pandemic remain unknown, the Company is committed to supporting its customers, employees and communities during this difficult time. The Company has given hardship relief assistance to customers, including the consideration of various loan payment deferral and fee waiver options, and encourages customers to reach out for assistance to support their individual circumstances. The pandemic could result in the recognition of credit losses in our loan portfolios and increases in our allowance for credit losses, particularly if businesses remain closed, the impact on the global economy worsens, or more customers draw on their lines of credit or seek additional loans to help finance their businesses. Similarly, because of changing economic and market conditions affecting issuers, we may be required to recognize impairments on the securities we hold. The extent to which the COVID-19 pandemic impacts our business, results of operations, and financial condition, as well as our regulatory capital and liquidity ratios, will depend on future developments, which are highly uncertain and cannot be predicted, including the scope and duration of the pandemic and actions taken by governmental authorities and other third parties in response to the pandemic.
The Company has responded to the circumstances surrounding the pandemic to support the safety and well-being of the employees, customers and shareholders by enacting the following measures:
Modified branch business hours Monday through Thursday to close at 4:00 pm (no change), Friday close at 4:00 pm (as opposed to 6:00 pm, and Saturday close at 12:00 pm (no change).
Monitor federal, state and local COVID-19 websites and adopt guidance as appropriate and feasible.
Encourage customers to use our various on-line portals (e.g. internet banking, online bill pay service), automated teller machines and night depositories to redirect routine transactions away from our branch staff as much as possible.
Non-branch banking services (e.g. lending, accounting, check and electronic processing) continue to be offered consistent with COVID-19 guidelines.
FINANCIAL CONDITION
The Company’s assets totaled ~~$355.2~~$332.2 million at ~~December 31, 2019,~~September 30, 2020, as compared to ~~$355.8~~$357.1 million at June 30, ~~2019.~~2020. The ~~$570 thousand~~$24.9 million or ~~0.2%~~7.0% decrease in total assets was ~~principally~~primarily due to a ~~$4.4~~$6.6 million decrease in investment securities available-for-sale and a $19.2 million decrease in mortgage-backed securities, ~~and a $2.3 million decrease in interest-earning demand deposits,~~which were partially offset by a ~~$5.3~~$1.3 million increase in ~~investment securitiesavailable-for-sale~~cash and ~~a $752 thousand increase in net loans receivable.~~cash equivalents. The decrease in ~~mortgage-backed~~investment securities was principally due to repayments of principal totaling $4.4 million and the decrease in interest-earning demand deposits is associated with changing liquidity needs of the Company. The increase in securitiesavailable-for-sale was primarily the result of ~~purchases~~maturities and sales of ~~floating rate investment-grade corporate bonds totaling $17.3~~$19.5 million and $1.0 million, respectively, partially offset by purchases of investment securities ~~sales~~totaling $12.9 million. The decrease in mortgage-backed securities was due to repayments of $9.1 million and $3.3 million of maturities and calls. The increase in net loans receivable was primarily attributable to an increase in the single-family owner occupied segment of the loan portfolio.$19.2 million.
The Company’s total liabilities decreased ~~$2.0~~$26.0 million or ~~0.6%~~8.1% to ~~$317.7~~$294.2 million as of ~~December 31, 2019~~September 30, 2020 from ~~$319.8~~$320.2 million as of June 30, ~~2019.~~2020. The decrease in total liabilities was primarily comprised of ~~a $2.8~~an $8.4 million or ~~4.0%~~5.6% decrease in ~~FHLB~~total deposits, a $15.9 million decrease in Federal Home Loan Bank (“FHLB”) short-term advances ~~which was partially offset by~~and a ~~$700~~$1.1 million decrease in other short-term borrowings. Additionally, other liabilities decreased $402 thousand ~~increase~~to $1.8 million at September 30, 2020 from $2.2 million at June 30, 2020, primarily due to a $318 thousand decrease in accrued income taxes payable and a $20 thousand decrease in the reserve for off-balance sheet loan commitments. The decrease in total ~~deposits. Certificates~~deposits was primarily attributable to decreases in money market accounts and certificates of deposit ~~(“CDs”) increased by $4.5 million andnon-interest~~ ~~bearing demand and savings deposit declined~~of $1.7 million and ~~$1.0~~$5.2 million, ~~respectively, as of December 31, 2019 from June 30, 2019.~~respectively. Management believes that the decrease in~~non-interest~~ ~~bearing demand deposits~~ money market accounts was primarily due to seasonal withdrawals for the payment of local real estate taxes and the decrease in certificates of deposit was primarily the result of ~~seasonal fluctuations related to local real estate tax collectors’~~a $4.4 million decrease in brokered deposits. The ~~increase~~decrease in ~~certificates~~FHLB short-term borrowings, other short-term borrowings, and brokered deposits were primarily funded by proceeds received from repayments of ~~deposit was largely due to higher levels of brokered CDs~~investment securities available-for-sale and mortgage-backed securities as part of the Company’s overall funding strategy. See also Quantitative and Qualitative Disclosures About Market Risk “Asset and Liability Management”.
Total stockholders’ equity increased ~~$1.5~~$1.0 million or ~~4.1%~~2.8% to ~~$37.5~~$37.9 million as of ~~December 31, 2019,~~September 30, 2020, from ~~$36.0~~$36.9 million as of June 30, ~~2019.~~2020. The ~~increase in~~change to stockholders’ equity was primarily attributable to net income of ~~$1.5 million,~~$420 thousand and an increase in accumulated other comprehensive income (loss) of $797 thousand, which was partially offset by cash dividends paid totaling ~~$354 thousand.~~$175 thousand and the purchase of $52 thousand of Treasury shares. The increase in accumulated other comprehensive income was primarily the result of an unrealized gain on the Company’s available-for-sale investment portfolio.
RESULTS OF OPERATIONS
General. WVS ~~Financial Corp.~~ reported net income of ~~$727 million~~$420 thousand or ~~$0.41~~$0.24 earnings per share ~~(diluted~~(basic and ~~basic)~~diluted) for the three months ended ~~December 31, 2019~~September 30, 2020 as compared to ~~$685~~$793 thousand or ~~$0.38~~$0.45 per share (basic and diluted) for the same period in ~~2018.~~2019. The ~~$42~~$373 thousand ~~or 6.1% increase~~decrease in net income ~~during~~for the for the three months ended ~~December 31, 2019~~September 30, 2020 was primarily attributable to a $463 thousand decrease in net interest income, a $12 thousand increase in~~non-interest~~ ~~income, a decrease innon-interest~~ ~~expense of $84 thousand and a $22 thousand decrease~~ in the provision for loan losses and a $33 thousand increase in non-interest expense, which were partially offset by a ~~$74~~$134 thousand decrease in ~~net interest income, when compared to the same period of 2018.~~
Net income for the six months ended December 31, 2019 totaled $1.5 million or $0.86 per share (diluted and basic) as compared to $1.4 million or $0.80 per diluted share for the same period in 2018. The $88 thousand or 6.1% increase in net income during the six months ended December 31, 2019 was primarily attributable to a $138 thousand decrease in~~non-interest~~ ~~expense and a $51 thousand decrease in the provision for loan losses, partially offset by a $71 thousand decrease in net interest income and a $42 thousand increase in~~ income tax ~~expense, when compared to the same period in 2018.~~expense.
Net Interest Income. The Company’s net interest income decreased by ~~$74~~$463 thousand or ~~4.3%~~25.7% for the three months ended ~~December 31, 2019,~~September 30, 2020, when compared to the same period in ~~2018.~~2019. The decrease in net interest income is attributable to a $1.3 million decrease in interest and dividend income, which was partially offset by an $859 thousand decrease in interest expense. The decrease in interest and dividend income during the three months ended ~~December 31, 2019~~September 30, 2020 was primarily attributable to ~~a $172 thousand decrease in interest income, partially offset by a $98 thousand decrease in interest expense for~~lower yields earned on the ~~three months ended December 31, 2019,~~Company’s investment and mortgage-backed securities, FHLB stock and net loans, when compared to the same period in ~~2018.~~2019. The decrease in interest ~~income for~~expense during the three months ended ~~December 31, 2019~~September 30, 2020 was primarily attributable to lower market yields earned on the Company’s floating rate investment and mortgage-backed securities portfolio and lower average balances of mortgage-backed securities outstanding which were partially offset by higher yields on Federal Home Loan Bank (“FHLB”) stock, and higher average balances of investment securities, loans and certificates of deposit when compared to the same period in 2018. The decrease in interest ~~expense for the three months ended December 31, 2019 was primarily attributable to lower~~ rates paid on FHLB ~~short-term~~advances and ~~variable rate long-term borrowings and lower average balances of FHLB short-term borrowings, which were partially offset by higher average balances of wholesale~~ time deposits ~~and~~as well as a slightly higher ~~rates paid on~~level of average time deposits, when compared to the same period in ~~2018.~~2019.
~~For~~Interest Income.Interest income on net loans receivable decreased $19 thousand or 2.2% for the ~~six~~three months ended ~~December 31, 2019, net interest income decreased $71 thousand or 2.0%~~September 30, 2020, when compared to the same period in ~~2018.~~2019. The decrease ~~in net interest income~~for the quarter ended September 30, 2020 was primarily attributable to a ~~$16 thousand~~15 basis point decrease in ~~interest income and a $55 thousand increase in interest expense for~~ the ~~six months ended December 31, 2019, when compared to the same period in 2018. The decrease in interest income was primarily the result of lower~~ average ~~yields on the Company’s floating rate investment and mortgage-backed securities, and lower outstanding balances of floating rate mortgage-backed securities~~portfolio yield, partially offset by ~~higher average outstanding balances of loans and investment securities, and higher yields earned on FHLB stock, when compared to the same period in 2018. The~~a $1.7 million increase in interest expense was primarily attributable to higher average balances outstanding of wholesale time deposits and higher yields paid on time deposits which were partially offset by lower yields paid on FHLB advances and lower average balances of FHLB advances outstanding during the six months ended December 31, 2019, when compared to the same period of 2018.
~~Interest Income.~~Interest income on net loans receivable increased $46 thousand or 5.6% and $126 thousand or 7.7% for the three and six months ended December 31, 2019, respectively, when compared to the same periods in 2018. The increase for the three and six months ended December 31, 2019 was primarily attributable to increases of $5.1 million and $5.4 million, respectively, in the average balance of net loans receivable, when compared to the same ~~periods~~period in ~~2018. For both the quarter and six months ended December 31, 2019, the~~2019. The increase in the average balance of loans outstanding was primarily attributable to increased loan originations and purchases which were in excess of ~~repayments on new loans originated when compared to the same periods in 2018.~~repayments. During fiscal ~~2018, 2019~~2020 and into fiscal ~~2020,~~2021, the Company enjoyed higher demand for single-family home purchase loans. Substantially all of our loan originations and purchases were fixed-rate ~~loans~~ with a mix of 15, 20, and 30 year terms.
Interest income on investment securities decreased ~~$69~~$644 thousand or ~~6.5% and $10 thousand or 0.5%~~59.6% for the three ~~and six~~ months ended ~~December 31, 2019, respectively,~~September 30, 2020, when compared to the same ~~periods~~period in ~~2018.~~2019. The decrease for the three months ended ~~December 31, 2019~~September 30, 2020 was primarily attributable to a 37196 basis point decrease in the ~~weighted average~~weighted-average yield on ~~investment securities,~~the available-for-sale portfolio, partially offset by a ~~$7.5~~$9.6 million increase in the average balance of these investment securities ~~outstanding,~~ when compared to the same period in ~~2018. The decrease~~2019.
Interest income on mortgage-backed securities decreased $616 thousand or 69.6% for the ~~six~~three months ended December 31, 2019 was primarily attributable to a decrease in the weighted average yield of 13 basis points, partially offset by a $5.0 million increase in the average balance of investment securities outstanding,September 30, 2020, when compared to the same period in 2018. The increase in the average balance of investments outstanding during both periods is attributable to the redeployment of mortgage-backed securities cash flows into floating rate corporate bonds. The decrease in weighted average yields in 2019 was principally attributable to lower three-month dollar London Interbank Offered Rates (“LIBOR”) when compared to the same periods in 2018.
Interest income on mortgage-backed securities decreased $170 thousand or 18.3% and $174 thousand or 9.6% for the three and six months ended December 31, 2019, respectively, when compared to the same periods in 2018.2019. The decrease for the three months ended ~~December 31, 2019~~September 30, 2020 was primarily attributable to a 210 basis point decrease in the ~~$5.3~~weighted-average yield earned on U.S. Government agency mortgage-backed securities and a $17.3 million decrease in the average balance of these U.S. Government agency mortgage-backed securities and a 47 basis point decrease in the weighted average yield earned on these securities. The decrease for the six months ended December 31, 2019 was also primarily attributable to $5.6 million decline in the average balance of U.S. Government agency mortgage-backed securities and a 15 basis point decrease in the weighted average yield earned on these mortgage-backed securities, when compared to the same period in ~~2018.~~2019. The decrease in the average balances of U.S. Government agency and ~~agency private-label~~Private-Label mortgage-backed securities during the three ~~and six~~ months ended ~~December 31, 2019~~September 30, 2020 was attributable to principal ~~pay downs during the periods. The~~pay-downs of $19.2 million on U.S. Government agency and Private-Label mortgage-backed securities, proceeds during both periods were primarily used to fund purchases of floating rate corporate bonds in the investment portfolio and loan originations and purchases. The decrease in weighted average yields in 2019 was primarily attributable to higher~~one-month~~ ~~LIBOR~~ when compared to the same ~~periods~~period in ~~2018.~~
~~Dividend income on~~2019. The $19.2 million in principal paydowns was used in part to reduce the level of FHLB ~~stock increased $14 thousand or 12.1%~~short-term advances and ~~$24 thousand or 10.5% for the three~~other short-term borrowings outstanding and ~~six months ended December 31, 2019, respectively, when compared~~ to ~~the same periods in 2018. The change in dividends on FHLB stock for both the three and six months ended December 31, 2019 was primarily attributable~~decrease brokered certificates of deposit by ~~a 96 basis point increase in the average yield on FHLB stock held during the three and six months ended December 31, 2019, when compared to the same periods in 2018.~~$4.4 million.
Interest income on bank certificates of deposit ~~increased $12 thousand and $25~~decreased $9 thousand for the three ~~and six~~ months ended ~~December 31, 2019, respectively,~~September 30, 2020 when compared to the same period in ~~2018.~~2019. The ~~increases in both periods of 2019 were primarily attributable to increases in the average portfolio balances of certificates of deposit of approximately $2.0 million.~~
~~Interest Expense.~~~~Interest paid on FHLB variable-rate long-term advances and FHLB short-term advances decreased by $74 thousand and $127 thousand, respectively,~~decrease for the three months ended ~~December 31, 2019,~~September 30, 2020 was attributable to a decrease of $750 thousand in the average balance of certificates of deposit as well as a decrease of 123 basis points in the average yield earned.
Interest income on FHLB stock decreased $33 thousand or 27.0% for the three months ended September 30, 2020 when compared to the same period in ~~2018. For~~2019. The decrease for the three months ended ~~December 31, 2019, the~~September 30, 2020 was primarily attributable to a 144 basis point decrease in ~~interest expense~~the weighted-average yield earned as well as a $593 thousand decrease in the average balance of FHLB stock held.
Interest Expense. Interest paid on FHLB short-term advances decreased $268 thousand or 88.7% for the ~~FHLB variable-rate long-term advances was principally due to lower market interest rates,~~three months ended September 30, 2020, when compared to the same period in ~~2018.~~2019. The decrease ~~in interest expense on FHLB short-term advances~~ for the three months ended ~~December 31, 2019 reflects lower market interest rates~~September 30, 2020 was primarily attributable to a 205 basis point decrease in the weighted-average rate paid on FHLB short-term balances outstanding as well as a ~~$5.5~~$14.9 million decrease in the average balance of FHLB short-term advances ~~outstanding,~~outstanding. The decrease in rates paid on FHLB short-term borrowings were consistent with decreases in short-term market interest rates.
Interest paid on FHLB long-term variable rate advances decreased $447 thousand for the three months ended September 30, 2020, when compared to the same period in ~~2018.~~ 2019. The decrease for the three months ended September 30, 2020 was primarily attributable to a 211 basis point decrease in the weighted-average interest rate paid on these variable rate advances.
Interest expense on ~~FHLB short-term borrowings during~~deposits decreased $146 thousand or 58.4% for the ~~six~~three months ended December 31, 2019 decreased by $732 thousand or 54.4% primarily due to a decrease of $57.9 million in the average balance of advances outstanding, when compared to the same period of 2018. For the six months ended December 31, 2019, interest expense on both FHLB long-term fixed and long-term variable FHLB advances increased by $116 thousand or 100.0% and $441 thousand or 83.8%, respectively,September 30, 2020, when compared to the same period in ~~2018. These increases were primarily due to higher average balances of FHLB long-term advances outstanding during the six months ended December 31, 2019, when compared to the same period in 2018.~~
Interest expense on deposits increased $103 thousand or 79.8% and $230 thousand or 91.3% for the three and six months ended December 31, 2019, respectively, when compared to the same periods in 2018.2019. The ~~increase~~decrease in interest expense on deposits for the three months ended ~~December 31, 2019~~September 30, 2020 was primarily attributable to a 59126 basis point ~~increase~~decrease in the ~~weighted average~~weighted-average rate paid on time deposits and ~~a $14.3 million~~was partially offset by an increase of $981 thousand in the average balance of time deposits when compared to the same period in 2018. For the six months ended December 31, 2019, the $230 thousand increase in interest expense was primarily due to a 55 basis point increase in the weighted average rate paid on time deposits and a $14.6 million increase in the average balance of the time deposits, when compared to the same period in 2018. The increases in the average balances of time deposits for both the three and six months ended December 31, 2019, were primarily attributable to higher levels of short-term brokered deposits when compared to the same periods of 2018. From time to time the Company uses brokered deposits to fund investment purchases or as an alternative to FHLB borrowings if the cost of such deposits is less than other wholesale funding options.prior year.
Provision for Loan Losses. A provision for loan losses is charged ~~or accreted~~ to earnings (while credit provision for loan losses are accretive to ~~bring~~earnings) to maintain the total allowance toat a level considered adequate by management to absorb potential losses in the portfolio. Management’s determination of the adequacy of the allowance is based on an evaluation of the portfolio considering past experience, current economic conditions, volume, growth and composition of the loan portfolio, and other relevant factors.
~~During the three and six months ending December 31, 2019, the allowance~~Provision for loan losses ~~(“ALLL”) decreased $8~~increased $12 thousand ~~and $18 thousand, respectively. For~~for the three months ended ~~December 31, 2019,~~September 30, 2020, when compared to the ~~ALLL associated with 1 - 4 family real estate loans decreased $14 thousand and~~same period in 2019. The increase in the ~~ALLL associated with construction loans increased $8 thousand. During~~provision for loan losses for the ~~six~~three months ended ~~December 31, 2019,~~September 30, 2020 was primarily due to increased reserve factors related to the ~~ALLL associated with 1 - 4 family real estate loans, construction land acquisition and development loans decreased by $7 thousand, $9 thousand and $6 thousand, respectively. The primary reason for~~economic uncertainty as a result of the ~~changes~~COVID-19 pandemic, when compared to the same period in ~~the ALLL balances, both in total, and within the identified segments, are changes in applicable loan balances and the return of onenon-performing~~ ~~loan to performing status.~~
2019. At ~~December 31, 2019,~~September 30, 2020, the Company’s total allowance for loan losses amounted to ~~$530~~$620 thousand or ~~0.58%~~0.68% of the Company’s total loan portfolio, as compared to ~~$548~~$618 thousand ~~or 0.60%~~and 0.68% at June 30, ~~2019.~~2020. At ~~December 31, 2019,~~September 30, 2020 and June 30, 2020, the Company had nonon-performing ~~loans as compared to $225 thousand at June 30, 2019.~~loans.
Non-Interest Income.~~Non-interest~~ ~~income increased $12 thousand or 10.9% for~~ For the three months ended ~~December 31, 2019, when~~September 30, 2020, non-interest income increased $1 thousand compared to the same period in ~~2018. The increase for~~2019. For the ~~three months~~quarter ended ~~December 31, 2019 was primarily attributable to a $32~~September 30, 2020, gains on sales of investments increased $25 thousand ~~gain on the sale of investment securities~~ and a $4$1 thousand increase in miscellaneous operating income which were offset by a $12 thousand increase in security impairment losses, a $7 thousand decrease in service charges on deposits, ~~which were offset by~~ a ~~$16 thousand increase in other than temporary impairment losses on private label mortgage-backed securities, a $7~~$4 thousand decrease in automated teller machine ~~(ATM) program income~~ and ~~a $1 thousand decrease in earnings on Bank-owned life insurance, when compared to the same period in 2018.~~
~~For the six months ended December 31, 2019,non-interest~~ ~~income increased $12 thousand or 5.5%, when compared to the same period in 2018. The increase innon-interest~~ income for the six months ended December 31, 2019 was primarily attributable to a $34 thousand gain on the sale of investment securities and a $5 thousand increase in service charges on deposits, which were offset by an $18 thousand increase in other than temporary impairment losses on private label mortgage-backed securities, a $7 thousand decrease in ATM programdebit card fee income and a $2 thousand decrease in earnings on ~~Bank-owned~~bank owned life ~~insurance,~~insurance.
Non-Interest Expense. Non-interest expense increased $33 thousand or 3.9% for the three months ended September 30, 2020, when compared to the same period in ~~2018.~~2019. This increase was primarily due to a $50 thousand increase in federal deposit insurance premium expense, a $13 thousand increase in depreciation expense, and a $7 thousand increase in employee compensation and benefits expenses, which were partially offset by a $37 thousand decrease in the provision for off-balance sheet items relating to lower balances of unfunded mortgage commitments, when compared to the same period of 2019. The $50 thousand increase in federal deposit insurance expense was the result of the absence of Small Bank Assessment Credits applied by the Federal Deposit Insurance Corporation (“FDIC”) beginning in the quarter ended September 30, 2019. The FDIC provided small banks (those with consolidated assets of less than $10 billion) assessment credits after the Deposit Insurance Fund ratio reached, and remained at, 1.38 percent. The Savings Bank had no remaining assessment credits as of September 30, 2020. The increase in depreciation expense was attributable to purchases of fixed assets to upgrade technology or other capital improvements.
~~Non-Interest~~ ~~Expense~~Income Tax Expense. .~~Non-interest~~Income tax expense decreased ~~$84~~$134 thousand ~~or 8.8%~~ for the three months ended ~~December 31, 2019,~~September 30, 2020, when compared to the same period in ~~2018.~~2019. The decrease in~~non-interest~~ ~~expense~~ for the three months ended ~~December 31, 2019~~September 30, 2020 was primarily ~~attributable~~due to a $30 thousand decrease in employee benefit costs, a $22 thousand decrease in federal deposit insurance expense, $20 thousand decrease in a variety of other operating expenses and a $7 thousand decrease in ATM network expenses, when compared to the same period in 2018.~~Non-interest~~ ~~expense decreased $138 thousand or 7.4% for the six months ended December 31, 2019, when compared to the same period in 2018. The decrease innon-interest~~ ~~expense for the six months ended December 31, 2019 was primarily attributable to a~~
$73 thousand decrease in federal deposit insurance expense, a $41 thousand decrease in employee benefit expense and a $21 thousand decrease in ATM network expense, when compared to the same period in 2018. The decrease in federal deposit insurance expense for both periods in 2019 was primarily attributable to the application of Small Bank Assessment Credits by the Federal Deposit Insurance Corporation.
~~Income Tax Expense.~~Income tax expense increased $2 thousand and $42 thousand for the three and six months ended December 31, 2019, respectively, when compared to the same periods in 2018. The increases for both periods ended December 31, 2019, were primarily due higherlower levels of taxable income, when compared to the same ~~periods of 2018.~~period in 2019.
LIQUIDITY AND CAPITAL RESOURCES
Net cash ~~provided by~~used for operating activities totaled ~~$1.8 million~~$138 thousand during the ~~six~~three months ended ~~December 31, 2019.~~September 30, 2020. Net cash ~~provided~~used by operating activities was primarily ~~comprised~~due to decreases in accrued income taxes, accrued interest payable and earnings on bank owned life insurance of $355 thousand, $173 thousand and $28 thousand, respectively, which were partially offset by Company net income ~~of $1.5 million and a $167 thousand decrease in accrued interest receivable.~~totaling $420 thousand.
~~Funds used for~~Net cash provided by investing activities totaled ~~$608 thousand during~~$27.1 million for the ~~six~~three months ended December 31, 2019. Primary uses of funds during this period were purchases of investment securities available for sale totaling $17.3 million, purchases of loans totaling $6.3 million and purchases of certificates of deposit totaling $1.3 million.September 30, 2020. Primary sources of funds from investing activities during the ~~six~~three months ended ~~December 31, 2019~~September 30, 2020 included proceeds from repayments of investment securities ~~and mortgage-backed securities in theheld-to-maturity~~ ~~portfolio totaling $500 thousand and $4.4~~of $19.5 million, ~~respectively,~~ proceeds from ~~repayments of investment securities in theavailable-for-sale~~ ~~portfolio totaling $3.3 million, $9.1 million of proceeds on~~ sales of investment securities ~~available for sale and~~of $1.0 million, $19.2 million of repayments of mortgage-backed securities and a decrease in loans ~~in excess~~receivable of ~~originations~~$4.6 million. Primary uses of ~~$5.6~~funds for investing activities during the three months ended September 30, 2020 included purchases of investment securities available-for-sale totaling $12.9 million and ~~$1.6 million~~purchase of ~~proceeds from maturing certificates of deposit.~~loans totaling $5.2 million.
Funds used for financing activities totaled ~~$2.6~~$25.6 million for the ~~six~~three months ended ~~December 31, 2019. The primary~~September 30, 2020. Primary uses of funds by financing activities were ~~a $2.8 million decrease~~decreases in FHLB short-term advances of $15.9 million, a ~~$3.2~~$1.1 million decrease in other short-term borrowings, and decreases in transaction accounts and ~~savings accounts, a $618 thousand~~certificates of deposit of $1.8 million and $5.2 million, respectively.
The decrease in ~~advance payments by borrowers~~transaction accounts was primarily attributable to seasonal withdrawals for ~~taxes and insurance and $354 thousand in cash dividends paid on~~ the ~~Company’s common stock, which were partially offset by increases~~payment of local real estate taxes. The decrease in certificates of ~~deposits totaling $4.5 million. Management believes that~~deposit at September 30, 2020 was due principally to a ~~significant portion of our local maturing deposits will remain with the Company.~~$4.4 million decrease in brokered deposits. Management has determined that it currently is maintaining adequate liquidity and continues to match funding sources with lending and investment opportunities.
The Company’s primary sources of funds are deposits, amortization, repayments and maturities of existing loans, mortgage-backed securities and investment securities, funds from operations, and funds obtained through FHLB advances and other borrowings. Certificates of deposit scheduled to mature in one year or less at ~~December 31, 2019~~September 30, 2020 totaled ~~$38.7 million including $14.7 million of maturing wholesale time deposits.~~$27.1 million.
Historically, the Company used its sources of funds primarily to meet its ongoing commitments to pay maturing savings certificates and savings withdrawals, fund loan commitments and maintain a substantial portfolio of investment
securities. At ~~December 31, 2019,~~September 30, 2020, total approved loan commitments outstanding were ~~$2.6~~$1.7 million. At the same date, commitments under unused lines of credit amounted to $5.1 million and the unadvanced portion of construction loans approximated ~~$3.6~~$2.8 million. The Company has been able to generate sufficient cash through the retail deposit market, its traditional funding source, and through FHLB advances, and other ~~wholesale funding sources,~~borrowings, to provide the cash utilized in investing activities. The Company’s ~~available for sale~~available-for-sale segment of the investment portfolio totaled ~~$138.1~~$141.0 million at ~~December 31, 2019.~~September 30, 2020. In addition, the Company had ~~$1.6~~$1.3 million of certificates of deposit at ~~December 31, 2019.~~September 30, 2020. Management believes that the Company currently has adequate liquidity available to respond to liquidity demands.
On ~~January~~October 27, 2020, the Company’s Board of Directors declared a quarterly cash dividend of $0.10 per share, payable on ~~February 20,~~November 19, 2020, to shareholders of record at the close of business on ~~February 10,~~November 9, 2020. Dividends are subject to determination and declaration by the Board of Directors, which take into
account the Company’s financial condition, statutory and regulatory restrictions, general economic conditions and other factors. There can be no assurance that dividends will in fact be paid on the Common Stock in future periods or that, if paid, such dividends will not be reduced or eliminated.
As of ~~December 31, 2019,~~September 30, 2020, WVS Financial Corp. exceeded all regulatory capital requirements and maintained Common Equity Tier I Capital, Tier I, and total risk-based capital equal to ~~$37.2 million or 19.1%, $37.2 million or 19.1%, and~~ $37.7 million or ~~19.4%~~19.53%, $37.7 million or 19.53%, and $38.4 million or 19.86%, respectively, of total risk-weighted assets, and Tier I leverage capital of ~~$37.2~~$37.7 million or ~~10.4%~~10.87% of average quarterly assets.
Nonperforming assets consist of nonaccrual loans and real estate owned. A loan is placed on nonaccrual status when, in the judgment of management, the probability of collection of interest is deemed insufficient to warrant further accrual. When a loan is placed on nonaccrual status, previously accrued but uncollected interest is deducted from interest income. The Company normally does not accrue interest on loans past due 90 days or more, however, interest may be accrued if management believes that it will collect on the loan.
The Company had no ~~nonperforming~~non-performing assets at ~~December 31, 2019 compared to $225 thousand or 0.06% of total assets at June~~September 30, ~~2019.~~
2020. During the quarter ended September 30, 2019, the Company’s one ~~nonperforming~~non-performing asset, consisting of a single-family real estate loan, was discharged from ~~bankruptcy and since that time has been current.~~bankruptcy. The loan was not delinquent at September 30, 2019 or September 30, 2020.
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ASSET AND LIABILITY MANAGEMENT
The Company’s primary market risk exposure is interest rate risk and, to a lesser extent, liquidity risk. All of the Company’s transactions are denominated in US dollars with no specific foreign exchange exposure. The Savings Bank has no agricultural loan assets and therefore would not have a specific exposure to changes in commodity prices. Any impacts that changes in foreign exchange rates and commodity prices would have on interest rates are assumed to be exogenous and will be analyzed on anexpost basis.
Interest rate risk (“IRR”) is the exposure of a banking organization’s financial condition to adverse movements in interest rates. Accepting this risk can be an important source of profitability and shareholder value, however excessive levels of IRR can pose a significant threat to the Company’s earnings and capital base. Accordingly, effective risk management that maintains IRR at prudent levels is essential to the Company’s safety and soundness.
Evaluating a financial institution’s exposure to changes in interest rates includes assessing both the adequacy of the management process used to control IRR and the organization’s quantitative level of exposure. When assessing the IRR management process, the Company seeks to ensure that appropriate policies, procedures, management information systems and internal controls are in place to maintain IRR at prudent levels with consistency and continuity. Evaluating the quantitative level of IRR exposure requires the Company to assess the existing and potential future effects of changes in interest rates on its consolidated financial condition, including capital adequacy, earnings, liquidity, and, where appropriate, asset quality.
Financial institutions derive their income primarily from the excess of interest collected over interest paid. The rates of interest an institution earns on its assets and owes on its liabilities generally are established contractually for a period of time. Since market interest rates change over time, an institution is exposed to lower profit margins (or losses) if it cannot adapt to interest-rate changes. For example, assume that an institution’s assets carry intermediate- or long-term fixed rates and that those assets were funded with short-term liabilities. If market interest rates rise by the time the short-term liabilities must be refinanced, the increase in the institution’s interest expense on its liabilities may not be sufficiently offset if assets continue to earn at the long-term fixed rates. Accordingly, an institution’s profits could decrease on existing assets because the institution will either have lower net interest income or, possibly, net interest expense. Similar risks exist when assets are subject to contractual interest-rate ceilings, or rate sensitive assets are funded by longer-term, fixed-rate liabilities in a decreasing-rate environment.
During the fiscal years ~~2014 - 2019~~2013-2020 and into fiscal year ~~2020,~~2021, intermediate and long-term market interest rates fluctuated considerably. Many central banks, including the Federal Reserve, continued above normal levels of monetary accommodation including quantitative easing and targeted asset purchase programs. The desired outcomes of these programs are to stimulate aggregate demand, reduce high levels of unemployment and to further lower market interest rates.
The effect of interest rate changes on a financial institution’s assets and liabilities may be analyzed by examining the “interest rate sensitivity” of the assets and liabilities and by monitoring an institution’s interest rate sensitivity “gap”. An asset or liability is said to be interest rate sensitive within a specific time period if it will mature or reprice within a given time period. A gap is considered positive (negative) when the amount of rate sensitive assets (liabilities) exceeds the amount of rate sensitive liabilities (assets). During a period of falling interest rates, a negative gap would tend to result in an increase in net interest income. During a period of rising interest rates, a positive gap would tend to result in an increase in net interest income.
As part of its asset/liability management strategy, the Company maintained an asset sensitive financial position due to unusually low market interest rates. An asset sensitive financial position may benefit earnings during a period of rising interest rates and reduce earnings during a period of declining interest rates.
The following table sets forth certain information at the dates indicated relating to the Company’s interest-earning assets and interest-bearing liabilities which are estimated to mature or are scheduled to reprice within one year.

   December 31, June 30,    September 30, June 30,
   2019           2019                     2018              2020           2020                     2019
   (Dollars in Thousands)    (Dollars in Thousands)
Interest-earning assets maturing or repricing within one year
       $279,078   $282,429   $270,356        $248,744   $289,076   $282,429
Interest-bearing liabilities maturing or repricing within one year
   221,983 214,916 229,231    194,894 218,272 214,916




Interest sensitivity gap
       $  57,095   $  67,513   $  41,125        $  53,850   $  70,804   $  67,513




Interest sensitivity gap as a percentage of total assets
   16.07 % 18.97 % 11.67 %    16.21 % 19.83 % 18.97 %
Ratio of assets to liabilities maturing or repricing within one year
   125.72 % 131.41 % 117.94 %    127.63 % 132.44 % 131.41 %
The following table illustrates the Company’s estimated stressed cumulative repricing gap – the difference between the amount of interest-earning assets and interest-bearing liabilities expected to reprice at a given point in time – at ~~December 31, 2019.~~September 30, 2020. The table estimates the impact of an upward or downward change in market interest rates of 100 and 200 basis points.
Cumulative Stressed Repricing Gap

     Month 3     Month 6     Month 12     Month 24     Month 36     Month 60     Long Term
     Month 3     Month 6     Month 12     Month 24     Month 36     Month 60     Long Term      (Dollars in Thousands)
   (Dollars in Thousands)
Base Case Up 200 bp
Base Case Up 200 bp

Base Case Up 200 bp

Cumulative Gap ($’s)
   $ 61,406 $ 57,549 $ 49,521 $ 44,400 $ 40,908 $ 43,645 $ 33,871    $ 47,433 $ 45,667 $ 47,177 $ 50,369 $ 52,365 $ 57,133 $ 29,571
% of Total
Assets
   17.3 % 16.2 % 13.9 % 12.5 % 11.5 % 12.3 % 9.5 %    14.3 % 13.7 % 14.2 % 15.2 % 15.8 % 17.2 % 8.9 %
Base Case Up 100 bp
Base Case Up 100 bp

Base Case Up 100 bp

Cumulative Gap ($’s)
   $ 61,964 $ 58,622 $ 51,459 $ 47,721 $ 45,192 $ 48,456 $ 33,871    $ 48,294 $ 48,439 $ 52,028 $ 57,777 $ 60,789 $ 65,199 $ 29,571
% of Total
Assets
   17.4 % 16.5 % 14.5 % 13.4 % 12.7 % 13.6 % 9.5 %    14.7 % 14.6 % 15.7 % 17.4 % 18.3 % 19.6 % 8.9 %
Base Case No Change
Base Case No Change

Base Case No Change

Cumulative Gap ($’s)
   $ 63,628 $ 61,782 $ 57,096 $ 56,885 $ 56,372 $ 60,104 $ 33,871    $ 49,509 $ 49,506 $ 53,849 $ 60,417 $ 63,580 $ 67,254 $ 29,571
% of Total
Assets
   17.9 % 17.4 % 16.1 % 16.0 % 15.9 % 16.9 % 9.5 %    14.9 % 14.9 % 16.2 % 18.2 % 19.1 % 20.2 % 8.9 %
Base Case Down 100 bp
Base Case Down 100 bp

Base Case Down 100 bp

Cumulative Gap ($’s)
   $ 65,090 $ 64,506 $ 61,761 $ 63,873 $ 64,238 $ 67,005 $ 33,871    $ 49,963 $ 50,431 $ 55,237 $ 62,315 $ 65,562 $ 68,793 $ 29,571
% of Total
Assets
   18.3 % 18.2 % 17.4 % 18.0 % 18.1 % 18.9 % 9.5 %    15.0 % 15.2 % 16.6 % 18.8 % 19.7 % 20.7 % 8.9 %
Base Case Down 200 bp
Base Case Down 200 bp

Base Case Down 200 bp

Cumulative Gap ($’s)
   $ 65,632 $ 65,508 $ 63,431 $ 66,268 $ 66,803 $ 68,894 $ 33,871    $ 50,043 $ 50,486 $ 55,480 $ 62,814 $ 66,242 $ 69,388 $ 29,571
% of Total
Assets
   18.5 % 18.4 % 17.9 % 18.7 % 18.8 % 19.4 % 9.5 %    15.1 % 15.2 % 16.7 % 18.9 % 19.9 % 20.9 % 8.9 %
The Company utilizes an income simulation model to measure interest rate risk and to manage interest rate sensitivity. The Company believes that income simulation modeling may enable the Company to better estimate the possible effects on net interest income due to changing market interest rates. Other key model parameters include: estimated prepayment rates on the Company’s loan, mortgage-backed securities and investment portfolios; savings decay rate assumptions; and the repayment terms and embedded options of the Company’s borrowings.
The following table presents the simulated impact of a 100 and 200 basis point upward or downward (parallel) shift in market interest rates on net interest income, return on average equity, return on average assets and the market value of portfolio equity at ~~December 31, 2019.~~September 30, 2020. This analysis was done assuming that the interest-earning assets will average approximately ~~$348~~$321 million and ~~$350~~$321 million over a projected twelve and twenty-four month period, respectively, for the estimated impact on change in net interest income, return on average equity and return on average assets. The estimated changes in market value of equity were calculated using balance sheet levels at ~~December 31, 2019.~~September 30, 2020. Actual future results could differ materially from our estimates primarily due to unknown future interest rate changes and the level of prepayments on our investment and loan ~~portfolios.~~portfolios and future FDIC regular and special assessments.
Analysis of Sensitivity to Changes in Market Interest Rates

   Twelve Month Forward Modeled Change in Market Interest Rates    Twelve Month Forward Modeled Change in Market Interest Rates
   December 31, 2020 December 31, 2021    September 30, 2021 September 30, 2022
Estimated impact on:
      -200       -100           0             +100       +200       -200           -100               0           +100       +200          -200       -100           0          +100       +200           -200           -100           0       +100       +200
Change in net interest income
   -22.3 % -11.5 % - 6.9 % 14.2 % -29.1 % -14.6 % - 9.1 % 18.1 %    -17.5 % -12.2 % - 6.6 % 13.9 % -36.1 % -25.5 % - 11.6 % 22.9 %
Return on average equity
   3.37 % 4.77 % 6.25 % 7.13 % 8.05 % 2.74 % 4.60 % 6.38 % 7.45 % 8.48 %    1.89 % 2.44 % 3.72 % 4.41 % 5.16 % -0.16 % 0.96 % 3.55 % 4.68 % 5.75 %
Return on average assets
   0.36 % 0.51 % 0.67 % 0.77 % 0.87 % 0.29 % 0.51 % 0.72 % 0.85 % 0.98 %    0.22 % 0.28 % 0.43 % 0.51 % 0.60 % -0.02 % 0.11 % 0.42 % 0.55 % 0.69 %
Market value of equity (in thousands)
   $ 39,328 $ 42,175 $ 45,378 $ 46,325 $ 46,662    $ 44,257 $ 40,993 $ 41,558 $ 43,620 $ 45,436
The table below provides information about the Company’s anticipated transactions comprised of firm loan commitments and other commitments, including undisbursed letters and lines of credit, at ~~December 31, 2019.~~September 30, 2020. The Company used no derivative financial instruments to hedge such anticipated transactions as of ~~December 31, 2019.~~September 30, 2020.

Anticipated Transactions

   (Dollars in Thousands)
Undisbursed construction and ~~land~~ development loans
             $ ~~3,573~~2,767
Undisbursed lines of credit
   $ ~~5,119~~5,117
Loan origination commitments
   $ ~~2,593~~
~~Letters of credit~~
         $ -1,651


             $   ~~11,285~~9,535


In the ordinary course of its construction lending business, the Savings Bank enters into performance standby letters of credit. Typically, the standby letters of credit are issued on behalf of a builder to a third party to ensure the timely completion of a certain aspect of a construction project or land development. At ~~December 31, 2019,~~September 30, 2020, the Savings Bank had no performance standby letters of credit outstanding.    In the event that an obligor is unable to perform its obligations as specified in the applicable letter of credit agreement, the Savings Bank would be obligated to disburse funds up to the amount specified in the letter of credit agreement. The Savings ~~Bank maintains~~Bank’s policy is to maintain adequate collateral that could be liquidated to fund ~~these~~such contingent obligations.
ITEM 4. CONTROLS AND PROCEDURES
As of ~~December 31, 2019,~~September 30, 2020, an evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Accounting Officer, on the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules13a-15(e) and15d-15(e) under the Securities Exchange Act of 1934). Based on that evaluation, the Company’s management, including the Chief Executive Officer and Chief Accounting Officer, concluded that the Company’s disclosure controls and procedures were effective as of ~~December 31, 2019.~~September 30, 2020.
Disclosure controls and procedures are the controls and other procedures that are designed to ensure that the information required to be disclosed by the Company in its reports filed and submitted under the Securities Exchange Act of 1934, as amended (“Exchange Act”) is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in its reports filed under the Exchange Act is accumulated and communicated to the Company’s management, including the principal executive officer and principal accounting officer, as appropriate to allow timely decisions regarding required disclosure.
During the quarter ended ~~December 31, 2019,~~September 30, 2020, no change in the Company’s internal controls over financial reporting (as defined in Rules13a-15(f) and15d-15(f) under the Exchange Act) has occurred that has materially affected, or is reasonably likely to materially affect, the Company’s internal controls over financial reporting.
PART ~~II—~~II–OTHER INFORMATION
ITEM 1.Legal Proceedings
(a)The Company is involved with various legal actions arising in the ordinary course of business. Management believes the outcome of these matters will have no material effect on the consolidated operations or consolidated financial condition of WVS Financial Corp.
(b)Not applicable.
ITEM 1A.Risk Factors
There are no material changes to the risk factors included in Item 1A of the Company’s Annual Report on Form10-K for the fiscal year ended June 30, ~~2019.~~2020.
ITEM 2.Unregistered Sales of Equity Securities and Use of Proceeds
(a) Not applicable.
(b) Not applicable.
(c) The following table sets forth information with respect to purchases of common stock of the Company made by WVS Financial Corp. during the three months ended ~~December 31, 2019.~~September 30, 2020.

~~COMPANY PURCHASES OF EQUITY SECURITIES~~
COMPANY PURCHASES OF EQUITY SECURITIES

Period
Total
Number of
Shares
  Purchased

  Average
  Price Paid per Share ($)

Total Number of
Shares
Purchased as
part of Publicly
  Announced Plans
or Programs⁽¹⁾

Maximum Number
of Shares
that May Yet Be
Repurchased
  Under the Plans or
Programs ⁽²⁾

07/01/20 – 07/31/20
2,314 13.05 2,314 89,005
08/01/20 – 08/31/20
1,700 13.05 1,700 87,305
09/01/20 – 09/30/20
         -         -          -   87,305
Total
4,014 13.05 4,014   87,305

~~Period~~ ~~Total~~
~~Number of~~
~~Shares~~
  ~~Purchased~~⁽¹⁾
  ~~Average~~
  ~~Price Paid per Share ($)~~
~~Total Number of~~
~~Shares~~
~~Purchased as~~
~~part of Publicly~~
  ~~Announced Plans~~
~~or Programs~~⁽¹⁾
~~Maximum Number~~
~~of Shares~~
~~that May Yet Be~~
~~Repurchased~~
  ~~Under the Plans or~~
~~Programs~~⁽²⁾
~~10/01/19 – 10/31/19~~
-         -         - ~~20,256~~
~~11/01/19 – 11/30/19~~
-         -         - ~~20,256~~
~~12/01/19 – 12/31/19~~
-         -         - ~~20,256~~
~~Total~~
-         -         - ~~20,256~~

(1)
All shares indicated were purchased under the Company’s ~~reopened Eleventh~~Twelfth Stock Repurchase Program.
(2)
~~Eleventh~~Twelfth Stock Repurchase Program
(a)
Announced ~~October 27, 2015.~~March 24, 2020.
(b)
~~100,800~~100,000 common shares approved for repurchase.
(c)
No fixed date of expiration.
(d)
This ~~program~~Program has not expired and has ~~20,256 of~~87,305 common shares remaining to be purchased at ~~December 31, 2019.~~September 30, 2020.
(e)
Not applicable.
ITEM 3.Defaults Upon Senior Securities
Not applicable.
ITEM 4.Mine Safety Disclosures
Not applicable.
ITEM 5.Other Information
(a) Not applicable.
(b) Not applicable.
ITEM 6.Exhibits
The following exhibits are filed as part of this Form10-Q, and this list includes the Exhibit Index.

Number

Description
31.1       Rule13a-14(a) /15d-14(a) Certification of the Chief Executive Officer
31.2       Rule13a-14(a) /15d-14(a) Certification of the Chief Accounting Officer
32.1       Section 1350 Certification of the Chief Executive Officer
32.2       Section 1350 Certification of the Chief Accounting Officer
99       Report of Independent Registered Public Accounting Firm
101.INS       XBRL Instance Document
101.SCH       XBRL Taxonomy Extension Schema Document
101.CAL       XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB       XBRL Taxonomy Extension Label Linkbase Document
101.PRE       XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF       XBRL Taxonomy Extension Definitions Linkbase Document
SIGNATURES
Pursuant to the requirements 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.

         WVS FINANCIAL CORP.
~~February~~
November 13, 2020

BY:

   /s/ David J. Bursic

Date

  David J. Bursic
  President and Chief Executive Officer
  (Principal Executive Officer)

~~February~~
November 13, 2020

BY:

   /s/ Linda K. Butia

Date

  Linda K. Butia
  Vice-President, Treasurer and Chief Accounting Officer
  (Principal Accounting Officer)

5447


	December 31, 2019			June 30, 2019
Assets
Cash and due from banks		$ 2,766			$ 1,849
Interest-earning demand deposits		276			2,530

Total cash and cash equivalents		3,042			4,379
Certificates of deposit		1,591			1,843
Investment securitiesavailable-for-sale (amortized cost of $137,541 and $132,673)		138,060			132,780
Investment securitiesheld-to-maturity (fair value of $3,578 and $4,080)		3,495			3,995
Mortgage-backed securitiesheld-to-maturity (fair value of $104,121 and $108,708)		103,956			108,331
Net loans receivable (allowance for loan losses of $530 and $548)		91,340			90,588
Accrued interest receivable		1,052			1,219
Federal Home Loan Bank (FHLB) stock, at cost		6,974			7,010
Premises and equipment, net		474			346
Bank owned life insurance		4,849			4,789
Deferred tax assets (net)		262			368
Other assets		153			170

TOTAL ASSETS		$ 355,248			$ 355,818


Liabilities and Stockholders’ Equity
Liabilities:
Deposits
Non-interest-bearing accounts		$ 18,113			$ 19,770
Interest-earning checking accounts		22,726			23,541
Savings accounts		42,719			43,740
Money market accounts		20,238			19,958
Certificates of deposit		41,888			37,361
Advance payments by borrowers for taxes and insurance		1,447			2,065

Total deposits		147,131			146,435
Federal Home Loan Bank advances: short-term		68,030			70,828
Federal Home Loan Bank advances: long-term – fixed rate		15,000			15,000
Federal Home Loan Bank advances: long-term – variable rate		85,000			85,000
Accrued interest payable		788			823
Other liabilities		1,786			1,683

TOTAL LIABILITIES		317,735			319,769


Stockholders’ equity:
Preferred stock:
5,000,000 shares, no par value per share, authorized; none issued		-			-
Common stock:
10,000,000 shares, $.01 par value per share, authorized; 3,805,636 shares issued		38			38
Additionalpaid-in capital		21,568			21,550
Treasury stock: 1,869,995 and 1,862,520 shares at cost, respectively		(28,382	)		(28,269	)
Retained earnings, substantially restricted		45,973			44,807
Accumulated other comprehensive income		347			15
Unallocated Employee Stock Ownership Plan (“ESOP”) shares		(2,031	)		(2,092	)

TOTAL STOCKHOLDERS’ EQUITY		37,513			36,049

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$ 355,248			$ 355,818


	Three Months Ended					Six Months Ended
	December 31,					December 31,
	2019			2018		2019			2018
INTEREST AND DIVIDEND INCOME:
Loans, including fees		$ 871			$ 825		$ 1,754			$ 1,628
Investment securities		997			1,066		2,078			2,088
Mortgage-backed securities		757			927		1,642			1,816
Certificates of deposit		15			3		30			5
Interest-earning demand deposits		1			6		2			9
FHLB Stock		130			116		252			228

Total interest and dividend income		2,771			2,943		5,758			5,774


INTEREST EXPENSE:
Deposits		232			129		482			252
Federal Home Loan Bank advances – long-term – fixed rate		116			116		232			116
Federal Home Loan Bank advances – long-term – variable rate		452			526		967			526
Federal Home Loan Bank advances – short-term		310			437		613			1,345

Total interest expense		1,110			1,208		2,294			2,239


NET INTEREST INCOME		1,661			1,735		3,464			3,535
(CREDIT) PROVISION FOR LOAN LOSSES		(8	)		14		(18	)		33

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		1,669			1,721		3,482			3,502


NON-INTEREST INCOME:
Service charges on deposits		30			26		60			55
Earnings on Bank Owned Life Insurance		29			30		59			61
Investment securities gains (losses)		32			-		32			(2	)
Other than temporary impairment (“OTTI”) losses		(16	)		-		(18	)		-
Portion of gain recognized in other comprehensive Income (before taxes)		-			-		-			-

Net impairment loss recognized in earnings		(16	)		-		(18	)		-
ATM fee income		36			43		78			85
Other		11			11		21			21

Totalnon-interest income		122			110		232			220


NON-INTEREST EXPENSE:
Salaries and employee benefits		535			565		1,080			1,121
Occupancy and equipment		57			58		119		��	126
Data processing		52			58		109			116
Correspondent bank service charges		9			7		18			15
Federal deposit insurance premium		-			22		(23	)		50
ATM network expense		18			25		41			62
Other		199			219		373			365

Totalnon-interest expense		870			954		1,717			1,855


INCOME BEFORE INCOME TAXES		921			877		1,997			1,867
INCOME TAX EXPENSE		194			192		477			435

NET INCOME		$ 727			$ 685		$ 1,520			$ 1,432


EARNINGS PER SHARE:
Basic		$ 0.41			$ 0.38		$ 0.86			$ 0.80
Diluted		$ 0.41			$ 0.38		$ 0.86			$ 0.80

AVERAGE SHARES OUTSTANDING:
Basic		1,771,457			1,782,091		1,773,509			1,787,573
Diluted		1,771,457			1,782,091		1,773,509			1,787,682


	Common Stock		Additional Paid-in Capital		Treasury Stock			Retained Earnings – Substantially Restricted			Accumulated Other Comprehensive Income		Unallocated ESOP Shares			Total
Balance September 30, 2019	$	38	$	21,560	$	(28,382	)	$	45,423		$	63	$	(2,064	)	$	36,638

Net income									727								727

Other comprehensive income												284					284

Amortization of unallocated ESOP Shares				8										33			41

Cash dividends declared ($0.10 per share)									(177	)							(177	)


Balance December 31, 2019	$	38	$	21,568	$	(28,382	)	$	45,973		$	347	$	(2,031	)	$	37,513


	Common Stock		Additional Paid-in Capital		Treasury Stock			Retained Earnings – Substantially Restricted			Accumulated Other Comprehensive Income		Unallocated ESOP Shares			Total
Balance June 30, 2019	$	38	$	21,550	$	(28,269	)	$	44,807		$	15	$	(2,092	)	$	36,049

Net income									1,520								1,520

Other comprehensive income												332					332

Purchase of treasury stock (7,475 shares)						(113	)										(113	)

Amortization of unallocated ESOP Shares				18										61			79

Cash dividends declared ($0.20 per share)									(354	)							(354	)


Balance December 31, 2019	$	38	$	21,568	$	(28,382	)	$	45,973		$	347	$	(2,031	)	$	37,513


	September 30, 2020			June 30, 2020
Assets
Cash and due from banks		$ 3,804			$ 2,488
Interest-earning demand deposits		7			12

Total cash and cash equivalents		3,811			2,500
Certificates of deposit		1,343			1,840
Investment securities available-for-sale (amortized cost of $140,672 and $148,271)		141,044			147,639
Investment securities held-to-maturity (fair value of $3,613 and $3,622)		3,495			3,495
Mortgage-backed securities held-to-maturity (fair value of $77,661 and $96,649)		77,937			97,106
Net loans receivable (allowance for loan losses of $620 and $618)		91,749			91,032
Accrued interest receivable		709			744
Federal Home Loan Bank (FHLB) stock, at cost		5,923			6,564
Premises and equipment, net		675			574
Bank owned life insurance		4,935			4,907
Deferred tax assets (net)		314			548
Other assets		216			152

TOTAL ASSETS		$ 332,151			$ 357,101


Liabilities and Stockholders’ Equity
Liabilities:
Deposits
Non-interest-bearing accounts		$ 22,765			$ 22,657
Interest-earning checking		24,844			25,075
Savings accounts		44,560			44,541
Money market accounts		19,994			21,743
Certificates of deposit		29,865			35,063
Advance payments by borrowers for taxes and insurance		909			2,256

Total deposits		142,937			151,335
Federal Home Loan Bank advances: long-term – fixed rate		15,000			15,000
Federal Home Loan Bank advances: long-term – variable rate		85,000			85,000
Federal Home Loan Bank advances: short-term		43,281			59,159
Other short-term borrowings		5,875			7,000
Accrued interest payable		314			487
Other liabilities		1,805			2,207

TOTAL LIABILITIES		294,212			320,188


Stockholders’ equity:
Preferred stock:
5,000,000 shares, no par value per share, authorized; none issued		-			-
Common stock:
10,000,000 shares, $.01 par value per share, authorized; 3,805,636 shares issued;		38			38
Additional paid-in capital		21,578			21,577
Treasury stock: 1,902,946 and 1,898,932 shares at cost, respectively		(28,827	)		(28,775	)
Retained earnings, substantially restricted		46,835			46,590
Accumulated other comprehensive income (loss)		241			(556	)
Unallocated Employee Stock Ownership Plan (“ESOP”) shares		(1,926	)		(1,961	)

TOTAL STOCKHOLDERS’ EQUITY		37,939			36,913

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$ 332,151			$ 357,101


	Three Months Ended
	September 30,
	2020				2019
INTEREST AND DIVIDEND INCOME:
Loans, including fees	$	864			$	883
Investment securities		437				1,081
Mortgage-backed securities		269				885
Certificates of deposit		6				15
Interest-earning demand deposits		—				1
FHLB Stock		89				122

Total interest and dividend income		1,665				2,987


INTEREST EXPENSE:
Deposits		104				250
Federal Home Loan Bank advances – long-term – fixed rate		115				114
Federal Home Loan Bank advances – long-term – variable rate		71				518
Federal Home Loan Bank advances – short-term		34				302
Other short-term borrowings		1				-

Total interest expense		325				1,184


NET INTEREST INCOME		1,340				1,803
PROVISION (CREDIT) FOR LOAN LOSSES		2				(10	)

NET INTEREST INCOME AFTER PROVISION (CREDIT) FOR LOAN LOSSES		1,338				1,813


NON-INTEREST INCOME:
Service charges on deposits		22				29
Earnings on Bank Owned Life Insurance		28				30
Investment securities gains		25				-

Other than temporary impairment (“OTTI”) losses		(13	)			(1	)
Portion of loss (gain) recognized in other comprehensive income (before taxes)		-				-

Net impairment loss recognized in earnings		(13	)			(1	)

ATM fee income		38				42
Other		11				10

Total non-interest income		111				110


NON-INTEREST EXPENSE:
Salaries and employee benefits		552		��		545
Occupancy and equipment		68				63
Data processing		59				57
Correspondent bank service charges		9				9
Federal deposit insurance premium		27				(23	)
ATM Network expense		21				23
Other		144				173

Total non-interest expense		880				847


INCOME BEFORE INCOME TAXES		569				1,076
INCOME TAX EXPENSE		149				283

NET INCOME	$	420			$	793


EARNINGS PER SHARE:
Basic	$	0.24			$	0.45
Diluted	$	0.24			$	0.45

AVERAGE SHARES OUTSTANDING:
Basic		1,748,040				1,775,561
Diluted		1,748,040				1,775,561


	Six Months Ended December 31,
	2019			2018
OPERATING ACTIVITIES

Net income	$	1,520		$	1,432
Adjustments to reconcile net income to cash provided by operating activities:
(Credit) provision for loan losses		(18	)		33
Depreciation		15			29
Net impairment loss recognized in earnings		18			-
(Gain) loss on sale of investments		(32	)		2
Amortization of discounts, premiums and deferred loan costs		50			111
Amortization of unallocated ESOP shares		79			93
Deferred income taxes		18			(27	)
Increase in prepaid/accrued income taxes		74			33
Earnings on bank owned life insurance		(59	)		(61	)
Decrease in accrued interest receivable		167			39
(Decrease) increase in accrued interest payable		(35	)		406
Increase in deferred director compensation payable		25			22
Other, net		18			22

Net cash provided by operating activities		1,840			2,134


INVESTING ACTIVITIES

Available-for-sale:
Purchase of investment securities		(17,324	)		(24,782	)
Proceeds from sale of investments		9,055			1,364
Proceeds from repayments of investments		3,330			22,705
Held-to-maturity:
Proceeds from repayments of investments		500			2,180
Proceeds from repayments of mortgage-backed securities		4,374			5,918
Purchase of certificates of deposit		(1,340	)		(1,096	)
Maturities/redemptions of certificates of deposit		1,593			100
Purchase of loans		(6,266	)		(5,102	)
Net decrease in net loans receivable		5,577			1,364
Purchase of FHLB stock		(6,974	)		(3,043	)
Redemption of FHLB stock		7,010			3,217
Acquisition of premises and equipment		(143	)		-

Net cash (used for) provided by investing activities		(608	)		2,825


	Three Months Ended September 30,
	2020			2019
OPERATING ACTIVITIES

Net income	$	420		$	793
Adjustments to reconcile net income to cash (used for) provided by operating activities:
Provision (credit) for loan losses		2			(10	)
Depreciation		18			6
Investment securities gains		(25	)		-
Net impairment loss recognized in earnings		13			1
Amortization of discounts, premiums and deferred loan fees, net		8			24
Amortization of unallocated ESOP shares		36			38
Deferred income taxes		22			(9	)
(Decrease) increase in accrued income taxes		(355	)		94
Earnings on bank owned life insurance		(28	)		(30	)
Decrease in accrued interest receivable		35			39
Decrease in accrued interest payable		(173	)		(26	)
Increase in deferred director compensation payable		14			12
Other, net		(125	)		(95	)

Net cash (used for) provided by operating activities		(138	)		837


INVESTING ACTIVITIES

Available-for-sale:
Purchases of investment securities		(12,945	)		(1,965	)
Proceeds from sale of investments		1,015			-
Proceeds from repayments of investment securities		19,507			-
Held-to-maturity:
Proceeds from repayments of investment securities		-			500
Proceeds from repayments of mortgage-backed securities		19,171			2,024
Purchases of certificates of deposit		(100	)		(1,092	)
Maturities/redemptions of certificates of deposit		597			349
Purchase of loans		(5,248	)		(2,377	)
Net decrease in net loans receivable		4,558			2,665
Purchase of FHLB stock		(3,044	)		(2,525	)
Redemption of FHLB stock		3,685			2,908
Acquisition of premises and equipment		(119	)		(15	)

Net cash provided by investing activities		27,077			472


					Gross			Gross										Gross			Gross
		Amortized			Unrealized			Unrealized				Fair			Amortized			Unrealized			Unrealized				Fair
		Cost			Gains			Losses				Value			Cost			Gains			Losses				Value
	(Dollars in Thousands)														(Dollars in Thousands)
December 31, 2019
September 30, 2020

AVAILABLE FOR SALE
Corporate debt securities	$		109,701	$		524	$		(121	)	$		110,104	$		107,894	$		409	$		(171	)	$		108,132
Foreign debt securities¹			27,840			126			(10	)			27,956			29,513			154			(19	)			29,648

Commercial paper																2,998			-			-				2,998
Obligations of states and political subdivisions																267			-			(1	)			266

Total	$		137,541	$		650	$		(131	)	$		138,060	$		140,672	$		563	$		(191	)	$		141,044


					Gross			Gross										Gross			Gross
		Amortized			Unrealized			Unrealized				Fair			Amortized			Unrealized			Unrealized				Fair
		Cost			Gains			Losses				Value			Cost			Gains			Losses				Value
	(Dollars in Thousands)														(Dollars in Thousands)
December 31, 2019
September 30, 2020

HELD TO MATURITY
Obligations of states and political subdivisions	$		3,495	$		83	$		-		$		3,578	$		3,495	$		118	$		-		$		3,613

Total														$		3,495	$		118	$		-		$		3,613


																		Gross			Gross
															Amortized			Unrealized			Unrealized				Fair
															Cost			Gains			Losses				Value
															(Dollars in Thousands)
June 30, 2020

AVAILABLE FOR SALE
Corporate debt securities														$		109,739	$		163	$		(774	)	$		109,128
Foreign debt securities¹																32,561			42			(63	)			32,540
Commercial paper																5,971			-			-				5,971

Total	$		3,495	$		83	$		-		$		3,578	$		148,271	$		205	$		(837	)	$		147,639


		Due in one year or less			Due after one through five years			Due after five through ten years			Due after ten years			Total			Due in one year or less			Due after one through five years			Due after five through ten years			Due after ten years			Total
		(Dollars in Thousands)															(Dollars in Thousands)
AVAILABLE FOR SALE
Amortized cost	$		17,528	$		119,373	$		640	$		-	$		137,541	$		25,430	$		114,975	$		267	$		-	$		140,672
Fair value			17,514			119,902			644			-			138,060			25,393			115,385			266			-			141,044

HELD TO MATURITY
Amortized cost	$		750	$		2,745	$		-	$		-	$		3,495	$		750	$		2,745	$		-	$		-	$		3,495
Fair value			757			2,821			-			-			3,578			753			2,860			-			-			3,613


			At December 31, 2019														At September 30, 2020
			Rating						Amortized Cost		Fair Value²		Life to Date Impairment Recorded in Earnings				Rating						Book Value		Fair Value²		Life to Date Impairment Recorded in Earnings
Cusip #	Security Description		S&P		Moody’s		Fitch		(in thousands)						Security Description		S&P		Moody’s		Fitch		(in thousands)
126694CP1		CWHL SER 21 A11		WR		WR		D	$	449	$	443	$	224		CWHL SER 21 A11		WR		WR		D	$	328	$	322	$	271
126694KF4		CWHL SER 24 A15		NR		NR		D		173		173		51		CWHL SER 24 A15		NR		N/A		D		54		54		60
126694KF4		CWHL SER 24 A15		NR		NR		D		87		86		101		CWHL SER 24 A15		NR		N/A		D		107		108		120
126694MP0		CWHL SER 26 1A5		NR		NR		D		76		79		41		CWHL SER 26 1A5		NR		N/A		D		55		57		48

									$	785	$	781	$	417									$	544	$	541	$	499


		Amortized Cost			Gross Unrealized Gains			Gross Unrealized Losses				Fair Value

		(Dollars in Thousands)
December 31, 2019
HELD TO MATURITY

Collateralized mortgage obligations:
Agency	$		103,171	$		761	$		(592	)	$		103,340
Private-label			785			3			(7	)			781


Total	$		103,956	$		764	$		(599	)	$		104,121


		Amortized Cost			Gross Unrealized Gains			Gross Unrealized Losses				Fair Value

		(Dollars in Thousands)
June 30, 2019
HELD TO MATURITY

Collateralized mortgage obligations:
Agency	$		107,448	$		954	$		(570	)	$		107,832
Private-label			883			5			(12	)			876


Total	$		108,331	$		959	$		(582	)	$		108,708


	Three Months Ended December 31, 2019
	(Dollars in Thousands – net of tax)

	Unrealized Gains and Losses on Available-for-Sale Securities			Unrealized Gains and Losses on Held-to-Maturity Securities			Total

Beginning Balance – September 30, 2019	$	129		$	(66	)	$	63

Other comprehensive income before reclassifications		306			3			309

Amounts reclassified from accumulated other comprehensive loss		(25	)		-			(25	)


Net current-period other comprehensive income		281			3			284


Ending Balance – December 31, 2019	$	410		$	(63	)	$	347


	Six Months Ended December 31, 2019
	(Dollars in Thousands – net of tax)

	Unrealized Gains and Losses on Available-for-Sale Securities			Unrealized Gains and Losses on Held-to-Maturity Securities			Total

Beginning Balance – June 30, 2019	$	85		$	(70)		$	15

Other comprehensive income before reclassifications		351			6			357

Amounts reclassified from accumulated other comprehensive loss		(25	)		-			(25	)


Net current-period other comprehensive income		326			6			332


Ending Balance – December 31, 2019	$	411		$	(64	)	$	347


	Three Months Ended December 31, 2018
	(Dollars in Thousands – net of tax)

	Unrealized Gains and Losses on Available-for-Sale Securities			Unrealized Gains and Losses on Held-to-Maturity Securities			Total

Beginning Balance – September 30, 2018	$	88		$	(209	)	$	(121)

Other comprehensive income (loss) before reclassifications		(1,574	)		10			(1,564	)

Amounts reclassified from accumulated other comprehensive income (loss)		-			-			-


Net current-period other comprehensive income (loss)		(1,574	)		10			(1,564	)


Ending Balance – December 31, 2018	$	(1,486	)	$	(199	)	$	(1,685	)


	Six Months Ended December 31, 2018
	(Dollars in Thousands – net of tax)

	Unrealized Gains and Losses on Available-for-Sale Securities			Unrealized Gains and Losses on Held-to-Maturity Securities			Total

Beginning Balance – June 30, 2018	$	(10	)	$	(178)		$	(188)

Other comprehensive loss before reclassifications		(1,478	)		(21	)		(1,499	)

Amounts reclassified from accumulated other comprehensive income		2			-			2


Net current-period other comprehensive loss		(1,476	)		(21	)		(1,497	)


Ending Balance – December 31, 2018	$	(1,486	)	$	(199	)	$	(1,685	)


	Three Months Ended September 30, 2020
	(Dollars in Thousands – net of tax)
	Unrealized Gains and Losses on Available-for-Sale Securities			Unrealized Gains and Losses on Held-to-Maturity Securities			Total

Beginning Balance – June 30, 2020	$	(499	)	$	(57	)	$	(556	)

Other comprehensive income before reclassifications		814			-			814

Amounts reclassified from accumulated other comprehensive income (loss)		(20	)		3			(17	)


Net current-period other comprehensive income		794			3			797


Ending Balance – September 30, 2020	$	295		$	(54	)	$	241


	Three Months Ended September 30, 2019
	(Dollars in Thousands – net of tax)
	Unrealized Gains and Losses on Available-for-Sale Securities			Unrealized Gains and Losses on Held-to-Maturity Securities			Total

Beginning Balance – June 30, 2019	$	84		$	(69)		$	15

Other comprehensive income (loss) before reclassifications		45			-			45

Amounts reclassified from accumulated other comprehensive income (loss)		-			3			3


Net current-period other comprehensive income (loss)		45			3			48


Ending Balance – September 30, 2019	$	129		$	(66	)	$	63


			December 31, 2019
																						September 30, 2020
			Less Than Twelve Months						Twelve Months or Greater						Total
																						Less Than Twelve Months						Twelve Months or Greater						Total
	Fair Value				Gross Unrealized Losses			Fair Value			Gross Unrealized Losses			Fair Value			Gross Unrealized Losses
																				Fair Value				Gross Unrealized Losses			Fair Value			Gross Unrealized Losses			Fair Value			Gross Unrealized Losses
			(Dollars in Thousands)																			(Dollars in Thousands)
Corporate debt securities		$		5,018	$	(4	)	$		13,950	$	(117	)	$		18,968	$	(121	)		$		18,684	$	(95	)	$		5,737	$	(76	)	$		24,421	$	(171	)
Foreign debt securities³				3,276		(1	)			1,994		(9	)			5,270		(10	)				4,493		(19	)			-		-				4,493		(19	)
Collateralized mortgage Obligations:
Agency				18,954		(214	)			23,161		(385	)			42,115		(599	)
Obligations of states and political subdivisions																							266		(1	)			-		-				266		(1	)
Collateralized mortgage obligations																							8,127		(385	)			25,062		(277	)			33,189		(662	)


Total		$		27,248	$	(219	)	$		39,105	$	(511	)	$		66,353	$	(730	)		$		31,570	$	(500	)	$		30,799	$	(353	)	$		62,369	$	(853	)


			June 30, 2019																			June 30, 2020

			Less Than Twelve Months						Twelve Months or Greater						Total							Less Than Twelve Months						Twelve Months or Greater						Total

	Fair Value				Gross Unrealized Losses			Fair Value			Gross Unrealized Losses			Fair Value			Gross Unrealized Losses			Fair Value				Gross Unrealized Losses			Fair Value			Gross Unrealized Losses			Fair Value			Gross Unrealized Losses
																						(Dollars in Thousands)
			(Dollars in Thousands)
Corporate debt securities		$		11,728	$	(86	)	$		17,077	$	(121	)	$		28,805	$	(207	)		$		50,115	$	(509	)	$		8,550	$	(265	)	$		58,665	$	(774	)
Foreign debt securities³				2,004		(2	)			5,699		(73	)			7,703		(75	)
Obligations of states and political subdivisions				-		-				1,329		(1	)			1,329		(1	)
Collateralized mortgage obligations:
Agency				24,368		(182	)			18,614		(400	)			42,982		(582	)
Foreign debt securities³																							13,970		(63	)			-		-				13,970		(63	)
Collateralized mortgage obligations																							13,782		(348	)			26,919		(598	)			40,701		(946	)


Total		$		38,100	$	(270	)	$		42,719	$	(595	)	$		80,819	$	(865	)		$		77,867	$	(920	)	$		35,469	$	(863	)	$		113,336	$	(1,783	)


		Current			30 – 59 Days Past Due			60 – 89 Days Past Due			90 Days + Past Due Accruing			90 Days + Past Due Non-accrual			Total Past Due			Total Loans

		(Dollars in Thousands)
December 31, 2019
First mortgage loans:
1 – 4 family dwellings	$		79,778	$		-	$		-	$		-	$		-	$		-	$		79,778
Construction			1,605			-			-			-			-			-			1,605
Land acquisition & development			246			-			-			-			-			-			246
Multi-family dwellings			2,341			-			-			-			-			-			2,341
Commercial			4,284			-			-			-			-			-			4,284

Consumer Loans:
Home equity			1,095			-			-			-			-			-			1,095
Home equity lines of credit			1,910			-			-			-			-			-			1,910
Other			112			-			-			-			-			-			112

Commercial Loans			6			-			-			-			-			-			6

	$		91,377	$		-	$		-	$		-	$		-	$		-			91,377

Plus: Deferred loan costs																					493
Allowance for loan losses																					(530	)

Net Loans Receivable																			$		91,340


		Current			30 – 59 Days Past Due			60 – 89 Days Past Due			90 Days + Past Due Accruing			90 Days + Past Due Non-accrual			Total Past Due			Total Loans

		(Dollars in Thousands)
June 30, 2019
First mortgage loans:
1 – 4 family dwellings	$		76,564	$		-	$		-	$		-	$		225	$		225	$		76,789
Construction			2,907			-			-			-			-			-			2,907
Land acquisition & development			694			-			-			-			-			-			694
Multi-family dwellings			3,123			-			-			-			-			-			3,123
Commercial			3,727			-			-			-			-			-			3,727

Consumer Loans
Home equity			906			-			-			-			-			-			906
Home equity lines of credit			1,953			-			-			-			-			-			1,953
Other			112			-			-			-			-			-			112

Commercial Loans			418			-			-			-			-			-			418

	$		90,404	$		-	$		-	$		-	$		225	$		225			90,629

Plus: Deferred loan costs																					507
Allowance for loan losses																					(548	)

Net Loans Receivable																			$		90,588


		December 31, 2019						September 30, 2020

		1 – 4 Family			Consumer			1 – 4 Family			Consumer

		(Dollars in Thousands)						(Dollars in Thousands)

Performing	$		79,778	$		3,117	$		79,189	$		2,683
Non-performing			-			-			-			-

Total	$		79,778	$		3,117	$		79,189	$		2,683


		June 30, 2019						June 30, 2020

		1 – 4 Family			Consumer			1 – 4 Family			Consumer

		(Dollars in Thousands)						(Dollars in Thousands)

Performing	$		76,564	$		2,971	$		78,077	$		2,945
Non-performing			225			-			-			-

Total	$		76,789	$		2,971	$		78,077	$		2,945


		As of December 31, 2019
		First Mortgage Loans
		1 – 4 Family				Construction			Land Acquisition & Development				Multi- family				Commercial			Consumer Loans			Commercial Loans				Total

		(Dollars in Thousands)
Beginning ALLL Balance at September 30, 2019	$		412		$		29	$		6		$		17		$		42	$		30	$		2		$		538
Charge-offs			-				-			-				-				-			-			-				-
Recoveries			-				-			-	��			-				-			-			-				-
Provisions			(14	)			8			(2	)			(4	)			3			2			(1	)			(8	)

Ending ALLL Balance at December 31, 2019	$		398		$		37	$		4		$		13		$		45	$		32	$		1		$		530

Individually evaluated for impairment	$		-		$		-	$		-		$		-		$		-	$		-	$		-		$		-
Collectively evaluated for impairment			398				37			4				13				45			32			1				530

	$		398		$		37	$		4		$		13		$		45	$		32	$		1		$		530


		As of December 31, 2019																														As of September 30, 2020
		First Mortgage Loans																														First Mortgage Loans
		1 – 4 Family				Construction				Land Acquisition & Development				Multi- family				Commercial			Consumer Loans			Commercial Loans				Total				1 – 4 Family			Construction				Land Acquisition & Development			Multi- family			Commercial				Consumer Loans				Commercial Loans			Total

		(Dollars in Thousands)																														(Dollars in Thousands)
Beginning ALLL Balance at June 30, 2019	$		405		$		46		$		10		$		17		$		37	$		30	$		3		$		548
Beginning ALLL Balance at June 30, 2020																															$		449	$		38		$		6	$		26	$		66		$		32		$		1	$		618
Charge-offs			-				-				-				-				-			-			-				-				-			-				-			-			-				-				-			-
Recoveries			-				-				-				-				-			-			-				-				-			-				-			-			-				-				-			-
Provisions			(7	)			(9	)			(6	)			(4	)			8			2			(2	)			(18	)			6			(2	)			1			-			(2	)			(2	)			1			2

Ending ALLL Balance at December 31, 2019	$		398		$		37		$		4		$		13		$		45	$		32	$		1		$		530
Ending ALLL Balance at September 30, 2020																															$		455	$		36		$		7	$		26	$		64		$		30		$		2	$		620

Individually evaluated for impairment	$		-		$		-		$		-		$		-		$		-	$		-	$		-		$		-		$		-	$		-		$		-	$		-	$		-		$		-		$		-	$		-
Collectively evaluated for impairment			398				37				4				13				45			32			1				530				455			36				7			26			64				30				2			620

	$		398		$		37		$		4		$		13		$		45	$		32	$		1		$		530		$		455	$		36		$		7	$		26	$		64		$		30		$		2	$		620


		As of December 31, 2018																										As of September 30, 2019
		First Mortgage Loans																										First Mortgage Loans
		1 – 4 Family			Construction				Land Acquisition & Development			Multi- family			Commercial			Consumer Loans			Commercial Loans				Total			1 – 4 Family			Construction				Land Acquisition & Development				Multi- family			Commercial			Consumer Loans			Commercial Loans				Total

					(Dollars in Thousands)																							(Dollars in Thousands)
Beginning ALLL Balance at September 30, 2018	$		363	$		29		$		10	$		18	$		32	$		32	$		3		$		487
Beginning ALLL Balance at June 30, 2019																											$		405	$		46		$		10		$		17	$		37	$		30	$		3		$		548
Charge-offs			-			-				-			-			-			-			-				-			-			-				-				-			-			-			-				-
Recoveries			-			-				-			-			-			-			-				-			-			-				-				-			-			-			-				-
Provisions			10			(4	)			-			-			7			1			-				14			7			(17	)			(4	)			-			5			-			(1	)			(10	)

Ending ALLL Balance at December 31, 2018	$		373	$		25		$		10	$		18	$		39	$		33	$		3		$		501
Ending ALLL Balance at September 30, 2019																											$		412	$		29		$		6		$		17	$		42	$		30	$		2		$		538

Individually evaluated for impairment	$		-	$		-		$		-	$		-	$		-	$		-	$		-		$		-	$		-	$		-		$		-		$		-	$		-	$		-	$		-		$		-
Collectively evaluated for impairment			373			25				10			18			39			33			3				501			412			29				6				17			42			30			2				538

	$		373	$		25		$		10	$		18	$		39	$		33	$		3		$		501	$		412	$		29		$		6		$		17	$		42	$		30	$		2		$		538


		As of December 31, 2018
		First Mortgage Loans
		1 – 4 Family			Construction				Land Acquisition & Development			Multi- family			Commercial			Consumer Loans			Commercial Loans				Total

					(Dollars in Thousands)
Beginning ALLL Balance at June 30, 2018	$		356	$		24		$		-	$		18	$		35	$		31	$		4		$		468
Charge-offs			-			-				-			-			-			-			-				-
Recoveries			-			-				-			-			-			-			-				-
Provisions			17			1				10			-			4			2			(1	)			33

Ending ALLL Balance at December 31, 2018	$		373	$		25		$		10	$		18	$		39	$		33	$		3		$		501

Individually evaluated for impairment	$		-	$		-		$		-	$		-	$		-	$		-	$		-		$		-
Collectively evaluated for impairment			373			25				10			18			39			33			3				501

	$		373	$		25		$		10	$		18	$		39	$		33	$		3		$		501


					Weighted-			Stated interest																Weighted-			Stated interest
	Maturity range				average			rate range							December 31,			June 30,		Maturity range				average			rate range							September 30,			June 30,
Description	from		to		interest rate ⁴			from			to				2019			2019		from		to		interest rate⁴			from			to				2020			2020
															(Dollars in Thousands)																			(Dollars in Thousands)
Fixed		10/01/20		10/03/22		3.03	%		2.95	%		3.09	%	$		15,000	$		15,000		10/01/20		10/03/22		3.03	%		2.95	%		3.09	%	$		15,000	$		15,000
Adjustable		10/01/20		10/01/21		2.02	%		1.85	%		2.16	%			85,000			85,000		10/01/20		10/01/21		0.32	%		0.29	%		0.36	%			85,000			85,000


Total														$		100,000	$		100,000														$		100,000	$		100,000


Maturing During Fiscal Year Ended June 30:		Amount		Weighted- Average Interest Rate⁽⁴⁾
		(Dollars in Thousands)
2020	$		-		-
2021			65,000		2.04%
2022			30,000		2.31%
2023			5,000		3.09%
2024			-		-

2025 and thereafter			-

Total	$		100,000		2.17%


Maturing During Fiscal Year Ended June 30:		Amount		Weighted- Average Interest Rate⁴
		(Dollars in Thousands)
2021	$		65,000		0.51%
2022			30,000		0.80%
2023			5,000		3.09%
2024			-		-
2025			-		-
2026 and thereafter			-		-

Total	$		100,000		0.73%


		December 31, 2019				June 30, 2019				September 30, 2020				June 30, 2020

		(Dollars in Thousands)								(Dollars in Thousands)
FHLB revolving and short-term advances:
Ending balance	$		68,030		$		70,828		$		43,281		$		59,159
Average balance			55,900				81,556				34,644				58,146
Maximummonth-end balance			68,030				161,289				43,281				68,030
Average interest rate			2.19	%			2.45	%			0.39	%			1.57	%
Weighted-average rate			1.81	%			2.46	%
Weighted-average rate at period end											0.37	%			0.39	%


Level I:		Quoted prices are available in active markets for identical assets or liabilities as of the reported date.

Level II:		Pricing inputs are other than the quoted prices in active markets, which are either directly or indirectly observable as of the reported date. The nature of these assets and liabilities includes items for which quoted prices are available but traded less frequently and items that are fair-valued using other financial instruments, the parameters of which can be directly observed.

Level III:		Assets and liabilities that have little to no pricing observability as of the reported date. These items do not havetwo-way markets and are measured using management’s best estimate of fair value, where the inputs into the determination of fair value require significant management judgment or estimation.


		December 31, 2019												September 30, 2020
		Level I			Level II			Level III			Total			Level I			Level II			Level III			Total
		(Dollars in Thousands)												(Dollars in Thousands)
Assets measured on a recurring basis:
Investment securities – available for sale:
Corporate securities	$		-	$		110,104	$		-	$		110,104
Corporate debt securities													$		-	$		108,132	$		-	$		108,132
Foreign debt securities⁵			-			27,956			-			27,956			-			29,648			-			29,648
Commercial paper															-			2,998			-			2,998
Obligations of states and political subdivisions															-			266			-			266

	$		-	$		138,060	$		-	$		138,060	$		-	$		141,044	$		-	$		141,044


		June 30, 2019
		Level I			Level II			Level III			Total
		(Dollars in Thousands)
Assets measured on a recurring basis:
Investment securities – available for sale:
Obligations of states and political subdivisions	$		-	$		1,329	$		-	$		1,329
Corporate securities			-			104,908			-			104,908
Foreign debt securities⁵			-			26,543			-			26,543

	$		-	$		132,780	$		-	$		132,780


		December 31, 2019															September 30, 2020
		Carrying Amount			Fair Value			Level I			Level II			Level III			Carrying Amount			Fair Value			Level I			Level II			Level III
		(Dollars in Thousands)															(Dollars in Thousands)

FINANCIAL ASSETS
Cash and cash equivalents	$		3,042	$		3,042	$		3,042	$		-	$		-	$		3,811	$		3,811	$		3,811	$		-	$		-
Certificates of deposit			1,591			1,591			1,591			-			-			1,343			1,343			1,343			-			-
Investment securities – held to maturity			3,495			3,578			-			3,578			-			3,495			3,613			-			3,613			-
Mortgage-backed securities – held to maturity:
Agency			103,171			103,340			-			103,340			-			77,393			77,120			-			77,120			-
Private-label			785			781			-			-			781			544			541			-			-			541
Net loans receivable			91,340			93,414			-			-			93,414			91,749			98,725			-			-			98,725
Accrued interest receivable			1,052			1,052			1,052			-			-			709			709			709			-			-
FHLB stock			6,974			6,974			6,974			-			-			5,923			5,923			5,923			-			-
Bank owned life insurance			4,849			4,849			4,849			-			-			4,935			4,935			4,935			-			-

FINANCIAL LIABILITIES
Deposits:
Non-interest earning checking	$		18,113	$		18,113	$		18,113	$		-	$		-
Non-interest bearing deposits																$		22,765	$		22,765	$		22,765	$		-	$		-
Interest-earning checking			22,726			22,726			22,726			-			-			24,844			24,844			24,844			-			-
Savings accounts			42,719			42,719			42,719			-			-			44,560			44,560			44,560			-			-
Money market accounts			20,238			20,238			20,238			-			-			19,994			19,994			19,994			-			-
Certificates of deposit			41,888			41,922			-			-			41,922			29,865			29,998			-			-			29,998
Advance payments by borrowers for taxes and insurance			1,447			1,447			1,447			-			-			909			909			909			-			-
FHLB advances – fixed rate			15,000			14,357			-			-			14,357			15,000			14,824			-			-			14,824
FHLB advances – variable rate			85,000			85,000			85,000			-			-			85,000			85,000			85,000			-			-
FHLB short-term advances			68,030			68,030			68,030			-			-			43,281			43,281			43,281			-			-
Other short-term advances																		5,875			5,875			5,875			-			-
Accrued interest payable			788			788			788			-			-			314			314			314			-			-


																								Month 3			Month 6			Month 12			Month 24			Month 36			Month 60			Long Term
		Month 3			Month 6			Month 12			Month 24			Month 36			Month 60			Long Term				(Dollars in Thousands)
		(Dollars in Thousands)
Base Case Up 200 bp	Base Case Up 200 bp																						Base Case Up 200 bp
Cumulative Gap ($’s)		$	61,406		$	57,549		$	49,521		$	44,400		$	40,908		$	43,645		$	33,871			$	47,433		$	45,667		$	47,177		$	50,369		$	52,365		$	57,133		$	29,571
% of Total Assets			17.3	%		16.2	%		13.9	%		12.5	%		11.5	%		12.3	%		9.5	%			14.3	%		13.7	%		14.2	%		15.2	%		15.8	%		17.2	%		8.9	%
Base Case Up 100 bp	Base Case Up 100 bp																						Base Case Up 100 bp
Cumulative Gap ($’s)		$	61,964		$	58,622		$	51,459		$	47,721		$	45,192		$	48,456		$	33,871			$	48,294		$	48,439		$	52,028		$	57,777		$	60,789		$	65,199		$	29,571
% of Total Assets			17.4	%		16.5	%		14.5	%		13.4	%		12.7	%		13.6	%		9.5	%			14.7	%		14.6	%		15.7	%		17.4	%		18.3	%		19.6	%		8.9	%
Base Case No Change	Base Case No Change																						Base Case No Change
Cumulative Gap ($’s)		$	63,628		$	61,782		$	57,096		$	56,885		$	56,372		$	60,104		$	33,871			$	49,509		$	49,506		$	53,849		$	60,417		$	63,580		$	67,254		$	29,571
% of Total Assets			17.9	%		17.4	%		16.1	%		16.0	%		15.9	%		16.9	%		9.5	%			14.9	%		14.9	%		16.2	%		18.2	%		19.1	%		20.2	%		8.9	%
Base Case Down 100 bp	Base Case Down 100 bp																						Base Case Down 100 bp
Cumulative Gap ($’s)		$	65,090		$	64,506		$	61,761		$	63,873		$	64,238		$	67,005		$	33,871			$	49,963		$	50,431		$	55,237		$	62,315		$	65,562		$	68,793		$	29,571
% of Total Assets			18.3	%		18.2	%		17.4	%		18.0	%		18.1	%		18.9	%		9.5	%			15.0	%		15.2	%		16.6	%		18.8	%		19.7	%		20.7	%		8.9	%
Base Case Down 200 bp	Base Case Down 200 bp																						Base Case Down 200 bp
Cumulative Gap ($’s)		$	65,632		$	65,508		$	63,431		$	66,268		$	66,803		$	68,894		$	33,871			$	50,043		$	50,486		$	55,480		$	62,814		$	66,242		$	69,388		$	29,571
% of Total Assets			18.5	%		18.4	%		17.9	%		18.7	%		18.8	%		19.4	%		9.5	%			15.1	%		15.2	%		16.7	%		18.9	%		19.9	%		20.9	%		8.9	%


	Twelve Month Forward Modeled Change in Market Interest Rates																														Twelve Month Forward Modeled Change in Market Interest Rates
	December 31, 2020															December 31, 2021															September 30, 2021															September 30, 2022
Estimated impact on:	-200			-100			0			+100			+200			-200			-100			0			+100			+200			-200			-100			0			+100			+200			-200			-100			0			+100			+200
Change in net interest income		-22.3	%		-11.5	%		-			6.9	%		14.2	%		-29.1	%		-14.6	%		-			9.1	%		18.1	%		-17.5	%		-12.2	%		-			6.6	%		13.9	%		-36.1	%		-25.5	%		-			11.6	%		22.9	%
Return on average equity		3.37	%		4.77	%		6.25	%		7.13	%		8.05	%		2.74	%		4.60	%		6.38	%		7.45	%		8.48	%		1.89	%		2.44	%		3.72	%		4.41	%		5.16	%		-0.16	%		0.96	%		3.55	%		4.68	%		5.75	%
Return on average assets		0.36	%		0.51	%		0.67	%		0.77	%		0.87	%		0.29	%		0.51	%		0.72	%		0.85	%		0.98	%		0.22	%		0.28	%		0.43	%		0.51	%		0.60	%		-0.02	%		0.11	%		0.42	%		0.55	%		0.69	%
Market value of equity (in thousands)	$	39,328		$	42,175		$	45,378		$	46,325		$	46,662																	$	44,257		$	40,993		$	41,558		$	43,620		$	45,436


Anticipated Transactions

	(Dollars in Thousands)
Undisbursed construction and ~~land~~ development loans	$	~~3,573~~2,767
Undisbursed lines of credit	$	~~5,119~~5,117
Loan origination commitments	$	~~2,593~~
~~Letters of credit~~	$	-1,651

	$	~~11,285~~9,535