Fair Value

3 Months Ended

Sep. 30, 2015

Fair Value Disclosures [Abstract]

Fair Value Disclosures [Text Block]

Note 4 - Fair Value

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

Financial assets and financial liabilities measured at fair value on a recurring basis include the following:

Securities available-for-sale: When available, the fair values of available-for-sale securities are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs). For securities where quoted market prices are not available, fair values are calculated based on market prices of similar securities (Level 2 inputs). For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators (Level 3 inputs).

Assets and liabilities measured at fair value on a recurring basis are summarized below, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

			Fair Value Measurements at
			September 30, 2015 Using
	Balance at
	September 30, 2015		Level 1		Level 2		Level 3
Assets:
Obligations of U.S. government-sponsored entities and agencies	$	16,305	$	—	$	16,305	$	—
Obligations of states and political subdivisions		51,589		—		51,589		—
Mortgage-backed securities – residential		62,532		—		62,532		—
Mortgage-backed securities – commercial		1,495		—		1,495		—
Collateralized mortgage obligations - residential		5,325		—		5,325		—
Pooled trust preferred security		517		—		517		—

			Fair Value Measurements at
			June 30, 2015 Using
	Balance at
	June 30, 2015		Level 1		Level 2		Level 3
Assets:
Obligations of U.S. government-sponsored entities and agencies	$	16,558	$	—	$	16,558	$	—
Obligations of states and political subdivisions		48,963		—		48,963		—
Mortgage-backed securities - residential		64,914		—		64,914		—
Mortgage-backed securities - commercial		1,486		—		1,486		—
Collateralized mortgage obligations - residential		4,683		—		4,683		—
Pooled trust preferred security		540		—		540		—

There were no transfers between Level 1 and Level 2 during the three month periods ended September 30, 2015 or 2014.

Certain financial assets and financial liabilities are measured at fair value on a non-recurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances. Financial assets and financial liabilities measured at fair value on a non-recurring basis include the following:

Impaired Loans: At the time a loan is considered impaired, it is valued at the lower of cost or fair value. Impaired loans carried at fair value generally receive specific allocations of the allowance for loan losses. For collateral dependent loans, fair value is commonly based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.

Financial assets and financial liabilities measured at fair value on a non-recurring basis are summarized below:

			Fair Value Measurements at
			September 30, 2015 Using
	Balance at
	September 30, 2015		Level 1		Level 2		Level 3
Impaired loans:
Commercial Real Estate - Other	$	1,954	$	—	$	—	$	1,954

			Fair Value Measurements at
			June 30, 2015 Using
	Balance at
	June 30, 2015		Level 1		Level 2		Level 3
Impaired loans:
Commercial Real Estate - Other	$	1,979	$	—	$	—	$	1,979

Impaired loans included in the tables above are measured for impairment using the fair value of the collateral and had a carrying amount of $1,954, with no valuation allowance at September 30, 2015. The resulting impact to the provision for loan losses was a reduction of $3 being recorded for the three month period ended September 30, 2015. As of June 30, 2015, the carrying amount of impaired loans was $1,979 with no valuation allowance. There was no provision for loan loss recorded related to impaired loans measured at fair value for the three month period ended September 30, 2014.

The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at September 30, 2015:

	Fair		Valuation	Unobservable			Weighted
	Value		Technique	Inputs	Range		Average
Impaired loans:
				Liquidation adjustment
Commercial Real Estate - Other	$	733	Income approach	for distressed sales		-40.0%		-40.0%
				Liquidation adjustment
Commercial Real Estate - Other	$	125	Cost approach	for distressed sales		-40.0%		-40.0%
				Adjustment for
			Sales comparison	differences between		82.9% to
Commercial Real Estate - Other	$	1,096	approach	comparable sales		-38.7%		-7.5%

The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at June 30, 2015:

	Fair		Valuation	Unobservable			Weighted
	Value		Technique	Inputs	Range		Average
Impaired loans:
				Liquidation adjustment
Commercial Real Estate - Other	$	733	Income approach	for distressed sales		-40.0%		-40.0%
				Liquidation adjustment
Commercial Real Estate - Other	$	125	Cost approach	for distressed sales		-40.0%		-40.0%
				Adjustment for
			Sales comparison	differences between		82.9% to
Commercial Real Estate - Other	$	1,121	approach	comparable sales		-71.6%		-11.7%

The valuation technique used by an independent third party appraiser in the fair value measurement of collateral for collateral-dependent commercial real estate impaired loans consisted of the sales comparison approach. The significant unobservable inputs used in the fair value measurement relate to any adjustment made to the value set forth in the appraisal due to a distressed sale situation.

The following table shows the estimated fair values of financial instruments that are reported at amortized cost in the Corporation’s consolidated balance sheets, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

	September 30, 2015				June 30, 2015
			Estimated				Estimated
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
Financial Assets:
Level 1 inputs:
Cash and cash equivalents	$	13,648	$	13,648	$	10,544	$	10,544
Level 2 inputs:
Certificates of deposits in other financial institutions		5,913		5,910		4,470		4,456
Loans held for sale		307		310		462		468
Accrued interest receivable		1,310		1,310		1,035		1,035
Level 3 inputs:
Securities held-to-maturity		3,565		3,712		3,655		3,722
Loans, net		231,400		232,295		226,087		226,915
Financial Liabilities:
Level 2 inputs:
Demand and savings deposits		275,893		275,893		266,635		266,635
Time deposits		64,998		65,104		66,361		66,498
Short-term borrowings		22,229		22,229		19,838		19,838
Federal Home Loan Bank advances		6,225		6,534		6,240		6,537
Accrued interest payable		39		39		41		41

The assumptions used to estimate fair value are described as follows:

Cash and cash equivalents: The carrying value of cash, deposits in other financial institutions and federal funds sold were considered to approximate fair value resulting in a Level 1 classification.

Certificates of deposits in other financial institutions: Fair value of certificates of deposits in other financial institutions was estimated using current rates for deposits of similar remaining maturities resulting in a Level 2 classification.

Accrued interest receivable and payable, demand and savings deposits and short-term borrowings: The carrying value of accrued interest receivable and payable, demand and savings deposits and short-term borrowings were considered to approximate fair value due to their short-term duration resulting in a Level 2 classification.

Loans held for sale: The fair value of loans held for sale is estimated based upon binding contracts and quotes from third party investors resulting in a Level 2 classification.

Loans: Fair value for loans was estimated for portfolios of loans with similar financial characteristics. For adjustable rate loans that reprice at least annually and for fixed rate commercial loans with maturities of six months or less which possess normal risk characteristics, carrying value was determined to be fair value. Fair value of other types of loans (including adjustable rate loans which reprice less frequently than annually and fixed rate term loans or loans which possess higher risk characteristics) was estimated by discounting future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for similar anticipated maturities resulting in a Level 3 classification. The methods utilized to estimate the fair value of loans do not necessarily represent an exit price.

Securities held-to-maturity: The held-to-maturity securities are general obligation and revenue bonds made to local municipalities. The fair values of these securities are estimated using a spread to the applicable municipal fair market curve resulting in a Level 3 classification.

Time deposits: Fair value of fixed-maturity certificates of deposit was estimated using the rates offered at September 30, 2015 and June 30, 2015, for deposits of similar remaining maturities. Estimated fair value does not include the benefit that results from low-cost funding provided by the deposit liabilities compared to the cost of borrowing funds in the market resulting in a Level 2 classification.

Federal Home Loan Bank advances: Fair value of Federal Home Loan Bank advances was estimated using current rates at September 30, 2015 and June 30, 2015 for similar financing resulting in a Level 2 classification.

Federal bank and other restricted stocks, at cost: Federal bank and other restricted stocks include stock acquired for regulatory purposes, such as Federal Home Loan Bank stock and Federal Reserve Bank stock that are accounted for at cost due to restrictions placed on their transferability; and therefore, are not subject to the fair value disclosure requirements.

Off-balance sheet commitments: The Corporation’s lending commitments have variable interest rates and “escape” clauses if the customer’s credit quality deteriorates. Therefore, the fair values of these items are not significant and are not included in the above table.