Note 5 - Fair Value

6 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Fair Value Disclosures [Text Block]

Note

5

- 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 unobservable inputs (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 December 31, 2019 Using
	Balance at December 31, 2019		Level 1		Level 2		Level 3
Assets:
Obligations of U.S. government-sponsored entities and agencies	$	12,047	$	—	$	12,047	$	—
Obligations of states and political subdivisions		57,530		—		57,530		—
U.S. Government-sponsored mortgage-backed securities – residential		53,584		—		53,584		—
U.S. Government-sponsored mortgage-backed securities – commercial		1,456		—		1,456		—
U.S. Government-sponsored collateralized mortgage obligations - residential		8,465		—		8,465		—

			Fair Value Measurements at June 30, 2019 Using
	Balance at June 30, 2019		Level 1		Level 2		Level 3
Assets:
Securities available-for-sale:
Obligations of government-sponsored entities	$	19,513	$	—	$	19,513	$	—
Obligations of states and political subdivisions		57,929		—		57,929		—
U.S. Government-sponsored mortgage-backed securities - residential		56,311		—		56,311		—
U.S. Government-sponsored collateralized mortgage obligations		10,257		—		10,257		—

There were

no

transfers between Level

1

and Level

2

during the

three

or

six

-month periods ended

December 31, 2019

or

2018.

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 or are charged down to their fair value. 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.

Other Real Estate Owned:

Assets acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell. Real estate owned properties are evaluated on a quarterly basis for additional impairment and adjusted accordingly. There was

no

other real estate owned being carried at fair value as of

December 31, 2019

or

June 30, 2019.

There were

no

financial assets measured at fair value on a non-recurring basis at

December 31, 2019.

Financial assets measured at fair value on a non-recurring basis at

June 30, 2019

are summarized below: 

			Fair Value Measurements at June 30, 2019 Using
	Balance at June 30, 2019		Level 1		Level 2		Level 3
Impaired loans:
Commercial Real Estate - Other	$	59	$	—	$	—	$	59

Impaired loans, measured for impairment using the fair value of the collateral, had a recorded investment of

$59,

with

no

valuation allowance at

June 30, 2019.

There was

no

impact to the provision for loan losses for the

three

and

six

-month periods ended

December 31, 2019

and

2018.

The following tables presents quantitative information about Level

3

fair value measurements for financial instruments measured at fair value on a non-recurring basis at

June 30, 2019: 

June 30, 2019

Fair Value

Valuation Technique

Unobservable Inputs

Range

Weighted Average

Impaired loans:

Commercial Real Estate – Other

$

59

Settlement Agreement

N/A

0.0

%

0.0

%

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:

	December 31 , 2019				June 30, 201 9
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Financial Assets:
Level 1 inputs:
Cash and cash equivalents	$	14,028	$	14,028	$	9,461	$	9,461
Level 2 inputs:
Certificates of deposits in other financial institutions		994		994		1,983		1,983
Loans held for sale		3,220		3,283		1,657		1,687
Accrued interest receivable		1,511		1,511		1,607		1,607
Level 3 inputs:
Securities held-to-maturity		3,580		3,859		3,786		3,821
Loans, net		392,298		399,465		365,387		366,911
Financial Liabilities:
Level 2 inputs:
Demand and savings deposits		375,534		375,534		359,969		359,969
Time deposits		112,111		112,652		112,205		112,841
Short-term borrowings		3,870		3,870		3,686		3,686
Federal Home Loan Bank advances		24,300		24,208		22,700		22,596
Accrued interest payable		127		127		132		132