Note 5 - Fair Value

3 Months Ended

Sep. 30, 2020

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 September 30, 2020 Using
	Balance at September 30, 2020		Level 1		Level 2		Level 3
Assets:
U.S. Treasury	$	753	$	—	$	753	$	—
Obligations of U.S. government-sponsored entities and agencies		10,252		—		10,252		—
Obligations of states and political subdivisions		64,021		—		64,021		—
U.S. Government-sponsored mortgage-backed securities – residential		46,118		—		46,118		—
U.S. Government-sponsored mortgage-backed securities – commercial		7,981		—		7,981		—
U.S. Government-sponsored collateralized mortgage obligations - residential		7,778		—		7,778		—

			Fair Value Measurements at June 30, 2020 Using
	Balance at June 30, 2020		Level 1		Level 2		Level 3
Assets:
Securities available-for-sale:
Obligations of U.S. Treasury	$	1,256	$	—	$	1,256	$	—
Obligations of government-sponsored entities		10,532		—		10,532		—
Obligations of states and political subdivisions		63,492		—		63,492		—
U.S. Government-sponsored mortgage-backed securities - residential		50,156		—		50,156		—
U.S. Government-sponsored mortgage-backed securities – commercial		8,497		—		8,497		—
U.S. Government-sponsored collateralized mortgage obligations		9,985		—		9,985		—

There were

no

transfers between Level

1

and Level

2

during the

three

-month periods ended

September 30, 2020

or

2019.

Certain assets and 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. Assets and 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. There were

no

impaired loans measured at fair value on a non-recurring basis at

September 30, 2020

or

June 30, 2020

and there was

no

impact to the provision for loan losses for the

three

month periods ended

September 30, 2020

or

September 30, 2019.

Other Real Estate

and Repossessed Assets

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 and other repossessed assets, which are primarily vehicles, are evaluated on a quarterly basis for additional impairment and adjusted accordingly. There was

no

other real estate owned or other repossessed assets being carried at fair value as of

September 30, 2020

or

June 30, 2020.

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, 20 20				June 30, 20 20
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Financial Assets:
Level 1 inputs:
Cash and cash equivalents	$	8,508	$	8,508	$	9,659	$	9,659
Level 2 inputs:
Certificates of deposit in other financial institutions		8,872		9,121		11,635		11,889
Loans held for sale		5,729		5,854		3,507		3,566
Accrued interest receivable		2,593		2,593		2,646		2,646
Level 3 inputs:
Securities held-to-maturity		3,441		3,734		3,541		3,868
Loans, net		556,371		571,676		537,183		548,247
Financial Liabilities:
Level 2 inputs:
Demand and savings deposits		524,832		524,832		517,973		517,973
Time deposits		115,266		115,938		115,382		116,238
Short-term borrowings		8,414		8,414		6,943		6,943
Federal Home Loan Bank advances		30,899		31,261		31,161		31,571
Accrued interest payable		108		108		107		107