Note 5 - Fair Value

3 Months Ended

Sep. 30, 2021

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:

	Balance at		Fair Value Measurements at September 30, 2021
	September 30, 2021		Level 1		Level 2		Level 3
Assets:
Obligations of U.S. government-sponsored entities and agencies	$	14,319	$	—	$	14,319	$	—
Obligations of state and political subdivisions		80,181		—		80,181		—
U.S. Government-sponsored mortgage-backed securities – residential		104,202		—		104,202		—
U.S. Government-sponsored mortgage-backed securities – commercial		8,650		—		8,650		—
U.S. Government-sponsored collateralized mortgage obligations - residential		21,989		—		21,989		—
Other debt securities		16,073		—		16,073		—
Equity securities		424		—		424		—

	Balance at		Fair Value Measurements at June 30, 2021
	June 30, 2021		Level 1		Level 2		Level 3
Assets:
Obligations of U.S. government-sponsored entities and agencies	$	15,033	$	—	$	15,033	$	—
Obligations of state and political subdivisions		76,499		—		76,499		—
U.S. government-sponsored mortgage-backed securities - residential		90,517		—		90,517		—
U.S. government-sponsored mortgage-backed securities - commercial		8,845		—		8,845		—
U.S. government-sponsored collateralized mortgage obligations - residential		16,374		—		16,374		—
Other debt securities		492		—		492		—
Equity securities		424		—		424		—

There were no transfers between Level 1 and Level 2 during the three-month period ended September 30, 2021.

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, 2021 or June 30, 2021 and there was no impact to the provision for loan losses for the three -month periods ended September 30, 2021 or 2020.

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, 2021 and June 30, 2021.

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, 2021				June 30, 2021
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Financial Assets:
Level 1 inputs:
Cash and cash equivalents	$	87,092	$	87,092	$	18,529	$	18,529
Level 2 inputs:
Certificates of deposit in other financial institutions		5,560		5,693		5,825		5,955
Loans held for sale		1,803		1,834		1,457		1,488
Accrued interest receivable		2,531		2,531		2,077		2,077
Level 3 inputs:
Securities held-to-maturity		7,896		8,219		7,996		8,352
Loans, net		570,484		578,780		559,956		560,208
Financial Liabilities:
Level 2 inputs:
Demand and savings deposits		727,606		727,606		639,310		639,310
Time deposits		121,580		122,296		87,539		88,147
Short-term borrowings		10,773		10,773		12,203		12,203
Federal Home Loan Bank advances		16,300		16,342		18,050		18,247
Accrued interest payable		66		66		51		51