Note 15 - Fair Value

12 Months Ended

Jun. 30, 2022

Notes to Financial Statements

Fair Value Disclosures [Text Block]

NOTE 15—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 and equity securities: When available, the fair values of available-for-sale and equity 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 June 30, 2022 Using
Assets:	Balance at June 30, 2022		Level 1		Level 2		Level 3
Obligations of U.S. treasury	$	8,447			$	8,447
Obligations of U.S. government-sponsored entities and agencies		26,265		—		26,265		—
Obligations of states and political subdivisions		97,357		—		97,357		—
U.S. government-sponsored mortgage-backed securities - residential		102,183		—		102,183		—
U.S. government-sponsored mortgage-backed securities - commercial		7,301		—		7,301		—
U.S. government-sponsored collateralized mortgage obligations		38,179		—		38,179		—
Other debt securities		16,615		—		16,615		—
Equity securities		400		—		400		—

	Fair Value Measurements at June 30, 2021 Using
Assets:	Balance at June 30, 2021		Level 1		Level 2		Level 3
Obligations of U.S. government-sponsored entities and agencies	$	15,033		—	$	15,033		—
Obligations of states 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		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 2022 or the 2021 fiscal year.

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.

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 June 30, 2022 or June 30, 2021.

There were no assets measured at fair value on a non-recurring basis at June 30, 2022 or 2021 and there was no impact to the provision for loan losses for the twelve months ended June 30, 2022 or 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:

	2022				2021
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Financial Assets:
Level 1 inputs:
Cash and cash equivalents	$	20,952	$	20,952	$	18,529	$	18,529
Level 2 inputs:
Certificates of deposit in other financial institutions		3,781		3,847		5,825		5,955
Loans held for sale		1,165		1,188		1,457		1,488
Accrued interest receivable		2,703		2,703		2,077		2,077
Level 3 inputs:
Securities held-to-maturity		7,874		7,831		7,996		8,352
Loans, net		604,683		577,708		559,956		560,208
Financial Liabilities:
Level 2 inputs:
Demand and savings deposits		784,181		784,181		639,310		639,310
Time deposits		102,381		102,622		87,539		88,147
Short-term borrowings		21,295		21,295		12,203		12,203
Federal Home Loan Bank advances		8,256		7,215		18,050		18,247
Accrued interest payable		49		49		51		51