Fair Value of Financial Instruments and Fair Value Measurement (Tables)

6 Months Ended

Mar. 31, 2015

Assets and Liabilities Measured on Recurring Basis

Assets and liabilities measured at fair value on a recurring basis are summarized below.



	March 31, 2015
	Estimated fair value		Quoted prices in active markets for identical assets (Level 1 inputs)		Quoted prices for similar assets (Level 2 inputs)		Significant unobservable inputs (Level 3 inputs)
Assets:
Investment securities available for sale:
Collateralized loan obligations	$	24,329,386	$	—	$	24,329,386	$	—
Mortgage-backed securities:
FHLMC certificates	40,546,762		—		40,546,762		—
FNMA certificates	105,984,755		—		105,984,755		—
GNMA certificates	1,646,637		—		1,646,637		—
Collateralized mortgage obligations:
FHLMC	44,890		—		44,890		—
FNMA	71,917		—		71,917		—
Private-label mortgage securities:
Investment grade	1,167,623		—		1,167,623		—
Split rating ₍₁₎	1,031,106		—		1,031,106		—
Non-investment grade	8,158,450		—		8,158,450		—
Total investment securities available for sale	182,981,526		—		182,981,526		—
Assets held for sale	1,744,584		—		—		1,744,584
Total recurring assets at fair value	$	184,726,110	$	—	$	182,981,526	$	1,744,584

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(1)	Bonds with split ratings represent securities with both investment and non-investment grades.



	September 30, 2014
	Estimated fair value		Quoted prices in active markets for identical assets (Level 1 inputs)		Quoted prices for similar assets (Level 2 inputs)		Significant unobservable inputs (Level 3 inputs)
Assets:
Investment securities available for sale:
Tax free municipals	$	13,457,203	$	—	$	13,457,203	$	—
Mortgage–backed securities:
FHLMC certificates	44,025,928		—		44,025,928		—
FNMA certificates	118,278,377		—		118,278,377		—
GNMA certificates	1,697,844		—		1,697,844		—
Collateralized mortgage obligations:
FHLMC	53,496		—		53,496		—
FNMA	80,156		—		80,156		—
Private-label mortgage securities:
Investment grade	1,446,858		—		1,446,858		—
Split rating ₍₁₎	1,094,107		—		1,094,107		—
Non-investment grade	8,609,304		—		8,609,304		—
Total investment securities available for sale	188,743,273		—		188,743,273		—
Assets held for sale	1,744,584		—		—		1,744,584
Total recurring assets at fair value	$	190,487,857	$	—	$	188,743,273	$	1,744,584

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(1)	Bonds with split ratings represent securities with both investment and non-investment grades.

Assets Measured on Recurring Basis, Unobservable Input Reconciliation

A reconciliation of the beginning and ending balances of Level 3 assets and liabilities recorded at fair value on a recurring basis is as follows:



	Six Months Ended March 31, 2015		Year Ended September 30, 2014
Fair value, beginning balance	$	1,744,584	$	1,744,584
Purchases	—		—
Sales	—		—
Transfers in and/or out of level 3	—		—
Fair value, ending balance	$	1,744,584	$	1,744,584

Assets and Liabilities Measured on Nonrecurring Basis

Assets and liabilities measured at fair value on a nonrecurring basis are summarized below.



			Fair value measurements using:
	Estimated fair value		Quoted prices in active markets for identical assets (Level 1 inputs)		Quoted prices for similar assets (Level 2 inputs)		Significant unobservable inputs (Level 3 inputs)
March 31, 2015
Impaired loans:
Not covered under loss share	$	2,579,119	$	—	$	—	$	2,579,119
Other real estate owned:
Not covered under loss share	1,144,112		—		—		1,144,112
Covered under loss share	3,343,384		—		—		3,343,384
September 30, 2014
Impaired loans:
Not covered under loss share	3,174,410		—		—		3,174,410
Other real estate owned:
Not covered under loss share	1,757,864		—		—		1,757,864
Covered under loss share	5,557,927		—		—		5,557,927

Quantitative Information about Level 3 Fair Value Measurements

The following table provides information describing the valuation processes used to determine recurring and nonrecurring fair value measurements categorized within Level 3 of the fair value hierarchy at March 31, 2015:



	Quantitative Information about Level 3 Fair Value Measurements
	Fair Value		Valuation Technique	Unobservable Input	General Range (Discount)			Weighted Average Discount
Impaired Loans	$	2,579,119	Property appraisals	Management discount for property type and recent market volatility	19%	—	50%	31%
OREO	$	4,487,496	Property appraisals	Management discount for property type and recent market volatility	20%	—	47%	29%
Assets Held for Sale	$	1,744,584	Valuation analysis	Management discount for property type and recent market volatility	0%	—	50%	34%

Estimated Fair Value of On-Balance Sheet Financial Instruments

The estimated fair value of the Company’s remaining on-balance sheet financial instruments as of March 31, 2015 and September 30, 2014 is summarized below:



	March 31, 2015
					Estimated Fair Value
	Carrying Value		Total Estimated Fair Value		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial assets:
Cash and cash equivalents	$	64,563,841	$	64,563,841	$	64,563,841	$	—	$	—
Investments available for sale	182,981,526		182,981,526		—		182,981,526		—
FHLB stock	3,005,600		3,005,600		—		3,005,600		—
Loans receivable, net	656,212,122		654,262,331		—		—		654,262,331
Loans held for sale	2,700,613		2,755,616		—		2,755,616		—
FDIC receivable for loss sharing arrangements	6,749,359		5,932,365		—		—		5,932,365
Assets held for sale	1,744,584		1,744,584		—		—		1,744,584
Accrued interest and dividends receivable	2,594,483		2,594,483		—		495,737		2,098,746
Financial liabilities:
Deposits	$	736,802,784	$	737,511,630	$	—	$	737,511,630	$	—
FHLB advances	50,000,000		54,061,552		—		54,061,552		—
Accrued interest payable	198,293		198,293		—		198,293		—



	September 30, 2014
					Estimated Fair Value
	Carrying Value		Total Estimated Fair Value		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial assets:
Cash and cash equivalents	$	99,462,953	$	99,462,953	$	99,462,953	$	—	$	—
Investments available for sale	188,743,273		188,743,273		—		188,743,273		—
FHLB stock	3,442,900		3,442,900		—		3,442,900		—
Loans receivable, net	606,366,713		607,754,670		—		—		607,754,670
Loans held for sale	2,054,722		2,090,469		—		2,090,469		—
FDIC receivable for loss sharing arrangements	10,531,809		7,658,896		—		—		7,658,896
Assets held for sale	1,744,584		1,744,584		—		—		1,744,584
Accrued interest and dividends receivable	2,459,347		2,459,347		—		538,043		1,921,304
Financial liabilities:
Deposits	$	717,192,200	$	718,935,248	$	—	$	718,935,248	$	—
FHLB advances	55,000,000		59,391,540		—		59,391,540		—
Accrued interest payable	182,198		182,198		—		182,198		—

- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

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- Definition

Tabular disclosure of the fair value of financial instruments, including financial assets and financial liabilities, and the measurements of those instruments, assets, and liabilities.

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