FAIR VALUE MEASUREMENTS

6 Months Ended

Dec. 31, 2016

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

12. FAIR VALUE MEASUREMENTS

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for an asset or liability in an orderly transaction between market participants at the measurement date. GAAP established a fair value hierarchy that prioritizes the use of inputs used in valuation methodologies into the following three levels:

LeveI I:	Quoted prices are available in active markets for identical assets or liabilities as of the reported date.
LeveI lI:	Pricing inputs are other than the quoted prices in active markets, which are either directly or indirectly observable as of the reported date. The nature of these assets and liabilities includes items for which quoted prices are available but traded less frequently and items that are fair-valued using other financial instruments, the parameters of which can be directly observed.
LeveI lII:	Assets and liabilities that have little to no pricing observability as of the reported date. These items do not have two-way markets and are measured using management’s best estimate of fair value, where the inputs into the determination of fair value require significant management judgment or estimation.

Assets Measured at Fair Value on a Recurring Basis

Investment Securities Available-for-Sale

Fair values for securities available for sale are determined by obtaining quoted prices on nationally recognized securities exchanges or matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities, but rather by relying on the securities’ relationship to other benchmark quoted securities. The Company has no Level I or Level III investment securities. Level II investment securities were primarily comprised of investment-grade corporate bonds and U.S. dollar-denominated investment-grade corporate bonds of large foreign issuers.

The following tables present the assets reported on a recurring basis on the Consolidated Balance Sheet at their fair value as of December 31, 2016 and June 30, 2016, by level within the fair value hierarchy. As required by GAAP, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

		December 31, 2016
		Level I			Level II			Level III			Total
		(Dollars in Thousands)
Assets measured on a recurring basis:
Trading Securities	$		920	$		-	$		-	$		920
Investment securities – available for sale:
Obligations of states and political subdivisions	$		-	$		1,306	$		-	$		1,306
Corporate securities			-			98,420			-			98,420
Foreign debt securities 7			-			7,028			-			7,028
	$		920	$		106,754	$		-	$		107,674
		June 30, 2016
		Level I			Level II			Level III			Total
		(Dollars in Thousands)
Assets measured on a recurring basis:
Investment securities – available for sale:
Obligations of states and political subdivisions	$		-	$		2,041	$		-	$		2,041
Corporate securities			-			96,852			-			96,852
Foreign debt securities 7			-			8,783			-			8,753
	$		-	$		107,676	$		-	$		107,676

Assets Measured at Fair Value on a Nonrecurring Basis

The Company may be required, from time to time, to measure certain financial assets and financial liabilities at fair value on a nonrecurring basis in accordance with U.S. generally accepted accounting principles. These include assets that are measured at the lower of cost or market value that were recognized at fair value below cost at the end of the period.

Impaired Loans

Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are considered impaired. Once a loan is identified as individually impaired, management measures impairment in accordance with ASC Topic 310. The fair value of impaired loans is estimated using one of several methods, including collateral value, liquidation value and discounted cash flows. Those impaired loans not requiring an allowance represent loans for which the fair value of the expected repayments or collateral exceed the recorded investments in such loans. Collateral values are estimated using Level II inputs based on observable market data or Level III inputs based on customized discounting criteria. For a majority of impaired real estate related loans, the Company obtains a current external appraisal. Other valuation techniques are used as well, including internal valuations, comparable property analysis and contractual sales information. The Company has no Level I or Level II impaired loans. Level III impaired loans were primarily comprised of one single-family residential construction loan, one land loan, and one home equity line of credit.

The following tables present the assets reported on a non-recurring basis on the consolidated balance sheet at their fair values as of December 31, 2016 and June 30, 2016, by level within the fair value hierarchy. As required by GAAP, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

⁷  U.S. dollar-denominated investment-grade corporate bonds of large foreign corporate issuers.

December 31, 2016

Level I

Level II

Level III

Total

(Dollars in Thousands)

Assets measured on a non-recurring basis:

Impaired loans

$

-

$

-

$

-

$

-

Total

$

-

$

-

$

-

$

-

June 30, 2016

Level I

Level II

Level III

Total

(Dollars in Thousands)

Assets measured on a non-recurring basis:

Impaired loans

$

-

$

-

$

-

$

-

Total

$

-

$

-

$

-

$

-

For Level III assets measured at fair value on a recurring and non-recurring basis as of December 31, 2016 and June 30, 2016, the significant observable inputs used in the fair value measurements were as follows:

		Fair Value at
		December 31,         2016		June 30,     2016		Valuation       Technique	Significant     Unobservable     Inputs	Significant Unobservable       Input Range (Weighted Average)
		(Dollars in Thousands)
Impaired loans	$		-	$	-	Appraisal of collateral8	Discounted appraisal9	0%/0%

When evaluating the value of the collateral on impaired loans, the Company will consider the age of the most current appraisal, and may discount the appraised value from 0.0% to 15.0%.

The Company classifies financial instruments in Level III of the fair value hierarchy when there is reliance on at least one significant unobservable input to the valuation model. In addition to these unobservable inputs, the valuation model for Level III financial instruments typically also rely on a number of inputs that are readily observable, either directly or indirectly.

⁸  Fair value is generally determined through independent appraisals of the underlying collateral, which generally include various level III inputs which are not identifiable.

⁹  Appraisals may be adjusted by management for qualitative factors such as economic conditions. The range and weighted average of appraisal adjustments are presented as a percentage of the appraisals.