XML 39 R25.htm IDEA: XBRL DOCUMENT
v3.19.3.a.u2

NOTE 18: Fair Value Measurements | 12 Months Ended
--- | ---
Jun. 30, 2019
Notes |
NOTE 18: Fair Value Measurements | NOTE 18: Fair Value Measurements ASC Topic 820, Fair Value Measurements, defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Topic 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value: Level 1 – Quoted prices in active markets for identical assets or liabilities Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in active markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities Level 3 – Unobservable inputs supported by little or no market activity and significant to the fair value of the assets or liabilities Recurring Measurements. The following table presents the fair value measurements of assets recognized in the accompanying consolidated balance sheets measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall at June 30, 2019 and 2018:
| Fair Value Measurements at June 30, 2019, Using:
|  | Quoted Prices in Active Markets for Identical Assets | Significant Other Observable Inputs | Significant Unobservable Inputs
(dollars in thousands) | Fair Value | (Level 1) | (Level 2) | (Level 3)
U.S. government sponsored enterprises (GSEs) | $ 7,270 | $ - | $ 7,270 | $ -
State and political subdivisions | 42,783 | - | 42,783 | -
Other securities | 5,053 | - | 5,053 | -
Mortgage-backed GSE residential | 110,429 | - | 110,429 | -
| Fair Value Measurements at June 30, 2018, Using:
|  | Quoted Prices in Active Markets for Identical Assets | Significant Other Observable Inputs | Significant Unobservable Inputs
(dollars in thousands) | Fair Value | (Level 1) | (Level 2) | (Level 3)
U.S. government sponsored enterprises (GSEs) | $ 9,385 | $ - | $ 9,385 | $ -
State and political subdivisions | 41,612 | - | 41,612 | -
Other securities | 5,152 | - | 5,152 | -
Mortgage-backed GSE residential | 90,176 | - | 90,176 | -
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets, as well as the general classification of such assets pursuant to the valuation hierarchy. There have been no significant changes in the valuation techniques during the year ended June 30, 2019. Available-for-sale Securities. When quoted market prices are available in an active market, securities are classified within Level 1. If quoted market prices are not available, then fair values are estimated using pricing models, or quoted prices of securities with similar characteristics. For these securities, our Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and conditions, among other things. In certain cases where Level 1 or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy. Nonrecurring Measurements. The following tables present the fair value measurement of assets measured at fair value on a nonrecurring basis and the level within the ASC 820 fair value hierarchy in which the fair value measurements fell at June 30, 2019 and 2018:
|  | Fair Value Measurements at June 30 , 2019, Using:
|  |  | Quoted Prices in |  |
|  |  | Active Markets for | Significant Other | Significant
|  |  | Identical Assets | Observable Inputs | Unobservable Inputs
(dollars in thousands) |  | Fair Value | (Level 1) | (Level 2) | (Level 3)
Foreclosed and repossessed assets held for sale |  | $ 2,430 | $ - | $ - | $ 2,430
|  | Fair Value Measurements at June 30, 2018, Using:
|  |  | Quoted Prices in |  |
|  |  | Active Markets for | Significant Other | Significant
|  |  | Identical Assets | Observable Inputs | Unobservable Inputs
(dollars in thousands) |  | Fair Value | (Level 1) | (Level 2) | (Level 3)
Impaired loans (collateral dependent) |  | $ 490 | $ - | $ - | $ 490
Foreclosed and repossessed assets held for sale |  | 1,467 | - | - | 1,467
The following table presents gains and (losses) recognized on assets measured on a non-recurring basis for the years ended June 30, 2019 and 2018:
(dollars in thousands) |  |  | 2019 | 2018
Impaired loans (collateral dependent) |  |  | $ - | $ (750)
Foreclosed and repossessed assets held for sale |  |  | (353) | (248)
Total losses on assets measured on a non-recurring basis | $ (353) | $ (998)
The following is a description of valuation methodologies and inputs used for assets measured at fair value on a nonrecurring basis and recognized in the accompanying consolidated balance sheets, as well as the general classification of such assets pursuant to the valuation hierarch. For assets classified within Level 3 of fair value hierarchy, the process used to develop the reported fair value process is described below. Impaired Loans (Collateral Dependent). A collateral dependent loan is considered to be impaired when it is probable that all of the principal and interest due may not be collected according to its contractual terms. Generally, when a collateral dependent loan is considered impaired, the amount of reserve required is measured based on the fair value of the underlying collateral. The Company makes such measurements on all material collateral dependent loans deemed impaired using the fair value of the collateral for collateral dependent loans. The fair value of collateral used by the Company is determined by obtaining an observable market price or by obtaining an appraised value from an independent, licensed or certified appraiser, using observable market data. This data includes information such as selling price of similar properties and capitalization rates of similar properties sold within the market, expected future cash flows or earnings of the subject property based on current market expectations, and other relevant factors. In addition, management applies selling and other discounts to the underlying collateral value to determine the fair value. If an appraised value is not available, the fair value of the collateral dependent impaired loan is determined by an adjusted appraised value including unobservable cash flows. On a quarterly basis, loans classified as special mention, substandard, doubtful, or loss are evaluated including the loan officer’s review of the collateral and its current condition, the Company’s knowledge of the current economic environment in the market where the collateral is located, and the Company’s recent experience with real estate in the area. The date of the appraisal is also considered in conjunction with the economic environment and any decline in the real estate market since the appraisal was obtained. For all loan types, updated appraisals are obtained if considered necessary. In instances where the economic environment has worsened and/or the real estate market declined since the last appraisal, a higher distressed sale discount would be applied to the appraised value. The Company records collateral dependent impaired loans based on nonrecurring Level 3 inputs. If a collateral dependent loan’s fair value, as estimated by the Company, is less than its carrying value, the Company either records a charge-off of the portion of the loan that exceeds the fair value or establishes a specific reserve as part of the allowance for loan losses. Foreclosed and Repossessed Assets Held for Sale. Foreclosed and repossessed assets held for sale are valued at the time the loan is foreclosed upon or collateral is repossessed and the asset is transferred to foreclosed or repossessed assets held for sale. The value of the asset is based on third party or internal appraisals, less estimated costs to sell and appropriate discounts, if any. The appraisals are generally discounted based on current and expected market conditions that may impact the sale or value of the asset and management’s knowledge and experience with similar assets. Such discounts typically may be significant and result in a Level 3 classification of the inputs for determining fair value of these assets. Foreclosed and repossessed assets held for sale are continually evaluated for additional impairment and are adjusted accordingly if impairment is identified. Unobservable (Level 3) Inputs. The following table presents quantitative information about unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements.
(dollars in thousands) | Fair value at June 30 , 2019 | Valuation technique | Unobservable inputs | Range of inputs applied | Weighted-average inputs applied
Nonrecurring Measurements |  |  |  |  |
Foreclosed and repossessed assets | $ 2,430 | Third party appraisal | Marketability discount | 5.1% - 77.0% | 35.2%
(dollars in thousands) | Fair value at June 30, 2018 | Valuation technique | Unobservable inputs | Range of inputs applied | Weighted-average inputs applied
Nonrecurring Measurements |  |  |  |  |
Impaired loans (collateral dependent) | $ 490 | Internal Valuation | Discount to reflect realizable value | n/a |
Foreclosed and repossessed assets | $ 1,467 | Third party appraisal | Marketability discount | 0.0% - 53.1% | 18.2%
Fair Value of Financial Instruments. The following table presents estimated fair values of the Company’s financial instruments and the level within the fair value hierarchy in which the fair value measurements fell at June 30, 2019 and 2018:
| June 30, 2019
|  | Quoted Prices |  |
|  | in Active |  | Significant
|  | Markets for | Significant Other | Unobservable
| Carrying | Identical Assets | Observable Inputs | Inputs
(dollars in thousands) | Amount | (Level 1) | (Level 2) | (Level 3)
Financial assets |  |  |  |
Cash and cash equivalents | $ 35,400 | $ 35,400 | $ - | $ -
Interest-bearing time deposits | 969 | - | 969 | -
Stock in FHLB | 5,233 | - | 5,233 | -
Stock in Federal Reserve Bank of St. Louis | 4,350 | - | 4,350 | -
Loans receivable, net | 1,846,405 | - | - | 1,823,040
Accrued interest receivable | 10,189 | - | 10,189 | -
Financial liabilities |  |  |  |
Deposits | 1,893,695 | 1,214,606 | - | 678,301
Securities sold under agreements to repurchase | 4,376 | - | 4,376 | -
Advances from FHLB | 44,908 | - | 45,547 | -
Note payable | 3,000 | - | - | 3,000
Accrued interest payable | 2,099 | - | 2,099 | -
Subordinated debt | 15,043 | - | - | 15,267
Unrecognized financial instruments (net of contract amount) |  |  |  |
Commitments to originate loans | - | - | - | -
Letters of credit | - | - | - | -
Lines of credit | - | - | - | -
| June 30, 2018
|  | Quoted Prices |  |
|  | in Active |  | Significant
|  | Markets for | Significant Other | Unobservable
| Carrying | Identical Assets | Observable Inputs | Inputs
(dollars in thousands) | Amount | (Level 1) | (Level 2) | (Level 3)
Financial assets |  |  |  |
Cash and cash equivalents | $ 26,326 | $ 26,326 | $ - | $ -
Interest-bearing time deposits | 1,953 | - | 1,953 | -
Stock in FHLB | 5,661 | - | 5,661 | -
Stock in Federal Reserve Bank of St. Louis | 3,566 | - | 3,566 | -
Loans receivable, net | 1,563,380 | - | - | 1,556,466
Accrued interest receivable | 7,992 | - | 7,992 | -
Financial liabilities |  |  |  |
Deposits | 1,579,902 | 1,046,491 | - | 529,297
Securities sold under agreements to repurchase | 3,267 | - | 3,267 | -
Advances from FHLB | 76,652 | 66,550 | 10,110 | -
Note payable | 3,000 | - | - | 3,000
Accrued interest payable | 1,206 | - | 1,206 | -
Subordinated debt | 14,945 | - | - | 14,382
Unrecognized financial instruments (net of contract amount) |  |  |  |
Commitments to originate loans | - | - | - | -
Letters of credit | - | - | - | -
Lines of credit | - | - | - | -
The following methods and assumptions were used in estimating the fair values of financial instruments: Cash and cash equivalents, interest-bearing time deposits, accrued interest receivable, and accrued interest payable are valued at their carrying amounts, which approximates book value. Stock in FHLB and the Federal Reserve Bank of St. Louis is valued at cost, which approximates fair value. For June 30, 2019, the fair value of loans is estimated on an exit price basis incorporating contractual cash flow, prepayments discount spreads, credit loss and liquidity premiums. For June 30, 2018, the fair value of loans was estimated by discounting the future cash flows using the market rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. Loans with similar characteristics were aggregated for purposes of the calculations. . The fair value of fixed-maturity time deposits is estimated using a discounted cash flow calculation that applies the rates currently offered for deposits of similar remaining maturities. Non-maturity deposits and securities sold under agreements are valued at their carrying value, which approximates fair value. Fair value of advances from the FHLB is estimated by discounting maturities using an estimate of the current market for similar instruments. The fair value of subordinated debt and notes payable is estimated using rates currently available to the Company for debt with similar terms and maturities. The fair value of commitments to originate loans is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. For fixed-rate loan commitments, fair value also considers the difference between current levels of interest rates and committed rates. The fair value of letters of credit and lines of credit are based on fees currently charged for similar agreements or on the estimated cost to terminate or otherwise settle the obligations with the counterparties at the reporting date.

X
- References No definition available. + Details
Name: | us-gaap_DisclosureTextBlockAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=117815213&loc=d3e19207-110258 + Details
Name: | us-gaap_FairValueDisclosuresTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration