Level 2

Observable inputs other than Level 1 prices, such as quoted prices for similar assets; quoted prices in 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

Level 3

Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets

Recurring Measurements

The following table presents the fair value measurements of assets recognized in the accompanying 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 September 30, 2021 and June 30, 2021:


			Fair Value Measurements Using
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
September 30, 2021:
Available-for-sale securities:
U.S. Treasury	$	995	$	—	$	995	$	—
U.S. Government and federal agency and Government sponsored enterprises (GSE’s)		7,991		—		7,991		—
Mortgage-backed: GSE residential		178,762		—		178,762		—
Small Business Administration		10,810		—		10,810		—
State and political subdivisions		1,251		—		1,251		—
Mortgage servicing rights		1,020		—		—		1,020


			Fair Value Measurements Using
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
June 30, 2021:
Available-for-sale securities:
U.S. Treasury	$	996	$	—	$	996	$	—
U.S. Government and federal agency and Government sponsored enterprises (GSE’s)		8,039		—		8,039		—
Mortgage-backed: GSE residential		170,415		—		170,415		—
Small Business Administration		9,190		—		9,190		—
State and political subdivisions		1,251		—		1,251		—
Mortgage servicing rights		1,013		—		—		1,013

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 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 period ended September 30, 2021. For assets classified within Level 3 of the fair value hierarchy, the process used to develop the reported fair value is described below.

Available-for-sale

Securities

Where quoted market prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. There were no Level 1 securities as of September 30, 2021 or June 30, 2021. If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics or discounted cash flows. For these investments, the inputs used by the pricing service to determine fair value may include one, or a combination of, observable inputs such as benchmark yields, reported trades, broker/dealer quotes, issuer spreads,

two-sided

markets, benchmark securities, bid, offers and reference data market research publications and are classified within Level 2 of the valuation hierarchy. Level 2 securities include U.S. Treasury, U.S. Government and federal agency, mortgage-backed securities (GSE—residential), Small Business Administration, and state and political subdivisions. In certain cases where Level 1 or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy. There were no Level 3 securities as of September 30, 2021 or June 30, 2021.

Mortgage Servicing Rights

Mortgage servicing rights do not trade in an active, open market with readily observable prices. Accordingly, fair value is estimated using discounted cash flow models. Due to the nature of the valuation inputs, mortgage servicing rights are classified within Level 3 of the hierarchy.

Level 3 Reconciliation

The following is a reconciliation of the beginning and ending balances of recurring fair value measurements recognized in the accompanying balance sheet using significant unobservable (Level 3) inputs:


	Mortgage Servicing Rights
Balance, July 1, 2021	$	1,013
Total realized and unrealized gains and losses included in net income		(6	)
Servicing rights that result from asset transfers		65
Payments received and loans refinanced		(52	)

Balance, September 30, 2021	$	1,020

Total gains or losses for the period included in net income attributable to the change in unrealized gains or losses related to assets and liabilities still held at the reporting date	$	(6	)

Realized and unrealized gains and losses for items reflected in the table above are included in net income in the consolidated statements of income as noninterest income.

Nonrecurring Measurements

The following table presents the fair value measurement of assets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at September 30, 2021 and June 30, 2021:


			Fair Value Measurements Using
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
September 30, 2021:
Foreclosed assets	$	—	$	—	$	—	$	—
June 30, 2021:
Foreclosed assets	$	191	$	—	$	—	$	191

The following table presents (losses)/recoveries recognized on assets measured on a

non-recurring

basis for the three months ended September 30, 2021 and 2020:


	Three Months Ended September 30,
	2021		2020
Foreclosed and repossessed assets held for sale	$	—	$	(30	)

Following is a description of the valuation methodologies used for assets measured at fair value on a nonrecurring basis and recognized in the accompanying balance sheets, as well as the general classification of such assets pursuant to the valuation hierarchy. For assets classified within Level 3 of the fair value hierarchy, the process used to develop the reported fair value is described below.

Foreclosed assets

Foreclosed assets are carried at the lower of fair value at acquisition date or current estimated fair value, less estimated cost to sell when the real estate is acquired. Estimated fair value of foreclosed assets are based on appraisals or evaluations and are classified within Level 3 of the fair value hierarchy.

Appraisals of foreclosed assets are obtained when the real estate is acquired and subsequently as deemed necessary by management. Appraisals are reviewed for accuracy and consistency and are selected from the list of approved appraisers maintained by management.

Unobservable (Level 3) Inputs

The following tables present quantitative information about unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements at September 30, 2021 and June 30, 2021.


	Fair Value at September 30, 2021		Valuation Technique	Unobservable Inputs	Range (Weighted Average)
Mortgage servicing rights	$	1,020	Discounted cash flow	Discount rate	9.5% - 11.5% (9.5%)
				Constant prepayment rate	10.4% - 14.7% (12.5%)
				Probability of default	0.00% - 0.14% (0.12%)


	Fair Value at June 30, 2021		Valuation Technique	Unobservable Inputs	Range (Weighted Average)
Mortgage servicing rights	$	1,013	Discounted cash flow	Discount rate	9.5% - 11.5% (9.5%)
				Constant prepayment rate	9.8% - 14.4% (11.9%)
				Probability of default	0.00% - 0.14% (0.12%)
Foreclosed assets		191	Market comparable properties	Comparability adjustments (%)	11.6% (11.6%)

Fair Value of Financial Instruments

The following tables present estimated fair values of the Company’s financial instruments and the level within the fair value hierarchy in which the fair value measurements fall at September 30, 2021 and June 30, 2021.


	Carrying Amount		Fair Value Measurements Using Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
September 30, 2021:
Financial assets
Cash and cash equivalents	$	28,911	$	28,911	$	—	$	—
Interest-bearing time deposits in banks		2,250		2,250		—		—
Loans, net of allowance for loan losses		506,283		—		—		507,145
Federal Home Loan Bank stock		4,198		—		4,198		—
Accrued interest receivable		2,002		—		2,002		—
Financial liabilities
Deposits		637,328		—		375,646		262,141
Repurchase agreements		6,703		—		6,703		—
Federal Home Loan Bank advances		25,000		—		25,604		—
Lines of credit		3,000		—		3,000		—
Advances from borrowers for taxes and insurance		776		—		776		—
Accrued interest payable		187		—		187		—
Unrecognized financial instruments (net of contract amount)
Commitments to originate loans		—		—		—		—


			Fair Value Measurements Using
	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
June 30, 2021:
Financial assets
Cash and cash equivalents	$	62,735	$	62,735	$	—	$	—
Interest-bearing time deposits in banks		2,250		2,250		—		—
Loans, net of allowance for loan losses		513,371		—		—		515,515
Federal Home Loan Bank stock		4,198		—		4,198		—
Accrued interest receivable		1,897		—		1,897		—
Financial liabilities
Deposits		667,632		—		405,664		262,603
Repurchase agreements		6,245		—		6,245		—
Federal Home Loan Bank advances		25,000		—		25,673		—
Lines of credit		3,000		—		3,000		—
Advances from borrowers for taxes and insurance		928		—		928		—
Accrued interest payable		199		—		199		—
Unrecognized financial instruments (net of contract amount)
Commitments to originate loans		—		—		—		—

In accordance with the Company’s adoption of ASU

2016-01

as of July 1, 2018, the methods utilized to measure the fair value of financial instruments at September 30, 2021, represent an approximation of exit price; however, an actual exit price may differ.