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Disclosures About Fair Value of Assets and Liabilities | 6 Months Ended
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Dec. 31, 2021
Fair Value Disclosures [Abstract] |
Disclosures About Fair Value of Assets and Liabilities | 5. Disclosures About Fair Value of Assets and Liabilities ASC topic 820 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 (exit price) at the measurement date. ASC 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 six 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 that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Following is a description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy. Securities Where quoted market prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics. Level 2 securities include agency mortgage-backed securities and agency bonds. Financial assets measured at fair value on a recurring basis are summarized below:
|  | Fair Value Measurements Using |
(in thousands) |  | Fair Value |  |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  |  | Significant Other Observable Inputs (Level 2) |  |  | Significant Unobservable Inputs (Level 3) |
December 31, 2021 |  |  |  |  |  |  |  |  |  |  |  |
Agency mortgage-backed: residential |  | $ | 30 |  |  | $ | – |  |  | $ | 30 |  |  | $ | – |
June 30, 2021 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Agency mortgage-backed: residential |  | $ | 33 |  |  | $ | – |  |  | $ | 33 |  |  | $ | – |
Impaired Loans Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a nonrecurring basis and recognized in the accompanying consolidated balance sheet 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. At the time a loan is considered impaired, it is evaluated for loss based on the fair value of collateral securing the loan if the loan is collateral dependent. If a loss is identified, a specific allocation will be established as part of the allowance for loan losses such that the loan’s net carrying value is at its estimated fair value. Impaired loans carried at fair value generally receive specific allocations of the allowance for loan losses. 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 independent 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. Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business, resulting in a Level 3 fair value classification. Impaired loans are evaluated on a quarterly basis for additional impairment and adjusted accordingly. There were no loans measured on a nonrecurring basis using the fair value of the collateral for collateral-dependent loans, at December 31, 2021 or at June 30, 2021. Other Real Estate 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. 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 independent 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. There was no other real estate owned (“OREO”) written down during the six- or three-month periods ended December 31, 2021 or 2020. There was no OREO measured on a nonrecurring basis during the period at fair value less costs to sell at December 31, 2021 or June 30, 2021. The following is a disclosure of the fair value of financial instruments, both assets and liabilities, whether or not recognized in the consolidated balance sheet, for which it is practicable to estimate that value. For financial instruments where quoted market prices are not available, fair values are based on estimates using present value and other valuation methods. The methods used are greatly affected by the assumptions applied, including the discount rate and estimates of future cash flows. Therefore, the fair values presented may not represent amounts that could be realized in an exchange for certain financial instruments. Based on the foregoing methods and assumptions, the carrying value and fair value of the Company’s financial instruments at December 31, 2021 and June 30, 2021 are as follows:
|  |  |  |  | Fair Value Measurements at |
|  | Carrying |  |  | December 31, 2021 Using |
(in thousands) |  | Value |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
Financial assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 45,292 |  |  | $ | 45,292 |  |  |  |  |  |  |  |  |  |  | $ | 45,292 |
Available-for-sale securities |  |  | 30 |  |  |  |  |  |  | $ | 30 |  |  |  |  |  |  |  | 30 |
Held-to-maturity securities |  |  | 411 |  |  |  |  |  |  |  | 421 |  |  |  |  |  |  |  | 421 |
Loans held for sale |  |  | 585 |  |  |  |  |  |  |  |  |  |  | $ | 595 |  |  |  | 595 |
Loans receivable - net |  |  | 276,684 |  |  |  |  |  |  |  |  |  |  |  | 282,961 |  |  |  | 282,961 |
Federal Home Loan Bank stock |  |  | 6,498 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | n/a |
Accrued interest receivable |  |  | 649 |  |  |  |  |  |  |  | 649 |  |  |  |  |  |  |  | 649 |
Financial liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Deposits |  | $ | 236,838 |  |  | $ | 109,176 |  |  | $ | 127,936 |  |  |  |  |  |  |  | 237,112 |
Federal Home Loan Bank advances |  |  | 48,822 |  |  |  |  |  |  |  | 49,109 |  |  |  |  |  |  |  | 49,109 |
Advances by borrowers for taxes and insurance |  |  | 246 |  |  |  |  |  |  |  | 246 |  |  |  |  |  |  |  | 246 |
Accrued interest payable |  |  | 16 |  |  |  |  |  |  |  | 16 |  |  |  |  |  |  |  | 16 |
|  |  |  |  | Fair Value Measurements at |
|  | Carrying |  |  | June 30, 2021 Using |
(in thousands) |  | Value |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
Financial assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 21,648 |  |  | $ | 21,648 |  |  |  |  |  |  |  |  |  |  | $ | 21,648 |
Term deposits in other financial institutions |  |  | 247 |  |  |  | 248 |  |  |  |  |  |  |  |  |  |  |  | 248 |
Available-for-sale securities |  |  | 33 |  |  |  |  |  |  | $ | 33 |  |  |  |  |  |  |  | 33 |
Held-to-maturity securities |  |  | 462 |  |  |  |  |  |  |  | 476 |  |  |  |  |  |  |  | 476 |
Loans held for sale |  |  | 1,307 |  |  |  |  |  |  |  | 1,336 |  |  |  |  |  |  |  | 1,336 |
Loans receivable – net |  |  | 297,902 |  |  |  |  |  |  |  |  |  |  | $ | 306,346 |  |  |  | 306,346 |
Federal Home Loan Bank stock |  |  | 6,498 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | n/a |
Accrued interest receivable |  |  | 694 |  |  |  |  |  |  |  | 694 |  |  |  |  |  |  |  | 694 |
Financial liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Deposits |  | $ | 226,843 |  |  | $ | 101,951 |  |  | $ | 125,232 |  |  |  |  |  |  | $ | 227,183 |
Federal Home Loan Bank advances |  |  | 56,873 |  |  |  |  |  |  |  | 57,314 |  |  |  |  |  |  |  | 57,314 |
Advances by borrowers for taxes and insurance |  |  | 838 |  |  |  |  |  |  |  | 838 |  |  |  |  |  |  |  | 838 |
Accrued interest payable |  |  | 20 |  |  |  |  |  |  |  | 20 |  |  |  |  |  |  |  | 20 |

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- 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=123874694&loc=d3e19207-110258 + Details
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