Fair Value of Financial Instruments

3 Months Ended

Jun. 30, 2018

FAIR VALUE OF FINANCIAL INSTRUMENTS

Disclosures regarding the fair value of financial instruments are required to include, in addition to the carrying value, the fair value of certain financial instruments, both assets and liabilities recorded on and off-balance sheet, for which it is practicable to estimate fair value. Accounting guidance defines financial instruments as cash, evidence of ownership of an entity, or a contract that conveys or imposes on an entity the contractual right or obligation to either receive or deliver cash or another financial instrument. The fair value of a financial instrument is discussed below. In cases where quoted market prices are not available, estimated fair values have been determined by the Bank using the best available data and estimation methodology suitable for each such category of financial instruments. For those loans and deposits with floating interest rates, it is presumed that estimated fair values generally approximate their recorded carrying value. The Bank's primary component of market risk is interest rate volatility. Fluctuations in interest rates will ultimately impact the Bank's fair value of all interest-earning assets and interest-bearing liabilities, other than those which are short-term in maturity.

The carrying amounts and estimated fair values of the Bank’s financial instruments and estimation methodologies at June 30, 2018 and March 31, 2018 are as follows:



	June 30, 2018
$ in thousands	Carrying Amount		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	$	92,084	$	92,084	$	92,084	$	—	$	—
Securities available-for-sale	65,828		65,828		16,272		49,556		—
Equity securities	9,710		9,710		—		9,279		431
FHLB Stock	566		566		—		566		—
Securities held-to-maturity	11,844		11,603		—		11,603		—
Loans receivable	446,709		434,784		—		—		434,784
Accrued interest receivable	1,912		1,912		—		1,912		—
Mortgage servicing rights	174		174		—		—		174
Other assets - Interest-bearing deposits	972		972		—		972		—
Financial Liabilities:
Deposits	$	556,983	$	554,452	$	289,152	$	265,300	$	—
Other borrowed money	13,403		13,403		—		13,403		—
Accrued interest payable	1,398		1,398		—		1,398		—



	March 31, 2018
$ in thousands	Carrying Amount		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	$	134,558	$	134,558	$	134,558	$	—	$	—
Securities available-for-sale	60,709		60,709		—		60,276		433
FHLB Stock	1,768		1,768		—		1,768		—
Securities held-to-maturity	12,075		11,909		—		11,909		—
Loans receivable	472,627		469,382		—		—		469,382
Accrued interest receivable	2,023		2,023		—		2,023		—
Mortgage servicing rights	181		181		—		—		181
Other assets - Interest-bearing deposits	971		971		—		971		—
Financial Liabilities:
Deposits	$	586,883	$	535,808	$	245,634	$	290,174	$	—
Advances from FHLB of New York	25,000		24,970		—		24,970		—
Other borrowed money	13,403		14,565		—		14,565		—
Accrued interest payable	1,086		1,086		—		1,086		—

Securities

The fair values for securities available-for-sale, securities held-to-maturity and equity securities are based on quoted market or dealer prices, if available. If quoted market or dealer prices are not available, fair value is estimated using quoted market or dealer prices for similar securities. Available-for-sale securities and equity securities are classified across Levels 1, 2 and 3. Held-to-maturity securities are classified as Level 2.

Mortgage Servicing Rights

The fair value of mortgage servicing rights is determined by discounting the present value of estimated future servicing cash flows using current market assumptions for prepayments, servicing costs and other factors and are classified as Level 3.

- 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.

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