Note 11 - Fair Value Measurement

12 Months Ended

Jun. 30, 2016

Notes to Financial Statements

Fair Value, Measurement Inputs, Disclosure [Text Block]

Note 11 – Fair Value Measurement:

ASC Topic 820: “Fair Value Measurements and Disclosures” defines fair value as the price that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants in the principal or most advantageous market for the asset or liability. ASC Topic 820 establishes a three-tiered value hierarchy that prioritizes inputs based on the extent to which inputs used are observable in the market and requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs.  If a value is based on inputs that fall in different levels of the hierarchy, the instrument will be categorized based upon the lowest level of input that is significant to the fair value calculation. The three levels of inputs are defined as follows:

• Level 1 - Valuation is based upon unadjusted quoted prices for identical instruments traded in active markets;

• Level 2 - Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant assumptions are observable in the market;

• Level 3 - Valuation is generated from model-based techniques that use inputs not observable in the market and based on the entity’s own judgment. Level 3 valuation techniques could include the use of option pricing models, discounted cash flow models and similar techniques, and rely on assumptions that market participants would use in pricing the asset or liability.

ASC 820 applies whenever other accounting pronouncements require presentation of fair value measurements, but does not change existing guidance as to whether or not an instrument is carried at fair value. As such, ASC 820 does not apply to the Company’s investment in leases. The Company’s financial assets measured at fair value on a recurring basis include primarily securities available-for-sale and at June 30, 2016, there were no liabilities subject to ASC 820. 

The Company classifies financial assets and liabilities within the fair value hierarchy based on the availability of observable market information. Securities available-for-sale include U.S. Treasury securities, corporate and municipal bonds, U.S. government agency (“Agency”) mortgage-backed securities (“MBS”), mutual fund and equity investments and generally are reported at fair value utilizing Level 1 and Level 2 inputs. The fair value of corporate and municipal bonds and the MBS are obtained from independent quotation bureaus that use computerized valuation formulas to calculate current values based on observable transactions, but not a quoted bid, or are valued using prices obtained from the custodian, who uses third party data service providers (Level 2 input). U.S. Treasury securities, mutual funds and equity investments are valued by reference to the market closing or last trade price (Level 1 inputs). In the unlikely event that no trade occurred on the applicable date, an indicative bid or the last trade most proximate to the applicable date would be used (Level 2 input). Changes in markets, economic conditions or the Company valuation model may require the transfer of financial instruments from one level to another. Such transfer, if any, would be recorded at the fair value as of the beginning of the period in which the transfer occurred. The Company has had no transfers in fiscal 2016 and 2015.

The following table summarizes the Company’s assets, which are measured at fair value on a recurring basis as of June 30, 2016 and 2015:

			Quoted Price in				Significant
			Active Markets for		Significant Other		Unobservable
	Total		Identical Assets		Observable Inputs		Inputs
Description of Assets / Liabilities	Fair Value		(Level 1)		(Level 2)		(Level 3)
	(in thousands)
As of June 30, 2016
U.S. Treasury Notes	$	48,774	$	48,774	$	-	$	-
Corporate debt securities		13,385		-		13,385		-
Agency MBS		32,223		-		32,223		-
Mutual fund investments		1,462		1,462		-		-
	$	95,844	$	50,236	$	45,608	$	-
As of June 30, 2015
U.S. Treasury notes	$	47,770	$	47,770	$	-	$	-
Corporate debt securities		13,152		-		13,152		-
Agency MBS		18,669		-		18,669		-
Securities of state and political subdivisions		412		-		412		-
Mutual fund investment		1,209		1,209		-		-
	$	81,212	$	48,979	$	32,233	$	-

Certain financial assets, such as collateral dependent impaired loans and repossessed or returned assets are measured at fair value on a nonrecurring basis; that is, the assets are not measured at fair value on an ongoing basis but are subject to fair value adjustments only in certain circumstances. During the year ended June 30, 2016, the equipment subject to a lease rejected in bankruptcy was transferred from lease receivables and recorded as repossessed equipment in other assets.

The fair value of repossessed equipment is based on available market information, including sales results and appraisal, less estimated selling costs. The equipment repossessed was initially recorded at the estimated fair value less estimated selling costs at the time of transfer to repossessed assets and subsequently written down based on an updated appraisal.

The following table summarizes the Company’s assets which are measured at fair value on a non-recurring basis as of June 30, 2016. The Company had no such assets or liabilities at June 30, 2015.

			Quoted Price in				Significant
			Active Markets for		Significant Other		Unobservable
	Total		Identical Assets		Observable Inputs		Inputs
Description of Assets / Liabilities	Fair Value		(Level 1)		(Level 2)		(Level 3)
	(in thousands)
As of June 30, 2016
Repossessed asset	$	1,300	$	-	$	-	$	1,300