Home Federal Bancorp, Inc. of LouisianaHFBL
Home Federal Bancorp, Inc. of Louisiana Fair Value Disclosure
|
Note 18.
|
Fair Value Disclosures
|
The following disclosure is made in accordance with the requirements of ASC 825, Financial
Instruments. Financial instruments are defined as cash and contractual rights and obligations that require settlement, directly or indirectly, in cash. In cases where quoted market prices are not available, fair values have been
estimated using the present value of future cash flows or other valuation techniques. The results of these techniques are highly sensitive to the assumptions used, such as those concerning appropriate discount rates and estimates of future
cash flows, which require considerable judgment. Accordingly, estimates presented herein are not necessarily indicative of the amounts the Company could realize in a current settlement of the underlying financial instruments.
ASC 825 excludes certain financial instruments and all nonfinancial instruments from its disclosure requirements. These disclosures should
not be interpreted as representing an aggregate measure of the underlying value of the Company.
The following methods and assumptions were used by the Company in estimating fair values of financial instruments:
Cash and Cash Equivalents
The carrying amount approximates the fair value of cash and cash equivalents.
Investment Securities
Fair values for investment securities, including mortgage-backed securities, are based on quoted market prices, where available. If quoted
market prices are not available, fair values are based on quoted market prices of comparable instruments. The carrying values of restricted or non-marketable equity securities approximate their fair values. The carrying amount of accrued
investment income approximates its fair value.
Mortgage Loans Held-for-Sale
Because these loans are normally disposed of within ninety days of origination, their carrying value closely approximates the fair value of such loans.
Loans Receivable
For variable-rate loans that re-price frequently and with no significant changes in credit risk, fair value approximates the
carrying value. Fair values for other loans are estimated using the discounted value of expected future cash flows. Interest rates used are those being offered currently for loans with similar terms to borrowers of similar credit quality.
The carrying amount of accrued interest receivable approximates its fair value.
Other Real Estate Owned
Other real estate owned, which is obtained through the foreclosure process, is valued utilizing the appraised collateral value.
Collateral values are estimated using level II inputs based on observable market data or Level III inputs based on customized discounting criteria.
Deposit Liabilities
The fair values for demand deposit accounts are, by definition, equal to the amount payable on demand at the reporting date,
that is, their carrying amounts. Fair values for other deposit accounts are estimated using the discounted value of expected future cash flows. The discount rate is estimated using the rates currently offered for deposits of similar
maturities.
Advances from Federal Home Loan Bank and Other Borrowings
The carrying amount of short-term borrowings approximates their fair value. The fair value of long-term debt is estimated
using discounted cash flow analyses based on current incremental borrowing rates for similar borrowing arrangements.
At June 30, 2025 and 2024, the carrying amount and estimated fair values of the Company’s financial instruments were as follows:
|
June 30, 2025
|
||||||||||||||||||||
|
Carrying
|
Estimated
|
|||||||||||||||||||
|
Value
|
Fair Value
|
Level 1
|
Level 2
|
Level 3
|
||||||||||||||||
|
(In Thousands)
|
||||||||||||||||||||
|
Financial Assets
|
||||||||||||||||||||
|
Cash and Cash Equivalents
|
$
|
17,347
|
$
|
17,347
|
$
|
17,347
|
$
|
-
|
$
|
-
|
||||||||||
|
Debt Securities Available-for-Sale
|
34,246
|
34,246
|
-
|
34,246
|
-
|
|||||||||||||||
|
Securities Held-to-Maturity
|
61,334
|
51,139
|
-
|
51,139
|
-
|
|||||||||||||||
|
Other Securities
|
650
|
650
|
-
|
-
|
650
|
|||||||||||||||
|
Loans Held-for-Sale
|
1,540
|
1,540
|
-
|
1,540
|
-
|
|||||||||||||||
|
Loans Receivable, Net
|
461,004
|
440,812
|
-
|
-
|
440,812
|
|||||||||||||||
|
Financial Liabilities
|
||||||||||||||||||||
|
Deposits
|
$
|
546,290
|
$
|
544,944
|
$
|
-
|
$
|
544,944
|
$
|
-
|
||||||||||
|
Other Borrowings
|
4,000
|
4,000
|
-
|
4,000
|
-
|
|||||||||||||||
|
June 30, 2024
|
||||||||||||||||||||
|
Carrying
|
Estimated
|
|||||||||||||||||||
|
Value
|
Fair Value
|
Level 1
|
Level 2
|
Level 3
|
||||||||||||||||
|
(In Thousands)
|
||||||||||||||||||||
|
Financial Assets
|
||||||||||||||||||||
|
Cash and Cash Equivalents
|
$
|
34,948
|
$
|
34,948
|
$
|
34,948
|
$
|
-
|
$
|
-
|
||||||||||
|
Debt Securities Available-for-Sale
|
27,037
|
27,037
|
-
|
27,037
|
-
|
|||||||||||||||
|
Securities Held-to-Maturity
|
67,302
|
54,450
|
-
|
54,450
|
-
|
|||||||||||||||
|
Other Securities
|
1,614
|
1,614
|
-
|
-
|
1,614
|
|||||||||||||||
|
Loans Held-for-Sale
|
1,733
|
1,733
|
-
|
1,733
|
-
|
|||||||||||||||
|
Loans Receivable, Net
|
470,852
|
437,845
|
-
|
-
|
437,845
|
|||||||||||||||
|
Financial Liabilities
|
||||||||||||||||||||
|
Deposits
|
$
|
574,007
|
$
|
572,159
|
$
|
-
|
$
|
572,159
|
$
|
-
|
||||||||||
|
Other Borrowings
|
7,000
|
7,000
|
-
|
7,000
|
-
|
|||||||||||||||
The estimated fair values presented above could be materially different than net realizable value and are only indicative of the individual
financial instrument’s fair value. Accordingly, these estimates should not be considered an indication of the fair value of the Company taken as a whole.
The Company follows the guidance of ASC 820, Fair Value Measurements. ASC 820 establishes a
framework for measuring fair value and expands disclosures about fair value measurements. This standard was issued to establish a uniform definition of fair value. The definition of fair value under ASC 820 is market-based, as opposed to
company-specific, and includes the following:
|
•
|
Defines fair value as the price that would be received to sell an asset or paid to transfer a liability, in either case, through an orderly transaction between market
participants at a measurement date and establishes a framework for measuring fair value;
|
|
•
|
Establishes a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement
date;
|
|
•
|
Nullifies the guidance in EITF 02-3, which required the deferral of profit at inception of a transaction involving a derivative financial instrument in the absence of
observable data supporting the valuation technique;
|
|
•
|
Eliminates large position discounts for financial instruments quoted in active markets and requires consideration of the company’s creditworthiness when valuing
liabilities; and
|
|
•
|
Expands disclosures about instruments that are measured at fair value.
|
The standard establishes a three-level valuation hierarchy for disclosure of fair value measurements. The valuation hierarchy favors the
transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows:
|
•
|
Level 1 - Fair value is based upon quoted prices (unadjusted) for identical assets or liabilities in active markets in which the Company can participate.
|
|
•
|
Level 2 - Fair value is based upon (a) quoted prices for similar assets or liabilities in active markets; (b) quoted prices for identical or similar assets or liabilities in markets that are not active,
that is, markets in which there are few transactions for the asset or liability, the prices are not current, or price quotations vary substantially either over time or among market makers, or in which little information is
released publicly; (c) inputs other than quoted prices that are observable for the asset or liability; or (d) inputs that are derived principally from or corroborated by observable market data by correlation or other means.
|
|
•
|
Level 3 - Fair value is based upon inputs that are unobservable for the asset or liability. These inputs reflect the Company’s own assumptions about the assumptions that market participants would use in
pricing the asset or liability (including assumptions about risk). These inputs are developed based on the best information available in the circumstances, which include the Company’s own data. The Company’s own data used to
develop unobservable inputs are adjusted, if information indicates that market participants would use different assumptions.
|
A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair
value measurement.
The preceding methods described may produce a fair value calculation that may not be indicative of the net realizable value or reflective of
future fair values. Furthermore, although the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain
financial instruments could result in a different fair value measurement at the reporting date. There have been no changes in the methodologies used during the year ended June 30, 2025.
Fair values of assets and liabilities measured on a recurring basis at June 30, 2025 and 2024 are as follows:
|
Fair Value Measurements
|
||||||||||||||||
|
June 30, 2025
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
Total
|
||||||||||||
|
(In Thousands)
|
||||||||||||||||
|
Available-for-Sale
|
||||||||||||||||
| Debt Securities | ||||||||||||||||
|
FHLMC
|
$
|
-
|
$
|
10,431
|
$
|
-
|
$
|
10,431
|
||||||||
|
FNMA
|
-
|
17,961
|
-
|
17,961
|
||||||||||||
|
GNMA
|
-
|
5,489
|
-
|
5,489
|
||||||||||||
|
Municipal Bonds
|
- | 365 | - | 365 | ||||||||||||
|
Total
|
$ | - | $ | 34,246 | $ | - | $ | 34,246 | ||||||||
|
Fair Value Measurements
|
||||||||||||||||
|
June 30, 2024
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
Total
|
||||||||||||
|
(In Thousands)
|
||||||||||||||||
|
Available-for-Sale
|
||||||||||||||||
| Debt Securities | ||||||||||||||||
|
FHLMC
|
$
|
-
|
$
|
5,950
|
$
|
-
|
$
|
5,950
|
||||||||
|
FNMA
|
-
|
15,474
|
-
|
15,474
|
||||||||||||
|
GNMA
|
-
|
3,247
|
-
|
3,247
|
||||||||||||
| US Treasury Notes | - | 2,000 | - | 2,000 | ||||||||||||
| Municipal Bonds | - | 366 | - | 366 | ||||||||||||
|
Total
|
$ | - | $ | 27,037 | $ | - | $ | 27,037 | ||||||||
The Company did not record
any liabilities at fair market value for which measurement of the fair value was made on a recurring basis at June 30, 2025 or 2024.
The following tables present the Company’s assets and liabilities measured at fair value on a non-recurring basis at June 30, 2025 and 2024.
|
Fair Value Measurements
|
||||||||||||||||
|
June 30, 2025
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
Total
|
||||||||||||
|
(In Thousands)
|
||||||||||||||||
|
Assets:
|
||||||||||||||||
|
Impaired Loans,
|
||||||||||||||||
|
Net of Allowance
|
$
|
-
|
$
|
-
|
$
|
2,502
|
$
|
2,502
|
||||||||
|
Other Real Estate Owned,
|
||||||||||||||||
|
Net of Allowance
|
$ | - | $ |
- | $ |
970 | $ |
970 | ||||||||
|
Total
|
$ | - | $ | - | $ | 3,472 | $ | 3,472 | ||||||||
|
Fair Value Measurements
|
||||||||||||||||
|
June 30, 2024
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
Total
|
||||||||||||
|
(In Thousands)
|
||||||||||||||||
|
Assets:
|
||||||||||||||||
|
Impaired Loans,
|
||||||||||||||||
|
Net of Allowance
|
$
|
-
|
$
|
-
|
$
|
1,970
|
$
|
1,970
|
||||||||
|
Other Real Estate Owned,
|
||||||||||||||||
| Net of Allowance | $ |
- | $ |
- | $ |
418 | $ |
418 | ||||||||
|
Total
|
$ | - | $ | - | $ | 2,388 | $ | 2,388 | ||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Sep 26, 2025 | Showing above |
| 2024 | Sep 30, 2024 | |
| 2023 | Oct 2, 2023 | |
| 2022 | Sep 26, 2022 | |
| 2021 | Sep 28, 2021 | |
| 2020 | Sep 29, 2020 | |
| 2019 | Sep 30, 2019 | |
| 2018 | Sep 26, 2018 | |
| 2017 | Sep 21, 2017 | |
| 2016 | Sep 21, 2016 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.