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FAIR VALUE
 3 Months Ended
Sep. 30, 2022
Fair Value Disclosures [Abstract]  
FAIR VALUE FAIR VALUE
The Company’s financial assets and liabilities measured at fair value on a recurring basis at September 30, 2022 and June 30, 2022 are classified in their entirety based on the lowest level of input significant to the fair value measurement.
September 30, 2022
(Dollars in thousands)Significant Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)		Total
ASSETS:
Securities—Trading: Municipal$75 $— $75 
Securities—Available-for-Sale:
Agency MBS1
23,763 — 23,763 
Non-Agency MBS2
— 184,012 184,012 
Municipal2,995 — 2,995 
Asset-backed securities and structured notes46,864 — 46,864 
Total—Securities—Available-for-Sale$73,622 $184,012 $257,634 
Loans Held for Sale$9,463 $— $9,463 
Mortgage servicing rights$— $26,373 $26,373 
Other assets—Derivative instruments$— $897 $897 
LIABILITIES:
   Other liabilities—Derivative instruments$— $362 $362 

June 30, 2022
(Dollars in thousands)Significant Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)		Total
ASSETS:
Securities—Trading: Municipal
$1,758 $— $1,758 
Securities—Available-for-Sale:
Agency MBS1
25,325 — 25,325 
Non-Agency MBS2
— 186,814 186,814 
Municipal3,248 — 3,248 
Asset-backed securities and structured notes47,131 — 47,131 
Total—Securities—Available-for-Sale$75,704 $186,814 $262,518 
Loans Held for Sale$4,973 $— $4,973 
Mortgage servicing rights$— $25,213 $25,213 
Other assets—Derivative instruments$— $464 $464 
LIABILITIES:
Other liabilities—Derivative instruments$— $— $— 
1Includes securities guaranteed by Ginnie Mae, a U.S. government agency, and the government sponsored enterprises Fannie Mae and Freddie Mac.
2 Private sponsors of securities collateralized primarily by first-lien mortgage loans on commercial properties or by pools of 1-4 family residential first mortgages. Primarily super senior securities secured by Alt-A or pay-option ARM mortgages.
Additional information is presented below about assets measured at fair value on a recurring basis for which the Company has utilized Level 3 inputs to determine fair value:
For the Three Months Ended
September 30, 2022
(Dollars in thousands)Securities – Available-for-Sale: Non-Agency RMBS
Mortgage Servicing Rights1
Derivative Instruments, netTotal
Opening Balance$186,814 $25,213 $464 $212,491 
Total gains or losses for the period:
Included in earnings—Mortgage banking income— 953 71 1,024 
Included in other comprehensive income(2,473)— — (2,473)
Purchases, retentions, issues, sales and settlements:
Purchases/Retentions— 207 — 207 
Settlements(329)— — (329)
Closing balance$184,012 $26,373 $535 $210,920 
Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period$— $953 $71 $1,024 
1 Earnings from mortgage servicing rights (“MSR”) were attributable to: Time and payoffs, representing a decrease in MSR value due to passage of time, including the impact from both regularly scheduled loan principal payments and loans that were paid down or paid off during the period of $0.4 million, and an increase in MSR value resulting from market-driven changes in interest rates of $1.4 million. Additions to mortgage servicing rights were retained upon sale of loans held for sale.

For the Three Months Ended
September 30, 2021
(Dollars in thousands)Securities – Available-for-Sale: Non-Agency RMBS
Mortgage Servicing Rights1
Derivative Instruments, netTotal
Opening Balance$67,615 $17,911 $2,205 $87,731 
Total gains or losses for the period:
Included in earnings—Mortgage banking income— (1,185)21 (1,164)
Included in other comprehensive income(112)— — (112)
Purchases, retentions, issues, sales and settlements:
Purchases/Retentions— 1,712 — 1,712 
Settlements(7,652)— — (7,652)
Closing balance$59,851 $18,438 $2,226 $80,515 
Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period$— $(1,185)$21 $(1,164)
1 Earnings from mortgage servicing rights were attributable to: Time and payoffs, representing a decrease in MSR value due to passage of time, including the impact from both regularly scheduled loan principal payments and loans that were paid down or paid off during the period of $1.6 million, and an increase in MSR value resulting from market-driven changes in interest rates of $0.4 million. Additions to mortgage servicing rights were retained upon sale of loans held for sale.
The table below summarizes the quantitative information about level 3 fair value measurements as of the dates indicated:
September 30, 2022
(Dollars in thousands)Fair ValueValuation TechniqueUnobservable InputRange (Weighted Average)
Securities – Non-agency MBS$184,012 Discounted Cash FlowProjected Constant Prepayment Rate,
Projected Constant Default Rate,
Projected Loss Severity,
Discount Rate over LIBOR
0.0 to 30.0% (21.4%)
0.0 to 15.9% (2.3%)
0.0 to 68.6% (26.6%)
2.7 to 8.8% (2.7%)
Mortgage Servicing Rights$26,373 Discounted Cash FlowProjected Constant Prepayment Rate,
Life (in years),
Discount Rate
3.8 to 38.0% (9.3%)
0.9 to 13.0 (9.4)
9.5 to 11.0% (9.5%)
Derivative Instruments$535 Sales Comparison ApproachProjected Sales Profit of Underlying Loans
-3.1 to 1.2% (-1.2%)
June 30, 2022
(Dollars in thousands)Fair ValueValuation TechniqueUnobservable InputRange (Weighted Average)
Securities – Non-agency MBS$186,814 Discounted Cash FlowProjected Constant Prepayment Rate,
Projected Constant Default Rate,
Projected Loss Severity,
Discount Rate over LIBOR
0.0 to 30.0% (21.4%)
0.0 to 7.9% (2.2%)
0.0 to 68.4% (26.7%)
2.7 to 9.3% (2.8%)
Mortgage Servicing Rights$25,213 Discounted Cash FlowProjected Constant Prepayment Rate,
Life (in years),
Discount Rate
7.9 to 56.3% (11.0%)
1.2 to 9.9 (8.4)
9.5 to 11.5% (9.5%)
Derivative Instruments$464 Sales Comparison ApproachProjected Sales Profit of Underlying Loans
-3.1 to 0.8% (-1.2%)
The significant unobservable inputs used in the fair value measurement of the Company’s residential mortgage-backed securities are projected prepayment rates, probability of default, projected loss severity in the event of default and discount rate over LIBOR. Significant increases (decreases) in any of those inputs in isolation would result in a significantly lower (higher) fair value measurement. Generally, a change in the assumption used for the probability of default is accompanied by a directionally similar change in the assumption used for the projected loss severity and a directionally opposite change in the assumption used for projected prepayment rates.
The table below summarizes assets measured for impairment on a non-recurring basis:
September 30, 2022
(Dollars in thousands)Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)		Significant Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)		Balance
Other real estate owned and foreclosed assets:
Single family real estate$— $— $4,534 $4,534 
Autos and RVs$— $— $768 $768 
Total$— $— $5,302 $5,302 
June 30, 2022
(Dollars in thousands)Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)		Significant Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)		Balance
Other real estate owned and foreclosed assets:
Autos and RVs— — 798 798 
Total$— $— $798 $798 
Non-recurring fair value measurements for other real estate owned and foreclosed assets represent charge-offs of $307 thousand for the three months ended September 30, 2022 and $12 thousand for the three months ended September 30, 2021.
The Company has elected the fair value option for Agency loans held for sale. These loans are intended for sale and fair value is the best indicator of the resolution of these loans. Interest income is recorded based on the contractual terms of the loan and in accordance with the Company’s policy on loans. None of these loans are 90 days or more past due nor on nonaccrual as of September 30, 2022 and June 30, 2022.
As of September 30, 2022 and June 30, 2022, the aggregate fair value of loans held for sale, carried at fair value, contractual balance (including accrued interest), and unrealized gain was as follows:
(Dollars in thousands)September 30, 2022June 30, 2022
Aggregate fair value$9,463 $4,973 
Contractual balance9,348 4,881 
Unrealized gain$115 $92 
Gains and losses from changes in fair value included in earnings for loans held for sale for the periods indicated below were:
For the Three Months Ended
September 30,
(Dollars in thousands)20222021
Interest income$50 $200 
Change in fair value91 43 
Total $141 $243 
The following table presents quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at the periods indicated:
September 30, 2022
(Dollars in thousands)Fair ValueValuation Technique(s)Unobservable Input
Range (Weighted Average) 1
Other real estate owned and foreclosed assets:
Single family real estate$4,534 Sales comparison approachAdjustment for differences between the comparable sales
3.5 to 12.1% (4.1%)
Autos and RVs$768 Sales comparison approachAdjustment for differences between the comparable sales
-13.7 to -0.5% (-3.4%)
June 30, 2022
(Dollars in thousands)Fair ValueValuation Technique(s)Unobservable Input
Range (Weighted Average) 1
Other real estate owned and foreclosed assets:
Autos and RVs$798 Sales comparison approachAdjustment for differences between the comparable sales
-17.2 to 4.6% (-7.5%)
1 For other real estate owned and foreclosed assets the ranges shown may vary positively or negatively based on the comparable sales reported in the current appraisal. In certain instances, the range can be significant due to small sample sizes and in some cases the property being valued having limited comparable sales with similar characteristics at the time the current appraisal is conducted.
Fair Value of Financial Instruments
Carrying amounts and estimated fair values of financial instruments at September 30, 2022 and June 30, 2022 were:
September 30, 2022
Fair Value
(Dollars in thousands)Carrying
Amount		Level 1Level 2Level 3Total Fair Value
Financial assets:
Cash and cash equivalents$1,698,048 $1,698,048 $— $— $1,698,048 
Securities — trading75 — 75 — 75 
Securities — available-for-sale257,634 — 73,622 184,012 257,634 
Loans held for sale, at fair value9,463 — 9,463 — 9,463 
Loans held for sale, at lower of cost or fair value10,476 — — 10,489 10,489 
Loans held for investment—net15,211,573 — — 14,893,655 14,893,655 
Securities borrowed87,622 — — 86,728 86,728 
Customer, broker-dealer and clearing receivables410,842 — — 411,171 411,171 
Mortgage servicing rights26,373 — — 26,373 26,373 
Financial liabilities:
Total deposits15,176,631 — 13,373,113 — 13,373,113 
Advances from the Federal Home Loan Bank112,500 — 105,387 — 105,387 
Borrowings, subordinated notes and debentures425,818 — 385,257 — 385,257 
Securities loaned206,889 — — 206,910 206,910 
Customer, broker-dealer and clearing payables500,584 — — 500,584 500,584 
June 30, 2022
Fair Value
(Dollars in thousands)Carrying
Amount		Level 1Level 2Level 3Total Fair Value
Financial assets:
Cash and cash equivalents$1,574,699 $1,574,699 $— $— $1,574,699 
Securities — trading1,758 — 1,758 — 1,758 
Securities — available-for-sale262,518 — 75,704 186,814 262,518 
Loans held for sale, at fair value4,973 — 4,973 — 4,973 
Loans held for sale, at lower of cost or fair value10,938 — — 10,985 10,985 
Loans held for investment—net14,091,061 — — 14,015,157 14,015,157 
Securities borrowed338,980 — — 329,963 329,963 
Customer, broker-dealer and clearing receivables417,417 — — 414,383 414,383 
Mortgage servicing rights25,213 — — 25,213 25,213 
Financial liabilities:
Total deposits13,946,422 — 12,812,512 — 12,812,512 
Advances from the Federal Home Loan Bank117,500 — 117,500 — 117,500 
Borrowings, subordinated notes and debentures445,244 — 416,947 — 416,947 
Securities loaned474,400 — — 473,831 473,831 
Customer, broker-dealer and clearing payables511,654 — — 471,859 471,859 
Carrying amount is the estimated fair value for cash and cash equivalents, interest bearing deposits, accrued interest receivable and payable, demand deposits, short-term debt, and variable rate loans or deposits that reprice frequently and fully. For fixed rate loans, deposits, borrowings or subordinated debt and for variable rate loans, deposits, borrowings or subordinated debt with infrequent repricing or repricing limits, fair value is based on discounted cash flows using current market rates applied to the estimated life and credit risk. A discussion of the methods of valuing trading securities, available for sale securities and loans held for sale can be found in Note 3 – “Fair Value” of the 2022 Form 10-K. The carrying amount of stock of regulatory agencies approximates the estimated fair value of this investment. The fair value of off-balance sheet items is not material.