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FAIR VALUE

9 Months Ended

Mar. 31, 2024

Fair Value Disclosures [Abstract]

FAIR VALUE

FAIR VALUE

The following tables set forth the Company’s financial assets and liabilities measured at fair value on a recurring basis at March 31, 2024 and June 30, 2023. Assets and liabilities are classified in their entirety based on the lowest level of input significant to the fair value measurement:

						March 31, 2024
(Dollars in thousands)									Significant Other Observable Inputs (Level 2)						Significant Unobservable Inputs (Level 3)						Total
ASSETS:
Trading securities									$	592					$	—					$	592
Available-for-sale securities:
Agency MBS									27,481						—						27,481
Non-Agency MBS									—						176,679						176,679
Municipal									3,422						—						3,422
Total—Available-for-sale securities:									$	30,903					$	176,679					$	207,582
Loans held for sale									$	16,239					$	—					$	16,239
Servicing rights									$	—					$	28,130					$	28,130
Other assets—Derivative instruments									$	106,392					$	—					$	106,392
LIABILITIES:
Accounts payable and other liabilities—Derivative instruments									$	102,635					$	—					$	102,635
						June 30, 2023
(Dollars in thousands)									Significant Other Observable Inputs (Level 2)						Significant Unobservable Inputs (Level 3)						Total
ASSETS:
Trading securities									$	758					$	—					$	758
Available-for-sale securities:
Agency MBS									23,947						—						23,947
Non-Agency MBS									—						205,005						205,005
Municipal									3,398						—						3,398
Total—Available-for-sale securities:									$	27,345					$	205,005					$	232,350
Loans held for sale									$	23,203					$	—					$	23,203
Servicing rights									$	—					$	25,443					$	25,443
Other assets—Derivative instruments									$	919					$	—					$	919
LIABILITIES:
Accounts payable and other liabilities—Derivative instruments									$	691					$	—					$	691

The following tables present additional information about assets measured at fair value on a recurring basis and for which the Company has utilized Level 3 inputs to determine fair value:

									For the Three Months Ended
									March 31, 2024
(Dollars in thousands)									Available-for-sale Securities: Non-Agency MBS						Servicing Rights1												Total
Opening balance									$	207,708					$	28,043											$	235,751
Total gains or losses for the period:
Included in earnings—Mortgage banking and servicing rights income									—						(152)												(152)
Included in other comprehensive income									1,517						—												1,517
Purchases, retentions, issues, sales and settlements:
Purchases/Retentions									—						239												239
Settlements									(32,546)						—												(32,546)
Closing balance									$	176,679					$	28,130											$	204,809
Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period									$	—					$	(152)											$	(152)

									For the Nine Months Ended
									March 31, 2024
(Dollars in thousands)									Available-for-sale Securities: Non-Agency MBS						Servicing Rights1												Total
Opening Balance									$	205,005					$	25,443											$	230,448
Total gains or losses for the period:
Included in earnings—Mortgage banking and servicing rights income									—						213												213
Included in other comprehensive income									4,708						—												4,708
Purchases, retentions, issues, sales and settlements:
Purchases/Retentions									—						2,474												2,474
Settlements									(33,034)						—												(33,034)
Closing balance									$	176,679					$	28,130											$	204,809
Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period									$	—					$	213											$	213

1 Earnings from servicing rights were attributable to: time and payoffs, representing a decrease in servicing rights 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 $0.9 million for the three and nine months ended March 31, 2024 and an increase in servicing rights value resulting from market-driven changes in interest rates of $0.2 million for the three months ended March 31, 2024 and an increase of $1.1 million for the nine months ended March 31, 2024. Additions to servicing rights were related to purchases and servicing rights retained upon sale of loans held for sale.

									For the Three Months Ended
									March 31, 2023
(Dollars in thousands)									Available-for-sale Securities: Non-Agency MBS						Servicing Rights1						Derivative Instruments, net						Total
Opening balance									$	175,123					$	25,526					$	18					$	200,667
Total gains or losses for the period:
Included in earnings—Mortgage banking and servicing rights income									—						(282)						(674)						(956)
Included in other comprehensive income									1,231						—						—						1,231
Purchases, retentions, issues, sales and settlements:
Purchases/Retentions									30,000						152						—						30,152
Settlements									(54)						—						—						(54)
Closing balance									$	206,300					$	25,396					$	(656)					$	231,040
Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period									$	—					$	(282)					$	(674)					$	(956)

									For the Nine Months Ended
									March 31, 2023
(Dollars in thousands)									Available-for-sale Securities: Non-Agency MBS						Servicing Rights1						Derivative Instruments, net						Total
Opening Balance									$	186,814					$	25,213					$	464					$	212,491
Total gains or losses for the period:
Included in earnings—Mortgage banking and servicing rights income									—						(375)						(1,120)						(1,495)
Included in other comprehensive income									(3,384)						—						—						(3,384)
Purchases, retentions, issues, sales and settlements:
Purchases/Retentions									30,000						558						—						30,558
Settlements									(7,130)						—						—						(7,130)
Closing balance									$	206,300					$	25,396					$	(656)					$	231,040
Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period									$	—					$	(375)					$	(1,120)					$	(1,495)

1 Earnings from servicing rights were attributable to: time and payoffs, representing a decrease in servicing rights 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 $0.2 million and $0.7 million for the three and nine months ended March 31, 2023, respectively, and a decrease in servicing rights value resulting from market-driven changes in interest rates of $0.1 million for the three months ended March 31, 2023 and an increase of $0.3 million for the nine months ended March 31, 2023. Additions to servicing rights were retained upon sale of loans held for sale.

The table below summarizes the quantitative information about Level 3 fair value measurements:

March 31, 2024

(Dollars in thousands)

Fair Value

Valuation Technique

Unobservable Input

Range (Weighted Average)1

Available-for-sale securities: Non-Agency MBS

$

176,679

Discounted Cash Flow

Projected Constant Prepayment Rate, Projected Constant Default Rate, Projected Loss Severity, Discount Rate over SOFR Swaps

0.0 to 62.3% (42.8%) 0.0 to 25.6% (2.9%) 0.0 to 68.7% (33.7%) 2.5 to 6.5% (2.5%)

Servicing Rights

$

28,130

Discounted Cash Flow

Projected Constant Prepayment Rate, Life (in years), Discount Rate

5.5 to 95.2% (11.8%) 0.4 to 14.9 (7.9) 9.5 to 11.2% (9.8%)

June 30, 2023

(Dollars in thousands)

Fair Value

Valuation Technique

Unobservable Input

Range (Weighted Average)1

Available-for-sale securities: Non-Agency MBS

$

205,005

Discounted Cash Flow

Projected Constant Prepayment Rate, Projected Constant Default Rate, Projected Loss Severity, Discount Rate over LIBOR

0.0 to 59.7% (32.0%) 0.0 to 7.5% (2.4%) 0.0 to 68.7% (28.5%) 2.6 to 7.5% (2.7%)

Servicing Rights

$

25,443

Discounted Cash Flow

Projected Constant Prepayment Rate, Life (in years), Discount Rate

6.1 to 40.1% (12.6%) 1.8 to 10.9 (7.7) 9.5 to 11.5% (9.6%)

1 The weighted average for Available-for-sale securities: Non-agency MBS is based on the relative fair value of the securities and for Servicing Rights is based on the relative unpaid principal of the loans being serviced.

For non-agency mortgage-backed securities, 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. For servicing rights, significant increases in projected prepayment rates or discount rates in isolation would result in a significantly lower fair value measurement, while a significant increase in expected life in isolation would result in a significantly higher fair value measurement. Generally, a change in the projected prepayment rates is accompanied by a directionally opposite change in expected life.

The aggregate fair value of loans held for sale, carried at fair value, the contractual balance (including accrued interest), and the unrealized gain were:

(Dollars in thousands)			March 31, 2024						June 30, 2023
Aggregate fair value			$	16,239					$	23,203
Contractual balance			15,784						22,844
Unrealized gain			$	455					$	359

The total interest income and amount of gains and losses from changes in fair value included in earnings for loans held for sale were:

			For the Three Months Ended												For the Nine Months Ended
			March 31,												March 31,
(Dollars in thousands)			2024						2023						2024						2023
Interest income			$	208					$	99					$	538					$	252
Change in fair value			118						51						22						(280)
Total			$	326					$	150					$	560					$	(28)

The table below summarizes assets measured at fair value on a non-recurring basis:

			March 31, 2024
(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 repossessed vehicles:
Single family real estate			$	—					$	—					$	1,765					$	1,765
Autos			—						—						1,102						1,102
Total			$	—					$	—					$	2,867					$	2,867
			June 30, 2023
(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 repossessed vehicles:
Single family real estate			$	—					$	—					$	5,574					$	5,574
Multifamily real estate			—						—						1,392						1,392
Autos			—						—						1,133						1,133
Total			$	—					$	—					$	8,099					$	8,099

Other real estate owned and foreclosed assets, which are measured at the lower of carrying value or fair value less costs to sell, had a net carrying amount of $2.9 million at March 31, 2024, after write-downs of $1.7 million, and a net carrying amount of $8.1 million at June 30, 2023, after write-downs of $1.7 million.

The following table presents quantitative information about Level 3 fair value measurements for other real estate owned measured at fair value on a non-recurring basis:

March 31, 2024

(Dollars in thousands)

Fair Value

Valuation Technique

Unobservable Input

Range (Weighted Average) 1

Other real estate owned:

Single family real estate

$

1,765

Sales comparison approach

Differences between the comparable sales

79.7 to 97.4% (79.7%)

June 30, 2023

(Dollars in thousands)

Fair Value

Valuation Technique

Unobservable Input

Range (Weighted Average) 1

Other real estate owned:

Single family real estate

$

5,574

Sales comparison approach

Differences between the comparable sales

62.1 to 93.6% (62.1%)

Multifamily real estate

$

1,392

Sales comparison approach and income approach

Differences between the comparable sales and differences in net operating income expectations, capitalization rate

49.8 to 54.5% (49.8%)

1 For other real estate owned 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 asset being valued having limited comparable sales with similar characteristics at the time the current appraisal is conducted. The weighted average is based on the relative fair value of comparable sales.

Fair Value of Financial Instruments

Carrying amounts and estimated fair values of financial instruments at March 31, 2024 and June 30, 2023 were:

			March 31, 2024
									Fair Value
(Dollars in thousands)			Carrying Amount						Level 1						Level 2						Level 3						Total Fair Value
Financial assets:
Cash, cash equivalents and restricted cash			$	2,345,911					$	2,345,911					$	—					$	—					$	2,345,911
Trading securities			592						—						592						—						592
Available-for-sale securities			207,582						—						30,903						176,679						207,582
Stock of regulatory agencies			22,264						—						22,264						—						22,264
Loans held for sale, at fair value			16,239						—						16,239						—						16,239
Loans held for investment—net			18,733,455						—						—						18,692,795						18,692,795
Securities borrowed			105,853						—						—						111,696						111,696
Customer, broker-dealer and clearing receivables			292,630						—						—						303,516						303,516
Servicing rights			28,130						—						—						28,130						28,130
Other assets - derivative instruments			106,392						—						106,392						—						106,392
Financial liabilities:
Total deposits			19,103,532						—						19,006,497						—						19,006,497
Advances from the Federal Home Loan Bank			90,000						—						83,966						—						83,966
Borrowings, subordinated notes and debentures			330,389						—						303,856						—						303,856
Securities loaned			119,800						—						—						119,584						119,584
Customer, broker-dealer and clearing payables			387,176						—						—						387,176						387,176
Accounts payable and other liabilities - derivative instruments			102,635						—						102,635						—						102,635

			June 30, 2023
									Fair Value
(Dollars in thousands)			Carrying Amount						Level 1						Level 2						Level 3						Total Fair Value
Financial assets:
Cash, cash equivalents and restricted cash			$	2,382,086					$	2,382,086					$	—					$	—					$	2,382,086
Trading securities			758						—						758						—						758
Available-for-sale securities			232,350						—						27,345						205,005						232,350
Stock of regulatory agencies			21,510						—						21,510						—						21,510
Loans held for sale, at fair value			23,203						—						23,203						—						23,203
Loans held for sale, at lower of cost or fair value			776						—						—						780						780
Loans held for investment—net			16,456,728						—						—						16,417,183						16,417,183
Securities borrowed			134,339						—						—						143,461						143,461
Customer, broker-dealer and clearing receivables			374,074						—						—						386,082						386,082
Servicing rights			25,443						—						—						25,443						25,443
Other assets - derivative instruments			919						—						919						—						919
Financial liabilities:
Total deposits			17,123,108						—						17,064,084						—						17,064,084
Advances from the Federal Home Loan Bank			90,000						—						83,192						—						83,192
Borrowings, subordinated notes and debentures			361,779						—						327,564						—						327,564
Securities loaned			159,832						—						—						159,416						159,416
Customer, broker-dealer and clearing payables			445,477						—						—						445,447						445,447
Accounts payable and other liabilities - derivative instruments			691						—						691						—						691

The carrying amount represents the estimated fair value for cash and cash equivalents and restricted cash, stock of regulatory agencies, 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, loans held for sale and derivatives can be found in Note 3—“Fair Value” of the 2023 Form 10-K. The fair value of off-balance sheet items is not significant.

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No definition available.

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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
-Topic 820
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482106/820-10-50-2

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