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Fair Value Measurements and Disclosures
 3 Months Ended
Sep. 30, 2024
Fair Value Disclosures [Abstract]  
Fair Value Measurements and Disclosures
13.
Fair Value Measurements and Disclosures

The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. The Company’s securities available-for-sale are recorded at fair value on a recurring basis. Additionally, from time to time, the Company may be required to record at fair value other assets or liabilities on a non-recurring basis. These non-recurring fair value adjustments involve the application of lower-of-cost-or-market accounting or write-downs of individual assets.

FASB ASC 820, Fair Value Measurements and Disclosures, defines fair value as an exit price representing the amount that would be received to sell an asset or settle a liability in an orderly transaction between market participants. A three-level hierarchy has been established for fair value measurements based upon the inputs to the valuation of an asset or liability.

Level 1 - Valuation is based on quoted prices in active markets for identical assets or liabilities;

Level 2 - Valuation is determined from quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument;

Level 3 - Valuation is derived from model-based and other techniques in which at least one significant input is unobservable and which may be based on the Company’s own estimates about the assumptions that a market participant would use to value the asset or liability.

The Company's available-for-sale portfolio is carried at estimated fair value on a recurring basis, with any unrealized gains and losses, net of taxes, reported as accumulated other comprehensive income or loss. The securities available-for-sale portfolio consists of U.S. government-sponsored enterprise and mortgage-backed securities. The fair values of these securities were obtained from an independent nationally recognized pricing service. The independent pricing service provided prices categorized as Level 2, as quoted prices in active markets for identical assets are generally not available for the securities.

For financial assets measured at fair value on a recurring basis as of September 30, 2024 and June 30, 2024, the fair value measurements by level within the fair value hierarchy used are as follows:

 

 

September 30, 2024

 

Description

 

(Level 1)

 

 

(Level 2)

 

 

(Level 3)

 

 

Total

 

 

 

(Dollars in thousands)

 

Equity securities

 

 

27

 

 

 

—

 

 

 

—

 

 

 

27

 

Total

 

$

27

 

 

$

—

 

 

$

—

 

 

$

27

 

 

 

June 30, 2024

 

Description

 

(Level 1)

 

 

(Level 2)

 

 

(Level 3)

 

 

Total

 

 

 

(Dollars in thousands)

 

Equity securities

 

 

25

 

 

 

—

 

 

 

—

 

 

 

25

 

Total

 

$

25

 

 

$

—

 

 

$

—

 

 

$

25

 

 

 

The classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

Other securities are measured at fair value using quoted market prices in an active market for identical assets and are classified as Level 1 in the hierarchy. The estimated fair values of equity securities are determined by obtaining quoted prices on nationally recognized exchanges (Level 1 inputs).

All debt securities are measured at fair value using matrix pricing, which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted prices and are classified as Level 2 in the hierarchy.

There were no transfers between levels within the fair value hierarchy during the three months ended September 30, 2024 and 2023.

Financial Assets Measured at Fair Value on a Nonrecurring Basis

The following tables present those assets and liabilities measured at fair value on a non-recurring basis at September 30, 2024 and June 30, 2024, and additional quantitative information about the valuation techniques and inputs utilized to determine fair value. All such assets and liabilities were measured using Level 3 inputs:

 

September 30, 2024

 

Fair Value Measurement

 

 

Quantitative Information

 

Recorded
Investment

 

 

Valuation
Allowance

 

 

Fair
Value

 

 

Valuation
Technique

 

Unobservable
Inputs

 

Value/Range

 

(Dollars in thousands)

 

 

 

 

 

 

 

Individually
   evaluated loans

$

9

 

 

$

—

 

 

$

9

 

 

Appraisal of collateral

 

Selling costs

 

15%

 

 

June 30, 2024

 

Fair Value Measurement

 

 

Quantitative Information

 

Recorded
Investment

 

 

Valuation
Allowance

 

 

Fair
Value

 

 

Valuation
Technique

 

Unobservable
Inputs

 

Value/Range

 

(Dollars in thousands)

 

 

 

 

 

 

 

Individually
   evaluated loans

$

50

 

 

$

—

 

 

$

50

 

 

Appraisal of collateral

 

Selling costs

 

15%

Fair Value of Financial Instruments not Carried at Fair Value

The Company discloses fair value information about financial assets, whether or not recognized in the statements of financial condition, for which it is practicable to estimate that value. The fair value of financial assets that are not measured at fair value in the financial statements were based on the exit price notion. The following estimated fair value amounts have been determined using available market information and appropriate valuation methodologies. However, the estimates below are not necessarily indicative of amounts that could be realized in the marketplace. The use of different market assumptions or valuation methodologies may have a material effect on the estimated fair value amounts.

For financial assets measured at fair value on a nonrecurring basis, the fair value measurements by level within the fair value hierarchy used at September 30, 2024 and June 30, 2024 were as follows:

 

 

September 30, 2024

 

Description

 

Total

 

 

(Level 1)

 

 

(Level 2)

 

 

(Level 3)

 

 

 

(Dollars in thousands)

 

Financial Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

47,298

 

 

$

47,298

 

 

$

—

 

 

$

—

 

Securities held-to-maturity, at amortized cost

 

 

152,516

 

 

 

—

 

 

 

129,119

 

 

 

—

 

Restricted equity securities, at cost

 

 

2,131

 

 

 

—

 

 

 

2,131

 

 

 

—

 

Loans receivable, net

 

 

767,717

 

 

 

—

 

 

 

—

 

 

 

750,674

 

Accrued interest receivable

 

 

2,800

 

 

 

—

 

 

 

2,800

 

 

 

—

 

Financial Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

819,384

 

 

 

—

 

 

 

746,540

 

 

 

—

 

Borrowings

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

June 30, 2024

 

Description

 

Total

 

 

(Level 1)

 

 

(Level 2)

 

 

(Level 3)

 

 

 

(Dollars in thousands)

 

Financial Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

45,909

 

 

$

45,909

 

 

$

—

 

 

$

—

 

Securities held-to-maturity, at amortized cost

 

 

156,144

 

 

 

—

 

 

 

129,436

 

 

 

—

 

Restricted equity securities, at cost

 

 

1,231

 

 

 

—

 

 

 

1,231

 

 

 

—

 

Loans receivable, net

 

 

731,859

 

 

 

—

 

 

 

—

 

 

 

696,757

 

Accrued interest receivable

 

 

2,695

 

 

 

—

 

 

 

2,695

 

 

 

—

 

Financial Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

807,100

 

 

 

—

 

 

 

704,566

 

 

 

—

 

Borrowings

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

Loans

The fair values of performing loans was estimated by segregating the portfolio into its primary loan categories—owner occupied commercial real estate, other commercial real estate, multi-family, commercial and industrial, residential and consumer. These categories were further disaggregated based upon significant financial characteristics such as type of interest rate (fixed/variable). The Company discounts the contractual cash flows for each loan category using interest rates currently being offered for loans with similar terms to borrowers of similar quality and incorporates estimates of future loan prepayments.

Deposits

The fair value of deposits with no defined maturities (e.g. demand deposits, interest-bearing demand accounts, money market accounts and savings accounts) is the amount payable on demand of the liabilities at the reporting date (i.e. their carrying amounts). This approach to estimating fair value excludes the significant benefit that results from the low -cost funding provided by such deposit liabilities, as compared to alternative sources of funding. Deposits with stated maturities (time deposits) have been valued using the present value of cash flows discounted at rates approximating the current market for similar deposits.

Borrowed Funds

The fair value of federal funds purchased is equal to the amount borrowed. The fair value of FRB-NY advances represents contractual repayments discounted using interest rates currently available for borrowings with similar characteristics and remaining maturities. The discount rates used are representative of approximate rates currently offered on borrowings with similar characteristics and maturities.