XML 36 R11.htm IDEA: XBRL DOCUMENT
v3.10.0.1

Mortgage Loan Servicing and Loans Originated for Sale | 12 Months Ended
--- | ---
Jun. 30, 2018
Transfers and Servicing [Abstract] |
Mortgage Loan Servicing and Loans Originated for Sale | Mortgage Loan Servicing and Loans Originated for Sale The following summarizes the unpaid principal balance of loans serviced for others by the Corporation at the dates indicated:
(In Thousands) | As of June 30,
2018 | 2017 | 2016
Loans serviced for Freddie Mac | $ | 19,244 |  | $ | 13,907 |  | $ | 6,819 |
Loans serviced for Fannie Mae | 96,384 |  | 90,076 |  | 78,250 |
Loans serviced for FHLB – San Francisco | 11,786 |  | 15,105 |  | 20,385 |
Loans serviced for other investors | 995 |  | 216 |  | 15 |
Total loans serviced for others | $ | 128,409 |  | $ | 119,304 |  | $ | 105,469 |
MSA are recorded when loans are sold to investors and the servicing of those loans is retained by the Bank. MSA are subject to interest rate risk and may become impaired when interest rates fall and the borrowers refinance or prepay their mortgage loans. The MSA are derived primarily from single-family loans. Servicing loans for others generally consists of collecting mortgage payments, maintaining escrow accounts, disbursing payments to investors and processing foreclosures. Income from servicing loans is reported as loan servicing and other fees in the Corporation’s Consolidated Statements of Operations, and the amortization of MSA is reported as a reduction to the loan servicing income. Loan servicing income includes servicing fees from investors and certain fees collected from borrowers, such as late payment fees. As of June 30, 2018 and 2017, the Corporation held borrowers’ escrow balances related to loans serviced for others of $577,000 and $546,000, respectively. In estimating fair values of the MSA at June 30, 2018 and 2017, the Corporation used a weighted-average constant prepayment rate (“CPR”) of 13.42% and 17.02%, respectively, and a weighted-average discount rate of 9.11% and 9.11%, respectively. Management obtained CPR estimates from an independent third party and reviewed for reasonableness given current market data. The discount rates were derived from market data. The MSA, which is included in prepaid expenses and other assets in the Consolidated Statements of Financial Condition, had a carrying value of $916,000 and a fair value of $1.0 million at June 30, 2018. This compares to the MSA at June 30, 2017 which had a carrying value of $739,000 and a fair value of $811,000. An allowance may be recorded to adjust the carrying value of each category of MSA to the lower of cost or market. As of June 30, 2018, a total allowance of $82,000 was required for six categories of MSA, compared to a total allowance of $158,000 for eight categories of MSA as of June 30, 2017. Total additions to the MSA during the years ended June 30, 2018, 2017 and 2016 were $237,000, $269,000 and $394,000, respectively. Total amortization of the MSA during the years ended June 30, 2018, 2017 and 2016 was $136,000, $167,000 and $243,000, respectively. Loans sold to the FHLB – San Francisco were completed under the MPF Program, which entitles the Bank to a credit enhancement fee collected from FHLB – San Francisco on a monthly basis and is described in Note 1 under PBM activities. The following table summarizes the Corporation’s MSA for years ended June 30, 2018 and 2017 :
| Year Ended June 30,
(Dollars In Thousands) | 2018 | 2017
MSA balance, beginning of fiscal year | $ | 897 |  | $ | 795 |
Additions | 237 |  | 269 |
Amortization | (136 | ) | (167 | )
MSA balance, end of fiscal year, before allowance | 998 |  | 897 |
Allowance | (82 | ) | (158 | )
MSA balance, end of fiscal year | $ | 916 |  | $ | 739 |
Fair value, beginning of fiscal year | $ | 811 |  | $ | 627 |
Fair value, end of fiscal year | $ | 1,015 |  | $ | 811 |
Allowance, beginning of fiscal year | $ | 158 |  | $ | 168 |
Impairment recoveries | (76 | ) | (10 | )
Allowance, end of fiscal year | $ | 82 |  | $ | 158 |
Key Assumptions: |  |
Weighted-average discount rate | 9.11 | % | 9.11 | %
Weighted-average prepayment speed | 13.42 | % | 17.02 | %
The following table summarizes the estimated future amortization of MSA for the next five years and thereafter:
| Amount
Year Ending June 30, | (In Thousands)
2019 | $ | 212 |
2020 | 180 |
2021 | 146 |
2022 | 118 |
2023 | 95 |
Thereafter | 247 |
Total estimated amortization expense | $ | 998 |
The following table represents the hypothetical effect on the fair value of the Corporation’s MSA using an unfavorable shock analysis of certain key valuation assumptions as of June 30, 2018 and 2017 . This analysis is presented for hypothetical purposes only. As the amounts indicate, changes in fair value based on changes in assumptions generally cannot be extrapolated because the relationship of the change in assumptions to the change in fair value may not be linear.
| Year Ended June 30,
(Dollars In Thousands) | 2018 | 2017
MSA net carrying value | $ | 916 |  | $ | 739 |
CPR assumption (weighted-average) | 13.42 | % | 17.02 | %
Impact on fair value with 10% adverse change in prepayment speed | $ | (31 | ) | $ | (28 | )
Impact on fair value with 20% adverse change in prepayment speed | $ | (61 | ) | $ | (55 | )
Discount rate assumption (weighted-average) | 9.11 | % | 9.11 | %
Impact on fair value with 10% adverse change in discount rate | $ | (45 | ) | $ | (33 | )
Impact on fair value with 20% adverse change in discount rate | $ | (88 | ) | $ | (64 | )
At June 30, 2018 and 2017, the Corporation has recorded interest-only strips under the MPF Program with a fair value of $23,000 and $31,000, comprised of gross unrealized gains with no remaining mortgage servicing asset. There were no additions to the mortgage servicing asset related to the MPF Program during fiscal 2018, 2017 or 2016; and there was no amortization of the mortgage servicing asset during the years ended June 30, 2018 and 2017, while there was $1,000 of amortization of the mortgage servicing asset during the year ended June 30, 2016. Loans sold consisted of the following for the years indicated:
(In Thousands) | Year Ended June 30,
2018 | 2017 | 2016
Loans sold: |  |  |
Servicing – released | $ | 1,174,618 |  | $ | 1,935,349 |  | $ | 1,948,423 |
Servicing – retained | 27,566 |  | 38,250 |  | 45,798 |
Total loans sold | $ | 1,202,184 |  | $ | 1,973,599 |  | $ | 1,994,221 |
During the years ended June 30, 2018, 2017 and 2016, the Corporation sold 12%, 12% and 14%, respectively, of its loans originated for sale to a single investor, other than Freddie Mac or Fannie Mae. If the Corporation is unable to sell loans to this investor, find alternative investors, or change its loan programs to meet investor guidelines, it may have a significant negative impact on the Corporation’s results of operations. Loans held for sale, at fair value, at June 30, 2018 and 2017 consisted of the following:
(In Thousands) | June 30,
2018 | 2017
Fixed rate | $ | 94,730 |  | $ | 115,703 |
Adjustable rate | 1,568 |  | 845 |
Total loans held for sale, at fair value | $ | 96,298 |  | $ | 116,548 |

X
- Definition The entire disclosure for mortgage loans on real estate, this includes the supplemental information pertaining to each mortgage loan receivable that equals or exceeds three percent of the carrying amount of mortgages. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 948 -SubTopic 310 -URI http://asc.fasb.org/subtopic&trid=2176522 + Details
Name: | us-gaap_MortgageLoansOnRealEstateByLoanDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_TransfersAndServicingAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration