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Fair Value of Financial Instruments (Tables)

9 Months Ended

Mar. 31, 2020

Fair Value of Financial Instruments

Schedule of aggregate fair value and aggregate unpaid principal balance of loans held for sale

					Aggregate
					Unpaid			Net
		Aggregate			Principal			Unrealized
(In Thousands)		Fair Value			Balance			Loss
As of March 31, 2020:
Loans held for investment, at fair value		$	3,835		$	3,971		$	(136)
As of June 30, 2019:
Loans held for investment, at fair value		$	5,094		$	5,218		$	(124)

Schedule of fair value, assets and liabilities measured on recurring basis

		Fair Value Measurement at March 31, 2020 Using:
(In Thousands)		Level 1			Level 2			Level 3			Total
Assets:
Investment securities - available for sale:
U.S. government agency MBS		$	—		$	3,001		$	—		$	3,001
U.S. government sponsored enterprise MBS			—			1,630			—			1,630
Private issue CMO			—			—			197			197
Investment securities - available for sale			—			4,631			197			4,828
Loans held for investment, at fair value			—			—			3,835			3,835
Interest-only strips			—			—			13			13
Total assets		$	—		$	4,631		$	4,045		$	8,676
Liabilities		$	—		$	—		$	—		$	—
Total liabilities		$	—		$	—		$	—		$	—

		Fair Value Measurement at June 30, 2019 Using:
(In Thousands)		Level 1			Level 2			Level 3			Total
Assets:
Investment securities - available for sale:
U.S. government agency MBS		$	—		$	3,613		$	—		$	3,613
U.S. government sponsored enterprise MBS			—			2,087			—			2,087
Private issue CMO			—			—			269			269
Investment securities - available for sale			—			5,700			269			5,969
Loans held for investment, at fair value			—			—			5,094			5,094
Interest-only strips			—			—			16			16
Total assets		$	—		$	5,700		$	5,379		$	11,079
Liabilities:		$	—		$	—		$	—		$	—
Total liabilities		$	—		$	—		$	—		$	—

Schedule for reconciliation of recurring fair value measurements using level 3 inputs

		For the Quarter Ended March 31, 2020
		Fair Value Measurement
		Using Significant Other Unobservable Inputs
		(Level 3)
		Private Issue			Loans Held For Investment,			Interest- Only
(In Thousands)		CMO			at fair value (1)			Strips			Total
Beginning balance at December 31, 2019		$	231		$	4,173		$	13		$	4,417
Total gains or losses (realized/unrealized):
Included in earnings			—			(25)			—			(25)
Included in other comprehensive loss			(26)			—			—			(26)
Purchases			—			—			—			—
Issuances			—			—			—			—
Settlements			(8)			(313)			—			(321)
Transfers in and/or out of Level 3			—			—			—			—
Ending balance at March 31, 2020		$	197		$	3,835		$	13		$	4,045

⁽¹⁾ The valuation of loans held for investment at fair value includes management estimates of the specific credit risk attributes of each loan, in addition to the quoted secondary-market prices which account for the interest rate characteristics of each loan.

		For the Quarter Ended March 31, 2019
		Fair Value Measurement
		Using Significant Other Unobservable Inputs
		(Level 3)
					Loans Held
		Private			For			Interest-			Loan
		Issue			Investment, at			Only			Commitments			Mandatory
(In Thousands)		CMO			fair value (1)			Strips			to Originate (2)			Commitments (3)			Total
Beginning balance at December 31, 2018		$	310		$	4,995		$	21		$	504		$	(9)		$	5,821
Total gains or losses (realized/unrealized):
Included in earnings			—			87			—			(264)			(3)			(180)
Included in other comprehensive loss			1			—			(3)			—			—			(2)
Purchases			—			—			—			—			—			—
Issuances			—			—			—			—			—			—
Settlements			(11)			(34)			—			—			5			(40)
Transfers in and/or out of Level 3			—			191			—			—			—			191
Ending balance at March 31, 2019		$	300		$	5,239		$	18		$	240		$	(7)		$	5,790

⁽¹⁾ The valuation of loans held for investment at fair value includes the management estimates of the specific credit risk attributes of each loan, in addition to the quoted secondary-market prices which account for the interest rate characteristics of each loan.

⁽²⁾ Consists of commitments to extend credit on loans to be held for sale.

⁽³⁾ Consists of mandatory loan sale commitments.

		For the Nine Months Ended March 31, 2020
		Fair Value Measurement
		Using Significant Other Unobservable Inputs
		(Level 3)
		Private Issue			Loans Held For Investment,			Interest-
(In Thousands)		CMO			at fair value (1)			Only Strips			Total
Beginning balance at June 30, 2019		$	269		$	5,094		$	16		$	5,379
Total gains or losses (realized/unrealized):
Included in earnings			—			(12)			—			(12)
Included in other comprehensive loss			(29)			—			(3)			(32)
Purchases			—			—			—			—
Issuances			—			—			—			—
Settlements			(43)			(1,247)			—			(1,290)
Transfers in and/or out of Level 3			—			—			—			—
Ending balance at March 31, 2020		$	197		$	3,835		$	13		$	4,045

⁽¹⁾ The valuation of loans held for investment at fair value includes management estimates of the specific credit risk attributes of each loan, in addition to the quoted secondary-market prices which account for the interest rate characteristics of each loan.

		For the Nine Months Ended March 31, 2019
		Fair Value Measurement
		Using Significant Other Unobservable Inputs
		(Level 3)
					Loans Held
		Private			For			Interest-			Loan
		Issue			Investment, at			Only			Commitments			Mandatory
(In Thousands)		CMO			fair value (1)			Strips			to Originate (2)			Commitments (3)			Total
Beginning balance at June 30, 2018		$	350		$	5,234		$	23		$	825		$	(32)		$	6,400
Total gains or losses (realized/unrealized):
Included in earnings			—			133			—			(585)			18			(434)
Included in other comprehensive loss			—			—			(5)			—			—			(5)
Purchases			—			—			—			—			—			—
Issuances			—			—			—			—			—			—
Settlements			(50)			(789)			—			—			7			(832)
Transfers in and/or out of Level 3			—			661			—			—			—			661
Ending balance at March 31, 2019		$	300		$	5,239		$	18		$	240		$	(7)		$	5,790

⁽¹⁾ The valuation of loans held for investment at fair value includes the management estimates of the specific credit risk attributes of each loan, in addition to the quoted secondary-market prices which account for the interest rate characteristics of each loan.

⁽²⁾ Consists of commitments to extend credit on loans to be held for sale.

⁽³⁾ Consists of mandatory loan sale commitments.

Schedule of fair value assets measured on nonrecurring basis

		Fair Value Measurement at March 31, 2020 Using:
(In Thousands)		Level 1			Level 2			Level 3			Total
Non-performing loans		$	—		$	2,073		$	1,562		$	3,635
Mortgage servicing assets			—			—			386			386
Real estate owned, net			—			—			—			—
Total		$	—		$	2,073		$	1,948		$	4,021

		Fair Value Measurement at June 30, 2019 Using:
(In Thousands)		Level 1			Level 2			Level 3			Total
Non-performing loans		$	—		$	3,971		$	2,247		$	6,218
Mortgage servicing assets			—			—			627			627
Real estate owned, net			—			—			—			—
Total		$	—		$	3,971		$	2,874		$	6,845

Schedule of additional information about valuation techniques and inputs used for assets and liabilities

The following table presents additional information about valuation techniques and inputs used for assets and liabilities, which are measured at fair value and categorized within Level 3 as of March 31, 2020:

											Impact to
		Fair Value									Valuation
		As of									from an
		March 31,			Valuation				Range (1)		Increase in
(Dollars In Thousands)		2020			Techniques		Unobservable Inputs		(Weighted Average)		Inputs (2)
Assets:
Securities available-for sale: Private issue CMO		$	197		Market comparable pricing		Comparability adjustment		(9.9)% – (10.7)% ((10.0)%)		Increase
Loans held for investment, at fair value		$	3,835		Relative value analysis		Broker quotes Credit risk factor		98.0% – 104.6% (100.9%) of par 1.3% - 100.0% (4.3%)		Increase Decrease
Non-performing loans(3)		$	666		Discounted cash flow		Default rates		5.0%		Decrease
Non-performing loans(4)		$	896		Relative value analysis		Credit risk factor		20.0% - 30.0% (20.4%)		Decrease
Mortgage servicing assets		$	386		Discounted cash flow		Prepayment speed (CPR) Discount rate		18.7% - 60.0% (31.2%) 9.0% - 10.5% (9.1%)		Decrease Decrease
Interest-only strips		$	13		Discounted cash flow		Prepayment speed (CPR) Discount rate		18.7% - 37.5% (36.2%) 9.0%		Decrease Decrease
Liabilities:
None

⁽¹⁾ The range is based on the historical estimated fair values and management estimates.

⁽²⁾ Unless otherwise noted, this column represents the directional change in the fair value of the Level 3 investments that would result from an increase to the corresponding unobservable input. A decrease to the unobservable input would have the opposite effect. Significant changes in these inputs in isolation could result in significantly higher or lower fair value measurements.

⁽³⁾ Consists of restructured loans.

⁽⁴⁾ Consists of other non-performing loans, excluding restructured loans.

Schedule of carrying amount and fair value of financial instruments

		March 31, 2020
		Carrying			Fair
(In Thousands)		Amount			Value			Level 1			Level 2			Level 3
Financial assets:
Investment securities - held to maturity		$	69,482		$	71,399		$	—		$	71,399		$	—
Loans held for investment, not recorded at fair value		$	910,472		$	905,972		$	—		$	—		$	905,972
FHLB – San Francisco stock		$	8,199		$	8,199		$	—		$	8,199		$	—
Financial liabilities:
Deposits		$	835,831		$	807,962		$	—		$	—		$	807,962
Borrowings		$	131,070		$	136,606		$	—		$	—		$	136,606

		June 30, 2019
		Carrying			Fair
(In Thousands)		Amount			Value			Level 1			Level 2			Level 3
Financial assets:
Investment securities - held to maturity		$	94,090		$	95,359		$	—		$	95,359		$	—
Loans held for investment, not recorded at fair value		$	874,831		$	861,374		$	—		$	—		$	861,374
FHLB – San Francisco stock		$	8,199		$	8,199		$	—		$	8,199		$	—
Financial liabilities:
Deposits		$	841,271		$	813,087		$	—		$	—		$	813,087
Borrowings		$	101,107		$	102,826		$	—		$	—		$	102,826

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Tabular disclosure of input and valuation technique used to measure fair value and change in valuation approach and technique for each separate class of asset and liability measured on recurring and nonrecurring basis.

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Tabular disclosure of assets and liabilities by class, including financial instruments measured at fair value that are classified in shareholders' equity, if any, that are measured at fair value on a nonrecurring basis in periods after initial recognition (for example, impaired assets). Disclosures may include, but are not limited to: (a) the fair value measurements recorded and the reasons for the measurements and (b) the level within the fair value hierarchy in which the fair value measurements are categorized in their entirety (levels 1, 2, 3).

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Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

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Tabular disclosure of assets and liabilities, including [financial] instruments measured at fair value that are classified in stockholders' equity, if any, that are measured at fair value on a recurring basis. The disclosures contemplated herein include the fair value measurements at the reporting date by the level within the fair value hierarchy in which the fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3).

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