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Fair Value of Financial Instruments (Tables)

9 Months Ended

Mar. 31, 2021

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, 2021:
Loans held for investment, at fair value		$	1,879		$	1,948		$	(69)
As of June 30, 2020:
Loans held for investment, at fair value		$	2,258		$	2,369		$	(111)

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

		Fair Value Measurement at March 31, 2021 Using:
(In Thousands)		Level 1			Level 2			Level 3			Total
Assets:
Investment securities - available for sale:
U.S. government agency MBS		$	—		$	2,360		$	—		$	2,360
U.S. government sponsored enterprise MBS			—			1,279			—			1,279
Private issue CMO			—			—			163			163
Investment securities - available for sale			—			3,639			163			3,802
Loans held for investment, at fair value			—			—			1,879			1,879
Interest-only strips			—			—			11			11
Total assets		$	—		$	3,639		$	2,053		$	5,692
Liabilities		$	—		$	—		$	—		$	—
Total liabilities		$	—		$	—		$	—		$	—

		Fair Value Measurement at June 30, 2020 Using:
(In Thousands)		Level 1			Level 2			Level 3			Total
Assets:
Investment securities - available for sale:
U.S. government agency MBS		$	—		$	2,943		$	—		$	2,943
U.S. government sponsored enterprise MBS			—			1,577			—			1,577
Private issue CMO			—			—			197			197
Investment securities - available for sale			—			4,520			197			4,717
Loans held for investment, at fair value			—			—			2,258			2,258
Interest-only strips			—			—			14			14
Total assets		$	—		$	4,520		$	2,469		$	6,989
Liabilities:		$	—		$	—		$	—		$	—
Total liabilities		$	—		$	—		$	—		$	—

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

		For the Quarter Ended March 31, 2021
		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 December 31, 2020		$	173		$	1,972		$	12		$	2,157
Total gains or losses (realized/unrealized):
Included in earnings			—			57			—			57
Included in other comprehensive loss			2			—			(1)			1
Purchases			—			—			—			—
Issuances			—			—			—			—
Settlements			(12)			(150)			—			(162)
Transfers in and/or out of Level 3			—			—			—			—
Ending balance at March 31, 2021		$	163		$	1,879		$	11		$	2,053

⁽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, 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 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 Nine Months Ended March 31, 2021
		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, 2020		$	197		$	2,258		$	14		$	2,469
Total gains or losses (realized/unrealized):
Included in earnings			—			42			—			42
Included in other comprehensive loss			8			—			(3)			5
Purchases			—			—			—			—
Issuances			—			—			—			—
Settlements			(42)			(421)			—			(463)
Transfers in and/or out of Level 3			—			—			—			—
Ending balance at March 31, 2021		$	163		$	1,879		$	11		$	2,053

⁽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, 2020
		Fair Value Measurement
		Using Significant Other Unobservable Inputs
		(Level 3)
					Loans Held
		Private			For			Interest-
		Issue			Investment, at			Only
(In Thousands)		CMO			fair value (1)			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.

Schedule of fair value assets measured on nonrecurring basis

		Fair Value Measurement at March 31, 2021 Using:
(In Thousands)		Level 1			Level 2			Level 3			Total
Non-performing loans		$	—		$	1,290		$	8,469		$	9,759
Mortgage servicing assets			—			—			253			253
Total		$	—		$	1,290		$	8,722		$	10,012

		Fair Value Measurement at June 30, 2020 Using:
(In Thousands)		Level 1			Level 2			Level 3			Total
Non-performing loans		$	—		$	2,042		$	2,882		$	4,924
Mortgage servicing assets			—			—			382			382
Total		$	—		$	2,042		$	3,264		$	5,306

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, 2021:

											Impact to
		Fair Value									Valuation
		As of									from an
		March 31,			Valuation				Range(1)		Increase in
(Dollars In Thousands)		2021			Techniques		Unobservable Inputs		(Weighted Average)		Inputs(2)
Assets:
Securities available-for sale: Private issue CMO		$	163		Market comparable pricing		Comparability adjustment		0.0% - 1.2%  (0.9%)		Increase
Loans held for investment, at fair value		$	1,879		Relative value analysis		Broker quotes Credit risk factor		98.0% – 103.5% (100.8%) of par 1.4% - 100.0%  (4.3%)		Increase Decrease
Non-performing loans(3)		$	7,481		Discounted cash flow		Default rates		5.0%		Decrease
Non-performing loans(4)		$	988		Relative value analysis		Credit risk factor		20.0% - 30.0%  (28.3%)		Decrease
Mortgage servicing assets		$	253		Discounted cash flow		Prepayment speed (CPR) Discount rate		15.5% - 60.0%  (20.9%) 9.0% - 10.5%  (9.1%)		Decrease Decrease
Interest-only strips		$	11		Discounted cash flow		Prepayment speed (CPR) Discount rate		19.7% - 23.0%  (22.8%) 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, 2021
		Carrying			Fair
(In Thousands)		Amount			Value			Level 1			Level 2			Level 3
Financial assets:
Investment securities - held to maturity		$	239,480		$	239,510		$	—		$	239,510		$	—
Loans held for investment, not recorded at fair value		$	838,395		$	837,523		$	—		$	—		$	837,523
FHLB – San Francisco stock		$	7,970		$	7,970		$	—		$	7,970		$	—
Financial liabilities:
Deposits		$	933,756		$	901,496		$	—		$	—		$	901,496
Borrowings		$	111,000		$	115,187		$	—		$	—		$	115,187

		June 30, 2020
		Carrying			Fair
(In Thousands)		Amount			Value			Level 1			Level 2			Level 3
Financial assets:
Investment securities - held to maturity		$	118,627		$	121,201		$	—		$	121,201		$	—
Loans held for investment, not recorded at fair value		$	900,538		$	902,074		$	—		$	—		$	902,074
FHLB – San Francisco stock		$	7,970		$	7,970		$	—		$	7,970		$	—
Financial liabilities:
Deposits		$	892,969		$	864,239		$	—		$	—		$	864,239
Borrowings		$	141,047		$	149,976		$	—		$	—		$	149,976

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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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