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Fair Value of Financial Instruments | 9 Months Ended
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Mar. 31, 2024
Fair Value of Financial Instruments |
Fair Value of Financial Instruments | Note 7: Fair Value of Financial Instruments The Corporation adopted ASC 820, “Fair Value Measurements and Disclosures,” and elected the fair value option pursuant to ASC 825, “Financial Instruments.” ASC 820 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. ASC 825 permits entities to elect to measure many financial instruments and certain other assets and liabilities at fair value on an instrument-by-instrument basis (the “Fair Value Option”) at specified election dates. The Corporation elected the fair value option on loans held for investment which were previously originated for sale. At each subsequent reporting date, an entity is required to report unrealized gains and losses on items in earnings for which the fair value option has been elected. The objective of the Fair Value Option is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. The following table describes the difference at the dates indicated between the aggregate fair value and the aggregate unpaid principal balance of loans held for investment at fair value: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | Aggregate | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | Unpaid | ​ | Net
​ | ​ | Aggregate | ​ | Principal | ​ | Unrealized
(In Thousands) |  | Fair Value |  | Balance |  | Loss
As of March 31, 2024: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Loans held for investment, at fair value | ​ | $ | 1,054 | ​ | $ | 1,211 | ​ | $ | (157)
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
As of June 30, 2023: | ​ |  |  | ​ |  |  | ​ |  |
Loans held for investment, at fair value | ​ | $ | 1,312 | ​ | $ | 1,483 | ​ | $ | (171)
​ ASC 820 establishes a three-level valuation hierarchy that prioritizes inputs to valuation techniques used in fair value calculations. The three levels of inputs are defined as follows:
Level 1 | - | Unadjusted quoted prices in active markets for identical assets or liabilities that the Corporation has the ability to access at the measurement date.
Level 2 | - | Observable inputs other than Level 1 such as: quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated to observable market data for substantially the full term of the asset or liability. Valuation techniques may include the use of discounted cash flow models and similar techniques.
Level 3 | - | Unobservable inputs for the asset or liability that use significant assumptions, including assumptions of risks. These unobservable assumptions reflect the Corporation’s estimate of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include the use of pricing models, discounted cash flow models and similar techniques.
​ ASC 820 requires the Corporation to maximize the use of observable inputs and minimize the use of unobservable inputs. If a financial instrument uses inputs that fall in different levels of the hierarchy, the instrument will be categorized based upon the lowest level of input that is significant to the fair value calculation. ​ The Corporation’s financial assets and liabilities measured at fair value on a recurring basis consist of investment securities available for sale, loans held for investment at fair value and interest-only strips; while loans with individually evaluated allowances and mortgage servicing assets (“MSA”) are measured at fair value on a nonrecurring basis. ​ Investment securities - available for sale are primarily comprised of U.S. government agency MBS, U.S. government sponsored enterprise MBS and private issue CMO. The Corporation utilizes quoted prices in active markets for similar securities for its fair value measurement of MBS (Level 2) and broker price indications for similar securities in non-active markets for its fair value measurement of the private issue CMO (Level 3). ​ Loans held for investment at fair value are primarily single-family loans which have been transferred from loans held for sale. The fair value is determined by 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 (Level 3). ​ Loans with an individually evaluated allowance that are recorded at fair value on a non-recurring basis are loans which are inadequately protected by the current sound worth and paying capacity of the borrowers or of the collateral pledged. These loans are characterized by the distinct possibility that the Corporation will sustain some loss if the deficiencies are not corrected. The fair value of a loan with an individually evaluated allowance is determined based on the discounted cash flow or current appraised value of the underlying collateral. Appraised and reported values may be discounted based on management’s historical knowledge, changes in market conditions from the time of valuation, and/or management’s expertise and knowledge of the collateral. For commercial real estate loans with an individually evaluated allowance, the fair value is derived from the appraised value of its collateral. Loans with an individually evaluated allowance are reviewed and evaluated on at least a quarterly basis for additional allowance and adjusted accordingly, based on the same factors identified above (Level 3). This loss is not recorded directly as an adjustment to current earnings or other comprehensive income (loss), but rather as a component in determining the overall adequacy of the ACL. These adjustments to the estimated fair value of loans with individually evaluated allowance may result in increases or decreases to the provision for (recovery of) credit losses recorded in current earnings. ​ The Corporation uses the amortization method for its MSA, which amortizes the MSA in proportion to and over the period of estimated net servicing income and assesses the MSA for impairment based on fair value at each reporting date. The fair value of the MSA is derived using the present value method; which includes a third party’s prepayment projections of similar instruments, weighted-average coupon rates, estimated servicing costs and discount interest rates (Level 3). ​ The fair value of interest-only strips is derived using the same assumptions that are used to value the related MSA (Level 3). ​ The Corporation’s valuation methodologies may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. While management believes the Corporation’s valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. ​ The following fair value hierarchy tables present information at the dates indicated about the Corporation’s assets and liabilities measured at fair value on a recurring basis: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Fair Value Measurement at March 31, 2024 Using:
(In Thousands) |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
Assets: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Investment securities - available for sale: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
U.S. government agency MBS | ​ | $ | — | ​ | $ | 1,274 | ​ | $ | — | ​ | $ | 1,274
U.S. government sponsored enterprise MBS | ​ |  | — | ​ |  | 570 | ​ |  | — | ​ |  | 570
Private issue CMO | ​ |  | — | ​ |  | — | ​ |  | 91 | ​ |  | 91
Investment securities - available for sale | ​ |  | — | ​ |  | 1,844 | ​ |  | 91 | ​ |  | 1,935
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Loans held for investment, at fair value | ​ |  | — | ​ |  | — | ​ |  | 1,054 | ​ |  | 1,054
Interest-only strips | ​ |  | — | ​ |  | — | ​ |  | 8 | ​ |  | 8
Total assets | ​ | $ | — | ​ | $ | 1,844 | ​ | $ | 1,153 | ​ | $ | 2,997
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Liabilities: | ​ | $ | — | ​ | $ | — | ​ | $ | — | ​ | $ | —
Total liabilities | ​ | $ | — | ​ | $ | — | ​ | $ | — | ​ | $ | —
​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Fair Value Measurement at June 30, 2023 Using:
(In Thousands) |  | ​ | Level 1 | ​ | ​ | Level 2 |  | ​ | Level 3 |  | ​ | Total
Assets: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Investment securities - available for sale: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
U.S. government agency MBS | ​ | $ | — | ​ | $ | 1,370 | ​ | $ | — | ​ | $ | 1,370
U.S. government sponsored enterprise MBS | ​ |  | — | ​ |  | 683 | ​ |  | — | ​ |  | 683
Private issue CMO | ​ |  | — | ​ |  | — | ​ |  | 102 | ​ |  | 102
Investment securities - available for sale | ​ |  | — | ​ |  | 2,053 | ​ |  | 102 | ​ |  | 2,155
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Loans held for investment, at fair value | ​ |  | — | ​ |  | — | ​ |  | 1,312 | ​ |  | 1,312
Interest-only strips | ​ |  | — | ​ |  | — | ​ |  | 9 | ​ |  | 9
Total assets | ​ | $ | — | ​ | $ | 2,053 | ​ | $ | 1,423 | ​ | $ | 3,476
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Liabilities: | ​ | $ | — | ​ | $ | — | ​ | $ | — | ​ | $ | —
Total liabilities | ​ | $ | — | ​ | $ | — | ​ | $ | — | ​ | $ | —
​ The following tables summarize reconciliations of the beginning and ending balances during the periods shown of recurring fair value measurements recognized in the Condensed Consolidated Statements of Financial Condition using Level 3 inputs: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | For the Quarter Ended March 31, 2024
​ | ​ | Fair Value Measurement
​ | ​ | Using Significant Other Unobservable Inputs
​ | ​ | (Level 3)
​ | ​ | Private | ​ | Loans Held For | ​ | Interest- | ​ | ​
​ | ​ | Issue | ​ | Investment, at | ​ | Only | ​ | ​
(In Thousands) |  | CMO |  | fair value(1) |  | Strips |  | Total
Beginning balance at December 31, 2023 | ​ | $ | 98 | ​ | $ | 1,092 | ​ | $ | 8 | ​ | $ | 1,198
Total gains or losses (realized/unrealized): | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Included in earnings | ​ |  | — | ​ |  | (28) | ​ |  | — | ​ |  | (28)
Included in other comprehensive loss | ​ |  | (1) | ​ |  | — | ​ |  | — | ​ |  | (1)
Purchases | ​ |  | — | ​ |  | — | ​ |  | — | ​ |  | —
Issuances | ​ |  | — | ​ |  | — | ​ |  | — | ​ |  | —
Settlements | ​ |  | (6) | ​ |  | (10) | ​ |  | — | ​ |  | (16)
Transfers in and/or out of Level 3 | ​ |  | — | ​ |  | — | ​ |  | — | ​ |  | —
Ending balance at March 31, 2024 | ​ | $ | 91 | ​ | $ | 1,054 | ​ | $ | 8 | ​ | $ | 1,153
​
(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, 2023
​ | ​ | Fair Value Measurement
​ | ​ | Using Significant Other Unobservable Inputs
​ | ​ | (Level 3)
​ | ​ | Private | ​ | Loans Held For | ​ | Interest- | ​ | ​
​ | ​ | Issue | ​ | Investment, at | ​ | Only | ​ | ​
(In Thousands) |  | CMO |  | fair value(1) |  | Strips |  | Total
Beginning balance at December 31, 2022 | ​ | $ | 102 | ​ | $ | 1,345 | ​ | $ | 9 | ​ | $ | 1,456
Total gains or losses (realized/unrealized): | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Included in earnings | ​ |  | — | ​ |  | 30 | ​ |  | — | ​ |  | 30
Included in other comprehensive loss | ​ |  | (1) | ​ |  | — | ​ |  | (1) | ​ |  | (2)
Purchases | ​ |  | — | ​ |  | — | ​ |  | — | ​ |  | —
Issuances | ​ |  | — | ​ |  | — | ​ |  | — | ​ |  | —
Settlements | ​ |  | (3) | ​ |  | (23) | ​ |  | — | ​ |  | (26)
Transfers in and/or out of Level 3 | ​ |  | — | ​ |  | — | ​ |  | — | ​ |  | —
Ending balance at March 31, 2023 | ​ | $ | 98 | ​ | $ | 1,352 | ​ | $ | 8 | ​ | $ | 1,458
​
(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, 2024
​ | ​ | Fair Value Measurement
​ | ​ | Using Significant Other Unobservable Inputs
​ | ​ | (Level 3)
​ | ​ | Private | ​ | Loans Held For | ​ | Interest- | ​ | ​
​ | ​ | Issue | ​ | Investment, at | ​ | Only | ​ | ​
(In Thousands) |  | CMO |  | fair value(1) |  | Strips |  | Total
Beginning balance at June 30, 2023 | ​ | $ | 102 | ​ | $ | 1,312 | ​ | $ | 9 | ​ | $ | 1,423
Adjustment due to ASC 326 CECL adoption | ​ | ​ | — | ​ | ​ | 28 | ​ | ​ | — | ​ | ​ | 28
Total gains or losses (realized/unrealized): | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Included in earnings | ​ |  | — | ​ |  | (14) | ​ |  | — | ​ |  | (14)
Included in other comprehensive loss | ​ |  | (1) | ​ |  | — | ​ |  | (1) | ​ |  | (2)
Purchases | ​ |  | — | ​ |  | — | ​ |  | — | ​ |  | —
Issuances | ​ |  | — | ​ |  | — | ​ |  | — | ​ |  | —
Settlements | ​ |  | (10) | ​ |  | (272) | ​ |  | — | ​ |  | (282)
Transfers in and/or out of Level 3 | ​ |  | — | ​ |  | — | ​ |  | — | ​ |  | —
Ending balance at March 31, 2024 | ​ | $ | 91 | ​ | $ | 1,054 | ​ | $ | 8 | ​ | $ | 1,153
​
(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, 2023
​ | ​ | Fair Value Measurement
​ | ​ | Using Significant Other Unobservable Inputs
​ | ​ | (Level 3)
​ | ​ | Private | ​ | Loans Held For | ​ | Interest- | ​ | ​
​ | ​ | Issue | ​ | Investment, at | ​ | Only | ​ | ​
(In Thousands) |  | CMO |  | fair value(1) |  | Strips |  | Total
Beginning balance at June 30, 2022 | ​ | $ | 113 | ​ | $ | 1,396 | ​ | $ | 7 | ​ | $ | 1,516
Total gains or losses (realized/ unrealized): | ​ |  | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Included in earnings | ​ |  | — | ​ |  | 19 | ​ |  | — | ​ |  | 19
Included in other comprehensive loss | ​ |  | (5) | ​ |  | — | ​ |  | 1 | ​ |  | (4)
Purchases | ​ |  | — | ​ |  | — | ​ |  | — | ​ |  | —
Issuances | ​ |  | — | ​ |  | — | ​ |  | — | ​ |  | —
Settlements | ​ |  | (10) | ​ |  | (63) | ​ |  | — | ​ |  | (73)
Transfers in and/or out of Level 3 | ​ |  | — | ​ |  | — | ​ |  | — | ​ |  | —
Ending balance at March 31, 2023 | ​ | $ | 98 | ​ | $ | 1,352 | ​ | $ | 8 | ​ | $ | 1,458
​
(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.
​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
The following fair value hierarchy tables present information about the Corporation’s assets measured at fair value at the dates indicated on a nonrecurring basis: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Fair Value Measurement at March 31, 2024 Using:
(In Thousands) |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
Loans with individually evaluated allowance | ​ | $ | — | ​ | $ | — | ​ | $ | 695 | ​ | $ | 695
Mortgage servicing assets | ​ |  | — | ​ |  | — | ​ |  | 83 | ​ |  | 83
Total | ​ | $ | — | ​ | $ | — | ​ | $ | 778 | ​ | $ | 778
​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Fair Value Measurement at June 30, 2023 Using:
(In Thousands) | ​ | Level 1 | ​ | Level 2 | ​ | Level 3 | ​ | Total
Loans with individually evaluated allowance |  | $ | — | ​ | $ | 251 | ​ | $ | 1,049 | ​ | $ | 1,300
Mortgage servicing assets | ​ |  | — | ​ |  | — | ​ |  | 90 | ​ |  | 90
Total | ​ | $ | — | ​ | $ | 251 | ​ | $ | 1,139 | ​ | $ | 1,390
​ 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, 2024: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Impact to
​ | ​ | Fair Value | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Valuation
​ | ​ | As of | ​ | ​ | ​ | ​ | ​ | ​ | ​ | from an
​ | ​ | March 31, | ​ | Valuation | ​ | ​ | ​ | Range(1) | ​ | Increase in
(Dollars In Thousands) |  | 2024 |  | Techniques |  | Unobservable Inputs |  | (Weighted Average) |  | Inputs(2)
Assets: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Securities available-for sale: Private issue CMO | ​ | $ | 91 |  | Market comparable pricing |  | Comparability adjustment |  | (1.4%) - (6.1%) (2.4%) |  | Increase
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Loans held for investment, at fair value | ​ | $ | 1,054 |  | Relative value analysis |  | Broker quotes |  | 86.7% - 88.9% (88.1%) |  | Increase
​ | ​ | ​ | ​ | ​ | ​ | ​ | ACL factors |  | 1.0% - 1.1% (1.1%) | ​ | Decrease
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Loans with individually evaluated allowance | ​ | $ | 695 |  | Discounted cash flow |  | Default Rate |  | 5.0% | ​ | Decrease
​ | ​ | ​ | ​ | ​ | ​ | ​ | Discount Rate | ​ | 4.8% | ​ | Decrease
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Mortgage servicing assets | ​ | $ | 83 |  | Discounted cash flow |  | Prepayment speed (CPR) |  | 5.5% - 60.0% (10.6%) |  | Decrease
​ | ​ | ​ | ​ | ​ | ​ |  | Discount rate |  | 9.0% - 10.5% (9.1%) |  | Decrease
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Interest-only strips | ​ | $ | 8 |  | Discounted cash flow |  | Prepayment speed (CPR) |  | 7.3% - 15.1% (9.2%) | ​ | Decrease
​ | ​ | ​ | ​ | ​ | ​ |  | Discount rate |  | 9.0% |  | 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 asset instruments 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.
​ ​ The significant unobservable inputs used in the fair value measurement of the Corporation’s assets and liabilities include the following: prepayment speeds, discount rates and broker quotes, among others. Significant increases or decreases in any of these inputs in isolation could result in significantly lower or higher fair value measurement. The various unobservable inputs used to determine valuations may have similar or diverging impacts on valuation. The carrying amount and fair value of the Corporation’s other financial instruments as of March 31, 2024 and June 30, 2023 was as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | March 31, 2024
​ | ​ | Carrying | ​ | Fair | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
(In Thousands) |  | Amount |  | Value |  | Level 1 |  | Level 2 |  | Level 3
Financial assets: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Loans held for investment, not recorded at fair value | ​ | $ | 1,064,707 | ​ | $ | 982,881 | ​ | $ | — | ​ | $ | — | ​ | $ | 982,881
Investment securities - held to maturity | ​ | $ | 135,971 | ​ | $ | 120,271 | ​ | $ | — | ​ | $ | 120,271 | ​ | $ | —
FHLB – San Francisco stock | ​ | $ | 9,505 | ​ | $ | 9,505 | ​ | $ | — | ​ | $ | 9,505 | ​ | $ | —
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Financial liabilities: | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |
Deposits | ​ | $ | 908,122 | ​ | $ | 908,057 | ​ | $ | — | ​ | $ | 908,057 | ​ | $ | —
Borrowings | ​ | $ | 235,000 | ​ | $ | 234,043 | ​ | $ | — | ​ | $ | 234,043 | ​ | $ | —
​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | June 30, 2023
​ | ​ | Carrying | ​ | Fair | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
(In Thousands) |  | Amount |  | Value |  | Level 1 |  | Level 2 |  | Level 3
Financial assets: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Loans held for investment, not recorded at fair value | ​ | $ | 1,076,317 | ​ | $ | 970,277 | ​ | $ | — | ​ | $ | — | ​ | $ | 970,277
Investment securities - held to maturity | ​ | $ | 154,337 | ​ | $ | 135,541 | ​ | $ | — | ​ | $ | 135,541 | ​ | $ | —
FHLB – San Francisco stock | ​ | $ | 9,505 | ​ | $ | 9,505 | ​ | $ | — | ​ | $ | 9,505 | ​ | $ | —
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Financial liabilities: | ​ |  | ​ | ​ |  | ​ | ​ |  | ​ | ​ |  | ​ | ​ |  | ​
Deposits | ​ | $ | 950,571 | ​ | $ | 949,116 | ​ | $ | — | ​ | $ | 949,116 | ​ | $ | —
Borrowings | ​ | $ | 235,009 | ​ | $ | 232,764 | ​ | $ | — | ​ | $ | 232,764 | ​ | $ | —
​ Loans held for investment, not recorded at fair value: For loans that reprice frequently at market rates, the carrying amount approximates the fair value. For fixed-rate loans, the fair value is determined by either (i) discounting the estimated future cash flows of such loans over their estimated remaining contractual maturities using a current interest rate at which similar loans would be made to borrowers, or (ii) quoted market prices. ​ Investment securities - held to maturity: The investment securities - held to maturity consist of U.S. SBA securities, U.S. government sponsored enterprise MBS and U.S. government sponsored enterprise CMO. For the U.S. SBA securities and U.S. government sponsored enterprise MBS and CMO, the Corporation utilizes quoted prices in active markets for similar securities for its fair value measurement. ​ FHLB – San Francisco stock: The carrying amount reported for FHLB – San Francisco stock approximates fair value. When redeemed, the Corporation will receive an amount equal to the par value of the stock. ​ Deposits: The fair value of time deposits is estimated using a discounted cash flow calculation. The discount rate is based upon observable inputs, including rates currently offered for deposits of similar remaining maturities. The fair value of transaction accounts (checking, money market and savings accounts) is equal to the carrying amounts payable on demand or estimated using a discounted cash flow calculation and management estimates of current market conditions. ​ Borrowings: The fair value of borrowings has been estimated using a discounted cash flow calculation. The discount rate on such borrowings is based upon rates currently offered for borrowings of similar remaining maturities. ​ The Corporation has various processes and controls in place to ensure that fair value is reasonably estimated. The Corporation generally determines fair value of their Level 3 assets and liabilities by using internally developed models which primarily utilize discounted cash flow techniques and prices obtained from independent management services or brokers. The Corporation performs due diligence procedures over third-party pricing service providers in order to support their use in the valuation process. ​ While the Corporation believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. For the quarter and first nine months of fiscal 2024, there were no significant changes to the Corporation’s valuation techniques that had, or are expected to have, a material impact on its condensed consolidated financial position or results of operations.

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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 + Details
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