Fair Value of Financial Instruments (Tables)

3 Months Ended

Sep. 30, 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 September 30, 2021:
Loans held for investment, at fair value	$	1,577	$	1,635	$	(58)
As of June 30, 2021:
Loans held for investment, at fair value	$	1,874	$	1,934	$	(60)

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

	Fair Value Measurement at September 30, 2021 Using:
(In Thousands)	Level 1		Level 2		Level 3		Total
Assets:
Investment securities - available for sale:
U.S. government agency MBS	$	—	$	2,062	$	—	$	2,062
U.S. government sponsored enterprise MBS		—		1,104		—		1,104
Private issue CMO		—		—		150		150
Investment securities - available for sale		—		3,166		150		3,316
Loans held for investment, at fair value		—		—		1,577		1,577
Interest-only strips		—		—		9		9
Total assets	$	—	$	3,166	$	1,736	$	4,902
Liabilities:	$	—	$	—	$	—	$	—
Total liabilities	$	—	$	—	$	—	$	—

	Fair Value Measurement at June 30, 2021 Using:
(In Thousands)		Level 1		Level 2		Level 3		Total
Assets:
Investment securities - available for sale:
U.S. government agency MBS	$	—	$	2,222	$	—	$	2,222
U.S. government sponsored enterprise MBS		—		1,211		—		1,211
Private issue CMO		—		—		154		154
Investment securities - available for sale		—		3,433		154		3,587
Loans held for investment, at fair value		—		—		1,874		1,874
Interest-only strips		—		—		10		10
Total assets	$	—	$	3,433	$	2,038	$	5,471
Liabilities:	$	—	$	—	$	—	$	—
Total liabilities	$	—	$	—	$	—	$	—

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

	For the Quarter Ended September 30, 2021
	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, 2021	$	154	$	1,874	$	10	$	2,038
Total gains or losses (realized/unrealized):
Included in earnings		—		2		—		2
Included in other comprehensive income (loss)		1		—		(1)		—
Purchases		—		—		—		—
Issuances		—		—		—		—
Settlements		(5)		(299)		—		(304)
Transfers in and/or out of Level 3		—		—		—		—
Ending balance at September 30, 2021	$	150	$	1,577	$	9	$	1,736

(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 September 30, 2020
	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, 2020	$	197	$	2,258	$	14	$	2,469
Total gains or losses (realized/unrealized):
Included in earnings		—		(4)		—		(4)
Included in other comprehensive income (loss)		4		—		(1)		3
Purchases		—		—		—		—
Issuances		—		—		—		—
Settlements		(17)		(14)		—		(31)
Transfers in and/or out of Level 3		—		—		—		—
Ending balance at September 30, 2020	$	184	$	2,240	$	13	$	2,437

(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 September 30, 2021 Using:
(In Thousands)	Level 1		Level 2		Level 3		Total
Non-performing loans	$	—	$	713	$	5,903	$	6,616
Mortgage servicing assets		—		—		132		132
Total	$	—	$	713	$	6,035	$	6,748

	Fair Value Measurement at June 30, 2021 Using:
(In Thousands)	Level 1		Level 2		Level 3		Total
Non-performing loans	$	—	$	899	$	7,747	$	8,646
Mortgage servicing assets		—		—		208		208
Total	$	—	$	899	$	7,955	$	8,854

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 September 30, 2021:

						Impact to
	Fair Value					Valuation
	As of					from an
	September 30,		Valuation		Range(1)	Increase in
(Dollars In Thousands)	2021		Techniques	Unobservable Inputs	(Weighted Average)	Inputs(2)
Assets:
Securities available-for sale: Private issue CMO	$	150	Market comparable pricing	Comparability adjustment	1.6% - 2.5% (2.3%)	Increase
Loans held for investment, at fair value	$	1,577	Relative value analysis	Broker quotes	98.0% - 104.1% (101.0%) of par	Increase
				Credit risk factor	1.3% - 100.0% (4.6%)	Decrease
Non-performing loans(3)	$	4,931	Discounted cash flow	Default rates	5.0% - 5.2% (5.0%)	Decrease
Non-performing loans(4)	$	972	Relative value analysis	Credit risk factor	20.0% - 30.0% (28.4%)	Decrease
Mortgage servicing assets	$	132	Discounted cash flow	Prepayment speed (CPR)	21.1% - 60.0% (26.5%)	Decrease
				Discount rate	9.0% - 10.5% (9.1%)	Decrease
Interest-only strips	$	9	Discounted cash flow	Prepayment speed (CPR)	25.4% - 28.9% (28.7%)	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 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

	September 30, 2021
	Carrying		Fair
(In Thousands)	Amount		Value		Level 1		Level 2		Level 3
Financial assets:
Loans held for investment, not recorded at fair value	$	857,458	$	858,810	$	—	$	—	$	858,810
Investment securities - held to maturity	$	205,821	$	206,420	$	—	$	206,420	$	—
FHLB – San Francisco stock	$	8,155	$	8,155	$	—	$	8,155	$	—
Financial liabilities:
Deposits	$	956,742	$	922,037	$	—	$	—	$	922,037
Borrowings	$	90,000	$	93,311	$	—	$	—	$	93,311

	June 30, 2021
	Carrying		Fair
(In Thousands)	Amount		Value		Level 1		Level 2		Level 3
Financial assets:
Loans held for investment, not recorded at fair value	$	849,086	$	848,727	$	—	$	—	$	848,727
Investment securities - held to maturity	$	223,306	$	224,721	$	—	$	224,721	$	—
FHLB – San Francisco stock	$	8,155	$	8,155	$	—	$	8,155	$	—
Financial liabilities:
Deposits	$	937,973	$	904,673	$	—	$	—	$	904,673
Borrowings	$	100,983	$	104,526	$	—	$	—	$	104,526