Fair Value of Financial Instruments (Tables)

3 Months Ended

Sep. 30, 2023

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, 2023:
Loans held for investment, at fair value	$	1,061	$	1,256	$	(195)
As of June 30, 2023:
Loans held for investment, at fair value	$	1,312	$	1,483	$	(171)

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

	Fair Value Measurement at September 30, 2023 Using:
(In Thousands)	Level 1		Level 2		Level 3		Total
Assets:
Investment securities - available for sale:
U.S. government agency MBS	$	—	$	1,340	$	—	$	1,340
U.S. government sponsored enterprise MBS		—		652		—		652
Private issue CMO		—		—		98		98
Investment securities - available for sale		—		1,992		98		2,090
Loans held for investment, at fair value		—		—		1,061		1,061
Interest-only strips		—		—		9		9
Total assets	$	—	$	1,992	$	1,168	$	3,160
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	$	—	$	—	$	—	$	—

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

	For the Quarter Ended September 30, 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, 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		—		(52)		—		(52)
Included in other comprehensive loss		(1)		—		—		(1)
Purchases		—		—		—		—
Issuances		—		—		—		—
Settlements		(3)		(227)		—		(230)
Transfers in and/or out of Level 3		—		—		—		—
Ending balance at September 30, 2023	$	98	$	1,061	$	9	$	1,168

(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, 2022
	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		—		(26)		—		(26)
Included in other comprehensive loss		(1)		—		—		(1)
Purchases		—		—		—		—
Issuances		—		—		—		—
Settlements		(5)		(20)		—		(25)
Transfers in and/or out of Level 3		—		—		—		—
Ending balance at September 30, 2022	$	107	$	1,350	$	7	$	1,464

(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, 2023 Using:
(In Thousands)	Level 1		Level 2		Level 3		Total
Loans with individually evaluated allowance	$	—	$	—	$	703	$	703
Mortgage servicing assets		—		—		67		67
Total	$	—	$	—	$	770	$	770

	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

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, 2023:

						Impact to
	Fair Value					Valuation
	As of					from an
	September 30,		Valuation		Range(1)	Increase in
(Dollars In Thousands)	2023		Techniques	Unobservable Inputs	(Weighted Average)	Inputs(2)
Assets:
Securities available-for sale: Private issue CMO	$	98	Market comparable pricing	Comparability adjustment	(1.7%) - (6.6%) (2.7%)	Increase
Loans held for investment, at fair value	$	1,061	Relative value analysis	Broker quotes	84.4% - 87.6% (85.6%)	Increase
				ACL factors	0.0% - 1.2% (1.1%)	Decrease
Loans with individually evaluated allowance	$	703	Discounted cash flow	Default rates	5.0%	Decrease
Mortgage servicing assets	$	67	Discounted cash flow	Prepayment speed (CPR)	4.7% - 60.0% (8.1%)	Decrease
				Discount rate	9.0% - 10.5% (9.1%)	Decrease
Interest-only strips	$	9	Discounted cash flow	Prepayment speed (CPR)	6.4% - 8.9% (8.0%)	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.

Schedule of carrying amount and fair value of financial instruments

	September 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	$	1,071,109	$	966,437	$	—	$	—	$	966,437
Investment securities - held to maturity	$	147,574	$	126,851	$	—	$	126,851	$	—
FHLB – San Francisco stock	$	9,505	$	9,505	$	—	$	9,505	$	—
Financial liabilities:
Deposits	$	931,131	$	928,497	$	—	$	928,497	$	—
Borrowings	$	235,009	$	232,686	$	—	$	232,686	$	—

	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	$	—