FAIR VALUE

6 Months Ended

Dec. 31, 2024

FAIR VALUE

FAIR VALUE

15.     FAIR VALUE

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The fair values of securities are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs) or matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs).

The fair value of interest rate swaps are based on valuation models using observable market data as of the measurement date (Level 2). The fair value of derivatives are classified as a component of other assets and other liabilities on the consolidated statements of condition.

The fair value of individually evaluated loans are valued at the lower of cost or fair value. Individually evaluated loans carried at fair value have been partially charged-off or receive a specific allocation of the allowance for credit losses on loans. For collateral dependent loans, fair value is generally based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments result in a Level 3 classification of the inputs for determining fair value.

Nonrecurring adjustments to certain commercial and residential real estate properties classified as OREO are measured at fair value, less costs to sell. Fair values are based on recent real estate appraisals. These appraisals may use a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments result in a Level 3 classification of the inputs for determining fair value.

Assets and Liabilities Measured on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis are summarized below (dollars in thousands):

			Fair Value Measurements at
			December 31, 2024 Using
					Significant
			Quoted Prices in		Other		Significant
			Active Markets for		Observable		Unobservable
			Identical Assets		Inputs		Inputs
	Fair Value		(Level 1)		(Level 2)		(Level 3)
Assets:
Available for sale securities:
U.S. Treasury	$	216,706	$	216,706	$	—	$	—
Mortgage-backed securities:
U.S. Government agency securities		19,328		—		19,328		—
Government-sponsored enterprises		16,889		—		16,889		—
Collateralized mortgage obligations:
U.S. Government agency securities		17,548		—		17,548		—
Government-sponsored enterprises		33,241		—		33,241		—
Municipal obligations		17,825		—		17,825		—
Total available for sale securities		321,537		216,706		104,831		—
Derivative assets (1)		13,735		—		13,735		—
Total	$	335,272	$	216,706	$	118,566	$	—
Liabilities:
Derivative liabilities (1)	$	13,735	$	—	$	13,735	$	—
Total	$	13,735	$	—	$	13,735	$	—

			Fair Value Measurements at
			June 30, 2024 Using
					Significant
			Quoted Prices in		Other		Significant
			Active Markets for		Observable		Unobservable
			Identical Assets		Inputs		Inputs
	Fair Value		(Level 1)		(Level 2)		(Level 3)
Assets:
Available for sale securities:
U.S. Treasury	$	243,549	$	243,549	$	—	$	—
Municipal obligations		13,416		—		13,416		—
Other debt securities		444		—		444
Total available for sale securities		257,409		243,549		13,860		—
Derivative assets (1)		16,781		—		16,781		—
Total	$	274,190	$	243,549	$	30,641	$	—
Liabilities:
Derivative liabilities (1)	$	16,781	$	—	$	16,781	$	—
Total	$	16,781	$	—	$	16,781	$	—

			Fair Value Measurements at
			June 30, 2023 Using
					Significant
			Quoted Prices in		Other		Significant
			Active Markets for		Observable		Unobservable
			Identical Assets		Inputs		Inputs
	Fair Value		(Level 1)		(Level 2)		(Level 3)
Assets:
Available for sale securities:
U.S. Treasury	$	377,729	$	377,729	$	—	$	—
Municipal obligations		53,434		—		53,434		—
Other debt securities		504		—		504
Total available for sale securities		431,667		377,729		53,938		—
Equity securities		2,413		2,413		—		—
Derivative assets (1)		18,844		—		18,844		—
Total	$	452,924	$	380,142	$	72,782	$	—
Liabilities:
Derivative liabilities (1)	$	18,844	$	—	$	18,844	$	—
Total	$	18,844	$	—	$	18,844	$	—

(1) Additional information regarding the impact of offsetting cash collateral can be found in Note 6 – Derivatives.

Assets and Liabilities Measured on a Non-Recurring Basis

Assets and liabilities measured at fair value on a non-recurring basis are summarized below (dollars in thousands):

			Fair Value Measurements Using
					Significant
			Quoted Prices in		Other		Significant
			Active Markets for		Observable		Unobservable
			Identical Assets		Inputs		Inputs
	Fair Value		(Level 1)		(Level 2)		(Level 3)
December 31, 2024
Individually evaluated loans:
Commercial loans	$	—	$	—	$	—	$	—
OREO		—		—		—		—
June 30, 2024
Individually evaluated loans:
Commercial loans	$	539	$	—	$	—	$	539
OREO		153		—		—		153
June 30, 2023
Impaired loans:
Commercial loans	$	539	$	—	$	—	$	539
OREO		—		—		—		—

There were no loans individually evaluated for credit losses where the amortized cost was adjusted to fair value as of December 31, 2024. Individually evaluated loans, which are assets measured at fair value on a non-recurring basis, using the fair value of collateral for collateral dependent loans, had a carrying amount of $673,000 with a valuation allowance of $134,000 resulting in an estimated fair value of $539,000 as of June 30, 2024.

Impaired loans had a carrying amount of $1.3 million with a valuation allowance of $792,000 resulting in an estimated fair value of $539,000 as of June 30, 2023.

The Company had no other real estate owned at December 31, 2024. The Company had $153,000 and no other real estate owned at June 30, 2024 and 2023, respectively. There were no write-downs for the six months ended December 31, 2024 and 2023 and the fiscal years ended June 30, 2024 and June 30, 2023.

The following table presents additional quantitative information about assets measured at fair value on a nonrecurring basis and for which the Company has utilized Level 3 inputs to determine fair value (dollars in thousands):

					Significant		Significant Unobservable
			Valuation		Unobservable		Input Range
	Fair Value		Technique		Inputs		(Weighted Average)
December 31, 2024
Individually evaluated loans:
Commercial loans	$	—
OREO		—
June 30, 2024
Individually evaluated loans:
Commercial loans	$	539		Appraisal of collateral (1)		Liquidation expense (2)		11.0%
OREO		153		Appraisal of collateral (1)		Liquidation expense (2)		10.0%
June 30, 2023
Impaired loans:
Commercial loans	$	539		Appraisal of collateral (1)		Liquidation expense (2)		11.0%

(1) Fair value is generally determined through independent appraisals of the underlying collateral that generally include various level 3 inputs which are not identifiable.

(2) Estimated selling costs.

The fair value of individually evaluated loans is based on the fair value of the collateral. Individually evaluated loans were determined to be collateral dependent and categorized as Level 3 due to ongoing real estate market conditions resulting in inactive market data, which in turn required the use of unobservable inputs and assumptions in fair value measurements. There were no changes in valuation techniques used during the six months ended December 31, 2024.

The carrying and estimated fair values of financial assets and liabilities as of the dates indicated were as follows (dollars in thousands):

	December 31, 2024
						Fair Value Measurements Using
							Significant
					Quoted Prices in		Other		Significant
					Active Markets for		Observable		Unobservable
	Carrying		Estimated		Identical Assets		Inputs		Inputs
	Amount		Fair Value		(Level 1)		(Level 2)		(Level 3)
Financial assets
Cash and cash equivalents	$	96,521	$	96,521	$	96,521	$	—	$	—
Securities available for sale		321,537		321,537		216,706		104,831		—
Securities held to maturity		25,400		22,457		—		22,457		—
FHLBNY and FRBNY stock		5,283		5,283		—		5,283		—
Net loans receivable		1,434,575		1,373,719		—		—		1,373,719
Accrued interest receivable		7,937		7,937		—		7,937		—
Derivative assets (1)		13,735		13,735		—		13,735		—
Financial liabilities
Deposits
Savings, money market, and demand accounts	$	1,411,385	$	1,411,385	$	—	$	1,411,385	$	—
Time deposits		174,798		173,881		—		173,881		—
Mortgagors’ escrow deposits		8,097		8,097		—		8,097		—
FHLB advances		40,000		39,995		—		39,995		—
Accrued interest payable		143		143		—		143		—
Derivative liabilities (1)		13,735		13,735		—		13,735		—

	June 30, 2024
						Fair Value Measurements Using
							Significant
					Quoted Prices in		Other		Significant
					Active Markets for		Observable		Unobservable
	Carrying		Estimated		Identical Assets		Inputs		Inputs
	Amount		Fair Value		(Level 1)		(Level 2)		(Level 3)
Financial assets
Cash and cash equivalents	$	165,190	$	165,190	$	165,190	$	—	$	—
Securities available for sale		257,409		257,409		243,549		13,860		—
Securities held to maturity		25,090		22,437		—		22,437		—
FHLBNY and FRBNY stock		3,546		3,546		—		3,546		—
Net loans receivable		1,344,069		1,293,472		—		—		1,293,472
Accrued interest receivable		7,559		7,559		—		7,559		—
Derivative assets (1)		16,781		16,781		—		16,781		—
Financial liabilities
Deposits
Savings, money market, and demand accounts	$	1,383,222	$	1,383,222	$	—	$	1,383,222	$	—
Time deposits		167,030		165,420		—		165,420		—
Mortgagors’ escrow deposits		9,701		9,701		—		9,701		—
Accrued interest payable		137		137		—		137		—
Derivative liabilities (1)		16,781		16,781		—		16,781		—

	June 30, 2023
						Fair Value Measurements Using
							Significant
					Quoted Prices in		Other		Significant
					Active Markets for		Observable		Unobservable
	Carrying		Estimated		Identical Assets		Inputs		Inputs
	Amount		Fair Value		(Level 1)		(Level 2)		(Level 3)
Financial assets
Cash and cash equivalents	$	150,478	$	150,478	$	150,478	$	—	$	—
Securities available for sale		431,667		431,667		377,729		53,938		—
Securities held to maturity		23,949		21,744		—		21,744		—
Equity securities		2,413		2,413		2,413		—		—
FHLBNY and FRBNY stock		1,196		1,196		—		1,196		—
Net loans receivable		1,144,169		1,095,366		—		—		1,095,366
Accrued interest receivable		7,194		7,194		—		7,194		—
Derivative assets (1)		18,844		18,844		—		18,844		—
Financial liabilities
Deposits
Savings, money market, and demand accounts	$	1,424,874	$	1,424,874	$	—	$	1,424,874	$	—
Time deposits		116,977		114,596		—		114,596		—
Mortgagors’ escrow deposits		7,888		7,888		—		7,888		—
Accrued interest payable		84		84		—		84		—
Derivative liabilities (1)		18,844		18,844		—		18,844		—

(1) Additional information regarding the impact of offsetting cash collateral can be found in Note 6 – Derivatives.

Short-Term Financial Instruments

The fair value of certain financial instruments are estimated to approximate their carrying amounts because the remaining term to maturity or period to repricing of the financial instrument is less than ninety days. Such financial instruments include cash and cash equivalents, accrued interest receivable and payable and mortgagor’s escrow deposits.

Securities

Fair values of securities available for sale, securities held to maturity and equity securities are determined as outlined earlier in this footnote.

FHLBNY and FRBNY Stock

The fair value of FHLBNY and FRBNY stock approximates its carrying value due to transferability restrictions.

Loans

Fair values are estimated for portfolios of loans with similar financial characteristics. Loans are segregated by type, including residential real estate, commercial real estate, and consumer loans and whether the interest rates are fixed and/or variable.

The estimated fair values of performing loans is calculated by discounting scheduled cash flows through the estimated maturity using estimated market discount rates that reflect the credit and interest rate risk inherent in the respective loan portfolio.

Estimated fair values for nonperforming loans are based on estimated cash flows discounted using a rate commensurate with the credit risk involved. Assumptions regarding credit risk, cash flows, and discount rates are judgmentally determined using available market information and specific borrower information.

Derivatives

Fair values of derivative assets and liabilities are determined as outlined earlier in this footnote.

Deposits

The estimated fair value of deposits with no stated maturity, such as savings, money market and demand deposits, is regarded to be the amount payable on demand. The estimated fair value of time deposits is based on the discounted value of contractual cash flows. The discount rate is estimated using market rates for time deposits with similar maturities. The fair value estimates for deposits do not include the benefit that results from the low-cost funding provided by the deposits as compared to the cost of borrowing funds in the market.

Borrowings

The estimated fair value of FHLBNY advances, if any, is based on the discounted value of contractual cash flows. The discount rate is estimated using the rates currently offered for borrowings with similar remaining maturities.

The fair values of commitments to extend credit, unused lines of credit, and standby letters of credit are not considered material.