FAIR VALUE

Fair value is defined as the price that would be received for an asset or paid to transfer a liability (an 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. ASC Topic 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

Level 1:

Quoted prices in active markets for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date. Level 1 assets and liabilities include debt and equity securities that are actively traded in an exchange or over-the-counter market and are highly liquid, such as, among other assets and securities, certain U.S. treasury and other U.S Government and agency mortgage-backed debt.

Level 2:

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 for substantially the full term of the assets or liabilities. Level 2 assets include securities with quoted prices that are traded less frequently than exchange-traded instruments and whose value is determined using a pricing model with inputs that are observable in the market or can be derived principally from or corroborated by observable market data.

Level 3:

Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models such as discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

When available, the Company generally uses quoted market prices to determine fair value, in which case the items are classified in Level 1. In some cases where a market price is available, the Company will make use of acceptable practical expedients (such as matrix pricing) to calculate fair value, in which case the items are classified in Level 2.

The Company considers relevant and observable market prices in its valuations where possible. The frequency of transactions, the size of the bid-ask spread and the nature of the participants are some of the factors the Company uses to help determine whether a market is active and orderly or inactive and not orderly. Price quotes based upon transactions that are not orderly are not considered to be determinative of fair value and should be given little, if any, weight in measuring fair value.

If quoted market prices are not available, fair value is based upon internally developed valuation techniques that use, where possible, current market-based or independently sourced market parameters, such as interest rates, credit spreads, housing value forecasts, etc. Items valued using such internally generated valuation techniques are classified according to the lowest level input or value driver that is significant to the valuation. Thus, an item may be classified in Level 3 even though there may be some significant inputs that are readily observable.

The following section describes the valuation methodologies used by the Company to measure various financial instruments at fair value, including an indication of the level in the fair-value hierarchy in which each instrument is generally classified:

Securities—trading. Trading securities are recorded at fair value. The trading portfolio consists of two different issues of floating-rate debt securities collateralized by pools of bank trust preferred securities. Recent liquidity and economic uncertainty have made the market for collateralized debt obligations less active or inactive. As quoted market prices are not available, the Level 3 fair values for these securities are determined by the Company utilizing industry-standard tools to calculate the net present value of the expected cash flows available to the securities from the underlying assets. The Company’s expected cash flows are calculated for each security and include the impact of actual and forecasted bank defaults within each collateral pool as well as structural features of the security’s tranche such as lock outs, subordination and overcollateralization. The forecast of underlying bank defaults in each pool is based upon a quarterly financial update including the trend in non-performing assets, the allowance for loan loss and the underlying bank’s capital ratios. Also a factor is the Company’s loan loss experience in the local economy in which the bank operates. At March 31, 2012, the Company’s forecast of cash flows for both securities includes actual and forecasted defaults totaling 34.70% of all banks in the collateral pools, compared to 28.55% of the banks actually in default. The expected cash flows reflect the Company’s best estimate of all pool losses which are then applied to the overcollateralization reserve and the subordinated tranches to determine the cash flows. The Company selects a discount rate margin based upon the spread between U.S. Treasury rates and the market rates for active credit grades for financial companies. The discount margin when added to the U.S. Treasury rate determines the discount rate, reflecting primarily market liquidity and interest rate risk since expected credit loss is included in the cash flows. At March 31, 2012, the Company used a weighted average discount margin of 425 basis points above U.S. Treasury rates to calculate the net present value of the expected cash flows and the fair value of its trading securities.

The Level 3 fair values determined by the Company for its trading securities rely heavily on management’s assumptions as to the future credit performance of the collateral banks, the impact of the global and regional recession, the timing of forecasted defaults and the discount rate applied to cash flows. The fair value of the trading securities at March 31, 2012 is sensitive to an increase or decrease in the discount rate. An increase in the discount margin of 100 basis points would have reduced the total fair value of the trading securities and decreased net income before income tax by $740. A decrease in the discount margin of 100 basis points would have increased the total fair value of the trading securities and increased net income before income tax by $880.

Securities—available for sale and held to maturity. Available for sale securities are recorded at fair value and consist of residential mortgage-backed securities (RMBS) and debt securities issued by U.S. agencies as well as RMBS issued by non-agencies. Held to maturity securities are recorded at amortized cost and consist of RMBS issued by U.S. agencies as well as RMBS issued by non-agencies. Fair value for U.S. agency securities is generally based on quoted market prices of similar securities used to form a dealer quote or a pricing matrix. There continues to be significant illiquidity in the market for RMBS issued by non-agencies, impacting the availability and reliability of transparent pricing. As orderly quoted market prices are not available, the Level 3 fair values for these securities are determined by the Company utilizing industry-standard tools to calculate the net present value of the expected cash flows available to the securities from the underlying mortgage assets. The Company computes Level 3 fair values for each non-agency RMBS in the same manner (as described below) whether available for sale or held to maturity.

To determine the performance of the underlying mortgage loan pools, the Company estimates prepayments, defaults, and loss severities based on a number of macroeconomic factors, including housing price changes, unemployment rates, interest rates and borrower attributes such as credit score and loan documentation at the time of origination. The Company inputs for each security a projection of monthly default rates, loss severity rates and voluntary prepayment rates for the underlying mortgages for the remaining life of the security to determine the expected cash flows. The projections of default rates are derived by the Company from the historic default rate observed in the pool of loans collateralizing the security, increased by and decreased by the forecasted increase or decrease in the national unemployment rate. The projections of loss severity rates are derived by the Company from the historic loss severity rate observed in the pool of loans, increased by (and decreased by) the forecasted decrease or increase in the national home price appreciation (HPA) index. The largest factor influencing the Company’s modeling of the monthly default rate is unemployment. The most updated national unemployment rate announced prior to the end of the period covered by this report (reported in February 2012) was 8.3%, down from the high of 10.1% in October 2009. Consensus estimates for unemployment are that the rate will continue to decline. Going forward, the Company is projecting lower monthly default rates. The range of loss severity rates applied to each default used in the Company’s projections at March 31, 2012 are from 22.43% up to 78.12% based upon individual bond historical performance. The default rates and the severities are projected for every non-agency RMBS security held by the Company and will vary monthly based upon the actual performance of the security and the macroeconomic factors discussed above.

To determine the discount rates used to compute the present value of the expected cash flows for these non-agency RMBS securities, the Company separates the securities by the borrower characteristics in the underlying pool. Specifically, “prime” securities generally have borrowers with higher FICO scores and better documentation of income. “Alt-A” securities generally have borrowers with a little lower FICO and a little less documentation of income. “Pay-option ARMs” are Alt-A securities with borrowers that tend to pay the least amount of principal (or increase their loan balance through negative amortization). The Company calculates separate discount rates for prime, Alt-A and Pay-option ARM non-agency RMBS securities using market-participant assumptions for risk, capital and return on equity. The range of annual default rates used in the Company’s projections at March 31, 2012 are from 1.5% up to 24.08% with prime securities tending toward the lower end of the range and Alt-A and Pay-option ARMs tending toward the higher end of the range. The Company applies its discount rates to the projected monthly cash flows which already reflect the full impact of all forecasted losses using the assumptions described above. When calculating present value of the expected cash flows at March 31, 2012, the Company computed its discount rates as a spread between 222 and 368 basis points over the LIBOR Index using the LIBOR forward curve with prime securities tending toward the lower end of the range and Alt-A and Pay-option ARMs tending toward the higher end of the range.

Loans Held for Sale. Loans held for sale at fair value are primarily single-family and multi-family residential loans. The fair value of loans held for sale is determined, by pricing for comparable assets or by existing forward sales commitment prices with investors.

Impaired Loans. Impaired loans are loans which are inadequately protected by the current net worth and paying capacity of the borrowers or of the collateral pledged and the accrual of interest income has been discontinued. The impaired loans are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. The Bank assesses loans individually and identifies impairment when the loan is classified as impaired or been restructured or management has serious doubts about the future collectibility of principal and interest, even though the loans may currently be performing. The fair value of an impaired loan is determined based on an observable market price or current appraised value of the underlying collateral. The fair value of impaired loans with specific write-offs or allocations of the allowance for loan and lease losses are generally based on recent real estate appraisals or other third-party valuations and analysis of cash flows. These appraisals and analysis may utilize a single valuation approach or a combination of approaches including comparable sales and income approaches. Adjustments are routinely made in the process by the appraisers to adjust for differences between the comparable sales and income data available. These adjustments to the estimated fair value of non-performing loans may result in increases or decreases to the provision for loan losses recorded in current earnings. Such adjustments are typically significant and result in a Level 3 classification for the inputs for determining fair value.

Other Real Estate Owned. Nonrecurring adjustments to certain commercial and residential real estate properties classified as other real estate owned (OREO) are measured at the lower of carrying amount or fair value, less costs to sell. Fair values are generally based on third party appraisals of the property, resulting in a Level 3 classification. In cases where the carrying amount exceeds the fair value, less costs to sell, an impairment loss is recognized.

Mortgage Banking Derivatives. Level 3 fair values for mortgage banking derivatives are either based upon prices in active secondary markets for identical securities or based on quoted market prices of similar assets used to form a dealer quote or a pricing matrix. If no such quoted price exists, the fair value of a commitment is determined by quoted prices for a similar commitment or commitments, adjusted for the specific attributes of each commitment. These fair values are then adjusted for items such as fallout and estimated costs to originate the loan.

The Company'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 Company's valuation methodologies are appropriate and consistent with or, in some cases, more conservative than 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 relevant reporting date.

The following table sets forth the Company’s financial assets and liabilities measured at fair value on a recurring basis at March 31, 2012 and June 30, 2011. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement:



	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
	(Dollars in thousands)
	March 31, 2012
ASSETS:
Securities—Trading: Collateralized Debt Obligations	$	—	$	—	$	5,983	$	5,983
Securities—Available for Sale:
Agency Debt	—		10,037		—		10,037
Agency RMBS	—		62,497		—		62,497
Non-Agency RMBS	—		—		90,419		90,419
Non-Agency Other	—		7,444		—		7,444
Total—Securities—Available for Sale	$	—	$	79,978	$	90,419	$	170,397
Loans Held for Sale	$	—	$	44,286	$	—	$	44,286
Other assets—Derivative instruments	$	—	$	—	$	971	$	971

LIABILITIES:
Other liabilities—Derivative instruments	$	—	$	—	$	—	$	—

	June 30, 2011
ASSETS:
Securities—Trading: Collateralized Debt Obligations	$	—	$	—	$	5,053	$	5,053
Securities—Available for Sale:
Agency Debt	$	—	$	—	$	—	$	—
Agency RMBS	—		61,919		—		61,919
Non-Agency RMBS	—		—		83,752		83,752
Total—Securities—Available for Sale	$	—	$	61,919	$	83,752	$	145,671
Loans Held for Sale	$	—	$	20,110	$	—	$	20,110
Other assets—Derivative instruments	$	—	$	—	$	543	$	543

LIABILITIES:
Other liabilities—Derivative instruments	$	—	$	—	$	125	$	125

The following table presents additional information about assets measured at fair value on a recurring basis and for which the Company has utilized Level 3 inputs to determine fair value:



	For the three month period ended
	March 31, 2012
	Available for Sale Securities: RMBS Non-Agency			Trading Securities Other Debt Securities: Non-Agency		Derivative Instruments, net			Total
	(Dollars in thousands)
Assets:
Opening Balance	$	95,409		$	5,678	$	1,094		$	102,181
Transfers into Level 3	—			—		—			—
Transfers out of Level 3	—			—		—			—
Total gains or losses for the period:
Included in earnings—Sale of mortgage-back securities	—			—		—			—
Included in earnings—Fair value gain on trading securities	—			305		—			305
Included in earnings—Mortgage banking	—			—		(123		)	(123		)
Included in other comprehensive income	2,678			—		—			2,678
Purchases, issues, sales and settlements:
Purchases	—			—		—			—
Issues	—			—		—			—
Sales	—			—		—			—
Settlements	(7,404		)	—		—			(7,404		)
Other than temporary impairment	(264		)	—		—			(264		)
Closing balance	$	90,419		$	5,983	$	971		$	97,373

Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period	$	—		$	305	$	(123	)	$	182



	For the nine month period ended
	March 31, 2012
	Available for Sale Securities: RMBS Non-Agency			Trading Securities Other Debt Securities: Non-Agency		Derivative Instruments, net		Total
	(Dollars in thousands)
Assets:
Opening Balance	$	83,752		$	5,053	$	418	$	89,223
Transfers into Level 3	—			—		—		—
Transfers out of Level 3	—			—		—		—
Total gains or losses for the period:
Included in earnings—Sale of mortgage-back securities	—			—		—		—
Included in earnings—Fair value gain on trading securities	—			930		—		930
Included in earnings—Mortgage banking	—			—		553		553
Included in other comprehensive income	909			—		—		909
Purchases, issues, sales and settlements:
Purchases	19,999			—		—		19,999
Issues	—			—		—		—
Sales	—			—		—		—
Settlements	(13,765		)	—		—		(13,765		)
Other than temporary impairment	(476		)	—		—		(476		)
Closing balance	$	90,419		$	5,983	$	971	$	97,373

Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period	$	—		$	930	$	553	$	1,483



	For the three month period ended
	March 31, 2011
	Available for Sale Securities: RMBS Non-Agency			Trading Securities Other Debt Securities: Non-Agency		Derivative Instruments, net		Total
	(Dollars in thousands)
Assets:
Opening Balance	$	110,548		$	4,428	$	786	$	115,762
Transfers into Level 3	—			—		—		—
Transfers out of Level 3	—			—		—		—
Total gains or losses for the period:
Included in earnings—Sale of mortgage-back securities	1,308			—		—		1,308
Included in earnings—Fair value gain on trading securities	—			41		—		41
Included in earnings—Mortgage banking	—			—		488		488
Included in other comprehensive income	(1,732		)	—		—		(1,732		)
Purchases, issues, sales and settlements:
Purchases	—			—		—		—
Issues	—			—		—		—
Sales	(6,938		)	—		—		(6,938		)
Settlements	(7,162		)	—		—		(7,162		)
Other than temporary impairment	(716		)	—		—		(716		)
Closing balance	$	95,308		$	4,469	$	1,274	$	101,051

Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period	$	—		$	41	$	488	$	529



	For the nine month period ended
	March 31, 2011
	Available for Sale Securities: RMBS Non-Agency			Trading Securities Other Debt Securities: Non-Agency		Derivative Instruments, net		Total
	(Dollars in thousands)
Assets:
Opening Balance	$	123,186		$	4,402	$	199	$	127,787
Transfers into Level 3	—			—		—		—
Transfers out of Level 3	—			—		—		—
Total gains or losses for the period:
Included in earnings—Sale of mortgage-back securities	1,790			—		—		1,790
Included in earnings—Fair value gain on trading securities	—			67		—		67
Included in earnings—Mortgage banking	—			—		78		78
Included in other comprehensive income	(3,870		)	—		—		(3,870		)
Purchases, issues, sales and settlements:
Purchases	—			—		—		—
Issues	—			—		—		—
Sales	(7,110		)	—		—		(7,110		)
Settlements	(17,017		)	—		—		(17,017		)
Other than temporary impairment	(1,671		)	—		—		(1,671		)
Closing balance	$	95,308		$	4,469	$	277	$	100,054

Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period	$	—		$	67	$	78	$	145

The Table below summarizes the quantitative information about level 3 fair value measurements at the periods indicated:



	Fair Value at
	March 31, 2012		Valuation Technique(s)	Unobservable Input	Range (Weighted Average)
	(Dollars in thousands)

Securities - Trading	$	5,983	Discounted Cash Flow	Total projected defaults	29 to 40% (33.3%)
Securities - Non agency MBS	$	90,419	Discounted Cash Flow	Constant Prepayment Rate, Constant Default Rate, Loss Severity	2.5 to 69.5% (15.2%) 1.5 to 50.6% (12.5%) 1.6 to 78.1% (56.1%)
Derivative Instruments	$	971	Sales Comparison Approach	Projected Sales Profit of Underlying Loans	0.5 to 1.5%



	Fair Value at
	June 30, 2011		Valuation Technique(s)	Unobservable Input	Range (Weighted Average)
	(Dollars in thousands)

Securities - Trading	$	5,053	Discounted Cash Flow	Projected Total Default	31 to 46% (35.0%)
Securities - Non agency MBS	$	83,752	Discounted Cash Flow	Constant Prepayment Rate, Constant Default Rate, Loss Severity	2.5 to 62.7% (14.0%) 0.7 to 22.1% (10.4%) 1.6 to 76.1% (56.2%)
Derivative Instruments	$	418	Sales Comparison Approach	Projected Sales Profit of Underlying Loans	0.5 to 1.5%

The significant unobservable inputs used in the fair value measurement of the Company's residential mortgage-backed securities are prepayment rates, probability of default, and loss severity in the event of default. Significant increases (decreases) in any of those inputs in isolation would result in a significantly lower (higher) fair value measurement. Generally, a change in the assumption used for the probability of default is accompanied by a directionally similar change in the assumption used for the loss severity and a directionally opposite change in the assumption used for prepayment rates.

The Table below summarizes changes in unrealized gains and losses and interest income recorded in earnings for level 3 assets and liabilities that are still held at the periods indicated:



	For the Three Months Ended March 31,				For the Nine Months Ended March 31,
	2012		2011		2012		2011
	(Dollars in thousands)
Interest income on investments	$	63	$	28	$	122	$	91
Fair value adjustment	305		42		930		67
Total	$	368	$	70	$	1,052	$	158

The Table below summarizes assets measured for impairment on a non-recurring basis was as follows:



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance
	(Dollars in thousands)
	March 31, 2012
Impaired Loans:
Single Family	$	—	$	—	$	5,983	$	5,983
Multifamily	—		—		1,731		1,731
Commercial					279		279
RV/Auto	—		—		644		644
Total	—		—		8,637		8,637
Other real estate owned and foreclosed assets:
Single Family	—		—		737		737
Multifamily	—		—		—		—
RV/Auto	—		—		627		627
Total	$	—	$	—	$	1,364	$	1,364
HTM Securities-Non Agency MBS	$	—	$	—	$	115,781	$	115,781



	June 30, 2011
Impaired Loans:
Single Family	$	—	$	—	$	3,812	$	3,812
Multifamily	—		—		611		611
Total	—		—		4,423		4,423
Other real estate owned and foreclosed assets:
Single Family	—		—		1,779		1,779
Multifamily	—		—		5,899		5,899
RV/Auto	—		—		1,926		1,926
Total	$	—	$	—	$	9,604	$	9,604
HTM Securities-Non Agency MBS	$	—	$	—	$	108,354	$	108,354

Impaired loans measured for impairment on a non-recurring basis using the fair value of the collateral for collateral-dependent loans have a carrying amount of $8,637after a charge-off of $3,220, and a no valuation allowance at March 31, 2012, resulting in an additional provision for loan losses of $2,405 during the nine months ended March 31, 2012 and $865 for the nine months ended March 31, 2011. At June 30, 2011, our collateral-dependent loans had a carrying amount of $4,423 after a charge-off of $1,207.

Other real estate owned and foreclosed assets, which is measured at the lower of carrying or fair value less costs to sell, had a net carrying amount of $1,364, with a valuation allowance of $62 and $77for the three and nine months ended March 31, 2012. Our other real estate owned and foreclosed assets had a net carrying amount of 8,700 after a valuation allowance of $387 and $437during the three and nine months ended March 31, 2011.

Held to maturity securities measured for impairment on a non-recurring basis had a carrying amount of $115,781 at March 31, 2012, after net impairment charge to income of $1,211 and other comprehensive loss of zero during the three months ended March 31, 2012. During the nine months ended March 31, 2012, the Company recognized a net impairment charge to income of $2,523 and other comprehensive income of $120. These held to maturity securities are valued using Level 3 inputs.

The following table presents quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at the periods indicated:



	Fair Value at
	March 31, 2012		Valuation Technique(s)	Unobservable Input	Range (Weighted Average)
	(Dollars in thousands)
Impaired loans:
Single Family	$	5,983	Sales comparison approach	Adjustment for differences between the comparable sales	-26.6 to 36.5% (5.1%)
Multifamily	$	1,731	Sales comparison approach and income approach	Adjustment for differences between the comparable sales and adjustments for differences in net operating income expectations Capitalization rate	-23.4 to -6.5% (-15.6%)
Commercial	$	279	Sales comparison approach and income approach	Adjustment for differences between the comparable sales and adjustments for differences in net operating income expectations Capitalization rate	-31.1 to -31.1% (-31.1%)
RV/Auto	$	644	Sales comparison approach	Adjustment for differences between the comparable sales	-45.9 to 36.6% (-5.1%)
Other real estate owned:
Single Family	$	737	Sales comparison approach	Adjustment for differences between the comparable sales	-2.8 to 3.6% (-.6%)
RV/Auto	$	627	Sales comparison approach	Adjustment for differences between the comparable sales	-45.9 to 36.6% (-5.1%)



	Fair Value at
	June 30, 2011		Valuation Technique(s)	Unobservable Input	Range (Weighted Average)
	(Dollars in thousands)
Impaired loans:
Single Family	$	3,812	Sales comparison approach	Adjustment for differences between the comparable sales	-14.6 to 31.9% (4.3%)
Multifamily	$	611	Sales comparison approach and income approach	Adjustment for differences between the comparable sales and adjustments for differences in net operating income expectations Capitalization rate	0 to .7% (.5%)
Commercial	$	—	Sales comparison approach and income approach	Adjustment for differences between the comparable sales and adjustments for differences in net operating income expectations Capitalization rate	—
RV/Auto	$	—	Sales comparison approach	Adjustment for differences between the comparable sales	—
Other real estate owned:
Single Family	$	1,779	Sales comparison approach	Adjustment for differences between the comparable sales	-18.3 to15.4% (-9.8%)
Multifamily	$	5,899	Sales comparison approach	Adjustment for differences between the comparable sales	-34.3 to 4.9% (-20.7%)
RV/Auto	$	1,926	Sales comparison approach	Adjustment for differences between the comparable sales	-29.1 to 27.5% (-2.3%)

Fair value of Financial Instruments

The carrying amounts and estimated fair values of financial instruments at the periods indicated:



	March 31, 2012
			Fair Value
	Carrying Amount		Level 1		Level 2		Level 3		Total Fair Value
	(Dollars in Thousands)
Financial assets:
Cash and cash equivalents	$	25,858	$	25,858	$	—	$	—	$	25,858
Securities trading	5,983		—		—		5,983		5,983
Securities available for sale	170,397		—		79,978		90,419		170,397
Securities held to maturity	328,528		—		114,936		234,790		349,726
Stock of the Federal Home Loan Bank	16,873		—		—		—		N/A
Loans held for sale, at fair value	44,286		—		44,286		—		44,286
Loans held for sale, at lower of cost or market	45,329		—		—		46,925		46,925
Loans held for investment—net	1,595,704		—		—		1,640,520		1,640,520
Accrued interest receivable	7,599		—		7,599		—		7,599
Financial liabilities:
Time deposits and savings	1,575,473		587,638		1,003,233		—		1,590,871
Securities sold under agreements to repurchase	120,000		—		132,093		—		132,093
Advances from the Federal Home Loan Bank	359,000		—		368,721		—		368,721
Subordinated debentures and other borrowings	5,155		—		5,155		—		5,155
Accrued interest payable	1,940		—		1,940		—		1,940

Carrying amount and estimated fair values of financial instruments at period-end were as follows:



	March 31, 2012				June 30, 2011
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(Dollars in Thousands)
Financial assets:
Cash and cash equivalents	$	25,858	$	25,858	$	9,052	$	9,052
Securities trading	5,983		5,983		5,053		5,053
Securities available for sale	170,397		170,397		145,671		145,671
Securities held to maturity	328,528		349,725		370,626		387,286
Stock of the Federal Home Loan Bank	16,873		N/A		15,463		N/A
Loans held for sale, at fair value	44,286		44,286		20,110		20,110
Loans held for sale, at lower of cost or market	45,329		46,925		—		—
Loans held for investment—net	1,595,704		1,640,520		1,325,101		1,372,243
Accrued interest receivable	7,599		7,599		6,577		6,577
Financial liabilities:
Time deposits and savings	1,575,473		1,590,871		1,340,325		1,347,951
Securities sold under agreements to repurchase	120,000		132,093		130,000		142,881
Advances from the Federal Home Loan Bank	359,000		368,721		305,000		311,477
Subordinated debentures and other borrowings	5,155		5,155		7,655		7,655
Accrued interest payable	1,940		1,940		2,237		2,237

The methods and assumptions, not previously presented, used to estimate fair value are described as follows:

Carrying amount is the estimated fair value for cash and cash equivalents, interest bearing deposits, accrued interest receivable and payable, demand deposits, short-term debt, and variable rate loans or deposits that reprice frequently and fully. For fixed rate loans or deposits and for variable rate loans or deposits with infrequent repricing or repricing limits, fair value is based on discounted cash flows using current market rates applied to the estimated life and credit risk. It was not practicable to determine the fair value of FHLB stock due to restrictions placed on its transferability. The fair value of off-balance sheet items is not considered material.