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FAIR VALUE
 3 Months Ended
Sep. 30, 2021
Fair Value Disclosures [Abstract]  
FAIR VALUE 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, Fair Value Measurement, 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 following table sets forth the Company’s financial assets and liabilities measured at fair value on a recurring basis at September 30, 2021 and June 30, 2021. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement:
September 30, 2021
(Dollars in thousands)Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)		Significant Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)		Total
ASSETS:
Securities—Trading: Municipal$— $1,941 $— $1,941 
Securities—Available-for-Sale:
Agency Debt1
$— $— $— $— 
Agency MBS1
— 24,526 — 24,526 
Non-Agency MBS2
— — 59,851 59,851 
Municipal— 3,501 — 3,501 
Asset-backed securities and structured notes— 48,118 — 48,118 
Total—Securities—Available-for-Sale$— $76,145 $59,851 $135,996 
Loans Held for Sale$— $33,344 $— $33,344 
Mortgage servicing rights$— $— $18,438 $18,438 
Other assets—Derivative instruments$— $— $2,292 $2,292 
LIABILITIES:
   Other liabilities—Derivative instruments$— $— $66 $66 
June 30, 2021
(Dollars in thousands)Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)		Significant Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)		Total
ASSETS:
Securities—Trading: Municipal
$— $1,983 $— $1,983 
Securities—Available-for-Sale:
Agency Debt1
$— $— $— $— 
Agency MBS1
— 23,913 — 23,913 
Non-Agency MBS2
— — 67,615 67,615 
Municipal— 3,565 — 3,565 
Asset-backed securities and structured notes— 92,242 — 92,242 
Total—Securities—Available-for-Sale$— $119,720 $67,615 $187,335 
Loans Held for Sale$— $29,768 $— $29,768 
Mortgage servicing rights$— $— $17,911 $17,911 
Other assets—Derivative instruments$— $— $2,280 $2,280 
LIABILITIES:
Other liabilities—Derivative instruments$— $— $75 $75 
1Includes securities guaranteed by Ginnie Mae, a U.S. government agency, and the government sponsored enterprises Fannie Mae and Freddie Mac.
2Private sponsors of securities collateralized primarily by first-lien mortgage loans on commercial properties or by pools of 1-4 family residential first mortgages. Primarily super senior securities secured by Alt-A or pay-option ARM mortgages.
The following tables present 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 Months Ended
September 30, 2021
(Dollars in thousands)Securities – Available-for-Sale: Non-Agency MBSMortgage Servicing RightsDerivative Instruments, netTotal
Opening balance$67,615 $17,911 $2,205 $87,731 
Included in earnings—Mortgage banking income— (1,185)21 (1,164)
Included in other comprehensive income(112)— — (112)
Purchases, retentions, issues, sales and settlements:
Purchases/Retentions— 1,712 — 1,712 
Settlements(7,652)— — (7,652)
Closing balance$59,851 $18,438 $2,226 $80,515 
Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period$— $(1,185)$21 $(1,164)

For the Three Months Ended
September 30, 2020
(Dollars in thousands)Securities – Available-for-Sale: Non-Agency MBSMortgage Servicing RightsDerivative Instruments, netTotal
Opening balance$18,332 $10,675 $7,416 $36,423 
Included in earnings—Mortgage banking income— (1,795)5,583 3,788 
Included in other comprehensive income(323)— — (323)
Purchases, retentions, issues, sales and settlements:
Purchases/Retentions— 3,250 — 3,250 
Settlements(397)— — (397)
Closing balance$17,612 $12,130 $12,999 $42,741 
Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period$— $(1,795)$5,583 $3,788 

The table below summarizes the quantitative information about level 3 fair value measurements as of the dates indicated:
September 30, 2021
(Dollars in thousands)Fair ValueValuation TechniqueUnobservable InputRange (Weighted Average)
Securities – Non-agency MBS$59,851 Discounted Cash FlowProjected Constant Prepayment Rate,
Projected Constant Default Rate,
Projected Loss Severity,
Discount Rate over LIBOR
0.0 to 33.9% (2.3%)
0.0 to 4.7% (0.4%)
0.0 to 68.3% (9.4%)
2.7 to 6.3% (3.0%)
Mortgage Servicing Rights$18,438 Discounted Cash FlowProjected Constant Prepayment Rate,
Life (in years),
Discount Rate
6.9 to 37.2% (11.2%)
1.6 to 7.7 (6.5)
9.5 to 14.0% (9.6%)
Derivative Instruments$2,226 Sales Comparison ApproachProjected Sales Profit of Underlying Loans
0.2 to 0.9% (0.5%)
June 30, 2021
(Dollars in thousands)Fair ValueValuation TechniqueUnobservable InputRange (Weighted Average)
Securities – Non-agency MBS$67,615 Discounted Cash FlowProjected Constant Prepayment Rate,
Projected Constant Default Rate,
Projected Loss Severity,
Discount Rate over LIBOR
0.0 to 25.0% (2.7%)
0.0 to 5.6% (0.6%)
0.0 to 100.0% (19.4%)
2.7 to 7.2% (3.1%)
Mortgage Servicing Rights$17,911 Discounted Cash FlowProjected Constant Prepayment Rate,
Life (in years),
Discount Rate
7.5 to 37.4% (11.5%)
1.7 to 7.5 (6.4)
9.5 to 13.0% (9.6%)
Derivative Instruments$2,205 Sales Comparison ApproachProjected Sales Profit of Underlying Loans
0.2 to 0.5% (0.3%)
The significant unobservable inputs used in the fair value measurement of the Company’s residential mortgage-backed securities are projected prepayment rates, probability of default, and projected loss severity in the event of default. Significant increases (decreases) in any of those inputs in isolation would result in a significantly lower (higher) fair value measurement. Generally, a change in the assumption used for the probability of default is accompanied by a directionally similar change in the assumption used for the projected loss severity and a directionally opposite change in the assumption used for projected prepayment rates.
The table below summarizes assets measured for impairment on a non-recurring basis:
September 30, 2021
(Dollars in thousands)Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)		Significant Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)		Balance
Other real estate owned and foreclosed assets:
Single family real estate$— $— $6,114 $6,114 
Autos and RVs— — 206 206 
Total$— $— $6,320 $6,320 
June 30, 2021
(Dollars in thousands)Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)		Significant Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)		Balance
Other real estate owned and foreclosed assets:
Single family real estate$— $— $6,547 $6,547 
Autos and RVs— — 235 235 
Total$— $— $6,782 $6,782 
Other real estate owned and foreclosed assets, which are measured at the lower of carrying value or fair value less costs to sell, had a net carrying amount of $6,320 after charge-offs of $12 for the three months ended September 30, 2021.
The Company has elected the fair value option for Agency loans held for sale. These loans are intended for sale and the Company believes that the fair value is the best indicator of the resolution of these loans. Interest income is recorded based on the contractual terms of the loan and in accordance with the Company’s policy on loans held for investment. None of these loans are 90 days or more past due nor on nonaccrual as of September 30, 2021 and June 30, 2021.
As of September 30, 2021 and June 30, 2021, the aggregate fair value of loans held for sale, carried at fair value, contractual balance (including accrued interest), and unrealized gain was as follows:
(Dollars in thousands)September 30, 2021June 30, 2021
Aggregate fair value$33,344 $29,768 
Contractual balance32,494 28,940 
Unrealized gain $850 $828 
The total amount of gains and losses from changes in fair value included in earnings for the period indicated below for loans held for sale were:
For the Three Months Ended
September 30,
(Dollars in thousands)20212020
Interest income$200 $382 
Change in fair value43 6,885 
Total $243 $7,267 
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:
September 30, 2021
(Dollars in thousands)Fair ValueValuation Technique(s)Unobservable Input
Range (Weighted Average) 1
Other real estate owned and foreclosed assets:
Single family real estate$6,114 Sales comparison approachAdjustment for differences between the comparable sales
(3.8) to 0.9% (0.1%)
Autos and RVs$206 Sales comparison approachAdjustment for differences between the comparable sales
1.5 to 21.5% (1.5%)
June 30, 2021
(Dollars in thousands)Fair ValueValuation Technique(s)Unobservable Input
Range (Weighted Average) 1
Other real estate owned and foreclosed assets:
Single family real estate$6,547 Sales comparison approachAdjustment for differences between the comparable sales
(1.5) to 6.1% (2.0%)
Autos and RVs$235 Sales comparison approachAdjustment for differences between the comparable sales
(2.1) to 14.7% (2.1%)
1 For other real estate owned and foreclosed assets the ranges shown may vary positively or negatively based on the comparable sales reported in the current appraisal. In certain instances, the range can be significant due to small sample sizes and in some cases the property being valued having limited comparable sales with similar characteristics at the time the current appraisal is conducted.
Fair value of Financial Instruments
The carrying amounts and estimated fair values of financial instruments at September 30, 2021 and June 30, 2021 were as follows:
September 30, 2021
Fair Value
(Dollars in thousands)Carrying
Amount		Level 1Level 2Level 3Total Fair Value
Financial assets:
Cash and cash equivalents$1,269,434 $1,269,434 $— $— $1,269,434 
Securities — trading1,941 — 1,941 — 1,941 
Securities — available-for-sale135,996 — 76,145 59,851 135,996 
Loans held for sale, at fair value33,344 — 33,344 — 33,344 
Loans held for sale, at lower of cost or fair value11,949 — — 12,041 12,041 
Loans held for investment—net11,879,021 — — 12,252,262 12,252,262 
Securities borrowed457,282 — — 457,282 457,282 
Customer, broker-dealer and clearing receivables427,169 — — 427,297 427,297 
Mortgage servicing rights18,438 — — 18,438 18,438 
Financial liabilities:
Total deposits11,747,442 — 11,191,110 — 11,191,110 
Advances from the Federal Home Loan Bank157,500 — 157,500 — 157,500 
Borrowings, subordinated notes and debentures255,896 — 251,279 — 251,279 
Securities loaned539,505 — — 541,339 541,339 
Customer, broker-dealer and clearing payables510,040 — — 510,040 510,040 
June 30, 2021
Fair Value
(Dollars in thousands)Carrying
Amount		Level 1Level 2Level 3Total Fair Value
Financial assets:
Cash and cash equivalents$1,037,777 $1,037,777 $— $— $1,037,777 
Securities — trading1,983 — 1,983 — 1,983 
Securities — available-for-sale187,335 — 119,720 67,615 187,335 
Loans held for sale, at fair value29,768 — 29,768 — 29,768 
Loans held for sale, at lower of cost or fair value12,294 — — 12,336 12,336 
Loans held for investment—net11,414,814 — — 11,833,102 11,833,102 
Securities borrowed619,088 — — 619,274 619,274 
Customer, broker-dealer and clearing receivables369,815 — — 369,815 369,815 
Mortgage servicing rights17,911 — — 17,911 17,911 
Financial liabilities:
Total deposits10,815,797 — 10,297,450 — 10,297,450 
Advances from the Federal Home Loan Bank353,500 — 353,500 — 353,500 
Borrowings, subordinated notes and debentures221,358 — 210,196 — 210,196 
Securities loaned728,988 — — 731,467 731,467 
Customer, broker-dealer and clearing payables535,425 — — 535,425 535,425 
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, deposits, borrowings or subordinated debt and for variable rate loans, deposits, borrowings or subordinated debt 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. A discussion of the methods of valuing trading securities, available for sale securities and loans held for sale can be found in Note 3 – “Fair Value” of our Form 10-K for the year ended June 30, 2021. The carrying amount of stock of regulatory agencies approximates the estimated fair value of this investment. The fair value of off-balance sheet items is not considered material.