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Investment Securities

6 Months Ended

Dec. 31, 2023

Investment Securities

Investment Securities

Note 4: Investment Securities

The amortized cost and estimated fair value of investment securities as of December 31, 2023 and June 30, 2023 were as follows:


					Gross			Gross			Estimated
		Amortized			Unrealized			Unrealized			Fair			Carrying
December 31, 2023		Cost			Gains			(Losses)			Value			Value
(In Thousands)
Held to maturity
U.S. government sponsored enterprise MBS⁽¹⁾		$	137,205		$	63		$	(15,061)		$	122,207		$	137,205
U.S. government sponsored enterprise CMO⁽²⁾			3,857			—			(256)			3,601			3,857
U.S. SBA securities⁽³⁾			630			—			(1)			629			630
Total investment securities - held to maturity			141,692			63			(15,318)			126,437			141,692

Available for sale
U.S. government agency MBS			1,328			—			(14)			1,314			1,314
U.S. government sponsored enterprise MBS			587			1			(4)			584			584
Private issue CMO			99			—			(1)			98			98
Total investment securities - available for sale			2,014			1			(19)			1,996			1,996
Total investment securities		$	143,706		$	64		$	(15,337)		$	128,433		$	143,688

(1)Mortgage-Backed Securities (“MBS”).

(2)Collateralized Mortgage Obligations (“CMO”).

(3)Small Business Administration (“SBA”).


					Gross			Gross			Estimated
		Amortized			Unrealized			Unrealized			Fair			Carrying
June 30, 2023		Cost			Gains			(Losses)			Value			Value
(In Thousands)
Held to maturity
U.S. government sponsored enterprise MBS		$	149,803		$	—		$	(18,459)		$	131,344		$	149,803
U.S. government sponsored enterprise CMO			3,883			—			(336)			3,547			3,883
U.S. SBA securities			651			—			(1)			650			651
Total investment securities - held to maturity			154,337			—			(18,796)			135,541			154,337

Available for sale
U.S. government agency MBS			1,417			—			(47)			1,370			1,370
U.S. government sponsored enterprise MBS			697			—			(14)			683			683
Private issue CMO			103			—			(1)			102			102
Total investment securities - available for sale			2,217			—			(62)			2,155			2,155
Total investment securities		$	156,554		$	—		$	(18,858)		$	137,696		$	156,492

In the second quarters of fiscal 2024 and 2023, the Corporation received MBS principal payments of $5.9 million and $7.6 million, respectively, and there were no purchases or sales of investment securities during these periods.

For the first six months of fiscal 2024 and 2023, the Corporation received MBS principal payments of $12.6 million and $16.9 million, respectively, and there were no purchases or sales of investment securities during these periods.

The Corporation held investments with an unrealized loss position of $15.3 million at December 31, 2023 and $18.9 million at June 30, 2023 as follows:


As of December 31, 2023		Unrealized Holding Losses						Unrealized Holding Losses						Unrealized Holding Losses
(In Thousands)		Less Than 12 Months						12 Months or More						Total
		Fair			Unrealized			Fair			Unrealized			Fair			Unrealized
Description of Securities		Value			Losses			Value			Losses			Value			Losses
Held to maturity
U.S. government sponsored enterprise MBS		$	—		$	—		$	117,410		$	15,061		$	117,410		$	15,061
U.S. government sponsored enterprise CMO			—			—			3,601			256			3,601			256
U.S. SBA securities			—			—			629			1			629			1
Total investment securities - held to maturity			—			—			121,640			15,318			121,640			15,318

Available for sale
U.S government agency MBS			—			—			1,216			14			1,216			14
U.S. government sponsored enterprise MBS			61			1			444			3			505			4
Private issue CMO			—			—			98			1			98			1
Total investment securities - available for sale			61			1			1,758			18			1,819			19
Total investment securities		$	61		$	1			123,398		$	15,336		$	123,459		$	15,337


As of June 30, 2023		Unrealized Holding Losses						Unrealized Holding Losses						Unrealized Holding Losses
(In Thousands)		Less Than 12 Months						12 Months or More						Total
		Fair			Unrealized			Fair			Unrealized			Fair			Unrealized
Description of Securities		Value			Losses			Value			Losses			Value			Losses
Held to maturity
U.S. government sponsored enterprise MBS		$	10,839		$	253		$	120,506		$	18,206		$	131,345		$	18,459
U.S. government sponsored enterprise CMO			—			—			3,547			336			3,547			336
U.S. SBA securities			650			1			—			—			650			1
Total investment securities - held to maturity			11,489			254			124,053			18,542			135,542			18,796

Available for sale
U.S government agency MBS			696			20			673			27			1,369			47
U.S. government sponsored enterprise MBS			87			2			558			12			645			14
Private issue CMO			—			—			102			1			102			1
Total investment securities - available for sale			783			22			1,333			40			2,116			62
Total investment securities		$	12,272		$	276		$	125,386		$	18,582		$	137,658		$	18,858

The Corporation adopted ASC 326 on July 1, 2023. The Corporation evaluates individual investment securities quarterly for impairment. At December 31, 2023, predominately all of the $15.3 million of unrealized holding losses were in a loss position for 12 months or more; while at June 30, 2023, $18.6 million of the $18.9 million of unrealized holding losses were in a loss position for 12 months or more. The unrealized losses on investment securities were attributable to changes in interest rates relative to when the investment securities were purchased and not due to the credit quality of the investment securities, which are predominately U.S. government sponsored enterprise (GSE) securities that are either explicitly or implicitly guaranteed by the U.S. government and have a long history of no credit losses. Therefore, the Corporation has determined that the unrealized losses are due to the fluctuating nature of interest rates, and not related to credit risks. As a part of the Corporation’s monthly risk assessment, the Corporation runs a number of stressed liquidity scenarios. These liquidity scenarios support the Corporation’s assessment that the Corporation has the ability to hold these securities until maturity and does not need to liquidate these investment securities in order to maintain adequate liquidity. As a result, no ACL on investment securities was recorded at adoption and at December 31, 2023.

In order to maintain adequate liquidity, the Bank has established borrowing facilities with various counterparties. The Bank had a remaining borrowing capacity of $266.5 million as of December 31, 2023 at the FHLB of San Francisco. In addition, the Bank has secured an estimated $183.0 million discount window facility at the FRB of San Francisco collateralized by investment securities with total balance of $137.8 million and loans with total balance of $107.0 million as of December 31, 2023. As of December 31, 2023, the Bank also has a borrowing arrangement in the form of a federal funds facility with its correspondent bank for $50.0 million. The Bank had no advances under the Federal Reserve discount window or correspondent bank facility as of December 31, 2023. The total available borrowing capacity across all sources totaled approximately $499.5 million at December 31, 2023.

At June 30, 2023, the Bank had a remaining borrowing capacity of $287.9 million at the FHLB of San Francisco. In addition, the Bank had secured an estimated $139.0 million discount window facility at the FRB of San Francisco collateralized by investment securities with a June 30, 2023 total balance of $150.3 million. As of June 30, 2023, the Bank also had a borrowing arrangement in the form of a federal funds facility with its correspondent bank for $50.0 million. The Bank had no advances under the Federal Reserve discount window or correspondent bank facility as of June 30, 2023. The total available borrowing capacity across all sources totaled approximately $476.9 million at June 30, 2023.

At December 31, 2023 and 2022, the Corporation did not hold any investment securities with the intent to sell and determined it had the ability to hold these investment securities until maturity. It also determined that it was more likely

than not that the Corporation would not be required to sell the securities prior to recovery of the amortized cost basis; therefore, no impairment losses were recorded for the quarters and six months ended December 31, 2023 and 2022.

Contractual maturities of investment securities as of December 31, 2023 and June 30, 2023 were as follows:


		December 31, 2023						June 30, 2023
					Estimated						Estimated
		Amortized			Fair			Amortized			Fair
(In Thousands)		Cost			Value			Cost			Value
Held to maturity
Due in one year or less		$	21		$	21		$	303		$	300
Due after one through five years			6,061			5,868			7,686			7,365
Due after five through ten years			54,946			50,341			61,043			54,686
Due after ten years			80,664			70,207			85,305			73,190
Total investment securities - held to maturity			141,692			126,437			154,337			135,541

Available for sale
Due in one year or less			—			—			—			—
Due after one through five years			—			—			—			—
Due after five through ten years			626			621			590			580
Due after ten years			1,388			1,375			1,627			1,575
Total investment securities - available for sale			2,014			1,996			2,217			2,155
Total investment securities		$	143,706		$	128,433		$	156,554		$	137,696