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Investment Securities

9 Months Ended

Mar. 31, 2024

Investment Securities

Investment Securities

Note 4: Investment Securities

The amortized cost and estimated fair value of investment securities as of March 31, 2024 and June 30, 2023 were as follows:


					Gross			Gross			Estimated
		Amortized			Unrealized			Unrealized			Fair			Carrying
March 31, 2024		Cost			Gains			(Losses)			Value			Value
(In Thousands)
Held to maturity
U.S. government sponsored enterprise MBS⁽¹⁾		$	131,711		$	72		$	(15,501)		$	116,282		$	131,711
U.S. government sponsored enterprise CMO⁽²⁾			3,802			—			(270)			3,532			3,802
U.S. SBA securities⁽³⁾			458			—			(1)			457			458
Total investment securities - held to maturity			135,971			72			(15,772)			120,271			135,971

Available for sale
U.S. government agency MBS			1,288			1			(15)			1,274			1,274
U.S. government sponsored enterprise MBS			572			1			(3)			570			570
Private issue CMO			93			—			(2)			91			91
Total investment securities - available for sale			1,953			2			(20)			1,935			1,935
Total investment securities		$	137,924		$	74		$	(15,792)		$	122,206		$	137,906

(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 third quarters of fiscal 2024 and 2023, the Corporation received MBS principal payments of $5.7 million and $6.9 million, respectively, and there were no purchases or sales of investment securities during these periods.

For the first nine months of fiscal 2024 and 2023, the Corporation received MBS principal payments of $18.2 million and $23.8 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 $15.8 million at March 31, 2024 and $18.9 million at June 30, 2023 as follows:


As of March 31, 2024		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		$	—		$	—		$	111,712		$	15,501		$	111,712		$	15,501
U.S. government sponsored enterprise CMO			—			—			3,533			270			3,533			270
U.S. SBA securities			457			1			—			—			457			1
Total investment securities - held to maturity			457			1			115,245			15,771			115,702			15,772

Available for sale
U.S government agency MBS			—			—			1,179			15			1,179			15
U.S. government sponsored enterprise MBS			—			—			462			3			462			3
Private issue CMO			—			—			91			2			91			2
Total investment securities - available for sale			—			—			1,732			20			1,732			20
Total investment securities		$	457		$	1			116,977		$	15,791		$	117,434		$	15,792


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 March 31, 2024, predominately all of the $15.8 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 any potential credit risks within the investment portfolio. The Bank does not currently intend to sell any investment securities classified as held to maturity or available for sale and as such, records the investment security at book value or fair market value as prescribed by generally accepted accounting principles. As a part of the Corporation’s monthly risk assessment, the Corporation runs a number of stressed liquidity scenarios to determine if it is more likely than not that the Bank will be required to sell the investment security before the recovery of its amortized costs basis. These liquidity scenarios support the Corporation’s assessment that the Corporation has the ability to hold these held to maturity securities until maturity or available for sale securities until recovery of the amortized costs is realized and it is not more likely than not that the company will be required to sell the securities prior to recovery of the amortized costs. There were no ACL or impairment on investment securities held to maturity and there were no impairment on investment securities available for sale at adoption of ASC 326 and at March 31, 2024.

In order to maintain adequate liquidity, the Bank has established borrowing facilities with various counterparties. The Bank had a remaining borrowing capacity of $269.2 million as of March 31, 2024 at the FHLB of San Francisco. In addition, the Bank has secured an estimated $172.7 million discount window facility at the FRB of San Francisco collateralized by investment securities with total balance of $132.3 million and loans held for investment with total balance of $104.5 million as of March 31, 2024. As of March 31, 2024, the Bank also has an unsecured 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 March 31, 2024. The total available borrowing capacity across all sources totaled approximately $491.9 million at March 31, 2024.

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 an unsecured 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 March 31, 2024 and June 30, 2023, the Corporation did not hold any investment securities held to maturity or investment securities available for sale 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 on were recorded on investment securities available for sale and investment securities held to maturity for the quarters and nine months ended March 31, 2024 and 2023.

Contractual maturities of investment securities as of March 31, 2024 and June 30, 2023 were as follows:


		March 31, 2024						June 30, 2023
					Estimated						Estimated
		Amortized			Fair			Amortized			Fair
(In Thousands)		Cost			Value			Cost			Value
Held to maturity
Due in one year or less		$	5		$	5		$	303		$	300
Due after one through five years			5,354			5,161			7,686			7,365
Due after five through ten years			52,205			47,404			61,043			54,686
Due after ten years			78,407			67,701			85,305			73,190
Total investment securities - held to maturity			135,971			120,271			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			781			777			590			580
Due after ten years			1,172			1,158			1,627			1,575
Total investment securities - available for sale			1,953			1,935			2,217			2,155
Total investment securities		$	137,924		$	122,206		$	156,554		$	137,696