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Investment Securities

3 Months Ended

Sep. 30, 2024

Investment Securities

Investment Securities

Note 4: Investment Securities

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


					Gross			Gross			Estimated
		Amortized			Unrealized			Unrealized			Fair			Carrying
September 30, 2024		Cost			Gains			(Losses)			Value			Value
(In Thousands)
Held to maturity
U.S. government sponsored enterprise MBS⁽¹⁾		$	120,128		$	123		$	(11,264)		$	108,987		$	120,128
U.S. government sponsored enterprise CMO⁽²⁾			3,700			—			(157)			3,543			3,700
U.S. SBA securities⁽³⁾			440			—			(1)			439			440
Total investment securities - held to maturity			124,268			123			(11,422)			112,969			124,268

Available for sale
U.S. government agency MBS⁽¹⁾			1,183			4			(2)			1,185			1,185
U.S. government sponsored enterprise MBS⁽¹⁾			526			13			—			539			539
Private issue CMO⁽²⁾			86			—			(1)			85			85
Total investment securities - available for sale			1,795			17			(3)			1,809			1,809
Total investment securities		$	126,063		$	140		$	(11,425)		$	114,778		$	126,077

(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, 2024		Cost			Gains			(Losses)			Value			Value
(In Thousands)
Held to maturity
U.S. government sponsored enterprise MBS		$	125,883		$	76		$	(15,481)		$	110,478		$	125,883
U.S. government sponsored enterprise CMO			3,713			—			(253)			3,460			3,713
U.S. SBA securities			455			—			—			455			455
Total investment securities - held to maturity			130,051			76			(15,734)			114,393			130,051

Available for sale
U.S. government agency MBS			1,222			—			(14)			1,208			1,208
U.S. government sponsored enterprise MBS			548			5			—			553			553
Private issue CMO			91			—			(3)			88			88
Total investment securities - available for sale			1,861			5			(17)			1,849			1,849
Total investment securities		$	131,912		$	81		$	(15,751)		$	116,242		$	131,900

In the first quarter of fiscal 2025 and 2024, the Corporation received MBS principal payments of $5.7 million and $6.7 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 $11.4 million at September 30, 2024 and $15.8 million at June 30, 2024 as follows:


As of September 30, 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		$	—		$	—		$	104,182		$	11,264		$	104,182		$	11,264
U.S. government sponsored enterprise CMO			—			—			3,543			157			3,543			157
U.S. SBA securities			439			1			—			—			439			1
Total investment securities - held to maturity			439			1			107,725			11,421			108,164			11,422

Available for sale
U.S government agency MBS			—			—			389			2			389			2
Private issue CMO			—			—			16			1			16			1
Total investment securities - available for sale			—			—			405			3			405			3
Total investment securities		$	439		$	1			108,130		$	11,424		$	108,569		$	11,425


As of June 30, 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		$	—		$	—		$	105,530		$	15,481		$	105,530		$	15,481
U.S. government sponsored enterprise CMO			—			—			3,460			253			3,460			253
U.S. SBA securities			455			—			—			—			455			—
Total investment securities - held to maturity			455			—			108,990			15,734			109,445			15,734

Available for sale
U.S government agency MBS			91			—			1,117			14			1,208			14
U.S. government sponsored enterprise MBS			—			—			8			—			8			—
Private issue CMO			—			—			88			3			88			3
Total investment securities - available for sale			91			—			1,213			17			1,304			17
Total investment securities		$	546		$	—		$	110,203		$	15,751		$	110,749		$	15,751

The Corporation evaluates individual investment securities quarterly for impairment based on the adoption of ASC 326 on July 1, 2023. At September 30, 2024, most of the $11.4 million of unrealized holding losses were in a loss position for 12 months or more, except $1,000 of unrealized holding losses were in a loss position for less than 12 months; while at June 30, 2024, all $15.8 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 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 recorded at amortized cost or available for sale recorded at fair market value as prescribed by GAAP. 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 securities before the recovery of its amortized cost 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 cost is realized and it is not more likely than not that the Corporation will be required to sell the securities prior to recovery of the amortized cost. There was no allowance for credit losses (“ACL”) on or impairment of investment securities held to maturity and there was no impairment of investment securities available for sale at September 30, 2024 and June 30, 2024.

In order to maintain adequate liquidity, the Bank has established borrowing facilities with various counterparties. The Bank had a remaining borrowing capacity of $249.2 million as of September 30, 2024 at the FHLB of San Francisco. In addition, the Bank has secured an estimated $211.5 million discount window facility at the FRB of San Francisco collateralized by investment securities totaling $120.8 million and loans held for investment totaling $174.4 million as of September 30, 2024. As of September 30, 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 September 30, 2024. The total remaining available borrowing capacity across all sources totaled approximately $510.7 million at September 30, 2024.

At June 30, 2024, the Bank had a remaining borrowing capacity of $261.3 million at the FHLB of San Francisco. In addition, the Bank had secured an estimated $208.6 million discount window facility at the FRB of San Francisco collateralized by investment securities totaling $126.6 million and loans held for investment totaling $178.6 million at June 30, 2024. As of June 30, 2024, 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 the correspondent bank facility as of June 30, 2024. The total remaining available borrowing capacity across all sources totaled approximately $519.9 million at June 30, 2024.

At September 30, 2024 and 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.

Contractual maturities of investment securities as of September 30, 2024 and June 30, 2024 were as follows:


		September 30, 2024						June 30, 2024
					Estimated						Estimated
		Amortized			Fair			Amortized			Fair
(In Thousands)		Cost			Value			Cost			Value
Held to maturity
Due in one year or less		$	355		$	352		$	349		$	343
Due after one through five years			3,710			3,628			4,328			4,167
Due after five through ten years			46,492			43,415			49,331			44,830
Due after ten years			73,711			65,574			76,043			65,053
Total investment securities - held to maturity			124,268			112,969			130,051			114,393

Available for sale
Due in one year or less			—			—			—			—
Due after one through five years			—			—			—			—
Due after five through ten years			1,386			1,399			1,055			1,053
Due after ten years			409			410			806			796
Total investment securities - available for sale			1,795			1,809			1,861			1,849
Total investment securities		$	126,063		$	114,778		$	131,912		$	116,242