SECURITIES

6 Months Ended

Dec. 31, 2023

Investments, Debt and Equity Securities [Abstract]

The amortized cost and fair value of securities, with gross unrealized gains and losses and allowance for credit losses, follows:


	December 31, 2023
(In thousands)	Amortized Cost		Allowance for Credit Losses		Net Carrying Amount		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Securities available for sale:
Government-sponsored enterprises:
Mortgage-backed securities	$	133	$	-	$	133	$	-	$	(2	)	$	131
Collateralized mortgage obligations		1		-		1		-		-			1
Total securities available for sale	$	134	$	-	$	134	$	-	$	(2	)	$	132

Securities held to maturity:
Government-sponsored enterprises:
Debt obligations	$	997	$	-	$	997	$	-	$	(19	)	$	978
Mortgage-backed securities		50,861		-		50,861		113		(2,523	)		48,451
Municipal bonds		42,844		2		42,842		7		(5,997	)		36,852
Corporate bonds		54,549		132		54,417		17		(4,288	)		50,146
Total securities held to maturity	$	149,251	$	134	$	149,117	$	137	$	(12,827	)	$	136,427


	June 30, 2023
(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Securities available for sale:
Government-sponsored enterprises:
Mortgage-backed securities	$	147	$	-	$	(5	)	$	142
Collateralized mortgage obligations		4		-		-			4
Total securities available for sale	$	151	$	-	$	(5	)	$	146

Securities held to maturity:
Government-sponsored enterprises:
Debt obligations	$	996	$	-	$	(34	)		962
Mortgage-backed securities		46,619		-		(3,500	)		43,119
Collateralized mortgage obligations		1		-		-			1
Municipal bonds		43,865		3		(6,423	)		37,445
Corporate bonds		56,421		-		(5,675	)		50,746
Total securities held to maturity	$	147,902	$	3	$	(15,632	)	$	132,273

Securities with an amortized cost of $19,804,000 and a fair value of $17,906,000 at December 31, 2023 were pledged to secure a credit line with the Federal Reserve Bank. See Note 7 of these unaudited consolidated financial statements.

The amortized cost and fair value of debt securities, by contractual maturity, is shown below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.


	December 31, 2023
	Due in One Year or Less				Due After One Year to Five Years				Due after Five Years to Ten Years				Due After 10 Years				Total
(In thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
Securities available for sale:
Government-sponsored enterprises:
Mortgage-backed securities	$	-	$	-	$	11	$	11	$	91	$	90	$	31	$	30	$	133	$	131
Collateralized mortgage obligations		1		1		-		-		-		-		-		-		1		1
Total securities available for sale	$	1	$	1	$	11	$	11.00	$	91.00	$	90.00	$	31	$	30	$	134	$	132

Securities held to maturity:
Government-sponsored enterprises:
Debt obligations	$	-	$	-	$	997	$	978	$	-	$	-	$	-	$	-	$	997	$	978
Mortgage-backed securities		12		12		3,643		3,517		21,775		20,633		25,431		24,289		50,861		48,451
Municipal bonds		3,805		3,786		7,766		7,696		14,064		12,177		17,209		13,193		42,844		36,852
Corporate bonds		4,195		4,165		31,863		29,986		16,790		14,672		1,701		1,323		54,549		50,146
Total securities held to maturity	$	8,012	$	7,963	$	44,269	$	42,177	$	52,629	$	47,482	$	44,341	$	38,805	$	149,251	$	136,427


	June 30, 2023
	Due in One Year or Less				Due After One Year to Five Years				Due after Five Years to Ten Years				Due After 10 Years				Total
(In thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
Securities available for sale:
Government-sponsored enterprises:
Mortgage-backed securities	$	-	$	-	$	13	$	13	$	64	$	62	$	70	$	67	$	147	$	142
Collateralized mortgage obligations		4		4		-		-		-		-		-		-		4		4
Total securities available for sale	$	4	$	4	$	13	$	13	$	64	$	62	$	70	$	67	$	151	$	146

Securities held to maturity:
Government-sponsored enterprises:
Debt obligations	$	-	$	-	$	996	$	962	$	-	$	-	$	-	$	-	$	996	$	962
Mortgage-backed securities		22		22		4,360		4,161		19,713		18,008		22,524		20,928		46,619		43,119
Collateralized mortgage obligations		1		1		-		-		-		-		-		-		1		1
Municipal bonds		2,570		2,559		9,444		9,303		10,998		9,597		20,853		15,986		43,865		37,445
Corporate bonds		5,200		5,127		21,298		19,723		28,216		24,588		1,707		1,308		56,421		50,746
Total securities held to maturity	$	7,793	$	7,709	$	36,098	$	34,149	$	58,927	$	52,193	$	45,084	$	38,222	$	147,902	$	132,273

On July 1, 2023, the Company adopted ASU 2016-13 Financial Instruments - Credit Losses (Topic 326): Measurements of Credit Losses on Financial Instruments, as amended, which replaced the incurred loss methodology with the CECL methodology. The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loan receivables and securities held to maturity. In addition, ASC 326 made changes to the accounting for securities available for sale.

Allowance for Credit Losses - Securities Available for Sale

The Company measures expected credit losses on securities available for sale based upon the gain or loss position of the security. For securities available for sale in an unrealized loss position which the Company does not intend to sell, and it is not more likely than not that the Company will be required to sell the security before recovery of the amortized cost, the Company evaluates qualitative criteria to determine any expected loss. This includes among other items the financial health of, and specific prospects for the issuer, including whether the issuer is in compliance with the terms and covenants of the security. The Company also evaluates quantitative criteria including determining whether there has been an adverse change in expected future cash flows of the security. Securities available for sale which are guaranteed by government agencies do not currently have an allowance for credit loss, as the Company determined these securities are either backed by the full faith and credit of the U.S. government and/or there is an unconditional commitment to make interest payments and to return the principal investment in full to investors when a debt security reaches maturity. In assessing the Company’s investments in government-sponsored and U.S. government guaranteed mortgage-backed securities and government-sponsored enterprise obligations, the contractual cash flows of these investments are guaranteed by the respective government-sponsored enterprise Federal Home Loan Mortgage Corporation (“FHLMC”), Federal National Mortgage Association (“FNMA”), or Government National Mortgage Association (“GNMA”). Accordingly, it is expected that the securities would not be settled at a price less than the par value of the Company’s investments. The Company will evaluate this position no less than annually, however, certain items which may cause the Company to change this methodology include legislative changes that remove a government-sponsored enterprise’s ability to draw funds from the U.S. government, or legislative changes to housing policy that reduce or eliminate the U.S. government’s implicit guarantee on such securities. Accrued interest receivable on securities available for sale guaranteed by government agencies totaled $1,000 at December 31, 2023 and is excluded from the estimate of credit losses. If the Company does not expect to recover the entire amortized cost basis of the security, an allowance for credit losses would be recorded, with a related charge to earnings, limited by the amount of the fair value of the security less its amortized cost. If the Company intends to sell the security or it is more likely than not that the Company will be required to sell the debt security before recovery of its amortized cost basis, the Company recognizes the entire difference between the amortized cost basis of the security and its fair value in earnings. Any impairment that has not been recorded through an allowance for credit loss is recognized in other comprehensive income. There were no securities available for sale not guaranteed by government agencies at December 31, 2023.

Allowance for Credit Losses - Securities Held to Maturity

The Company measures expected credit losses on securities held to maturity on a collective basis by security type and risk rating where available. The reserve for each pool is calculated based on a Probability of Default/Loss Given Default basis taking into consideration the expected life of each security. Held-to-maturity securities which are issued by the United States Treasury or are guaranteed by government agencies do not currently have an allowance for credit loss as the Company determined these securities are either backed by the full faith and credit of the U.S. government and/or there is an unconditional commitment to make interest payments and to return the principal investment in full to investors when a debt security reaches maturity. In assessing the Company’s investments in government-sponsored and U.S. government guaranteed mortgage-backed securities and government-sponsored enterprise obligations, the contractual cash flows of these investments are guaranteed by the respective government-sponsored enterprise FHLMC, FNMA, or GNMA. Accordingly, it is expected that the securities would not be settled at a price less than the par value of the Company’s investments. The Company will evaluate this position no less than annually, however, certain items which may cause the Company to change this methodology include legislative changes that remove a government-sponsored enterprise’s ability to draw funds from the U.S. government, or legislative changes to housing policy that reduce or eliminate the U.S. government’s implicit guarantee on such securities. Any expected credit losses on held-to-maturity securities would be presented as an allowance for credit loss. Accrued interest receivable on held-to-maturity securities totaled $911,000 at December 31, 2023 and is excluded from the estimate of credit losses.

The following tables summarize the activity in the allowance for credit losses for securities held to maturity by security type for the dates indicated:


	Government-sponsored Enterprises
(In thousands)	Debt Obligations		Mortgage-backed Securities		Municipal Bonds		Corporate Bonds			Total
Balance at September 30, 2023	$	-	$	-	$	2	$	231		$	233
Provision for (reversal of) credit losses		-		-		-		(99	)	$	(99	)
Balance at December 31, 2023	$	-	$	-	$	2	$	132		$	134


	Government-sponsored Enterprises
(In thousands)	Debt Obligations		Mortgage-backed Securities		Municipal Bonds		Corporate Bonds			Total
Balance at June 30, 2023	$	-	$	-	$	-	$	-		$	-
Adoption of ASU 2016-13		-		-		2		274			276
Adjusted beginning balance		-		-		2		274			276
Provision for (reversal of) credit losses		-		-		-		(142	)		(142	)
Balance at December 31, 2023	$	-	$	-	$	2	$	132		$	134

Information pertaining to securities with gross unrealized losses at December 31, 2023 or June 30, 2023 aggregated by investment category and length of time that individual securities have been in a continuous loss position, follows:


	December 31, 2023
	Less Than Twelve Months									Over Twelve Months
(In thousands)	Number of Securities		Gross Unrealized Losses		Fair Value		Depreciation from Amortized Cost Basis (%)			Number of Securities		Gross Unrealized Losses		Fair Value		Depreciation from Amortized Cost Basis (%)
Securities available for sale:
Mortgage-backed securities		-	$	-	$	-		-	%		36	$	2	$	114		1.7	%
Total temporarily impaired securities available for sale		-	$	-	$	-		-	%		36	$	2	$	114		1.7	%

Securities held to maturity:
Government-sponsored enterprises:
Mortgage-backed securities		5	$	10	$	5,150		0.2	%		128	$	2,513	$	37,595		6.3	%
Debt obligations		-		-		-		-			1		19		978		1.9
Municipal bonds		5		14		3,228		0.4			38		5,983		28,699		17.3
Corporate bonds		2		33		2,967		1.1			43		4,255		45,755		8.5
Total temporarily impaired securities held to maturity		12	$	57	$	11,345		0.5	%		210	$	12,770	$	113,027		10.2	%


	June 30, 2023
	Less Than Twelve Months									Over Twelve Months
(In thousands)	Number of Securities		Gross Unrealized Losses		Fair Value		Depreciation from Amortized Cost Basis (%)			Number of Securities		Gross Unrealized Losses		Fair Value		Depreciation from Amortized Cost Basis (%)
Securities available for sale:
Mortgage-backed securities		20	$	2	$	71		2.7	%		20	$	3	$	67		4.3	%
Total temporarily impaired securities available for sale		20	$	2	$	71		2.7	%		20	$	3	$	67		4.3	%

Securities held to maturity:
Government-sponsored enterprises:
Mortgage-backed securities		27	$	336	$	10,494		3.1	%		115	$	3,164	$	32,597		8.8	%
Debt obligations		1		34		962		3.4			-		-		-		-
Municipal bonds		11		111		6,280		1.7			35		6,312		27,676		18.6
Corporate bonds		9		318		9,534		3.2			38		5,357		40,213		11.8
Total temporarily impaired securities held to maturity		48	$	799	$	27,270		2.8	%		188	$	14,833	$	100,486		12.9	%

At December 31, 2023, 258 debt securities had unrealized losses with aggregate depreciation of 9.34% from the Bank’s amortized cost basis. These unrealized losses are the result of changes in the interest rate environment and there have been no downgrades in the investment quality of these securities.

Credit Quality Indicators

The Company monitors the credit quality of securities through the use of credit ratings. The Company monitors the credit ratings on a quarterly basis. The following tables provide the amortized cost of securities available for sale and securities held to maturity at the dates indicated:


	December 31, 2023
(In thousands)	Aaa		Aa1		Aa2		Aa3		A1		A2		A3		Baa2		Total
Securities available for sale:
Government-sponsored enterprises:
Mortgage-backed securities	$	133	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	133
Collateralized mortgage obligations		1		-		-		-		-		-		-		-		1
Total securities available for sale	$	134	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	134

Securities held to maturity:
Government-sponsored enterprises:
Debt obligations	$	997	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	997
Mortgage-backed securities		50,861		-		-		-		-		-		-		-		50,861
Municipal bonds		9,343		13,845		14,163		2,637		1,146		1,710		-		-		42,844
Corporate bonds		2,199		-		4,796		2,819		17,246		16,763		10,211		515		54,549
Total securities held to maturity	$	63,400	$	13,845	$	18,959	$	5,456	$	18,392	$	18,473	$	10,211	$	515	$	149,251


	June 30, 2023
(In thousands)	Aaa		Aa1		Aa2		Aa3		A1		A2		A3		Baa2		Not Rated		Total
Securities available for sale:
Government-sponsored enterprises:
Mortgage-backed securities	$	147	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	147
Collateralized mortgage obligations		4		-		-		-		-		-		-		-		-		4
Total securities available for sale	$	151	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	151

Securities held to maturity:
Government-sponsored enterprises:
Debt obligations	$	996	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	996
Mortgage-backed securities		46,619		-		-		-		-		-		-		-		-		46,619
Collateralized mortgage obligations		1		-		-		-		-		-		-		-		-		1
Municipal bonds		9,349		12,811		14,108		2,943		2,178		1,710		-		-		766		43,865
Corporate bonds		2,205		-		4,826		2,825		19,449		16,377		10,222		517		-		56,421
Total securities held to maturity	$	59,170	$	12,811	$	18,934	$	5,768	$	21,627	$	18,087	$	10,222	$	517	$	766	$	147,902

There were no sales of securities during the three or six months ended December 31, 2023 or 2022.