Securities

12 Months Ended

Jun. 30, 2023

Investments, Debt and Equity Securities [Abstract]

Note 2: Securities

The amortized cost and approximate fair values, together with gross unrealized gains and losses, of securities are as follows:


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available-for-sale Securities:
June 30, 2023:
U.S. Treasury	$	497	$	—	$	(59	)	$	438
U.S. Government and federal agency and Government sponsored enterprises (GSEs)		6,976		—		(499	)		6,477
Mortgage-backed:
GSE residential		203,139		21		(27,434	)		175,726
Small Business Administration		17,629		1		(2,397	)		15,233
State and political subdivisions		3,431		—		(6	)		3,425

	$	231,672	$	22	$	(30,395	)	$	201,299

June 30, 2022:
U.S. Treasury	$	3,483	$	—	$	(83	)	$	3,400
U.S. Government and federal agency and Government sponsored enterprises (GSEs)		9,488		—		(367	)		9,121
Mortgage-backed:
GSE residential		210,367		47		(22,229	)		188,185
Small Business Administration		17,960		3		(1,521	)		16,442
State and political subdivisions		3,754		4		—			3,758

	$	245,052	$	54	$	(24,200	)	$	220,906

Available for sale securities (“AFS”), which include any security for which the Company has no immediate plan to sell but which may be sold in the future, are carried at fair value. Unrealized gains and losses, net of tax, are reported in accumulated other comprehensive income (loss), a component of stockholders’ equity. All securities have been classified as available for sale.

Premiums and discounts on debt securities are amortized or accreted as adjustments to income over the estimated life of the security using the level yield method or to the earlier of call or maturity date. Realized gains or losses on the sale of securities is based on the specific identification method. The fair value of securities is based on quoted market prices or dealer quotes. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities.

For AFS securities with fair value less than amortized cost that management has no intent to sell and believes that it more likely than not will not be required to sell prior to recovery, only the credit loss component of the impairment is recognized in earnings, while the noncredit loss is recognized in accumulated other comprehensive income (loss). The credit loss component recognized in earnings is identified as the amount of principal cash flows not expected to be received over the remaining term of the security as projected based on cash flow projections, and is recorded to the allowance for credit losses (ACL) on investments, by a charge to provision for credit losses. Accrued interest receivable is excluded from the estimate of credit losses. Both the ACL and the adjustment to net income may be reversed if conditions change. However, if the Company intends to sell an impaired AFS security, or, if it is more likely than not the Company will be required to sell such a security before recovering its amortized cost basis, the entire impairment amount would be recognized in earnings with a corresponding adjustment to the security’s amortized cost basis. Because the security’s amortized cost basis is adjusted to fair value, there would be no ACL in this situation.

At adoption of ASU

2016-13,

no impairment on AFS securities was attributable to credit. The Company will evaluate impaired AFS securities at the individual level on a quarterly basis, and will consider such factors including, but not limited to: the extent to which the fair value of the security is less than the amortized cost basis; adverse conditions specifically related to the security, an industry, or geographic area; the payment structure of the security and likelihood of the issuer to be able to make payments that may increase in the future; failure of the issuer to make scheduled interest or principal payments; any changes to the rating of the security by a rating agency; and the ability and intent to hold the security until maturity. A qualitative determination as to whether any portion of the impairment is attributable to credit risk is acceptable. There were no credit related factors underlying unrealized losses on AFS securities at June 30, 2023 or 2022.

Changes in the ACL are recorded as expense. Losses are charged against the ACL when management believes the collectability of an AFS debt security is confirmed or when either of the criteria regarding intent or requirement to sell is met.

The Company did not hold securities of any one issuer at June 30, 2023 with a book value that exceeded 10% of the Company’s total equity except for: Mortgage-backed GSE residential securities and Small Business Administration securities with an amortized cost of approximately $203,139,000 and $17,629,000, respectively, and a market value of approximately $175,726,000 and $15,233,000, respectively, at June 30, 2023.

All mortgage-backed securities at June 30, 2023 and June 30, 2022 were issued by GSEs.

The amortized cost and fair value of

available-for-sale

securities at June 30, 2023, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.


	Amortized Cost		Fair Value
Within one year	$	—	$	—
One to five years		5,956		5,653
Five to ten years		10,996		10,042
After ten years		11,581		9,878

		28,533		25,573
Mortgage-backed securities		203,139		175,726

Totals	$	231,672	$	201,299

The carrying value of securities pledged as collateral, to secure public deposits and for other purposes, was $138,022,000 at June 30, 2023 and $125,209,000 at June 30, 2022.

Gross gains of $12,000 and $0 and gross losses of $183,000 and $275,000 resulting from sales of

available-for-sale

securities were realized for 2023 and 2022, respectively. The tax credit applicable to these net realized losses amounted to approximately $49,000 and $78,000 for 2023 and 2022, respectively.

Certain investments in debt securities are reported in the consolidated financial statements at an amount less than their historical cost. The total fair value of these investments at June 30, 2023 and 2022, was $

194,818,00

and $

209,133,000

, respectively, which is approximately 97% and 95% of the Company’s

available-for-sale

investment portfolio. These declines in fair value at June 30, 2023 and 2022, resulted from changes in market interest rates and are considered temporary.

The following table shows the Company’s gross unrealized investment losses and the fair value of the Company’s investments with unrealized losses aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at June 30, 2023 and 2022:


	Less Than 12 Months					12 Months or More					Total
Description of Securities	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
June 30, 2023:

U.S. Treasury	$	—	$	—		$	438	$	(59	)	$	438	$	(59	)
U.S. Government and federal agency and Government sponsored enterprises (GSEs)		—		—			6,477		(499	)		6,477		(499	)
Mortgage-backed:
GSE residential		14,517		(440	)		158,413		(26,994	)		172,930		(27,434	)
Small Business Administration		1,148		(60	)		12,762		(2,337	)		13,910		(2,397	)
State and political subdivisions		1,063		(6	)		—		—			1,063		(6	)

Total	$	16,728	$	(506	)	$	178,090	$	(29,889	)	$	194,818	$	(30,395	)

June 30, 2022:

U.S. Treasury	$	3,400	$	(83	)	$	—	$	—		$	3,400	$	(83	)
U.S. Government and federal agency and Government sponsored enterprises (GSEs)		9,121		(367	)		—		—			9,121		(367	)
Mortgage-backed:
GSE residential		144,042		(15,267	)		37,587		(6,962	)		181,629		(22,229	)
Small Business Administration		12,955		(1,160	)		2,028		(361	)		14,983		(1,521	)

Total	$	169,518	$	(16,877	)	$	39,615	$	(7,323	)	$	209,133	$	(24,200	)

The unrealized losses on the Company’s investment in U.S. Treasury, U.S. Government and federal agency, GSE residential mortgage-backed securities, Small Business Administration, and state and political subdivisions securities at June 30, 2023 and 2022, were mostly the result of a decline in market value that was attributable to changes in interest rates and not credit quality, and the Company does not consider those investments to be impaired at June 30, 2023 and 2022.