Note 3 - Securities

9 Months Ended

Mar. 31, 2023

Notes to Financial Statements

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

Note 3 – Securities

Debt securities

The following tables summarize the Corporation’s debt securities as of March 31, 2023 and June 30, 2022:

Available –for-Sale	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
March 31, 2023
Obligations of U.S. Treasury	$	8,933	$	—	$	(499	)	$	8,434
Obligations of U.S. government-sponsored entities and agencies		30,600		8		(3,362	)		27,246
Obligations of state and political subdivisions		99,955		185		(8,082	)		92,058
U.S. Government-sponsored mortgage-backed securities–residential		106,444		21		(14,244	)		92,221
U.S. Government-sponsored mortgage-backed securities– commercial		8,608		—		(1,652	)		6,956
U.S. Government-sponsored collateralized mortgage obligations– residential		49,577		51		(4,780	)		44,848
Other debt securities		17,224		—		(1,652	)		15,572
Total securities available-for-sale	$	321,341	$	265	$	(34,271	)	$	287,335

Held-to-Maturity	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses			Fair Value
March 31, 2023
Obligations of state and political subdivisions	$	7,338	$	—	$	(399	)	$	6,939

Available-for-sale	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
June 30, 2022
Obligation of U.S Treasury	$	8,909	$	—	$	(462	)	$	8,447
Obligations of U.S. government-sponsored entities and agencies		28,689		—		(2,424	)		26,265
Obligations of state and political subdivisions		105,977		129		(8,749	)		97,357
U.S. Government-sponsored mortgage-backed securities – residential		113,812		13		(11,642	)		102,183
U.S. Government-sponsored mortgage-backed securities – commercial		8,623		—		(1,322	)		7,301
U.S. Government-sponsored collateralized mortgage obligations – residential		40,952		1		(2,774	)		38,179
Other debt securities		17,367		—		(752	)		16,615
Total available-for-sale securities	$	324,329	$	143	$	(28,125	)	$	296,347

Held-to-maturity	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses			Fair Value
June 30, 2022
Obligations of state and political subdivisions	$	7,874	$	47	$	(90	)	$	7,831

Proceeds from the sale of available-for-sale securities were as follows:

	Three Months Ended March 31,				Nine Months Ended March 31,
	2023		2022		2023		2022
Proceeds from sales	$	5,977	$	—	$	9,685	$	1,000
Gross realized gains		35		—		43		2
Gross realized losses		37		—		60		—

The income tax benefit related to the net realized loss amounted to $4 for the nine-month period ended March 31, 2023. The income tax effect related to the net realized gains or losses amounted to less than $1 for the three-month period ended March 31, 2023 and the nine-month period ended March 31, 2022.

The amortized cost and fair values of debt securities as of March 31, 2023, by expected maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date, primarily mortgage-backed securities, are shown separately. 

Available-for-Sale	Amortized Cost		Estimated Fair Value
Due in one year or less	$	5,247	$	5,121
Due after one year through five years		29,863		28,596
Due after five years through ten years		52,185		46,942
Due after ten years		69,417		62,651
Total		156,712		143,310
U.S. Government-sponsored mortgage-backed and related securities		164,629		144,025
Total securities available-for-sale	$	321,341	$	287,335
Held-to-Maturity
Due after one year through five years	$	171	$	170
Due after five years through ten years		3,289		3,210
Due after ten years		3,878		3,559
Total securities held-to-maturity	$	7,338	$	6,939

Securities with a carrying value of approximately $131,005 and $126,679 were pledged at March 31, 2023 and June 30, 2022, respectively, to secure public deposits and commitments as required or permitted by law.

The following table summarizes the securities with unrealized losses as of March 31, 2023 and June 30, 2022, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position:

	Less than 12 Months					12 Months or more					Total
Available-for-sale	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
March 31, 2023
Obligation of U.S. Treasury	$	—	$	—		$	8,434	$	(499	)	$	8,434	$	(499	)
Obligations of U.S. government-sponsored entities and agencies		5,624		(346	)		19,421		(3,016	)		25,045		(3,362	)
Obligations of state and political subdivisions		31,090		(1,102	)		46,129		(6,980	)		77,219		(8,082	)
U.S. Government-sponsored mortgage-backed securities – residential		11,095		(742	)		78,403		(13,502	)		89,498		(14,244	)
U.S. Government-sponsored mortgage-backed securities – commercial		—		—			6,956		(1,652	)		6,956		(1,652	)
Collateralized mortgage obligations - residential		22,560		(1,250	)		16,697		(3,530	)		39,257		(4,780	)
Other debt securities		940		(60	)		14,632		(1,592	)		15,572		(1,652	)
Total temporarily impaired	$	71,309	$	(3,500	)	$	190,672	$	(30,771	)	$	261,981	$	(34,271	)

	Less than 12 Months					12 Months or more					Total
Held to Maturity	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
March 31, 2023
Obligations of state and political subdivisions	$	3,729	$	(320	)	$	3,210	$	(79	)	$	6,939	$	(399	)
Total temporarily impaired	$	3,729	$	(320	)	$	3,210	$	(79	)	$	6,939	$	(399	)

	Less than 12 Months					12 Months or more					Total
Available-for-sale	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
June 30, 2022
Obligations of U.S. Treasury	$	8,447	$	(462	)	$	—	$	—		$	8,447	$	(462	)
Obligations of U.S. government-sponsored entities and agencies		26,265		(2,424	)		—		—			26,265		(2,424	)
Obligations of state and political subdivisions		80,445		(8,331	)		2,047		(418	)		82,492		(8,749	)
Mortgage-backed securities – residential		76,526		(7,586	)		24,569		(4,056	)		101,095		(11,642	)
Mortgage-backed securities – commercial		7,301		(1,322	)		—		—			7,301		(1,322	)
Collateralized mortgage obligations - residential		30,729		(2,308	)		2,713		(466	)		33,442		(2,774	)
Other debt securities		16,156		(711	)		459		(41	)		16,615		(752	)
Total temporarily impaired	$	245,869	$	(23,144	)	$	29,788	$	(4,981	)	$	275,657	$	(28,125	)

	Less than 12 Months					12 Months or more				Total
Held to Maturity	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
June 30, 2022
Obligations of state and political subdivisions	$	3,522	$	(90	)		—	$	—	$	3,522	$	(90	)
Total temporarily impaired	$	3,522	$	(90	)	$	—	$	—	$	3,522	$	(90	)

Management evaluates securities for other-than-temporary impairment (OTTI) on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. The securities portfolio is evaluated for OTTI by segregating the portfolio into two general segments and applying the appropriate OTTI model. Investment securities are generally evaluated for OTTI under FASB ASC Topic 320, Accounting for Certain Investments in Debt and Equity Securities.

In determining OTTI under the ASC Topic 320 model, management considers many factors, including: (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, (3) whether the market decline was affected by macroeconomic conditions, and (4) whether the entity has the intent to sell the debt security or more likely than not will be required to sell the debt security before its anticipated recovery. The assessment of whether an other-than-temporary decline exists involves a high degree of subjectivity and judgment and is based on the information available to management at a point in time.

At March 31, 2023, there were a total of 381 available-for-sale and four held-to-maturity securities in the portfolio with unrealized losses due to an increase in market interest rates when compared to the time of purchase. The unrealized losses within the securities portfolio as of March 31, 2023, have not been recognized into income because the decline in fair value is not attributed to credit quality and management does not intend to sell, and it is not likely that management will be required to sell, the securities prior to their anticipated recovery. The mortgage-backed securities and collateralized mortgage obligations were primarily issued by Fannie Mae, Freddie Mac and Ginnie Mae, institutions which the government has affirmed its commitment to support. The Corporation does not own any private label mortgage-backed securities. The municipal bond portfolio consists of tax-exempt and taxable general obligations and revenue bonds to a broad range of counties, towns, school districts, and other essential service providers. As of March 31, 2023, 98.7% of the municipal bonds held in the available-for-sale portfolio had an S&P or Moody’s investment grade rating, and 1.3% were non-rated issues. The municipal bonds in the held-to-maturity portfolio are all non-rated issues to local customers.

Equity Securities

The Corporation owned equity securities with an amortized cost of $400 as of March 31, 2023, and June 30, 2022. Changes in the fair value of these securities are included in noninterest income on the consolidated statements of income. The following table presents the net unrealized losses on equity securities recognized in earnings for the three and nine-month periods ended March 31, 2023 and 2022. There were no sales of equity securities during the three and nine-month periods ended March 31, 2023 and 2022.

	Three Months Ended March 31,				Nine Months Ended March 31,
	2023		2022		2023			2022
Unrealized gain (loss) recognized on equity securities held at the end of the period	$	19	$	—	$	(14	)	$	—