Investment Securities

12 Months Ended

Jun. 30, 2024

Investment Securities

Investment Securities

Note 2: Investment Securities

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

			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(1)	$	125,883	$	76	$	(15,481)	$	110,478	$	125,883
U.S. government sponsored enterprise CMO(2)		3,713		—		(253)		3,460		3,713
U.S. SBA securities(3)		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)		1,222		—		(14)		1,208		1,208
U.S. government sponsored enterprise MBS(1)		548		5		—		553		553
Private issue CMO(2)		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

(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 fiscal 2024 and 2023, the Corporation received principal payments from its investment securities of $24.1 million and $30.7 million, respectively and did not sell any investment securities. The Corporation did not purchase any investment securities in fiscal 2024 and 2023.

As of June 30, 2024 and 2023, the Corporation held investments with an unrealized loss position of $15.8 million and $18.9 million, respectively.

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

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 evaluates individual investment securities quarterly for impairment based on ASC 326 since the adoption on July 1, 2023. At June 30, 2024, 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 amortized cost or 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 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 Corporation 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 was no impairment on investment securities available for sale at the adoption date of ASC 326 on July 1, 2023 and at 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 $261.3 million as of June 30, 2024 at the FHLB of San Francisco. In addition, the Bank has 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 as of June 30, 2024. As of June 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 June 30, 2024. The total available borrowing capacity across all sources totaled approximately $519.9 million at June 30, 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 totaling $150.3 million at June 30, 2023. 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 the 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 June 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; therefore, no impairment losses were recorded on investment securities available for sale for fiscal years ended June 30, 2024 and 2023. In addition, no allowance for credit losses were recorded on investment securities held to maturity for the fiscal years ended June 30, 2024 and 2023.

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

	June 30, 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	$	349	$	343	$	303	$	300
Due after one through five years		4,328		4,167		7,686		7,365
Due after five through ten years		49,331		44,830		61,043		54,686
Due after ten years		76,043		65,053		85,305		73,190
Total investment securities - held to maturity		130,051		114,393		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		1,055		1,053		590		580
Due after ten years		806		796		1,627		1,575
Total investment securities - available for sale		1,861		1,849		2,217		2,155
Total investment securities	$	131,912	$	116,242	$	156,554	$	137,696