Investment Securities

3 Months Ended

Sep. 30, 2021

Investment Securities

Investment Securities

Note 5 – Investment Securities

Debt Securities

The amortized cost, gross unrealized gains and losses, and estimated fair value of investments in debt securities are as follows:

	September 30, 2021
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
(Dollars in thousands)	Cost		Gains		Losses		Value
Available For Sale:
Mortgage-backed securities	$	51,172	$	—	$	(723)	$	50,449
U.S. agency collateralized mortgage obligations		14,876		44		(295)		14,625
U.S. government agency securities		6,293		—		(60)		6,233
Municipal bonds		20,219		7		(662)		19,564
Corporate bonds		35,300		861		(25)		36,136
Total Available For Sale	$	127,860	$	912	$	(1,765)	$	127,007
Held To Maturity:
Mortgage-backed securities	$	38,127	$	—	$	(458)	$	37,669
Total Held To Maturity	$	38,127	$	—	$	(458)	$	37,669

	June 30, 2021
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
(Dollars in thousands)	Cost		Gains		Losses		Value
Available For Sale:
Mortgage-backed securities	$	55,385	$	53	$	(374)	$	55,064
U.S. agency collateralized mortgage obligations		15,641		47		(255)		15,433
U.S. government agency securities		6,952		—		(56)		6,896
Municipal bonds		20,239		11		(389)		19,861
Corporate bonds		25,200		881		—		26,081
Total Available For Sale	$	123,417	$	992	$	(1,074)	$	123,335

The Company recognized $62 thousand of gross gains on the sale of $5.0 million of investment securities during the three months ended September 30, 2021.  The Company did not sell any investment securities during the three months ended September 30, 2020.

The amortized cost and fair value of debt securities, by contractual maturity, are shown below. Maturities for mortgage-backed securities are dependent upon the rate environment and prepayments of the underlying loans. Expected maturities may differ from contractual maturities because the securities be called or prepaid with or without penalties.

	September 30, 2021				September 30, 2021
	Available For Sale				Held To Maturity
	Amortized		Fair		Amortized		Fair
(Dollars in thousands)	Cost		Value		Cost		Value
Due in one year or less	$	—	$	—	$	—	$	—
Due after one year through five years		73		72		—		—
Due after five years through ten years		37,765		38,589		—		—
Due after ten years		90,022		88,346		38,127		37,669
	$	127,860	$	127,007	$	38,127	$	37,669

The following tables provide information on the gross unrealized losses and fair market value of the Company's investments with unrealized losses that are not deemed to be other than temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at September 30, 2021 and June 30, 2021:

	September 30, 2021
	Less than 12 Months				12 Months or More				Total		Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(Dollars in thousands)	Value		Losses		Value		Losses		Value		Losses
Available For Sale:
Mortgage-backed securities	$	45,290	$	(643)	$	2,815	$	(80)	$	48,105	$	(723)
U.S. agency collateralized mortgage obligations		6,795		(102)		5,529		(193)		12,324		(295)
U.S. government agency securities		171		(1)		4,665		(59)		4,836		(60)
Municipal bonds		14,993		(530)		4,051		(132)		19,044		(662)
Corporate bonds		4,975		(25)		—		—		4,975		(25)
		72,224		(1,301)		17,060		(464)		89,284		(1,765)
Held To Maturity:
Mortgage-backed securities		37,669		(458)		—		—		37,669		(458)
		37,669		(458)		—		—		37,669		(458)
Total Temporarily Impaired Securities	$	109,893	$	(1,759)	$	17,060	$	(464)	$	126,953	$	(2,223)

	June 30, 2021
	Less than 12 Months				12 Months or More				Total		Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(Dollars in thousands)	Value		Losses		Value		Losses		Value		Losses
Available For Sale:
Mortgage-backed securities	$	43,152	$	(374)	$	—	$	—	$	43,152	$	(374)
U.S. agency collateralized mortgage obligations		10,613		(202)		2,407		(53)		13,020		(255)
U.S. government agency securities		6,896		(56)		—		—		6,896		(56)
Municipal bonds		17,748		(389)		—		—		17,748		(389)
Total Temporarily Impaired Securities	$	78,409	$	(1,021)	$	2,407	$	(53)	$	80,816	$	(1,074)

The Company evaluates its investment securities holdings for other-than-temporary impairment (“OTTI”) on at least a quarterly basis. As part of this process, management considers its intent to sell each debt security and whether it is more likely than not the Company will be required to sell the security before its anticipated recovery. If either of these conditions is met, OTTI is recognized in earnings equal to the entire difference between the security’s amortized cost basis and its fair value at the most recent Statement of Financial Condition date. For securities that meet neither of these conditions, management performs analysis to determine whether any of these securities are at risk for OTTI. To determine which individual securities are at risk for OTTI and should be quantitatively evaluated utilizing a detailed analysis, management uses indicators which consider various characteristics of each security including, but not limited to, the following: the credit rating; the duration and level of the unrealized loss; prepayment assumptions; and certain other collateral-related characteristics such as delinquency rates, the security’s performance, and the severity of expected collateral losses.

The unrealized loss on securities greater than 12 months is due to current interest rate levels relative to the Company’s cost. Because the unrealized losses are due to current interest rate levels relative to the Company’s cost and not credit quality, and because the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell these investments before recovery of its amortized cost, which may be at maturity, the Company does not consider these investments to be other-than temporarily impaired at September 30, 2021 and June 30, 2021. There were 58 investment securities that were temporarily impaired at September 30, 2021 and 42 investment securities that were temporarily impaired at June 30, 2021.

Based on its analysis, management has concluded that the investment securities portfolio has experienced unrealized losses and a decrease in fair value due to interest rate volatility. However, the decline is considered temporary, and the Company does not intend to sell these securities nor is it more likely than not the Company would be required to sell the security before its anticipated recovery, which may be maturity.

At September 30, 2021 and June 30, 2021, $3.4 million and $3.8 million, respectively, of investment securities were pledged to secure municipal deposits.

Equity Securities

The Company had one equity security with a fair value of $2.6 million as of September 30, 2021.  During the three months ended September 30, 2021, the Company recorded $105 thousand of unrealized gains, which were recorded in Unrealized gain on equity securities in the Consolidated Statements of Income.