Securities

3 Months Ended

Sep. 30, 2021

Securities

Securities

Note 3:  Securities

The amortized cost, gross unrealized gains, gross unrealized losses, ACL, and approximate fair value of securities available for sale consisted of the following:

	September 30, 2021
			Gross		Gross		Allowance		Estimated
	Amortized		Unrealized		Unrealized		for		Fair
(dollars in thousands)	Cost		Gains		Losses		Credit Losses		Value
Debt and equity securities:
Obligations of states and political subdivisions	$	45,360	$	1,545	$	(36)	$	—	$	46,869
Corporate obligations		18,853		325		(346)		—		18,832
Other securities		591		17		—		—		608
Total debt and equity securities		64,804		1,887		(382)		—		66,309
Mortgage-backed securities (MBS) and collateralized mortgage obligations (CMOs):
Residential MBS issued by governmental sponsored enterprises (GSEs)		63,247		950		(258)		—		63,939
Commercial MBS issued by GSEs		35,349		1,286		(291)		—		36,344
CMOs issued by GSEs		42,263		628		(74)		—		42,817
Total MBS and CMOs		140,859		2,864		(623)		—		143,100
Total AFS securities	$	205,663	$	4,751	$	(1,005)	$	—	$	209,409

	June 30, 2021
			Gross		Gross		Allowance		Estimated
	Amortized		Unrealized		Unrealized		for		Fair
(dollars in thousands)	Cost		Gains		Losses		Credit Losses		Value
Debt and equity securities:
Obligations of states and political subdivisions	$	46,257	$	1,479	$	(40)	$	—		47,696
Corporate obligations		20,356		290		(335)		—		20,311
Other securities		647		25		—		—		672
Total debt and equity securities		67,260		1,794		(375)		—		68,679
Mortgage-backed securities (MBS) and collateralized mortgage obligations (CMOs):
Residential MBS issued by governmental sponsored enterprises (GSEs)		64,400		932		(379)		—		64,953
Commercial MBS issued by GSEs		35,425		1,394		(338)		—		36,481
CMOs issued by GSEs		36,201		755		(49)		—		36,907
Total MBS and CMOs		136,026		3,081		(766)		—		138,341
Total AFS securities	$	203,286	$	4,875	$	(1,141)	$	—	$	207,020

The amortized cost and estimated fair value of investment and mortgage-backed securities, by contractual 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 penalties.

	September 30, 2021
	Amortized		Estimated
(dollars in thousands)	Cost		Fair Value
Within one year	$	1,555	$	1,562
After one year but less than five years		7,236		7,375
After five years but less than ten years		28,516		29,212
After ten years		27,497		28,160
Total investment securities		64,804		66,309
MBS and CMOs		140,859		143,100
Total AFS securities	$	205,663	$	209,409

The carrying value of investment and mortgage-backed securities pledged as collateral to secure public deposits amounted to $164.8 million at September 30, 2021 and $155.6 million at June 30, 2021. The securities pledged consist of marketable securities, including $93.2 million and $95.4 million of Mortgage-backed Securities, $30.1 million and $18.8 million of Collateralized Mortgage Obligations, and $41.5 million and $41.4 million of State and Political Subdivisions Obligations at September 30, 2021 and June 30, 2021, respectively.

The following tables show the Company’s investments’ gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position for which an ACL has not been recorded at September 30 and June 30, 2021:

	September 30, 2021
	Less than 12 months				12 months or more				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
(dollars in thousands)
Obligations of state and political subdivisions	$	2,716	$	36	$	—	$	—	$	2,716	$	36
Corporate obligations		6,381		84		715		262		7,096		346
MBS and CMOs		45,063		547		4,399		76		49,462		623
Total AFS securities	$	54,160	$	667	$	5,114	$	338	$	59,274	$	1,005

	June 30, 2021
	Less than 12 months				12 months or more				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
(dollars in thousands)
Obligations of state and political subdivisions	$	3,177	$	40	$	—	$	—	$	3,177	$	40
Corporate obligations		9,331		79		720		256		10,051		335
MBS and CMOs		53,893		764		70		2		53,963		766
Total AFS securities	$	66,401	$	883	$	790	$	258	$	67,191	$	1,141

Obligations of state and political subdivisions. The unrealized losses on the Company’s investments in obligations of state and political subdivisions include six individual securities which have been in an unrealized loss position for less than 12 months. The securities are performing and are of high credit quality. The unrealized losses were caused by variations in market interest rates since purchase or acquisition. Because the Company does not intend to sell these securities and it is likely that the Company will not be required to sell these securities prior to recovery of their amortized cost basis, which may be maturity, the Company has not recorded an ACL on these securities.

Corporate Obligations. The unrealized losses on the Company’s investments in corporate obligations include five individual securities which have been in an unrealized loss position for less than 12 months. The securities are performing and are of high credit quality. The unrealized losses were caused by variations in market interest rates since purchase or acquisition. Because the Company does not intend to sell these securities and it likely that the Company will not be required to sell these securities prior to recovery of their amortized cost basis, which may be maturity, the Company has not recorded an ACL on these securities.

At September 30, 2021, corporate obligations included two pooled trust preferred securities with an estimated fair value of $715,000 and unrealized losses of $262,000 in a continuous unrealized loss position for twelve months or more. These unrealized losses were primarily due to the long-term nature of the pooled trust preferred securities and a reduced demand for these securities, and concerns regarding the issuers of the underlying trust preferred securities.

A cash flow analysis performed as of September 30, 2021, for these two securities indicated it is probable the Company will receive all contracted principal and related interest projected. The cash flow analysis used in making this determination was based on anticipated default, recovery, and prepayment rates, and the resulting cash flows were discounted based on the yield spread anticipated at the time the securities were purchased. Because the Company does not intend to sell these securities and it is likely that the Company will not be required to sell these securities prior to recovery of their amortized cost basis, which may be maturity, the Company has not recorded an ACL on these securities.

Mortgage-backed securities and Collateralized mortgage obligations. As of September 30, 2021, the unrealized losses on the Company’s investments in mortgage-backed securities and collateralized mortgage obligations include 18 individual securities which have been in an unrealized loss position for less than 12 months, and two individual securities which have been in an unrealized loss position for more than 12 months. The securities are performing and are of high credit quality. The unrealized losses were caused by variations in market interest rates since purchase or acquisition. Because the Company does not intend to sell these securities and it is likely that the Company will not be required to sell these securities prior to recovery of their amortized cost basis, which may be maturity, the Company has not recorded an ACL on these securities.

The Company does not believe that any individual unrealized loss as of September 30, 2021, is the result of a credit loss. However, the Company could be required to recognize an ACL in future periods with respect to its available for sale investment securities portfolio.

Credit losses recognized on investments.  There were no credit losses recognized in income and other losses or recorded in other comprehensive income for the three-month periods ended September 30, 2021 and 2020.