NOTE 2: Available-for-sale Securities

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

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The amortized cost and fair value of available-for-sale 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 call or prepayment penalties.

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The carrying value of investment and mortgage-backed securities pledged as collateral to secure public deposits amounted to $254.1 million and $294.3 million at June 30, 2026 and 2025 respectively.

There were no gains or losses recognized from sales of AFS securities in fiscal 2026. Gross gains of $48,000 and no gross losses were recognized from sales of AFS securities in fiscal 2025. Gross gains of $67,000 and gross losses of $1.6 million were recognized from sales of AFS securities in fiscal 2024.

The Company did not hold any securities of a single issuer, payable from and secured by the same source of revenue or taxing authority, the book value of which exceeded 10% of stockholders’ equity at June 30, 2026.

Certain investments in debt securities are reported in the consolidated financial statements at an amount less than their historical cost. Total fair value of these investments at June 30, 2026, was $253.8 million, which is approximately 56.3% of the Company’s AFS investment portfolio, as compared to $264.5 million or approximately 57.4% of the Company’s AFS investment portfolio at June 30, 2025. The Company does not consider available-for-sale securities with unrealized losses at June 30, 2026, to be experiencing credit losses and recognized no resulting allowance for credit losses. The Company does not intend to sell a significant amount of these investments, and it is more likely than not that the Company will not be required to sell these investments before recovery of the amortized cost basis, which may be the maturity dates of the securities. The unrealized losses occurred as a result of changes in interest rates, market spreads and market conditions subsequent to purchase.

The following tables below 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 ACL has not been recorded at June 30, 2026 and 2025.

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Obligations of States and Political Subdivisions. The unrealized losses on the Company’s investments in obligations of states and political subdivisions include 12 individual securities which have been in an unrealized loss position for less than 12 months and 25 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 increases in market interest rates since purchase or acquisition. Because the Company does not intend to sell these securities and it is more likely than not 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 and Other Obligations. The unrealized losses on the Company’s investments in corporate obligations include three individual securities which have been in an unrealized loss position for less than 12 months and ten individual securities which have been in an unrealized loss position for more than 12 months. The securities are performing. The unrealized losses were caused by increases in market interest rates since purchase or acquisition. Because the Company does not intend to sell these securities and it is more likely than not 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.

Asset-Backed Securities. The unrealized losses on the Company’s investments in asset-backed securities include two 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 loss was caused by variations in market interest rates and spreads since purchase or acquisition. Because the Company does not intend to sell these securities and it is more likely than not 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.

MBS and CMOs. The unrealized losses on the Company’s investments in MBS and CMOs include 23 individual securities which have been in an unrealized loss position for less than 12 months, and 101 individual securities which have been in an unrealized loss position for 12 months or more. The securities are performing and are of high credit quality. The unrealized losses were caused by increases in market interest rates since purchase or acquisition. Because the Company does not intend to sell these securities and it is more likely than not 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 June 30, 2026 was attributable to credit-related factors. Should credit conditions of an issuer deteriorate or expected cash flows decline, the Company could be required to recognize an allowance for credit losses on its AFS securities in future periods.

Credit Losses Recognized on Investments. There were no credit losses recognized in income and other losses or recorded in other comprehensive income for the fiscal years ended June 30, 2026 and 2025.

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