Clearfield, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Note 4 - Investments

Note 4 - Investments

9 Months Ended

Jun. 30, 2023

Note 4. Investments

The Company invests in certificates of deposit (“CDs”) in amounts that are fully insured by the Federal Deposit Insurance Corporation (“FDIC”) and United States (“U.S.”) Treasury securities with terms of not more than five years, as well as money market funds. Historically, the Company’s investment portfolio had been classified as held-to-maturity and recorded at amortized cost. During the second quarter of fiscal 2022, the Company sold investments and reclassified its investment portfolio to available-for-sale, which is reported at fair value. The unrealized gain or loss on investment securities is recorded in other comprehensive income, net of tax. Realized gains and losses on available-for-sale securities are recognized upon sale and are included in net investment income in the consolidated statement of earnings.

As of June 30, 2023, available-for-sale investments consisted of the following:

	June 30, 2023
(In thousands)	Cost		Unrealized Gains		Unrealized Losses		Fair Value
Short-Term
U.S. Treasury securities	$	121,458	$	-	$	278	$	121,180
Certificates of deposit		9,750		-		204		9,546
Total investment securities – short-term	$	131,208	$	-	$	482	$	130,726
Long-Term
U.S Treasury securities	$	6,711	$	-	$	610	$	6,101
Certificates of deposit		495		-		40		455
Total investment securities – long-term	$	7,206	$	-	$	650	$	6,556

As of September 30, 2022, available-for-sale investments consisted of the following:

	September 30, 2022
(In thousands)	Cost		Unrealized Gains		Unrealized Losses		Fair Value
Short-Term
Certificates of deposit	$	5,945	$	-	$	143	$	5,802
Total investment securities – short-term	$	5,945	$	-	$	143	$	5,802
Long-Term
U.S Treasury securities		16,178		-		1,085		15,093
Certificates of deposit		8,016		-		362		7,654
Total investment securities – long-term	$	24,194	$	-	$	1,447	$	22,747

As of June 30, 2023, investments in debt securities in an unrealized loss position were as follows:

	In Unrealized Loss Position For Less Than 12 Months				In Unrealized Loss Position For Greater Than 12 Months
(In thousands)	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
U.S Treasury securities	$	-	$	150	$	15,464	$	738
Certificates of deposit		340		1		9,660		244
Total investment securities	$	340	$	151	$	25,124	$	982

As of June 30, 2023, there were 50 securities in an unrealized loss position which is due to the market paying a higher interest rate than the coupon rate on these securities. As of June 30, 2023, there are no securities which are other than temporarily impaired as the Company intends to hold these securities until their value recovers and there is negligible credit risk due to the nature of the securities which are backed by the FDIC and U.S. federal government.

As of September 30, 2022, investments in debt securities in an unrealized loss position were as follows:

	In Unrealized Loss Position For Less Than 12 Months				In Unrealized Loss Position For Greater Than 12 Months
(In thousands)	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
U.S Treasury securities	$	-	$	-	$	15,093	$	1,085
Certificates of deposit		6,345		176		7,111		329
Total investment securities	$	6,345	$	176	$	22,204	$	1,414

As of September 30, 2022, there were 62 securities in an unrealized loss position which was due to the securities paying lower interest rates than the market. As of September 30, 2022, there were no securities which were other than temporarily impaired as the Company intended to hold these securities until their value recovered and there was negligible credit risk due to the nature of the securities which were backed by the FDIC and US federal government.