What changed in this filing

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Item 1. Financial Statements

2022-02-08 compared with 2021-08-05 · 141 added, 293 removed, 878 unchanged (33% of the section changed)

3 unchanged sentences

CONSOLIDATED BALANCE SHEETS

June 30, 2021 and September 30, 2020

December 31, 2021 and September 30, 2021

(Dollars in thousands, except per share amounts)

39 unchanged sentences

CONSOLIDATED BALANCE SHEETS (continued)

June 30, 2021 and September 30, 2020

December 31, 2021 and September 30, 2021

(Dollars in thousands, except per share amounts)

6 unchanged sentences

50,000,000 shares authorized;

8,353,969 shares issued and outstanding - June 30, 2021 8,310,793 shares issued and outstanding - September 30, 2020

8,348,821 shares issued and outstanding - December 31, 2021 8,355,469 shares issued and outstanding - September 30, 2021

42,436 42,673

8 unchanged sentences

CONSOLIDATED STATEMENTS OF INCOME

For the three and nine months ended June 30, 2021 and 2020

For the three months ended December 31, 2021 and 2020

(Dollars in thousands, except per share amounts)

Three Months Ended

June 30, Nine Months Ended

2021 2020 2021 2020

Interest and dividend income

18 unchanged sentences

Escrow fees 78 105

Servicing income (expense) on loans sold ( 9 ) 35 ( 4 ) 171

Valuation (allowance) recovery on loan servicing rights, net ( 179 ) — 23 ( 23 )

Valuation recovery (allowance) on loan servicing rights, net 119 ( 236 )

Other, net 230 323

4 unchanged sentences

CONSOLIDATED STATEMENTS OF INCOME (continued)

For the three and nine months ended June 30, 2021 and 2020

For the three months ended December 31, 2021 and 2020

(Dollars in thousands, except per share amounts)

Three Months Ended

June 30, Nine Months Ended

2021 2020 2021 2020

Non-interest expense

1 unchanged sentence

Premises and equipment 928 957

Loss (gain) on sales/dispositions of premises and equipment, net — 4 — ( 98 )

Advertising 166 156

25 unchanged sentences

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the three and nine months ended June 30, 2021 and 2020

For the three months ended December 31, 2021 and 2020

(Dollars in thousands)

Three Months Ended

June 30, Nine Months Ended

2021 2020 2021 2020

Comprehensive income

1 unchanged sentence

Other comprehensive income (loss)

Unrealized holding gain (loss) on investment securities available for sale, net of income taxes of $ 0 , $( 41 ),$ 16 and $( 23 ), respectively

Unrealized holding loss on investment securities available for sale, net of income taxes of $( 5 ) and $( 3 ), respectively

( 18 ) ( 17 )

1 unchanged sentence

Accretion of OTTI on investment securities held to maturity, net of income taxes of $ 0 and $ 0 , respectively

Total other comprehensive income (loss), net of income taxes 8 155 68 ( 74 )

Total other comprehensive loss, net of income taxes ( 17 ) ( 17 )

Total comprehensive income $ 5,468 $ 7,273

3 unchanged sentences

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

For the three and nine months ended June 30, 2021 and 2020

For the three months ended December 31, 2021 and 2020

(Dollars in thousands, except per share amounts)

Common Stock Accumulated

Income (Loss)

Number of Shares Amount Retained

Earnings Total

Balance, March 31, 2020 8,309,193 $ 42,258 $ 135,929 $ ( 179 ) $ 178,008

Net income — — 6,211 — 6,211

Other comprehensive income — — — 155 155

Exercise of stock options 1,600 17 — — 17

Common stock dividends ($ 0.20 per common share)

— — ( 1,662 ) — ( 1,662 )

Earned Employee Stock Ownership Plan ("ESOP") shares, net of income taxes — 31 — — 31

Stock option compensation expense — 46 — — 46

Balance, June 30, 2020 8,310,793 $ 42,352 $ 140,478 $ ( 24 ) $ 182,806

Balance, March 31, 2021 8,361,457 $ 42,949 $ 155,473 $ 121 $ 198,543

Net income — — 7,024 — 7,024

Other comprehensive income — — — 8 8

Repurchase of common stock ( 16,688 ) ( 469 ) — — ( 469 )

Exercise of stock options 9,200 97 — — 97

Common stock dividends ($ 0.21 per common share)

— — ( 1,758 ) — ( 1,758 )

Stock option compensation expense — 47 — — 47

Balance, June 30, 2021 8,353,969 $ 42,624 $ 160,739 $ 129 $ 203,492

Common Stock Accumulated

Compre-hensive

9 unchanged sentences

— — ( 1,662 ) — ( 1,662 )

Earned ESOP shares, net of income taxes — 31 — — 31

Stock option compensation expense — 46 — — 46

Balance, June 30, 2020 8,310,793 $ 42,352 $ 140,478 $ ( 24 ) $ 182,806

Balance, December 31, 2020 8,317,793 $ 42,480 $ 150,801 $ 44 $ 193,325

Balance, September 30, 2021 8,355,469 $ 42,673 $ 164,167 $ 59 $ 206,899

Net income — — 5,485 — 5,485

Other comprehensive income — — — 68 68

Other comprehensive loss — — — ( 17 ) ( 17 )

Repurchase of common stock ( 15,548 ) ( 433 ) — — ( 433 )

3 unchanged sentences

Stock option compensation expense — 66 — — 66

Balance, June 30, 2021 8,353,969 $ 42,624 $ 160,739 $ 129 $ 203,492

Balance, December 31, 2021 8,348,821 $ 42,436 $ 167,897 $ 42 $ 210,375

See notes to unaudited consolidated financial statements

2 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the nine months ended June 30, 2021 and 2020

For the three months ended December 31, 2021 and 2020

(Dollars in thousands)

Nine Months Ended June 30,

Three Months Ended December 31

Cash flows from operating activities

1 unchanged sentence

Adjustments to reconcile net income to net cash provided by operating activities:

Provision for loan losses — 3,200

Depreciation 358 391

2 unchanged sentences

Amortization of CDI 79 90

Earned ESOP shares — 31

Stock option compensation expense 66 46

1 unchanged sentence

Change in fair value of investments in equity securities 9 3

Accretion of discounts and premiums on securities 49 138

Amortization (accretion) of discounts and premiums on securities 101 ( 27 )

Gain on sales of OREO and other repossessed assets, net — ( 21 )

Provision for OREO losses — 25

Gain on sales of loans, net ( 663 ) ( 2,002 )

Gain on sales/disposition of premises and equipment, net — ( 98 )

Loans originated for sale ( 22,379 ) ( 48,199 )

1 unchanged sentence

Amortization of loan servicing rights 299 257

Valuation adjustment on servicing rights ( 23 ) 23

Valuation recovery (allowance) on loan servicing rights, net ( 119 ) 236

BOLI net earnings ( 154 ) ( 149 )

Increase (decrease) in deferred loan origination fees ( 97 ) 3,925

Decrease in deferred loan origination fees ( 604 ) ( 987 )

Net change in accrued interest receivable and other assets, and other liabilities and accrued expenses ( 978 ) 162

6 unchanged sentences

Proceeds from maturities and prepayments of investment securities available for sale 6,502 2,360

Purchase of FHLB stock ( 181 ) ( 485 )

Decrease (increase) in loans receivable, net ( 24,892 ) 7,674

Additions to premises and equipment ( 99 ) ( 109 )

Proceeds from sales of premises and equipment — 307

Proceeds from sales of OREO and other repossessed assets — 803

Net cash provided by (used in) investing activities 13,213 ( 146,865 )

Net cash (used in) provided by investing activities ( 60,146 ) 19,821

S ee notes to unaudited consolidated financial statements

2 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

For the nine months ended June 30, 2021 and 2020

For the three months ended December 31, 2021 and 2020

(Dollars in thousands)

Nine Months Ended June 30,

Three Months Ended December 31

Cash flows from financing activities

Net increase in deposits $ 36,076 $ 16,710

Proceeds from (repayments of) FHLB borrowings ( 5,000 ) 10,000

Proceeds from exercise of stock options 130 96

2 unchanged sentences

Net cash provided by financing activities 34,018 15,086

Net increase in cash and cash equivalents 189,274 128,629

Net increase (decrease) in cash and cash equivalents ( 21,868 ) 35,761

Cash and cash equivalents

2 unchanged sentences

Supplemental disclosure of cash flow information

Income taxes paid $ 4,642 $ 5,165

Interest paid $ 656 $ 980

Supplemental disclosure of non-cash investing activities

Other comprehensive income (loss) related to investment securities $ 68 $ ( 74 )

Operating lease liabilities arising from recording of ROU assets — 2,889

Other comprehensive loss related to investment securities $ ( 17 ) $ ( 17 )

See notes to unaudited consolidated financial statements

9 unchanged sentences

The unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended September 30, 2021 (“2021 Form 10-K”).

The unaudited consolidated results of operations for the nine months ended June 30, 2021 are not necessarily indicative of the results that may be expected for the entire fiscal year ending September 30, 2021.

The unaudited consolidated results of operations for the three months ended December 31, 2021 are not necessarily indicative of the results that may be expected for the entire fiscal year ending September 30, 2022.

(b) Principles of Consolidation:

5 unchanged sentences

Actual results could differ from those estimates.

(e) Certain prior period amounts have been reclassified to conform to the June 30, 2021 presentation with no change to previously reported net income or total shareholders’ equity.

(e) Certain prior period amounts have been reclassified to conform to the December 31, 2021 presentation with no change to previously reported net income or total shareholders’ equity.

(2) INVESTMENT SECURITIES

Held to maturity and available for sale investment securities have been classified according to management’s intent and were as follows as of June 30, 2021 and September 30, 2020 (dollars in thousands):

Held to maturity and available for sale investment securities have been classified according to management’s intent and were as follows as of December 31, 2021 and September 30, 2021 (dollars in thousands):

Losses Estimated

June 30, 2021

December 31, 2021

Held to maturity

Treasury and U.S.

government agency securities $ 67,195 $ 95 $ ( 285 ) $ 67,005

Mortgage-backed securities ("MBS"):

1 unchanged sentence

Private label residential 23,355 292 ( 94 ) 23,553

Treasury and U.S.

government agency securities 18,874 1 ( 59 ) 18,816

Bank issued trust preferred securities 500 2 — 502

5 unchanged sentences

Held to maturity

Treasury and U.S.

government agency securities $ 28,760 $ 8 $ ( 99 ) $ 28,669

government agencies 25,913 936 ( 122 ) 26,727

5 unchanged sentences

Total $ 63,080 $ 210 $ ( 114 ) $ 63,176

Held to maturity and available for sale investment securities with unrealized losses were as follows as of June 30, 2021 (dollars in thousands):

Held to maturity and available for sale investment securities with unrealized losses were as follows as of December 31, 2021 (dollars in thousands):

Less Than 12 Months 12 Months or Longer Total

3 unchanged sentences

government agencies $ 40,171 $ ( 285 ) 10 $ — $ — — $ 40,171 $ ( 285 )

$ 4,269 $ ( 19 ) 5 $ 16 $ — 3 $ 4,285 $ ( 19 )

Private label residential 8,213 ( 192 ) 5 14 — 3 8,227 ( 192 )

8,223 ( 22 ) 2 1 — 1 8,224 ( 22 )

Treasury and U.S.

4 unchanged sentences

$ 9,941 $ ( 66 ) 10 $ 13,439 $ ( 43 ) 7 $ 23,380 $ ( 109 )

$ 26,667 $ ( 86 ) 15 $ 926 $ — 1 $ 27,593 $ ( 86 )

Held to maturity and available for sale investment securities with unrealized losses were as follows as of September 30, 2021 (dollars in thousands):

5 unchanged sentences

government agencies $ 8,091 $ ( 122 ) 5 $ 15 $ — 3 $ 8,106 $ ( 122 )

$ 5,130 $ ( 2 ) 4 $ 39 $ ( 1 ) 4 $ 5,169 $ ( 3 )

Private label residential

9,712 ( 23 ) 4 1 — 1 9,713 ( 23 )

Bank issued trust preferred securities 499 ( 1 ) 1 — — — 499 ( 1 )

Treasury and U.S.

government agency securities 18,795 ( 99 ) 5 — — — 18,795 ( 99 )

$ 36,598 $ ( 244 ) 14 $ 16 $ — 4 $ 36,614 $ ( 244 )

7 unchanged sentences

The Company has the ability and the intent to hold the investments until the fair value recovers.

Furthermore, as of June 30, 2021, management does not have the intent to sell any of the securities classified as available for sale for which the estimated fair value is below the recorded value and believes that it

is more likely than not that the Company will not have to sell such securities before a recovery of cost (or recorded value if previously written down).

Further, as of December 31, 2021, management does not have the intent to sell any of the securities classified as available for sale for which the estimated fair value is below the recorded value and believes

that it is more likely than not that the Company will not have to sell such securities before a recovery of cost (or recorded value if previously written down).

The Company bifurcates OTTI into (1) amounts related to credit losses which are recognized through earnings and (2) amounts related to all other factors which are recognized as a component of other comprehensive income (loss).

2 unchanged sentences

Significant judgment by management is required in this analysis that includes, but is not limited to, assumptions regarding the collectability of principal and interest, net of related expenses, on the underlying loans.

The following table presents a summary of the significant inputs utilized to measure management’s estimates of the credit loss component on OTTI securities as of June 30, 2021 and 2020:

The following table presents a summary of the significant inputs utilized to measure management’s estimates of the credit loss component on OTTI securities as of December 31, 2021 and 2020:

Range Weighted

Minimum Maximum Average

June 30, 2021

December 31, 2021

Constant prepayment rate 6.00 % 15.00 % 12.50 %

1 unchanged sentence

Loss severity rate — % 13.95 % 3.30 %

June 30, 2020

December 31, 2020

Constant prepayment rate 6.00 % 15.00 % 9.23 %

1 unchanged sentence

Loss severity rate — % 10.07 % 3.44 %

The following table presents the OTTI recoveries for the three and nine months ended June 30, 2021 and 2020 (dollars in thousands):

The following table presents the OTTI recoveries for the three months ended December 31, 2021 and 2020 (dollars in thousands):

Three Months Ended

June 30, 2021 Three Months Ended

June 30, 2020

Maturity Held To

Total recoveries $ 6 $ 6

Net recoveries recognized in earnings (1) $ 6 $ 6

Nine Months Ended

June 30, 2021 Nine Months Ended

June 30, 2020

December 31, 2021 Three Months Ended

December 31, 2020

Maturity Held To

3 unchanged sentences

(1) Represents OTTI related to credit losses.

The following table presents a roll forward of the credit loss component of held to maturity and available for sale debt securities that have been written down for OTTI with the credit loss component recognized in earnings for the nine months ended June 30, 2021 and 2020 (dollars in thousands):

Nine Months Ended

The following table presents a roll forward of the credit loss component of held to maturity and available for sale debt securities that have been written down for OTTI with the credit loss component recognized in earnings for the three months ended December 31, 2021 and 2020 (dollars in thousands):

Three Months Ended

Beginning balance of credit loss $ 853 $ 885

Additional increases to the amount

related to credit loss for which OTTI

was previously recognized

Subtractions:

Realized losses previously recorded

Net realized gain (losses) previously recorded

as credit losses

1 unchanged sentence

Ending balance of credit loss $ 850 $ 877

During the nine months ended June 30, 2021, the Company recorded a $ 5,000 net realized loss (as a result of investment securities being deemed worthless) on 12 held to maturity investment securities, all of which had been recognized previously as a credit loss.

During the nine months ended June 30, 2020, the Company recorded a $ 65,000 net realized loss (as a result of investment securities being deemed worthless) on 9 held to maturity investment securities, all of which had been recognized previously as a credit loss.

The recorded amount of investment securities pledged as collateral for public fund deposits, federal treasury tax and loan deposits, FHLB collateral and other non-profit organization deposits totaled $ 98.62 million and $ 81.03 million at June 30, 2021 and September 30, 2020, respectively.

The contractual maturities of debt securities at June 30, 2021 were as follows (dollars in thousands).

During the three months ended December 31, 2021, the Company recorded a $ 3,000 net realized loss (as a result of investment securities being deemed worthless) on 15 held to maturity investment securities.

During the three months ended December 31, 2020, the Company recorded a $ 3,000 net realized loss (as a result of investment securities being deemed worthless) on 15 held to maturity investment securities, all of which had been recognized previously as a credit loss.

The recorded amount of investment securities pledged as collateral for public fund deposits, federal treasury tax and loan deposits, FHLB collateral and other non-profit organization deposits totaled $ 89.58 million and $ 97.60 million at December 31, 2021 and September 30, 2021, respectively.

The contractual maturities of debt securities at December 31, 2021 were as follows (dollars in thousands).

Expected maturities may differ from scheduled maturities due to the prepayment of principal or call provisions.

15 unchanged sentences

If an entity concludes that it is not "more likely than not" that the fair value of a reporting unit is less than its carrying amount, it need not perform a two-step impairment test.

If the Company's qualitative assessment concluded that it is "more likely than not" that the fair value of its reporting unit is less than its carrying amount, it must perform the two-step impairment test to identify potential goodwill impairment and measure the amount of

goodwill impairment loss to be recognized, if any.

The first step of the goodwill impairment test compares the estimated fair value of the reporting unit with its carrying amount, or the book value, including goodwill.

10 unchanged sentences

a significant decline in expected future cash flows;

a sustained, significant decline in the Company's stock price and market capitalization;

a sustained, significant decline in the

Company's stock price and market capitalization;

a significant adverse change in legal factors or in the business climate;

2 unchanged sentences

Any change in these indicators could have a significant negative impact on the Company's financial condition, impact the goodwill impairment analysis or cause the Company to perform a goodwill impairment analysis more frequently than once per year.

As of June 30, 2021, management believes that there have been no events or changes in the circumstances since May 31, 2021 that would indicate a potential impairment of goodwill.

As of December 31, 2021, management believes that there have been no events or changes in the circumstances since May 31, 2021 that would indicate a potential impairment of goodwill.

No assurances can be given, however, that the Company will not record an impairment loss on goodwill in the future.

If adverse economic conditions or decreases in the Company's stock price and market capitalization as a result of the novel coronavirus of 2019 ("COVID-19") pandemic were to be deemed sustained rather then temporary, it may significantly affect the fair value of the Company's goodwill and may trigger impairment charges.

If adverse economic conditions or decreases in the Company's stock price and market capitalization as a result of the novel coronavirus of 2019 ("COVID-19") pandemic were to be deemed to be other than temporary, it may significantly affect the fair value of the Company's goodwill and may trigger impairment charges.

Any impairment charge could have a material adverse effect on the Company's results of operations and financial condition.

The recorded amount of goodwill at June 30, 2021 and September 30, 2020 remained unchanged at $ 15.13 million.

The recorded amount of goodwill at December 31, 2021 and September 30, 2021 remained unchanged at $ 15.13 million.

CDI represents the future economic benefit of the potential cost savings from acquiring core deposits as part of a business combination compared to the cost of alternative funding sources.

1 unchanged sentence

CDI is evaluated for impairment whenever events or changes in circumstances indicate that its carrying amount may not be recoverable, with any changes in estimated useful life accounted for prospectively over the revised remaining life.

As of June 30, 2021, management believes that there have been no events or changes in the circumstances that would indicate a potential impairment of CDI.

As of December 31, 2021, management believes that there have been no events or changes in the circumstances that would indicate a potential impairment of CDI.

(4) LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES

Loans receivable by portfolio segment consisted of the following at June 30, 2021 and September 30, 2020 (dollars in thousands):

Loans receivable by portfolio segment consisted of the following at December 31, 2021 and September 30, 2021 (dollars in thousands):

2021 September 30,

21 unchanged sentences

Undisbursed portion of construction loans in process 106,009 95,224

90,332 100,558

Deferred loan origination fees, net 4,539 5,143

3 unchanged sentences

_____________________________

(1) Does not include one- to four-family loans held for sale totaling $ 3,359 and $ 4,509 at June 30, 2021 and September 30, 2020, respectively.

Loans receivable at June 30, 2021 and September 30, 2020 are reported net of unamortized discounts totaling $ 499,000 and $ 790,000 , respectively.

(1) Does not include one- to four-family loans held for sale totaling $ 3,700 and $ 3,217 at December 31, 2021 and September 30, 2021, respectively.

Loans receivable at December 31, 2021 and September 30, 2021 are reported net of unamortized discounts totaling $ 392,000 and $ 449,000 , respectively.

Allowance for Loan Losses

The following tables set forth information for the three and nine months ended June 30, 2021 and 2020 regarding activity in the allowance for loan losses by portfolio segment (dollars in thousands):

Three Months Ended June 30, 2021

Allowance Provision for

(Recapture of) Loan Losses Charge-

offs Recoveries Ending

Mortgage loans:

One- to four-family $ 1,151 $ ( 9 ) $ — $ — $ 1,142

Multi-family 784 26 — — 810

Commercial 7,238 ( 277 ) — — 6,961

Construction – custom and owner/builder 695 ( 91 ) — — 604

Construction – speculative one- to four-family 148 36 — — 184

Construction – commercial 714 44 — — 758

Construction – multi-family 323 125 — — 448

Construction – land development 19 12 — — 31

Land 407 ( 58 ) — 35 384

Consumer loans:

Home equity and second mortgage 552 ( 1 ) — — 551

Other 56 — — — 56

Commercial business loans 1,347 193 — — 1,540

Total $ 13,434 $ — $ — $ 35 $ 13,469

Nine Months Ended June 30, 2021

Allowance Provision for

(Recapture of) Loan Losses Charge-

offs Recoveries Ending

Mortgage loans:

One-to four-family $ 1,163 $ ( 21 ) $ — $ — $ 1,142

Multi-family 718 92 — — 810

Commercial 7,144 ( 183 ) — — 6,961

Construction – custom and owner/builder 832 ( 228 ) — — 604

Construction – speculative one- to four-family 158 26 — — 184

Construction – commercial 420 338 — — 758

Construction – multi-family 238 210 — — 448

Construction – land development 133 ( 102 ) — — 31

Land 572 ( 233 ) — 45 384

Consumer loans:

Home equity and second mortgage 593 ( 42 ) — — 551

Other 71 ( 18 ) ( 1 ) 4 56

Commercial business loans 1,372 161 ( 2 ) 9 1,540

Total $ 13,414 $ — $ ( 3 ) $ 58 $ 13,469

Three Months Ended June 30, 2020

The following tables set forth information for the three months ended December 31, 2021 and 2020 regarding activity in the allowance for loan losses by portfolio segment (dollars in thousands):

Three Months Ended December 31, 2021

Allowance Provision for

16 unchanged sentences

Total $ 13,469 $ — $ ( 1 ) $ — $ 13,468

Nine Months Ended June 30, 2020

Three Months Ended December 31, 2020

Allowance Provision for

16 unchanged sentences

Total $ 13,414 $ — $ — $ 18 $ 13,432

The following tables present information on the loans evaluated individually and collectively for impairment in the allowance for loan losses by portfolio segment at June 30, 2021 and September 30, 2020 (dollars in thousands):

The following tables present information on the loans evaluated individually and collectively for impairment in the allowance for loan losses by portfolio segment at December 31, 2021 and September 30, 2021 (dollars in thousands):

Allowance for Loan Losses Recorded Investment in Loans

7 unchanged sentences

Impairment Total

June 30, 2021

December 31, 2021

Mortgage loans:

34 unchanged sentences

Total $ 247 $ 13,222 $ 13,469 $ 5,224 $ 981,842 $ 987,066

The following tables present an analysis of loans by aging category and portfolio segment at June 30, 2021 and September 30, 2020 (dollars in thousands):

The following tables present an analysis of loans by aging category and portfolio segment at December 31, 2021 and September 30, 2021 (dollars in thousands):

Past Due 60-89

3 unchanged sentences

Past Due Current Total

June 30, 2021

December 31, 2021

Mortgage loans:

51 unchanged sentences

Loans in this classification have the weaknesses of substandard loans with the additional characteristic that the weaknesses make the collection or liquidation in full on the basis of currently existing facts, conditions and values questionable, and there is a high possibility of loss.

At both June 30, 2021 and September 30, 2020, there were no loans classified as doubtful.

At December 31, 2021 and September 30, 2021, there were no loans classified as doubtful.

Loans in this classification are considered uncollectible and of such little value that continuance as bankable assets is not warranted.

This classification does not mean that the loan has absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing off this loan even though partial recovery may be realized in the future.

At both June 30, 2021 and September 30, 2020, there were no loans classified as loss.

The following tables present an analysis of loans by credit quality indicator and portfolio segment at June 30, 2021 and September 30, 2020 (dollars in thousands):

June 30, 2021 Pass Watch Special

At December 31, 2021 and September 30, 2021, there were no loans classified as loss.

The following tables present an analysis of loans by credit quality indicator and portfolio segment at December 31, 2021 and September 30, 2021 (dollars in thousands):

December 31, 2021 Pass Watch Special

Mention Substandard Total

44 unchanged sentences

The categories of non-accrual loans and impaired loans overlap, although they are not identical.

The following table is a summary of information related to impaired loans by portfolio segment as of June 30, 2021 and for the three and nine months then ended (dollars in thousands):

The following table is a summary of information related to impaired loans by portfolio segment as of December 31, 2021 and for the three months then ended (dollars in thousands):

Investment Unpaid Principal Balance (Loan Balance Plus Charge Off) Related

Allowance Quarter to Date ("QTD") Average Recorded Investment (1) Year to Date ("YTD") Average Recorded Investment (2) QTD Interest Income Recognized (1) YTD Interest Income Recognized (2) QTD Cash Basis Interest Income Recognized (1) YTD Cash Basis Interest Income Recognized (2)

Allowance Year to Date ("YTD") Average Recorded Investment (1) YTD Interest Income Recognized (1) YTD Cash Basis Interest Income Recognized (1)

With no related allowance recorded:

10 unchanged sentences

Mortgage loans:

One- to four-family — — — — 121 — — — —

Land 362 362 78 362 — —

Commercial business loans 299 299 176 297 — —

10 unchanged sentences

______________________________________________

(1) For the three months ended June 30, 2021 .

(2) For the nine months ended June 30, 2021.

(1) For the three months ended December 31, 2021 .

The following table is a summary of information related to impaired loans by portfolio segment as of and for the year ended September 30, 2021 (dollars in thousands):

17 unchanged sentences

Land 362 362 76 72 — —

Consumer loans:

Other — — — 7 — —

Commercial business loans 294 294 171 285 — —

20 unchanged sentences

TDRs are classified as non-accrual (and considered to be non-performing) unless they have been performing in accordance with modified terms for a period of at least six months.

The Company had $ 2.57 million and $ 3.07 million in TDRs included in impaired loans at June 30, 2021 and September 30, 2020, respectively, and had no commitments at these dates to lend additional funds on these loans.

There was no allowance for loan losses allocated to TDRs at June 30, 2021, and, at September 30, 2020, there was $ 3,000 in allowance for loan losses allocated to TDRs.

There were no TDRs for which there was a payment default within the first 12 months of the modification during the nine months ended June 30, 2021.

The Company had $ 2.54 million and $ 2.55 million in TDRs included in impaired loans at December 31, 2021 and September 30, 2021, respectively, and had no commitments at these dates to lend additional funds on these loans.

There was no allowance for loan losses allocated to TDRs at December 31, 2021 and September 30, 2021.

There were no TDRs for which there was a payment default within the first 12 months of the modification during the three months ended December 31, 2021.

The Coronavirus Aid, Relief, and Economic Security Act of 2020 signed into law on March 27, 2020 ("CARES Act") provided guidance around the modification of loans as a result of the COVID-19 pandemic, which outlined, among other criteria, that short-term modifications made on a good faith basis to borrowers who were current as defined under the CARES Act prior to any relief, are not TDRs.

This includes short-term (e.g., six months) modifications such as payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment that are insignificant.

This includes short-term (e.g., six months) modifications such as payment deferrals, fee waivers,

extensions of repayment terms, or other delays in payment that are insignificant.

Borrowers are considered current under the CARES Act and related regulatory guidance if they are less than 30 days past due on their contractual payments at the time a modification program is implemented.

On December 27, 2020, the Consolidated Appropriations Act, 2021 ("CAA 2021") was signed into law.

Among other purposes, this act provides coronavirus emergency response and relief, including extending relief offered under the CARES Act related to restructured loans as a result of COVID-19 through January 1, 2022 or 60 days after the end of the the national emergency declared by the President, whichever is earlier.

In response to requests from borrowers, the Company made payment deferral modifications (typically 90-day payment deferrals with interest continuing to accrue or scheduled to be paid monthly) on a number of loans.

Nearly all of these borrowers had resumed making payments as of June 30, 2021, and as of that date, only one loan with a balance of $1.70 million remained on deferral status under a COVID-19 loan modification forbearance agreement.

Among other purposes, this act provided coronavirus emergency response and relief, including extending relief offered under the CARES Act related to restructured loans as a result of COVID-19, this provision ended on January 1, 2022.

In response to requests from borrowers and in accordance with the CARES Act and related regulatory guidance, the Company made payment deferral COVID-19 related modifications (typically 90-day payment deferrals with interest continuing to accrue or scheduled to be paid monthly) on a number of loans.

All of these borrowers had resumed making payments as of December 31, 2021.

Loan modifications in accordance with the CARES Act and related regulatory guidance are still subject to an evaluation in regard to determining whether or not a loan is deemed to be impaired.

See Note 10 - Recent Accounting Pronouncements.

The following tables set forth information with respect to total COVID-19 loan modifications, on deferral status, as of June 30, 2021 and September 30, 2020 (dollars in thousands):

COVID-19 Loan Modifications June 30, 2021

Mortgage loans Count Balance Percent

Commercial 1 $ 1,703 100.0 %

Total mortgage loans 1 1,703 100.0

Total COVID-19 Modifications 1 $ 1,703 100.0 %

There were no loans with COVID-19 loan modifications on deferral status outstanding at December 31, 2021.

The following table set forth information with respect to COVID-19 loan modifications on deferral status at September 30, 2021 (dollars in thousands):

COVID-19 Loan Modifications September 30, 2021

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One- to four-family 1 $ 323 100.0 %

Commercial 2 3,951 67.2

Construction 1 1,402 23.9

Total mortgage loans 4 5,820 99.1

Consumer loans

Home equity and second mortgage 1 50 0.9

Total consumer loans 1 50 0.9

Total COVID-19 Modifications 1 $ 323 100.0 %

The following tables set forth information with respect to the Company’s TDRs by interest accrual status as of June 30, 2021 and September 30, 2020 (dollars in thousands):

June 30, 2021

The following tables set forth information with respect to the Company’s TDRs by interest accrual status as of December 31, 2021 and September 30, 2021 (dollars in thousands):

December 31, 2021

Accruing Non-

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Mortgage loans:

One- to four-family $ 483 $ — $ 483

Commercial $ 2,371 $ — $ 2,371

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Total $ 2,371 $ 182 $ 2,553

There were no new TDRs during the nine months ended June 30, 2021 or during the year ended September 30, 2020.

There were no new TDRs recognized during the three months ended December 31, 2021 or during the year ended September 30, 2021.

The Company adopted the Financial Accounting Standard Board's ("FASB's") Accounting Standards Codification ("ASC") 842, Leases ("ASC 842") on October 1, 2019 and began recording operating lease liabilities and operating lease ROU assets in the consolidated balance sheets.

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The Company's leases have remaining lease terms of sixteen months to eleven years, some of which include options to extend the leases for up to five years.

The components of lease cost (included in the premises and equipment expense category in the consolidated statements of income) are as follows for the three and nine months ended June 30, 2021 and 2020 (dollars in thousands):

Three Months Ended June 30, 2021 Nine Months Ended June 30, 2021

Operating lease cost $ 92 $ 277

Short-term lease cost — —

Total lease cost $ 92 $ 277

Three Months Ended June 30, 2020 Nine Months Ended June 30, 2020

The components of lease cost (included in the premises and equipment expense category in the consolidated statements of income) are as follows for the three months ended December 31, 2021 and 2020 (dollars in thousands):

Three Months Ended December 31, 2021 Three Months Ended December 31, 2020

Operating lease cost $ 94 $ 93

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Total lease cost $ 94 $ 93

The following table provides supplemental information to operating leases at or for the three and nine months ended June 30, 2021 and 2020 (dollars in thousands):

At or For Three Months Ended June 30, 2021 At or For Nine Months Ended June 30, 2021

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases $ 80 $ 240

Weighted average remaining lease term-operating leases 8.6 years 8.6 years

Weighted average discount rate-operating leases 2.23 % 2.23 %

At or For Three Months Ended June 30, 2020 At or For Nine Months Ended June 30, 2020

The following table provides supplemental information related to operating leases at or for the three months ended December 31, 2021 and the year ended September 30, 2021 (dollars in thousands):

At or For Three Months Ended December 31, 2021 At or For the

September 30, 2021

Cash paid for amounts included in the measurement of lease liabilities:

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The Company's leases typically do not contain a discount rate implicit in the lease contracts.

As an alternative, the weighted average discount rate used to value the future value of lease payments due in calculating the value of the ROU asset and lease liability was determined by utilizing the September 30, 2019 fixed-rate advances issued by the FHLB, for all leases entered into prior to the October 1, 2019 adoption date.

Maturities of operating lease liabilities at June 30, 2021 for future fiscal years are as follows (dollars in thousands):

As an alternative, the weighted average discount rate used to estimate the present value of future lease payments in calculating the value of the ROU asset and liability was determined by utilizing the September 30, 2019 fixed-rate advances issued by the FHLB, for all leases entered into prior to the October 1, 2019 adoption date.

Maturities of operating lease liabilities at December 31, 2021 for future fiscal years are as follows (dollars in thousands):

Remainder of 2022 $ 255

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Common stock equivalents arise from the assumed conversion of outstanding stock options to purchase common stock.

Information regarding the calculation of basic and diluted net income per common share for the three and nine months ended June 30, 2021 and 2020 is as follows (dollars in thousands, except per share amounts):

Three Months Ended June 30, Nine Months Ended June 30,

2021 2020 2021 2020

Information regarding the calculation of basic and diluted net income per common share for the three months ended December 31, 2021 and 2020 is as follows (dollars in thousands, except per share amounts):

Three Months Ended December 31,

Basic net income per common share computation

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____________________________________________

(1) For the three and nine months ended June 30, 2021, average options to purchase 134,365 and 135,876 shares of common stock, respectively, were outstanding but not included in the computation of diluted net income per share, because their effect would have been anti-dilutive.

For the three and nine months ended June 30, 2020, average options to purchase 135,212 and 126,052 shares of common stock, respectively, were outstanding but not included in the computation of diluted net income per shares, because their effect would have been anti-dilutive.

(1) For the three months ended December 31, 2021 and 2020, average options to purchase 210,052 and 137,650 shares of common stock, respectively, were outstanding but not included in the computation of diluted net income per share, because their effect would have been anti-dilutive.

(7) ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The changes in accumulated other comprehensive income (loss) ("AOCI") by component during the three and nine months ended June 30, 2021 and 2020 are as follows (dollars in thousands):

Three Months Ended June 30, 2021

Changes in fair value of available for sale securities (1) Changes in OTTI on held to maturity securities (1) Total (1)

Balance of AOCI at the beginning of period $ 144 $ ( 23 ) $ 121

Other comprehensive income 1 7 8

Balance of AOCI at the end of period $ 145 $ ( 16 ) $ 129

Nine Months Ended June 30, 2021

Changes in fair value of available for sale securities (1) Changes in OTTI on held to maturity securities (1) Total (1)

Balance of AOCI at the beginning of period $ 87 $ ( 26 ) $ 61

Other comprehensive income 58 10 68

Balance of AOCI at the end of period $ 145 $ ( 16 ) $ 129

Three Months Ended June 30, 2020

The changes in accumulated other comprehensive income (loss) ("AOCI") by component during the three months ended December 31, 2021 and 2020 are as follows (dollars in thousands):

Three Months Ended December 31, 2021

Changes in fair value of available for sale securities (1) Changes in OTTI on held to maturity securities (1) Total (1)

Balance of AOCI at the beginning of period $ 75 $ ( 16 ) $ 59

Other comprehensive income 154 1 155

Other comprehensive loss ( 18 ) 1 ( 17 )

Balance of AOCI at the end of period $ 57 $ ( 15 ) $ 42

Nine Months Ended June 30, 2020

Three Months Ended December 31, 2020

Changes in fair value of available for sale securities (1) Changes in OTTI on held to maturity securities (1) Total (1)

Balance of AOCI at the beginning of period $ 87 $ ( 26 ) $ 61

Other comprehensive (loss) income ( 87 ) 13 ( 74 )

Other comprehensive loss ( 17 ) — ( 17 )

Balance of AOCI at the end of period $ 70 $ ( 26 ) $ 44

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Under the Company's 2014 Equity Incentive Plan, the Company is able to grant options and awards of restricted stock (with or without performance measures) for up to 352,366 shares of common stock to employees, officers, directors and directors emeriti.

Under the Company's 2019 Equity Incentive Plan, which was approved by shareholders on January 28, 2020, the Company is able to grant options and awards or restricted stock (with or

without performance measures) for up to 350,000 shares of common stock, of which 300,000 shares are reserved to be awarded to employees, including officers, and 50,000 shares are reserved to be awarded to directors and directors emeriti.

Under the Company's 2019 Equity Incentive Plan, the Company is able to grant options and awards or restricted stock (with or without performance measures) for up to 350,000 shares of common stock, of which 300,000 shares are reserved to be awarded to employees, including officers, and 50,000 shares are reserved to be awarded to directors and directors emeriti.

Shares issued may be purchased in the open market or may be issued from authorized and unissued shares.

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Generally, options and restricted stock vest in 20 % annual installments on each of the five anniversaries from the date of the grant, and options generally have a maximum contractual term of ten years from the date of grant.

At June 30, 2021, there were 29,926 shares of common stock available which may be awarded as options or restricted stock pursuant to future grant under the 2014 Equity Incentive Plan.

At June 30, 2021, there were 298,500 shares of common stock available which may be awarded as options or restricted stock pursuant to future grant under the 2019 Equity Incentive Plan.

At both June 30, 2021 and 2020, there were no unvested restricted stock awards.

There were no restricted stock grants awarded during the nine months ended June 30, 2021 and 2020.

Stock option activity for the nine months ended June 30, 2021 and 2020 is summarized as follows:

Nine Months Ended June 30, 2021 Nine Months Ended June 30, 2020

At December 31, 2021, there were 21,520 shares of common stock available which may be awarded as options or restricted stock pursuant to future grant under the 2014 Equity Incentive Plan.

At December 31, 2021, there were 238,000 shares of common stock available which may be awarded as options or restricted stock pursuant to future grant under the 2019 Equity Incentive Plan.

At both December 31, 2021 and 2020, there were no unvested restricted stock awards.

There were no restricted stock grants awarded during the three months ended December 31, 2021 and 2020.

Stock option activity for the three months ended December 31, 2021 and 2020 is summarized as follows:

Three Months Ended December 31, 2021 Three Months Ended December 31, 2020

Number of Shares Weighted

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The fair value of stock options is determined using the Black-Scholes valuation model.

The weighted average assumptions for options granted during the nine months ended June 30, 2021 were as follows:

The weighted average assumptions for options granted during the three months ended December 31, 2021 were as follows:

Expected volatility 34 %

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Grant date fair value per share $ 5.88

The aggregate intrinsic value of options exercised during the nine months ended June 30, 2021 and 2020 was $ 1.12 million and $ 640,000 , respectively.

At June 30, 2021, there were 157,892 unvested options with an aggregate grant date fair value of $ 564,000 , all of which the Company assumes will vest.

The aggregate intrinsic value of unvested options at June 30, 2021 was $ 928,000 .

There were 200 options vested during the nine months ended June 30, 2021 with a total fair value of $ 1,000 .

At June 30, 2020, there were 141,570 unvested options with an aggregate grant date fair value of $ 559,000 .

There were 13,100 options that vested during the nine months ended June 30, 2020.

Additional information regarding options outstanding at June 30, 2021 is as follows:

The aggregate intrinsic value of options exercised during the three months ended December 31, 2021 and 2020 was $ 123,000 and $ 120,000 , respectively.

At December 31, 2021, there were 176,670 unvested options with an aggregate grant date fair value of $ 844,000 , all of which the Company assumes will vest.

The aggregate intrinsic value of unvested options at December 31, 2021 was $ 568,000 .

There were 200 options vested during the three months ended December 31, 2021 with a total fair value of $ 1,000 .

At December 31, 2020, there were 158,572 unvested options with an aggregate grant date fair value of $ 567,000 .

There were 200 options that vested during the three months ended December 31, 2020.

Additional information regarding options outstanding at December 31, 2021 is as follows:

Options Outstanding Options Exercisable

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387,321 $ 21.70 6.6 210,651 $ 18.80 4.8

The aggregate intrinsic value of options outstanding at June 30, 2021 and 2020 was $ 2.91 million and $ 1.38 million , respectively.

As of June 30, 2021, unrecognized compensation cost related to unvested stock options was $ 461,000 , which is expected to be recognized over a weighted average life of 2.03 years.

The aggregate intrinsic value of options outstanding at December 31, 2021 and 2020 was $ 2.62 million and $ 2.88 million , respectively.

As of December 31, 2021, unrecognized compensation cost related to unvested stock options was $ 844,000 , which is expected to be recognized over a weighted average life of 2.42 years.

(9) FAIR VALUE MEASUREMENTS

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The estimated fair values of mutual funds are based upon quoted market prices (Level 1).

The Company had no liabilities measured at fair value on a recurring basis at both June 30, 2021 and September 30, 2020.

The Company's assets measured at estimated fair value on a recurring basis at June 30, 2021 and September 30, 2020 were as follows (dollars in thousands):

June 30, 2021 Estimated Fair Value

The Company had no liabilities measured at fair value on a recurring basis at December 31, 2021 and September 30, 2021.

The Company's assets measured at estimated fair value on a recurring basis at December 31, 2021 and September 30, 2021 were as follows (dollars in thousands):

December 31, 2021 Estimated Fair Value

Level 1 Level 2 Level 3 Total

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Total $ 955 $ 63,176 $ — $ 64,131

There were no transfers among Level 1, Level 2 and Level 3 during the nine months ended June 30, 2021 and the year ended September 30, 2020.

There were no transfers among Level 1, Level 2 and Level 3 during the three months ended December 31, 2021 and the year ended September 30, 2021.

The Company may be required, from time to time, to measure certain assets and liabilities at fair value on a non-recurring basis in accordance with GAAP.

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The specific reserve for collateral dependent impaired loans is based on the estimated fair value of the collateral less estimated costs to sell, if applicable.

In some cases, adjustments are made to the appraised values due to various factors including age of the appraisal, age of comparables included in the appraisal and known changes in the market and in the collateral.

In some cases, adjustments are made to the appraised values due to various factors including age of the appraisal, age of the comparable collateral included in the appraisal and known changes in the market and in the underlying collateral.

Such adjustments may be significant and typically result in a Level 3 classification of the inputs for determining fair value.

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The valuation of OREO and other repossessed assets is subject to significant external and internal judgment (Level 3).

The following table summarizes the balances of assets measured at estimated fair value on a non-recurring basis at June 30, 2021 (dollars in thousands):

The following table summarizes the balances of assets measured at estimated fair value on a non-recurring basis at December 31, 2021 (dollars in thousands):

Estimated Fair Value

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Impaired loans:

Mortgage loans:

Land $ — $ — $ 284

Commercial business loans — — 123

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Total $ — $ 1 $ 564

The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis as of June 30, 2021 (dollars in thousands):

The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis as of December 31, 2021 (dollars in thousands):

Fair Value Valuation

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Mortgage loans:

One- to four-family $ — $ — $ 481

Land $ — $ — $ 286

Commercial business loans — — 123

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The disclosures also do not include estimated fair value amounts for certain items which are not defined as financial instruments but for which may have significant value.

The Company does not believe that it would be practicable to estimate a representative fair value for these types of items as of June 30, 2021 and September 30, 2020.

The Company does not believe that it would be practicable to estimate a representative fair value for these types of items as of December 31, 2021 and September 30, 2021.

Because GAAP excludes certain items from fair value disclosure requirements, any aggregation of the fair value amounts presented would not represent the underlying value of the Company.

Additionally, in accordance with GAAP, the Company uses the exit price notion in calculating the fair values of financial instruments not measured at fair value on a recurring basis.

The recorded amounts and estimated fair values of financial instruments were as follows as of June 30, 2021 and September 30, 2020 (dollars in thousands):

June 30, 2021

The recorded amounts and estimated fair values of financial instruments were as follows as of December 31, 2021 and September 30, 2021 (dollars in thousands):

December 31, 2021

Fair Value Measurements Using:

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Certificates of deposit 132,155 133,005 — — 133,005

FHLB borrowings 5,000 5,039 — — 5,039

Accrued interest payable 124 124 124 — —

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Certificates of deposit 134,129 135,178 — — 135,178

FHLB borrowings 10,000 10,167 — — 10,167

Accrued interest payable 134 134 134 — —

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Measurement of Credit Losses on Financial Instruments , as amended by ASU 2018-19, ASU 2019-04, ASU 2019-05, ASU 2019-10 and ASU 2019-11.

other receivables, loans, held to maturity investment securities and off-balance sheet commitments.

ASU 2016-13 replaces the existing incurred losses methodology with a current expected losses methodology with respect to most financial assets measured at amortized cost and certain other instruments, including trade and other receivables, loans, held to maturity investment securities and off-balance sheet commitments.

In addition, ASU 2016-13 requires credit losses relating to available for sale debt securities to be recorded through an allowance for credit losses rather than as a reduction of the carrying amount.

ASU 2016-13 also changes the accounting for purchased credit-impaired securities and loans.

ASU 2016-13 also changes the accounting for purchased credit-impaired securities

ASU 2016-13 retains many of the current disclosure requirements in GAAP and expands certain disclosure requirements.

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The adoption ASU 2017-04 is not expected to a have a material impact on the Company's future consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820):

Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement .

This ASU modifies the disclosure requirements for fair value measurements.

The following disclosure requirements were removed from ASC Topic 820, Fair Value Measurement :

(1) the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy;

(2) the policy for timing of transfers between levels;

and (3) the valuation process for Level 3 fair value measurements.

This ASU clarifies that the measurement uncertainty disclosure is to communicate information about the uncertainty in measurement as of the reporting date.

This ASU adds the following disclosure requirements for Level 3 measurements:

(1) changes in unrealized gains and losses for the period included in other comprehensive income for the recurring Level 3 fair value measurements held at the end of the reporting period, and (2) the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements.

ASU 2018-13 was effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.

The Company adopted ASU 2018-13 effective October 1, 2020, and it did not have a material impact on the Company's unaudited interim consolidated financial statements.

In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40), Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract .

The amendments in this ASU broaden the scope of ASC Subtopic 350-40 to include costs incurred to implement a hosting arrangement that is a service contract.

The amendments align the requirements for capitalizing implementation costs incurred

in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license).

The costs are capitalized or expensed depending on the nature of the costs and the project stage during which they are incurred, consistent with the accounting for internal-use software costs.

The amendments in this ASU result in consistent capitalization of implementation costs of a hosting arrangement that is a service contract and implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license).

The accounting for the service element of a hosting arrangement that is a service contract is not affected by the amendments in this ASU.

ASU 2018-15 was effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.

The Company adopted ASU 2018-15 effective October 1, 2020, and it did not have a material impact on the Company's unaudited interim consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740), Simplifying the accounting for Income Taxes.

The amendments in this ASU simplify the accounting for income taxes by removing certain exceptions to the general principles

in Topic 740.

The amendments in this ASU simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740.

The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidelines.

ASU 2019-12 is effective for fiscal years beginning after December 15, 2020,

ASU 2019-12 was effective for fiscal years beginning after December 15, 2020,

including interim periods within those fiscal years.

The adoption of ASU 2019-12 is not expected to have a material impact on the Company's future consolidated financial statements.

The Company adopted ASU 2019-12 effective October 1, 2021, and it did not have a material impact on the Company's consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848):

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This ASU is effective for all entities as of March 12, 2020 through December 31, 2022.

The Company has not adopted ASU 2020-04 as of June 30, 2021.

The Company has not adopted ASU 2020-04 as of December 31, 2021.

The adoption of ASU 2020-04 is not expected to have a material impact on the Company's future consolidated financial statements.

On March 22, 2020, federal banking regulators issued an interagency statement that included guidance on their approach for the accounting for loan modifications in light of the economic impact of the COVID-19 pandemic.

The guidance interprets current accounting standards and indicates that a lender can conclude that a borrower is not experiencing financial difficulty if short-term modifications are made in response to COVID-19, such as payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment that are insignificant related to the loans in which the borrower is less than 30 days past due on its contractual payments at the time a modification is implemented.

The agencies confirmed in working with the staff of the FASB that short-term modifications made on a good faith basis in response to COVID-19 to borrowers who were current prior to any relief are not TDRs.

(11) REVENUE FROM CONTRACTS WITH CUSTOMERS

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All of the Company's revenue from contracts with customers within the scope of ASC 60 6 is recognized in non-interest income with the exception of gains on sales of OREO and gains on sales/disposition of premises and equipment, which are included in non-interest expense.

For the three months ended June 30, 2021, the Company recognized $ 948,000 in service charges on deposits, $ 1.36 million in ATM and debit card interchange fees, $ 64,000 in escrow fees, and $ 8,000 in fee income from non-deposit investment sales, all considered within the scope of ASC 606.

For the nine months ended June 30, 2021, the Company recognized $ 2.94 million in service charges on deposits, $ 3.76 million in ATM and debit card interchange fees, $ 243,000 in escrow fees, and $ 14,000 in fee income from non-deposit investment sales, all considered within the scope of ASC 606.

For the three months ended June 30, 2020, the Company recognized $ 858,000 in service charges on deposits, $ 1.07 million in ATM and debit card interchange fees, $ 81,000 in escrow fees, and $ 0 in fee income from non-deposit investment sales, all considered within the scope of ASC 606.

For the nine months ended June 30, 2020, the Company recognized $ 3.14 million in service charges on deposits, $ 3.18 million in ATM and debit card interchange fees, $ 211,000 in escrow fees, and $ 13,000 in fee income from non-deposit investment sales, all considered within the scope of ASC 606.

For the three months ended December 31, 2021, the Company recognized $ 913,000 in service charges on deposits, $ 1.3 million in ATM and debit card interchange fees, $ 78,000 in escrow fees, and $ 2,000 in fee income from non-deposit investment sales, all considered within the scope of ASC 606.

For the three months ended December 31, 2020, the Company recognized $ 1.1 million in service charges on deposits, $ 1.2 million in ATM and debit card interchange fees, $ 105,000 in escrow fees, and $ 3,000 in fee income from non-deposit investment sales, all considered within the scope of ASC 606.

If a contract is determined to be within the scope of ASC 606, the Company recognizes revenue when it satisfies its performance obligation.

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• ATM and Debit Card Interchange Transaction Fees:

The Company earns fees from cardholder transactions conducted through third-party payment network providers which consist of interchange fees earned from the payment networks

as a debit card issuer.

The Company earns fees from cardholder transactions conducted through third-party payment network providers which consist of interchange fees earned from the payment networks as a debit card issuer.

These fees are recognized when the transaction occurs, but may settle on a daily or monthly basis.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements