What changed in this filing

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Item 1. Financial Statements

2022-05-09 compared with 2022-02-08 · 232 added, 134 removed, 885 unchanged (29% of the section changed)

3 unchanged sentences

CONSOLIDATED BALANCE SHEETS

December 31, 2021 and September 30, 2021

March 31, 2022 and September 30, 2021

(Dollars in thousands, except per share amounts)

39 unchanged sentences

CONSOLIDATED BALANCE SHEETS (continued)

December 31, 2021 and September 30, 2021

March 31, 2022 and September 30, 2021

(Dollars in thousands, except per share amounts)

6 unchanged sentences

50,000,000 shares authorized;

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

8,305,826 shares issued and outstanding - March 31, 2022 8,355,469 shares issued and outstanding - September 30, 2021

40,988 42,673

Retained earnings 171,388 164,167

Accumulated other comprehensive income 42 59

Accumulated other comprehensive income (loss) ( 107 ) 59

Total shareholders’ equity 212,269 206,899

5 unchanged sentences

CONSOLIDATED STATEMENTS OF INCOME

For the three months ended December 31, 2021 and 2020

For the three and six months ended March 31, 2022 and 2021

(Dollars in thousands, except per share amounts)

Three Months Ended

Three Months Ended March 31, Six Months Ended

2022 2021 2022 2021

Interest and dividend income

18 unchanged sentences

Escrow fees 44 74 123 179

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

Valuation recovery on loan servicing rights, net — 438 119 202

Other, net 207 289 438 612

Total non-interest income, net 3,442 4,559

Total non-interest income 3,083 4,886 6,525 9,445

See notes to unaudited consolidated financial statements

2 unchanged sentences

CONSOLIDATED STATEMENTS OF INCOME (continued)

For the three months ended December 31, 2021 and 2020

For the three and six months ended March 31, 2022 and 2021

(Dollars in thousands, except per share amounts)

Three Months Ended

Three Months Ended March 31, Six Months Ended

2022 2021 2022 2021

Non-interest expense

28 unchanged sentences

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the three months ended December 31, 2021 and 2020

For the three and six months ended March 31, 2022 and 2021

(Dollars in thousands)

Three Months Ended

March 31, Six Months Ended

2022 2021 2022 2021

Comprehensive income

1 unchanged sentence

Other comprehensive income (loss)

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

Unrealized holding gain (loss) on investment securities available for sale, net of income taxes of $( 40 ), $ 19 , $( 45 ), and $ 15 , respectively

( 152 ) 74 ( 170 ) 57

1 unchanged sentence

Accretion of OTTI on investment securities held to maturity, net of income taxes of $ 1 , $ 1 , $1, and $1, respectively

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

Total other comprehensive income (loss), net of income taxes ( 149 ) 77 ( 166 ) 60

Total comprehensive income $ 5,178 $ 7,328 $ 10,646 $ 14,601

3 unchanged sentences

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

For the three months ended December 31, 2021 and 2020

For the three and six months ended March 31, 2022 and 2021

(Dollars in thousands, except per share amounts)

Number of Shares Amount Accumulated

Compre-hensive

Income (Loss)

Stock Retained

Earnings Total

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

Net income — — 7,251 — 7,251

Other comprehensive income — — — 77 77

Exercise of stock options 43,664 423 — — 423

Common stock dividends ($0.31 per common share) — — ( 2,579 ) — ( 2,579 )

Stock option compensation expense — 46 — — 46

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

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

Net income — — 5,327 — 5,327

Other comprehensive loss — — — ( 149 ) ( 149 )

Repurchase of common stock ( 61,565 ) ( 1,716 ) — — ( 1,716 )

Exercise of stock options 18,570 202 — — 202

Common stock dividends ($0.22 per common share) — — ( 1,836 ) — ( 1,836 )

Stock option compensation expense — 66 — — 66

Balance, March 31, 2022 8,305,826 $ 40,988 $ 171,388 $ ( 107 ) $ 212,269

Common Stock Accumulated

5 unchanged sentences

Net income — — 14,541 — 14,541

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

Other comprehensive income — — — 60 60

Repurchase of common stock ( 2,900 ) ( 58 ) — — ( 58 )

1 unchanged sentence

Common stock dividends ($0.51 per common share) — — ( 4,241 ) — ( 4,241 )

— — ( 1,662 ) — ( 1,662 )

Stock option compensation expense — 92 — — 92

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

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

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

4 unchanged sentences

Common stock dividends ($0.43 per common share) — — ( 3,591 ) — ( 3,591 )

— — ( 1,755 ) — ( 1,755 )

Stock option compensation expense — 132 — — 132

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

Balance, March 31, 2022 8,305,826 $ 40,988 $ 171,388 $ ( 107 ) $ 212,269

See notes to unaudited consolidated financial statements

2 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the three months ended December 31, 2021 and 2020

For the six months ended March 31, 2022 and 2021

(Dollars in thousands)

Three Months Ended December 31

Six Months Ended March 31,

Cash flows from operating activities

14 unchanged sentences

Amortization of loan servicing rights 600 529

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

Valuation recovery on loan servicing rights, net ( 119 ) ( 202 )

BOLI net earnings ( 305 ) ( 295 )

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

Increase (decrease) in deferred loan origination fees ( 1,342 ) 563

Net change in accrued interest receivable and other assets, and other liabilities and accrued expenses ( 2,071 ) ( 1,826 )

1 unchanged sentence

Cash flows from investing activities

Net decrease in CDs held for investment 3,834 15,916

Net (increase) decrease in CDs held for investment ( 137 ) 25,871

Purchase of investment securities held to maturity ( 126,272 ) ( 15,050 )

2 unchanged sentences

Proceeds from maturities and prepayments of investment securities available for sale 12,152 5,093

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

Additions to premises and equipment ( 99 ) ( 109 )

Purchase of FHLB stock ( 91 ) ( 381 )

Increase in loans receivable, net ( 64,193 ) ( 17,164 )

Purchases of premises and equipment ( 219 ) ( 509 )

Proceeds from sales of OREO and other repossessed assets — 985

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

Net cash used in investing activities ( 172,768 ) ( 10,949 )

S ee notes to unaudited consolidated financial statements

2 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

For the three months ended December 31, 2021 and 2020

For the six months ended March 31, 2022 and 2021

(Dollars in thousands)

Three Months Ended December 31

Six Months Ended March 31,

Cash flows from financing activities

Net increase in deposits $ 85,871 $ 123,453

Repayments of FHLB borrowings ( 5,000 ) —

Proceeds from exercise of stock options 332 519

7 unchanged sentences

Supplemental disclosure of cash flow information

Income taxes paid $ 2,188 $ 2,688

Interest paid $ 1,305 $ 1,818

Supplemental disclosure of non-cash investing activities

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

Other comprehensive income (loss) related to investment securities $ ( 166 ) $ 60

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 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.

The unaudited consolidated results of operations for the six months ended March 31, 2022 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 December 31, 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 March 31, 2022 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 December 31, 2021 and September 30, 2021 (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 March 31, 2022 and September 30, 2021 (dollars in thousands):

Losses Estimated

December 31, 2021

March 31, 2022

Held to maturity

20 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 December 31, 2021 (dollars in thousands):

Held to maturity and available for sale investment securities with unrealized losses were as follows as of March 31, 2022 (dollars in thousands):

Less Than 12 Months 12 Months or Longer Total

2 unchanged sentences

Held to maturity

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

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

Treasury and U.S.

government agency securities $ 127,757 $ ( 4,150 ) 23 $ — $ — 1 $ 127,757 $ ( 4,150 )

government agencies 8,405 ( 507 ) 10 416 ( 1 ) 4 8,821 ( 508 )

Private label residential 21,091 ( 505 ) 15 3,356 ( 37 ) 1 24,447 ( 542 )

Bank issued trust preferred securities 500 ( 10 ) 1 — — — 500 ( 10 )

$ 157,753 $ ( 5,172 ) 49 $ 3,772 $ ( 38 ) 6 $ 161,525 $ ( 5,210 )

8 unchanged sentences

Held to maturity

Treasury and U.S.

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

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

1 unchanged sentence

9,712 ( 23 ) 4 1 — 1 9,713 ( 23 )

Treasury and U.S.

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

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

2 unchanged sentences

$ 20,146 $ ( 103 ) 13 $ 5,491 $ ( 11 ) 3 $ 25,637 $ ( 114 )

The Company has evaluated the investment securities in the above tables and has determined that the declines in their fair value are temporary.

2 unchanged sentences

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

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).

Further, as of March 31, 2022, 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 December 31, 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 March 31, 2022 and 2021:

Range Weighted

Minimum Maximum Average

December 31, 2021

March 31, 2022

Constant prepayment rate 6.00 % 15.00 % 8.37 %

1 unchanged sentence

Loss severity rate — % 8.53 % 3.72 %

December 31, 2020

March 31, 2021

Constant prepayment rate 6.00 % 15.00 % 13.18 %

1 unchanged sentence

Loss severity rate — % 18.93 % 5.79 %

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

The following table presents the OTTI recoveries for the three and six months ended March 31, 2022 and 2021 (dollars in thousands):

Three Months Ended

December 31, 2021 Three Months Ended

December 31, 2020

March 31, 2022 Three Months Ended

March 31, 2021

Maturity Held To

1 unchanged sentence

Net recoveries recognized in earnings (1) $ 3 $ 3

Six Months Ended

March 31, 2022 Six Months Ended

March 31, 2021

Maturity Held To

Total recoveries $ 11 $ 8

Net recoveries recognized in earnings (1) $ 11 $ 8

_________________

(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 three months ended December 31, 2021 and 2020 (dollars in thousands):

Three 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 six months ended March 31, 2022 and 2021 (dollars in thousands):

Six Months Ended

Beginning balance of credit loss $ 853 $ 885

Subtractions:

Additions (subtractions):

Net realized gain (losses) previously recorded

2 unchanged sentences

Ending balance of credit loss $ 846 $ 872

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).

During the six months ended March 31, 2022, the Company recorded a $ 1,000 net realized gain on 14 held to maturity investment securities.

During the six months ended March 31, 2021, the Company recorded a $ 5,000 net realized loss (as a result of investment securities being deemed worthless) on 13 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 $ 82.57 million and $ 97.60 million at March 31, 2022 and September 30, 2021, respectively.

The contractual maturities of debt securities at March 31, 2022 were as follows (dollars in thousands).

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

3 unchanged sentences

Cost Estimated

Due within one year $ — $ — $ 744 $ 743

Due after one year to five years 109,829 105,932 3,622 3,616

22 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 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.

As of March 31, 2022, 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.

1 unchanged sentence

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 December 31, 2021 and September 30, 2021 remained unchanged at $ 15.13 million.

The recorded amount of goodwill at March 31, 2022 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 December 31, 2021, management believes that there have been no events or changes in the circumstances that would indicate a potential impairment of CDI.

As of March 31, 2022, 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 December 31, 2021 and September 30, 2021 (dollars in thousands):

Loans receivable by portfolio segment consisted of the following at March 31, 2022 and September 30, 2021 (dollars in thousands):

2022 September 30,

26 unchanged sentences

_____________________________

(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.

(1) Does not include one- to four-family loans held for sale totaling $ 2,772 and $ 3,217 at March 31, 2022 and September 30, 2021, respectively.

Loans receivable at March 31, 2022 and September 30, 2021 are reported net of unamortized discounts totaling $ 358,000 and $ 449,000 , respectively.

Allowance for Loan Losses

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

The following tables set forth information for the three and six months ended March 31, 2022 and 2021 regarding activity in the allowance for loan losses by portfolio segment (dollars in thousands):

Three Months Ended March 31, 2022

Allowance Provision for

16 unchanged sentences

Total $ 13,468 $ — $ ( 50 ) $ 15 $ 13,433

Three Months Ended December 31, 2020

Six Months Ended March 31, 2022

Allowance Provision for

16 unchanged sentences

Total $ 13,469 $ — $ ( 51 ) $ 15 $ 13,433

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):

Three Months Ended March 31, 2021

Allowance Provision for

(Recapture of) Loan Losses Charge-

offs Recoveries Ending

Mortgage loans:

One- to four-family $ 1,135 $ 16 $ — $ — $ 1,151

Multi-family 757 27 — — 784

Commercial 7,136 102 — — 7,238

Construction – custom and owner/builder 770 ( 75 ) — — 695

Construction – speculative one- to four-family 182 ( 34 ) — — 148

Construction – commercial 558 156 — — 714

Construction – multi-family 186 137 — — 323

Construction – land development 123 ( 104 ) — — 19

Land 474 ( 72 ) — 5 407

Consumer loans:

Home equity and second mortgage 605 ( 53 ) — — 552

Other 57 — ( 1 ) — 56

Commercial business loans 1,449 ( 100 ) ( 2 ) — 1,347

Total $ 13,432 $ — $ ( 3 ) $ 5 $ 13,434

Six Months Ended March 31, 2021

Allowance Provision for

(Recapture of) Loan Losses Charge-

offs Recoveries Ending

Mortgage loans:

One-to four-family $ 1,163 $ ( 12 ) $ — $ — $ 1,151

Multi-family 718 66 — — 784

Commercial 7,144 94 — — 7,238

Construction – custom and owner/builder 832 ( 137 ) — — 695

Construction – speculative one- to four-family 158 ( 10 ) — — 148

Construction – commercial 420 294 — — 714

Construction – multi-family 238 85 — — 323

Construction – land development 133 ( 114 ) — — 19

Land 572 ( 175 ) — 10 407

Consumer loans:

Home equity and second mortgage 593 ( 41 ) — — 552

Other 71 ( 18 ) ( 1 ) 4 56

Commercial business loans 1,372 ( 32 ) ( 2 ) 9 1,347

Total $ 13,414 $ — $ ( 3 ) $ 23 $ 13,434

The following tables present information on the loans evaluated individually and collectively for impairment in the allowance for loan losses by portfolio segment at March 31, 2022 and September 30, 2021 (dollars in thousands):

Allowance for Loan Losses Recorded Investment in Loans

7 unchanged sentences

Impairment Total

December 31, 2021

March 31, 2022

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 December 31, 2021 and September 30, 2021 (dollars in thousands):

The following tables present an analysis of loans by aging category and portfolio segment at March 31, 2022 and September 30, 2021 (dollars in thousands):

Past Due 60-89

3 unchanged sentences

Past Due Current Total

December 31, 2021

March 31, 2022

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

At March 31, 2022 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 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

At March 31, 2022 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 March 31, 2022 and September 30, 2021 (dollars in thousands):

March 31, 2022 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 December 31, 2021 and for the three months then ended (dollars in thousands):

The following table is a summary of information related to impaired loans by portfolio segment as of March 31, 2022 and for the three and six months then ended (dollars in thousands):

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

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

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)

With no related allowance recorded:

23 unchanged sentences

______________________________________________

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

(1) For the three months ended March 31, 2022 .

(2) For the six months ended March 31, 2022.

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):

39 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 $ 2.54 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 Company had $ 2.67 million and $ 2.55 million in TDRs included in impaired loans at March 31, 2022 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 March 31, 2022 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 six months ended March 31, 2022.

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.

3 unchanged sentences

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

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.

Among other purposes,the CAA 2021, provided coronavirus emergency response and relief, including extending relief offered under the CARES Act related to restructured loans as a result of COVID-19.

The provisions 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.

All of these borrowers had resumed making payments as of March 31, 2022.

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.

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):

There were no loans with COVID-19 loan modifications on deferral status outstanding at March 31, 2022.

The following table sets 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

2 unchanged sentences

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 December 31, 2021 and September 30, 2021 (dollars in thousands):

December 31, 2021

The following tables set forth information with respect to the Company’s TDRs by interest accrual status as of March 31, 2022 and September 30, 2021 (dollars in thousands):

March 31, 2022

Accruing Non-

15 unchanged sentences

Total $ 2,371 $ 182 $ 2,553

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

There was one new TDR recognized during the six months ended March 31, 2022.

There were no new TDRs recognized during the year ended September 30, 2021.

The following table sets forth information with respect to the Company's TDRs, by portfolio segment, during the six months ended March 31, 2022:

March 31, 2022 Number of

Contracts Pre-Modification

Investment Post- Modification

Investment End of

Home equity and second mortgage loan (1) 1 $ 136 $ 144 $ 144

Total 1 $ 136 $ 144 $ 144

(1) Modification was a result of an increase in principal balance and a reduction in interest rate and monthly payment.

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.

2 unchanged sentences

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 months ended December 31, 2021 and 2020 (dollars in thousands):

Three Months Ended December 31, 2021 Three Months Ended December 31, 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 and six months ended March 31, 2022 and 2021 (dollars in thousands):

Three Months Ended March 31, Six Months Ended March 31,

2022 2021 2022 2021

Operating lease cost $ 94 $ 92 $ 188 $ 185

1 unchanged sentence

Total lease cost $ 94 $ 92 $ 188 $ 185

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

The following tables provide supplemental information related to operating leases at or for the three and six months ended March 31, 2022 and 2021 (dollars in thousands):

At or For the Three Months Ended March 31, 2022 At or For the

Six Months Ended

March 31, 2022

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

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Weighted average discount rate-operating leases 2.24 % 2.24 %

At or For the Three Months Ended March 31, 2021 At or For Six Months Ended March 31, 2021

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

Operating cash flows from operating leases $ 80 $ 160

Weighted average remaining lease term-operating leases 8.8 years 8.8 years

Weighted average discount rate-operating leases 2.23 % 2.23 %

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 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):

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 March 31, 2022 for future fiscal years are as follows (dollars in thousands):

Remainder of 2022 $ 168

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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 months ended December 31, 2021 and 2020 is as follows (dollars in thousands, except per share amounts):

Three Months Ended December 31,

Information regarding the calculation of basic and diluted net income per common share for the three and six months ended March 31, 2022 and 2021 is as follows (dollars in thousands, except per share amounts):

Three Months Ended March 31, Six Months Ended March 31,

2022 2021 2022 2021

Basic net income per common share computation

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____________________________________________

(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.

(1) For the three and six months ended March 31, 2022, average options to purchase 204,398 and 207,256 shares of common stock, respectively, were outstanding but not included in the computation of diluted net income per common share, because their effect would have been anti-dilutive.

For the three and six months ended March 31, 2021, average options to purchase 135,590 and 136,631 shares of common stock, respectively, were outstanding but not included in the computation of diluted net income per common 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 months ended December 31, 2021 and 2020 are as follows (dollars in thousands):

Three Months Ended December 31, 2021

The changes in accumulated other comprehensive income (loss) ("AOCI") by component during the three and six months ended March 31, 2022 and 2021 are as follows (dollars in thousands):

Three Months Ended March 31, 2022

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 $ 57 $ ( 15 ) $ 42

Other comprehensive loss ( 18 ) 1 ( 17 )

Other comprehensive income (loss) ( 152 ) 3 ( 149 )

Balance of AOCI at the end of period $ ( 95 ) $ ( 12 ) $ ( 107 )

Three Months Ended December 31, 2020

Six Months Ended March 31, 2022

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 loss ( 17 ) — ( 17 )

Other comprehensive income (loss) ( 170 ) 4 ( 166 )

Balance of AOCI at the end of period $ ( 95 ) $ ( 12 ) $ ( 107 )

Three Months Ended March 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 $ 70 $ ( 26 ) $ 44

Other comprehensive income 74 3 77

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

Six Months Ended March 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 $ 87 $ ( 26 ) $ 61

Other comprehensive income 57 3 60

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

__________________________

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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, 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 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

At March 31, 2022, there were 26,696 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 March 31, 2022, there were 238,400 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 March 31, 2022 and 2021, there were no unvested restricted stock awards.

There were no restricted stock grants awarded during the six months ended March 31, 2022 and 2021.

Stock option activity for the six months ended March 31, 2022 and 2021 is summarized as follows:

Six Months Ended March 31, 2022 Six Months Ended March 31, 2021

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 three months ended December 31, 2021 were as follows:

The weighted average assumptions for options granted during the six months ended March 31, 2022 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 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:

The aggregate intrinsic value of options exercised during the six months ended March 31, 2022 and 2021 was $ 443,000 and $ 947,000 , respectively.

At March 31, 2022, there were 178,670 unvested options with an aggregate grant date fair value of $ 847,000 , all of which the Company assumes will vest.

The aggregate intrinsic value of unvested options at March 31, 2022 was $ 538,000 .

There were 400 options vested during the six months ended March 31, 2022 with a total fair value of $ 2,000 .

At March 31, 2021, there were 158,392 unvested options with an aggregate grant date fair value of $ 565,000 .

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

Additional information regarding options outstanding at March 31, 2022 is as follows:

Options Outstanding Options Exercisable

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363,175 $ 22.15 6.5 184,505 $ 19.33 4.7

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.

The aggregate intrinsic value of options outstanding at March 31, 2022 and 2021 was $ 2.17 million and $ 2.99 million , respectively.

As of March 31, 2022, unrecognized compensation cost related to unvested stock options was $ 777,000 , which is expected to be recognized over a weighted average life of 2.31 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 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

The Company had no liabilities measured at fair value on a recurring basis at March 31, 2022 and September 30, 2021.

The Company's assets measured at estimated fair value on a recurring basis at March 31, 2022 and September 30, 2021 were as follows (dollars in thousands):

March 31, 2022 Estimated Fair Value

Level 1 Level 2 Level 3 Total

11 unchanged sentences

Total $ 955 $ 63,176 $ — $ 64,131

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.

There were no transfers among Level 1, Level 2 and Level 3 during the six months ended March 31, 2022 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 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 December 31, 2021 (dollars in thousands):

The following table summarizes the balances of assets measured at estimated fair value on a non-recurring basis at March 31, 2022 (dollars in thousands):

Estimated Fair Value

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Impaired loans:

Mortgage loans:

Land $ — $ — $ 284

Commercial business loans $ — $ — $ 122

4 unchanged sentences

Total $ — $ 1 $ 279

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):

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 March 31, 2022 (dollars in thousands):

Fair Value Valuation

24 unchanged sentences

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 December 31, 2021 and September 30, 2021.

The Company does not believe that it would be practicable to estimate a representative fair value for these types of items as of March 31, 2022 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 December 31, 2021 and September 30, 2021 (dollars in thousands):

December 31, 2021

The recorded amounts and estimated fair values of financial instruments were as follows as of March 31, 2022 and September 30, 2021 (dollars in thousands):

March 31, 2022

Fair Value Measurements Using:

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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 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.

For the three months ended March 31, 2022, the Company recognized $ 1.01 million in service charges on deposits, $ 1.25 million in ATM and debit card interchange transaction fees, $ 44,000 in escrow fees, and $ 8,000 in fee income from non-deposit investment sales, all considered within the scope of ASC 606.

For the six months ended March 31, 2022, the Company recognized $ 1.93 million in service charges on deposits, $ 2.52 million in ATM and debit card interchange transaction fees, $ 123,000 in escrow fees, and $ 10,000 in fee income from non-deposit investment sales, all considered within the scope of ASC 606.

For the three months ended March 31,

2021, the Company recognized $ 941,000 in service charges on deposits, $ 1.24 million in ATM and debit card interchange transaction fees, $ 74,000 in escrow fees, and $ 3,000 in fee income from non-deposit investment sales, all considered within the scope of ASC 606.

For the six months ended March 31, 2021, the Company recognized $ 2.00 million in service charges on deposits, $ 2.39 million in ATM and debit card interchange transaction fees, $ 179,000 in escrow fees, and $ 7,000 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.

16 unchanged sentences

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