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Item 1. Financial Statements

2024-08-07 compared with 2024-05-08 · 182 added, 159 removed, 1050 unchanged (25% of the section changed)

3 unchanged sentences

CONSOLIDATED BALANCE SHEETS

March 31, 2024 and September 30, 2023

June 30, 2024 and September 30, 2023

(Dollars in thousands, except per share amounts)

7 unchanged sentences

approximates fair value) 10,458 15,188

Investment securities held to maturity, at amortized cost (net of allowance for credit losses of $ 85 at March 31, 2024), (estimated fair value of $ 200,807 and $ 253,766 )

Investment securities held to maturity, at amortized cost (net of allowance for credit losses of $ 72 at June 30, 2024 and $ 0 at September 30, 2023), (estimated fair value of $ 166,761 and $ 253,766 )

176,787 270,218

28 unchanged sentences

CONSOLIDATED BALANCE SHEETS (continued)

March 31, 2024 and September 30, 2023

June 30, 2024 and September 30, 2023

(Dollars in thousands, except per share amounts)

7 unchanged sentences

50,000,000 shares authorized;

8,023,121 shares issued and outstanding - March 31, 2024 8,105,338 shares issued and outstanding - September 30, 2023

7,953,421 shares issued and outstanding - June 30, 2024 8,105,338 shares issued and outstanding - September 30, 2023

30,681 34,771

8 unchanged sentences

CONSOLIDATED STATEMENTS OF INCOME

For the three and six months ended March 31, 2024 and 2023

For the three and nine months ended June 30, 2024 and 2023

(Dollars in thousands, except per share amounts)

Three Months Ended March 31, Six Months Ended

Three Months Ended June 30, Nine Months Ended

2024 2023 2024 2023

12 unchanged sentences

Provision for credit losses - loans 264 610 810 1,610

Provision for (recapture of) credit losses - investment securities 3 — ( 7 ) —

Recapture of credit losses - investment securities ( 12 ) — ( 20 ) —

Recapture of credit losses - unfunded commitments ( 8 ) — ( 130 ) —

3 unchanged sentences

Net recoveries on investment securities 2 2 9 7

Gain on sale of investment securities available for sale, net — 95 — 95

Service charges on deposits 1,014 970 3,024 2,810

9 unchanged sentences

CONSOLIDATED STATEMENTS OF INCOME (continued)

For the three and six months ended March 31, 2024 and 2023

For the three and nine months ended June 30, 2024 and 2023

(Dollars in thousands, except per share amounts)

Three Months Ended March 31, Six Months Ended

Three Months Ended June 30, Nine Months Ended

2024 2023 2024 2023

2 unchanged sentences

Premises and equipment 1,011 1,010 3,065 2,935

Gain on sales/dispositions of premises and equipment, net ( 3 ) ( 32 ) ( 3 ) ( 32 )

Advertising 211 179 556 551

OREO and other repossessed assets, net — — 1 1

ATM and debit card interchange transaction fees 580 491 1,796 1,463

23 unchanged sentences

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the three and six months ended March 31, 2024 and 2023

For the three and nine months ended June 30, 2024 and 2023

(Dollars in thousands)

Three Months Ended March 31, Six Months Ended

Three Months Ended June 30, Nine Months Ended

2024 2023 2024 2023

1 unchanged sentence

Net income $ 5,924 $ 6,306 $ 17,928 $ 20,476

Other comprehensive income

Unrealized holding gain on investment securities available for sale, net of income taxes of $ 22 , $ 64 , $ 88 and $ 58 , respectively

Other comprehensive income (loss)

Unrealized holding gain (loss) on investment securities available for sale, net of income taxes of $ 53 , $( 66 ), $ 142 and $( 8 ), respectively

200 ( 249 ) 530 ( 29 )

1 unchanged sentence

Accretion of OTTI on investment securities held to maturity, net of income taxes of $ 0 , $ 0 , $ 2 , and $ 1 , respectively

Total other comprehensive income, net of income taxes 82 240 339 222

Total other comprehensive income (loss), net of income taxes 200 ( 249 ) 539 ( 27 )

Total comprehensive income $ 6,124 $ 6,057 $ 18,467 $ 20,449

3 unchanged sentences

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

For the three and six months ended March 31, 2024 and 2023

For the three and nine months ended June 30, 2024 and 2023

(Dollars in thousands, except per share amounts)

4 unchanged sentences

Earnings Total

Balance, December 31, 2022 8,231,197 $ 38,878 $ 185,406 $ ( 735 ) $ 223,549

Balance, March 31, 2023 8,203,174 $ 37,979 $ 190,177 $ ( 495 ) $ 227,661

Net income — — 6,306 — 6,306

Other comprehensive income — — — 240 240

Other comprehensive loss — — — ( 249 ) ( 249 )

Repurchase of common stock ( 110,000 ) ( 2,674 ) — — ( 2,674 )

3 unchanged sentences

Stock-based compensation expense — 79 — — 79

Balance, June 30, 2023 8,094,174 $ 35,401 $ 194,606 $ ( 744 ) $ 229,263

Balance, March 31, 2024 8,023,121 $ 32,338 $ 207,086 $ ( 745 ) $ 238,679

Balance, December 31, 2023 8,120,708 $ 34,869 $ 203,327 $ ( 827 ) $ 237,369

Net income — — 5,924 — 5,924

5 unchanged sentences

Stock-based compensation expense — 105 — — 105

Balance, March 31, 2024 8,023,121 $ 32,338 $ 207,086 $ ( 745 ) $ 238,679

Balance, June 30, 2024 7,953,421 $ 30,681 $ 211,087 $ ( 545 ) $ 241,223

Common Stock Accumulated

5 unchanged sentences

Net income — — 20,476 — 20,476

Other comprehensive income — — — 222 222

Other comprehensive loss — — — ( 27 ) ( 27 )

Repurchase of common stock ( 154,833 ) ( 4,119 ) — — ( 4,119 )

3 unchanged sentences

Stock-based compensation expense — 235 — — 235

Balance, March 31, 2023 8,203,174 $ 37,979 $ 190,177 $ ( 495 ) $ 227,661

Balance, June 30, 2023 8,094,174 $ 35,401 $ 194,606 $ ( 744 ) $ 229,263

Balance, September 30, 2023 8,105,338 $ 34,771 $ 199,386 $ ( 1,084 ) $ 233,073

8 unchanged sentences

— — ( 488 ) — ( 488 )

Balance, March 31, 2024 8,023,121 $ 32,338 $ 207,086 $ ( 745 ) $ 238,679

Balance, June 30, 2024 7,953,421 $ 30,681 $ 211,087 $ ( 545 ) $ 241,223

See notes to unaudited consolidated financial statements

2 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the six months ended March 31, 2024 and 2023

For the nine months ended June 30, 2024 and 2023

(Dollars in thousands)

Six Months Ended March 31,

Nine Months Ended June 30,

Cash flows from operating activities

3 unchanged sentences

Depreciation 1,088 1,022

Deferred income taxes/(benefits) — ( 77 )

Accretion of discount on purchased loans ( 29 ) ( 64 )

1 unchanged sentence

Stock-based compensation expense 316 235

Gain on sale of investment securities available for sale, net — ( 95 )

Net recoveries on investment securities ( 9 ) ( 7 )

2 unchanged sentences

Gain on sales of loans, net ( 188 ) ( 147 )

Gain on sales/disposition of premises and equipment, net ( 3 ) ( 32 )

Loans originated for sale ( 10,330 ) ( 6,062 )

2 unchanged sentences

BOLI net earnings ( 470 ) ( 470 )

Increase (decrease) in deferred loan origination fees ( 63 ) 438

Increase in deferred loan origination fees 162 636

Net change in accrued interest receivable and other assets, and other liabilities and accrued expenses ( 1,830 ) ( 800 )

2 unchanged sentences

Net decrease in CDs held for investment 4,730 5,963

Proceeds from sale of investment securities available for sale — 8,929

Purchase of investment securities held to maturity ( 1,919 ) ( 15,601 )

6 unchanged sentences

Purchases of premises and equipment ( 1,010 ) ( 711 )

Proceeds from sales of premises and equipment 8 45

Net cash used in investing activities ( 28,676 ) ( 135,596 )

3 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

For the six months ended March 31, 2024 and 2023

For the nine months ended June 30, 2024 and 2023

(Dollars in thousands)

Six Months Ended March 31,

Nine Months Ended June 30,

Cash flows from financing activities

Net increase (decrease) in deposits $ 67,609 $ ( 79,446 )

Repayments of FHLB borrowings ( 15,000 ) —

Proceeds from (repayment of) FHLB borrowings ( 15,000 ) 15,000

Proceeds from exercise of stock options 395 534

10 unchanged sentences

Supplemental disclosure of non-cash investing activities

Other comprehensive income related to investment securities $ 339 $ 222

Other comprehensive income (loss) related to investment securities $ 539 $ ( 27 )

Operating lease liabilities arising from recording of ROU assets $ — $ 71

Adjustment to retained earnings, net of deferred tax;

11 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, 2023 (“2023 Form 10-K”).

The unaudited consolidated results of operations for the six months ended March 31, 2024 are not necessarily indicative of the results that may be expected for the entire fiscal year ending September 30, 2024.

The unaudited consolidated results of operations for the nine months ended June 30, 2024 are not necessarily indicative of the results that may be expected for the entire fiscal year ending September 30, 2024.

(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 March 31, 2024 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 June 30, 2024 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 March 31, 2024 and September 30, 2023 (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 June 30, 2024 and September 30, 2023 (dollars in thousands):

Losses Estimated

Fair Value Allowance for Credit Losses ("ACL")

March 31, 2024

June 30, 2024

Held to Maturity

7 unchanged sentences

Total held to maturity $ 176,787 $ 240 $ ( 10,266 ) $ 166,761 $ 72

March 31, 2024 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value

June 30, 2024 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value

Available for Sale

Treasury and U.S.

government agency securities $ 8,924 $ — $ ( 14 ) $ 8,910

government agencies 66,280 137 ( 812 ) 65,605

12 unchanged sentences

$ 43,132 $ — $ ( 1,361 ) $ 41,771

Held to maturity and available for sale investment securities with unrealized losses were as follows as of March 31, 2024 (dollars in thousands):

Held to maturity and available for sale investment securities with unrealized losses were as follows as of June 30, 2024 (dollars in thousands):

Less Than 12 Months 12 Months or Longer Total

11 unchanged sentences

Available for sale

Treasury and U.S.

government agency securities $ 8,910 $ ( 14 ) 3 $ — $ 8,910 $ ( 14 )

government agencies 11,018 ( 33 ) 3 33,578 ( 779 ) 28 44,596 ( 812 )

17 unchanged sentences

$ 10,635 $ ( 308 ) 3 $ 30,809 $ ( 1,053 ) 27 $ 41,444 $ ( 1,361 )

During the six months ended March 31, 2024, the Company had no net realized losses on held to maturity investment securities.

During the six months ended March 31, 2023, the Company recorded a $ 9,000 net realized loss on 14 held to maturity investment securities all of which had been recognized previously as 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 $ 230.46 million and $ 201.82 million at March 31, 2024 and September 30, 2023, respectively.

The contractual maturities of debt securities at March 31, 2024 were as follows (dollars in thousands).

During the nine months ended June 30, 2024, the Company recorded a $ 1,000 net realized losses on 14 held to maturity investment securities.

During the nine months ended June 30, 2023, the Company recorded a $ 10,000 net realized loss on 14 held to maturity investment securities all of which had been recognized previously as 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 $ 212.16 million and $ 201.82 million at June 30, 2024 and September 30, 2023, respectively.

The contractual maturities of debt securities at June 30, 2024 were as follows (dollars in thousands).

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

11 unchanged sentences

The Company assesses each available for sale investment security that is in an unrealized loss position to determine whether the decline in fair value below the amortized cost basis results from a credit loss or other factors.

The Company did not record an

ACL on any available for sale debt securities at March 31, 2024 or upon adoption of ASU 2016-13 on October 1, 2023.

The Company did not record an ACL on any available for sale debt securities at June 30, 2024 or upon adoption of ASU 2016-13 on October 1, 2023.

As of both dates, the Company considered the unrealized losses across the classes of major security-type to be related to fluctuations in market conditions, primarily interest rates, and not reflective of a deterioration in credit value.

12 unchanged sentences

The calculation is completed on a quarterly basis using the default studies provided by an industry leading source.

At March 31, 2024, the ACL on the held to maturity securities portfolio totaled $ 85,000 .

The following tables set forth information for the three and six months ended March 31, 2024 regarding activity in the ACL by portfolio segment (dollars in thousands):

Three Months Ended March 31, 2024

At June 30, 2024, the ACL on the held to maturity securities portfolio totaled $ 72,000 .

The following tables set forth information for the three and nine months ended June 30, 2024 regarding activity in the ACL by portfolio segment (dollars in thousands):

Three Months Ended June 30, 2024

Held to Maturity Beginning Allowance Impact of Adopting CECL (ASU 2016-13) Provision for (Recapture of) Credit Losses Ending Allowance

2 unchanged sentences

Total $ 85 $ — $ ( 13 ) (1) $ 72

Six Months Ended March 31, 2024

(1) The total provision for (recapture of) credit losses does not match the three months ended income statement due to rounding.

Nine Months Ended June 30, 2024

Beginning Allowance Impact of Adopting CECL (ASU 2016-13) Provision for (Recapture of) Credit Losses Ending Allowance

5 unchanged sentences

Changes in the ACL are recorded through the provision for (recapture of) credit losses on the consolidated income statement.

Accrued interest receivable on held to maturity investment securities totaled $ 665,000 at March 31, 2024 and is included

Accrued interest receivable on held to maturity investment securities totaled $ 663,000 at June 30, 2024 and is included

in accrued interest income receivable on the consolidated balance sheet.

6 unchanged sentences

credited to income is reversed.

The Company had $ 79,000 of private label mortgage-backed held to maturity investment securities in non-accrual status at March 31, 2024.

The Company monitors the credit quality of debt securities held to maturity through the use of credit ratings from Moody's, S&P and Fitch.

The Company had $ 72,000 of private label mortgage-backed held to maturity investment securities in non-accrual status at June 30, 2024.

The Company monitors the credit quality of debt securities held to maturity using credit ratings from Moody's, S&P and Fitch.

The Company monitors the credit ratings on a quarterly basis.

The following table sets forth the Company's held to maturity investment securities at March 31, 2024 by credit quality indicator:

The following table sets forth the Company's held to maturity investment securities at June 30, 2024 by credit quality indicator:

Credit Ratings

As of March 31, 2024 AAA/AA/A BBB/BB/B Unrated Total

As of June 30, 2024 AAA/AA/A BBB/BB/B Unrated Total

Held to Maturity

11 unchanged sentences

The amounts written off due to credit loss remain and continue to be recovered on a cash basis.

The following table presents a roll forward of the credit loss component of held to maturity debt securities that have been written down for OTTI with the credit loss component recognized in earnings for the six months ended March 31, 2024 and 2023 (dollars in thousands):

Six Months Ended

The following table presents a roll forward of the credit loss component of held to maturity debt securities that have been written down for OTTI with the credit loss component recognized in earnings for the nine months ended June 30, 2024 and 2023 (dollars in thousands):

Nine Months Ended

Beginning balance of credit loss $ 816 $ 836

12 unchanged sentences

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.

If the estimated fair value of the

reporting unit equals or exceeds its book value, goodwill is considered not impaired, and the second step of the impairment test is unnecessary.

If the estimated fair value of the reporting unit equals or exceeds its book value, goodwill is considered not impaired, and the second step of the impairment test is unnecessary.

The second step, if necessary, measures the amount of goodwill impairment loss to be recognized.

3 unchanged sentences

Management's qualitative assessment takes into consideration macroeconomic conditions, industry and market considerations, cost or margin factors, financial performance and share price of the Company's common stock.

The Company performed its fiscal year 2023 goodwill impairment test during the quarter ended June 30, 2023 with the assistance of an independent third-party firm specializing in goodwill impairment valuations for financial institutions.

The Company performed its fiscal year 2024 goodwill impairment test during the quarter ended June 30, 2024.

Based on this assessment, the Company determined that it is not "more likely than not" that the Company's fair value is less than its carrying amount, and, therefore, goodwill was determined not to be impaired at May 31, 2024.

6 unchanged sentences

and unanticipated competition.

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 March 31, 2024, management believes that there have been no events or changes in the circumstances since May 31, 2023 that would indicate a potential impairment of goodwill.

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, 2024, management believes that there have been no events or changes in the circumstances since May 31, 2024 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 March 31, 2024 and September 30, 2023 remained unchanged at $ 15.13 million.

The recorded amount of goodwill at June 30, 2024 and September 30, 2023 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 March 31, 2024, management believes that there have been no events or changes in the circumstances that would indicate a potential impairment of CDI.

As of June 30, 2024, 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 CREDIT LOSSES

Loans receivable by portfolio segment consisted of the following at March 31, 2024 and September 30, 2023 (dollars in thousands):

Loans receivable by portfolio segment consisted of the following at June 30, 2024 and September 30, 2023 (dollars in thousands):

2024 September 30,

26 unchanged sentences

_____________________________

(1) Does not include one- to four-family loans held for sale totaling $ 1.31 million and $ 400,000 at March 31, 2024 and September 30, 2023, respectively.

Loans receivable at March 31, 2024 and September 30, 2023 are reported net of unamortized discounts totaling $ 172,000 and $ 192,000 , respectively.

(1) Does not include one- to four-family loans held for sale totaling $ 1.80 million and $ 400,000 at June 30, 2024 and September 30, 2023, respectively.

Loans receivable at June 30, 2024 and September 30, 2023 are reported net of unamortized discounts totaling $ 163,000 and $ 192,000 , respectively.

Credit Quality Indicators

1 unchanged sentence

The Company categorizes loans into risk grade categories based on relevant information about the ability of borrowers to service their debt such as:

current financial information, historical payment experience, credit documentation, public information and current economic

trends, among other factors such as the estimated fair value of the collateral.

current financial information, historical payment experience, credit documentation, public information and current economic trends, among other factors such as the estimated fair value of the collateral.

The Company uses the following definitions for credit risk ratings as part of the on-going monitoring of the credit quality of its loan portfolio:

10 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 March 31, 2024 and September 30, 2023, there were no loans classified as doubtful.

At June 30, 2024 there was one loan classified as doubtful which is supported by an SBA guarantee of the remaining balance.

At September 30, 2023, 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 March 31, 2024 and September 30, 2023, there were no loans classified as loss.

The following table sets forth the Company's loan portfolio at March 31, 2024 by risk attribute and year of origination as well as current period gross charge-offs (dollars in thousands):

At June 30, 2024 and September 30, 2023, there were no loans classified as loss.

The following table sets forth the Company's loan portfolio at June 30, 2024 by risk attribute and year of origination as well as current period gross charge-offs (dollars in thousands):

Term Loans Amortized Cost Basis by Origination Fiscal Year

51 unchanged sentences

Substandard — 1,186 — — — 532 — 1,718

Doubtful — 202 — — — — — 202

Total commercial business $ 12,815 $ 22,084 $ 37,646 $ 9,474 $ 8,909 $ 5,701 $ 39,584 $ 136,213

Current period gross write-offs $ — $ 79 $ — $ — $ — $ — $ — $ 79

Pass $ — $ — $ — $ 267 $ 47 $ — $ — $ 314

5 unchanged sentences

Substandard — 1,186 — 152 — 6,667 615 8,620

Doubtful — 202 — — — — — 202

Total loans receivable $ 99,610 $ 256,996 $ 352,658 $ 193,051 $ 118,854 $ 314,457 $ 83,843 $ 1,419,469

2 unchanged sentences

The Company adopted the new accounting standard for the ACL, commonly referred to as the current expected credit losses ("CECL") methodology, as of October 1, 2023.

All disclosures as of and for the three and six months ended March 31, 2024 are presented in accordance with the new accounting standard.

All disclosures as of and for the three and nine months ended June 30, 2024 are presented in accordance with the new accounting standard.

The comparative financial periods prior to the adoption of this new accounting standard are presented and disclosed under previously applicable GAAP's incurred loss methodology, which is not directly comparable to the new, CECL methodology.

13 unchanged sentences

Loans that are evaluated individually are not included in the collective analysis.

The ACL on loans that are individually evaluated may be estimated based on their expected cash flows, or in the case of loans for which repayment is expected substantially through the operation or sale of collateral when the borrower is experiencing financial difficulty, may be measured based on the fair value of the collateral less estimated selling costs.

The ACL on loans that are individually evaluated may be estimated based on their expected cash flows, or in the case of loans for which repayment is

expected substantially through the operation or sale of collateral when the borrower is experiencing financial difficulty, may be measured based on the fair value of the collateral less estimated selling costs.

When available information confirms that specific loans or portions thereof are uncollectible, identified amounts are charged against the ACL.

9 unchanged sentences

In addition, regulatory agencies, as integral part of their examination process, periodically review the Company's ACL and may require the Company to make additions to the ACL based on their judgment about information available to them at the time of their examinations.

The following tables set forth information for the three and six months ended March 31, 2024 and 2023 regarding activity in the ACL by portfolio segment (dollars in thousands):

Three Months Ended March 31, 2024

The following tables set forth information for the three and nine months ended June 30, 2024 and 2023 regarding activity in the ACL by portfolio segment (dollars in thousands):

Three Months Ended June 30, 2024

Allowance Provision for

16 unchanged sentences

Total $ 16,818 $ 264 $ ( 81 ) $ 45 $ 17,046

Six Months Ended March 31, 2024

Nine Months Ended June 30, 2024

Allowance Impact of Adopting CECL (ASU 2016-13) Provision for

(Recapture of) Loan Losses Charge-

(Recapture of) Credit Losses Charge-

offs Recoveries Ending

14 unchanged sentences

Total $ 15,817 $ 461 $ 810 $ ( 87 ) $ 45 $ 17,046

Three Months Ended March 31, 2023

Three Months Ended June 30, 2023

Allowance Provision for

16 unchanged sentences

Total $ 14,698 $ 610 $ ( 1 ) $ — $ 15,307

Six Months Ended March 31, 2023

Nine Months Ended June 30, 2023

Allowance Provision for

52 unchanged sentences

A loan is generally not removed from non-accrual until all delinquent principal, interest and late fees have been brought current and the borrower demonstrates repayment ability over a period of not less than six months and all taxes are current.

The following tables present an analysis of loans by aging category and portfolio segment at March 31, 2024 and September 30, 2023 (dollars in thousands):

The following tables present an analysis of loans by aging category and portfolio segment at June 30, 2024 and September 30, 2023 (dollars in thousands):

Past Due 60-89

3 unchanged sentences

Past Due Current Total

March 31, 2024

June 30, 2024

Mortgage loans:

58 unchanged sentences

Total $ 1,299,220 $ 17,758 $ — $ 6,386 $ 1,323,364

At March 31, 2024, the Company had $ 2.21 million of non-accrual loans with an ACL of $ 361,000 and $ 1.40 million of non-accrual loans with no ACL.

The following table is a summary of the amortized cost of collateral dependent non-accrual loans as of March 31, 2024 (in thousands):

At June 30, 2024, the Company had $ 1.91 million of non-accrual loans with an ACL of $ 243,000 and $ 2.21 million of non-accrual loans with no ACL.

The following table is a summary of the amortized cost of collateral dependent non-accrual loans as of June 30, 2024 (in thousands):

Recorded Investment Related ACL

46 unchanged sentences

(1) For the year ended September 30, 2023 .

The following table is a summary of information related to impaired loans by portfolio segment prior to the adoption of CECL as of March 31, 2023 and for three and six months then ended (dollars in thousands):

The following table is a summary of information related to impaired loans by portfolio segment prior to the adoption of CECL as of June 30, 2023 and for three and nine months then ended (dollars in thousands):

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

23 unchanged sentences

_____________________________________________

(1) For the three months ended March 31, 2023.

(2) For the six months ended March 31, 2023.

(1) For the three months ended June 30, 2023.

(2) For the nine months ended June 30, 2023.

Troubled debt restructurings ("TDRs")

2 unchanged sentences

This ASU eliminated the accounting guidance for TDR loans for creditors, while enhancing disclosure requirements for certain loan refinancing and restructurings by creditors when a borrower experiences financial difficulty.

No loans to borrowers experiencing financial difficulty were modified in the three and six months ended March 31, 2024 and 2023.

At March 31, 2023, the Company had $ 2.60 million of TDRs, all of which were paying as agreed.

There were no defaults in these loans during the six months ended March 31, 2024 and 2023.

No loans to borrowers experiencing financial difficulty were modified in the three and nine months ended June 30, 2024 and 2023.

At June 30, 2023, the Company had $ 2.60 million of TDRs, all of which were paying as agreed.

There were no defaults in these loans during the nine months ended June 30, 2024 and 2023.

In accordance with the Company's policy guidelines, unsecured loans are generally charged-off when no payments have been received for three consecutive months unless an alternative action plan is in effect.

1 unchanged sentence

However, charge-off's are postponed if alternative proposals to restructure, obtain additional guarantors, obtain additional assets as collateral or a potential sale of the underlying collateral would result in full repayment of the outstanding loan balance.

Once any other potential source of repayment are exhausted, the impaired portion of the loan is charged-off.

Once other potential sources of repayment are exhausted, the impaired portion of the loan is charged-off.

Regardless of whether a loan is unsecured or collateralized, once an amount is determined to be a confirmed loan loss it is promptly charged off.

At March 31, 2024, the Company has operating leases for two retail bank branch offices and an administrative office.

At June 30, 2024, the Company has operating leases for two retail bank branch offices and an administrative office.

The Company's leases have remaining lease terms of two to seven years , and include options to extend the leases from two to five years .

Lease extensions are not certain, and the Company evaluates each lease based on the specific circumstances for the location to determine the probability of exercising the extensions in the calculation of operating lease ROU assets and lease liabilities.

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, 2024 and 2023 (dollars in thousands):

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

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, 2024 and 2023 (dollars in thousands):

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

2024 2023 2024 2023

2 unchanged sentences

Total lease cost $ 98 $ 87 $ 283 $ 261

The following tables provide supplemental information related to operating leases at or for the three and six months ended March 31, 2024 and 2023 (dollars in thousands):

At or For the Three Months Ended March 31, 2024 At or For the Six Months Ended March 31, 2024

The following tables provide supplemental information related to operating leases at or for the three and nine months ended June 30, 2024 and 2023 (dollars in thousands):

At or For the Three Months Ended June 30, 2024 At or For the Nine Months Ended June 30, 2024

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

2 unchanged sentences

Weighted average discount rate-operating leases 2.34 % 2.34 %

At or For the Three Months Ended March 31, 2023 At or For the Six Months Ended March 31, 2023

At or For the Three Months Ended June 30, 2023 At or For the Nine Months Ended June 30, 2023

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

4 unchanged sentences

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 lease liability was determined by utilizing the FHLB fixed-rate credit advance borrowing rate for the term correlating to the remaining term of each lease.

Maturities of operating lease liabilities at March 31, 2024 for future fiscal years are as follows (dollars in thousands):

Maturities of operating lease liabilities at June 30, 2024 for future fiscal years are as follows (dollars in thousands):

Remainder of 2024 $ 83

8 unchanged sentences

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 six months ended March 31, 2024 and 2023 is as follows (dollars in thousands, except per share amounts):

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

Information regarding the calculation of basic and diluted net income per common share for the three and nine months ended June 30, 2024 and 2023 is as follows (dollars in thousands, except per share amounts):

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

2024 2023 2024 2023

10 unchanged sentences

____________________________________________

(1) For the three and six months ended March 31, 2024, average options to purchase 244,030 and 229,232 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, 2023, average options to purchase 176,867

(1) For the three and nine months ended June 30, 2024, average options to purchase 240,820 and 233,081 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 nine months ended June 30, 2023, average options to purchase 256,503

and 203,823 shares of common stock, respectively, were outstanding but not included in the computation of diluted net income per common share because their effect would be anti-dilutive.

(7) ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The changes in accumulated other comprehensive income (loss) ("AOCI") by component during the three and six months ended March 31, 2024 and 2023 are as follows (dollars in thousands):

Three Months Ended March 31, 2024

The changes in accumulated other comprehensive income (loss) ("AOCI") by component during the three and nine months ended June 30, 2024 and 2023 are as follows (dollars in thousands):

Three Months Ended June 30, 2024

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

2 unchanged sentences

Balance of AOCI at the end of period $ ( 545 ) $ — $ ( 545 )

Six Months Ended March 31, 2024

Nine Months Ended June 30, 2024

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

2 unchanged sentences

Balance of AOCI at the end of period $ ( 545 ) $ — $ ( 545 )

Three Months Ended March 31, 2023

Three Months Ended June 30, 2023

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 $ ( 486 ) $ ( 9 ) $ ( 495 )

Other comprehensive income 239 1 240

Other comprehensive loss ( 249 ) — ( 249 )

Balance of AOCI at the end of period $ ( 735 ) $ ( 9 ) $ ( 744 )

Six Months Ended March 31, 2023

Nine Months Ended June 30, 2023

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 $ ( 706 ) $ ( 11 ) $ ( 717 )

Other comprehensive income 220 2 222

Other comprehensive income (loss) ( 29 ) 2 ( 27 )

Balance of AOCI at the end of period $ ( 735 ) $ ( 9 ) $ ( 744 )

2 unchanged sentences

(8) STOCK COMPENSATION PLANS

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 2014 Equity Incentive Plan, the Company can 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.

1 unchanged sentence

The exercise price of each option equals the fair market value of the Company’s common stock on the date of grant.

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 March 31, 2024, there were 9,356 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, 2024, there were 181,870 shares of common stock available which may be awarded as options or restricted stock pursuant to future grant under the 2019 Equity Incentive Plan.

Stock option activity for the six months ended March 31, 2024 and 2023 is summarized as follows:

Six Months Ended March 31, 2024 Six Months Ended March 31, 2023

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, 2024, there were 15,576 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, 2024, there were 182,070 shares of common stock available which may be awarded as options or restricted stock pursuant to future grant under the 2019 Equity Incentive Plan.

Stock option activity for the nine months ended June 30, 2024 and 2023 is summarized as follows:

Nine Months Ended June 30, 2024 Nine Months Ended June 30, 2023

Number of Shares Weighted

6 unchanged sentences

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

There were no stock options granted during the six months ended March 31, 2024.

The weighted average assumptions for options granted during the six months ended March 31, 2023 were as follows:

There were no stock options granted during the nine months ended June 30, 2024.

The weighted average assumptions for options granted during the nine months ended June 30, 2023 were as follows:

Expected volatility 33 %

3 unchanged sentences

Grant date fair value per share $ 8.65

The aggregate intrinsic value of options exercised during the six months ended March 31, 2024 and 2023 was $ 499,000 and $ 337,000 , respectively.

At March 31, 2024, there were 121,820 unvested options with an aggregate grant date fair value of $ 709,000 , all of which the Company assumes will vest.

The aggregate intrinsic value of unvested options at March 31, 2024 was $ 217,000 .

There were 300 options that vested during the six months ended March 31, 2024 with a total fair value of $ 2,000 .

At March 31, 2023, there were 189,910 unvested options with an aggregate grant date fair value of $ 1.07 million.

There were 200 options that vested during the six months ended March 31, 2023 with a total fair value of $ 1,000 .

Additional information regarding options outstanding at March 31, 2024 is as follows:

The aggregate intrinsic value of options exercised during the nine months ended June 30, 2024 and 2023 was $ 501,000 and $ 345,000 , respectively.

At June 30, 2024, there were 121,820 unvested options with an aggregate grant date fair value of $ 709,000 , all of which the Company assumes will vest.

The aggregate intrinsic value of unvested options at June 30, 2024 was $ 221,000 .

There were 300 options that vested during the nine months ended June 30, 2024 with a total fair value of $ 2,000 .

At June 30, 2023, there were 186,910 unvested options with an aggregate grant date fair value of $ 1.05 million.

There were 3,200 options that vested during the nine months ended June 30, 2023 with a total fair value of $ 17,000 .

Additional information regarding options outstanding at June 30, 2024 is as follows:

Options Outstanding Options Exercisable

9 unchanged sentences

322,390 $ 24.87 5.6 200,570 $ 24.29 4.5

The aggregate intrinsic value of options outstanding at March 31, 2024 and 2023 was $ 1.06 million and $ 1.78 million , respectively.

As of March 31, 2024, unrecognized compensation cost related to unvested stock options was $ 645,000 , which is expected to be recognized over a weighted average life of 1.90 years.

At March 31, 2024, there were 26,150 unvested restricted stock awards.

At March 31, 2023, there were no unvested restricted stock awards.

There were no restricted stock grants awarded during the six months ended March 31, 2024 and 2023.

The aggregate intrinsic value of options outstanding at June 30, 2024 and 2023 was $ 1.07 million and $ 1.58 million , respectively.

As of June 30, 2024, unrecognized compensation cost related to unvested stock options was $ 579,000 , which is expected to be recognized over a weighted average life of 1.81 years.

At June 30, 2024, there were 26,150 unvested restricted stock awards.

At June 30, 2023, there were no unvested restricted stock awards.

There were no restricted stock awards granted during the nine months ended June 30, 2024 and 2023.

Number of Unvested Shares Weighted Average Grant Date Fair Value

1 unchanged sentence

Forfeited — —

Outstanding, March 31, 2024 26,150 $ 27.37

Outstanding, June 30, 2024 26,150 $ 27.37

The fair value of restricted stock awards is equal to the fair value of the Company's stock on the date of the grant.

The related stock-based compensation expense is recorded over the requisite service period.

At March 31, 2024, unrecognized compensation cost related to unvested restricted stock awards was $ 636,000 , which is expected to be recognized over a weighted average period of 2.23 years.

At June 30, 2024, unrecognized compensation cost related to unvested restricted stock awards was $ 597,000 , which is expected to be recognized over a weighted average period of 1.98 years.

(9) FAIR VALUE MEASUREMENTS

10 unchanged sentences

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 March 31, 2024 and September 30, 2023.

The Company's assets measured at estimated fair value on a recurring basis at March 31, 2024 and September 30, 2023 were as follows (dollars in thousands):

March 31, 2024 Estimated Fair Value

The Company had no liabilities measured at fair value on a recurring basis at June 30, 2024 and September 30, 2023.

The Company's assets measured at estimated fair value on a recurring basis at June 30, 2024 and September 30, 2023 were as follows (dollars in thousands):

June 30, 2024 Estimated Fair Value

Level 1 Level 2 Level 3 Total

11 unchanged sentences

Total $ 811 $ 41,771 $ — $ 42,582

There were no transfers among Level 1, Level 2 and Level 3 during the six months ended March 31, 2024 and the year ended September 30, 2023.

There were no transfers among Level 1, Level 2 and Level 3 during the nine months ended June 30, 2024 and the year ended September 30, 2023.

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.

10 unchanged sentences

Impaired loans are evaluated on a quarterly basis for additional impairment and adjusted accordingly.

The following table summarizes the balances of assets measured at estimated fair value on a non-recurring basis at March 31, 2024 and September 30, 2023 (dollars in thousands):

The following table summarizes the balances of assets measured at estimated fair value on a non-recurring basis at June 30, 2024 and September 30, 2023 (dollars in thousands):

Estimated Fair Value Total Estimated

March 31, 2024 Level 1 Level 2 Level 3 Fair Value

June 30, 2024 Level 1 Level 2 Level 3 Fair Value

Individually evaluated loans:

Mortgage loans:

Commercial $ — $ — $ 460 $ 460

Commercial business loans $ — $ — $ 1,168 $ 1,168

5 unchanged sentences

Total $ — $ — $ 122 $ 122

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, 2024 and September 30, 2023 (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 June 30, 2024 and September 30, 2023 (dollars in thousands):

Technique(s) Unobservable Input(s) Range

5 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 March 31, 2024 and September 30, 2023.

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, 2024 and September 30, 2023.

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 March 31, 2024 and September 30, 2023 (dollars in thousands):

March 31, 2024

The recorded amounts and estimated fair values of financial instruments were as follows as of June 30, 2024 and September 30, 2023 (dollars in thousands):

June 30, 2024

Fair Value Measurements Using:

36 unchanged sentences

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

ASU 2016-13 also changed the accounting for PCI debt securities and loans.

ASU 2016-13 also changed the accounting for Purchase Credit Impaired ("PCI") debt securities and loans.

ASU 2016-13 retained many of the current disclosure requirements in GAAP and expanded certain disclosure requirements.

2 unchanged sentences

Upon adoption, the Company experienced changes in the processes and procedures to calculate the ACL, including changes in the assumptions and estimates to consider expected credit losses over the life of the loan versus the accounting practices that were utilized with the incurred loss model.

In addition, the prior policy for OTTI on investment securities available for sale was replaced with an allowance approach.

In addition, the prior policy for OTTI on investment securities held to maturity was replaced with an allowance approach.

On October 1, 2023, the Company adopted this ASU, which resulted in a net of tax charge of $ 488,000 to retained earnings, a $ 461,000 increase to the ACL on loans, a $ 92,000 increase to ACL on investment securities, and a $ 65,000 increase to ACL on unfunded commitments for the cumulative effect of adopting this guidance.

For more information related to the implementation, see Note 4 Loans Receivable and Allowance for Credit Losses, Note 2 Investment Securities and Note 12 Commitments and Contingent Liabilities.

For more information related to the implementation, see Note 2 Investment Securities, Note 4 Loans Receivable and Allowance for Credit Losses and Note 12 Commitments and Contingent Liabilities.

In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other:

14 unchanged sentences

On October 1, 2023, the Company adopted this ASU at the same time ASU 2016-13 was adopted.

The Company had $ 1,000 in recoveries and $ 6,000 of write offs for the six months ended March 31, 2024.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures .

The amendments in this ASU are intended to provide more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income tax paid information.

The ASU requires disclosure in the rate reconciliation of specific categories as well as additional information for reconciling items that meet a quantitative threshold.

The amendment requires on an annual basis a reconciliation broken out into specified categories with certain reconciling items further broken out by nature and jurisdiction to the extent those items exceed a specified threshold.

In addition, all entities are required to disclose income taxes paid, net of refunds received disaggregated by federal, state/local, and foreign and by jurisdiction if the amount is at least 5% of total income tax payments, net of refunds received.

The new standard is effective for annual periods beginning after December 15, 2024, with early adoption permitted.

An entity should apply the amendments in this ASU on a prospective basis.

The Company expects this ASU to only impact its disclosure requirement and does not expect the adoption of this ASU to have a material impact on its business operations or the Company's consolidated financial statements.

(11) REVENUE FROM CONTRACTS WITH CUSTOMERS

3 unchanged sentences

All of the Company's revenue from contracts with customers within the scope of ASC 606 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 March 31, 2024, the Company recognized $ 988,000 in service charges on deposits, $ 1.21 million in ATM and debit card interchange transaction fees, $ 15,000 in escrow fees, and $ 2,000 in fee income from non-deposit investment sales, all considered within the scope of ASC 606.

For the six months ended March 31, 2024, the Company recognized $ 2.01 million in service changes on deposits, $ 2.48 million in ATM and debit card interchange transaction fees, $ 33,000 in escrow fees, and $ 3,000 in fee income from non-deposit investment sales.

For the three months

ended March 31, 2023, the Company recognized $ 893,000 in service charges on deposits, $ 1.28 million in ATM and debit card interchange transaction fees, $ 29,000 in escrow fees, and $ 4,000 in fee income from non-deposit investment sales.

For the six months ended March 31, 2023, the Company recognized $ 1.84 million in service changes on deposits, $ 2.53 million in ATM and debit card interchange transaction fees, $ 59,000 in escrow fees, and $ 34,000 in fee income from non-deposit investment sales.

For the three months ended June 30, 2024, the Company recognized $ 1.01 million in service charges on deposits, $ 1.30 million in ATM and debit card interchange transaction fees, $ 18,000 in escrow fees, and $ 3,000 in fee income from non-deposit investment sales included in "Other" on the Consolidated Statement of Income, all considered within the scope of ASC 606.

For the nine months ended June 30, 2024, the Company recognized $ 3.02 million in service charges on deposits, $ 3.77 million in ATM and debit card interchange transaction fees, $ 51,000 in escrow fees, and $ 6,000 in fee in come from non-deposit investment sales.

For the three months ended June 30, 2023, the Company recognized $ 970,000 in service charges on deposits, $ 1.34 million in ATM and debit card interchange transaction fees, $ 27,000 in escrow fees, and $ 1,000 in fee income from non-deposit investment sales.

For the nine months ended June 30, 2023, the Company recognized $ 2.81 million in service charges on deposits, $ 3.86 million in ATM and debit card interchange transaction fees, $ 85,000 in escrow fees, and $ 35,000 in fee income from non-deposit investment sales.

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

25 unchanged sentences

The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation of the party.

However, such loan to value ratios will subsequently change, based on increases and decreases in the supporting collateral values.

However, such loan to value ratios will subsequently change, based on increases and decreases in the

supporting collateral values.

Collateral held varies, but may include accounts receivable, inventory, property and equipment, residential real estate, land and income-producing commercial properties.

A summary of the Company's commitments at March 31, 2024 and 2023 are listed below (in thousands):

March 31, 2024 March 31, 2023

A summary of the Company's commitments at June 30, 2024 and 2023 are listed below (in thousands):

June 30, 2024 June 30, 2023

Undisbursed portion of construction loans in process (see Note 4) $ 87,196 $ 104,774

3 unchanged sentences

The Company maintains a separate ACL related to unfunded loan commitments.

The Company estimates expected losses on unfunded, off-balance sheet commitments over the contractual period in which the exposure to credit risk from a contractual

obligation to extend credit, unless the Company has determined that obligation is unconditionally cancellable.

The Company estimates expected losses on unfunded, off-balance sheet commitments over the contractual period in which the exposure to credit risk from a contractual obligation to extend credit, unless the Company has determined that obligation is unconditionally cancellable.

The methodology for calculating the ACL on unfunded loan commitments is similar to the methodology for calculating the ACL on loans but also includes an estimate of the future utilization of the commitment as determined by historical commitment utilization.

1 unchanged sentence

The ACL on unfunded commitments is recognized in other liabilities and accrued expenses in the consolidated balance sheets and is adjusted as a provision (recapture of provision) for credit losses on the consolidated income statements.

The ACL on unfunded loan commitments totaled $ 276,000 at March 31, 2024.

The following table sets forth information for the three and six months ended March 31, 2024 and 2023 regarding activity in the a ACL on unfunded loan commitments (dollars in thousands):

ACL Three Months Ended March 31, 2024 Three Months Ended March 31, 2023

The ACL on unfunded loan commitments totaled $ 267,000 at June 30, 2024.

The following table sets forth information for the three and nine months ended June 30, 2024 and 2023 regarding activity in the a ACL on unfunded loan commitments (dollars in thousands):

ACL Three Months Ended June 30, 2024 Three Months Ended June 30, 2023

Beginning ACL $ 276 $ 320

(Recapture of) provision for credit losses ( 88 ) —

Provision for (recapture of) credit losses ( 9 ) (1) 7

Ending ACL $ 267 $ 327

ACL Six Months Ended March 31, 2024 Six Months Ended March 31, 2023

(1) The provision for (recapture of) credit losses does not match the three months ended income statement due to rounding.

ACL Nine Months Ended June 30, 2024 Nine Months Ended June 30, 2023

Beginning ACL $ 332 $ 305

Impact of adopting CECL (ASU 2016-13) 65 —

(Recapture of) provision for credit losses ( 121 ) 15

Provision for (recapture of) credit losses ( 130 ) 22

Ending ACL $ 267 $ 327

7 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