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Loans Receivable And Allowance For Loan Losses
 3 Months Ended
Dec. 31, 2022
Accounts, Notes, Loans and Financing Receivable, Gross, Allowance, and Net [Abstract]  
Loans Receivable And Allowance For Loan Losses LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES
Loans receivable by portfolio segment consisted of the following at December 31, 2022 and September 30, 2022 (dollars in thousands):
 December 31,
2022		September 30,
2022
 AmountPercentAmountPercent
Mortgage loans:    
One- to four-family (1)$200,285 15.4 %$176,116 14.1 %
Multi-family96,831 7.4 95,025 7.6 
Commercial542,571 41.6 536,650 42.8 
Construction - custom and owner/builder117,592 9.0 119,240 9.5 
Construction - speculative one- to four-family11,220 0.9 12,254 1.0 
Construction - commercial36,825 2.8 40,364 3.2 
Construction - multi-family89,040 6.8 64,480 5.1 
Construction - land development17,015 1.3 19,280 1.5 
Land25,872 2.0 26,854 2.1 
Total mortgage loans1,137,251 87.2 1,090,263 86.9 
Consumer loans:    
Home equity and second mortgage35,967 2.8 35,187 2.8 
Other2,482 0.2 2,128 0.2 
Total consumer loans38,449 3.0 37,315 3.0 
Commercial loans:
Commercial business127,085 9.8 125,039 10.0 
U.S. Small Business Administration ("SBA") Paycheck Protection Program ("PPP") loans631 — 1,001 0.1 
    Total commercial loans127,716 9.8 %126,040 10.1 
Total loans receivable1,303,416 100.0 %1,253,618 100.0 %
Less:    
Undisbursed portion of construction loans in process112,096  103,168  
Deferred loan origination fees, net4,532  4,321  
Allowance for loan losses14,229  13,703  
Subtotal130,857 121,192 
Loans receivable, net$1,172,559  $1,132,426  
_____________________________
 (1) Does not include one- to four-family loans held for sale totaling $0 and $748 at December 31, 2022 and September 30, 2022, respectively.

Loans receivable at December 31, 2022 and September 30, 2022 are reported net of unamortized discounts totaling $239,000 and $267,000, respectively.
Allowance for Loan Losses

The following tables set forth information for the three months ended December 31, 2022 and 2021 regarding activity in the allowance for loan losses by portfolio segment (dollars in thousands):
 Three Months Ended December 31, 2022
 Beginning
Allowance		Provision for
(Recapture of) Loan Losses		Charge-
offs		RecoveriesEnding
Allowance
Mortgage loans:     
One- to four-family$1,658 $230 $— $— $1,888 
Multi-family855 16 — — 871 
Commercial6,682 112 — — 6,794 
Construction – custom and owner/builder675 (2)— — 673 
Construction – speculative one- to four-family130 (5)— — 125 
Construction – commercial343 (20)— — 323 
Construction – multi-family447 130 — — 577 
Construction – land development233 (11)— — 222 
Land397 (14)— — 383 
Consumer loans:    
Home equity and second mortgage440 53 — — 493 
Other42 4 — 1 47 
Commercial business loans1,801 32 — — 1,833 
Total$13,703 $525 $— $1 $14,229 
 Three Months Ended December 31, 2021
 Beginning
Allowance		Provision for
(Recapture of) Loan Losses		Charge-
offs		RecoveriesEnding
Allowance
Mortgage loans:     
  One- to four-family$1,154 $83 $— $— $1,237 
  Multi-family765 (17)— — 748
  Commercial6,813 (6)— — 6,807
  Construction – custom and owner/builder644 27 — — 671
  Construction – speculative one- to four-family188 (35)— — 153
  Construction – commercial784 (191)— — 593
Construction – multi-family436 24 — — 460 
  Construction – land development124 33 — — 157 
  Land470 (35)— — 435
Consumer loans:     
  Home equity and second mortgage528 4 — — 532
  Other50 (1)(1)— 48
Commercial business loans1,513 114 — — 1,627
Total$13,469 $— $(1)$— $13,468 
The following tables present information on the loans evaluated individually and collectively for impairment in the allowance for loan losses by portfolio segment at December 31, 2022 and September 30, 2022 (dollars in thousands):
 Allowance for Loan LossesRecorded Investment in Loans
 Individually
Evaluated for
Impairment		Collectively
Evaluated for
Impairment		TotalIndividually
Evaluated for
Impairment		Collectively
Evaluated for
Impairment		Total
December 31, 2022      
Mortgage loans:      
One- to four-family$— $1,888 $1,888 $383 $199,902 $200,285 
Multi-family— 871 871 — 96,831 96,831 
Commercial— 6,794 6,794 2,980 539,591 542,571 
Construction – custom and owner/builder— 673 673 — 66,840 66,840 
Construction – speculative one- to four-family— 125 125 — 8,032 8,032 
Construction – commercial— 323 323 — 27,432 27,432 
Construction – multi-family— 577 577 — 44,374 44,374 
Construction – land development— 222 222 — 12,918 12,918 
Land— 383 383 425 25,447 25,872 
Consumer loans:     
Home equity and second mortgage
— 493 493 405 35,562 35,967 
Other— 47 47 2 2,480 2,482 
Commercial business loans127 1,706 1,833 304 126,781 127,085 
SBA PPP loans— — — — 631 631 
Total$127 $14,102 $14,229 $4,499 $1,186,821 $1,191,320 
September 30, 2022      
Mortgage loans:      
One- to four-family$— $1,658 $1,658 $388 $175,728 $176,116 
Multi-family— 855 855 — 95,025 95,025 
Commercial— 6,682 6,682 2,988 533,662 536,650 
Construction – custom and owner/builder
— 675 675 — 67,091 67,091 
Construction – speculative one- to four-family
— 130 130 — 8,364 8,364 
Construction – commercial— 343 343 — 29,059 29,059 
Construction – multi-family— 447 447 — 34,354 34,354 
Construction – land development— 233 233 — 13,582 13,582 
Land— 397 397 450 26,404 26,854 
Consumer loans:      
Home equity and second mortgage
— 440 440 394 34,793 35,187 
Other— 42 42 3 2,125 2,128 
Commercial business loans127 1,674 1,801 309 124,730 125,039 
SBA PPP loans— — — — 1,001 1,001 
Total$127 $13,576 $13,703 $4,532 $1,145,918 $1,150,450 
The following tables present an analysis of loans by aging category and portfolio segment at December 31, 2022 and September 30, 2022 (dollars in thousands):
 30–59
Days
Past Due		60-89
Days
Past Due		Non-
Accrual (1)		Past Due
90 Days
or More
and Still
Accruing		Total
Past Due		CurrentTotal
Loans
December 31, 2022       
Mortgage loans:       
One- to four-family$— $— $383 $— $383 $199,902 $200,285 
Multi-family— — — — — 96,831 96,831 
Commercial209 — 658 — 867 541,704 542,571 
Construction – custom and owner/builder— — — — — 66,840 66,840 
Construction – speculative one- to four-family— — — — — 8,032 8,032 
Construction – commercial— — — — — 27,432 27,432 
Construction – multi-family— — — — — 44,374 44,374 
Construction – land development— — — — — 12,918 12,918 
Land— — 425 — 425 25,447 25,872 
Consumer loans:    
Home equity and second mortgage— — 263 — 263 35,704 35,967 
Other— — 2 — 2 2,480 2,482 
Commercial business loans9 — 304 — 313 126,772 127,085 
SBA PPP loans— — — — — 631 631 
Total$218 $— $2,035 $— $2,253 $1,189,067 $1,191,320 
September 30, 2022       
Mortgage loans:       
One- to four-family$— $— $388 $— $388 $175,728 $176,116 
Multi-family— — — — — 95,025 95,025 
Commercial— — 657 — 657 535,993 536,650 
Construction – custom and owner/builder
— — — — — 67,091 67,091 
Construction – speculative one- to four-family
— — — — — 8,364 8,364 
Construction – commercial— — — — — 29,059 29,059 
Construction – multi-family— — — — — 34,354 34,354 
Construction – land development— — — — — 13,582 13,582 
Land— — 450 — 450 26,404 26,854 
Consumer loans:     
Home equity and second mortgage37 — 252 — 289 34,898 35,187 
Other— — 3 — 3 2,125 2,128 
Commercial business loans— — 309 — 309 124,730 125,039 
SBA PPP loans— — — — — 1,001 1,001 
Total$37 $— $2,059 $— $2,096 $1,148,354 $1,150,450 
______________________
(1) Includes non-accrual loans past due 90 days or more and other loans classified as non-accrual.
Credit Quality Indicators
The Company uses credit risk grades which reflect the Company’s assessment of a loan’s risk or loss potential.  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.  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:

Pass:  Pass loans are defined as those loans that meet acceptable quality underwriting standards.

Watch:  Watch loans are defined as those loans that still exhibit acceptable quality, but have some concerns that justify greater attention.  If these concerns are not corrected, a potential for further adverse categorization exists.  These concerns could relate to a specific condition peculiar to the borrower, its industry segment or the general economic environment.

Special Mention: Special mention loans are defined as those loans deemed by management to have some potential weaknesses that deserve management’s close attention.  If left uncorrected, these potential weaknesses may result in the deterioration of the payment prospects of the loan. 

Substandard:  Substandard loans are defined as those loans that are inadequately protected by the current net worth and paying capacity of the obligor, or of the collateral pledged.  Loans classified as substandard have a well-defined weakness or weaknesses that jeopardize the repayment of the debt.  If the weakness or weaknesses are not corrected, there is the distinct possibility that some loss will be sustained.

Doubtful: 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, 2022 and September 30, 2022, there were no loans classified as doubtful.

Loss:  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, 2022 and September 30, 2022, 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, 2022 and September 30, 2022 (dollars in thousands):
Loan Grades 
December 31, 2022PassWatchSpecial
Mention		SubstandardTotal
Mortgage loans:     
One- to four-family$199,864 $36 $— $385 $200,285 
Multi-family96,831 — — — 96,831 
Commercial528,906 7,925 233 5,507 542,571 
Construction – custom and owner/builder64,708 2,132 — — 66,840 
Construction – speculative one- to four-family8,032 — — — 8,032 
Construction – commercial27,432 — — — 27,432 
Construction – multi-family44,374 — — — 44,374 
Construction – land development12,896 — — 22 12,918 
Land24,932 515 — 425 25,872 
Consumer loans:    
Home equity and second mortgage35,465 32 — 470 35,967 
Other2,419 61 — 2 2,482 
Commercial business loans126,764 — — 321 127,085 
SBA PPP loans631 — — — 631 
Total$1,173,254 $10,701 $233 $7,132 $1,191,320 
September 30, 2022     
Mortgage loans:    
One- to four-family$175,687 $38 $— $391 $176,116 
Multi-family95,025 — — — 95,025 
Commercial522,741 7,940 237 5,732 536,650 
Construction – custom and owner/builder65,249 1,842 — — 67,091 
Construction – speculative one- to four-family8,364 — — — 8,364 
Construction – commercial29,059 — — — 29,059 
Construction – multi-family34,354 — — — 34,354 
Construction – land development13,557 — — 25 13,582 
Land25,882 522 — 450 26,854 
Consumer loans:    
Home equity and second mortgage34,709 19 — 459 35,187 
Other2,063 62 — 3 2,128 
Commercial business loans124,712 — — 327 125,039 
SBA PPP loans1,001 — — — 1,001 
Total$1,132,403 $10,423 $237 $7,387 $1,150,450 

Impaired Loans
A loan is considered impaired when it is probable that the Company will be unable to collect all amounts (principal and interest) when due according to the contractual terms of the loan agreement. Smaller balance homogeneous loans, such as residential mortgage loans and consumer loans, may be collectively evaluated for impairment. When a loan has been identified as being impaired, the amount of the impairment is measured by using discounted cash flows, except when, as an alternative, the current estimated fair value of the collateral (reduced by estimated costs to sell, if applicable) or observable market price is used. The valuation of real estate collateral is subjective in nature and may be adjusted in future periods because of changes in economic conditions.  Management considers third-party appraisals, as well as independent fair market value assessments from realtors or persons involved in selling real estate, in determining the estimated fair value of particular properties.  In addition, as certain of these third-party appraisals and independent fair market value assessments are only updated periodically, changes in the values of specific properties may have occurred subsequent to the most recent appraisals.  Accordingly, the amounts of any such potential changes and any related adjustments are generally recorded at the time that such information is received. When the estimated net realizable value of the impaired loan is less than the recorded investment in the loan (including accrued interest and net deferred loan origination fees or costs), impairment is recognized by creating or adjusting an allocation of the allowance for loan losses, and uncollected accrued interest is reversed against interest income. If ultimate collection of principal is in doubt, all cash receipts on impaired loans are applied to reduce the principal balance. 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, 2022 and for the three months then ended (dollars in thousands):
Recorded
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)
With no related allowance recorded:   
Mortgage loans:   
One- to four-family$383 $427 $— $386 $7 $7 
Commercial2,980 2,980 — 2,984 33 42 
Land425 425 — 438 — — 
Consumer loans: 
Home equity and second mortgage405 405 — 400 2 3 
Other2 2 — 3 — — 
Commercial business loans55 103 — 57 — — 
Subtotal4,250 4,342 — 4,268 42 52 
With an allowance recorded:   
Commercial business loans249 249 127 249 — — 
Subtotal249 249 127 249 — — 
Total:   
Mortgage loans:   
One- to four-family383 427 — 386 7 7 
Commercial2,980 2,980 — 2,984 33 42 
Land425 425 — 438 — — 
Consumer loans:
Home equity and second mortgage405 405 — 400 2 3 
Other2 2 — 3 — — 
Commercial business loans304 352 127 306 — — 
Total$4,499 $4,591 $127 $4,517 $42 $52 
______________________________________________
(1)For the three months ended December 31, 2022.
Recorded
Investment		Unpaid Principal Balance (Loan Balance Plus Charge Off)Related
Allowance		YTD
Average
Recorded
Investment (1)		YTD Interest
Income
Recognized
(1)		YTD Cash Basis Interest Income Recognized (1)
With no related allowance recorded:      
Mortgage loans:      
One- to four-family$388 $432 $— $470 $31 $31 
Commercial2,988 2,988 — 3,041 152 123 
Land
450 450 — 492 — — 
Consumer loans:      
Home equity and second mortgage394 394 — 436 6 5 
Other3 3 — 7 — — 
Commercial business loans59 108 — 121 — — 
Subtotal4,282 4,375 — 4,567 189 159 
With an allowance recorded:      
Consumer loans:      
Home equity and second mortgage— — — 145 — — 
Commercial business loans250 250 127 268 — — 
Subtotal250 250 127 413 — — 
Total      
Mortgage loans:      
One- to four-family388 432 — 470 31 31 
Commercial2,988 2,988 — 3,041 152 123 
Land450 450 — 492 — — 
Consumer loans:      
Home equity and second mortgage394 394 — 581 6 5 
Other3 3 — 7 — — 
Commercial business loans309 358 127 389 — — 
Total$4,532 $4,625 $127 $4,980 $189 $159 
_____________________________________________
(1) For the year ended September 30, 2022.




A troubled debt restructured loan ("TDR") is a loan for which the Company, for reasons related to a borrower’s financial difficulties, grants a concession to the borrower that the Company would not otherwise consider.  Examples of such concessions include, but are not limited to: a reduction in the stated interest rate; an extension of the maturity at an interest rate below current market rates; a reduction in the face amount of the debt; a reduction in the accrued interest; or re-amortizations, extensions, deferrals and renewals.  TDRs are considered impaired and are individually evaluated for impairment.  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 $2.58 million and $2.62 million in TDRs included in impaired loans at December 31, 2022 and September 30, 2022, 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, 2022 and September 30, 2022. 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, 2022.
The following tables set forth information with respect to the Company’s TDRs by interest accrual status as of December 31, 2022 and September 30, 2022 (dollars in thousands):
 December 31, 2022
 AccruingNon-
Accrual		Total
Mortgage loans:   
Commercial$2,322 $— $2,322 
Land— 63 63 
Consumer loans:   
   Home equity and second mortgage141 53 194 
Total$2,463 $116 $2,579 

 September 30, 2022
 AccruingNon-
Accrual		Total
Mortgage loans:   
Commercial$2,330 $— $2,330 
Land— 88 88 
Consumer loans:   
   Home equity and second mortgage142 55 197 
Total$2,472 $143 $2,615 

There were no new TDRs recognized during the three months ended December 31, 2022. There was one new TDR recognized during the year ended September 30, 2022. The following table sets forth information with respect to the Company's TDR, by portfolio segment, during the year ended September 30, 2022:
September 30, 2022Number of
Contracts		Pre-Modification
Outstanding
Recorded
Investment		Post- Modification
Outstanding
Recorded
Investment		End of
Period
Balance
Home equity and second mortgage loan (1)1$136 $145 $142 
Total1$136 $145 $142 
(1) Modification was a result of an increase in principal balance and a reduction in interest rate and monthly payment.