Mortgage Loan Servicing Rights

12 Months Ended

Sep. 30, 2025

Disclosures Pertaining to Servicing Assets and Servicing Liabilities [Abstract]

Mortgage Loan Servicing Assets

MORTGAGE LOAN SERVICING RIGHTS

The Company sells certain types of loans through whole loan sales and through securitizations. The Company retains a servicing interest in the majority of loans or securitized loans. Certain assumptions and estimates are used to determine the fair value allocated to these retained interests at the date of transfer and at subsequent measurement dates. These assumptions and estimates include loan repayment rates and discount rates.

Changes in interest rates can affect the average life of loans and mortgage-backed securities and the related servicing rights. A reduction in interest rates normally results in increased prepayments, as borrowers refinance their debt in order to reduce their borrowing costs. This creates reinvestment risk, which is the risk that the Company may not be able to reinvest the proceeds of loan and securities prepayments at rates that are comparable to the rates earned on the loans or securities prior to receipt of the repayment.

During 2025, 2024 and 2023, $397,062, $237,106 and $77,206, respectively, of mortgage loans were securitized and/or sold including accrued interest thereon with servicing retained. Primary economic assumptions used to measure the value of the Company’s retained servicing interests at the date of sale resulting from the completed transactions were as follows (per annum):

	2025		2024
Primary prepayment speed assumptions (weighted average annual rate)	14.4	%	15.5	%
Weighted average life (years)	28.3		28.4
Amortized cost to service loans (weighted average)	0.12	%	0.12	%
Weighted average discount rate	12	%	12	%

Key economic assumptions and the sensitivity of the current fair value of mortgage loan servicing rights to immediate 10% and 20% adverse changes in those assumptions are as presented in the following table. The three key economic assumptions that impact the valuation of the mortgage loan servicing rights are: (1) the prepayment speed, or how long the mortgage servicing right will be outstanding; (2) the estimate of servicing costs that will be incurred in fulfilling the mortgage servicing right responsibilities; and (3) the discount factor applied to future net cash flows to convert them to present value. The Company established these factors based on independent analysis of its portfolio and reviews these assumptions periodically to ensure that they reasonably reflect current market conditions and its loan portfolio experience.

	September 30, 2025
Fair value of mortgage loan servicing rights	$	17,457
Prepayment speed assumptions (weighted average annual rate)	10.3		%
Impact on fair value of 10% adverse change	$	(659)
Impact on fair value of 20% adverse change	$	(1,258)
Estimated prospective annual cost to service loans (weighted average)	0.12		%
Impact on fair value of 10% adverse change	$	(1,568)
Impact on fair value of 20% adverse change	$	(3,136)
Discount rate	12.0		%
Impact on fair value of 10% adverse change	$	(622)
Impact on fair value of 20% adverse change	$	(1,196)

These sensitivities are hypothetical and should be used with caution. As indicated in the table above, changes in fair value based on a 10% variation in assumptions generally cannot be extrapolated because the relationship in the change in assumption to the change in fair value may not be linear. Also, the effect of a variation in a particular assumption on the fair value of the retained interest is calculated without changing any other assumption. In reality, changes in one factor may result in changes in another (for example, increases in market interest rates may result in lower prepayments), which could magnify or counteract the sensitivities.

Servicing rights are evaluated periodically for impairment based on the fair value of those rights. Nineteen risk tranches are used in evaluating servicing rights for impairment, segregated primarily by interest rate stratum within original term to maturity categories with additional strata for less uniform account types.

Activity in mortgage servicing rights is summarized as follows. There was no change in the valuation allowance for the years ended September 30, 2025, 2024 and 2023. 

	Year Ended September 30,
	2025		2024		2023
Balance—beginning of year	$	7,627	$	7,400	$	7,943
Additions from loan securitizations/sales	1,925		1,108		322
Amortization	(1,003)		(881)		(865)
Balance—end of year	$	8,549	$	7,627	$	7,400
Fair value of capitalized amounts	$	17,457	$	17,093	$	15,916

The Company receives annual servicing fees ranging from 0.02% to 0.84% of the outstanding loan balances. Servicing income, net of amortization of capitalized servicing rights, included in non-interest income, amounted to $4,301 in 2025,

$4,255 in 2024 and $4,516 in 2023. The unpaid principal balance of mortgage loans serviced for others was approximately $2,134,527, $1,966,634 and $1,933,249 at September 30, 2025, 2024 and 2023, respectively. The ratio of capitalized servicing rights to the unpaid principal balance of mortgage loans serviced for others was 0.40%, 0.39%, and 0.38% at September 30, 2025, 2024 and 2023, respectively.