10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2023

OR

☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to __________

Commission File No. 001-33384

ESSA Bancorp, Inc.

(Exact name of registrant as specified in its charter)

Pennsylvania	20-8023072
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)
200 Palmer Street, Stroudsburg, Pennsylvania	18360
(Address of Principal Executive Offices)	(Zip Code)

(570) 421-0531

(Registrant’s telephone number)

N/A

(Former name or former address, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common	ESSA	Nasdaq Stock Market LLC

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filers,” “accelerated filers,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 7, 2023, there were 10,401,205 shares of the Registrant’s common stock, par value $0.01 per share, outstanding.

ESSA Bancorp, Inc.

FORM 10-Q

Table of Contents

		Page
	Part I. Financial Information
Item 1.	Financial Statements (unaudited)	2
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	38
Item 3	Quantitative and Qualitative Disclosures About Market Risk	47
Item 4	Controls and Procedures	47
	Part II. Other Information
Item 1.	Legal Proceedings	48
Item 1A.	Risk Factors	48
Item 2.	Unregistered Sales of Equity Securities,Use of Proceeds, and Issuer Purchases of Equity Securities	48
Item 3.	Defaults Upon Senior Securities	48
Item 4.	Mine Safety Disclosures	48
Item 5.	Other Information	48
Item 6.	Exhibits	49
Signature Page		50

Part I. Financial Information

Item 1. Financial Statements

ESSA BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEET

(UNAUDITED)

	June 30,			September 30,
	2023			2022
	(dollars in thousands)
ASSETS
Cash and due from banks	$	58,533		$	19,970
Interest-bearing deposits with other institutions		36,649			7,967
Total cash and cash equivalents		95,182			27,937
Investment securities available for sale, at fair value		287,983			208,647
Investment securities held to maturity, at amortized cost		53,570			57,285
Loans receivable (net of allowance for loan losses of $18,220 and $18,528)		1,611,066			1,435,783
Regulatory stock, at cost		18,773			14,393
Premises and equipment, net		13,031			13,126
Bank-owned life insurance		38,822			38,240
Foreclosed real estate		3,546			29
Intangible assets, net		139			281
Goodwill		13,801			13,801
Deferred income taxes		6,177			5,375
Derivative and hedging assets		19,154			24,481
Other assets		23,056			22,439
TOTAL ASSETS	$	2,184,300		$	1,861,817
LIABILITIES
Deposits	$	1,525,477		$	1,380,021
Short-term borrowings		399,989			230,810
Advances by borrowers for taxes and insurance		14,996			11,803
Derivative and hedging liabilities		7,949			9,176
Other liabilities		17,205			17,670
TOTAL LIABILITIES		1,965,616			1,649,480
STOCKHOLDERS’ EQUITY
Preferred stock ($0.01 par value; 10,000,000 shares authorized, none issued)		-			-
Common stock ($0.01 par value; 40,000,000 shares authorized, 18,133,095 issued;    10,401,205 and 10,371,022 outstanding at June 30, 2023 and September 30,    2022, respectively)		181			181
Additional paid in capital		182,526			182,173
Unallocated common stock held by the Employee Stock Ownership Plan (ESOP)		(6,123	)		(6,462	)
Retained earnings		148,693			139,139
Treasury stock, at cost; 7,731,890 and 7,762,073 shares outstanding at    June 30, 2023 and September 30, 2022, respectively		(99,410	)		(99,800	)
Accumulated other comprehensive loss		(7,183	)		(2,894	)
TOTAL STOCKHOLDERS’ EQUITY		218,684			212,337
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	2,184,300		$	1,861,817

See accompanying notes to the unaudited consolidated financial statements.

2

ESSA BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENT OF OPERATIONS

(UNAUDITED)

	For the Three Months Ended June 30,						For the Nine Months Ended June 30,
	2023			2022			2023			2022
	(dollars in thousands, except per share data)						(dollars in thousands, except per share data)
INTEREST INCOME
Loans receivable, including fees	$	19,132		$	13,615		$	52,721		$	40,464
Investment securities:
Taxable		2,161			1,542			6,348			3,722
Exempt from federal income tax		11			12			32			50
Other investment income		461			330			1,337			579
Total interest income		21,765			15,499			60,438			44,815
INTEREST EXPENSE
Deposits		4,915			506			10,733			2,045
Short-term borrowings		1,606			35			3,691			35
Total interest expense		6,521			541			14,424			2,080
NET INTEREST INCOME		15,244			14,958			46,014			42,735
Provision for loan losses		150			—			450			—
NET INTEREST INCOME AFTER PROVISION FOR LOAN    LOSSES		15,094			14,958			45,564			42,735
NONINTEREST INCOME
Service fees on deposit accounts		782			783			2,343			2,301
Services charges and fees on loans		288			571			985			1,399
Loan swap fees		—			58			138			207
Unrealized (loss) gain on equity securities, net		(1	)		4			(4	)		5
Trust and investment fees		426			386			1,231			1,232
Gain on sale of loans, net		39			—			97			239
Earnings on bank-owned life insurance		196			187			582			567
Insurance commissions		145			145			459			433
Other		64			12			92			43
Total noninterest income		1,939			2,146			5,923			6,426
NONINTEREST EXPENSE
Compensation and employee benefits		6,622			6,456			20,154			19,095
Occupancy and equipment		1,068			1,113			3,223			3,381
Professional fees		1,223			759			3,581			2,199
Data processing		1,296			1,207			3,697			3,538
Advertising		181			254			535			627
Federal Deposit Insurance Corporation (FDIC) premiums		380			148			748			432
Foreclosed real estate		(1	)		(60	)		(4	)		(180	)
Amortization of intangible assets		47			59			142			191
Other		677			823			2,143			2,178
Total noninterest expense		11,493			10,759			34,219			31,461
Income before income taxes		5,540			6,345			17,268			17,700
Income taxes		1,144			1,306			3,321			3,456
NET INCOME	$	4,396		$	5,039		$	13,947		$	14,244
Earnings per share
Basic	$	0.45		$	0.51		$	1.44		$	1.46
Diluted	$	0.45		$	0.51		$	1.44		$	1.46
Dividends per share	$	0.15		$	0.15		$	0.45		$	0.39

See accompanying notes to the unaudited consolidated financial statements.

3

ESSA BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(UNAUDITED)

	For the Three Months Ended June 30,						For the Nine Months Ended June 30,
	2023			2022			2023			2022
	(dollars in thousands)
Net income	$	4,396		$	5,039		$	13,947		$	14,244
Other comprehensive (loss) income
Investment securities available for sale:
Unrealized holding losses		(4,007	)		(5,221	)		(1,331	)		(11,545	)
Tax effect		841			1,096			280			2,424
Net of tax amount		(3,166	)		(4,125	)		(1,051	)		(9,121	)
Pension plan:
Changes in unrealized holding (losses) gains		-			(442	)		-			455
Tax effect		-			92			-			(96	)
Reclassification of items recognized in net income		-			20			-			243
Tax effect		-			(3	)		-			(51	)
Net of tax amount		-			(333	)		-			551
Derivative and hedging activities adjustments:
Changes in unrealized holding gains on derivatives included in net income		2,330			2,076			2,525			11,042
Tax effect		(489	)		(436	)		(529	)		(2,319	)
Reclassification adjustment for (gains) losses on derivatives included in net income		(2,498	)		(222	)		(6,625	)		180
Tax effect		524			46			1,391			(38	)
Net of tax amount		(133	)		1,464			(3,238	)		8,865
Total other comprehensive (loss) income		(3,299	)		(2,994	)		(4,289	)		295
Comprehensive income	$	1,097		$	2,045		$	9,658		$	14,539

See accompanying notes to the unaudited consolidated financial statements.

4

ESSA BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

(UNAUDITED)

									Unallocated									Accumulated
	Common Stock					Additional			Common									Other			Total
	Number of					Paid In			Stock Held by			Retained			Treasury			Comprehensive			Stockholders’
	Shares			Amount		Capital			the ESOP			Earnings			Stock			Income			Equity
	(dollars in thousands except share data)
Balance, September 30, 2021		10,461,443		$	181	$	181,659		$	(6,915	)	$	124,342		$	(98,127	)	$	682		$	201,822
Net Income													14,244									14,244
Other comprehensive income																			295			295
Cash dividends declared ($0.39 per share)													(3,819	)								(3,819	)
Stock based compensation							427															427
Allocation of ESOP stock							240			340												580
Allocation of treasury shares to incentive plan		26,353					(342	)								340						(2	)
Purchase of common stock		(17,055	)													(284	)					(284	)
Balance, June 30, 2022		10,470,741		$	181	$	181,984		$	(6,575	)	$	134,767		$	(98,071	)	$	977		$	213,263
									Unallocated									Accumulated
	Common Stock					Additional			Common									Other			Total
	Number of					Paid In			Stock Held by			Retained			Treasury			Comprehensive			Stockholders’
	Shares			Amount		Capital			the ESOP			Earnings			Stock			Loss			Equity
	(dollars in thousands except share data)
Balance, September 30, 2022		10,371,022		$	181	$	182,173		$	(6,462	)	$	139,139		$	(99,800	)	$	(2,894	)	$	212,337
Net income													13,947									13,947
Other comprehensive loss																			(4,289	)		(4,289	)
Cash dividends declared ($0.45 per share)													(4,393	)								(4,393	)
Stock based compensation							471															471
Allocation of ESOP stock							279			339												618
Allocation of treasury shares to incentive plan		30,183					(397	)								390						(7	)
Balance, June 30, 2023		10,401,205		$	181	$	182,526		$	(6,123	)	$	148,693		$	(99,410	)	$	(7,183	)	$	218,684

See accompanying notes to the unaudited consolidated financial statements.

5

ESSA BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

(UNAUDITED)

								Unallocated									Accumulated
	Common Stock					Additional		Common									Other			Total
	Number of					Paid In		Stock Held by			Retained			Treasury			Comprehensive			Stockholders’
	Shares			Amount		Capital		the ESOP			Earnings			Stock			Income			Equity
	(dollars in thousands except share data)
Balance, March 31, 2022		10,489,391		$	181	$	181,816	$	(6,689	)	$	131,201		$	(97,767	)	$	3,971		$	212,713
Net income												5,039									5,039
Other comprehensive loss																		(2,994	)		(2,994	)
Cash dividends declared ($0.15 per share)												(1,473	)								(1,473	)
Stock based compensation							72														72
Allocation of ESOP stock							75	114													189
Allocation of treasury shares to incentive plan		(1,595	)				21								(20	)					1
Purchase of common stock		(17,055	)												(284	)					(284	)
Balance, June 30, 2022		10,470,741		$	181	$	181,984	$	(6,575	)	$	134,767		$	(98,071	)	$	977		$	213,263
								Unallocated									Accumulated
	Common Stock					Additional		Common									Other			Total
	Number of					Paid In		Stock Held by			Retained			Treasury			Comprehensive			Stockholders’
	Shares			Amount		Capital		the ESOP			Earnings			Stock			Loss			Equity
	(dollars in thousands except share data)
Balance, March 31, 2023		10,402,537		$	181	$	182,377	$	(6,236	)	$	145,762		$	(99,401	)	$	(3,884	)	$	218,799
Net income												4,396									4,396
Other comprehensive loss																		(3,299	)		(3,299	)
Cash dividends declared ($0.15 per share)												(1,465	)								(1,465	)
Stock based compensation							92														92
Allocation of ESOP stock							57		113												170
Allocation of treasury shares to incentive plan		(1,332	)												(9	)					(9	)
Balance, June 30, 2023		10,401,205		$	181	$	182,526	$	(6,123	)	$	148,693		$	(99,410	)	$	(7,183	)	$	218,684

See accompanying notes to the unaudited consolidated financial statements.

6

ESSA BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENT OF CASH FLOWS

(UNAUDITED)

	For the Nine Months Ended June 30,
	2023			2022
	(dollars in thousands)
OPERATING ACTIVITIES
Net income	$	13,947		$	14,244
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		450			—
Provision for depreciation and amortization		828			803
Amortization and accretion of discounts and premiums, net		87			(457	)
Unrealized loss (gain) on equity securities		4			(5	)
Gain on sale of loans, net		(97	)		(239	)
Origination of residential real estate loans for sale		(7,565	)		(12,932	)
Proceeds on sale of residential real estate loans		7,662			13,552
Compensation expense on ESOP		618			580
Amortization of right-of-use asset		651			617
Stock based compensation		471			427
Increase in accrued interest receivable		(2,458	)		(63	)
Increase (decrease) in accrued interest payable		1,728			(4	)
Earnings on bank-owned life insurance		(582	)		(567	)
Deferred federal income taxes		338			185
Increase in accrued pension		(234	)		(327	)
Gain on foreclosed real estate, net		(4	)		(180	)
Amortization of intangible assets		142			191
Other, net		(679	)		105
Net cash provided by operating activities		15,307			15,930
INVESTING ACTIVITIES
Investment securities available for sale:
Proceeds from principal repayments and maturities		19,321			119,997
Purchases		(100,423	)		(92,423	)
Investment securities held to maturity:
Proceeds from principal repayments and maturities		3,715			3,963
Purchases		-			(41,272	)
Increase in loans receivable, net		(178,931	)		(38,318	)
Redemption of regulatory stock		19,525			389
Purchase of regulatory stock		(23,905	)		(9,742	)
Proceeds from sale of foreclosed real estate		32			620
Purchase of premises, equipment and software, net		(832	)		(425	)
Net cash used for investing activities		(261,498	)		(57,211	)
FINANCING ACTIVITIES
Increase (decrease) in deposits, net		145,456			(264,790	)
Net increase in short-term borrowings		169,179			225,000
Purchase of common stock		-			(284	)
Increase in advances by borrowers for taxes and insurance		3,193			9,359
Dividends on common stock		(4,393	)		(3,819	)
Net cash provided by (used for) financing activities		313,435			(34,534	)
Increase (decrease) in cash and cash equivalents		67,244			(75,815	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR		27,937			158,946
CASH AND CASH EQUIVALENTS AT END OF YEAR	$	95,181		$	83,131
SUPPLEMENTAL CASH FLOW DISCLOSURES
Cash Paid:
Interest	$	13,505		$	2,084
Income taxes	$	2,850		$	2,425
Noncash items:
Transfers from loans to foreclosed real estate		3,546			54
Initial recognition of Operating Right-of-Use Asset		236			671
Initial recognition of Operating Right-of-Use Liability		236			671
Unrealized holding losses		(1,331	)		(11,545	)

See accompanying notes to the unaudited consolidated financial statements.

7

ESSA BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

(unaudited)

1.Nature of Operations and Basis of Presentation

The consolidated financial statements include the accounts of ESSA Bancorp, Inc. (the “Company”), its wholly owned subsidiary, ESSA Bank & Trust (the “Bank”), and the Bank’s wholly owned subsidiaries, ESSACOR Inc.; Pocono Investments Company; ESSA Advisory Services, LLC; Integrated Financial Corporation; and Integrated Abstract Incorporated, a wholly owned subsidiary of Integrated Financial Corporation. The primary purpose of the Company is to act as a holding company for the Bank. The Bank’s primary business consists of the taking of deposits and granting of loans to customers generally in Monroe, Northampton, Lehigh, Delaware, Chester, Montgomery, Lackawanna, and Luzerne Counties, Pennsylvania. The Bank is a Pennsylvania chartered savings bank and is subject to regulation and supervision by the Pennsylvania Department of Banking and Securities and the Federal Deposit Insurance Corporation (the “FDIC”). The investment in the Bank on the parent company’s financial statements is carried at the parent company’s equity in the underlying net assets.

ESSACOR, Inc. is a Pennsylvania corporation that has been used to purchase properties at tax sales that represent collateral for delinquent loans of the Bank. Pocono Investment Company is a Delaware corporation formed as an investment company subsidiary to hold and manage certain investments, including certain intellectual property. ESSA Advisory Services, LLC is a Pennsylvania limited liability company wholly owned by ESSA Bank & Trust. ESSA Advisory Services, LLC is a full-service insurance benefits consulting company offering group services such as health insurance, life insurance, short-term and long-term disability, dental, vision, and 401(k) retirement planning as well as individual health products. Integrated Financial Corporation is a Pennsylvania corporation that provided investment advisory services to the general public and is currently inactive. Integrated Abstract Incorporated is a Pennsylvania corporation that provided title insurance services and is currently inactive. All significant intercompany accounts and transactions have been eliminated in consolidation.

The unaudited consolidated financial statements reflect all adjustments, which in the opinion of management, are necessary for a fair presentation of the results of the interim periods and are of a normal and recurring nature. Operating results for the nine month period ended June 30, 2023 are not necessarily indicative of the results that may be expected for the year ending September 30, 2023.

2.Earnings per Share

The following table sets forth the composition of the weighted-average common shares (denominator) used in the basic and diluted earnings per share computation for the three and nine months ended June 30, 2023 and 2022.

	Three Months Ended						Nine Months Ended
	June 30,			June 30,			June 30,			June 30,
	2023			2022			2023			2022
Weighted-average common shares outstanding		18,133,095			18,133,095			18,133,095			18,133,095
Average treasury stock shares		(7,730,956	)		(7,647,258	)		(7,732,112	)		(7,644,930	)
Average unearned ESOP shares		(626,229	)		(650,628	)		(637,587	)		(661,986	)
Average unearned non-vested shares		(41,202	)		(46,965	)		(46,803	)		(50,071	)
Weighted average common shares and common stock    equivalents used to calculate basic earnings per share		9,734,708			9,788,244			9,716,593			9,776,108
Additional common stock equivalents (nonvested stock)    used to calculate diluted earnings per share		—			1,965			—			2,050
Weighted average common shares and common stock    equivalents used to calculate diluted earnings per share		9,734,708			9,790,209			9,716,593			9,778,158

At June 30, 2023 there were 2,947 shares of nonvested stock outstanding at an average weighted price of $19.04 per share that were not included in the computation of diluted earnings per share because to do so would have been antidilutive. At June 30, 2022 there were 25,148 shares of nonvested stock outstanding at an average weighted price of $16.52 per share that were not included in the computation of diluted earnings per share because to do so would have been anti-dilutive.

8

3.Use of Estimates in the Preparation of Financial Statements

The accounting principles followed by the Company and its subsidiaries and the methods of applying these principles conform to U.S. generally accepted accounting principles (“GAAP”) and to general practice within the banking industry. In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the Consolidated Balance Sheet date and related revenues and expenses for the period. Actual results could differ from those estimates.

4.Accounting Pronouncements

Recent Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments, which changes the impairment model for most financial assets. This Update is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The underlying premise of the Update is that financial assets measured at amortized cost should be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The allowance for credit losses should reflect management’s current estimate of credit losses that are expected to occur over the remaining life of a financial asset. The income statement will be effected for the measurement of credit losses for newly recognized financial assets, as well as the expected increases or decreases of expected credit losses that have taken place during the period. ASU 2016-13 is effective for annual and interim periods beginning after December 15, 2019, and early adoption is permitted for annual and interim periods beginning after December 15, 2018. With certain exceptions, transition to the new requirements will be through a cumulative effect adjustment to opening retained earnings as of the beginning of the first reporting period in which the guidance is adopted. In November 2019, the FASB issued ASU 2019-10, Financial Instruments ‒ Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842). This Update defers the effective date of ASU 2016-13 for SEC filers that are eligible to be smaller reporting companies, non-SEC filers, and all other companies to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. We expect to recognize a one-time cumulative effect adjustment to the allowance for loan losses as of the beginning of the first reporting period in which the new standard is effective, but cannot yet determine the magnitude of any such one-time adjustment or the overall impact of the new guidance on the consolidated financial statements.

In May 2019, the FASB issued ASU 2019-05, Financial Instruments – Credit Losses (Topic 326), which allows entities to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost upon adoption of the new credit losses standard. To be eligible for the transition election, the existing financial asset must otherwise be both within the scope of the new credit losses standard and eligible for applying the fair value option in ASC 825-10.3. The election must be applied on an instrument-by-instrument basis and is not available for either available-for-sale or held-to-maturity debt securities. For entities that elect the fair value option, the difference between the carrying amount and the fair value of the financial asset would be recognized through a cumulative-effect adjustment to opening retained earnings as of the date an entity adopted ASU 2016-13. Changes in fair value of that financial asset would subsequently be reported in current earnings. For entities that have not yet adopted the credit losses standard, the ASU is effective when they implement the credit losses standard. For entities that already have adopted the credit losses standard, the ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company qualifies as a smaller reporting company and does not expect to early adopt ASU 2016-13.

In November 2019, the FASB issued ASU 2019-11, Codification Improvements to Topic 326, Financial Instruments – Credit Losses, to clarify its new credit impairment guidance in ASC 326, based on implementation issues raised by stakeholders. This Update clarified, among other things, that expected recoveries are to be included in the allowance for credit losses for these financial assets; an accounting policy election can be made to adjust the effective interest rate for existing troubled debt restructurings based on the prepayment assumptions instead of the prepayment assumptions applicable immediately prior to the restructuring event; and extends the practical expedient to exclude accrued interest receivable from all additional relevant disclosures involving amortized cost basis. For entities that have not yet adopted ASU 2016-13 as of November 26, 2019, the effective dates for ASU 2019-11 are the same as the effective dates and transition requirements in ASU 2016-13. For entities that have adopted ASU 2016-13, ASU 2019-11 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company qualifies as a smaller reporting company and does not expect to early adopt these ASUs.

In March 2020, the FASB issued ASU 2020-3, Codification Improvements to Financial Instruments. This ASU was issued to improve and clarify various financial instruments topics, including the current expected credit losses (CECL) standard issued in 2016. The ASU includes seven issues that describe the areas of improvement and the related amendments to GAAP; they are intended to make the standards easier to understand and apply and to eliminate inconsistencies, and they are narrow in scope and are not expected to significantly change practice for most entities. Among its provisions, the ASU clarifies that all entities, other than public business entities that elected the fair value option, are required to provide certain fair value disclosures under ASC 825, Financial Instruments, in both interim and annual financial statements. It also clarifies that the contractual term of a net investment in a lease under Topic 842 should be the contractual term used to measure expected credit losses under Topic 326. Amendments related to ASU 2019-04 are

9

effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is not permitted before an entity’s adoption of ASU 2016-01. Amendments related to ASU 2016-13 for entities that have not yet adopted that guidance are effective upon adoption of the amendments in ASU 2016-13. Early adoption is not permitted before an entity’s adoption of ASU 2016-13. Amendments related to ASU 2016-13 for entities that have adopted that guidance are effective for fiscal years beginning after December 15, 2019, including interim periods within those years. Other amendments are effective upon issuance of this ASU. This Update is not expected to have a significant impact on the Company’s financial statements.

In March 2022, the FASB issued ASU 2022-01, Derivatives and Hedging (ASC 815): Fair Value Hedging - Portfolio Layer Method. ASC 815 currently permits only prepayable financial assets and one or more beneficial interests secured by a portfolio of prepayable financial instruments to be included in a last-of-layer closed portfolio. The amendments in this Update allow non-prepayable financial assets to also be included in a closed portfolio hedged using the portfolio layer method. That expanded scope permits an entity to apply the same portfolio hedging method to both prepayable and non-prepayable financial assets, thereby allowing consistent accounting for similar hedges. The guidance is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position or results of operations.

In March 2022, the FASB issued ASU 2022-02, Financial Instruments - Credit Losses (ASC 326): Troubled Debt Restructurings (TDRs) and Vintage Disclosures. The guidance amends ASC 326 to eliminate the accounting guidance for TDRs by creditors, while enhancing disclosure requirements for certain loan refinancing and restructuring activities by creditors when a borrower is experiencing financial difficulty. Specifically, rather than applying TDR recognition and measurement guidance, creditors will determine whether a modification results in a new loan or continuation of existing loan. These amendments are intended to enhance existing disclosure requirements and introduce new requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty. Additionally, the amendments to ASC 326 require that an entity disclose current-period gross writeoffs by year of origination within the vintage disclosures, which requires that an entity disclose the amortized cost basis of financing receivables by credit quality indicator and class of financing receivable by year of origination. The guidance is only for entities that have adopted the amendments in Update 2016-13 for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. Early adoption using prospective application, including adoption in an interim period where the guidance should be applied as of the beginning of the fiscal year. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position or results of operations.

In March 2023, the FASB issued ASU No. 2023-02, "Investments—Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method (a consensus of the Emerging Issues Task Force)". The ASU allows entities to elect the proportional amortization method, on a tax-credit-program-by-tax-credit-program basis, for all equity investments in tax credit programs meeting the eligibility criteria in Accounting Standards Codification (ASC) 323-740-25-1. While the ASU does not significantly alter the existing eligibility criteria, it does provide clarifications to address existing interpretive issues. It also prescribes specific information reporting entities must disclose about tax credit investments each period. This ASU is effective for reporting periods beginning after December 15, 2023, for public business entities, or January 1, 2024 for the Company. The Company does not expect the adoption of this ASU to have a material impact on the Company's financial statements.

10

5.Investment Securities

The amortized cost, gross unrealized gains and losses, and fair value of investment securities are summarized as follows (in thousands):

	June 30, 2023
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available for Sale
Fannie Mae	$	55,614	$	—	$	(4,680	)	$	50,934
Freddie Mac	$	49,366		—	$	(3,801	)		45,565
Governmental National Mortgage Association		4,892		—		(301	)		4,591
Total mortgage-backed securities		109,872		—		(8,782	)		101,090
Obligations of states and political subdivisions		10,800		—		(734	)		10,066
U.S. government treasury securities		98,510		17		(1	)		98,526
U.S. government agency securities		4,500		—		(133	)		4,367
Corporate obligations		75,786		—		(8,618	)		67,168
Other debt securities		7,417		—		(651	)		6,766
Total	$	306,885	$	17	$	(18,919	)	$	287,983
Held to Maturity
Fannie Mae	$	28,450	$	-	$	(4,405	)	$	24,045
Freddie Mac		22,677		-		(3,625	)		19,052
Total mortgage-backed securities		51,127		-		(8,030	)		43,097
U.S. government agency securities		2,443		-		(438	)		2,005
Total	$	53,570	$	-	$	(8,468	)	$	45,102

	September 30, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available for sale
Fannie Mae	$	61,118	$	1	$	(5,432	)	$	55,687
Freddie Mac		53,842		-		(4,532	)		49,310
Governmental National Mortgage Association securities		5,411		-		(248	)		5,163
Total mortgage-backed securities		120,371		1		(10,212	)		110,160
Obligations of states and political subdivisions		10,815		-		(895	)		9,920
U.S. government agency securities		9,530		-		(200	)		9,330
Corporate obligations		76,692		14		(5,587	)		71,119
Other debt securities		8,810		2		(694	)		8,118
Total	$	226,218	$	17	$	(17,588	)	$	208,647
Held to maturity
Fannie Mae	$	30,659	$	-	$	(5,127	)	$	25,532
Freddie Mac		24,187		-		(4,142	)		20,045
Total		54,846		-		(9,269	)		45,577
U.S. government agency securities		2,439		-		(470	)		1,969
Total	$	57,285	$	-	$	(9,739	)	$	47,546

11

The following is a summary of unrealized and realized gains and losses recognized in net income on equity securities during the three and nine months ended June 30, 2023 and 2022.

(in thousands)	For the Three Months Ended June 30, 2023			For the Three Months Ended June 30, 2022
Net (losses) gains recognized during the period on equity securities	$	(1	)	$	4
Less: Net (losses) gains recognized during the period on equity securities sold    during the period		-			-
Unrealized (losses) gains recognized during the reporting period on equity    securities still held at the reporting date	$	(1	)	$	4
(in thousands)	For the Nine Months Ended June 30, 2023			For the Nine Months Ended June 30, 2022
Net (losses) gains recognized during the period on equity securities	$	(4	)	$	5
Less: Net (losses) gains recognized during the period on equity securities sold    during the period		-			-
Unrealized (losses) gains recognized during the reporting period on equity    securities still held at the reporting date	$	(4	)	$	5

The amortized cost and fair value of debt securities at June 30, 2023, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties (in thousands):

	Available For Sale				Held to Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	101,884	$	101,877	$	—	$	—
Due after one year through five years		36,811		34,915		—		—
Due after five years through ten years		72,505		63,609		7,267		6,297
Due after ten years		95,685		87,582		46,303		38,805
Total	$	306,885	$	287,983	$	53,570	$	45,102

For the three and nine months ended June 30, 2023 and 2022, the Company realized no gross gains or gross losses on proceeds from the sale on investment securities.

The following tables show the Company’s gross unrealized losses and fair value, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position (dollars in thousands):

	June 30, 2023
	Number of Securities		Less than Twelve Months					Twelve Months or Greater					Total
			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Fannie Mae		77	$	5,600	$	(116	)	$	69,380	$	(8,969	)	$	74,980	$	(9,085	)
Freddie Mac		62		15,125		(708	)		49,287		(6,718	)		64,412		(7,426	)
Governmental National Mortgage    Association		12		918		(25	)		3,674		(276	)		4,592		(301	)
U.S. government treasury securities		1		24,378		(1	)		-		-			24,378		(1	)
U.S. government agency securities		3		-		-			6,372		(571	)		6,372		(571	)
Obligations of states and political    subdivisions		12		1,474		(27	)		8,593		(707	)		10,067		(734	)
Corporate obligations		89		10,329		(682	)		56,338		(7,936	)		66,667		(8,618	)
Other debt securities		17		-		-			6,361		(651	)		6,361		(651	)
Total		273	$	57,824	$	(1,559	)	$	200,005	$	(25,828	)	$	257,829	$	(27,387	)

12

	September 30, 2022
			Less than Twelve Months					Twelve Months or Greater					Total
	Number of Securities		Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Fannie Mae		74	$	67,101	$	(8,344	)	$	13,759	$	(2,215	)	$	80,860	$	(10,559	)
Freddie Mac		63		59,954		(6,868	)		9,401		(1,806	)		69,355		(8,674	)
Governmental National Mortgage    Association securities		13		2,924		(194	)		2,182		(54	)		5,106		(248	)
Obligations of states and political    subdivisions		12		9,920		(895	)		-		-			9,920		(895	)
U.S. government agency securities		4		11,299		(670	)		-		-			11,299		(670	)
Corporate obligations		88		49,333		(3,394	)		19,773		(2,193	)		69,106		(5,587	)
Other debt securities		17		5,764		(610	)		1,759		(84	)		7,523		(694	)
Total		271	$	206,295	$	(20,975	)	$	46,874	$	(6,352	)	$	253,169	$	(27,327	)

The Company’s investment securities portfolio contains unrealized losses on securities, including mortgage-related instruments issued or backed by the full faith and credit of the United States government, or generally viewed as having the implied guarantee of the U.S. government, other mortgage backed securities, debt obligations of a U.S. state or political subdivision, U.S. government agency securities, corporate obligations, other debt securities and equity securities.

The Company reviews its position quarterly and has asserted that at June 30, 2023, the declines outlined in the above table represent temporary declines and the Company would not be required to sell the above securities before their anticipated recovery in market value.

The Company has concluded that any impairment of its investment securities portfolio is not other than temporary but is the result of interest rate changes that are not expected to result in the non-collection of principal and interest during the period.

6.Loans Receivable, Net and Allowance for Loan Losses

Loans receivable consist of the following (in thousands):

	June 30, 2023		September 30, 2022
Real estate loans:
Residential	$	693,711	$	623,375
Construction		26,761		25,024
Commercial		764,849		678,841
Commercial		47,181		38,158
Obligations of states and political subdivisions		47,904		40,416
Home equity loans and lines of credit		46,302		43,170
Auto loans		926		3,611
Other		1,652		1,716
		1,629,286		1,454,311
Less allowance for loan losses		18,220		18,528
Net loans	$	1,611,066	$	1,435,783

13

The following tables show the amount of loans in each category that were individually and collectively evaluated for impairment at the dates indicated (in thousands):

	Total Loans		Individually Evaluated for Impairment		Collectively Evaluated for Impairment
June 30, 2023
Real estate loans:
Residential	$	693,711	$	1,400	$	692,311
Construction		26,761		-		26,761
Commercial		764,849		7,805		757,044
Commercial		47,181		670		46,511
Obligations of states and political subdivisions		47,904		-		47,904
Home equity loans and lines of credit		46,302		30		46,272
Auto loans		926		8		918
Other		1,652		4		1,648
Total	$	1,629,286	$	9,917	$	1,619,369

	Total Loans		Individually Evaluated for Impairment		Collectively Evaluated for Impairment
September 30, 2022
Real estate loans:
Residential	$	623,375	$	1,342	$	622,033
Construction		25,024		-		25,024
Commercial		678,841		12,165		666,676
Commercial		38,158		937		37,221
Obligations of states and political subdivisions		40,416		-		40,416
Home equity loans and lines of credit		43,170		36		43,134
Auto loans		3,611		16		3,595
Other		1,716		6		1,710
Total	$	1,454,311	$	14,502	$	1,439,809

The Company maintains a loan review system that allows for a periodic review of our loan portfolio and the early identification of potential impaired loans. Such system takes into consideration, among other things, delinquency status, size of loans, type and market value of collateral and financial condition of the borrowers. Specific loan loss allowances are established for identified losses based on a review of such information. A loan evaluated for impairment is considered to be impaired when, based on current information and events, it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement. All loans identified as impaired are evaluated independently. The Company does not aggregate such loans for evaluation purposes. Impairment is measured on a loan-by-loan basis for commercial and construction loans by the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral-dependent.

Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, the Company does not separately identify individual consumer and residential mortgage loans for impairment disclosures, unless such loans are part of a larger relationship that is impaired or are classified as a troubled debt restructuring (“TDR”).

A loan is considered to be a TDR loan when the Company grants a concession to the borrower that it would not otherwise consider because of the borrower’s financial condition. Such concessions include the reduction of interest rates, forgiveness of principal or interest, or other modifications of interest rates that are less than the current market rate for new obligations with similar risk. TDR loans that are in compliance with their modified terms and that yield a market rate at the time of modification may be removed from TDR status after one year of performance.

14

The following tables include the recorded investment and unpaid principal balances for impaired loans with the associated allowance amount at the dates indicated, if applicable (in thousands):

	Recorded Investment		Unpaid Principal Balance		Associated Allowance
June 30, 2023
With no specific allowance recorded:
Real estate loans
Residential	$	1,300	$	1,915	$	-
Construction		-		-		-
Commercial		7,805		8,683		-
Commercial		670		967		-
Obligations of states and political subdivisions		-		-		-
Home equity loans and lines of credit		30		64		-
Auto loans		8		8		-
Other		4		18		-
Total		9,817		11,655		-
With an allowance recorded:
Real estate loans
Residential		100		104		8
Construction		-		-		-
Commercial		-		-		-
Commercial		-		-		-
Obligations of states and political subdivisions		-		-		-
Home equity loans and lines of credit		-		-		-
Auto loans		-		-		-
Other		-		-		-
Total		100		104		8
Total:
Real estate loans
Residential		1,400		2,019		8
Construction		-		-		-
Commercial		7,805		8,683		-
Commercial		670		967		-
Obligations of states and political subdivisions		-		-		-
Home equity loans and lines of credit		30		64		-
Auto loans		8		8		-
Other		4		18		-
Total Impaired Loans	$	9,917	$	11,759	$	8

15

	Recorded Investment		Unpaid Principal Balance		Associated Allowance
September 30, 2022
With no specific allowance recorded:
Real Estate Loans
Residential	$	1,239	$	2,029	$	-
Construction		-		-		-
Commercial		8,384		8,987		-
Commercial		865		905		-
Obligations of states and political subdivisions		-		-		-
Home equity loans and lines of credit		36		68		-
Auto Loans		16		28		-
Other		6		19		-
Total		10,546		12,036		-
With an allowance recorded:
Real Estate Loans
Residential		103		108		12
Construction		-		-		-
Commercial		3,781		3,928		301
Commercial		72		83		38
Obligations of states and political subdivisions		-		-		-
Home equity loans and lines of credit		-		-		-
Auto Loans		-		-		-
Other		-		-		-
Total		3,956		4,119		351
Total:
Real Estate Loans
Residential		1,342		2,137		12
Construction		-		-		-
Commercial		12,165		12,915		301
Commercial		937		988		38
Obligations of states and political subdivisions		-		-		-
Home equity loans and lines of credit		36		68		-
Auto Loans		16		28		-
Other		6		19		-
Total Impaired Loans	$	14,502	$	16,155	$	351

16

The following tables represents the average recorded investments in the impaired loans and the related amount of interest recognized during the time within the period that the impaired loans were impaired (in thousands):

	For the Three Months Ended June 30,
	2023		2022		2023		2022
	Average Recorded Investment		Average Recorded Investment		Interest Income Recognized		Interest Income Recognized
With no specific allowance recorded:
Real estate loans
Residential	$	898	$	1,600	$	-	$	2
Construction		-		-		-		-
Commercial		7,618		1,722		1		-
Commercial		454		78		-		-
Obligations of states and political subdivisions		-		-		-		-
Home equity loans and lines of credit		31		285		-		-
Auto loans		2		11		-		-
Other		4		-		-		-
Total		9,007		3,696		1		2
With an allowance recorded:
Real estate loans
Residential		101		105		-		-
Construction		-		-		-		-
Commercial		523		1,270		-		-
Commercial		300		80		-		-
Obligations of states and political subdivisions		-		-		-		-
Home equity loans and lines of credit		-		-		-		-
Auto loans		-		-		-		-
Other		-		-		-		-
Total		924		1,455		-		-
Total:
Real estate loans
Residential		999		1,705		-		2
Construction		-		-		-		-
Commercial		8,141		2,992		1		-
Commercial		754		158		-
Obligations of states and political subdivisions		-		-		-		-
Home equity loans and lines of credit		31		285		-		-
Auto loans		2		11		-		-
Other		4		-		-		-
Total Impaired Loans	$	9,931	$	5,151	$	1	$	2

17

	For the Nine Months Ended June 30,
	2023		2022		2023		2022
	Average Recorded Investment		Average Recorded Investment		Interest Income Recognized		Interest Income Recognized
With no specific allowance recorded:
Real estate loans
Residential	$	1,090	$	1,935	$	2	$	7
Construction		-		-		-		-
Commercial		8,497		6,135		2
Commercial		507		88		-		-
Obligations of states and political subdivisions		-		-		-		-
Home equity loans and lines of credit		33		295		-		-
Auto loans		4		21		-		-
Other		5		-		-		-
Total		10,136		8,474		4		7
With an allowance recorded:
Real estate loans
Residential		102		116		-		-
Construction		-		-		-		-
Commercial		1,828		431		-		-
Commercial		361		681		-		-
Obligations of states and political subdivisions		-		-		-		-
Home equity loans and lines of credit		-		-		-		-
Auto loans		-		4		-		-
Other		-		-		-		-
Total		2,291		1,232		-		—
Total:
Real estate loans
Residential		1,192		2,051		2		7
Construction		-		-		-		-
Commercial		10,325		6,566		2		-
Commercial		868		769		-		-
Obligations of states and political subdivisions		-		-		-		-
Home equity loans and lines of credit		33		295		-		-
Auto loans		4		25		-		-
Other		5		-		-		-
Total Impaired Loans	$	12,427	$	9,706	$	4	$	7

The Company uses a ten-point internal risk-rating system to monitor the credit quality of the overall loan portfolio. The first six categories are considered not criticized and are aggregated as Pass-rated. The criticized rating categories utilized by management generally follow bank regulatory definitions. The Special Mention category includes assets that are fundamentally sound yet exhibit potentially unacceptable credit risk or deteriorating trends or characteristics which, if left uncorrected, may result in deterioration of the repayment prospects for the asset or in the Company’s credit position at some future date. Loans in the Substandard category have well-defined weaknesses that jeopardize the liquidation of the debt and have a distinct possibility that some loss will be sustained if the weaknesses are not corrected. All loans that are 90 or more days past due are considered Substandard. Loans in the Doubtful category have all the weaknesses inherent in loans classified as Substandard with the added characteristic that their weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. Loans in the Loss category are considered uncollectible and of little value that their continuance as bankable assets is not warranted. Certain residential real estate loans, construction loans, home equity loans and lines of credit, auto loans and other consumer loans are underwritten and structured using standardized criteria and characteristics, primarily payment performance, and are normally risk rated and monitored collectively on a monthly basis. These are typically loans to individuals in the consumer categories and are delineated as either performing or non-performing.

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To help ensure that risk ratings are accurate and reflect the present and future capacity of borrowers to repay a loan as agreed, the Bank has a structured loan rating process with several layers of internal and external oversight. Generally, consumer and residential mortgage loans are included in the Pass categories unless a specific action, such as bankruptcy, repossession, or death occurs to raise awareness of a possible credit event. The Bank’s commercial loan officers are responsible for the timely and accurate risk rating recommendation for the loans in their portfolios at origination and on an ongoing basis. The Bank’s commercial loan officers perform an annual review of all commercial relationships $750,000 or greater. Confirmation of the appropriate risk grade is included in the review on an ongoing basis. The Bank engages an external consultant to conduct loan reviews on at least a semi-annual basis. Generally, the external consultant reviews commercial relationships greater than $1,000,000 and/or all criticized relationships. Detailed reviews, including plans for resolution, are performed on loans classified as Substandard on a quarterly basis. Loans in the Special Mention and Substandard categories that are collectively evaluated for impairment are given separate consideration in the determination of the allowance.

The following tables present the classes of the loan portfolio summarized by the aggregate Pass and the criticized categories of Special Mention, Substandard, and Doubtful or Loss within the internal risk rating system at June 30, 2023 and September 30, 2022(in thousands):

	Pass		Special Mention		Substandard		Doubtful or Loss		Total
June 30, 2023
Commercial real estate loans	$	751,109	$	3,241	$	10,499	$	-	$	764,849
Commercial		45,192		15		1,974		-		47,181
Obligations of states and political subdivisions		47,904		-		-		-		47,904
Total	$	844,205	$	3,256	$	12,473	$	-	$	859,934

	Pass		Special Mention		Substandard		Doubtful or Loss		Total
September 30, 2022
Commercial real estate loans	$	659,104	$	6,060	$	13,677	$	-	$	678,841
Commercial		35,322		1,690		1,146		-		38,158
Obligations of states and political subdivisions		40,416		-		-		-		40,416
Total	$	734,842	$	7,750	$	14,823	$	-	$	757,415

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All other loans are underwritten and structured using standardized criteria and characteristics, primarily payment performance, and are normally risk rated and monitored collectively on a monthly basis. These are typically loans to individuals in the consumer categories and are delineated as either performing or non-performing. The following tables present the risk ratings in the consumer categories of performing and non-performing loans at June 30, 2023 and September 30, 2022 (in thousands):

	Performing		Non- performing		Total
June 30, 2023
Real estate loans:
Residential	$	691,269	$	2,442	$	693,711
Construction		26,761		-		26,761
Home equity loans and lines of credit		46,251		51		46,302
Auto loans		916		10		926
Other		1,619		33		1,652
Total	$	766,816	$	2,536	$	769,352

	Performing		Non- performing		Total
September 30, 2022
Real estate loans:
Residential	$	621,781	$	1,594	$	623,375
Construction		25,024		-		25,024
Home equity loans and lines of credit		42,832		338		43,170
Auto loans		3,590		21		3,611
Other		1,710		6		1,716
Total	$	694,937	$	1,959	$	696,896

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The Company further monitors the performance and credit quality of the loan portfolio by analyzing the age of the portfolio as determined by the length of time a recorded payment is past due. The following tables present the classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans as of June 30, 2023 and September 30, 2022 (in thousands):

			31-60 Days		61-89 Days		90 + Days		Total		Total
	Current		Past Due		Past Due		Past Due		Past Due		Loans
June 30, 2023
Real estate loans:
Residential	$	690,450	$	1,134	$	145	$	1,982	$	3,261	$	693,711
Construction		26,761		-		-		-		-		26,761
Commercial		762,960		222		847		820		1,889		764,849
Commercial		46,909		-		15		257		272		47,181
Obligations of states and political subdivisions		47,904		-		-		-		-		47,904
Home equity loans and lines of credit		46,251		-		30		21		51		46,302
Auto loans		904		22		-		-		22		926
Other		1,622		-		-		30		30		1,652
Total	$	1,623,761	$	1,378	$	1,037	$	3,110	$	5,525	$	1,629,286

			31-60 Days		61-89 Days		90 + Days		Total		Total
	Current		Past Due		Past Due		Past Due		Past Due		Loans
September 30, 2022
Real estate loans:
Residential	$	621,270	$	598	$	367	$	1,140	$	2,105	$	623,375
Construction		25,024		-		-		-		-		25,024
Commercial		672,875		5,719		-		247		5,966		678,841
Commercial		37,160		539		440		19		998		38,158
Obligations of states and political subdivisions		40,416		-		-		-		-		40,416
Home equity loans and lines of credit		42,842		121		144		63		328		43,170
Auto loans		3,462		134		2		13		149		3,611
Other		1,685		-		31		-		31		1,716
Total	$	1,444,734	$	7,111	$	984	$	1,482	$	9,577	$	1,454,311

Non-Accrual Loans	June 30, 2023		September 30, 2022
Real estate loans:
Residential	$	2,442	$	1,594
Construction		-		-
Commercial		7,946		12,165
Commercial		673		958
Obligations of states and    political subdivisions		-		-
Home equity loans and lines of    credit		51		338
Auto loans		10		21
Other		33		6
Total	$	11,155	$	15,082

There are no loans greater than 90 days past due that are accruing interest.

The allowance for loan losses is maintained at a level necessary to absorb loan losses that are both probable and reasonably estimable. Management, in determining the allowance for loan losses, considers the losses inherent in its loan portfolio and changes in the nature and volume of loan activities, along with the general economic and real estate market conditions. The allowance for loan losses consists of two elements: (1) an allocated allowance, which comprises allowances established on specific loans and class allowances based on historical loss experience and current trends, and (2) an unallocated allowance based on general economic conditions and other risk factors in our markets and portfolios. We maintain a loan review system, which allows for a periodic review of our loan portfolio and the early identification of potential impaired loans. Such system takes into consideration, among other things, delinquency status, size of loans, type and market value of collateral and financial condition of the borrowers. General loan loss allowances are based upon a combination of factors including, but not limited to, actual loan loss experience, composition of the loan portfolio, current economic conditions, management’s judgment and losses which are probable and reasonably estimable. The allowance is increased through provisions charged against current earnings and recoveries of previously charged-off loans. Loans that are determined to be uncollectible are charged against the allowance. While management uses available information to recognize probable and reasonably estimable loan losses, future loss provisions may be necessary, based on changing economic conditions. Payments received on impaired loans generally are either applied against principal or reported as interest income, according to management’s judgment as to the collectability of principal. The allowance for loan losses as of June 30, 2023 was maintained at a

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level that represents management’s best estimate of losses inherent in the loan portfolio, and such losses were both probable and reasonably estimable.

In addition, the FDIC and the Pennsylvania Department of Banking and Securities, as an integral part of their examination process, periodically review our allowance for loan losses. The banking regulators may require that we recognize additions to the allowance based on its analysis and review of information available to it at the time of its examination.

Management reviews the loan portfolio on a quarterly basis using a defined, consistently applied process in order to make appropriate and timely adjustments to the allowance for loan losses (“ALL”). When information confirms all or part of specific loans to be uncollectible, these amounts are promptly charged off against the ALL.

The following table summarizes changes in the primary segments of the ALL during the three and nine months ended June 30, 2023 and 2022 (in thousands):

																Home
													Obligations of			Equity
													States and			Loans and
	Real Estate Loans									Commercial			Political			Lines of			Auto			Other
	Residential			Construction			Commercial			Loans			Subdivisions			Credit			Loans			Loans			Unallocated			Total
ALL balance at March 31, 2023	$	4,870		$	328		$	11,016		$	1,185		$	243		$	336		$	8		$	22		$	307		$	18,315
Charge-offs		-			-			(6	)		(269	)		-			-			-			-			-			(275	)
Recoveries		-			-			-			-			-			14			16			-			-			30
Provision		(157	)		(29	)		205			53			(1	)		(18	)		(19	)		(4	)		120			150
ALL balance at June 30, 2023	$	4,713		$	299		$	11,215		$	969		$	242		$	332		$	5		$	18		$	427		$	18,220
ALL balance at March 31, 2022	$	4,403		$	245		$	10,550		$	823		$	246		$	310		$	89		$	20		$	1,522		$	18,208
Charge-offs		(9	)		-			-			-			-			(6	)		(16	)		(11	)		-			(42	)
Recoveries		130			-			15			-			-			1			22			-			-			168
Provision		77			14			450			(30	)		37			36			(45	)		11			(550	)		-
ALL balance at June 30, 2022	$	4,601		$	259		$	11,015		$	793		$	283		$	341		$	50		$	20		$	972		$	18,334
ALL balance at September 30, 2022	$	5,122		$	319		$	10,754		$	698		$	283		$	361		$	22		$	22		$	947		$	18,528
Charge-offs		-			-			(599	)		(269	)		-			-			(27	)		-			-			(895	)
Recoveries		2			-			1			-			-			65			69			-			-			137
Provision		(411	)		(20	)		1,059			540			(41	)		(94	)		(59	)		(4	)		(520	)		450
ALL balance at June 30, 2023	$	4,713		$	299		$	11,215		$	969		$	242		$	332		$	5		$	18		$	427		$	18,220
ALL balance at September 30, 2021	$	4,114		$	187		$	10,470		$	1,041		$	393		$	318		$	232		$	21		$	1,337		$	18,113
Charge-offs		(19	)		-			(19	)		-			-			(6	)		(37	)		(11	)					(92	)
Recoveries		202			-			22			-			-			4			85			-						313
Provision		304			72			542			(248	)		(110	)		25			(230	)		10			(365	)		-
ALL balance at June 30, 2022	$	4,601		$	259		$	11,015		$	793		$	283		$	341		$	50		$	20		$	972		$	18,334

During the three months ended June 30, 2023, the Company recorded provision expense for the commercial real estate loans and commercial loans segments due to increased loan balances, changes in the loan mix within the pool, and/or charge-off activity in those segments. Credit provisions were recorded for loan loss for the residential real estate loans, construction real estate loans, obligations of states and political subdivisions, home equity loans and lines of credit, auto loans and other loans due to either decreased loan balances, improved asset quality, changes in the loan mix within the pool, and/or decreased charge-off activity in those segments.

During the three months ended June 30, 2022, the Company recorded provision expense for the residential real estate loans, construction real estate loans, commercial real estate loans, obligations of states and political subdivisions, home equity loans and lines of credit and other loan segments due to increased loan balances, changes in the loan mix within the pool, and/or charge-off activity in those segments. Credit provisions were recorded for loan loss for the commercial loans and auto loans due to either decreased loan balances, improved asset quality, changes in the loan mix within the pool, and/or decreased charge-off activity in those segments.

During the nine months ended June 30, 2023, the Company recorded provision expense for the commercial real estate loans and commercial loans segments, due to increased loan balances, changes in the loan mix within the pool, and/or charge-off activity in those segments. Credit provisions were recorded for loan loss for the residential real estate loans, construction real estate loans, obligations of states and political subdivisions, home equity loans and lines of credit and auto loans segments due to either decreased loan balances, changes in the loan mix within the pool, and/or decreased charge-off activity in those segments.

During the nine months ended June 30, 2022, the Company recorded provision expense for the residential real estate loans, construction real estate loans, commercial real estate loans, home equity loans and lines of credit and other loans segments due to increased loan balances, changes in the loan mix within the pool, and/or charge-off activity in those segments. Credit provisions were recorded for loan loss for the commercial loans, obligations of states and political subdivisions, and auto loans segments due to either decreased loan balances, improved asset quality, changes in the loan mix within the pool, and/or decreased charge-off activity in those segments.

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The following table summarizes the primary segments of the ALL, segregated into two categories, the amount required for loans individually evaluated for impairment and the amount required for loans collectively evaluated for impairment as of June 30, 2023 and September 30, 2022 (in thousands):

											Home
									Obligations of		Equity
									States and		Loans and
	Real Estate Loans						Commercial		Political		Lines of				Other
	Residential		Construction		Commercial		Loans		Subdivisions		Credit		Auto Loans		Loans		Unallocated		Total
Individually    evaluated for    impairment	$	8	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	8
Collectively    evaluated for    impairment		4,705		299		11,215		969		242		332		5		18		427		18,212
ALL balance at June 30, 2023	$	4,713	$	299	$	11,215	$	969	$	242	$	332	$	5	$	18	$	427	$	18,220
Individually    evaluated for    impairment	$	12	$	-	$	301	$	38	$	-	$	-	$	-	$	-	$	-	$	351
Collectively    evaluated for    impairment		5,110		319		10,453		660		283		361		22		22		947		18,177
ALL balance at September 30, 2022	$	5,122	$	319	$	10,754	$	698	$	283	$	361	$	22	$	22	$	947	$	18,528

The allowance for loan losses is based on estimates, and actual losses will vary from current estimates. Management believes that the granularity of the homogeneous pools and the related historical loss ratios and other qualitative factors, as well as the consistency in the application of assumptions, result in an ALL that is representative of the risk found in the components of the portfolio at any given date. Despite the above allocations, the allowance for loan losses is general in nature and is available to absorb losses from any loan segment.

There were no new troubled debt restructurings granted during the three months ended June 30, 2022.

The following is a summary of troubled debt restructuring granted during the three months ended June 30, 2023 and the nine months ended June 30, 2023 and 2022 (dollars in thousands):

	For the Three Months Ended June 30, 2023
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings
Real estate loans:
Residential		1	$	211	$	211
Construction		—		—		—
Commercial		3		6,058		6,058
Commercial		—		—		—
Obligations of states and political subdivisions		—		—		—
Home equity loans and lines of credit		—		—		—
Auto loans		—		—		—
Other		—		—		—
Total	$	4	$	6,269	$	6,269

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	For the Nine Months Ended June 30, 2023
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings
Real estate loans:
Residential		2	$	262	$	262
Construction		—		—		—
Commercial		3		6,058		6,058
Commercial		—		—		—
Obligations of states and political subdivisions		—		—		—
Home equity loans and lines of credit		—		—		—
Auto loans		—		—		—
Other		—		—		—
Total		5	$	6,320	$	6,320

	For the Nine Months Ended June 30, 2022
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings
Real estate loans:
Residential		2	$	88	$	88
Construction		—		—		—
Commercial		—		—		—
Commercial		—		—		—
Obligations of states and political subdivisions		—		—		—
Home equity loans and lines of credit		—		—		—
Auto loans		—		—		—
Other		—		—		—
Total		2	$	88	$	88

For the three and nine months ended June 30, 2023 and 2022, no loans defaulted on a restructuring agreement within one year of modification.

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7.Deposits

Deposits consist of the following major classifications (in thousands):

	June 30, 2023		September 30, 2022
Non-interest bearing demand accounts	$	280,732	$	290,061
Interest bearing demand accounts		308,280		357,516
Money market accounts		341,844		402,080
Savings and club accounts		169,329		196,696
Certificates of deposit		425,292		133,668
Total	$	1,525,477	$	1,380,021

8.Net Periodic Benefit Cost-Defined Benefit Plan

For a detailed disclosure on the Bank’s pension and employee benefits plans, please refer to Note 12 of the Company’s Consolidated Financial Statements for the year ended September 30, 2022 included in the Company’s Annual Report on Form 10-K.

The following table comprises the components of net periodic benefit cost (income) for the three and nine months ended June 30, 2023 and 2022 (in thousands):

	For the Three Months Ended June 30,						For the Nine Months Ended June 30,
	2023			2022			2023			2022
Service Cost	$	-		$	-		$	-		$	-
Interest Cost		164			142			492			398
Expected return on plan assets		(242	)		(296	)		(726	)		(968	)
Partial settlement		-			20			—			241
Amortization of net loss from earlier periods		-			-			—			2
Net periodic benefit income	$	(78	)	$	(134	)	$	(234	)	$	(327	)

The Company’s board of directors adopted resolutions to freeze the status of the Defined Benefit Plan (“the plan”) effective February 28, 2017 (“the freeze date”). Accordingly, no additional participants have been allowed to enter the plan since February 28, 2017; no additional years of service for benefit accrual purposes have been credited since the freeze date under the plan; and compensation earned by participants after the freeze date is not taken into account under the plan.

9.Equity Incentive Plan

The Company previously maintained the ESSA Bancorp, Inc. 2007 Equity Incentive Plan (the “Plan”). The Plan provided for a total of 2,377,326 shares of common stock for issuance upon the grant or exercise of awards. Of the shares that were available under the Plan, 1,698,090 were available to be issued in connection with the exercise of stock options and 679,236 were available to be issued as restricted stock. The Plan allowed for the granting of non-qualified stock options (“NSOs”), incentive stock options (“ISOs”), and restricted stock. Options granted under the plan were granted at no less than the fair value of the Company’s common stock on the date of the grant. As of the effective date of the 2016 Equity Incentive Plan (detailed below), no further grants will be made under the Plan and forfeitures of outstanding awards under the Plan will be added to the shares available under the 2016 Equity Incentive Plan.

The Company replaced the 2007 Equity Incentive Plan with the ESSA Bancorp, Inc. 2016 Equity Incentive Plan (the “2016 Plan”) which was approved by shareholders on March 3, 2016. The 2016 Plan provides for a total of 250,000 shares of common stock for issuance upon the grant or exercise of awards. The 2016 Plan allows for the granting of restricted stock, restricted stock units, ISOs and NSOs.

The Company classifies share-based compensation for employees and outside directors within “Compensation and employee benefits” in the Consolidated Statement of Operations to correspond with the same line item as compensation paid.

Restricted stock shares outstanding at June 30, 2023 vest over periods ranging from 3 to 39 months. The product of the number of shares granted and the grant date market price of the Company’s common stock determines the fair value of restricted shares under

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the Company’s restricted stock plan. The Company expenses the fair value of all share based compensation grants over the requisite service period.

For the three months ended June 30, 2023 and 2022, the Company recorded $72,000 and $92,000 of share-based compensation expense, respectively, comprised of restricted stock expense. For the nine months ended June 30, 2023 and 2022, the Company recorded $427,000 and $471,000 of share-based compensation expense, respectively, comprised of restricted stock expense. Expected future compensation expense relating to the restricted shares outstanding at June 30, 2023 is $633,000 over the remaining vesting period of 3.25 years.

The following is a summary of the status of the Company’s restricted stock as of June 30, 2023, and changes therein during the nine month period then ended:

	Number of Restricted Stock			Weighted- average Grant Date Fair Value
Nonvested at September 30, 2022		35,639		$	14.88
Granted		31,696			19.06
Vested		(11,941	)		18.31
Forfeited		(1,148	)		16.35
Nonvested at June 30, 2023		54,246		$	16.54

10.Fair Value

The following disclosures show the hierarchal disclosure framework associated within the level of pricing observations utilized in measuring assets and liabilities at fair value. The definition of fair value maintains the exchange price notion in earlier definitions of fair value but focuses on the exit price of the asset or liability. The exit price is the price that would be received to sell the asset or paid

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to transfer the liability adjusted for certain inherent risks and restrictions. Expanded disclosures are also required about the use of fair value to measure assets and liabilities.

Assets and Liabilities Required to be Measured and Reported at Fair Value on a Recurring Basis

The following tables provide the fair value for assets and liabilities required to be measured and reported at fair value on a recurring basis on the Consolidated Balance Sheet as of June 30, 2023 and September 30, 2022 by level within the fair value hierarchy (in thousands).

Recurring Fair Value Measurements at Reporting Date
	June 30, 2023
Assets	Level I		Level II		Level III		Total
Investment securities available for sale:
Mortgage backed securities	$	-	$	101,090	$	-	$	101,090
Obligations of states and political subdivisions		-		10,066		-		10,066
U.S. government treasury securities		-		98,526		-		98,526
U.S. government agency securities		-		4,367		-		4,367
Corporate obligations		-		64,335		2,833		67,168
Other debt securities		-		6,766		-		6,766
Total debt securities	$	-	$	285,150	$	2,833	$	287,983
Equity securities- financial services		31		-		-		31
Derivatives and hedging activities		-		19,154		-		19,154
Liabilities
Derivatives and hedging activities	$	-	$	7,949	$	-	$	7,949
	September 30, 2022
Assets	Level I		Level II		Level III		Total
Investment securities available for sale:
Mortgage backed securities	$	-	$	110,160	$	-	$	110,160
Obligations of states and political subdivisions		-		9,920		-		9,920
U.S. government agency securities		-		9,330		-		9,330
Corporate obligations		-		63,745		7,374		71,119
Other debt securities		-		8,118		-		8,118
Total debt securities	$	-	$	201,273	$	7,374	$	208,647
Equity securities-financial services		36		-		-		36
Derivatives and hedging activities		-		24,481		-		24,481
Liabilities:
Derivatives and hedging activities	$	-	$	9,176	$	-	$	9,176

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The following table presents a summary of changes in the fair value of the Company’s Level III investments for the three and nine months ended June 30, 2023 and 2022 (in thousands).

	Fair Value Measurement Using Significant Unobservable Inputs (Level III)
	Three Months Ended
	June 30, 2023			June 30, 2022
Beginning balance	$	3,429		$	10,762
Purchases, sales, issuances, settlements, net		-			1,000
Total unrealized (loss) gain:
Included in earnings		-			-
Included in other comprehensive (loss) income		(96	)		(493	)
Transfers in and/or out of Level III		(500	)		-
	$	2,833		$	11,269

	Fair Value Measurement Using Significant Unobservable Inputs (Level III)
	Nine Months Ended
	June 30, 2023			June 30, 2022
Beginning balance	$	7,374		$	11,112
Purchases, sales, issuances, settlements, net		-			500
Total unrealized gain (loss):
Included in earnings		-			-
Included in other comprehensive (loss) income		(524	)		(843	)
Transfers in and/or out of Level III		(4,017	)		500
	$	2,833		$	11,269

Each financial asset and liability is identified as having been valued according to a specified level of input, 1, 2 or 3. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Fair values determined by Level 2 inputs utilize inputs other than quoted prices included in Level 1 that are observable for the asset, either directly or indirectly. Level 2 inputs include quoted prices for similar assets in active markets, and inputs other than quoted prices that are observable for the asset or liability. Level 3 inputs are unobservable inputs for the asset, and include situations where there is little, if any, market activity for the asset or liability. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy, within which the fair value measurement in its entirety falls, has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset.

The measurement of fair value should be consistent with one of the following valuation techniques: market approach, income approach, and/or cost approach. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities (including a business). For example, valuation techniques consistent with the market approach often use market multiples derived from a set of comparable. Multiples might lie in ranges with a different multiple for each comparable. The selection of where within the range the appropriate multiple falls requires judgment, considering factors specific to the measurement (qualitative and quantitative). Valuation techniques consistent with the market approach include matrix pricing. Matrix pricing is a mathematical technique used principally to value debt securities without relying exclusively on quoted prices for the specific securities, but rather by relying on a security’s relationship to other benchmark quoted securities. Most of the securities classified as available for sale are reported at fair value utilizing Level 2 inputs. For these securities, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quoted market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and conditions, among other things. Securities reported at fair value utilizing Level 1 inputs are limited to actively traded equity securities whose market price is readily available from the New York Stock Exchange or the NASDAQ exchange. A few securities are valued using Level 3 inputs, all of these are classified as available for sale and are reported at fair value using Level 3 inputs.

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Assets and Liabilities Required to be Measured and Reported on a Non-Recurring Basis

The following tables provide the fair value for assets required to be measured and reported at fair value on a non-recurring basis on the Consolidated Balance Sheet as of June 30, 2023 and September 30, 2022 by level within the fair value hierarchy:

Non-Recurring Fair Value Measurements at Reporting Date (in thousands)
	June 30, 2023
	Level I		Level II		Level III		Total
Foreclosed real estate	$	-	$	-	$	3,546	$	3,546
Impaired loans		-		-		9,909		9,909
	September 30, 2022
	Level I		Level II		Level III		Total
Foreclosed real estate	$	-	$	-	$	29	$	29
Impaired loans		-		-		14,151		14,151

The following tables present additional quantitative information about assets measured at fair value on a nonrecurring basis and for which the Company has utilized Level 3 inputs to determine fair value:

	Quantitative Information about Level 3 Fair Value Measurements
(dollars in thousands)	Fair Value Estimate		Valuation Techniques	Unobservable Input	Range (Average)
June 30, 2023
Impaired loans	$	9,909	Appraisal of collateral (1)	Appraisal adjustments (2)	0% to 35% (20.8%)
Foreclosed real estate owned		3,546	Appraisal of collateral (1)	Appraisal adjustments (2)	20% to 35% (20.1%)

	Quantitative Information about Level 3 Fair Value Measurements
(dollars in thousands)	Fair Value Estimate		Valuation Techniques	Unobservable Input	Range (Average)
September 30, 2022
Impaired loans	$	14,151	Appraisal of collateral (1)	Appraisal adjustments (2)	0% to 35% (20.6%)
Foreclosed real estate owned		29	Appraisal of collateral (1)	Appraisal adjustments (2)	20% (20.0%)

(1)Fair value is generally determined through independent appraisals of the underlying collateral, which generally include various level 3 inputs which are not identifiable.

(2)Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses. The range of liquidation expenses and other appraisal adjustments are presented as a percent of the appraisal.

Foreclosed real estate is measured at fair value, less cost to sell at the date of foreclosure, valuations are periodically performed by management and the assets are carried at the lower of carrying amount or fair value, less cost to sell. Income and expenses from operations and changes in valuation allowance are included in the net expenses from foreclosed real estate. Impaired loans are reported at fair value utilizing level three inputs. For these loans, a review of the collateral is conducted and an appropriate allowance for loan losses is allocated to the loan. At June 30, 2023, 35 impaired loans with a carrying value of $9.9 million were reduced by specific valuation allowance totaling $8,000 resulting in a net fair value of $9.9 million based on Level 3 inputs. At September 30, 2022, 49 impaired loans with a carrying value of $14.5 million were reduced by a specific valuation totaling $351,000 resulting in a net fair value of $14.2 million based on Level 3 inputs.

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Assets and Liabilities not Required to be Measured and Reported at Fair Value

The following tables provide the carrying value and fair value for certain financial instruments that are not required to be measured or reported at fair value on the Consolidated Balance Sheet at June 30, 2023 and September 30, 2022 by level within the fair value hierarchy:

	June 30, 2023
(in thousands)	Carrying Value		Level I		Level II		Level III		Total Fair Value
Financial assets:
Investment securities held to maturity	$	53,570	$	-	$	45,102	$	-	$	45,102
Loans receivable, net		1,611,066		-		-		1,482,365		1,482,365
Mortgage servicing rights		830		-		-		1,380		1,380
Financial liabilities:
Deposits	$	1,525,477	$	1,100,185	$	-	$	274,823	$	1,375,008
Short term borrowings		399,989		—		—		388,427		388,427

	September 30, 2022
(in thousands)	Carrying Value		Level I		Level II		Level III		Total Fair Value
Financial assets:
Investment securities held to maturity	$	57,285	$	-	$	47,546	$	-	$	47,546
Loans receivable, net		1,435,783		-		-		1,351,823		1,351,823
Mortgage servicing rights		788		-		-		1,390		1,390
Financial liabilities:
Deposits	$	1,380,021	$	1,246,353	$	-	$	128,533	$	1,374,886
Short-term borrowings		230,810		-		-		215,287		215,287

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11.Accumulated Other Comprehensive Income (Loss)

The activity in accumulated other comprehensive income (loss) for the three and nine months ended June 30, 2023 and 2022 is as follows (in thousands):

	Accumulated Other Comprehensive Income/(Loss)
	Defined Benefit Pension Plan			Unrealized Gains (Losses) on Securities Available for Sale			Derivatives			Total
Balance at March 31, 2023	$	(1,108	)	$	(11,764	)	$	8,988		$	(3,884	)
Other comprehensive (loss) income before    reclassifications		-			(3,166	)		1,841			(1,325	)
Amounts reclassified from accumulated    other comprehensive income (loss)		-			-			(1,974	)		(1,974	)
Period change		—			(3,166	)		(133	)		(3,299	)
Balance at June 30, 2023	$	(1,108	)	$	(14,930	)	$	8,855		$	(7,183	)
Balance at March 31, 2022	$	(1,022	)	$	(3,034	)	$	8,027		$	3,971
Other comprehensive (loss) income before    reclassifications		(351	)		(4,125	)		1,641			(2,835	)
Amounts reclassified from accumulated    other comprehensive (loss) income		17			-			(176	)		(159	)
Period change		(334	)		(4,125	)		1,465			(2,994	)
Balance at June 30, 2022	$	(1,356	)	$	(7,159	)	$	9,492		$	977
	Accumulated Other Comprehensive Income/(Loss)
	Defined Benefit Pension Plan			Unrealized Gains (Losses) on Securities Available for Sale			Derivatives			Total
Balance at September 30, 2022	$	(1,108	)	$	(13,879	)	$	12,093		$	(2,894	)
Other comprehensive income (loss) before    reclassifications		—			(1,051	)		1,996			945
Amounts reclassified from accumulated other    comprehensive income (loss)		—			—			(5,234	)		(5,234	)
Period change		—			(1,051	)		(3,238	)		(4,289	)
Balance at June 30, 2023	$	(1,108	)	$	(14,930	)	$	8,855		$	(7,183	)
Balance at September 30, 2021	$	(1,907	)	$	1,962		$	627		$	682
Other comprehensive income (loss) before reclassifications		359			(9,121	)		8,723			(39	)
Amounts reclassified from accumulated other    comprehensive income (loss)		192			—			142			334
Period change		551			(9,121	)		8,865			295
Balance at June 30, 2022	$	(1,356	)	$	(7,159	)	$	9,492		$	977

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The following table presents significant amounts reclassified out of each component of accumulated other comprehensive income (loss) for the three and nine months ended June 30, 2023 and 2022 (in thousands):

	Amount Reclassified from Accumulated Other Comprehensive Income (Loss)
Details About Accumulated Other Comprehensive Income (Loss) Components	Accumulated Other Comprehensive Income (Loss) for the Three Months Ended June 30,						Affected Line Item in the Consolidated Statement of Operations
	2023			2022
Securities available for sale:
Defined benefit pension plan
Amortization of net gain and prior service costs	$	-		$	(20	)	Compensation and employee benefits
Related income tax expense		-			3		Income taxes
Net effect on accumulated other comprehensive income (loss)    for the period		-			(17	)
Derivatives and hedging activities:
Interest expense, effective portion		2,498			222		Interest expense
Related income tax expense		(524	)		(46	)	Income taxes
Net effect on accumulated other comprehensive income (loss)    for the period		1,974			176
Total reclassification for the period	$	1,974		$	159
	Amount Reclassified from Accumulated Other Comprehensive Income (Loss)
	Accumulated Other Comprehensive Income (Loss) For the Nine Months Ended June 30,						Affected Line Item in the Consolidated Statement of Operations
	2023			2022
Defined benefit pension plan
Amortization of net (loss) gain and prior service costs	$	-		$	(243	)	Compensation and employee benefits
Related income tax expense		-			51		Income taxes
Net effect on accumulated other comprehensive income (loss)    for the period		-			(192	)
Derivative and hedging activities:
Interest expense, effective portion		6,625			(180	)	Interest expense
Related income tax expense		(1,391	)		38		Income taxes
Net effect on accumulated other comprehensive income (loss)    for the period		5,234			(142	)
Total reclassification for the period	$	5,234		$	(334	)

12.Derivatives and Hedging Activities

Risk Management Objective of Using Derivatives

The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk, primarily by managing the amount, sources, and duration of its assets and liabilities and through the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to certain variable rate borrowings.

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Fair Values of Derivative Instruments on the Consolidated Balance Sheet

The table below presents the fair value of the Company’s derivative financial instruments as of June 30, 2023 and September 30, 2022 (in thousands).

Fair Values of Derivative Instruments
Asset Derivatives
	As of June 30, 2023				As of September 30, 2022
Hedged Item	Notional Amount		Fair Value		Notional Amount		Fair Value
FHLB Advances	$	215,000	$	11,211	$	225,000	$	15,310
Commercial Loans		82,490		7,943		79,602		9,171
Total	$	297,490	$	19,154	$	304,602	$	24,481
Fair Values of Derivative Instruments
Liability Derivatives
	As of June 30, 2023				As of September 30, 2022
Hedged Item	Notional Amount		Fair Value		Notional Amount		Fair Value
Commercial Loans	$	113,946	$	7,949	$	111,668	$	9,176
Total	$	113,946	$	7,949	$	111,668	$	9,176

Cash Flow Hedges of Interest Rate Risk

The Company’s objectives in using interest rate derivatives are to add stability to interest income and expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company has entered into interest rate swaps as part of its interest rate risk management strategy. These interest rate swaps are designated as cash flow hedges and involve the receipt of variable rate amounts from a counterparty in exchange for the Company making fixed payments. As of June 30, 2023, the Company had nine interest rate swaps with a notional principal amount of $215.0 million associated with the Company’s cash outflows associated with various FHLB advances and $196.4 million associated with associated with various commercial loans.

For derivatives designated as cash flow hedges, the effective portion of changes in the fair value of the derivative is initially reported in other comprehensive income (outside of earnings), net of tax, and subsequently reclassified to earnings when the hedged transaction affects earnings, and the ineffective portion of changes in the fair value of the derivative is recognized directly in earnings. The Company assesses the effectiveness of each hedging relationship by comparing the changes in cash flows of the derivative hedging instrument with the changes in cash flows of the designated hedged transactions. The Company did not recognize any hedge ineffectiveness in earnings during the three and nine months ended June 30, 2023 and 2022.

Amounts reported in accumulated other comprehensive income (loss) related to derivatives that will be reclassified to interest income/expense as interest payments are made/received on the Company’s variable-rate assets/liabilities. During the three months ended June 30, 2023, the Company had $2.5 million of gains, which resulted in a decrease to interest expense. During the three months ended June 30, 2022, the Company had $222,000 of gains which resulted in a decrease to interest expense. During the nine months ended June 30, 2023, the Company had $6.6 million of gains, which resulted in a decrease to interest expense. During the nine months ended June 30, 2022, the Company had $180,000 of losses which resulted in an increase to interest expense. During the next twelve months, the Company estimates that $7.8 million will be reclassified as a decrease to interest expense.

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The table below presents the effect of the Company’s cash flow hedge accounting on Accumulated Other Comprehensive Income (Loss) for the three and nine months ended June 30, 2023 and 2022 (in thousands).

The Effect of Fair Value and Cash Flow Hedge Accounting on Accumulated Other Comprehensive Income (Loss)
Derivatives in Hedging Relationships	(Gain) Loss Recognized in OCI on Derivative (Effective Portion)  Three Months Ended June 30,					Location of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)  Three Months Ended June 30,
Derivatives in Cash Flow Hedging Relationships	2023			2022			2023		2022
Interest Rate Products	$	(168	)	$	1,854	Interest expense	$	2,498	$	222
Total	$	(168	)	$	1,854		$	2,498	$	222
Derivatives in Cash Flow Hedging Relationships	Gain (Loss) Recognized in OCI on Derivative (Effective Portion)  Nine Months Ended June 30,					Location of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	Gain (Loss) Recognized in OCI on Derivative (Effective Portion)  Nine Months Ended June 30,
	2023			2022			2023		2022
Interest Rate Products	$	(4,100	)	$	11,222	Interest expense	$	6,625	$	(180	)
Total	$	(4,100	)	$	11,222		$	6,625	$	(180	)

Credit-risk-related Contingent Features

The Company has agreements with its derivative counterparties that contain a provision where if the Company defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the Company could also be declared in default on its derivative obligations.

The Company also has agreements with certain of its derivative counterparties that contain a provision where if the Company fails to maintain its status as a well / adequately capitalized institution, then the counterparty could terminate the derivative positions and the Company would be required to settle its obligations under the agreements.

As of June 30, 2023 and September 30, 2022, the Company had no derivatives in a net liability position and was not required to post collateral against its obligations under these agreements. If the Company had breached any of these provisions at June 30, 2023 and September 30, 2022, it could have been required to settle its obligations under the agreements at the termination value.

13.Contingent Liabilities

Legal Proceedings

The Company and its subsidiaries are subject to various legal actions arising in the normal course of business. In the opinion of Management, the resolution of these legal actions is not expected to have a material adverse effect on the Company’s results of operations.

The Company and its subsidiary, ESSA Bank were named as defendants, among others, in an action commenced on December 8, 2016 by one plaintiff who sought to pursue the suit as a class action on behalf of the entire class of people similarly situated. The plaintiff alleged that a bank previously acquired by the Company received unearned fees and kickbacks in the process of making loans, in violation of the Real Estate Settlement Procedures Act. In an order dated January 29, 2018, the district court granted the defendants’ motion to dismiss the case. The plaintiff appealed the court’s ruling. In an opinion and order dated April 26, 2019, the appellate court reversed the district court’s order dismissing the plaintiff’s case against the Company and remanded the case to the district court in order to continue the litigation. The litigation is now proceeding before the district court. On December 9, 2019, the court permitted an amendment to the complaint to add two new plaintiffs to the case asserting similar claims. On May 21, 2020, the court granted the plaintiffs’ motion for class certification. Fact and expert discovery is now complete, and the Company and ESSA Bank have filed motions seeking to have the case dismissed (in whole or in part) and/or the class de-certified, as well as for other relief. Plaintiffs have opposed the motions. The Company and ESSA Bank will continue to vigorously defend against plaintiffs’ allegations. To the extent that this matter could result in exposure to the Company and/or ESSA Bank, the amount or range of such exposure is not currently estimable but could be substantial.

On May 29, 2020, the Company and ESSA Bank were named as defendants in a second action commenced by three plaintiffs who also sought to pursue the action as a class action on behalf of the entire class of people similarly situated. The plaintiffs allege that a bank previously acquired by the Company received unearned fees and kickbacks from a different title company than the one

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involved in the previously discussed litigation in the process of making loans. The original complaint alleged violations of the Real Estate Settlement Procedures Act, the Sherman Act, and the Racketeer Influenced and Corrupt Organizations Act (“RICO”). The plaintiffs filed an Amended Complaint on September 30, 2020 that dropped the RICO claim, but they are continuing to pursue the Real Estate Settlement Procedures Act and Sherman Act claims. The defendants moved to dismiss the Sherman Act claim on October 14, 2020, and that motion was denied on April 2, 2021. On March 13, 2023 the court granted plaintiffs’ motion for class certification. The case is currently in the discovery phase. The Company and ESSA Bank intend to vigorously defend against plaintiffs’ allegations. To the extent that this matter could result in exposure to the Company and/or ESSA Bank, the amount or range of such exposure is not currently estimable but could be substantial.

14.Revenue Recognition

Management determined that the primary sources of revenue associated with financial instruments, including interest income on loans and investments, along with certain noninterest revenue sources including investment security gains, loan servicing charges, gains on the sale of loans, and earnings on bank owned life insurance are not within the scope of Topic 606.

Noninterest income within the scope of Topic 606 are as follows:

Trust and Investment Fees

Trust and asset management income is primarily comprised of fees earned from the management and administration of trusts and other customer assets. The Company’s performance obligation is generally satisfied over time and the resulting fees are recognized monthly, based upon the month-end market value of the assets under management and the applicable fee rate. Payment is generally received a few days after month end through a direct charge to customer’s accounts. The Company does not earn performance-based incentives. Optional services such as real estate sales and tax return preparation services are also available to existing trust and asset management customers. The Company’s performance obligation for these transactional-based services is generally satisfied, and related revenue recognized, at a point in time (i.e. as incurred). Payment is received shortly after services are rendered.

Service Charges on Deposit Accounts

Service charges on deposit accounts consist of account analysis fees (i.e. net fees earned on analyzed business and public checking accounts), monthly service fees, check orders, and other deposit account related fees. The Company’s performance obligation for account analysis fees and monthly service fees is generally satisfied, and the related revenue recognized, over the period in which the service is provided. Check orders and other deposit account related fees are largely transactional based, and therefore, the Company’s performance obligation is satisfied, and related revenue recognized, at a point in time. Payment for service charges on deposit accounts is primarily received immediately or in the following month through a direct charge to customers’ accounts.

Fees, Exchange, and Other Service Charges

Fees, interchange, and other service charges are primarily comprised of debit card income, ATM fees, cash management income, and other services charges. Debit card income is primarily comprised of interchange fees earned whenever the Company’s debit cards are processed through card payment networks such as Mastercard. ATM fees are primarily generated when a Company cardholder uses a non-Company ATM or a non-Company cardholder uses a company ATM. Other service charges include revenue from processing wire transfers, bill pay service, cashier’s checks, and other services. The Company’s performance obligation for fees, exchange, and other service charges are largely satisfied, and related revenue recognized when the services are rendered or upon completion. Payment is typically received immediately or in the following month.

Insurance Commissions

Insurance income primarily consists of commissions received on product sales. The Company acts as an intermediary between the Company’s customer and the insurance carrier. The Company’s performance obligation is generally satisfied upon the issuance of the policy. Shortly after the policy is issued, the carrier remits the commission payment to the Company, and the Company recognizes the revenue.

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15.Leases

A lease is defined as a contract, or part of a contract, that conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. For the Company, Topic 842 primarily affects the accounting treatment for operating lease agreements in which the Company is the lessee.

Lessee Accounting

Substantially all of the leases in which the Company is the lessee are comprised of real estate property for branches, ATM locations, and office space with terms extending through 2044. In accordance with Topic 842, operating lease agreements are required to be recognized on the Consolidated Balance sheet as a right-of-use (“ROU”) asset and a corresponding lease liability.

The following table presents the Consolidated Balance Sheet classification of the Company’s ROU assets and lease liabilities. The Company elected not to include short-term leases (i.e., leases with initial terms of twelve months or less), or equipment leases (deemed immaterial) on the Consolidated Balance sheet.

(in thousands)		June 30, 2023
Lease Right-of-Use Assets	Classification
Operating lease right-of-use assets	Other assets	$	5,659
Total Lease Right-Of-Use Assets		$	5,659
(in thousands)		June 30, 2023
Lease Liabilities	Classification
Operating lease Liabilities	Other liabilities	$	5,890
Total Lease Liabilities		$	5,890
(in thousands)		September 30, 2022
Lease Right-of-Use Assets	Classification
Operating lease right-of-use assets	Other assets	$	6,075
Total Lease Right-Of-Use Assets		$	6,075
(in thousands)		September 30, 2022
Lease Liabilities	Classification
Operating lease Liabilities	Other liabilities	$	6,275
Total Lease Liabilities		$	6,275

The calculated amount of the ROU assets and lease liabilities in the table above are impacted by the length of the lease term and the discount rate used to present value the minimum lease payments. The Company’s lease agreements often include one or more options to renew at the Company’s discretion. If at lease inception, the Company considers the exercising of a renewal option to be reasonably certain, the Company will include the extended term in the calculation of the ROU asset and lease liability. Regarding the discount rate, Topic 842 requires the use of the rate implicit in the lease whenever this rate is readily determinable. As this rate is rarely determinable, the Company utilizes its incremental borrowing rate at lease inception, on a collateralized basis, over a similar term.

	June 30, 2023
Weighted average remaining lease term
Operating leases	11.7
Weighted average discount rate
Operating leases		2.51	%

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The following table represents lease costs and other lease information. As the Company elected, for all classes of underlying assets, not to separate lease and non-lease components and instead to account for them as a single lease component, the variable lease cost primarily represents variable payments such as common area maintenance and utilities.

Lease Costs (in thousands)	Three Months Ended June 30, 2023
Operating lease cost	$	241
Variable lease cost		58
Net lease cost	$	299
Lease Costs (in thousands)	Three Months Ended June 30, 2022
Operating lease cost	$	238
Variable lease cost		53
Net lease cost	$	291
Lease Costs (in thousands)	Nine Months Ended June 30,2023
Operating lease cost	$	722
Variable lease cost		167
Net lease cost	$	889
Lease Costs (in thousands)	Nine Months Ended June 30,2022
Operating lease cost	$	501
Variable lease cost		180
Net lease cost	$	681

Future minimum payments for operating leases with initial or remaining terms of one year or more as of June 30, 2023 were as follows:

(in thousands)	Operating leases
Twelve months Ended:
June 30, 2024	$	800
June 30, 2025		650
June 30, 2026		633
June 30, 2027		494
June 30, 2028		464
Thereafter		3,707
Total future minimum lease payments		6,748
Amounts representing interest		858
Present Value of Net Future Minimum Lease Payments	$	5,890

Note 16. Other Matters

On May 31, 2023, ESSA Bank & Trust (“ESSA Bank”), a wholly owned subsidiary of the Company, entered into a consent order with the U.S. Department of Justice (“DOJ”) to resolve allegations of violations of the fair lending laws within the Philadelphia Metropolitan Statistical Area (“MSA”). Under the settlement, ESSA Bank agrees to provide $2.9 million in mortgage loan subsidies over a five-year period for majority Black and Hispanic census tracts, with at least 50% of those subsidies to be invested in specified Philadelphia MSA census tracts in proximity to ESSA Bank’s two Delaware County branch locations. The remainder of the subsidies may be used in other qualifying areas.

ESSA Bank is also committing $250,000 in additional focused marketing and outreach, $125,000 in community development partnerships, and making investments in additional mortgage professionals and a community development officer focused on statistically underserved communities. The DOJ consent order was approved by the United States District Court for the Eastern District of Pennsylvania on June 9, 2023, and at that point all claims asserted by the DOJ against ESSA Bank were resolved according to its terms. The Company is committed to investing the $2.9 million over five years and will record the related expenses in the period in which the activities occur.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements, which can be identified by the use of such words as estimate, project, believe, intend, anticipate, plan, seek, expect and similar expressions. These forward-looking statements include:

•statements of our goals, intentions and expectations;

•statements regarding our business plans and prospects and growth and operating strategies;

•statements regarding the asset quality of our loan and investment portfolios; and

•estimates of our risks and future costs and benefits.

By identifying these forward-looking statements for you in this manner, we are alerting you to the possibility that our actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements. Important factors that could cause our actual results and financial condition to differ from those indicated in the forward-looking statements include, among others, those discussed under “Risk Factors” in Part I, Item 1A of the Company’s Annual Report on Form 10-K and Part II, Item 1A of this and any previous Quarterly Report on Form 10-Q filed since our most recent Annual Report on Form 10-K, as well as the following factors:

•significantly increased competition among depository and other financial institutions;

•inflation and changes in the interest rate environment that reduce our margins or reduce the fair value of financial instruments;

•general economic conditions, either nationally or in our market areas, that are worse than expected;

•adverse changes in the securities markets;

•legislative or regulatory changes that adversely affect our business;

•our ability to enter new markets successfully and take advantage of growth opportunities, and the possible short-term dilutive effect of potential acquisitions or de novo branches, if any;

•changes in consumer spending, borrowing and savings habits;

•changes in accounting policies and practices, as may be adopted by the bank regulatory agencies and the FASB; and

•changes in our organization, compensation and benefit plans.

These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.

Comparison of Financial Condition at June 30, 2023 and September 30, 2022

Total Assets. Total assets increased by $322.5 million, or 17.3%, to $2.18 billion at June 30, 2023 from $1.86 billion at September 30, 2022 due primarily to increases in total cash and cash equivalents, loans receivable and investment securities available for sale.

Total Cash and Cash Equivalents. Total cash and cash equivalents increased $67.2 million, or 240.7%, to $95.2 million at June 30, 2023 from $27.9 million at September 30, 2022. The Bank increased it’s balance sheet liquidity in response to recent market volatility.

Net Loans. Net loans increased $175.3 million, or 12.2%, to $1.61 billion at June 30, 2023 from $1.44 billion at September 30, 2022. During this period, residential loans increased $70.3 million to $693.7 million, construction loans increased $1.7 million to $26.8 million, commercial real estate loans increased $86.0 million to $764.8 million, commercial loans increased $9.0 million to $47.2 million, obligations of states and political subdivisions increased $7.5 million to $47.9 million, home equity loans and lines of credit increased $3.1 million to $46.3 million, auto loans decreased $2.7 million to $926,000 reflecting expected runoff of the portfolio following the Company’s previously announced discontinuation of indirect auto lending in July 2018, and other loans decreased $64,000 to $1.7 million.

Investment Securities Available for Sale. Investment securities available for sale increased $79.3 million, or 38.0%, to $288.0 million at June 30, 2023 from $208.6 million at September 30, 2022 due primarily to purchases of U.S. treasury securities offset in part by the maturity or principal repayment of securities in the portfolio.

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Investment Securities Held to Maturity. Investment securities held to maturity decreased to $53.6 million at June 30, 2023 from $57.3 million at September 30, 2022. The Company carries some investment securities as held to maturity to manage fluctuations in comprehensive loss caused by interest rate changes.

Foreclosed Real Estate. Foreclosed real estate increased to $3.5 million at June 30, 2023 from $29,000 at September 30, 2022. The Company foreclosed on one commercial real estate loan during the quarter and is actively marketing the property. This property was formerly part of nonperforming loans at December 31, 2022 and September 30, 2022.

Deposits. Deposits increased $145.5 million, or 10.5%, to $1.53 billion at June 30, 2023 from $1.38 billion at September 30, 2022. An increase in certificates of deposit of $291.6 million was offset in part by decreases in interest bearing demand accounts of $49.2 million, money market accounts of $60.2 million, savings and club accounts of $27.4 million and non-interest bearing demand accounts of $9.3 million as the Company increased rates on certificates of deposit to defend against deposit outflow. At June 30, 2023, uninsured deposits, including fully collateralized public deposits of $156.5 million, amounted to approximately 30.4% of total deposits.

Short-Term Borrowings. Short-term borrowings increased to $400.0 million at June 30, 2023 from $230.8 million at September 30, 2022 primarily to fund loan growth.

Stockholders’ Equity. Stockholders’ equity increased by $6.3 million, or 3.0%, to $218.7 million at June 30, 2023 from $212.3 million at September 30, 2022. The increase in stockholders’ equity was primarily due to net income of $13.9 million partially offset by regular cash dividends of $0.45 per share which reduced stockholders’ equity by $4.4 million and other comprehensive loss of $4.3 million.

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Average Balance Sheets for the Three and nine Months Ended June 30, 2023 and 2022

The following tables set forth average balance sheets, average yields and costs, and certain other information for the periods indicated. All average balances are daily average balances, the yields set forth below include the effect of deferred fees and discounts and premiums that are amortized or accreted to interest income.

	For the Three Months Ended June 30,
	2023									2022
	Average Balance			Interest Income/ Expense			Yield/Cost			Average Balance			Interest Income/ Expense			Yield/Cost
	(dollars in thousands)
Interest-earning assets:
Loans(1)	$	1,610,897		$	19,132			4.76	%	$	1,378,788		$	13,615			3.96	%
Investment securities
Taxable(2)		94,908			1,032			4.36	%		85,799			722			3.38	%
Exempt from federal income    tax(2)(3)		1,869			11			2.99	%		2,262			12			2.69	%
Total investment securities		96,777			1,043			4.33	%		88,061			734			3.36	%
Mortgage-backed securities		163,278			1,129			2.77	%		155,522			820			2.11	%
Federal Home Loan Bank stock		16,972			331			7.82	%		6,098			71			4.67	%
Other		11,630			130			4.48	%		137,728			259			0.75	%
Total interest-earning assets		1,899,554			21,765			4.60	%		1,766,197			15,499			3.52	%
Allowance for loan losses		(18,255	)								(18,269	)
Noninterest-earning assets		131,505									119,196
Total assets	$	2,012,804								$	1,867,124
Interest-bearing liabilities:
NOW accounts	$	320,716		$	374			0.47	%	$	338,103		$	45			0.05	%
Money market accounts		343,346			1,376			1.61	%		411,879			142			0.14	%
Savings and club accounts		172,123			28			0.07	%		200,515			26			0.05	%
Certificates of deposit		350,217			3,137			3.59	%		353,915			293			0.33	%
Borrowed funds		309,118			1,606			2.08	%		29,722			35			0.47	%
Total interest-bearing liabilities		1,495,520			6,521			1.75	%		1,334,134			541			0.16	%
Non-interest-bearing NOW    accounts		257,957									284,467
Non-interest-bearing liabilities		38,048									33,545
Total liabilities		1,791,525									1,652,146
Equity		221,279									214,978
Total liabilities and equity	$	2,012,804								$	1,867,124
Net interest income				$	15,244								$	14,958
Interest rate spread								2.85	%								3.36	%
Net interest-earning assets	$	404,034								$	432,063
Net interest margin(4)								3.22	%								3.40	%
Average interest-earning assets to    average interest-bearing liabilities					127.02	%								132.39	%

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	For the Nine Months Ended June 30,
	2023									2022
	Average Balance			Interest Income/ Expense			Yield/Cost			Average Balance			Interest Income/ Expense			Yield/Cost
	(dollars in thousands)
Interest-earning assets:
Loans(1)	$	1,547,937		$	52,721			4.54	%	$	1,363,832		$	40,464			3.95	%
Investment securities
Taxable(2)		92,269			2,890			4.17	%		102,601			1,966			2.55	%
Exempt from federal income    tax(2)(3)		1,859			32			2.90	%		3,294			50			2.56	%
Total investment securities		94,128			2,922			4.15	%		105,895			2,016			2.55	%
Mortgage-backed securities		167,043			3,458			2.76	%		126,875			1,756			1.84	%
Federal Home Loan Bank stock		16,126			970			8.01	%		5,242			180			4.57	%
Other		12,553			367			3.89	%		167,126			399			0.32	%
Total interest-earning assets		1,837,787			60,438			4.38	%		1,768,970			44,815			3.38	%
Allowance for loan losses		(18,546	)								(18,126	)
Noninterest-earning assets		131,431									115,332
Total assets	$	1,950,672								$	1,866,176
Interest-bearing liabilities:
Interest bearing demand accounts	$	329,501		$	839			0.34	%	$	316,156		$	123			0.05	%
Money market accounts		363,550			3,743			1.37	%		432,068			421			0.13	%
Savings and club accounts		181,033			77			0.06	%		196,329			77			0.05	%
Certificates of deposit		276,668			6,074			2.92	%		395,180			1,424			0.48	%
Borrowed funds		280,338			3,691			1.75	%		9,907			35			0.47	%
Total interest-bearing liabilities		1,431,090			14,424			1.34	%		1,349,640			2,080			0.21	%
Non-interest-bearing NOW    accounts		263,097									276,958
Non-interest-bearing liabilities		37,591									29,024
Total liabilities		1,731,778									1,655,622
Equity		218,894									210,554
Total liabilities and equity	$	1,950,672								$	1,866,176
Net interest income				$	46,014								$	42,735
Interest rate spread								3.04	%								3.17	%
Net interest-earning assets	$	406,697								$	419,330
Net interest margin(4)								3.34	%								3.22	%
Average interest-earning assets to    average interest-bearing liabilities					128.42	%								131.07	%

_____________________

(1)Non-accruing loans are included in the outstanding loan balances.

(2)Available for sale securities are reported at fair value.

(3)Yields on tax exempt securities have been calculated on a fully tax equivalent basis assuming a tax rate of 21.00% for the three and nine months ended June 30, 2023 and 2022.

(4)Represents the difference between interest earned and interest paid, divided by average total interest earning assets.

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Comparison of Operating Results for the Three Months Ended June 30, 2023 and 2022

Net Income. Net income decreased $643,000, or 12.8%, to $4.4 million for the three months ended June 30, 2023 compared to net income of $5.0 million for the comparable period in 2022. The decrease was primarily due to increases in non-interest expense and the provision for loan losses and a decrease in non-interest income partially offset by increases in net interest income and a decrease in the income tax provision.

Net Interest Income. Net interest income increased $286,000, or 1.9%, to $15.2 million for the three months ended June 30, 2023 compared to $15.0 million for the comparable period in 2022.

Interest Income. Total interest income was $21.8 million for the three months ended June 30, 2023 compared with $15.5 million for the three months ended June 30, 2022 reflecting increases in interest rates and total yield on average interest earning assets from 3.52% for the three months ended June 30, 2022 to 4.60% for the three months ended June 30, 2023. An increase of $133.4 million in average interest earning assets also contributed to the increase in interest income.

Interest Expense. Interest expense was $6.5 million for the quarter ended June 30, 2023 compared to $541,000 for the same period in 2022. The cost of interest-bearing liabilities increased to 1.75% for the quarter ended June 30, 2023 from 0.16% a year earlier, reflecting higher interest rates, repricing of deposits and higher-cost borrowings. The average balance of interest-bearing liabilities increased $161.4 million year-over-year.

Provision for Loan Losses. In evaluating the level of the allowance for loan losses, management considers historical loss experience, the types of loans and the amount of loans in the loan portfolio, adverse situations that may affect a borrower’s ability to repay, the estimated value of any underlying collateral, peer group information and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are subject to interpretation and revision as more information becomes available or as future events occur. After an evaluation of these factors, management made a $150,000 provision for loan losses for the three month period ended June 30, 2023 compared to no provision for the three month period ended June 30, 2022. The allowance for loan losses was $18.2 million, or 1.12% of loans outstanding, at June 30, 2023, compared to $18.5 million, or 1.27% of loans outstanding, at September 30, 2022.

Non-interest Income. Noninterest income decreased 9.7% to $1.9 million for the three months ended June 30, 2023, compared with $2.1 million for the three months ended June 30, 2022. Decreases in loan swap fees of $58,000 and service charges and fees on loans of $283,000 were partially offset by increases in gains on sales of residential mortgages of $39,000, earnings on bank-owned life insurance of $9,000, trust and investment fees of $40,000 and other income of $52,000 for the quarter ended June 30, 2023 compared with the comparable period in 2022.

Non-interest Expense. Noninterest expense increased $734,000, or 6.8%, to $11.5 million for the three months ended June 30, 2023 compared with the comparable period a year earlier primarily reflecting increases in compensation and employee benefits of $166,000, professional fees of $464,000, Federal Deposit Insurance Corporation premiums of $232,000, gain on foreclosed real estate of $59,000 and data processing of $89,000, partially offset by decreases in occupancy and equipment of $45,000, advertising of $73,000 and other expenses of $146,000.

Income Taxes. Income tax expense decreased $162,000 to $1.1 million for the three months ended June 30, 2023 from the comparable 2022 period. The effective tax rate for the three months ended June 30, 2023 was 20.6% compared to 20.6% for the 2022 period.

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Comparison of Operating Results for the Nine Months Ended June 30, 2023 and 2022

Net Income. Net income decreased $297,000, or 2.1%, to $13.9 million for the nine months ended June 30, 2023 compared to net income of $14.2 million for the comparable period in 2022. The decrease was primarily due to increases in non-interest expense and the provision for loan losses and a decrease in non-interest income partially offset by an increase in net interest income and a decrease in the income tax provision.

Net Interest Income. Net interest income increased $3.3 million, or 7.7%, to 46.0 million for the nine months ended June 30, 2023 compared to $42.7 million for the comparable period in 2022.

Interest Income. Total interest income was $60.4 million for the nine months ended June 30, 2023 compared with $44.8 million for the nine months ended June 30, 2022 reflecting increases in interest rates and total yield on average interest earning assets from 3.38% for the nine months ended June 30, 2022 to 4.38% for the nine months ended June 30, 2023. A increase of $68.8 million in average interest earning assets also contributed to the increase in interest income

Interest Expense. Interest expense was $14.4 million for the nine months ended June 30, 2023 compared to $2.1 million for the same period in 2022. The cost of interest-bearing liabilities increased to 1.34% for the nine months ended June 30, 2023 from 0.21% a year earlier, reflecting higher interest rates, repricing of deposits and higher-cost borrowings. The average balance of interest-bearing liabilities increased $81.5 million year-over-year.

Provision for Loan Losses. In evaluating the level of the allowance for loan losses, management considers historical loss experience, the types of loans and the amount of loans in the loan portfolio, adverse situations that may affect a borrower’s ability to repay, the estimated value of any underlying collateral, peer group information and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are subject to interpretation and revision as more information becomes available or as future events occur. After an evaluation of these factors, management made a $450,000 provision for loan losses for the nine month period ended June 30, 2023 compared to no provision for the nine month period ended June 30, 2022. The allowance for loan losses was $18.2 million, or 1.12% of loans outstanding, at June 30, 2023, compared to $18.5 million, or 1.27% of loans outstanding, at September 30, 2022.

Non-interest Income. Noninterest income decreased 7.8% to $5.9 million for the nine months ended June 30, 2023, compared with $6.4 million for the nine months ended June 30, 2022. Decreases in service charges and fee on loans of $414,000, loan swap fees of $69,000, and gains on sales of residential mortgages of $142,000 were partially offset by increases in service fees on deposit accounts of $42,000, earnings on bank-owned life insurance of $15,000 and insurance commissions of $26,000 and other income of $49,000 for the nine months ended June 30, 2023 compared with the comparable period in 2022.

Non-interest Expense. Noninterest expense increased $2.8 million, or 8.8%, to $34.2 million for the nine months ended June 30, 2023 compared with the comparable period a year earlier primarily reflecting increases in compensation and employee benefits of $1.1 million, professional fees of $1.4 million, Federal Deposit Insurance Corporation premiums of $316,000, and data processing of $159,000, partially offset by decreases in occupancy and equipment of $158,000, other expenses of $35,000 and advertising of $92,000.

Income Taxes. Income tax expense decreased $135,000 to $3.3 million for the nine months ended June 30, 2023 from the comparable 2022 period. The effective tax rate for the nine months ended June 30, 2023 was 19.2% compared to 19.5% for the 2022 period.

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The following table provides information with respect to the Bank’s non-performing assets at the dates indicated (dollars in thousands).

	June 30, 2023			September 30, 2022
Non-performing assets:
Non-accruing loans	$	11,155		$	15,082
Loans 90+ days delinquent and accruing interest		—			—
Total non-performing loans		11,155			15,082
Foreclosed real estate		3,546			29
Total non-performing assets	$	14,701		$	15,111
Ratio of non-performing loans to total loans		0.68	%		1.04	%
Ratio of non-performing loans to total assets		0.51	%		0.81	%
Ratio of non-performing assets to total assets		0.67	%		0.81	%
Ratio of allowance for loan losses to total loans		1.12	%		1.27	%

Loans are reviewed on a regular basis and are placed on non-accrual status when they become 90 days delinquent. When loans are placed on non-accrual status, unpaid accrued interest is fully reserved, and further income is recognized only to the extent received. Non-performing assets decreased $442,000 from September 30, 2022 to June 30, 2023. The $11.2 million of non-accruing loans at June 30, 2023 included 18 residential loans with an aggregate outstanding balance of $2.4 million, 23 commercial and commercial real estate loans with aggregate outstanding balances of $8.6 million and 19 consumer loans with aggregate balances of $94,000. Within the residential loan balance were $347,000 of loans past due less than 90 days. In the quarter ended June 30, 2023, the Company identified five residential loans which, although paying as agreed, have a high probability of default. Foreclosed real estate increased $3.5 million to $3.5 million at June 30, 2023. Foreclosed real estate consists of one residential property and one commercial property.

At June 30, 2023, the principal balance of troubled debt restructures (“TDRs”) was $9.0 million compared to $8.8 million at September 30, 2022. All of the TDRs at June 30, 2023 were non-accrual loans.

As of June 30, 2023, TDRs were comprised of five residential loans totaling $412,000, seven commercial and commercial real estate loans totaling $8.6 million and two consumer loans (home equity loans, home equity lines and credit, indirect auto and other loans) totaling $34,000.

For the three months ended June 30, 2023, no loans were removed from TDR status. For the nine months ended June 30, 2023, one loan totaling $6.6 million was removed from TDR status removed as it was paid off and one loan totaling $37,000 was removed for on time payments.

Liquidity and Capital Resources

We maintain liquid assets at levels we consider adequate to meet both our short-term and long-term liquidity needs. We adjust our liquidity levels to fund deposit outflows, repay our borrowings and to fund loan commitments. We also adjust liquidity as appropriate to meet asset and liability management objectives.

Our primary sources of liquidity are deposits, prepayment and repayment of loans and mortgage-backed securities, maturities of investment securities and other short-term investments, and earnings and funds provided from operations, as well as access to FHLB advances and other borrowing sources. While scheduled principal repayments on loans and mortgage-backed securities are a relatively predictable source of funds, deposit flows and loan prepayments are greatly influenced by market interest rates, economic conditions, and rates offered by our competition. We set the interest rates on our deposits to maintain a desired level of total deposits.

A portion of our liquidity consists of cash and cash equivalents and borrowings, which are a product of our operating, investing and financing activities. At June 30, 2023, $95.2 million of our assets were invested in cash and cash equivalents. Our primary sources of cash are principal repayments on loans, proceeds from the maturities of investment securities, principal repayments of mortgage-backed securities and increases in deposit accounts and borrowings. As of June 30, 2023, we had $339.9 million of borrowings outstanding from the Pittsburgh FHLB. We have access to total FHLB advances of up to approximately $837.1 million. The Company also has a fully secured $60.0 million borrowing from the Federal Reserve Bank of Philadelphia.

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At June 30, 2023, we had $332.9 million in loan commitments outstanding, which included, in part, $161.8 million in undisbursed construction loans and land development loans, $52.6 million in unused home equity lines of credit, $103.6 million in commercial lines of credit and commitments to originate commercial loans, $13.4 million in performance standby letters of credit and $1.4 million in other unused commitments which are primarily to originate residential mortgage loans and multifamily loans. Certificates of deposit due within one year of June 30, 2023 totaled $345.9 million, or 81.3% of certificates of deposit. If these maturing deposits do not remain with us, we will be required to seek other sources of funds, including other certificates of deposit and borrowings. Depending on market conditions, we may be required to pay higher rates on such deposits or other borrowings than we currently pay on the certificates of deposit due on or before June 30, 2024. We believe, however, based on past experience that a significant portion of our certificates of deposit will remain with us. We have the ability to attract and retain deposits by adjusting the interest rates offered.

As reported in the Consolidated Statements of Cash Flow, our cash flows are classified for financial reporting purposes as operating, investing or financing cash flows. Net cash provided by operating activities was $15.3 million and $15.9 million for the nine months ended June 30, 2023 and 2022, respectively. These amounts differ from our net income because of a variety of cash receipts and disbursements that did not affect net income for the respective periods. Net cash used for investing activities was $(261.5) million and $(57.2) million for the nine months ended June 30, 2023 and 2022, respectively, principally reflecting our loan and investment security activities. Deposit and borrowing cash flows have comprised most of our financing activities, which resulted in net cash provided by (used for) financing activities of $313.4 million and $(34.5) million for the nine months ended June 30, 2023 and 2022, respectively.

Critical Accounting Policies

We consider accounting policies that require management to exercise significant judgment or discretion or make significant assumptions that have, or could have, a material impact on the carrying value of certain assets or on income, to be critical accounting policies. We consider the following to be our critical accounting policies:

Allowance for Loan Losses. The allowance for loan losses is the estimated amount considered necessary to cover credit losses inherent in the loan portfolio at the balance sheet date. The allowance is established through the provision for loan losses which is charged against income. In determining the allowance for loan losses, management makes significant estimates and has identified this policy as one of our most critical. The methodology for determining the allowance for loan losses is considered a critical accounting policy by management due to the high degree of judgment involved, the subjectivity of the assumptions utilized and the potential for changes in the economic environment that could result in changes to the amount of the recorded allowance for loan losses.

As a substantial amount of our loan portfolio is collateralized by real estate, appraisals of the underlying value of property securing loans and discounted cash flow valuations of properties are critical in determining the amount of the allowance required for specific loans. Assumptions for appraisals and discounted cash flow valuations are instrumental in determining the value of properties. Overly optimistic assumptions or negative changes to assumptions could significantly impact the valuation of a property securing a loan and the related allowance determined. The assumptions supporting such appraisals and discounted cash flow valuations are carefully reviewed by management to determine that the resulting values reasonably reflect amounts realizable on the related loans.

Management performs a quarterly evaluation of the adequacy of the allowance for loan losses. Consideration is given to a variety of factors in establishing this estimate including, but not limited to, current economic conditions, delinquency statistics, geographic and industry concentrations, the adequacy of the underlying collateral, the financial strength of the borrower, results of internal and external loan reviews and other relevant factors. This evaluation is inherently subjective, as it requires material estimates that may be susceptible to significant revision based on changes in economic and real estate market conditions.

The analysis of the allowance for loan losses has two components: specific and general allocations. Specific allocations are made for loans that are determined to be impaired. Impairment is measured by determining the present value of expected future cash flows or, for collateral-dependent loans, the fair value of the collateral adjusted for market conditions and selling expenses. The general allocation is determined by segregating the remaining loans by type of loan, risk weighting (if applicable) and payment history. We also analyze historical loss experience, delinquency trends, general economic conditions and geographic and industry concentrations. This analysis establishes factors that are applied to the loan groups to determine the amount of the general allocations. Actual loan losses may be significantly more than the allowance for loan losses we have established which could have a material negative effect on our financial results.

Goodwill and Intangible Assets. Goodwill is not amortized, but it is tested at least annually for impairment in the fourth quarter, or more frequently if indicators of impairment are present. If the estimated current fair value of a reporting unit exceeds its carrying value, no additional testing is required and an impairment loss is not recorded. The Company uses market capitalization and multiples of tangible book value methods to determine the estimated current fair value of its reporting unit. Based on this analysis, no impairment was recorded in 2023 or 2022.

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The other intangibles assets are assigned useful lives, which are amortized on an accelerated basis over their weighted-average lives. The Company periodically reviews the intangible assets for impairment as events or changes in circumstances indicate that the carrying amount of such asset may not be recoverable. Based on these reviews, no impairment was recorded in 2023 or 2022.

Derivative Instruments and Hedging Activities. The Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Derivatives may also be designated as hedges of the foreign currency exposure of a net investment in a foreign operation. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risk, even though hedge accounting does not apply or the Company elects not to apply hedge accounting.

Fair Value Measurements. We group our assets at fair value in three levels, based on the markets in which the assets are traded and the reliability of the assumptions used to determine fair value. These levels are:

•Level I – Valuation is based upon quoted prices for identical instruments traded in active markets.

•Level II – Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.

•Level III – Valuation is generated from model-based techniques that use significant assumptions not observable in the market. These unobservable assumptions reflect the Company’s own estimates of assumptions that market participants would use in pricing the asset.

We base our fair values on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. It is our policy to maximize the use of observable inputs and minimize the use of unobservable inputs when developing fair value measurements, in accordance with the fair value hierarchy in generally accepted accounting principles.

Fair value measurements for most of our assets are obtained from independent pricing services that we have engaged for this purpose. When available, we, or our independent pricing service, use quoted market prices to measure fair value. If market prices are not available, fair value measurement is based upon models that incorporate available trade, bid, and other market information. Subsequently, all of our financial instruments use either of the foregoing methodologies to determine fair value adjustments recorded to our financial statements. In certain cases, however, when market observable inputs for model-based valuation techniques may not be readily available, we are required to make judgments about assumptions market participants would use in estimating the fair value of financial instruments. The degree of management judgment involved in determining the fair value of a financial instrument is dependent upon the availability of quoted market prices or observable market parameters. For financial instruments that trade actively and have quoted market prices or observable market parameters, there is minimal subjectivity involved in measuring fair value. When observable market prices and parameters are not fully available, management judgment is necessary to estimate fair value. In addition, changes in the market conditions may reduce the availability of quoted prices or observable data. When market data is not available, we use valuation techniques requiring more management judgment to estimate the appropriate fair value measurement. Therefore, the results cannot be determined with precision and may not be realized in an actual sale or immediate settlement of the asset. Additionally, there may be inherent weaknesses in any calculation technique, and changes in the underlying assumptions used, including discount rates and estimates of future cash flows, that could significantly affect the results of current or future valuations.

Other-than-Temporary Investment Security Impairment. Securities are evaluated periodically to determine whether a decline in their value is other-than-temporary. Management utilizes criteria such as the magnitude and duration of the decline, in addition to the reasons underlying the decline, to determine whether the loss in value is other-than-temporary. The term “other-than-temporary” is not intended to indicate that the decline is permanent, but indicates that the prospect for a near-term recovery of value is not necessarily favorable, or that there is a lack of evidence to support a realizable value equal to or greater than the carrying value of the investment. Once a decline in value is determined to be other-than-temporary, the value of the security is reduced and a corresponding charge to earnings is recognized.

46

Deferred Income Taxes. We use the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. If current available information raises doubt as to the realization of the deferred tax assets, a valuation allowance is established. We consider the determination of this valuation allowance to be a critical accounting policy because of the need to exercise significant judgment in evaluating the amount and timing of recognition of deferred tax liabilities and assets, including projections of future taxable income. These judgments and estimates are reviewed on a continual basis as regulatory and business factors change. A valuation allowance for deferred tax assets may be required if the amount of taxes recoverable through loss carryback declines, or if we project lower levels of future taxable income. Such a valuation allowance would be established through a charge to income tax expense that would adversely affect our operating results.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements (as such term is defined in applicable Securities and Exchange Commission rules) that are reasonably likely to have a current or future material effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The majority of our assets and liabilities are monetary in nature. Consequently, our most significant form of market risk is interest rate risk. Our assets, consisting primarily of mortgage loans, have longer maturities than our liabilities, consisting primarily of deposits and borrowings. As a result, a principal part of our business strategy is to manage interest rate risk and reduce the exposure of our net interest income to changes in market interest rates. Accordingly, our Board of Directors has approved guidelines for managing the interest rate risk inherent in our assets and liabilities, given our business strategy, operating environment, capital, liquidity and performance objectives. Senior management monitors the level of interest rate risk on a regular basis and the asset/liability committee meets quarterly to review our asset/liability policies and interest rate risk position.

We have sought to manage our interest rate risk in order to minimize the exposure of our earnings and capital to changes in interest rates. The net proceeds from the Company’s stock offering increased our capital and provided management with greater flexibility to manage our interest rate risk. In particular, management used the majority of the capital we received to increase our interest-earning assets. There have been no material changes in our interest rate risk since September 30, 2022.

Item 4. Controls and Procedures

Under the supervision and with the participation of our management, including our Principal Executive Officer and Principal Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this Report. Based upon that evaluation, the Principal Executive Officer and Principal Financial Officer concluded that, as of the end of the period covered by this Report, our disclosure controls and procedures were effective.

There were no changes made in the Company’s internal controls over financial reporting (as defined by Rule 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934) or in other factors that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting during the period covered by this Quarterly Report on Form 10-Q.

47

Part II – Other Information

Item 1. Legal Proceedings

The Company and its subsidiaries are subject to various legal actions arising in the normal course of business. In the opinion of Management, the resolution of these legal actions is not expected to have a material adverse effect on the Company’s results of operations.

The Company and its subsidiary, ESSA Bank were named as defendants, among others, in an action commenced on December 8, 2016 by one plaintiff who sought to pursue the suit as a class action on behalf of the entire class of people similarly situated. The plaintiff alleged that a bank previously acquired by the Company received unearned fees and kickbacks in the process of making loans, in violation of the Real Estate Settlement Procedures Act. In an order dated January 29, 2018, the district court granted the defendants’ motion to dismiss the case. The plaintiff appealed the court’s ruling. In an opinion and order dated April 26, 2019, the appellate court reversed the district court’s order dismissing the plaintiff’s case against the Company and remanded the case to the district court in order to continue the litigation. The litigation is now proceeding before the district court. On December 9, 2019, the court permitted an amendment to the complaint to add two new plaintiffs to the case asserting similar claims. On May 21, 2020, the court granted the plaintiffs’ motion for class certification. Fact and expert discovery is now complete, and the Company and ESSA Bank have filed motions seeking to have the case dismissed (in whole or in part) and/or the class de-certified, as well as for other relief. Plaintiffs have opposed the motions. The Company and ESSA Bank will continue to vigorously defend against plaintiffs’ allegations. To the extent that this matter could result in exposure to the Company and/or ESSA Bank, the amount or range of such exposure is not currently estimable but could be substantial.

On May 29, 2020, the Company and ESSA Bank were named as defendants in a second action commenced by three plaintiffs who also sought to pursue the action as a class action on behalf of the entire class of people similarly situated. The plaintiffs allege that a bank previously acquired by the Company received unearned fees and kickbacks from a different title company than the one involved in the previously discussed litigation in the process of making loans. The original complaint alleged violations of the Real Estate Settlement Procedures Act, the Sherman Act, and the Racketeer Influenced and Corrupt Organizations Act (“RICO”). The plaintiffs filed an Amended Complaint on September 30, 2020 that dropped the RICO claim, but they are continuing to pursue the Real Estate Settlement Procedures Act and Sherman Act claims. The defendants moved to dismiss the Sherman Act claim on October 14, 2020, and that motion was denied on April 2, 2021. On March 13, 2023 the court granted plaintiffs’ motion for class certification. The case is currently in the discovery phase. The Company and ESSA Bank intend to vigorously defend against plaintiffs’ allegations. To the extent that this matter could result in exposure to the Company and/or ESSA Bank, the amount or range of such exposure is not currently estimable but could be substantial.

Item 1A. Risk Factors

For information regarding the Company’s risk factors, see Part 1, Item 1A “Risk Factors” in the Company’s Annual Report on Form 10-K for fiscal year ended September 30, 2022, and Part II, Item 1A “Risk Factors” in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, each as filed with the Securities and Exchange Commission.

Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities

On June 6, 2022 the Company announced the authorization of a ninth repurchase program for up to 500,000 shares of its common stock. This program has no expiration date. The company made no purchases of its common stock under this program during the three month period ended June 30, 2023. There are currently 389,851 shares that may yet be repurchased under the program.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

48

Item 6. Exhibits

The following exhibits are either filed as part of this Report or are incorporated herein by reference:

3.1	Articles of Incorporation of ESSA Bancorp, Inc. (incorporated by reference to the Registration Statement on Form S-1 of ESSA Bancorp, Inc. (file no. 333-139157), originally filed with the Securities and Exchange Commission on December 7, 2006)
3.2	Bylaws of ESSA Bancorp, Inc. (incorporated by reference to the Registration Statement on Form S-1 of ESSA Bancorp, Inc. (file no. 333-139157), originally filed with the Securities and Exchange Commission on December 7, 2006)
4	Form of Common Stock Certificate of ESSA Bancorp, Inc. (incorporated by reference to the Registration Statement on Form S-1 of ESSA Bancorp, Inc. (file no. 333-139157), originally filed with the Securities and Exchange Commission on December 7, 2006)
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101	Interactive data files pursuant to Rule 405 of Regulation S-T, formatted in Inline XBRL (Extensible Business Reporting Language): (i) the Consolidated Statements of Condition; (ii) the Consolidated Statement of Income; (iii) the Consolidated Statement of Changes in Stockholder Equity; (iv) the Consolidated Statement of Cash Flows; and (v) the Notes to Consolidated Financial Statements.
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

49

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

	ESSA BANCORP, INC.
Date: August 11, 2023	/s/ Gary S. Olson
	Gary S. Olson
	President and Chief Executive Officer
Date: August 11, 2023	/s/ Allan A. Muto
	Allan A. Muto
	Executive Vice President and Chief Financial Officer

50

EX-31.1

Exhibit 31.1

Certification of Chief Executive Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Gary S. Olson, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of ESSA Bancorp, Inc., a Pennsylvania corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 11, 2023	/s/ Gary S. Olson
	Gary S. Olson
	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification of Chief Financial Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Allan A. Muto, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of ESSA Bancorp, Inc., a Pennsylvania corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 11, 2023	/s/ Allan A. Muto
	Allan A. Muto
	Executive Vice President and Chief Financial Officer

EX-32.1

Exhibit 32

Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the

Sarbanes-Oxley Act of 2002

Gary S. Olson, Chief Executive Officer and President of ESSA Bancorp, Inc., a Pennsylvania corporation (the “Company”) and Allan A. Muto, Executive Vice President and Chief Financial Officer of the Company, each certify in his capacity as an officer of the Company that he has reviewed the quarterly report on Form 10-Q for the period ended June 30, 2023 (the “Report”) and that to the best of his knowledge:

1, the Report fully complies with the requirements of Sections 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2, the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 11, 2023	/s/ Gary S. Olson
	Gary S. Olson
	President and Chief Executive Officer
Date: August 11, 2023	/s/ Allan A. Muto
	Allan A. Muto
	Executive Vice President and Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request,

XML

Document and Entity Information - shares	9 Months Ended
	Jun. 30, 2023	Aug. 07, 2023
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2023
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q3
Trading Symbol	ESSA
Entity Registrant Name	ESSA Bancorp, Inc.
Entity Central Index Key	0001382230
Current Fiscal Year End Date	--09-30
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Current Reporting Status	Yes
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		10,401,205
Entity File Number	001-33384
Entity Tax Identification Number	20-8023072
Entity Address, Address Line One	200 Palmer Street
Entity Address, City or Town	Stroudsburg
Entity Address, State or Province	PA
Entity Address, Postal Zip Code	18360
City Area Code	570
Local Phone Number	421-0531
Entity Interactive Data Current	Yes
Title of 12(b) Security	Common
Security Exchange Name	NASDAQ
Entity Incorporation, State or Country Code	PA
Document Quarterly Report	true
Document Transition Report	false

XML

Consolidated Balance Sheet (Unaudited) - USD ($) $ in Thousands	Jun. 30, 2023	Sep. 30, 2022
ASSETS
Cash and due from banks	$ 58,533	$ 19,970
Interest-bearing deposits with other institutions	36,649	7,967
Total cash and cash equivalents	95,182	27,937
Investment securities available for sale, at fair value	287,983	208,647
Investment securities held to maturity, at amortized cost	53,570	57,285
Loans receivable (net of allowance for loan losses of $18,220 and $18,528)	1,611,066	1,435,783
Regulatory stock, at cost	18,773	14,393
Premises and equipment, net	13,031	13,126
Bank-owned life insurance	38,822	38,240
Foreclosed real estate	3,546	29
Intangible assets, net	139	281
Goodwill	13,801	13,801
Deferred income taxes	6,177	5,375
Derivative and hedging assets	19,154	24,481
Other assets	23,056	22,439
TOTAL ASSETS	2,184,300	1,861,817
LIABILITIES
Deposits	1,525,477	1,380,021
Short-term borrowings	399,989	230,810
Advances by borrowers for taxes and insurance	14,996	11,803
Derivative and hedging liabilities	7,949	9,176
Other liabilities	17,205	17,670
TOTAL LIABILITIES	1,965,616	1,649,480
STOCKHOLDERS’ EQUITY
Preferred stock ($0.01 par value; 10,000,000 shares authorized, none issued)
Common stock ($0.01 par value; 40,000,000 shares authorized, 18,133,095 issued; 10,401,205 and 10,371,022 outstanding at June 30, 2023 and September 30, 2022, respectively)	181	181
Additional paid in capital	182,526	182,173
Unallocated common stock held by the Employee Stock Ownership Plan (ESOP)	(6,123)	(6,462)
Retained earnings	148,693	139,139
Treasury stock, at cost; 7,731,890 and 7,762,073 shares outstanding at June 30, 2023 and September 30, 2022, respectively	(99,410)	(99,800)
Accumulated other comprehensive loss	(7,183)	(2,894)
TOTAL STOCKHOLDERS’ EQUITY	218,684	212,337
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$ 2,184,300	$ 1,861,817

XML

Consolidated Balance Sheet (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2023	Sep. 30, 2022
Statement of Financial Position [Abstract]
Allowance for loan losses	$ 18,220	$ 18,528
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	40,000,000	40,000,000
Common stock, shares issued	18,133,095	18,133,095
Common stock, shares outstanding	10,401,205	10,371,022
Treasury stock, shares outstanding	7,731,890	7,762,073

XML

Consolidated Statement of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
INTEREST INCOME
Loans receivable, including fees	$ 19,132	$ 13,615	$ 52,721	$ 40,464
Investment securities:
Taxable	2,161	1,542	6,348	3,722
Exempt from federal income tax	11	12	32	50
Other investment income	461	330	1,337	579
Total interest income	21,765	15,499	60,438	44,815
INTEREST EXPENSE
Deposits	4,915	506	10,733	2,045
Short-term borrowings	1,606	35	3,691	35
Total interest expense	6,521	541	14,424	2,080
NET INTEREST INCOME	15,244	14,958	46,014	42,735
Provision for loan losses	150		450
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	15,094	14,958	45,564	42,735
NONINTEREST INCOME
Service fees on deposit accounts	782	783	2,343	2,301
Services charges and fees on loans	288	571	985	1,399
Loan swap fees		58	138	207
Unrealized (loss) gain on equity securities, net	(1)	4	(4)	5
Trust and investment fees	426	386	1,231	1,232
Gain on sale of loans, net	39		97	239
Earnings on bank-owned life insurance	196	187	582	567
Insurance commissions	145	145	459	433
Other	64	12	92	43
Total noninterest income	1,939	2,146	5,923	6,426
NONINTEREST EXPENSE
Compensation and employee benefits	6,622	6,456	20,154	19,095
Occupancy and equipment	1,068	1,113	3,223	3,381
Professional fees	1,223	759	3,581	2,199
Data processing	1,296	1,207	3,697	3,538
Advertising	181	254	535	627
Federal Deposit Insurance Corporation (FDIC) premiums	380	148	748	432
Foreclosed real estate	(1)	(60)	(4)	(180)
Amortization of intangible assets	47	59	142	191
Other	677	823	2,143	2,178
Total noninterest expense	11,493	10,759	34,219	31,461
Income before income taxes	5,540	6,345	17,268	17,700
Income taxes	1,144	1,306	3,321	3,456
NET INCOME	$ 4,396	$ 5,039	$ 13,947	$ 14,244
Earnings per share
Basic	$ 0.45	$ 0.51	$ 1.44	$ 1.46
Diluted	0.45	0.51	1.44	1.46
Dividends per share	$ 0.15	$ 0.15	$ 0.45	$ 0.39

XML

Consolidated Statement of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Statement of Comprehensive Income [Abstract]
Net income	$ 4,396	$ 5,039	$ 13,947	$ 14,244
Investment securities available for sale:
Unrealized holding losses	(4,007)	(5,221)	(1,331)	(11,545)
Tax effect	841	1,096	280	2,424
Net of tax amount	(3,166)	(4,125)	(1,051)	(9,121)
Pension plan:
Changes in unrealized holding (losses) gains		(442)		455
Tax effect		92		(96)
Reclassification of items recognized in net income		20		243
Tax effect		(3)		(51)
Net of tax amount		(333)		551
Derivative and hedging activities adjustments:
Changes in unrealized holding gains on derivatives included in net income	2,330	2,076	2,525	11,042
Tax effect	(489)	(436)	(529)	(2,319)
Reclassification adjustment for (gains) losses on derivatives included in net income	(2,498)	(222)	(6,625)	180
Tax effect	524	46	1,391	(38)
Net of tax amount	(133)	1,464	(3,238)	8,865
Total other comprehensive (loss) income	(3,299)	(2,994)	(4,289)	295
Comprehensive income	$ 1,097	$ 2,045	$ 9,658	$ 14,539

XML

Consolidated Statement of Changes in Stockholders' Equity (Unaudited) - USD ($) $ in Thousands	Total	Common Stock [Member]	Additional Paid-In Capital [Member]	Unallocated Common Stock Held by the ESOP [Member]	Retained Earnings [Member]	Treasury Stock [Member]	Accumulated Other Comprehensive (Loss) Income [Member]
Beginning Balance at Sep. 30, 2021	$ 201,822	$ 181	$ 181,659	$ (6,915)	$ 124,342	$ (98,127)	$ 682
Beginning Balance, Shares at Sep. 30, 2021		10,461,443
Net income	14,244				14,244
Other comprehensive income (loss)	295						295
Cash dividends declared	(3,819)				(3,819)
Stock based compensation	427		427
Allocation of ESOP stock	580		240	340
Allocation of treasury shares to incentive plan	(2)		(342)			340
Allocation of treasury shares to incentive plan, Shares		26,353
Purchase of common stock	(284)					(284)
Purchase of common stock, Shares		(17,055)
Ending Balance at Jun. 30, 2022	213,263	$ 181	181,984	(6,575)	134,767	(98,071)	977
Ending Balance, Shares at Jun. 30, 2022		10,470,741
Beginning Balance at Mar. 31, 2022	212,713	$ 181	181,816	(6,689)	131,201	(97,767)	3,971
Beginning Balance, Shares at Mar. 31, 2022		10,489,391
Net income	5,039				5,039
Other comprehensive income (loss)	(2,994)						(2,994)
Cash dividends declared	(1,473)				(1,473)
Stock based compensation	72		72
Allocation of ESOP stock	189		75	114
Allocation of treasury shares to incentive plan	1		21			(20)
Allocation of treasury shares to incentive plan, Shares		(1,595)
Purchase of common stock	(284)					(284)
Purchase of common stock, Shares		(17,055)
Ending Balance at Jun. 30, 2022	213,263	$ 181	181,984	(6,575)	134,767	(98,071)	977
Ending Balance, Shares at Jun. 30, 2022		10,470,741
Beginning Balance at Sep. 30, 2022	$ 212,337	$ 181	182,173	(6,462)	139,139	(99,800)	(2,894)
Beginning Balance, Shares at Sep. 30, 2022	10,371,022	10,371,022
Net income	$ 13,947				13,947
Other comprehensive income (loss)	(4,289)						(4,289)
Cash dividends declared	(4,393)				(4,393)
Stock based compensation	471		471
Allocation of ESOP stock	618		279	339
Allocation of treasury shares to incentive plan	(7)		(397)			390
Allocation of treasury shares to incentive plan, Shares		30,183
Ending Balance at Jun. 30, 2023	$ 218,684	$ 181	182,526	(6,123)	148,693	(99,410)	(7,183)
Ending Balance, Shares at Jun. 30, 2023	10,401,205	10,401,205
Beginning Balance at Mar. 31, 2023	$ 218,799	$ 181	182,377	(6,236)	145,762	(99,401)	(3,884)
Beginning Balance, Shares at Mar. 31, 2023		10,402,537
Net income	4,396				4,396
Other comprehensive income (loss)	(3,299)						(3,299)
Cash dividends declared	(1,465)				(1,465)
Stock based compensation	92		92
Allocation of ESOP stock	170		57	113
Allocation of treasury shares to incentive plan	(9)					(9)
Allocation of treasury shares to incentive plan, Shares		(1,332)
Ending Balance at Jun. 30, 2023	$ 218,684	$ 181	$ 182,526	$ (6,123)	$ 148,693	$ (99,410)	$ (7,183)
Ending Balance, Shares at Jun. 30, 2023	10,401,205	10,401,205

XML

Consolidated Statement of Changes in Stockholders' Equity (Unaudited) (Parenthetical) - $ / shares	3 Months Ended		9 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Cash dividends declared, per share	$ 0.15	$ 0.15	$ 0.45	$ 0.39
Retained Earnings [Member]
Cash dividends declared, per share	$ 0.15	$ 0.15	$ 0.45	$ 0.39

XML

Consolidated Statement of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
OPERATING ACTIVITIES
Net income	$ 13,947	$ 14,244
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	450
Provision for depreciation and amortization	828	803
Amortization and accretion of discounts and premiums, net	87	(457)
Unrealized loss (gain) on equity securities	4	(5)
Gain on sale of loans, net	(97)	(239)
Origination of residential real estate loans for sale	(7,565)	(12,932)
Proceeds on sale of residential real estate loans	7,662	13,552
Compensation expense on ESOP	618	580
Amortization of right-of-use asset	651	617
Stock based compensation	471	427
Increase in accrued interest receivable	(2,458)	(63)
Increase (decrease) in accrued interest payable	1,728	(4)
Earnings on bank-owned life insurance	(582)	(567)
Deferred federal income taxes	338	185
Increase in accrued pension	(234)	(327)
Gain on foreclosed real estate, net	(4)	(180)
Amortization of intangible assets	142	191
Other, net	(679)	105
Net cash provided by operating activities	15,307	15,930
Investment securities available for sale:
Proceeds from principal repayments and maturities	19,321	119,997
Purchases	(100,423)	(92,423)
Investment securities held to maturity:
Proceeds from principal repayments and maturities	3,715	3,963
Purchases		(41,272)
Increase in loans receivable, net	(178,931)	(38,318)
Redemption of regulatory stock	19,525	389
Purchase of regulatory stock	(23,905)	(9,742)
Proceeds from sale of foreclosed real estate	32	620
Purchase of premises, equipment and software, net	(832)	(425)
Net cash used for investing activities	(261,498)	(57,211)
FINANCING ACTIVITIES
Increase (decrease) in deposits, net	145,456	(264,790)
Net increase in short-term borrowings	169,179	225,000
Purchase of common stock		(284)
Increase in advances by borrowers for taxes and insurance	3,193	9,359
Dividends on common stock	(4,393)	(3,819)
Net cash provided by (used for) financing activities	313,435	(34,534)
Increase (decrease) in cash and cash equivalents	67,244	(75,815)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR	27,937	158,946
CASH AND CASH EQUIVALENTS AT END OF YEAR	95,181	83,131
Cash Paid:
Interest	13,505	2,084
Income taxes	2,850	2,425
Noncash items:
Transfers from loans to foreclosed real estate	3,546	54
Initial recognition of Operating Right-of-Use Asset	236	671
Initial recognition of Operating Right-of-Use Liability	236	671
Unrealized holding losses	$ (1,331)	$ (11,545)

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Nature of Operations and Basis of Presentation

9 Months Ended

Jun. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Nature of Operations and Basis of Presentation

1.Nature of Operations and Basis of Presentation

The consolidated financial statements include the accounts of ESSA Bancorp, Inc. (the “Company”), its wholly owned subsidiary, ESSA Bank & Trust (the “Bank”), and the Bank’s wholly owned subsidiaries, ESSACOR Inc.; Pocono Investments Company; ESSA Advisory Services, LLC; Integrated Financial Corporation; and Integrated Abstract Incorporated, a wholly owned subsidiary of Integrated Financial Corporation. The primary purpose of the Company is to act as a holding company for the Bank. The Bank’s primary business consists of the taking of deposits and granting of loans to customers generally in Monroe, Northampton, Lehigh, Delaware, Chester, Montgomery, Lackawanna, and Luzerne Counties, Pennsylvania. The Bank is a Pennsylvania chartered savings bank and is subject to regulation and supervision by the Pennsylvania Department of Banking and Securities and the Federal Deposit Insurance Corporation (the “FDIC”). The investment in the Bank on the parent company’s financial statements is carried at the parent company’s equity in the underlying net assets.

ESSACOR, Inc. is a Pennsylvania corporation that has been used to purchase properties at tax sales that represent collateral for delinquent loans of the Bank. Pocono Investment Company is a Delaware corporation formed as an investment company subsidiary to hold and manage certain investments, including certain intellectual property. ESSA Advisory Services, LLC is a Pennsylvania limited liability company wholly owned by ESSA Bank & Trust. ESSA Advisory Services, LLC is a full-service insurance benefits consulting company offering group services such as health insurance, life insurance, short-term and long-term disability, dental, vision, and 401(k) retirement planning as well as individual health products. Integrated Financial Corporation is a Pennsylvania corporation that provided investment advisory services to the general public and is currently inactive. Integrated Abstract Incorporated is a Pennsylvania corporation that provided title insurance services and is currently inactive. All significant intercompany accounts and transactions have been eliminated in consolidation.

The unaudited consolidated financial statements reflect all adjustments, which in the opinion of management, are necessary for a fair presentation of the results of the interim periods and are of a normal and recurring nature. Operating results for the nine month period ended June 30, 2023 are not necessarily indicative of the results that may be expected for the year ending September 30, 2023.

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Earnings per Share

9 Months Ended

Jun. 30, 2023

Earnings Per Share [Abstract]

Earnings per Share

2.Earnings per Share

The following table sets forth the composition of the weighted-average common shares (denominator) used in the basic and diluted earnings per share computation for the three and nine months ended June 30, 2023 and 2022.

	Three Months Ended						Nine Months Ended
	June 30,			June 30,			June 30,			June 30,
	2023			2022			2023			2022
Weighted-average common shares outstanding		18,133,095			18,133,095			18,133,095			18,133,095
Average treasury stock shares		(7,730,956	)		(7,647,258	)		(7,732,112	)		(7,644,930	)
Average unearned ESOP shares		(626,229	)		(650,628	)		(637,587	)		(661,986	)
Average unearned non-vested shares		(41,202	)		(46,965	)		(46,803	)		(50,071	)
Weighted average common shares and common stock    equivalents used to calculate basic earnings per share		9,734,708			9,788,244			9,716,593			9,776,108
Additional common stock equivalents (nonvested stock)    used to calculate diluted earnings per share		—			1,965			—			2,050
Weighted average common shares and common stock    equivalents used to calculate diluted earnings per share		9,734,708			9,790,209			9,716,593			9,778,158

At June 30, 2023 there were 2,947 shares of nonvested stock outstanding at an average weighted price of $19.04 per share that were not included in the computation of diluted earnings per share because to do so would have been antidilutive. At June 30, 2022 there were 25,148 shares of nonvested stock outstanding at an average weighted price of $16.52 per share that were not included in the computation of diluted earnings per share because to do so would have been anti-dilutive.

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Use of Estimates in the Preparation of Financial Statements

9 Months Ended

Jun. 30, 2023

Text Block [Abstract]

Use of Estimates in the Preparation of Financial Statements

3.Use of Estimates in the Preparation of Financial Statements

The accounting principles followed by the Company and its subsidiaries and the methods of applying these principles conform to U.S. generally accepted accounting principles (“GAAP”) and to general practice within the banking industry. In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the Consolidated Balance Sheet date and related revenues and expenses for the period. Actual results could differ from those estimates.

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Accounting Pronouncements

9 Months Ended

Jun. 30, 2023

Accounting Changes and Error Corrections [Abstract]

Accounting Pronouncements

4.Accounting Pronouncements

Recent Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments, which changes the impairment model for most financial assets. This Update is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The underlying premise of the Update is that financial assets measured at amortized cost should be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The allowance for credit losses should reflect management’s current estimate of credit losses that are expected to occur over the remaining life of a financial asset. The income statement will be effected for the measurement of credit losses for newly recognized financial assets, as well as the expected increases or decreases of expected credit losses that have taken place during the period. ASU 2016-13 is effective for annual and interim periods beginning after December 15, 2019, and early adoption is permitted for annual and interim periods beginning after December 15, 2018. With certain exceptions, transition to the new requirements will be through a cumulative effect adjustment to opening retained earnings as of the beginning of the first reporting period in which the guidance is adopted. In November 2019, the FASB issued ASU 2019-10, Financial Instruments ‒ Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842). This Update defers the effective date of ASU 2016-13 for SEC filers that are eligible to be smaller reporting companies, non-SEC filers, and all other companies to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. We expect to recognize a one-time cumulative effect adjustment to the allowance for loan losses as of the beginning of the first reporting period in which the new standard is effective, but cannot yet determine the magnitude of any such one-time adjustment or the overall impact of the new guidance on the consolidated financial statements.

In May 2019, the FASB issued ASU 2019-05, Financial Instruments – Credit Losses (Topic 326), which allows entities to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost upon adoption of the new credit losses standard. To be eligible for the transition election, the existing financial asset must otherwise be both within the scope of the new credit losses standard and eligible for applying the fair value option in ASC 825-10.3. The election must be applied on an instrument-by-instrument basis and is not available for either available-for-sale or held-to-maturity debt securities. For entities that elect the fair value option, the difference between the carrying amount and the fair value of the financial asset would be recognized through a cumulative-effect adjustment to opening retained earnings as of the date an entity adopted ASU 2016-13. Changes in fair value of that financial asset would subsequently be reported in current earnings. For entities that have not yet adopted the credit losses standard, the ASU is effective when they implement the credit losses standard. For entities that already have adopted the credit losses standard, the ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company qualifies as a smaller reporting company and does not expect to early adopt ASU 2016-13.

In November 2019, the FASB issued ASU 2019-11, Codification Improvements to Topic 326, Financial Instruments – Credit Losses, to clarify its new credit impairment guidance in ASC 326, based on implementation issues raised by stakeholders. This Update clarified, among other things, that expected recoveries are to be included in the allowance for credit losses for these financial assets; an accounting policy election can be made to adjust the effective interest rate for existing troubled debt restructurings based on the prepayment assumptions instead of the prepayment assumptions applicable immediately prior to the restructuring event; and extends the practical expedient to exclude accrued interest receivable from all additional relevant disclosures involving amortized cost basis. For entities that have not yet adopted ASU 2016-13 as of November 26, 2019, the effective dates for ASU 2019-11 are the same as the effective dates and transition requirements in ASU 2016-13. For entities that have adopted ASU 2016-13, ASU 2019-11 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company qualifies as a smaller reporting company and does not expect to early adopt these ASUs.

In March 2020, the FASB issued ASU 2020-3, Codification Improvements to Financial Instruments. This ASU was issued to improve and clarify various financial instruments topics, including the current expected credit losses (CECL) standard issued in 2016. The ASU includes seven issues that describe the areas of improvement and the related amendments to GAAP; they are intended to make the standards easier to understand and apply and to eliminate inconsistencies, and they are narrow in scope and are not expected to significantly change practice for most entities. Among its provisions, the ASU clarifies that all entities, other than public business entities that elected the fair value option, are required to provide certain fair value disclosures under ASC 825, Financial Instruments, in both interim and annual financial statements. It also clarifies that the contractual term of a net investment in a lease under Topic 842 should be the contractual term used to measure expected credit losses under Topic 326. Amendments related to ASU 2019-04 are

effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is not permitted before an entity’s adoption of ASU 2016-01. Amendments related to ASU 2016-13 for entities that have not yet adopted that guidance are effective upon adoption of the amendments in ASU 2016-13. Early adoption is not permitted before an entity’s adoption of ASU 2016-13. Amendments related to ASU 2016-13 for entities that have adopted that guidance are effective for fiscal years beginning after December 15, 2019, including interim periods within those years. Other amendments are effective upon issuance of this ASU. This Update is not expected to have a significant impact on the Company’s financial statements.

In March 2022, the FASB issued ASU 2022-01, Derivatives and Hedging (ASC 815): Fair Value Hedging - Portfolio Layer Method. ASC 815 currently permits only prepayable financial assets and one or more beneficial interests secured by a portfolio of prepayable financial instruments to be included in a last-of-layer closed portfolio. The amendments in this Update allow non-prepayable financial assets to also be included in a closed portfolio hedged using the portfolio layer method. That expanded scope permits an entity to apply the same portfolio hedging method to both prepayable and non-prepayable financial assets, thereby allowing consistent accounting for similar hedges. The guidance is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position or results of operations.

In March 2022, the FASB issued ASU 2022-02, Financial Instruments - Credit Losses (ASC 326): Troubled Debt Restructurings (TDRs) and Vintage Disclosures. The guidance amends ASC 326 to eliminate the accounting guidance for TDRs by creditors, while enhancing disclosure requirements for certain loan refinancing and restructuring activities by creditors when a borrower is experiencing financial difficulty. Specifically, rather than applying TDR recognition and measurement guidance, creditors will determine whether a modification results in a new loan or continuation of existing loan. These amendments are intended to enhance existing disclosure requirements and introduce new requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty. Additionally, the amendments to ASC 326 require that an entity disclose current-period gross writeoffs by year of origination within the vintage disclosures, which requires that an entity disclose the amortized cost basis of financing receivables by credit quality indicator and class of financing receivable by year of origination. The guidance is only for entities that have adopted the amendments in Update 2016-13 for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. Early adoption using prospective application, including adoption in an interim period where the guidance should be applied as of the beginning of the fiscal year. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position or results of operations.

In March 2023, the FASB issued ASU No. 2023-02, "Investments—Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method (a consensus of the Emerging Issues Task Force)". The ASU allows entities to elect the proportional amortization method, on a tax-credit-program-by-tax-credit-program basis, for all equity investments in tax credit programs meeting the eligibility criteria in Accounting Standards Codification (ASC) 323-740-25-1. While the ASU does not significantly alter the existing eligibility criteria, it does provide clarifications to address existing interpretive issues. It also prescribes specific information reporting entities must disclose about tax credit investments each period. This ASU is effective for reporting periods beginning after December 15, 2023, for public business entities, or January 1, 2024 for the Company. The Company does not expect the adoption of this ASU to have a material impact on the Company's financial statements.

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Investment Securities

9 Months Ended

Jun. 30, 2023

Investments, Debt and Equity Securities [Abstract]

Investment Securities

5.Investment Securities

The amortized cost, gross unrealized gains and losses, and fair value of investment securities are summarized as follows (in thousands):

	June 30, 2023
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available for Sale
Fannie Mae	$	55,614	$	—	$	(4,680	)	$	50,934
Freddie Mac	$	49,366		—	$	(3,801	)		45,565
Governmental National Mortgage Association		4,892		—		(301	)		4,591
Total mortgage-backed securities		109,872		—		(8,782	)		101,090
Obligations of states and political subdivisions		10,800		—		(734	)		10,066
U.S. government treasury securities		98,510		17		(1	)		98,526
U.S. government agency securities		4,500		—		(133	)		4,367
Corporate obligations		75,786		—		(8,618	)		67,168
Other debt securities		7,417		—		(651	)		6,766
Total	$	306,885	$	17	$	(18,919	)	$	287,983
Held to Maturity
Fannie Mae	$	28,450	$	-	$	(4,405	)	$	24,045
Freddie Mac		22,677		-		(3,625	)		19,052
Total mortgage-backed securities		51,127		-		(8,030	)		43,097
U.S. government agency securities		2,443		-		(438	)		2,005
Total	$	53,570	$	-	$	(8,468	)	$	45,102

	September 30, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available for sale
Fannie Mae	$	61,118	$	1	$	(5,432	)	$	55,687
Freddie Mac		53,842		-		(4,532	)		49,310
Governmental National Mortgage Association securities		5,411		-		(248	)		5,163
Total mortgage-backed securities		120,371		1		(10,212	)		110,160
Obligations of states and political subdivisions		10,815		-		(895	)		9,920
U.S. government agency securities		9,530		-		(200	)		9,330
Corporate obligations		76,692		14		(5,587	)		71,119
Other debt securities		8,810		2		(694	)		8,118
Total	$	226,218	$	17	$	(17,588	)	$	208,647
Held to maturity
Fannie Mae	$	30,659	$	-	$	(5,127	)	$	25,532
Freddie Mac		24,187		-		(4,142	)		20,045
Total		54,846		-		(9,269	)		45,577
U.S. government agency securities		2,439		-		(470	)		1,969
Total	$	57,285	$	-	$	(9,739	)	$	47,546

The following is a summary of unrealized and realized gains and losses recognized in net income on equity securities during the three and nine months ended June 30, 2023 and 2022.

(in thousands)	For the Three Months Ended June 30, 2023			For the Three Months Ended June 30, 2022
Net (losses) gains recognized during the period on equity securities	$	(1	)	$	4
Less: Net (losses) gains recognized during the period on equity securities sold    during the period		-			-
Unrealized (losses) gains recognized during the reporting period on equity    securities still held at the reporting date	$	(1	)	$	4
(in thousands)	For the Nine Months Ended June 30, 2023			For the Nine Months Ended June 30, 2022
Net (losses) gains recognized during the period on equity securities	$	(4	)	$	5
Less: Net (losses) gains recognized during the period on equity securities sold    during the period		-			-
Unrealized (losses) gains recognized during the reporting period on equity    securities still held at the reporting date	$	(4	)	$	5

The amortized cost and fair value of debt securities at June 30, 2023, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties (in thousands):

	Available For Sale				Held to Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	101,884	$	101,877	$	—	$	—
Due after one year through five years		36,811		34,915		—		—
Due after five years through ten years		72,505		63,609		7,267		6,297
Due after ten years		95,685		87,582		46,303		38,805
Total	$	306,885	$	287,983	$	53,570	$	45,102

For the three and nine months ended June 30, 2023 and 2022, the Company realized no gross gains or gross losses on proceeds from the sale on investment securities.

The following tables show the Company’s gross unrealized losses and fair value, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position (dollars in thousands):

	June 30, 2023
	Number of Securities		Less than Twelve Months					Twelve Months or Greater					Total
			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Fannie Mae		77	$	5,600	$	(116	)	$	69,380	$	(8,969	)	$	74,980	$	(9,085	)
Freddie Mac		62		15,125		(708	)		49,287		(6,718	)		64,412		(7,426	)
Governmental National Mortgage    Association		12		918		(25	)		3,674		(276	)		4,592		(301	)
U.S. government treasury securities		1		24,378		(1	)		-		-			24,378		(1	)
U.S. government agency securities		3		-		-			6,372		(571	)		6,372		(571	)
Obligations of states and political    subdivisions		12		1,474		(27	)		8,593		(707	)		10,067		(734	)
Corporate obligations		89		10,329		(682	)		56,338		(7,936	)		66,667		(8,618	)
Other debt securities		17		-		-			6,361		(651	)		6,361		(651	)
Total		273	$	57,824	$	(1,559	)	$	200,005	$	(25,828	)	$	257,829	$	(27,387	)

	September 30, 2022
			Less than Twelve Months					Twelve Months or Greater					Total
	Number of Securities		Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Fannie Mae		74	$	67,101	$	(8,344	)	$	13,759	$	(2,215	)	$	80,860	$	(10,559	)
Freddie Mac		63		59,954		(6,868	)		9,401		(1,806	)		69,355		(8,674	)
Governmental National Mortgage    Association securities		13		2,924		(194	)		2,182		(54	)		5,106		(248	)
Obligations of states and political    subdivisions		12		9,920		(895	)		-		-			9,920		(895	)
U.S. government agency securities		4		11,299		(670	)		-		-			11,299		(670	)
Corporate obligations		88		49,333		(3,394	)		19,773		(2,193	)		69,106		(5,587	)
Other debt securities		17		5,764		(610	)		1,759		(84	)		7,523		(694	)
Total		271	$	206,295	$	(20,975	)	$	46,874	$	(6,352	)	$	253,169	$	(27,327	)

The Company’s investment securities portfolio contains unrealized losses on securities, including mortgage-related instruments issued or backed by the full faith and credit of the United States government, or generally viewed as having the implied guarantee of the U.S. government, other mortgage backed securities, debt obligations of a U.S. state or political subdivision, U.S. government agency securities, corporate obligations, other debt securities and equity securities.

The Company reviews its position quarterly and has asserted that at June 30, 2023, the declines outlined in the above table represent temporary declines and the Company would not be required to sell the above securities before their anticipated recovery in market value.

The Company has concluded that any impairment of its investment securities portfolio is not other than temporary but is the result of interest rate changes that are not expected to result in the non-collection of principal and interest during the period.

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Loans Receivable, Net and Allowance for Loan Losses

9 Months Ended

Jun. 30, 2023

Receivables [Abstract]

Loans Receivable, Net and Allowance for Loan Losses

6.Loans Receivable, Net and Allowance for Loan Losses

Loans receivable consist of the following (in thousands):

	June 30, 2023		September 30, 2022
Real estate loans:
Residential	$	693,711	$	623,375
Construction		26,761		25,024
Commercial		764,849		678,841
Commercial		47,181		38,158
Obligations of states and political subdivisions		47,904		40,416
Home equity loans and lines of credit		46,302		43,170
Auto loans		926		3,611
Other		1,652		1,716
		1,629,286		1,454,311
Less allowance for loan losses		18,220		18,528
Net loans	$	1,611,066	$	1,435,783

The following tables show the amount of loans in each category that were individually and collectively evaluated for impairment at the dates indicated (in thousands):

	Total Loans		Individually Evaluated for Impairment		Collectively Evaluated for Impairment
June 30, 2023
Real estate loans:
Residential	$	693,711	$	1,400	$	692,311
Construction		26,761		-		26,761
Commercial		764,849		7,805		757,044
Commercial		47,181		670		46,511
Obligations of states and political subdivisions		47,904		-		47,904
Home equity loans and lines of credit		46,302		30		46,272
Auto loans		926		8		918
Other		1,652		4		1,648
Total	$	1,629,286	$	9,917	$	1,619,369

	Total Loans		Individually Evaluated for Impairment		Collectively Evaluated for Impairment
September 30, 2022
Real estate loans:
Residential	$	623,375	$	1,342	$	622,033
Construction		25,024		-		25,024
Commercial		678,841		12,165		666,676
Commercial		38,158		937		37,221
Obligations of states and political subdivisions		40,416		-		40,416
Home equity loans and lines of credit		43,170		36		43,134
Auto loans		3,611		16		3,595
Other		1,716		6		1,710
Total	$	1,454,311	$	14,502	$	1,439,809

The Company maintains a loan review system that allows for a periodic review of our loan portfolio and the early identification of potential impaired loans. Such system takes into consideration, among other things, delinquency status, size of loans, type and market value of collateral and financial condition of the borrowers. Specific loan loss allowances are established for identified losses based on a review of such information. A loan evaluated for impairment is considered to be impaired when, based on current information and events, it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement. All loans identified as impaired are evaluated independently. The Company does not aggregate such loans for evaluation purposes. Impairment is measured on a loan-by-loan basis for commercial and construction loans by the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral-dependent.

Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, the Company does not separately identify individual consumer and residential mortgage loans for impairment disclosures, unless such loans are part of a larger relationship that is impaired or are classified as a troubled debt restructuring (“TDR”).

A loan is considered to be a TDR loan when the Company grants a concession to the borrower that it would not otherwise consider because of the borrower’s financial condition. Such concessions include the reduction of interest rates, forgiveness of principal or interest, or other modifications of interest rates that are less than the current market rate for new obligations with similar risk. TDR loans that are in compliance with their modified terms and that yield a market rate at the time of modification may be removed from TDR status after one year of performance.

The following tables include the recorded investment and unpaid principal balances for impaired loans with the associated allowance amount at the dates indicated, if applicable (in thousands):

	Recorded Investment		Unpaid Principal Balance		Associated Allowance
June 30, 2023
With no specific allowance recorded:
Real estate loans
Residential	$	1,300	$	1,915	$	-
Construction		-		-		-
Commercial		7,805		8,683		-
Commercial		670		967		-
Obligations of states and political subdivisions		-		-		-
Home equity loans and lines of credit		30		64		-
Auto loans		8		8		-
Other		4		18		-
Total		9,817		11,655		-
With an allowance recorded:
Real estate loans
Residential		100		104		8
Construction		-		-		-
Commercial		-		-		-
Commercial		-		-		-
Obligations of states and political subdivisions		-		-		-
Home equity loans and lines of credit		-		-		-
Auto loans		-		-		-
Other		-		-		-
Total		100		104		8
Total:
Real estate loans
Residential		1,400		2,019		8
Construction		-		-		-
Commercial		7,805		8,683		-
Commercial		670		967		-
Obligations of states and political subdivisions		-		-		-
Home equity loans and lines of credit		30		64		-
Auto loans		8		8		-
Other		4		18		-
Total Impaired Loans	$	9,917	$	11,759	$	8

	Recorded Investment		Unpaid Principal Balance		Associated Allowance
September 30, 2022
With no specific allowance recorded:
Real Estate Loans
Residential	$	1,239	$	2,029	$	-
Construction		-		-		-
Commercial		8,384		8,987		-
Commercial		865		905		-
Obligations of states and political subdivisions		-		-		-
Home equity loans and lines of credit		36		68		-
Auto Loans		16		28		-
Other		6		19		-
Total		10,546		12,036		-
With an allowance recorded:
Real Estate Loans
Residential		103		108		12
Construction		-		-		-
Commercial		3,781		3,928		301
Commercial		72		83		38
Obligations of states and political subdivisions		-		-		-
Home equity loans and lines of credit		-		-		-
Auto Loans		-		-		-
Other		-		-		-
Total		3,956		4,119		351
Total:
Real Estate Loans
Residential		1,342		2,137		12
Construction		-		-		-
Commercial		12,165		12,915		301
Commercial		937		988		38
Obligations of states and political subdivisions		-		-		-
Home equity loans and lines of credit		36		68		-
Auto Loans		16		28		-
Other		6		19		-
Total Impaired Loans	$	14,502	$	16,155	$	351

The following tables represents the average recorded investments in the impaired loans and the related amount of interest recognized during the time within the period that the impaired loans were impaired (in thousands):

	For the Three Months Ended June 30,
	2023		2022		2023		2022
	Average Recorded Investment		Average Recorded Investment		Interest Income Recognized		Interest Income Recognized
With no specific allowance recorded:
Real estate loans
Residential	$	898	$	1,600	$	-	$	2
Construction		-		-		-		-
Commercial		7,618		1,722		1		-
Commercial		454		78		-		-
Obligations of states and political subdivisions		-		-		-		-
Home equity loans and lines of credit		31		285		-		-
Auto loans		2		11		-		-
Other		4		-		-		-
Total		9,007		3,696		1		2
With an allowance recorded:
Real estate loans
Residential		101		105		-		-
Construction		-		-		-		-
Commercial		523		1,270		-		-
Commercial		300		80		-		-
Obligations of states and political subdivisions		-		-		-		-
Home equity loans and lines of credit		-		-		-		-
Auto loans		-		-		-		-
Other		-		-		-		-
Total		924		1,455		-		-
Total:
Real estate loans
Residential		999		1,705		-		2
Construction		-		-		-		-
Commercial		8,141		2,992		1		-
Commercial		754		158		-
Obligations of states and political subdivisions		-		-		-		-
Home equity loans and lines of credit		31		285		-		-
Auto loans		2		11		-		-
Other		4		-		-		-
Total Impaired Loans	$	9,931	$	5,151	$	1	$	2

	For the Nine Months Ended June 30,
	2023		2022		2023		2022
	Average Recorded Investment		Average Recorded Investment		Interest Income Recognized		Interest Income Recognized
With no specific allowance recorded:
Real estate loans
Residential	$	1,090	$	1,935	$	2	$	7
Construction		-		-		-		-
Commercial		8,497		6,135		2
Commercial		507		88		-		-
Obligations of states and political subdivisions		-		-		-		-
Home equity loans and lines of credit		33		295		-		-
Auto loans		4		21		-		-
Other		5		-		-		-
Total		10,136		8,474		4		7
With an allowance recorded:
Real estate loans
Residential		102		116		-		-
Construction		-		-		-		-
Commercial		1,828		431		-		-
Commercial		361		681		-		-
Obligations of states and political subdivisions		-		-		-		-
Home equity loans and lines of credit		-		-		-		-
Auto loans		-		4		-		-
Other		-		-		-		-
Total		2,291		1,232		-		—
Total:
Real estate loans
Residential		1,192		2,051		2		7
Construction		-		-		-		-
Commercial		10,325		6,566		2		-
Commercial		868		769		-		-
Obligations of states and political subdivisions		-		-		-		-
Home equity loans and lines of credit		33		295		-		-
Auto loans		4		25		-		-
Other		5		-		-		-
Total Impaired Loans	$	12,427	$	9,706	$	4	$	7

The Company uses a ten-point internal risk-rating system to monitor the credit quality of the overall loan portfolio. The first six categories are considered not criticized and are aggregated as Pass-rated. The criticized rating categories utilized by management generally follow bank regulatory definitions. The Special Mention category includes assets that are fundamentally sound yet exhibit potentially unacceptable credit risk or deteriorating trends or characteristics which, if left uncorrected, may result in deterioration of the repayment prospects for the asset or in the Company’s credit position at some future date. Loans in the Substandard category have well-defined weaknesses that jeopardize the liquidation of the debt and have a distinct possibility that some loss will be sustained if the weaknesses are not corrected. All loans that are 90 or more days past due are considered Substandard. Loans in the Doubtful category have all the weaknesses inherent in loans classified as Substandard with the added characteristic that their weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. Loans in the Loss category are considered uncollectible and of little value that their continuance as bankable assets is not warranted. Certain residential real estate loans, construction loans, home equity loans and lines of credit, auto loans and other consumer loans are underwritten and structured using standardized criteria and characteristics, primarily payment performance, and are normally risk rated and monitored collectively on a monthly basis. These are typically loans to individuals in the consumer categories and are delineated as either performing or non-performing.

To help ensure that risk ratings are accurate and reflect the present and future capacity of borrowers to repay a loan as agreed, the Bank has a structured loan rating process with several layers of internal and external oversight. Generally, consumer and residential mortgage loans are included in the Pass categories unless a specific action, such as bankruptcy, repossession, or death occurs to raise awareness of a possible credit event. The Bank’s commercial loan officers are responsible for the timely and accurate risk rating recommendation for the loans in their portfolios at origination and on an ongoing basis. The Bank’s commercial loan officers perform an annual review of all commercial relationships $750,000 or greater. Confirmation of the appropriate risk grade is included in the review on an ongoing basis. The Bank engages an external consultant to conduct loan reviews on at least a semi-annual basis. Generally, the external consultant reviews commercial relationships greater than $1,000,000 and/or all criticized relationships. Detailed reviews, including plans for resolution, are performed on loans classified as Substandard on a quarterly basis. Loans in the Special Mention and Substandard categories that are collectively evaluated for impairment are given separate consideration in the determination of the allowance.

The following tables present the classes of the loan portfolio summarized by the aggregate Pass and the criticized categories of Special Mention, Substandard, and Doubtful or Loss within the internal risk rating system at June 30, 2023 and September 30, 2022(in thousands):

	Pass		Special Mention		Substandard		Doubtful or Loss		Total
June 30, 2023
Commercial real estate loans	$	751,109	$	3,241	$	10,499	$	-	$	764,849
Commercial		45,192		15		1,974		-		47,181
Obligations of states and political subdivisions		47,904		-		-		-		47,904
Total	$	844,205	$	3,256	$	12,473	$	-	$	859,934

	Pass		Special Mention		Substandard		Doubtful or Loss		Total
September 30, 2022
Commercial real estate loans	$	659,104	$	6,060	$	13,677	$	-	$	678,841
Commercial		35,322		1,690		1,146		-		38,158
Obligations of states and political subdivisions		40,416		-		-		-		40,416
Total	$	734,842	$	7,750	$	14,823	$	-	$	757,415

All other loans are underwritten and structured using standardized criteria and characteristics, primarily payment performance, and are normally risk rated and monitored collectively on a monthly basis. These are typically loans to individuals in the consumer categories and are delineated as either performing or non-performing. The following tables present the risk ratings in the consumer categories of performing and non-performing loans at June 30, 2023 and September 30, 2022 (in thousands):

	Performing		Non- performing		Total
June 30, 2023
Real estate loans:
Residential	$	691,269	$	2,442	$	693,711
Construction		26,761		-		26,761
Home equity loans and lines of credit		46,251		51		46,302
Auto loans		916		10		926
Other		1,619		33		1,652
Total	$	766,816	$	2,536	$	769,352

	Performing		Non- performing		Total
September 30, 2022
Real estate loans:
Residential	$	621,781	$	1,594	$	623,375
Construction		25,024		-		25,024
Home equity loans and lines of credit		42,832		338		43,170
Auto loans		3,590		21		3,611
Other		1,710		6		1,716
Total	$	694,937	$	1,959	$	696,896

The Company further monitors the performance and credit quality of the loan portfolio by analyzing the age of the portfolio as determined by the length of time a recorded payment is past due. The following tables present the classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans as of June 30, 2023 and September 30, 2022 (in thousands):

			31-60 Days		61-89 Days		90 + Days		Total		Total
	Current		Past Due		Past Due		Past Due		Past Due		Loans
June 30, 2023
Real estate loans:
Residential	$	690,450	$	1,134	$	145	$	1,982	$	3,261	$	693,711
Construction		26,761		-		-		-		-		26,761
Commercial		762,960		222		847		820		1,889		764,849
Commercial		46,909		-		15		257		272		47,181
Obligations of states and political subdivisions		47,904		-		-		-		-		47,904
Home equity loans and lines of credit		46,251		-		30		21		51		46,302
Auto loans		904		22		-		-		22		926
Other		1,622		-		-		30		30		1,652
Total	$	1,623,761	$	1,378	$	1,037	$	3,110	$	5,525	$	1,629,286

			31-60 Days		61-89 Days		90 + Days		Total		Total
	Current		Past Due		Past Due		Past Due		Past Due		Loans
September 30, 2022
Real estate loans:
Residential	$	621,270	$	598	$	367	$	1,140	$	2,105	$	623,375
Construction		25,024		-		-		-		-		25,024
Commercial		672,875		5,719		-		247		5,966		678,841
Commercial		37,160		539		440		19		998		38,158
Obligations of states and political subdivisions		40,416		-		-		-		-		40,416
Home equity loans and lines of credit		42,842		121		144		63		328		43,170
Auto loans		3,462		134		2		13		149		3,611
Other		1,685		-		31		-		31		1,716
Total	$	1,444,734	$	7,111	$	984	$	1,482	$	9,577	$	1,454,311

Non-Accrual Loans	June 30, 2023		September 30, 2022
Real estate loans:
Residential	$	2,442	$	1,594
Construction		-		-
Commercial		7,946		12,165
Commercial		673		958
Obligations of states and    political subdivisions		-		-
Home equity loans and lines of    credit		51		338
Auto loans		10		21
Other		33		6
Total	$	11,155	$	15,082

There are no loans greater than 90 days past due that are accruing interest.

The allowance for loan losses is maintained at a level necessary to absorb loan losses that are both probable and reasonably estimable. Management, in determining the allowance for loan losses, considers the losses inherent in its loan portfolio and changes in the nature and volume of loan activities, along with the general economic and real estate market conditions. The allowance for loan losses consists of two elements: (1) an allocated allowance, which comprises allowances established on specific loans and class allowances based on historical loss experience and current trends, and (2) an unallocated allowance based on general economic conditions and other risk factors in our markets and portfolios. We maintain a loan review system, which allows for a periodic review of our loan portfolio and the early identification of potential impaired loans. Such system takes into consideration, among other things, delinquency status, size of loans, type and market value of collateral and financial condition of the borrowers. General loan loss allowances are based upon a combination of factors including, but not limited to, actual loan loss experience, composition of the loan portfolio, current economic conditions, management’s judgment and losses which are probable and reasonably estimable. The allowance is increased through provisions charged against current earnings and recoveries of previously charged-off loans. Loans that are determined to be uncollectible are charged against the allowance. While management uses available information to recognize probable and reasonably estimable loan losses, future loss provisions may be necessary, based on changing economic conditions. Payments received on impaired loans generally are either applied against principal or reported as interest income, according to management’s judgment as to the collectability of principal. The allowance for loan losses as of June 30, 2023 was maintained at a

level that represents management’s best estimate of losses inherent in the loan portfolio, and such losses were both probable and reasonably estimable.

In addition, the FDIC and the Pennsylvania Department of Banking and Securities, as an integral part of their examination process, periodically review our allowance for loan losses. The banking regulators may require that we recognize additions to the allowance based on its analysis and review of information available to it at the time of its examination.

Management reviews the loan portfolio on a quarterly basis using a defined, consistently applied process in order to make appropriate and timely adjustments to the allowance for loan losses (“ALL”). When information confirms all or part of specific loans to be uncollectible, these amounts are promptly charged off against the ALL.

The following table summarizes changes in the primary segments of the ALL during the three and nine months ended June 30, 2023 and 2022 (in thousands):

																Home
													Obligations of			Equity
													States and			Loans and
	Real Estate Loans									Commercial			Political			Lines of			Auto			Other
	Residential			Construction			Commercial			Loans			Subdivisions			Credit			Loans			Loans			Unallocated			Total
ALL balance at March 31, 2023	$	4,870		$	328		$	11,016		$	1,185		$	243		$	336		$	8		$	22		$	307		$	18,315
Charge-offs		-			-			(6	)		(269	)		-			-			-			-			-			(275	)
Recoveries		-			-			-			-			-			14			16			-			-			30
Provision		(157	)		(29	)		205			53			(1	)		(18	)		(19	)		(4	)		120			150
ALL balance at June 30, 2023	$	4,713		$	299		$	11,215		$	969		$	242		$	332		$	5		$	18		$	427		$	18,220
ALL balance at March 31, 2022	$	4,403		$	245		$	10,550		$	823		$	246		$	310		$	89		$	20		$	1,522		$	18,208
Charge-offs		(9	)		-			-			-			-			(6	)		(16	)		(11	)		-			(42	)
Recoveries		130			-			15			-			-			1			22			-			-			168
Provision		77			14			450			(30	)		37			36			(45	)		11			(550	)		-
ALL balance at June 30, 2022	$	4,601		$	259		$	11,015		$	793		$	283		$	341		$	50		$	20		$	972		$	18,334
ALL balance at September 30, 2022	$	5,122		$	319		$	10,754		$	698		$	283		$	361		$	22		$	22		$	947		$	18,528
Charge-offs		-			-			(599	)		(269	)		-			-			(27	)		-			-			(895	)
Recoveries		2			-			1			-			-			65			69			-			-			137
Provision		(411	)		(20	)		1,059			540			(41	)		(94	)		(59	)		(4	)		(520	)		450
ALL balance at June 30, 2023	$	4,713		$	299		$	11,215		$	969		$	242		$	332		$	5		$	18		$	427		$	18,220
ALL balance at September 30, 2021	$	4,114		$	187		$	10,470		$	1,041		$	393		$	318		$	232		$	21		$	1,337		$	18,113
Charge-offs		(19	)		-			(19	)		-			-			(6	)		(37	)		(11	)					(92	)
Recoveries		202			-			22			-			-			4			85			-						313
Provision		304			72			542			(248	)		(110	)		25			(230	)		10			(365	)		-
ALL balance at June 30, 2022	$	4,601		$	259		$	11,015		$	793		$	283		$	341		$	50		$	20		$	972		$	18,334

During the three months ended June 30, 2023, the Company recorded provision expense for the commercial real estate loans and commercial loans segments due to increased loan balances, changes in the loan mix within the pool, and/or charge-off activity in those segments. Credit provisions were recorded for loan loss for the residential real estate loans, construction real estate loans, obligations of states and political subdivisions, home equity loans and lines of credit, auto loans and other loans due to either decreased loan balances, improved asset quality, changes in the loan mix within the pool, and/or decreased charge-off activity in those segments.

During the three months ended June 30, 2022, the Company recorded provision expense for the residential real estate loans, construction real estate loans, commercial real estate loans, obligations of states and political subdivisions, home equity loans and lines of credit and other loan segments due to increased loan balances, changes in the loan mix within the pool, and/or charge-off activity in those segments. Credit provisions were recorded for loan loss for the commercial loans and auto loans due to either decreased loan balances, improved asset quality, changes in the loan mix within the pool, and/or decreased charge-off activity in those segments.

During the nine months ended June 30, 2023, the Company recorded provision expense for the commercial real estate loans and commercial loans segments, due to increased loan balances, changes in the loan mix within the pool, and/or charge-off activity in those segments. Credit provisions were recorded for loan loss for the residential real estate loans, construction real estate loans, obligations of states and political subdivisions, home equity loans and lines of credit and auto loans segments due to either decreased loan balances, changes in the loan mix within the pool, and/or decreased charge-off activity in those segments.

During the nine months ended June 30, 2022, the Company recorded provision expense for the residential real estate loans, construction real estate loans, commercial real estate loans, home equity loans and lines of credit and other loans segments due to increased loan balances, changes in the loan mix within the pool, and/or charge-off activity in those segments. Credit provisions were recorded for loan loss for the commercial loans, obligations of states and political subdivisions, and auto loans segments due to either decreased loan balances, improved asset quality, changes in the loan mix within the pool, and/or decreased charge-off activity in those segments.

The following table summarizes the primary segments of the ALL, segregated into two categories, the amount required for loans individually evaluated for impairment and the amount required for loans collectively evaluated for impairment as of June 30, 2023 and September 30, 2022 (in thousands):

											Home
									Obligations of		Equity
									States and		Loans and
	Real Estate Loans						Commercial		Political		Lines of				Other
	Residential		Construction		Commercial		Loans		Subdivisions		Credit		Auto Loans		Loans		Unallocated		Total
Individually    evaluated for    impairment	$	8	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	8
Collectively    evaluated for    impairment		4,705		299		11,215		969		242		332		5		18		427		18,212
ALL balance at June 30, 2023	$	4,713	$	299	$	11,215	$	969	$	242	$	332	$	5	$	18	$	427	$	18,220
Individually    evaluated for    impairment	$	12	$	-	$	301	$	38	$	-	$	-	$	-	$	-	$	-	$	351
Collectively    evaluated for    impairment		5,110		319		10,453		660		283		361		22		22		947		18,177
ALL balance at September 30, 2022	$	5,122	$	319	$	10,754	$	698	$	283	$	361	$	22	$	22	$	947	$	18,528

The allowance for loan losses is based on estimates, and actual losses will vary from current estimates. Management believes that the granularity of the homogeneous pools and the related historical loss ratios and other qualitative factors, as well as the consistency in the application of assumptions, result in an ALL that is representative of the risk found in the components of the portfolio at any given date. Despite the above allocations, the allowance for loan losses is general in nature and is available to absorb losses from any loan segment.

There were no new troubled debt restructurings granted during the three months ended June 30, 2022.

The following is a summary of troubled debt restructuring granted during the three months ended June 30, 2023 and the nine months ended June 30, 2023 and 2022 (dollars in thousands):

	For the Three Months Ended June 30, 2023
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings
Real estate loans:
Residential		1	$	211	$	211
Construction		—		—		—
Commercial		3		6,058		6,058
Commercial		—		—		—
Obligations of states and political subdivisions		—		—		—
Home equity loans and lines of credit		—		—		—
Auto loans		—		—		—
Other		—		—		—
Total	$	4	$	6,269	$	6,269

	For the Nine Months Ended June 30, 2023
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings
Real estate loans:
Residential		2	$	262	$	262
Construction		—		—		—
Commercial		3		6,058		6,058
Commercial		—		—		—
Obligations of states and political subdivisions		—		—		—
Home equity loans and lines of credit		—		—		—
Auto loans		—		—		—
Other		—		—		—
Total		5	$	6,320	$	6,320

	For the Nine Months Ended June 30, 2022
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings
Real estate loans:
Residential		2	$	88	$	88
Construction		—		—		—
Commercial		—		—		—
Commercial		—		—		—
Obligations of states and political subdivisions		—		—		—
Home equity loans and lines of credit		—		—		—
Auto loans		—		—		—
Other		—		—		—
Total		2	$	88	$	88

For the three and nine months ended June 30, 2023 and 2022, no loans defaulted on a restructuring agreement within one year of modification.

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Deposits

9 Months Ended

Jun. 30, 2023

Deposits Liabilities Disclosures [Abstract]

Deposits

7.Deposits

Deposits consist of the following major classifications (in thousands):

	June 30, 2023		September 30, 2022
Non-interest bearing demand accounts	$	280,732	$	290,061
Interest bearing demand accounts		308,280		357,516
Money market accounts		341,844		402,080
Savings and club accounts		169,329		196,696
Certificates of deposit		425,292		133,668
Total	$	1,525,477	$	1,380,021

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Net Periodic Benefit Cost-Defined Benefit Plan

9 Months Ended

Jun. 30, 2023

Retirement Benefits [Abstract]

Net Periodic Benefit Cost-Defined Benefit Plan

8.Net Periodic Benefit Cost-Defined Benefit Plan

For a detailed disclosure on the Bank’s pension and employee benefits plans, please refer to Note 12 of the Company’s Consolidated Financial Statements for the year ended September 30, 2022 included in the Company’s Annual Report on Form 10-K.

The following table comprises the components of net periodic benefit cost (income) for the three and nine months ended June 30, 2023 and 2022 (in thousands):

	For the Three Months Ended June 30,						For the Nine Months Ended June 30,
	2023			2022			2023			2022
Service Cost	$	-		$	-		$	-		$	-
Interest Cost		164			142			492			398
Expected return on plan assets		(242	)		(296	)		(726	)		(968	)
Partial settlement		-			20			—			241
Amortization of net loss from earlier periods		-			-			—			2
Net periodic benefit income	$	(78	)	$	(134	)	$	(234	)	$	(327	)

The Company’s board of directors adopted resolutions to freeze the status of the Defined Benefit Plan (“the plan”) effective February 28, 2017 (“the freeze date”). Accordingly, no additional participants have been allowed to enter the plan since February 28, 2017; no additional years of service for benefit accrual purposes have been credited since the freeze date under the plan; and compensation earned by participants after the freeze date is not taken into account under the plan.

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Equity Incentive Plan

9 Months Ended

Jun. 30, 2023

Share-Based Payment Arrangement [Abstract]

Equity Incentive Plan

9.Equity Incentive Plan

The Company previously maintained the ESSA Bancorp, Inc. 2007 Equity Incentive Plan (the “Plan”). The Plan provided for a total of 2,377,326 shares of common stock for issuance upon the grant or exercise of awards. Of the shares that were available under the Plan, 1,698,090 were available to be issued in connection with the exercise of stock options and 679,236 were available to be issued as restricted stock. The Plan allowed for the granting of non-qualified stock options (“NSOs”), incentive stock options (“ISOs”), and restricted stock. Options granted under the plan were granted at no less than the fair value of the Company’s common stock on the date of the grant. As of the effective date of the 2016 Equity Incentive Plan (detailed below), no further grants will be made under the Plan and forfeitures of outstanding awards under the Plan will be added to the shares available under the 2016 Equity Incentive Plan.

The Company replaced the 2007 Equity Incentive Plan with the ESSA Bancorp, Inc. 2016 Equity Incentive Plan (the “2016 Plan”) which was approved by shareholders on March 3, 2016. The 2016 Plan provides for a total of 250,000 shares of common stock for issuance upon the grant or exercise of awards. The 2016 Plan allows for the granting of restricted stock, restricted stock units, ISOs and NSOs.

The Company classifies share-based compensation for employees and outside directors within “Compensation and employee benefits” in the Consolidated Statement of Operations to correspond with the same line item as compensation paid.

Restricted stock shares outstanding at June 30, 2023 vest over periods ranging from 3 to 39 months. The product of the number of shares granted and the grant date market price of the Company’s common stock determines the fair value of restricted shares under

the Company’s restricted stock plan. The Company expenses the fair value of all share based compensation grants over the requisite service period.

For the three months ended June 30, 2023 and 2022, the Company recorded $72,000 and $92,000 of share-based compensation expense, respectively, comprised of restricted stock expense. For the nine months ended June 30, 2023 and 2022, the Company recorded $427,000 and $471,000 of share-based compensation expense, respectively, comprised of restricted stock expense. Expected future compensation expense relating to the restricted shares outstanding at June 30, 2023 is $633,000 over the remaining vesting period of 3.25 years.

The following is a summary of the status of the Company’s restricted stock as of June 30, 2023, and changes therein during the nine month period then ended:

	Number of Restricted Stock			Weighted- average Grant Date Fair Value
Nonvested at September 30, 2022		35,639		$	14.88
Granted		31,696			19.06
Vested		(11,941	)		18.31
Forfeited		(1,148	)		16.35
Nonvested at June 30, 2023		54,246		$	16.54

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Fair Value

9 Months Ended

Jun. 30, 2023

Fair Value Disclosures [Abstract]

Fair Value

10.Fair Value

The following disclosures show the hierarchal disclosure framework associated within the level of pricing observations utilized in measuring assets and liabilities at fair value. The definition of fair value maintains the exchange price notion in earlier definitions of fair value but focuses on the exit price of the asset or liability. The exit price is the price that would be received to sell the asset or paid

to transfer the liability adjusted for certain inherent risks and restrictions. Expanded disclosures are also required about the use of fair value to measure assets and liabilities.

Assets and Liabilities Required to be Measured and Reported at Fair Value on a Recurring Basis

The following tables provide the fair value for assets and liabilities required to be measured and reported at fair value on a recurring basis on the Consolidated Balance Sheet as of June 30, 2023 and September 30, 2022 by level within the fair value hierarchy (in thousands).

Recurring Fair Value Measurements at Reporting Date
	June 30, 2023
Assets	Level I		Level II		Level III		Total
Investment securities available for sale:
Mortgage backed securities	$	-	$	101,090	$	-	$	101,090
Obligations of states and political subdivisions		-		10,066		-		10,066
U.S. government treasury securities		-		98,526		-		98,526
U.S. government agency securities		-		4,367		-		4,367
Corporate obligations		-		64,335		2,833		67,168
Other debt securities		-		6,766		-		6,766
Total debt securities	$	-	$	285,150	$	2,833	$	287,983
Equity securities- financial services		31		-		-		31
Derivatives and hedging activities		-		19,154		-		19,154
Liabilities
Derivatives and hedging activities	$	-	$	7,949	$	-	$	7,949
	September 30, 2022
Assets	Level I		Level II		Level III		Total
Investment securities available for sale:
Mortgage backed securities	$	-	$	110,160	$	-	$	110,160
Obligations of states and political subdivisions		-		9,920		-		9,920
U.S. government agency securities		-		9,330		-		9,330
Corporate obligations		-		63,745		7,374		71,119
Other debt securities		-		8,118		-		8,118
Total debt securities	$	-	$	201,273	$	7,374	$	208,647
Equity securities-financial services		36		-		-		36
Derivatives and hedging activities		-		24,481		-		24,481
Liabilities:
Derivatives and hedging activities	$	-	$	9,176	$	-	$	9,176

The following table presents a summary of changes in the fair value of the Company’s Level III investments for the three and nine months ended June 30, 2023 and 2022 (in thousands).

	Fair Value Measurement Using Significant Unobservable Inputs (Level III)
	Three Months Ended
	June 30, 2023			June 30, 2022
Beginning balance	$	3,429		$	10,762
Purchases, sales, issuances, settlements, net		-			1,000
Total unrealized (loss) gain:
Included in earnings		-			-
Included in other comprehensive (loss) income		(96	)		(493	)
Transfers in and/or out of Level III		(500	)		-
	$	2,833		$	11,269

	Fair Value Measurement Using Significant Unobservable Inputs (Level III)
	Nine Months Ended
	June 30, 2023			June 30, 2022
Beginning balance	$	7,374		$	11,112
Purchases, sales, issuances, settlements, net		-			500
Total unrealized gain (loss):
Included in earnings		-			-
Included in other comprehensive (loss) income		(524	)		(843	)
Transfers in and/or out of Level III		(4,017	)		500
	$	2,833		$	11,269

Each financial asset and liability is identified as having been valued according to a specified level of input, 1, 2 or 3. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Fair values determined by Level 2 inputs utilize inputs other than quoted prices included in Level 1 that are observable for the asset, either directly or indirectly. Level 2 inputs include quoted prices for similar assets in active markets, and inputs other than quoted prices that are observable for the asset or liability. Level 3 inputs are unobservable inputs for the asset, and include situations where there is little, if any, market activity for the asset or liability. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy, within which the fair value measurement in its entirety falls, has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset.

The measurement of fair value should be consistent with one of the following valuation techniques: market approach, income approach, and/or cost approach. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities (including a business). For example, valuation techniques consistent with the market approach often use market multiples derived from a set of comparable. Multiples might lie in ranges with a different multiple for each comparable. The selection of where within the range the appropriate multiple falls requires judgment, considering factors specific to the measurement (qualitative and quantitative). Valuation techniques consistent with the market approach include matrix pricing. Matrix pricing is a mathematical technique used principally to value debt securities without relying exclusively on quoted prices for the specific securities, but rather by relying on a security’s relationship to other benchmark quoted securities. Most of the securities classified as available for sale are reported at fair value utilizing Level 2 inputs. For these securities, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quoted market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and conditions, among other things. Securities reported at fair value utilizing Level 1 inputs are limited to actively traded equity securities whose market price is readily available from the New York Stock Exchange or the NASDAQ exchange. A few securities are valued using Level 3 inputs, all of these are classified as available for sale and are reported at fair value using Level 3 inputs.

Assets and Liabilities Required to be Measured and Reported on a Non-Recurring Basis

The following tables provide the fair value for assets required to be measured and reported at fair value on a non-recurring basis on the Consolidated Balance Sheet as of June 30, 2023 and September 30, 2022 by level within the fair value hierarchy:

Non-Recurring Fair Value Measurements at Reporting Date (in thousands)
	June 30, 2023
	Level I		Level II		Level III		Total
Foreclosed real estate	$	-	$	-	$	3,546	$	3,546
Impaired loans		-		-		9,909		9,909
	September 30, 2022
	Level I		Level II		Level III		Total
Foreclosed real estate	$	-	$	-	$	29	$	29
Impaired loans		-		-		14,151		14,151

The following tables present additional quantitative information about assets measured at fair value on a nonrecurring basis and for which the Company has utilized Level 3 inputs to determine fair value:

	Quantitative Information about Level 3 Fair Value Measurements
(dollars in thousands)	Fair Value Estimate		Valuation Techniques	Unobservable Input	Range (Average)
June 30, 2023
Impaired loans	$	9,909	Appraisal of collateral (1)	Appraisal adjustments (2)	0% to 35% (20.8%)
Foreclosed real estate owned		3,546	Appraisal of collateral (1)	Appraisal adjustments (2)	20% to 35% (20.1%)

	Quantitative Information about Level 3 Fair Value Measurements
(dollars in thousands)	Fair Value Estimate		Valuation Techniques	Unobservable Input	Range (Average)
September 30, 2022
Impaired loans	$	14,151	Appraisal of collateral (1)	Appraisal adjustments (2)	0% to 35% (20.6%)
Foreclosed real estate owned		29	Appraisal of collateral (1)	Appraisal adjustments (2)	20% (20.0%)

(1)Fair value is generally determined through independent appraisals of the underlying collateral, which generally include various level 3 inputs which are not identifiable.

(2)Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses. The range of liquidation expenses and other appraisal adjustments are presented as a percent of the appraisal.

Foreclosed real estate is measured at fair value, less cost to sell at the date of foreclosure, valuations are periodically performed by management and the assets are carried at the lower of carrying amount or fair value, less cost to sell. Income and expenses from operations and changes in valuation allowance are included in the net expenses from foreclosed real estate. Impaired loans are reported at fair value utilizing level three inputs. For these loans, a review of the collateral is conducted and an appropriate allowance for loan losses is allocated to the loan. At June 30, 2023, 35 impaired loans with a carrying value of $9.9 million were reduced by specific valuation allowance totaling $8,000 resulting in a net fair value of $9.9 million based on Level 3 inputs. At September 30, 2022, 49 impaired loans with a carrying value of $14.5 million were reduced by a specific valuation totaling $351,000 resulting in a net fair value of $14.2 million based on Level 3 inputs.

Assets and Liabilities not Required to be Measured and Reported at Fair Value

The following tables provide the carrying value and fair value for certain financial instruments that are not required to be measured or reported at fair value on the Consolidated Balance Sheet at June 30, 2023 and September 30, 2022 by level within the fair value hierarchy:

	June 30, 2023
(in thousands)	Carrying Value		Level I		Level II		Level III		Total Fair Value
Financial assets:
Investment securities held to maturity	$	53,570	$	-	$	45,102	$	-	$	45,102
Loans receivable, net		1,611,066		-		-		1,482,365		1,482,365
Mortgage servicing rights		830		-		-		1,380		1,380
Financial liabilities:
Deposits	$	1,525,477	$	1,100,185	$	-	$	274,823	$	1,375,008
Short term borrowings		399,989		—		—		388,427		388,427

	September 30, 2022
(in thousands)	Carrying Value		Level I		Level II		Level III		Total Fair Value
Financial assets:
Investment securities held to maturity	$	57,285	$	-	$	47,546	$	-	$	47,546
Loans receivable, net		1,435,783		-		-		1,351,823		1,351,823
Mortgage servicing rights		788		-		-		1,390		1,390
Financial liabilities:
Deposits	$	1,380,021	$	1,246,353	$	-	$	128,533	$	1,374,886
Short-term borrowings		230,810		-		-		215,287		215,287

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Accumulated Other Comprehensive Income (Loss)

9 Months Ended

Jun. 30, 2023

Equity [Abstract]

Accumulated Other Comprehensive Income (Loss)

11.Accumulated Other Comprehensive Income (Loss)

The activity in accumulated other comprehensive income (loss) for the three and nine months ended June 30, 2023 and 2022 is as follows (in thousands):

	Accumulated Other Comprehensive Income/(Loss)
	Defined Benefit Pension Plan			Unrealized Gains (Losses) on Securities Available for Sale			Derivatives			Total
Balance at March 31, 2023	$	(1,108	)	$	(11,764	)	$	8,988		$	(3,884	)
Other comprehensive (loss) income before    reclassifications		-			(3,166	)		1,841			(1,325	)
Amounts reclassified from accumulated    other comprehensive income (loss)		-			-			(1,974	)		(1,974	)
Period change		—			(3,166	)		(133	)		(3,299	)
Balance at June 30, 2023	$	(1,108	)	$	(14,930	)	$	8,855		$	(7,183	)
Balance at March 31, 2022	$	(1,022	)	$	(3,034	)	$	8,027		$	3,971
Other comprehensive (loss) income before    reclassifications		(351	)		(4,125	)		1,641			(2,835	)
Amounts reclassified from accumulated    other comprehensive (loss) income		17			-			(176	)		(159	)
Period change		(334	)		(4,125	)		1,465			(2,994	)
Balance at June 30, 2022	$	(1,356	)	$	(7,159	)	$	9,492		$	977
	Accumulated Other Comprehensive Income/(Loss)
	Defined Benefit Pension Plan			Unrealized Gains (Losses) on Securities Available for Sale			Derivatives			Total
Balance at September 30, 2022	$	(1,108	)	$	(13,879	)	$	12,093		$	(2,894	)
Other comprehensive income (loss) before    reclassifications		—			(1,051	)		1,996			945
Amounts reclassified from accumulated other    comprehensive income (loss)		—			—			(5,234	)		(5,234	)
Period change		—			(1,051	)		(3,238	)		(4,289	)
Balance at June 30, 2023	$	(1,108	)	$	(14,930	)	$	8,855		$	(7,183	)
Balance at September 30, 2021	$	(1,907	)	$	1,962		$	627		$	682
Other comprehensive income (loss) before reclassifications		359			(9,121	)		8,723			(39	)
Amounts reclassified from accumulated other    comprehensive income (loss)		192			—			142			334
Period change		551			(9,121	)		8,865			295
Balance at June 30, 2022	$	(1,356	)	$	(7,159	)	$	9,492		$	977

The following table presents significant amounts reclassified out of each component of accumulated other comprehensive income (loss) for the three and nine months ended June 30, 2023 and 2022 (in thousands):

	Amount Reclassified from Accumulated Other Comprehensive Income (Loss)
Details About Accumulated Other Comprehensive Income (Loss) Components	Accumulated Other Comprehensive Income (Loss) for the Three Months Ended June 30,						Affected Line Item in the Consolidated Statement of Operations
	2023			2022
Securities available for sale:
Defined benefit pension plan
Amortization of net gain and prior service costs	$	-		$	(20	)	Compensation and employee benefits
Related income tax expense		-			3		Income taxes
Net effect on accumulated other comprehensive income (loss)    for the period		-			(17	)
Derivatives and hedging activities:
Interest expense, effective portion		2,498			222		Interest expense
Related income tax expense		(524	)		(46	)	Income taxes
Net effect on accumulated other comprehensive income (loss)    for the period		1,974			176
Total reclassification for the period	$	1,974		$	159
	Amount Reclassified from Accumulated Other Comprehensive Income (Loss)
	Accumulated Other Comprehensive Income (Loss) For the Nine Months Ended June 30,						Affected Line Item in the Consolidated Statement of Operations
	2023			2022
Defined benefit pension plan
Amortization of net (loss) gain and prior service costs	$	-		$	(243	)	Compensation and employee benefits
Related income tax expense		-			51		Income taxes
Net effect on accumulated other comprehensive income (loss)    for the period		-			(192	)
Derivative and hedging activities:
Interest expense, effective portion		6,625			(180	)	Interest expense
Related income tax expense		(1,391	)		38		Income taxes
Net effect on accumulated other comprehensive income (loss)    for the period		5,234			(142	)
Total reclassification for the period	$	5,234		$	(334	)

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Derivatives and Hedging Activities

9 Months Ended

Jun. 30, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives and Hedging Activities

12.Derivatives and Hedging Activities

Risk Management Objective of Using Derivatives

The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk, primarily by managing the amount, sources, and duration of its assets and liabilities and through the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to certain variable rate borrowings.

Fair Values of Derivative Instruments on the Consolidated Balance Sheet

The table below presents the fair value of the Company’s derivative financial instruments as of June 30, 2023 and September 30, 2022 (in thousands).

Fair Values of Derivative Instruments
Asset Derivatives
	As of June 30, 2023				As of September 30, 2022
Hedged Item	Notional Amount		Fair Value		Notional Amount		Fair Value
FHLB Advances	$	215,000	$	11,211	$	225,000	$	15,310
Commercial Loans		82,490		7,943		79,602		9,171
Total	$	297,490	$	19,154	$	304,602	$	24,481
Fair Values of Derivative Instruments
Liability Derivatives
	As of June 30, 2023				As of September 30, 2022
Hedged Item	Notional Amount		Fair Value		Notional Amount		Fair Value
Commercial Loans	$	113,946	$	7,949	$	111,668	$	9,176
Total	$	113,946	$	7,949	$	111,668	$	9,176

Cash Flow Hedges of Interest Rate Risk

The Company’s objectives in using interest rate derivatives are to add stability to interest income and expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company has entered into interest rate swaps as part of its interest rate risk management strategy. These interest rate swaps are designated as cash flow hedges and involve the receipt of variable rate amounts from a counterparty in exchange for the Company making fixed payments. As of June 30, 2023, the Company had nine interest rate swaps with a notional principal amount of $215.0 million associated with the Company’s cash outflows associated with various FHLB advances and $196.4 million associated with associated with various commercial loans.

For derivatives designated as cash flow hedges, the effective portion of changes in the fair value of the derivative is initially reported in other comprehensive income (outside of earnings), net of tax, and subsequently reclassified to earnings when the hedged transaction affects earnings, and the ineffective portion of changes in the fair value of the derivative is recognized directly in earnings. The Company assesses the effectiveness of each hedging relationship by comparing the changes in cash flows of the derivative hedging instrument with the changes in cash flows of the designated hedged transactions. The Company did not recognize any hedge ineffectiveness in earnings during the three and nine months ended June 30, 2023 and 2022.

Amounts reported in accumulated other comprehensive income (loss) related to derivatives that will be reclassified to interest income/expense as interest payments are made/received on the Company’s variable-rate assets/liabilities. During the three months ended June 30, 2023, the Company had $2.5 million of gains, which resulted in a decrease to interest expense. During the three months ended June 30, 2022, the Company had $222,000 of gains which resulted in a decrease to interest expense. During the nine months ended June 30, 2023, the Company had $6.6 million of gains, which resulted in a decrease to interest expense. During the nine months ended June 30, 2022, the Company had $180,000 of losses which resulted in an increase to interest expense. During the next twelve months, the Company estimates that $7.8 million will be reclassified as a decrease to interest expense.

The table below presents the effect of the Company’s cash flow hedge accounting on Accumulated Other Comprehensive Income (Loss) for the three and nine months ended June 30, 2023 and 2022 (in thousands).

The Effect of Fair Value and Cash Flow Hedge Accounting on Accumulated Other Comprehensive Income (Loss)
Derivatives in Hedging Relationships	(Gain) Loss Recognized in OCI on Derivative (Effective Portion)  Three Months Ended June 30,					Location of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)  Three Months Ended June 30,
Derivatives in Cash Flow Hedging Relationships	2023			2022			2023		2022
Interest Rate Products	$	(168	)	$	1,854	Interest expense	$	2,498	$	222
Total	$	(168	)	$	1,854		$	2,498	$	222
Derivatives in Cash Flow Hedging Relationships	Gain (Loss) Recognized in OCI on Derivative (Effective Portion)  Nine Months Ended June 30,					Location of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	Gain (Loss) Recognized in OCI on Derivative (Effective Portion)  Nine Months Ended June 30,
	2023			2022			2023		2022
Interest Rate Products	$	(4,100	)	$	11,222	Interest expense	$	6,625	$	(180	)
Total	$	(4,100	)	$	11,222		$	6,625	$	(180	)

Credit-risk-related Contingent Features

The Company has agreements with its derivative counterparties that contain a provision where if the Company defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the Company could also be declared in default on its derivative obligations.

The Company also has agreements with certain of its derivative counterparties that contain a provision where if the Company fails to maintain its status as a well / adequately capitalized institution, then the counterparty could terminate the derivative positions and the Company would be required to settle its obligations under the agreements.

As of June 30, 2023 and September 30, 2022, the Company had no derivatives in a net liability position and was not required to post collateral against its obligations under these agreements. If the Company had breached any of these provisions at June 30, 2023 and September 30, 2022, it could have been required to settle its obligations under the agreements at the termination value.

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Contingent Liabilities

9 Months Ended

Jun. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

Contingent Liabilities

13.Contingent Liabilities

Legal Proceedings

The Company and its subsidiaries are subject to various legal actions arising in the normal course of business. In the opinion of Management, the resolution of these legal actions is not expected to have a material adverse effect on the Company’s results of operations.

The Company and its subsidiary, ESSA Bank were named as defendants, among others, in an action commenced on December 8, 2016 by one plaintiff who sought to pursue the suit as a class action on behalf of the entire class of people similarly situated. The plaintiff alleged that a bank previously acquired by the Company received unearned fees and kickbacks in the process of making loans, in violation of the Real Estate Settlement Procedures Act. In an order dated January 29, 2018, the district court granted the defendants’ motion to dismiss the case. The plaintiff appealed the court’s ruling. In an opinion and order dated April 26, 2019, the appellate court reversed the district court’s order dismissing the plaintiff’s case against the Company and remanded the case to the district court in order to continue the litigation. The litigation is now proceeding before the district court. On December 9, 2019, the court permitted an amendment to the complaint to add two new plaintiffs to the case asserting similar claims. On May 21, 2020, the court granted the plaintiffs’ motion for class certification. Fact and expert discovery is now complete, and the Company and ESSA Bank have filed motions seeking to have the case dismissed (in whole or in part) and/or the class de-certified, as well as for other relief. Plaintiffs have opposed the motions. The Company and ESSA Bank will continue to vigorously defend against plaintiffs’ allegations. To the extent that this matter could result in exposure to the Company and/or ESSA Bank, the amount or range of such exposure is not currently estimable but could be substantial.

On May 29, 2020, the Company and ESSA Bank were named as defendants in a second action commenced by three plaintiffs who also sought to pursue the action as a class action on behalf of the entire class of people similarly situated. The plaintiffs allege that a bank previously acquired by the Company received unearned fees and kickbacks from a different title company than the one

involved in the previously discussed litigation in the process of making loans. The original complaint alleged violations of the Real Estate Settlement Procedures Act, the Sherman Act, and the Racketeer Influenced and Corrupt Organizations Act (“RICO”). The plaintiffs filed an Amended Complaint on September 30, 2020 that dropped the RICO claim, but they are continuing to pursue the Real Estate Settlement Procedures Act and Sherman Act claims. The defendants moved to dismiss the Sherman Act claim on October 14, 2020, and that motion was denied on April 2, 2021. On March 13, 2023 the court granted plaintiffs’ motion for class certification. The case is currently in the discovery phase. The Company and ESSA Bank intend to vigorously defend against plaintiffs’ allegations. To the extent that this matter could result in exposure to the Company and/or ESSA Bank, the amount or range of such exposure is not currently estimable but could be substantial.

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Revenue Recognition

9 Months Ended

Jun. 30, 2023

Revenue from Contract with Customer [Abstract]

Revenue Recognition

14.Revenue Recognition

Management determined that the primary sources of revenue associated with financial instruments, including interest income on loans and investments, along with certain noninterest revenue sources including investment security gains, loan servicing charges, gains on the sale of loans, and earnings on bank owned life insurance are not within the scope of Topic 606.

Noninterest income within the scope of Topic 606 are as follows:

Trust and Investment Fees

Trust and asset management income is primarily comprised of fees earned from the management and administration of trusts and other customer assets. The Company’s performance obligation is generally satisfied over time and the resulting fees are recognized monthly, based upon the month-end market value of the assets under management and the applicable fee rate. Payment is generally received a few days after month end through a direct charge to customer’s accounts. The Company does not earn performance-based incentives. Optional services such as real estate sales and tax return preparation services are also available to existing trust and asset management customers. The Company’s performance obligation for these transactional-based services is generally satisfied, and related revenue recognized, at a point in time (i.e. as incurred). Payment is received shortly after services are rendered.

Service Charges on Deposit Accounts

Service charges on deposit accounts consist of account analysis fees (i.e. net fees earned on analyzed business and public checking accounts), monthly service fees, check orders, and other deposit account related fees. The Company’s performance obligation for account analysis fees and monthly service fees is generally satisfied, and the related revenue recognized, over the period in which the service is provided. Check orders and other deposit account related fees are largely transactional based, and therefore, the Company’s performance obligation is satisfied, and related revenue recognized, at a point in time. Payment for service charges on deposit accounts is primarily received immediately or in the following month through a direct charge to customers’ accounts.

Fees, Exchange, and Other Service Charges

Fees, interchange, and other service charges are primarily comprised of debit card income, ATM fees, cash management income, and other services charges. Debit card income is primarily comprised of interchange fees earned whenever the Company’s debit cards are processed through card payment networks such as Mastercard. ATM fees are primarily generated when a Company cardholder uses a non-Company ATM or a non-Company cardholder uses a company ATM. Other service charges include revenue from processing wire transfers, bill pay service, cashier’s checks, and other services. The Company’s performance obligation for fees, exchange, and other service charges are largely satisfied, and related revenue recognized when the services are rendered or upon completion. Payment is typically received immediately or in the following month.

Insurance Commissions

Insurance income primarily consists of commissions received on product sales. The Company acts as an intermediary between the Company’s customer and the insurance carrier. The Company’s performance obligation is generally satisfied upon the issuance of the policy. Shortly after the policy is issued, the carrier remits the commission payment to the Company, and the Company recognizes the revenue.

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Leases

9 Months Ended

Jun. 30, 2023

Leases [Abstract]

Leases

15.Leases

A lease is defined as a contract, or part of a contract, that conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. For the Company, Topic 842 primarily affects the accounting treatment for operating lease agreements in which the Company is the lessee.

Lessee Accounting

Substantially all of the leases in which the Company is the lessee are comprised of real estate property for branches, ATM locations, and office space with terms extending through 2044. In accordance with Topic 842, operating lease agreements are required to be recognized on the Consolidated Balance sheet as a right-of-use (“ROU”) asset and a corresponding lease liability.

The following table presents the Consolidated Balance Sheet classification of the Company’s ROU assets and lease liabilities. The Company elected not to include short-term leases (i.e., leases with initial terms of twelve months or less), or equipment leases (deemed immaterial) on the Consolidated Balance sheet.

(in thousands)		June 30, 2023
Lease Right-of-Use Assets	Classification
Operating lease right-of-use assets	Other assets	$	5,659
Total Lease Right-Of-Use Assets		$	5,659
(in thousands)		June 30, 2023
Lease Liabilities	Classification
Operating lease Liabilities	Other liabilities	$	5,890
Total Lease Liabilities		$	5,890
(in thousands)		September 30, 2022
Lease Right-of-Use Assets	Classification
Operating lease right-of-use assets	Other assets	$	6,075
Total Lease Right-Of-Use Assets		$	6,075
(in thousands)		September 30, 2022
Lease Liabilities	Classification
Operating lease Liabilities	Other liabilities	$	6,275
Total Lease Liabilities		$	6,275

The calculated amount of the ROU assets and lease liabilities in the table above are impacted by the length of the lease term and the discount rate used to present value the minimum lease payments. The Company’s lease agreements often include one or more options to renew at the Company’s discretion. If at lease inception, the Company considers the exercising of a renewal option to be reasonably certain, the Company will include the extended term in the calculation of the ROU asset and lease liability. Regarding the discount rate, Topic 842 requires the use of the rate implicit in the lease whenever this rate is readily determinable. As this rate is rarely determinable, the Company utilizes its incremental borrowing rate at lease inception, on a collateralized basis, over a similar term.

	June 30, 2023
Weighted average remaining lease term
Operating leases	11.7
Weighted average discount rate
Operating leases		2.51	%

The following table represents lease costs and other lease information. As the Company elected, for all classes of underlying assets, not to separate lease and non-lease components and instead to account for them as a single lease component, the variable lease cost primarily represents variable payments such as common area maintenance and utilities.

Lease Costs (in thousands)	Three Months Ended June 30, 2023
Operating lease cost	$	241
Variable lease cost		58
Net lease cost	$	299
Lease Costs (in thousands)	Three Months Ended June 30, 2022
Operating lease cost	$	238
Variable lease cost		53
Net lease cost	$	291
Lease Costs (in thousands)	Nine Months Ended June 30,2023
Operating lease cost	$	722
Variable lease cost		167
Net lease cost	$	889
Lease Costs (in thousands)	Nine Months Ended June 30,2022
Operating lease cost	$	501
Variable lease cost		180
Net lease cost	$	681

Future minimum payments for operating leases with initial or remaining terms of one year or more as of June 30, 2023 were as follows:

(in thousands)	Operating leases
Twelve months Ended:
June 30, 2024	$	800
June 30, 2025		650
June 30, 2026		633
June 30, 2027		494
June 30, 2028		464
Thereafter		3,707
Total future minimum lease payments		6,748
Amounts representing interest		858
Present Value of Net Future Minimum Lease Payments	$	5,890

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Other Matters

9 Months Ended

Jun. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

Other Matters

Note 16. Other Matters

On May 31, 2023, ESSA Bank & Trust (“ESSA Bank”), a wholly owned subsidiary of the Company, entered into a consent order with the U.S. Department of Justice (“DOJ”) to resolve allegations of violations of the fair lending laws within the Philadelphia Metropolitan Statistical Area (“MSA”). Under the settlement, ESSA Bank agrees to provide $2.9 million in mortgage loan subsidies over a five-year period for majority Black and Hispanic census tracts, with at least 50% of those subsidies to be invested in specified Philadelphia MSA census tracts in proximity to ESSA Bank’s two Delaware County branch locations. The remainder of the subsidies may be used in other qualifying areas.

ESSA Bank is also committing $250,000 in additional focused marketing and outreach, $125,000 in community development partnerships, and making investments in additional mortgage professionals and a community development officer focused on statistically underserved communities. The DOJ consent order was approved by the United States District Court for the Eastern District of Pennsylvania on June 9, 2023, and at that point all claims asserted by the DOJ against ESSA Bank were resolved according to its terms. The Company is committed to investing the $2.9 million over five years and will record the related expenses in the period in which the activities occur.

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Accounting Pronouncements (Policies)

9 Months Ended

Jun. 30, 2023

Accounting Changes and Error Corrections [Abstract]

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments, which changes the impairment model for most financial assets. This Update is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The underlying premise of the Update is that financial assets measured at amortized cost should be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The allowance for credit losses should reflect management’s current estimate of credit losses that are expected to occur over the remaining life of a financial asset. The income statement will be effected for the measurement of credit losses for newly recognized financial assets, as well as the expected increases or decreases of expected credit losses that have taken place during the period. ASU 2016-13 is effective for annual and interim periods beginning after December 15, 2019, and early adoption is permitted for annual and interim periods beginning after December 15, 2018. With certain exceptions, transition to the new requirements will be through a cumulative effect adjustment to opening retained earnings as of the beginning of the first reporting period in which the guidance is adopted. In November 2019, the FASB issued ASU 2019-10, Financial Instruments ‒ Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842). This Update defers the effective date of ASU 2016-13 for SEC filers that are eligible to be smaller reporting companies, non-SEC filers, and all other companies to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. We expect to recognize a one-time cumulative effect adjustment to the allowance for loan losses as of the beginning of the first reporting period in which the new standard is effective, but cannot yet determine the magnitude of any such one-time adjustment or the overall impact of the new guidance on the consolidated financial statements.

In May 2019, the FASB issued ASU 2019-05, Financial Instruments – Credit Losses (Topic 326), which allows entities to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost upon adoption of the new credit losses standard. To be eligible for the transition election, the existing financial asset must otherwise be both within the scope of the new credit losses standard and eligible for applying the fair value option in ASC 825-10.3. The election must be applied on an instrument-by-instrument basis and is not available for either available-for-sale or held-to-maturity debt securities. For entities that elect the fair value option, the difference between the carrying amount and the fair value of the financial asset would be recognized through a cumulative-effect adjustment to opening retained earnings as of the date an entity adopted ASU 2016-13. Changes in fair value of that financial asset would subsequently be reported in current earnings. For entities that have not yet adopted the credit losses standard, the ASU is effective when they implement the credit losses standard. For entities that already have adopted the credit losses standard, the ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company qualifies as a smaller reporting company and does not expect to early adopt ASU 2016-13.

In November 2019, the FASB issued ASU 2019-11, Codification Improvements to Topic 326, Financial Instruments – Credit Losses, to clarify its new credit impairment guidance in ASC 326, based on implementation issues raised by stakeholders. This Update clarified, among other things, that expected recoveries are to be included in the allowance for credit losses for these financial assets; an accounting policy election can be made to adjust the effective interest rate for existing troubled debt restructurings based on the prepayment assumptions instead of the prepayment assumptions applicable immediately prior to the restructuring event; and extends the practical expedient to exclude accrued interest receivable from all additional relevant disclosures involving amortized cost basis. For entities that have not yet adopted ASU 2016-13 as of November 26, 2019, the effective dates for ASU 2019-11 are the same as the effective dates and transition requirements in ASU 2016-13. For entities that have adopted ASU 2016-13, ASU 2019-11 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company qualifies as a smaller reporting company and does not expect to early adopt these ASUs.

In March 2020, the FASB issued ASU 2020-3, Codification Improvements to Financial Instruments. This ASU was issued to improve and clarify various financial instruments topics, including the current expected credit losses (CECL) standard issued in 2016. The ASU includes seven issues that describe the areas of improvement and the related amendments to GAAP; they are intended to make the standards easier to understand and apply and to eliminate inconsistencies, and they are narrow in scope and are not expected to significantly change practice for most entities. Among its provisions, the ASU clarifies that all entities, other than public business entities that elected the fair value option, are required to provide certain fair value disclosures under ASC 825, Financial Instruments, in both interim and annual financial statements. It also clarifies that the contractual term of a net investment in a lease under Topic 842 should be the contractual term used to measure expected credit losses under Topic 326. Amendments related to ASU 2019-04 are

effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is not permitted before an entity’s adoption of ASU 2016-01. Amendments related to ASU 2016-13 for entities that have not yet adopted that guidance are effective upon adoption of the amendments in ASU 2016-13. Early adoption is not permitted before an entity’s adoption of ASU 2016-13. Amendments related to ASU 2016-13 for entities that have adopted that guidance are effective for fiscal years beginning after December 15, 2019, including interim periods within those years. Other amendments are effective upon issuance of this ASU. This Update is not expected to have a significant impact on the Company’s financial statements.

In March 2022, the FASB issued ASU 2022-01, Derivatives and Hedging (ASC 815): Fair Value Hedging - Portfolio Layer Method. ASC 815 currently permits only prepayable financial assets and one or more beneficial interests secured by a portfolio of prepayable financial instruments to be included in a last-of-layer closed portfolio. The amendments in this Update allow non-prepayable financial assets to also be included in a closed portfolio hedged using the portfolio layer method. That expanded scope permits an entity to apply the same portfolio hedging method to both prepayable and non-prepayable financial assets, thereby allowing consistent accounting for similar hedges. The guidance is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position or results of operations.

In March 2022, the FASB issued ASU 2022-02, Financial Instruments - Credit Losses (ASC 326): Troubled Debt Restructurings (TDRs) and Vintage Disclosures. The guidance amends ASC 326 to eliminate the accounting guidance for TDRs by creditors, while enhancing disclosure requirements for certain loan refinancing and restructuring activities by creditors when a borrower is experiencing financial difficulty. Specifically, rather than applying TDR recognition and measurement guidance, creditors will determine whether a modification results in a new loan or continuation of existing loan. These amendments are intended to enhance existing disclosure requirements and introduce new requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty. Additionally, the amendments to ASC 326 require that an entity disclose current-period gross writeoffs by year of origination within the vintage disclosures, which requires that an entity disclose the amortized cost basis of financing receivables by credit quality indicator and class of financing receivable by year of origination. The guidance is only for entities that have adopted the amendments in Update 2016-13 for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. Early adoption using prospective application, including adoption in an interim period where the guidance should be applied as of the beginning of the fiscal year. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position or results of operations.

In March 2023, the FASB issued ASU No. 2023-02, "Investments—Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method (a consensus of the Emerging Issues Task Force)". The ASU allows entities to elect the proportional amortization method, on a tax-credit-program-by-tax-credit-program basis, for all equity investments in tax credit programs meeting the eligibility criteria in Accounting Standards Codification (ASC) 323-740-25-1. While the ASU does not significantly alter the existing eligibility criteria, it does provide clarifications to address existing interpretive issues. It also prescribes specific information reporting entities must disclose about tax credit investments each period. This ASU is effective for reporting periods beginning after December 15, 2023, for public business entities, or January 1, 2024 for the Company. The Company does not expect the adoption of this ASU to have a material impact on the Company's financial statements.

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Earnings per Share (Tables)

9 Months Ended

Jun. 30, 2023

Earnings Per Share [Abstract]

Composition of the Weighted-Average Common Shares (Denominator) Used in the Basic and Diluted Earnings Per Share Computation

The following table sets forth the composition of the weighted-average common shares (denominator) used in the basic and diluted earnings per share computation for the three and nine months ended June 30, 2023 and 2022.

	Three Months Ended						Nine Months Ended
	June 30,			June 30,			June 30,			June 30,
	2023			2022			2023			2022
Weighted-average common shares outstanding		18,133,095			18,133,095			18,133,095			18,133,095
Average treasury stock shares		(7,730,956	)		(7,647,258	)		(7,732,112	)		(7,644,930	)
Average unearned ESOP shares		(626,229	)		(650,628	)		(637,587	)		(661,986	)
Average unearned non-vested shares		(41,202	)		(46,965	)		(46,803	)		(50,071	)
Weighted average common shares and common stock    equivalents used to calculate basic earnings per share		9,734,708			9,788,244			9,716,593			9,776,108
Additional common stock equivalents (nonvested stock)    used to calculate diluted earnings per share		—			1,965			—			2,050
Weighted average common shares and common stock    equivalents used to calculate diluted earnings per share		9,734,708			9,790,209			9,716,593			9,778,158

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Investment Securities (Tables)

9 Months Ended

Jun. 30, 2023

Investments, Debt and Equity Securities [Abstract]

Summary of Amortized Cost, Gross Unrealized Gains and Losses, and Fair Value of Investment Securities

The amortized cost, gross unrealized gains and losses, and fair value of investment securities are summarized as follows (in thousands):

	June 30, 2023
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available for Sale
Fannie Mae	$	55,614	$	—	$	(4,680	)	$	50,934
Freddie Mac	$	49,366		—	$	(3,801	)		45,565
Governmental National Mortgage Association		4,892		—		(301	)		4,591
Total mortgage-backed securities		109,872		—		(8,782	)		101,090
Obligations of states and political subdivisions		10,800		—		(734	)		10,066
U.S. government treasury securities		98,510		17		(1	)		98,526
U.S. government agency securities		4,500		—		(133	)		4,367
Corporate obligations		75,786		—		(8,618	)		67,168
Other debt securities		7,417		—		(651	)		6,766
Total	$	306,885	$	17	$	(18,919	)	$	287,983
Held to Maturity
Fannie Mae	$	28,450	$	-	$	(4,405	)	$	24,045
Freddie Mac		22,677		-		(3,625	)		19,052
Total mortgage-backed securities		51,127		-		(8,030	)		43,097
U.S. government agency securities		2,443		-		(438	)		2,005
Total	$	53,570	$	-	$	(8,468	)	$	45,102

	September 30, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available for sale
Fannie Mae	$	61,118	$	1	$	(5,432	)	$	55,687
Freddie Mac		53,842		-		(4,532	)		49,310
Governmental National Mortgage Association securities		5,411		-		(248	)		5,163
Total mortgage-backed securities		120,371		1		(10,212	)		110,160
Obligations of states and political subdivisions		10,815		-		(895	)		9,920
U.S. government agency securities		9,530		-		(200	)		9,330
Corporate obligations		76,692		14		(5,587	)		71,119
Other debt securities		8,810		2		(694	)		8,118
Total	$	226,218	$	17	$	(17,588	)	$	208,647
Held to maturity
Fannie Mae	$	30,659	$	-	$	(5,127	)	$	25,532
Freddie Mac		24,187		-		(4,142	)		20,045
Total		54,846		-		(9,269	)		45,577
U.S. government agency securities		2,439		-		(470	)		1,969
Total	$	57,285	$	-	$	(9,739	)	$	47,546

Summary of Unrealized and Realized Gains and Losses Recognized in Net Income on Equity Securities

The following is a summary of unrealized and realized gains and losses recognized in net income on equity securities during the three and nine months ended June 30, 2023 and 2022.

(in thousands)	For the Three Months Ended June 30, 2023			For the Three Months Ended June 30, 2022
Net (losses) gains recognized during the period on equity securities	$	(1	)	$	4
Less: Net (losses) gains recognized during the period on equity securities sold    during the period		-			-
Unrealized (losses) gains recognized during the reporting period on equity    securities still held at the reporting date	$	(1	)	$	4
(in thousands)	For the Nine Months Ended June 30, 2023			For the Nine Months Ended June 30, 2022
Net (losses) gains recognized during the period on equity securities	$	(4	)	$	5
Less: Net (losses) gains recognized during the period on equity securities sold    during the period		-			-
Unrealized (losses) gains recognized during the reporting period on equity    securities still held at the reporting date	$	(4	)	$	5

Schedule of Amortized Cost and Fair Value of Debt Securities by Contractual Maturity

The amortized cost and fair value of debt securities at June 30, 2023, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties (in thousands):

	Available For Sale				Held to Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	101,884	$	101,877	$	—	$	—
Due after one year through five years		36,811		34,915		—		—
Due after five years through ten years		72,505		63,609		7,267		6,297
Due after ten years		95,685		87,582		46,303		38,805
Total	$	306,885	$	287,983	$	53,570	$	45,102

Schedule of Gross Unrealized Losses and Fair Value

The following tables show the Company’s gross unrealized losses and fair value, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position (dollars in thousands):

	June 30, 2023
	Number of Securities		Less than Twelve Months					Twelve Months or Greater					Total
			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Fannie Mae		77	$	5,600	$	(116	)	$	69,380	$	(8,969	)	$	74,980	$	(9,085	)
Freddie Mac		62		15,125		(708	)		49,287		(6,718	)		64,412		(7,426	)
Governmental National Mortgage    Association		12		918		(25	)		3,674		(276	)		4,592		(301	)
U.S. government treasury securities		1		24,378		(1	)		-		-			24,378		(1	)
U.S. government agency securities		3		-		-			6,372		(571	)		6,372		(571	)
Obligations of states and political    subdivisions		12		1,474		(27	)		8,593		(707	)		10,067		(734	)
Corporate obligations		89		10,329		(682	)		56,338		(7,936	)		66,667		(8,618	)
Other debt securities		17		-		-			6,361		(651	)		6,361		(651	)
Total		273	$	57,824	$	(1,559	)	$	200,005	$	(25,828	)	$	257,829	$	(27,387	)

	September 30, 2022
			Less than Twelve Months					Twelve Months or Greater					Total
	Number of Securities		Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Fannie Mae		74	$	67,101	$	(8,344	)	$	13,759	$	(2,215	)	$	80,860	$	(10,559	)
Freddie Mac		63		59,954		(6,868	)		9,401		(1,806	)		69,355		(8,674	)
Governmental National Mortgage    Association securities		13		2,924		(194	)		2,182		(54	)		5,106		(248	)
Obligations of states and political    subdivisions		12		9,920		(895	)		-		-			9,920		(895	)
U.S. government agency securities		4		11,299		(670	)		-		-			11,299		(670	)
Corporate obligations		88		49,333		(3,394	)		19,773		(2,193	)		69,106		(5,587	)
Other debt securities		17		5,764		(610	)		1,759		(84	)		7,523		(694	)
Total		271	$	206,295	$	(20,975	)	$	46,874	$	(6,352	)	$	253,169	$	(27,327	)

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Loans Receivable, Net and Allowance for Loan Losses (Tables)

9 Months Ended

Jun. 30, 2023

Receivables [Abstract]

Summary of Loans Receivable

Loans receivable consist of the following (in thousands):

	June 30, 2023		September 30, 2022
Real estate loans:
Residential	$	693,711	$	623,375
Construction		26,761		25,024
Commercial		764,849		678,841
Commercial		47,181		38,158
Obligations of states and political subdivisions		47,904		40,416
Home equity loans and lines of credit		46,302		43,170
Auto loans		926		3,611
Other		1,652		1,716
		1,629,286		1,454,311
Less allowance for loan losses		18,220		18,528
Net loans	$	1,611,066	$	1,435,783

Schedule of Loans Evaluated for Impairment

The following tables show the amount of loans in each category that were individually and collectively evaluated for impairment at the dates indicated (in thousands):

	Total Loans		Individually Evaluated for Impairment		Collectively Evaluated for Impairment
June 30, 2023
Real estate loans:
Residential	$	693,711	$	1,400	$	692,311
Construction		26,761		-		26,761
Commercial		764,849		7,805		757,044
Commercial		47,181		670		46,511
Obligations of states and political subdivisions		47,904		-		47,904
Home equity loans and lines of credit		46,302		30		46,272
Auto loans		926		8		918
Other		1,652		4		1,648
Total	$	1,629,286	$	9,917	$	1,619,369

	Total Loans		Individually Evaluated for Impairment		Collectively Evaluated for Impairment
September 30, 2022
Real estate loans:
Residential	$	623,375	$	1,342	$	622,033
Construction		25,024		-		25,024
Commercial		678,841		12,165		666,676
Commercial		38,158		937		37,221
Obligations of states and political subdivisions		40,416		-		40,416
Home equity loans and lines of credit		43,170		36		43,134
Auto loans		3,611		16		3,595
Other		1,716		6		1,710
Total	$	1,454,311	$	14,502	$	1,439,809

Schedule of Investment and Unpaid Principal Balances for Impaired Loans

The following tables include the recorded investment and unpaid principal balances for impaired loans with the associated allowance amount at the dates indicated, if applicable (in thousands):

	Recorded Investment		Unpaid Principal Balance		Associated Allowance
June 30, 2023
With no specific allowance recorded:
Real estate loans
Residential	$	1,300	$	1,915	$	-
Construction		-		-		-
Commercial		7,805		8,683		-
Commercial		670		967		-
Obligations of states and political subdivisions		-		-		-
Home equity loans and lines of credit		30		64		-
Auto loans		8		8		-
Other		4		18		-
Total		9,817		11,655		-
With an allowance recorded:
Real estate loans
Residential		100		104		8
Construction		-		-		-
Commercial		-		-		-
Commercial		-		-		-
Obligations of states and political subdivisions		-		-		-
Home equity loans and lines of credit		-		-		-
Auto loans		-		-		-
Other		-		-		-
Total		100		104		8
Total:
Real estate loans
Residential		1,400		2,019		8
Construction		-		-		-
Commercial		7,805		8,683		-
Commercial		670		967		-
Obligations of states and political subdivisions		-		-		-
Home equity loans and lines of credit		30		64		-
Auto loans		8		8		-
Other		4		18		-
Total Impaired Loans	$	9,917	$	11,759	$	8

	Recorded Investment		Unpaid Principal Balance		Associated Allowance
September 30, 2022
With no specific allowance recorded:
Real Estate Loans
Residential	$	1,239	$	2,029	$	-
Construction		-		-		-
Commercial		8,384		8,987		-
Commercial		865		905		-
Obligations of states and political subdivisions		-		-		-
Home equity loans and lines of credit		36		68		-
Auto Loans		16		28		-
Other		6		19		-
Total		10,546		12,036		-
With an allowance recorded:
Real Estate Loans
Residential		103		108		12
Construction		-		-		-
Commercial		3,781		3,928		301
Commercial		72		83		38
Obligations of states and political subdivisions		-		-		-
Home equity loans and lines of credit		-		-		-
Auto Loans		-		-		-
Other		-		-		-
Total		3,956		4,119		351
Total:
Real Estate Loans
Residential		1,342		2,137		12
Construction		-		-		-
Commercial		12,165		12,915		301
Commercial		937		988		38
Obligations of states and political subdivisions		-		-		-
Home equity loans and lines of credit		36		68		-
Auto Loans		16		28		-
Other		6		19		-
Total Impaired Loans	$	14,502	$	16,155	$	351

The following tables represents the average recorded investments in the impaired loans and the related amount of interest recognized during the time within the period that the impaired loans were impaired (in thousands):

	For the Three Months Ended June 30,
	2023		2022		2023		2022
	Average Recorded Investment		Average Recorded Investment		Interest Income Recognized		Interest Income Recognized
With no specific allowance recorded:
Real estate loans
Residential	$	898	$	1,600	$	-	$	2
Construction		-		-		-		-
Commercial		7,618		1,722		1		-
Commercial		454		78		-		-
Obligations of states and political subdivisions		-		-		-		-
Home equity loans and lines of credit		31		285		-		-
Auto loans		2		11		-		-
Other		4		-		-		-
Total		9,007		3,696		1		2
With an allowance recorded:
Real estate loans
Residential		101		105		-		-
Construction		-		-		-		-
Commercial		523		1,270		-		-
Commercial		300		80		-		-
Obligations of states and political subdivisions		-		-		-		-
Home equity loans and lines of credit		-		-		-		-
Auto loans		-		-		-		-
Other		-		-		-		-
Total		924		1,455		-		-
Total:
Real estate loans
Residential		999		1,705		-		2
Construction		-		-		-		-
Commercial		8,141		2,992		1		-
Commercial		754		158		-
Obligations of states and political subdivisions		-		-		-		-
Home equity loans and lines of credit		31		285		-		-
Auto loans		2		11		-		-
Other		4		-		-		-
Total Impaired Loans	$	9,931	$	5,151	$	1	$	2

	For the Nine Months Ended June 30,
	2023		2022		2023		2022
	Average Recorded Investment		Average Recorded Investment		Interest Income Recognized		Interest Income Recognized
With no specific allowance recorded:
Real estate loans
Residential	$	1,090	$	1,935	$	2	$	7
Construction		-		-		-		-
Commercial		8,497		6,135		2
Commercial		507		88		-		-
Obligations of states and political subdivisions		-		-		-		-
Home equity loans and lines of credit		33		295		-		-
Auto loans		4		21		-		-
Other		5		-		-		-
Total		10,136		8,474		4		7
With an allowance recorded:
Real estate loans
Residential		102		116		-		-
Construction		-		-		-		-
Commercial		1,828		431		-		-
Commercial		361		681		-		-
Obligations of states and political subdivisions		-		-		-		-
Home equity loans and lines of credit		-		-		-		-
Auto loans		-		4		-		-
Other		-		-		-		-
Total		2,291		1,232		-		—
Total:
Real estate loans
Residential		1,192		2,051		2		7
Construction		-		-		-		-
Commercial		10,325		6,566		2		-
Commercial		868		769		-		-
Obligations of states and political subdivisions		-		-		-		-
Home equity loans and lines of credit		33		295		-		-
Auto loans		4		25		-		-
Other		5		-		-		-
Total Impaired Loans	$	12,427	$	9,706	$	4	$	7

Classes of the Loan Portfolio, Internal Risk Rating System

The following tables present the classes of the loan portfolio summarized by the aggregate Pass and the criticized categories of Special Mention, Substandard, and Doubtful or Loss within the internal risk rating system at June 30, 2023 and September 30, 2022(in thousands):

	Pass		Special Mention		Substandard		Doubtful or Loss		Total
June 30, 2023
Commercial real estate loans	$	751,109	$	3,241	$	10,499	$	-	$	764,849
Commercial		45,192		15		1,974		-		47,181
Obligations of states and political subdivisions		47,904		-		-		-		47,904
Total	$	844,205	$	3,256	$	12,473	$	-	$	859,934

	Pass		Special Mention		Substandard		Doubtful or Loss		Total
September 30, 2022
Commercial real estate loans	$	659,104	$	6,060	$	13,677	$	-	$	678,841
Commercial		35,322		1,690		1,146		-		38,158
Obligations of states and political subdivisions		40,416		-		-		-		40,416
Total	$	734,842	$	7,750	$	14,823	$	-	$	757,415

Schedule of Performing or Nonperforming Loans

The following tables present the risk ratings in the consumer categories of performing and non-performing loans at June 30, 2023 and September 30, 2022 (in thousands):

	Performing		Non- performing		Total
June 30, 2023
Real estate loans:
Residential	$	691,269	$	2,442	$	693,711
Construction		26,761		-		26,761
Home equity loans and lines of credit		46,251		51		46,302
Auto loans		916		10		926
Other		1,619		33		1,652
Total	$	766,816	$	2,536	$	769,352

	Performing		Non- performing		Total
September 30, 2022
Real estate loans:
Residential	$	621,781	$	1,594	$	623,375
Construction		25,024		-		25,024
Home equity loans and lines of credit		42,832		338		43,170
Auto loans		3,590		21		3,611
Other		1,710		6		1,716
Total	$	694,937	$	1,959	$	696,896

Classes of the Loan Portfolio Summarized by the Aging Categories

The following tables present the classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans as of June 30, 2023 and September 30, 2022 (in thousands):

			31-60 Days		61-89 Days		90 + Days		Total		Total
	Current		Past Due		Past Due		Past Due		Past Due		Loans
June 30, 2023
Real estate loans:
Residential	$	690,450	$	1,134	$	145	$	1,982	$	3,261	$	693,711
Construction		26,761		-		-		-		-		26,761
Commercial		762,960		222		847		820		1,889		764,849
Commercial		46,909		-		15		257		272		47,181
Obligations of states and political subdivisions		47,904		-		-		-		-		47,904
Home equity loans and lines of credit		46,251		-		30		21		51		46,302
Auto loans		904		22		-		-		22		926
Other		1,622		-		-		30		30		1,652
Total	$	1,623,761	$	1,378	$	1,037	$	3,110	$	5,525	$	1,629,286

			31-60 Days		61-89 Days		90 + Days		Total		Total
	Current		Past Due		Past Due		Past Due		Past Due		Loans
September 30, 2022
Real estate loans:
Residential	$	621,270	$	598	$	367	$	1,140	$	2,105	$	623,375
Construction		25,024		-		-		-		-		25,024
Commercial		672,875		5,719		-		247		5,966		678,841
Commercial		37,160		539		440		19		998		38,158
Obligations of states and political subdivisions		40,416		-		-		-		-		40,416
Home equity loans and lines of credit		42,842		121		144		63		328		43,170
Auto loans		3,462		134		2		13		149		3,611
Other		1,685		-		31		-		31		1,716
Total	$	1,444,734	$	7,111	$	984	$	1,482	$	9,577	$	1,454,311

Non-Accrual Loans	June 30, 2023		September 30, 2022
Real estate loans:
Residential	$	2,442	$	1,594
Construction		-		-
Commercial		7,946		12,165
Commercial		673		958
Obligations of states and    political subdivisions		-		-
Home equity loans and lines of    credit		51		338
Auto loans		10		21
Other		33		6
Total	$	11,155	$	15,082

Summary of Primary Segments of ALL

The following table summarizes changes in the primary segments of the ALL during the three and nine months ended June 30, 2023 and 2022 (in thousands):

																Home
													Obligations of			Equity
													States and			Loans and
	Real Estate Loans									Commercial			Political			Lines of			Auto			Other
	Residential			Construction			Commercial			Loans			Subdivisions			Credit			Loans			Loans			Unallocated			Total
ALL balance at March 31, 2023	$	4,870		$	328		$	11,016		$	1,185		$	243		$	336		$	8		$	22		$	307		$	18,315
Charge-offs		-			-			(6	)		(269	)		-			-			-			-			-			(275	)
Recoveries		-			-			-			-			-			14			16			-			-			30
Provision		(157	)		(29	)		205			53			(1	)		(18	)		(19	)		(4	)		120			150
ALL balance at June 30, 2023	$	4,713		$	299		$	11,215		$	969		$	242		$	332		$	5		$	18		$	427		$	18,220
ALL balance at March 31, 2022	$	4,403		$	245		$	10,550		$	823		$	246		$	310		$	89		$	20		$	1,522		$	18,208
Charge-offs		(9	)		-			-			-			-			(6	)		(16	)		(11	)		-			(42	)
Recoveries		130			-			15			-			-			1			22			-			-			168
Provision		77			14			450			(30	)		37			36			(45	)		11			(550	)		-
ALL balance at June 30, 2022	$	4,601		$	259		$	11,015		$	793		$	283		$	341		$	50		$	20		$	972		$	18,334
ALL balance at September 30, 2022	$	5,122		$	319		$	10,754		$	698		$	283		$	361		$	22		$	22		$	947		$	18,528
Charge-offs		-			-			(599	)		(269	)		-			-			(27	)		-			-			(895	)
Recoveries		2			-			1			-			-			65			69			-			-			137
Provision		(411	)		(20	)		1,059			540			(41	)		(94	)		(59	)		(4	)		(520	)		450
ALL balance at June 30, 2023	$	4,713		$	299		$	11,215		$	969		$	242		$	332		$	5		$	18		$	427		$	18,220
ALL balance at September 30, 2021	$	4,114		$	187		$	10,470		$	1,041		$	393		$	318		$	232		$	21		$	1,337		$	18,113
Charge-offs		(19	)		-			(19	)		-			-			(6	)		(37	)		(11	)					(92	)
Recoveries		202			-			22			-			-			4			85			-						313
Provision		304			72			542			(248	)		(110	)		25			(230	)		10			(365	)		-
ALL balance at June 30, 2022	$	4,601		$	259		$	11,015		$	793		$	283		$	341		$	50		$	20		$	972		$	18,334

The following table summarizes the primary segments of the ALL, segregated into two categories, the amount required for loans individually evaluated for impairment and the amount required for loans collectively evaluated for impairment as of June 30, 2023 and September 30, 2022 (in thousands):

											Home
									Obligations of		Equity
									States and		Loans and
	Real Estate Loans						Commercial		Political		Lines of				Other
	Residential		Construction		Commercial		Loans		Subdivisions		Credit		Auto Loans		Loans		Unallocated		Total
Individually    evaluated for    impairment	$	8	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	8
Collectively    evaluated for    impairment		4,705		299		11,215		969		242		332		5		18		427		18,212
ALL balance at June 30, 2023	$	4,713	$	299	$	11,215	$	969	$	242	$	332	$	5	$	18	$	427	$	18,220
Individually    evaluated for    impairment	$	12	$	-	$	301	$	38	$	-	$	-	$	-	$	-	$	-	$	351
Collectively    evaluated for    impairment		5,110		319		10,453		660		283		361		22		22		947		18,177
ALL balance at September 30, 2022	$	5,122	$	319	$	10,754	$	698	$	283	$	361	$	22	$	22	$	947	$	18,528

Summary of Troubled Debt Restructurings Granted

The following is a summary of troubled debt restructuring granted during the three months ended June 30, 2023 and the nine months ended June 30, 2023 and 2022 (dollars in thousands):

	For the Three Months Ended June 30, 2023
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings
Real estate loans:
Residential		1	$	211	$	211
Construction		—		—		—
Commercial		3		6,058		6,058
Commercial		—		—		—
Obligations of states and political subdivisions		—		—		—
Home equity loans and lines of credit		—		—		—
Auto loans		—		—		—
Other		—		—		—
Total	$	4	$	6,269	$	6,269

	For the Nine Months Ended June 30, 2023
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings
Real estate loans:
Residential		2	$	262	$	262
Construction		—		—		—
Commercial		3		6,058		6,058
Commercial		—		—		—
Obligations of states and political subdivisions		—		—		—
Home equity loans and lines of credit		—		—		—
Auto loans		—		—		—
Other		—		—		—
Total		5	$	6,320	$	6,320

	For the Nine Months Ended June 30, 2022
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings
Real estate loans:
Residential		2	$	88	$	88
Construction		—		—		—
Commercial		—		—		—
Commercial		—		—		—
Obligations of states and political subdivisions		—		—		—
Home equity loans and lines of credit		—		—		—
Auto loans		—		—		—
Other		—		—		—
Total		2	$	88	$	88

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Deposits (Tables)

9 Months Ended

Jun. 30, 2023

Deposits Liabilities Disclosures [Abstract]

Schedule of Deposits by Major Classifications

Deposits consist of the following major classifications (in thousands):

	June 30, 2023		September 30, 2022
Non-interest bearing demand accounts	$	280,732	$	290,061
Interest bearing demand accounts		308,280		357,516
Money market accounts		341,844		402,080
Savings and club accounts		169,329		196,696
Certificates of deposit		425,292		133,668
Total	$	1,525,477	$	1,380,021

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Net Periodic Benefit Cost-Defined Benefit Plan (Tables)

9 Months Ended

Jun. 30, 2023

Retirement Benefits [Abstract]

Summary of the Components of Net Periodic Benefit Cost (Income)

The following table comprises the components of net periodic benefit cost (income) for the three and nine months ended June 30, 2023 and 2022 (in thousands):

	For the Three Months Ended June 30,						For the Nine Months Ended June 30,
	2023			2022			2023			2022
Service Cost	$	-		$	-		$	-		$	-
Interest Cost		164			142			492			398
Expected return on plan assets		(242	)		(296	)		(726	)		(968	)
Partial settlement		-			20			—			241
Amortization of net loss from earlier periods		-			-			—			2
Net periodic benefit income	$	(78	)	$	(134	)	$	(234	)	$	(327	)

XML

Equity Incentive Plan (Tables)

9 Months Ended

Jun. 30, 2023

Postemployment Benefits [Abstract]

Schedule of Restricted Stock Option Activity

The following is a summary of the status of the Company’s restricted stock as of June 30, 2023, and changes therein during the nine month period then ended:

	Number of Restricted Stock			Weighted- average Grant Date Fair Value
Nonvested at September 30, 2022		35,639		$	14.88
Granted		31,696			19.06
Vested		(11,941	)		18.31
Forfeited		(1,148	)		16.35
Nonvested at June 30, 2023		54,246		$	16.54

XML

Fair Value (Tables)

9 Months Ended

Jun. 30, 2023

Fair Value Disclosures [Abstract]

Schedule of Fair Value For Assets and Liabilities Required to be Measured and Reported at Fair Value on a Recurring Basis

The following tables provide the fair value for assets and liabilities required to be measured and reported at fair value on a recurring basis on the Consolidated Balance Sheet as of June 30, 2023 and September 30, 2022 by level within the fair value hierarchy (in thousands).

Recurring Fair Value Measurements at Reporting Date
	June 30, 2023
Assets	Level I		Level II		Level III		Total
Investment securities available for sale:
Mortgage backed securities	$	-	$	101,090	$	-	$	101,090
Obligations of states and political subdivisions		-		10,066		-		10,066
U.S. government treasury securities		-		98,526		-		98,526
U.S. government agency securities		-		4,367		-		4,367
Corporate obligations		-		64,335		2,833		67,168
Other debt securities		-		6,766		-		6,766
Total debt securities	$	-	$	285,150	$	2,833	$	287,983
Equity securities- financial services		31		-		-		31
Derivatives and hedging activities		-		19,154		-		19,154
Liabilities
Derivatives and hedging activities	$	-	$	7,949	$	-	$	7,949
	September 30, 2022
Assets	Level I		Level II		Level III		Total
Investment securities available for sale:
Mortgage backed securities	$	-	$	110,160	$	-	$	110,160
Obligations of states and political subdivisions		-		9,920		-		9,920
U.S. government agency securities		-		9,330		-		9,330
Corporate obligations		-		63,745		7,374		71,119
Other debt securities		-		8,118		-		8,118
Total debt securities	$	-	$	201,273	$	7,374	$	208,647
Equity securities-financial services		36		-		-		36
Derivatives and hedging activities		-		24,481		-		24,481
Liabilities:
Derivatives and hedging activities	$	-	$	9,176	$	-	$	9,176

Schedule of Changes in Fair Value of Level III Investments

The following table presents a summary of changes in the fair value of the Company’s Level III investments for the three and nine months ended June 30, 2023 and 2022 (in thousands).

	Fair Value Measurement Using Significant Unobservable Inputs (Level III)
	Three Months Ended
	June 30, 2023			June 30, 2022
Beginning balance	$	3,429		$	10,762
Purchases, sales, issuances, settlements, net		-			1,000
Total unrealized (loss) gain:
Included in earnings		-			-
Included in other comprehensive (loss) income		(96	)		(493	)
Transfers in and/or out of Level III		(500	)		-
	$	2,833		$	11,269

	Fair Value Measurement Using Significant Unobservable Inputs (Level III)
	Nine Months Ended
	June 30, 2023			June 30, 2022
Beginning balance	$	7,374		$	11,112
Purchases, sales, issuances, settlements, net		-			500
Total unrealized gain (loss):
Included in earnings		-			-
Included in other comprehensive (loss) income		(524	)		(843	)
Transfers in and/or out of Level III		(4,017	)		500
	$	2,833		$	11,269

Schedule of Fair Value For Assets Required to be Measured and Reported at Fair Value on a Nonrecurring Basis

The following tables provide the fair value for assets required to be measured and reported at fair value on a non-recurring basis on the Consolidated Balance Sheet as of June 30, 2023 and September 30, 2022 by level within the fair value hierarchy:

Non-Recurring Fair Value Measurements at Reporting Date (in thousands)
	June 30, 2023
	Level I		Level II		Level III		Total
Foreclosed real estate	$	-	$	-	$	3,546	$	3,546
Impaired loans		-		-		9,909		9,909
	September 30, 2022
	Level I		Level II		Level III		Total
Foreclosed real estate	$	-	$	-	$	29	$	29
Impaired loans		-		-		14,151		14,151

Summary of Additional Quantitative Information about Assets Measured at Fair Value on a Nonrecurring Basis

The following tables present additional quantitative information about assets measured at fair value on a nonrecurring basis and for which the Company has utilized Level 3 inputs to determine fair value:

	Quantitative Information about Level 3 Fair Value Measurements
(dollars in thousands)	Fair Value Estimate		Valuation Techniques	Unobservable Input	Range (Average)
June 30, 2023
Impaired loans	$	9,909	Appraisal of collateral (1)	Appraisal adjustments (2)	0% to 35% (20.8%)
Foreclosed real estate owned		3,546	Appraisal of collateral (1)	Appraisal adjustments (2)	20% to 35% (20.1%)

	Quantitative Information about Level 3 Fair Value Measurements
(dollars in thousands)	Fair Value Estimate		Valuation Techniques	Unobservable Input	Range (Average)
September 30, 2022
Impaired loans	$	14,151	Appraisal of collateral (1)	Appraisal adjustments (2)	0% to 35% (20.6%)
Foreclosed real estate owned		29	Appraisal of collateral (1)	Appraisal adjustments (2)	20% (20.0%)

(1)Fair value is generally determined through independent appraisals of the underlying collateral, which generally include various level 3 inputs which are not identifiable.

(2)Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses. The range of liquidation expenses and other appraisal adjustments are presented as a percent of the appraisal.

Schedule of Carrying Value and Fair Value for Certain Financial Instruments not Required to be Measured and Reported at Fair Value

The following tables provide the carrying value and fair value for certain financial instruments that are not required to be measured or reported at fair value on the Consolidated Balance Sheet at June 30, 2023 and September 30, 2022 by level within the fair value hierarchy:

	June 30, 2023
(in thousands)	Carrying Value		Level I		Level II		Level III		Total Fair Value
Financial assets:
Investment securities held to maturity	$	53,570	$	-	$	45,102	$	-	$	45,102
Loans receivable, net		1,611,066		-		-		1,482,365		1,482,365
Mortgage servicing rights		830		-		-		1,380		1,380
Financial liabilities:
Deposits	$	1,525,477	$	1,100,185	$	-	$	274,823	$	1,375,008
Short term borrowings		399,989		—		—		388,427		388,427

	September 30, 2022
(in thousands)	Carrying Value		Level I		Level II		Level III		Total Fair Value
Financial assets:
Investment securities held to maturity	$	57,285	$	-	$	47,546	$	-	$	47,546
Loans receivable, net		1,435,783		-		-		1,351,823		1,351,823
Mortgage servicing rights		788		-		-		1,390		1,390
Financial liabilities:
Deposits	$	1,380,021	$	1,246,353	$	-	$	128,533	$	1,374,886
Short-term borrowings		230,810		-		-		215,287		215,287

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Accumulated Other Comprehensive Income (Loss) (Tables)

9 Months Ended

Jun. 30, 2023

Equity [Abstract]

Summary of Activity in Accumulated Other Comprehensive Income (Loss)

The activity in accumulated other comprehensive income (loss) for the three and nine months ended June 30, 2023 and 2022 is as follows (in thousands):

	Accumulated Other Comprehensive Income/(Loss)
	Defined Benefit Pension Plan			Unrealized Gains (Losses) on Securities Available for Sale			Derivatives			Total
Balance at March 31, 2023	$	(1,108	)	$	(11,764	)	$	8,988		$	(3,884	)
Other comprehensive (loss) income before    reclassifications		-			(3,166	)		1,841			(1,325	)
Amounts reclassified from accumulated    other comprehensive income (loss)		-			-			(1,974	)		(1,974	)
Period change		—			(3,166	)		(133	)		(3,299	)
Balance at June 30, 2023	$	(1,108	)	$	(14,930	)	$	8,855		$	(7,183	)
Balance at March 31, 2022	$	(1,022	)	$	(3,034	)	$	8,027		$	3,971
Other comprehensive (loss) income before    reclassifications		(351	)		(4,125	)		1,641			(2,835	)
Amounts reclassified from accumulated    other comprehensive (loss) income		17			-			(176	)		(159	)
Period change		(334	)		(4,125	)		1,465			(2,994	)
Balance at June 30, 2022	$	(1,356	)	$	(7,159	)	$	9,492		$	977
	Accumulated Other Comprehensive Income/(Loss)
	Defined Benefit Pension Plan			Unrealized Gains (Losses) on Securities Available for Sale			Derivatives			Total
Balance at September 30, 2022	$	(1,108	)	$	(13,879	)	$	12,093		$	(2,894	)
Other comprehensive income (loss) before    reclassifications		—			(1,051	)		1,996			945
Amounts reclassified from accumulated other    comprehensive income (loss)		—			—			(5,234	)		(5,234	)
Period change		—			(1,051	)		(3,238	)		(4,289	)
Balance at June 30, 2023	$	(1,108	)	$	(14,930	)	$	8,855		$	(7,183	)
Balance at September 30, 2021	$	(1,907	)	$	1,962		$	627		$	682
Other comprehensive income (loss) before reclassifications		359			(9,121	)		8,723			(39	)
Amounts reclassified from accumulated other    comprehensive income (loss)		192			—			142			334
Period change		551			(9,121	)		8,865			295
Balance at June 30, 2022	$	(1,356	)	$	(7,159	)	$	9,492		$	977

Summary of Reclassification Out of Accumulated Other Comprehensive Income (Loss)

The following table presents significant amounts reclassified out of each component of accumulated other comprehensive income (loss) for the three and nine months ended June 30, 2023 and 2022 (in thousands):

	Amount Reclassified from Accumulated Other Comprehensive Income (Loss)
Details About Accumulated Other Comprehensive Income (Loss) Components	Accumulated Other Comprehensive Income (Loss) for the Three Months Ended June 30,						Affected Line Item in the Consolidated Statement of Operations
	2023			2022
Securities available for sale:
Defined benefit pension plan
Amortization of net gain and prior service costs	$	-		$	(20	)	Compensation and employee benefits
Related income tax expense		-			3		Income taxes
Net effect on accumulated other comprehensive income (loss)    for the period		-			(17	)
Derivatives and hedging activities:
Interest expense, effective portion		2,498			222		Interest expense
Related income tax expense		(524	)		(46	)	Income taxes
Net effect on accumulated other comprehensive income (loss)    for the period		1,974			176
Total reclassification for the period	$	1,974		$	159
	Amount Reclassified from Accumulated Other Comprehensive Income (Loss)
	Accumulated Other Comprehensive Income (Loss) For the Nine Months Ended June 30,						Affected Line Item in the Consolidated Statement of Operations
	2023			2022
Defined benefit pension plan
Amortization of net (loss) gain and prior service costs	$	-		$	(243	)	Compensation and employee benefits
Related income tax expense		-			51		Income taxes
Net effect on accumulated other comprehensive income (loss)    for the period		-			(192	)
Derivative and hedging activities:
Interest expense, effective portion		6,625			(180	)	Interest expense
Related income tax expense		(1,391	)		38		Income taxes
Net effect on accumulated other comprehensive income (loss)    for the period		5,234			(142	)
Total reclassification for the period	$	5,234		$	(334	)

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Derivatives and Hedging Activities (Tables)

9 Months Ended

Jun. 30, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Fair Value of Derivative Financial Instruments as well as their Classification on Consolidated Balance Sheet

The table below presents the fair value of the Company’s derivative financial instruments as of June 30, 2023 and September 30, 2022 (in thousands).

Fair Values of Derivative Instruments
Asset Derivatives
	As of June 30, 2023				As of September 30, 2022
Hedged Item	Notional Amount		Fair Value		Notional Amount		Fair Value
FHLB Advances	$	215,000	$	11,211	$	225,000	$	15,310
Commercial Loans		82,490		7,943		79,602		9,171
Total	$	297,490	$	19,154	$	304,602	$	24,481
Fair Values of Derivative Instruments
Liability Derivatives
	As of June 30, 2023				As of September 30, 2022
Hedged Item	Notional Amount		Fair Value		Notional Amount		Fair Value
Commercial Loans	$	113,946	$	7,949	$	111,668	$	9,176
Total	$	113,946	$	7,949	$	111,668	$	9,176

Schedule of Effect of Fair Value and Cash Flow Hedge Accounting on Accumulated Other Comprehensive Income (Loss)

The table below presents the effect of the Company’s cash flow hedge accounting on Accumulated Other Comprehensive Income (Loss) for the three and nine months ended June 30, 2023 and 2022 (in thousands).

The Effect of Fair Value and Cash Flow Hedge Accounting on Accumulated Other Comprehensive Income (Loss)
Derivatives in Hedging Relationships	(Gain) Loss Recognized in OCI on Derivative (Effective Portion)  Three Months Ended June 30,					Location of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)  Three Months Ended June 30,
Derivatives in Cash Flow Hedging Relationships	2023			2022			2023		2022
Interest Rate Products	$	(168	)	$	1,854	Interest expense	$	2,498	$	222
Total	$	(168	)	$	1,854		$	2,498	$	222
Derivatives in Cash Flow Hedging Relationships	Gain (Loss) Recognized in OCI on Derivative (Effective Portion)  Nine Months Ended June 30,					Location of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	Gain (Loss) Recognized in OCI on Derivative (Effective Portion)  Nine Months Ended June 30,
	2023			2022			2023		2022
Interest Rate Products	$	(4,100	)	$	11,222	Interest expense	$	6,625	$	(180	)
Total	$	(4,100	)	$	11,222		$	6,625	$	(180	)

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Leases (Tables)

9 Months Ended

Jun. 30, 2023

Leases [Abstract]

Summary of Balance Sheet Operating Lease Right-of-Use Assets and Lease Liabilities

The following table presents the Consolidated Balance Sheet classification of the Company’s ROU assets and lease liabilities. The Company elected not to include short-term leases (i.e., leases with initial terms of twelve months or less), or equipment leases (deemed immaterial) on the Consolidated Balance sheet.

(in thousands)		June 30, 2023
Lease Right-of-Use Assets	Classification
Operating lease right-of-use assets	Other assets	$	5,659
Total Lease Right-Of-Use Assets		$	5,659
(in thousands)		June 30, 2023
Lease Liabilities	Classification
Operating lease Liabilities	Other liabilities	$	5,890
Total Lease Liabilities		$	5,890
(in thousands)		September 30, 2022
Lease Right-of-Use Assets	Classification
Operating lease right-of-use assets	Other assets	$	6,075
Total Lease Right-Of-Use Assets		$	6,075
(in thousands)		September 30, 2022
Lease Liabilities	Classification
Operating lease Liabilities	Other liabilities	$	6,275
Total Lease Liabilities		$	6,275

Summary of Lease Term and Discount Rate

The calculated amount of the ROU assets and lease liabilities in the table above are impacted by the length of the lease term and the discount rate used to present value the minimum lease payments. The Company’s lease agreements often include one or more options to renew at the Company’s discretion. If at lease inception, the Company considers the exercising of a renewal option to be reasonably certain, the Company will include the extended term in the calculation of the ROU asset and lease liability. Regarding the discount rate, Topic 842 requires the use of the rate implicit in the lease whenever this rate is readily determinable. As this rate is rarely determinable, the Company utilizes its incremental borrowing rate at lease inception, on a collateralized basis, over a similar term.

	June 30, 2023
Weighted average remaining lease term
Operating leases	11.7
Weighted average discount rate
Operating leases		2.51	%

Summary of Components of Lease Cost

The following table represents lease costs and other lease information. As the Company elected, for all classes of underlying assets, not to separate lease and non-lease components and instead to account for them as a single lease component, the variable lease cost primarily represents variable payments such as common area maintenance and utilities.

Lease Costs (in thousands)	Three Months Ended June 30, 2023
Operating lease cost	$	241
Variable lease cost		58
Net lease cost	$	299
Lease Costs (in thousands)	Three Months Ended June 30, 2022
Operating lease cost	$	238
Variable lease cost		53
Net lease cost	$	291
Lease Costs (in thousands)	Nine Months Ended June 30,2023
Operating lease cost	$	722
Variable lease cost		167
Net lease cost	$	889
Lease Costs (in thousands)	Nine Months Ended June 30,2022
Operating lease cost	$	501
Variable lease cost		180
Net lease cost	$	681

Summary of Future Minimum Lease Payments

Future minimum payments for operating leases with initial or remaining terms of one year or more as of June 30, 2023 were as follows:

(in thousands)	Operating leases
Twelve months Ended:
June 30, 2024	$	800
June 30, 2025		650
June 30, 2026		633
June 30, 2027		494
June 30, 2028		464
Thereafter		3,707
Total future minimum lease payments		6,748
Amounts representing interest		858
Present Value of Net Future Minimum Lease Payments	$	5,890

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Earnings Per Share - Composition of the Weighted-Average Common Shares (Denominator) Used in the Basic and Diluted Earnings per Share Computation (Detail) - shares	3 Months Ended		9 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Earnings Per Share [Abstract]
Weighted-average common shares outstanding	18,133,095	18,133,095	18,133,095	18,133,095
Average treasury stock shares	(7,730,956)	(7,647,258)	(7,732,112)	(7,644,930)
Average unearned ESOP shares	(626,229)	(650,628)	(637,587)	(661,986)
Average unearned non-vested shares	(41,202)	(46,965)	(46,803)	(50,071)
Weighted average common shares and common stock equivalents used to calculate basic earnings per share	9,734,708	9,788,244	9,716,593	9,776,108
Additional common stock equivalents (nonvested stock) used to calculate diluted earnings per share		1,965		2,050
Weighted average common shares and common stock equivalents used to calculate diluted earnings per share	9,734,708	9,790,209	9,716,593	9,778,158

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Earnings Per Share - Additional Information (Detail) - Stock Option [Member] - $ / shares	9 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities	2,947	25,148
Average weighted price per share of anti-dilutive shares	$ 19.04	$ 16.52

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Investment Securities - Summary of Amortized Cost, Gross Unrealized Gains and Losses, and Fair Value of Investment Securities (Detail) - USD ($) $ in Thousands	Jun. 30, 2023	Sep. 30, 2022
Schedule Of Available For Sale Securities [Line Items]
Available for sale, Amortized Cost	$ 306,885
Available for sale, Fair Value	287,983	$ 208,647
Held to maturity, Amortized Cost	53,570	57,285
Fannie Mae [Member]
Schedule Of Available For Sale Securities [Line Items]
Available for sale, Amortized Cost	55,614	61,118
Available for sale, Gross Unrealized Gains		1
Available for sale, Gross Unrealized Losses	(4,680)	(5,432)
Available for sale, Fair Value	50,934	55,687
Held to maturity, Amortized Cost	28,450	30,659
Held to maturity, Gross Unrealized Losses	(4,405)	(5,127)
Held to maturity, Fair Value	24,045	25,532
Freddie Mac [Member]
Schedule Of Available For Sale Securities [Line Items]
Available for sale, Amortized Cost	49,366	53,842
Available for sale, Gross Unrealized Losses	(3,801)	(4,532)
Available for sale, Fair Value	45,565	49,310
Held to maturity, Amortized Cost	22,677	24,187
Held to maturity, Gross Unrealized Losses	(3,625)	(4,142)
Held to maturity, Fair Value	19,052	20,045
Governmental National Mortgage Association [Member]
Schedule Of Available For Sale Securities [Line Items]
Available for sale, Amortized Cost	4,892	5,411
Available for sale, Gross Unrealized Losses	(301)	(248)
Available for sale, Fair Value	4,591	5,163
Mortgage-Backed Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Available for sale, Amortized Cost	109,872	120,371
Available for sale, Gross Unrealized Gains		1
Available for sale, Gross Unrealized Losses	(8,782)	(10,212)
Available for sale, Fair Value	101,090	110,160
Held to maturity, Amortized Cost	51,127	54,846
Held to maturity, Gross Unrealized Losses	(8,030)	(9,269)
Held to maturity, Fair Value	43,097	45,577
Obligations of States and Political Subdivisions [Member]
Schedule Of Available For Sale Securities [Line Items]
Available for sale, Amortized Cost	10,800	10,815
Available for sale, Gross Unrealized Losses	(734)	(895)
Available for sale, Fair Value	10,066	9,920
U.S. Government Treasury Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Available for sale, Amortized Cost	98,510
Available for sale, Gross Unrealized Gains	17
Available for sale, Gross Unrealized Losses	(1)
Available for sale, Fair Value	98,526
U.S. Government Agency Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Available for sale, Amortized Cost	4,500	9,530
Available for sale, Gross Unrealized Losses	(133)	(200)
Available for sale, Fair Value	4,367	9,330
Held to maturity, Amortized Cost	2,443	2,439
Held to maturity, Gross Unrealized Losses	(438)	(470)
Held to maturity, Fair Value	2,005	1,969
Corporate Obligations [Member]
Schedule Of Available For Sale Securities [Line Items]
Available for sale, Amortized Cost	75,786	76,692
Available for sale, Gross Unrealized Gains		14
Available for sale, Gross Unrealized Losses	(8,618)	(5,587)
Available for sale, Fair Value	67,168	71,119
Other Debt Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Available for sale, Amortized Cost	7,417	8,810
Available for sale, Gross Unrealized Gains		2
Available for sale, Gross Unrealized Losses	(651)	(694)
Available for sale, Fair Value	6,766	8,118
Total Debt Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Available for sale, Amortized Cost	306,885	226,218
Available for sale, Gross Unrealized Gains	17	17
Available for sale, Gross Unrealized Losses	(18,919)	(17,588)
Available for sale, Fair Value	287,983	208,647
Held to maturity, Amortized Cost	53,570	57,285
Held to maturity, Gross Unrealized Losses	(8,468)	(9,739)
Held to maturity, Fair Value	$ 45,102	$ 47,546

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Investment Securities - Summary of Unrealized and Realized Gains and Losses Recognized in Net Income on Equity Securities (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Investments, Debt and Equity Securities [Abstract]
Net (losses) gains recognized during the period on equity securities	$ (1)	$ 4	$ (4)	$ 5
Unrealized (losses) gains recognized during the reporting period on equity securities still held at the reporting date	$ (1)	$ 4	$ (4)	$ 5

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Investment Securities - Schedule of Amortized Cost and Fair Value of Debt Securities by Contractual Maturity (Detail) - USD ($) $ in Thousands	Jun. 30, 2023	Sep. 30, 2022
Available-for-sale Securities, Debt Maturities, Amortized Cost Basis, Fiscal Year Maturity [Abstract]
Due in one year or less, Amortized Cost	$ 101,884
Due after one year through five years, Amortized Cost	36,811
Due after five years through ten years, Amortized Cost	72,505
Due after ten years, Amortized Cost	95,685
Available for sale, Amortized Cost	306,885
Available-for-sale Securities, Debt Maturities, Fair Value, Fiscal Year Maturity [Abstract]
Due in one year or less, Fair Value	101,877
Due after one year through five years, Fair Value	34,915
Due after five years through ten years, Fair Value	63,609
Due after ten years, Fair Value	87,582
Total, Fair Value	287,983	$ 208,647
Held to maturity Securities, Debt Maturities, Amortized Cost Basis, Fiscal Year Maturity [Abstract]
Due after five years through ten years, Amortized Cost	7,267
Due after ten years, Amortized Cost	46,303
Total, Amortized Cost	53,570
Held to maturity Securities, Debt Maturities, Fair Value, Fiscal Year Maturity [Abstract]
Due after five years through ten years, Fair Value	6,297
Due after ten years, Fair Value	38,805
Total, Fair Value	$ 45,102

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Investment Securities - Additional Information (Detail) - USD ($)	3 Months Ended		9 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Amortized Cost And Fair Value Debt Securities [Abstract]
Realized gross gains	$ 0	$ 0	$ 0	$ 0
Realized gross losses	$ 0	$ 0	$ 0	$ 0

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Investment Securities - Schedule of Gross Unrealized Losses and Fair Value (Detail) $ in Thousands	Jun. 30, 2023 USD ($) Security	Sep. 30, 2022 USD ($) Security
Schedule Of Available For Sale Securities [Line Items]
Number of Securities, Debt | Security	273	271
Fair Value, Less than Twelve Months, Debt	$ 57,824	$ 206,295
Gross Unrealized Losses, Less than Twelve Months, Debt	(1,559)	(20,975)
Fair Value, Twelve Months or Greater, Debt	200,005	46,874
Gross Unrealized Losses, Twelve Months or Greater, Debt	(25,828)	(6,352)
Fair Value Total, Debt	257,829	253,169
Gross Unrealized Losses Total, Debt	$ (27,387)	$ (27,327)
Fannie Mae [Member]
Schedule Of Available For Sale Securities [Line Items]
Number of Securities, Debt | Security	77	74
Fair Value, Less than Twelve Months, Debt	$ 5,600	$ 67,101
Gross Unrealized Losses, Less than Twelve Months, Debt	(116)	(8,344)
Fair Value, Twelve Months or Greater, Debt	69,380	13,759
Gross Unrealized Losses, Twelve Months or Greater, Debt	(8,969)	(2,215)
Fair Value Total, Debt	74,980	80,860
Gross Unrealized Losses Total, Debt	$ (9,085)	$ (10,559)
Freddie Mac [Member]
Schedule Of Available For Sale Securities [Line Items]
Number of Securities, Debt | Security	62	63
Fair Value, Less than Twelve Months, Debt	$ 15,125	$ 59,954
Gross Unrealized Losses, Less than Twelve Months, Debt	(708)	(6,868)
Fair Value, Twelve Months or Greater, Debt	49,287	9,401
Gross Unrealized Losses, Twelve Months or Greater, Debt	(6,718)	(1,806)
Fair Value Total, Debt	64,412	69,355
Gross Unrealized Losses Total, Debt	$ (7,426)	$ (8,674)
Governmental National Mortgage Association Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Number of Securities, Debt | Security	12	13
Fair Value, Less than Twelve Months, Debt	$ 918	$ 2,924
Gross Unrealized Losses, Less than Twelve Months, Debt	(25)	(194)
Fair Value, Twelve Months or Greater, Debt	3,674	2,182
Gross Unrealized Losses, Twelve Months or Greater, Debt	(276)	(54)
Fair Value Total, Debt	4,592	5,106
Gross Unrealized Losses Total, Debt	$ (301)	$ (248)
U.S. Government Treasury Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Number of Securities, Debt | Security	1
Fair Value, Less than Twelve Months, Debt	$ 24,378
Gross Unrealized Losses, Less than Twelve Months, Debt	(1)
Fair Value Total, Debt	24,378
Gross Unrealized Losses Total, Debt	$ (1)
U.S. Government Agency Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Number of Securities, Debt | Security	3	4
Fair Value, Less than Twelve Months, Debt		$ 11,299
Gross Unrealized Losses, Less than Twelve Months, Debt		(670)
Fair Value, Twelve Months or Greater, Debt	$ 6,372
Gross Unrealized Losses, Twelve Months or Greater, Debt	(571)
Fair Value Total, Debt	6,372	11,299
Gross Unrealized Losses Total, Debt	$ (571)	$ (670)
Obligations of States and Political Subdivisions [Member]
Schedule Of Available For Sale Securities [Line Items]
Number of Securities, Debt | Security	12	12
Fair Value, Less than Twelve Months, Debt	$ 1,474	$ 9,920
Gross Unrealized Losses, Less than Twelve Months, Debt	(27)	(895)
Fair Value, Twelve Months or Greater, Debt	8,593
Gross Unrealized Losses, Twelve Months or Greater, Debt	(707)
Fair Value Total, Debt	10,067	9,920
Gross Unrealized Losses Total, Debt	$ (734)	$ (895)
Corporate Obligations [Member]
Schedule Of Available For Sale Securities [Line Items]
Number of Securities, Debt | Security	89	88
Fair Value, Less than Twelve Months, Debt	$ 10,329	$ 49,333
Gross Unrealized Losses, Less than Twelve Months, Debt	(682)	(3,394)
Fair Value, Twelve Months or Greater, Debt	56,338	19,773
Gross Unrealized Losses, Twelve Months or Greater, Debt	(7,936)	(2,193)
Fair Value Total, Debt	66,667	69,106
Gross Unrealized Losses Total, Debt	$ (8,618)	$ (5,587)
Other Debt Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Number of Securities, Debt | Security	17	17
Fair Value, Less than Twelve Months, Debt		$ 5,764
Gross Unrealized Losses, Less than Twelve Months, Debt		(610)
Fair Value, Twelve Months or Greater, Debt	$ 6,361	1,759
Gross Unrealized Losses, Twelve Months or Greater, Debt	(651)	(84)
Fair Value Total, Debt	6,361	7,523
Gross Unrealized Losses Total, Debt	$ (651)	$ (694)

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Loans Receivable, Net and Allowance for Loan Losses - Summary of Loans Receivable (Detail) - USD ($) $ in Thousands	Jun. 30, 2023	Mar. 31, 2023	Sep. 30, 2022	Jun. 30, 2022	Mar. 31, 2022	Sep. 30, 2021
Real estate loans:
Total Loans	$ 1,629,286		$ 1,454,311
Less allowance for loan losses	18,220	$ 18,315	18,528	$ 18,334	$ 18,208	$ 18,113
Net loans	1,611,066		1,435,783
Commercial Loans [Member]
Real estate loans:
Total Loans	47,181		38,158
Less allowance for loan losses	969	1,185	698	793	823	1,041
Real Estate Loans [Member] | Residential [Member]
Real estate loans:
Total Loans	693,711		623,375
Less allowance for loan losses	4,713	4,870	5,122	4,601	4,403	4,114
Real Estate Loans [Member] | Construction [Member]
Real estate loans:
Total Loans	26,761		25,024
Less allowance for loan losses	299	328	319	259	245	187
Real Estate Loans [Member] | Commercial [Member]
Real estate loans:
Total Loans	764,849		678,841
Less allowance for loan losses	11,215	11,016	10,754	11,015	10,550	10,470
Obligations of States and Political Subdivisions [Member]
Real estate loans:
Total Loans	47,904		40,416
Less allowance for loan losses	242	243	283	283	246	393
Home Equity Loans and Lines of Credit [Member]
Real estate loans:
Total Loans	46,302		43,170
Less allowance for loan losses	332	336	361	341	310	318
Auto Loans [Member]
Real estate loans:
Total Loans	926		3,611
Less allowance for loan losses	5	8	22	50	89	232
Other [Member]
Real estate loans:
Total Loans	1,652		1,716
Less allowance for loan losses	$ 18	$ 22	$ 22	$ 20	$ 20	$ 21

XML

Loans Receivable, Net and Allowance for Loan Losses - Schedule of Loans Evaluated for Impairment (Detail) - USD ($) $ in Thousands	Jun. 30, 2023	Sep. 30, 2022
Financing Receivable, Recorded Investment [Line Items]
Total Loans	$ 1,629,286	$ 1,454,311
Individually Evaluated for Impairment	9,917	14,502
Collectively Evaluated for Impairment	1,619,369	1,439,809
Commercial Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	47,181	38,158
Individually Evaluated for Impairment	670	937
Collectively Evaluated for Impairment	46,511	37,221
Real Estate Loans [Member] | Residential [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	693,711	623,375
Individually Evaluated for Impairment	1,400	1,342
Collectively Evaluated for Impairment	692,311	622,033
Real Estate Loans [Member] | Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	26,761	25,024
Collectively Evaluated for Impairment	26,761	25,024
Real Estate Loans [Member] | Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	764,849	678,841
Individually Evaluated for Impairment	7,805	12,165
Collectively Evaluated for Impairment	757,044	666,676
Obligations of States and Political Subdivisions [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	47,904	40,416
Collectively Evaluated for Impairment	47,904	40,416
Home Equity Loans and Lines of Credit [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	46,302	43,170
Individually Evaluated for Impairment	30	36
Collectively Evaluated for Impairment	46,272	43,134
Auto Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	926	3,611
Individually Evaluated for Impairment	8	16
Collectively Evaluated for Impairment	918	3,595
Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	1,652	1,716
Individually Evaluated for Impairment	4	6
Collectively Evaluated for Impairment	$ 1,648	$ 1,710

XML

Loans Receivable, Net and Allowance for Loan Losses - Schedule of Investment and Unpaid Principal Balances for Impaired Loans (Detail) - USD ($)	3 Months Ended		9 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Sep. 30, 2022
Financing Receivable, Impaired [Line Items]
Recorded Investment	$ 9,917,000		$ 9,917,000		$ 14,502,000
Unpaid Principal Balance	11,759,000		11,759,000		16,155,000
Associated Allowance	8,000		8,000		351,000
Average Recorded Investment	9,931,000	$ 5,151,000	12,427,000	$ 9,706,000
Interest Income Recognized	1,000	2,000	4,000	7,000
With no Specific Allowance Recorded [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment	9,817,000		9,817,000		10,546,000
Unpaid Principal Balance	11,655,000		11,655,000		12,036,000
Average Recorded Investment	9,007,000	3,696,000	10,136,000	8,474,000
Interest Income Recognized	1,000	2,000	4,000	7,000
With an Allowance Recorded [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment	100,000		100,000		3,956,000
Unpaid Principal Balance	104,000		104,000		4,119,000
Associated Allowance	8,000		8,000		351,000
Average Recorded Investment	924,000	1,455,000	2,291,000	1,232,000
Home Equity Loans and Lines of Credit [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment	30,000		30,000		36,000
Unpaid Principal Balance	64,000		64,000		68,000
Average Recorded Investment	31,000	285,000	33,000	295,000
Home Equity Loans and Lines of Credit [Member] | With no Specific Allowance Recorded [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment	30,000		30,000		36,000
Unpaid Principal Balance	64,000		64,000		68,000
Average Recorded Investment	31,000	285,000	33,000	295,000
Auto Loans [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment	8,000		8,000		16,000
Unpaid Principal Balance	8,000		8,000		28,000
Average Recorded Investment	2,000	11,000	4,000	25,000
Auto Loans [Member] | With no Specific Allowance Recorded [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment	8,000		8,000		16,000
Unpaid Principal Balance	8,000		8,000		28,000
Average Recorded Investment	2,000	11,000	4,000	21,000
Auto Loans [Member] | With an Allowance Recorded [Member]
Financing Receivable, Impaired [Line Items]
Average Recorded Investment				4,000
Other [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment	4,000		4,000		6,000
Unpaid Principal Balance	18,000		18,000		19,000
Average Recorded Investment	4,000		5,000
Other [Member] | With no Specific Allowance Recorded [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment	4,000		4,000		6,000
Unpaid Principal Balance	18,000		18,000		19,000
Average Recorded Investment	4,000		5,000
Residential [Member] | Real Estate Loans [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment	1,400,000		1,400,000		1,342,000
Unpaid Principal Balance	2,019,000		2,019,000		2,137,000
Associated Allowance	8,000		8,000		12,000
Average Recorded Investment	999,000	1,705,000	1,192,000	2,051,000
Interest Income Recognized		2,000	2,000	7,000
Residential [Member] | Real Estate Loans [Member] | With no Specific Allowance Recorded [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment	1,300,000		1,300,000		1,239,000
Unpaid Principal Balance	1,915,000		1,915,000		2,029,000
Average Recorded Investment	898,000	1,600,000	1,090,000	1,935,000
Interest Income Recognized		2,000	2,000	7,000
Residential [Member] | Real Estate Loans [Member] | With an Allowance Recorded [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment	100,000		100,000		103,000
Unpaid Principal Balance	104,000		104,000		108,000
Associated Allowance	8,000		8,000		12,000
Average Recorded Investment	101,000	105,000	102,000	116,000
Commercial [Member] | Real Estate Loans [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment	7,805,000		7,805,000		12,165,000
Unpaid Principal Balance	8,683,000		8,683,000		12,915,000
Associated Allowance					301,000
Average Recorded Investment	8,141,000	2,992,000	10,325,000	6,566,000
Interest Income Recognized	1,000		2,000
Commercial [Member] | Real Estate Loans [Member] | With no Specific Allowance Recorded [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment	7,805,000		7,805,000		8,384,000
Unpaid Principal Balance	8,683,000		8,683,000		8,987,000
Average Recorded Investment	7,618,000	1,722,000	8,497,000	6,135,000
Interest Income Recognized	1,000		2,000
Commercial [Member] | Real Estate Loans [Member] | With an Allowance Recorded [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment					3,781,000
Unpaid Principal Balance					3,928,000
Associated Allowance					301,000
Average Recorded Investment	523,000	1,270,000	1,828,000	431,000
Commercial Loans [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment	670,000		670,000		937,000
Unpaid Principal Balance	967,000		967,000		988,000
Associated Allowance					38,000
Average Recorded Investment	754,000	158,000	868,000	769,000
Commercial Loans [Member] | With no Specific Allowance Recorded [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment	670,000		670,000		865,000
Unpaid Principal Balance	967,000		967,000		905,000
Average Recorded Investment	454,000	78,000	507,000	88,000
Commercial Loans [Member] | With an Allowance Recorded [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment					72,000
Unpaid Principal Balance					83,000
Associated Allowance					$ 38,000
Average Recorded Investment	$ 300,000	$ 80,000	$ 361,000	$ 681,000

XML

Loans Receivable, Net and Allowance for Loan Losses - Additional Information (Detail)	3 Months Ended		9 Months Ended
	Jun. 30, 2023 USD ($) Contract	Jun. 30, 2022 Contract	Jun. 30, 2023 USD ($) Contract	Jun. 30, 2022 Contract
Receivables [Abstract]
Criteria in internal rating system			ten-point
Categories considered as not criticized			six
Days past due over which loans are considered as substandard			90 days
Minimum internal review amount	$ 750,000		$ 750,000
Minimum external review amount	1,000,000		1,000,000
Loans greater than 90 days past due and still accruing interest	$ 0		$ 0
Number of Contracts | Contract		0
Number of troubled debt restructurings, loan modified, defaulted within one year of modification | Contract	0	0	0	0

XML

Loans Receivable, Net and Allowance for Loan Losses - Classes of Loan Portfolio, Internal Risk Rating System (Detail) - USD ($) $ in Thousands	Jun. 30, 2023	Sep. 30, 2022
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loan, total	$ 1,611,066	$ 1,435,783
Commercial And Municipal Portfolio Segment
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loan, total	859,934	757,415
Commercial And Municipal Portfolio Segment | Commercial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loan, total	764,849	678,841
Commercial And Municipal Portfolio Segment | Commercial Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loan, total	47,181	38,158
Commercial And Municipal Portfolio Segment | Obligations of States and Political Subdivisions [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loan, total	47,904	40,416
Commercial And Municipal Portfolio Segment | Pass [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loan, total	844,205	734,842
Commercial And Municipal Portfolio Segment | Pass [Member] | Commercial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loan, total	751,109	659,104
Commercial And Municipal Portfolio Segment | Pass [Member] | Commercial Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loan, total	45,192	35,322
Commercial And Municipal Portfolio Segment | Pass [Member] | Obligations of States and Political Subdivisions [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loan, total	47,904	40,416
Commercial And Municipal Portfolio Segment | Special Mention [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loan, total	3,256	7,750
Commercial And Municipal Portfolio Segment | Special Mention [Member] | Commercial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loan, total	3,241	6,060
Commercial And Municipal Portfolio Segment | Special Mention [Member] | Commercial Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loan, total	15	1,690
Commercial And Municipal Portfolio Segment | Substandard [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loan, total	12,473	14,823
Commercial And Municipal Portfolio Segment | Substandard [Member] | Commercial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loan, total	10,499	13,677
Commercial And Municipal Portfolio Segment | Substandard [Member] | Commercial Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loan, total	$ 1,974	$ 1,146

XML

Loans Receivable, Net and Allowance for Loan Losses - Schedule of Performing or Non-Performing Loans (Detail) - USD ($) $ in Thousands	Jun. 30, 2023	Sep. 30, 2022
Financing Receivable, Recorded Investment [Line Items]
Total	$ 1,611,066	$ 1,435,783
Consumer Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	769,352	696,896
Home Equity Loans and Lines of Credit [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	46,302	43,170
Auto Loans [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	926	3,611
Other [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	1,652	1,716
Performing [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	766,816	694,937
Performing [Member] | Home Equity Loans and Lines of Credit [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	46,251	42,832
Performing [Member] | Auto Loans [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	916	3,590
Performing [Member] | Other [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	1,619	1,710
Non-performing [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	2,536	1,959
Non-performing [Member] | Home Equity Loans and Lines of Credit [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	51	338
Non-performing [Member] | Auto Loans [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	10	21
Non-performing [Member] | Other [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	33	6
Residential [Member] | Real Estate Loans [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	693,711	623,375
Residential [Member] | Performing [Member] | Real Estate Loans [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	691,269	621,781
Residential [Member] | Non-performing [Member] | Real Estate Loans [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	2,442	1,594
Construction [Member] | Real Estate Loans [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	26,761	25,024
Construction [Member] | Performing [Member] | Real Estate Loans [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	$ 26,761	$ 25,024

XML

Loans Receivable, Net and Allowance for Loan Losses - Classes of Loan Portfolio Summarized by Aging Categories (Detail) - USD ($) $ in Thousands	Jun. 30, 2023	Sep. 30, 2022
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current, Accruing Loans	$ 1,623,761	$ 1,444,734
31-60 Days Past Due, Accruing Loans	1,378	7,111
61-89 Days Past Due, Accruing Loans	1,037	984
90+ Days Past Due	3,110	1,482
Total Past Due, Accruing Loans	5,525	9,577
Total Accruing Loans	1,629,286	1,454,311
Non-Accrual Loans	11,155	15,082
Obligations of States and Political Subdivisions [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current, Accruing Loans	47,904	40,416
Total Accruing Loans	47,904	40,416
Home Equity Loans and Lines of Credit [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current, Accruing Loans	46,251	42,842
31-60 Days Past Due, Accruing Loans		121
61-89 Days Past Due, Accruing Loans	30	144
90+ Days Past Due	21	63
Total Past Due, Accruing Loans	51	328
Total Accruing Loans	46,302	43,170
Non-Accrual Loans	51	338
Auto Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current, Accruing Loans	904	3,462
31-60 Days Past Due, Accruing Loans	22	134
61-89 Days Past Due, Accruing Loans		2
90+ Days Past Due		13
Total Past Due, Accruing Loans	22	149
Total Accruing Loans	926	3,611
Non-Accrual Loans	10	21
Other [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current, Accruing Loans	1,622	1,685
61-89 Days Past Due, Accruing Loans		31
90+ Days Past Due	30
Total Past Due, Accruing Loans	30	31
Total Accruing Loans	1,652	1,716
Non-Accrual Loans	33	6
Residential [Member] | Real Estate Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current, Accruing Loans	690,450	621,270
31-60 Days Past Due, Accruing Loans	1,134	598
61-89 Days Past Due, Accruing Loans	145	367
90+ Days Past Due	1,982	1,140
Total Past Due, Accruing Loans	3,261	2,105
Total Accruing Loans	693,711	623,375
Non-Accrual Loans	2,442	1,594
Construction [Member] | Real Estate Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current, Accruing Loans	26,761	25,024
Total Accruing Loans	26,761	25,024
Commercial [Member] | Real Estate Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current, Accruing Loans	762,960	672,875
31-60 Days Past Due, Accruing Loans	222	5,719
61-89 Days Past Due, Accruing Loans	847
90+ Days Past Due	820	247
Total Past Due, Accruing Loans	1,889	5,966
Total Accruing Loans	764,849	678,841
Non-Accrual Loans	7,946	12,165
Commercial Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current, Accruing Loans	46,909	37,160
31-60 Days Past Due, Accruing Loans		539
61-89 Days Past Due, Accruing Loans	15	440
90+ Days Past Due	257	19
Total Past Due, Accruing Loans	272	998
Total Accruing Loans	47,181	38,158
Non-Accrual Loans	$ 673	$ 958

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Loans Receivable, Net and Allowance for Loan Losses - Summary of Changes in Primary Segments of ALL (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Sep. 30, 2022
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance, Beginning of period	$ 18,315	$ 18,208	$ 18,528	$ 18,113
Charge-offs	(275)	(42)	(895)	(92)
Recoveries	30	168	137	313
Provision	150		450
Balance, End of period	18,220	18,334	18,220	18,334
Individually evaluated for impairment	8		8		$ 351
Collectively evaluated for impairment	18,212		18,212		18,177
Commercial Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance, Beginning of period	1,185	823	698	1,041
Charge-offs	(269)		(269)
Provision	53	(30)	540	(248)
Balance, End of period	969	793	969	793
Individually evaluated for impairment					38
Collectively evaluated for impairment	969		969		660
Unallocated [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance, Beginning of period	307	1,522	947	1,337
Provision	120	(550)	(520)	(365)
Balance, End of period	427	972	427	972
Collectively evaluated for impairment	427		427		947
Real Estate Loans [Member] | Residential [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance, Beginning of period	4,870	4,403	5,122	4,114
Charge-offs		(9)		(19)
Recoveries		130	2	202
Provision	(157)	77	(411)	304
Balance, End of period	4,713	4,601	4,713	4,601
Individually evaluated for impairment	8		8		12
Collectively evaluated for impairment	4,705		4,705		5,110
Real Estate Loans [Member] | Construction [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance, Beginning of period	328	245	319	187
Provision	(29)	14	(20)	72
Balance, End of period	299	259	299	259
Collectively evaluated for impairment	299		299		319
Real Estate Loans [Member] | Commercial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance, Beginning of period	11,016	10,550	10,754	10,470
Charge-offs	(6)		(599)	(19)
Recoveries		15	1	22
Provision	205	(450)	1,059	542
Balance, End of period	11,215	11,015	11,215	11,015
Individually evaluated for impairment					301
Collectively evaluated for impairment	11,215		11,215		10,453
Obligations of States and Political Subdivisions [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance, Beginning of period	243	246	283	393
Provision	(1)	37	(41)	(110)
Balance, End of period	242	283	242	283
Collectively evaluated for impairment	242		242		283
Home Equity Loans and Lines of Credit [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance, Beginning of period	336	310	361	318
Charge-offs		(6)		(6)
Recoveries	14	1	65	4
Provision	(18)	36	(94)	25
Balance, End of period	332	341	332	341
Collectively evaluated for impairment	332		332		361
Auto Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance, Beginning of period	8	89	22	232
Charge-offs		(16)	(27)	(37)
Recoveries	16	22	69	85
Provision	(19)	(45)	(59)	(230)
Balance, End of period	5	50	5	50
Collectively evaluated for impairment	5		5		22
Other [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance, Beginning of period	22	20	22	21
Charge-offs		(11)		(11)
Provision	(4)	11	(4)	10
Balance, End of period	18	$ 20	18	$ 20
Collectively evaluated for impairment	$ 18		$ 18		$ 22

XML

Loans Receivable, Net and Allowance for Loan Losses - Summary of Troubled Debt Restructurings Granted (Detail) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2023 USD ($) Contract	Jun. 30, 2022 Contract	Jun. 30, 2023 USD ($) Contract	Jun. 30, 2022 USD ($) Contract
Financing Receivable, Modifications [Line Items]
Number of Contracts | Contract		0
Real Estate Loans [Member] | Residential [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts | Contract	1		2	2
Pre-Modification Outstanding Recorded Investment	$ 211		$ 262	$ 88
Post-Modification Outstanding Recorded Investment	$ 211		$ 262	$ 88
Real Estate Loans [Member] | Commercial [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts | Contract	3		3
Pre-Modification Outstanding Recorded Investment	$ 6,058		$ 6,058
Post-Modification Outstanding Recorded Investment	$ 6,058		$ 6,058
Troubled Debt Restructurings [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts | Contract	4		5	2
Pre-Modification Outstanding Recorded Investment	$ 6,269		$ 6,320	$ 88
Post-Modification Outstanding Recorded Investment	$ 6,269		$ 6,320	$ 88

XML

Deposits - Schedule of Deposits by Major Classifications (Detail) - USD ($) $ in Thousands	Jun. 30, 2023	Sep. 30, 2022
Deposits Liabilities Disclosures [Abstract]
Non-interest bearing demand accounts	$ 280,732	$ 290,061
Interest bearing demand accounts	308,280	357,516
Money market accounts	341,844	402,080
Savings and club accounts	169,329	196,696
Certificates of deposit	425,292	133,668
Total	$ 1,525,477	$ 1,380,021

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Net Periodic Benefit Cost-Defined Benefit Plan - Summary of the Components of Net Periodic Benefit Cost (Income) (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Compensation Related Costs [Abstract]
Interest Cost	$ 164	$ 142	$ 492	$ 398
Expected return on plan assets	(242)	(296)	(726)	(968)
Partial settlement		20		241
Amortization of net loss from earlier periods				2
Net periodic benefit income	$ (78)	$ (134)	$ (234)	$ (327)

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Equity Incentive Plan - Additional Information (Detail) - USD ($)		3 Months Ended		9 Months Ended
	Mar. 02, 2016	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Compensation Related Costs Disclosure [Line Items]
Share-based compensation expense				$ 471,000	$ 427,000
2007 Equity Incentive Plan [Member]
Compensation Related Costs Disclosure [Line Items]
Common stock issuance, Grant	2,377,326
Further number of shares, grants	0
2016 Plan [Member]
Compensation Related Costs Disclosure [Line Items]
Common stock issuance, Grant		250,000		250,000
Stock Option [Member]
Compensation Related Costs Disclosure [Line Items]
Number of available shares	1,698,090
Restricted Stock [Member]
Compensation Related Costs Disclosure [Line Items]
Number of available shares	679,236
Share-based compensation expense		$ 72,000	$ 92,000	$ 427,000	$ 471,000
Expected future expense				$ 633,000
Remaining vesting periods				3 years 3 months
Restricted Stock [Member] | Minimum [Member]
Compensation Related Costs Disclosure [Line Items]
Restricted shares vesting period				3 months
Restricted Stock [Member] | Maximum [Member]
Compensation Related Costs Disclosure [Line Items]
Restricted shares vesting period				39 months

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Equity Incentive Plan - Schedule of Restricted Stock Option Activity (Detail) - Restricted Stock [Member]	9 Months Ended
	Jun. 30, 2023 $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of Restricted Stock, Nonvested at September 30, 2022 | shares	35,639
Number of Restricted Stock, Granted | shares	31,696
Number of Restricted Stock, Vested | shares	(11,941)
Number of Restricted Stock, Forfeited | shares	(1,148)
Number of Restricted Stock, Nonvested at June 30, 2023 | shares	54,246
Weighted-average Grant Date Fair Value, Nonvested at September 30, 2022 | $ / shares	$ 14.88
Weighted-average Grant Date Fair Value, Granted | $ / shares	19.06
Weighted-average Grant Date Fair Value, Vested | $ / shares	18.31
Weighted-average Grant Date Fair Value, Forfeited | $ / shares	16.35
Weighted-average Grant Date Fair Value, Nonvested at June 30, 2023 | $ / shares	$ 16.54

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Fair Value - Schedule of Fair Value For Assets and Liabilities Required to be Measured and Reported at Fair Value on a Recurring Basis (Detail) - USD ($) $ in Thousands	Jun. 30, 2023	Sep. 30, 2022
Assets
Total debt securities	$ 287,983	$ 208,647
Fair Value, Measurements, Recurring [Member]
Assets
Total debt securities	287,983	208,647
Equity securities- financial services	31	36
Derivatives and hedging activities	19,154	24,481
Liabilities
Derivatives and hedging activities	7,949	9,176
Fair Value, Measurements, Recurring [Member] | Mortgage-Backed Securities [Member]
Assets
Total debt securities	101,090	110,160
Fair Value, Measurements, Recurring [Member] | Obligations of States and Political Subdivisions [Member]
Assets
Total debt securities	10,066	9,920
Fair Value, Measurements, Recurring [Member] | U.S. Government Agency Securities [Member]
Assets
Total debt securities	4,367	9,330
Fair Value, Measurements, Recurring [Member] | U.S. Government Treasury Securities [Member]
Assets
Total debt securities	98,526
Fair Value, Measurements, Recurring [Member] | Corporate Obligations [Member]
Assets
Total debt securities	67,168	71,119
Fair Value, Measurements, Recurring [Member] | Other Debt Securities [Member]
Assets
Total debt securities	6,766	8,118
Fair Value, Measurements, Recurring [Member] | Level I [Member]
Assets
Equity securities- financial services	31	36
Fair Value, Measurements, Recurring [Member] | Level II [Member]
Assets
Total debt securities	285,150	201,273
Derivatives and hedging activities	19,154	24,481
Liabilities
Derivatives and hedging activities	7,949	9,176
Fair Value, Measurements, Recurring [Member] | Level II [Member] | Mortgage-Backed Securities [Member]
Assets
Total debt securities	101,090	110,160
Fair Value, Measurements, Recurring [Member] | Level II [Member] | Obligations of States and Political Subdivisions [Member]
Assets
Total debt securities	10,066	9,920
Fair Value, Measurements, Recurring [Member] | Level II [Member] | U.S. Government Agency Securities [Member]
Assets
Total debt securities	4,367	9,330
Fair Value, Measurements, Recurring [Member] | Level II [Member] | U.S. Government Treasury Securities [Member]
Assets
Total debt securities	98,526
Fair Value, Measurements, Recurring [Member] | Level II [Member] | Corporate Obligations [Member]
Assets
Total debt securities	64,335	63,745
Fair Value, Measurements, Recurring [Member] | Level II [Member] | Other Debt Securities [Member]
Assets
Total debt securities	6,766	8,118
Fair Value, Measurements, Recurring [Member] | Level III [Member]
Assets
Total debt securities	2,833	7,374
Fair Value, Measurements, Recurring [Member] | Level III [Member] | Corporate Obligations [Member]
Assets
Total debt securities	$ 2,833	$ 7,374

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Fair Value - Schedule of Changes in Fair Value of Level III Investments (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Fair Value Disclosures [Abstract]
Beginning balance	$ 3,429	$ 10,762	$ 7,374	$ 11,112
Purchases, sales, issuances, settlements, net		1,000		500
Total unrealized (loss) gain:
Included in other comprehensive (loss) income	$ (96)	$ (493)	$ (524)	$ (843)
Fair Value, Asset, Recurring Basis, Unobservable Input Reconciliation, Asset, Gain (Loss), Statement of Other Comprehensive Income or Comprehensive Income [Extensible Enumeration]	Gain on sale of loans, net	Gain on sale of loans, net	Gain on sale of loans, net	Gain on sale of loans, net
Transfers in and/or out of Level III	$ (500)		$ (4,017)	$ 500
Ending balance	$ 2,833	$ 11,269	$ 2,833	$ 11,269

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Fair Value - Schedule of Fair Value For Assets Required to be Measured and Reported at Fair Value on a Nonrecurring Basis (Detail) - USD ($) $ in Thousands	Jun. 30, 2023	Sep. 30, 2022
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Foreclosed real estate	$ 3,546	$ 29
Fair Value, Measurements, Nonrecurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Foreclosed real estate	3,546	29
Impaired loans	9,909	14,151
Level III [Member] | Fair Value, Measurements, Nonrecurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Foreclosed real estate	3,546	29
Impaired loans	$ 9,909	$ 14,151

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Fair Value - Summary of Additional Quantitative Information about Assets Measured at Fair Value on Nonrecurring Basis (Detail) - Fair Value, Measurements, Nonrecurring [Member] - Level III [Member] $ in Thousands	Jun. 30, 2023 USD ($)	Sep. 30, 2022 USD ($)
Impaired Loans [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value Estimate	$ 9,909	$ 14,151
Servicing Asset Valuation Technique [Extensible Enumeration]	us-gaap:MarketApproachValuationTechniqueMember	us-gaap:MarketApproachValuationTechniqueMember
Servicing Asset, Measurement Input [Extensible Enumeration]	us-gaap:MeasurementInputAppraisedValueMember	us-gaap:MeasurementInputAppraisedValueMember
Fair value input appraisal adjustments	0.208	0.206
Impaired Loans [Member] | Minimum [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value input appraisal adjustments	0	0
Impaired Loans [Member] | Maximum [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value input appraisal adjustments	0.35	0.35
Foreclosed Real Estate Owned [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value Estimate	$ 3,546	$ 29
Servicing Asset Valuation Technique [Extensible Enumeration]	us-gaap:MarketApproachValuationTechniqueMember	us-gaap:MarketApproachValuationTechniqueMember
Servicing Asset, Measurement Input [Extensible Enumeration]	us-gaap:MeasurementInputAppraisedValueMember	us-gaap:MeasurementInputAppraisedValueMember
Fair value input appraisal adjustments	0.201	0.20
Foreclosed Real Estate Owned [Member] | Minimum [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value input appraisal adjustments	0.20
Foreclosed Real Estate Owned [Member] | Maximum [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value input appraisal adjustments	0.35

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Fair Value - Additional Information (Detail)	Jun. 30, 2023 USD ($) Loan	Sep. 30, 2022 USD ($) Loan
Fair Value Disclosures [Abstract]
Number of impaired loans | Loan	35	49
Impaired loans, carrying value	$ 9,900,000	$ 14,500,000
Impaired loans, valuation allowance	8,000	351,000
Impaired loans, net fair value	$ 9,900,000	$ 14,200,000

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Fair Value - Schedule of Carrying Value and Fair Value for Certain Financial Instruments not Required to be Measured and Reported at Fair Value (Detail) - USD ($) $ in Thousands	Jun. 30, 2023	Sep. 30, 2022
Financial assets:
Loans receivable, net	$ 9,900	$ 14,200
Carrying Value [Member]
Financial assets:
Investment securities held to maturity	53,570	57,285
Loans receivable, net	1,611,066	1,435,783
Mortgage servicing rights	830	788
Financial liabilities:
Deposits	1,525,477	1,380,021
Short term borrowings	399,989	230,810
Estimated Fair Value [Member]
Financial assets:
Investment securities held to maturity	45,102	47,546
Loans receivable, net	1,482,365	1,351,823
Mortgage servicing rights	1,380	1,390
Financial liabilities:
Deposits	1,375,008	1,374,886
Short term borrowings	388,427	215,287
Estimated Fair Value [Member] | Level 1 [Member]
Financial liabilities:
Deposits	1,100,185	1,246,353
Estimated Fair Value [Member] | Level II [Member]
Financial assets:
Investment securities held to maturity	45,102	47,546
Estimated Fair Value [Member] | Level 3 [Member]
Financial assets:
Loans receivable, net	1,482,365	1,351,823
Mortgage servicing rights	1,380	1,390
Financial liabilities:
Deposits	274,823	128,533
Short term borrowings	$ 388,427	$ 215,287

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Accumulated Other Comprehensive Income (Loss) - Summary of Activity in Accumulated Other Comprehensive Income (Loss) (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Accumulated Other Comprehensive Income Loss [Line Items]
Beginning Balance	$ 218,799	$ 212,713	$ 212,337	$ 201,822
Ending Balance	218,684	213,263	218,684	213,263
Defined Benefit Pension Plan [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Beginning Balance	(1,108)	(1,022)	(1,108)	(1,907)
Other comprehensive (loss) income before reclassifications		(351)		359
Amounts reclassified from accumulated other comprehensive income (loss)		17		192
Total other comprehensive income (loss)		(334)		551
Ending Balance	(1,108)	(1,356)	(1,108)	(1,356)
Unrealized Gains (Losses) on Securities Available for Sale [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Beginning Balance	(11,764)	(3,034)	(13,879)	1,962
Other comprehensive (loss) income before reclassifications	(3,166)	(4,125)	(1,051)	(9,121)
Total other comprehensive income (loss)	(3,166)	(4,125)	(1,051)	(9,121)
Ending Balance	(14,930)	(7,159)	(14,930)	(7,159)
Derivatives [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Beginning Balance	8,988	8,027	12,093	627
Other comprehensive (loss) income before reclassifications	1,841	1,641	1,996	8,723
Amounts reclassified from accumulated other comprehensive income (loss)	(1,974)	(176)	(5,234)	142
Total other comprehensive income (loss)	(133)	1,465	(3,238)	8,865
Ending Balance	8,855	9,492	8,855	9,492
Accumulated Other Comprehensive Income (Loss) [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Beginning Balance	(3,884)	3,971	(2,894)	682
Other comprehensive (loss) income before reclassifications	(1,325)	(2,835)	945	(39)
Amounts reclassified from accumulated other comprehensive income (loss)	(1,974)	(159)	(5,234)	334
Total other comprehensive income (loss)	(3,299)	(2,994)	(4,289)	295
Ending Balance	$ (7,183)	$ 977	$ (7,183)	$ 977

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Accumulated Other Comprehensive Income (Loss) - Summary of Reclassification Out of Accumulated Other Comprehensive Income (Loss) (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Schedule Of Available For Sale Securities [Line Items]
Interest expense	$ (6,521)	$ (541)	$ (14,424)	$ (2,080)
Income taxes	(1,144)	(1,306)	(3,321)	(3,456)
NET INCOME	4,396	5,039	13,947	14,244
Reclassification Out of Accumulated Other Comprehensive Income (Loss) [Member]
Schedule Of Available For Sale Securities [Line Items]
NET INCOME	1,974	159	5,234	(334)
Reclassification Out of Accumulated Other Comprehensive Income (Loss) [Member] | Defined Benefit Pension Plan [Member]
Schedule Of Available For Sale Securities [Line Items]
Compensation and employee benefits		(20)		(243)
Income taxes		3		51
NET INCOME		(17)		(192)
Reclassification Out of Accumulated Other Comprehensive Income (Loss) [Member] | Derivatives [Member]
Schedule Of Available For Sale Securities [Line Items]
Interest expense	2,498	222	6,625	(180)
Income taxes	(524)	(46)	(1,391)	38
NET INCOME	$ 1,974	$ 176	$ 5,234	$ (142)

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Derivatives and Hedging Activities - Schedule of Fair Value of Derivative Financial Instruments as well as their Classification on Consolidated Balance Sheet (Detail) - Designated as Hedging Instrument [Member] - USD ($)	Jun. 30, 2023	Sep. 30, 2022
Derivatives Fair Value [Line Items]
Derivatives Assets, Notional Amount	$ 297,490,000	$ 304,602,000
Fair Values of Derivative Instruments, Asset	19,154,000	24,481,000
Derivatives Liability, Notional Amount	113,946,000	111,668,000
Fair Values of Derivative Instruments, Liability	7,949,000	9,176,000
Federal Home Loan Bank Advances
Derivatives Fair Value [Line Items]
Derivatives Assets, Notional Amount	215,000,000	225,000,000
Fair Values of Derivative Instruments, Asset	11,211,000	15,310,000
Commercial Loans [Member]
Derivatives Fair Value [Line Items]
Derivatives Assets, Notional Amount	82,490,000	79,602,000
Fair Values of Derivative Instruments, Asset	7,943,000	9,171,000
Derivatives Liability, Notional Amount	113,946,000	111,668,000
Fair Values of Derivative Instruments, Liability	$ 7,949,000	$ 9,176,000

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Derivatives and Hedging Activities - Additional Information (Detail) - USD ($)	3 Months Ended		9 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Sep. 30, 2022
Derivative Instruments And Hedging Activities Disclosures [Line Items]
Derivative liability, collateral against obligations	$ 0		$ 0		$ 0
Designated as Hedging Instrument [Member] | Cash Flow Hedges of Interest Rate Risk [Member]
Derivative Instruments And Hedging Activities Disclosures [Line Items]
Interest expense	2,498,000	$ 222,000	6,625,000	$ (180,000)
Designated as Hedging Instrument [Member] | Cash Flow Hedges of Interest Rate Risk [Member] | Reclassification Out of Accumulated Other Comprehensive Income (Loss) [Member]
Derivative Instruments And Hedging Activities Disclosures [Line Items]
Interest expense	2,500,000	$ 222,000	6,600,000	$ (180,000)
Increase (decrease) in accrued interest payable	7,800,000		7,800,000
Designated as Hedging Instrument [Member] | Cash Flow Hedges of Interest Rate Risk [Member] | Interest Rate Swaps [Member] | Brokered Certificates [Member] | Variable Rate [Member]
Derivative Instruments And Hedging Activities Disclosures [Line Items]
Derivative, notional principal amount	215,000,000.0		215,000,000.0
Designated as Hedging Instrument [Member] | Cash Flow Hedges of Interest Rate Risk [Member] | Interest Rate Swaps [Member] | Commercial Loans [Member] | Variable Rate [Member]
Derivative Instruments And Hedging Activities Disclosures [Line Items]
Derivative, notional principal amount	$ 196,400,000		$ 196,400,000

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Derivatives and Hedging Activities - Schedule of Effect of Cash Flow Hedge Accounting on Accumulated Other Comprehensive Income (Loss) (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Derivative Instruments Gain Loss [Line Items]
(Gain) Loss Recognized in OCI on Derivative	$ 2,330	$ 2,076	$ 2,525	$ 11,042
Designated as Hedging Instrument [Member] | Cash Flow Hedges of Interest Rate Risk [Member]
Derivative Instruments Gain Loss [Line Items]
(Gain) Loss Recognized in OCI on Derivative	(168)	1,854	(4,100)	11,222
Gain (Loss) Reclassified from Accumulated OCI into Income	$ 2,498	$ 222	$ 6,625	$ (180)
Derivative Instrument, Gain (Loss) Reclassified from AOCI into Income, Effective Portion, Statement of Income or Comprehensive Income [Extensible Enumeration]	Interest Expense	Interest Expense	Interest Expense	Interest Expense
Designated as Hedging Instrument [Member] | Interest Rate Products [Member] | Cash Flow Hedges of Interest Rate Risk [Member]
Derivative Instruments Gain Loss [Line Items]
(Gain) Loss Recognized in OCI on Derivative	$ (168)	$ 1,854	$ (4,100)	$ 11,222
Gain (Loss) Reclassified from Accumulated OCI into Income	$ 2,498	$ 222	$ 6,625	$ (180)

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Contingent Liabilities - Additional Information (Detail) - Plaintiff	May 29, 2020	Dec. 09, 2019	Dec. 08, 2016
Commitments and Contingencies Disclosure [Abstract]
Number of plaintiffs	3		1
Additional number of plaintiffs		2

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Leases - Additional Information (Detail)	9 Months Ended
	Jun. 30, 2023
Leases [Abstract]
Lessee operating lease expiration year	2044

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Leases - Summary of Balance Sheet Operating Lease Right-of-Use Assets and Lease Liabilities (Detail) - USD ($) $ in Thousands	Jun. 30, 2023	Sep. 30, 2022
ASSETS
Operating lease right-of-use assets	$ 5,659	$ 6,075
Operating Lease Right Of Use Asset Statement Of Financial Position Extensible List	Other assets	Other assets
LIABILITIES
Operating lease Liabilities	$ 5,890	$ 6,275
Operating Lease Liability Statement Of Financial Position Extensible List	Other liabilities	Other liabilities

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Leases - Summary of Lease Term and Discount Rate (Detail)	Jun. 30, 2023
Weighted average remaining lease term
Operating leases	11 years 8 months 12 days
Weighted average discount rate
Operating leases	2.51%

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Leases - Summary of Components of Lease Cost (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Lease, Cost [Abstract]
Operating lease cost	$ 241	$ 238	$ 722	$ 501
Variable lease cost	58	53	167	180
Net lease cost	$ 299	$ 291	$ 889	$ 681

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Leases - Summary of Future Minimum Lease Payments (Detail) - USD ($) $ in Thousands	Jun. 30, 2023	Sep. 30, 2022
Lease, Cost [Abstract]
June 30, 2024	$ 800
June 30, 2025	650
June 30, 2026	633
June 30, 2027	494
June 30, 2028	464
Thereafter	3,707
Total future minimum lease payments	6,748
Amounts representing interest	858
Present Value of Net Future Minimum Lease Payments	$ 5,890	$ 6,275

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Other Matters - Additional Information (Details) - USD ($)	Jun. 09, 2023	May 31, 2023
Commitments and Contingencies Disclosure [Abstract]
Mortgage loan subsidies commitments		$ 2,900,000
Mortgage loans subsidies commitments minimum period		5 years
Minimum percentage of mortgage loans subisidies to be invested		50.00%
Investment commitments related to marketing and outreach		$ 250,000
Investment commitments related to community development partnerships, mortgage professional and development officer		$ 125,000
Loss contingeny committed amount	$ 2,900,000
Committed amount investing period	5 years