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, 2021

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 July 29, 2021, there were 10,492,782 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	39
Item 3	Quantitative and Qualitative Disclosures About Market Risk	48
Item 4	Controls and Procedures	48
	Part II. Other Information
Item 1.	Legal Proceedings	49
Item 1A.	Risk Factors	49
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	49
Item 3.	Defaults Upon Senior Securities	50
Item 4.	Mine Safety Disclosures	50
Item 5.	Other Information	50
Item 6.	Exhibits	51
Signature Page		52

Part I. Financial Information

Item 1. Financial Statements

ESSA BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEET

(UNAUDITED)

	June 30,			September 30,
	2021			2020
	(dollars in thousands)
ASSETS
Cash and due from banks	$	170,623		$	101,447
Interest-bearing deposits with other institutions		14,777			54,470
Total cash and cash equivalents		185,400			155,917
Investment securities available for sale, at fair value		148,170			212,484
Investment securities held to maturity, at amortized cost		17,982			—
Loans held for sale		1,581			208
Loans receivable (net of allowance for loan losses of $17,693 and $15,400)		1,368,616			1,417,974
Regulatory stock, at cost		4,140			7,344
Premises and equipment, net		13,996			14,230
Bank-owned life insurance		37,286			40,546
Foreclosed real estate		373			269
Intangible assets, net		587			791
Goodwill		13,801			13,801
Deferred income taxes		3,873			5,993
Other assets		26,404			23,958
TOTAL ASSETS	$	1,822,209		$	1,893,515
LIABILITIES
Deposits	$	1,590,072		$	1,543,696
Short-term borrowings		—			111,713
Other borrowings		—			14,164
Advances by borrowers for taxes and insurance		14,902			7,858
Other liabilities		17,983			24,687
TOTAL LIABILITIES		1,622,957			1,702,118
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;    10,570,536 and 10,876,869 outstanding at June 30, 2021 and September 30,    2020, respectively)		181			181
Additional paid in capital		181,500			181,487
Unallocated common stock held by the Employee Stock Ownership Plan (ESOP)		(7,019	)		(7,350	)
Retained earnings		121,603			112,612
Treasury stock, at cost; 7,562,559 and 7,256,226 shares outstanding at    June 30, 2021 and September 30, 2020, respectively		(96,376	)		(91,477	)
Accumulated other comprehensive loss		(637	)		(4,056	)
TOTAL STOCKHOLDERS’ EQUITY		199,252			191,397
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,822,209		$	1,893,515

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						For the Nine Months Ended
	June 30,						June 30,
	2021			2020			2021			2020
	(dollars in thousands, except per share data)						(dollars in thousands, except per share data)
INTEREST INCOME
Loans receivable, including fees	$	13,378		$	13,763		$	40,808		$	41,958
Investment securities:
Taxable		894			1,768			2,773			5,670
Exempt from federal income tax		40			45			121			141
Other investment income		91			277			276			941
Total interest income		14,403			15,853			43,978			48,710
INTEREST EXPENSE
Deposits		1,251			2,211			4,612			8,772
Short-term borrowings		—			588			209			1,582
Other borrowings		—			854			62			2,598
Total interest expense		1,251			3,653			4,883			12,952
NET INTEREST INCOME		13,152			12,200			39,095			35,758
Provision for loan losses		600			1,300			2,400			2,175
NET INTEREST INCOME AFTER PROVISION FOR LOAN    LOSSES		12,552			10,900			36,695			33,583
NONINTEREST INCOME
Service fees on deposit accounts		781			558			2,305			2,163
Services charges and fees on loans		450			325			1,367			985
Loan swap fees		1			627			622			1,200
Realized and unrealized gain (loss) on equity securities, net		4			2			15			(3	)
Trust and investment fees		398			298			1,074			1,045
Gain on sale of investment securities available for sale, net		42			—			459			381
Gain on sale of loans, net		250			647			1,737			791
Earnings on Bank-owned life insurance		191			233			725			709
Insurance commissions		158			195			492			641
Other		18			(2	)		147			102
Total noninterest income		2,293			2,883			8,943			8,014
NONINTEREST EXPENSE
Compensation and employee benefits		6,315			5,714			19,083			18,029
Occupancy and equipment		1,060			1,033			3,257			3,169
Professional fees		526			457			1,583			1,449
Data processing		1,169			1,113			3,390			3,215
Advertising		218			114			471			348
Federal Deposit Insurance Corporation (FDIC) premiums		280			154			834			492
(Gain) loss on foreclosed real estate		(534	)		(5	)		(639	)		61
Amortization of intangible assets		69			68			204			208
Other		915			482			2,448			1,746
Total noninterest expense		10,018			9,130			30,631			28,717
Income before income taxes		4,827			4,653			15,007			12,880
Income taxes		801			876			2,506			2,286
NET INCOME	$	4,026		$	3,777		$	12,501		$	10,594
Earnings per share
Basic	$	0.41		$	0.37		$	1.25		$	1.02
Diluted	$	0.41		$	0.37		$	1.25		$	1.02
Dividends per share	$	0.12		$	0.11		$	0.35		$	0.33

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						For the Nine Months Ended
	June 30,						June 30,
	2021			2020			2021			2020
	(dollars in thousands)
Net income	$	4,026		$	3,777		$	12,501		$	10,594
Other comprehensive income (loss)
Investment securities available for sale:
Unrealized holding gains (losses)		429			1,091			(440	)		6,763
Tax effect		(90	)		(228	)		95			(1,419	)
Reclassification of gains recognized in net income		(42	)		—			(459	)		(381	)
Tax effect		8			—			96			80
Net of tax amount		305			863			(708	)		5,043
Pension plan:
Reclassification of gains recognized in net income		(56	)		-			(166	)		-
Tax effect		12			-			35			-
Net of tax amount		(44	)		-			(131	)		—
Derivative and hedging activities adjustments:
Changes in unrealized holding (losses) gains on derivatives included in net income		(590	)		(2,353	)		3,645			(4,705	)
Tax effect		127			494			(766	)		988
Reclassification adjustment for losses on derivatives included  in net income		434			108			1,745			50
Tax effect		(91	)		(23	)		(366	)		(11	)
Net of tax amount		(120	)		(1,774	)		4,258			(3,678	)
Total other comprehensive income (loss)		141			(911	)		3,419			1,365
Comprehensive income	$	4,167		$	2,866		$	15,920		$	11,959

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, March 31, 2020		11,105,887		$	181	$	181,218	$	(7,576	)	$	107,265		$	(88,418	)	$	996		$	193,666
Net income												3,777									3,777
Other comprehensive loss																		(911	)		(911	)
Cash dividends declared ($0.11 per share)												(1,130	)								(1,130	)
Stock based compensation							82														82
Allocation of ESOP stock							35	113													148
Allocation of forfeited incentive shares		(2,442	)				31								(31	)					—
Purchase of common stock		(143,088	)												(1,947	)					(1,947	)
Balance, June 30, 2020		10,960,357		$	181	$	181,366	$	(7,463	)	$	109,912		$	(90,396	)	$	85		$	193,685
								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, 2021		10,731,235		$	181	$	181,353	$	(7,132	)	$	118,769		$	(93,785	)	$	(778	)	$	198,608
Net income												4,026									4,026
Other comprehensive income																		141			141
Cash dividends declared ($0.12 per share)												(1,192	)								(1,192	)
Stock based compensation							95														95
Allocation of ESOP stock							52		113												165
Purchase of common stock		(160,699	)												(2,591	)					(2,591	)
Balance, June 30, 2021		10,570,536		$	181	$	181,500	$	(7,019	)	$	121,603		$	(96,376	)	$	(637	)	$	199,252

5

									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) Income			Equity
	(dollars in thousands except share data)
Balance, September 30, 2019		11,321,417		$	181	$	181,161		$	(7,803	)	$	102,465		$	(85,216	)	$	(1,280	)	$	189,508
Net Income													10,594									10,594
Other comprehensive income																			1,365			1,365
Cash dividends declared ($0.33 per share)													(3,437	)								(3,437	)
Change in accounting principal for adoption of ASU 2016-02													290									290
Stock based compensation							415															415
Allocation of ESOP stock							179			340												519
Allocation of treasury shares to incentive plan		30,692					(389	)								385						(4	)
Purchase of common stock		(391,752	)													(5,565	)					(5,565	)
Balance, June 30, 2020		10,960,357		$	181	$	181,366		$	(7,463	)	$	109,912		$	(90,396	)	$	85		$	193,685
									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, 2020		10,876,869		$	181	$	181,487		$	(7,350	)	$	112,612		$	(91,477	)	$	(4,056	)	$	191,397
Net income													12,501									12,501
Other comprehensive income																			3,419			3,419
Cash dividends declared ($0.35 per share)													(3,510	)								(3,510	)
Stock based compensation							421															421
Allocation of ESOP stock							142			331												473
Allocation of treasury shares to incentive plan		43,582					(550	)								550						—
Purchase of common stock		(349,915	)													(5,449	)					(5,449	)
Balance, June 30, 2021		10,570,536		$	181	$	181,500		$	(7,019	)	$	121,603		$	(96,376	)	$	(637	)	$	199,252

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,
	2021			2020
	(dollars in thousands)
OPERATING ACTIVITIES
Net income	$	12,501		$	10,594
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		2,400			2,175
Provision for depreciation and amortization		790			809
Amortization and accretion of discounts and premiums, net		(771	)		1,485
Net gain on sale of investment securities, available for sale		(459	)		(381	)
Realized and unrealized (gain) loss on equity securities		(15	)		3
Gain on sale of loans, net		(1,737	)		(791	)
Origination of residential real estate loans for sale		(52,552	)		(19,112	)
Proceeds on sale of residential real estate loans		52,916			19,903
Compensation expense on ESOP		473			519
Amortization of right-of-use asset		669			660
Stock based compensation		421			415
Decrease (increase) in accrued interest receivable		1,684			(763	)
Decrease in accrued interest payable		(487	)		(173	)
Earnings on bank-owned life insurance		(605	)		(709	)
Deferred federal income taxes		1,210			(23	)
Decrease in accrued pension liability		(529	)		(443	)
(Gain) loss on foreclosed real estate, net		(639	)		61
Amortization of intangible assets		204			208
Other, net		(1,394	)		2,678
Net cash provided by operating activities		14,080			17,115
INVESTING ACTIVITIES
Investment securities available for sale:
Proceeds from sale of investment securities		19,673			24,009
Proceeds from principal repayments and maturities		77,413			44,409
Purchases		(34,104	)		(44,623	)
Investment securities held to maturity:
Proceeds from principal repayments and maturities		222			—
Purchases		(18,204	)		—
Decrease (increase) in loans receivable, net		48,394			(97,349	)
Redemption of regulatory stock		6,007			8,166
Purchase of regulatory stock		(2,803	)		(15,168	)
Proceeds from sale of foreclosed real estate		766			111
Purchase of premises, equipment and software		(545	)		(871	)
Net cash provided by (used for) investing activities		96,819			(81,316	)
FINANCING ACTIVITIES
Increase in deposits, net		46,376			142,005
Net (decrease) increase in short-term borrowings		(111,713	)		31,012
Proceeds from other borrowings		—			55,661
Repayment of other borrowings		(14,164	)		(45,415	)
Increase in advances by borrowers for taxes and insurance		7,044			8,542
Purchase of common stock		(5,449	)		(5,565	)
Dividends on common stock		(3,510	)		(3,437	)
Net cash (used for) provided by financing activities		(81,416	)		182,803
Increase in cash and cash equivalents		29,483			118,602
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR		155,917			52,242
CASH AND CASH EQUIVALENTS AT END OF YEAR	$	185,400		$	170,844
SUPPLEMENTAL CASH FLOW DISCLOSURES
Cash Paid:
Interest	$	5,370		$	13,125
Income taxes		—			8
Noncash items:
Transfers from loans to foreclosed real estate		231			344
Death benefit receivable on  BOLI		(3,865	)		—
Initial recognition of operating right-of-use asset		—			(7,272	)
Initial recognition of operating lease liability		—			7,272
Unrealized holding (losses) gains		(899	)		6,383

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 and is currently inactive. 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 owned 100 percent 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 three and nine month periods ended June 30, 2021 and 2020 are not necessarily indicative of the results that may be expected for the year ending September 30, 2021.

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 month periods ended June 30, 2021 and 2020.

	Three Months Ended						Nine Months Ended
	June 30,			June 30,			June 30,			June 30,
	2021			2020			2021			2020
Weighted-average common shares outstanding		18,133,095			18,133,095			18,133,095			18,133,095
Average treasury stock shares		(7,473,715	)		(7,076,709	)		(7,362,121	)		(6,924,021	)
Average unearned ESOP shares		(692,120	)		(741,156	)		(707,250	)		(752,513	)
Average unearned non-vested shares		(61,535	)		(54,735	)		(57,683	)		(50,204	)
Weighted average common shares and common stock    equivalents used to calculate basic earnings per share		9,905,725			10,260,495			10,006,041			10,406,357
Additional common stock equivalents (nonvested stock)    used to calculate diluted earnings per share		2,063			234			2,688			257
Weighted average common shares and common stock    equivalents used to calculate diluted earnings per share		9,907,788			10,260,729			10,008,729			10,406,614

At June 30, 2021 there were 23,312 shares of nonvested stock outstanding at an average weighted price of $16.15 per share that were not included in the computation of diluted earnings per share because to do so would have been anti-dilutive. At June 30, 2020 there were 42,520 shares of nonvested stock outstanding at an average weighted price of $16.15 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 August 2018, the FASB issued ASU 2018-14, Compensation – Retirement Benefits (Topic 715-20). This Update amends ASC 715 to add, remove and clarify disclosure requirements related to defined benefit pension and other postretirement plans. The Update eliminates the requirement to disclose the amounts in accumulated other comprehensive income expected to be recognized as part of net periodic benefit cost over the next year. The Update also removes the disclosure requirements for the effects of a one-percentage-point change on the assumed health care costs and the effect of this change in rates on service cost, interest cost and the benefit obligation for postretirement health care benefits. This Update is effective for public business entities for fiscal years ending after December 15, 2020, and must be applied on a retrospective basis. For all other entities, this Update is effective for fiscal years ending after December 15, 2021. This Update is not expected to have a significant impact on the Company’s financial statements.

9

In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments – Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, which affects a variety of topics in the Codification and applies to all reporting entities within the scope of the affected accounting guidance. Topic 326, Financial Instruments – Credit Losses amendments are effective for SEC registrants for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. For all other public business entities, the effective date is for fiscal years beginning after December 15, 2020, and for all other entities, the effective date is for fiscal years beginning after December 15, 2021. Topic 815, Derivatives and Hedging amendments are effective for public business entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods beginning after December 15, 2020. For entities that have adopted the amendments in Update 2017-12, the effective date is as of the beginning of the first annual period beginning after the issuance of this Update. Topic 825, Financial Instruments amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years. 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 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 the 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 ASU 2016-13, the effective dates and transition requirements are the same as those in ASU 2016-13. For entities that have adopted ASU 2016-13, ASU 2019-05 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted once ASU 2016-13 has been adopted. 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 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. The effective dates in this Update are the same as those applicable for ASU 2019-10. 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 December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740), to simplify the accounting for income taxes, change the accounting for certain tax transactions, and make minor improvements to the codification. This Update provides a policy election to not allocate consolidated income taxes when a member of a consolidated tax return is not subject to income tax and provides guidance to evaluate whether a step-up in tax basis of goodwill relates to a business combination in which book goodwill was recognized or a separate transaction. The Update also changes current guidance for making an intraperiod allocation, if there is a loss in continuing operations and gains outside of continuing operations; determining when a deferred tax liability is recognized after an investor in a foreign entity transitions to or from the equity method of accounting; accounting for tax law changes and year-to-date losses in interim periods; and determining how to apply the income tax guidance to franchise taxes that are partially based on income. For public business entities, the amendments in this Update are effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2020. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. This Update is not expected to have a significant impact on the Company’s financial statements.

In January 2020, the FASB issued ASU 2020-1, Investments – Equity Securities (Topic 321), Investments – Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815), to clarify that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting for the purposes of applying the measurement alternative in accordance with Topic 321 immediately before applying or upon discontinuing the equity method. The amendments also clarify that, for the purpose of applying paragraph 815-10-15-141(a) an entity should not consider whether, upon the settlement of the forward contract or exercise of the purchased option, individually or with existing investments, the underlying securities would be accounted for under the equity method in Topic 323 or the fair value option, in accordance with the financial instruments guidance in Topic 825. An entity also would evaluate the remaining characteristics in paragraph 815-10-15-141 to determine the accounting for those forward contracts and purchased options. For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years. This Update is not expected to have a significant impact on the Company’s financial statements.

10

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 January 2020, the FASB issued ASU 2020-4, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, March 2020, to provide temporary optional expedients and exceptions to the U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from LIBOR and other interbank offered rates to alternative reference rates, such as Secured Overnight Financing Rate. Entities can elect not to apply certain modification accounting requirements to contracts affected by what the guidance calls reference rate reform, if certain criteria are met. An entity that makes this election would not have to remeasure the contracts at the modification date or reassess a previous accounting determination. Also, entities can elect various optional expedients that would allow them to continue applying hedge accounting for hedging relationships affected by reference rate reform, if certain criteria are met, and can make a one-time election to sell and/or reclassify held-to-maturity debt securities that reference an interest rate affected by reference rate reform. The amendments in this ASU are effective for all entities upon issuance through December 31, 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 August 2020, the FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity.  This ASU removes from U.S. GAAP the separation models for (1) convertible debt with a cash conversion feature and (2) convertible instruments with a beneficial conversion feature. As a result, entities will not separately present in equity an embedded conversion feature in such debt. Instead, they will account for a convertible debt instrument wholly as debt, and for convertible preferred stock wholly as preferred stock (i.e., as a single unit of account), unless (1) a convertible instrument contains features that require bifurcation as a derivative under ASC 815 or (2) a convertible debt instrument was issued at a substantial premium.  This ASU requires entities to provide expanded disclosures about the terms and features of convertible instruments, how the instruments have been reported in the entity’s financial statements, and information about events, conditions, and circumstances that can affect how to assess the amount or timing of an entity’s future cash flows related to those instruments. The amendments in this ASU are effective for public business entities that are not smaller reporting companies, for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years.  For all other entities, this ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. The guidance may be early adopted for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. This Update is not expected to have a significant impact on the Company’s financial statements.

In October 2020, the FASB issued ASU 2020-08, Codification Improvements to Subtopic 310-20, Receivables – Nonrefundable Fees and Other Costs, which clarifies that, for each reporting period, an entity should reevaluate whether a callable debt security is within the scope of ASC 310-20-35-33. For public business entities, ASU 2020-08 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early application is not permitted. For all other entities, ASU 2020-08 is effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. This Update is not expected to have a significant impact on the Company’s financial statements.

In October 2020, the FASB issued ASU 2020-10, Codification Improvements, which makes minor technical corrections and clarifications to the ASC. The amendments in Sections B and C of the ASU are effective for annual periods beginning after December 15, 2020, for public business entities. For all other entities, the amendments are effective for annual periods beginning after December 15, 2021, and interim periods within annual periods beginning after December 15, 2022. This Update is not expected to have a significant impact on the Company’s financial statements.

In November 2020, the FASB issued ASU 2020-11, Financial Services – Insurance (Topic 944), which was made in consideration of the implications of the Coronavirus Disease 2019 (COVID-19) pandemic on an insurance entity’s ability to

11

effectively implement the amendments in Accounting Standards Update No. 2018-12, Financial Services— Insurance: Targeted Improvements to the Accounting for Long-Duration Contracts (LDTI). The amendments in this Update defer the effective date of LDTI for all entities by one year, as (1) for public business entities that meet the definition of an SEC filer and are not SRCs, LDTI is effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years; and (2) for all other entities, LDTI is effective for fiscal years beginning after December 15, 2024, and interim periods within fiscal years beginning after December 15, 2025. This Update is not expected to have a significant impact on the Company’s financial statements.

In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848), which provides optional temporary guidance for entities transitioning away from the London Interbank Offered Rate(LIBOR) and other interbank offered rates (IBORs) to new references rates so that derivatives affected by the discounting transition are explicitly eligible for certain optional expedients and exceptions within Topic848. ASU 2021-01 clarifies that the derivatives affected by the discounting transition are explicitly eligible for certain optional expedients and exceptions in Topic 848. ASU 2021-01 is effective immediately for all entities. Entities may elect to apply the amendments on a full retrospective basis as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or on a prospective basis to new modifications from any date within an interim period that includes or is subsequent to the date of the issuance of a final update, up to the date that financial statements are available to be issued. The

amendments in this update do not apply to contract modifications made, as well as new hedging relationships entered into, after December 31, 2022, and to existing hedging relationships evaluated for effectiveness for periods after December 31, 2022, except for certain hedging relationships existing as of December 31, 2022, that apply certain optional expedients in which the accounting effects are recorded through the end of the hedging relationship. 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 2021, the FASB issued ASU 2021-03, Intangibles – Goodwill and Other (Topic 350), which provides private companies and not-for-profit entities with an accounting alternative to elect not to monitor for goodwill impairment-triggering events during the reporting period and, instead, to evaluate the facts and circumstances as of the end of the reporting period to determine whether it is more likely than not that goodwill is impaired. The amendments in this Update are effective on a prospective basis for fiscal years beginning after December 15, 2019. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance as of March 30, 2021. An entity should not retroactively adopt the amendments in this Update for interim financial statements already issued in the year of adoption.  This Update is not expected to have a significant impact on the Company’s financial statements.

In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt – Modifications and Extinguishments (Subtopic 470-50), Compensation – Stock Compensation (Topic 718), and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40), which requires an entity to treat a modification of an equity-classified warrant that does not cause the warrant to become liability-classified as an exchange of the original warrant for a new warrant. This guidance applies whether the modification is structured as an amendment to the terms and conditions of the warrant or as termination of the original warrant and issuance of a new warrant.  An entity should measure the effect of a modification as the difference between the fair value of the modified warrant and the fair value of that warrant immediately before modification. The amendments in this Update are effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. An entity should apply the amendments prospectively to modifications or exchanges occurring on or after the effective date of the amendments. Early adoption is permitted for all entities, including adoption in an interim period. If an entity elects to early adopt the amendments in this Update in an interim period, the guidance should be applied as of the beginning of the fiscal year that includes that interim period. This Update is not expected to have a significant impact on the Company’s financial statements.

In July 2021, the FASB issued ASU 2021-05, Leases (Topic 842), which amends ASC 842 so that lessors are no longer required to recognize a selling loss upon commencement of a lease with variable lease payments that, prior to the amendments, would have been classified as a sales-type or direct financing lease.  Furthermore, a lessor must classify as an operating lease any lease that would otherwise be classified as a sales-type or direct financing lease and that would result in the recognition of a selling loss at lease commencement, provided that the lease includes variable lease payments that do not depend on an index or rate.  For public business entities and certain not-for-profit entities and employee benefit plans that have adopted ASC 842, the amendments are effective for fiscal years beginning after December 15, 2021, and for interim periods within those fiscal years.  For all other entities that have adopted ASC 842, the amendments are effective for fiscal years beginning after December 15, 2021, and for interim periods within fiscal years beginning after December 15, 2022.  All entities that have adopted ASC 842 are permitted to early adopt the amendments in ASU 2021-05. The amendments in ASU 2021-05 are effective as of the same date as the guidance in ASC 842 for entities that have not adopted ASC 842.  This Update is not expected to have a significant impact on the Company’s financial statements.

12

5. Investment Securities

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

	June 30, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available for Sale
Fannie Mae	$	28,237	$	865	$	(30	)	$	29,072
Freddie Mac		23,294		629		(10	)		23,913
Governmental National Mortgage Association		7,614		206		(13	)		7,807
Total mortgage-backed securities		59,145		1,700		(53	)		60,792
Obligations of states and political subdivisions		17,251		545		—			17,796
U.S. government agency securities		1,998		13		—			2,011
Corporate obligations		54,695		997		(341	)		55,351
Other debt securities		11,969		373		(122	)		12,220
Total	$	145,058	$	3,628	$	(516	)	$	148,170
Held to Maturity
Fannie Mae	$	10,080	$	13	$	(8	)	$	10,085
Freddie Mac		7,902		46		(21	)		7,927
Total	$	17,982	$	59	$	(29	)	$	18,012

	September 30, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available for Sale
Fannie Mae	$	41,961	$	1,385	$	(88	)	$	43,258
Freddie Mac		31,642		964		(2	)		32,604
Governmental National Mortgage Association		15,300		368		(99	)		15,569
Total mortgage-backed securities		88,903		2,717		(189	)		91,431
Obligations of states and political subdivisions		21,136		795		—			21,931
U.S. government agency securities		24,990		—		—			24,990
U.S. government treasury securities		7,991		57		—			8,048
Corporate obligations		51,188		807		(521	)		51,474
Other debt securities		14,265		495		(150	)		14,610
Total	$	208,473	$	4,871	$	(860	)	$	212,484

         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, 2021 and 2020.

(in thousands)	Three Months Ended June 30, 2021		Three Months Ended June 30, 2020
Net gains recognized during the period on equity securities	$	4	$	2
Less: Net gains recognized during the period on equity securities sold    during the period		—		—
Unrealized gains recognized during the reporting period on equity    securities still held at the reporting date	$	4	$	2
(in thousands)	Nine Months Ended June 30, 2021		Nine Months Ended June 30, 2020
Net gains (losses) recognized during the period on equity securities	$	15	$	(3	)
Less: Net gains recognized during the period on equity securities sold    during the period		—		—
Unrealized gains (losses) recognized during the reporting period on equity    securities still held at the reporting date	$	15	$	(3	)

13

The amortized cost and fair value of debt securities at June 30, 2021, 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	$	1,403	$	1,408	$	—	$	—
Due after one year through five years		21,050		21,428		—		—
Due after five years through ten years		59,260		60,237		1,955		1,961
Due after ten years		63,345		65,097		16,027		16,051
Total	$	145,058	$	148,170	$	17,982	$	18,012

For the three months ended June 30, 2021, the Company realized gross gains of $90,000 and gross losses of $48,000 on proceeds from the sale on investment securities of $9.0 million.  For the three months ended June 30, 2020, the Company realized no gross gains or gross losses on proceeds from the sale on investment securities.

For the nine months ended June 30, 2021, the Company realized gross gains of $507,000 and gross losses of $48,000 on proceeds from the sale on investment securities of $19.7 million.  For the nine months ended June 30, 2020, the Company realized gross gains of $420,000 and gross losses of $39,000 on proceeds from the sale on investment securities of $24.0 million

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 (in thousands):

	June 30, 2021
	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		9	$	6,122	$	(10	)	$	4,582	$	(28	)	$	10,704	$	(38	)
Freddie Mac		5		3,965		(31	)		—		—			3,965		(31	)
Governmental National Mortgage Association		4		409		(1	)		1,817		(12	)		2,226		(13	)
Corporate obligations		17		11,396		(274	)		1,926		(67	)		13,322		(341	)
Other debt securities		8		—		—			2,453		(122	)		2,453		(122	)
Total		43	$	21,892	$	(316	)	$	10,778	$	(229	)	$	32,670	$	(545	)

	September 30, 2020
			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		8	$	1,397	$	(19	)	$	5,827	$	(69	)	$	7,224	$	(88	)
Freddie Mac		1		330		(2	)		—		—			330		(2	)
Governmental National Mortgage Association		7		4,428		(61	)		2,996		(38	)		7,424		(99	)
Corporate obligations		20		13,213		(93	)		6,573		(428	)		19,786		(521	)
Other debt securities		10		—		—			3,879		(150	)		3,879		(150	)
Total		46	$	19,368	$	(175	)	$	19,275	$	(685	)	$	38,643	$	(860	)

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.

14

The Company reviews its position quarterly and has asserted that at June 30, 2021, 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, 2021		September 30, 2020
Real estate loans:
Residential	$	584,368	$	610,172
Construction		12,236		11,853
Commercial		578,506		509,628
Commercial		95,153		139,603
Obligations of states and political subdivisions		57,070		79,230
Home equity loans and lines of credit		38,571		40,800
Auto loans		18,805		39,795
Other		1,600		2,293
		1,386,309		1,433,374
Less allowance for loan losses		17,693		15,400
Net loans	$	1,368,616	$	1,417,974

During 2020 and 2021 the Company participated in the Paycheck Protection Program (“PPP”), administered directly by the U.S. SBA. The PPP provides loans to small businesses who were affected by economic conditions as a result of COVID-19 to provide cash-flow assistance to employers who maintain their payroll (including healthcare and certain related expenses), mortgage interest, rent, leases, utilities and interest on existing debt during the COVID-19 emergency. The PPP loans are fully guaranteed by the SBA and may be eligible for forgiveness by the SBA to the extent that the proceeds are used to cover eligible payroll costs, interest costs, rent, and utility costs over a period of up to 24 weeks after the loan is made as long as certain conditions are met regarding employee retention and compensation levels. PPP loans deemed eligible for forgiveness by the SBA will be repaid by the SBA to the Company. PPP loans are included in the Commercial loan category.

In accordance with the SBA terms and conditions on these PPP loans, the Company received approximately $2.4 million in fees associated with the processing of these loans. Upon funding of the loan, these fees were deferred and will be amortized over the life of the loan as an adjustment to yield in accordance with FASB ASC 310-20-25-2.

Included in commercial loans in the above table are 442 loans totaling $44.2 million originated by the Company under the Paycheck Protection Program through the quarter ended June 30, 2021 compared to 673 loans totaling $76.8 million at September 30, 2020.   These loans mature in two or five years.

Purchased loans acquired in a business combination are recorded at fair value on their purchase date without a carryover of the related allowance for loan losses.

The following table presents additional information regarding loans acquired and accounted for in accordance with ASC 310-30 (in thousands):

	June 30, 2021		September 30, 2020
	Acquired Loans with Specific Evidence or Deterioration in Credit Quality (ASC 310-30)		Acquired Loans with Specific Evidence or Deterioration in Credit Quality (ASC 310-30)
Outstanding balance	$	942	$	1,086
Carrying amount	$	880	$	1,025

15

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		Loans Acquired with Deteriorated Credit Quality		Collectively Evaluated for Impairment
June 30, 2021
Real estate loans:
Residential	$	584,368	$	2,493	$	—	$	581,875
Construction		12,236		—		—		12,236
Commercial		578,506		11,330		880		566,296
Commercial		95,153		5,320		—		89,833
Obligations of states and political subdivisions		57,070		—		—		57,070
Home equity loans and lines of credit		38,571		92		—		38,479
Auto loans		18,805		73		—		18,732
Other		1,600		9		—		1,591
Total	$	1,386,309	$	19,317	$	880	$	1,366,112

	Total Loans		Individually Evaluated for Impairment		Loans Acquired with Deteriorated Credit Quality		Collectively Evaluated for Impairment
September 30, 2020
Real estate loans:
Residential	$	610,172	$	3,949	$	—	$	606,223
Construction		11,853		—		—		11,853
Commercial		509,628		11,322		1,025		497,281
Commercial		139,603		1,595		—		138,008
Obligations of states and political sub divisions		79,230		—		—		79,230
Home equity loans and lines of credit		40,800		117		—		40,683
Auto loans		39,795		210		—		39,585
Other		2,293		11		—		2,282
Total	$	1,433,374	$	17,204	$	1,025	$	1,415,145

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.

16

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, 2021
With no specific allowance recorded:
Real estate loans
Residential	$	2,384	$	3,587	$	—
Construction		—		—		—
Commercial		10,929		12,922		—
Commercial		676		910		—
Obligations of states and political subdivisions		—		—		—
Home equity loans and lines of credit		92		180		—
Auto loans		73		99		—
Other		9		21		—
Total		14,163		17,719		—
With an allowance recorded:
Real estate loans
Residential		109		113		18
Construction		—		—		—
Commercial		401		415		21
Commercial		4,644		4,686		848
Obligations of states and political subdivisions		—		—		—
Home equity loans and lines of credit		—		—		—
Auto loans		—		—		—
Other		—		—		—
Total		5,154		5,214		887
Total:
Real estate loans
Residential		2,493		3,700		18
Construction		—		—		—
Commercial		11,330		13,337		21
Commercial		5,320		5,596		848
Obligations of states and political subdivisions		—		—
Home equity loans and lines of credit		92		180		—
Auto loans		73		99		—
Other		9		21		—
Total Impaired Loans	$	19,317	$	22,933	$	887

17

	Recorded Investment		Unpaid Principal Balance		Associated Allowance
September 30, 2020
With no specific allowance recorded:
Real Estate Loans
Residential	$	3,699	$	5,070	$	—
Construction		—		—		—
Commercial		4,203		6,342		—
Commercial		1,539		1,625		—
Obligations of states and political subdivisions		—		—		—
Home equity loans and lines of credit		117		222		—
Auto Loans		72		131		—
Other		11		22		—
Total		9,641		13,412		—
With an allowance recorded:
Real Estate Loans
Residential		250		271		26
Construction		—		—		—
Commercial		7,119		7,169		132
Commercial		56		57		20
Obligations of states and political subdivisions		—		—		—
Home equity loans and lines of credit		—		—		—
Auto Loans		138		143		43
Other		—		—		—
Total		7,563		7,640		221
Total:
Real Estate Loans
Residential		3,949		5,341		26
Construction		—		—		—
Commercial		11,322		13,511		132
Commercial		1,595		1,682		20
Obligations of states and political subdivisions		—		—
Home equity loans and lines of credit		117		222		—
Auto Loans		210		274		43
Other		11		22		—
Total Impaired Loans	$	17,204	$	21,052	$	221

18

The following table 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,
	2021		2020		2021		2020
	Average Recorded Investment		Average Recorded Investment		Interest Income Recognized		Interest Income Recognized
With no specific allowance recorded:
Real estate loans
Residential	$	1,107	$	3,602	$	2	$	1
Construction		—		—		—		—
Commercial		7,422		5,108		6		—
Commercial		1,946		2,323		—		—
Obligations of states and political subdivisions		—		—		—		—
Home equity loans and lines of credit		90		244		—		—
Auto loans		50		74		—		1
Other		10		13		—		—
Total		10,625		11,364		8		2
With an allowance recorded:
Real estate loans
Residential		146		361		—		—
Construction		—		—		—		—
Commercial		4,985		182		—		—
Commercial		4,903		168		—		—
Obligations of states and political subdivisions		—		—		—		—
Home equity loans and lines of credit		—		6		—		—
Auto loans		12		85		—		—
Other		—		—		—		—
Total		10,046		802		—		—
Total:
Real estate loans
Residential		1,253		3,963		2		1
Construction		—		—		—		—
Commercial		12,407		5,290		6		—
Commercial		6,849		2,491				—
Obligations of states and political subdivisions		—		—		—		—
Home equity loans and lines of credit		90		250		—		—
Auto loans		62		159		—		1
Other		10		13		—		—
Total Impaired Loans	$	20,671	$	12,166	$	8	$	2

19

	For the Nine Months Ended June 30,
	2021		2020		2021		2020
	Average Recorded Investment		Average Recorded Investment		Interest Income Recognized		Interest Income Recognized
With no specific allowance recorded:
Real estate loans
Residential	$	1,304	$	3,800	$	3	$	2
Construction		—		—		—		—
Commercial		8,408		3,203		11		1
Commercial		1,569		1,260		—		4
Obligations of states and political subdivisions		—		—		—		—
Home equity loans and lines of credit		98		253		—		—
Auto loans		52		130		—		1
Other		11		14		—		—
Total		11,442		8,660		14		8
With an allowance recorded:
Real estate loans
Residential		171		304		—		—
Construction		—		—		—		—
Commercial		4,908		239		—		—
Commercial		2,222		97		—		—
Obligations of states and political subdivisions		—		—		—		—
Home equity loans and lines of credit		—		2		—		—
Auto loans		28		128		1		—
Other		—		8		—		—
Total		7,329		778		1		—
Total:
Real estate loans
Residential		1,475		4,104		3		2
Construction		—		—		—		—
Commercial		13,316		3,442		11		1
Commercial		3,791		1,357				4
Obligations of states and political subdivisions		—		—		—		—
Home equity loans and lines of credit		98		255		—		—
Auto loans		80		258		1		1
Other		11		22		—		—
Total Impaired Loans	$	18,771	$	9,438	$	15	$	8

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.

20

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, 2021 and September 30, 2020 (in thousands):

	Pass		Special Mention		Substandard		Doubtful or Loss		Total
June 30, 2021
Commercial real estate loans	$	539,774	$	16,422	$	22,310	$	—	$	578,506
Commercial		89,317		159		5,677		—		95,153
Obligations of states and political subdivisions		57,070		—		—		—		57,070
Total	$	686,161	$	16,581	$	27,987	$	—	$	730,729

	Pass		Special Mention		Substandard		Doubtful or Loss		Total
September 30, 2020
Commercial real estate loans	$	479,475	$	15,022	$	15,131	$	—	$	509,628
Commercial		137,860		—		1,743		—		139,603
Obligations of states and political subdivisions		79,230		—		—		—		79,230
Total	$	696,565	$	15,022	$	16,874	$	—	$	728,461

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, 2021 and September 30, 2020 (in thousands):

	Performing		Non- performing		Total
June 30, 2021
Real estate loans:
Residential	$	580,970	$	3,398	$	584,368
Construction		12,236		—		12,236
Home equity loans and lines of credit		38,408		163		38,571
Auto loans		18,725		80		18,805
Other		1,585		15		1,600
Total	$	651,924	$	3,656	$	655,580

	Performing		Non- performing		Total
September 30, 2020
Real estate loans:
Residential	$	605,549	$	4,623	$	610,172
Construction		11,853		—		11,853
Home equity loans and lines of credit		40,581		219		40,800
Auto loans		39,572		223		39,795
Other		2,282		11		2,293
Total	$	699,837	$	5,076	$	704,913

21

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, 2021 and September 30, 2020 (in thousands):

			31-60 Days		61-89 Days		90 + Days Past Due and				Total		Purchased Credit Impaired				Total
	Current		Past Due		Past Due		Accruing		Non­accrual		Past Due		Accruing		Non­accrual		Loans
June 30, 2021
Real estate loans:
Residential	$	580,186	$	460	$	324	$	—	$	3,398	$	4,182	$	—	$	—	$	584,368
Construction		12,236		—		—		—		—		—		—		—		12,236
Commercial		565,745		—		—		—		11,881		11,881		227		653		578,506
Commercial		89,815		—		—		—		5,338		5,338		—		—		95,153
Obligations of states and political    subdivisions		57,070		—		—		—		—		—		—		—		57,070
Home equity loans and lines of credit		38,103		222		83		—		163		468		—		—		38,571
Auto loans		18,495		219		11		—		80		310		—		—		18,805
Other		1,585		—		—		—		15		15		—		—		1,600
Total	$	1,363,235	$	901	$	418	$	—	$	20,875	$	22,194	$	227	$	653	$	1,386,309

			31-60 Days		61-89 Days		90 + Days Past Due and				Total		Purchased Credit Impaired				Total
	Current		Past Due		Past Due		Accruing		Non­accrual		Past Due		Accruing		Non­accrual		Loans
September 30, 2020
Real estate loans:
Residential	$	604,168	$	979	$	402	$	—	$	4,623	$	6,004	$	—	$	—	$	610,172
Construction		11,853		—		—		—		—		—		—		—		11,853
Commercial		494,881		1,085		—		—		12,637		13,722		236		789		509,628
Commercial		137,769		6		—		—		1,828		1,834		—		—		139,603
Obligations of states and political    subdivisions		79,230		—		—		—		—		—		—		—		79,230
Home equity loans and lines of credit		40,533		48		—		—		219		267		—		—		40,800
Auto loans		38,971		593		8		—		223		824		—		—		39,795
Other		2,282		—		—		—		11		11		—		—		2,293
Total	$	1,409,687	$	2,711	$	410	$	—	$	19,541	$	22,662	$	236	$	789	$	1,433,374

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. In addition, for the three and nine months ended June 30, 2021, consideration was given and a credit provision was recorded for loans granted short term payment relief due to the COVID pandemic. 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, 2021 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.

22

In addition, the FDIC and the Pennsylvania Department of Banking and Securities, as an integral part of their examination process, have periodically reviewed 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 for the three and nine months ended June 30, 2021 and 2020 (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
ALL balance at March 31, 2021	$	4,299		$	117	$	8,943		$	1,770		$	487		$	337		$	439		$	20		$	742		$	17,154
Charge-offs		(55	)		—		—			(200	)		—			—			(18	)		—			—			(273	)
Recoveries		149			—		20			—			—			1			42			—			—			212
Provision		(184	)		39		564			88			(88	)		(17	)		(120	)		—			318			600
ALL balance at June 30, 2021	$	4,209		$	156	$	9,527		$	1,658		$	399		$	321		$	343		$	20		$	1,060		$	17,693
ALL balance at March 31, 2020	$	4,330		$	55	$	4,563		$	2,180		$	359		$	351		$	1,104		$	29		$	208		$	13,179
Charge-offs		(42	)		—		(4	)		—			—			(21	)		(135	)		(15	)		—			(217	)
Recoveries		1			—		17			—			—			1			49			—			—			68
Provision		78			48		2,294			(1,206	)		185			5			(55	)		10			(59	)		1,300
ALL balance at June 30, 2020	$	4,367		$	103	$	6,870		$	974		$	544		$	336		$	963		$	24		$	149		$	14,330
ALL balance at September 30, 2020	$	4,301		$	127	$	7,209		$	874		$	555		$	337		$	780		$	25		$	1,192		$	15,400
Charge-offs		(59	)		—		(76	)		(209	)		—			(8	)		(244	)		(1	)		—			(597	)
Recoveries		213			—		56			—			—			4			217			—			—			490
Provision		(246	)		29		2,338			993			(156	)		(12	)		(410	)		(4	)		(132	)		2,400
ALL balance at June 30, 2021	$	4,209		$	156	$	9,527		$	1,658		$	399		$	321		$	343		$	20		$	1,060		$	17,693
ALL balance at September 30, 2019	$	4,243		$	53	$	3,806		$	1,870		$	343		$	329		$	1,384		$	28		$	574		$	12,630
Charge-offs		(72	)		—		(54	)		—			—			(61	)		(717	)		(20	)		—			(924	)
Recoveries		7			—		77			1			—			4			358			2			—			449
Provision		189			50		3,041			(897	)		201			64			(62	)		14			(425	)		2,175
ALL balance at June 30, 2020	$	4,367		$	103	$	6,870		$	974		$	544		$	336		$	963		$	24		$	149		$	14,330

During the three months ended June 30, 2021, the Company recorded provision expense for the construction real estate loans, commercial real estate loans and commercial loans segments, due to either increased loan balances, changes in the loan mix within the pool, and/or charge-off activity in those segments. Provision expense was also recorded for possible loan losses due to the economic slowdown caused by COVID-19 restrictions. Credit provisions were recorded for loan loss for the residential real estate loans,  obligations of states and political subdivisions, home equity loans and lines of credit and auto loans segments.

During the three months ended June 30, 2020 the Company recorded provision expense for the residential real estate loans, commercial real estate loans, obligations of states and political subdivisions, construction loans, home equity loans and lines of credit and other loan segments, due to either increased loan balances, changes in the loan mix within the pool, and/or charge-off activity in those segments. Provision expense was also recorded for possible loan losses due to the economic slowdown caused by COVID-19 restrictions. Credit provisions were recorded for loan loss for the commercial loans and auto loan segments.

During the nine months ended June 30, 2021, the Company recorded provision expense for the construction real estate loans, commercial real estate loans and commercial loans, due to either increased loan balances, changes in the loan mix within the pool, and/or charge-off activity in those segments. Provision expense was also recorded for possible loan losses due to the economic slowdown caused by COVID-19 restrictions. Credit provisions were recorded for loan loss for the residential real estate loans, obligations of states and political subdivisions, home equity loans and lines of credit segments, auto loan and other loan segments.

During the nine months ended June 30, 2020 the Company recorded provision expense for the residential real estate loans, commercial real estate loans, obligations of states and political subdivisions, construction loans, home equity loans and lines of credit and other loan segments, due to either increased loan balances, changes in the loan mix within the pool, and/or charge-off activity in those segments. Provision expense was also recorded for possible loan losses due to the economic slowdown caused by COVID-19 restrictions. Credit provisions were recorded for loan loss for the commercial loans and auto loan segments.

23

The Company is closely monitoring all customer credit positions, particularly loans requesting payment relief.  Such loans, as of June 30, 2021, amounted to approximately 2.3% of total loans outstanding, including $29.8 million in commercial real estate loans, $481,000 in commercial loans and $1.1 million in mortgage loans.  As the economic impact of the COVID-19 pandemic continues to evolve, our customers may experience decreased cash flows, which may correlate to an inability to make timely loan payments.  This, in turn, may require further increases in our allowance for loan losses and increases in the level of charge-offs in our loan portfolio.

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, 2021 and September 30, 2020 (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	$	18	$	—	$	21	$	848	$	—	$	—	$	—	$	—	$	—	$	887
Collectively    evaluated for    impairment		4,191		156		9,506		810		399		321		343		20		1,060		16,806
ALL balance at June 30, 2021	$	4,209	$	156	$	9,527	$	1,658	$	399	$	321	$	343	$	20	$	1,060	$	17,693
Individually    evaluated for    impairment	$	26	$	—	$	132	$	20	$	—	$	—	$	43	$	—	$	—	$	221
Collectively    evaluated for    impairment		4,275		127		7,077		854		555		337		737		25		1,192		15,179
ALL balance at September 30, 2020	$	4,301	$	127	$	7,209	$	874	$	555	$	337	$	780	$	25	$	1,192	$	15,400

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.

         The following is a summary of troubled debt restructuring granted during the three months ended June 30, 2021 (dollars in thousands):

	For the Three Months Ended June 30, 2021
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings
Real estate loans:
Residential		1	$	343	$	343
Construction		—		—		—
Commercial		4		7,353		7,353
Commercial		—		—		—
Obligations of states and political subdivisions		—		—		—
Home equity loans and lines of credit		—		—		—
Auto loans		—		—		—
Other		—		—		—
Total	$	5	$	7,696	$	7,696

24

There were no new troubled debt restructurings granted for the three months ended June 30, 2020.

The following is a summary of troubled debt restructuring granted during the nine months ended June 30, 2021 and 2020 (dollars in thousands):

	For the Nine Months Ended June 30, 2021
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings
Real estate loans:
Residential		2	$	416	$	416
Construction		—		—		—
Commercial		4		7,353		7,353
Commercial		—		—		—
Obligations of states and political subdivisions		—		—		—
Home equity loans and lines of credit		—		—		—
Auto loans		—		—		—
Other		—		—		—
Total		6	$	7,769	$	7,769

	For the Nine Months Ended June 30, 2020
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings
Real estate loans:
Residential		1	$	534	$	534
Construction		—		—		—
Commercial		—		—		—
Commercial		—		—		—
Obligations of states and political subdivisions		—		—		—
Home equity loans and lines of credit		—		—		—
Auto loans		—		—		—
Other		—		—		—
Total		1	$	534	$	534

  The five new troubled debt restructurings granted for the three months ended June 30, 2021, totaled $7.7 million and were granted interest rate and or terms concessions.   The six new troubled debt restructurings granted for the nine months ended June 30, 2021, totaled $7.8 million and were granted terms and or interest rate concessions.  The one troubled debt restructuring granted for the nine months ended June 30, 2020, totaled $534,000 and was granted an interest rate concession.

For the three and nine months ended June 30, 2021 and 2020, no loans defaulted on a restructuring agreement within one year of modification.

The Company continues to closely monitor all customer credit positions, particularly loans requesting payment relief.  As of June 30, 2021, approximately 15 of our commercial clients had requested loan payment deferrals or payments of interest only on loans totaling $30.3 million. We have had similar requests from approximately five mortgage customers totaling $1.1 million.  In accordance with interagency guidance issued in March 2020, these short-term deferrals are not considered troubled debt restructurings  unless the borrower was previously experiencing financial difficulty.  As the economic impact of the COVID-19 pandemic continues to evolve, our customers may experience decreased cash flows, which may correlate to an inability to make timely loan payments. This, in turn may require further increases in our allowance for loan losses and increases in the level of chargeoffs in our loan portfolio.

25

There can be no assurance that our non-performing assets will not increase in the future due to the impact of COVID-19 or otherwise.  We will continue to closely monitor credit risk and our exposure to increased loan losses resulting from the impact of COVID-19 on our commercial and consumer clients.

7. Deposits

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

	June 30, 2021		September 30, 2020
Non-interest bearing demand accounts	$	277,814	$	242,642
Interest bearing demand accounts		473,119		274,722
Money market accounts		410,310		401,863
Savings and club accounts		187,573		160,975
Certificates of deposit		241,256		463,494
Total	$	1,590,072	$	1,543,696

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, 2020 included in the Company’s Annual Report on Form 10-K.

The following table comprises the components of net periodic benefit cost for the three and nine-month periods ended June 30, 2021 and 2020 (in thousands):

	For the Three Months Ended June 30,						For the Nine Months Ended June 30,
	2021			2020			2021			2020
Service Cost	$	—		$	—		$	—		$	—
Interest Cost		112			121			338			364
Expected return on plan assets		(289	)		(268	)		(867	)		(807	)
Amortization of net loss from earlier periods		56			—			166			—
Net periodic benefit cost	$	(121	)	$	(147	)	$	(363	)	$	(443	)

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 will enter the plan after February 28, 2017; no additional years of service for benefit accrual purposes will be credited after the freeze date under the plan; and compensation earned by participants after the freeze date will not be 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.

26

Restricted stock shares outstanding at June 30, 2021 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, 2021 and 2020, the Company recorded $95,000 and $82,000 of share-based compensation expense, respectively, comprised of restricted stock expense. For the nine months ended June 30, 2021 and 2020, the Company recorded $421,000 and $415,000 of share-based compensation expense, respectively, comprised of restricted stock expense.    Expected future compensation expense relating to the restricted shares outstanding at June 30, 2021 is $679,000 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, 2021, and changes therein during the nine month period then ended:

	Number of Restricted Stock			Weighted- average Grant Date Fair Value
Nonvested at September 30, 2020		35,245		$	16.15
Granted		43,939			12.56
Vested		(10,834	)		14.75
Forfeited		—			—
Nonvested at June 30, 2021		68,350		$	14.06

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.

27

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, 2021 and September 30, 2020 by level within the fair value hierarchy (in thousands).

Recurring Fair Value Measurements at Reporting Date
	June 30, 2021
Assets	Level I		Level II		Level III		Total
Investment securities available for sale:
Mortgage backed securities	$	—	$	60,792	$	—	$	60,792
Obligations of states and political subdivisions		—		17,796		—		17,796
U.S. government agencies		—		2,011		—		2,011
Corporate obligations		—		42,071		13,280		55,351
Other debt securities		—		12,220		—		12,220
Total debt securities	$	—	$	134,890	$	13,280	$	148,170
Equity securities- financial services		32		—		—		32
Derivatives and hedging activities		—		2,358		—		2,358
Liabilities
Derivatives and hedging activities		—		1,763		—		1,763
	September 30, 2020
Assets	Level I		Level II		Level III		Total
Investment securities available for sale:
Mortgage backed securities	$	—	$	91,431	$	—	$	91,431
Obligations of states and political subdivisions		—		21,931		—		21,931
U.S. government treasury securities		—		24,990		—		24,990
U.S. government agencies		—		8,048		—		8,048
Corporate obligations		—		43,214		8,260		51,474
Other debt securities		—		14,610		—		14,610
Total debt securities	$	—	$	204,224	$	8,260	$	212,484
Equity securities-financial services		17		—		—		17
Derivatives and hedging activities		—		2,192		—		2,192
Liabilities:
Derivatives and hedging activities		—		7,002		—		7,002

The following table presents a summary of changes in the fair value of the Company’s Level III investments for the three and nine month periods ended June 30, 2021 and 2020 (in thousands).

	Fair Value Measurement Using Significant Unobservable Inputs (Level III)
	Three Months Ended
	June 30, 2021		June 30, 2020
Beginning balance	$	4,678	$	7,821
Purchases, sales, issuances, settlements, net		8,541		(1,000	)
Total unrealized gain (loss):
Included in earnings		—		—
Included in other comprehensive income (loss)		61		(34	)
Transfers in and/or out of Level III		—		—
	$	13,280	$	6,787

28

	Fair Value Measurement Using Significant Unobservable Inputs (Level III)
	Nine Months Ended
	June 30, 2021		June 30, 2020
Beginning balance	$	8,260	$	7,792
Purchases, sales, issuances, settlements, net		4,791		(1,000	)
Total unrealized gain (loss):
Included in earnings		—		—
Included in other comprehensive (loss) income		229		(5	)
Transfers in and/or out of Level III		—		—
	$	13,280	$	6,787

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, 2021 and September 30, 2020 by level within the fair value hierarchy:

Non-Recurring Fair Value Measurements at Reporting Date (in thousands)
	June 30, 2021
	Level I		Level II		Level III		Total
Foreclosed real estate	$	—	$	—	$	373	$	373
Impaired loans		—		—		18,430		18,430
	September 30, 2020
	Level I		Level II		Level III		Total
Foreclosed real estate	$	—	$	—	$	269	$	269
Impaired loans		—		—		16,983		16,983

29

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
June 30, 2021
Impaired loans	$	18,430	Appraisal of collateral (1)	Appraisal adjustments (2)	0% to 35% (21.1%)
Foreclosed real estate owned		373	Appraisal of collateral (1)	Appraisal adjustments (2)	20% to 35% (29.8%)

	Quantitative Information about Level 3 Fair Value Measurements
(dollars in thousands)	Fair Value Estimate		Valuation Techniques	Unobservable Input	Range
September 30, 2020
Impaired loans	$	16,983	Appraisal of collateral (1)	Appraisal adjustments (2)	0% to 35% (20.5%)
Foreclosed real estate owned		269	Appraisal of collateral (1)	Appraisal adjustments (2)	20% to 35% (25.7%)

(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, 2021, 61 impaired loans with a carrying value of $19.3 million were reduced by specific valuation allowance totaling $887,000 resulting in a net fair value of $18.4 million based on Level 3 inputs. At September 30, 2020, 111 impaired loans with a carrying value of $17.2 million were reduced by a specific valuation totaling $221,000 resulting in a net fair value of $17.0 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, 2021 and September 30, 2020 by level within the fair value hierarchy:

	June 30, 2021
(in thousands)	Carrying Value		Level I		Level II		Level III		Total Fair Value
Financial assets:
Investment securities held to maturity	$	17,982	$	—	$	—	$	18,012	$	18,012
Loans receivable, net		1,368,616		—		—		1,381,913		1,381,913
Mortgage servicing rights		694		—		—		816		816
Financial liabilities:
Deposits	$	1,590,072	$	1,348,816	$	—	$	241,524	$	1,590,340

30

	September 30, 2020
(in thousands)	Carrying Value		Level I		Level II		Level III		Total Fair Value
Financial assets:
Loans receivable, net	$	1,417,974	$	—	$	—	$	1,426,962	$	1,426,962
Mortgage servicing rights		393		—		—		393		393
Financial liabilities:
Deposits	$	1,543,696	$	1,080,201	$	—	$	467,630	$	1,547,831
Other borrowings		14,164		—		—		17,721		17,721

For Cash and Cash Equivalents, Loans Held For Sale, Accrued Interest Receivable, Regulatory Stock, Bank Owned Life Insurance, Short-Term Borrowings, Advances by Borrowers for Taxes and Insurance, and Accrued Interest Payable the carrying value is a reasonable estimate of the fair value and are considered Level 1 measurements.

The fair value approximates the current book value.

31

11. Accumulated Other Comprehensive Income (Loss)

The activity in accumulated other comprehensive income (loss) for the three and nine month periods ended June 30, 2021 and 2020 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, 2021	$	(3,519	)	$	2,154		$	587		$	(778	)
Other comprehensive income (loss) before    reclassifications		—			339			(463	)		(124	)
Amounts reclassified from accumulated    other comprehensive income (loss)		(44	)		(34	)		343			265
Period change		(44	)		305			(120	)		141
Balance at June 30, 2021	$	(3,563	)	$	2,459		$	467		$	(637	)
Balance at March 31, 2020	$	(1,527	)	$	4,987		$	(2,464	)	$	996
Other comprehensive income (loss) before    reclassifications		—			863			(1,859	)		(996	)
Amounts reclassified from accumulated    other comprehensive income (loss)		—			—			85			85
Period change		—			863			(1,774	)		(911	)
Balance at June 30, 2020	$	(1,527	)	$	5,850		$	(4,238	)	$	85
	Accumulated Other Comprehensive Income/(Loss)
	Defined Benefit Pension Plan			Unrealized Gains (Losses) on Securities Available for Sale			Derivatives			Total
Balance at September 30, 2020	$	(3,432	)	$	3,167		$	(3,791	)	$	(4,056	)
Other comprehensive income (loss) before    reclassifications		—			(345	)		2,879			2,534
Amounts reclassified from accumulated other    comprehensive income (loss)		(131	)		(363	)		1,379			885
Period change		(131	)		(708	)		4,258			3,419
Balance at June 30, 2021	$	(3,563	)	$	2,459		$	467		$	(637	)
Balance at September 30, 2019	$	(1,527	)	$	807		$	(560	)	$	(1,280	)
Other comprehensive income (loss) before reclassifications		—			5,344			(3,717	)		1,627
Amounts reclassified from accumulated other    comprehensive income (loss)		—			(301	)		39			(262	)
Period change		—			5,043			(3,678	)		1,365
Balance at June 30, 2020	$	(1,527	)	$	5,850		$	(4,238	)	$	85

32

The following table presents significant amounts reclassified out of each component of accumulated other comprehensive income (loss) for the three and nine month periods ended June 30, 2021 and 2020 (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
	2021			2020
Securities available for sale
Net securities gains reclassified into earnings	$	42		$	—		Gain on sale of investment securities available for sale, net
Related income tax expense		(8	)		—		Income taxes
Net effect on accumulated other comprehensive income (loss)    for the period		34			—
Defined benefit pension plan
Amortization of net gain and prior service costs		56			—		Compensation and employee benefits
Related income tax expense		(12	)		—		Income taxes
Net effect on accumulated other comprehensive income (loss)    for the period		44			—
Derivatives and hedging activities:
Interest expense, effective portion		(434	)		(108	)	Interest expense
Related income tax expense		91			23		Income taxes
Net effect on accumulated other comprehensive income (loss)    for the period		(343	)		(85	)
Total reclassification for the period	$	(265	)	$	(85	)
	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
	2021			2020
Securities available for sale:
Net securities gains reclassified into earnings	$	459		$	381		Gain on sale of investment securities available for sale, net
Related income tax expense		(96	)		(80	)	Income taxes
Net effect on accumulated other comprehensive income (loss)    for the period		363			301		Net of tax
Defined benefit pension plan
Amortization of net (loss) gain and prior service costs		166			—
Related income tax expense		(35	)		—		Income taxes
Net effect on accumulated other comprehensive income (loss)    for the period		131			—
Derivative and hedging activities:
Interest expense, effective portion		(1,745	)		(50	)	Interest expense
Related income tax expense		366			11		Income taxes
Net effect on accumulated other comprehensive income (loss)    for the period		(1,379	)		(39	)
Total reclassification for the period	$	(885	)	$	262

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,

33

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 well as their classification on the Consolidated Balance Sheet as of June 30, 2021 and September 30, 2020 (in thousands).

			Fair Values of Derivative Instruments
			Asset Derivatives
			As of June 30, 2021					As of September 30, 2020
Hedged Item	Notional Amount		Balance Sheet Location	Fair Value		Notional Amount		Balance Sheet Location	Fair Value
Brokered Deposits	$	150,000	Other Assets	$	1,171	$	-	Other Assets	$	—
Commercial Loans		70,108	Other Assets		1,187		55,784	Other Assets		2,192
Total	$	220,108		$	2,358	$	55,784		$	2,192
			Fair Values of Derivative Instruments
			Liability Derivatives
			As of June 30, 2021					As of September 30, 2020
Hedged Item	Notional Amount		Balance Sheet Location	Fair Value		Notional Amount		Balance Sheet Location	Fair Value
FHLB Advances	$	-	Other Liabilities	$	-	$	25,000	Other Liabilities	$	700
Brokered Deposits		95,000	Other Liabilities		578		410,000	Other Liabilities		4,098
Commercial Loans		102,665	Other Liabilities		1,185		70,784	Other Liabilities		2,204
Total	$	197,665		$	1,763	$	505,784		$	7,002

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, 2021, the Company had twelve interest rate swaps with a notional principal amount of $245 million associated with the Company’s cash outflows associated with various brokered certificates and $173 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 periods ended June 30, 2021 and 2020.

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, 2021 and 2020, the Company had $434,000 and $108,000 of losses respectively, which resulted in an increase to interest expense. During the nine months ended June 30, 2021, the Company had $1.7 million of losses which resulted in an increase to interest expense During the nine months ended June 30, 2020, the Company had $50,000 in losses which resulted in an increase to interest expense.  During the next twelve months, the Company estimates that $835,000 will be reclassified as an increase to interest expense.

34

The table below presents the effect of the Company’s cash flow hedge accounting on Accumulated Other Comprehensive Income (Loss) for the three month periods ended June 30, 2021 and 2020 (in thousands).

The Effect of Fair Value and Cash Flow Hedge Accounting on Accumulated Other Comprehensive Income (Loss)
Derivatives in Hedging Relationships	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)	Loss Recognized in OCI on Derivative (Effective Portion) Three Months Ended June 30,
Derivatives in Cash Flow Hedging Relationships	2021			2020				2021			2020
Interest Rate Products	$	(156	)	$	(2,244	)	Interest expense	$	(434	)	$	(108	)
Total	$	(156	)	$	(2,244	)		$	(434	)	$	(108	)
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)	Loss Recognized in OCI on Derivative (Effective Portion) Nine Months Ended June 30,
	2021			2020				2021			2020
Interest Rate Products	$	5,390		$	(4,655	)	Interest expense	$	(1,745	)	$	(50	)
Total	$	5,390		$	(4,655	)		$	(1,745	)	$	(50	)

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, 2021, the Company had derivatives in a net liability position and was required to post $1.2 million in collateral against its obligations under these agreements.  As of September 30, 2020, the Company was required to post $7.5 million in collateral against its obligations under these agreements.  If the Company had breached any of these provisions at June 30, 2021 and September 30, 2020, 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 Bank was named as a defendant in an action commenced on December 8, 2016 by one plaintiff who will also seek to pursue this action as a class action on behalf of the entire class of people similarly situated. The plaintiff alleges that a bank previously acquired by ESSA Bancorp 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 Bank’s 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 Bank, and remanded the case back 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.  In an order dated November 24, 2020, the court referred the case to a Magistrate Judge to assist in mediation efforts.  The case was stayed while the parties explored the potential for a negotiated resolution. The parties engaged in mediation but did not resolve the matter.  The parties are now in the discovery process.  The Bank will continue to defend against plaintiffs’ allegations.  To the extent that this matter could result in exposure to the Bank, the amount of such exposure is not currently estimable.

35

On May 29, 2020, the Bank was named as a defendant in a second action commenced by three plaintiffs who will also seek to pursue this action as a class action on behalf of the entire class of people similarly situated.  The plaintiffs allege that a bank previously acquired by ESSA Bancorp 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 Bank moved to dismiss the Sherman Act claim on October 14, 2020, and that motion was denied on April 2, 2021.  The parties are now in the discovery process.  The Bank will continue to defend against plaintiffs’ allegations.  To the extent that this matter could result in exposure to the Bank, the amount of such exposure is not currently estimable.

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.

36

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. On October 1, 2019, the Company adopted ASU No. 2016-02 “Leases” (Topic 842) and all subsequent ASUs that modified Topic 842. For the Company, Topic 842 primarily affected 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. All of our leases are classified as operating leases, and therefore, were previously not recognized on the Company’s Consolidated Balance sheet. With the adoption of 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, 2021
Lease Right-of-Use Assets	Classification
Operating lease right-of-use assets	Other assets	$	6,446
Total Lease Right-Of-Use Assets		$	6,446
(in thousands)		June 30, 2021
Lease Liabilities	Classification
Operating lease Liabilities	Other liabilities	$	6,580
Total Lease Liabilities		$	6,580
(in thousands)		September 30, 2020
Lease Right-of-Use Assets	Classification
Operating lease right-of-use assets	Other assets	$	7,082
Total Lease Right-Of-Use Assets		$	7,082
(in thousands)		September 30, 2020
Lease Liabilities	Classification
Operating lease Liabilities	Other liabilities	$	7,161
Total Lease Liabilities		$	7,161

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. For operating leases existing prior to October 1, 2019, the rate for the remaining lease term as of October 1, 2019 was used.

	June 30, 2021
Weighted average remaining lease term
Operating leases	13.3 years
Weighted average discount rate
Operating leases		2.42	%

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.

37

Lease Costs (in thousands)	Three  Months Ended June 30, 2021
Operating lease cost	$	264
Variable lease cost		70
Net lease cost	$	334
Lease Costs (in thousands)	Three  Months Ended June 30, 2020
Operating lease cost	$	259
Variable lease cost		61
Net lease cost	$	320
Lease Costs (in thousands)	Nine Months Ended June 30,2021
Operating lease cost	$	791
Variable lease cost		213
Net lease cost	$	1,004
Lease Costs (in thousands)	Nine Months Ended June 30,2020
Operating lease cost	$	780
Variable lease cost		171
Net lease cost	$	951

Future minimum payments for finance leases and operating leases with initial or remaining terms of one year or more as of June 30, 2021 were as follows:

(in thousands)	Operating leases
Twelve months Ended:
June 30, 2022	$	886
June 30, 2023		704
June 30, 2024		641
June 30, 2025		505
June 30, 2026		507
Thereafter		4,619
Total future minimum lease payments		7,862
Amounts representing interest		1,282
Present Value of Net Future Minimum Lease Payments	$	6,580

38

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.

Further, the COVID-19 pandemic has caused local and national economic disruption and has had and may continue to have an impact on the Company’s operations and financial results. Given its ongoing and dynamic nature, it is difficult to predict what effects the pandemic will have on our business and results of operations in the future. The pandemic and related local and national economic disruption may, among other effects, result in a decline in demand for our products and services; increased levels of loan delinquencies, problem assets and foreclosures; branch closures, work stoppages and unavailability of personnel; and increased cybersecurity risks, as employees increasingly work remotely.

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, 2021 and September 30, 2020

Total Assets. Total assets decreased by $71.3 million, or 3.8%, to $1.82 billion at June 30, 2021 from $1.89 billion at September 30, 2020 due primarily to decreases in interest bearing deposits with other institutions, investment securities available for sale and loans receivable partially offset by an increase in cash and due from banks. At the onset of the pandemic, the Company moved quickly to build its liquidity as an offset to the economic uncertainty caused by the resulting economic slowdown.   The Company will continue to maintain a strong liquidity position against the changing economic forecasts through daily monitoring.

Total Cash and Cash Equivalents. Total cash and cash equivalents increased $29.5 million, or 18.9%, to $185.4 million at June 30, 2021 from $155.9 million at September 30, 2020 as a result of pandemic-oriented balance sheet adjustments made to mitigate related risks. Decreases in investment and loan balances outstanding along with an increase in liabilities accounted for the majority of the increase. The Company built the majority of its cash position in the fiscal second quarter of 2020 and has maintained that position through the third quarter of fiscal 2021 to remain prepared for ongoing economic uncertainties.

39

Net Loans. Net loans decreased $49.4 million, or 3.5%, to $1.37 billion at June 30, 2021 from $1.42 billion at September 30, 2020. During this period, residential loans decreased $25.8 million to $584.4 million, construction loans increased $383,000 to $12.2 million, commercial real estate loans increased $68.9 million to $578.5 million, commercial loans decreased $44.5 million to $95.2 million partially due to the repayment and forgiveness of $32.6 million in PPP loans carried in the commercial loan portfolio, obligations of states and political subdivisions decreased $22.1 million to $57.1 million, home equity loans and lines of credit decreased $2.2 million to $38.6 million, auto loans decreased $21.0 million to $18.8 million reflecting expected runoff of the portfolio following the Company’s previously announced discontinuation of indirect auto lending in July 2018, and other loans decreased $693,000 to $1.6 million. The Company sold $52.6 million in residential mortgage loans to the Federal Home Loan Bank of Pittsburgh during the nine month period ended June 30, 2021, recording gains on the sale of these loans in noninterest income.

Investment Securities Available for Sale. Investment securities available for sale decreased $64.3 million, or 30.3%, to $148.2 million at June 30, 2021 from $212.5 million at September 30, 2020 due primarily to the maturity of a $25.0 million United States treasury security and the sale of $19.7 million in various securities.  The Company has continued to maintain a liquid position in cash and cash equivalents and has limited its investment purchases.

Investment Securities Held to Maturity. Investment securities held to maturity increased to $18.0 million at June 30, 2021 from zero at September 30, 2020. The Company carries some investment as held to maturity to manage fluctuations in comprehensive loss caused by interest rate changes.

Deposits. Deposits increased $46.4 million, or 3.0%, to $1.59 billion at June 30, 2021 from $1.54 billion at September 30, 2020 due primarily to increases in interest bearing demand accounts, money markets accounts, non-interest bearing demand accounts and savings and club accounts offset by a decrease in certificate of deposits. Increases in non-interest bearing demand accounts of $35.2 million, interest bearing demand accounts of $198.4 million, money market accounts of $8.4 million and savings and club accounts of $26.6 million were offset in part by a decrease in certificates of deposit of $222.2 million. The overall decrease in certificates of deposit reflected a decrease in brokered certificates of $170.0 million.

Borrowed Funds. Borrowed funds decreased to zero at June 30, 2021, from $125.9 million at September 30, 2020. The decrease in borrowed funds was due to a decrease in short term borrowings of $111.7 million and a decrease in other borrowings of $14.2 million.

Stockholders’ Equity. Stockholders’ equity increased by $7.9 million, or 3.8%, to $199.3 million at June 30, 2021 from $191.4 million at September 30, 2020. The increase in stockholders’ equity was primarily due to net income of $12.5 million, which was partially offset by an increase in treasury stock due to the repurchase by the Company of 349,915 shares of its common stock at an aggregate cost of $5.4 million under a previously disclosed stock repurchase plan and regular cash dividends of $0.12 per share, which reduced stockholders’ equity by $3.5 million.

40

Average Balance Sheets for the Three and Nine Months Ended June 30, 2021 and 2020

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,
	2021									2020
	Average Balance			Interest Income/ Expense			Yield/Cost			Average Balance			Interest Income/ Expense			Yield/Cost
	(dollars in thousands)
Interest-earning assets:
Loans(1)	$	1,397,096		$	13,378			3.84	%	$	1,416,370		$	13,763			3.90	%
Investment Securities
Taxable(2)		69,111			548			3.18	%		67,076			637			3.81	%
Exempt from federal income    tax(2)(3)		8,419			40			2.41	%		8,267			45			2.70	%
Total investment securities		77,530			588			3.10	%		75,343			682			3.69	%
Mortgage-backed securities		89,869			346			1.54	%		225,073			1,131			2.02	%
Federal Home Loan Bank stock		3,908			49			5.03	%		17,713			224			5.07	%
Other		245,800			42			0.07	%		162,203			53			0.13	%
Total interest-earning assets		1,814,203			14,403			3.19	%		1,896,702			15,853			3.36	%
Allowance for loan losses		(17,491	)								(13,520	)
Noninterest-earning assets		110,582									123,200
Total assets	$	1,907,294								$	2,006,382
Interest-bearing liabilities:
NOW accounts	$	276,093		$	63			0.09	%	$	226,736		$	134			0.24	%
Money market accounts		406,211			148			0.15	%		350,993			442			0.51	%
Savings and club accounts		186,267			25			0.05	%		151,427			22			0.06	%
Certificates of deposit		530,191			1,015			0.77	%		422,789			1,613			1.53	%
Borrowed funds		—			—			—			402,581			1,442			1.44	%
Total interest-bearing liabilities		1,398,762			1,251			0.36	%		1,554,526			3,653			0.94	%
Non-interest-bearing NOW    accounts		276,919									221,139
Non-interest-bearing liabilities		31,521									34,986
Total liabilities		1,707,202									1,810,651
Equity		200,092									195,731
Total liabilities and equity	$	1,907,294								$	2,006,382
Net interest income				$	13,152								$	12,200
Interest rate spread								2.83	%								2.42	%
Net interest-earning assets	$	415,441								$	342,176
Net interest margin(4)								2.91	%								2.58	%
Average interest-earning assets to    average interest-bearing liabilities					129.70	%								122.01	%

41

	For the Nine Months Ended June 30,
	2021									2020
	Average Balance			Interest Income/ Expense			Yield/Cost			Average Balance			Interest Income/ Expense			Yield/Cost
	(dollars in thousands)
Interest-earning assets:
Loans(1)	$	1,402,415		$	40,808			3.88	%	$	1,372,482		$	41,958			4.07	%
Investment Securities
Taxable(2)		78,353			1,705			2.90	%		66,108			1,888			3.80	%
Exempt from federal income    tax(2)(3)		8,449			121			2.41	%		10,376			141			2.29	%
Total investment securities		86,802			1,826			2.85	%		76,484			2,029			3.60	%
Mortgage-backed securities		93,463			1,068			1.52	%		229,835			3,782			2.19	%
Federal Home Loan Bank stock		4,304			163			5.04	%		13,522			652			6.41	%
Other		215,719			113			0.07	%		77,738			289			0.50	%
Total interest-earning assets		1,802,703			43,978			3.25	%		1,770,061			48,710			3.67	%
Allowance for loan losses		(16,561	)								(13,005	)
Noninterest-earning assets		117,664									116,628
Total assets	$	1,903,806								$	1,873,684
Interest-bearing liabilities:
Interest bearing demand accounts	$	262,171		$	234			0.12	%	$	213,614		$	525			0.33	%
Money market accounts		406,423			521			0.17	%		348,809			2,326			0.89	%
Savings and club accounts		175,247			69			0.05	%		142,091			60			0.06	%
Certificates of deposit		545,653			3,788			0.92	%		448,765			5,861			1.74	%
Borrowed funds		24,414			271			1.48	%		304,444			4,180			1.83	%
Total interest-bearing liabilities		1,413,908			4,883			0.46	%		1,457,723			12,952			1.18	%
Non-interest-bearing NOW    accounts		261,565									162,904
Non-interest-bearing liabilities		30,930									59,349
Total liabilities		1,706,403									1,679,976
Equity		197,403									193,708
Total liabilities and equity	$	1,903,806								$	1,873,684
Net interest income				$	39,095								$	35,758
Interest rate spread								2.79	%								2.49	%
Net interest-earning assets	$	388,795								$	312,338
Net interest margin(4)								2.89	%								2.69	%
Average interest-earning assets to    average interest-bearing liabilities					127.50	%								121.43	%

_____________________                          

(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, 2021 and 2020.

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

42

Comparison of Operating Results for the Three Months Ended June 30, 2021 and June 30, 2020

Net Income. Net income increased $250,000, or 6.6%, to $4.0 million for the three months ended June 30, 2021 compared to net income of $3.8 million for the comparable period in 2020. The increase was primarily due to an increase in net interest income and a decline in the provision for loan losses partially offset by increases in non-interest expense and the income tax provision.

Net Interest Income. Net interest income increased $952,000, or 7.8%, to $13.2 million for the three months ended June 30, 2021 compared to $12.2 million for the comparable period in 2020.

Interest Income. Total interest income was $14.4 million for the three months ended June 30, 2021 compared with $15.9 million for the three months ended June 30, 2020 reflecting a decline in interest rates and a decrease in the total yield on average interest earning assets from 3.36% for the quarter ended June 30, 2020 to 3.19% for the quarter ended June 30, 2021. A decline of $82.5 million in average interest earning assets also contributed to the decline in interest income.

Interest Expense. Interest expense was $1.3 million for the quarter ended June 30, 2021 compared to $3.7 million for the same period in 2020. The cost of interest-bearing liabilities declined to 0.36% in the third quarter of 2021 from 0.94% a year earlier, reflecting lower interest rates, timely repricing of deposits and roll-off of higher-cost borrowings. Average interest-bearing liabilities shrank $155.8 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 provision for loan losses of $600,000 for the three month period ended June 30, 2021 compared to $1.3 million for the three month period ended June 30, 2020. The allowance for loan losses was $17.7 million, or 1.27% of loans outstanding at June 30, 2021, compared to $15.4 million, or 1.07% of loans outstanding, at September 30, 2020.  As the economic impact of the COVID-19 pandemic continues to evolve, our customers may experience decreased cash flows, which may correlate to an inability to make timely loan payments.  This, in turn may require further increases in our allowance for loan losses and increases in the level of charge-offs in our loan portfolio.

Non-interest Income. Noninterest income decreased 20.5% to $2.3 million for the three months ended June 30, 2021, compared with $2.9 million for the three months ended June 30, 2020. Decreases in loan swap fees of $626,000 and gains on sales of residential mortgages of $397,000 were partially offset by increases in service fees on deposit accounts of $223,000 and trust and investment fees of $100,000 in the quarter ended June 30, 2021 compared with the comparable period in 2020.

Non-interest Expense. Noninterest expense increased $888,000 or 9.7% to $10.0 million for the three months ended June 30, 2021 compared with $9.1 million for the comparable period a year earlier primarily reflecting increases in compensation and employee benefits expenses, Federal Deposit Insurance Corporation premiums and other expenses which were partially offset by gains on foreclosed real estate.

Income Taxes. Income tax expense decreased $75,000 to $801,000 for the three months ended June 30, 2021 from $876,000 for the comparable 2020 period. The effective tax rate for the three months ended June 30, 2021 was 16.6% compared to 18.8% for the 2020 period.

43

Comparison of Operating Results for the Nine Months Ended June 30, 2021 and June 30, 2020

Net Income. Net income increased $1.9 million, or 18.0%, to $12.5 million for the nine months ended June 30, 2021 compared to net income of $10.6 million for the comparable period in 2020. The increase was primarily due to increases in net interest income and non-interest income partially offset by increases in non-interest expense, the provision for loan losses and the income tax provision.

Net Interest Income. Net interest income increased $3.3 million, or 9.3%, to $39.1 million for the nine months ended June 30, 2021 compared to $35.8 million for the comparable period in 2020.

Interest Income. Total interest income was $44.0 million for the nine months ended June 30, 2021 compared with $48.7 million for the nine months ended June 30, 2020 reflecting a decline in interest rates, resulting in a decrease in the yield on average interest earning assets from 3.67% for the nine months ended June 30, 2020 to 3.25% for the nine months ended June 30, 2021. The decline in rates was partially offset by growth of $32.6 million in average interest earning assets.  The majority of the growth, however, was in the lower yielding cash category of interest earning assets.

Interest Expense. Interest expense declined to $4.9 million for the nine months ended June 30, 2021 compared to $13.0 million for the same period in 2020. The cost of interest bearing liabilities declined from 1.18% for the 2020 period to 0.46% for the 2021 period, reflecting lower interest rates, timely repricing of deposits and roll-off of higher-cost borrowings. Balance sheet management includes the effect of the deleverage transaction completed by the Company during the fourth quarter of 2020 that decreased the Company’s borrowed funds by approximately $123.0 million.  Average interest-bearing liabilities decreased $43.8 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 provision for loan losses of $2.4 million for the nine month period ended June 30, 2021 compared to $2.2 million for the nine month period ended June 30, 2020. The allowance for loan losses was $17.7 million, or 1.27% of loans outstanding at June 30, 2021, compared to $15.4 million, or 1.07% of loans outstanding, at September 30, 2020.  As the economic impact of the COVID-19 pandemic continues to evolve, our customers may experience decreased cash flows, which may correlate to an inability to make timely loan payments.  This, in turn may require further increases in our allowance for loan losses and increases in the level of charge-offs in our loan portfolio.

Non-interest Income. Noninterest income increased 11.6% to $8.9 million for the nine months ended June 30, 2021, compared with $8.0 million for the nine months ended June 30, 2020. Noninterest income in the nine months ended June 30, 2021 included approximately $1.7 million in gains on sales of residential mortgages, primarily lower-interest 30-year fixed rate loans. The Company’s strategy continues to focus on commercial banking and decreasing the amount of long-term, low interest, retained residential mortgages. Loan swap fees were $622,000 in fiscal first half 2021 compared to $1.2 million in fiscal first half 2020.  In addition, the Company recorded $120,000 in earnings on bank-owned life insurance during this fiscal first quarter due to the receipt of policy proceeds. Service charges and fees on loans also increased $382,000 for the for the nine months ended June 30, 2021 compared to the comparable period in 2020.

Non-interest Expense. Noninterest expense increased $1.9 million or 6.7% to $30.6 million for the nine months ended June 30, 2021 compared with $28.7 million for the comparable period a year earlier primarily reflecting increases in compensation and employee benefits expenses, Federal Deposit Insurance Corporation premiums and other expenses partially offset by gains on foreclosed real estate.

Income Taxes. Income tax expense increased $220,000 to $2.5 million for the nine months ended June 30, 2021 from $2.3 million for the comparable 2020 period. The effective tax rate for the nine months ended June 30, 2021 was 16.7% compared to 17.7% for the 2020 period.

44

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

	June 30, 2021			September 30, 2020
Non-performing assets:
Non-accruing loans	$	20,875		$	19,541
Non-accruing purchased credit impaired loans		653			789
Total non-performing loans		21,528			20,330
Foreclosed real estate		373			269
Total non-performing assets	$	21,901		$	20,599
Ratio of non-performing loans to total loans		1.55	%		1.42	%
Ratio of non-performing loans to total assets		1.18	%		1.07	%
Ratio of non-performing assets to total assets		1.20	%		1.09	%
Ratio of allowance for loan losses to total loans		1.27	%		1.07	%

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 increased $1.3 million from September 30, 2020 to June 30, 2021. The primary reason for the increase in nonperforming assets at June 30, 2021 as compared to September 30, 2020 was the addition of one non-performing commercial loan relationship of $5.6 million.  Also included in non-performing assets are two nonperforming commercial real estate loans totaling $8.9 million.  These loans are well collateralized and carry personal guarantees. The number of nonperforming residential loans was 43 at June 30, 2021 compared to 56 at September 30, 2020. The $21.5 million of non-accruing loans at June 30, 2021 included 43 residential loans with an aggregate outstanding balance of $3.4 million, 31 commercial and commercial real estate loans with aggregate outstanding balances of $17.9 million and 39 consumer loans with aggregate balances of $258,000. Within the residential loan balance were $1.3 million of loans past due less than 90 days. In the quarter ended June 30, 2021, the Company identified 11 residential loans which, although paying as agreed, have a high probability of default. Foreclosed real estate increased $105,000 to $373,000 at June 30, 2021. Foreclosed real estate consists of nine residential properties and one commercial property.

At June 30, 2021, the principal balance of troubled debt restructures (“TDRs”) was $8.6 million compared to $2.7 million at September 30, 2020. All of the $8.6 million of troubled debt restructures at June 30, 2021 are non-accrual loans.

As of June 30, 2021, TDRs were comprised of 11 residential loans totaling $1.1 million, eight commercial and commercial real estate loans totaling $7.4 million and four consumer loans (home equity loans, home equity lines and credit, indirect auto and other loans) totaling $62,000.

For the nine month period ended June 30, 2021, six loans were paid in full and removed from non-performing TDR status and five loans were removed due to completion of one year of consecutive on time payments.

The Company continues to closely monitor all customer credit positions, particularly loans requesting payment relief.  As of June 30, 2021, approximately 15 of our commercial clients had requested loan payment deferrals or payments of interest only on loans totaling $30.3 million. We have had similar requests from approximately five mortgage customers totaling $1.1 million.  In accordance with interagency guidance issued in March 2020, these short-term deferrals are not considered  TDRs unless the borrower was previously experiencing financial difficulty.  As the economic impact of the COVID-19 pandemic continues to evolve, our customers may experience decreased cash flows, which may correlate to an inability to make timely loan payments. This, in turn may require further increases in our allowance for loan losses and increases in the level of chargeoffs in our loan portfolio.

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

45

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, 2021, $185.4 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, 2021, we had no borrowings outstanding from the Pittsburgh FHLB. We have access to total FHLB advances of up to approximately $706.6 million.

At June 30, 2021, we had $331.3 million in loan commitments outstanding, which included, in part, $129.3 million in undisbursed construction loans and land development loans, $49.1 million in unused home equity lines of credit, $87.0 million in commercial lines of credit and commitments to originate commercial loans, $17.0 million in performance standby letters of credit and $48.9 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, 2021 totaled $179.3 million, or 74.3% 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, 2022. 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 $14.1 million and $17.1 million for the nine months ended June 30, 2021 and 2020, 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) provided by investing activities was $96.8 million and $(81.3) million for the nine months ended June 30, 2021 and 2020, 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 (used for) provided by, of $(81.4) million and $182.8 million for the nine months ended June 30, 2021 and 2020, 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

46

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 2021 or 2020.

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 2021 or 2020.

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.

47

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.

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, 2020.

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.

48

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 Bank was named as a defendant in an action commenced on December 8, 2016 by one plaintiff who will also seek to pursue this action as a class action on behalf of the entire class of people similarly situated.  The plaintiff alleges that a bank previously acquired by ESSA Bancorp 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 Bank’s 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 Bank, and remanded the case back 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.  In an order dated November 24, 2020, the court referred the case to a Magistrate Judge to assist in mediation efforts.  The case was stayed while the parties explored the potential for a negotiated resolution. The parties engaged in mediation but did not resolve the matter.  The parties are now in the discovery process.  The Bank will continue to defend against plaintiffs’ allegations.  To the extent that this matter could result in exposure to the Bank, the amount of such exposure is not currently estimable.

On May 29, 2020, the Bank was named as a defendant in a second action commenced by three plaintiffs who will also seek to pursue this action as a class action on behalf of the entire class of people similarly situated.  The plaintiffs allege that a bank previously acquired by ESSA Bancorp 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 Bank moved to dismiss the Sherman Act claim on October 14, 2020, and that motion was denied on April 2, 2021.  The parties are now in the discovery process.  The Bank will continue to defend against plaintiffs’ allegations.  To the extent that this matter could result in exposure to the Bank, the amount of such exposure is not currently estimable.

Item 1A.Risk Factors

There have been no material changes in the “Risk Factors” as disclosed in the Company’s response to Item 1A in Part 1 of its Annual Report on Form 10-K for the year ended September 30, 2020, filed on December 14, 2020.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Company Purchases of Common Stock
Month Ending	Total number of shares purchased		Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs(1)		Maximum number of shares that may yet be purchased under the plans or programs
April 30, 2021		63,834	$	16.14		63,834		196,650
May 31, 2021		9,316	$	15.67		9,316		187,334
June 30, 2021		87,549	$	16.14		87,549		99,785
Total		160,699	$	16.11		160,699

______________________

(1)  On August 25, 2020 the Company announced the authorization of an eighth repurchase program for up to 500,000 shares of its common stock.  This program has no expiration date.

49

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

50

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)

51

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 5, 2021	/s/ Gary S. Olson
	Gary S. Olson
	President and Chief Executive Officer
Date: August 5, 2021	/s/ Allan A. Muto
	Allan A. Muto
	Executive Vice President and Chief Financial Officer

52

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 5, 2021	/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 5, 2021	/s/ Allan A. Muto
	Allan A. Muto
	Executive Vice President and Chief Financial Officer

EX-32

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, 2021 (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 5, 2021	/s/ Gary S. Olson
	Gary S. Olson
	President and Chief Executive Officer
Date: August 5, 2021	/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, 2021	Jul. 29, 2021
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2021
Document Fiscal Year Focus	2021
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		10,492,782
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, 2021	Sep. 30, 2020
ASSETS
Cash and due from banks	$ 170,623	$ 101,447
Interest-bearing deposits with other institutions	14,777	54,470
Total cash and cash equivalents	185,400	155,917
Investment securities available for sale, at fair value	148,170	212,484
Investment securities held to maturity, at amortized cost	17,982
Loans held for sale	1,581	208
Loans receivable (net of allowance for loan losses of $17,693 and $15,400)	1,368,616	1,417,974
Regulatory stock, at cost	4,140	7,344
Premises and equipment, net	13,996	14,230
Bank-owned life insurance	37,286	40,546
Foreclosed real estate	373	269
Intangible assets, net	587	791
Goodwill	13,801	13,801
Deferred income taxes	3,873	5,993
Other assets	26,404	23,958
TOTAL ASSETS	1,822,209	1,893,515
LIABILITIES
Deposits	1,590,072	1,543,696
Short-term borrowings		111,713
Other borrowings		14,164
Advances by borrowers for taxes and insurance	14,902	7,858
Other liabilities	17,983	24,687
TOTAL LIABILITIES	1,622,957	1,702,118
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; 10,570,536 and 10,876,869 outstanding at June 30, 2021 and September 30, 2020, respectively)	181	181
Additional paid in capital	181,500	181,487
Unallocated common stock held by the Employee Stock Ownership Plan (ESOP)	(7,019)	(7,350)
Retained earnings	121,603	112,612
Treasury stock, at cost; 7,562,559 and 7,256,226 shares outstanding at June 30, 2021 and September 30, 2020, respectively	(96,376)	(91,477)
Accumulated other comprehensive loss	(637)	(4,056)
TOTAL STOCKHOLDERS’ EQUITY	199,252	191,397
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$ 1,822,209	$ 1,893,515

XML

Consolidated Balance Sheet (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2021	Sep. 30, 2020
Statement Of Financial Position [Abstract]
Allowance for loan losses	$ 17,693	$ 15,400
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	10,570,536	10,876,869
Treasury stock, shares outstanding	7,562,559	7,256,226

XML

Consolidated Statement of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
INTEREST INCOME
Loans receivable, including fees	$ 13,378	$ 13,763	$ 40,808	$ 41,958
Investment securities:
Taxable	894	1,768	2,773	5,670
Exempt from federal income tax	40	45	121	141
Other investment income	91	277	276	941
Total interest income	14,403	15,853	43,978	48,710
INTEREST EXPENSE
Deposits	1,251	2,211	4,612	8,772
Short-term borrowings		588	209	1,582
Other borrowings		854	62	2,598
Total interest expense	1,251	3,653	4,883	12,952
NET INTEREST INCOME	13,152	12,200	39,095	35,758
Provision for loan losses	600	1,300	2,400	2,175
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	12,552	10,900	36,695	33,583
NONINTEREST INCOME
Service fees on deposit accounts	781	558	2,305	2,163
Services charges and fees on loans	450	325	1,367	985
Loan swap fees	1	627	622	1,200
Realized and unrealized gain (loss) on equity securities, net	4	2	15	(3)
Trust and investment fees	398	298	1,074	1,045
Gain on sale of investment securities available for sale, net	42		459	381
Gain on sale of loans, net	250	647	1,737	791
Earnings on Bank-owned life insurance	191	233	725	709
Insurance commissions	158	195	492	641
Other	18	(2)	147	102
Total noninterest income	2,293	2,883	8,943	8,014
NONINTEREST EXPENSE
Compensation and employee benefits	6,315	5,714	19,083	18,029
Occupancy and equipment	1,060	1,033	3,257	3,169
Professional fees	526	457	1,583	1,449
Data processing	1,169	1,113	3,390	3,215
Advertising	218	114	471	348
Federal Deposit Insurance Corporation (FDIC) premiums	280	154	834	492
(Gain) loss on foreclosed real estate	(534)	(5)	(639)	61
Amortization of intangible assets	69	68	204	208
Other	915	482	2,448	1,746
Total noninterest expense	10,018	9,130	30,631	28,717
Income before income taxes	4,827	4,653	15,007	12,880
Income taxes	801	876	2,506	2,286
NET INCOME	$ 4,026	$ 3,777	$ 12,501	$ 10,594
Earnings per share
Basic	$ 0.41	$ 0.37	$ 1.25	$ 1.02
Diluted	0.41	0.37	1.25	1.02
Dividends per share	$ 0.12	$ 0.11	$ 0.35	$ 0.33

XML

Consolidated Statement of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Statement Of Income And Comprehensive Income [Abstract]
Net income	$ 4,026	$ 3,777	$ 12,501	$ 10,594
Investment securities available for sale:
Unrealized holding gains (losses)	429	1,091	(440)	6,763
Tax effect	(90)	(228)	95	(1,419)
Reclassification of gains recognized in net income	(42)		(459)	(381)
Tax effect	8		96	80
Net of tax amount	305	863	(708)	5,043
Pension plan:
Reclassification of gains recognized in net income	(56)		(166)
Tax effect	12		35
Net of tax amount	(44)		(131)
Derivative and hedging activities adjustments:
Changes in unrealized holding (losses) gains on derivatives included in net income	(590)	(2,353)	3,645	(4,705)
Tax effect	127	494	(766)	988
Reclassification adjustment for losses on derivatives included in net income	434	108	1,745	50
Tax effect	(91)	(23)	(366)	(11)
Net of tax amount	(120)	(1,774)	4,258	(3,678)
Total other comprehensive income (loss)	141	(911)	3,419	1,365
Comprehensive income	$ 4,167	$ 2,866	$ 15,920	$ 11,959

XML

Consolidated Statement of Changes in Stockholders' Equity (Unaudited) - USD ($) $ in Thousands	Total	Cumulative Effect, Period of Adoption, Adjustment [Member]	Common Stock [Member]	Additional Paid-In Capital [Member]	Unallocated Common Stock Held by the ESOP [Member]	Retained Earnings [Member]	Retained Earnings [Member] Cumulative Effect, Period of Adoption, Adjustment [Member]	Treasury Stock [Member]	Accumulated Other Comprehensive (Loss) Income [Member]
Beginning Balance at Sep. 30, 2019	$ 189,508	$ 290	$ 181	$ 181,161	$ (7,803)	$ 102,465	$ 290	$ (85,216)	$ (1,280)
Beginning Balance, Shares at Sep. 30, 2019			11,321,417
Net income	10,594					10,594
Other comprehensive income (loss)	1,365								1,365
Cash dividends declared	$ (3,437)					(3,437)
Accounting Standards Update [Extensible List]	ASU No. 2016-02
Stock based compensation	$ 415			415
Allocation of ESOP stock	519			179	340
Allocation of treasury shares to incentive plan	(4)			(389)				385
Allocation of treasury shares to incentive plan, Shares			30,692
Purchase of common stock	(5,565)							(5,565)
Purchase of common stock, Shares			(391,752)
Ending Balance at Jun. 30, 2020	193,685		$ 181	181,366	(7,463)	109,912		(90,396)	85
Ending Balance, Shares at Jun. 30, 2020			10,960,357
Beginning Balance at Mar. 31, 2020	193,666		$ 181	181,218	(7,576)	107,265		(88,418)	996
Beginning Balance, Shares at Mar. 31, 2020			11,105,887
Net income	3,777					3,777
Other comprehensive income (loss)	(911)								(911)
Cash dividends declared	(1,130)					(1,130)
Stock based compensation	82			82
Allocation of ESOP stock	148			35	113
Allocation of forfeited incentive shares				31				(31)
Allocation of forfeited incentive shares, Shares			(2,442)
Purchase of common stock	(1,947)							(1,947)
Purchase of common stock, Shares			(143,088)
Ending Balance at Jun. 30, 2020	193,685		$ 181	181,366	(7,463)	109,912		(90,396)	85
Ending Balance, Shares at Jun. 30, 2020			10,960,357
Beginning Balance at Sep. 30, 2020	$ 191,397		$ 181	181,487	(7,350)	112,612		(91,477)	(4,056)
Beginning Balance, Shares at Sep. 30, 2020	10,876,869		10,876,869
Net income	$ 12,501					12,501
Other comprehensive income (loss)	3,419								3,419
Cash dividends declared	(3,510)					(3,510)
Stock based compensation	421			421
Allocation of ESOP stock	473			142	331
Allocation of treasury shares to incentive plan				(550)				550
Allocation of treasury shares to incentive plan, Shares			43,582
Purchase of common stock	(5,449)							(5,449)
Purchase of common stock, Shares			(349,915)
Ending Balance at Jun. 30, 2021	$ 199,252		$ 181	181,500	(7,019)	121,603		(96,376)	(637)
Ending Balance, Shares at Jun. 30, 2021	10,570,536		10,570,536
Beginning Balance at Mar. 31, 2021	$ 198,608		$ 181	181,353	(7,132)	118,769		(93,785)	(778)
Beginning Balance, Shares at Mar. 31, 2021			10,731,235
Net income	4,026					4,026
Other comprehensive income (loss)	141								141
Cash dividends declared	(1,192)					(1,192)
Stock based compensation	95			95
Allocation of ESOP stock	165			52	113
Purchase of common stock	(2,591)							(2,591)
Purchase of common stock, Shares			(160,699)
Ending Balance at Jun. 30, 2021	$ 199,252		$ 181	$ 181,500	$ (7,019)	$ 121,603		$ (96,376)	$ (637)
Ending Balance, Shares at Jun. 30, 2021	10,570,536		10,570,536

XML

Consolidated Statement of Changes in Stockholders' Equity (Unaudited) (Parenthetical) - $ / shares	3 Months Ended		9 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Cash dividends declared, per share	$ 0.12	$ 0.11	$ 0.35	$ 0.33
Retained Earnings [Member]
Cash dividends declared, per share	$ 0.12	$ 0.11	$ 0.35	$ 0.33

XML

Consolidated Statement of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
OPERATING ACTIVITIES
Net income	$ 12,501	$ 10,594
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	2,400	2,175
Provision for depreciation and amortization	790	809
Amortization and accretion of discounts and premiums, net	(771)	1,485
Net gain on sale of investment securities, available for sale	(459)	(381)
Realized and unrealized (gain) loss on equity securities	(15)	3
Gain on sale of loans, net	(1,737)	(791)
Origination of residential real estate loans for sale	(52,552)	(19,112)
Proceeds on sale of residential real estate loans	52,916	19,903
Compensation expense on ESOP	473	519
Amortization of right-of-use asset	669	660
Stock based compensation	421	415
Decrease (increase) in accrued interest receivable	1,684	(763)
Decrease in accrued interest payable	(487)	(173)
Earnings on bank-owned life insurance	(605)	(709)
Deferred federal income taxes	1,210	(23)
Decrease in accrued pension liability	(529)	(443)
(Gain) loss on foreclosed real estate, net	(639)	61
Amortization of intangible assets	204	208
Other, net	(1,394)	2,678
Net cash provided by operating activities	14,080	17,115
Investment securities available for sale:
Proceeds from sale of investment securities	19,673	24,009
Proceeds from principal repayments and maturities	77,413	44,409
Purchases	(34,104)	(44,623)
Investment securities held to maturity:
Proceeds from principal repayments and maturities	222
Purchases	(18,204)
Decrease (increase) in loans receivable, net	48,394	(97,349)
Redemption of regulatory stock	6,007	8,166
Purchase of regulatory stock	(2,803)	(15,168)
Proceeds from sale of foreclosed real estate	766	111
Purchase of premises, equipment and software	(545)	(871)
Net cash provided by (used for) investing activities	96,819	(81,316)
FINANCING ACTIVITIES
Increase in deposits, net	46,376	142,005
Net (decrease) increase in short-term borrowings	(111,713)	31,012
Proceeds from other borrowings		55,661
Repayment of other borrowings	(14,164)	(45,415)
Increase in advances by borrowers for taxes and insurance	7,044	8,542
Purchase of common stock	(5,449)	(5,565)
Dividends on common stock	(3,510)	(3,437)
Net cash (used for) provided by financing activities	(81,416)	182,803
Increase in cash and cash equivalents	29,483	118,602
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR	155,917	52,242
CASH AND CASH EQUIVALENTS AT END OF YEAR	185,400	170,844
Cash Paid:
Interest	5,370	13,125
Income taxes		8
Noncash items:
Transfers from loans to foreclosed real estate	231	344
Death benefit receivable on BOLI	(3,865)
Initial recognition of operating right-of-use asset		(7,272)
Initial recognition of operating lease liability		7,272
Unrealized holding (losses) gains	$ (899)	$ 6,383

XML

Nature of Operations and Basis of Presentation

9 Months Ended

Jun. 30, 2021

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 and is currently inactive. 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 owned 100 percent 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 three and nine month periods ended June 30, 2021 and 2020 are not necessarily indicative of the results that may be expected for the year ending September 30, 2021.

XML

Earnings per Share

9 Months Ended

Jun. 30, 2021

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 month periods ended June 30, 2021 and 2020.

	Three Months Ended						Nine Months Ended
	June 30,			June 30,			June 30,			June 30,
	2021			2020			2021			2020
Weighted-average common shares outstanding		18,133,095			18,133,095			18,133,095			18,133,095
Average treasury stock shares		(7,473,715	)		(7,076,709	)		(7,362,121	)		(6,924,021	)
Average unearned ESOP shares		(692,120	)		(741,156	)		(707,250	)		(752,513	)
Average unearned non-vested shares		(61,535	)		(54,735	)		(57,683	)		(50,204	)
Weighted average common shares and common stock    equivalents used to calculate basic earnings per share		9,905,725			10,260,495			10,006,041			10,406,357
Additional common stock equivalents (nonvested stock)    used to calculate diluted earnings per share		2,063			234			2,688			257
Weighted average common shares and common stock    equivalents used to calculate diluted earnings per share		9,907,788			10,260,729			10,008,729			10,406,614

At June 30, 2021 there were 23,312 shares of nonvested stock outstanding at an average weighted price of $16.15 per share that were not included in the computation of diluted earnings per share because to do so would have been anti-dilutive. At June 30, 2020 there were 42,520 shares of nonvested stock outstanding at an average weighted price of $16.15 per share that were not included in the computation of diluted earnings per share because to do so would have been anti-dilutive.   

XML

Use of Estimates in the Preparation of Financial Statements

9 Months Ended

Jun. 30, 2021

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.

XML

Accounting Pronouncements

9 Months Ended

Jun. 30, 2021

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 August 2018, the FASB issued ASU 2018-14, Compensation – Retirement Benefits (Topic 715-20). This Update amends ASC 715 to add, remove and clarify disclosure requirements related to defined benefit pension and other postretirement plans. The Update eliminates the requirement to disclose the amounts in accumulated other comprehensive income expected to be recognized as part of net periodic benefit cost over the next year. The Update also removes the disclosure requirements for the effects of a one-percentage-point change on the assumed health care costs and the effect of this change in rates on service cost, interest cost and the benefit obligation for postretirement health care benefits. This Update is effective for public business entities for fiscal years ending after December 15, 2020, and must be applied on a retrospective basis. For all other entities, this Update is effective for fiscal years ending after December 15, 2021. This Update is not expected to have a significant impact on the Company’s financial statements.

In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments – Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, which affects a variety of topics in the Codification and applies to all reporting entities within the scope of the affected accounting guidance. Topic 326, Financial Instruments – Credit Losses amendments are effective for SEC registrants for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. For all other public business entities, the effective date is for fiscal years beginning after December 15, 2020, and for all other entities, the effective date is for fiscal years beginning after December 15, 2021. Topic 815, Derivatives and Hedging amendments are effective for public business entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods beginning after December 15, 2020. For entities that have adopted the amendments in Update 2017-12, the effective date is as of the beginning of the first annual period beginning after the issuance of this Update. Topic 825, Financial Instruments amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years. 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 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 the 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 ASU 2016-13, the effective dates and transition requirements are the same as those in ASU 2016-13. For entities that have adopted ASU 2016-13, ASU 2019-05 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted once ASU 2016-13 has been adopted. 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 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. The effective dates in this Update are the same as those applicable for ASU 2019-10. 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 December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740), to simplify the accounting for income taxes, change the accounting for certain tax transactions, and make minor improvements to the codification. This Update provides a policy election to not allocate consolidated income taxes when a member of a consolidated tax return is not subject to income tax and provides guidance to evaluate whether a step-up in tax basis of goodwill relates to a business combination in which book goodwill was recognized or a separate transaction. The Update also changes current guidance for making an intraperiod allocation, if there is a loss in continuing operations and gains outside of continuing operations; determining when a deferred tax liability is recognized after an investor in a foreign entity transitions to or from the equity method of accounting; accounting for tax law changes and year-to-date losses in interim periods; and determining how to apply the income tax guidance to franchise taxes that are partially based on income. For public business entities, the amendments in this Update are effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2020. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. This Update is not expected to have a significant impact on the Company’s financial statements.

In January 2020, the FASB issued ASU 2020-1, Investments – Equity Securities (Topic 321), Investments – Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815), to clarify that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting for the purposes of applying the measurement alternative in accordance with Topic 321 immediately before applying or upon discontinuing the equity method. The amendments also clarify that, for the purpose of applying paragraph 815-10-15-141(a) an entity should not consider whether, upon the settlement of the forward contract or exercise of the purchased option, individually or with existing investments, the underlying securities would be accounted for under the equity method in Topic 323 or the fair value option, in accordance with the financial instruments guidance in Topic 825. An entity also would evaluate the remaining characteristics in paragraph 815-10-15-141 to determine the accounting for those forward contracts and purchased options. For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years. This Update is not expected to have a significant impact on the Company’s financial statements.

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 January 2020, the FASB issued ASU 2020-4, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, March 2020, to provide temporary optional expedients and exceptions to the U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from LIBOR and other interbank offered rates to alternative reference rates, such as Secured Overnight Financing Rate. Entities can elect not to apply certain modification accounting requirements to contracts affected by what the guidance calls reference rate reform, if certain criteria are met. An entity that makes this election would not have to remeasure the contracts at the modification date or reassess a previous accounting determination. Also, entities can elect various optional expedients that would allow them to continue applying hedge accounting for hedging relationships affected by reference rate reform, if certain criteria are met, and can make a one-time election to sell and/or reclassify held-to-maturity debt securities that reference an interest rate affected by reference rate reform. The amendments in this ASU are effective for all entities upon issuance through December 31, 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 August 2020, the FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity.  This ASU removes from U.S. GAAP the separation models for (1) convertible debt with a cash conversion feature and (2) convertible instruments with a beneficial conversion feature. As a result, entities will not separately present in equity an embedded conversion feature in such debt. Instead, they will account for a convertible debt instrument wholly as debt, and for convertible preferred stock wholly as preferred stock (i.e., as a single unit of account), unless (1) a convertible instrument contains features that require bifurcation as a derivative under ASC 815 or (2) a convertible debt instrument was issued at a substantial premium.  This ASU requires entities to provide expanded disclosures about the terms and features of convertible instruments, how the instruments have been reported in the entity’s financial statements, and information about events, conditions, and circumstances that can affect how to assess the amount or timing of an entity’s future cash flows related to those instruments. The amendments in this ASU are effective for public business entities that are not smaller reporting companies, for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years.  For all other entities, this ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. The guidance may be early adopted for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. This Update is not expected to have a significant impact on the Company’s financial statements.

In October 2020, the FASB issued ASU 2020-08, Codification Improvements to Subtopic 310-20, Receivables – Nonrefundable Fees and Other Costs, which clarifies that, for each reporting period, an entity should reevaluate whether a callable debt security is within the scope of ASC 310-20-35-33. For public business entities, ASU 2020-08 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early application is not permitted. For all other entities, ASU 2020-08 is effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. This Update is not expected to have a significant impact on the Company’s financial statements.

In October 2020, the FASB issued ASU 2020-10, Codification Improvements, which makes minor technical corrections and clarifications to the ASC. The amendments in Sections B and C of the ASU are effective for annual periods beginning after December 15, 2020, for public business entities. For all other entities, the amendments are effective for annual periods beginning after December 15, 2021, and interim periods within annual periods beginning after December 15, 2022. This Update is not expected to have a significant impact on the Company’s financial statements.

In November 2020, the FASB issued ASU 2020-11, Financial Services – Insurance (Topic 944), which was made in consideration of the implications of the Coronavirus Disease 2019 (COVID-19) pandemic on an insurance entity’s ability to

effectively implement the amendments in Accounting Standards Update No. 2018-12, Financial Services— Insurance: Targeted Improvements to the Accounting for Long-Duration Contracts (LDTI). The amendments in this Update defer the effective date of LDTI for all entities by one year, as (1) for public business entities that meet the definition of an SEC filer and are not SRCs, LDTI is effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years; and (2) for all other entities, LDTI is effective for fiscal years beginning after December 15, 2024, and interim periods within fiscal years beginning after December 15, 2025. This Update is not expected to have a significant impact on the Company’s financial statements.

In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848), which provides optional temporary guidance for entities transitioning away from the London Interbank Offered Rate(LIBOR) and other interbank offered rates (IBORs) to new references rates so that derivatives affected by the discounting transition are explicitly eligible for certain optional expedients and exceptions within Topic848. ASU 2021-01 clarifies that the derivatives affected by the discounting transition are explicitly eligible for certain optional expedients and exceptions in Topic 848. ASU 2021-01 is effective immediately for all entities. Entities may elect to apply the amendments on a full retrospective basis as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or on a prospective basis to new modifications from any date within an interim period that includes or is subsequent to the date of the issuance of a final update, up to the date that financial statements are available to be issued. The

amendments in this update do not apply to contract modifications made, as well as new hedging relationships entered into, after December 31, 2022, and to existing hedging relationships evaluated for effectiveness for periods after December 31, 2022, except for certain hedging relationships existing as of December 31, 2022, that apply certain optional expedients in which the accounting effects are recorded through the end of the hedging relationship. 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 2021, the FASB issued ASU 2021-03, Intangibles – Goodwill and Other (Topic 350), which provides private companies and not-for-profit entities with an accounting alternative to elect not to monitor for goodwill impairment-triggering events during the reporting period and, instead, to evaluate the facts and circumstances as of the end of the reporting period to determine whether it is more likely than not that goodwill is impaired. The amendments in this Update are effective on a prospective basis for fiscal years beginning after December 15, 2019. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance as of March 30, 2021. An entity should not retroactively adopt the amendments in this Update for interim financial statements already issued in the year of adoption.  This Update is not expected to have a significant impact on the Company’s financial statements.

In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt – Modifications and Extinguishments (Subtopic 470-50), Compensation – Stock Compensation (Topic 718), and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40), which requires an entity to treat a modification of an equity-classified warrant that does not cause the warrant to become liability-classified as an exchange of the original warrant for a new warrant. This guidance applies whether the modification is structured as an amendment to the terms and conditions of the warrant or as termination of the original warrant and issuance of a new warrant.  An entity should measure the effect of a modification as the difference between the fair value of the modified warrant and the fair value of that warrant immediately before modification. The amendments in this Update are effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. An entity should apply the amendments prospectively to modifications or exchanges occurring on or after the effective date of the amendments. Early adoption is permitted for all entities, including adoption in an interim period. If an entity elects to early adopt the amendments in this Update in an interim period, the guidance should be applied as of the beginning of the fiscal year that includes that interim period. This Update is not expected to have a significant impact on the Company’s financial statements.

In July 2021, the FASB issued ASU 2021-05, Leases (Topic 842), which amends ASC 842 so that lessors are no longer required to recognize a selling loss upon commencement of a lease with variable lease payments that, prior to the amendments, would have been classified as a sales-type or direct financing lease.  Furthermore, a lessor must classify as an operating lease any lease that would otherwise be classified as a sales-type or direct financing lease and that would result in the recognition of a selling loss at lease commencement, provided that the lease includes variable lease payments that do not depend on an index or rate.  For public business entities and certain not-for-profit entities and employee benefit plans that have adopted ASC 842, the amendments are effective for fiscal years beginning after December 15, 2021, and for interim periods within those fiscal years.  For all other entities that have adopted ASC 842, the amendments are effective for fiscal years beginning after December 15, 2021, and for interim periods within fiscal years beginning after December 15, 2022.  All entities that have adopted ASC 842 are permitted to early adopt the amendments in ASU 2021-05. The amendments in ASU 2021-05 are effective as of the same date as the guidance in ASC 842 for entities that have not adopted ASC 842.  This Update is not expected to have a significant impact on the Company’s financial statements.

XML

Investment Securities

9 Months Ended

Jun. 30, 2021

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 available for sale are summarized as follows (in thousands):

	June 30, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available for Sale
Fannie Mae	$	28,237	$	865	$	(30	)	$	29,072
Freddie Mac		23,294		629		(10	)		23,913
Governmental National Mortgage Association		7,614		206		(13	)		7,807
Total mortgage-backed securities		59,145		1,700		(53	)		60,792
Obligations of states and political subdivisions		17,251		545		—			17,796
U.S. government agency securities		1,998		13		—			2,011
Corporate obligations		54,695		997		(341	)		55,351
Other debt securities		11,969		373		(122	)		12,220
Total	$	145,058	$	3,628	$	(516	)	$	148,170
Held to Maturity
Fannie Mae	$	10,080	$	13	$	(8	)	$	10,085
Freddie Mac		7,902		46		(21	)		7,927
Total	$	17,982	$	59	$	(29	)	$	18,012

	September 30, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available for Sale
Fannie Mae	$	41,961	$	1,385	$	(88	)	$	43,258
Freddie Mac		31,642		964		(2	)		32,604
Governmental National Mortgage Association		15,300		368		(99	)		15,569
Total mortgage-backed securities		88,903		2,717		(189	)		91,431
Obligations of states and political subdivisions		21,136		795		—			21,931
U.S. government agency securities		24,990		—		—			24,990
U.S. government treasury securities		7,991		57		—			8,048
Corporate obligations		51,188		807		(521	)		51,474
Other debt securities		14,265		495		(150	)		14,610
Total	$	208,473	$	4,871	$	(860	)	$	212,484

         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, 2021 and 2020.

(in thousands)	Three Months Ended June 30, 2021		Three Months Ended June 30, 2020
Net gains recognized during the period on equity securities	$	4	$	2
Less: Net gains recognized during the period on equity securities sold    during the period		—		—
Unrealized gains recognized during the reporting period on equity    securities still held at the reporting date	$	4	$	2
(in thousands)	Nine Months Ended June 30, 2021		Nine Months Ended June 30, 2020
Net gains (losses) recognized during the period on equity securities	$	15	$	(3	)
Less: Net gains recognized during the period on equity securities sold    during the period		—		—
Unrealized gains (losses) recognized during the reporting period on equity    securities still held at the reporting date	$	15	$	(3	)

The amortized cost and fair value of debt securities at June 30, 2021, 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	$	1,403	$	1,408	$	—	$	—
Due after one year through five years		21,050		21,428		—		—
Due after five years through ten years		59,260		60,237		1,955		1,961
Due after ten years		63,345		65,097		16,027		16,051
Total	$	145,058	$	148,170	$	17,982	$	18,012

For the three months ended June 30, 2021, the Company realized gross gains of $90,000 and gross losses of $48,000 on proceeds from the sale on investment securities of $9.0 million.  For the three months ended June 30, 2020, the Company realized no gross gains or gross losses on proceeds from the sale on investment securities.

For the nine months ended June 30, 2021, the Company realized gross gains of $507,000 and gross losses of $48,000 on proceeds from the sale on investment securities of $19.7 million.  For the nine months ended June 30, 2020, the Company realized gross gains of $420,000 and gross losses of $39,000 on proceeds from the sale on investment securities of $24.0 million

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 (in thousands):

	June 30, 2021
	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		9	$	6,122	$	(10	)	$	4,582	$	(28	)	$	10,704	$	(38	)
Freddie Mac		5		3,965		(31	)		—		—			3,965		(31	)
Governmental National Mortgage Association		4		409		(1	)		1,817		(12	)		2,226		(13	)
Corporate obligations		17		11,396		(274	)		1,926		(67	)		13,322		(341	)
Other debt securities		8		—		—			2,453		(122	)		2,453		(122	)
Total		43	$	21,892	$	(316	)	$	10,778	$	(229	)	$	32,670	$	(545	)

	September 30, 2020
			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		8	$	1,397	$	(19	)	$	5,827	$	(69	)	$	7,224	$	(88	)
Freddie Mac		1		330		(2	)		—		—			330		(2	)
Governmental National Mortgage Association		7		4,428		(61	)		2,996		(38	)		7,424		(99	)
Corporate obligations		20		13,213		(93	)		6,573		(428	)		19,786		(521	)
Other debt securities		10		—		—			3,879		(150	)		3,879		(150	)
Total		46	$	19,368	$	(175	)	$	19,275	$	(685	)	$	38,643	$	(860	)

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, 2021, 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.

XML

Loans Receivable, Net and Allowance for Loan Losses

9 Months Ended

Jun. 30, 2021

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, 2021		September 30, 2020
Real estate loans:
Residential	$	584,368	$	610,172
Construction		12,236		11,853
Commercial		578,506		509,628
Commercial		95,153		139,603
Obligations of states and political subdivisions		57,070		79,230
Home equity loans and lines of credit		38,571		40,800
Auto loans		18,805		39,795
Other		1,600		2,293
		1,386,309		1,433,374
Less allowance for loan losses		17,693		15,400
Net loans	$	1,368,616	$	1,417,974

During 2020 and 2021 the Company participated in the Paycheck Protection Program (“PPP”), administered directly by the U.S. SBA. The PPP provides loans to small businesses who were affected by economic conditions as a result of COVID-19 to provide cash-flow assistance to employers who maintain their payroll (including healthcare and certain related expenses), mortgage interest, rent, leases, utilities and interest on existing debt during the COVID-19 emergency. The PPP loans are fully guaranteed by the SBA and may be eligible for forgiveness by the SBA to the extent that the proceeds are used to cover eligible payroll costs, interest costs, rent, and utility costs over a period of up to 24 weeks after the loan is made as long as certain conditions are met regarding employee retention and compensation levels. PPP loans deemed eligible for forgiveness by the SBA will be repaid by the SBA to the Company. PPP loans are included in the Commercial loan category.

In accordance with the SBA terms and conditions on these PPP loans, the Company received approximately $2.4 million in fees associated with the processing of these loans. Upon funding of the loan, these fees were deferred and will be amortized over the life of the loan as an adjustment to yield in accordance with FASB ASC 310-20-25-2.

Included in commercial loans in the above table are 442 loans totaling $44.2 million originated by the Company under the Paycheck Protection Program through the quarter ended June 30, 2021 compared to 673 loans totaling $76.8 million at September 30, 2020.   These loans mature in two or five years.

Purchased loans acquired in a business combination are recorded at fair value on their purchase date without a carryover of the related allowance for loan losses.

The following table presents additional information regarding loans acquired and accounted for in accordance with ASC 310-30 (in thousands):

	June 30, 2021		September 30, 2020
	Acquired Loans with Specific Evidence or Deterioration in Credit Quality (ASC 310-30)		Acquired Loans with Specific Evidence or Deterioration in Credit Quality (ASC 310-30)
Outstanding balance	$	942	$	1,086
Carrying amount	$	880	$	1,025

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		Loans Acquired with Deteriorated Credit Quality		Collectively Evaluated for Impairment
June 30, 2021
Real estate loans:
Residential	$	584,368	$	2,493	$	—	$	581,875
Construction		12,236		—		—		12,236
Commercial		578,506		11,330		880		566,296
Commercial		95,153		5,320		—		89,833
Obligations of states and political subdivisions		57,070		—		—		57,070
Home equity loans and lines of credit		38,571		92		—		38,479
Auto loans		18,805		73		—		18,732
Other		1,600		9		—		1,591
Total	$	1,386,309	$	19,317	$	880	$	1,366,112

	Total Loans		Individually Evaluated for Impairment		Loans Acquired with Deteriorated Credit Quality		Collectively Evaluated for Impairment
September 30, 2020
Real estate loans:
Residential	$	610,172	$	3,949	$	—	$	606,223
Construction		11,853		—		—		11,853
Commercial		509,628		11,322		1,025		497,281
Commercial		139,603		1,595		—		138,008
Obligations of states and political sub divisions		79,230		—		—		79,230
Home equity loans and lines of credit		40,800		117		—		40,683
Auto loans		39,795		210		—		39,585
Other		2,293		11		—		2,282
Total	$	1,433,374	$	17,204	$	1,025	$	1,415,145

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, 2021
With no specific allowance recorded:
Real estate loans
Residential	$	2,384	$	3,587	$	—
Construction		—		—		—
Commercial		10,929		12,922		—
Commercial		676		910		—
Obligations of states and political subdivisions		—		—		—
Home equity loans and lines of credit		92		180		—
Auto loans		73		99		—
Other		9		21		—
Total		14,163		17,719		—
With an allowance recorded:
Real estate loans
Residential		109		113		18
Construction		—		—		—
Commercial		401		415		21
Commercial		4,644		4,686		848
Obligations of states and political subdivisions		—		—		—
Home equity loans and lines of credit		—		—		—
Auto loans		—		—		—
Other		—		—		—
Total		5,154		5,214		887
Total:
Real estate loans
Residential		2,493		3,700		18
Construction		—		—		—
Commercial		11,330		13,337		21
Commercial		5,320		5,596		848
Obligations of states and political subdivisions		—		—
Home equity loans and lines of credit		92		180		—
Auto loans		73		99		—
Other		9		21		—
Total Impaired Loans	$	19,317	$	22,933	$	887

	Recorded Investment		Unpaid Principal Balance		Associated Allowance
September 30, 2020
With no specific allowance recorded:
Real Estate Loans
Residential	$	3,699	$	5,070	$	—
Construction		—		—		—
Commercial		4,203		6,342		—
Commercial		1,539		1,625		—
Obligations of states and political subdivisions		—		—		—
Home equity loans and lines of credit		117		222		—
Auto Loans		72		131		—
Other		11		22		—
Total		9,641		13,412		—
With an allowance recorded:
Real Estate Loans
Residential		250		271		26
Construction		—		—		—
Commercial		7,119		7,169		132
Commercial		56		57		20
Obligations of states and political subdivisions		—		—		—
Home equity loans and lines of credit		—		—		—
Auto Loans		138		143		43
Other		—		—		—
Total		7,563		7,640		221
Total:
Real Estate Loans
Residential		3,949		5,341		26
Construction		—		—		—
Commercial		11,322		13,511		132
Commercial		1,595		1,682		20
Obligations of states and political subdivisions		—		—
Home equity loans and lines of credit		117		222		—
Auto Loans		210		274		43
Other		11		22		—
Total Impaired Loans	$	17,204	$	21,052	$	221

The following table 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,
	2021		2020		2021		2020
	Average Recorded Investment		Average Recorded Investment		Interest Income Recognized		Interest Income Recognized
With no specific allowance recorded:
Real estate loans
Residential	$	1,107	$	3,602	$	2	$	1
Construction		—		—		—		—
Commercial		7,422		5,108		6		—
Commercial		1,946		2,323		—		—
Obligations of states and political subdivisions		—		—		—		—
Home equity loans and lines of credit		90		244		—		—
Auto loans		50		74		—		1
Other		10		13		—		—
Total		10,625		11,364		8		2
With an allowance recorded:
Real estate loans
Residential		146		361		—		—
Construction		—		—		—		—
Commercial		4,985		182		—		—
Commercial		4,903		168		—		—
Obligations of states and political subdivisions		—		—		—		—
Home equity loans and lines of credit		—		6		—		—
Auto loans		12		85		—		—
Other		—		—		—		—
Total		10,046		802		—		—
Total:
Real estate loans
Residential		1,253		3,963		2		1
Construction		—		—		—		—
Commercial		12,407		5,290		6		—
Commercial		6,849		2,491				—
Obligations of states and political subdivisions		—		—		—		—
Home equity loans and lines of credit		90		250		—		—
Auto loans		62		159		—		1
Other		10		13		—		—
Total Impaired Loans	$	20,671	$	12,166	$	8	$	2

	For the Nine Months Ended June 30,
	2021		2020		2021		2020
	Average Recorded Investment		Average Recorded Investment		Interest Income Recognized		Interest Income Recognized
With no specific allowance recorded:
Real estate loans
Residential	$	1,304	$	3,800	$	3	$	2
Construction		—		—		—		—
Commercial		8,408		3,203		11		1
Commercial		1,569		1,260		—		4
Obligations of states and political subdivisions		—		—		—		—
Home equity loans and lines of credit		98		253		—		—
Auto loans		52		130		—		1
Other		11		14		—		—
Total		11,442		8,660		14		8
With an allowance recorded:
Real estate loans
Residential		171		304		—		—
Construction		—		—		—		—
Commercial		4,908		239		—		—
Commercial		2,222		97		—		—
Obligations of states and political subdivisions		—		—		—		—
Home equity loans and lines of credit		—		2		—		—
Auto loans		28		128		1		—
Other		—		8		—		—
Total		7,329		778		1		—
Total:
Real estate loans
Residential		1,475		4,104		3		2
Construction		—		—		—		—
Commercial		13,316		3,442		11		1
Commercial		3,791		1,357				4
Obligations of states and political subdivisions		—		—		—		—
Home equity loans and lines of credit		98		255		—		—
Auto loans		80		258		1		1
Other		11		22		—		—
Total Impaired Loans	$	18,771	$	9,438	$	15	$	8

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, 2021 and September 30, 2020 (in thousands):

	Pass		Special Mention		Substandard		Doubtful or Loss		Total
June 30, 2021
Commercial real estate loans	$	539,774	$	16,422	$	22,310	$	—	$	578,506
Commercial		89,317		159		5,677		—		95,153
Obligations of states and political subdivisions		57,070		—		—		—		57,070
Total	$	686,161	$	16,581	$	27,987	$	—	$	730,729

	Pass		Special Mention		Substandard		Doubtful or Loss		Total
September 30, 2020
Commercial real estate loans	$	479,475	$	15,022	$	15,131	$	—	$	509,628
Commercial		137,860		—		1,743		—		139,603
Obligations of states and political subdivisions		79,230		—		—		—		79,230
Total	$	696,565	$	15,022	$	16,874	$	—	$	728,461

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, 2021 and September 30, 2020 (in thousands):

	Performing		Non- performing		Total
June 30, 2021
Real estate loans:
Residential	$	580,970	$	3,398	$	584,368
Construction		12,236		—		12,236
Home equity loans and lines of credit		38,408		163		38,571
Auto loans		18,725		80		18,805
Other		1,585		15		1,600
Total	$	651,924	$	3,656	$	655,580

	Performing		Non- performing		Total
September 30, 2020
Real estate loans:
Residential	$	605,549	$	4,623	$	610,172
Construction		11,853		—		11,853
Home equity loans and lines of credit		40,581		219		40,800
Auto loans		39,572		223		39,795
Other		2,282		11		2,293
Total	$	699,837	$	5,076	$	704,913

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, 2021 and September 30, 2020 (in thousands):

			31-60 Days		61-89 Days		90 + Days Past Due and				Total		Purchased Credit Impaired				Total
	Current		Past Due		Past Due		Accruing		Non­accrual		Past Due		Accruing		Non­accrual		Loans
June 30, 2021
Real estate loans:
Residential	$	580,186	$	460	$	324	$	—	$	3,398	$	4,182	$	—	$	—	$	584,368
Construction		12,236		—		—		—		—		—		—		—		12,236
Commercial		565,745		—		—		—		11,881		11,881		227		653		578,506
Commercial		89,815		—		—		—		5,338		5,338		—		—		95,153
Obligations of states and political    subdivisions		57,070		—		—		—		—		—		—		—		57,070
Home equity loans and lines of credit		38,103		222		83		—		163		468		—		—		38,571
Auto loans		18,495		219		11		—		80		310		—		—		18,805
Other		1,585		—		—		—		15		15		—		—		1,600
Total	$	1,363,235	$	901	$	418	$	—	$	20,875	$	22,194	$	227	$	653	$	1,386,309

			31-60 Days		61-89 Days		90 + Days Past Due and				Total		Purchased Credit Impaired				Total
	Current		Past Due		Past Due		Accruing		Non­accrual		Past Due		Accruing		Non­accrual		Loans
September 30, 2020
Real estate loans:
Residential	$	604,168	$	979	$	402	$	—	$	4,623	$	6,004	$	—	$	—	$	610,172
Construction		11,853		—		—		—		—		—		—		—		11,853
Commercial		494,881		1,085		—		—		12,637		13,722		236		789		509,628
Commercial		137,769		6		—		—		1,828		1,834		—		—		139,603
Obligations of states and political    subdivisions		79,230		—		—		—		—		—		—		—		79,230
Home equity loans and lines of credit		40,533		48		—		—		219		267		—		—		40,800
Auto loans		38,971		593		8		—		223		824		—		—		39,795
Other		2,282		—		—		—		11		11		—		—		2,293
Total	$	1,409,687	$	2,711	$	410	$	—	$	19,541	$	22,662	$	236	$	789	$	1,433,374

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. In addition, for the three and nine months ended June 30, 2021, consideration was given and a credit provision was recorded for loans granted short term payment relief due to the COVID pandemic. 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, 2021 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, have periodically reviewed 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 for the three and nine months ended June 30, 2021 and 2020 (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
ALL balance at March 31, 2021	$	4,299		$	117	$	8,943		$	1,770		$	487		$	337		$	439		$	20		$	742		$	17,154
Charge-offs		(55	)		—		—			(200	)		—			—			(18	)		—			—			(273	)
Recoveries		149			—		20			—			—			1			42			—			—			212
Provision		(184	)		39		564			88			(88	)		(17	)		(120	)		—			318			600
ALL balance at June 30, 2021	$	4,209		$	156	$	9,527		$	1,658		$	399		$	321		$	343		$	20		$	1,060		$	17,693
ALL balance at March 31, 2020	$	4,330		$	55	$	4,563		$	2,180		$	359		$	351		$	1,104		$	29		$	208		$	13,179
Charge-offs		(42	)		—		(4	)		—			—			(21	)		(135	)		(15	)		—			(217	)
Recoveries		1			—		17			—			—			1			49			—			—			68
Provision		78			48		2,294			(1,206	)		185			5			(55	)		10			(59	)		1,300
ALL balance at June 30, 2020	$	4,367		$	103	$	6,870		$	974		$	544		$	336		$	963		$	24		$	149		$	14,330
ALL balance at September 30, 2020	$	4,301		$	127	$	7,209		$	874		$	555		$	337		$	780		$	25		$	1,192		$	15,400
Charge-offs		(59	)		—		(76	)		(209	)		—			(8	)		(244	)		(1	)		—			(597	)
Recoveries		213			—		56			—			—			4			217			—			—			490
Provision		(246	)		29		2,338			993			(156	)		(12	)		(410	)		(4	)		(132	)		2,400
ALL balance at June 30, 2021	$	4,209		$	156	$	9,527		$	1,658		$	399		$	321		$	343		$	20		$	1,060		$	17,693
ALL balance at September 30, 2019	$	4,243		$	53	$	3,806		$	1,870		$	343		$	329		$	1,384		$	28		$	574		$	12,630
Charge-offs		(72	)		—		(54	)		—			—			(61	)		(717	)		(20	)		—			(924	)
Recoveries		7			—		77			1			—			4			358			2			—			449
Provision		189			50		3,041			(897	)		201			64			(62	)		14			(425	)		2,175
ALL balance at June 30, 2020	$	4,367		$	103	$	6,870		$	974		$	544		$	336		$	963		$	24		$	149		$	14,330

During the three months ended June 30, 2021, the Company recorded provision expense for the construction real estate loans, commercial real estate loans and commercial loans segments, due to either increased loan balances, changes in the loan mix within the pool, and/or charge-off activity in those segments. Provision expense was also recorded for possible loan losses due to the economic slowdown caused by COVID-19 restrictions. Credit provisions were recorded for loan loss for the residential real estate loans,  obligations of states and political subdivisions, home equity loans and lines of credit and auto loans segments.

During the three months ended June 30, 2020 the Company recorded provision expense for the residential real estate loans, commercial real estate loans, obligations of states and political subdivisions, construction loans, home equity loans and lines of credit and other loan segments, due to either increased loan balances, changes in the loan mix within the pool, and/or charge-off activity in those segments. Provision expense was also recorded for possible loan losses due to the economic slowdown caused by COVID-19 restrictions. Credit provisions were recorded for loan loss for the commercial loans and auto loan segments.

During the nine months ended June 30, 2021, the Company recorded provision expense for the construction real estate loans, commercial real estate loans and commercial loans, due to either increased loan balances, changes in the loan mix within the pool, and/or charge-off activity in those segments. Provision expense was also recorded for possible loan losses due to the economic slowdown caused by COVID-19 restrictions. Credit provisions were recorded for loan loss for the residential real estate loans, obligations of states and political subdivisions, home equity loans and lines of credit segments, auto loan and other loan segments.

During the nine months ended June 30, 2020 the Company recorded provision expense for the residential real estate loans, commercial real estate loans, obligations of states and political subdivisions, construction loans, home equity loans and lines of credit and other loan segments, due to either increased loan balances, changes in the loan mix within the pool, and/or charge-off activity in those segments. Provision expense was also recorded for possible loan losses due to the economic slowdown caused by COVID-19 restrictions. Credit provisions were recorded for loan loss for the commercial loans and auto loan segments.

The Company is closely monitoring all customer credit positions, particularly loans requesting payment relief.  Such loans, as of June 30, 2021, amounted to approximately 2.3% of total loans outstanding, including $29.8 million in commercial real estate loans, $481,000 in commercial loans and $1.1 million in mortgage loans.  As the economic impact of the COVID-19 pandemic continues to evolve, our customers may experience decreased cash flows, which may correlate to an inability to make timely loan payments.  This, in turn, may require further increases in our allowance for loan losses and increases in the level of charge-offs in our loan portfolio.

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, 2021 and September 30, 2020 (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	$	18	$	—	$	21	$	848	$	—	$	—	$	—	$	—	$	—	$	887
Collectively    evaluated for    impairment		4,191		156		9,506		810		399		321		343		20		1,060		16,806
ALL balance at June 30, 2021	$	4,209	$	156	$	9,527	$	1,658	$	399	$	321	$	343	$	20	$	1,060	$	17,693
Individually    evaluated for    impairment	$	26	$	—	$	132	$	20	$	—	$	—	$	43	$	—	$	—	$	221
Collectively    evaluated for    impairment		4,275		127		7,077		854		555		337		737		25		1,192		15,179
ALL balance at September 30, 2020	$	4,301	$	127	$	7,209	$	874	$	555	$	337	$	780	$	25	$	1,192	$	15,400

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.

         The following is a summary of troubled debt restructuring granted during the three months ended June 30, 2021 (dollars in thousands):

	For the Three Months Ended June 30, 2021
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings
Real estate loans:
Residential		1	$	343	$	343
Construction		—		—		—
Commercial		4		7,353		7,353
Commercial		—		—		—
Obligations of states and political subdivisions		—		—		—
Home equity loans and lines of credit		—		—		—
Auto loans		—		—		—
Other		—		—		—
Total	$	5	$	7,696	$	7,696

There were no new troubled debt restructurings granted for the three months ended June 30, 2020.

The following is a summary of troubled debt restructuring granted during the nine months ended June 30, 2021 and 2020 (dollars in thousands):

	For the Nine Months Ended June 30, 2021
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings
Real estate loans:
Residential		2	$	416	$	416
Construction		—		—		—
Commercial		4		7,353		7,353
Commercial		—		—		—
Obligations of states and political subdivisions		—		—		—
Home equity loans and lines of credit		—		—		—
Auto loans		—		—		—
Other		—		—		—
Total		6	$	7,769	$	7,769

	For the Nine Months Ended June 30, 2020
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings
Real estate loans:
Residential		1	$	534	$	534
Construction		—		—		—
Commercial		—		—		—
Commercial		—		—		—
Obligations of states and political subdivisions		—		—		—
Home equity loans and lines of credit		—		—		—
Auto loans		—		—		—
Other		—		—		—
Total		1	$	534	$	534

  The five new troubled debt restructurings granted for the three months ended June 30, 2021, totaled $7.7 million and were granted interest rate and or terms concessions.   The six new troubled debt restructurings granted for the nine months ended June 30, 2021, totaled $7.8 million and were granted terms and or interest rate concessions.  The one troubled debt restructuring granted for the nine months ended June 30, 2020, totaled $534,000 and was granted an interest rate concession.

For the three and nine months ended June 30, 2021 and 2020, no loans defaulted on a restructuring agreement within one year of modification.

The Company continues to closely monitor all customer credit positions, particularly loans requesting payment relief.  As of June 30, 2021, approximately 15 of our commercial clients had requested loan payment deferrals or payments of interest only on loans totaling $30.3 million. We have had similar requests from approximately five mortgage customers totaling $1.1 million.  In accordance with interagency guidance issued in March 2020, these short-term deferrals are not considered troubled debt restructurings  unless the borrower was previously experiencing financial difficulty.  As the economic impact of the COVID-19 pandemic continues to evolve, our customers may experience decreased cash flows, which may correlate to an inability to make timely loan payments. This, in turn may require further increases in our allowance for loan losses and increases in the level of chargeoffs in our loan portfolio.

There can be no assurance that our non-performing assets will not increase in the future due to the impact of COVID-19 or otherwise.  We will continue to closely monitor credit risk and our exposure to increased loan losses resulting from the impact of COVID-19 on our commercial and consumer clients.

XML

Deposits

9 Months Ended

Jun. 30, 2021

Deposits Liabilities Disclosures [Abstract]

Deposits

7. Deposits

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

	June 30, 2021		September 30, 2020
Non-interest bearing demand accounts	$	277,814	$	242,642
Interest bearing demand accounts		473,119		274,722
Money market accounts		410,310		401,863
Savings and club accounts		187,573		160,975
Certificates of deposit		241,256		463,494
Total	$	1,590,072	$	1,543,696

XML

Net Periodic Benefit Cost-Defined Benefit Plan

9 Months Ended

Jun. 30, 2021

Compensation And Retirement Disclosure [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, 2020 included in the Company’s Annual Report on Form 10-K.

The following table comprises the components of net periodic benefit cost for the three and nine-month periods ended June 30, 2021 and 2020 (in thousands):

	For the Three Months Ended June 30,						For the Nine Months Ended June 30,
	2021			2020			2021			2020
Service Cost	$	—		$	—		$	—		$	—
Interest Cost		112			121			338			364
Expected return on plan assets		(289	)		(268	)		(867	)		(807	)
Amortization of net loss from earlier periods		56			—			166			—
Net periodic benefit cost	$	(121	)	$	(147	)	$	(363	)	$	(443	)

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 will enter the plan after February 28, 2017; no additional years of service for benefit accrual purposes will be credited after the freeze date under the plan; and compensation earned by participants after the freeze date will not be taken into account under the plan.

XML

Equity Incentive Plan

9 Months Ended

Jun. 30, 2021

Disclosure Of Compensation Related Costs Sharebased Payments [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, 2021 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, 2021 and 2020, the Company recorded $95,000 and $82,000 of share-based compensation expense, respectively, comprised of restricted stock expense. For the nine months ended June 30, 2021 and 2020, the Company recorded $421,000 and $415,000 of share-based compensation expense, respectively, comprised of restricted stock expense.    Expected future compensation expense relating to the restricted shares outstanding at June 30, 2021 is $679,000 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, 2021, and changes therein during the nine month period then ended:

	Number of Restricted Stock			Weighted- average Grant Date Fair Value
Nonvested at September 30, 2020		35,245		$	16.15
Granted		43,939			12.56
Vested		(10,834	)		14.75
Forfeited		—			—
Nonvested at June 30, 2021		68,350		$	14.06

XML

Fair Value

9 Months Ended

Jun. 30, 2021

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, 2021 and September 30, 2020 by level within the fair value hierarchy (in thousands).

Recurring Fair Value Measurements at Reporting Date
	June 30, 2021
Assets	Level I		Level II		Level III		Total
Investment securities available for sale:
Mortgage backed securities	$	—	$	60,792	$	—	$	60,792
Obligations of states and political subdivisions		—		17,796		—		17,796
U.S. government agencies		—		2,011		—		2,011
Corporate obligations		—		42,071		13,280		55,351
Other debt securities		—		12,220		—		12,220
Total debt securities	$	—	$	134,890	$	13,280	$	148,170
Equity securities- financial services		32		—		—		32
Derivatives and hedging activities		—		2,358		—		2,358
Liabilities
Derivatives and hedging activities		—		1,763		—		1,763
	September 30, 2020
Assets	Level I		Level II		Level III		Total
Investment securities available for sale:
Mortgage backed securities	$	—	$	91,431	$	—	$	91,431
Obligations of states and political subdivisions		—		21,931		—		21,931
U.S. government treasury securities		—		24,990		—		24,990
U.S. government agencies		—		8,048		—		8,048
Corporate obligations		—		43,214		8,260		51,474
Other debt securities		—		14,610		—		14,610
Total debt securities	$	—	$	204,224	$	8,260	$	212,484
Equity securities-financial services		17		—		—		17
Derivatives and hedging activities		—		2,192		—		2,192
Liabilities:
Derivatives and hedging activities		—		7,002		—		7,002

The following table presents a summary of changes in the fair value of the Company’s Level III investments for the three and nine month periods ended June 30, 2021 and 2020 (in thousands).

	Fair Value Measurement Using Significant Unobservable Inputs (Level III)
	Three Months Ended
	June 30, 2021		June 30, 2020
Beginning balance	$	4,678	$	7,821
Purchases, sales, issuances, settlements, net		8,541		(1,000	)
Total unrealized gain (loss):
Included in earnings		—		—
Included in other comprehensive income (loss)		61		(34	)
Transfers in and/or out of Level III		—		—
	$	13,280	$	6,787

	Fair Value Measurement Using Significant Unobservable Inputs (Level III)
	Nine Months Ended
	June 30, 2021		June 30, 2020
Beginning balance	$	8,260	$	7,792
Purchases, sales, issuances, settlements, net		4,791		(1,000	)
Total unrealized gain (loss):
Included in earnings		—		—
Included in other comprehensive (loss) income		229		(5	)
Transfers in and/or out of Level III		—		—
	$	13,280	$	6,787

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, 2021 and September 30, 2020 by level within the fair value hierarchy:

Non-Recurring Fair Value Measurements at Reporting Date (in thousands)
	June 30, 2021
	Level I		Level II		Level III		Total
Foreclosed real estate	$	—	$	—	$	373	$	373
Impaired loans		—		—		18,430		18,430
	September 30, 2020
	Level I		Level II		Level III		Total
Foreclosed real estate	$	—	$	—	$	269	$	269
Impaired loans		—		—		16,983		16,983

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
June 30, 2021
Impaired loans	$	18,430	Appraisal of collateral (1)	Appraisal adjustments (2)	0% to 35% (21.1%)
Foreclosed real estate owned		373	Appraisal of collateral (1)	Appraisal adjustments (2)	20% to 35% (29.8%)

	Quantitative Information about Level 3 Fair Value Measurements
(dollars in thousands)	Fair Value Estimate		Valuation Techniques	Unobservable Input	Range
September 30, 2020
Impaired loans	$	16,983	Appraisal of collateral (1)	Appraisal adjustments (2)	0% to 35% (20.5%)
Foreclosed real estate owned		269	Appraisal of collateral (1)	Appraisal adjustments (2)	20% to 35% (25.7%)

(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, 2021, 61 impaired loans with a carrying value of $19.3 million were reduced by specific valuation allowance totaling $887,000 resulting in a net fair value of $18.4 million based on Level 3 inputs. At September 30, 2020, 111 impaired loans with a carrying value of $17.2 million were reduced by a specific valuation totaling $221,000 resulting in a net fair value of $17.0 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, 2021 and September 30, 2020 by level within the fair value hierarchy:

	June 30, 2021
(in thousands)	Carrying Value		Level I		Level II		Level III		Total Fair Value
Financial assets:
Investment securities held to maturity	$	17,982	$	—	$	—	$	18,012	$	18,012
Loans receivable, net		1,368,616		—		—		1,381,913		1,381,913
Mortgage servicing rights		694		—		—		816		816
Financial liabilities:
Deposits	$	1,590,072	$	1,348,816	$	—	$	241,524	$	1,590,340

	September 30, 2020
(in thousands)	Carrying Value		Level I		Level II		Level III		Total Fair Value
Financial assets:
Loans receivable, net	$	1,417,974	$	—	$	—	$	1,426,962	$	1,426,962
Mortgage servicing rights		393		—		—		393		393
Financial liabilities:
Deposits	$	1,543,696	$	1,080,201	$	—	$	467,630	$	1,547,831
Other borrowings		14,164		—		—		17,721		17,721

For Cash and Cash Equivalents, Loans Held For Sale, Accrued Interest Receivable, Regulatory Stock, Bank Owned Life Insurance, Short-Term Borrowings, Advances by Borrowers for Taxes and Insurance, and Accrued Interest Payable the carrying value is a reasonable estimate of the fair value and are considered Level 1 measurements.

The fair value approximates the current book value.

XML

Accumulated Other Comprehensive Income (Loss)

9 Months Ended

Jun. 30, 2021

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 month periods ended June 30, 2021 and 2020 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, 2021	$	(3,519	)	$	2,154		$	587		$	(778	)
Other comprehensive income (loss) before    reclassifications		—			339			(463	)		(124	)
Amounts reclassified from accumulated    other comprehensive income (loss)		(44	)		(34	)		343			265
Period change		(44	)		305			(120	)		141
Balance at June 30, 2021	$	(3,563	)	$	2,459		$	467		$	(637	)
Balance at March 31, 2020	$	(1,527	)	$	4,987		$	(2,464	)	$	996
Other comprehensive income (loss) before    reclassifications		—			863			(1,859	)		(996	)
Amounts reclassified from accumulated    other comprehensive income (loss)		—			—			85			85
Period change		—			863			(1,774	)		(911	)
Balance at June 30, 2020	$	(1,527	)	$	5,850		$	(4,238	)	$	85
	Accumulated Other Comprehensive Income/(Loss)
	Defined Benefit Pension Plan			Unrealized Gains (Losses) on Securities Available for Sale			Derivatives			Total
Balance at September 30, 2020	$	(3,432	)	$	3,167		$	(3,791	)	$	(4,056	)
Other comprehensive income (loss) before    reclassifications		—			(345	)		2,879			2,534
Amounts reclassified from accumulated other    comprehensive income (loss)		(131	)		(363	)		1,379			885
Period change		(131	)		(708	)		4,258			3,419
Balance at June 30, 2021	$	(3,563	)	$	2,459		$	467		$	(637	)
Balance at September 30, 2019	$	(1,527	)	$	807		$	(560	)	$	(1,280	)
Other comprehensive income (loss) before reclassifications		—			5,344			(3,717	)		1,627
Amounts reclassified from accumulated other    comprehensive income (loss)		—			(301	)		39			(262	)
Period change		—			5,043			(3,678	)		1,365
Balance at June 30, 2020	$	(1,527	)	$	5,850		$	(4,238	)	$	85

The following table presents significant amounts reclassified out of each component of accumulated other comprehensive income (loss) for the three and nine month periods ended June 30, 2021 and 2020 (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
	2021			2020
Securities available for sale
Net securities gains reclassified into earnings	$	42		$	—		Gain on sale of investment securities available for sale, net
Related income tax expense		(8	)		—		Income taxes
Net effect on accumulated other comprehensive income (loss)    for the period		34			—
Defined benefit pension plan
Amortization of net gain and prior service costs		56			—		Compensation and employee benefits
Related income tax expense		(12	)		—		Income taxes
Net effect on accumulated other comprehensive income (loss)    for the period		44			—
Derivatives and hedging activities:
Interest expense, effective portion		(434	)		(108	)	Interest expense
Related income tax expense		91			23		Income taxes
Net effect on accumulated other comprehensive income (loss)    for the period		(343	)		(85	)
Total reclassification for the period	$	(265	)	$	(85	)
	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
	2021			2020
Securities available for sale:
Net securities gains reclassified into earnings	$	459		$	381		Gain on sale of investment securities available for sale, net
Related income tax expense		(96	)		(80	)	Income taxes
Net effect on accumulated other comprehensive income (loss)    for the period		363			301		Net of tax
Defined benefit pension plan
Amortization of net (loss) gain and prior service costs		166			—
Related income tax expense		(35	)		—		Income taxes
Net effect on accumulated other comprehensive income (loss)    for the period		131			—
Derivative and hedging activities:
Interest expense, effective portion		(1,745	)		(50	)	Interest expense
Related income tax expense		366			11		Income taxes
Net effect on accumulated other comprehensive income (loss)    for the period		(1,379	)		(39	)
Total reclassification for the period	$	(885	)	$	262

XML

Derivative and Hedging Activities

9 Months Ended

Jun. 30, 2021

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 well as their classification on the Consolidated Balance Sheet as of June 30, 2021 and September 30, 2020 (in thousands).

			Fair Values of Derivative Instruments
			Asset Derivatives
			As of June 30, 2021					As of September 30, 2020
Hedged Item	Notional Amount		Balance Sheet Location	Fair Value		Notional Amount		Balance Sheet Location	Fair Value
Brokered Deposits	$	150,000	Other Assets	$	1,171	$	-	Other Assets	$	—
Commercial Loans		70,108	Other Assets		1,187		55,784	Other Assets		2,192
Total	$	220,108		$	2,358	$	55,784		$	2,192
			Fair Values of Derivative Instruments
			Liability Derivatives
			As of June 30, 2021					As of September 30, 2020
Hedged Item	Notional Amount		Balance Sheet Location	Fair Value		Notional Amount		Balance Sheet Location	Fair Value
FHLB Advances	$	-	Other Liabilities	$	-	$	25,000	Other Liabilities	$	700
Brokered Deposits		95,000	Other Liabilities		578		410,000	Other Liabilities		4,098
Commercial Loans		102,665	Other Liabilities		1,185		70,784	Other Liabilities		2,204
Total	$	197,665		$	1,763	$	505,784		$	7,002

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, 2021, the Company had twelve interest rate swaps with a notional principal amount of $245 million associated with the Company’s cash outflows associated with various brokered certificates and $173 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 periods ended June 30, 2021 and 2020.

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, 2021 and 2020, the Company had $434,000 and $108,000 of losses respectively, which resulted in an increase to interest expense. During the nine months ended June 30, 2021, the Company had $1.7 million of losses which resulted in an increase to interest expense During the nine months ended June 30, 2020, the Company had $50,000 in losses which resulted in an increase to interest expense.  During the next twelve months, the Company estimates that $835,000 will be reclassified as an increase 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 month periods ended June 30, 2021 and 2020 (in thousands).

The Effect of Fair Value and Cash Flow Hedge Accounting on Accumulated Other Comprehensive Income (Loss)
Derivatives in Hedging Relationships	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)	Loss Recognized in OCI on Derivative (Effective Portion) Three Months Ended June 30,
Derivatives in Cash Flow Hedging Relationships	2021			2020				2021			2020
Interest Rate Products	$	(156	)	$	(2,244	)	Interest expense	$	(434	)	$	(108	)
Total	$	(156	)	$	(2,244	)		$	(434	)	$	(108	)
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)	Loss Recognized in OCI on Derivative (Effective Portion) Nine Months Ended June 30,
	2021			2020				2021			2020
Interest Rate Products	$	5,390		$	(4,655	)	Interest expense	$	(1,745	)	$	(50	)
Total	$	5,390		$	(4,655	)		$	(1,745	)	$	(50	)

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, 2021, the Company had derivatives in a net liability position and was required to post $1.2 million in collateral against its obligations under these agreements.  As of September 30, 2020, the Company was required to post $7.5 million in collateral against its obligations under these agreements.  If the Company had breached any of these provisions at June 30, 2021 and September 30, 2020, it could have been required to settle its obligations under the agreements at the termination value.

XML

Contingent Liabilities

9 Months Ended

Jun. 30, 2021

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 Bank was named as a defendant in an action commenced on December 8, 2016 by one plaintiff who will also seek to pursue this action as a class action on behalf of the entire class of people similarly situated. The plaintiff alleges that a bank previously acquired by ESSA Bancorp 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 Bank’s 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 Bank, and remanded the case back 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.  In an order dated November 24, 2020, the court referred the case to a Magistrate Judge to assist in mediation efforts.  The case was stayed while the parties explored the potential for a negotiated resolution. The parties engaged in mediation but did not resolve the matter.  The parties are now in the discovery process.  The Bank will continue to defend against plaintiffs’ allegations.  To the extent that this matter could result in exposure to the Bank, the amount of such exposure is not currently estimable.

On May 29, 2020, the Bank was named as a defendant in a second action commenced by three plaintiffs who will also seek to pursue this action as a class action on behalf of the entire class of people similarly situated.  The plaintiffs allege that a bank previously acquired by ESSA Bancorp 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 Bank moved to dismiss the Sherman Act claim on October 14, 2020, and that motion was denied on April 2, 2021.  The parties are now in the discovery process.  The Bank will continue to defend against plaintiffs’ allegations.  To the extent that this matter could result in exposure to the Bank, the amount of such exposure is not currently estimable.

XML

Revenue Recognition

9 Months Ended

Jun. 30, 2021

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.

XML

Leases

9 Months Ended

Jun. 30, 2021

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. On October 1, 2019, the Company adopted ASU No. 2016-02 “Leases” (Topic 842) and all subsequent ASUs that modified Topic 842. For the Company, Topic 842 primarily affected 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. All of our leases are classified as operating leases, and therefore, were previously not recognized on the Company’s Consolidated Balance sheet. With the adoption of 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, 2021
Lease Right-of-Use Assets	Classification
Operating lease right-of-use assets	Other assets	$	6,446
Total Lease Right-Of-Use Assets		$	6,446
(in thousands)		June 30, 2021
Lease Liabilities	Classification
Operating lease Liabilities	Other liabilities	$	6,580
Total Lease Liabilities		$	6,580
(in thousands)		September 30, 2020
Lease Right-of-Use Assets	Classification
Operating lease right-of-use assets	Other assets	$	7,082
Total Lease Right-Of-Use Assets		$	7,082
(in thousands)		September 30, 2020
Lease Liabilities	Classification
Operating lease Liabilities	Other liabilities	$	7,161
Total Lease Liabilities		$	7,161

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. For operating leases existing prior to October 1, 2019, the rate for the remaining lease term as of October 1, 2019 was used.

	June 30, 2021
Weighted average remaining lease term
Operating leases	13.3 years
Weighted average discount rate
Operating leases		2.42	%

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, 2021
Operating lease cost	$	264
Variable lease cost		70
Net lease cost	$	334
Lease Costs (in thousands)	Three  Months Ended June 30, 2020
Operating lease cost	$	259
Variable lease cost		61
Net lease cost	$	320
Lease Costs (in thousands)	Nine Months Ended June 30,2021
Operating lease cost	$	791
Variable lease cost		213
Net lease cost	$	1,004
Lease Costs (in thousands)	Nine Months Ended June 30,2020
Operating lease cost	$	780
Variable lease cost		171
Net lease cost	$	951

Future minimum payments for finance leases and operating leases with initial or remaining terms of one year or more as of June 30, 2021 were as follows:

(in thousands)	Operating leases
Twelve months Ended:
June 30, 2022	$	886
June 30, 2023		704
June 30, 2024		641
June 30, 2025		505
June 30, 2026		507
Thereafter		4,619
Total future minimum lease payments		7,862
Amounts representing interest		1,282
Present Value of Net Future Minimum Lease Payments	$	6,580

XML

Accounting Pronouncements (Policies)

9 Months Ended

Jun. 30, 2021

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 August 2018, the FASB issued ASU 2018-14, Compensation – Retirement Benefits (Topic 715-20). This Update amends ASC 715 to add, remove and clarify disclosure requirements related to defined benefit pension and other postretirement plans. The Update eliminates the requirement to disclose the amounts in accumulated other comprehensive income expected to be recognized as part of net periodic benefit cost over the next year. The Update also removes the disclosure requirements for the effects of a one-percentage-point change on the assumed health care costs and the effect of this change in rates on service cost, interest cost and the benefit obligation for postretirement health care benefits. This Update is effective for public business entities for fiscal years ending after December 15, 2020, and must be applied on a retrospective basis. For all other entities, this Update is effective for fiscal years ending after December 15, 2021. This Update is not expected to have a significant impact on the Company’s financial statements.

In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments – Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, which affects a variety of topics in the Codification and applies to all reporting entities within the scope of the affected accounting guidance. Topic 326, Financial Instruments – Credit Losses amendments are effective for SEC registrants for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. For all other public business entities, the effective date is for fiscal years beginning after December 15, 2020, and for all other entities, the effective date is for fiscal years beginning after December 15, 2021. Topic 815, Derivatives and Hedging amendments are effective for public business entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods beginning after December 15, 2020. For entities that have adopted the amendments in Update 2017-12, the effective date is as of the beginning of the first annual period beginning after the issuance of this Update. Topic 825, Financial Instruments amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years. 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 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 the 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 ASU 2016-13, the effective dates and transition requirements are the same as those in ASU 2016-13. For entities that have adopted ASU 2016-13, ASU 2019-05 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted once ASU 2016-13 has been adopted. 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 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. The effective dates in this Update are the same as those applicable for ASU 2019-10. 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 December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740), to simplify the accounting for income taxes, change the accounting for certain tax transactions, and make minor improvements to the codification. This Update provides a policy election to not allocate consolidated income taxes when a member of a consolidated tax return is not subject to income tax and provides guidance to evaluate whether a step-up in tax basis of goodwill relates to a business combination in which book goodwill was recognized or a separate transaction. The Update also changes current guidance for making an intraperiod allocation, if there is a loss in continuing operations and gains outside of continuing operations; determining when a deferred tax liability is recognized after an investor in a foreign entity transitions to or from the equity method of accounting; accounting for tax law changes and year-to-date losses in interim periods; and determining how to apply the income tax guidance to franchise taxes that are partially based on income. For public business entities, the amendments in this Update are effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2020. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. This Update is not expected to have a significant impact on the Company’s financial statements.

In January 2020, the FASB issued ASU 2020-1, Investments – Equity Securities (Topic 321), Investments – Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815), to clarify that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting for the purposes of applying the measurement alternative in accordance with Topic 321 immediately before applying or upon discontinuing the equity method. The amendments also clarify that, for the purpose of applying paragraph 815-10-15-141(a) an entity should not consider whether, upon the settlement of the forward contract or exercise of the purchased option, individually or with existing investments, the underlying securities would be accounted for under the equity method in Topic 323 or the fair value option, in accordance with the financial instruments guidance in Topic 825. An entity also would evaluate the remaining characteristics in paragraph 815-10-15-141 to determine the accounting for those forward contracts and purchased options. For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years. This Update is not expected to have a significant impact on the Company’s financial statements.

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 January 2020, the FASB issued ASU 2020-4, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, March 2020, to provide temporary optional expedients and exceptions to the U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from LIBOR and other interbank offered rates to alternative reference rates, such as Secured Overnight Financing Rate. Entities can elect not to apply certain modification accounting requirements to contracts affected by what the guidance calls reference rate reform, if certain criteria are met. An entity that makes this election would not have to remeasure the contracts at the modification date or reassess a previous accounting determination. Also, entities can elect various optional expedients that would allow them to continue applying hedge accounting for hedging relationships affected by reference rate reform, if certain criteria are met, and can make a one-time election to sell and/or reclassify held-to-maturity debt securities that reference an interest rate affected by reference rate reform. The amendments in this ASU are effective for all entities upon issuance through December 31, 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 August 2020, the FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity.  This ASU removes from U.S. GAAP the separation models for (1) convertible debt with a cash conversion feature and (2) convertible instruments with a beneficial conversion feature. As a result, entities will not separately present in equity an embedded conversion feature in such debt. Instead, they will account for a convertible debt instrument wholly as debt, and for convertible preferred stock wholly as preferred stock (i.e., as a single unit of account), unless (1) a convertible instrument contains features that require bifurcation as a derivative under ASC 815 or (2) a convertible debt instrument was issued at a substantial premium.  This ASU requires entities to provide expanded disclosures about the terms and features of convertible instruments, how the instruments have been reported in the entity’s financial statements, and information about events, conditions, and circumstances that can affect how to assess the amount or timing of an entity’s future cash flows related to those instruments. The amendments in this ASU are effective for public business entities that are not smaller reporting companies, for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years.  For all other entities, this ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. The guidance may be early adopted for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. This Update is not expected to have a significant impact on the Company’s financial statements.

In October 2020, the FASB issued ASU 2020-08, Codification Improvements to Subtopic 310-20, Receivables – Nonrefundable Fees and Other Costs, which clarifies that, for each reporting period, an entity should reevaluate whether a callable debt security is within the scope of ASC 310-20-35-33. For public business entities, ASU 2020-08 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early application is not permitted. For all other entities, ASU 2020-08 is effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. This Update is not expected to have a significant impact on the Company’s financial statements.

In October 2020, the FASB issued ASU 2020-10, Codification Improvements, which makes minor technical corrections and clarifications to the ASC. The amendments in Sections B and C of the ASU are effective for annual periods beginning after December 15, 2020, for public business entities. For all other entities, the amendments are effective for annual periods beginning after December 15, 2021, and interim periods within annual periods beginning after December 15, 2022. This Update is not expected to have a significant impact on the Company’s financial statements.

In November 2020, the FASB issued ASU 2020-11, Financial Services – Insurance (Topic 944), which was made in consideration of the implications of the Coronavirus Disease 2019 (COVID-19) pandemic on an insurance entity’s ability to

effectively implement the amendments in Accounting Standards Update No. 2018-12, Financial Services— Insurance: Targeted Improvements to the Accounting for Long-Duration Contracts (LDTI). The amendments in this Update defer the effective date of LDTI for all entities by one year, as (1) for public business entities that meet the definition of an SEC filer and are not SRCs, LDTI is effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years; and (2) for all other entities, LDTI is effective for fiscal years beginning after December 15, 2024, and interim periods within fiscal years beginning after December 15, 2025. This Update is not expected to have a significant impact on the Company’s financial statements.

In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848), which provides optional temporary guidance for entities transitioning away from the London Interbank Offered Rate(LIBOR) and other interbank offered rates (IBORs) to new references rates so that derivatives affected by the discounting transition are explicitly eligible for certain optional expedients and exceptions within Topic848. ASU 2021-01 clarifies that the derivatives affected by the discounting transition are explicitly eligible for certain optional expedients and exceptions in Topic 848. ASU 2021-01 is effective immediately for all entities. Entities may elect to apply the amendments on a full retrospective basis as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or on a prospective basis to new modifications from any date within an interim period that includes or is subsequent to the date of the issuance of a final update, up to the date that financial statements are available to be issued. The

amendments in this update do not apply to contract modifications made, as well as new hedging relationships entered into, after December 31, 2022, and to existing hedging relationships evaluated for effectiveness for periods after December 31, 2022, except for certain hedging relationships existing as of December 31, 2022, that apply certain optional expedients in which the accounting effects are recorded through the end of the hedging relationship. 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 2021, the FASB issued ASU 2021-03, Intangibles – Goodwill and Other (Topic 350), which provides private companies and not-for-profit entities with an accounting alternative to elect not to monitor for goodwill impairment-triggering events during the reporting period and, instead, to evaluate the facts and circumstances as of the end of the reporting period to determine whether it is more likely than not that goodwill is impaired. The amendments in this Update are effective on a prospective basis for fiscal years beginning after December 15, 2019. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance as of March 30, 2021. An entity should not retroactively adopt the amendments in this Update for interim financial statements already issued in the year of adoption.  This Update is not expected to have a significant impact on the Company’s financial statements.

In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt – Modifications and Extinguishments (Subtopic 470-50), Compensation – Stock Compensation (Topic 718), and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40), which requires an entity to treat a modification of an equity-classified warrant that does not cause the warrant to become liability-classified as an exchange of the original warrant for a new warrant. This guidance applies whether the modification is structured as an amendment to the terms and conditions of the warrant or as termination of the original warrant and issuance of a new warrant.  An entity should measure the effect of a modification as the difference between the fair value of the modified warrant and the fair value of that warrant immediately before modification. The amendments in this Update are effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. An entity should apply the amendments prospectively to modifications or exchanges occurring on or after the effective date of the amendments. Early adoption is permitted for all entities, including adoption in an interim period. If an entity elects to early adopt the amendments in this Update in an interim period, the guidance should be applied as of the beginning of the fiscal year that includes that interim period. This Update is not expected to have a significant impact on the Company’s financial statements.

In July 2021, the FASB issued ASU 2021-05, Leases (Topic 842), which amends ASC 842 so that lessors are no longer required to recognize a selling loss upon commencement of a lease with variable lease payments that, prior to the amendments, would have been classified as a sales-type or direct financing lease.  Furthermore, a lessor must classify as an operating lease any lease that would otherwise be classified as a sales-type or direct financing lease and that would result in the recognition of a selling loss at lease commencement, provided that the lease includes variable lease payments that do not depend on an index or rate.  For public business entities and certain not-for-profit entities and employee benefit plans that have adopted ASC 842, the amendments are effective for fiscal years beginning after December 15, 2021, and for interim periods within those fiscal years.  For all other entities that have adopted ASC 842, the amendments are effective for fiscal years beginning after December 15, 2021, and for interim periods within fiscal years beginning after December 15, 2022.  All entities that have adopted ASC 842 are permitted to early adopt the amendments in ASU 2021-05. The amendments in ASU 2021-05 are effective as of the same date as the guidance in ASC 842 for entities that have not adopted ASC 842.  This Update is not expected to have a significant impact on the Company’s financial statements.

XML

Earnings per Share (Tables)

9 Months Ended

Jun. 30, 2021

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 month periods ended June 30, 2021 and 2020.

	Three Months Ended						Nine Months Ended
	June 30,			June 30,			June 30,			June 30,
	2021			2020			2021			2020
Weighted-average common shares outstanding		18,133,095			18,133,095			18,133,095			18,133,095
Average treasury stock shares		(7,473,715	)		(7,076,709	)		(7,362,121	)		(6,924,021	)
Average unearned ESOP shares		(692,120	)		(741,156	)		(707,250	)		(752,513	)
Average unearned non-vested shares		(61,535	)		(54,735	)		(57,683	)		(50,204	)
Weighted average common shares and common stock    equivalents used to calculate basic earnings per share		9,905,725			10,260,495			10,006,041			10,406,357
Additional common stock equivalents (nonvested stock)    used to calculate diluted earnings per share		2,063			234			2,688			257
Weighted average common shares and common stock    equivalents used to calculate diluted earnings per share		9,907,788			10,260,729			10,008,729			10,406,614

XML

Investment Securities (Tables)

9 Months Ended

Jun. 30, 2021

Investments Debt And Equity Securities [Abstract]

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

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

	June 30, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available for Sale
Fannie Mae	$	28,237	$	865	$	(30	)	$	29,072
Freddie Mac		23,294		629		(10	)		23,913
Governmental National Mortgage Association		7,614		206		(13	)		7,807
Total mortgage-backed securities		59,145		1,700		(53	)		60,792
Obligations of states and political subdivisions		17,251		545		—			17,796
U.S. government agency securities		1,998		13		—			2,011
Corporate obligations		54,695		997		(341	)		55,351
Other debt securities		11,969		373		(122	)		12,220
Total	$	145,058	$	3,628	$	(516	)	$	148,170
Held to Maturity
Fannie Mae	$	10,080	$	13	$	(8	)	$	10,085
Freddie Mac		7,902		46		(21	)		7,927
Total	$	17,982	$	59	$	(29	)	$	18,012

	September 30, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available for Sale
Fannie Mae	$	41,961	$	1,385	$	(88	)	$	43,258
Freddie Mac		31,642		964		(2	)		32,604
Governmental National Mortgage Association		15,300		368		(99	)		15,569
Total mortgage-backed securities		88,903		2,717		(189	)		91,431
Obligations of states and political subdivisions		21,136		795		—			21,931
U.S. government agency securities		24,990		—		—			24,990
U.S. government treasury securities		7,991		57		—			8,048
Corporate obligations		51,188		807		(521	)		51,474
Other debt securities		14,265		495		(150	)		14,610
Total	$	208,473	$	4,871	$	(860	)	$	212,484

Summary of Unrealized and Realized Gains 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, 2021 and 2020.

(in thousands)	Three Months Ended June 30, 2021		Three Months Ended June 30, 2020
Net gains recognized during the period on equity securities	$	4	$	2
Less: Net gains recognized during the period on equity securities sold    during the period		—		—
Unrealized gains recognized during the reporting period on equity    securities still held at the reporting date	$	4	$	2
(in thousands)	Nine Months Ended June 30, 2021		Nine Months Ended June 30, 2020
Net gains (losses) recognized during the period on equity securities	$	15	$	(3	)
Less: Net gains recognized during the period on equity securities sold    during the period		—		—
Unrealized gains (losses) recognized during the reporting period on equity    securities still held at the reporting date	$	15	$	(3	)

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, 2021, 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	$	1,403	$	1,408	$	—	$	—
Due after one year through five years		21,050		21,428		—		—
Due after five years through ten years		59,260		60,237		1,955		1,961
Due after ten years		63,345		65,097		16,027		16,051
Total	$	145,058	$	148,170	$	17,982	$	18,012

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 (in thousands):

	June 30, 2021
	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		9	$	6,122	$	(10	)	$	4,582	$	(28	)	$	10,704	$	(38	)
Freddie Mac		5		3,965		(31	)		—		—			3,965		(31	)
Governmental National Mortgage Association		4		409		(1	)		1,817		(12	)		2,226		(13	)
Corporate obligations		17		11,396		(274	)		1,926		(67	)		13,322		(341	)
Other debt securities		8		—		—			2,453		(122	)		2,453		(122	)
Total		43	$	21,892	$	(316	)	$	10,778	$	(229	)	$	32,670	$	(545	)

	September 30, 2020
			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		8	$	1,397	$	(19	)	$	5,827	$	(69	)	$	7,224	$	(88	)
Freddie Mac		1		330		(2	)		—		—			330		(2	)
Governmental National Mortgage Association		7		4,428		(61	)		2,996		(38	)		7,424		(99	)
Corporate obligations		20		13,213		(93	)		6,573		(428	)		19,786		(521	)
Other debt securities		10		—		—			3,879		(150	)		3,879		(150	)
Total		46	$	19,368	$	(175	)	$	19,275	$	(685	)	$	38,643	$	(860	)

XML

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

9 Months Ended

Jun. 30, 2021

Receivables [Abstract]

Summary of Loans Receivable

Loans receivable consist of the following (in thousands):

	June 30, 2021		September 30, 2020
Real estate loans:
Residential	$	584,368	$	610,172
Construction		12,236		11,853
Commercial		578,506		509,628
Commercial		95,153		139,603
Obligations of states and political subdivisions		57,070		79,230
Home equity loans and lines of credit		38,571		40,800
Auto loans		18,805		39,795
Other		1,600		2,293
		1,386,309		1,433,374
Less allowance for loan losses		17,693		15,400
Net loans	$	1,368,616	$	1,417,974

Summary of Additional Information Regarding Loans Acquired and Accounted

The following table presents additional information regarding loans acquired and accounted for in accordance with ASC 310-30 (in thousands):

	June 30, 2021		September 30, 2020
	Acquired Loans with Specific Evidence or Deterioration in Credit Quality (ASC 310-30)		Acquired Loans with Specific Evidence or Deterioration in Credit Quality (ASC 310-30)
Outstanding balance	$	942	$	1,086
Carrying amount	$	880	$	1,025

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		Loans Acquired with Deteriorated Credit Quality		Collectively Evaluated for Impairment
June 30, 2021
Real estate loans:
Residential	$	584,368	$	2,493	$	—	$	581,875
Construction		12,236		—		—		12,236
Commercial		578,506		11,330		880		566,296
Commercial		95,153		5,320		—		89,833
Obligations of states and political subdivisions		57,070		—		—		57,070
Home equity loans and lines of credit		38,571		92		—		38,479
Auto loans		18,805		73		—		18,732
Other		1,600		9		—		1,591
Total	$	1,386,309	$	19,317	$	880	$	1,366,112

	Total Loans		Individually Evaluated for Impairment		Loans Acquired with Deteriorated Credit Quality		Collectively Evaluated for Impairment
September 30, 2020
Real estate loans:
Residential	$	610,172	$	3,949	$	—	$	606,223
Construction		11,853		—		—		11,853
Commercial		509,628		11,322		1,025		497,281
Commercial		139,603		1,595		—		138,008
Obligations of states and political sub divisions		79,230		—		—		79,230
Home equity loans and lines of credit		40,800		117		—		40,683
Auto loans		39,795		210		—		39,585
Other		2,293		11		—		2,282
Total	$	1,433,374	$	17,204	$	1,025	$	1,415,145

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, 2021
With no specific allowance recorded:
Real estate loans
Residential	$	2,384	$	3,587	$	—
Construction		—		—		—
Commercial		10,929		12,922		—
Commercial		676		910		—
Obligations of states and political subdivisions		—		—		—
Home equity loans and lines of credit		92		180		—
Auto loans		73		99		—
Other		9		21		—
Total		14,163		17,719		—
With an allowance recorded:
Real estate loans
Residential		109		113		18
Construction		—		—		—
Commercial		401		415		21
Commercial		4,644		4,686		848
Obligations of states and political subdivisions		—		—		—
Home equity loans and lines of credit		—		—		—
Auto loans		—		—		—
Other		—		—		—
Total		5,154		5,214		887
Total:
Real estate loans
Residential		2,493		3,700		18
Construction		—		—		—
Commercial		11,330		13,337		21
Commercial		5,320		5,596		848
Obligations of states and political subdivisions		—		—
Home equity loans and lines of credit		92		180		—
Auto loans		73		99		—
Other		9		21		—
Total Impaired Loans	$	19,317	$	22,933	$	887

	Recorded Investment		Unpaid Principal Balance		Associated Allowance
September 30, 2020
With no specific allowance recorded:
Real Estate Loans
Residential	$	3,699	$	5,070	$	—
Construction		—		—		—
Commercial		4,203		6,342		—
Commercial		1,539		1,625		—
Obligations of states and political subdivisions		—		—		—
Home equity loans and lines of credit		117		222		—
Auto Loans		72		131		—
Other		11		22		—
Total		9,641		13,412		—
With an allowance recorded:
Real Estate Loans
Residential		250		271		26
Construction		—		—		—
Commercial		7,119		7,169		132
Commercial		56		57		20
Obligations of states and political subdivisions		—		—		—
Home equity loans and lines of credit		—		—		—
Auto Loans		138		143		43
Other		—		—		—
Total		7,563		7,640		221
Total:
Real Estate Loans
Residential		3,949		5,341		26
Construction		—		—		—
Commercial		11,322		13,511		132
Commercial		1,595		1,682		20
Obligations of states and political subdivisions		—		—
Home equity loans and lines of credit		117		222		—
Auto Loans		210		274		43
Other		11		22		—
Total Impaired Loans	$	17,204	$	21,052	$	221

The following table 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,
	2021		2020		2021		2020
	Average Recorded Investment		Average Recorded Investment		Interest Income Recognized		Interest Income Recognized
With no specific allowance recorded:
Real estate loans
Residential	$	1,107	$	3,602	$	2	$	1
Construction		—		—		—		—
Commercial		7,422		5,108		6		—
Commercial		1,946		2,323		—		—
Obligations of states and political subdivisions		—		—		—		—
Home equity loans and lines of credit		90		244		—		—
Auto loans		50		74		—		1
Other		10		13		—		—
Total		10,625		11,364		8		2
With an allowance recorded:
Real estate loans
Residential		146		361		—		—
Construction		—		—		—		—
Commercial		4,985		182		—		—
Commercial		4,903		168		—		—
Obligations of states and political subdivisions		—		—		—		—
Home equity loans and lines of credit		—		6		—		—
Auto loans		12		85		—		—
Other		—		—		—		—
Total		10,046		802		—		—
Total:
Real estate loans
Residential		1,253		3,963		2		1
Construction		—		—		—		—
Commercial		12,407		5,290		6		—
Commercial		6,849		2,491				—
Obligations of states and political subdivisions		—		—		—		—
Home equity loans and lines of credit		90		250		—		—
Auto loans		62		159		—		1
Other		10		13		—		—
Total Impaired Loans	$	20,671	$	12,166	$	8	$	2

	For the Nine Months Ended June 30,
	2021		2020		2021		2020
	Average Recorded Investment		Average Recorded Investment		Interest Income Recognized		Interest Income Recognized
With no specific allowance recorded:
Real estate loans
Residential	$	1,304	$	3,800	$	3	$	2
Construction		—		—		—		—
Commercial		8,408		3,203		11		1
Commercial		1,569		1,260		—		4
Obligations of states and political subdivisions		—		—		—		—
Home equity loans and lines of credit		98		253		—		—
Auto loans		52		130		—		1
Other		11		14		—		—
Total		11,442		8,660		14		8
With an allowance recorded:
Real estate loans
Residential		171		304		—		—
Construction		—		—		—		—
Commercial		4,908		239		—		—
Commercial		2,222		97		—		—
Obligations of states and political subdivisions		—		—		—		—
Home equity loans and lines of credit		—		2		—		—
Auto loans		28		128		1		—
Other		—		8		—		—
Total		7,329		778		1		—
Total:
Real estate loans
Residential		1,475		4,104		3		2
Construction		—		—		—		—
Commercial		13,316		3,442		11		1
Commercial		3,791		1,357				4
Obligations of states and political subdivisions		—		—		—		—
Home equity loans and lines of credit		98		255		—		—
Auto loans		80		258		1		1
Other		11		22		—		—
Total Impaired Loans	$	18,771	$	9,438	$	15	$	8

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, 2021 and September 30, 2020 (in thousands):

	Pass		Special Mention		Substandard		Doubtful or Loss		Total
June 30, 2021
Commercial real estate loans	$	539,774	$	16,422	$	22,310	$	—	$	578,506
Commercial		89,317		159		5,677		—		95,153
Obligations of states and political subdivisions		57,070		—		—		—		57,070
Total	$	686,161	$	16,581	$	27,987	$	—	$	730,729

	Pass		Special Mention		Substandard		Doubtful or Loss		Total
September 30, 2020
Commercial real estate loans	$	479,475	$	15,022	$	15,131	$	—	$	509,628
Commercial		137,860		—		1,743		—		139,603
Obligations of states and political subdivisions		79,230		—		—		—		79,230
Total	$	696,565	$	15,022	$	16,874	$	—	$	728,461

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, 2021 and September 30, 2020 (in thousands):

	Performing		Non- performing		Total
June 30, 2021
Real estate loans:
Residential	$	580,970	$	3,398	$	584,368
Construction		12,236		—		12,236
Home equity loans and lines of credit		38,408		163		38,571
Auto loans		18,725		80		18,805
Other		1,585		15		1,600
Total	$	651,924	$	3,656	$	655,580

	Performing		Non- performing		Total
September 30, 2020
Real estate loans:
Residential	$	605,549	$	4,623	$	610,172
Construction		11,853		—		11,853
Home equity loans and lines of credit		40,581		219		40,800
Auto loans		39,572		223		39,795
Other		2,282		11		2,293
Total	$	699,837	$	5,076	$	704,913

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, 2021 and September 30, 2020 (in thousands):

			31-60 Days		61-89 Days		90 + Days Past Due and				Total		Purchased Credit Impaired				Total
	Current		Past Due		Past Due		Accruing		Non­accrual		Past Due		Accruing		Non­accrual		Loans
June 30, 2021
Real estate loans:
Residential	$	580,186	$	460	$	324	$	—	$	3,398	$	4,182	$	—	$	—	$	584,368
Construction		12,236		—		—		—		—		—		—		—		12,236
Commercial		565,745		—		—		—		11,881		11,881		227		653		578,506
Commercial		89,815		—		—		—		5,338		5,338		—		—		95,153
Obligations of states and political    subdivisions		57,070		—		—		—		—		—		—		—		57,070
Home equity loans and lines of credit		38,103		222		83		—		163		468		—		—		38,571
Auto loans		18,495		219		11		—		80		310		—		—		18,805
Other		1,585		—		—		—		15		15		—		—		1,600
Total	$	1,363,235	$	901	$	418	$	—	$	20,875	$	22,194	$	227	$	653	$	1,386,309

			31-60 Days		61-89 Days		90 + Days Past Due and				Total		Purchased Credit Impaired				Total
	Current		Past Due		Past Due		Accruing		Non­accrual		Past Due		Accruing		Non­accrual		Loans
September 30, 2020
Real estate loans:
Residential	$	604,168	$	979	$	402	$	—	$	4,623	$	6,004	$	—	$	—	$	610,172
Construction		11,853		—		—		—		—		—		—		—		11,853
Commercial		494,881		1,085		—		—		12,637		13,722		236		789		509,628
Commercial		137,769		6		—		—		1,828		1,834		—		—		139,603
Obligations of states and political    subdivisions		79,230		—		—		—		—		—		—		—		79,230
Home equity loans and lines of credit		40,533		48		—		—		219		267		—		—		40,800
Auto loans		38,971		593		8		—		223		824		—		—		39,795
Other		2,282		—		—		—		11		11		—		—		2,293
Total	$	1,409,687	$	2,711	$	410	$	—	$	19,541	$	22,662	$	236	$	789	$	1,433,374

Summary of Changes in Primary Segments of ALL

The following table summarizes changes in the primary segments of the ALL for the three and nine months ended June 30, 2021 and 2020 (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
ALL balance at March 31, 2021	$	4,299		$	117	$	8,943		$	1,770		$	487		$	337		$	439		$	20		$	742		$	17,154
Charge-offs		(55	)		—		—			(200	)		—			—			(18	)		—			—			(273	)
Recoveries		149			—		20			—			—			1			42			—			—			212
Provision		(184	)		39		564			88			(88	)		(17	)		(120	)		—			318			600
ALL balance at June 30, 2021	$	4,209		$	156	$	9,527		$	1,658		$	399		$	321		$	343		$	20		$	1,060		$	17,693
ALL balance at March 31, 2020	$	4,330		$	55	$	4,563		$	2,180		$	359		$	351		$	1,104		$	29		$	208		$	13,179
Charge-offs		(42	)		—		(4	)		—			—			(21	)		(135	)		(15	)		—			(217	)
Recoveries		1			—		17			—			—			1			49			—			—			68
Provision		78			48		2,294			(1,206	)		185			5			(55	)		10			(59	)		1,300
ALL balance at June 30, 2020	$	4,367		$	103	$	6,870		$	974		$	544		$	336		$	963		$	24		$	149		$	14,330
ALL balance at September 30, 2020	$	4,301		$	127	$	7,209		$	874		$	555		$	337		$	780		$	25		$	1,192		$	15,400
Charge-offs		(59	)		—		(76	)		(209	)		—			(8	)		(244	)		(1	)		—			(597	)
Recoveries		213			—		56			—			—			4			217			—			—			490
Provision		(246	)		29		2,338			993			(156	)		(12	)		(410	)		(4	)		(132	)		2,400
ALL balance at June 30, 2021	$	4,209		$	156	$	9,527		$	1,658		$	399		$	321		$	343		$	20		$	1,060		$	17,693
ALL balance at September 30, 2019	$	4,243		$	53	$	3,806		$	1,870		$	343		$	329		$	1,384		$	28		$	574		$	12,630
Charge-offs		(72	)		—		(54	)		—			—			(61	)		(717	)		(20	)		—			(924	)
Recoveries		7			—		77			1			—			4			358			2			—			449
Provision		189			50		3,041			(897	)		201			64			(62	)		14			(425	)		2,175
ALL balance at June 30, 2020	$	4,367		$	103	$	6,870		$	974		$	544		$	336		$	963		$	24		$	149		$	14,330

During the three months ended June 30, 2021, the Company recorded provision expense for the construction real estate loans, commercial real estate loans and commercial loans segments, due to either increased loan balances, changes in the loan mix within the pool, and/or charge-off activity in those segments. Provision expense was also recorded for possible loan losses due to the economic slowdown caused by COVID-19 restrictions. Credit provisions were recorded for loan loss for the residential real estate loans,  obligations of states and political subdivisions, home equity loans and lines of credit and auto loans segments.

During the three months ended June 30, 2020 the Company recorded provision expense for the residential real estate loans, commercial real estate loans, obligations of states and political subdivisions, construction loans, home equity loans and lines of credit and other loan segments, due to either increased loan balances, changes in the loan mix within the pool, and/or charge-off activity in those segments. Provision expense was also recorded for possible loan losses due to the economic slowdown caused by COVID-19 restrictions. Credit provisions were recorded for loan loss for the commercial loans and auto loan segments.

During the nine months ended June 30, 2021, the Company recorded provision expense for the construction real estate loans, commercial real estate loans and commercial loans, due to either increased loan balances, changes in the loan mix within the pool, and/or charge-off activity in those segments. Provision expense was also recorded for possible loan losses due to the economic slowdown caused by COVID-19 restrictions. Credit provisions were recorded for loan loss for the residential real estate loans, obligations of states and political subdivisions, home equity loans and lines of credit segments, auto loan and other loan segments.

During the nine months ended June 30, 2020 the Company recorded provision expense for the residential real estate loans, commercial real estate loans, obligations of states and political subdivisions, construction loans, home equity loans and lines of credit and other loan segments, due to either increased loan balances, changes in the loan mix within the pool, and/or charge-off activity in those segments. Provision expense was also recorded for possible loan losses due to the economic slowdown caused by COVID-19 restrictions. Credit provisions were recorded for loan loss for the commercial loans and auto loan segments.

The Company is closely monitoring all customer credit positions, particularly loans requesting payment relief.  Such loans, as of June 30, 2021, amounted to approximately 2.3% of total loans outstanding, including $29.8 million in commercial real estate loans, $481,000 in commercial loans and $1.1 million in mortgage loans.  As the economic impact of the COVID-19 pandemic continues to evolve, our customers may experience decreased cash flows, which may correlate to an inability to make timely loan payments.  This, in turn, may require further increases in our allowance for loan losses and increases in the level of charge-offs in our loan portfolio.

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, 2021 and September 30, 2020 (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	$	18	$	—	$	21	$	848	$	—	$	—	$	—	$	—	$	—	$	887
Collectively    evaluated for    impairment		4,191		156		9,506		810		399		321		343		20		1,060		16,806
ALL balance at June 30, 2021	$	4,209	$	156	$	9,527	$	1,658	$	399	$	321	$	343	$	20	$	1,060	$	17,693
Individually    evaluated for    impairment	$	26	$	—	$	132	$	20	$	—	$	—	$	43	$	—	$	—	$	221
Collectively    evaluated for    impairment		4,275		127		7,077		854		555		337		737		25		1,192		15,179
ALL balance at September 30, 2020	$	4,301	$	127	$	7,209	$	874	$	555	$	337	$	780	$	25	$	1,192	$	15,400

Summary of Troubled Debt Restructuring Granted

         The following is a summary of troubled debt restructuring granted during the three months ended June 30, 2021 (dollars in thousands):

	For the Three Months Ended June 30, 2021
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings
Real estate loans:
Residential		1	$	343	$	343
Construction		—		—		—
Commercial		4		7,353		7,353
Commercial		—		—		—
Obligations of states and political subdivisions		—		—		—
Home equity loans and lines of credit		—		—		—
Auto loans		—		—		—
Other		—		—		—
Total	$	5	$	7,696	$	7,696

The following is a summary of troubled debt restructuring granted during the nine months ended June 30, 2021 and 2020 (dollars in thousands):

	For the Nine Months Ended June 30, 2021
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings
Real estate loans:
Residential		2	$	416	$	416
Construction		—		—		—
Commercial		4		7,353		7,353
Commercial		—		—		—
Obligations of states and political subdivisions		—		—		—
Home equity loans and lines of credit		—		—		—
Auto loans		—		—		—
Other		—		—		—
Total		6	$	7,769	$	7,769

	For the Nine Months Ended June 30, 2020
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings
Real estate loans:
Residential		1	$	534	$	534
Construction		—		—		—
Commercial		—		—		—
Commercial		—		—		—
Obligations of states and political subdivisions		—		—		—
Home equity loans and lines of credit		—		—		—
Auto loans		—		—		—
Other		—		—		—
Total		1	$	534	$	534

XML

Deposits (Tables)

9 Months Ended

Jun. 30, 2021

Deposits Liabilities Disclosures [Abstract]

Schedule of Deposits by Major Classifications

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

	June 30, 2021		September 30, 2020
Non-interest bearing demand accounts	$	277,814	$	242,642
Interest bearing demand accounts		473,119		274,722
Money market accounts		410,310		401,863
Savings and club accounts		187,573		160,975
Certificates of deposit		241,256		463,494
Total	$	1,590,072	$	1,543,696

XML

Net Periodic Benefit Cost-Defined Benefit Plan (Tables)

9 Months Ended

Jun. 30, 2021

Compensation And Retirement Disclosure [Abstract]

Summary of the Components of Net Periodic Benefit Cost

The following table comprises the components of net periodic benefit cost for the three and nine-month periods ended June 30, 2021 and 2020 (in thousands):

	For the Three Months Ended June 30,						For the Nine Months Ended June 30,
	2021			2020			2021			2020
Service Cost	$	—		$	—		$	—		$	—
Interest Cost		112			121			338			364
Expected return on plan assets		(289	)		(268	)		(867	)		(807	)
Amortization of net loss from earlier periods		56			—			166			—
Net periodic benefit cost	$	(121	)	$	(147	)	$	(363	)	$	(443	)

XML

Equity Incentive Plan (Tables)

9 Months Ended

Jun. 30, 2021

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, 2021, and changes therein during the nine month period then ended:

	Number of Restricted Stock			Weighted- average Grant Date Fair Value
Nonvested at September 30, 2020		35,245		$	16.15
Granted		43,939			12.56
Vested		(10,834	)		14.75
Forfeited		—			—
Nonvested at June 30, 2021		68,350		$	14.06

XML

Fair Value (Tables)

9 Months Ended

Jun. 30, 2021

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, 2021 and September 30, 2020 by level within the fair value hierarchy (in thousands).

Recurring Fair Value Measurements at Reporting Date
	June 30, 2021
Assets	Level I		Level II		Level III		Total
Investment securities available for sale:
Mortgage backed securities	$	—	$	60,792	$	—	$	60,792
Obligations of states and political subdivisions		—		17,796		—		17,796
U.S. government agencies		—		2,011		—		2,011
Corporate obligations		—		42,071		13,280		55,351
Other debt securities		—		12,220		—		12,220
Total debt securities	$	—	$	134,890	$	13,280	$	148,170
Equity securities- financial services		32		—		—		32
Derivatives and hedging activities		—		2,358		—		2,358
Liabilities
Derivatives and hedging activities		—		1,763		—		1,763
	September 30, 2020
Assets	Level I		Level II		Level III		Total
Investment securities available for sale:
Mortgage backed securities	$	—	$	91,431	$	—	$	91,431
Obligations of states and political subdivisions		—		21,931		—		21,931
U.S. government treasury securities		—		24,990		—		24,990
U.S. government agencies		—		8,048		—		8,048
Corporate obligations		—		43,214		8,260		51,474
Other debt securities		—		14,610		—		14,610
Total debt securities	$	—	$	204,224	$	8,260	$	212,484
Equity securities-financial services		17		—		—		17
Derivatives and hedging activities		—		2,192		—		2,192
Liabilities:
Derivatives and hedging activities		—		7,002		—		7,002

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 month periods ended June 30, 2021 and 2020 (in thousands).

	Fair Value Measurement Using Significant Unobservable Inputs (Level III)
	Three Months Ended
	June 30, 2021		June 30, 2020
Beginning balance	$	4,678	$	7,821
Purchases, sales, issuances, settlements, net		8,541		(1,000	)
Total unrealized gain (loss):
Included in earnings		—		—
Included in other comprehensive income (loss)		61		(34	)
Transfers in and/or out of Level III		—		—
	$	13,280	$	6,787

	Fair Value Measurement Using Significant Unobservable Inputs (Level III)
	Nine Months Ended
	June 30, 2021		June 30, 2020
Beginning balance	$	8,260	$	7,792
Purchases, sales, issuances, settlements, net		4,791		(1,000	)
Total unrealized gain (loss):
Included in earnings		—		—
Included in other comprehensive (loss) income		229		(5	)
Transfers in and/or out of Level III		—		—
	$	13,280	$	6,787

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, 2021 and September 30, 2020 by level within the fair value hierarchy:

Non-Recurring Fair Value Measurements at Reporting Date (in thousands)
	June 30, 2021
	Level I		Level II		Level III		Total
Foreclosed real estate	$	—	$	—	$	373	$	373
Impaired loans		—		—		18,430		18,430
	September 30, 2020
	Level I		Level II		Level III		Total
Foreclosed real estate	$	—	$	—	$	269	$	269
Impaired loans		—		—		16,983		16,983

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
June 30, 2021
Impaired loans	$	18,430	Appraisal of collateral (1)	Appraisal adjustments (2)	0% to 35% (21.1%)
Foreclosed real estate owned		373	Appraisal of collateral (1)	Appraisal adjustments (2)	20% to 35% (29.8%)

	Quantitative Information about Level 3 Fair Value Measurements
(dollars in thousands)	Fair Value Estimate		Valuation Techniques	Unobservable Input	Range
September 30, 2020
Impaired loans	$	16,983	Appraisal of collateral (1)	Appraisal adjustments (2)	0% to 35% (20.5%)
Foreclosed real estate owned		269	Appraisal of collateral (1)	Appraisal adjustments (2)	20% to 35% (25.7%)

(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, 2021 and September 30, 2020 by level within the fair value hierarchy:

	June 30, 2021
(in thousands)	Carrying Value		Level I		Level II		Level III		Total Fair Value
Financial assets:
Investment securities held to maturity	$	17,982	$	—	$	—	$	18,012	$	18,012
Loans receivable, net		1,368,616		—		—		1,381,913		1,381,913
Mortgage servicing rights		694		—		—		816		816
Financial liabilities:
Deposits	$	1,590,072	$	1,348,816	$	—	$	241,524	$	1,590,340

	September 30, 2020
(in thousands)	Carrying Value		Level I		Level II		Level III		Total Fair Value
Financial assets:
Loans receivable, net	$	1,417,974	$	—	$	—	$	1,426,962	$	1,426,962
Mortgage servicing rights		393		—		—		393		393
Financial liabilities:
Deposits	$	1,543,696	$	1,080,201	$	—	$	467,630	$	1,547,831
Other borrowings		14,164		—		—		17,721		17,721

XML

Accumulated Other Comprehensive Income (Loss) (Tables)

9 Months Ended

Jun. 30, 2021

Equity [Abstract]

Summary of Activity in Accumulated Other Comprehensive Income (Loss)

The activity in accumulated other comprehensive income (loss) for the three and nine month periods ended June 30, 2021 and 2020 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, 2021	$	(3,519	)	$	2,154		$	587		$	(778	)
Other comprehensive income (loss) before    reclassifications		—			339			(463	)		(124	)
Amounts reclassified from accumulated    other comprehensive income (loss)		(44	)		(34	)		343			265
Period change		(44	)		305			(120	)		141
Balance at June 30, 2021	$	(3,563	)	$	2,459		$	467		$	(637	)
Balance at March 31, 2020	$	(1,527	)	$	4,987		$	(2,464	)	$	996
Other comprehensive income (loss) before    reclassifications		—			863			(1,859	)		(996	)
Amounts reclassified from accumulated    other comprehensive income (loss)		—			—			85			85
Period change		—			863			(1,774	)		(911	)
Balance at June 30, 2020	$	(1,527	)	$	5,850		$	(4,238	)	$	85
	Accumulated Other Comprehensive Income/(Loss)
	Defined Benefit Pension Plan			Unrealized Gains (Losses) on Securities Available for Sale			Derivatives			Total
Balance at September 30, 2020	$	(3,432	)	$	3,167		$	(3,791	)	$	(4,056	)
Other comprehensive income (loss) before    reclassifications		—			(345	)		2,879			2,534
Amounts reclassified from accumulated other    comprehensive income (loss)		(131	)		(363	)		1,379			885
Period change		(131	)		(708	)		4,258			3,419
Balance at June 30, 2021	$	(3,563	)	$	2,459		$	467		$	(637	)
Balance at September 30, 2019	$	(1,527	)	$	807		$	(560	)	$	(1,280	)
Other comprehensive income (loss) before reclassifications		—			5,344			(3,717	)		1,627
Amounts reclassified from accumulated other    comprehensive income (loss)		—			(301	)		39			(262	)
Period change		—			5,043			(3,678	)		1,365
Balance at June 30, 2020	$	(1,527	)	$	5,850		$	(4,238	)	$	85

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 month periods ended June 30, 2021 and 2020 (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
	2021			2020
Securities available for sale
Net securities gains reclassified into earnings	$	42		$	—		Gain on sale of investment securities available for sale, net
Related income tax expense		(8	)		—		Income taxes
Net effect on accumulated other comprehensive income (loss)    for the period		34			—
Defined benefit pension plan
Amortization of net gain and prior service costs		56			—		Compensation and employee benefits
Related income tax expense		(12	)		—		Income taxes
Net effect on accumulated other comprehensive income (loss)    for the period		44			—
Derivatives and hedging activities:
Interest expense, effective portion		(434	)		(108	)	Interest expense
Related income tax expense		91			23		Income taxes
Net effect on accumulated other comprehensive income (loss)    for the period		(343	)		(85	)
Total reclassification for the period	$	(265	)	$	(85	)
	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
	2021			2020
Securities available for sale:
Net securities gains reclassified into earnings	$	459		$	381		Gain on sale of investment securities available for sale, net
Related income tax expense		(96	)		(80	)	Income taxes
Net effect on accumulated other comprehensive income (loss)    for the period		363			301		Net of tax
Defined benefit pension plan
Amortization of net (loss) gain and prior service costs		166			—
Related income tax expense		(35	)		—		Income taxes
Net effect on accumulated other comprehensive income (loss)    for the period		131			—
Derivative and hedging activities:
Interest expense, effective portion		(1,745	)		(50	)	Interest expense
Related income tax expense		366			11		Income taxes
Net effect on accumulated other comprehensive income (loss)    for the period		(1,379	)		(39	)
Total reclassification for the period	$	(885	)	$	262

XML

Derivatives and Hedging Activities (Tables)

9 Months Ended

Jun. 30, 2021

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 well as their classification on the Consolidated Balance Sheet as of June 30, 2021 and September 30, 2020 (in thousands).

			Fair Values of Derivative Instruments
			Asset Derivatives
			As of June 30, 2021					As of September 30, 2020
Hedged Item	Notional Amount		Balance Sheet Location	Fair Value		Notional Amount		Balance Sheet Location	Fair Value
Brokered Deposits	$	150,000	Other Assets	$	1,171	$	-	Other Assets	$	—
Commercial Loans		70,108	Other Assets		1,187		55,784	Other Assets		2,192
Total	$	220,108		$	2,358	$	55,784		$	2,192
			Fair Values of Derivative Instruments
			Liability Derivatives
			As of June 30, 2021					As of September 30, 2020
Hedged Item	Notional Amount		Balance Sheet Location	Fair Value		Notional Amount		Balance Sheet Location	Fair Value
FHLB Advances	$	-	Other Liabilities	$	-	$	25,000	Other Liabilities	$	700
Brokered Deposits		95,000	Other Liabilities		578		410,000	Other Liabilities		4,098
Commercial Loans		102,665	Other Liabilities		1,185		70,784	Other Liabilities		2,204
Total	$	197,665		$	1,763	$	505,784		$	7,002

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 month periods ended June 30, 2021 and 2020 (in thousands).

The Effect of Fair Value and Cash Flow Hedge Accounting on Accumulated Other Comprehensive Income (Loss)
Derivatives in Hedging Relationships	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)	Loss Recognized in OCI on Derivative (Effective Portion) Three Months Ended June 30,
Derivatives in Cash Flow Hedging Relationships	2021			2020				2021			2020
Interest Rate Products	$	(156	)	$	(2,244	)	Interest expense	$	(434	)	$	(108	)
Total	$	(156	)	$	(2,244	)		$	(434	)	$	(108	)
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)	Loss Recognized in OCI on Derivative (Effective Portion) Nine Months Ended June 30,
	2021			2020				2021			2020
Interest Rate Products	$	5,390		$	(4,655	)	Interest expense	$	(1,745	)	$	(50	)
Total	$	5,390		$	(4,655	)		$	(1,745	)	$	(50	)

XML

Leases (Tables)

9 Months Ended

Jun. 30, 2021

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, 2021
Lease Right-of-Use Assets	Classification
Operating lease right-of-use assets	Other assets	$	6,446
Total Lease Right-Of-Use Assets		$	6,446
(in thousands)		June 30, 2021
Lease Liabilities	Classification
Operating lease Liabilities	Other liabilities	$	6,580
Total Lease Liabilities		$	6,580
(in thousands)		September 30, 2020
Lease Right-of-Use Assets	Classification
Operating lease right-of-use assets	Other assets	$	7,082
Total Lease Right-Of-Use Assets		$	7,082
(in thousands)		September 30, 2020
Lease Liabilities	Classification
Operating lease Liabilities	Other liabilities	$	7,161
Total Lease Liabilities		$	7,161

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. For operating leases existing prior to October 1, 2019, the rate for the remaining lease term as of October 1, 2019 was used.

	June 30, 2021
Weighted average remaining lease term
Operating leases	13.3 years
Weighted average discount rate
Operating leases		2.42	%

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, 2021
Operating lease cost	$	264
Variable lease cost		70
Net lease cost	$	334
Lease Costs (in thousands)	Three  Months Ended June 30, 2020
Operating lease cost	$	259
Variable lease cost		61
Net lease cost	$	320
Lease Costs (in thousands)	Nine Months Ended June 30,2021
Operating lease cost	$	791
Variable lease cost		213
Net lease cost	$	1,004
Lease Costs (in thousands)	Nine Months Ended June 30,2020
Operating lease cost	$	780
Variable lease cost		171
Net lease cost	$	951

Summary of Future Minimum Lease Payments

Future minimum payments for finance leases and operating leases with initial or remaining terms of one year or more as of June 30, 2021 were as follows:

(in thousands)	Operating leases
Twelve months Ended:
June 30, 2022	$	886
June 30, 2023		704
June 30, 2024		641
June 30, 2025		505
June 30, 2026		507
Thereafter		4,619
Total future minimum lease payments		7,862
Amounts representing interest		1,282
Present Value of Net Future Minimum Lease Payments	$	6,580

XML

Nature of Operations and Basis of Presentation - Additional Information (Detail)	Jun. 30, 2021
ESSA Advisory Services, LLC [Member]
Summary Of Significant Accounting Policies [Line Items]
Percentage ownership of wholly owned subsidiary	100.00%

XML

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, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
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	(7,473,715)	(7,076,709)	(7,362,121)	(6,924,021)
Average unearned ESOP shares	(692,120)	(741,156)	(707,250)	(752,513)
Average unearned non-vested shares	(61,535)	(54,735)	(57,683)	(50,204)
Weighted average common shares and common stock equivalents used to calculate basic earnings per share	9,905,725	10,260,495	10,006,041	10,406,357
Additional common stock equivalents (nonvested stock) used to calculate diluted earnings per share	2,063	234	2,688	257
Weighted average common shares and common stock equivalents used to calculate diluted earnings per share	9,907,788	10,260,729	10,008,729	10,406,614

XML

Earnings Per Share - Additional Information (Detail) - Stock Option [Member] - $ / shares	9 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities	23,312	42,520
Average weighted price per share of anti-dilutive shares	$ 16.15	$ 16.15

XML

Investment Securities - Summary of Amortized Cost, Gross Unrealized Gains and Losses, and Fair Value of Investment Securities Available for Sale (Detail) - USD ($) $ in Thousands	Jun. 30, 2021	Sep. 30, 2020
Schedule of Available-for-sale Securities [Line Items]
Available for sale, Amortized Cost	$ 145,058	$ 208,473
Available for sale, Gross Unrealized Gains	3,628	4,871
Available for sale, Gross Unrealized Losses	(516)	(860)
Available for sale, Fair Value	148,170	212,484
Held to maturity, Amortized Cost	17,982
Held to maturity, Gross Unrealized Gains	59
Held to maturity, Gross Unrealized Losses	(29)
Held to maturity, Fair Value	18,012
Fannie Mae [Member]
Schedule of Available-for-sale Securities [Line Items]
Available for sale, Amortized Cost	28,237	41,961
Available for sale, Gross Unrealized Gains	865	1,385
Available for sale, Gross Unrealized Losses	(30)	(88)
Available for sale, Fair Value	29,072	43,258
Held to maturity, Amortized Cost	10,080
Held to maturity, Gross Unrealized Gains	13
Held to maturity, Gross Unrealized Losses	(8)
Held to maturity, Fair Value	10,085
Freddie Mac [Member]
Schedule of Available-for-sale Securities [Line Items]
Available for sale, Amortized Cost	23,294	31,642
Available for sale, Gross Unrealized Gains	629	964
Available for sale, Gross Unrealized Losses	(10)	(2)
Available for sale, Fair Value	23,913	32,604
Held to maturity, Amortized Cost	7,902
Held to maturity, Gross Unrealized Gains	46
Held to maturity, Gross Unrealized Losses	(21)
Held to maturity, Fair Value	7,927
Governmental National Mortgage Association [Member]
Schedule of Available-for-sale Securities [Line Items]
Available for sale, Amortized Cost	7,614	15,300
Available for sale, Gross Unrealized Gains	206	368
Available for sale, Gross Unrealized Losses	(13)	(99)
Available for sale, Fair Value	7,807	15,569
Mortgage-Backed Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available for sale, Amortized Cost	59,145	88,903
Available for sale, Gross Unrealized Gains	1,700	2,717
Available for sale, Gross Unrealized Losses	(53)	(189)
Available for sale, Fair Value	60,792	91,431
Obligations of States and Political Subdivisions [Member]
Schedule of Available-for-sale Securities [Line Items]
Available for sale, Amortized Cost	17,251	21,136
Available for sale, Gross Unrealized Gains	545	795
Available for sale, Fair Value	17,796	21,931
U.S. Government Agency Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available for sale, Amortized Cost	1,998	24,990
Available for sale, Gross Unrealized Gains	13
Available for sale, Fair Value	2,011	24,990
U.S. Government Treasury Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available for sale, Amortized Cost		7,991
Available for sale, Gross Unrealized Gains		57
Available for sale, Fair Value		8,048
Corporate Obligations [Member]
Schedule of Available-for-sale Securities [Line Items]
Available for sale, Amortized Cost	54,695	51,188
Available for sale, Gross Unrealized Gains	997	807
Available for sale, Gross Unrealized Losses	(341)	(521)
Available for sale, Fair Value	55,351	51,474
Other Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available for sale, Amortized Cost	11,969	14,265
Available for sale, Gross Unrealized Gains	373	495
Available for sale, Gross Unrealized Losses	(122)	(150)
Available for sale, Fair Value	$ 12,220	$ 14,610

XML

Investment Securities - Summary of Unrealized and Realized Gains Losses Recognized in Net Income on Equity Securities (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Investments Debt And Equity Securities [Abstract]
Net gains (losses) recognized during the period on equity securities	$ 4	$ 2	$ 15	$ (3)
Realized and unrealized gain (loss) on equity securities, net	$ 4	$ 2	$ 15	$ (3)

XML

Investment Securities - Schedule of Amortized Cost and Fair Value of Debt Securities by Contractual Maturity (Detail) - USD ($) $ in Thousands	Jun. 30, 2021	Sep. 30, 2020
Available-for-sale Securities, Debt Maturities, Amortized Cost Basis, Fiscal Year Maturity [Abstract]
Due in one year or less, Amortized Cost	$ 1,403
Due after one year through five years, Amortized Cost	21,050
Due after five years through ten years, Amortized Cost	59,260
Due after ten years, Amortized Cost	63,345
Available for sale, Amortized Cost	145,058	$ 208,473
Available-for-sale Securities, Debt Maturities, Fair Value, Fiscal Year Maturity [Abstract]
Due in one year or less, Fair Value	1,408
Due after one year through five years, Fair Value	21,428
Due after five years through ten years, Fair Value	60,237
Due after ten years, Fair Value	65,097
Total, Fair Value	148,170	$ 212,484
Held to maturity Securities, Debt Maturities, Amortized Cost Basis, Fiscal Year Maturity [Abstract]
Due after five years through ten years, Amortized Cost	1,955
Due after ten years, Amortized Cost	16,027
Total, Amortized Cost	17,982
Held to maturity Securities, Debt Maturities, Fair Value, Fiscal Year Maturity [Abstract]
Due after five years through ten years, Fair Value	1,961
Due after ten years, Fair Value	16,051
Total, Fair Value	$ 18,012

XML

Investment Securities - Additional Information (Detail) - USD ($)	3 Months Ended		9 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Amortized Cost And Fair Value Debt Securities [Abstract]
Realized gross gains	$ 90,000	$ 0	$ 507,000	$ 420,000
Realized gross losses	48,000	$ 0	48,000	39,000
Proceeds from the sale of investment securities	$ 9,000,000.0		$ 19,700,000	$ 24,000,000.0

XML

Investment Securities - Schedule of Gross Unrealized Losses and Fair Value (Detail) $ in Thousands	Jun. 30, 2021 USD ($) Security	Sep. 30, 2020 USD ($) Security
Schedule of Available-for-sale Securities [Line Items]
Number of Securities, Debt | Security	43	46
Fair Value, Less than Twelve Months, Debt	$ 21,892	$ 19,368
Gross Unrealized Losses, Less than Twelve Months, Debt	(316)	(175)
Fair Value, Twelve Months or Greater, Debt	10,778	19,275
Gross Unrealized Losses, Twelve Months or Greater, Debt	(229)	(685)
Fair Value Total, Debt	32,670	38,643
Gross Unrealized Losses Total, Debt	$ (545)	$ (860)
Fannie Mae [Member]
Schedule of Available-for-sale Securities [Line Items]
Number of Securities, Debt | Security	9	8
Fair Value, Less than Twelve Months, Debt	$ 6,122	$ 1,397
Gross Unrealized Losses, Less than Twelve Months, Debt	(10)	(19)
Fair Value, Twelve Months or Greater, Debt	4,582	5,827
Gross Unrealized Losses, Twelve Months or Greater, Debt	(28)	(69)
Fair Value Total, Debt	10,704	7,224
Gross Unrealized Losses Total, Debt	$ (38)	$ (88)
Freddie Mac [Member]
Schedule of Available-for-sale Securities [Line Items]
Number of Securities, Debt | Security	5	1
Fair Value, Less than Twelve Months, Debt	$ 3,965	$ 330
Gross Unrealized Losses, Less than Twelve Months, Debt	(31)	(2)
Fair Value Total, Debt	3,965	330
Gross Unrealized Losses Total, Debt	$ (31)	$ (2)
Governmental National Mortgage Association [Member]
Schedule of Available-for-sale Securities [Line Items]
Number of Securities, Debt | Security	4	7
Fair Value, Less than Twelve Months, Debt	$ 409	$ 4,428
Gross Unrealized Losses, Less than Twelve Months, Debt	(1)	(61)
Fair Value, Twelve Months or Greater, Debt	1,817	2,996
Gross Unrealized Losses, Twelve Months or Greater, Debt	(12)	(38)
Fair Value Total, Debt	2,226	7,424
Gross Unrealized Losses Total, Debt	$ (13)	$ (99)
Corporate Obligations [Member]
Schedule of Available-for-sale Securities [Line Items]
Number of Securities, Debt | Security	17	20
Fair Value, Less than Twelve Months, Debt	$ 11,396	$ 13,213
Gross Unrealized Losses, Less than Twelve Months, Debt	(274)	(93)
Fair Value, Twelve Months or Greater, Debt	1,926	6,573
Gross Unrealized Losses, Twelve Months or Greater, Debt	(67)	(428)
Fair Value Total, Debt	13,322	19,786
Gross Unrealized Losses Total, Debt	$ (341)	$ (521)
Other Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Number of Securities, Debt | Security	8	10
Fair Value, Twelve Months or Greater, Debt	$ 2,453	$ 3,879
Gross Unrealized Losses, Twelve Months or Greater, Debt	(122)	(150)
Fair Value Total, Debt	2,453	3,879
Gross Unrealized Losses Total, Debt	$ (122)	$ (150)

XML

Loans Receivable, Net and Allowance for Loan Losses - Summary of Loans Receivable (Detail) - USD ($)	Jun. 30, 2021	Mar. 31, 2021	Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2020	Sep. 30, 2019
Real estate loans:
Total Loans	$ 1,386,309,000		$ 1,433,374,000
Less allowance for loan losses	17,693,000	$ 17,154,000	15,400,000	$ 14,330,000	$ 13,179,000	$ 12,630,000
Net loans	1,368,616,000		1,417,974,000
Obligations of States and Political Subdivisions [Member]
Real estate loans:
Total Loans	57,070,000		79,230,000
Less allowance for loan losses	399,000	487,000	555,000	544,000	359,000	343,000
Home Equity Loans and Lines of Credit [Member]
Real estate loans:
Total Loans	38,571,000		40,800,000
Less allowance for loan losses	321,000	337,000	337,000	336,000	351,000	329,000
Auto Loans [Member]
Real estate loans:
Total Loans	18,805,000		39,795,000
Less allowance for loan losses	343,000	439,000	780,000	963,000	1,104,000	1,384,000
Other [Member]
Real estate loans:
Total Loans	1,600,000		2,293,000
Less allowance for loan losses	20,000	20,000	25,000	24,000	29,000	28,000
Residential [Member] | Real Estate Loans [Member]
Real estate loans:
Total Loans	584,368,000		610,172,000
Less allowance for loan losses	4,209,000	4,299,000	4,301,000	4,367,000	4,330,000	4,243,000
Construction [Member] | Real Estate Loans [Member]
Real estate loans:
Total Loans	12,236,000		11,853,000
Less allowance for loan losses	156,000	117,000	127,000	103,000	55,000	53,000
Commercial [Member]
Real estate loans:
Net loans	29,800,000
Commercial [Member] | Real Estate Loans [Member]
Real estate loans:
Total Loans	578,506,000		509,628,000
Less allowance for loan losses	9,527,000	8,943,000	7,209,000	6,870,000	4,563,000	3,806,000
Commercial Loans [Member]
Real estate loans:
Total Loans	95,153,000		139,603,000
Less allowance for loan losses	1,658,000	$ 1,770,000	$ 874,000	$ 974,000	$ 2,180,000	$ 1,870,000
Net loans	$ 481,000

XML

Loans Receivable, Net and Allowance for Loan Losses - Additional Information (Detail)	3 Months Ended		9 Months Ended		12 Months Ended
	Jun. 30, 2021 USD ($) Contract	Jun. 30, 2020 Contract	Jun. 30, 2021 USD ($) Loan Contract Customer	Jun. 30, 2020 USD ($) Contract	Sep. 30, 2020 USD ($) Loan
Accounts, Notes, Loans and Financing Receivable [Line Items]
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
Payment relief loan reported as percentage of loans outstanding	2.30%		2.30%
Loan, total	$ 1,368,616,000		$ 1,368,616,000		$ 1,417,974,000
Number of Contracts | Contract		0
Number of troubled debt restructuring loans granted interest rate concession | Contract	5		6	1
Troubled debt restructurings loans granted interest rate concession	$ 7,700,000		$ 7,800,000	$ 534,000
Number of troubled debt restructurings, loan modified, defaulted within one year of modification | Contract	0	0	0	0
Mortgage Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan, total	$ 1,100,000		$ 1,100,000
Mortgage Loans [Member] | Payment Deferrals or Payments of Interest Only [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan, total	1,100,000		$ 1,100,000
Number of customers | Customer			5
Commercial Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan, total	481,000		$ 481,000
Commercial Loans [Member] | Payment Deferrals or Payments of Interest Only [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan, total	30,300,000		$ 30,300,000
Number of customers | Customer			15
Commercial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan, total	29,800,000		$ 29,800,000
Paycheck Protection Program [Member] | Commercial Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of loans | Loan			442		673
Loans originated	$ 44,200,000		$ 44,200,000		$ 76,800,000
Guaranteed loans maturity period			two or five years
Paycheck Protection Program [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Proceeds from loans			$ 2,400,000

XML

Loans Receivable, Net and Allowance for Loan Losses - Summary of Additional Information Regarding Loans Acquired and Accounted (Detail) - USD ($) $ in Thousands	Jun. 30, 2021	Sep. 30, 2020
Accounts, Notes, Loans and Financing Receivable [Line Items]
Carrying amount	$ 1,386,309	$ 1,433,374
Loans Acquired with Deteriorated Credit Quality [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding balance	942	1,086
Carrying amount	$ 880	$ 1,025

XML

Loans Receivable, Net and Allowance for Loan Losses - Schedule of Loans Evaluated for Impairment (Detail) - USD ($) $ in Thousands	Jun. 30, 2021	Sep. 30, 2020
Financing Receivable, Recorded Investment [Line Items]
Total Loans	$ 1,386,309	$ 1,433,374
Individually Evaluated for Impairment	19,317	17,204
Collectively Evaluated for Impairment	1,366,112	1,415,145
Loans Acquired with Deteriorated Credit Quality [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	880	1,025
Obligations of States and Political Subdivisions [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	57,070	79,230
Collectively Evaluated for Impairment	57,070	79,230
Home Equity Loans and Lines of Credit [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	38,571	40,800
Individually Evaluated for Impairment	92	117
Collectively Evaluated for Impairment	38,479	40,683
Auto Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	18,805	39,795
Individually Evaluated for Impairment	73	210
Collectively Evaluated for Impairment	18,732	39,585
Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	1,600	2,293
Individually Evaluated for Impairment	9	11
Collectively Evaluated for Impairment	1,591	2,282
Residential [Member] | Real Estate Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	584,368	610,172
Individually Evaluated for Impairment	2,493	3,949
Collectively Evaluated for Impairment	581,875	606,223
Construction [Member] | Real Estate Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	12,236	11,853
Collectively Evaluated for Impairment	12,236	11,853
Commercial [Member] | Real Estate Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	578,506	509,628
Individually Evaluated for Impairment	11,330	11,322
Collectively Evaluated for Impairment	566,296	497,281
Commercial [Member] | Real Estate Loans [Member] | Loans Acquired with Deteriorated Credit Quality [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	880	1,025
Commercial Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	95,153	139,603
Individually Evaluated for Impairment	5,320	1,595
Collectively Evaluated for Impairment	$ 89,833	$ 138,008

XML

Loans Receivable, Net and Allowance for Loan Losses - Schedule of Investment and Unpaid Principal Balances for Impaired Loans (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Sep. 30, 2020
Financing Receivable, Impaired [Line Items]
Recorded Investment	$ 19,317		$ 19,317		$ 17,204
Unpaid Principal Balance	22,933		22,933		21,052
Associated Allowance	887		887		221
Average Recorded Investment	20,671	$ 12,166	18,771	$ 9,438
Interest Income Recognized	8	2	15	8
With no Specific Allowance Recorded [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment	14,163		14,163		9,641
Unpaid Principal Balance	17,719		17,719		13,412
Average Recorded Investment	10,625	11,364	11,442	8,660
Interest Income Recognized	8	2	14	8
With an Allowance Recorded [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment	5,154		5,154		7,563
Unpaid Principal Balance	5,214		5,214		7,640
Associated Allowance	887		887		221
Average Recorded Investment	10,046	802	7,329	778
Interest Income Recognized			1
Home Equity Loans and Lines of Credit [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment	92		92		117
Unpaid Principal Balance	180		180		222
Average Recorded Investment	90	250	98	255
Home Equity Loans and Lines of Credit [Member] | With no Specific Allowance Recorded [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment	92		92		117
Unpaid Principal Balance	180		180		222
Average Recorded Investment	90	244	98	253
Home Equity Loans and Lines of Credit [Member] | With an Allowance Recorded [Member]
Financing Receivable, Impaired [Line Items]
Average Recorded Investment		6		2
Auto Loans [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment	73		73		210
Unpaid Principal Balance	99		99		274
Associated Allowance					43
Average Recorded Investment	62	159	80	258
Interest Income Recognized		1	1	1
Auto Loans [Member] | With no Specific Allowance Recorded [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment	73		73		72
Unpaid Principal Balance	99		99		131
Average Recorded Investment	50	74	52	130
Interest Income Recognized		1		1
Auto Loans [Member] | With an Allowance Recorded [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment					138
Unpaid Principal Balance					143
Associated Allowance					43
Average Recorded Investment	12	85	28	128
Interest Income Recognized			1
Other [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment	9		9		11
Unpaid Principal Balance	21		21		22
Average Recorded Investment	10	13	11	22
Other [Member] | With no Specific Allowance Recorded [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment	9		9		11
Unpaid Principal Balance	21		21		22
Average Recorded Investment	10	13	11	14
Other [Member] | With an Allowance Recorded [Member]
Financing Receivable, Impaired [Line Items]
Average Recorded Investment				8
Residential [Member] | Real Estate Loans [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment	2,493		2,493		3,949
Unpaid Principal Balance	3,700		3,700		5,341
Associated Allowance	18		18		26
Average Recorded Investment	1,253	3,963	1,475	4,104
Interest Income Recognized	2	1	3	2
Residential [Member] | Real Estate Loans [Member] | With no Specific Allowance Recorded [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment	2,384		2,384		3,699
Unpaid Principal Balance	3,587		3,587		5,070
Average Recorded Investment	1,107	3,602	1,304	3,800
Interest Income Recognized	2	1	3	2
Residential [Member] | Real Estate Loans [Member] | With an Allowance Recorded [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment	109		109		250
Unpaid Principal Balance	113		113		271
Associated Allowance	18		18		26
Average Recorded Investment	146	361	171	304
Commercial [Member] | Real Estate Loans [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment	11,330		11,330		11,322
Unpaid Principal Balance	13,337		13,337		13,511
Associated Allowance	21		21		132
Average Recorded Investment	12,407	5,290	13,316	3,442
Interest Income Recognized	6		11	1
Commercial [Member] | Real Estate Loans [Member] | With no Specific Allowance Recorded [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment	10,929		10,929		4,203
Unpaid Principal Balance	12,922		12,922		6,342
Average Recorded Investment	7,422	5,108	8,408	3,203
Interest Income Recognized	6		11	1
Commercial [Member] | Real Estate Loans [Member] | With an Allowance Recorded [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment	401		401		7,119
Unpaid Principal Balance	415		415		7,169
Associated Allowance	21		21		132
Average Recorded Investment	4,985	182	4,908	239
Commercial Loans [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment	5,320		5,320		1,595
Unpaid Principal Balance	5,596		5,596		1,682
Associated Allowance	848		848		20
Average Recorded Investment	6,849	2,491	3,791	1,357
Interest Income Recognized				4
Commercial Loans [Member] | With no Specific Allowance Recorded [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment	676		676		1,539
Unpaid Principal Balance	910		910		1,625
Average Recorded Investment	1,946	2,323	1,569	1,260
Interest Income Recognized				4
Commercial Loans [Member] | With an Allowance Recorded [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment	4,644		4,644		56
Unpaid Principal Balance	4,686		4,686		57
Associated Allowance	848		848		$ 20
Average Recorded Investment	$ 4,903	$ 168	$ 2,222	$ 97

XML

Loans Receivable, Net and Allowance for Loan Losses - Classes of Loan Portfolio, Internal Risk Rating System (Detail) - USD ($) $ in Thousands	Jun. 30, 2021	Sep. 30, 2020
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loan, total	$ 1,368,616	$ 1,417,974
Commercial And Municipal Portfolio Segment
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loan, total	730,729	728,461
Commercial And Municipal Portfolio Segment | Commercial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loan, total	578,506	509,628
Commercial And Municipal Portfolio Segment | Commercial Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loan, total	95,153	139,603
Commercial And Municipal Portfolio Segment | Obligations of States and Political Subdivisions [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loan, total	57,070	79,230
Commercial And Municipal Portfolio Segment | Pass [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loan, total	686,161	696,565
Commercial And Municipal Portfolio Segment | Pass [Member] | Commercial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loan, total	539,774	479,475
Commercial And Municipal Portfolio Segment | Pass [Member] | Commercial Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loan, total	89,317	137,860
Commercial And Municipal Portfolio Segment | Pass [Member] | Obligations of States and Political Subdivisions [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loan, total	57,070	79,230
Commercial And Municipal Portfolio Segment | Special Mention [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loan, total	16,581	15,022
Commercial And Municipal Portfolio Segment | Special Mention [Member] | Commercial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loan, total	16,422	15,022
Commercial And Municipal Portfolio Segment | Special Mention [Member] | Commercial Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loan, total	159
Commercial And Municipal Portfolio Segment | Substandard [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loan, total	27,987	16,874
Commercial And Municipal Portfolio Segment | Substandard [Member] | Commercial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loan, total	22,310	15,131
Commercial And Municipal Portfolio Segment | Substandard [Member] | Commercial Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loan, total	$ 5,677	$ 1,743

XML

Loans Receivable, Net and Allowance for Loan Losses - Schedule of Performing or Non-Performing Loans (Detail) - USD ($) $ in Thousands	Jun. 30, 2021	Sep. 30, 2020
Financing Receivable, Recorded Investment [Line Items]
Total	$ 1,368,616	$ 1,417,974
Consumer Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	655,580	704,913
Home Equity Loans and Lines of Credit [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	38,571	40,800
Auto Loans [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	18,805	39,795
Other [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	1,600	2,293
Performing [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	651,924	699,837
Performing [Member] | Home Equity Loans and Lines of Credit [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	38,408	40,581
Performing [Member] | Auto Loans [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	18,725	39,572
Performing [Member] | Other [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	1,585	2,282
Non-performing [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	3,656	5,076
Non-performing [Member] | Home Equity Loans and Lines of Credit [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	163	219
Non-performing [Member] | Auto Loans [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	80	223
Non-performing [Member] | Other [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	15	11
Residential [Member] | Real Estate Loans [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	584,368	610,172
Residential [Member] | Performing [Member] | Real Estate Loans [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	580,970	605,549
Residential [Member] | Non-performing [Member] | Real Estate Loans [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	3,398	4,623
Construction [Member] | Real Estate Loans [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	12,236	11,853
Construction [Member] | Performing [Member] | Real Estate Loans [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	$ 12,236	$ 11,853

XML

Loans Receivable, Net and Allowance for Loan Losses - Classes of Loan Portfolio Summarized by Aging Categories (Detail) - USD ($) $ in Thousands	Jun. 30, 2021	Sep. 30, 2020
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	$ 1,363,235	$ 1,409,687
31-60 Days Past Due	901	2,711
61-89 Days Past Due	418	410
Non-accrual	20,875	19,541
Total Past Due	22,194	22,662
Purchased Credit Impaired, Accruing	227	236
Purchased Credit Impaired, Nonaccrual	653	789
Total Loans	1,386,309	1,433,374
Obligations of States and Political Subdivisions [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	57,070	79,230
Total Loans	57,070	79,230
Home Equity Loans and Lines of Credit [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	38,103	40,533
31-60 Days Past Due	222	48
61-89 Days Past Due	83
Non-accrual	163	219
Total Past Due	468	267
Total Loans	38,571	40,800
Auto Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	18,495	38,971
31-60 Days Past Due	219	593
61-89 Days Past Due	11	8
Non-accrual	80	223
Total Past Due	310	824
Total Loans	18,805	39,795
Other [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	1,585	2,282
Non-accrual	15	11
Total Past Due	15	11
Total Loans	1,600	2,293
Residential [Member] | Real Estate Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	580,186	604,168
31-60 Days Past Due	460	979
61-89 Days Past Due	324	402
Non-accrual	3,398	4,623
Total Past Due	4,182	6,004
Total Loans	584,368	610,172
Construction [Member] | Real Estate Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	12,236	11,853
Total Loans	12,236	11,853
Commercial [Member] | Real Estate Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	565,745	494,881
31-60 Days Past Due		1,085
Non-accrual	11,881	12,637
Total Past Due	11,881	13,722
Purchased Credit Impaired, Accruing	227	236
Purchased Credit Impaired, Nonaccrual	653	789
Total Loans	578,506	509,628
Commercial Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	89,815	137,769
31-60 Days Past Due		6
Non-accrual	5,338	1,828
Total Past Due	5,338	1,834
Total Loans	$ 95,153	$ 139,603

XML

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, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Sep. 30, 2020
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance, Beginning of period	$ 17,154	$ 13,179	$ 15,400	$ 12,630
Charge-offs	(273)	(217)	(597)	(924)
Recoveries	212	68	490	449
Provision	600	1,300	2,400	2,175
Balance, End of period	17,693	14,330	17,693	14,330
Individually evaluated for impairment	887		887		$ 221
Collectively evaluated for impairment	16,806		16,806		15,179
Commercial Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance, Beginning of period	1,770	2,180	874	1,870
Charge-offs	(200)		(209)
Recoveries				1
Provision	88	(1,206)	993	(897)
Balance, End of period	1,658	974	1,658	974
Individually evaluated for impairment	848		848		20
Collectively evaluated for impairment	810		810		854
Unallocated [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance, Beginning of period	742	208	1,192	574
Provision	318	(59)	(132)	(425)
Balance, End of period	1,060	149	1,060	149
Collectively evaluated for impairment	1,060		1,060		1,192
Real Estate Loans [Member] | Residential [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance, Beginning of period	4,299	4,330	4,301	4,243
Charge-offs	(55)	(42)	(59)	(72)
Recoveries	149	1	213	7
Provision	(184)	78	(246)	189
Balance, End of period	4,209	4,367	4,209	4,367
Individually evaluated for impairment	18		18		26
Collectively evaluated for impairment	4,191		4,191		4,275
Real Estate Loans [Member] | Construction [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance, Beginning of period	117	55	127	53
Provision	39	48	29	50
Balance, End of period	156	103	156	103
Collectively evaluated for impairment	156		156		127
Real Estate Loans [Member] | Commercial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance, Beginning of period	8,943	4,563	7,209	3,806
Charge-offs		(4)	(76)	(54)
Recoveries	20	17	56	77
Provision	564	2,294	2,338	3,041
Balance, End of period	9,527	6,870	9,527	6,870
Individually evaluated for impairment	21		21		132
Collectively evaluated for impairment	9,506		9,506		7,077
Obligations of States and Political Subdivisions [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance, Beginning of period	487	359	555	343
Provision	(88)	185	(156)	201
Balance, End of period	399	544	399	544
Collectively evaluated for impairment	399		399		555
Home Equity Loans and Lines of Credit [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance, Beginning of period	337	351	337	329
Charge-offs		(21)	(8)	(61)
Recoveries	1	1	4	4
Provision	(17)	5	(12)	64
Balance, End of period	321	336	321	336
Collectively evaluated for impairment	321		321		337
Auto Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance, Beginning of period	439	1,104	780	1,384
Charge-offs	(18)	(135)	(244)	(717)
Recoveries	42	49	217	358
Provision	(120)	(55)	(410)	(62)
Balance, End of period	343	963	343	963
Individually evaluated for impairment					43
Collectively evaluated for impairment	343		343		737
Other [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance, Beginning of period	20	29	25	28
Charge-offs		(15)	(1)	(20)
Recoveries				2
Provision		10	(4)	14
Balance, End of period	20	$ 24	20	$ 24
Collectively evaluated for impairment	$ 20		$ 20		$ 25

XML

Loans Receivable, Net and Allowance for Loan Losses - Summary of Troubled Debt Restructuring Granted (Detail) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2021 USD ($) Contract	Jun. 30, 2020 Contract	Jun. 30, 2021 USD ($) Contract	Jun. 30, 2020 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	1
Pre-Modification Outstanding Recorded Investment	$ 343		$ 416	$ 534
Post-Modification Outstanding Recorded Investment	$ 343		$ 416	$ 534
Real Estate Loans [Member] | Commercial [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts | Contract	4		4
Pre-Modification Outstanding Recorded Investment	$ 7,353		$ 7,353
Post-Modification Outstanding Recorded Investment	$ 7,353		$ 7,353
Troubled Debt Restructurings [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts | Contract	5		6	1
Pre-Modification Outstanding Recorded Investment	$ 7,696		$ 7,769	$ 534
Post-Modification Outstanding Recorded Investment	$ 7,696		$ 7,769	$ 534

XML

Deposits - Schedule of Deposits by Major Classifications (Detail) - USD ($) $ in Thousands	Jun. 30, 2021	Sep. 30, 2020
Deposits Liabilities Disclosures [Abstract]
Non-interest bearing demand accounts	$ 277,814	$ 242,642
Interest bearing demand accounts	473,119	274,722
Money market accounts	410,310	401,863
Savings and club accounts	187,573	160,975
Certificates of deposit	241,256	463,494
Total	$ 1,590,072	$ 1,543,696

XML

Net Periodic Benefit Cost-Defined Benefit Plan - Summary of the Components of Net Periodic Benefit Cost (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Compensation Related Costs [Abstract]
Interest Cost	$ 112	$ 121	$ 338	$ 364
Expected return on plan assets	(289)	(268)	(867)	(807)
Amortization of net loss from earlier periods	56		166
Net periodic benefit cost	$ (121)	$ (147)	$ (363)	$ (443)

XML

Equity Incentive Plan - Additional Information (Detail) - USD ($)		3 Months Ended		9 Months Ended
	Mar. 02, 2016	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Compensation Related Costs Disclosure [Line Items]
Share-based compensation expense				$ 421,000	$ 415,000
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		$ 95,000	$ 82,000	$ 421,000	$ 415,000
Expected future expense				$ 679,000
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

XML

Equity Incentive Plan - Schedule of Restricted Stock Option Activity (Detail) - Restricted Stock [Member]	9 Months Ended
	Jun. 30, 2021 $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of Restricted Stock, Nonvested at September 30, 2020 | shares	35,245
Number of Restricted Stock, Granted | shares	43,939
Number of Restricted Stock, Vested | shares	(10,834)
Number of Restricted Stock, Nonvested at June 30, 2021 | shares	68,350
Weighted-average Grant Date Fair Value, Nonvested at September 30, 2020 | $ / shares	$ 16.15
Weighted-average Grant Date Fair Value, Granted | $ / shares	12.56
Weighted-average Grant Date Fair Value, Vested | $ / shares	14.75
Weighted-average Grant Date Fair Value, Nonvested at June 30, 2021 | $ / shares	$ 14.06

XML

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, 2021	Sep. 30, 2020
Assets
Total debt securities	$ 148,170	$ 212,484
Fair Value, Measurements, Recurring [Member]
Assets
Total debt securities	148,170	212,484
Equity securities- financial services	32	17
Derivatives and hedging activities	2,358	2,192
Liabilities
Derivatives and hedging activities	1,763	7,002
Fair Value, Measurements, Recurring [Member] | Mortgage-Backed Securities [Member]
Assets
Total debt securities	60,792	91,431
Fair Value, Measurements, Recurring [Member] | Obligations of States and Political Subdivisions [Member]
Assets
Total debt securities	17,796	21,931
Fair Value, Measurements, Recurring [Member] | U.S. Government Agency Securities [Member]
Assets
Total debt securities	2,011	8,048
Fair Value, Measurements, Recurring [Member] | Corporate Obligations [Member]
Assets
Total debt securities	55,351	51,474
Fair Value, Measurements, Recurring [Member] | Other Debt Securities [Member]
Assets
Total debt securities	12,220	14,610
Fair Value, Measurements, Recurring [Member] | U.S. Government Treasury Securities [Member]
Assets
Total debt securities		24,990
Fair Value, Measurements, Recurring [Member] | Level I [Member]
Assets
Equity securities- financial services	32	17
Fair Value, Measurements, Recurring [Member] | Level II [Member]
Assets
Total debt securities	134,890	204,224
Derivatives and hedging activities	2,358	2,192
Liabilities
Derivatives and hedging activities	1,763	7,002
Fair Value, Measurements, Recurring [Member] | Level II [Member] | Mortgage-Backed Securities [Member]
Assets
Total debt securities	60,792	91,431
Fair Value, Measurements, Recurring [Member] | Level II [Member] | Obligations of States and Political Subdivisions [Member]
Assets
Total debt securities	17,796	21,931
Fair Value, Measurements, Recurring [Member] | Level II [Member] | U.S. Government Agency Securities [Member]
Assets
Total debt securities	2,011	8,048
Fair Value, Measurements, Recurring [Member] | Level II [Member] | Corporate Obligations [Member]
Assets
Total debt securities	42,071	43,214
Fair Value, Measurements, Recurring [Member] | Level II [Member] | Other Debt Securities [Member]
Assets
Total debt securities	12,220	14,610
Fair Value, Measurements, Recurring [Member] | Level II [Member] | U.S. Government Treasury Securities [Member]
Assets
Total debt securities		24,990
Fair Value, Measurements, Recurring [Member] | Level III [Member]
Assets
Total debt securities	13,280	8,260
Fair Value, Measurements, Recurring [Member] | Level III [Member] | Corporate Obligations [Member]
Assets
Total debt securities	$ 13,280	$ 8,260

XML

Fair Value - Schedule of Changes in Fair Value of Level III Investments (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Fair Value Disclosures [Abstract]
Beginning balance	$ 4,678	$ 7,821	$ 8,260	$ 7,792
Purchases, sales, issuances, settlements, net	8,541	(1,000)	4,791	(1,000)
Total unrealized gain (loss):
Included in other comprehensive income (loss)	61	(34)	229	(5)
Ending balance	$ 13,280	$ 6,787	$ 13,280	$ 6,787

XML

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, 2021	Sep. 30, 2020
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Foreclosed real estate	$ 373	$ 269
Fair Value, Measurements, Nonrecurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Foreclosed real estate	373	269
Impaired loans	18,430	16,983
Level III [Member] | Fair Value, Measurements, Nonrecurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Foreclosed real estate	373	269
Impaired loans	$ 18,430	$ 16,983

XML

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, 2021 USD ($)	Sep. 30, 2020 USD ($)
Impaired Loans [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value Estimate	$ 18,430	$ 16,983
Servicing Asset Valuation Technique Extensible List	essa:AppraisalOfCollateralMember	essa:AppraisalOfCollateralMember
Servicing Asset, Measurement Input [Extensible List]	essa:AppraisalAdjustmentsMember	essa:AppraisalAdjustmentsMember
Fair value input appraisal adjustments	0.211	0.205
Impaired Loans [Member] | Minimum [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value input appraisal adjustments	0.00	0.00
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	$ 373	$ 269
Servicing Asset Valuation Technique Extensible List	essa:AppraisalOfCollateralMember	essa:AppraisalOfCollateralMember
Servicing Asset, Measurement Input [Extensible List]	essa:AppraisalAdjustmentsMember	essa:AppraisalAdjustmentsMember
Fair value input appraisal adjustments	0.298	0.257
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	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	0.35

XML

Fair Value - Additional Information (Detail) $ in Thousands	Jun. 30, 2021 USD ($) Loan	Sep. 30, 2020 USD ($) Loan
Fair Value Disclosures [Abstract]
Number of impaired loans | Loan	61	111
Impaired loans, carrying value	$ 19,300	$ 17,200
Impaired loans, valuation allowance	887	221
Impaired loans, net fair value	$ 18,400	$ 17,000

XML

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, 2021	Sep. 30, 2020
Financial assets:
Investment securities held to maturity	$ 18,012
Loans receivable, net	18,400	$ 17,000
Financial liabilities:
Other borrowings		14,164
Carrying Value [Member]
Financial assets:
Investment securities held to maturity	17,982
Loans receivable, net	1,368,616	1,417,974
Mortgage servicing rights	694	393
Financial liabilities:
Deposits	1,590,072	1,543,696
Other borrowings		14,164
Estimated Fair Value [Member]
Financial assets:
Investment securities held to maturity	18,012
Loans receivable, net	1,381,913	1,426,962
Mortgage servicing rights	816	393
Financial liabilities:
Deposits	1,590,340	1,547,831
Other borrowings		17,721
Estimated Fair Value [Member] | Level 1 [Member]
Financial liabilities:
Deposits	1,348,816	1,080,201
Estimated Fair Value [Member] | Level 3 [Member]
Financial assets:
Investment securities held to maturity	18,012
Loans receivable, net	1,381,913	1,426,962
Mortgage servicing rights	816	393
Financial liabilities:
Deposits	$ 241,524	467,630
Other borrowings		$ 17,721

XML

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, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Accumulated Other Comprehensive Income Loss [Line Items]
Beginning Balance	$ 198,608	$ 193,666	$ 191,397	$ 189,508
Ending Balance	199,252	193,685	199,252	193,685
Defined Benefit Pension Plan [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Beginning Balance	(3,519)	(1,527)	(3,432)	(1,527)
Amounts reclassified from accumulated other comprehensive income (loss)	(44)		(131)
Total other comprehensive income (loss)	(44)		(131)
Ending Balance	(3,563)	(1,527)	(3,563)	(1,527)
Unrealized Gains (Losses) on Securities Available for Sale [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Beginning Balance	2,154	4,987	3,167	807
Other comprehensive income (loss) before reclassifications	339	863	(345)	5,344
Amounts reclassified from accumulated other comprehensive income (loss)	(34)		(363)	(301)
Total other comprehensive income (loss)	305	863	(708)	5,043
Ending Balance	2,459	5,850	2,459	5,850
Derivatives [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Beginning Balance	587	(2,464)	(3,791)	(560)
Other comprehensive income (loss) before reclassifications	(463)	(1,859)	2,879	(3,717)
Amounts reclassified from accumulated other comprehensive income (loss)	343	85	1,379	39
Total other comprehensive income (loss)	(120)	(1,774)	4,258	(3,678)
Ending Balance	467	(4,238)	467	(4,238)
Accumulated Other Comprehensive Income/(Loss) [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Beginning Balance	(778)	996	(4,056)	(1,280)
Other comprehensive income (loss) before reclassifications	(124)	(996)	2,534	1,627
Amounts reclassified from accumulated other comprehensive income (loss)	265	85	885	(262)
Total other comprehensive income (loss)	141	(911)	3,419	1,365
Ending Balance	$ (637)	$ 85	$ (637)	$ 85

XML

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, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Schedule of Available-for-sale Securities [Line Items]
Interest expense	$ (1,251)	$ (3,653)	$ (4,883)	$ (12,952)
Income taxes	(801)	(876)	(2,506)	(2,286)
NET INCOME	4,026	3,777	12,501	10,594
Reclassification Out of Accumulated Other Comprehensive Income (Loss) [Member]
Schedule of Available-for-sale Securities [Line Items]
NET INCOME	(265)	(85)	(885)	262
Reclassification Out of Accumulated Other Comprehensive Income (Loss) [Member] | Unrealized Gains (Losses) on Securities Available for Sale [Member]
Schedule of Available-for-sale Securities [Line Items]
Gain on sale of investment securities available for sale, net	42		459	381
Income taxes	(8)		(96)	(80)
NET INCOME	34		363	301
Reclassification Out of Accumulated Other Comprehensive Income (Loss) [Member] | Derivatives [Member]
Schedule of Available-for-sale Securities [Line Items]
Interest expense	(434)	(108)	(1,745)	(50)
Income taxes	91	23	366	11
NET INCOME	(343)	$ (85)	(1,379)	$ (39)
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	56		166
Income taxes	(12)		(35)
NET INCOME	$ 44		$ 131

XML

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, 2021	Sep. 30, 2020
Other Assets [Member]
Derivatives Fair Value [Line Items]
Derivatives, Notional Amount	$ 220,108,000	$ 55,784,000
Fair Values of Derivative Instruments, Asset	2,358,000	2,192,000
Other Liabilities [Member]
Derivatives Fair Value [Line Items]
Derivatives, Notional Amount	197,665,000	505,784,000
Fair Values of Derivative Instruments, Liability	1,763,000	7,002,000
Brokered Deposits [Member] | Other Assets [Member]
Derivatives Fair Value [Line Items]
Derivatives, Notional Amount	150,000,000
Fair Values of Derivative Instruments, Asset	1,171,000
Brokered Deposits [Member] | Other Liabilities [Member]
Derivatives Fair Value [Line Items]
Derivatives, Notional Amount	95,000,000	410,000,000
Fair Values of Derivative Instruments, Liability	578,000	4,098,000
Commercial Loans [Member] | Other Assets [Member]
Derivatives Fair Value [Line Items]
Derivatives, Notional Amount	70,108,000	55,784,000
Fair Values of Derivative Instruments, Asset	1,187,000	2,192,000
Commercial Loans [Member] | Other Liabilities [Member]
Derivatives Fair Value [Line Items]
Derivatives, Notional Amount	102,665,000	70,784,000
Fair Values of Derivative Instruments, Liability	$ 1,185,000	2,204,000
FHLB Advances [Member] | Other Liabilities [Member]
Derivatives Fair Value [Line Items]
Derivatives, Notional Amount		25,000,000
Fair Values of Derivative Instruments, Liability		$ 700,000

XML

Derivatives and Hedging Activities - Additional Information (Detail)	3 Months Ended		9 Months Ended
	Jun. 30, 2021 USD ($) Contract	Jun. 30, 2020 USD ($)	Jun. 30, 2021 USD ($) Contract	Jun. 30, 2020 USD ($)	Sep. 30, 2020 USD ($)
Derivative Instruments And Hedging Activities Disclosures [Line Items]
Interest expense	$ 1,251,000	$ 3,653,000	$ 4,883,000	$ 12,952,000
Derivative liability, collateral against obligations	1,200,000		1,200,000		$ 7,500,000
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	434,000	$ 108,000	1,700,000	$ 50,000
Increase (decrease) in accrued interest payable	$ 835,000		$ 835,000
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, number of instruments | Contract	12		12
Derivative, notional principal amount	$ 245,000,000		$ 245,000,000
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	$ 173,000,000		$ 173,000,000

XML

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, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Derivative Instruments Gain Loss [Line Items]
Gain (Loss) Recognized in OCI on Derivative	$ (590)	$ (2,353)	$ 3,645	$ (4,705)
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	(156)	(2,244)	5,390	(4,655)
Gain (Loss) Reclassified from Accumulated OCI into Income	(434)	(108)	(1,745)	(50)
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	(156)	(2,244)	5,390	(4,655)
Designated as Hedging Instrument [Member] | Interest Rate Products [Member] | Cash Flow Hedges of Interest Rate Risk [Member] | Interest Expense [Member]
Derivative Instruments Gain Loss [Line Items]
Gain (Loss) Reclassified from Accumulated OCI into Income	$ (434)	$ (108)	$ (1,745)	$ (50)

XML

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

XML

Leases - Additional Information (Detail)	9 Months Ended
	Jun. 30, 2021
Lessee Lease Description [Line Items]
Lessee operating lease expiration year	2044
ASU No. 2016-02
Lessee Lease Description [Line Items]
Change in Accounting Principle, Accounting Standards Update, Adopted [true false]	true
Change in Accounting Principle, Accounting Standards Update, Adoption Date	Oct. 01, 2019

XML

Leases - Summary of Balance Sheet Operating Lease Right-of-Use Assets and Lease Liabilities (Detail) - USD ($) $ in Thousands	Jun. 30, 2021	Sep. 30, 2020
ASSETS
Operating lease right-of-use assets	$ 6,446	$ 7,082
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List]	Other Assets [Member]	Other Assets [Member]
LIABILITIES
Operating lease Liabilities	$ 6,580	$ 7,161
Operating Lease, Liability, Statement of Financial Position [Extensible List]	Other Liabilities [Member]	Other Liabilities [Member]

XML

Leases - Summary of Lease Term and Discount Rate (Detail)	Jun. 30, 2021
Weighted average remaining lease term
Operating leases	13 years 3 months 18 days
Weighted average discount rate
Operating leases	2.42%

XML

Leases - Summary of Components of Lease Cost (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Lease Cost [Abstract]
Operating lease cost	$ 264	$ 259	$ 791	$ 780
Variable lease cost	70	61	213	171
Net lease cost	$ 334	$ 320	$ 1,004	$ 951

XML

Leases - Summary of Future Minimum Lease Payments (Detail) - USD ($) $ in Thousands	Jun. 30, 2021	Sep. 30, 2020
Lease Cost [Abstract]
June 30, 2022	$ 886
June 30, 2023	704
June 30, 2024	641
June 30, 2025	505
June 30, 2026	507
Thereafter	4,619
Total future minimum lease payments	7,862
Amounts representing interest	1,282
Present Value of Net Future Minimum Lease Payments	$ 6,580	$ 7,161