Fair Value Measurements and Disclosures about Fair Value of Financial Instruments (Tables)

3 Months Ended

Dec. 31, 2018

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

Financial Assets Measured at Fair Value on Recurring and Nonrecurring Basis

The tables below present the balances of financial assets and liabilities measured at fair value on a recurring and nonrecurring basis as of December 31, 2018 and September 30, 2018. The Company had no liabilities measured at fair value as of September 30, 2018.

	Carrying Value
	Level 1		Level 2		Level 3		Total
	(In thousands)
December 31, 2018:
Assets Measured - Recurring Basis:
Securities available for sale:
Agency mortgage-backed	$	-	$	24,193	$	-	$	24,193
Agency CMO		-		12,049		-		12,049
Privately-issued CMO		-		1,492		-		1,492
Privately-issued ABS		-		1,589		-		1,589
SBA certificates		-		1,318		-		1,318
Municipal		-		145,619		-		145,619
Total securities available for sale	$	-	$	186,260	$	-	$	186,260
Residential mortgage loans held for sale – fair value option elected	$	-	$	15,920	$	-	$	15,920
Derivative assets (included in other assets)	$	-	$	-	$	658	$	658
Liabilities Measured – Recurring Basis:
Derivative liabilities (included in other liabilities)	$	-	$	132	$	-	$	132
Assets Measured - Nonrecurring Basis:
Impaired loans:
Residential real estate	$	-	$	-	$	4,922	$	4,922
Commercial real estate		-		-		7,194		7,194
Land and land development		-		-		-		-
Commercial business		-		-		294		294
Consumer		-		-		301		301
Total impaired loans	$	-	$	-	$	12,711	$	12,711
SBA loans held for sale	$	-	$	-	$	22,032	$	22,032
Loan servicing rights	$	-	$	-	$	2,554	$	2,554
Other real estate owned, held for sale:
Residential real estate	$	-	$	-	$	122	$	122
Commercial real estate		-		-		110		110
Total other real estate owned	$	-	$	-	$	232	$	232

	Carrying Value
	Level 1		Level 2		Level 3		Total
	(In thousands)
September 30, 2018:
Assets Measured - Recurring Basis:
Securities available for sale:
Agency mortgage-backed	$	-	$	31,130	$	-	$	31,130
Agency CMO		-		10,441		-		10,441
Privately-issued CMO		-		1,579		-		1,579
Privately-issued ABS		-		1,884		-		1,884
SBA certificates		-		1,351		-		1,351
Municipal		-		137,988		-		137,988
Total securities available for sale	$	-	$	184,373	$	-	$	184,373
Residential mortgage loans held for sale – fair value option elected	$	-	$	9,952	$	-	$	9,952
Derivative assets (included in other assets)	$	-	$	41	$	380	$	421
Assets Measured - Nonrecurring Basis:
Impaired loans:
Residential real estate	$	-	$	-	$	5,100	$	5,100
Commercial real estate		-		-		7,227		7,227
Land and land development		-		-		27		27
Commercial business		-		-		231		231
Consumer		-		-		231		231
Total impaired loans	$	-	$	-	$	12,816	$	12,816
Residential mortgage loans held for sale – fair value option not elected	$	-	$	514	$	-	$	514
SBA loans held for sale	$	-	$	21,659	$	-	$	21,659
Loan servicing rights	$	-	$	-	$	2,405	$	2,405
Other real estate owned, held for sale:
Residential real estate	$	-	$	-	$	103	$	103
Total other real estate owned	$	-	$	-	$	103	$	103

Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation

The table below presents a reconciliation of derivative assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three months ended December 31, 2018 and 2017:

(In thousands)	2018			2017
Beginning balance	$	380		$	-
Unrealized gains recognized in earnings		658			-
Net settlements		(380	)		-
Ending balance	$	658		$	-

Fair Value Measurement Inputs and Valuation Techniques

The table below presents information about significant unobservable inputs (Level 3) used in the valuation of assets measured at fair value on a recurring basis as of December 31, 2018 and September 30, 2018.

Financial Instrument	Significant Unobservable Inputs	Range of Inputs	Range of Inputs
		December 31, 2018	September 30, 2018
Interest rate lock commitments	Pull-through rate	69% - 97%	72% - 95%
	Direct costs to close	1%	1% - 3%

Fair Value, by Balance Sheet Grouping

The table below presents the difference between the aggregate fair value and the aggregate remaining principal balance for residential mortgage loans held for sale for which the fair value option had been elected as of December 31, 2018 and September 30, 2018.

(In thousands)	Aggregate Fair Value December 31, 2018		Aggregate Principal Balance December 31, 2018		Difference
Residential mortgage loans held for sale	$	15,920	$	15,331	$	589

(In thousands)	Aggregate Fair Value September 30, 2018		Aggregate Principal Balance September 30, 2018		Difference
Residential mortgage loans held for sale	$	9,952	$	9,695	$	257

Fair Value, Measured on Recurring Basis, Gain (Loss) Included in Earnings

The table below presents gains and losses and interest included in earnings related to financial assets measured at fair value under the fair value option for the three month periods ended December 31, 2018 and 2017:

(In thousands)	2018		2017
Gains – included in mortgage banking income	$	589	$	-
Interest income		154		-
	$	743	$	-

Schedule of Carrying Values and Estimated Fair Values of Debt Instruments

The fair value of loans at September 30, 2018 was measured using an entry price notion.

	Carrying		Fair Value Measurements Using:
	Amount		Level 1		Level 2		Level 3
	(In thousands)
December 31, 2018:
Financial assets:
Cash and due from banks	$	11,524	$	11,524	$	-	$	-
Interest-bearing deposits with banks		24,820		24,820		-		-
Interest-bearing time deposits		2,991		-		2,978		-
Securities available for sale		186,260		-		186,260		-
Securities held to maturity		2,570		-		2,897		-
Residential mortgage loans held for sale		15,920		-		15,920		-
SBA loans held for sale		22,032		-		-		24,128
Loans, net		734,061		-		-		698,595
FRB and FHLB stock		10,196		N/A		N/A		N/A
Accrued interest receivable		4,808		-		4,808		-
Loan servicing rights (included in other assets)		2,554		-		-		2,614
Derivative assets (included in other    assets)		658		-		-		658
Financial liabilities:
Deposits		832,073		-		-		830,814
Short-term repurchase agreements		1,352		-		1,352		-
Borrowings from FHLB		107,019		-		102,984		-
Subordinated note		19,678		-		19,678		-
Accrued interest payable		996		-		996		-
Advance payments by borrowers for taxes and insurance		855		-		855		-
Derivative liabilities (included in other liabilities)		132		-		132		-

	Carrying		Fair Value Measurements Using:
	Amount		Level 1		Level 2		Level 3
	(In thousands)
September 30, 2018:
Financial assets:
Cash and due from banks	$	14,191	$	14,191	$	-	$	-
Interest-bearing deposits with banks		28,083		28,083		-		-
Interest-bearing time deposits		2,501		-		2,494		-
Securities available for sale		184,373		-		184,373		-
Securities held to maturity		2,607		-		2,896		-
Residential mortgage loans held for sale		10,466		-		10,476		-
SBA loans held for sale		21,659		-		23,488		-
Loans, net		704,271		-		-		673,652
FRB and FHLB stock		9,621		N/A		N/A		N/A
Accrued interest receivable		4,287		-		4,287		-
Loan servicing rights (included in other assets)		2,405		-		-		2,405
Derivative assets (included in other assets)		421		-		41		380
Financial liabilities:
Deposits		811,112		-		-		809,305
Short-term repurchase agreements		1,352		-		1,352		-
Borrowings from FHLB		90,000		-		84,175		-
Subordinated note		19,661		-		19,661		-
Accrued interest payable		743		-		743		-
Advance payments by borrowers for taxes and insurance		1,218		-		1,218		-