Income Taxes

9 Months Ended

Jun. 30, 2025

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

At June 30, 2025 and September 30, 2024, the Company had a net operating loss deferred income tax asset of $19.9 million and $30.5 million, respectively. The gross federal and state net operating loss amount at June 30, 2025 was $82.0 million, which will carry forward indefinitely. The net operating loss will be applied to the Company's taxable income, subject to federal and state regulations regarding net operating loss usage limitations, until such time as it is fully utilized. Additionally, the Company had a $19.6 million and $12.8 million deferred tax asset related to the Bank's low income housing tax credits as of June 30, 2025 and September 30, 2024, respectively. These credits are not currently able to be fully utilized due to income tax return income limitations. Federal tax credits carry forward for 20 years.

The Company assesses the available positive and negative evidence surrounding the recoverability of its deferred tax assets and applies its judgment in estimating the amount of the valuation allowance necessary under the circumstances. At June 30, 2025 and September 30, 2024, the Company had a valuation allowance of $33 thousand and $27 thousand, respectively, related to the net operating losses generated by the Company's consolidated Kansas corporate income tax return as management believes there will not be sufficient taxable income to fully utilize these deferred tax assets before they begin to expire in 2028 and thereafter. For this reason, a valuation allowance was recorded for the related amounts at June 30, 2025 and September 30, 2024. No additional valuation allowances were recorded for the Company's other deferred tax assets as management believes it is more likely than not that these amounts will be realized through the reversal of the Company's existing taxable temporary differences and projected future taxable income.

During the three months ended June 30, 2025, the State of Kansas enacted a change in the tax law that is effective October 1, 2027 for the Company and the Bank. The State of Kansas is changing the way it attributes taxable income to the State, specifically changing from a three-factor apportionment (property, payroll and receipts) to a single, revenue-based method. Most of the Bank's property and payroll are located in Kansas, but a large amount of its revenue generating activities, predominantly loan interest income, are outside of Kansas. Therefore, the Bank is expecting a decrease in income apportioned to Kansas starting in fiscal year 2028 due to the tax law change. As a result, as of June 30, 2025, the Bank remeasured its state deferred tax assets and liabilities expected as of October 1, 2027. The Bank recorded an $857 thousand reduction in net state income tax expense during the current quarter related to this law change.

On July 4, 2025, the H.R. 1 - One Big Beautiful Bill Act ("OBBBA") was enacted into law. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others being phased in through 2027. The Company is currently evaluating the effect the OBBBA will have on the Company's consolidated financial condition and results of operations.