Income Taxes (Tables)

12 Months Ended

Sep. 30, 2022

Income Taxes.

Components of Income Tax Expense

	Year Ended September 30,
(in thousands)	2022		2021
Current:
Federal	$	5,081	$	2,594
State		540		242
Total current		5,621		2,836
Deferred:
Federal		1,055		394
State		735		(383)
Total deferred		1,790		11
Change in valuation allowance		(472)		354
Total income tax expense	$	6,939	$	3,201

Reconciliation of Reported Income Tax Expense

	Year Ended September 30,
	2022				2021
			Percentage				Percentage
			of Pre-tax				of Pre-tax
(in thousands)	Amount		Earnings		Amount		Earnings
Federal income tax expense computed by applying the statutory rate to income before income taxes	$	6,404	21.0	%	$	2,951	21.0	%
State taxes, net of federal benefit		1,156	3.8	%		48	0.3	%
Non-deductible transaction costs		(1)	—	%		204	1.5	%
Other		(148)	(0.5)	%		(356)	(2.5)	%
Change in valuation allowance		(472)	(1.5)	%		354	2.5	%
Income tax expense	$	6,939	22.8	%	$	3,201	22.8	%

Composition of Deferred Tax Assets and Liabilities

	September 30,
(in thousands)	2022		2021
Deferred tax assets:
Allowance for loan losses and other contingent liabilities	$	4,014	$	2,654
Net operating loss carryforwards		2,415		2,443
Compensation and related benefit obligations		1,323		775
Accrued SERP		1,062		1,288
Purchase accounting fair value adjustments		727		2,034
Unrealized loss on securities AFS		170		—
Organizational costs		63		153
Mortgage servicing rights		—		45
Total deferred tax assets		9,774		9,392
Deferred tax liabilities:
Deferred fees and costs		(2,718)		(883)
Depreciation		(951)		(771)
Mortgage servicing rights		(15)		—
Tax bad debt reserve		—		(204)
Unrealized gain on securities AFS		—		(70)
Other		(158)		(10)
Total deferred tax liabilities		(3,842)		(1,938)
Total		5,932		7,454
Valuation allowance		(3,424)		(3,896)
Net deferred tax asset	$	2,508	$	3,558