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Fair Value Measurements
 12 Months Ended
Sep. 30, 2022
Fair Value Disclosures [Abstract]  
Fair Value Measurements Fair Value Measurements
Fair value is defined under GAAP as the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. GAAP requires that valuation techniques maximize the use of observable inputs and minimize the use of unobservable inputs. GAAP also establishes a fair value hierarchy which prioritizes the valuation inputs into three levels. Based on the underlying inputs, each fair value measurement in its entirety is reported in one of three levels. These levels are:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

Level 2: Significant observable inputs other than quoted prices included within Level 1, such as quoted prices for similar (as opposed to identical) assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs other than quoted prices that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability based on the best information available in the circumstances.

The Company's assets measured at fair value on a recurring basis consist of investment securities available for sale and investments in equity securities. The estimated fair values of MBS are based upon market prices of similar securities or observable inputs (Level 2). The estimated fair values of mutual funds are based upon quoted market prices (Level 1).

The Company had no liabilities measured at fair value on a recurring basis at September 30, 2022 and 2021. The Company's assets measured at estimated fair value on a recurring basis at September 30, 2022 and 2021 are as follows (dollars in thousands):
 Estimated Fair Value
September 30, 2022Level 1Level 2Level 3Total
Available for sale investment securities    
MBS: U.S. government agencies
$— $41,415 $— $41,415 
Investments in equity securities
Mutual funds
835 — — 835 
Total$835 $41,415 $— $42,250 
September 30, 2021
Available for sale investment securities    
     MBS: U.S. government agencies$— $63,176 $— $63,176 
Investments in equity securities
     Mutual funds955 — — 955 
Total$955 $63,176 $— $64,131 

There were no transfers among Level 1, Level 2 and Level 3 during the years ended September 30, 2022 and 2021.

The Company may be required, from time to time, to measure certain assets and liabilities at fair value on a non-recurring basis in accordance with GAAP.  These include assets that are measured at the lower of cost or market value that were recognized at fair value below cost at the end of the period.

The Company uses the following methods and significant assumptions to estimate fair value on a non-recurring basis:

Impaired Loans: The estimated fair value of impaired loans is calculated using the collateral value method or on a discounted cash flow basis. The specific reserve for collateral dependent impaired loans is based on the estimated fair value of the collateral less estimated costs to sell, if applicable.  In some cases, adjustments are made to the appraised
values due to various factors including age of the appraisal, age of comparables included in the appraisal and known changes in the market and in the collateral. Such adjustments may be significant and typically result in a Level 3 classification of the inputs for determining fair value. Impaired loans are evaluated on a quarterly basis for additional impairment and adjusted accordingly.

Investment Securities Held to Maturity: The estimated fair value of investment securities held to maturity is based upon the assumptions market participants would use in pricing the investment security.  Such assumptions include quoted market prices (Level 1), market prices of similar securities or observable inputs (Level 2) and unobservable inputs such as dealer quotes, discounted cash flows or similar techniques (Level 3).

OREO and Other Repossessed Assets, net:  OREO and other repossessed assets are recorded at estimated fair value less estimated costs to sell.  Estimated fair value is generally determined by management based on a number of factors, including third-party appraisals of estimated fair value in an orderly sale.  Estimated costs to sell are based on standard market factors.  The valuation of OREO and other repossessed assets is subject to significant external and internal judgment (Level 3).

The following table summarizes the balances of assets measured at estimated fair value on a non-recurring basis at September 30, 2022 (dollars in thousands):
 Estimated Fair Value
Impaired loans:Level 1Level 2Level 3
Commercial business loans
$— $— $123 
Total impaired loans— — 123 
Total$— $— $123 

The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis as of September 30, 2022 (dollars in thousands):
 Estimated Fair Value Valuation Technique(s) 
Unobservable Input(s)		 
Range
 
Impaired loans		$123 Market approachAppraised value less estimated selling costsNA

The following table summarizes the balances of assets measured at estimated fair value on a non-recurring basis at September 30, 2021 (dollars in thousands):
Estimated Fair Value
Impaired loans:Level 1Level 2Level 3
Mortgage loans:   
Land$— $— $286 
Commercial business loans— — 123 
Total impaired loans— — 409 
Investment securities – held to maturity:   
MBS - Private label residential— 10 — 
OREO and other repossessed assets— — 157 
Total$— $10 $566 
The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis as of September 30, 2021 (dollars in thousands):
 Estimated Fair Value Valuation Technique(s)Unobservable Input(s) Range
 
Impaired loans		$409 Market approachAppraised value less estimated selling costsNA
OREO and other repossessed assets157 Market approachLower of appraised value or
listing price less estimated selling costs		NA

GAAP requires disclosure of estimated fair values for financial instruments. Such estimates are subjective in nature, and significant judgment is required regarding the risk characteristics of various financial instruments at a discrete point in time.  Therefore, such estimates could vary significantly if assumptions regarding uncertain factors were to change.  In addition, as the Company normally intends to hold the majority of its financial instruments until maturity, it does not expect to realize many of the estimated amounts disclosed.  The disclosures also do not include estimated fair value amounts for certain items which are not defined as financial instruments but which may have significant value.  The Company does not believe that it would be practicable to estimate a fair value for these types of items as of September 30, 2022 and 2021. Because GAAP excludes certain items from fair value disclosure requirements, any aggregation of the fair value amounts presented would not represent the underlying value of the Company. Additionally, the Company uses the exit price notion in calculating the fair values of financial instruments not measured at fair value on a recurring basis.

The recorded amounts and estimated fair values of financial instruments were as follows as of September 30, 2022 (dollars in thousands):
  Fair Value Measurements Using:
  Recorded
Amount		Estimated Fair Value Level 1Level 2 Level 3
Financial Assets     
Cash and cash equivalents$316,755 $316,755 $316,755 $— $— 
CDs held for investment22,894 22,519 22,519 — — 
Investment securities308,023 291,198 158,578 132,620 — 
Investments in equity securities835 835 835 — — 
FHLB stock2,194 2,194 2,194 — — 
Other investments3,000 3,000 3,000 — — 
Loans held for sale748 758 758 — — 
Loans receivable, net1,132,426 1,124,579 — — 1,124,579 
Accrued interest receivable4,483 4,483 4,483 — — 
Financial Liabilities     
Certificates of deposit
122,584 120,807 — — 120,807 
Accrued interest payable108 108 108 — — 
The recorded amounts and estimated fair values of financial instruments were as follows as of September 30, 2021 (dollars in thousands):
  Fair Value Measurements Using:
  Recorded
Amount		Estimated Fair Value Level 1Level 2 Level 3
Financial Assets     
Cash and cash equivalents$580,196 $580,196 $580,196 $— $— 
CDs held for investment28,482 28,771 28,771 — — 
Investment securities132,278 133,285 28,669 104,616 — 
Investments in equity securities 955 955 955 — — 
FHLB stock2,103 2,103 2,103 — — 
Other investments3,000 3,000 3,000 — — 
Loans held for sale3,217 3,290 3,290 — — 
Loans receivable, net968,454 981,905 — — 981,905 
Accrued interest receivable3,745 3,745 3,745 — — 
Financial Liabilities     
Certificates of deposit
134,129 135,178 — — 135,178 
Accrued interest payable137 134 134 — — 

The Company assumes interest rate risk (the risk that general interest rate levels will change) as a result of its normal operations. As a result, the estimated fair value of the Company’s financial instruments will change when interest rate levels change, and that change may either be favorable or unfavorable to the Company. Management attempts to match maturities of assets and liabilities to the extent believed necessary to appropriately manage interest rate risk.  However, borrowers with fixed interest rate obligations are less likely to prepay in a rising interest rate environment and more likely to prepay in a falling interest rate environment. Conversely, depositors who are receiving fixed interest rates are more likely to withdraw funds before maturity in a rising interest rate environment and less likely to do so in a falling interest rate environment. Management monitors interest rates and maturities of assets and liabilities, and attempts to manage interest rate risk by adjusting terms of new loans and deposits and by investing in securities with terms that mitigate the Company’s overall interest rate risk.