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v3.23.3

Investment Securities | 12 Months Ended
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Sep. 30, 2023
Investments [Abstract] |
Investment Securities | Investment Securities Held to maturity and available for sale investment securities were as follows as of September 30, 2023 and 2022 (dollars in thousands):
| Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Estimated Fair Value
September 30, 2023 |  |  |  |  |  |  |
Held to Maturity |  |  |  |  |  |  |
U.S. Treasury and U.S. government agency securities | $ | 171,626 |  |  | $ | — |  |  | $ | (10,088) |  |  | $ | 161,538 |
Mortgage-backed securities ("MBS"): |  |  |  |  |  |  |
U.S. government agencies | 52,294 |  |  | — |  |  | (3,950) |  |  | 48,344 |
Private label residential | 44,011 |  |  | 295 |  |  | (2,611) |  |  | 41,695 |
Taxable municipal securities | 1,787 |  |  | — |  |  | (47) |  |  | 1,740 |
Bank issued trust preferred securities | 500 |  |  | — |  |  | (51) |  |  | 449 |
Total | $ | 270,218 |  |  | $ | 295 |  |  | $ | (16,747) |  |  | $ | 253,766 |
Available for Sale |  |  |  |  |  |  |
MBS: U.S. government agencies | $ | 43,132 |  |  | $ | — |  |  | $ | (1,361) |  |  | $ | 41,771 |
Total | $ | 43,132 |  |  | $ | — |  |  | $ | (1,361) |  |  | $ | 41,771 |
September 30, 2022 |  |  |  |  |  |  |
Held to Maturity |  |  |  |  |  |  |
U.S. Treasury and U.S. government agency securities | $ | 170,676 |  |  | $ | 11 |  |  | $ | (12,109) |  |  | $ | 158,578 |
MBS: |  |  |  |  |  |  |
U.S. government agencies | 43,995 |  |  | 4 |  |  | (2,486) |  |  | 41,513 |
Private label residential | 49,335 |  |  | 245 |  |  | (2,392) |  |  | 47,188 |
Taxable municipal securities | 2,102 |  |  | — |  |  | (67) |  |  | 2,035 |
Bank issued trust preferred securities | 500 |  |  | — |  |  | (31) |  |  | 469 |
Total | $ | 266,608 |  |  | $ | 260 |  |  | $ | (17,085) |  |  | $ | 249,783 |
Available for Sale |  |  |  |  |  |  |
MBS: U.S. government agencies | $ | 42,309 |  |  | $ | — |  |  | $ | (894) |  |  | $ | 41,415 |
Total | $ | 42,309 |  |  | $ | — |  |  | $ | (894) |  |  | $ | 41,415 |
Held to maturity and available for sale investment securities with unrealized losses were as follows as of September 30, 2023 (dollars in thousands):
| Less Than 12 Months |  | 12 Months or Longer |  | Total
| Estimated Fair Value |  | Gross Unrealized Losses |  | Qty |  | Estimated Fair Value |  | Gross Unrealized Losses |  | Qty |  | Estimated Fair Value |  | Gross Unrealized Losses
Held to Maturity |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury and U.S. government agency securities | $ | 9,455 |  |  | $ | (129) |  |  | 1 |  |  | $ | 152,082 |  |  | $ | (9,959) |  |  | 26 |  |  | $ | 161,537 |  |  | $ | (10,088) |
MBS: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. government agencies | 16,432 |  |  | (549) |  |  | 13 |  |  | 31,703 |  |  | (3,401) |  |  | 51 |  |  | 48,135 |  |  | (3,950) |
Private label residential | 1,288 |  |  | (2) |  |  | 1 |  |  | 38,205 |  |  | (2,609) |  |  | 32 |  |  | 39,493 |  |  | (2,611) |
Taxable municipal securities | — |  |  | — |  |  | — |  |  | 1,740 |  |  | (47) |  |  | 1 |  |  | 1,740 |  |  | (47) |
Bank issued trust preferred securities | — |  |  | — |  |  | — |  |  | 449 |  |  | (51) |  |  | 1 |  |  | 449 |  |  | (51) |
Total | $ | 27,175 |  |  | $ | (680) |  |  | 15 |  |  | $ | 224,179 |  |  | $ | (16,067) |  |  | 111 |  |  | $ | 251,354 |  |  | $ | (16,747) |
Available for Sale |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
MBS: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. government agencies | $ | 10,635 |  |  | $ | (308) |  |  | 3 |  |  | $ | 30,809 |  |  | $ | (1,053) |  |  | 27 |  |  | $ | 41,444 |  |  | $ | (1,361) |
Total | $ | 10,635 |  |  | $ | (308) |  |  | 3 |  |  | $ | 30,809 |  |  | $ | (1,053) |  |  | 27 |  |  | $ | 41,444 |  |  | $ | (1,361) |
Held to maturity and available for sale investment securities with unrealized losses were as follows as of September 30, 2022 (dollars in thousands):
| Less Than 12 Months |  | 12 Months or Longer |  | Total
| Estimated Fair Value |  | Gross Unrealized Losses |  | Qty |  | Estimated Fair Value |  | Gross Unrealized Losses |  | Qty |  | Estimated Fair Value |  | Gross Unrealized Losses
Held to Maturity |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury and U.S. government agency securities | $ | 115,504 |  |  | $ | (7,224) |  |  | 17 |  |  | $ | 33,638 |  |  | $ | (4,885) |  |  | 9 |  |  | $ | 149,142 |  |  | $ | (12,109) |
MBS: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. government agencies | 35,896 |  |  | (1,449) |  |  | 54 |  |  | 5,306 |  |  | (1,037) |  |  | 5 |  |  | 41,202 |  |  | (2,486) |
Private label residential | 35,447 |  |  | (2,166) |  |  | 27 |  |  | 8,708 |  |  | (226) |  |  | 6 |  |  | 44,155 |  |  | (2,392) |
Taxable municipal securities | 2,035 |  |  | (67) |  |  | 1 |  |  | — |  |  | — |  |  | — |  |  | 2,035 |  |  | (67) |
Bank issued trust preferred securities | 469 |  |  | (31) |  |  | 1 |  |  | — |  |  | — |  |  | — |  |  | 469 |  |  | (31) |
Total | $ | 189,351 |  |  | $ | (10,937) |  |  | 100 |  |  | $ | 47,652 |  |  | $ | (6,148) |  |  | 20 |  |  | $ | 237,003 |  |  | $ | (17,085) |
Available for Sale |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
MBS: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. government agencies | $ | 25,170 |  |  | $ | (292) |  |  | 16 |  |  | $ | 15,705 |  |  | $ | (602) |  |  | 13 |  |  | $ | 40,875 |  |  | $ | (894) |
Total | $ | 25,170 |  |  | $ | (292) |  |  | 16 |  |  | $ | 15,705 |  |  | $ | (602) |  |  | 13 |  |  | $ | 40,875 |  |  | $ | (894) |
The Company has evaluated the investment securities in the above tables and has determined that the decline in their fair value is temporary. The unrealized losses are primarily due to changes in market interest rates and spreads in the market for mortgage-related products. The fair value of these securities is expected to recover as the securities approach their maturity dates and/or as the pricing spreads narrow on mortgage-related securities. The Company has the ability and the intent to hold the investments until the fair value of these securities recovers. The Company bifurcates OTTI into (1) amounts related to credit losses which are recognized through earnings and (2) amounts related to all other factors which are recognized as a component of other comprehensive income (loss). To determine the component of the gross OTTI related to credit losses, the Company compared the amortized cost basis of the OTTI security to the present value of its revised expected cash flows, discounted using its pre-impairment yield. The revised expected cash flow estimates for individual securities are based primarily on an analysis of default rates, prepayment speeds and third-party analytic reports. Significant judgment by management is required in this analysis that includes, but is not limited to, assumptions regarding the collectability of principal and interest, net of related expenses, on the underlying loans. The following table presents a summary of the significant inputs utilized to measure management’s estimates of the credit loss component on OTTI securities as of September 30, 2023, 2022 and 2021:
| Range |  | Weighted
| Minimum |  | Maximum |  | Average
September 30, 2023 |  |  |  |  |
Constant prepayment rate | 6.00 | % |  | 15.00 | % |  | 8.26 | %
Collateral default rate | — | % |  | 26.71 | % |  | 11.28 | %
Loss severity rate | — | % |  | 5.73 | % |  | 1.55 | %
September 30, 2022 |  |  |  |  |
Constant prepayment rate | 6.00 | % |  | 15.00 | % |  | 12.98 | %
Collateral default rate | 0.58 | % |  | 25.64 | % |  | 9.96 | %
Loss severity rate | — | % |  | 8.19 | % |  | 3.36 | %
September 30, 2021 |  |  |  |  |
Constant prepayment rate | 6.00 | % |  | 15.00 | % |  | 10.20 | %
Collateral default rate | 1.47 | % |  | 17.55 | % |  | 12.19 | %
Loss severity rate | — | % |  | 12.96 | % |  | 4.55 | %
The following table presents a roll forward of the credit loss component of held to maturity and available for sale debt securities that have been written down for OTTI with the credit loss component recognized in earnings for the years ended September 30, 2023, 2022 and 2021 (dollars in thousands):
| 2023 |  | 2022 |  | 2021
Balance, beginning of year | $ | 836 |  |  | $ | 853 |  |  | $ | 885 |
Additions: |  |  |  |  |
Additional increases to the amount related to credit losses for which OTTI was previously recognized | — |  |  | — |  |  | 2 |
Subtractions: |  |  |  |  |
Net realized gain (losses) previously recorded as credit losses | (11) |  |  | 1 |  |  | (12) |
Recovery of prior credit loss | (9) |  |  | (18) |  |  | (22) |
Balance, end of year | $ | 816 |  |  | $ | 836 |  |  | $ | 853 |
During the year ended September 30, 2023, the Company recorded a $11,000 net realized loss on 14 held to maturity investment securities, all of which had been recognized previously as a credit loss. During the year ended September 30, 2022, the Company recorded a $1,000 net realized gain on 16 held to maturity investment securities, all of which had been recognized previously as a credit loss. During the year ended September 30, 2021, the Company recorded a $12,000 net realized loss on 19 held to maturity investment securities, all of which had been recognized previously as a credit loss. During the year ended September 30, 2023, the Company recorded a $95,000 realized gain on sale of two available for sale investment securities. There were no realized gains or losses on available for sale investment securities for the years ended September 30, 2022 and 2021. The recorded amount of investment securities pledged as collateral for public fund deposits, federal treasury tax and loan deposits and FHLB collateral totaled $201,817,000 and $133,824,000 at September 30, 2023 and 2022, respectively. The contractual maturities of debt securities at September 30, 2023 are as follows (dollars in thousands). Expected maturities may differ from scheduled maturities due to the prepayment of principal or call provisions.
| Held to Maturity |  | Available for Sale
| Amortized Cost |  | Estimated Fair Value |  | Amortized Cost |  | Estimated Fair Value
Due within one year | $ | 83,614 |  |  | $ | 82,258 |  |  | $ | 388 |  |  | $ | 385 |
Due after one year to five years | 105,308 |  |  | 96,743 |  |  | 2,608 |  |  | 2,590 |
Due after five years to ten years | 10,510 |  |  | 9,428 |  |  | 6,689 |  |  | 6,642 |
Due after ten years | 70,786 |  |  | 65,337 |  |  | 33,447 |  |  | 32,154 |
Total | $ | 270,218 |  |  | $ | 253,766 |  |  | $ | 43,132 |  |  | $ | 41,771 |

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