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FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK | 12 Months Ended
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Sep. 30, 2023
Financial Instruments with Off-Balance-Sheet Risk [Abstract] |
FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK | NOTE P - FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK The Company may use derivative financial instruments, such as interest rate floors and collars, as part of its interest rate risk management. Interest rate caps and floors are agreements whereby one party agrees to pay or receive a floating rate of interest on a notional principal amount for a predetermined period of time if certain market interest rate thresholds are met. The Company considers the credit risk inherent in these contracts to be negligible. As of September 30, 2023 and 2022, the Company did not hold any interest rate floors or collars. The Company is a party to interest rate derivatives that are not designated as hedging instruments. Under a program, the Company executes interest rate swaps with commercial lending customers to facilitate their respective risk management strategies. These interest rate swaps with customers are simultaneously offset by interest rate swaps that the Bank executes with a third-party financial institution, such that the Bank minimizes its net risk exposure resulting from such transactions. Because the interest rate swaps associated with this program do not meet the strict hedge accounting requirements, changes in the fair value of both the customer swaps and the offsetting swaps are recognized directly in earnings. The changes in the fair value of the swaps offset each other, except for the credit risk of the counterparties, which is determined by taking into consideration the risk rating, probability of default and loss given default for all counterparties. The Company had $0 in cash pledged for collateral on its interest rate swaps with financial institutions at September 30, 2023 and 2022. The following table presents summary information regarding these derivatives for September 30, 2023 and 2022.
|  | Notional Amount |  |  | Average Maturiy (Years) |  |  | Weighted Average Fixed Rate |  |  | Weighted Average Variable Rate |  | Fair Value |
|  | (Dollars in thousands) |
September 30, 2023 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Classified in Other Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Customer interest rate swaps |  | $ | 36,020 |  |  |  | 4.2 |  |  |  | 4.96% |  |  | 1 Mo. BSBY + 2.44 |  | $ | 2,579 |
Total |  | $ | 36,020 |  |  |  | 4.2 |  |  |  | 4.96% |  |  |  |  | $ | 2,579 |
Classified in Other Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
3rd Party interest rate swaps |  | $ | 36,020 |  |  |  | 4.2 |  |  |  | 4.96% |  |  | 1 Mo. BSBY + 2.44 |  | $ | 2,579 |
Total |  | $ | 36,020 |  |  |  | 4.2 |  |  |  | 4.96% |  |  |  |  | $ | 2,579 |
September 30, 2022 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Classified in Other Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Customer interest rate swaps (1) |  | $ | 19,512 |  |  |  | 5.9 |  |  |  | 3.63% |  |  | 1 Mo. LIBOR + 2.50 |  | $ | 2,275 |
|  |  | 6,940 |  |  |  | 4.6 |  |  |  | 6.13% |  |  | 1 Mo. BSBY + 3.00 |  |  | 212 |
Total |  | $ | 26,452 |  |  |  | 5.2 |  |  |  | 4.88% |  |  |  |  | $ | 2,487 |
Classified in Other Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
3rd Party interest rate swaps |  | $ | 19,512 |  |  |  | 5.9 |  |  |  | 3.63% |  |  | 1 Mo. LIBOR + 2.50 |  | $ | 2,275 |
|  |  | 6,940 |  |  |  | 4.6 |  |  |  | 6.13% |  |  | 1 Mo. BSBY + 3.00 |  |  | 212 |
Total |  | $ | 26,452 |  |  |  | 5.2 |  |  |  | 4.88% |  |  |  |  | $ | 2,487 |
(1) Derivative assets were incorrectly shown as a negative balance within the Company's Annual Report on Form 10-K for the year-ended September 30, 2022. The derivative asset balances have been corrected within the table above. The correction did not have an impact on the Company's consolidated balance sheet. At September 30, 2023 and 2022, the Company had outstanding commitments (substantially all of which expire within one year) to originate one-to four-family residential loans, construction loans, commercial real estate loans, commercial business loans and consumer loans. These commitments were comprised of fixed and variable rate loans.
|  | September 30, |
|  | 2023 |  |  | 2022 |
|  | (In thousands) |
Financial instruments whose contract amounts represent credit risk |  |  |  |  |  |  |  |
Letters of credit |  | $ | 1,073 |  |  | $ | 740 |
Unused lines of credit |  |  | 89,933 |  |  |  | 73,825 |
Fixed rate loan commitments |  |  | 3,578 |  |  |  | 2,550 |
Variable rate loan commitments |  |  | 26,472 |  |  |  | 49,913 |
Total |  | $ | 121,056 |  |  | $ | 127,028 |

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- Definition The entire disclosure for financial instruments. This disclosure includes, but is not limited to, fair value measurements of short and long term marketable securities, international currencies forward contracts, and auction rate securities. Financial instruments may include hedging and non-hedging currency exchange instruments, derivatives, securitizations and securities available for sale at fair value. Also included are investment results, realized and unrealized gains and losses as well as impairments and risk management disclosures. + References No definition available. + Details
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