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FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
 12 Months Ended
Sep. 30, 2025
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, 2025 and 2024, 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 and did not have a significant impact on fair value. The Company had $50 thousand and $0 in cash pledged for collateral on its interest rate swaps with financial institutions at September 30, 2025 and 2024, respectively.

 

The following table presents summary information regarding these derivatives for September 30, 2025 and 2024.

 

       Average   Weighted        
   Notional   Maturity   Average   Weighted Average  Fair 
   Amount   (Years)   Fixed Rate   Variable Rate  Value 
   (Dollars in thousands) 
September 30, 2025                   
Classified in Other Assets:                   
Customer interest rate swaps  $43,122    3.6    5.75%  1 Mo. SOFR + 2.66  $911 
Total  $43,122    3.6    5.75%     $911 
                        
Classified in Other Liabilities:                       
3rd Party interest rate swaps  $43,122    3.6    5.75%  1 Mo. SOFR + 2.66  $911 
Total  $43,122    3.6    5.75%     $911 
                        
September 30, 2024                       
Classified in Other Assets:                       
Customer interest rate swaps  $34,890    3.2    4.96%  1 Mo. BSBY + 2.44  $1,405 
Total  $34,890    3.2    4.96%     $1,405 
                        
Classified in Other Liabilities:                       
3rd Party interest rate swaps  $34,890    3.2    4.96%  1 Mo. BSBY + 2.44  $1,405 
Total  $34,890    3.2    4.96%     $1,405 

At September 30, 2025 and 2024, 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.

 

   Years Ended September 30, 
   2025   2024 
   (In thousands) 
Financial instruments whose contract amounts represent credit risk        
Letters of credit  $820   $620 
Unused lines of credit   80,867    88,272 
Fixed rate loan commitments   3,395    1,804 
Variable rate loan commitments   25,975    26,843 
Total  $111,057   $117,539