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FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK | 6 Months Ended
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Mar. 31, 2025
Financial Instruments With Off-Balance Sheet Risk [Abstract] |
FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK | NOTE L - FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK The Company may use derivative financial instruments, such as interest rate swaps and interest rate floors and caps, 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 March 31, 2025, 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 Company executes with a third-party financial institution, such that the Company 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 was not significant to the total fair value. The Company was not required to pledge any collateral for its interest rate swaps with financial institutions at March 31, 2025 and September 30, 2024. The following table presents summary information regarding these derivatives as of March 31, 2025 and September 30, 2024.
|  |  |  |  | Average |  |  | Weighted |  |  |  |  |  |
|  | Notional |  |  | Maturity |  |  | Average |  |  | Weighted Average |  | Fair |
|  | Amount |  |  | (Years) |  |  | Fixed Rate |  |  | Variable Rate |  | Value |
|  | (Dollars in thousands) |
March 31, 2025 |  |  |  |  |  |  |  |  |  |  |  |  |  |
Classified in Other Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Customer interest rate swaps |  | $ | 28,879 |  |  |  | 2.7 |  |  |  | 5.26% |  |  | 1 Mo. SOFR + 2.46 |  | $ | 949 |
Total |  | $ | 28,879 |  |  |  | 2.7 |  |  |  | 5.26% |  |  |  |  | $ | 949 |
Classified in Other Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
3rd Party interest rate swaps |  | $ | 28,879 |  |  |  | 2.7 |  |  |  | 5.26% |  |  | 1 Mo. SOFR + 2.46 |  | $ | 949 |
Total |  | $ | 28,879 |  |  |  | 2.7 |  |  |  | 5.26% |  |  |  |  | $ | 949 |
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 |
The Company is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments are commitments to extend credit and are summarized in the below table. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amounts recognized in the Consolidated Balance Sheets.
|  | March 31, |  |  | September 30, |
|  | 2025 |  |  | 2024 |
|  | (In thousands) |
Financial instruments whose contract amounts represent credit risk |  |  |  |  |  |  |  |
Letters of credit |  | $ | 785 |  |  | $ | 620 |
Unused lines of credit |  |  | 82,963 |  |  |  | 88,272 |
Fixed rate loan commitments |  |  | 1,588 |  |  |  | 1,804 |
Variable rate loan commitments |  |  | 22,568 |  |  |  | 26,843 |
Total |  | $ | 107,904 |  |  | $ | 117,539 |

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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 Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 825 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/825/tableOfContent + Details
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