10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒          QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021

OR

 ☐           TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from _____ to _____.

Commission file number 000-23333

TIMBERLAND BANCORP, INC.

(Exact name of registrant as specified in its charter) 

Washington	91-1863696
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

624 Simpson Avenue, Hoquiam, Washington	98550
(Address of principal executive offices)	(Zip Code)

(360) 533-4747

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $.01 par value	TSBK	The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☒     No ___

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes _☒_   No __

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☐    Non-accelerated filer ☒ Smaller reporting company ☒   Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ___    No   _☒_

As of May 4, 2021, there were 8,362,907 shares of the registrant's common stock, $.01 par value per share outstanding.

INDEX

PART I.	FINANCIAL INFORMATION	Page
Item 1.	Financial Statements (unaudited)
	Consolidated Balance Sheets	3
	Consolidated Statements of Income	5
	Consolidated Statements of Comprehensive Income	7
	Consolidated Statements of Shareholders’ Equity	8
	Consolidated Statements of Cash Flows	9
	Notes to Unaudited Consolidated Financial Statements	11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	38
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	52
Item 4.	Controls and Procedures	52
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	52
Item 1A.	Risk Factors	52
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	53
Item 3.	Defaults Upon Senior Securities	53
Item 4.	Mine Safety Disclosures	53
Item 5.	Other Information	53
Item 6.	Exhibits	54
SIGNATURES
Certifications
	Exhibit 31.1
	Exhibit 31.2
	Exhibit 32
	Exhibit 101

2

PART I.    FINANCIAL INFORMATION

Item 1.    Financial Statements (unaudited)

TIMBERLAND BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

March 31, 2021 and September 30, 2020

(Dollars in thousands, except per share amounts)

	March 31, 2021		September 30, 2020
	(Unaudited)		*
Assets
Cash and cash equivalents:
Cash and due from financial institutions	$	21,707	$	21,877
Interest-bearing deposits in banks	411,635		292,575
Total cash and cash equivalents	433,342		314,452
Certificates of deposit (“CDs”) held for investment (at cost, which      approximates fair value)	39,674		65,545
Investment securities held to maturity, at amortized cost (estimated fair value of $37,838 and $29,827)	36,465		27,890
Investment securities available for sale, at fair value	69,184		57,907
Investments in equity securities, at fair value	957		977
Federal Home Loan Bank of Des Moines (“FHLB”) stock, at cost	2,303		1,922
Other investments, at cost	3,000		3,000
Loans held for sale	8,455		4,509
Loans receivable, net of allowance for loan losses of $13,434 and $13,414	1,030,683		1,013,875
Premises and equipment, net	22,763		23,035
Other real estate owned (“OREO”) and other repossessed assets, net	157		1,050
Accrued interest receivable	4,471		4,484
Bank owned life insurance (“BOLI”)	21,891		21,596
Goodwill	15,131		15,131
Core deposit intangible (“CDI”), net	1,444		1,625
Servicing rights, net	3,604		3,095
Operating lease right-of-use ("ROU") assets	2,436		2,587
Other assets	3,284		3,298
Total assets	$	1,699,244	$	1,565,978
Liabilities and shareholders’ equity
Liabilities
Deposits:
Non-interest-bearing demand	$	499,541	$	441,889
Interest-bearing	982,318		916,517
Total deposits	1,481,859		1,358,406
FHLB borrowings	10,000		10,000
Operating lease liabilities	2,499		2,630
Other liabilities and accrued expenses	6,343		7,312
Total liabilities	1,500,701		1,378,348

* Derived from audited consolidated financial statements.

See notes to unaudited consolidated financial statements

3

TIMBERLAND BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS (continued)

March 31, 2021 and September 30, 2020

(Dollars in thousands, except per share amounts)

	March 31, 2021		September 30, 2020
	(Unaudited)		*
Shareholders’ equity
Preferred stock, $0.01 par value; 1,000,000 shares authorized; none issued	$	—	$	—
Common stock, $0.01 par value; 50,000,000 shares authorized; 8,361,457 shares issued and outstanding - March 31, 2021 8,310,793 shares issued and outstanding - September 30, 2020	42,949		42,396
Retained earnings	155,473		145,173
Accumulated other comprehensive income	121		61
Total shareholders’ equity	198,543		187,630
Total liabilities and shareholders’ equity	$	1,699,244	$	1,565,978

* Derived from audited consolidated financial statements.

See notes to unaudited consolidated financial statements

4

TIMBERLAND BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

For the three and six months ended March 31, 2021 and 2020

(Dollars in thousands, except per share amounts)

(Unaudited)

	Three Months Ended   March 31,				Six Months Ended  March 31,
	2021		2020		2021		2020
Interest and dividend income
Loans receivable and loans held for sale	$	12,790	$	12,823	$	26,108	$	25,587
Investment securities	284		489		585		928
Dividends from mutual funds, FHLB stock and other investments	27		35		55		72
Interest-bearing deposits in banks and CDs	259		784		569		1,735
Total interest and dividend income	13,360		14,131		27,317		28,322
Interest expense
Deposits	764		1,243		1,668		2,432
FHLB borrowings	29		8		58		8
Total interest expense	793		1,251		1,726		2,440
Net interest income	12,567		12,880		25,591		25,882
Provision for loan losses	—		2,000		—		2,200
Net interest income after provision for loan losses	12,567		10,880		25,591		23,682
Non-interest income
Net recoveries on investment securities	3		3		8		106
Service charges on deposits	941		1,078		1,996		2,278
ATM and debit card interchange transaction fees	1,237		1,015		2,393		2,109
BOLI net earnings	146		147		295		294
Gain on sales of loans, net	1,758		736		3,760		1,688
Escrow fees	74		47		179		130
Servicing income (expense) on loans sold	(10)		62		5		136
Valuation recovery (allowance) on servicing rights, net	438		—		202		(23)
Other, net	299		592		607		900
Total non-interest income, net	4,886		3,680		9,445		7,618

 See notes to unaudited consolidated financial statements

5

TIMBERLAND BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME (continued)

For the three and six months ended March 31, 2021 and 2020

(Dollars in thousands, except per share amounts)

(Unaudited)

	Three Months Ended   March 31,				Six Months Ended  March 31,
	2021		2020		2021		2020
Non-interest expense
Salaries and employee benefits	$	4,778	$	4,621	$	9,391	$	9,343
Premises and equipment	998		943		1,955		1,837
Gain on sales/dispositions of premises and equipment, net	—		(3)		—		(102)
Advertising	155		159		311		342
OREO and other repossessed assets, net	(68)		51		(94)		50
ATM and debit card interchange transaction fees	445		359		876		799
Postage and courier	149		145		287		279
State and local taxes	255		233		538		449
Professional fees	181		210		412		480
Federal Deposit Insurance Corporation ("FDIC") insurance	105		—		201		(27)
Loan administration and foreclosure	90		78		171		167
Data processing and telecommunications	634		515		1,240		1,099
Deposit operations	245		274		529		591
Amortization of CDI	91		102		181		203
Other	493		599		963		1,149
Total non-interest expense, net	8,551		8,286		16,961		16,659
Income before income taxes	8,902		6,274		18,075		14,641
Provision for income taxes	1,651		1,225		3,534		2,940
Net income	$	7,251	$	5,049	$	14,541	$	11,701
Net income per common share
Basic	$	0.87	$	0.61	$	1.75	$	1.40
Diluted	$	0.86	$	0.60	$	1.73	$	1.38
Weighted average common shares outstanding
Basic	8,331,121		8,344,201		8,322,210		8,342,828
Diluted	8,444,798		8,456,659		8,428,595		8,465,894
Dividends paid per common share	$	0.31	$	0.20	$	0.51	$	0.45

See notes to unaudited consolidated financial statements

6

TIMBERLAND BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the three and six months ended March 31, 2021 and 2020

(Dollars in thousands)

(Unaudited) 

	Three Months Ended   March 31,				Six Months Ended   March 31,
	2021		2020		2021		2020
Comprehensive income
Net income	$	7,251	$	5,049	$	14,541	$	11,701
Other comprehensive income (loss)
Unrealized holding gain (loss) on investment securities available for sale, net of income taxes of $19, $(9), $15 and $(63), respectively	74		(35)		57		(241)
Change in other than temporary impairment ("OTTI") on investment securities held to maturity, net of income taxes:
Accretion of OTTI on investment securities held to maturity, net of income taxes of $1, $1, $1 and $3, respectively	3		2		3		12
Total other comprehensive income (loss), net of income taxes	77		(33)		60		(229)
Total comprehensive income	$	7,328	$	5,016	$	14,601	$	11,472

See notes to unaudited consolidated financial statements

7

TIMBERLAND BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

For the three and six months ended March 31, 2021 and 2020

(Dollars in thousands, except per share amounts)

(Unaudited)

	Common Stock					Accumulated Other Compre- hensive Income (Loss)
	Number of Shares	Amount		Retained Earnings				Total
Balance, December 31, 2019	8,346,394	$	43,246	$	132,553	$	(146)	$	175,653
Net income	—	—		5,049		—		5,049
Other comprehensive loss	—	—		—		(33)		(33)
Repurchase of common stock	(56,601)	(1,238)		—		—		(1,238)
Exercise of stock options	19,400	204		—		—		204
Common stock dividends ($0.20 per common share)	—	—		(1,673)		—		(1,673)
Stock option compensation expense	—	46		—		—		46
Balance, March 31, 2020	8,309,193	$	42,258	$	135,929	$	(179)	$	178,008
Balance, December 31, 2020	8,317,793	$	42,480	$	150,801	$	44	$	193,325
Net income	—	—		7,251		—		7,251
Other comprehensive income	—	—		—		77		77
Exercise of stock options	43,664	423		—		—		423
Common stock dividends ($0.31 per common share)	—	—		(2,579)		—		(2,579)
Stock option compensation expense	—	46		—		—		46
Balance, March 31, 2021	8,361,457	$	42,949	$	155,473	$	121	$	198,543

	Common Stock					Accumulated Other Compre-hensive Income (Loss)
	Number of Shares	Amount		Retained Earnings				Total
Balance, September 30, 2019	8,329,419	$	43,030	$	127,987	$	50	$	171,067
Net income	—	—		11,701		—		11,701
Other comprehensive loss	—	—		—		(229)		(229)
Repurchase of common stock	(56,601)	(1,238)		—		—		(1,238)
Exercise of stock options	36,375	374		—		—		374
Common stock dividends ($0.45 per common share)	—	—		(3,759)		—		(3,759)
Stock option compensation expense	—	92		—		—		92
Balance, March 31, 2020	8,309,193	$	42,258	$	135,929	$	(179)	$	178,008
Balance, September 30, 2020	8,310,793	$	42,396	$	145,173	$	61	$	187,630
Net income	—	—		14,541		—		14,541
Other comprehensive income	—	—		—		60		60
Repurchase of common stock	(2,900)	(58)		—		—		(58)
Exercise of stock options	53,564	519		—		—		519
Common stock dividends ($0.51 per common share)	—	—		(4,241)		—		(4,241)
Stock option compensation expense	—	92		—		—		92
Balance, March 31, 2021	8,361,457	$	42,949	$	155,473	$	121	$	198,543

See notes to unaudited consolidated financial statements

8

TIMBERLAND BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the six months ended March 31, 2021 and 2020

(Dollars in thousands)

(Unaudited)

	Six Months Ended March 31,
	2021		2020
Cash flows from operating activities
Net income	$	14,541	$	11,701
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	—		2,200
Depreciation	781		748
Deferred income taxes	51		—
Accretion of discount on purchased loans	(207)		(253)
Amortization of CDI	181		203
Stock option compensation expense	92		92
Net recoveries on investment securities	(8)		(106)
Change in fair value of investments in equity securities	20		(11)
Accretion of discounts and premiums on securities	(16)		(88)
Gain on sales of OREO and other repossessed assets, net	(92)		(39)
Provision for OREO losses	—		25
Gain on sales of loans, net	(3,760)		(1,688)
Gain on sales/disposition of premises and equipment, net	—		(102)
Loans originated for sale	(85,313)		(60,097)
Proceeds from sales of loans	85,127		62,058
Amortization of servicing rights	529		383
Valuation adjustment on servicing rights	(202)		23
BOLI net earnings	(295)		(294)
Increase (decrease) in deferred loan origination fees	563		(104)
Net change in accrued interest receivable and other assets, and other liabilities and accrued expenses	(1,826)		545
Net cash provided by operating activities	10,166		15,196
Cash flows from investing activities
Net decrease (increase) in CDs held for investment	25,871		(4,126)
Purchase of investment securities held to maturity	(15,050)		(9,755)
Purchase of investment securities available for sale	(16,383)		(21,521)
Proceeds from maturities and prepayments of investment securities held to maturity	6,589		4,412
Proceeds from maturities and prepayments of investment securities available for sale	5,093		2,266
Purchase of FHLB stock	(381)		(485)
Increase in loans receivable, net	(17,164)		(22,838)
Additions to premises and equipment	(509)		(1,195)
Proceeds from sales of premises and equipment	—		307
Proceeds from sales of OREO and other repossessed assets	985		74
Net cash used in investing activities	(10,949)		(52,861)

See notes to unaudited consolidated financial statements

9

TIMBERLAND BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

For the six months ended March 31, 2021 and 2020

(Dollars in thousands)

(Unaudited)

	Six Months Ended March 31,
	2021		2020
Cash flows from financing activities
Net increase in deposits	$	123,453	$	57,421
FHLB borrowings	—		10,000
Proceeds from exercise of stock options	519		374
Repurchase of common stock	(58)		(1,238)
Payment of dividends	(4,241)		(3,759)
Net cash provided by financing activities	119,673		62,798
Net increase in cash and cash equivalents	118,890		25,133
Cash and cash equivalents
Beginning of period	314,452		143,015
End of period	$	433,342	$	168,148
Supplemental disclosure of cash flow information
Income taxes paid	$	2,688	$	1,988
Interest paid	1,818		2,416
Supplemental disclosure of non-cash investing activities
Other comprehensive income (loss) related to investment securities	$	60	$	(229)
Operating lease liabilities arising from recording of ROU assets	—		2,889

See notes to unaudited consolidated financial statements

10

Timberland Bancorp, Inc. and Subsidiary

Notes to Unaudited Consolidated Financial Statements

(1)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a)  Basis of Presentation:  The accompanying unaudited consolidated financial statements of Timberland Bancorp, Inc.and its wholly-owned subsidiary, Timberland Bank (the "Bank") (collectively, "the Company") were prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with instructions for Form 10-Q and, therefore, do not include all disclosures necessary for a complete presentation of consolidated financial condition, results of operations, and cash flows in conformity with GAAP. However, all adjustments which are, in the opinion of management, necessary for a fair presentation of the interim consolidated financial statements have been included.  All such adjustments are of a normal recurring nature. The unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended September 30, 2020 (“2020 Form 10-K”).  The unaudited consolidated results of operations for the six months ended March 31, 2021 are not necessarily indicative of the results that may be expected for the entire fiscal year ending September 30, 2021.

(b)  Principles of Consolidation:  The unaudited consolidated financial statements include the accounts of the Company and the Bank, and the Bank’s wholly-owned subsidiary, Timberland Service Corporation.   All significant inter-company transactions and balances have been eliminated in consolidation.

(c)  Operating Segment:  The Company has one reportable operating segment which is defined as community banking in western Washington.

(d)  The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities, as of the date of the consolidated balance sheets, and the reported amounts of income and expenses during the reporting period.  Actual results could differ from those estimates.

(e)  Certain prior period amounts have been reclassified to conform to the March 31, 2021 presentation with no change to previously reported net income or total shareholders’ equity.

11

(2) INVESTMENT SECURITIES

Held to maturity and available for sale investment securities have been classified according to management’s intent and were as follows as of March 31, 2021 and September 30, 2020 (dollars in thousands):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
March 31, 2021
Held to maturity
Mortgage-backed securities ("MBS"):
U.S. government agencies	$	21,888	$	1,164	$	(9)	$	23,043
Private label residential	5,056		312		(23)		5,345
U.S. Treasury and U.S. government agency securities	9,021		—		(68)		8,953
Bank issued trust preferred securities	500		—		(3)		497
Total	$	36,465	$	1,476	$	(103)	$	37,838
Available for sale
MBS: U.S. government agencies	$	69,001	$	282	$	(99)	$	69,184
Total	$	69,001	$	282	$	(99)	$	69,184
September 30, 2020
Held to maturity
MBS:
U.S. government agencies	$	27,161	$	1,635	$	(3)	$	28,793
Private label residential	229		307		(1)		535
Bank issued trust preferred securities	500		—		(1)		499
Total	$	27,890	$	1,942	$	(5)	$	29,827
Available for sale
MBS: U.S. government agencies	$	57,797	$	178	$	(68)	$	57,907
Total	$	57,797	$	178	$	(68)	$	57,907

12

Held to maturity and available for sale investment securities with unrealized losses were as follows as of March 31, 2021 (dollars in thousands):

	Less Than 12 Months					12 Months or Longer					Total
	Estimated  Fair  Value		Gross Unrealized Losses		Quantity	Estimated  Fair  Value		Gross Unrealized Losses		Quantity	Estimated  Fair  Value		Gross Unrealized Losses
Held to maturity
MBS:
U.S. government agencies	$	2,098	$	(8)	3	$	34	$	(1)	4	$	2,132	$	(9)
Private label residential	4,836		(23)		1	2		—		2	4,838		(23)
U.S. Treasury and U.S. government agency securities	8,953		(68)		3	—		—		—	8,953		(68)
Bank issued trust preferred securities	497		(3)		1	—		—		—	497		(3)
Total	$	16,384	$	(102)	8	$	36	$	(1)	6	$	16,420	$	(103)
Available for sale
MBS: U.S. government agencies	$	22,873	$	(99)	12	$	—	$	—	—	$	22,873	$	(99)
Total	$	22,873	$	(99)	12	$	—	$	—	—	$	22,873	$	(99)

Held to maturity and available for sale investment securities with unrealized losses were as follows as of September 30, 2020 (dollars in thousands):

	Less Than 12 Months					12 Months or Longer					Total
	Estimated  Fair  Value		Gross Unrealized Losses		Quantity	Estimated  Fair  Value		Gross Unrealized Losses		Quantity	Estimated  Fair  Value		Gross Unrealized Losses
Held to maturity
MBS:
U.S. government agencies	$	5,130	$	(2)	4	$	39	$	(1)	4	$	5,169	$	(3)
Private label residential	7		—		1	11		(1)		2	18		(1)
Bank issued trust preferred securities	499		(1)		1	—		—		—	499		(1)
Total	$	5,636	$	(3)	6	$	50	$	(2)	6	$	5,686	$	(5)
Available for sale
MBS:
U.S. government agencies	$	21,464	$	(68)	11	$	—	$	—	—	$	21,464	$	(68)
Total	$	21,464	$	(68)	11	$	—	$	—	—	$	21,464	$	(68)

The Company has evaluated the investment securities in the above tables and has determined that the declines in their fair value are 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 recovers.  Furthermore, as of March 31, 2021, management does not have the intent to sell

13

any of the securities classified as available for sale where the estimated fair value is below the recorded value and believes that it is more likely than not that the Company will not have to sell such securities before a recovery of cost (or recorded value if previously written down).

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 March 31, 2021 and 2020:

	Range				Weighted
	Minimum		Maximum		Average
March 31, 2021
Constant prepayment rate	6.00	%	15.00	%	13.18	%
Collateral default rate	1.73	%	28.92	%	13.94	%
Loss severity rate	—	%	18.93	%	5.79	%
March 31, 2020
Constant prepayment rate	6.00	%	15.00	%	10.91	%
Collateral default rate	1.86	%	22.47	%	10.44	%
Loss severity rate	—	%	16.34	%	4.02	%

The following table presents the OTTI recoveries for the three and six months ended March 31, 2021 and 2020 (dollars in thousands):

	Three Months Ended March 31, 2021		Three Months Ended March 31, 2020
	Held To Maturity		Held To Maturity
Total recoveries	$	3	$	3
Adjustment for portion of OTTI transferred from        other comprehensive income (loss) before income taxes (1)	—		—
Net recoveries recognized in earnings (2)	$	3	$	3

	Six Months Ended March 31, 2021		Six Months Ended March 31, 2020
	Held To Maturity		Held To Maturity
Total recoveries	$	8	$	106
Adjustment for portion of OTTI transferred from        other comprehensive income (loss) before income taxes (1)	—		—
Net recoveries recognized in earnings (2)	$	8	$	106

_________________

(1) Represents OTTI related to all other factors.

(2) Represents OTTI related to credit losses.

14

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 six months ended March 31, 2021 and 2020 (dollars in thousands):

	Six Months Ended March 31,
	2021		2020
Beginning balance of credit loss	$	885	$	1,071
Subtractions:
Realized losses previously recorded as credit losses	(5)		(60)
Recovery of prior credit loss	(8)		(106)
Ending balance of credit loss	$	872	$	905

During the six months ended March 31, 2021, the Company recorded a $5,000 net realized loss (as a result of investment securities being deemed worthless) on 13 held to maturity investment securities, all of which had been recognized previously as a credit loss. During the six months ended March 31, 2020, the Company recorded a $60,000 net realized loss (as a result of investment securities being deemed worthless) on 19 held to maturity investment securities, all of which had been recognized previously as a credit loss.

The recorded amount of investment securities pledged as collateral for public fund deposits, federal treasury tax and loan deposits, FHLB collateral and other non-profit organization deposits totaled $96.24 million and $81.03 million at March 31, 2021 and September 30, 2020, respectively.

The contractual maturities of debt securities at March 31, 2021 were 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	$	—	$	—	$	1,428	$	1,421
Due after one year to five years	8,230		8,290		2,829		2,829
Due after five years to ten years	13,703		14,180		19,173		19,236
Due after ten years	14,532		15,368		45,571		45,698
Total	$	36,465	$	37,838	$	69,001	$	69,184

(3) GOODWILL AND CDI

Goodwill is initially recorded when the purchase price paid in a business combination exceeds the estimated fair value of the net identified tangible and intangible assets acquired and liabilities assumed.  Goodwill is presumed to have an indefinite useful life and is analyzed annually for impairment.  The Company performs an annual review during the third quarter of each fiscal year, or more frequently if indicators of potential impairment exist, to determine if the recorded goodwill is impaired. For purposes of goodwill impairment testing, the services offered through the Bank and its subsidiary are managed as one strategic unit and represent the Company's only reporting unit.

The annual goodwill impairment test begins with a qualitative assessment of whether it is "more likely than not" that the reporting unit's fair value is less than its carrying amount. If an entity concludes that it is not "more likely than not" that the fair value of a reporting unit is less than its carrying amount, it need not perform a two-step impairment test. If the Company's qualitative assessment concluded that it is "more likely than not" that the fair value of its reporting unit is less than its carrying amount, it must perform the two-step impairment test to identify potential goodwill impairment and measure the amount of goodwill impairment loss to be recognized, if any. The first step of the goodwill impairment test compares the estimated fair value of the reporting unit with its carrying amount, or the book value, including goodwill. If the estimated fair value of the reporting unit equals or exceeds its book value, goodwill is considered not impaired, and the second step of the impairment test is unnecessary.

15

The second step, if necessary, measures the amount of goodwill impairment loss to be recognized. The reporting unit must determine fair value for all assets and liabilities, excluding goodwill. The net of the assigned fair value of assets and liabilities is then compared to the book value of the reporting unit, and any excess book value becomes the implied fair value of goodwill. If the carrying amount of the goodwill exceeds the newly calculated implied fair value of goodwill, an impairment loss is recognized in the amount required to write-down the goodwill to the implied fair value.

Management's qualitative assessment takes into consideration macroeconomic conditions, industry and market considerations, cost or margin factors, financial performance and share price of the Company's common stock. The Company performed its fiscal year 2020 goodwill impairment test during the quarter ended June 30, 2020 with the assistance of an independent third-party firm specializing in goodwill impairment valuations for financial institutions. The third-party analysis was conducted as of May 31, 2020, and the step one test concluded that the reporting unit's fair value was more than its recorded value and, therefore, step two of the analysis was not necessary. Accordingly, the recorded value of goodwill as of May 31, 2020 was not impaired.

A significant amount of judgment is involved in determining if an indicator of goodwill impairment has occurred. Such indicators may include, among others: a significant decline in expected future cash flows; a sustained, significant decline in the Company's stock price and market capitalization; a significant adverse change in legal factors or in the business climate; adverse assessment or action by a regulator; and unanticipated competition. Any change in these indicators could have a significant negative impact on the Company's financial condition, impact the goodwill impairment analysis or cause the Company to perform a goodwill impairment analysis more frequently than once per year.

As of March 31, 2021, management believes that there have been no events or changes in the circumstances since May 31, 2020 that would indicate a potential impairment of goodwill. No assurances can be given, however, that the Company will not record an impairment loss on goodwill in the future. If adverse economic conditions or decreases in the Company's stock price and market capitalization as a result of the novel coronavirus of 2019 ("COVID-19") pandemic were to be deemed sustained rather then temporary, it may significantly affect the fair value of the Company's goodwill and may trigger impairment charges. Any impairment charge could have a material adverse effect on the Company's results of operations and financial condition. The recorded amount of goodwill at March 31, 2021 and September 30, 2020 remained unchanged at $15.13 million.

CDI represents the future economic benefit of the potential cost savings from acquiring core deposits as part of a business combination compared to the cost of alternative funding sources. CDI is amortized to non-interest expense using an accelerated method based on an estimated runoff of related deposits over a period of ten years. CDI is evaluated for impairment whenever events or changes in circumstances indicate that its carrying amount may not be recoverable, with any changes in estimated useful life accounted for prospectively over the revised remaining life. As of March 31, 2021, management believes that there have been no events or changes in the circumstances that would indicate a potential impairment of CDI.

16

(4) LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES

Loans receivable by portfolio segment consisted of the following at March 31, 2021 and September 30, 2020 (dollars in thousands):

	March 31, 2021				September 30, 2020
	Amount		Percent		Amount		Percent
Mortgage loans:
One- to four-family (1)	$	117,184	10.3	%	$	118,580	10.5	%
Multi-family	92,435		8.1		85,053		7.5
Commercial	461,966		40.5		453,574		40.0
Construction - custom and owner/builder	105,305		9.2		129,572		11.4
Construction - speculative one- to four-family	17,289		1.5		14,592		1.3
Construction - commercial	42,340		3.7		33,144		2.9
Construction - multi-family	44,266		3.9		34,476		3.0
Construction - land development	2,238		0.2		7,712		0.7
Land	19,041		1.7		25,571		2.3
Total mortgage loans	902,064		79.1		902,274		79.6
Consumer loans:
Home equity and second mortgage	32,026		2.8		32,077		2.8
Other	2,756		0.2		3,572		0.3
Total consumer loans	34,782		3.0		35,649		3.1
Commercial loans:
Commercial business	66,645		5.8		69,540		6.1
U.S. Small Business Administration ("SBA") Paycheck Protection Program ("PPP") loans	138,175		12.1		126,820		11.2
Total commercial loans	204,820		17.9	%	196,360		17.3
Total loans receivable	1,141,666		100.0	%	1,134,283		100.0	%
Less:
Undisbursed portion of construction  loans in process	90,550				100,558
Deferred loan origination fees, net	6,999				6,436
Allowance for loan losses	13,434				13,414
Subtotal	110,983				120,408
Loans receivable, net	$	1,030,683			$	1,013,875
_____________________________
(1) Does not include one- to four-family loans held for sale totaling $8,455 and $4,509 at March 31, 2021 and September 30, 2020, respectively.

Loans receivable at March 31, 2021 and September 30, 2020 are reported net of unamortized discounts totaling $583,000 and $790,000, respectively.

17

Allowance for Loan Losses

The following tables set forth information for the three and six months ended March 31, 2021 and 2020 regarding activity in the allowance for loan losses by portfolio segment (dollars in thousands):

	Three Months Ended March 31, 2021
	Beginning Allowance		Provision for (Recapture of) Loan Losses		Charge- offs		Recoveries		Ending Allowance
Mortgage loans:
One- to four-family	$	1,135	$	16	$	—	$	—	$	1,151
Multi-family	757		27		—		—		784
Commercial	7,136		102		—		—		7,238
Construction – custom and owner/builder	770		(75)		—		—		695
Construction – speculative one- to four-family	182		(34)		—		—		148
Construction – commercial	558		156		—		—		714
Construction – multi-family	186		137		—		—		323
Construction – land development	123		(104)		—		—		19
Land	474		(72)		—		5		407
Consumer loans:
Home equity and second mortgage	605		(53)		—		—		552
Other	57		—		(1)		—		56
Commercial business loans	1,449		(100)		(2)		—		1,347
SBA PPP loans	—		—		—		—		—
Total	$	13,432	$	—	$	(3)	$	5	$	13,434

	Six Months Ended March 31, 2021
	Beginning Allowance		Provision for (Recapture of) Loan Losses		Charge- offs		Recoveries		Ending Allowance
Mortgage loans:
One-to four-family	$	1,163	$	(12)	$	—	$	—	$	1,151
Multi-family	718		66		—		—		784
Commercial	7,144		94		—		—		7,238
Construction – custom and owner/builder	832		(137)		—		—		695
Construction – speculative one- to four-family	158		(10)		—		—		148
Construction – commercial	420		294		—		—		714
Construction – multi-family	238		85		—		—		323
Construction – land development	133		(114)		—		—		19
Land	572		(175)		—		10		407
Consumer loans:
Home equity and second mortgage	593		(41)		—		—		552
Other	71		(18)		(1)		4		56
Commercial business loans	1,372		(32)		(2)		9		1,347
SBA PPP loans	—		—		—		—		—
Total	$	13,414	$	—	$	(3)	$	23	$	13,434

18

	Three Months Ended March 31, 2020
	Beginning Allowance		Provision for (Recapture of) Loan Losses		Charge- offs		Recoveries		Ending Allowance
Mortgage loans:
One- to four-family	$	1,065	$	83	$	—	$	1	$	1,149
Multi-family	499		96		—		—		595
Commercial	4,410		1,351		—		1		5,762
Construction – custom and owner/builder	754		(57)		—		—		697
Construction – speculative one- to four-family	248		(44)		—		—		204
Construction – commercial	403		20		—		—		423
Construction – multi-family	333		61		—		—		394
Construction – land development	48		32		—		—		80
Land	654		19		—		5		678
Consumer loans:
Home equity and second mortgage	609		47		—		—		656
Other	87		(10)		(1)		2		78
Commercial business loans	772		402		—		—		1,174
Total	$	9,882	$	2,000	$	(1)	$	9	$	11,890

	Six Months Ended March 31, 2020
	Beginning Allowance		Provision for (Recapture of) Loan Losses		Charge- offs		Recoveries		Ending Allowance
Mortgage loans:
One-to four-family	$	1,167	$	(21)	$	—	$	3	$	1,149
Multi-family	481		114		—		—		595
Commercial	4,154		1,603		—		5		5,762
Construction – custom and owner/builder	755		(63)		—		5		697
Construction – speculative one- to four-family	212		(8)		—		—		204
Construction – commercial	338		85		—		—		423
Construction – multi-family	375		19		—		—		394
Construction – land development	67		13		—		—		80
Land	697		(29)		—		10		678
Consumer loans:
Home equity and second mortgage	623		33		—		—		656
Other	99		(13)		(11)		3		78
Commercial business loans	722		467		(15)		—		1,174
Total	$	9,690	$	2,200	$	(26)	$	26	$	11,890

19

The following tables present information on the loans evaluated individually and collectively for impairment in the allowance for loan losses by portfolio segment at March 31, 2021 and September 30, 2020 (dollars in thousands):

	Allowance for Loan Losses						Recorded Investment in Loans
	Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Total		Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Total
March 31, 2021
Mortgage loans:
One- to four-family	$	—	$	1,151	$	1,151	$	896	$	116,288	$	117,184
Multi-family	—		784		784		—		92,435		92,435
Commercial	—		7,238		7,238		3,028		458,938		461,966
Construction – custom and owner/builder	—		695		695		—		62,973		62,973
Construction – speculative one- to four-family	—		148		148		—		7,336		7,336
Construction – commercial	—		714		714		—		34,217		34,217
Construction – multi-family	—		323		323		—		15,739		15,739
Construction – land development	—		19		19		—		623		623
Land	—		407		407		173		18,868		19,041
Consumer loans:
Home equity and second mortgage	—		552		552		537		31,489		32,026
Other	—		56		56		8		2,748		2,756
Commercial business loans	73		1,274		1,347		527		66,118		66,645
SBA PPP loans	—		—		—		—		138,175		138,175
Total	$	73	$	13,361	$	13,434	$	5,169	$	1,045,947	$	1,051,116
September 30, 2020
Mortgage loans:
One- to four-family	$	3	$	1,160	$	1,163	$	1,143	$	117,437	$	118,580
Multi-family	—		718		718		—		85,053		85,053
Commercial	—		7,144		7,144		3,242		450,332		453,574
Construction – custom and owner/builder	—		832		832		—		75,332		75,332
Construction – speculative one- to four-family	—		158		158		—		7,108		7,108
Construction – commercial	—		420		420		—		20,927		20,927
Construction – multi-family	—		238		238		—		10,832		10,832
Construction – land development	—		133		133		—		4,739		4,739
Land	—		572		572		394		25,177		25,571
Consumer loans:
Home equity and second mortgage	—		593		593		555		31,522		32,077
Other	—		71		71		9		3,563		3,572
Commercial business loans	38		1,334		1,372		430		69,110		69,540
SBA PPP loans	—		—		—		—		126,820		126,820
Total	$	41	$	13,373	$	13,414	$	5,773	$	1,027,952	$	1,033,725

20

The following tables present an analysis of loans by aging category and portfolio segment at March 31, 2021 and September 30, 2020 (dollars in thousands):

	30–59 Days Past Due		60-89 Days Past Due		Non- Accrual (1)		Past Due 90 Days or More and Still Accruing		Total Past Due		Current		Total Loans
March 31, 2021
Mortgage loans:
One- to four-family	$	—	$	—	$	415	$	—	$	415	$	116,769	$	117,184
Multi-family	—		—		—		—		—		92,435		92,435
Commercial	514		—		643		—		1,157		460,809		461,966
Construction – custom and owner/builder	808		—		—		—		808		62,165		62,973
Construction – speculative one- to four-family	—		—		—		—		—		7,336		7,336
Construction – commercial	—		—		—		—		—		34,217		34,217
Construction – multi-family	—		—		—		—		—		15,739		15,739
Construction – land development	—		—		—		—		—		623		623
Land	217		—		173		—		390		18,651		19,041
Consumer loans:
Home equity and second mortgage	—		73		539		—		612		31,414		32,026
Other	11		—		8		—		19		2,737		2,756
Commercial business loans	—		—		527		—		527		66,118		66,645
SBA PPP loans	—		—		—		—		—		138,175		138,175
Total	$	1,550	$	73	$	2,305	$	—	$	3,928	$	1,047,188	$	1,051,116
September 30, 2020
Mortgage loans:
One- to four-family	$	—	$	68	$	659	$	—	$	727	$	117,853	$	118,580
Multi-family	—		—		—		—		—		85,053		85,053
Commercial	—		519		858		—		1,377		452,197		453,574
Construction – custom and owner/builder	—		—		—		—		—		75,332		75,332
Construction – speculative one- to four-family	—		—		—		—		—		7,108		7,108
Construction – commercial	—		—		—		—		—		20,927		20,927
Construction – multi-family	—		—		—		—		—		10,832		10,832
Construction – land development	—		38		—		—		38		4,701		4,739
Land	—		144		394		—		538		25,033		25,571
Consumer loans:
Home equity and second mortgage	—		22		555		—		577		31,500		32,077
Other	3		—		9		—		12		3,560		3,572
Commercial business loans	49				430				479		69,061		69,540
SBA PPP loans	—		—		—		—		—		126,820		126,820
Total	$	52	$	791	$	2,905	$	—	$	3,748	$	1,029,977	$	1,033,725

______________________

(1) Includes non-accrual loans past due 90 days or more and other loans classified as non-accrual.

21

Credit Quality Indicators

The Company uses credit risk grades which reflect the Company’s assessment of a loan’s risk or loss potential.  The Company categorizes loans into risk grade categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information and current economic trends, among other factors such as the estimated fair value of the collateral.  The Company uses the following definitions for credit risk ratings as part of the on-going monitoring of the credit quality of its loan portfolio:

Pass:  Pass loans are defined as those loans that meet acceptable quality underwriting standards.

Watch:  Watch loans are defined as those loans that still exhibit acceptable quality, but have some concerns that justify greater attention.  If these concerns are not corrected, a potential for further adverse categorization exists.  These concerns could relate to a specific condition peculiar to the borrower, its industry segment or the general economic environment.

Special Mention: Special mention loans are defined as those loans deemed by management to have some potential weaknesses that deserve management’s close attention.  If left uncorrected, these potential weaknesses may result in the deterioration of the payment prospects of the loan. 

Substandard:  Substandard loans are defined as those loans that are inadequately protected by the current net worth and paying capacity of the obligor, or of the collateral pledged.  Loans classified as substandard have a well-defined weakness or weaknesses that jeopardize the repayment of the debt.  If the weakness or weaknesses are not corrected, there is the distinct possibility that some loss will be sustained.

Doubtful: Loans in this classification have the weaknesses of substandard loans with the additional characteristic that the weaknesses make the collection or liquidation in full on the basis of currently existing facts, conditions and values questionable, and there is a high possibility of loss. At both March 31, 2021 and September 30, 2020, there were no loans classified as doubtful.

Loss:  Loans in this classification are considered uncollectible and of such little value that continuance as bankable assets is not warranted.  This classification does not mean that the loan has absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing off this loan even though partial recovery may be realized in the future. At both March 31, 2021 and September 30, 2020, there were no loans classified as loss.

22

The following tables present an analysis of loans by credit quality indicator and portfolio segment at March 31, 2021 and September 30, 2020 (dollars in thousands):

	Loan Grades
March 31, 2021	Pass		Watch		Special Mention		Substandard		Total
Mortgage loans:
One- to four-family	$	115,603	$	615	$	544	$	422	$	117,184
Multi-family	92,435		—		—		—		92,435
Commercial	439,977		13,290		7,600		1,099		461,966
Construction – custom and owner/builder	62,165		808		—		—		62,973
Construction – speculative one- to four-family	7,336		—		—		—		7,336
Construction – commercial	32,700		—		1,517		—		34,217
Construction – multi-family	15,739		—		—		—		15,739
Construction – land development	583		—		—		40		623
Land	17,727		575		566		173		19,041
Consumer loans:
Home equity and second mortgage	31,331		36		—		659		32,026
Other	2,717		31		—		8		2,756
Commercial business loans	66,030		—		45		570		66,645
SBA PPP loans	138,175		—		—		—		138,175
Total	$	1,022,518	$	15,355	$	10,272	$	2,971	$	1,051,116
September 30, 2020
Mortgage loans:
One- to four-family	$	115,992	$	1,369	$	551	$	668	$	118,580
Multi-family	85,053		—		—		—		85,053
Commercial	441,037		7,712		3,447		1,378		453,574
Construction – custom and owner/builder	74,529		803		—		—		75,332
Construction – speculative one- to four-family	7,108		—		—		—		7,108
Construction – commercial	19,525		—		1,402		—		20,927
Construction – multi-family	10,832		—		—		—		10,832
Construction – land development	4,701		—		—		38		4,739
Land	23,290		1,518		370		393		25,571
Consumer loans:
Home equity and second mortgage	31,344		53		—		680		32,077
Other	3,531		32		—		9		3,572
Commercial business loans	68,904		59		94		483		69,540
SBA PPP loans	126,820		—		—		—		126,820
Total	$	1,012,666	$	11,546	$	5,864	$	3,649	$	1,033,725

Impaired Loans

A loan is considered impaired when it is probable that the Company will be unable to collect all amounts (principal and interest) when due according to the contractual terms of the loan agreement. Smaller balance homogeneous loans, such as residential mortgage loans and consumer loans, may be collectively evaluated for impairment. When a loan has been identified as being impaired, the amount of the impairment is measured by using discounted cash flows, except when, as an alternative, the current estimated fair value of the collateral (reduced by estimated costs to sell, if applicable) or observable market price is used. The valuation of real estate collateral is subjective in nature and may be adjusted in future periods because of changes in economic conditions.  Management considers third-party appraisals, as well as independent fair market value assessments from realtors or persons involved in selling real estate, in determining the estimated fair value of particular properties.  In addition, as certain of these third-party appraisals and independent fair market value assessments are only updated periodically, changes in the values of specific properties may have occurred subsequent to the most recent appraisals.  Accordingly, the amounts of any such potential changes and any related adjustments are generally recorded at the time that such information is received. When the estimated net realizable value of the impaired loan is less than the recorded investment in the loan (including accrued interest and net deferred loan origination fees or costs), impairment is recognized by creating or adjusting an allocation of the allowance for loan losses, and uncollected accrued interest is reversed against interest income. If ultimate collection of principal is in doubt, all cash receipts on impaired loans are applied to reduce the principal balance. The categories of non-accrual loans and impaired loans overlap, although they are not identical.  

23

The following table is a summary of information related to impaired loans by portfolio segment as of March 31, 2021 and for the three and six months then ended (dollars in thousands):

	Recorded Investment		Unpaid Principal Balance (Loan Balance Plus Charge Off)		Related Allowance		Quarter to Date ("QTD") Average Recorded Investment (1)		Year to Date ("YTD") Average Recorded Investment (2)		QTD Interest Income Recognized (1)		YTD Interest Income Recognized (2)		QTD Cash Basis Interest Income Recognized (1)		YTD Cash Basis Interest Income Recognized (2)
With no related allowance recorded:
Mortgage loans:
One- to four-family	$	895	$	938	$	—	$	899	$	819	$	19	$	41	$	16	$	36
Commercial	3,028		3,028		—		3,028		3,099		40		80		33		63
Land	173		208		—		289		324		1		1		1		1
Consumer loans:
Home equity and second mortgage	538		538		—		573		567		1		1		1		1
Other	8		8		—		9		9		—		—		—		—
Commercial business loans	233		236		—		218		206		—		—		—		—
Subtotal	4,875		4,956		—		5,016		5,024		61		123		51		101
With an allowance recorded:
Mortgage loans:
One- to four-family	—		—		—		—		161		—		—		—		—
Commercial business loans	294		294		73		295		279		—		—		—		—
Subtotal	294		294		73		295		440		—		—		—		—
Total:
Mortgage loans:
One- to four-family	895		938		—		899		980		19		41		16		36
Commercial	3,028		3,028		—		3,028		3,099		40		80		33		63
Land	173		208		—		289		324		1		1		1		1
Consumer loans:
Home equity and second mortgage	538		538		—		573		567		1		1		1		1
Other	8		8		—		9		9		—		—		—		—
Commercial business loans	527		530		73		513		485		—		—		—		—
Total	$	5,169	$	5,250	$	73	$	5,311	$	5,464	$	61	$	123	$	51	$	101

______________________________________________

(1)For the three months ended March 31, 2021.

(2)For the six months ended March 31, 2021.

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The following table is a summary of information related to impaired loans by portfolio segment as of and for the year ended September 30, 2020 (dollars in thousands):

	Recorded Investment		Unpaid Principal Balance (Loan Balance Plus Charge Off)		Related Allowance		YTD Average Recorded Investment (1)		YTD Interest Income Recognized (1)		YTD Cash Basis Interest Income Recognized (1)
With no related allowance recorded:
Mortgage loans:
One- to four-family	$	659	$	703	$	—	$	1,127	$	44	$	34
Commercial	3,242		3,242		—		3,236		133		107
Land	394		438		—		125		—		—
Consumer loans:
Home equity and second mortgage	555		555		—		581		—		—
Other	9		9		—		6		—		—
Commercial business loans	182		182		—		176		—		—
Subtotal	5,041		5,129		—		5,251		177		141
With an allowance recorded:
Mortgage loans:
One- to four-family	484		484		3		194		16		8
Land	—		—		—		110		—		—
Consumer loans:
Other	—		—		—		7		—		—
Commercial business loans	248		248		38		370		—		—
Subtotal	732		732		41		681		16		8
Total
Mortgage loans:
One- to four-family	1,143		1,187		3		1,321		60		42
Commercial	3,242		3,242		—		3,236		133		107
Land	394		438		—		235		—		—
Consumer loans:
Home equity and second mortgage	555		555		—		581		—		—
Other	9		9		—		13		—		—
Commercial business loans	430		430		38		546		—		—
Total	$	5,773	$	5,861	$	41	$	5,932	$	193	$	149

_____________________________________________

(1) For the year ended September 30, 2020.

A troubled debt restructured loan ("TDR") is a loan for which the Company, for reasons related to a borrower’s financial difficulties, grants a concession to the borrower that the Company would not otherwise consider.  Examples of such concessions include, but are not limited to: a reduction in the stated interest rate; an extension of the maturity at an interest rate below current market rates; a reduction in the face amount of the debt; a reduction in the accrued interest; or re-amortizations, extensions, deferrals and renewals.  TDRs are considered impaired and are individually evaluated for impairment.  TDRs are classified as non-accrual (and considered to be non-performing) unless they have been performing in accordance with modified terms for a period of at least six months. The Company had $3.06 million and $3.07 million in TDRs included in impaired loans at March 31, 2021 and September 30, 2020, respectively, and had no commitments at these dates to lend additional funds on these loans.  There was no allowance for loan losses allocated to TDRs at March 31, 2021, and, at September 30, 2020, there was $3,000 in allowance for loan losses allocated to TDRs. There were no TDRs for which there was a payment default within the first 12 months of the modification during the six months ended March 31, 2021.

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The Coronavirus Aid, Relief, and Economic Security Act of 2020 signed into law on March 27, 2020 ("CARES Act") provided guidance around the modification of loans as a result of the COVID-19 pandemic, which outlined, among other criteria, that short-term modifications made on a good faith basis to borrowers who were current as defined under the CARES Act prior to any relief, are not TDRs. This includes short-term (e.g., six months) modifications such as payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment that are insignificant. Borrowers are considered current under the CARES Act and related regulatory guidance if they are less than 30 days past due on their contractual payments at the time a modification program is implemented. On December 27, 2020, the Consolidated Appropriations Act, 2021 ("CAA 2021") was signed into law. Among other purposes, this act provides coronavirus emergency response and relief, including extending relief offered under the CARES Act related to restructured loans as a result of COVID-19 through January 1, 2022 or 60 days after the end of the the national emergency declared by the President, whichever is earlier.

In response to requests from borrowers, the Company made payment deferral modifications (typically 90-day payment deferrals with interest continuing to accrue or scheduled to be paid monthly) on a number of loans. The majority of these borrowers had resumed making payments as of March 31, 2021, and as of that date, only eight loans totaling $12.88 million remained on deferral status under COVID-19 loan modification forbearance agreements. Loan modifications in accordance with the CARES Act and related regulatory guidance are still subject to an evaluation in regard to determining whether or not a loan is deemed to be impaired. See Note 10 - Recent Accounting Pronouncements.

The following tables set forth information with respect to total COVID-19 loan modifications, on deferral status, as of March 31, 2021 and September 30, 2020 (dollars in thousands):

COVID-19 Loan Modifications	March 31, 2021
Mortgage loans	Count	Balance		Percent
Commercial	4	$	11,174	86.7	%
Construction	1	1,517		11.8
Total mortgage loans	5	12,691		98.5
Consumer loans
Home equity and second mortgage	1	18		0.1
Total consumer loans	1	18		0.1
Commercial loans	2	175		1.4
Total COVID-19 Modifications	8	$	12,884	100.0	%

COVID-19 Loan Modifications	September 30, 2020
Mortgage loans	Number	Balance		Percent
One- to four-family	1	$	467	8.0	%
Commercial	2	3,951		67.2
Construction	1	1,402		23.9
Total mortgage loans	4	5,820		99.1
Consumer loans
Home equity and second mortgage	1	50		0.9
Total consumer loans	1	50		0.9
Total COVID-19 Modifications	5	$	5,870	100.0	%

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The following tables set forth information with respect to the Company’s TDRs by interest accrual status as of March 31, 2021 and September 30, 2020 (dollars in thousands):

	March 31, 2021
	Accruing		Non- Accrual		Total
Mortgage loans:
One- to four-family	$	479	$	—	$	479
Commercial	2,385		—		2,385
Land	—		124		124
Consumer loans:
Home equity and second mortgage	—		68		68
Total	$	2,864	$	192	$	3,056

	September 30, 2020
	Accruing		Non- Accrual		Total
Mortgage loans:
One- to four-family	$	483	$	—	$	483
Commercial	2,385		—		2,385
Land	—		130		130
Consumer loans:
Home equity and second mortgage	—		73		73
Total	$	2,868	$	203	$	3,071

There were no new TDRs during the six months ended March 31, 2021 or during the year ended September 30, 2020.

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(5) LEASES

The Company adopted Financial Accounting Standard Board ("FASB") Accounting Standards Codification ("ASC") 842, Leases ("ASC 842") on October 1, 2019 and began recording operating lease liabilities and operating lease ROU assets on the consolidated balance sheets. The Company has operating leases for three retail bank branch offices. The ROU assets totaled $2.89 million at October 1, 2019. The Company's leases have remaining lease terms of nineteen months to eleven years, some of which include options to extend the leases for up to five years.

The components of lease cost (included in the premises and equipment expense category in the consolidated statements of income) are as follows for the three and six months ended March 31, 2021 and 2020 (dollars in thousands):

	Three Months Ended March 31, 2021		Six Months Ended March 31, 2021
Lease cost:
Operating lease cost	$	92	$	185
Short-term lease cost	—		—
Total lease cost	$	92	$	185
	Three Months Ended March 31, 2020		Six Months Ended March 31, 2020
Lease cost:
Operating lease cost	$	83	$	166
Short-term lease cost	—		—
Total lease cost	$	83	$	166

The following table provides supplemental information to operating leases for the three and six months ended March 31, 2021 and 2020 (dollars in thousands):

	At or For Three Months Ended March 31, 2021				At or For Six Months Ended March 31, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	80			$	160
Weighted average remaining lease term-operating leases	8.8			years	8.8			years
Weighted average discount rate-operating leases	2.23		%		2.23		%
	At or For Three Months Ended March 31, 2020				At or For Six Months Ended March 31, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	80			$	158
Weighted average remaining lease term-operating leases	9.7			years	9.7			years
Weighted average discount rate-operating leases	2.22		%		2.22		%

The Company's leases typically do not contain a discount rate implicit in the lease contracts. As an alternative, the weighted average discount rate used to value the future value of lease payments due in calculating the value of the ROU asset and lease liability was determined by utilizing the September 30, 2019 fixed-rate advances issued by the FHLB, for all leases entered into prior to the October 1, 2019 adoption date.

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Maturities of operating lease liabilities at March 31, 2021 for future fiscal years are as follows (dollars in thousands):

Remainder of 2021	$	167
2022	342
2023	310
2024	313
2025	317
Thereafter	1,322
Total lease payments	2,771
Less imputed interest	272
Total	$	2,499

(6) NET INCOME PER COMMON SHARE

Basic net income per common share is computed by dividing net income to common shareholders by the weighted average number of common shares outstanding during the period without considering any dilutive items.  Diluted net income per common share is computed by dividing net income to common shareholders by the weighted average number of common shares and common stock equivalents for items that are dilutive, net of shares assumed to be repurchased using the treasury stock method at the average share price for the Company’s common stock during the period.  Common stock equivalents arise from the assumed conversion of outstanding stock options to purchase common stock.  

Information regarding the calculation of basic and diluted net income per common share for the three and six months ended March 31, 2021 and 2020 is as follows (dollars in thousands, except per share amounts):

	Three Months Ended March 31,				Six Months Ended March 31,
	2021		2020		2021		2020
Basic net income per common share computation
Numerator – net income	$	7,251	$	5,049	$	14,541	$	11,701
Denominator – weighted average common shares outstanding	8,331,121		8,344,201		8,322,210		8,342,828
Basic net income per common share	$	0.87	$	0.61	$	1.75	$	1.40
Diluted net income per common share computation
Numerator – net income	$	7,251	$	5,049	$	14,541	$	11,701
Denominator – weighted average common shares outstanding	8,331,121		8,344,201		8,322,210		8,342,828
Effect of dilutive stock options (1)	113,677		112,458		106,385		123,066
Weighted average common shares outstanding - assuming dilution	8,444,798		8,456,659		8,428,595		8,465,894
Diluted net income per common share	$	0.86	$	0.60	$	1.73	$	1.38

____________________________________________

(1) For the three and six months ended March 31, 2021, average options to purchase 135,590 and 136,631 shares of common stock, respectively, were outstanding but not included in the computation of diluted net income per share, because their effect would have been anti-dilutive. For the three and six months ended March 31, 2020, average options to purchase 138,362 and 121,497 shares of common stock, respectively, were outstanding but not included in the computation of diluted net income per shares, because their effect would have been anti-dilutive.

29

(7) ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The changes in accumulated other comprehensive income (loss) ("AOCI") by component during the three and six months ended March 31, 2021 and 2020 are as follows (dollars in thousands):

	Three Months Ended March 31, 2021
	Changes in fair value of available for sale securities (1)		Changes in OTTI on held to maturity securities (1)		Total (1)
Balance of AOCI at the beginning of period	$	70	$	(26)	$	44
Other comprehensive income (loss)	74		3		77
Balance of AOCI at the end of period	$	144	$	(23)	$	121

	Six Months Ended March 31, 2021
	Changes in fair value of available for sale securities (1)		Changes in OTTI on held to maturity securities (1)		Total (1)
Balance of AOCI at the beginning of period	$	87	$	(26)	$	61
Other comprehensive income (loss)	57		3		60
Balance of AOCI at the end of period	$	144	$	(23)	$	121

	Three Months Ended March 31, 2020
	Changes in fair value of available for sale securities (1)		Changes in OTTI on held to maturity securities (1)		Total (1)
Balance of AOCI at the beginning of period	$	(116)	$	(30)	$	(146)
Other comprehensive (loss) income	(35)		2		(33)
Balance of AOCI at the end of period	$	(151)	$	(28)	$	(179)

	Six Months Ended March 31, 2020
	Changes in fair value of available for sale securities (1)		Changes in OTTI on held to maturity securities (1)		Total (1)
Balance of AOCI at the beginning of period	$	90	$	(40)	$	50
Other comprehensive (loss) income	(241)		12		(229)
Balance of AOCI at the end of period	$	(151)	$	(28)	$	(179)

__________________________

(1) All amounts are net of income taxes.

(8) STOCK COMPENSATION PLANS

Under the Company’s 2003 Stock Option Plan, the Company was able to grant options for up to 300,000 shares of common stock to employees, officers, directors and directors emeriti.  Under the Company's 2014 Equity Incentive Plan, the Company is able to grant options and awards of restricted stock (with or without performance measures) for up to 352,366 shares of common stock to employees, officers, directors and directors emeriti. Under the Company's 2019 Equity Incentive Plan, which was approved by shareholders on January 28, 2020, the Company is able to grant options and awards or restricted stock (with or

30

without performance measures) for up to 350,000 shares of common stock, of which 300,000 shares are reserved to be awarded to employees, including officers, and 50,000 shares are reserved to be awarded to directors and directors emeriti.  Shares issued may be purchased in the open market or may be issued from authorized and unissued shares.  The exercise price of each option equals the fair market value of the Company’s common stock on the date of grant. Generally, options and restricted stock vest in 20% annual installments on each of the five anniversaries from the date of the grant, and options generally have a maximum contractual term of ten years from the date of grant. At March 31, 2021, there were 29,676 shares of common stock available which may be awarded as options or restricted stock pursuant to future grant under the 2014 Equity Incentive Plan. At March 31, 2021, there were 298,000 shares of common stock available which may be awarded as options or restricted stock pursuant to future grant under the 2019 Equity Incentive Plan.

At both March 31, 2021 and 2020, there were no unvested restricted stock awards. There were no restricted stock grants awarded during the six months ended March 31, 2021 and 2020.

Stock option activity for the six months ended March 31, 2021 and 2020 is summarized as follows:

	Six Months Ended March 31, 2021			Six Months Ended March 31, 2020
	Number of Shares	Weighted Average Exercise Price		Number of Shares	Weighted Average Exercise Price
Options outstanding, beginning of period	395,349	$	18.45	378,304	$	18.15
Exercised	(53,564)	9.70		(36,375)	10.30
Granted	1,500	19.13		1,000	26.50
Forfeited	(4,520)	27.57		(8,650)	24.84
Options outstanding, end of period	338,765	$	19.71	334,279	$	18.86

The fair value of stock options is determined using the Black-Scholes valuation model.

The weighted average assumptions for options granted during the six months ended March 31, 2021 were as follows:

Expected volatility	33		%
Expected life (in years)	5
Expected dividend yield	4.76		%
Risk free interest rate	0.38		%
Grant date fair value per share	$	3.26

The aggregate intrinsic value of options exercised during the six months ended March 31, 2021 and 2020 was $947,000 and $628,000, respectively.

At March 31, 2021, there were 158,392 unvested options with an aggregate grant date fair value of $565,000, all of which the Company assumes will vest. The aggregate intrinsic value of unvested options at March 31, 2021 was $897,000.  There were 200 options vested during the six months ended March 31, 2021 with a total fair value of $1,000.

At March 31, 2020, there were 154,670 unvested options with an aggregate grant date fair value of $584,000. There were no options that vested during the six months ended March 31, 2020.

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Additional information regarding options outstanding at March 31, 2021 is as follows:

			Options Outstanding				Options Exercisable
Range of Exercise Prices ($)			Number	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)	Number	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)
$5.86	-	6.00	4,200	$	5.93	1.5	4,200	$	5.93	1.5
9.00			30,000	9.00		2.6	30,000	9.00		2.6
10.26	-	10.71	65,575	10.57		4.0	65,575	10.57		4.0
15.67	-	19.13	104,500	16.50		8.2	25,400	15.67		5.5
26.50	-	27.14	43,990	27.13		8.5	8,798	27.13		8.5
29.69			50,400	29.69		6.5	30,300	29.69		6.5
31.80			40,100	31.80		7.5	16,100	31.80		7.5
			338,765	$	19.71	6.5	180,373	$	16.83	4.9

The aggregate intrinsic value of options outstanding at March 31, 2021 and 2020 was $2.99 million and $1.41 million, respectively.

As of March 31, 2021, unrecognized compensation cost related to unvested stock options was $507,000, which is expected to be recognized over a weighted average life of 2.12 years.

(9) 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 broad 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 both March 31, 2021 and September 30, 2020. The Company's assets measured at estimated fair value on a recurring basis at March 31, 2021 and September 30, 2020 were as follows (dollars in thousands):

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March 31, 2021	Estimated Fair Value
	Level 1		Level 2		Level 3		Total
Available for sale investment securities
MBS: U.S. government agencies	$	—	$	69,184	$	—	$	69,184
Investments in equity securities
Mutual funds	957		—		—		957
Total	$	957	$	69,184	$	—	$	70,141

September 30, 2020	Estimated Fair Value
	Level 1		Level 2		Level 3		Total
Available for sale investment securities
MBS: U.S. government agencies	$	—	$	57,907	$	—	$	57,907
Investments in equity securities
Mutual funds	977		—		—		977
Total	$	977	$	57,907	$	—	$	58,884

There were no transfers among Level 1, Level 2 and Level 3 during the six months ended March 31, 2021 and the year ended September 30, 2020.

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 March 31, 2021 (dollars in thousands):

	Estimated Fair Value
	Level 1		Level 2		Level 3
Impaired loans:
Commercial business loans	$	—	$	—	$	221
Total impaired loans	—		—		221
OREO and other repossessed assets	—		—		157
Total	$	—	$	—	$	378

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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 March 31, 2021 (dollars in thousands):

	Estimated Fair Value		Valuation Technique(s)	Unobservable Input(s)	Range
Impaired loans	$	221	Market approach	Appraised value less estimated selling costs	NA
OREO and other repossessed assets	$	157	Market approach	Lower of appraised value or listing price less estimated selling costs	NA

The following table summarizes the balances of assets measured at estimated fair value on a non-recurring basis at September 30, 2020 (dollars in thousands):

	Estimated Fair Value
	Level 1		Level 2		Level 3
Impaired loans:
Mortgage loans:
One- to four-family	$	—	$	—	$	481
Commercial business loans	—		—		210
Total impaired loans	—		—		691
Investment securities – held to maturity:
MBS - private label residential	—		8		—
OREO and other repossessed assets	—		—		1,050
Total	$	—	$	8	$	1,741

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, 2020 (dollars in thousands):

	Estimated Fair Value		Valuation Technique(s)	Unobservable Input(s)	Range
Impaired loans	$	691	Market approach	Appraised value less estimated selling costs	NA
OREO and other repossessed assets	$	1,050	Market approach	Lower of appraised value or listing price less estimated selling costs	NA

GAAP requires disclosure of estimated fair values for certain 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 for which may have significant value. The Company does not believe that it would be practicable to estimate a representative fair value for these types of items as of March 31, 2021 and September 30, 2020. 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, in accordance with GAAP, the Company uses the exit price notion in calculating the fair values of financial instruments not measured at fair value on a recurring basis.

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The recorded amounts and estimated fair values of financial instruments were as follows as of March 31, 2021 and September 30, 2020 (dollars in thousands):

	March 31, 2021
					Fair Value Measurements Using:
	Recorded Amount		Estimated Fair Value		Level 1		Level 2		Level 3
Financial assets
Cash and cash equivalents	$	433,342	$	433,342	$	433,342	$	—	$	—
CDs held for investment	39,674		39,674		39,674		—		—
Investment securities	105,649		107,022		8,953		97,572		497
Investments in equity securities	957		957		957		—		—
FHLB stock	2,303		2,303		2,303		—		—
Other investments	3,000		3,000		3,000		—		—
Loans held for sale	8,455		8,714		8,714		—		—
Loans receivable, net	1,030,683		1,040,302		—		—		1,040,302
Accrued interest receivable	4,471		4,471		4,471		—		—
Financial liabilities
Certificates of deposit	142,781		144,344		—		—		144,344
FHLB borrowings	10,000		9,939		—		—		9,939
Accrued interest payable	182		182		182		—		—

	September 30, 2020
					Fair Value Measurements Using:
	Recorded Amount		Estimated Fair Value		Level 1		Level 2		Level 3
Financial assets
Cash and cash equivalents	$	314,452	$	314,452	$	314,452	$	—	$	—
CDs held for investment	65,545		65,545		65,545		—		—
Investment securities	85,797		87,734		—		87,235		499
Investments in equity securities	977		977		977		—		—
FHLB stock	1,922		1,922		1,922		—		—
Other investments	3,000		3,000		3,000		—		—
Loans held for sale	4,509		4,664		4,664		—		—
Loans receivable, net	1,013,875		1,034,876		—		—		1,034,876
Accrued interest receivable	4,484		4,484		4,484		—		—
Financial liabilities
Certificates of deposit	158,524		160,921		—		—		160,921
FHLB borrowings	10,000		10,167		—		—		10,167
Accrued interest payable	274		274		274		—		—

(10) RECENT ACCOUNTING PRONOUNCEMENTS

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses, as amended by ASU 2018-19, ASU 2019-04, ASU 2019-05, ASU 2019-10 and ASU 2019-11. ASU 2016-13 replaces the existing incurred losses methodology with a current expected losses methodology with respect to most financial assets measured at amortized cost and certain other instruments, including trade and other receivables, loans, held to maturity investment securities and off-balance sheet commitments. In addition, ASU 2016-13 requires credit losses relating to available for sale debt securities to be recorded

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through an allowance for credit losses rather than as a reduction of the carrying amount. ASU 2016-13 also changes the accounting for purchased credit-impaired securities and loans. ASU 2016-13 retains many of the current disclosure requirements in GAAP and expands certain disclosure requirements. ASU 2016-13 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Upon adoption, the Company expects a change in the processes and procedures to calculate the allowance for loan losses, including changes in the assumptions and estimates to consider expected credit losses over the life of the loan versus the current accounting practice that utilizes the incurred loss model. In addition, the current policy for OTTI on investment securities available for sale will be replaced with an allowance approach. The Company is reviewing the requirements of ASU 2016-13 and has begun developing and implementing processes and procedures to help ensure that it is fully compliant with the amendments at the adoption date. At this time, the Company anticipates the allowance for loan losses will increase as a result of the implementation of this ASU; however, until its evaluation is complete, the magnitude of the increase will be unknown.

In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other: Simplifying the Test for Goodwill Impairment. This ASU simplifies the subsequent measurement of goodwill and eliminates Step 2 from the goodwill impairment test. In computing the implied fair value of goodwill under Step 2, an entity had to perform procedures to determine the fair value of its assets and liabilities (including unrecognized assets and liabilities) at the impairment testing date following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Under ASU 2017-04, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by

which the carrying amount exceeds the reporting unit's fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax

deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. ASU 2017-04 is effective for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2022. The adoption ASU 2017-04 is not expected to a have a material impact on the Company's future consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. This ASU modifies the disclosure requirements for fair value measurements. The following disclosure requirements were removed from ASC Topic 820, Fair Value Measurement: (1) the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy; (2) the policy for timing of transfers between levels; and (3) the valuation process for Level 3 fair value measurements. This ASU clarifies that the measurement uncertainty disclosure is to communicate information about the uncertainty in measurement as of the reporting date. This ASU adds the following disclosure requirements for Level 3 measurements: (1) changes in unrealized gains and losses for the period included in other comprehensive income for the recurring Level 3 fair value measurements held at the end of the reporting period, and (2) the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. ASU 2018-13 was effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company adopted ASU 2018-13 effective October 1, 2020, and it did not have a material impact on the Company's unaudited interim consolidated financial statements.

In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40), Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The amendments in this ASU broaden the scope of ASC Subtopic 350-40 to include costs incurred to implement a hosting arrangement that is a service contract. The amendments align the requirements for capitalizing implementation costs incurred

in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The costs are capitalized or expensed depending on the nature of the costs and the project stage during which they are incurred, consistent with the accounting for internal-use software costs. The amendments in this ASU result in consistent capitalization of implementation costs of a hosting arrangement that is a service contract and implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The accounting for the service element of a hosting arrangement that is a service contract is not affected by the amendments in this ASU. ASU 2018-15 was effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company adopted ASU 2018-15 effective October 1, 2020, and it did not have a material impact on the Company's unaudited interim consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740), Simplifying the accounting for Income Taxes. The amendments in this ASU simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidelines. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020,

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including interim periods within those fiscal years. The adoption of ASU 2019-12 is not expected to have a material impact on the Company's future consolidated financial statements.

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This ASU applies to contracts, hedging relationships and other transactions that reference the London Interbank Offered Rate ("LIBOR") or other rate references expected to be discontinued because of reference rate reform. The ASU permits an entity to make necessary modifications to eligible contracts or transactions without requiring contract remeasurement or reassessment of a previous accounting determination. This ASU is effective for all entities as of March 12, 2020 through December 31, 2022. The Company has not adopted ASU 2020-04 as of March 31, 2021. The adoption of ASU 2020-04 is not expected to have a material impact on the Company's future consolidated financial statements.

On March 22, 2020, federal banking regulators issued an interagency statement that included guidance on their approach for the accounting for loan modifications in light of the economic impact of the COVID-19 pandemic. The guidance interprets current accounting standards and indicates that a lender can conclude that a borrower is not experiencing financial difficulty if short-term modifications are made in response to COVID-19, such as payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment that are insignificant related to the loans in which the borrower is less than 30 days past due on its contractual payments at the time a modification is implemented. The agencies confirmed in working with the staff of the FASB that short-term modifications made on a good faith basis in response to COVID-19 to borrowers who were current prior to any relief are not TDRs.

(11) REVENUE FROM CONTRACTS WITH CUSTOMERS

ASC 606 applies to all contracts with customers to provide goods or services in the ordinary course of business, except for contracts that are specifically excluded from its scope. The majority of the Company's revenues are composed of interest income, deferred loan fee accretion, premium/discount accretion, gains on sales of loans and investments, BOLI net earnings, servicing income on loans sold and other loan fee income, which are not within the scope of ASC 606. Revenue reported as service charges on deposits, ATM and debit card interchange transaction fees, merchant services fees, non-deposit investment fees and escrow fees are within the scope of ASC 606. All of the Company's revenue from contracts with customers within the scope of ASC 606 is recognized in non-interest income with the exception of gains on sales of OREO and gains on sales/disposition of premises and equipment, which are included in non-interest expense. For the three months ended March 31, 2021, the Company recognized $941,000 in service charges on deposits, $1.24 million in ATM and debit card interchange fees, $74,000 in escrow fees, and $3,000 in fee income from non-deposit investment sales, all considered within the scope of ASC 606. For the six months ended March 31, 2021, the Company recognized $2.00 million in service charges on deposits, $2.39 million in ATM and debit card interchange fees, $179,000 in escrow fees, and $7,000 in fee income from non-deposit investment sales, all considered within the scope of ASC 606. For the three months ended March 31, 2020, the Company recognized $1.08 million in service charges on deposits, $1.02 million in ATM and debit card interchange fees, $47,000 in escrow fees, and $7,000 in fee income from non-deposit investment sales, all considered within the scope of ASC 606. For the six months ended March 31, 2020, the Company recognized $2.28 million in service charges on deposits, $2.11 million in ATM and debit card interchange fees, $130,000 in escrow fees, and $13,000 in fee income from non-deposit investment sales, all considered within the scope of ASC 606.

If a contract is determined to be within the scope of ASC 606, the Company recognizes revenue when it satisfies its performance obligation. Descriptions of the Company's revenue-generating activities that are within the scope of ASC 606 are as follows:

•Service Charges on Deposits: The Company earns fees from its deposit customers from a variety of deposit products and services. Non-transaction based fees such as account maintenance fees and monthly statement fees are considered to be provided to the customer under a day-to-day contract with ongoing renewals. Revenue for these non-transaction fees are earned over the course of a month, representing the period over which the Company satisfies the performance obligation. Transaction-based fees such as non-sufficient fund charges, stop payment charges and wire fees are recognized at the time the transaction is executed, as the contract duration does not extend beyond the service performed.

•ATM and Debit Card Interchange Transaction Fees: The Company earns fees from cardholder transactions conducted through third-party payment network providers which consist of interchange fees earned from the payment networks as a debit card issuer. These fees are recognized when the transaction occurs, but may settle on a daily or monthly basis.

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•Escrow Fees: The Company earns fees from real estate escrow contracts with customers. The Company receives and disburses money and/or property according to the customer's contract. Fees are recognized when the escrow contract closes.

•Fee Income from Non-deposit Investment Sales: The Company earns fees from contracts with customers for investment activities. Revenues are generally recognized on a monthly basis and are generally based on a percentage of the customer's assets under management or based on investment solutions that are implemented for the customer.

Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations

As used in this Form 10-Q, the terms “we,” “our” and “Company” refer to Timberland Bancorp, Inc. and its consolidated subsidiaries, unless the context indicates otherwise.  When we refer to “Bank” in this Form 10-Q, we are referring to Timberland Bank, a wholly-owned subsidiary of Timberland Bancorp, Inc., and the Bank’s wholly-owned subsidiary, Timberland Service Corporation.

The following analysis discusses the material changes in the consolidated financial condition and results of operations of the Company at and for the three and six months ended March 31, 2021.  

Certain matters discussed in this Quarterly Report on Form 10-Q may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  These statements relate to our financial condition, results of operations, plans, objectives, future performance or business.  Forward-looking statements are not statements of historical fact, are based on certain assumptions and often include the words “believes,” “expects,” “anticipates,” “estimates,” “forecasts,” “intends,” “plans,” “targets,” “potentially,” “probably,” “projects,” “outlook” or similar expressions or future or conditional verbs such as “may,” “will,” “should,” “would” and “could.”  Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, assumptions and statements about future economic performance.  These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause our actual results to differ materially from the results anticipated or implied by our forward-looking statements, including, but not limited to: the effect of the COVID-19 pandemic, including on the Company's credit quality and business operations, as well as its impact on general economic and financial market conditions and other uncertainties resulting from the COVID-19 pandemic, such as the extent and duration of the impact on public health, the U.S. and global economies, and consumer and corporate customers, including economic activity, employment levels and market liquidity; the credit risks of lending activities, including changes in the level and trend of loan delinquencies and write-offs and changes in our allowance for loan losses and provision for loan losses that may be impacted by deterioration in the housing and commercial real estate markets which may lead to increased losses and non-performing loans in our loan portfolio, and may result in our allowance for loan losses not being adequate to cover actual losses, and require us to materially increase our loan loss reserves; changes in general economic conditions, either nationally or in our market areas; changes in the levels of general interest rates, and the relative differences between short and long term interest rates, deposit interest rates, our net interest margin and funding sources; uncertainty regarding the future of LIBOR, and the potential transition away from LIBOR toward new interest rate benchmarks; fluctuations in the demand for loans, the number of unsold homes, land and other properties and fluctuations in real estate values in our market areas; secondary market conditions for loans and our ability to sell loans in the secondary market; results of examinations of us by the Board of Governors of the Federal Reserve System ("Federal Reserve") and of our bank subsidiary by the FDIC, the Washington State Department of Financial Institutions, Division of Banks or other regulatory authorities, including the possibility that any such regulatory authority may, among other things, institute a formal or informal enforcement action against us or our bank subsidiary which could require us to increase our allowance for loan losses, write-down assets, change our regulatory capital position or affect our ability to borrow funds or maintain or increase deposits or impose additional requirements or restrictions on us, any of which could adversely affect our liquidity and earnings; legislative or regulatory changes that adversely affect our business including changes in regulatory policies and principles, or the interpretation of regulatory capital or other rules including as a result of Basel III; the impact of the Dodd Frank Wall Street Reform and Consumer Protection Act and implementing regulations; our ability to attract and retain deposits; increases in premiums for deposit insurance; our ability to control operating costs and expenses; the use of estimates in determining fair value of certain of our assets, which estimates may prove to be incorrect and result in significant declines in valuation; difficulties in reducing risks associated with the loans in our consolidated balance sheet; staffing fluctuations in response to product demand or the implementation of corporate strategies that affect our work force and potential associated charges; disruptions, security breaches, or other adverse events, failures or interruptions in, or attacks on, our information technology systems or on the third-party vendors who perform several of our critical processing functions; our ability to retain key members of our senior management team; costs and effects of litigation, including settlements and judgments; our ability to implement our business

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strategies; our ability to manage loan delinquency rates; increased competitive pressures among financial services companies; changes in consumer spending, borrowing and savings habits; the availability of resources to address changes in laws, rules, or regulations or to respond to regulatory actions; our ability to pay dividends on our common stock; adverse changes in the securities markets; inability of key third-party providers to perform their obligations to us; changes in accounting policies and practices, as may be adopted by the financial institution regulatory agencies or the FASB, including additional guidance and interpretation on accounting issues and details of the implementation of new accounting methods; including as a result of the CARES Act and the CAA 2021; the economic impact of war or any terrorist activities; other economic, competitive, governmental, regulatory, and technological factors affecting our operations, pricing, products and services including as a result of the CAA 2021 and recent COVID-19 vaccination and economic stimulus efforts; and other risks described elsewhere in this Form 10-Q and in the Company's other reports filed with or furnished to the Securities and Exchange Commission, including our 2020 Form 10-K.

Any of the forward-looking statements that we make in this Form 10-Q and in the other public statements that we make are based upon management’s beliefs and assumptions at the time that they are made.  We do not undertake and specifically disclaim any obligation to publicly update or revise any forward-looking statements included in this report to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements or to update the reasons why actual results could differ from those contained in such statements, whether as a result of new information, future events or otherwise.  In light of these risks, uncertainties and assumptions, the forward-looking statements discussed in this document might not occur and we caution readers not to place undue reliance on any forward-looking statements.  These risks could cause our actual results for fiscal year 2021 and beyond to differ materially from those expressed in any forward-looking statements by, or on behalf of us, and could negatively affect the Company’s consolidated financial condition and results of operations as well as its stock price performance.

Overview

Timberland Bancorp, Inc., a Washington corporation, is the holding company for Timberland Bank. The Bank opened for business in 1915 and serves consumers and businesses across Grays Harbor, Thurston, Pierce, King, Kitsap and Lewis counties, Washington with a full range of lending and deposit services through its 24 offices (including its main office in Hoquiam). At March 31, 2021, the Company had total assets of $1.70 billion, net loans receivable of $1.03 billion, total deposits of $1.48 billion and total shareholders’ equity of $198.54 million.  The Company's business activities generally are limited to passive investment activities and oversight of its investment in the Bank. Accordingly, the information set forth in this report, including consolidated financial statements and related data, relates primarily to the Bank's operations.

The Bank is a community-oriented bank which has traditionally offered a variety of savings products to its retail and business customers while concentrating its lending activities on real estate secured loans. Lending activities have been focused primarily on the origination of loans secured by real estate, including residential construction loans, one- to four-family residential loans, multi-family loans and commercial real estate loans. The Bank also originates commercial business loans and other consumer loans.

The profitability of the Company’s operations depends primarily on its net interest income after provision for (recapture of) loan losses.  Net interest income is the difference between interest income, which is the income that the Company earns on interest-earning assets, which are primarily loans and investments, and interest expense, the amount that the Company pays on its interest-bearing liabilities, which are primarily deposits and borrowings (as needed).  Net interest income is affected by changes in the volume and mix of interest-earning assets, the interest earned on those assets, the volume and mix of interest-bearing liabilities and the interest paid on those interest-bearing liabilities. Management attempts to maintain a net interest margin placing it within the top quartile of its Washington State peers. Because the length of the COVID-19 pandemic and the efficacy of the extraordinary measures being put in place to address its economic consequences are unknown, including the 150 basis point reductions in the targeted federal funds rate in March 2020, until the pandemic subsides, the Company expects that its net interest income and net interest margin will be adversely affected.

The provision for (recapture of) loan losses is dependent on changes in the loan portfolio and management’s assessment of the collectability of the loan portfolio as well as prevailing economic and market conditions.  The allowance for loan losses reflects the amount that the Company believes is adequate to cover probable credit losses inherent in its loan portfolio. The Company did not record a provision for loan losses for the six months ended March 31, 2021, primarily reflecting the improving economy and resulting decline in forecasted probable loan losses from COVID-19 during this period. The Company recorded a provision for loan losses of $2.00 million for the three months ended March 31, 2020 and $3.70 million for the year ended September 30,

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2020. The provisions recorded during the last nine months of the year ended September 30, 2020 were primarily due to forecasted probable loan losses reflecting the potential future impact of the COVID-19 pandemic on the economy.

The Company maintains its commitment to supporting its community and customers during these unprecedented times as a result of the COVID-19 pandemic. The Company remains focused on keeping its employees safe and the Bank running effectively to serve its customers. The Bank is managing branch access and occupancy levels in relation to cases and close contact scenarios, following governmental restrictions and public health authority guidelines. To help ensure the safety of the Company's customers and employees, services are offered primarily through drive up facilities and/or by appointment. Some of the Company's employees are working remotely or have flexible work schedules, and protective measures within the Company's offices have been established to help ensure the safety of those employees who must work on-site.

The Company has worked with loan customers on loan deferral and forbearance plans. In response to requests from borrowers, the Company made payment deferral modifications (typically 90-day payment deferrals with interest continuing to accrue or scheduled to be paid monthly) on a number of loans. The majority of these borrowers had resumed making payments as of March 31, 2021, and only eight loans with balances totaling $12.88 million remained on deferral status as of that date. Borrowers were paying interest monthly on five of these eight deferred loans totaling $8.46 million. These modifications were not classified as TDRs at March 31, 2021 in accordance with the guidance of the CARES Act and related regulatory guidance. The Company is continuing to work on forbearance plans with customers impacted by the COVID-19 pandemic. The CARES Act also authorized the SBA to temporarily guarantee loans under a new loan program called the Paycheck Protection Program ("PPP"). As a qualified SBA lender, the Company was automatically authorized to originate PPP loans in April 2020 and originated $127.54 million in PPP loans through the program's initial conclusion in August 2020. The CAA 2021, which was signed into law on December 27, 2020, renews and extends the PPP until May 31, 2021. As a result, the Company began originating PPP loans again in January 2021. As of March 31, 2021, the Company had $138.18 million in PPP loans to new and existing customers who are small to midsize businesses as well as non-profit organizations, independent contractors, and partnerships as allowed under PPP guidance.

Net income is also affected by non-interest income and non-interest expense.  For the three and six months ended March 31, 2021, non-interest income consisted primarily of service charges on deposit accounts, gain on sales of loans, ATM and debit card interchange transaction fees, an increase in the cash surrender value of BOLI, servicing income on loans sold and other operating income.  Non-interest income is also increased by net recoveries on investment securities and reduced by net OTTI losses on investment securities, if any.  Non-interest income is also decreased by valuation allowances on servicing rights and increased by recoveries of valuation allowances on servicing rights, if any.  Non-interest expense consisted primarily of salaries and employee benefits, premises and equipment, advertising, ATM and debit card interchange transaction fees, OREO and other repossessed asset expenses, postage and courier expenses, state and local taxes, professional fees, FDIC insurance premiums, loan administration and foreclosure expenses, data processing and telecommunication expenses, deposit operation expenses, amortization of CDI, and other non-interest expenses.  Non-interest expense in certain periods is reduced by gains on the sale of premises and equipment and gains on the sale of OREO. Non-interest income and non-interest expense are affected by the growth of the Company's operations and growth in the number of loan and deposit accounts.

Results of operations may be affected significantly by general and local economic and competitive conditions, changes in market interest rates, governmental policies and actions of regulatory authorities.

Critical Accounting Policies and Estimates

The Company has identified several accounting policies that as a result of judgments, estimates and assumptions inherent in those policies, are critical to an understanding of the Company’s Consolidated Financial Statements. Critical accounting policies and estimates are discussed in the Company’s 2020 Form 10-K under Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operation – Critical Accounting Policies and Estimates.” That discussion highlights estimates that the Company makes that involve uncertainty or potential for substantial change. There have been no material changes in the Company’s critical accounting policies and estimates as previously disclosed in the Company’s 2020 Form 10-K.

Comparison of Financial Condition at March 31, 2021 and September 30, 2020

The Company’s total assets increased by $133.27 million, or 8.5%, to $1.699 billion at March 31, 2021 from $1.566 billion at September 30, 2020.  The increase in total assets was primarily due to increased cash and cash equivalents, and to a much lesser

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extent, increases in investment securities, and net loans receivable, partially offset by a decrease in CDs held for investment. The increase in total assets was funded primarily by an increase in total deposits.

Net loans receivable increased by $16.81 million, or 1.7%, to $1.031 billion at March 31, 2021 from $1.014 billion at September 30, 2020, primarily due to an increase in SBA PPP loans and smaller increases in several other categories. These increases were partially offset by decreases in construction loans, land loans, and smaller decreases in several other categories.  

Total deposits increased by $123.45 million, or 9.1%, to $1.482 billion at March 31, 2021 from $1.358 billion at September 30, 2020, primarily due to increases in non-interest-bearing demand account balances, savings account balances, NOW checking account balances, and money market account balances. These increases were partially offset by a decrease in certificates of deposit account balances.

Shareholders’ equity increased by $10.91 million, or 5.8%, to $198.54 million at March 31, 2021 from $187.63 million at September 30, 2020.  The increase in shareholders' equity was primarily due to net income, partially offset by the payment of dividends to common shareholders.

A more detailed explanation of the changes in significant balance sheet categories follows:

Cash and Cash Equivalents and CDs Held for Investment: Cash and cash equivalents and CDs held for investment increased by $93.02 million, or 24.5%, to $473.02 million at March 31, 2021 from $380.00 million at September 30, 2020. The increase was primarily a result of an increase in total deposits, which exceeded the funds required for loan originations and used for purchases of investment securities.

Investment Securities:  Investment securities (including investments in equity securities) increased by $19.84 million, or 22.9%, to $106.61 million at March 31, 2021 from $86.77 million at September 30, 2020. This increase was primarily due to the purchase of additional mortgage-backed investment securities and U.S. Treasury securities during the six months ended March 31, 2021 as the Company put a portion of its excess overnight liquidity into higher-earning investment securities during the period. These increases were partially offset by maturities, prepayments and scheduled amortization of other investment securities. For additional information on investment securities, see Note 2 of the Notes to Unaudited Consolidated Financial Statements contained in “Item 1, Financial Statements.”

FHLB Stock: FHLB stock increased $381,000, or 19.8% to $2.30 million at March 31, 2021 from $1.92 million at September 30, 2020, due to purchases required by the FHLB due to the increase in total assets.

Other Investments: Other investments consist solely of the Company's investment in the Solomon Hess SBA Loan Fund LLC, which was unchanged at $3.00 million at both March 31, 2021 and September 30, 2020. This investment is utilized to help satisfy compliance with the Bank's Community Reinvestment Act investment test requirements.

Loans: Net loans receivable increased by $16.81 million, or 1.7%, to $1.031 billion at March 31, 2021 from $1.014 billion at September 30, 2020.  The increase was primarily due to an $11.36 million increase in SBA PPP loans, a $10.01 million decrease in the undisbursed portion of construction loans in process, an $8.39 million increase in commercial real estate mortgage loans, and a $7.38 million increase in multi-family mortgage loans. These increases to net loans receivable were partially offset by an $8.06 million decrease in construction loans, a $6.52 million decrease in land loans, and smaller decreases in several other loan categories. The SBA PPP loan balances increased primarily due to the renewal of the program in December 2020 and was partially offset by borrowers applying for forgiveness from the SBA and the loans being subsequently paid off by the SBA.

Loan originations increased by $90.69 million, or 38.9%, to $323.72 million for the six months ended March 31, 2021 from $233.03 million for the six months ended March 31, 2020.  The increase in loan originations was primarily due to funding new SBA PPP loans, increased loan demand for one- to four-family mortgage loan refinances, and the funding of several larger commercial business and commercial real estate loans. The Company continued to sell longer-term fixed rate one- to four-family mortgage loans for asset liability management purposes and to generate non-interest income. The Company also periodically sells the guaranteed portion of SBA loans.  Sales of fixed rate one- to four-family mortgage loans increased by $23.07 million, or 37.2%, to $85.13 million for the six months ended March 31, 2021 from $62.06 million for the six months ended March 31, 2020, primarily due to increased refinance activity for one- to four-family loan due to the decrease in mortgage interest rates.

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For additional information, see Note 4 of the Notes to Unaudited Consolidated Financial Statements contained in “Item 1, Financial Statements.”

Premises and Equipment:  Premises and equipment decreased by $272,000, or 1.2%, to $22.76 million at March 31, 2021 from $23.04 million at September 30, 2020.  This decrease was primarily due to normal depreciation.

OREO (Other Real Estate Owned): OREO and other repossessed assets decreased by $893,000, or 85.0%, to $157,000 at March 31, 2021 from $1.05 million at September 30, 2020, primarily due to the sale of three land parcels.  At March 31, 2021, total OREO and other repossessed assets consisted of three land parcels totaling $157,000.

BOLI (Bank Owned Life Insurance): BOLI increased by $295,000 or 1.4%. to $21.89 million at March 31, 2021 from $21.60 million at September 30, 2020. The increase was due to net BOLI earnings, representing the increase in the cash surrender value of the BOLI policies.

Goodwill and CDI:  The recorded amount of goodwill remained unchanged at $15.13 million at both March 31, 2021 and September 30, 2020. CDI decreased by $181,000, or 11.1%, to $1.44 million at March 31, 2021 from $1.63 million at September 30, 2020 due to scheduled amortization. For additional information on goodwill and CDI, see Note 3 of the Notes to Unaudited Consolidated Financial Statements contained in “Item 1, Financial Statements.”

Deposits: Deposits increased by $123.45 million, or 9.1%, to $1.482 billion at March 31, 2021 from $1.358 billion at September 30, 2020. The increase in total deposits was primarily due to a $57.65 million increase in non-interest bearing demand account balances, a $30.87 million increase in savings account balances, a $26.91 million increase in NOW checking account balances, and a $23.77 million increase in money market account balances. These increases were partially offset by a $15.74 million decrease in certificates of deposit account balances.

Deposits consisted of the following at March 31, 2021 and September 30, 2020 (dollars in thousands):

	March 31, 2021				September 30, 2020
	Amount		Percent		Amount		Percent
Non-interest-bearing demand	$	499,541	33.7	%	$	441,889	32.5	%
NOW checking	403,811		27.2		376,899		27.8
Savings	250,736		16.9		219,869		16.2
Money market	171,896		11.6		149,922		11.0
Money market - reciprocal	13,094		0.9		11,303		0.9
Certificates of deposit under $250	119,388		8.1		129,579		9.5
Certificates of deposit $250 and over	23,393		1.6		28,945		2.1
Total	$	1,481,859	100.0	%	$	1,358,406	100.0	%

FHLB Borrowings: The Company has short- and long-term borrowing lines with the FHLB with total credit available on the lines equal to 45% of the Bank's total assets, limited by available collateral. FHLB borrowings remained unchanged at $10.00 million at both March 31, 2021 and September 30, 2020, and consisted of two $5.00 million borrowings, with scheduled maturities in March 2025 and March 2027, respectively, and which bear interest at 1.19% and 1.11%, respectively.

Shareholders’ Equity:  Total shareholders’ equity increased by $10.91 million, or 5.8%, to $198.54 million at March 31, 2021 from $187.63 million at September 30, 2020.  The increase was primarily due to net income of $14.54 million for the six months ended March 31, 2021 and $519,000 from the exercise of stock options, which was partially offset by dividend payments to common shareholders of $4.24 million and the repurchase of 2,900 shares of the Company's common stock for $58,000 (an average price of $20.04 per share). During the quarter ended March 31, 2021, the Company adopted a new stock repurchase program under which the Company may repurchase up to 5% of the Company's outstanding shares, or 415,970 shares. The new stock repurchase program replaces the existing stock repurchase program, which had 141,952 shares available to be repurchased. For additional information, see Item 2 of Part II of this Form 10-Q.

Asset Quality: The non-performing assets to total assets ratio was 0.16% at March 31, 2021 compared to 0.27% at September 30, 2020. Total non-performing assets decreased by $1.51 million, or 36.4%, to $2.65 million at March 31, 2021 from $4.16 million at September 30, 2020. The decrease in non-performing assets was due to an $893,000 decrease in OREO and other repossessed assets, a $600,000 decrease in non-accrual loans, and a $21,000 decrease in non-accrual investment securities.

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The following table sets forth information with respect to the Company’s non-performing assets at March 31, 2021 and September 30, 2020 (dollars in thousands):

	March 31, 2021			September 30, 2020
Loans accounted for on a non-accrual basis:
Mortgage loans:
One- to four-family (1)	$	415		$	659
Commercial	643			858
Land	173			394
Consumer loans:
Home equity and second mortgage	539			564
Other	8			—
Commercial business loans	527			430
Total loans accounted for on a non-accrual basis	2,305			2,905
Accruing loans which are contractually past due 90 days or more	—			—
Total of non-accrual and 90 days past due loans	2,305			2,905
Non-accrual investment securities	188			209
OREO and other repossessed assets, net (2)	157			1,050
Total non-performing assets (3)	$	2,650		$	4,164
TDRs on accrual status (4)	$	2,864		$	2,868
Non-accrual and 90 days or more past due loans as a percentage of loans receivable	0.22		%	0.28		%
Non-accrual and 90 days or more past due loans as a percentage of total assets	0.14		%	0.19		%
Non-performing assets as a percentage of total assets	0.16		%	0.27		%
Loans receivable (5)	$	1,044,117		$	1,027,289
Total assets	$	1,699,244		$	1,565,978

___________________________________

(1) As of March 31, 2021 and September 30, 2020, there were no one- to-four family properties in the process of foreclosure.

(2) As of March 31, 2021 and September 30, 2020, the balance of OREO did not include any foreclosed residential real estate property.

(3) Does not include TDRs on accrual status.

(4) Does not include TDRs totaling $192 and $203 reported as non-accrual loans at March 31, 2021 and September 30, 2020, respectively.

(5)  Does not include loans held for sale and loan balances are before the allowance for loan losses.

The Company has received, and continues to receive, inquiries and requests from borrowers for some type of payment relief due to the COVID 19-pandemic. In response, the Company has made payment deferral modifications (typically 90-day payment deferral with interest continuing to accrue or scheduled to be paid monthly) on a number of loans. All loans modified due to COVID-19 are separately monitored, and any request for continuation of relief beyond the initial modification is reassessed at that time to determine if a further modification should be granted and if a downgrade in risk rating is appropriate. For additional information on these loan modifications, see Note 4 of the Notes to Unaudited Consolidated Financial Statements contained in "Item 1, Financial Statements."

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Comparison of Operating Results for the Three and Six Months Ended March 31, 2021 and 2020

Net income increased by $2.20 million, or 43.6%, to $7.25 million for the quarter ended March 31, 2021 from $5.05 million for the quarter ended March 31, 2020. Net income per diluted common share increased by $0.26, or 43.3%, to $0.86 for the quarter ended March 31, 2021 from $0.60 for the quarter ended March 31, 2020. The increases in net income and net income per diluted common share for the three months ended March 31, 2021 were primarily due to a $2.00 million decrease in the provision for loan losses and a $1.21 million increase in non-interest income, which were partially offset by a $312,000 decrease in net interest income, a $265,000 increase in non-interest expense, and a $427,000 increase in the provision for income taxes.

Net income increased by $2.84 million, or 24.3%, to $14.54 million for the six months ended March 31, 2021 from $11.70 million for the six months ended March 31, 2020. Net income per diluted common share increased by $0.35, or 25.4%, to $1.73 for the six months ended March 31, 2021 from $1.38 for the six months ended March 31, 2021. The increases in net income and net income per diluted common share were primarily due to a $2.20 million decrease in the provision for loan losses and a $1.83 million increase in non-interest income, which were partially offset by a $302,000 increase in non-interest expense, a $291,000 decrease in net interest income, and a $594,000 increase in the provision for income taxes.

A more detailed explanation of the income statement categories is presented below.

Net Interest Income: Net interest income decreased by $313,000, or 2.4%, to $12.57 million for the quarter ended March 31, 2021 from $12.88 million for the quarter ended March 31, 2020. The decrease in net interest income was primarily due to a decrease in the average yield of interest-earning assets, which was partially offset by an increase in the average balance on interest-earnings assets and a decline in the average cost of interest-bearing liabilities.

Total interest and dividend income decreased by $771,000, or 5.5%, to $13.36 million for the quarter ended March 31, 2021 from $14.13 million for the quarter ended March 31, 2020, primarily due to a decrease in the average yield on interest-earning assets. The average yield on interest-earning assets decreased to 3.41% for the quarter ended March 31, 2021 from 4.68% for the quarter ended March 31, 2020, as market interest rates decreased following the 150 basis point decline in the targeted federal funds rate in March 2020 in response to the COVID-19 pandemic, to a range of 0.00% to 0.25% at March 31, 2021. Partially offsetting the decrease in the average yield on interest earning assets was an increase in the average balance of interest-earning assets. Average total interest-earning assets increased by $360.57 million, or 29.9%, to $1.57 billion for the quarter ended March 31, 2021 from $1.21 billion for the quarter ended March 31, 2020. Average loans receivable increased by $122.47 million, or 13.3%, average investment securities increased by $19.36 million, or 25.3%, and average interest-bearing deposits in banks and CDs increased by $218.35 million, or 107.1%, between the periods. During the quarter ended March 31, 2021, the accretion of the purchase accounting fair value discount on loans acquired in the South Sound Acquisition increased interest income on loans by $86,000 compared to $107,000 for the quarter ended March 31, 2020. The incremental accretion will change during any period based on the volume of prepayments, but is expected to decrease over time as the balance of the net discount declines. During the quarter ended March 31, 2021, there was a total of $129,000 of pre-payment penalties, non-accrual interest and late fees collected, compared to $320,000 collected for the quarter ended March 31, 2020. Also impacting the average yield and average interest-earning asset balances during the current quarter were SBA PPP loans originated. These PPP loans have a prescribed interest rate of 1.00% and are also subject to loan origination fees which are accreted into interest income over the life of each loan. For the quarter ended March 31, 2021, average PPP loans were $124.48 million and the Company recorded $306,000 in interest income and accreted $1.14 million in PPP loan origination fees into income. At March 31, 2021, PPP deferred loan origination fees of $3.86 million remain to be accreted into interest income during the remaining life of the loans.

Total interest expense decreased by $458,000, or 36.6%, to $793,000 for the quarter ended March 31, 2021 from $1.25 million for the quarter ended March 31, 2020. The decrease in interest expense was primarily due to a decrease in the average cost of interest-bearing liabilities, which was partially offset by an increase in the average balance of interest-bearing liabilities. The average cost of interest-bearing liabilities decreased to 0.33% for the quarter ended March 31, 2021 from 0.63% for the quarter ended March 31, 2020. Average interest-bearing liabilities increased by $168.00 million, or 21.1%, to $965.95 million for the quarter ended March 31, 2021 from $797.95 million for the quarter ended March 31, 2020, due to increases in the average balances of savings accounts, NOW checking accounts, money market accounts, and borrowings.

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As a result of these changes, the net interest margin ("NIM") decreased to 3.21% for the quarter ended March 31, 2021 from 4.27% for the quarter ended March 31, 2020.

Net interest income decreased by $291,000, or 1.1%, to $25.59 million for the six months ended March 31, 2021 from $25.88 million for the six months ended March 31, 2020. The decrease in net interest income was primarily due to a decrease in the average yield of interest-earning assets, which was partially offset by an increase in the average balance on interest-earning assets and a decline in the average cost of interest-bearing liabilities.

Total interest and dividend income decreased by $1.01 million, or 3.5%, to $27.32 million for the six months ended March 31, 2021 from $28.32 million for the six months ended March 31, 2020, primarily due to a decrease in the average yield on interest-earning assets. The average yield on interest-earning assets decreased to 3.56% for the six months ended March 31, 2021 from 4.76% for the six months ended March 31, 2020 as market interest rates decreased following the 150 basis point decline in the targeted federal funds rate in March 2020 in response to the COVID-19 pandemic, to a range of 0.00% to 0.25% at March 31, 2021. Substantially offsetting the decrease in the average yield on interest-earning assets was an increase in the average balance of interest-earning assets. Average total interest-earning assets increased by $342.25 million, or 28.7%, to $1.53 billion for the six months ended March 31, 2021 from $1.19 billion for the six months ended March 31, 2020. Average loans receivable increased by $120.37 million, or 13.1%, average investment securities increased by $23.47 million, or 34.3%, and average interest-bearing deposits in banks and CDs increased by $197.96 million, or 98.9%, between the periods.

Total interest expense decreased by $714,000, or 29.3%, to $1.73 million for the six months ended March 31, 2021 from $2.44 million for the six months ended March 31, 2020. The decrease in interest expense was primarily due to a decrease in the average cost of interest-bearing liabilities, which was partially offset by an increase in the average balance of interest-bearing liabilities. The average cost of interest-bearing liabilities decreased to 0.36% for the six months ended March 31, 2021 from 0.62% for the six months ended March 31, 2020. Average interest-bearing liabilities increased by $165.25 million, or 21.1%, to $949.93 million for the six months ended March 31, 2021 from $784.68 million for the six months ended March 31, 2020, due to increases in the average balances of savings accounts, NOW checking accounts, money market accounts, and borrowings.

As a result of these changes, the NIM decreased to 3.34% for the six months ended March 31, 2021 from 4.35% for the six months ended March 31, 2020.

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Average Balances, Interest and Average Yields/Cost

The following tables set forth, for the periods indicated, information regarding average balances of assets and liabilities as well as the total dollar amounts of interest income from average interest-earning assets and interest expense on average interest-bearing liabilities and average yields and costs. Such yields and costs for the periods indicated are derived by dividing income or expense by the average daily balance of assets or liabilities, respectively, for the periods presented (dollars in thousands).

	Three Months Ended March 31,
	2021						2020
	Average Balance		Interest and Dividends		Yield/ Cost		Average Balance		Interest and Dividends		Yield/ Cost
Interest-earning assets:
Loans receivable (1)(2)	$	1,044,476	$	12,791	4.90	%	$	922,011	$	12,823	5.56	%
Investment securities (2)	95,771		284		1.19		76,412		489		2.56
Dividends from mutual funds, FHLB stock and other investments	5,904		28		1.92		5,513		35		2.54
Interest-bearing deposits in banks and CDs	422,286		258		0.24		203,936		784		1.54
Total interest-earning assets	1,568,437		13,361		3.41		1,207,872		14,131		4.68
Non-interest-earning assets	85,203						85,226
Total assets	$	1,653,640					$	1,293,098
Interest-bearing liabilities:
Savings	$	236,504	48		0.08		$	178,688	52		0.12
Money market	178,768		134		0.30		143,817		207		0.58
NOW checking	394,612		153		0.16		303,403		234		0.31
Certificates of deposit	146,065		429		1.19		169,293		750		1.78
Short-term borrowings	3		—		0.23		—		—		—
Long-term borrowings	10,000		29		1.16		2,747		8		1.17
Total interest-bearing liabilities	965,952		793		0.33		797,948		1,251		0.63
Non-interest-bearing deposits	482,528						306,907
Other liabilities	10,365						10,982
Total liabilities	1,458,845						1,115,837
Shareholders' equity	194,795						177,261
Total liabilities and
shareholders' equity	$	1,653,640					$	1,293,098
Net interest income			$	12,568					$	12,880
Interest rate spread					3.08	%					4.05	%
Net interest margin (3)					3.21	%					4.27	%
Ratio of average interest-earning    assets to average interest- bearing liabilities					162.37	%					151.37	%

_______________

(1)Does not include interest on loans on non-accrual status. Includes loans held for sale. Amortized net deferred loan fees, late fees, extension fees, prepayment penalties, and the accretion of the fair value discount on loans acquired in the South Sound Acquisition are included with interest and dividends.

(2)Average balances include loans and investment securities on non-accrual status.

(3)Net interest income divided by total average interest-earning assets, annualized.

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	Six Months Ended March 31,
	2021						2020
	Average Balance		Interest and Dividends		Yield/ Cost		Average Balance		Interest and Dividends		Yield/ Cost
Interest-earning assets:
Loans receivable (1)(2)	$	1,037,304	$	26,108	5.03	%	$	916,931	$	25,587	5.58	%
Investment securities (2)	91,912		585		1.27		68,440		928		2.71
Dividends from mutual funds, FHLB stock and other investments	5,900		55		1.87		5,453		72		2.64
Interest-bearing deposits in banks and CDs	398,067		569		0.29		200,107		1,735		1.73
Total interest-earning assets	1,533,183		27,317		3.56		1,190,931		28,322		4.76
Non-interest-earning assets	84,635						84,311
Total assets	$	1,617,818					$	1,275,242
Interest-bearing liabilities:
Savings	$	229,610	96		0.08		$	176,628	86		0.10
Money market	173,579		272		0.31		138,758		396		0.57
NOW checking	386,093		330		0.17		299,884		454		0.30
Certificates of deposit	150,645		970		1.29		168,039		1,496		1.78
Short-term borrowings	2		—		0.13		1		—		2.53
Long-term borrowings	10,000		58		1.16		1,366		8		1.17
Total interest-bearing liabilities	949,929		1,726		0.36		784,676		2,440		0.62
Non-interest-bearing deposits	465,251						306,175
Other liabilities	10,528						9,394
Total liabilities	1,425,708						1,100,245
Shareholders' equity	192,110						174,997
Total liabilities and
shareholders' equity	$	1,617,818					$	1,275,242
Net interest income			$	25,591					$	25,882
Interest rate spread					3.20	%					4.14	%
Net interest margin (3)					3.34	%					4.35	%
Ratio of average interest-earning assets to average interest-bearing liabilities					161.40	%					151.77	%

_______________

(1)Does not include interest on loans on non-accrual status. Includes loans held for sale. Amortized net deferred loan fees, late fees, extension fees, prepayment penalties, and the accretion of the fair value discount on loans acquired in the South Sound Acquisition are included with interest and dividends.

(2)Average balances include loans and investment securities on non-accrual status.

(3)Net interest income divided by total average interest-earning assets, annualized.

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Rate Volume Analysis

The following table sets forth the effects of changing rates and volumes on the net interest income of the Company.   Information is provided with respect to the (i) effects on interest income attributable to changes in volume (changes in volume multiplied by prior rate), (ii) effects on interest income attributable to changes in rate (changes in rate multiplied by prior volume), and (iii) the net change (sum of the prior columns).  Changes in rate/volume have been allocated to rate and volume variances based on the absolute values of each (dollars in thousands).

	Three months ended March 31, 2021 compared to three months ended March 31, 2020 increase (decrease) due to						Six months ended March 31, 2021 compared to six months ended March 31, 2020 increase (decrease) due to
	Rate		Volume		Net Change		Rate		Volume		Net Change
Interest-earning assets:
Loans receivable and loans held for sale	$	(1,628)	$	1,596	$	(32)	$	(1,214)	$	1,735	$	521
Investment securities	(308)		103		(205)		(402)		59		(343)
Dividends from mutual funds, FHLB stock and other investments	(10)		3		(7)		(18)		1		(17)
Interest-bearing deposits in banks and CDs	(970)		444		(526)		(1,319)		153		(1,166)
Total net increase (decrease) in income on interest-earning assets	(2,916)		2,146		(770)		(2,953)		1,948		(1,005)
Interest-bearing liabilities:
Savings	(18)		14		(4)		(6)		16		10
Money market	(115)		42		(73)		(143)		19		(124)
NOW checking	(138)		57		(81)		(153)		29		(124)
Certificates of deposit	(227)		(94)		(321)		(383)		(143)		(526)
FHLB borrowings	—		21		21		—		50		50
Total net increase (decrease) in expense on interest-bearing liabilities	(498)		40		(458)		(685)		(29)		(714)
Net increase (decrease) in net interest income	$	(2,418)	$	2,106	$	(312)	$	(2,268)	$	1,977	$	(291)

Provision for Loan Losses: There was no provision for loan losses made for the quarter ended March 31, 2021 compared to a $2.00 million provision for loans losses for the quarter ended March 31, 2020 due primarily to improvement in forecasted probable credit losses from the COVID-19 pandemic on the economy as of March 31, 2021.. For the quarter ended March 31, 2021, there were net recoveries of $2,000 compared to net recoveries of $8,000 for the quarter ended March 31, 2020. Non-accrual loans decreased by $600,000 or 20.7%, to $2.31 million at March 31, 2021, from $2.91 million at September 30, 2020 and decreased by $911,000, or 28.3%, from $3.22 million at March 31, 2020. Total delinquent loans (past due 30 days or more) and non-accrual loans increased by $180,000, or 4.8%, to $3.93 million at March 31, 2021, from $3.75 million at September 30, 2020 and increased by $495,000, or 14.4%, from $3.43 million one year ago. 

The $138.18 million balance of SBA PPP loans was omitted from the Company's normal allowance for loan losses calculation at March 31, 2021, as these loans are fully guaranteed by the SBA, and management expects that most PPP borrowers will seek full or partial forgiveness of their loan obligations from the SBA within a short time frame, which will in turn reimburse the Bank for the amount forgiven.

There was no provision for loan losses made for the six months ended March 31, 2021 compared to a $2.20 million provision for loan losses for the six months ended March 31, 2020 due primarily to forecasted probable credit losses reflecting the potential future impact of the COVID-19 pandemic on the economy as of March 31, 2020. For the six months ended March 31, 2021, there were net recoveries of $20,000 compared to no net charge-offs for the six months ended March 31, 2020.

The Company has established a comprehensive methodology for determining the allowance for loan losses.  On a quarterly basis, the Company performs an analysis that considers pertinent factors underlying the quality of the loan portfolio.  These

48

factors include changes in the amount and composition of the loan portfolio, historic loss experience for various loan segments, changes in economic conditions, delinquency rates, a detailed analysis of impaired loans, and other factors to determine an appropriate level of allowance for loan losses. Impaired loans are subjected to an impairment analysis to determine an appropriate reserve amount to be allocated to each loan.  The aggregate principal impairment reserve amount determined at March 31, 2021 was $73,000 compared to $41,000 at September 30, 2020 and $89,000 at March 31, 2020. 

In accordance with GAAP, loans acquired in the South Sound Acquisition were recorded at their estimated fair value, which resulted in a net discount to the loan's contractual amounts, of which a portion reflects a discount for possible credit losses. Credit discounts are included in the determination of fair value, and, as a result, no allowance for loan losses is recorded for acquired loans at the acquisition date. The discount recorded on the acquired loans is not reflected in the allowance for loan losses or related allowance coverage ratios. The remaining fair value discount on loans acquired in the South Sound Acquisition was $583,000 at March 31, 2021. The Company believes that this should be considered by investors when comparing the Company's allowance for loan losses to total loans in periods prior to the South Sound Acquisition.

Based on its comprehensive analysis, management believes that the allowance for loan losses of $13.43 million at March 31, 2021 (1.29% of loans receivable and 582.8% of non-performing loans) was adequate to provide for probable losses inherent in the loan portfolio based on an evaluation of known and inherent risks in the loan portfolio at that date.  The allowance for loan losses was $13.41 million (1.31% of loans receivable and 461.8% of non-performing loans) at September 30, 2020 and $11.89 mil1ion (1.29% of loans receivable and 369.7% of non-performing loans) at March 31, 2020. While the Company believes that it has established its existing allowance for loan losses in accordance with GAAP, there can be no assurance that bank regulators, in reviewing the Company's loan portfolio, will not request the Company to significantly increase its allowance for loan losses. In addition, because future events affecting borrowers and collateral cannot be predicted with certainty, there can be no assurance that the existing allowance for loan losses is adequate or that substantial increases will not be necessary should the quality of any loans deteriorate. A decline in national and local economic conditions, as a result of the COVID-19 pandemic or other factors, could result in a material increase in the allowance for loan losses and may adversely affect the Company's financial condition and results of operations. For additional information, see Note 4 of the Notes to Unaudited Consolidated Financial Statements contained in “Item 1, Financial Statements.”

Non-interest Income: Total non-interest income increased by $1.21 million, or 32.8%, to $4.89 million for the quarter ended March 31, 2021 from $3.68 million for the quarter ended March 31, 2020. The increase was primarily due to a $1.02 million increase in gain on sales of loans, a $438,000 valuation recovery on servicing rights, a $222,000 increase in ATM and debit card interchange transaction fees, and smaller increases in several other categories. These increases to non-interest income were partially offset by a $293,000 decrease in the other non-interest income category, a $137,000 decrease in service charges on deposits, and smaller decreases in several other categories. The increase in gain on sales of loans was primarily due to an increase in the dollar amount of fixed rate one- to four-family loans originated and sold during the current quarter and an increase in the average pricing margin compared to the same period last year. The increased mortgage banking volumes were largely due to increased refinance activity for single family homes. The valuation recovery on servicing rights was primarily due to a decrease in the projected mortgage prepayment speeds as mortgage interest rates increased during the quarter. The increase in ATM and debit card interchange transaction fees was primarily due to an increase in the dollar volume of debit card transactions. The decrease in the other non-interest income category was related to a non-recurring $283,000 recovery (during the quarter ended March 31, 2020) of a previously charged off receivable acquired in the South Sound Acquisition. The decrease in service charges on deposits was primarily due to a decrease in overdraft fee income.

Total non-interest income for the six months ended March 31, 2021 increased by $1.83 million, or 24.0%, to $9.46 million from $7.62 million for the six months ended March 31, 2020. This increase was primarily due to a $2.07 million increase in gain on sales of loans, a $284,000 increase in ATM and debit card interchange transaction fees, a $202,000 valuation recovery on servicing rights (compared to a $23,000 valuation allowance in the comparable period one year ago), and smaller increases in several other categories. These increases were partially offset by a $293,000 decrease in the other non-interest income category (primarily due the $283,000 recovery discussed above), a $282,000 decrease in services charges on deposits, and smaller decreases in several other categories.

Non-interest Expense:  Total non-interest expense increased by $265,000, or 3.2%, to $8.55 million for the quarter ended March 31, 2021 from $8.29 million for the quarter ended March 31, 2020. This increase was primarily due to a $157,000 increase in salary and employee benefits expense and smaller increases in several other categories, which were partially offset by smaller decreases in several categories. The increase in salaries and employee benefits expense was primarily due to annual salary adjustments. The efficiency ratio for the current quarter improved to 48.99% from 50.04% for the comparable quarter one year ago.

49

Total non-interest expense increased by $302,000, or 1.8%, to $16.96 million for the six months ended March 31, 2021 from $16.66 million for the six months ended March 31, 2020. The increase was primarily due to a $228,000 increase in FDIC insurance expense and smaller increases in several other categories, which were partially offset by smaller decreases in several categories. The increase in FDIC insurance expense was primarily due an assessment credit which reduced the expense in the comparable period one year ago. The efficiency ratio for the six months ended March 31, 2021 improved to 48.41% from 49.73% for the six months ended March 31, 2020.

Provision for Income Taxes: The provision for income taxes increased by $426,000, or 34.8%, to $1.65 million for the quarter ended March 31, 2021 from $1.23 million for the quarter ended March 31, 2020, primarily due to higher income before income taxes. The provision for income tax increased by $594,000, or 20.2%, to $3.53 million for the six months ended March 31, 2021 from $2.94 million for the six months ended March 31, 2020. The Company's effective income tax rate was 18.56% for the quarter ended March 31, 2021 and 19.53% for the quarter ended March 31, 2020. The Company's effective tax rate was 19.55% for the six months ended March 31, 2020 and 20.08% for the six months ended March 31, 2020. The effective income tax rates for both the three and six months ended March 31, 2021 were lower primarily due to tax benefits recognized from the disposition of stock options.

Liquidity

The Company’s primary sources of funds are customer deposits, proceeds from principal and interest payments on loans, the sale of loans, maturing investment securities, maturing CDs held for investment and FHLB borrowings (if needed).  While maturities and the scheduled amortization of loans are a predictable source of funds, deposit flows and mortgage prepayments are greatly influenced by general interest rates, economic conditions and competition.

Liquidity management is both a short and long-term responsibility of the Bank’s management.  The Bank adjusts its investments in liquid assets based upon management’s assessment of (i) expected loan demand, (ii) projected loan sales, (iii) expected deposit flows, and (iv) yields available on interest-bearing deposits.  Excess liquidity is invested generally in interest-bearing overnight deposits and other short-term investments.

The Bank generally maintains sufficient cash and short-term investments to meet short-term liquidity needs.  At March 31, 2021, the Bank’s regulatory liquidity ratio (net cash, and short-term and marketable assets, as a percentage of net deposits and short-term liabilities) was 34.52%.

The Company’s total cash and cash equivalents and CDs held for investment increased by $93.02 million, or 24.5%, to $473.02 million at March 31, 2021 from $380.00 million at September 30, 2020. If the Bank requires funds that exceed its ability to generate them internally, it has additional borrowing capacity with the FHLB, the Federal Reserve Bank of San Francisco ("FRB") and Pacific Coast Bankers' Bank ("PCBB"). At March 31, 2021, the Bank maintained an uncommitted credit facility with the FHLB that provided for immediately available borrowings up to an aggregate amount equal to 45% of total assets, limited by available collateral. At March 31, 2021, the Bank had $10.00 million in FHLB borrowings outstanding and $378.24 million available for additional FHLB borrowings. Additionally, the Bank maintains a short-term borrowing line with the FRB with available total credit based on eligible collateral.  At March 31, 2021, the Bank had $63.76 million available for borrowings with the FRB and there was no outstanding balance on this borrowing line. Additionally, the Federal Reserve recently established the Paycheck Protection Program Liquidity Facility ("PPPLF") to improve the effectiveness of the PPP. As of March 31, 2021, the Bank was approved to utilize the PPPLF, which allows banks to pledge PPP loans at face value as collateral to obtain FRB non-recourse loans. There were no borrowings outstanding under this program during the quarter ended March 31, 2021. The Bank also maintains a $50.00 million overnight borrowing line with PCBB. At March 31, 2021, the Bank did not have an outstanding balance on this borrowing line.

The Bank’s primary investing activity is the origination of one- to four-family mortgage loans, commercial mortgage loans, construction loans, consumer loans, and commercial business loans.  At March 31, 2021, the Bank had loan commitments totaling $107.65 million and undisbursed construction loans in process totaling $90.55 million.  The Bank anticipates that it will have sufficient funds available to meet current loan commitments.  CDs that are scheduled to mature in less than one year from March 31, 2021 totaled $91.32 million. 

50

Capital Resources

The Bank, as a state-chartered, federally insured savings bank, is subject to the capital requirements established by the FDIC. Under the FDIC's capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank's assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. The Bank's capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weighting and other factors.

Based on its capital levels at March 31, 2021, the Bank exceeded all regulatory capital requirements as of that date. Consistent with the Bank's goals to operate a sound and profitable organization, it is the Bank's policy to maintain a "well-capitalized" status under the regulatory capital categories of the FDIC. Based on capital levels at March 31, 2021, the Bank was considered to be "well-capitalized" under applicable regulatory requirements. Management monitors the capital levels to provide for current and future business opportunities and to maintain the Bank's "well-capitalized" status.

The following table compares the Bank’s actual capital amounts at March 31, 2021 to its minimum regulatory capital requirements at that date (dollars in thousands):

	Actual			Regulatory Minimum To Be “Adequately Capitalized”			To Be “Well Capitalized” Under Prompt Corrective Action Provisions
	Amount	Ratio		Amount	Ratio		Amount	Ratio
Leverage Capital Ratio:
Tier 1 capital	$179,906	10.90	%	$65,997	4.00	%	$82,497	5.00	%
Risk-based Capital Ratios:
Common equity tier 1 capital	179,906	19.12		42,340	4.50		61,158	6.50
Tier 1 capital	179,906	19.12		56,453	6.00		75,271	8.00
Total capital	191,692	20.37		75,271	8.00		94,089	10.00

In addition to the minimum common equity Tier 1 ("CET1"), Tier 1 and total capital ratios, the Bank is required to maintain a capital conservation buffer consisting of additional CET1 capital greater than 2.5% of risk-weighted assets above the required minimum levels in order to avoid limitations on paying dividends, engaging in share repurchases, and paying discretionary bonuses based on percentages of retained income that could be utilized for such actions. At March 31, 2021, the Bank's CET1 capital exceeded the required capital conservation buffer.

Timberland Bancorp, Inc. is a bank holding company registered with the Federal Reserve. Bank holding companies are subject to capital adequacy requirements of the Federal Reserve under the Bank Holding Company Act of 1956, as amended, and the regulations of the Federal Reserve. For a bank holding company with less than $3.0 billion in assets (as of June 30th of the preceding year), the capital guidelines apply on a bank only basis, and the Federal Reserve expects the holding company's subsidiary bank to be well capitalized under the prompt corrective action regulations. If Timberland Bancorp, Inc. were subject to regulatory guidelines for bank holding companies with $3.0 billion or more in assets, at March 31, 2021, Timberland Bancorp, Inc. would have exceeded all regulatory requirements. The following table presents for informational purposes the regulatory capital ratios for Timberland Bancorp, Inc. as of March 31, 2021 (dollars in thousands):

	Actual
	Amount	Ratio
Leverage Capital Ratio:
Tier 1 capital	$183,374	11.19	%
Risk-based Capital Ratios:
Common equity tier 1 capital	183,374	19.47
Tier 1 capital	183,374	19.47
Total capital	195,171	20.72

51

Key Financial Ratios and Data

	Three Months Ended March 31,				Six Months Ended March 31,
	2021		2020		2021		2020
PERFORMANCE RATIOS:
Return on average assets	1.75	%	1.56	%	1.80	%	1.84	%
Return on average equity	14.89	%	11.39	%	15.14	%	13.37	%
Net interest margin	3.21	%	4.27	%	3.34	%	4.35	%
Efficiency ratio	48.99	%	50.04	%	48.41	%	49.73	%

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

There were no material changes in information concerning market risk from the information provided in the Company’s Form 10-K for the fiscal year ended September 30, 2020.

Item 4.  Controls and Procedures

(a)Evaluation of Disclosure Controls and Procedures:  An evaluation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”)) was carried out under the supervision and with the participation of the Company’s Chief Executive Officer, Chief Financial Officer and several other members of the Company’s senior management as of the end of the period covered by this report.  The Company’s Chief Executive Officer and Chief Financial Officer concluded that as of March 31, 2021 the Company’s disclosure controls and procedures were effective in ensuring that the information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is (i) accumulated and communicated to the Company’s management (including the Chief Executive Officer and Chief Financial Officer) in a timely manner to allow timely decisions regarding required disclosure, and (ii) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

(b)Changes in Internal Controls:  There have been no changes in our internal control over financial reporting (as defined in 13a-15(f) of the Exchange Act) that occurred during the quarter ended March 31, 2021, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.  The Company continued, however, to implement suggestions from its internal auditor and independent auditors to strengthen existing controls.  The Company does not expect that its disclosure controls and procedures and internal control over financial reporting will prevent all errors and fraud.  A control procedure, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control procedure are met.  Because of the inherent limitations in all control procedures, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.  These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns in controls or procedures can occur because of simple error or mistake.  Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control.  The design of any control procedure is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; as over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.  Because of the inherent limitations in a cost-effective control procedure, misstatements due to error or fraud may occur and not be detected.

PART II.   OTHER INFORMATION

Item 1.       Legal Proceedings

Neither the Company nor the Bank is a party to any material legal proceedings at this time.  From time to time,

the Bank is involved in various claims and legal actions arising in the ordinary course of business.

Item 1A.    Risk Factors

There have been no material changes in the Risk Factors previously disclosed in Item 1A of the Company's Form 10-K for the fiscal year ended September 30, 2020.

52

Item 2.       Unregistered Sales of Equity Securities and Use of Proceeds

(a)    Not applicable

(b)    Not applicable

(c)    Stock Repurchases

The following table sets forth the shares repurchased by the Company during the quarter ended March 31, 2021:

Period	Total No. of Shares Repurchased	Average Price Paid Per Share		Total No. of Shares Purchased as Part of Publicly Announced Plan	Maximum No. of Shares that May Yet Be Purchased Under the Plan (1) (2)
1/1/2021 - 1/31/2021	—	$	—	—	141,952
2/1/2021 - 2/28/2021	—	—		—	415,970
3/1/2021 - 3/31/2021	—	—		—	415,970
Total	—	$	—	—	415,970

(1) On July 28, 2015, the Company announced a plan to repurchase 352,681 shares of the Company's common stock. This plan was replaced on February 24, 2021, as discussed below. As of February 24, 2021, a total of 210,729 shares had been repurchased at an average price of $15.77 per share. All shares were repurchased through open market broker transactions, and no shares were directly repurchased from directors or officers of the Company.

(2) On February 24, 2021, the Company announced a plan to repurchase 415,970 shares of the Company's common stock. As of March 31, 2021, no shares had been repurchased, and there were 415,970 shares still authorized to be repurchased under the plan.

Item 3.      Defaults Upon Senior Securities

Not applicable.

Item 4.     Mine Safety Disclosures

Not applicable.

Item 5.     Other Information

None to be reported.

53

Item 6.         Exhibits

(a)   Exhibits

3.1	Articles of Incorporation of the Registrant (1)
3.2	Amended and Restated Bylaws of the Registrant (2)
4.1	Form of Certificate of Timberland Bancorp, Inc. Common Stock (1)
10.1	Employee Severance Compensation Plan, as revised (3)
10.2	Employee Stock Ownership Plan (4)
10.4	Form of Incentive Stock Option Agreement (5)
10.5	Form of Non-qualified Stock Option Agreement (5)
10.7	Employment Agreement with Michael R. Sand (6)
10.8	Employment Agreement with Dean J. Brydon (6)
10.9	Timberland Bancorp, Inc. 2014 Equity Incentive Plan (7)
10.10	Timberland Bancorp, Inc. 2019 Equity Incentive Plan (8)
31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes OxleyAct
31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes Oxley Act
32	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes Oxley Act
101	The following materials from Timberland Bancorp Inc's Quarterly Report 10-Q for the quarter ended March 31, 2021, formatted on Extensible Business Reporting Language (XBRL) (a) Consolidated Balance Sheets; (b) Consolidated Statements of Income; (c) Consolidated Statements of Comprehensive Income; (d) Consolidated Statements of Shareholders' Equity; (e) Consolidated Statements of Cash Flows; and (f) Notes to Unaudited Consolidated Financial Statements

_________________

(1)Incorporated by reference to the Registrant’s Registration Statement on Form S-1 (333-35817).

(2)Incorporated by reference to the Registrant's Current Report on Form 8-K filed on January 20, 2021.

(3)Incorporated by reference to the Registrant's Current Report on Form 8-K filed on April 16, 2007.

(4)Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q for the quarter ended December 31, 1997.

(5)Incorporated by reference to the Exhibit 99.2 included in the Registrant's Registration Statement on Form S-8 (333-1161163).

(6)Incorporated by reference to the Registrant's Current Report on Form 8-K filed on March 29, 2013.

(7)Attached as Appendix A to the Registrant's Annual Meeting Proxy Statement filed on December 19, 2014.

(8)Attached as Appendix A to the Registrant's Annual Meeting Proxy Statement filed on December 18, 2019.

54

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Timberland Bancorp, Inc.
Date: May 7, 2021	By:  /s/ Michael R. Sand
	Michael R. Sand
	Chief Executive Officer
	(Principal Executive Officer)
Date: May 7, 2021	By:  /s/ Dean J. Brydon
	Dean J. Brydon
	Chief Financial Officer
	(Principal Financial Officer)

55

EX-31.1

Exhibit 31.1

Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes Oxley Act

I, Michael R. Sand, certify that:

1.I have reviewed this Form 10-Q of Timberland Bancorp, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 7, 2021 

/s/ Michael R. Sand                         

Michael R. Sand

Chief Executive Officer 

EX-31.2

Exhibit 31.2

Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes Oxley Act

I, Dean J. Brydon, certify that:

1.I have reviewed this Form 10-Q of Timberland Bancorp, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 7, 2021 

/s/ Dean J. Brydon                                 

Dean J. Brydon 

Chief Financial Officer 

EX-32

EXHIBIT 32

Certification Pursuant to Section 906 of the Sarbanes Oxley Act

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

OF TIMBERLAND BANCORP, INC.

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

           Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350), each of the undersigned hereby certifies in his capacity as an officer of Timberland Bancorp, Inc. (the “Company”) and in connection with the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2021 (“Report”), that:

•the Report fully complies with the requirements of Sections 13(a)  and 15(d) of the Securities Exchange Act of 1934, as amended, and

•the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods presented in the financial statements included in the Report.

/s/ Michael R. Sand	/s/ Dean J. Brydon
Michael R. Sand	Dean J. Brydon
Chief Executive Officer	Chief Financial Officer

Date: May 7, 2021

XML

Cover - $ / shares	6 Months Ended
	Mar. 31, 2021	May 04, 2021	Sep. 30, 2020
Document and Entity Information
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2021
Document Transition Report	false
Entity File Number	000-23333
Entity Incorporation, State or Country Code	WA
Entity Tax Identification Number	91-1863696
Entity Address, Address Line One	624 Simpson Avenue
Entity Address, City or Town	Hoquiam
Entity Address, State or Province	WA
Entity Address, Postal Zip Code	98550
City Area Code	(360)
Local Phone Number	533-4747
Title of 12(b) Security	Common stock, $.01 par value
Trading Symbol	TSBK
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding (in shares)		8,362,907
Common stock par value (in dollars per share)	$ 0.01		$ 0.01
Entity Registrant Name	TIMBERLAND BANCORP, INC.
Entity Central Index Key	0001046050
Current Fiscal Year End Date	--09-30
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q2
Amendment Flag	false

XML

Recent Accounting Pronouncements

6 Months Ended

Mar. 31, 2021

Accounting Changes and Error Corrections [Abstract]

Recent Accounting Pronouncements

RECENT ACCOUNTING PRONOUNCEMENTS In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses, as amended by ASU 2018-19, ASU 2019-04, ASU 2019-05, ASU 2019-10 and ASU 2019-11. ASU 2016-13 replaces the existing incurred losses methodology with a current expected losses methodology with respect to most financial assets measured at amortized cost and certain other instruments, including trade and other receivables, loans, held to maturity investment securities and off-balance sheet commitments. In addition, ASU 2016-13 requires credit losses relating to available for sale debt securities to be recorded

through an allowance for credit losses rather than as a reduction of the carrying amount. ASU 2016-13 also changes the accounting for purchased credit-impaired securities and loans. ASU 2016-13 retains many of the current disclosure requirements in GAAP and expands certain disclosure requirements. ASU 2016-13 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Upon adoption, the Company expects a change in the processes and procedures to calculate the allowance for loan losses, including changes in the assumptions and estimates to consider expected credit losses over the life of the loan versus the current accounting practice that utilizes the incurred loss model. In addition, the current policy for OTTI on investment securities available for sale will be replaced with an allowance approach. The Company is reviewing the requirements of ASU 2016-13 and has begun developing and implementing processes and procedures to help ensure that it is fully compliant with the amendments at the adoption date. At this time, the Company anticipates the allowance for loan losses will increase as a result of the implementation of this ASU; however, until its evaluation is complete, the magnitude of the increase will be unknown.

In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other: Simplifying the Test for Goodwill Impairment. This ASU simplifies the subsequent measurement of goodwill and eliminates Step 2 from the goodwill impairment test. In computing the implied fair value of goodwill under Step 2, an entity had to perform procedures to determine the fair value of its assets and liabilities (including unrecognized assets and liabilities) at the impairment testing date following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Under ASU 2017-04, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by

which the carrying amount exceeds the reporting unit's fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax

deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. ASU 2017-04 is effective for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2022. The adoption ASU 2017-04 is not expected to a have a material impact on the Company's future consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. This ASU modifies the disclosure requirements for fair value measurements. The following disclosure requirements were removed from ASC Topic 820, Fair Value Measurement: (1) the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy; (2) the policy for timing of transfers between levels; and (3) the valuation process for Level 3 fair value measurements. This ASU clarifies that the measurement uncertainty disclosure is to communicate information about the uncertainty in measurement as of the reporting date. This ASU adds the following disclosure requirements for Level 3 measurements: (1) changes in unrealized gains and losses for the period included in other comprehensive income for the recurring Level 3 fair value measurements held at the end of the reporting period, and (2) the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. ASU 2018-13 was effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company adopted ASU 2018-13 effective October 1, 2020, and it did not have a material impact on the Company's unaudited interim consolidated financial statements.

In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40), Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The amendments in this ASU broaden the scope of ASC Subtopic 350-40 to include costs incurred to implement a hosting arrangement that is a service contract. The amendments align the requirements for capitalizing implementation costs incurred

in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The costs are capitalized or expensed depending on the nature of the costs and the project stage during which they are incurred, consistent with the accounting for internal-use software costs. The amendments in this ASU result in consistent capitalization of implementation costs of a hosting arrangement that is a service contract and implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The accounting for the service element of a hosting arrangement that is a service contract is not affected by the amendments in this ASU. ASU 2018-15 was effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company adopted ASU 2018-15 effective October 1, 2020, and it did not have a material impact on the Company's unaudited interim consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740), Simplifying the accounting for Income Taxes. The amendments in this ASU simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidelines. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020,

including interim periods within those fiscal years. The adoption of ASU 2019-12 is not expected to have a material impact on the Company's future consolidated financial statements.

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This ASU applies to contracts, hedging relationships and other transactions that reference the London Interbank Offered Rate ("LIBOR") or other rate references expected to be discontinued because of reference rate reform. The ASU permits an entity to make necessary modifications to eligible contracts or transactions without requiring contract remeasurement or reassessment of a previous accounting determination. This ASU is effective for all entities as of March 12, 2020 through December 31, 2022. The Company has not adopted ASU 2020-04 as of March 31, 2021. The adoption of ASU 2020-04 is not expected to have a material impact on the Company's future consolidated financial statements.

On March 22, 2020, federal banking regulators issued an interagency statement that included guidance on their approach for the accounting for loan modifications in light of the economic impact of the COVID-19 pandemic. The guidance interprets current accounting standards and indicates that a lender can conclude that a borrower is not experiencing financial difficulty if short-term modifications are made in response to COVID-19, such as payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment that are insignificant related to the loans in which the borrower is less than 30 days past due on its contractual payments at the time a modification is implemented. The agencies confirmed in working with the staff of the FASB that short-term modifications made on a good faith basis in response to COVID-19 to borrowers who were current prior to any relief are not TDRs.

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2021	Sep. 30, 2020
Cash and cash equivalents:
Cash and due from financial institutions	$ 21,707	$ 21,877	[1]
Interest-bearing deposits in banks	411,635	292,575	[1]
Total cash and cash equivalents	433,342	314,452	[1]
Certificates of deposit (“CDs”) held for investment (at cost, which      approximates fair value)	39,674	65,545	[1]
Investment securities held to maturity, at amortized cost (estimated fair value of $37,838 and $29,827)	36,465	27,890	[1]
Investment securities available for sale, at fair value	69,184	57,907	[1]
Investments in equity securities, at fair value	957	977
Federal Home Loan Bank of Des Moines (“FHLB”) stock, at cost	2,303	1,922	[1]
Other investments, at cost	3,000	3,000	[1]
Loans held for sale	8,455	4,509	[1]
Loans receivable, net of allowance for loan losses of $13,434 and $13,414	1,030,683	1,013,875	[1]
Premises and equipment, net	22,763	23,035	[1]
Other real estate owned (“OREO”) and other repossessed assets, net	157	1,050	[1]
Accrued interest receivable	4,471	4,484	[1]
Bank owned life insurance (“BOLI”)	21,891	21,596	[1]
Goodwill	15,131	15,131	[1]
Core deposit intangible (“CDI”), net	1,444	1,625
Servicing rights, net	3,604	3,095	[1]
Operating lease right-of-use ("ROU") assets	2,436	2,587	[1]
Other assets	3,284	3,298	[1]
Total assets	1,699,244	1,565,978	[1]
Deposits:
Non-interest-bearing demand	499,541	441,889	[1]
Interest-bearing	982,318	916,517	[1]
Total deposits	1,481,859	1,358,406	[1]
FHLB borrowings	10,000	10,000	[1]
Operating lease liabilities	2,499	2,630
Other liabilities and accrued expenses	6,343	7,312	[1]
Total liabilities	1,500,701	1,378,348	[1]
Shareholders’ equity
Preferred stock, $0.01 par value; 1,000,000 shares authorized; none issued	0	0	[2]
Common stock, $0.01 par value; 50,000,000 shares authorized; 8,361,457 shares issued and outstanding - March 31, 2021 8,310,793 shares issued and outstanding - September 30, 2020	42,949	42,396	[2]
Retained earnings	155,473	145,173	[2]
Accumulated other comprehensive income	121	61	[2]
Total shareholders’ equity	198,543	187,630	[2]
Total liabilities and shareholders’ equity	$ 1,699,244	$ 1,565,978	[2]

[1] Derived from audited consolidated financial statements.

[2] Derived from audited consolidated financial statements.

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Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2021	Sep. 30, 2020
Statement of Financial Position [Abstract]
Investments securities held to maturity, estimated fair value	$ 37,838	$ 29,827
Allowance for loan losses	$ 13,434	$ 13,414
Preferred stock par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock shares authorized (shares)	1,000,000	1,000,000
Preferred stock shares issued (shares)	0	0
Common stock par value (in dollars per share)	$ 0.01	$ 0.01
Common stock shares authorized (shares)	50,000,000	50,000,000
Common stock shares issued (shares)	8,361,457	8,310,793
Common stock shares outstanding (shares)	8,361,457	8,310,793

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Consolidated Statements of Income - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Mar. 31, 2021	Mar. 31, 2020
Interest and dividend income
Loans receivable and loans held for sale	$ 12,790	$ 12,823	$ 26,108	$ 25,587
Investment securities	284	489	585	928
Dividends from mutual funds, FHLB stock and other investments	27	35	55	72
Interest-bearing deposits in banks and CDs	259	784	569	1,735
Total interest and dividend income	13,360	14,131	27,317	28,322
Interest expense
Deposits	764	1,243	1,668	2,432
FHLB borrowings	29	8	58	8
Total interest expense	793	1,251	1,726	2,440
Net interest income	12,567	12,880	25,591	25,882
Provision for loan losses	0	2,000	0	2,200
Net interest income after provision for loan losses	12,567	10,880	25,591	23,682
Non-interest income
Net recoveries on investment securities	3	3	8	106
BOLI net earnings	146	147	295	294
Gain on sales of loans, net	1,758	736	3,760	1,688
Valuation recovery (allowance) on servicing rights, net	438	0	202	(23)
Other, net	299	592	607	900
Total non-interest income, net	4,886	3,680	9,445	7,618
Non-interest expense
Salaries and employee benefits	4,778	4,621	9,391	9,343
Premises and equipment	998	943	1,955	1,837
Gain on sales/dispositions of premises and equipment, net	0	(3)	0	(102)
Advertising	155	159	311	342
OREO and other repossessed assets, net	(68)	51	(94)	50
ATM and debit card interchange transaction fees	445	359	876	799
Postage and courier	149	145	287	279
State and local taxes	255	233	538	449
Professional fees	181	210	412	480
Federal Deposit Insurance Corporation ("FDIC") insurance	105	0	201	(27)
Loan administration and foreclosure	90	78	171	167
Data processing and telecommunications	634	515	1,240	1,099
Deposit operations	245	274	529	591
Amortization of CDI	91	102	181	203
Other	493	599	963	1,149
Total non-interest expense, net	8,551	8,286	16,961	16,659
Income before income taxes	8,902	6,274	18,075	14,641
Provision for income taxes	1,651	1,225	3,534	2,940
Net income	$ 7,251	$ 5,049	$ 14,541	$ 11,701
Net income per common share
Basic (in dollars per share)	$ 0.87	$ 0.61	$ 1.75	$ 1.40
Diluted (in dollars per share)	$ 0.86	$ 0.60	$ 1.73	$ 1.38
Weighted average common shares outstanding
Basic (in shares)	8,331,121	8,344,201	8,322,210	8,342,828
Diluted (in shares)	8,444,798	8,456,659	8,428,595	8,465,894
Dividends paid per common share (in dollars per share)			$ 0.51	$ 0.45
Deposit Account
Non-interest income
Revenue from contract with customer	$ 941	$ 1,078	$ 1,996	$ 2,278
Credit and Debit Card
Non-interest income
Revenue from contract with customer	1,237	1,015	2,393	2,109
Asset Management
Non-interest income
Revenue from contract with customer	74	47	179	130
Servicing Income On Loans Sold
Non-interest income
Revenue from contract with customer	$ (10)	$ 62	$ 5	$ 136

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Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Mar. 31, 2021	Mar. 31, 2020
Comprehensive income
Net income	$ 7,251	$ 5,049	$ 14,541	$ 11,701
Unrealized holding gain (loss) on investment securities available for sale, net of income taxes of $19, $(9), $15 and $(63), respectively	74	(35)	57	(241)
Change in other than temporary impairment ("OTTI") on investment securities held to maturity, net of income taxes:
Accretion of OTTI on investment securities held to maturity, net of income taxes of $1, $1, $1 and $3, respectively	3	2	3	12
Total other comprehensive income (loss), net of income taxes	77	(33)	60	(229)
Total comprehensive income	$ 7,328	$ 5,016	$ 14,601	$ 11,472

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Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Mar. 31, 2021	Mar. 31, 2020
Statement of Comprehensive Income [Abstract]
Unrealized holding loss on investment securities available for sale, tax	$ 19	$ (9)	$ 15	$ (63)
Accretion of OTTI on investment securities held to maturity, tax	$ 1	$ 1	$ 1	$ 3

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Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands	Total		Stock Options	Common Stock	Common Stock Stock Options	Retained Earnings	Accumulated Other Comprehensive Loss
Balance at beginning of period (in shares) at Sep. 30, 2019				8,329,419
Balance at beginning of period at Sep. 30, 2019	$ 171,067			$ 43,030		$ 127,987	$ 50	[1]
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	11,701					11,701
Other comprehensive income (loss)	(229)						(229)
Repurchase of common stock (in shares)				(56,601)
Repurchase of common stock	$ (1,238)			$ (1,238)
Exercise of stock options (in shares)	36,375			36,375
Exercise of stock options	$ 374			$ 374
Common stock dividends	(3,759)					(3,759)
Stock option compensation expense			$ 92		$ 92
Balance at end of period (in shares) at Mar. 31, 2020				8,309,193
Balance at end of period at Mar. 31, 2020	178,008			$ 42,258		135,929	(179)	[1]
Balance at beginning of period (in shares) at Dec. 31, 2019				8,346,394
Balance at beginning of period at Dec. 31, 2019	175,653			$ 43,246		132,553	(146)	[1]
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	5,049					5,049
Other comprehensive income (loss)	(33)						(33)
Repurchase of common stock (in shares)				(56,601)
Repurchase of common stock	(1,238)			$ (1,238)
Exercise of stock options (in shares)				19,400
Exercise of stock options	204			$ 204
Common stock dividends	(1,673)					(1,673)
Stock option compensation expense			46		46
Balance at end of period (in shares) at Mar. 31, 2020				8,309,193
Balance at end of period at Mar. 31, 2020	178,008			$ 42,258		135,929	(179)	[1]
Balance at beginning of period (in shares) at Sep. 30, 2020				8,310,793
Balance at beginning of period at Sep. 30, 2020	187,630	[2]		$ 42,396		145,173	61	[1]
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	14,541					14,541
Other comprehensive income (loss)	60						60
Repurchase of common stock (in shares)				(2,900)
Repurchase of common stock	$ (58)			$ (58)
Exercise of stock options (in shares)	53,564			53,564
Exercise of stock options	$ 519			$ 519
Common stock dividends	(4,241)					(4,241)
Stock option compensation expense			92		92
Balance at end of period (in shares) at Mar. 31, 2021				8,361,457
Balance at end of period at Mar. 31, 2021	198,543			$ 42,949		155,473	121	[1]
Balance at beginning of period (in shares) at Dec. 31, 2020				8,317,793
Balance at beginning of period at Dec. 31, 2020	193,325			$ 42,480		150,801	44	[1]
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	7,251					7,251
Other comprehensive income (loss)	77						77
Exercise of stock options (in shares)				43,664
Exercise of stock options	423			$ 423
Common stock dividends	(2,579)					(2,579)
Stock option compensation expense			$ 46		$ 46
Balance at end of period (in shares) at Mar. 31, 2021				8,361,457
Balance at end of period at Mar. 31, 2021	$ 198,543			$ 42,949		$ 155,473	$ 121	[1]

[1] All amounts are net of income taxes.

[2] Derived from audited consolidated financial statements.

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Consolidated Statements of Shareholders' Equity (Parentheticals) - $ / shares	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Common Stock
Dividends paid per common share (in dollars per share)	$ 0.31	$ 0.20

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Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Mar. 31, 2021		Mar. 31, 2020
Cash flows from operating activities
Net income	$ 14,541		$ 11,701
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	0		2,200
Depreciation	781		748
Deferred income taxes	51		0
Accretion of discount on purchased loans	(207)		(253)
Amortization of CDI	181		203
Stock option compensation expense	92		92
Net recoveries on investment securities	(8)		(106)
Change in fair value of investments in equity securities	20		(11)
Accretion of discounts and premiums on securities	(16)		(88)
Gain on sales of OREO and other repossessed assets, net	(92)		(39)
Provision for OREO losses	0		25
Gain on sales of loans, net	(3,760)		(1,688)
Gain on sales/disposition of premises and equipment, net	0		102
Loans originated for sale	(85,313)		(60,097)
Proceeds from sales of loans	85,127		62,058
Amortization of servicing rights	529		383
Valuation adjustment on servicing rights	(202)		23
BOLI net earnings	(295)		(294)
Increase (decrease) in deferred loan origination fees	563		(104)
Net change in accrued interest receivable and other assets, and other liabilities and accrued expenses	(1,826)		545
Net cash provided by operating activities	10,166		15,196
Cash flows from investing activities
Net decrease (increase) in CDs held for investment	25,871		(4,126)
Purchase of investment securities held to maturity	(15,050)		(9,755)
Purchase of investment securities available for sale	(16,383)		(21,521)
Proceeds from maturities and prepayments of investment securities held to maturity	6,589		4,412
Proceeds from maturities and prepayments of investment securities available for sale	5,093		2,266
Purchase of FHLB stock	(381)		(485)
Increase in loans receivable, net	(17,164)		(22,838)
Additions to premises and equipment	(509)		(1,195)
Proceeds from sales of premises and equipment	0		307
Proceeds from sales of OREO and other repossessed assets	985		74
Net cash used in investing activities	(10,949)		(52,861)
Cash flows from financing activities
Net increase in deposits	123,453		57,421
FHLB borrowings	0		10,000
Proceeds from exercise of stock options	519		374
Repurchase of common stock	(58)		(1,238)
Payment of dividends	(4,241)		(3,759)
Net cash provided by financing activities	119,673		62,798
Net increase in cash and cash equivalents	118,890		25,133
Cash and cash equivalents, at beginning of period	314,452	[1]	143,015
Cash and cash equivalents, at end of period	433,342		168,148
Supplemental disclosure of cash flow information
Income taxes paid	2,688		1,988
Interest paid	1,818		2,416
Supplemental disclosure of non-cash investing activities
Other comprehensive income (loss) related to investment securities	60		(229)
Operating lease liabilities arising from recording of ROU assets	$ 0		$ 2,889	[1]

[1] Derived from audited consolidated financial statements.

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Summary Of Significant Accounting Policies

6 Months Ended

Mar. 31, 2021

Accounting Policies [Abstract]

Summary Of Significant Accounting Policies

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a)  Basis of Presentation:  The accompanying unaudited consolidated financial statements of Timberland Bancorp, Inc.and its wholly-owned subsidiary, Timberland Bank (the "Bank") (collectively, "the Company") were prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with instructions for Form 10-Q and, therefore, do not include all disclosures necessary for a complete presentation of consolidated financial condition, results of operations, and cash flows in conformity with GAAP. However, all adjustments which are, in the opinion of management, necessary for a fair presentation of the interim consolidated financial statements have been included.  All such adjustments are of a normal recurring nature. The unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended September 30, 2020 (“2020 Form 10-K”).  The unaudited consolidated results of operations for the six months ended March 31, 2021 are not necessarily indicative of the results that may be expected for the entire fiscal year ending September 30, 2021.

(b)  Principles of Consolidation:  The unaudited consolidated financial statements include the accounts of the Company and the Bank, and the Bank’s wholly-owned subsidiary, Timberland Service Corporation.   All significant inter-company transactions and balances have been eliminated in consolidation.

(c)  Operating Segment:  The Company has one reportable operating segment which is defined as community banking in western Washington.

(d)  The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities, as of the date of the consolidated balance sheets, and the reported amounts of income and expenses during the reporting period.  Actual results could differ from those estimates.

(e)  Certain prior period amounts have been reclassified to conform to the March 31, 2021 presentation with no change to previously reported net income or total shareholders’ equity.

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Investment Securities

6 Months Ended

Mar. 31, 2021

Investments [Abstract]

Investment Securities

INVESTMENT SECURITIES

Held to maturity and available for sale investment securities have been classified according to management’s intent and were as follows as of March 31, 2021 and September 30, 2020 (dollars in thousands):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
March 31, 2021
Held to maturity
Mortgage-backed securities ("MBS"):
U.S. government agencies	$	21,888	$	1,164	$	(9)	$	23,043
Private label residential	5,056		312		(23)		5,345
U.S. Treasury and U.S. government agency securities	9,021		—		(68)		8,953
Bank issued trust preferred securities	500		—		(3)		497
Total	$	36,465	$	1,476	$	(103)	$	37,838
Available for sale
MBS: U.S. government agencies	$	69,001	$	282	$	(99)	$	69,184
Total	$	69,001	$	282	$	(99)	$	69,184
September 30, 2020
Held to maturity
MBS:
U.S. government agencies	$	27,161	$	1,635	$	(3)	$	28,793
Private label residential	229		307		(1)		535
Bank issued trust preferred securities	500		—		(1)		499
Total	$	27,890	$	1,942	$	(5)	$	29,827
Available for sale
MBS: U.S. government agencies	$	57,797	$	178	$	(68)	$	57,907
Total	$	57,797	$	178	$	(68)	$	57,907

Held to maturity and available for sale investment securities with unrealized losses were as follows as of March 31, 2021 (dollars in thousands):

	Less Than 12 Months					12 Months or Longer					Total
	Estimated  Fair  Value		Gross Unrealized Losses		Quantity	Estimated  Fair  Value		Gross Unrealized Losses		Quantity	Estimated  Fair  Value		Gross Unrealized Losses
Held to maturity
MBS:
U.S. government agencies	$	2,098	$	(8)	3	$	34	$	(1)	4	$	2,132	$	(9)
Private label residential	4,836		(23)		1	2		—		2	4,838		(23)
U.S. Treasury and U.S. government agency securities	8,953		(68)		3	—		—		—	8,953		(68)
Bank issued trust preferred securities	497		(3)		1	—		—		—	497		(3)
Total	$	16,384	$	(102)	8	$	36	$	(1)	6	$	16,420	$	(103)
Available for sale
MBS: U.S. government agencies	$	22,873	$	(99)	12	$	—	$	—	—	$	22,873	$	(99)
Total	$	22,873	$	(99)	12	$	—	$	—	—	$	22,873	$	(99)

Held to maturity and available for sale investment securities with unrealized losses were as follows as of September 30, 2020 (dollars in thousands):

	Less Than 12 Months					12 Months or Longer					Total
	Estimated  Fair  Value		Gross Unrealized Losses		Quantity	Estimated  Fair  Value		Gross Unrealized Losses		Quantity	Estimated  Fair  Value		Gross Unrealized Losses
Held to maturity
MBS:
U.S. government agencies	$	5,130	$	(2)	4	$	39	$	(1)	4	$	5,169	$	(3)
Private label residential	7		—		1	11		(1)		2	18		(1)
Bank issued trust preferred securities	499		(1)		1	—		—		—	499		(1)
Total	$	5,636	$	(3)	6	$	50	$	(2)	6	$	5,686	$	(5)
Available for sale
MBS:
U.S. government agencies	$	21,464	$	(68)	11	$	—	$	—	—	$	21,464	$	(68)
Total	$	21,464	$	(68)	11	$	—	$	—	—	$	21,464	$	(68)

The Company has evaluated the investment securities in the above tables and has determined that the declines in their fair value are 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 recovers.  Furthermore, as of March 31, 2021, management does not have the intent to sell

any of the securities classified as available for sale where the estimated fair value is below the recorded value and believes that it is more likely than not that the Company will not have to sell such securities before a recovery of cost (or recorded value if previously written down).

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 March 31, 2021 and 2020:

	Range				Weighted
	Minimum		Maximum		Average
March 31, 2021
Constant prepayment rate	6.00	%	15.00	%	13.18	%
Collateral default rate	1.73	%	28.92	%	13.94	%
Loss severity rate	—	%	18.93	%	5.79	%
March 31, 2020
Constant prepayment rate	6.00	%	15.00	%	10.91	%
Collateral default rate	1.86	%	22.47	%	10.44	%
Loss severity rate	—	%	16.34	%	4.02	%

The following table presents the OTTI recoveries for the three and six months ended March 31, 2021 and 2020 (dollars in thousands):

	Three Months Ended March 31, 2021		Three Months Ended March 31, 2020
	Held To Maturity		Held To Maturity
Total recoveries	$	3	$	3
Adjustment for portion of OTTI transferred from        other comprehensive income (loss) before income taxes (1)	—		—
Net recoveries recognized in earnings (2)	$	3	$	3

	Six Months Ended March 31, 2021		Six Months Ended March 31, 2020
	Held To Maturity		Held To Maturity
Total recoveries	$	8	$	106
Adjustment for portion of OTTI transferred from        other comprehensive income (loss) before income taxes (1)	—		—
Net recoveries recognized in earnings (2)	$	8	$	106

_________________

(1) Represents OTTI related to all other factors.

(2) Represents OTTI related to credit losses.

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 six months ended March 31, 2021 and 2020 (dollars in thousands):

	Six Months Ended March 31,
	2021		2020
Beginning balance of credit loss	$	885	$	1,071
Subtractions:
Realized losses previously recorded as credit losses	(5)		(60)
Recovery of prior credit loss	(8)		(106)
Ending balance of credit loss	$	872	$	905

During the six months ended March 31, 2021, the Company recorded a $5,000 net realized loss (as a result of investment securities being deemed worthless) on 13 held to maturity investment securities, all of which had been recognized previously as a credit loss. During the six months ended March 31, 2020, the Company recorded a $60,000 net realized loss (as a result of investment securities being deemed worthless) on 19 held to maturity investment securities, all of which had been recognized previously as a credit loss.

The recorded amount of investment securities pledged as collateral for public fund deposits, federal treasury tax and loan deposits, FHLB collateral and other non-profit organization deposits totaled $96.24 million and $81.03 million at March 31, 2021 and September 30, 2020, respectively.

The contractual maturities of debt securities at March 31, 2021 were 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	$	—	$	—	$	1,428	$	1,421
Due after one year to five years	8,230		8,290		2,829		2,829
Due after five years to ten years	13,703		14,180		19,173		19,236
Due after ten years	14,532		15,368		45,571		45,698
Total	$	36,465	$	37,838	$	69,001	$	69,184

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Goodwill and CDI

6 Months Ended

Mar. 31, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and CDI

GOODWILL AND CDI

Goodwill is initially recorded when the purchase price paid in a business combination exceeds the estimated fair value of the net identified tangible and intangible assets acquired and liabilities assumed.  Goodwill is presumed to have an indefinite useful life and is analyzed annually for impairment.  The Company performs an annual review during the third quarter of each fiscal year, or more frequently if indicators of potential impairment exist, to determine if the recorded goodwill is impaired. For purposes of goodwill impairment testing, the services offered through the Bank and its subsidiary are managed as one strategic unit and represent the Company's only reporting unit.

The annual goodwill impairment test begins with a qualitative assessment of whether it is "more likely than not" that the reporting unit's fair value is less than its carrying amount. If an entity concludes that it is not "more likely than not" that the fair value of a reporting unit is less than its carrying amount, it need not perform a two-step impairment test. If the Company's qualitative assessment concluded that it is "more likely than not" that the fair value of its reporting unit is less than its carrying amount, it must perform the two-step impairment test to identify potential goodwill impairment and measure the amount of goodwill impairment loss to be recognized, if any. The first step of the goodwill impairment test compares the estimated fair value of the reporting unit with its carrying amount, or the book value, including goodwill. If the estimated fair value of the reporting unit equals or exceeds its book value, goodwill is considered not impaired, and the second step of the impairment test is unnecessary.

The second step, if necessary, measures the amount of goodwill impairment loss to be recognized. The reporting unit must determine fair value for all assets and liabilities, excluding goodwill. The net of the assigned fair value of assets and liabilities is then compared to the book value of the reporting unit, and any excess book value becomes the implied fair value of goodwill. If the carrying amount of the goodwill exceeds the newly calculated implied fair value of goodwill, an impairment loss is recognized in the amount required to write-down the goodwill to the implied fair value.

Management's qualitative assessment takes into consideration macroeconomic conditions, industry and market considerations, cost or margin factors, financial performance and share price of the Company's common stock. The Company performed its fiscal year 2020 goodwill impairment test during the quarter ended June 30, 2020 with the assistance of an independent third-party firm specializing in goodwill impairment valuations for financial institutions. The third-party analysis was conducted as of May 31, 2020, and the step one test concluded that the reporting unit's fair value was more than its recorded value and, therefore, step two of the analysis was not necessary. Accordingly, the recorded value of goodwill as of May 31, 2020 was not impaired.

A significant amount of judgment is involved in determining if an indicator of goodwill impairment has occurred. Such indicators may include, among others: a significant decline in expected future cash flows; a sustained, significant decline in the Company's stock price and market capitalization; a significant adverse change in legal factors or in the business climate; adverse assessment or action by a regulator; and unanticipated competition. Any change in these indicators could have a significant negative impact on the Company's financial condition, impact the goodwill impairment analysis or cause the Company to perform a goodwill impairment analysis more frequently than once per year.

As of March 31, 2021, management believes that there have been no events or changes in the circumstances since May 31, 2020 that would indicate a potential impairment of goodwill. No assurances can be given, however, that the Company will not record an impairment loss on goodwill in the future. If adverse economic conditions or decreases in the Company's stock price and market capitalization as a result of the novel coronavirus of 2019 ("COVID-19") pandemic were to be deemed sustained rather then temporary, it may significantly affect the fair value of the Company's goodwill and may trigger impairment charges. Any impairment charge could have a material adverse effect on the Company's results of operations and financial condition. The recorded amount of goodwill at March 31, 2021 and September 30, 2020 remained unchanged at $15.13 million.

CDI represents the future economic benefit of the potential cost savings from acquiring core deposits as part of a business combination compared to the cost of alternative funding sources. CDI is amortized to non-interest expense using an accelerated method based on an estimated runoff of related deposits over a period of ten years. CDI is evaluated for impairment whenever events or changes in circumstances indicate that its carrying amount may not be recoverable, with any changes in estimated useful life accounted for prospectively over the revised remaining life. As of March 31, 2021, management believes that there have been no events or changes in the circumstances that would indicate a potential impairment of CDI.

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Loans Receivable And Allowance For Loan Losses

6 Months Ended

Mar. 31, 2021

Accounts, Notes, Loans and Financing Receivable, Gross, Allowance, and Net [Abstract]

Loans Receivable And Allowance For Loan Losses

LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES

Loans receivable by portfolio segment consisted of the following at March 31, 2021 and September 30, 2020 (dollars in thousands):

	March 31, 2021				September 30, 2020
	Amount		Percent		Amount		Percent
Mortgage loans:
One- to four-family (1)	$	117,184	10.3	%	$	118,580	10.5	%
Multi-family	92,435		8.1		85,053		7.5
Commercial	461,966		40.5		453,574		40.0
Construction - custom and owner/builder	105,305		9.2		129,572		11.4
Construction - speculative one- to four-family	17,289		1.5		14,592		1.3
Construction - commercial	42,340		3.7		33,144		2.9
Construction - multi-family	44,266		3.9		34,476		3.0
Construction - land development	2,238		0.2		7,712		0.7
Land	19,041		1.7		25,571		2.3
Total mortgage loans	902,064		79.1		902,274		79.6
Consumer loans:
Home equity and second mortgage	32,026		2.8		32,077		2.8
Other	2,756		0.2		3,572		0.3
Total consumer loans	34,782		3.0		35,649		3.1
Commercial loans:
Commercial business	66,645		5.8		69,540		6.1
U.S. Small Business Administration ("SBA") Paycheck Protection Program ("PPP") loans	138,175		12.1		126,820		11.2
Total commercial loans	204,820		17.9	%	196,360		17.3
Total loans receivable	1,141,666		100.0	%	1,134,283		100.0	%
Less:
Undisbursed portion of construction  loans in process	90,550				100,558
Deferred loan origination fees, net	6,999				6,436
Allowance for loan losses	13,434				13,414
Subtotal	110,983				120,408
Loans receivable, net	$	1,030,683			$	1,013,875
_____________________________
(1) Does not include one- to four-family loans held for sale totaling $8,455 and $4,509 at March 31, 2021 and September 30, 2020, respectively.

Loans receivable at March 31, 2021 and September 30, 2020 are reported net of unamortized discounts totaling $583,000 and $790,000, respectively.

Allowance for Loan Losses

The following tables set forth information for the three and six months ended March 31, 2021 and 2020 regarding activity in the allowance for loan losses by portfolio segment (dollars in thousands):

	Three Months Ended March 31, 2021
	Beginning Allowance		Provision for (Recapture of) Loan Losses		Charge- offs		Recoveries		Ending Allowance
Mortgage loans:
One- to four-family	$	1,135	$	16	$	—	$	—	$	1,151
Multi-family	757		27		—		—		784
Commercial	7,136		102		—		—		7,238
Construction – custom and owner/builder	770		(75)		—		—		695
Construction – speculative one- to four-family	182		(34)		—		—		148
Construction – commercial	558		156		—		—		714
Construction – multi-family	186		137		—		—		323
Construction – land development	123		(104)		—		—		19
Land	474		(72)		—		5		407
Consumer loans:
Home equity and second mortgage	605		(53)		—		—		552
Other	57		—		(1)		—		56
Commercial business loans	1,449		(100)		(2)		—		1,347
SBA PPP loans	—		—		—		—		—
Total	$	13,432	$	—	$	(3)	$	5	$	13,434

	Six Months Ended March 31, 2021
	Beginning Allowance		Provision for (Recapture of) Loan Losses		Charge- offs		Recoveries		Ending Allowance
Mortgage loans:
One-to four-family	$	1,163	$	(12)	$	—	$	—	$	1,151
Multi-family	718		66		—		—		784
Commercial	7,144		94		—		—		7,238
Construction – custom and owner/builder	832		(137)		—		—		695
Construction – speculative one- to four-family	158		(10)		—		—		148
Construction – commercial	420		294		—		—		714
Construction – multi-family	238		85		—		—		323
Construction – land development	133		(114)		—		—		19
Land	572		(175)		—		10		407
Consumer loans:
Home equity and second mortgage	593		(41)		—		—		552
Other	71		(18)		(1)		4		56
Commercial business loans	1,372		(32)		(2)		9		1,347
SBA PPP loans	—		—		—		—		—
Total	$	13,414	$	—	$	(3)	$	23	$	13,434

	Three Months Ended March 31, 2020
	Beginning Allowance		Provision for (Recapture of) Loan Losses		Charge- offs		Recoveries		Ending Allowance
Mortgage loans:
One- to four-family	$	1,065	$	83	$	—	$	1	$	1,149
Multi-family	499		96		—		—		595
Commercial	4,410		1,351		—		1		5,762
Construction – custom and owner/builder	754		(57)		—		—		697
Construction – speculative one- to four-family	248		(44)		—		—		204
Construction – commercial	403		20		—		—		423
Construction – multi-family	333		61		—		—		394
Construction – land development	48		32		—		—		80
Land	654		19		—		5		678
Consumer loans:
Home equity and second mortgage	609		47		—		—		656
Other	87		(10)		(1)		2		78
Commercial business loans	772		402		—		—		1,174
Total	$	9,882	$	2,000	$	(1)	$	9	$	11,890

	Six Months Ended March 31, 2020
	Beginning Allowance		Provision for (Recapture of) Loan Losses		Charge- offs		Recoveries		Ending Allowance
Mortgage loans:
One-to four-family	$	1,167	$	(21)	$	—	$	3	$	1,149
Multi-family	481		114		—		—		595
Commercial	4,154		1,603		—		5		5,762
Construction – custom and owner/builder	755		(63)		—		5		697
Construction – speculative one- to four-family	212		(8)		—		—		204
Construction – commercial	338		85		—		—		423
Construction – multi-family	375		19		—		—		394
Construction – land development	67		13		—		—		80
Land	697		(29)		—		10		678
Consumer loans:
Home equity and second mortgage	623		33		—		—		656
Other	99		(13)		(11)		3		78
Commercial business loans	722		467		(15)		—		1,174
Total	$	9,690	$	2,200	$	(26)	$	26	$	11,890

The following tables present information on the loans evaluated individually and collectively for impairment in the allowance for loan losses by portfolio segment at March 31, 2021 and September 30, 2020 (dollars in thousands):

	Allowance for Loan Losses						Recorded Investment in Loans
	Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Total		Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Total
March 31, 2021
Mortgage loans:
One- to four-family	$	—	$	1,151	$	1,151	$	896	$	116,288	$	117,184
Multi-family	—		784		784		—		92,435		92,435
Commercial	—		7,238		7,238		3,028		458,938		461,966
Construction – custom and owner/builder	—		695		695		—		62,973		62,973
Construction – speculative one- to four-family	—		148		148		—		7,336		7,336
Construction – commercial	—		714		714		—		34,217		34,217
Construction – multi-family	—		323		323		—		15,739		15,739
Construction – land development	—		19		19		—		623		623
Land	—		407		407		173		18,868		19,041
Consumer loans:
Home equity and second mortgage	—		552		552		537		31,489		32,026
Other	—		56		56		8		2,748		2,756
Commercial business loans	73		1,274		1,347		527		66,118		66,645
SBA PPP loans	—		—		—		—		138,175		138,175
Total	$	73	$	13,361	$	13,434	$	5,169	$	1,045,947	$	1,051,116
September 30, 2020
Mortgage loans:
One- to four-family	$	3	$	1,160	$	1,163	$	1,143	$	117,437	$	118,580
Multi-family	—		718		718		—		85,053		85,053
Commercial	—		7,144		7,144		3,242		450,332		453,574
Construction – custom and owner/builder	—		832		832		—		75,332		75,332
Construction – speculative one- to four-family	—		158		158		—		7,108		7,108
Construction – commercial	—		420		420		—		20,927		20,927
Construction – multi-family	—		238		238		—		10,832		10,832
Construction – land development	—		133		133		—		4,739		4,739
Land	—		572		572		394		25,177		25,571
Consumer loans:
Home equity and second mortgage	—		593		593		555		31,522		32,077
Other	—		71		71		9		3,563		3,572
Commercial business loans	38		1,334		1,372		430		69,110		69,540
SBA PPP loans	—		—		—		—		126,820		126,820
Total	$	41	$	13,373	$	13,414	$	5,773	$	1,027,952	$	1,033,725

The following tables present an analysis of loans by aging category and portfolio segment at March 31, 2021 and September 30, 2020 (dollars in thousands):

	30–59 Days Past Due		60-89 Days Past Due		Non- Accrual (1)		Past Due 90 Days or More and Still Accruing		Total Past Due		Current		Total Loans
March 31, 2021
Mortgage loans:
One- to four-family	$	—	$	—	$	415	$	—	$	415	$	116,769	$	117,184
Multi-family	—		—		—		—		—		92,435		92,435
Commercial	514		—		643		—		1,157		460,809		461,966
Construction – custom and owner/builder	808		—		—		—		808		62,165		62,973
Construction – speculative one- to four-family	—		—		—		—		—		7,336		7,336
Construction – commercial	—		—		—		—		—		34,217		34,217
Construction – multi-family	—		—		—		—		—		15,739		15,739
Construction – land development	—		—		—		—		—		623		623
Land	217		—		173		—		390		18,651		19,041
Consumer loans:
Home equity and second mortgage	—		73		539		—		612		31,414		32,026
Other	11		—		8		—		19		2,737		2,756
Commercial business loans	—		—		527		—		527		66,118		66,645
SBA PPP loans	—		—		—		—		—		138,175		138,175
Total	$	1,550	$	73	$	2,305	$	—	$	3,928	$	1,047,188	$	1,051,116
September 30, 2020
Mortgage loans:
One- to four-family	$	—	$	68	$	659	$	—	$	727	$	117,853	$	118,580
Multi-family	—		—		—		—		—		85,053		85,053
Commercial	—		519		858		—		1,377		452,197		453,574
Construction – custom and owner/builder	—		—		—		—		—		75,332		75,332
Construction – speculative one- to four-family	—		—		—		—		—		7,108		7,108
Construction – commercial	—		—		—		—		—		20,927		20,927
Construction – multi-family	—		—		—		—		—		10,832		10,832
Construction – land development	—		38		—		—		38		4,701		4,739
Land	—		144		394		—		538		25,033		25,571
Consumer loans:
Home equity and second mortgage	—		22		555		—		577		31,500		32,077
Other	3		—		9		—		12		3,560		3,572
Commercial business loans	49				430				479		69,061		69,540
SBA PPP loans	—		—		—		—		—		126,820		126,820
Total	$	52	$	791	$	2,905	$	—	$	3,748	$	1,029,977	$	1,033,725

______________________

(1) Includes non-accrual loans past due 90 days or more and other loans classified as non-accrual.

Credit Quality Indicators

The Company uses credit risk grades which reflect the Company’s assessment of a loan’s risk or loss potential.  The Company categorizes loans into risk grade categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information and current economic trends, among other factors such as the estimated fair value of the collateral.  The Company uses the following definitions for credit risk ratings as part of the on-going monitoring of the credit quality of its loan portfolio:

Pass:  Pass loans are defined as those loans that meet acceptable quality underwriting standards.

Watch:  Watch loans are defined as those loans that still exhibit acceptable quality, but have some concerns that justify greater attention.  If these concerns are not corrected, a potential for further adverse categorization exists.  These concerns could relate to a specific condition peculiar to the borrower, its industry segment or the general economic environment.

Special Mention: Special mention loans are defined as those loans deemed by management to have some potential weaknesses that deserve management’s close attention.  If left uncorrected, these potential weaknesses may result in the deterioration of the payment prospects of the loan. 

Substandard:  Substandard loans are defined as those loans that are inadequately protected by the current net worth and paying capacity of the obligor, or of the collateral pledged.  Loans classified as substandard have a well-defined weakness or weaknesses that jeopardize the repayment of the debt.  If the weakness or weaknesses are not corrected, there is the distinct possibility that some loss will be sustained.

Doubtful: Loans in this classification have the weaknesses of substandard loans with the additional characteristic that the weaknesses make the collection or liquidation in full on the basis of currently existing facts, conditions and values questionable, and there is a high possibility of loss. At both March 31, 2021 and September 30, 2020, there were no loans classified as doubtful.

Loss:  Loans in this classification are considered uncollectible and of such little value that continuance as bankable assets is not warranted.  This classification does not mean that the loan has absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing off this loan even though partial recovery may be realized in the future. At both March 31, 2021 and September 30, 2020, there were no loans classified as loss.

The following tables present an analysis of loans by credit quality indicator and portfolio segment at March 31, 2021 and September 30, 2020 (dollars in thousands):

	Loan Grades
March 31, 2021	Pass		Watch		Special Mention		Substandard		Total
Mortgage loans:
One- to four-family	$	115,603	$	615	$	544	$	422	$	117,184
Multi-family	92,435		—		—		—		92,435
Commercial	439,977		13,290		7,600		1,099		461,966
Construction – custom and owner/builder	62,165		808		—		—		62,973
Construction – speculative one- to four-family	7,336		—		—		—		7,336
Construction – commercial	32,700		—		1,517		—		34,217
Construction – multi-family	15,739		—		—		—		15,739
Construction – land development	583		—		—		40		623
Land	17,727		575		566		173		19,041
Consumer loans:
Home equity and second mortgage	31,331		36		—		659		32,026
Other	2,717		31		—		8		2,756
Commercial business loans	66,030		—		45		570		66,645
SBA PPP loans	138,175		—		—		—		138,175
Total	$	1,022,518	$	15,355	$	10,272	$	2,971	$	1,051,116
September 30, 2020
Mortgage loans:
One- to four-family	$	115,992	$	1,369	$	551	$	668	$	118,580
Multi-family	85,053		—		—		—		85,053
Commercial	441,037		7,712		3,447		1,378		453,574
Construction – custom and owner/builder	74,529		803		—		—		75,332
Construction – speculative one- to four-family	7,108		—		—		—		7,108
Construction – commercial	19,525		—		1,402		—		20,927
Construction – multi-family	10,832		—		—		—		10,832
Construction – land development	4,701		—		—		38		4,739
Land	23,290		1,518		370		393		25,571
Consumer loans:
Home equity and second mortgage	31,344		53		—		680		32,077
Other	3,531		32		—		9		3,572
Commercial business loans	68,904		59		94		483		69,540
SBA PPP loans	126,820		—		—		—		126,820
Total	$	1,012,666	$	11,546	$	5,864	$	3,649	$	1,033,725

Impaired Loans

A loan is considered impaired when it is probable that the Company will be unable to collect all amounts (principal and interest) when due according to the contractual terms of the loan agreement. Smaller balance homogeneous loans, such as residential mortgage loans and consumer loans, may be collectively evaluated for impairment. When a loan has been identified as being impaired, the amount of the impairment is measured by using discounted cash flows, except when, as an alternative, the current estimated fair value of the collateral (reduced by estimated costs to sell, if applicable) or observable market price is used. The valuation of real estate collateral is subjective in nature and may be adjusted in future periods because of changes in economic conditions.  Management considers third-party appraisals, as well as independent fair market value assessments from realtors or persons involved in selling real estate, in determining the estimated fair value of particular properties.  In addition, as certain of these third-party appraisals and independent fair market value assessments are only updated periodically, changes in the values of specific properties may have occurred subsequent to the most recent appraisals.  Accordingly, the amounts of any such potential changes and any related adjustments are generally recorded at the time that such information is received. When the estimated net realizable value of the impaired loan is less than the recorded investment in the loan (including accrued interest and net deferred loan origination fees or costs), impairment is recognized by creating or adjusting an allocation of the allowance for loan losses, and uncollected accrued interest is reversed against interest income. If ultimate collection of principal is in doubt, all cash receipts on impaired loans are applied to reduce the principal balance. The categories of non-accrual loans and impaired loans overlap, although they are not identical.  

The following table is a summary of information related to impaired loans by portfolio segment as of March 31, 2021 and for the three and six months then ended (dollars in thousands):

	Recorded Investment		Unpaid Principal Balance (Loan Balance Plus Charge Off)		Related Allowance		Quarter to Date ("QTD") Average Recorded Investment (1)		Year to Date ("YTD") Average Recorded Investment (2)		QTD Interest Income Recognized (1)		YTD Interest Income Recognized (2)		QTD Cash Basis Interest Income Recognized (1)		YTD Cash Basis Interest Income Recognized (2)
With no related allowance recorded:
Mortgage loans:
One- to four-family	$	895	$	938	$	—	$	899	$	819	$	19	$	41	$	16	$	36
Commercial	3,028		3,028		—		3,028		3,099		40		80		33		63
Land	173		208		—		289		324		1		1		1		1
Consumer loans:
Home equity and second mortgage	538		538		—		573		567		1		1		1		1
Other	8		8		—		9		9		—		—		—		—
Commercial business loans	233		236		—		218		206		—		—		—		—
Subtotal	4,875		4,956		—		5,016		5,024		61		123		51		101
With an allowance recorded:
Mortgage loans:
One- to four-family	—		—		—		—		161		—		—		—		—
Commercial business loans	294		294		73		295		279		—		—		—		—
Subtotal	294		294		73		295		440		—		—		—		—
Total:
Mortgage loans:
One- to four-family	895		938		—		899		980		19		41		16		36
Commercial	3,028		3,028		—		3,028		3,099		40		80		33		63
Land	173		208		—		289		324		1		1		1		1
Consumer loans:
Home equity and second mortgage	538		538		—		573		567		1		1		1		1
Other	8		8		—		9		9		—		—		—		—
Commercial business loans	527		530		73		513		485		—		—		—		—
Total	$	5,169	$	5,250	$	73	$	5,311	$	5,464	$	61	$	123	$	51	$	101

______________________________________________

(1)For the three months ended March 31, 2021.

(2)For the six months ended March 31, 2021.

	Recorded Investment		Unpaid Principal Balance (Loan Balance Plus Charge Off)		Related Allowance		YTD Average Recorded Investment (1)		YTD Interest Income Recognized (1)		YTD Cash Basis Interest Income Recognized (1)
With no related allowance recorded:
Mortgage loans:
One- to four-family	$	659	$	703	$	—	$	1,127	$	44	$	34
Commercial	3,242		3,242		—		3,236		133		107
Land	394		438		—		125		—		—
Consumer loans:
Home equity and second mortgage	555		555		—		581		—		—
Other	9		9		—		6		—		—
Commercial business loans	182		182		—		176		—		—
Subtotal	5,041		5,129		—		5,251		177		141
With an allowance recorded:
Mortgage loans:
One- to four-family	484		484		3		194		16		8
Land	—		—		—		110		—		—
Consumer loans:
Other	—		—		—		7		—		—
Commercial business loans	248		248		38		370		—		—
Subtotal	732		732		41		681		16		8
Total
Mortgage loans:
One- to four-family	1,143		1,187		3		1,321		60		42
Commercial	3,242		3,242		—		3,236		133		107
Land	394		438		—		235		—		—
Consumer loans:
Home equity and second mortgage	555		555		—		581		—		—
Other	9		9		—		13		—		—
Commercial business loans	430		430		38		546		—		—
Total	$	5,773	$	5,861	$	41	$	5,932	$	193	$	149

_____________________________________________

(1) For the year ended September 30, 2020.

A troubled debt restructured loan ("TDR") is a loan for which the Company, for reasons related to a borrower’s financial difficulties, grants a concession to the borrower that the Company would not otherwise consider.  Examples of such concessions include, but are not limited to: a reduction in the stated interest rate; an extension of the maturity at an interest rate below current market rates; a reduction in the face amount of the debt; a reduction in the accrued interest; or re-amortizations, extensions, deferrals and renewals.  TDRs are considered impaired and are individually evaluated for impairment.  TDRs are classified as non-accrual (and considered to be non-performing) unless they have been performing in accordance with modified terms for a period of at least six months. The Company had $3.06 million and $3.07 million in TDRs included in impaired loans at March 31, 2021 and September 30, 2020, respectively, and had no commitments at these dates to lend additional funds on these loans.  There was no allowance for loan losses allocated to TDRs at March 31, 2021, and, at September 30, 2020, there was $3,000 in allowance for loan losses allocated to TDRs. There were no TDRs for which there was a payment default within the first 12 months of the modification during the six months ended March 31, 2021.

The Coronavirus Aid, Relief, and Economic Security Act of 2020 signed into law on March 27, 2020 ("CARES Act") provided guidance around the modification of loans as a result of the COVID-19 pandemic, which outlined, among other criteria, that short-term modifications made on a good faith basis to borrowers who were current as defined under the CARES Act prior to any relief, are not TDRs. This includes short-term (e.g., six months) modifications such as payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment that are insignificant. Borrowers are considered current under the CARES Act and related regulatory guidance if they are less than 30 days past due on their contractual payments at the time a modification program is implemented. On December 27, 2020, the Consolidated Appropriations Act, 2021 ("CAA 2021") was signed into law. Among other purposes, this act provides coronavirus emergency response and relief, including extending relief offered under the CARES Act related to restructured loans as a result of COVID-19 through January 1, 2022 or 60 days after the end of the the national emergency declared by the President, whichever is earlier.

In response to requests from borrowers, the Company made payment deferral modifications (typically 90-day payment deferrals with interest continuing to accrue or scheduled to be paid monthly) on a number of loans. The majority of these borrowers had resumed making payments as of March 31, 2021, and as of that date, only eight loans totaling $12.88 million remained on deferral status under COVID-19 loan modification forbearance agreements. Loan modifications in accordance with the CARES Act and related regulatory guidance are still subject to an evaluation in regard to determining whether or not a loan is deemed to be impaired. See Note 10 - Recent Accounting Pronouncements.

The following tables set forth information with respect to total COVID-19 loan modifications, on deferral status, as of March 31, 2021 and September 30, 2020 (dollars in thousands):

COVID-19 Loan Modifications	March 31, 2021
Mortgage loans	Count	Balance		Percent
Commercial	4	$	11,174	86.7	%
Construction	1	1,517		11.8
Total mortgage loans	5	12,691		98.5
Consumer loans
Home equity and second mortgage	1	18		0.1
Total consumer loans	1	18		0.1
Commercial loans	2	175		1.4
Total COVID-19 Modifications	8	$	12,884	100.0	%

COVID-19 Loan Modifications	September 30, 2020
Mortgage loans	Number	Balance		Percent
One- to four-family	1	$	467	8.0	%
Commercial	2	3,951		67.2
Construction	1	1,402		23.9
Total mortgage loans	4	5,820		99.1
Consumer loans
Home equity and second mortgage	1	50		0.9
Total consumer loans	1	50		0.9
Total COVID-19 Modifications	5	$	5,870	100.0	%

The following tables set forth information with respect to the Company’s TDRs by interest accrual status as of March 31, 2021 and September 30, 2020 (dollars in thousands):

	March 31, 2021
	Accruing		Non- Accrual		Total
Mortgage loans:
One- to four-family	$	479	$	—	$	479
Commercial	2,385		—		2,385
Land	—		124		124
Consumer loans:
Home equity and second mortgage	—		68		68
Total	$	2,864	$	192	$	3,056

	September 30, 2020
	Accruing		Non- Accrual		Total
Mortgage loans:
One- to four-family	$	483	$	—	$	483
Commercial	2,385		—		2,385
Land	—		130		130
Consumer loans:
Home equity and second mortgage	—		73		73
Total	$	2,868	$	203	$	3,071

There were no new TDRs during the six months ended March 31, 2021 or during the year ended September 30, 2020.

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Leases

6 Months Ended

Mar. 31, 2021

Leases [Abstract]

Leases

LEASES

The Company adopted Financial Accounting Standard Board ("FASB") Accounting Standards Codification ("ASC") 842, Leases ("ASC 842") on October 1, 2019 and began recording operating lease liabilities and operating lease ROU assets on the consolidated balance sheets. The Company has operating leases for three retail bank branch offices. The ROU assets totaled $2.89 million at October 1, 2019. The Company's leases have remaining lease terms of nineteen months to eleven years, some of which include options to extend the leases for up to five years.

The components of lease cost (included in the premises and equipment expense category in the consolidated statements of income) are as follows for the three and six months ended March 31, 2021 and 2020 (dollars in thousands):

	Three Months Ended March 31, 2021		Six Months Ended March 31, 2021
Lease cost:
Operating lease cost	$	92	$	185
Short-term lease cost	—		—
Total lease cost	$	92	$	185
	Three Months Ended March 31, 2020		Six Months Ended March 31, 2020
Lease cost:
Operating lease cost	$	83	$	166
Short-term lease cost	—		—
Total lease cost	$	83	$	166

The following table provides supplemental information to operating leases for the three and six months ended March 31, 2021 and 2020 (dollars in thousands):

	At or For Three Months Ended March 31, 2021				At or For Six Months Ended March 31, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	80			$	160
Weighted average remaining lease term-operating leases	8.8			years	8.8			years
Weighted average discount rate-operating leases	2.23		%		2.23		%
	At or For Three Months Ended March 31, 2020				At or For Six Months Ended March 31, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	80			$	158
Weighted average remaining lease term-operating leases	9.7			years	9.7			years
Weighted average discount rate-operating leases	2.22		%		2.22		%

The Company's leases typically do not contain a discount rate implicit in the lease contracts. As an alternative, the weighted average discount rate used to value the future value of lease payments due in calculating the value of the ROU asset and lease liability was determined by utilizing the September 30, 2019 fixed-rate advances issued by the FHLB, for all leases entered into prior to the October 1, 2019 adoption date.

Maturities of operating lease liabilities at March 31, 2021 for future fiscal years are as follows (dollars in thousands):

Remainder of 2021	$	167
2022	342
2023	310
2024	313
2025	317
Thereafter	1,322
Total lease payments	2,771
Less imputed interest	272
Total	$	2,499

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Net Income Per Common Share

6 Months Ended

Mar. 31, 2021

Earnings Per Share [Abstract]

Net Income Per Common Share

NET INCOME PER COMMON SHARE

Basic net income per common share is computed by dividing net income to common shareholders by the weighted average number of common shares outstanding during the period without considering any dilutive items.  Diluted net income per common share is computed by dividing net income to common shareholders by the weighted average number of common shares and common stock equivalents for items that are dilutive, net of shares assumed to be repurchased using the treasury stock method at the average share price for the Company’s common stock during the period.  Common stock equivalents arise from the assumed conversion of outstanding stock options to purchase common stock.  

Information regarding the calculation of basic and diluted net income per common share for the three and six months ended March 31, 2021 and 2020 is as follows (dollars in thousands, except per share amounts):

	Three Months Ended March 31,				Six Months Ended March 31,
	2021		2020		2021		2020
Basic net income per common share computation
Numerator – net income	$	7,251	$	5,049	$	14,541	$	11,701
Denominator – weighted average common shares outstanding	8,331,121		8,344,201		8,322,210		8,342,828
Basic net income per common share	$	0.87	$	0.61	$	1.75	$	1.40
Diluted net income per common share computation
Numerator – net income	$	7,251	$	5,049	$	14,541	$	11,701
Denominator – weighted average common shares outstanding	8,331,121		8,344,201		8,322,210		8,342,828
Effect of dilutive stock options (1)	113,677		112,458		106,385		123,066
Weighted average common shares outstanding - assuming dilution	8,444,798		8,456,659		8,428,595		8,465,894
Diluted net income per common share	$	0.86	$	0.60	$	1.73	$	1.38

____________________________________________

(1) For the three and six months ended March 31, 2021, average options to purchase 135,590 and 136,631 shares of common stock, respectively, were outstanding but not included in the computation of diluted net income per share, because their effect would have been anti-dilutive. For the three and six months ended March 31, 2020, average options to purchase 138,362 and 121,497 shares of common stock, respectively, were outstanding but not included in the computation of diluted net income per shares, because their effect would have been anti-dilutive.

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Accumulated Other Comprehensive Income (Loss)

6 Months Ended

Mar. 31, 2021

Equity [Abstract]

Accumulated Other Comprehensive Income (Loss)

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The changes in accumulated other comprehensive income (loss) ("AOCI") by component during the three and six months ended March 31, 2021 and 2020 are as follows (dollars in thousands):

	Three Months Ended March 31, 2021
	Changes in fair value of available for sale securities (1)		Changes in OTTI on held to maturity securities (1)		Total (1)
Balance of AOCI at the beginning of period	$	70	$	(26)	$	44
Other comprehensive income (loss)	74		3		77
Balance of AOCI at the end of period	$	144	$	(23)	$	121

	Six Months Ended March 31, 2021
	Changes in fair value of available for sale securities (1)		Changes in OTTI on held to maturity securities (1)		Total (1)
Balance of AOCI at the beginning of period	$	87	$	(26)	$	61
Other comprehensive income (loss)	57		3		60
Balance of AOCI at the end of period	$	144	$	(23)	$	121

	Three Months Ended March 31, 2020
	Changes in fair value of available for sale securities (1)		Changes in OTTI on held to maturity securities (1)		Total (1)
Balance of AOCI at the beginning of period	$	(116)	$	(30)	$	(146)
Other comprehensive (loss) income	(35)		2		(33)
Balance of AOCI at the end of period	$	(151)	$	(28)	$	(179)

	Six Months Ended March 31, 2020
	Changes in fair value of available for sale securities (1)		Changes in OTTI on held to maturity securities (1)		Total (1)
Balance of AOCI at the beginning of period	$	90	$	(40)	$	50
Other comprehensive (loss) income	(241)		12		(229)
Balance of AOCI at the end of period	$	(151)	$	(28)	$	(179)

__________________________

(1) All amounts are net of income taxes.

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Stock Compensation Plans

6 Months Ended

Mar. 31, 2021

Share-based Payment Arrangement, Noncash Expense [Abstract]

Stock Compensation Plans

STOCK COMPENSATION PLANS Under the Company’s 2003 Stock Option Plan, the Company was able to grant options for up to 300,000 shares of common stock to employees, officers, directors and directors emeriti.  Under the Company's 2014 Equity Incentive Plan, the Company is able to grant options and awards of restricted stock (with or without performance measures) for up to 352,366 shares of common stock to employees, officers, directors and directors emeriti. Under the Company's 2019 Equity Incentive Plan, which was approved by shareholders on January 28, 2020, the Company is able to grant options and awards or restricted stock (with or

without performance measures) for up to 350,000 shares of common stock, of which 300,000 shares are reserved to be awarded to employees, including officers, and 50,000 shares are reserved to be awarded to directors and directors emeriti.  Shares issued may be purchased in the open market or may be issued from authorized and unissued shares.  The exercise price of each option equals the fair market value of the Company’s common stock on the date of grant. Generally, options and restricted stock vest in 20% annual installments on each of the five anniversaries from the date of the grant, and options generally have a maximum contractual term of ten years from the date of grant. At March 31, 2021, there were 29,676 shares of common stock available which may be awarded as options or restricted stock pursuant to future grant under the 2014 Equity Incentive Plan. At March 31, 2021, there were 298,000 shares of common stock available which may be awarded as options or restricted stock pursuant to future grant under the 2019 Equity Incentive Plan.

At both March 31, 2021 and 2020, there were no unvested restricted stock awards. There were no restricted stock grants awarded during the six months ended March 31, 2021 and 2020.

Stock option activity for the six months ended March 31, 2021 and 2020 is summarized as follows:

	Six Months Ended March 31, 2021			Six Months Ended March 31, 2020
	Number of Shares	Weighted Average Exercise Price		Number of Shares	Weighted Average Exercise Price
Options outstanding, beginning of period	395,349	$	18.45	378,304	$	18.15
Exercised	(53,564)	9.70		(36,375)	10.30
Granted	1,500	19.13		1,000	26.50
Forfeited	(4,520)	27.57		(8,650)	24.84
Options outstanding, end of period	338,765	$	19.71	334,279	$	18.86

The fair value of stock options is determined using the Black-Scholes valuation model.

The weighted average assumptions for options granted during the six months ended March 31, 2021 were as follows:

Expected volatility	33		%
Expected life (in years)	5
Expected dividend yield	4.76		%
Risk free interest rate	0.38		%
Grant date fair value per share	$	3.26

The aggregate intrinsic value of options exercised during the six months ended March 31, 2021 and 2020 was $947,000 and $628,000, respectively.

At March 31, 2021, there were 158,392 unvested options with an aggregate grant date fair value of $565,000, all of which the Company assumes will vest. The aggregate intrinsic value of unvested options at March 31, 2021 was $897,000.  There were 200 options vested during the six months ended March 31, 2021 with a total fair value of $1,000.

At March 31, 2020, there were 154,670 unvested options with an aggregate grant date fair value of $584,000. There were no options that vested during the six months ended March 31, 2020.

Additional information regarding options outstanding at March 31, 2021 is as follows:

			Options Outstanding				Options Exercisable
Range of Exercise Prices ($)			Number	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)	Number	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)
$5.86	-	6.00	4,200	$	5.93	1.5	4,200	$	5.93	1.5
9.00			30,000	9.00		2.6	30,000	9.00		2.6
10.26	-	10.71	65,575	10.57		4.0	65,575	10.57		4.0
15.67	-	19.13	104,500	16.50		8.2	25,400	15.67		5.5
26.50	-	27.14	43,990	27.13		8.5	8,798	27.13		8.5
29.69			50,400	29.69		6.5	30,300	29.69		6.5
31.80			40,100	31.80		7.5	16,100	31.80		7.5
			338,765	$	19.71	6.5	180,373	$	16.83	4.9

The aggregate intrinsic value of options outstanding at March 31, 2021 and 2020 was $2.99 million and $1.41 million, respectively.

As of March 31, 2021, unrecognized compensation cost related to unvested stock options was $507,000, which is expected to be recognized over a weighted average life of 2.12 years.

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Fair Value Measurements

6 Months Ended

Mar. 31, 2021

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 broad 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 both March 31, 2021 and September 30, 2020. The Company's assets measured at estimated fair value on a recurring basis at March 31, 2021 and September 30, 2020 were as follows (dollars in thousands):

March 31, 2021	Estimated Fair Value
	Level 1		Level 2		Level 3		Total
Available for sale investment securities
MBS: U.S. government agencies	$	—	$	69,184	$	—	$	69,184
Investments in equity securities
Mutual funds	957		—		—		957
Total	$	957	$	69,184	$	—	$	70,141

September 30, 2020	Estimated Fair Value
	Level 1		Level 2		Level 3		Total
Available for sale investment securities
MBS: U.S. government agencies	$	—	$	57,907	$	—	$	57,907
Investments in equity securities
Mutual funds	977		—		—		977
Total	$	977	$	57,907	$	—	$	58,884

There were no transfers among Level 1, Level 2 and Level 3 during the six months ended March 31, 2021 and the year ended September 30, 2020.

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 March 31, 2021 (dollars in thousands):

	Estimated Fair Value
	Level 1		Level 2		Level 3
Impaired loans:
Commercial business loans	$	—	$	—	$	221
Total impaired loans	—		—		221
OREO and other repossessed assets	—		—		157
Total	$	—	$	—	$	378

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 March 31, 2021 (dollars in thousands):

	Estimated Fair Value		Valuation Technique(s)	Unobservable Input(s)	Range
Impaired loans	$	221	Market approach	Appraised value less estimated selling costs	NA
OREO and other repossessed assets	$	157	Market approach	Lower of appraised value or listing price less estimated selling costs	NA

The following table summarizes the balances of assets measured at estimated fair value on a non-recurring basis at September 30, 2020 (dollars in thousands):

	Estimated Fair Value
	Level 1		Level 2		Level 3
Impaired loans:
Mortgage loans:
One- to four-family	$	—	$	—	$	481
Commercial business loans	—		—		210
Total impaired loans	—		—		691
Investment securities – held to maturity:
MBS - private label residential	—		8		—
OREO and other repossessed assets	—		—		1,050
Total	$	—	$	8	$	1,741

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, 2020 (dollars in thousands):

	Estimated Fair Value		Valuation Technique(s)	Unobservable Input(s)	Range
Impaired loans	$	691	Market approach	Appraised value less estimated selling costs	NA
OREO and other repossessed assets	$	1,050	Market approach	Lower of appraised value or listing price less estimated selling costs	NA

GAAP requires disclosure of estimated fair values for certain 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 for which may have significant value. The Company does not believe that it would be practicable to estimate a representative fair value for these types of items as of March 31, 2021 and September 30, 2020. 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, in accordance with GAAP, 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 March 31, 2021 and September 30, 2020 (dollars in thousands):

	March 31, 2021
					Fair Value Measurements Using:
	Recorded Amount		Estimated Fair Value		Level 1		Level 2		Level 3
Financial assets
Cash and cash equivalents	$	433,342	$	433,342	$	433,342	$	—	$	—
CDs held for investment	39,674		39,674		39,674		—		—
Investment securities	105,649		107,022		8,953		97,572		497
Investments in equity securities	957		957		957		—		—
FHLB stock	2,303		2,303		2,303		—		—
Other investments	3,000		3,000		3,000		—		—
Loans held for sale	8,455		8,714		8,714		—		—
Loans receivable, net	1,030,683		1,040,302		—		—		1,040,302
Accrued interest receivable	4,471		4,471		4,471		—		—
Financial liabilities
Certificates of deposit	142,781		144,344		—		—		144,344
FHLB borrowings	10,000		9,939		—		—		9,939
Accrued interest payable	182		182		182		—		—

	September 30, 2020
					Fair Value Measurements Using:
	Recorded Amount		Estimated Fair Value		Level 1		Level 2		Level 3
Financial assets
Cash and cash equivalents	$	314,452	$	314,452	$	314,452	$	—	$	—
CDs held for investment	65,545		65,545		65,545		—		—
Investment securities	85,797		87,734		—		87,235		499
Investments in equity securities	977		977		977		—		—
FHLB stock	1,922		1,922		1,922		—		—
Other investments	3,000		3,000		3,000		—		—
Loans held for sale	4,509		4,664		4,664		—		—
Loans receivable, net	1,013,875		1,034,876		—		—		1,034,876
Accrued interest receivable	4,484		4,484		4,484		—		—
Financial liabilities
Certificates of deposit	158,524		160,921		—		—		160,921
FHLB borrowings	10,000		10,167		—		—		10,167
Accrued interest payable	274		274		274		—		—

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Revenue from Contracts with Customers Revenue from Contracts with Customers

6 Months Ended

Mar. 31, 2021

Revenue from Contract with Customer [Abstract]

Revenue from Contracts with Customers

REVENUE FROM CONTRACTS WITH CUSTOMERS

ASC 606 applies to all contracts with customers to provide goods or services in the ordinary course of business, except for contracts that are specifically excluded from its scope. The majority of the Company's revenues are composed of interest income, deferred loan fee accretion, premium/discount accretion, gains on sales of loans and investments, BOLI net earnings, servicing income on loans sold and other loan fee income, which are not within the scope of ASC 606. Revenue reported as service charges on deposits, ATM and debit card interchange transaction fees, merchant services fees, non-deposit investment fees and escrow fees are within the scope of ASC 606. All of the Company's revenue from contracts with customers within the scope of ASC 606 is recognized in non-interest income with the exception of gains on sales of OREO and gains on sales/disposition of premises and equipment, which are included in non-interest expense. For the three months ended March 31, 2021, the Company recognized $941,000 in service charges on deposits, $1.24 million in ATM and debit card interchange fees, $74,000 in escrow fees, and $3,000 in fee income from non-deposit investment sales, all considered within the scope of ASC 606. For the six months ended March 31, 2021, the Company recognized $2.00 million in service charges on deposits, $2.39 million in ATM and debit card interchange fees, $179,000 in escrow fees, and $7,000 in fee income from non-deposit investment sales, all considered within the scope of ASC 606. For the three months ended March 31, 2020, the Company recognized $1.08 million in service charges on deposits, $1.02 million in ATM and debit card interchange fees, $47,000 in escrow fees, and $7,000 in fee income from non-deposit investment sales, all considered within the scope of ASC 606. For the six months ended March 31, 2020, the Company recognized $2.28 million in service charges on deposits, $2.11 million in ATM and debit card interchange fees, $130,000 in escrow fees, and $13,000 in fee income from non-deposit investment sales, all considered within the scope of ASC 606.

If a contract is determined to be within the scope of ASC 606, the Company recognizes revenue when it satisfies its performance obligation. Descriptions of the Company's revenue-generating activities that are within the scope of ASC 606 are as follows:

•Service Charges on Deposits: The Company earns fees from its deposit customers from a variety of deposit products and services. Non-transaction based fees such as account maintenance fees and monthly statement fees are considered to be provided to the customer under a day-to-day contract with ongoing renewals. Revenue for these non-transaction fees are earned over the course of a month, representing the period over which the Company satisfies the performance obligation. Transaction-based fees such as non-sufficient fund charges, stop payment charges and wire fees are recognized at the time the transaction is executed, as the contract duration does not extend beyond the service performed.

•ATM and Debit Card Interchange Transaction Fees: The Company earns fees from cardholder transactions conducted through third-party payment network providers which consist of interchange fees earned from the payment networks as a debit card issuer. These fees are recognized when the transaction occurs, but may settle on a daily or monthly basis.

•Escrow Fees: The Company earns fees from real estate escrow contracts with customers. The Company receives and disburses money and/or property according to the customer's contract. Fees are recognized when the escrow contract closes.

•Fee Income from Non-deposit Investment Sales: The Company earns fees from contracts with customers for investment activities. Revenues are generally recognized on a monthly basis and are generally based on a percentage of the customer's assets under management or based on investment solutions that are implemented for the customer.

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Summary Of Significant Accounting Policies (Policies)

6 Months Ended

Mar. 31, 2021

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation:  The accompanying unaudited consolidated financial statements of Timberland Bancorp, Inc.and its wholly-owned subsidiary, Timberland Bank (the "Bank") (collectively, "the Company") were prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with instructions for Form 10-Q and, therefore, do not include all disclosures necessary for a complete presentation of consolidated financial condition, results of operations, and cash flows in conformity with GAAP. However, all adjustments which are, in the opinion of management, necessary for a fair presentation of the interim consolidated financial statements have been included.  All such adjustments are of a normal recurring nature. The unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended September 30, 2020 (“2020 Form 10-K”).  The unaudited consolidated results of operations for the six months ended March 31, 2021 are not necessarily indicative of the results that may be expected for the entire fiscal year ending September 30, 2021.

Principles of Consolidation

Principles of Consolidation:  The unaudited consolidated financial statements include the accounts of the Company and the Bank, and the Bank’s wholly-owned subsidiary, Timberland Service Corporation.   All significant inter-company transactions and balances have been eliminated in consolidation.

Operating Segment

Operating Segment:  The Company has one reportable operating segment which is defined as community banking in western Washington.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities, as of the date of the consolidated balance sheets, and the reported amounts of income and expenses during the reporting period.  Actual results could differ from those estimates.

Reclassification

Certain prior period amounts have been reclassified to conform to the March 31, 2021 presentation with no change to previously reported net income or total shareholders’ equity.

Revenue from Contract with Customer

ASC 606 applies to all contracts with customers to provide goods or services in the ordinary course of business, except for contracts that are specifically excluded from its scope. The majority of the Company's revenues are composed of interest income, deferred loan fee accretion, premium/discount accretion, gains on sales of loans and investments, BOLI net earnings, servicing income on loans sold and other loan fee income, which are not within the scope of ASC 606. Revenue reported as service charges on deposits, ATM and debit card interchange transaction fees, merchant services fees, non-deposit investment fees and escrow fees are within the scope of ASC 606. All of the Company's revenue from contracts with customers within the scope of ASC 606 is recognized in non-interest income with the exception of gains on sales of OREO and gains on sales/disposition of premises and equipment, which are included in non-interest expense. For the three months ended March 31, 2021, the Company recognized $941,000 in service charges on deposits, $1.24 million in ATM and debit card interchange fees, $74,000 in escrow fees, and $3,000 in fee income from non-deposit investment sales, all considered within the scope of ASC 606. For the six months ended March 31, 2021, the Company recognized $2.00 million in service charges on deposits, $2.39 million in ATM and debit card interchange fees, $179,000 in escrow fees, and $7,000 in fee income from non-deposit investment sales, all considered within the scope of ASC 606. For the three months ended March 31, 2020, the Company recognized $1.08 million in service charges on deposits, $1.02 million in ATM and debit card interchange fees, $47,000 in escrow fees, and $7,000 in fee income from non-deposit investment sales, all considered within the scope of ASC 606. For the six months ended March 31, 2020, the Company recognized $2.28 million in service charges on deposits, $2.11 million in ATM and debit card interchange fees, $130,000 in escrow fees, and $13,000 in fee income from non-deposit investment sales, all considered within the scope of ASC 606.

If a contract is determined to be within the scope of ASC 606, the Company recognizes revenue when it satisfies its performance obligation. Descriptions of the Company's revenue-generating activities that are within the scope of ASC 606 are as follows:

•Service Charges on Deposits: The Company earns fees from its deposit customers from a variety of deposit products and services. Non-transaction based fees such as account maintenance fees and monthly statement fees are considered to be provided to the customer under a day-to-day contract with ongoing renewals. Revenue for these non-transaction fees are earned over the course of a month, representing the period over which the Company satisfies the performance obligation. Transaction-based fees such as non-sufficient fund charges, stop payment charges and wire fees are recognized at the time the transaction is executed, as the contract duration does not extend beyond the service performed.

•ATM and Debit Card Interchange Transaction Fees: The Company earns fees from cardholder transactions conducted through third-party payment network providers which consist of interchange fees earned from the payment networks as a debit card issuer. These fees are recognized when the transaction occurs, but may settle on a daily or monthly basis.

•Escrow Fees: The Company earns fees from real estate escrow contracts with customers. The Company receives and disburses money and/or property according to the customer's contract. Fees are recognized when the escrow contract closes.

•Fee Income from Non-deposit Investment Sales: The Company earns fees from contracts with customers for investment activities. Revenues are generally recognized on a monthly basis and are generally based on a percentage of the customer's assets under management or based on investment solutions that are implemented for the customer.

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Investment Securities (Tables)

6 Months Ended

Mar. 31, 2021

Investments [Abstract]

Marketable Securities

Held to maturity and available for sale investment securities have been classified according to management’s intent and were as follows as of March 31, 2021 and September 30, 2020 (dollars in thousands):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
March 31, 2021
Held to maturity
Mortgage-backed securities ("MBS"):
U.S. government agencies	$	21,888	$	1,164	$	(9)	$	23,043
Private label residential	5,056		312		(23)		5,345
U.S. Treasury and U.S. government agency securities	9,021		—		(68)		8,953
Bank issued trust preferred securities	500		—		(3)		497
Total	$	36,465	$	1,476	$	(103)	$	37,838
Available for sale
MBS: U.S. government agencies	$	69,001	$	282	$	(99)	$	69,184
Total	$	69,001	$	282	$	(99)	$	69,184
September 30, 2020
Held to maturity
MBS:
U.S. government agencies	$	27,161	$	1,635	$	(3)	$	28,793
Private label residential	229		307		(1)		535
Bank issued trust preferred securities	500		—		(1)		499
Total	$	27,890	$	1,942	$	(5)	$	29,827
Available for sale
MBS: U.S. government agencies	$	57,797	$	178	$	(68)	$	57,907
Total	$	57,797	$	178	$	(68)	$	57,907

Unrealized Gain (Loss) on Investments

Held to maturity and available for sale investment securities with unrealized losses were as follows as of March 31, 2021 (dollars in thousands):

	Less Than 12 Months					12 Months or Longer					Total
	Estimated  Fair  Value		Gross Unrealized Losses		Quantity	Estimated  Fair  Value		Gross Unrealized Losses		Quantity	Estimated  Fair  Value		Gross Unrealized Losses
Held to maturity
MBS:
U.S. government agencies	$	2,098	$	(8)	3	$	34	$	(1)	4	$	2,132	$	(9)
Private label residential	4,836		(23)		1	2		—		2	4,838		(23)
U.S. Treasury and U.S. government agency securities	8,953		(68)		3	—		—		—	8,953		(68)
Bank issued trust preferred securities	497		(3)		1	—		—		—	497		(3)
Total	$	16,384	$	(102)	8	$	36	$	(1)	6	$	16,420	$	(103)
Available for sale
MBS: U.S. government agencies	$	22,873	$	(99)	12	$	—	$	—	—	$	22,873	$	(99)
Total	$	22,873	$	(99)	12	$	—	$	—	—	$	22,873	$	(99)

Held to maturity and available for sale investment securities with unrealized losses were as follows as of September 30, 2020 (dollars in thousands):

	Less Than 12 Months					12 Months or Longer					Total
	Estimated  Fair  Value		Gross Unrealized Losses		Quantity	Estimated  Fair  Value		Gross Unrealized Losses		Quantity	Estimated  Fair  Value		Gross Unrealized Losses
Held to maturity
MBS:
U.S. government agencies	$	5,130	$	(2)	4	$	39	$	(1)	4	$	5,169	$	(3)
Private label residential	7		—		1	11		(1)		2	18		(1)
Bank issued trust preferred securities	499		(1)		1	—		—		—	499		(1)
Total	$	5,636	$	(3)	6	$	50	$	(2)	6	$	5,686	$	(5)
Available for sale
MBS:
U.S. government agencies	$	21,464	$	(68)	11	$	—	$	—	—	$	21,464	$	(68)
Total	$	21,464	$	(68)	11	$	—	$	—	—	$	21,464	$	(68)

Schedule of Significant Inputs Utilized to Measure Estimate of Credit Loss Component on OTTI Securities

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 March 31, 2021 and 2020:

	Range				Weighted
	Minimum		Maximum		Average
March 31, 2021
Constant prepayment rate	6.00	%	15.00	%	13.18	%
Collateral default rate	1.73	%	28.92	%	13.94	%
Loss severity rate	—	%	18.93	%	5.79	%
March 31, 2020
Constant prepayment rate	6.00	%	15.00	%	10.91	%
Collateral default rate	1.86	%	22.47	%	10.44	%
Loss severity rate	—	%	16.34	%	4.02	%

Other than Temporary Impairment, Credit Losses Recognized in Earnings

The following table presents the OTTI recoveries for the three and six months ended March 31, 2021 and 2020 (dollars in thousands):

	Three Months Ended March 31, 2021		Three Months Ended March 31, 2020
	Held To Maturity		Held To Maturity
Total recoveries	$	3	$	3
Adjustment for portion of OTTI transferred from        other comprehensive income (loss) before income taxes (1)	—		—
Net recoveries recognized in earnings (2)	$	3	$	3

	Six Months Ended March 31, 2021		Six Months Ended March 31, 2020
	Held To Maturity		Held To Maturity
Total recoveries	$	8	$	106
Adjustment for portion of OTTI transferred from        other comprehensive income (loss) before income taxes (1)	—		—
Net recoveries recognized in earnings (2)	$	8	$	106

_________________

(1) Represents OTTI related to all other factors.

(2) Represents OTTI related to credit losses.

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 six months ended March 31, 2021 and 2020 (dollars in thousands):

	Six Months Ended March 31,
	2021		2020
Beginning balance of credit loss	$	885	$	1,071
Subtractions:
Realized losses previously recorded as credit losses	(5)		(60)
Recovery of prior credit loss	(8)		(106)
Ending balance of credit loss	$	872	$	905

Schedule of Contractual Maturities of Debt Securities

The contractual maturities of debt securities at March 31, 2021 were 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	$	—	$	—	$	1,428	$	1,421
Due after one year to five years	8,230		8,290		2,829		2,829
Due after five years to ten years	13,703		14,180		19,173		19,236
Due after ten years	14,532		15,368		45,571		45,698
Total	$	36,465	$	37,838	$	69,001	$	69,184

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Loans Receivable And Allowance For Loan Losses (Tables)

6 Months Ended

Mar. 31, 2021

Accounts, Notes, Loans and Financing Receivable, Gross, Allowance, and Net [Abstract]

Schedule of Loans receivable and Loans held for sale

Loans receivable by portfolio segment consisted of the following at March 31, 2021 and September 30, 2020 (dollars in thousands):

	March 31, 2021				September 30, 2020
	Amount		Percent		Amount		Percent
Mortgage loans:
One- to four-family (1)	$	117,184	10.3	%	$	118,580	10.5	%
Multi-family	92,435		8.1		85,053		7.5
Commercial	461,966		40.5		453,574		40.0
Construction - custom and owner/builder	105,305		9.2		129,572		11.4
Construction - speculative one- to four-family	17,289		1.5		14,592		1.3
Construction - commercial	42,340		3.7		33,144		2.9
Construction - multi-family	44,266		3.9		34,476		3.0
Construction - land development	2,238		0.2		7,712		0.7
Land	19,041		1.7		25,571		2.3
Total mortgage loans	902,064		79.1		902,274		79.6
Consumer loans:
Home equity and second mortgage	32,026		2.8		32,077		2.8
Other	2,756		0.2		3,572		0.3
Total consumer loans	34,782		3.0		35,649		3.1
Commercial loans:
Commercial business	66,645		5.8		69,540		6.1
U.S. Small Business Administration ("SBA") Paycheck Protection Program ("PPP") loans	138,175		12.1		126,820		11.2
Total commercial loans	204,820		17.9	%	196,360		17.3
Total loans receivable	1,141,666		100.0	%	1,134,283		100.0	%
Less:
Undisbursed portion of construction  loans in process	90,550				100,558
Deferred loan origination fees, net	6,999				6,436
Allowance for loan losses	13,434				13,414
Subtotal	110,983				120,408
Loans receivable, net	$	1,030,683			$	1,013,875
_____________________________
(1) Does not include one- to four-family loans held for sale totaling $8,455 and $4,509 at March 31, 2021 and September 30, 2020, respectively.

Schedule of Allowance for Loan Losses

The following tables set forth information for the three and six months ended March 31, 2021 and 2020 regarding activity in the allowance for loan losses by portfolio segment (dollars in thousands):

	Three Months Ended March 31, 2021
	Beginning Allowance		Provision for (Recapture of) Loan Losses		Charge- offs		Recoveries		Ending Allowance
Mortgage loans:
One- to four-family	$	1,135	$	16	$	—	$	—	$	1,151
Multi-family	757		27		—		—		784
Commercial	7,136		102		—		—		7,238
Construction – custom and owner/builder	770		(75)		—		—		695
Construction – speculative one- to four-family	182		(34)		—		—		148
Construction – commercial	558		156		—		—		714
Construction – multi-family	186		137		—		—		323
Construction – land development	123		(104)		—		—		19
Land	474		(72)		—		5		407
Consumer loans:
Home equity and second mortgage	605		(53)		—		—		552
Other	57		—		(1)		—		56
Commercial business loans	1,449		(100)		(2)		—		1,347
SBA PPP loans	—		—		—		—		—
Total	$	13,432	$	—	$	(3)	$	5	$	13,434

	Six Months Ended March 31, 2021
	Beginning Allowance		Provision for (Recapture of) Loan Losses		Charge- offs		Recoveries		Ending Allowance
Mortgage loans:
One-to four-family	$	1,163	$	(12)	$	—	$	—	$	1,151
Multi-family	718		66		—		—		784
Commercial	7,144		94		—		—		7,238
Construction – custom and owner/builder	832		(137)		—		—		695
Construction – speculative one- to four-family	158		(10)		—		—		148
Construction – commercial	420		294		—		—		714
Construction – multi-family	238		85		—		—		323
Construction – land development	133		(114)		—		—		19
Land	572		(175)		—		10		407
Consumer loans:
Home equity and second mortgage	593		(41)		—		—		552
Other	71		(18)		(1)		4		56
Commercial business loans	1,372		(32)		(2)		9		1,347
SBA PPP loans	—		—		—		—		—
Total	$	13,414	$	—	$	(3)	$	23	$	13,434

	Three Months Ended March 31, 2020
	Beginning Allowance		Provision for (Recapture of) Loan Losses		Charge- offs		Recoveries		Ending Allowance
Mortgage loans:
One- to four-family	$	1,065	$	83	$	—	$	1	$	1,149
Multi-family	499		96		—		—		595
Commercial	4,410		1,351		—		1		5,762
Construction – custom and owner/builder	754		(57)		—		—		697
Construction – speculative one- to four-family	248		(44)		—		—		204
Construction – commercial	403		20		—		—		423
Construction – multi-family	333		61		—		—		394
Construction – land development	48		32		—		—		80
Land	654		19		—		5		678
Consumer loans:
Home equity and second mortgage	609		47		—		—		656
Other	87		(10)		(1)		2		78
Commercial business loans	772		402		—		—		1,174
Total	$	9,882	$	2,000	$	(1)	$	9	$	11,890

	Six Months Ended March 31, 2020
	Beginning Allowance		Provision for (Recapture of) Loan Losses		Charge- offs		Recoveries		Ending Allowance
Mortgage loans:
One-to four-family	$	1,167	$	(21)	$	—	$	3	$	1,149
Multi-family	481		114		—		—		595
Commercial	4,154		1,603		—		5		5,762
Construction – custom and owner/builder	755		(63)		—		5		697
Construction – speculative one- to four-family	212		(8)		—		—		204
Construction – commercial	338		85		—		—		423
Construction – multi-family	375		19		—		—		394
Construction – land development	67		13		—		—		80
Land	697		(29)		—		10		678
Consumer loans:
Home equity and second mortgage	623		33		—		—		656
Other	99		(13)		(11)		3		78
Commercial business loans	722		467		(15)		—		1,174
Total	$	9,690	$	2,200	$	(26)	$	26	$	11,890

Schedule of loans evaluated individually for impairment and collectively evaluated for impairment in the allowance for loan losses

The following tables present information on the loans evaluated individually and collectively for impairment in the allowance for loan losses by portfolio segment at March 31, 2021 and September 30, 2020 (dollars in thousands):

	Allowance for Loan Losses						Recorded Investment in Loans
	Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Total		Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Total
March 31, 2021
Mortgage loans:
One- to four-family	$	—	$	1,151	$	1,151	$	896	$	116,288	$	117,184
Multi-family	—		784		784		—		92,435		92,435
Commercial	—		7,238		7,238		3,028		458,938		461,966
Construction – custom and owner/builder	—		695		695		—		62,973		62,973
Construction – speculative one- to four-family	—		148		148		—		7,336		7,336
Construction – commercial	—		714		714		—		34,217		34,217
Construction – multi-family	—		323		323		—		15,739		15,739
Construction – land development	—		19		19		—		623		623
Land	—		407		407		173		18,868		19,041
Consumer loans:
Home equity and second mortgage	—		552		552		537		31,489		32,026
Other	—		56		56		8		2,748		2,756
Commercial business loans	73		1,274		1,347		527		66,118		66,645
SBA PPP loans	—		—		—		—		138,175		138,175
Total	$	73	$	13,361	$	13,434	$	5,169	$	1,045,947	$	1,051,116
September 30, 2020
Mortgage loans:
One- to four-family	$	3	$	1,160	$	1,163	$	1,143	$	117,437	$	118,580
Multi-family	—		718		718		—		85,053		85,053
Commercial	—		7,144		7,144		3,242		450,332		453,574
Construction – custom and owner/builder	—		832		832		—		75,332		75,332
Construction – speculative one- to four-family	—		158		158		—		7,108		7,108
Construction – commercial	—		420		420		—		20,927		20,927
Construction – multi-family	—		238		238		—		10,832		10,832
Construction – land development	—		133		133		—		4,739		4,739
Land	—		572		572		394		25,177		25,571
Consumer loans:
Home equity and second mortgage	—		593		593		555		31,522		32,077
Other	—		71		71		9		3,563		3,572
Commercial business loans	38		1,334		1,372		430		69,110		69,540
SBA PPP loans	—		—		—		—		126,820		126,820
Total	$	41	$	13,373	$	13,414	$	5,773	$	1,027,952	$	1,033,725

Past Due Status of Loans Receivable

The following tables present an analysis of loans by aging category and portfolio segment at March 31, 2021 and September 30, 2020 (dollars in thousands):

	30–59 Days Past Due		60-89 Days Past Due		Non- Accrual (1)		Past Due 90 Days or More and Still Accruing		Total Past Due		Current		Total Loans
March 31, 2021
Mortgage loans:
One- to four-family	$	—	$	—	$	415	$	—	$	415	$	116,769	$	117,184
Multi-family	—		—		—		—		—		92,435		92,435
Commercial	514		—		643		—		1,157		460,809		461,966
Construction – custom and owner/builder	808		—		—		—		808		62,165		62,973
Construction – speculative one- to four-family	—		—		—		—		—		7,336		7,336
Construction – commercial	—		—		—		—		—		34,217		34,217
Construction – multi-family	—		—		—		—		—		15,739		15,739
Construction – land development	—		—		—		—		—		623		623
Land	217		—		173		—		390		18,651		19,041
Consumer loans:
Home equity and second mortgage	—		73		539		—		612		31,414		32,026
Other	11		—		8		—		19		2,737		2,756
Commercial business loans	—		—		527		—		527		66,118		66,645
SBA PPP loans	—		—		—		—		—		138,175		138,175
Total	$	1,550	$	73	$	2,305	$	—	$	3,928	$	1,047,188	$	1,051,116
September 30, 2020
Mortgage loans:
One- to four-family	$	—	$	68	$	659	$	—	$	727	$	117,853	$	118,580
Multi-family	—		—		—		—		—		85,053		85,053
Commercial	—		519		858		—		1,377		452,197		453,574
Construction – custom and owner/builder	—		—		—		—		—		75,332		75,332
Construction – speculative one- to four-family	—		—		—		—		—		7,108		7,108
Construction – commercial	—		—		—		—		—		20,927		20,927
Construction – multi-family	—		—		—		—		—		10,832		10,832
Construction – land development	—		38		—		—		38		4,701		4,739
Land	—		144		394		—		538		25,033		25,571
Consumer loans:
Home equity and second mortgage	—		22		555		—		577		31,500		32,077
Other	3		—		9		—		12		3,560		3,572
Commercial business loans	49				430				479		69,061		69,540
SBA PPP loans	—		—		—		—		—		126,820		126,820
Total	$	52	$	791	$	2,905	$	—	$	3,748	$	1,029,977	$	1,033,725

______________________

(1) Includes non-accrual loans past due 90 days or more and other loans classified as non-accrual.

Financing Receivable Credit Quality Indicators

The following tables present an analysis of loans by credit quality indicator and portfolio segment at March 31, 2021 and September 30, 2020 (dollars in thousands):

	Loan Grades
March 31, 2021	Pass		Watch		Special Mention		Substandard		Total
Mortgage loans:
One- to four-family	$	115,603	$	615	$	544	$	422	$	117,184
Multi-family	92,435		—		—		—		92,435
Commercial	439,977		13,290		7,600		1,099		461,966
Construction – custom and owner/builder	62,165		808		—		—		62,973
Construction – speculative one- to four-family	7,336		—		—		—		7,336
Construction – commercial	32,700		—		1,517		—		34,217
Construction – multi-family	15,739		—		—		—		15,739
Construction – land development	583		—		—		40		623
Land	17,727		575		566		173		19,041
Consumer loans:
Home equity and second mortgage	31,331		36		—		659		32,026
Other	2,717		31		—		8		2,756
Commercial business loans	66,030		—		45		570		66,645
SBA PPP loans	138,175		—		—		—		138,175
Total	$	1,022,518	$	15,355	$	10,272	$	2,971	$	1,051,116
September 30, 2020
Mortgage loans:
One- to four-family	$	115,992	$	1,369	$	551	$	668	$	118,580
Multi-family	85,053		—		—		—		85,053
Commercial	441,037		7,712		3,447		1,378		453,574
Construction – custom and owner/builder	74,529		803		—		—		75,332
Construction – speculative one- to four-family	7,108		—		—		—		7,108
Construction – commercial	19,525		—		1,402		—		20,927
Construction – multi-family	10,832		—		—		—		10,832
Construction – land development	4,701		—		—		38		4,739
Land	23,290		1,518		370		393		25,571
Consumer loans:
Home equity and second mortgage	31,344		53		—		680		32,077
Other	3,531		32		—		9		3,572
Commercial business loans	68,904		59		94		483		69,540
SBA PPP loans	126,820		—		—		—		126,820
Total	$	1,012,666	$	11,546	$	5,864	$	3,649	$	1,033,725

Impaired Loans Receivable

The following table is a summary of information related to impaired loans by portfolio segment as of March 31, 2021 and for the three and six months then ended (dollars in thousands):

	Recorded Investment		Unpaid Principal Balance (Loan Balance Plus Charge Off)		Related Allowance		Quarter to Date ("QTD") Average Recorded Investment (1)		Year to Date ("YTD") Average Recorded Investment (2)		QTD Interest Income Recognized (1)		YTD Interest Income Recognized (2)		QTD Cash Basis Interest Income Recognized (1)		YTD Cash Basis Interest Income Recognized (2)
With no related allowance recorded:
Mortgage loans:
One- to four-family	$	895	$	938	$	—	$	899	$	819	$	19	$	41	$	16	$	36
Commercial	3,028		3,028		—		3,028		3,099		40		80		33		63
Land	173		208		—		289		324		1		1		1		1
Consumer loans:
Home equity and second mortgage	538		538		—		573		567		1		1		1		1
Other	8		8		—		9		9		—		—		—		—
Commercial business loans	233		236		—		218		206		—		—		—		—
Subtotal	4,875		4,956		—		5,016		5,024		61		123		51		101
With an allowance recorded:
Mortgage loans:
One- to four-family	—		—		—		—		161		—		—		—		—
Commercial business loans	294		294		73		295		279		—		—		—		—
Subtotal	294		294		73		295		440		—		—		—		—
Total:
Mortgage loans:
One- to four-family	895		938		—		899		980		19		41		16		36
Commercial	3,028		3,028		—		3,028		3,099		40		80		33		63
Land	173		208		—		289		324		1		1		1		1
Consumer loans:
Home equity and second mortgage	538		538		—		573		567		1		1		1		1
Other	8		8		—		9		9		—		—		—		—
Commercial business loans	527		530		73		513		485		—		—		—		—
Total	$	5,169	$	5,250	$	73	$	5,311	$	5,464	$	61	$	123	$	51	$	101

______________________________________________

(1)For the three months ended March 31, 2021.

(2)For the six months ended March 31, 2021.

	Recorded Investment		Unpaid Principal Balance (Loan Balance Plus Charge Off)		Related Allowance		YTD Average Recorded Investment (1)		YTD Interest Income Recognized (1)		YTD Cash Basis Interest Income Recognized (1)
With no related allowance recorded:
Mortgage loans:
One- to four-family	$	659	$	703	$	—	$	1,127	$	44	$	34
Commercial	3,242		3,242		—		3,236		133		107
Land	394		438		—		125		—		—
Consumer loans:
Home equity and second mortgage	555		555		—		581		—		—
Other	9		9		—		6		—		—
Commercial business loans	182		182		—		176		—		—
Subtotal	5,041		5,129		—		5,251		177		141
With an allowance recorded:
Mortgage loans:
One- to four-family	484		484		3		194		16		8
Land	—		—		—		110		—		—
Consumer loans:
Other	—		—		—		7		—		—
Commercial business loans	248		248		38		370		—		—
Subtotal	732		732		41		681		16		8
Total
Mortgage loans:
One- to four-family	1,143		1,187		3		1,321		60		42
Commercial	3,242		3,242		—		3,236		133		107
Land	394		438		—		235		—		—
Consumer loans:
Home equity and second mortgage	555		555		—		581		—		—
Other	9		9		—		13		—		—
Commercial business loans	430		430		38		546		—		—
Total	$	5,773	$	5,861	$	41	$	5,932	$	193	$	149

_____________________________________________

(1) For the year ended September 30, 2020.

Schedule Of COVID Loan Modifications

The following tables set forth information with respect to total COVID-19 loan modifications, on deferral status, as of March 31, 2021 and September 30, 2020 (dollars in thousands):

COVID-19 Loan Modifications	March 31, 2021
Mortgage loans	Count	Balance		Percent
Commercial	4	$	11,174	86.7	%
Construction	1	1,517		11.8
Total mortgage loans	5	12,691		98.5
Consumer loans
Home equity and second mortgage	1	18		0.1
Total consumer loans	1	18		0.1
Commercial loans	2	175		1.4
Total COVID-19 Modifications	8	$	12,884	100.0	%

COVID-19 Loan Modifications	September 30, 2020
Mortgage loans	Number	Balance		Percent
One- to four-family	1	$	467	8.0	%
Commercial	2	3,951		67.2
Construction	1	1,402		23.9
Total mortgage loans	4	5,820		99.1
Consumer loans
Home equity and second mortgage	1	50		0.9
Total consumer loans	1	50		0.9
Total COVID-19 Modifications	5	$	5,870	100.0	%

Schedule of Troubled Debt Restructured Loans by Interest Accrual Status

The following tables set forth information with respect to the Company’s TDRs by interest accrual status as of March 31, 2021 and September 30, 2020 (dollars in thousands):

	March 31, 2021
	Accruing		Non- Accrual		Total
Mortgage loans:
One- to four-family	$	479	$	—	$	479
Commercial	2,385		—		2,385
Land	—		124		124
Consumer loans:
Home equity and second mortgage	—		68		68
Total	$	2,864	$	192	$	3,056

	September 30, 2020
	Accruing		Non- Accrual		Total
Mortgage loans:
One- to four-family	$	483	$	—	$	483
Commercial	2,385		—		2,385
Land	—		130		130
Consumer loans:
Home equity and second mortgage	—		73		73
Total	$	2,868	$	203	$	3,071

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Leases (Tables)

6 Months Ended

Mar. 31, 2021

Leases [Abstract]

Lease, Cost

The components of lease cost (included in the premises and equipment expense category in the consolidated statements of income) are as follows for the three and six months ended March 31, 2021 and 2020 (dollars in thousands):

	Three Months Ended March 31, 2021		Six Months Ended March 31, 2021
Lease cost:
Operating lease cost	$	92	$	185
Short-term lease cost	—		—
Total lease cost	$	92	$	185
	Three Months Ended March 31, 2020		Six Months Ended March 31, 2020
Lease cost:
Operating lease cost	$	83	$	166
Short-term lease cost	—		—
Total lease cost	$	83	$	166

The following table provides supplemental information to operating leases for the three and six months ended March 31, 2021 and 2020 (dollars in thousands):

	At or For Three Months Ended March 31, 2021				At or For Six Months Ended March 31, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	80			$	160
Weighted average remaining lease term-operating leases	8.8			years	8.8			years
Weighted average discount rate-operating leases	2.23		%		2.23		%
	At or For Three Months Ended March 31, 2020				At or For Six Months Ended March 31, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	80			$	158
Weighted average remaining lease term-operating leases	9.7			years	9.7			years
Weighted average discount rate-operating leases	2.22		%		2.22		%

Lessee, Operating Lease, Liability, Maturity

Maturities of operating lease liabilities at March 31, 2021 for future fiscal years are as follows (dollars in thousands):

Remainder of 2021	$	167
2022	342
2023	310
2024	313
2025	317
Thereafter	1,322
Total lease payments	2,771
Less imputed interest	272
Total	$	2,499

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Net Income Per Common Share (Tables)

6 Months Ended

Mar. 31, 2021

Earnings Per Share [Abstract]

Schedule of Earnings per Share

Information regarding the calculation of basic and diluted net income per common share for the three and six months ended March 31, 2021 and 2020 is as follows (dollars in thousands, except per share amounts):

	Three Months Ended March 31,				Six Months Ended March 31,
	2021		2020		2021		2020
Basic net income per common share computation
Numerator – net income	$	7,251	$	5,049	$	14,541	$	11,701
Denominator – weighted average common shares outstanding	8,331,121		8,344,201		8,322,210		8,342,828
Basic net income per common share	$	0.87	$	0.61	$	1.75	$	1.40
Diluted net income per common share computation
Numerator – net income	$	7,251	$	5,049	$	14,541	$	11,701
Denominator – weighted average common shares outstanding	8,331,121		8,344,201		8,322,210		8,342,828
Effect of dilutive stock options (1)	113,677		112,458		106,385		123,066
Weighted average common shares outstanding - assuming dilution	8,444,798		8,456,659		8,428,595		8,465,894
Diluted net income per common share	$	0.86	$	0.60	$	1.73	$	1.38

____________________________________________

(1) For the three and six months ended March 31, 2021, average options to purchase 135,590 and 136,631 shares of common stock, respectively, were outstanding but not included in the computation of diluted net income per share, because their effect would have been anti-dilutive. For the three and six months ended March 31, 2020, average options to purchase 138,362 and 121,497 shares of common stock, respectively, were outstanding but not included in the computation of diluted net income per shares, because their effect would have been anti-dilutive.

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Accumulated Other Comprehensive Income (Loss) (Tables)

6 Months Ended

Mar. 31, 2021

Equity [Abstract]

Schedule of Accumulated Other Comprehensive Income (Loss)

The changes in accumulated other comprehensive income (loss) ("AOCI") by component during the three and six months ended March 31, 2021 and 2020 are as follows (dollars in thousands):

	Three Months Ended March 31, 2021
	Changes in fair value of available for sale securities (1)		Changes in OTTI on held to maturity securities (1)		Total (1)
Balance of AOCI at the beginning of period	$	70	$	(26)	$	44
Other comprehensive income (loss)	74		3		77
Balance of AOCI at the end of period	$	144	$	(23)	$	121

	Six Months Ended March 31, 2021
	Changes in fair value of available for sale securities (1)		Changes in OTTI on held to maturity securities (1)		Total (1)
Balance of AOCI at the beginning of period	$	87	$	(26)	$	61
Other comprehensive income (loss)	57		3		60
Balance of AOCI at the end of period	$	144	$	(23)	$	121

	Three Months Ended March 31, 2020
	Changes in fair value of available for sale securities (1)		Changes in OTTI on held to maturity securities (1)		Total (1)
Balance of AOCI at the beginning of period	$	(116)	$	(30)	$	(146)
Other comprehensive (loss) income	(35)		2		(33)
Balance of AOCI at the end of period	$	(151)	$	(28)	$	(179)

	Six Months Ended March 31, 2020
	Changes in fair value of available for sale securities (1)		Changes in OTTI on held to maturity securities (1)		Total (1)
Balance of AOCI at the beginning of period	$	90	$	(40)	$	50
Other comprehensive (loss) income	(241)		12		(229)
Balance of AOCI at the end of period	$	(151)	$	(28)	$	(179)

__________________________

(1) All amounts are net of income taxes.

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Stock Compensation Plans (Tables)

6 Months Ended

Mar. 31, 2021

Share-based Payment Arrangement, Noncash Expense [Abstract]

Disclosure of Share-based Compensation Arrangements by Share-based Payment Award

Stock option activity for the six months ended March 31, 2021 and 2020 is summarized as follows:

	Six Months Ended March 31, 2021			Six Months Ended March 31, 2020
	Number of Shares	Weighted Average Exercise Price		Number of Shares	Weighted Average Exercise Price
Options outstanding, beginning of period	395,349	$	18.45	378,304	$	18.15
Exercised	(53,564)	9.70		(36,375)	10.30
Granted	1,500	19.13		1,000	26.50
Forfeited	(4,520)	27.57		(8,650)	24.84
Options outstanding, end of period	338,765	$	19.71	334,279	$	18.86

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions

The weighted average assumptions for options granted during the six months ended March 31, 2021 were as follows:

Expected volatility	33		%
Expected life (in years)	5
Expected dividend yield	4.76		%
Risk free interest rate	0.38		%
Grant date fair value per share	$	3.26

Schedule of Share-based Compensation, Shares Authorized under Stock Option Plans, by Exercise Price Range

Additional information regarding options outstanding at March 31, 2021 is as follows:

			Options Outstanding				Options Exercisable
Range of Exercise Prices ($)			Number	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)	Number	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)
$5.86	-	6.00	4,200	$	5.93	1.5	4,200	$	5.93	1.5
9.00			30,000	9.00		2.6	30,000	9.00		2.6
10.26	-	10.71	65,575	10.57		4.0	65,575	10.57		4.0
15.67	-	19.13	104,500	16.50		8.2	25,400	15.67		5.5
26.50	-	27.14	43,990	27.13		8.5	8,798	27.13		8.5
29.69			50,400	29.69		6.5	30,300	29.69		6.5
31.80			40,100	31.80		7.5	16,100	31.80		7.5
			338,765	$	19.71	6.5	180,373	$	16.83	4.9

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Fair Value Measurements (Tables)

6 Months Ended

Mar. 31, 2021

Fair Value Disclosures [Abstract]

Fair Value, Assets Measured on Recurring Basis

The Company's assets measured at estimated fair value on a recurring basis at March 31, 2021 and September 30, 2020 were as follows (dollars in thousands):

March 31, 2021	Estimated Fair Value
	Level 1		Level 2		Level 3		Total
Available for sale investment securities
MBS: U.S. government agencies	$	—	$	69,184	$	—	$	69,184
Investments in equity securities
Mutual funds	957		—		—		957
Total	$	957	$	69,184	$	—	$	70,141

September 30, 2020	Estimated Fair Value
	Level 1		Level 2		Level 3		Total
Available for sale investment securities
MBS: U.S. government agencies	$	—	$	57,907	$	—	$	57,907
Investments in equity securities
Mutual funds	977		—		—		977
Total	$	977	$	57,907	$	—	$	58,884

Balances of Assets Measured at Estimated Fair Value, Nonrecurring Basis

The following table summarizes the balances of assets measured at estimated fair value on a non-recurring basis at March 31, 2021 (dollars in thousands):

	Estimated Fair Value
	Level 1		Level 2		Level 3
Impaired loans:
Commercial business loans	$	—	$	—	$	221
Total impaired loans	—		—		221
OREO and other repossessed assets	—		—		157
Total	$	—	$	—	$	378

The following table summarizes the balances of assets measured at estimated fair value on a non-recurring basis at September 30, 2020 (dollars in thousands):

	Estimated Fair Value
	Level 1		Level 2		Level 3
Impaired loans:
Mortgage loans:
One- to four-family	$	—	$	—	$	481
Commercial business loans	—		—		210
Total impaired loans	—		—		691
Investment securities – held to maturity:
MBS - private label residential	—		8		—
OREO and other repossessed assets	—		—		1,050
Total	$	—	$	8	$	1,741

Level 3 Fair Value Measurements, Nonrecurring Basis

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 March 31, 2021 (dollars in thousands):

	Estimated Fair Value		Valuation Technique(s)	Unobservable Input(s)	Range
Impaired loans	$	221	Market approach	Appraised value less estimated selling costs	NA
OREO and other repossessed assets	$	157	Market approach	Lower of appraised value or listing price less estimated selling costs	NA

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, 2020 (dollars in thousands):

	Estimated Fair Value		Valuation Technique(s)	Unobservable Input(s)	Range
Impaired loans	$	691	Market approach	Appraised value less estimated selling costs	NA
OREO and other repossessed assets	$	1,050	Market approach	Lower of appraised value or listing price less estimated selling costs	NA

Balances of Assets and Liabilities Measured at Estimated Fair Value, Recurring Basis

The recorded amounts and estimated fair values of financial instruments were as follows as of March 31, 2021 and September 30, 2020 (dollars in thousands):

	March 31, 2021
					Fair Value Measurements Using:
	Recorded Amount		Estimated Fair Value		Level 1		Level 2		Level 3
Financial assets
Cash and cash equivalents	$	433,342	$	433,342	$	433,342	$	—	$	—
CDs held for investment	39,674		39,674		39,674		—		—
Investment securities	105,649		107,022		8,953		97,572		497
Investments in equity securities	957		957		957		—		—
FHLB stock	2,303		2,303		2,303		—		—
Other investments	3,000		3,000		3,000		—		—
Loans held for sale	8,455		8,714		8,714		—		—
Loans receivable, net	1,030,683		1,040,302		—		—		1,040,302
Accrued interest receivable	4,471		4,471		4,471		—		—
Financial liabilities
Certificates of deposit	142,781		144,344		—		—		144,344
FHLB borrowings	10,000		9,939		—		—		9,939
Accrued interest payable	182		182		182		—		—

	September 30, 2020
					Fair Value Measurements Using:
	Recorded Amount		Estimated Fair Value		Level 1		Level 2		Level 3
Financial assets
Cash and cash equivalents	$	314,452	$	314,452	$	314,452	$	—	$	—
CDs held for investment	65,545		65,545		65,545		—		—
Investment securities	85,797		87,734		—		87,235		499
Investments in equity securities	977		977		977		—		—
FHLB stock	1,922		1,922		1,922		—		—
Other investments	3,000		3,000		3,000		—		—
Loans held for sale	4,509		4,664		4,664		—		—
Loans receivable, net	1,013,875		1,034,876		—		—		1,034,876
Accrued interest receivable	4,484		4,484		4,484		—		—
Financial liabilities
Certificates of deposit	158,524		160,921		—		—		160,921
FHLB borrowings	10,000		10,167		—		—		10,167
Accrued interest payable	274		274		274		—		—

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Summary Of Significant Accounting Policies (Details)	6 Months Ended
	Mar. 31, 2021 segment
Accounting Policies [Abstract]
Number of operating segments	1

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Investment Securities: Marketable Securities (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Sep. 30, 2020
Held to maturity
Amortized Cost	$ 36,465	$ 27,890
Gross Unrealized Gains	1,476	1,942
Gross Unrealized Losses	(103)	(5)
Estimated Fair Value	37,838	29,827
Available for sale
Estimated Fair Value	70,141	58,884
Mortgage-backed Securities, U.S. government agencies
Held to maturity
Amortized Cost	21,888	27,161
Gross Unrealized Gains	1,164	1,635
Gross Unrealized Losses	(9)	(3)
Estimated Fair Value	23,043	28,793
Available for sale
Amortized Cost	69,001	57,797
Gross Unrealized Gains	282	178
Gross Unrealized Losses	(99)	(68)
Estimated Fair Value	69,184	57,907
Mortgage-backed Securities, Private label residential
Held to maturity
Amortized Cost	5,056	229
Gross Unrealized Gains	312	307
Gross Unrealized Losses	(23)	(1)
Estimated Fair Value	5,345	535
U.S. Treasury and U.S. government agency securities
Held to maturity
Amortized Cost	9,021	500
Gross Unrealized Gains	0	0
Gross Unrealized Losses	(68)	(1)
Estimated Fair Value	8,953	$ 499
Bank issued trust preferred securities
Held to maturity
Amortized Cost	500
Gross Unrealized Gains	0
Gross Unrealized Losses	(3)
Estimated Fair Value	$ 497

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Investment Securities: Unrealized Gain (Loss) on Investments (Details) $ in Thousands	Mar. 31, 2021 USD ($) security	Sep. 30, 2020 USD ($) security
Held-to-maturity Securities, Fair Value:
Held to maturity, Less Than 12 Months, Estimated Fair Value	$ 16,384	$ 5,636
Held to maturity, 12 Months or Longer, Estimated Fair Value	36	50
Held to maturity, Total, Estimated Fair Value	16,420	5,686
Held-to-maturity Securities, Gross Unrealized Losses
Held to maturity, Less Than 12 Months, Gross Unrealized Losses	(102)	(3)
Held to maturity, 12 Months or Longer, Gross Unrealized Losses	(1)	(2)
Held to maturity, Total, Gross Unrealized Losses	$ (103)	$ (5)
Held to maturity, Less Than 12 Months, Quantity | security	8	6
Held to maturity, 12 Months or Longer, Quantity | security	6	6
Available-for-sale Securities, Fair Value:
Available for sale, Less Than 12 Months, Estimated Fair Value	$ 22,873	$ 21,464
Available for sale, 12 Months or Longer, Estimated Fair Value	0	0
Available for sale, Total, Estimated Fair Value	22,873	21,464
Available-for-sale Securities, Gross Unrealized Losses:
Available for sale, Less Than 12 Months, Gross Unrealized Losses	(99)	(68)
Available for sale, 12 Months or Longer, Gross Unrealized Losses	0	0
Available for sale, Total, Gross Unrealized Losses	$ (99)	$ (68)
Available-for-sale, Less than 12 Months, Quantity | security	12	11
Available-for-sale, 12 Months or Longer, Quantity | security	0	0
Mortgage-backed Securities, U.S. government agencies
Held-to-maturity Securities, Fair Value:
Held to maturity, Less Than 12 Months, Estimated Fair Value	$ 2,098	$ 5,130
Held to maturity, 12 Months or Longer, Estimated Fair Value	34	39
Held to maturity, Total, Estimated Fair Value	2,132	5,169
Held-to-maturity Securities, Gross Unrealized Losses
Held to maturity, Less Than 12 Months, Gross Unrealized Losses	(8)	(2)
Held to maturity, 12 Months or Longer, Gross Unrealized Losses	(1)	(1)
Held to maturity, Total, Gross Unrealized Losses	$ (9)	$ (3)
Held to maturity, Less Than 12 Months, Quantity | security	3	4
Held to maturity, 12 Months or Longer, Quantity | security	4	4
Available-for-sale Securities, Fair Value:
Available for sale, Less Than 12 Months, Estimated Fair Value	$ 22,873	$ 21,464
Available for sale, 12 Months or Longer, Estimated Fair Value	0	0
Available for sale, Total, Estimated Fair Value	22,873	21,464
Available-for-sale Securities, Gross Unrealized Losses:
Available for sale, Less Than 12 Months, Gross Unrealized Losses	(99)	(68)
Available for sale, 12 Months or Longer, Gross Unrealized Losses	0	0
Available for sale, Total, Gross Unrealized Losses	$ (99)	$ (68)
Available-for-sale, Less than 12 Months, Quantity | security	12	11
Available-for-sale, 12 Months or Longer, Quantity | security	0	0
Mortgage-backed Securities, Private label residential
Held-to-maturity Securities, Fair Value:
Held to maturity, Less Than 12 Months, Estimated Fair Value	$ 4,836	$ 7
Held to maturity, 12 Months or Longer, Estimated Fair Value	2	11
Held to maturity, Total, Estimated Fair Value	4,838	18
Held-to-maturity Securities, Gross Unrealized Losses
Held to maturity, Less Than 12 Months, Gross Unrealized Losses	(23)	0
Held to maturity, 12 Months or Longer, Gross Unrealized Losses	0	(1)
Held to maturity, Total, Gross Unrealized Losses	$ (23)	$ (1)
Held to maturity, Less Than 12 Months, Quantity | security	1	1
Held to maturity, 12 Months or Longer, Quantity | security	2	2
U.S. Treasury and U.S. government agency securities
Held-to-maturity Securities, Fair Value:
Held to maturity, Less Than 12 Months, Estimated Fair Value	$ 8,953
Held to maturity, 12 Months or Longer, Estimated Fair Value	0
Held to maturity, Total, Estimated Fair Value	8,953
Held-to-maturity Securities, Gross Unrealized Losses
Held to maturity, Less Than 12 Months, Gross Unrealized Losses	(68)
Held to maturity, 12 Months or Longer, Gross Unrealized Losses	0
Held to maturity, Total, Gross Unrealized Losses	$ (68)
Held to maturity, Less Than 12 Months, Quantity | security	3
Held to maturity, 12 Months or Longer, Quantity | security	0
Bank issued trust preferred securities
Held-to-maturity Securities, Fair Value:
Held to maturity, Less Than 12 Months, Estimated Fair Value	$ 497	$ 499
Held to maturity, 12 Months or Longer, Estimated Fair Value	0	0
Held to maturity, Total, Estimated Fair Value	497	499
Held-to-maturity Securities, Gross Unrealized Losses
Held to maturity, Less Than 12 Months, Gross Unrealized Losses	(3)	(1)
Held to maturity, 12 Months or Longer, Gross Unrealized Losses	0	0
Held to maturity, Total, Gross Unrealized Losses	$ (3)	$ (1)
Held to maturity, Less Than 12 Months, Quantity | security	1	1
Held to maturity, 12 Months or Longer, Quantity | security	0	0

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Investment Securities: Schedule of significant inputs utilized to measure management's estimate of the credit loss component on OTTI securities (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Mar. 31, 2021	Mar. 31, 2020
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items]
Net recoveries on investment securities	$ (3)	$ (3)	$ (8)	$ (106)
Held-to-maturity Securities
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items]
Recoveries (other than temporary impairment OTTI) on investment securities	3	3	8	106
Held to Maturity - adjustment for portion of OTTI recorded as OCI before income taxes	0	0	0	0
Net recoveries on investment securities	$ 3	$ 3	$ 8	$ 106
Minimum
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items]
OTTI significant inputs - Constant prepayment rate	6.00%	6.00%	6.00%	6.00%
OTTI significant inputs - Collateral default rate	1.73%	1.86%	1.73%	1.86%
OTTI significant inputs - Loss severity rate	0.00%	0.00%	0.00%	0.00%
Maximum
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items]
OTTI significant inputs - Constant prepayment rate	15.00%	15.00%	15.00%	15.00%
OTTI significant inputs - Collateral default rate	28.92%	22.47%	28.92%	22.47%
OTTI significant inputs - Loss severity rate	18.93%	16.34%	18.93%	16.34%
Weighted Average
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items]
OTTI significant inputs - Constant prepayment rate	13.18%	10.91%	13.18%	10.91%
OTTI significant inputs - Collateral default rate	13.94%	10.44%	13.94%	10.44%
OTTI significant inputs - Loss severity rate	5.79%	4.02%	5.79%	4.02%

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Investment Securities: Other than Temporary Impairment, Credit Losses Recognized in Earnings (Details) - USD ($) $ in Thousands	6 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Roll Forward]
Beginning balance of credit loss	$ 885	$ 1,071
Realized losses previously recorded as credit losses	(5)	(60)
Recovery of prior credit loss	(8)	(106)
Ending balance of credit loss	$ 872	$ 905

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Investment Securities: Narrative-Realized Gains (Losses) (Details) $ in Thousands	6 Months Ended
	Mar. 31, 2021 USD ($) security	Mar. 31, 2020 USD ($) security	Sep. 30, 2020 USD ($)
Investments [Abstract]
Loss on sale of securities	$ 5	$ 60
Held-to-maturity securities, realized loss, number of securities | security	13	19
Security owned and pledged as collateral	$ 96,240		$ 81,030

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Investment Securities: Schedule of Contractual maturities of debt securities (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Sep. 30, 2020
Held-to-maturity Securities, Amortized Cost:
Due within one year	$ 0
Due after one year to five years	8,230
Due after five years to ten years	13,703
Due after ten years	14,532
Total	36,465	$ 27,890	[1]
Held-to-maturity Securities, Estimated Fair Value:
Due within one year	0
Due after one year to five years	8,290
Due after five years to ten years	14,180
Due after ten years	15,368
Total	37,838	$ 29,827
Available-for-sale Securities, Amortized Cost:
Due within one year	1,428
Due after one year to five years	2,829
Due after five years to ten years	19,173
Due after ten years	45,571
Total	69,001
Available-for-sale Securities, Estimated Fair Value:
Due within one year	1,421
Due after one year to five years	2,829
Due after five years to ten years	19,236
Due after ten years	45,698
Total	$ 69,184

[1] Derived from audited consolidated financial statements.

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Goodwill and CDI - Goodwill (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Sep. 30, 2020
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill	$ 15,131	$ 15,131	[1]

[1] Derived from audited consolidated financial statements.

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Loans Receivable And Allowance For Loan Losses: Schedule of Loans receivable and Loans held for sale (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Sep. 30, 2020
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans receivable	$ 1,141,666	$ 1,134,283
Undisbursed portion of construction  loans in process	90,550	100,558
Deferred loan origination fees, net	6,999	6,436
Allowance for loan losses	13,434	13,414
Less: Loans in process, Deferred fees and Allowance for loan losses	110,983	120,408
Loans receivable, net	$ 1,030,683	$ 1,013,875	[1]
Ratio of loan category to total loans receivable (percent)	100.00%	100.00%
Mortgage loans excluded	$ 8,455	$ 4,509
Total mortgage loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Mortgage loans	$ 902,064	$ 902,274
Ratio of loan category to total loans receivable (percent)	79.10%	79.60%
Mortgage loans, one-to-four family
Accounts, Notes, Loans and Financing Receivable [Line Items]
Mortgage loans	$ 117,184	$ 118,580
Ratio of loan category to total loans receivable (percent)	10.30%	10.50%
Mortgage loans, multi-family
Accounts, Notes, Loans and Financing Receivable [Line Items]
Mortgage loans	$ 92,435	$ 85,053
Ratio of loan category to total loans receivable (percent)	8.10%	7.50%
Mortgage loans, commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Mortgage loans	$ 461,966	$ 453,574
Ratio of loan category to total loans receivable (percent)	40.50%	40.00%
Mortgage loans, construction - custom and owner/builder
Accounts, Notes, Loans and Financing Receivable [Line Items]
Mortgage loans	$ 105,305	$ 129,572
Ratio of loan category to total loans receivable (percent)	9.20%	11.40%
Mortgage loans, construction - speculative one-to-four family
Accounts, Notes, Loans and Financing Receivable [Line Items]
Mortgage loans	$ 17,289	$ 14,592
Ratio of loan category to total loans receivable (percent)	1.50%	1.30%
Mortgage loans, construction – commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Mortgage loans	$ 42,340	$ 33,144
Ratio of loan category to total loans receivable (percent)	3.70%	2.90%
Mortgage loans, construction - Multi-family
Accounts, Notes, Loans and Financing Receivable [Line Items]
Mortgage loans	$ 44,266	$ 34,476
Ratio of loan category to total loans receivable (percent)	3.90%	3.00%
Mortgage loans, construction - Land development
Accounts, Notes, Loans and Financing Receivable [Line Items]
Mortgage loans	$ 2,238	$ 7,712
Ratio of loan category to total loans receivable (percent)	0.20%	0.70%
Mortgage loans, land
Accounts, Notes, Loans and Financing Receivable [Line Items]
Mortgage loans	$ 19,041	$ 25,571
Ratio of loan category to total loans receivable (percent)	1.70%	2.30%
Total consumer loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Consumer loans	$ 34,782	$ 35,649
Ratio of loan category to total loans receivable (percent)	3.00%	3.10%
Consumer loans, home equity and second mortgage
Accounts, Notes, Loans and Financing Receivable [Line Items]
Consumer loans	$ 32,026	$ 32,077
Ratio of loan category to total loans receivable (percent)	2.80%	2.80%
Consumer loans, other
Accounts, Notes, Loans and Financing Receivable [Line Items]
Consumer loans	$ 2,756	$ 3,572
Ratio of loan category to total loans receivable (percent)	0.20%	0.30%
Commercial business loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Commercial business loans	$ 66,645	$ 69,540
Ratio of loan category to total loans receivable (percent)	5.80%	6.10%
SBA PPP Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Commercial business loans	$ 138,175	$ 126,820
Ratio of loan category to total loans receivable (percent)	12.10%	11.20%
Total Commercial Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Commercial business loans	$ 204,820	$ 196,360
Ratio of loan category to total loans receivable (percent)	17.90%	17.30%

[1] Derived from audited consolidated financial statements.

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Loans Receivable And Allowance For Loan Losses - Narrative (Details) - USD ($)	Mar. 31, 2021	Sep. 30, 2020
Accounts, Notes, Loans and Financing Receivable, Gross, Allowance, and Net [Abstract]
Unamortized loan commitment and origination fees and unamortized discounts or premiums	$ 583,000	$ 790,000
Troubled debt restructured loan	3,056,000	3,071,000
Loans and leases receivable, impaired, commitment to lend	0	0
Allowance for loan losses allocated to TDR loans	$ 0	$ 3,000

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Loans Receivable And Allowance For Loan Losses: Schedule of Allowance for Loan Losses (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Mar. 31, 2021	Mar. 31, 2020
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Allowance for loan losses, Beginning Allowance	$ 13,432	$ 9,882	$ 13,414	$ 9,690
Provision for (Recapture of) Loan Losses	0	2,000	0	2,200
Charge- offs	(3)	(1)	(3)	(26)
Recoveries	5	9	23	26
Allowance for loan losses, Ending Allowance	13,434	11,890	13,434	11,890
Mortgage loans, one-to-four family
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Allowance for loan losses, Beginning Allowance	1,135	1,065	1,163	1,167
Provision for (Recapture of) Loan Losses	16	83	(12)	(21)
Charge- offs	0	0	0	0
Recoveries	0	1	0	3
Allowance for loan losses, Ending Allowance	1,151	1,149	1,151	1,149
Mortgage loans, multi-family
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Allowance for loan losses, Beginning Allowance	757	499	718	481
Provision for (Recapture of) Loan Losses	27	96	66	114
Charge- offs	0	0	0	0
Recoveries	0	0	0	0
Allowance for loan losses, Ending Allowance	784	595	784	595
Mortgage loans, commercial
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Allowance for loan losses, Beginning Allowance	7,136	4,410	7,144	4,154
Provision for (Recapture of) Loan Losses	102	1,351	94	1,603
Charge- offs	0	0	0	0
Recoveries	0	1	0	5
Allowance for loan losses, Ending Allowance	7,238	5,762	7,238	5,762
Mortgage loans, construction - custom and owner/builder
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Allowance for loan losses, Beginning Allowance	770	754	832	755
Provision for (Recapture of) Loan Losses	(75)	(57)	(137)	(63)
Charge- offs	0	0	0	0
Recoveries	0	0	0	5
Allowance for loan losses, Ending Allowance	695	697	695	697
Mortgage loans, construction - speculative one-to-four family
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Allowance for loan losses, Beginning Allowance	182	248	158	212
Provision for (Recapture of) Loan Losses	(34)	(44)	(10)	(8)
Charge- offs	0	0	0	0
Recoveries	0	0	0	0
Allowance for loan losses, Ending Allowance	148	204	148	204
Mortgage loans, construction – commercial
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Allowance for loan losses, Beginning Allowance	558	403	420	338
Provision for (Recapture of) Loan Losses	156	20	294	85
Charge- offs	0	0	0	0
Recoveries	0	0	0	0
Allowance for loan losses, Ending Allowance	714	423	714	423
Mortgage loans, construction - Multi-family
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Allowance for loan losses, Beginning Allowance	186	333	238	375
Provision for (Recapture of) Loan Losses	137	61	85	19
Charge- offs	0	0	0	0
Recoveries	0	0	0	0
Allowance for loan losses, Ending Allowance	323	394	323	394
Mortgage loans, construction - Land development
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Allowance for loan losses, Beginning Allowance	123	48	133	67
Provision for (Recapture of) Loan Losses	(104)	32	(114)	13
Charge- offs	0		0	0
Recoveries	0	0	0	0
Allowance for loan losses, Ending Allowance	19	80	19	80
Mortgage loans, land
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Allowance for loan losses, Beginning Allowance	474	654	572	697
Provision for (Recapture of) Loan Losses	(72)	19	(175)	(29)
Charge- offs	0	0	0	0
Recoveries	5	5	10	10
Allowance for loan losses, Ending Allowance	407	678	407	678
Consumer loans, home equity and second mortgage
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Allowance for loan losses, Beginning Allowance	605	609	593	623
Provision for (Recapture of) Loan Losses	(53)	47	(41)	33
Charge- offs	0	0	0	0
Recoveries	0	0	0	0
Allowance for loan losses, Ending Allowance	552	656	552	656
Consumer loans, other
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Allowance for loan losses, Beginning Allowance	57	87	71	99
Provision for (Recapture of) Loan Losses	0	(10)	(18)	(13)
Charge- offs	(1)	(1)	(1)	(11)
Recoveries	0	2	4	3
Allowance for loan losses, Ending Allowance	56	78	56	78
Commercial business loans
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Allowance for loan losses, Beginning Allowance	1,449	772	1,372	722
Provision for (Recapture of) Loan Losses	(100)	402	(32)	467
Charge- offs	(2)	0	(2)	(15)
Recoveries	0	0	9	0
Allowance for loan losses, Ending Allowance	1,347	$ 1,174	1,347	$ 1,174
SBA PPP Loans
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Allowance for loan losses, Beginning Allowance	0		0
Provision for (Recapture of) Loan Losses	0		0
Charge- offs	0		0
Recoveries	0		0
Allowance for loan losses, Ending Allowance	$ 0		$ 0

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Loans Receivable And Allowance For Loan Losses: Schedule of loans evaluated individually for impairment and collectively evaluated for impairment in the allowance for loan losses (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020	Sep. 30, 2020	Mar. 31, 2020	Dec. 31, 2019	Sep. 30, 2019
Financing Receivable, Allowance for Credit Loss [Line Items]
Allowance for Loan Losses, Individually Evaluated for Impairment	$ 73		$ 41
Allowance for Loan Losses, Collectively Evaluated for Impairment	13,361		13,373
Allowance for Loan Losses, Total	13,434	$ 13,432	13,414	$ 11,890	$ 9,882	$ 9,690
Recorded Investment in Loans, Individually Evaluated for Impairment	5,169		5,773
Recorded Investment in Loans, Collectively Evaluated for Impairment	1,045,947		1,027,952
Loans receivable	1,051,116		1,033,725
Mortgage loans, one-to-four family
Financing Receivable, Allowance for Credit Loss [Line Items]
Allowance for Loan Losses, Individually Evaluated for Impairment	0		3
Allowance for Loan Losses, Collectively Evaluated for Impairment	1,151		1,160
Allowance for Loan Losses, Total	1,151	1,135	1,163	1,149	1,065	1,167
Recorded Investment in Loans, Individually Evaluated for Impairment	896		1,143
Recorded Investment in Loans, Collectively Evaluated for Impairment	116,288		117,437
Loans receivable	117,184		118,580
Mortgage loans, multi-family
Financing Receivable, Allowance for Credit Loss [Line Items]
Allowance for Loan Losses, Individually Evaluated for Impairment	0		0
Allowance for Loan Losses, Collectively Evaluated for Impairment	784		718
Allowance for Loan Losses, Total	784	757	718	595	499	481
Recorded Investment in Loans, Individually Evaluated for Impairment	0		0
Recorded Investment in Loans, Collectively Evaluated for Impairment	92,435		85,053
Loans receivable	92,435		85,053
Mortgage loans, commercial
Financing Receivable, Allowance for Credit Loss [Line Items]
Allowance for Loan Losses, Individually Evaluated for Impairment	0		0
Allowance for Loan Losses, Collectively Evaluated for Impairment	7,238		7,144
Allowance for Loan Losses, Total	7,238	7,136	7,144	5,762	4,410	4,154
Recorded Investment in Loans, Individually Evaluated for Impairment	3,028		3,242
Recorded Investment in Loans, Collectively Evaluated for Impairment	458,938		450,332
Loans receivable	461,966		453,574
Mortgage loans, construction - custom and owner/builder
Financing Receivable, Allowance for Credit Loss [Line Items]
Allowance for Loan Losses, Individually Evaluated for Impairment	0		0
Allowance for Loan Losses, Collectively Evaluated for Impairment	695		832
Allowance for Loan Losses, Total	695	770	832	697	754	755
Recorded Investment in Loans, Individually Evaluated for Impairment	0		0
Recorded Investment in Loans, Collectively Evaluated for Impairment	62,973		75,332
Loans receivable	62,973		75,332
Mortgage loans, construction - speculative one-to-four family
Financing Receivable, Allowance for Credit Loss [Line Items]
Allowance for Loan Losses, Individually Evaluated for Impairment	0		0
Allowance for Loan Losses, Collectively Evaluated for Impairment	148		158
Allowance for Loan Losses, Total	148	182	158	204	248	212
Recorded Investment in Loans, Individually Evaluated for Impairment	0		0
Recorded Investment in Loans, Collectively Evaluated for Impairment	7,336		7,108
Loans receivable	7,336		7,108
Mortgage loans, construction – commercial
Financing Receivable, Allowance for Credit Loss [Line Items]
Allowance for Loan Losses, Individually Evaluated for Impairment	0		0
Allowance for Loan Losses, Collectively Evaluated for Impairment	714		420
Allowance for Loan Losses, Total	714	558	420	423	403	338
Recorded Investment in Loans, Individually Evaluated for Impairment	0		0
Recorded Investment in Loans, Collectively Evaluated for Impairment	34,217		20,927
Loans receivable	34,217		20,927
Mortgage loans, construction - Multi-family
Financing Receivable, Allowance for Credit Loss [Line Items]
Allowance for Loan Losses, Individually Evaluated for Impairment	0		0
Allowance for Loan Losses, Collectively Evaluated for Impairment	323		238
Allowance for Loan Losses, Total	323	186	238	394	333	375
Recorded Investment in Loans, Individually Evaluated for Impairment	0		0
Recorded Investment in Loans, Collectively Evaluated for Impairment	15,739		10,832
Loans receivable	15,739		10,832
Mortgage loans, construction - Land development
Financing Receivable, Allowance for Credit Loss [Line Items]
Allowance for Loan Losses, Individually Evaluated for Impairment	0		0
Allowance for Loan Losses, Collectively Evaluated for Impairment	19		133
Allowance for Loan Losses, Total	19	123	133	80	48	67
Recorded Investment in Loans, Individually Evaluated for Impairment	0		0
Recorded Investment in Loans, Collectively Evaluated for Impairment	623		4,739
Loans receivable	623		4,739
Mortgage loans, land
Financing Receivable, Allowance for Credit Loss [Line Items]
Allowance for Loan Losses, Individually Evaluated for Impairment	0		0
Allowance for Loan Losses, Collectively Evaluated for Impairment	407		572
Allowance for Loan Losses, Total	407	474	572	678	654	697
Recorded Investment in Loans, Individually Evaluated for Impairment	173		394
Recorded Investment in Loans, Collectively Evaluated for Impairment	18,868		25,177
Loans receivable	19,041		25,571
Consumer loans, home equity and second mortgage
Financing Receivable, Allowance for Credit Loss [Line Items]
Allowance for Loan Losses, Individually Evaluated for Impairment	0		0
Allowance for Loan Losses, Collectively Evaluated for Impairment	552		593
Allowance for Loan Losses, Total	552	605	593	656	609	623
Recorded Investment in Loans, Individually Evaluated for Impairment	537		555
Recorded Investment in Loans, Collectively Evaluated for Impairment	31,489		31,522
Loans receivable	32,026		32,077
Consumer loans, other
Financing Receivable, Allowance for Credit Loss [Line Items]
Allowance for Loan Losses, Individually Evaluated for Impairment	0		0
Allowance for Loan Losses, Collectively Evaluated for Impairment	56		71
Allowance for Loan Losses, Total	56	57	71	78	87	99
Recorded Investment in Loans, Individually Evaluated for Impairment	8		9
Recorded Investment in Loans, Collectively Evaluated for Impairment	2,748		3,563
Loans receivable	2,756		3,572
Commercial business loans
Financing Receivable, Allowance for Credit Loss [Line Items]
Allowance for Loan Losses, Individually Evaluated for Impairment	73		38
Allowance for Loan Losses, Collectively Evaluated for Impairment	1,274		1,334
Allowance for Loan Losses, Total	1,347	1,449	1,372	$ 1,174	$ 772	$ 722
Recorded Investment in Loans, Individually Evaluated for Impairment	527		430
Recorded Investment in Loans, Collectively Evaluated for Impairment	66,118		69,110
Loans receivable	66,645		69,540
SBA PPP Loans
Financing Receivable, Allowance for Credit Loss [Line Items]
Allowance for Loan Losses, Individually Evaluated for Impairment	0		0
Allowance for Loan Losses, Collectively Evaluated for Impairment	0		0
Allowance for Loan Losses, Total	0	$ 0	0
Recorded Investment in Loans, Individually Evaluated for Impairment	0		0
Recorded Investment in Loans, Collectively Evaluated for Impairment	138,175		126,820
Loans receivable	$ 138,175		$ 126,820

XML

Loans Receivable And Allowance For Loan Losses: Past Due Status of Loans (Details) - USD ($) $ in Thousands		Mar. 31, 2021		Sep. 30, 2020
Financing Receivable, Past Due [Line Items]
Loans receivable, Total Past Due		$ 3,928		$ 3,748
Loans receivable, Non-Accrual	[1]	2,305		2,905
Loans receivable, Current		1,047,188		1,029,977
Loans receivable		1,051,116		1,033,725
Mortgage loans, one-to-four family
Financing Receivable, Past Due [Line Items]
Loans receivable, Total Past Due		415		727
Loans receivable, Non-Accrual	[1]	415		659
Loans receivable, Current		116,769		117,853
Loans receivable		117,184		118,580
Mortgage loans, multi-family
Financing Receivable, Past Due [Line Items]
Loans receivable, Total Past Due		0		0
Loans receivable, Non-Accrual	[1]	0		0
Loans receivable, Current		92,435		85,053
Loans receivable		92,435		85,053
Mortgage loans, commercial
Financing Receivable, Past Due [Line Items]
Loans receivable, Total Past Due		1,157		1,377
Loans receivable, Non-Accrual	[1]	643		858
Loans receivable, Current		460,809		452,197
Loans receivable		461,966		453,574
Mortgage loans, construction - custom and owner/builder
Financing Receivable, Past Due [Line Items]
Loans receivable, Total Past Due		808		0
Loans receivable, Non-Accrual	[1]	0		0
Loans receivable, Current		62,165		75,332
Loans receivable		62,973		75,332
Mortgage loans, construction - speculative one-to-four family
Financing Receivable, Past Due [Line Items]
Loans receivable, Total Past Due		0		0
Loans receivable, Non-Accrual	[1]	0		0
Loans receivable, Current		7,336		7,108
Loans receivable		7,336		7,108
Mortgage loans, construction – commercial
Financing Receivable, Past Due [Line Items]
Loans receivable, Total Past Due		0		0
Loans receivable, Non-Accrual	[1]	0		0
Loans receivable, Current		34,217		20,927
Loans receivable		34,217		20,927
Mortgage loans, construction - Multi-family
Financing Receivable, Past Due [Line Items]
Loans receivable, Total Past Due		0		0
Loans receivable, Non-Accrual	[1]	0		0
Loans receivable, Current		15,739		10,832
Loans receivable		15,739		10,832
Mortgage loans, construction - Land development
Financing Receivable, Past Due [Line Items]
Loans receivable, Total Past Due		0		38
Loans receivable, Non-Accrual	[1]	0		0
Loans receivable, Current		623		4,701
Loans receivable		623		4,739
Mortgage loans, land
Financing Receivable, Past Due [Line Items]
Loans receivable, Total Past Due		390		538
Loans receivable, Non-Accrual	[1]	173		394
Loans receivable, Current		18,651		25,033
Loans receivable		19,041		25,571
Consumer loans, home equity and second mortgage
Financing Receivable, Past Due [Line Items]
Loans receivable, Total Past Due		612		577
Loans receivable, Non-Accrual	[1]	539		555
Loans receivable, Current		31,414		31,500
Loans receivable		32,026		32,077
Consumer loans, other
Financing Receivable, Past Due [Line Items]
Loans receivable, Total Past Due		19		12
Loans receivable, Non-Accrual	[1]	8		9
Loans receivable, Current		2,737		3,560
Loans receivable		2,756		3,572
Commercial business loans
Financing Receivable, Past Due [Line Items]
Loans receivable, Total Past Due		527		479
Loans receivable, Non-Accrual		527	[1]	430
Loans receivable, Current		66,118		69,061
Loans receivable		66,645		69,540
SBA PPP Loans
Financing Receivable, Past Due [Line Items]
Loans receivable, Total Past Due		0		0
Loans receivable, Non-Accrual		0		0	[1]
Loans receivable, Current		138,175		126,820
Loans receivable		138,175		126,820
30 to 59 Days Past Due
Financing Receivable, Past Due [Line Items]
Loans receivable, Total Past Due		1,550		52
30 to 59 Days Past Due | Mortgage loans, one-to-four family
Financing Receivable, Past Due [Line Items]
Loans receivable, Total Past Due		0		0
30 to 59 Days Past Due | Mortgage loans, multi-family
Financing Receivable, Past Due [Line Items]
Loans receivable, Total Past Due		0		0
30 to 59 Days Past Due | Mortgage loans, commercial
Financing Receivable, Past Due [Line Items]
Loans receivable, Total Past Due		514		0
30 to 59 Days Past Due | Mortgage loans, construction - custom and owner/builder
Financing Receivable, Past Due [Line Items]
Loans receivable, Total Past Due		808		0
30 to 59 Days Past Due | Mortgage loans, construction - speculative one-to-four family
Financing Receivable, Past Due [Line Items]
Loans receivable, Total Past Due		0		0
30 to 59 Days Past Due | Mortgage loans, construction – commercial
Financing Receivable, Past Due [Line Items]
Loans receivable, Total Past Due		0		0
30 to 59 Days Past Due | Mortgage loans, construction - Multi-family
Financing Receivable, Past Due [Line Items]
Loans receivable, Total Past Due		0		0
30 to 59 Days Past Due | Mortgage loans, construction - Land development
Financing Receivable, Past Due [Line Items]
Loans receivable, Total Past Due		0		0
30 to 59 Days Past Due | Mortgage loans, land
Financing Receivable, Past Due [Line Items]
Loans receivable, Total Past Due		217		0
30 to 59 Days Past Due | Consumer loans, home equity and second mortgage
Financing Receivable, Past Due [Line Items]
Loans receivable, Total Past Due		0		0
30 to 59 Days Past Due | Consumer loans, other
Financing Receivable, Past Due [Line Items]
Loans receivable, Total Past Due		11		3
30 to 59 Days Past Due | Commercial business loans
Financing Receivable, Past Due [Line Items]
Loans receivable, Total Past Due		0		49
30 to 59 Days Past Due | SBA PPP Loans
Financing Receivable, Past Due [Line Items]
Loans receivable, Total Past Due		0		0
60 to 89 Days Past Due
Financing Receivable, Past Due [Line Items]
Loans receivable, Total Past Due		73		791
60 to 89 Days Past Due | Mortgage loans, one-to-four family
Financing Receivable, Past Due [Line Items]
Loans receivable, Total Past Due		0		68
60 to 89 Days Past Due | Mortgage loans, multi-family
Financing Receivable, Past Due [Line Items]
Loans receivable, Total Past Due		0		0
60 to 89 Days Past Due | Mortgage loans, commercial
Financing Receivable, Past Due [Line Items]
Loans receivable, Total Past Due		0		519
60 to 89 Days Past Due | Mortgage loans, construction - custom and owner/builder
Financing Receivable, Past Due [Line Items]
Loans receivable, Total Past Due		0		0
60 to 89 Days Past Due | Mortgage loans, construction - speculative one-to-four family
Financing Receivable, Past Due [Line Items]
Loans receivable, Total Past Due		0		0
60 to 89 Days Past Due | Mortgage loans, construction – commercial
Financing Receivable, Past Due [Line Items]
Loans receivable, Total Past Due		0		0
60 to 89 Days Past Due | Mortgage loans, construction - Multi-family
Financing Receivable, Past Due [Line Items]
Loans receivable, Total Past Due		0		0
60 to 89 Days Past Due | Mortgage loans, construction - Land development
Financing Receivable, Past Due [Line Items]
Loans receivable, Total Past Due		0		38
60 to 89 Days Past Due | Mortgage loans, land
Financing Receivable, Past Due [Line Items]
Loans receivable, Total Past Due		0		144
60 to 89 Days Past Due | Consumer loans, home equity and second mortgage
Financing Receivable, Past Due [Line Items]
Loans receivable, Total Past Due		73		22
60 to 89 Days Past Due | Consumer loans, other
Financing Receivable, Past Due [Line Items]
Loans receivable, Total Past Due		0		0
60 to 89 Days Past Due | Commercial business loans
Financing Receivable, Past Due [Line Items]
Loans receivable, Total Past Due		0
60 to 89 Days Past Due | SBA PPP Loans
Financing Receivable, Past Due [Line Items]
Loans receivable, Total Past Due		0		0
Past Due 90 Days or More and Still Accruing
Financing Receivable, Past Due [Line Items]
Loans receivable, Total Past Due		0		0
Past Due 90 Days or More and Still Accruing | Mortgage loans, one-to-four family
Financing Receivable, Past Due [Line Items]
Loans receivable, Total Past Due		0		0
Past Due 90 Days or More and Still Accruing | Mortgage loans, multi-family
Financing Receivable, Past Due [Line Items]
Loans receivable, Total Past Due		0		0
Past Due 90 Days or More and Still Accruing | Mortgage loans, commercial
Financing Receivable, Past Due [Line Items]
Loans receivable, Total Past Due		0		0
Past Due 90 Days or More and Still Accruing | Mortgage loans, construction - custom and owner/builder
Financing Receivable, Past Due [Line Items]
Loans receivable, Total Past Due		0		0
Past Due 90 Days or More and Still Accruing | Mortgage loans, construction - speculative one-to-four family
Financing Receivable, Past Due [Line Items]
Loans receivable, Total Past Due		0		0
Past Due 90 Days or More and Still Accruing | Mortgage loans, construction – commercial
Financing Receivable, Past Due [Line Items]
Loans receivable, Total Past Due		0		0
Past Due 90 Days or More and Still Accruing | Mortgage loans, construction - Multi-family
Financing Receivable, Past Due [Line Items]
Loans receivable, Total Past Due		0		0
Past Due 90 Days or More and Still Accruing | Mortgage loans, construction - Land development
Financing Receivable, Past Due [Line Items]
Loans receivable, Total Past Due		0		0
Past Due 90 Days or More and Still Accruing | Mortgage loans, land
Financing Receivable, Past Due [Line Items]
Loans receivable, Total Past Due		0		0
Past Due 90 Days or More and Still Accruing | Consumer loans, home equity and second mortgage
Financing Receivable, Past Due [Line Items]
Loans receivable, Total Past Due		0		0
Past Due 90 Days or More and Still Accruing | Consumer loans, other
Financing Receivable, Past Due [Line Items]
Loans receivable, Total Past Due		0		0
Past Due 90 Days or More and Still Accruing | Commercial business loans
Financing Receivable, Past Due [Line Items]
Loans receivable, Total Past Due		0
Past Due 90 Days or More and Still Accruing | SBA PPP Loans
Financing Receivable, Past Due [Line Items]
Loans receivable, Total Past Due		$ 0		$ 0

[1] Includes non-accrual loans past due 90 days or more and other loans classified as non-accrual.

XML

Loans Receivable And Allowance For Loan Losses: Financing Receivable Credit Quality Indicators (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Sep. 30, 2020
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	$ 1,051,116	$ 1,033,725
Mortgage loans, one-to-four family
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	117,184	118,580
Mortgage loans, multi-family
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	92,435	85,053
Mortgage loans, commercial
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	461,966	453,574
Mortgage loans, construction - custom and owner/builder
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	62,973	75,332
Mortgage loans, construction - speculative one-to-four family
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	7,336	7,108
Mortgage loans, construction – commercial
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	34,217	20,927
Mortgage loans, construction - Multi-family
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	15,739	10,832
Mortgage loans, construction - Land development
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	623	4,739
Mortgage loans, land
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	19,041	25,571
Consumer loans, home equity and second mortgage
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	32,026	32,077
Consumer loans, other
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	2,756	3,572
Commercial business loans
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	66,645	69,540
SBA PPP Loans
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	138,175	126,820
Pass
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	1,022,518	1,012,666
Pass | Mortgage loans, one-to-four family
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	115,603	115,992
Pass | Mortgage loans, multi-family
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	92,435	85,053
Pass | Mortgage loans, commercial
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	439,977	441,037
Pass | Mortgage loans, construction - custom and owner/builder
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	62,165	74,529
Pass | Mortgage loans, construction - speculative one-to-four family
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	7,336	7,108
Pass | Mortgage loans, construction – commercial
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	32,700	19,525
Pass | Mortgage loans, construction - Multi-family
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	15,739	10,832
Pass | Mortgage loans, construction - Land development
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	583	4,701
Pass | Mortgage loans, land
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	17,727	23,290
Pass | Consumer loans, home equity and second mortgage
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	31,331	31,344
Pass | Consumer loans, other
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	2,717	3,531
Pass | Commercial business loans
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	66,030	68,904
Pass | SBA PPP Loans
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	138,175	126,820
Watch
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	15,355	11,546
Watch | Mortgage loans, one-to-four family
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	615	1,369
Watch | Mortgage loans, multi-family
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	0	0
Watch | Mortgage loans, commercial
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	13,290	7,712
Watch | Mortgage loans, construction - custom and owner/builder
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	808	803
Watch | Mortgage loans, construction - speculative one-to-four family
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	0	0
Watch | Mortgage loans, construction – commercial
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	0	0
Watch | Mortgage loans, construction - Multi-family
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	0	0
Watch | Mortgage loans, construction - Land development
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	0	0
Watch | Mortgage loans, land
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	575	1,518
Watch | Consumer loans, home equity and second mortgage
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	36	53
Watch | Consumer loans, other
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	31	32
Watch | Commercial business loans
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	0	59
Watch | SBA PPP Loans
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	0	0
Special Mention
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	10,272	5,864
Special Mention | Mortgage loans, one-to-four family
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	544	551
Special Mention | Mortgage loans, multi-family
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	0	0
Special Mention | Mortgage loans, commercial
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	7,600	3,447
Special Mention | Mortgage loans, construction - custom and owner/builder
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	0	0
Special Mention | Mortgage loans, construction - speculative one-to-four family
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	0	0
Special Mention | Mortgage loans, construction – commercial
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	1,517	1,402
Special Mention | Mortgage loans, construction - Multi-family
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	0	0
Special Mention | Mortgage loans, construction - Land development
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	0	0
Special Mention | Mortgage loans, land
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	566	370
Special Mention | Consumer loans, home equity and second mortgage
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	0	0
Special Mention | Consumer loans, other
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	0	0
Special Mention | Commercial business loans
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	45	94
Special Mention | SBA PPP Loans
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	0	0
Substandard
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	2,971	3,649
Substandard | Mortgage loans, one-to-four family
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	422	668
Substandard | Mortgage loans, multi-family
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	0	0
Substandard | Mortgage loans, commercial
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	1,099	1,378
Substandard | Mortgage loans, construction - custom and owner/builder
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	0	0
Substandard | Mortgage loans, construction - speculative one-to-four family
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	0	0
Substandard | Mortgage loans, construction – commercial
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	0	0
Substandard | Mortgage loans, construction - Multi-family
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	0	0
Substandard | Mortgage loans, construction - Land development
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	40	38
Substandard | Mortgage loans, land
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	173	393
Substandard | Consumer loans, home equity and second mortgage
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	659	680
Substandard | Consumer loans, other
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	8	9
Substandard | Commercial business loans
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	570	483
Substandard | SBA PPP Loans
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	$ 0	$ 0

XML

Loans Receivable And Allowance For Loan Losses: Impaired Financing Receivables (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended	12 Months Ended
	Mar. 31, 2021		Mar. 31, 2021	Sep. 30, 2020
Recorded Investment
With no related allowance recorded	$ 4,875		$ 4,875	$ 5,041
With an allowance recorded	294		294	732
Total:	5,169		5,169	5,773
Unpaid Principal Balance (Loan Balance Plus Charge Off)
With no related allowance recorded	4,956		4,956	5,129
With an allowance recorded	294		294	732
Total:	5,250		5,250	5,861
Related Allowance	73		73	41
Average Recorded Investment
With no related allowance recorded	5,016	[1]	5,024	5,251
With an allowance recorded	295	[1]	440	681
Total	5,311	[1]	5,464	5,932
Interest Income Recognized
With no related allowance recorded	61	[1]	123	177	[1]
With an allowance recorded	0	[1]	0	16
Total	61	[1]	123	193
Cash Basis Interest Income Recognized
With no related allowance recorded	51	[1]	101	141
With an allowance recorded	0	[1]	0	8
Total	51	[1]	101	149
Mortgage loans, one-to-four family
Recorded Investment
With no related allowance recorded	895		895	659
With an allowance recorded	0		0	484
Total:	895		895	1,143
Unpaid Principal Balance (Loan Balance Plus Charge Off)
With no related allowance recorded	938		938	703
With an allowance recorded	0		0	484
Total:	938		938	1,187
Related Allowance	0		0	3
Average Recorded Investment
With no related allowance recorded	899	[1]	819	1,127
With an allowance recorded	0	[1]	161	194
Total	899	[1]	980	1,321
Interest Income Recognized
With no related allowance recorded	19	[1]	41	44	[1]
With an allowance recorded	0	[1]	0	16
Total	19	[1]	41	60
Cash Basis Interest Income Recognized
With no related allowance recorded	16	[1]	36	34
With an allowance recorded	0	[1]	0	8
Total	16	[1]	36	42
Mortgage loans, commercial
Recorded Investment
With no related allowance recorded	3,028		3,028	3,242
Total:	3,028		3,028	3,242
Unpaid Principal Balance (Loan Balance Plus Charge Off)
With no related allowance recorded	3,028		3,028	3,242
Total:	3,028		3,028	3,242
Related Allowance	0		0	0
Average Recorded Investment
With no related allowance recorded	3,028	[1]	3,099	3,236
Total	3,028	[1]	3,099	3,236
Interest Income Recognized
With no related allowance recorded	40	[1]	80	133	[1]
Total	40	[1]	80	133
Cash Basis Interest Income Recognized
With no related allowance recorded	33	[1]	63	107
Total	33	[1]	63	107
Mortgage loans, land
Recorded Investment
With no related allowance recorded	173		173	394
With an allowance recorded				0
Total:	173		173	394
Unpaid Principal Balance (Loan Balance Plus Charge Off)
With no related allowance recorded	208		208	438
With an allowance recorded				0
Total:	208		208	438
Related Allowance	0		0	0
Average Recorded Investment
With no related allowance recorded	289	[1]	324	125
With an allowance recorded				110
Total	289	[1]	324	235
Interest Income Recognized
With no related allowance recorded	1	[1]	1	0	[1]
With an allowance recorded				0
Total	1	[1]	1	0
Cash Basis Interest Income Recognized
With no related allowance recorded	1	[1]	1	0
With an allowance recorded				0
Total	1	[1]	1	0
Consumer loans, home equity and second mortgage
Recorded Investment
With no related allowance recorded	538		538	555
Total:	538		538	555
Unpaid Principal Balance (Loan Balance Plus Charge Off)
With no related allowance recorded	538		538	555
Total:	538		538	555
Related Allowance	0		0	0
Average Recorded Investment
With no related allowance recorded	573	[1]	567	581
Total	573	[1]	567	581
Interest Income Recognized
With no related allowance recorded	1	[1]	1	0	[1]
Total	1	[1]	1	0
Cash Basis Interest Income Recognized
With no related allowance recorded	1	[1]	1	0
Total	1	[1]	1	0
Consumer loans, other
Recorded Investment
With no related allowance recorded	8		8	9
With an allowance recorded				0
Total:	8		8	9
Unpaid Principal Balance (Loan Balance Plus Charge Off)
With no related allowance recorded	8		8	9
With an allowance recorded				0
Total:	8		8	9
Related Allowance	0		0	0
Average Recorded Investment
With no related allowance recorded	9	[1]	9	6
With an allowance recorded				7
Total	9	[1]	9	13
Interest Income Recognized
With no related allowance recorded	0	[1]	0	0
With an allowance recorded				0
Total	0	[1]	0	0
Cash Basis Interest Income Recognized
With no related allowance recorded	0	[1]	0
With an allowance recorded				0
Total	0	[1]	0	0
Commercial business loans
Recorded Investment
With no related allowance recorded	233		233	182
With an allowance recorded	294		294	248
Total:	527		527	430
Unpaid Principal Balance (Loan Balance Plus Charge Off)
With no related allowance recorded	236		236	182
With an allowance recorded	294		294	248
Total:	530		530	430
Related Allowance	73		73	38
Average Recorded Investment
With no related allowance recorded	218	[1]	206	176
With an allowance recorded	295		279	370
Total	513	[1]	485	546
Interest Income Recognized
With no related allowance recorded	0	[1]	0	0	[1]
With an allowance recorded	0	[1]	0	0
Total	0	[1]	0	0
Cash Basis Interest Income Recognized
With no related allowance recorded	0	[1]	0	0
With an allowance recorded	0	[1]	0	0
Total	$ 0	[1]	$ 0	$ 0

[1] For the three months ended March 31, 2021

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Loans Receivable And Allowance For Loan Losses: COVID Modifications (Details) $ in Thousands	Mar. 31, 2021 USD ($) loan	Sep. 30, 2020 USD ($) loan
Accounts, Notes, Loans and Financing Receivable [Line Items]
Ratio of loan category to total loans, modified for COVID	100.00%	100.00%
Number of commercial loans modified | loan	8	5
Commercial loans modified for COVID | $	$ 12,884	$ 5,870
Total mortgage loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of mortgage loans modified | loan	5	4
Mortgage loans modified for COVID | $	$ 12,691	$ 5,820
Ratio of loan category to total loans, modified for COVID	98.50%	99.10%
Mortgage loans, one-to-four family
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of mortgage loans modified | loan		1
Mortgage loans modified for COVID | $		$ 467
Ratio of loan category to total loans, modified for COVID		8.00%
Mortgage loans, commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of mortgage loans modified | loan	4	2
Mortgage loans modified for COVID | $	$ 11,174	$ 3,951
Ratio of loan category to total loans, modified for COVID	86.70%	67.20%
Mortgage loans, construction
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of mortgage loans modified | loan	1	1
Mortgage loans modified for COVID | $	$ 1,517	$ 1,402
Ratio of loan category to total loans, modified for COVID	11.80%	23.90%
Total consumer loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Ratio of loan category to total loans, modified for COVID	0.10%	0.90%
Number of consumer loans modified | loan	1	1
Consumer loans, modified for COVID | $	$ 18	$ 50
Consumer loans, home equity and second mortgage
Accounts, Notes, Loans and Financing Receivable [Line Items]
Ratio of loan category to total loans, modified for COVID	0.10%	0.90%
Number of consumer loans modified | loan	1	1
Consumer loans, modified for COVID | $	$ 18	$ 50
Commercial business loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Ratio of loan category to total loans, modified for COVID	1.40%
Number of commercial loans modified | loan	2
Commercial loans modified for COVID | $	$ 175

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Loans Receivable And Allowance For Loan Losses: Schedule 1 of Troubled debt restructured loans (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Sep. 30, 2020
Financing Receivable, Troubled Debt Restructuring [Line Items]
Troubled debt restructured loan	$ 3,056	$ 3,071
Accruing
Financing Receivable, Troubled Debt Restructuring [Line Items]
Troubled debt restructured loan	2,864	2,868
Non-Accrual
Financing Receivable, Troubled Debt Restructuring [Line Items]
Troubled debt restructured loan	192	203
Mortgage loans, one-to-four family
Financing Receivable, Troubled Debt Restructuring [Line Items]
Troubled debt restructured loan	479	483
Mortgage loans, one-to-four family | Accruing
Financing Receivable, Troubled Debt Restructuring [Line Items]
Troubled debt restructured loan	479	483
Mortgage loans, one-to-four family | Non-Accrual
Financing Receivable, Troubled Debt Restructuring [Line Items]
Troubled debt restructured loan	0	0
Mortgage loans, commercial
Financing Receivable, Troubled Debt Restructuring [Line Items]
Troubled debt restructured loan	2,385	2,385
Mortgage loans, commercial | Accruing
Financing Receivable, Troubled Debt Restructuring [Line Items]
Troubled debt restructured loan	2,385	2,385
Mortgage loans, commercial | Non-Accrual
Financing Receivable, Troubled Debt Restructuring [Line Items]
Troubled debt restructured loan	0	0
Mortgage loans, land
Financing Receivable, Troubled Debt Restructuring [Line Items]
Troubled debt restructured loan	124	130
Mortgage loans, land | Accruing
Financing Receivable, Troubled Debt Restructuring [Line Items]
Troubled debt restructured loan	0	0
Mortgage loans, land | Non-Accrual
Financing Receivable, Troubled Debt Restructuring [Line Items]
Troubled debt restructured loan	124	130
Consumer loans, home equity and second mortgage
Financing Receivable, Troubled Debt Restructuring [Line Items]
Troubled debt restructured loan	68	73
Consumer loans, home equity and second mortgage | Accruing
Financing Receivable, Troubled Debt Restructuring [Line Items]
Troubled debt restructured loan	0	0
Consumer loans, home equity and second mortgage | Non-Accrual
Financing Receivable, Troubled Debt Restructuring [Line Items]
Troubled debt restructured loan	$ 68	$ 73

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Leases (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Mar. 31, 2021	Mar. 31, 2020	Sep. 30, 2020	[1]	Oct. 01, 2019
Leases [Abstract]
Operating lease right-of-use ("ROU") assets	$ 2,436		$ 2,436		$ 2,587		$ 2,890
Operating lease cost	92	$ 83	185	$ 166
Short-term lease cost	0	0	0	0
Total lease cost	92	83	185	166
Operating cash flows from operating leases	$ 80	$ 80	$ 160	$ 158
Weighted average remaining lease term-operating leases	8 years 9 months 18 days	9 years 8 months 12 days	8 years 9 months 18 days	9 years 8 months 12 days
Weighted average discount rate-operating leases	2.23%	2.22%	2.23%	2.22%

[1] Derived from audited consolidated financial statements.

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Leases - Schedule Of Lease Maturities (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Sep. 30, 2020
Leases [Abstract]
Remainder of 2021	$ 167
2022	342
2023	310
2024	313
2025	317
Thereafter	1,322
Total lease payments	2,771
Less imputed interest	272
Total	$ 2,499	$ 2,630

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Net Income Per Common Share: Schedule of Earnings per Share (Details) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended		6 Months Ended
		Mar. 31, 2021	Mar. 31, 2020	Mar. 31, 2021	Mar. 31, 2020
Earnings Per Share, Basic [Abstract]
Numerator – net income		$ 7,251	$ 5,049	$ 14,541	$ 11,701
Denominator – weighted average common shares outstanding (in shares)		8,331,121	8,344,201	8,322,210	8,342,828
Basic net income per common share (in dollars per share)		$ 0.87	$ 0.61	$ 1.75	$ 1.40
Earnings Per Share, Diluted [Abstract]
Effect of dilutive stock options (in shares)	[1]	113,677	112,458	106,385	123,066
Weighted average common shares and common stock equivalents (in shares)		8,444,798	8,456,659	8,428,595	8,465,894
Diluted net income per common share (in dollars per share)		$ 0.86	$ 0.60	$ 1.73	$ 1.38
Stock Options
Earnings Per Share, Diluted [Abstract]
Antidilutive securities excluded from computation of earnings per share (in shares)		135,590	138,362	136,631	121,497

[1] For the three and six months ended March 31, 2020, average options to purchase 138,362 and 121,497 shares of common stock, respectively, were outstanding but not included in the computation of diluted net income per shares, because their effect would have been anti-dilutive.

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Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Mar. 31, 2021	Mar. 31, 2020	Mar. 31, 2021		Mar. 31, 2020
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance at beginning of period		$ 193,325	$ 175,653	$ 187,630	[1]	$ 171,067
Balance at end of period		198,543	178,008	198,543		178,008
Accumulated Other Comprehensive Income (Loss)
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance at beginning of period	[2]	44	(146)	61		50
Other comprehensive income (loss)	[2]	77	(33)	60		(229)
Balance at end of period	[2]	121	(179)	121		(179)
Accumulated Net Unrealized Investment Gain (Loss) | Available-for-sale Securities
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance at beginning of period	[2]	70	(116)	87		90
Other comprehensive income (loss)	[2]	74	(35)	57		(241)
Balance at end of period	[2]	144	(151)	144		(151)
Accumulated Net Unrealized Investment Gain (Loss) | Held-to-maturity Securities
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance at beginning of period	[2]	(26)	(30)	(26)		(40)
Other comprehensive income (loss)	[2]	3	2	3		12
Balance at end of period	[2]	$ (23)	$ (28)	$ (23)		$ (28)

[1] Derived from audited consolidated financial statements.

[2] All amounts are net of income taxes.

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Stock Compensation Plans (Details) - USD ($)	3 Months Ended	6 Months Ended
	Mar. 31, 2021	Mar. 31, 2021	Mar. 31, 2020	Jan. 28, 2020	Jan. 27, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Aggregate intrinsic value of options exercised during the period		$ 947,000	$ 628,000
Number of unvested stock options (shares)	158,392	158,392	154,670
Unvested stock options, aggregate grant date fair value	$ 565,000	$ 565,000	$ 584,000
Unvested stock options, aggregate intrinsic value	897,000	$ 897,000
Stock options vested during period (shares)		200	0
Stock options vested during period, aggregate grant date fair value	1,000
Stock options, outstanding, aggregate intrinsic value	2,990,000	$ 2,990,000	$ 1,410,000
Unrecognized compensation expense, non-vested options	$ 507,000	$ 507,000
Unrecognized compensation expense, non-vested options, amortization period (in years)		2 years 1 month 13 days
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized (in shares)	300,000	300,000
Award vesting percentage		20.00%
Award vesting period (years)		5 years
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Contractual term		10 years
Equity Incentive Plan 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized (in shares)					352,366
Number of shares available for grant (in shares)	29,676	29,676
Equity Incentive Plan 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized (in shares)	298,000	298,000		350,000
Equity Incentive Plan 2019 | Employee
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized (in shares)				300,000

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Stock Compensation Plans: Disclosure of Share-based Compensation Arrangements by Share-based Payment Award (Details) - $ / shares	6 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Shares:
Options outstanding, beginning of period (shares)	395,349	378,304
Exercised (shares)	(53,564)	(36,375)
Granted (shares)	1,500	1,000
Forfeited (shares)	(4,520)	(8,650)
Options outstanding, end of period (shares)	338,765	334,279
Weighted Average Exercise Price (in dollars per share):
Options outstanding, beginning of period (dollars per share)	$ 18.45	$ 18.15
Exercised (dollars per share)	9.70	10.30
Granted (dollars per share)	19.13	26.50
Forfeited (dollars per share)	27.57	24.84
Options outstanding, end of period (dollars per share)	$ 19.71	$ 18.86

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Stock Compensation Plans And Stock Based Compensation: Schedule of Fair Value Assumptions (Details)	6 Months Ended
	Mar. 31, 2021 $ / shares
Share-based Payment Arrangement, Noncash Expense [Abstract]
Expected volatility (percent)	33.00%
Expected term (in years)	5 years
Expected dividend yield (percent)	4.76%
Risk free interest rate (percent)	0.38%
Grant date fair value per share (dollars per share)	$ 3.26

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Stock Compensation Plans: Stock Options by Exercise Price (Details) - Stock Options shares in Thousands	6 Months Ended
	Mar. 31, 2021 $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options Outstanding, Number (shares) | shares	338,765
Options Outstanding, Weighed Average Exercise Price (dollars per share)	$ 19.71
Options Outstanding, Weighted Average Remaining Contractual Life (Years)	6 years 6 months
Options Exercisable, Number (shares) | shares	180,373
Options Exercisable, Weighted Average Exercise Price (dollars per share)	$ 16.83
Options Exercisable, Weighted Average Remaining Contractual Life (Years)	4 years 10 months 24 days
$5.86 - $6.00
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted Average Exercise Price, minimum (dollars per share)	$ 5.86
Weighted Average Exercise Price, maximum (dollars per share)	$ 6.00
Options Outstanding, Number (shares) | shares	4,200
Options Outstanding, Weighed Average Exercise Price (dollars per share)	$ 5.93
Options Outstanding, Weighted Average Remaining Contractual Life (Years)	1 year 6 months
Options Exercisable, Number (shares) | shares	4,200
Options Exercisable, Weighted Average Exercise Price (dollars per share)	$ 5.93
Options Exercisable, Weighted Average Remaining Contractual Life (Years)	1 year 6 months
$9.00
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted Average Exercise Price, minimum (dollars per share)	$ 9.00
Options Outstanding, Number (shares) | shares	30,000
Options Outstanding, Weighed Average Exercise Price (dollars per share)	$ 9.00
Options Outstanding, Weighted Average Remaining Contractual Life (Years)	2 years 7 months 6 days
Options Exercisable, Number (shares) | shares	30,000
Options Exercisable, Weighted Average Exercise Price (dollars per share)	$ 9.00
Options Exercisable, Weighted Average Remaining Contractual Life (Years)	2 years 7 months 6 days
$10.26 - $10.74
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted Average Exercise Price, minimum (dollars per share)	$ 10.26
Weighted Average Exercise Price, maximum (dollars per share)	$ 10.71
Options Outstanding, Number (shares) | shares	65,575
Options Outstanding, Weighed Average Exercise Price (dollars per share)	$ 10.57
Options Outstanding, Weighted Average Remaining Contractual Life (Years)	4 years
Options Exercisable, Number (shares) | shares	65,575
Options Exercisable, Weighted Average Exercise Price (dollars per share)	$ 10.57
Options Exercisable, Weighted Average Remaining Contractual Life (Years)	4 years
$15.67 - $19.13
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted Average Exercise Price, minimum (dollars per share)	$ 15.67
Weighted Average Exercise Price, maximum (dollars per share)	$ 19.13
Options Outstanding, Number (shares) | shares	104,500
Options Outstanding, Weighed Average Exercise Price (dollars per share)	$ 16.50
Options Outstanding, Weighted Average Remaining Contractual Life (Years)	8 years 2 months 12 days
Options Exercisable, Number (shares) | shares	25,400
Options Exercisable, Weighted Average Exercise Price (dollars per share)	$ 15.67
Options Exercisable, Weighted Average Remaining Contractual Life (Years)	5 years 6 months
$26.50 - $27.14
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted Average Exercise Price, minimum (dollars per share)	$ 26.50
Weighted Average Exercise Price, maximum (dollars per share)	$ 27.14
Options Outstanding, Number (shares) | shares	43,990
Options Outstanding, Weighed Average Exercise Price (dollars per share)	$ 27.13
Options Outstanding, Weighted Average Remaining Contractual Life (Years)	8 years 6 months
Options Exercisable, Number (shares) | shares	8,798
Options Exercisable, Weighted Average Exercise Price (dollars per share)	$ 27.13
Options Exercisable, Weighted Average Remaining Contractual Life (Years)	8 years 6 months
$29.69
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted Average Exercise Price, minimum (dollars per share)	$ 29.69
Options Outstanding, Number (shares) | shares	50,400
Options Outstanding, Weighed Average Exercise Price (dollars per share)	$ 29.69
Options Outstanding, Weighted Average Remaining Contractual Life (Years)	6 years 6 months
Options Exercisable, Number (shares) | shares	30,300
Options Exercisable, Weighted Average Exercise Price (dollars per share)	$ 29.69
Options Exercisable, Weighted Average Remaining Contractual Life (Years)	6 years 6 months
$31.80
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted Average Exercise Price, minimum (dollars per share)	$ 31.80
Options Outstanding, Number (shares) | shares	40,100
Options Outstanding, Weighed Average Exercise Price (dollars per share)	$ 31.80
Options Outstanding, Weighted Average Remaining Contractual Life (Years)	7 years 6 months
Options Exercisable, Number (shares) | shares	16,100
Options Exercisable, Weighted Average Exercise Price (dollars per share)	$ 31.80
Options Exercisable, Weighted Average Remaining Contractual Life (Years)	7 years 6 months

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Fair Value Measurements: Balances of assets and liabilities measured at estimated fair value on a recurring basis (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Sep. 30, 2020
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale investment securities, estimated fair value	$ 70,141	$ 58,884
MBS: U.S. government agencies
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale investment securities, estimated fair value	69,184	57,907
Fair Value, Inputs, Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale investment securities, estimated fair value	957	977
Fair Value, Inputs, Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale investment securities, estimated fair value	69,184	57,907
Fair Value, Inputs, Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale investment securities, estimated fair value	0	0
Recurring | MBS: U.S. government agencies
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale investment securities, estimated fair value	69,184	57,907
Recurring | Mutual funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale investment securities, estimated fair value	957	977
Recurring | Fair Value, Inputs, Level 1 | MBS: U.S. government agencies
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale investment securities, estimated fair value	0	0
Recurring | Fair Value, Inputs, Level 1 | Mutual funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale investment securities, estimated fair value	957	977
Recurring | Fair Value, Inputs, Level 2 | MBS: U.S. government agencies
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale investment securities, estimated fair value	69,184	57,907
Recurring | Fair Value, Inputs, Level 2 | Mutual funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale investment securities, estimated fair value	0	0
Recurring | Fair Value, Inputs, Level 3 | MBS: U.S. government agencies
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale investment securities, estimated fair value	0	0
Recurring | Fair Value, Inputs, Level 3 | Mutual funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale investment securities, estimated fair value	$ 0	$ 0

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Fair Value Measurements: Balances of assets measured at estimated fair value on a non-recurring basis, and total losses resulting from estimated fair value adjustments (Details) - Nonrecurring - USD ($) $ in Thousands	Mar. 31, 2021	Sep. 30, 2020
Fair Value, Inputs, Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, estimated fair value, nonrecurring	$ 0	$ 0
Fair Value, Inputs, Level 1 | Mortgage loans, one-to-four family
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, estimated fair value, nonrecurring		0
Fair Value, Inputs, Level 1 | Commercial business loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, estimated fair value, nonrecurring	0	0
Fair Value, Inputs, Level 1 | Total impaired loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, estimated fair value, nonrecurring	0	0
Fair Value, Inputs, Level 1 | Private label residential
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, estimated fair value, nonrecurring		0
Fair Value, Inputs, Level 1 | OREO and other repossessed assets
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, estimated fair value, nonrecurring	0	0
Fair Value, Inputs, Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, estimated fair value, nonrecurring	0	8
Fair Value, Inputs, Level 2 | Mortgage loans, one-to-four family
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, estimated fair value, nonrecurring		0
Fair Value, Inputs, Level 2 | Commercial business loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, estimated fair value, nonrecurring	0	0
Fair Value, Inputs, Level 2 | Total impaired loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, estimated fair value, nonrecurring	0	0
Fair Value, Inputs, Level 2 | Private label residential
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, estimated fair value, nonrecurring		8
Fair Value, Inputs, Level 2 | OREO and other repossessed assets
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, estimated fair value, nonrecurring	0	0
Fair Value, Inputs, Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, estimated fair value, nonrecurring	378	1,741
Fair Value, Inputs, Level 3 | Mortgage loans, one-to-four family
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, estimated fair value, nonrecurring		481
Fair Value, Inputs, Level 3 | Commercial business loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, estimated fair value, nonrecurring	221	210
Fair Value, Inputs, Level 3 | Total impaired loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, estimated fair value, nonrecurring	221	691
Fair Value, Inputs, Level 3 | Private label residential
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, estimated fair value, nonrecurring		0
Fair Value, Inputs, Level 3 | OREO and other repossessed assets
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, estimated fair value, nonrecurring	$ 157	$ 1,050

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Fair Value Measurements: Fair Value Measurements, Nonrecurring, Valuation Techniques (Details) - Nonrecurring - Fair Value, Inputs, Level 3 - USD ($) $ in Thousands	Mar. 31, 2021	Sep. 30, 2020
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31)
Assets, estimated fair value, nonrecurring	$ 378	$ 1,741
Impaired loans
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31)
Assets, estimated fair value, nonrecurring	221	691
Impaired loans | Market Approach Valuation Technique
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31)
Assets, estimated fair value, nonrecurring	221	691
OREO and other repossessed assets | Market Approach Valuation Technique
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31)
Assets, estimated fair value, nonrecurring	$ 157	$ 1,050

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Fair Value Measurements: Schedule of estimated fair values of financial instruments (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Sep. 30, 2020
Fair value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Other investments, at cost	$ 3,000	$ 3,000	[1]
Recorded Amount
Fair value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents	433,342	314,452
CDs held for investment	39,674	65,545
Investment securities	105,649	85,797
Investments in equity securities	957	977
FHLB stock	2,303	1,922
Other investments, at cost	3,000	3,000
Loans held for sale	8,455	4,509
Loans receivable, net	1,030,683	1,013,875
Accrued interest receivable	4,471	4,484
Certificates of deposit	142,781	158,524
FHLB borrowings	10,000	10,000
Accrued interest payable	182	274
Fair Value
Fair value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents	433,342	314,452
CDs held for investment	39,674	65,545
Investment securities	107,022	87,734
Investments in equity securities	957	977
FHLB stock	2,303	1,922
Other investments, at cost	3,000	3,000
Loans held for sale	8,714	4,664
Loans receivable, net	1,040,302	1,034,876
Accrued interest receivable	4,471	4,484
Certificates of deposit	144,344	160,921
FHLB borrowings	9,939	10,167
Accrued interest payable	182	274
Fair Value | Fair Value, Inputs, Level 1
Fair value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents	433,342	314,452
CDs held for investment	39,674	65,545
Investment securities	8,953	0
Investments in equity securities	957	977
FHLB stock	2,303	1,922
Other investments, at cost	3,000	3,000
Loans held for sale	8,714	4,664
Loans receivable, net	0	0
Accrued interest receivable	4,471	4,484
Certificates of deposit	0	0
FHLB borrowings	0	0
Accrued interest payable	182	274
Fair Value | Fair Value, Inputs, Level 2
Fair value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents	0	0
CDs held for investment	0	0
Investment securities	97,572	87,235
Investments in equity securities	0	0
FHLB stock	0	0
Other investments, at cost	0	0
Loans held for sale	0	0
Loans receivable, net	0	0
Accrued interest receivable	0	0
Certificates of deposit	0	0
FHLB borrowings	0	0
Accrued interest payable	0	0
Fair Value | Fair Value, Inputs, Level 3
Fair value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents	0	0
CDs held for investment	0	0
Investment securities	497	499
Investments in equity securities	0	0
FHLB stock	0	0
Other investments, at cost	0	0
Loans held for sale	0	0
Loans receivable, net	1,040,302	1,034,876
Accrued interest receivable	0	0
Certificates of deposit	144,344	160,921
FHLB borrowings	9,939	10,167
Accrued interest payable	$ 0	$ 0

[1] Derived from audited consolidated financial statements.

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Revenue from Contract with Customer (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Mar. 31, 2021	Mar. 31, 2020
Deposit Account
Disaggregation of Revenue [Line Items]
Revenue from contract with customer	$ 941	$ 1,078	$ 1,996	$ 2,278
Credit and Debit Card
Disaggregation of Revenue [Line Items]
Revenue from contract with customer	1,237	1,015	2,393	2,109
Asset Management
Disaggregation of Revenue [Line Items]
Revenue from contract with customer	74	47	179	130
Investment Advice
Disaggregation of Revenue [Line Items]
Revenue from contract with customer	$ 3	$ 7	$ 7	$ 13