The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk, primarily by managing the amount, sources, and duration of its assets and liabilities and through the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to certain variable rate borrowings.

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the Consolidated Balance Sheet as of December 31, 2021 and September 30, 2021 (in thousands).

			Fair Values of Derivative Instruments
			Asset Derivatives
			As of December 31, 2021					As of September 30, 2021
Hedged Item	Notional Amount		Balance Sheet Location	Fair Value		Notional Amount		Balance Sheet Location	Fair Value
Brokered Deposits	$	200,000	Other Assets	$	3,298	$	175,000	Other Assets	$	1,247
Commercial Loans		77,336	Other Assets		1,732		71,326	Other Assets		1,307
Total	$	277,336		$	5,030	$	246,326		$	2,554

			Fair Values of Derivative Instruments
			Liability Derivatives
			As of December 31, 2021					As of September 30, 2021
Hedged Item	Notional Amount		Balance Sheet Location	Fair Value		Notional Amount		Balance Sheet Location	Fair Value

Brokered Deposits	$	25,000	Other Liabilities	$	129	$	60,000	Other Liabilities	$	452
Commercial Loans		109,791	Other Liabilities		1,746		103,831	Other Liabilities		1,303
Total	$	134,791		$	1,875	$	163,831		$	1,755

The Company’s objectives in using interest rate derivatives are to add stability to interest income and expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company has entered into interest rate swaps as part of its interest rate risk management strategy. These interest rate swaps are designated as cash flow hedges and involve the receipt of variable rate amounts from a counterparty in exchange for the Company making fixed payments. As of December 31, 2021, the Company had ten interest rate swaps with a notional principal amount of $225.0 million associated with the Company’s cash outflows associated with various brokered certificates and $187.1 million associated with associated with various commercial loans.

For derivatives designated as cash flow hedges, the effective portion of changes in the fair value of the derivative is initially reported in other comprehensive income (outside of earnings), net of tax, and subsequently reclassified to earnings when the hedged transaction affects earnings, and the ineffective portion of changes in the fair value of the derivative is recognized directly in earnings. The Company assesses the effectiveness of each hedging relationship by comparing the changes in cash flows of the derivative hedging instrument with the changes in cash flows of the designated hedged transactions. The Company did not recognize any hedge ineffectiveness in earnings during the periods ended December 31, 2021 and 2020.

Amounts reported in accumulated other comprehensive income (loss) related to derivatives that will be reclassified to interest income/expense as interest payments are made/received on the Company’s variable-rate assets/liabilities. During the three months ended December 31, 2021 and 2020, the Company had $236,000 and $667,000 of losses respectively, which resulted in an increase to interest expense. During the next twelve months, the Company estimates that $20,000 will be reclassified as an increase to interest expense.

The table below presents the effect of the Company’s cash flow hedge accounting on Accumulated Other Comprehensive Income (Loss) for the three month periods ended December 31, 2021 and 2020 (in thousands).

The Effect of Fair Value and Cash Flow Hedge Accounting on Accumulated Other Comprehensive Income (Loss)
Derivatives in Hedging Relationships	Loss Recognized in OCI on Derivative (Effective Portion) Three Months Ended December 31,				Location of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	Loss Recognized in OCI on Derivative (Effective Portion) Three Months Ended December 31,
Derivatives in Cash Flow Hedging Relationships	2021		2020			2021			2020
Interest Rate Products	$	2,375	$	1,181	Interest expense	$	(236	)	$	(667	)
Total	$	2,375	$	1,181		$	(236	)	$	(667	)

The Company has agreements with its derivative counterparties that contain a provision where if the Company defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the Company could also be declared in default on its derivative obligations.

The Company also has agreements with certain of its derivative counterparties that contain a provision where if the Company fails to maintain its status as a well / adequately capitalized institution, then the counterparty could terminate the derivative positions and the Company would be required to settle its obligations under the agreements.

As of December 31, 2021, the Company had no derivatives in a net liability position and was not required to post collateral against its obligations under these agreements. As of September 30, 2021, the Company was required to post $640,000 in collateral against its obligations under these agreements. If the Company had breached any of these provisions at December 31, 2021 and September 30, 2021, it could have been required to settle its obligations under the agreements at the termination value.