Regulatory Matters

6 Months Ended

Mar. 31, 2021

Regulatory Matters Disclosure [Abstract]

Regulatory Matters

Note 9 - Regulatory Matters

Regulatory Capital Requirements

The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under 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 classifications are also subject to qualitative judgments by the regulators about components, risk-weightings, and other factors.

In July 2013, the respective U.S. federal banking agencies issued final rules implementing Basel III and the Dodd-Frank Act capital requirements to be fully phased in on a global basis on January 1, 2019. The regulations establish a new tangible common equity capital requirement, increase the minimum requirement for the current Tier 1 risk-weighted asset (“RWA”) ratio, phase out certain kinds of intangibles treated as capital and certain types of instruments and change the risk weightings of certain assets used to determine required capital ratios. The new common equity Tier 1 capital component requires capital of the highest quality – predominantly composed of retained earnings and common stock instruments. For community banks, such as the Bank, a common equity Tier 1 capital ratio of 4.5% became effective on January 1, 2015. The new capital rules also increased the minimum Tier 1 capital ratio from 4.0% to 6.0% beginning on January 1, 2015. The rules also establish a capital conservation buffer of 2.5% above the new regulatory minimum capital requirements, which must consist entirely of common equity Tier 1 capital and would result in the following minimum ratios: (1) a common equity Tier 1 capital ratio of 7.0%, (2) a Tier 1 capital ratio of 8.5%, and (3) a total capital ratio of 10.5%. The new capital conservation buffer requirement began to be phased in on January 1, 2016 at 0.625% of risk-weighted assets and increased by that amount each year until it became fully implemented at 2.5% on January 1, 2019. An institution is also subject to limitations on paying dividends, engaging in share repurchases, and paying discretionary bonuses if its capital level falls below the buffer amount. These limitations establish a maximum percentage of eligible retained income that could be utilized for such actions.

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the table below) of tangible and core capital (as defined in the regulations) to total adjusted tangible assets (as defined in the regulations) and of risk-based capital (as defined in the regulations) to risk-weighted assets (as defined in the regulations).  

As of March 31, 2021 and as of September 30, 2020, the Company’s and the Bank’s current capital levels exceeded the required capital amounts to be considered “well capitalized” and they also met the fully-phased in minimum capital requirements, including the related capital conservation buffers, as required by the Basel III capital rules.   

The following table summarizes the Company’s compliance with applicable regulatory capital requirements as of March 31, 2021 and September 30, 2020:

	Actual					For Capital Adequacy Purposes					To be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount	Ratio
	(Dollars in thousands)
As of March 31, 2021
Tier 1 Leverage (Core) Capital (to    adjusted assets)	$	146,396		11.96	%	$	48,955		4.00	%	N/A	N/A
Common Equity Tier 1 Capital (to risk    weighted assets)		146,396		14.69	%		44,845		4.50	%	N/A	N/A
Tier 1 Capital (to risk weighted assets)		146,396		14.69	%		59,793		6.00	%	N/A	N/A
Total Risk Based Capital (to risk    weighted assets)		183,711		18.43	%		79,724		8.00	%	N/A	N/A
As of September 30, 2020
Tier 1 Leverage (Core) Capital (to    adjusted assets)	$	141,681		11.63	%	$	48,473		4.00	%	N/A	N/A
Common Equity Tier 1 Capital (to risk    weighted assets)		141,681		14.00	%		45,528		4.50	%	N/A	N/A
Tier 1 Capital (to risk weighted assets)		141,681		14.00	%		60,704		6.00	%	N/A	N/A
Total Risk Based Capital (to risk    weighted assets)		178,972		17.69	%		80,939		8.00	%	N/A	N/A

The following table summarizes the Bank’s compliance with applicable regulatory capital requirements as of March 31, 2021 and September 30, 2020:

	Actual					For Capital Adequacy Purposes					To be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars in thousands)
As of March 31, 2021
Tier 1 Leverage (Core) Capital (to    adjusted assets)	$	161,106		13.18	%	$	48,896		4.00	%	$	61,120		5.00	%
Common Equity Tier 1 Capital (to risk    weighted assets)		161,106		16.20	%		44,762		4.50	%		64,657		6.50	%
Tier 1 Capital (to risk weighted assets)		161,106		16.20	%		59,683		6.00	%		79,577		8.00	%
Total Risk Based Capital (to risk    weighted assets)		173,543		17.45	%		79,577		8.00	%		99,472		10.00	%
As of September 30, 2020
Tier 1 Leverage (Core) Capital (to    adjusted assets)	$	155,575		12.78	%	$	48,685		4.00	%	$	60,856		5.00	%
Common Equity Tier 1 Capital (to risk    weighted assets)		155,575		15.40	%		45,459		4.50	%		65,663		6.50	%
Tier 1 Capital (to risk weighted assets)		155,575		15.40	%		60,612		6.00	%		80,816		8.00	%
Total Risk Based Capital (to risk    weighted assets)		168,090		16.64	%		80,816		8.00	%		101,020		10.00	%