Loans Receivable and Related Allowance for Loan Losses (Tables)

6 Months Ended

Mar. 31, 2022

Receivables [Abstract]

Schedule of loans receivable

Loans receivable in the Company’s portfolio consisted of the following at the dates indicated below:

	March 31, 2022			September 30, 2021
	(In thousands)
Residential mortgage	$	177,669		$	198,710
Construction and Development:
Residential and commercial		25,558			61,492
Land		4,603			2,204
Total Construction and Development		30,161			63,696
Commercial:
Commercial real estate		400,974			426,915
Farmland		15,624			10,297
Multi-family		54,789			66,332
Commercial and industrial		101,354			115,246
Other		7,977			10,954
Total Commercial		580,718			629,744
Consumer:
Home equity lines of credit		12,283			13,491
Second mortgages		4,969			5,884
Other		2,237			2,299
Total Consumer		19,489			21,674
Total loans		808,037			913,824
Deferred loan costs, net		574			629
Allowance for loan losses		(9,301	)		(11,472	)
Total loans receivable, net	$	799,310		$	902,981

Schedule of allowance for loan losses

The following tables summarize the primary classes of the allowance for loan losses (“ALLL”), segregated into the amount required for loans individually evaluated for impairment and the amount required for loans collectively evaluated for impairment, as of March 31, 2022 and September 30, 2021.  Activity in the ALLL is presented for the three and six months ended March 31, 2022 and 2021 and the fiscal year ended September 30, 2021:

				Construction and Development					Commercial														Consumer
	Residential Mortgage			Residential and Commercial			Land		Commercial Real Estate			Farmland		Multi- Family			Commercial and Industrial			Other			Home Equity Lines of Credit		Second Mortgages			Other			Unallocated		Total
Allowance for loan losses:	(In thousands)
Three Months Ended March 31,2022
Beginning balance	$	935		$	428		$	15	$	7,118		$	56	$	450		$	791		$	54		$	76	$	6		$	20		$	88	$	10,037
Charge-offs		-			-			-		-			-		-			(764	)		-			-		(21	)		-			-		(785	)
Recoveries		-			-			-		1			-		-			1			-			-		47			-			-		49
Provisions		(121	)		(276	)		12		(914	)		218		(123	)		1,169			(54	)		2		69			(3	)		21		-
Ending balance	$	814		$	152		$	27	$	6,205		$	274	$	327		$	1,197		$	-		$	78	$	101		$	17		$	109	$	9,301

				Construction and Development				Commercial															Consumer
	Residential Mortgage			Residential and Commercial		Land		Commercial Real Estate			Farmland			Multi- Family			Commercial and Industrial			Other			Home Equity Lines of Credit			Second Mortgages			Other			Unallocated			Total
Allowance for loan losses:	(In thousands)
Three Months Ended March 31,2021
Beginning balance	$	1,603		$	508	$	24	$	7,973		$	352		$	508		$	600		$	50		$	125		$	179		$	25		$	1,088		$	13,035
Charge-offs		-			-		-		(484	)		-			-			-			-			-			-			-			-			(484	)
Recoveries		-			-		-		-			-			-			-			-			1			48			1			-			50
Provisions		(175	)		24		-		888			(317	)		(2	)		(43	)		(1	)		(7	)		(113	)		(1	)		(253	)		-
Ending balance	$	1,428		$	532	$	24	$	8,377		$	35		$	506		$	557		$	49		$	119		$	114		$	25		$	835		$	12,601

				Construction and Development					Commercial														Consumer
	Residential Mortgage			Residential and Commercial			Land		Commercial Real Estate			Farmland		Multi- Family			Commercial and Industrial			Other			Home Equity Lines of Credit		Second Mortgages			Other			Unallocated		Total
Allowance for loan losses:	(In thousands)
Six Months Ended March 31, 2022
Beginning balance	$	934		$	428		$	15	$	7,043		$	56	$	450		$	2,221		$	54		$	76	$	87		$	20		$	88	$	11,472
Charge-offs		-			-			-		-			-		-			(2,194	)		-			-		(105	)		-			-		(2,299	)
Recoveries		1			-			-		76			-		-			1			-			-		50			-			-		128
Provisions		(121	)		(276	)		12		(914	)		218		(123	)		1,169			(54	)		2		69			(3	)		21		-
Ending balance	$	814		$	152		$	27	$	6,205		$	274	$	327		$	1,197		$	-		$	78	$	101		$	17		$	109	$	9,301
Ending balance: individually evaluated    for impairment	$	58		$	-		$	-	$	-		$	180	$	-		$	5		$	-		$	-	$	-		$	-		$	-	$	243
Ending balance: collectively evaluated    for impairment	$	756		$	152		$	27	$	6,205		$	94	$	327		$	1,192		$	-		$	78	$	101		$	17		$	109	$	9,058
Loans receivable:
Ending balance	$	177,669		$	25,558		$	4,603	$	400,974		$	15,624	$	54,789		$	101,354		$	7,977		$	12,283	$	4,969		$	2,237				$	808,037
Ending balance: individually evaluated    for impairment	$	482		$	-		$	-	$	-		$	2,232	$	-		$	625		$	-		$	-	$	-		$	-				$	3,339
Ending balance: collectively evaluated    for impairment	$	177,187		$	25,558		$	4,603	$	400,974		$	13,392	$	54,789		$	100,729		$	7,977		$	12,283	$	4,969		$	2,237				$	804,698

				Construction and Development				Commercial																Consumer
	Residential Mortgage			Residential and Commercial		Land		Commercial Real Estate			Farmland			Multi- Family				Commercial and Industrial			Other			Home Equity Lines of Credit			Second Mortgages			Other			Unallocated		Total
Allowance for loan losses:	(In thousands)
Six Months Ended March 31,2021
Beginning balance	$	1,667		$	465	$	23	$	8,682		$	47		$	511			$	578		$	51		$	130		$	196		$	29		$	54	$	12,433
Charge-offs		-			-		-		(484	)		-			-				-			-			-			-			(1	)		-		(485	)
Recoveries		1			-		-		1			-			-				1			-			1			98			1			-		103
Provisions		(240	)		67		1		178			(12	)		(5	)			(22	)		(2	)		(12	)		(180	)		(4	)		781		550
Ending balance	$	1,428		$	532	$	24	$	8,377		$	35		$	506			$	557		$	49		$	119		$	114		$	25		$	835	$	12,601
Ending balance: individually evaluated    for impairment	$	-		$	-	$	-	$	1,476		$	-		$	-			$	-		$	-		$	-		$	38		$	-		$	-	$	1,514
Ending balance: collectively evaluated    for impairment	$	1,428		$	532	$	24	$	6,901		$	35		$	506			$	557		$	49		$	119		$	76		$	25		$	835	$	11,087
Loans receivable:
Ending balance	$	218,165		$	76,257	$	3,596	$	482,611		$	7,344		$	67,122			$	94,706		$	9,927		$	15,936		$	8,114		$	2,650				$	986,428
Ending balance: individually evaluated    for impairment	$	3,671		$	-	$	-	$	38,838		$	2,266		$	-		#	$	549		$	-		$	24		$	352		$	-				$	45,700
Ending balance: collectively evaluated    for impairment	$	214,494		$	76,257	$	3,596	$	443,773		$	5,078		$	67,122			$	94,157		$	9,927		$	15,912		$	7,762		$	2,650				$	940,728

					Construction and Development						Commercial													Consumer
		Residential Mortgage			Residential and Commercial			Land			Commercial Real Estate			Farmland		Multi- Family			Commercial and Industrial			Other		Home Equity Lines of Credit			Second Mortgages			Other			Unallocated		Total
Allowance for loan losses:	(In thousands)
Year Ended September 30, 2021
Beginning balance		$	1,667		$	465		$	23		$	8,682		$	47	$	511		$	578		$	51	$	130		$	196		$	29		$	54	$	12,433
Charge-offs			-			-			-			(11,930	)		-		-			(379	)		-		-			-			(4	)		-		(12,313	)
Recoveries			41			4			-			1			-		-			2			-		17			108			2			-		176
Provisions			(774	)		(41	)		(8	)		10,290			9		(61	)		2,020			3		(71	)		(217	)		(7	)		34		11,176
Ending balance		$	934		$	428		$	15		$	7,043		$	56	$	450		$	2,221		$	54	$	76		$	87		$	20		$	88	$	11,472
Ending balance: individually evaluated    for impairment		$	-		$	-		$	-		$	18		$	-	$	-		$	1,488		$	-	$	-		$	38		$	-		$	-	$	1,544
Ending balance: collectively evaluated    for impairment		$	934		$	428		$	15		$	7,025		$	56	$	450		$	733		$	54	$	76		$	49		$	20		$	88	$	9,928
Loans receivable:
Ending balance		$	198,710		$	61,492		$	2,204		$	426,915		$	10,297	$	66,332		$	115,246		$	10,954	$	13,491		$	5,884		$	2,299				$	913,824
Ending balance: individually evaluated    for impairment		$	-		$	-		$	-		$	286		$	-	$	-		$	2,517		$	-	$	-		$	102		$	-				$	2,905
Ending balance: collectively evaluated    for impairment		$	198,710		$	61,492		$	2,204		$	426,629		$	10,297	$	66,332		$	112,729		$	10,954	$	13,491		$	5,782		$	2,299				$	910,919

Schedule of impaired loans

Impaired loans with no specific allowance decreased by $22.9 million from $39.7 million at September 30, 2021 to $16.9 million at March 31, 2022, due primarily to three commercial real estate loans totaling $18.9 million being sold during the six months period, as part of the note sale, previously announced, $2.2 million partial charge down of one commercial and industrial loan and a $1.7 million valuation allowance recorded on loans held for sale.  The valuation allowance adjustment consists of approximately $395,000 in reduced value and approximately $1.3 million in real estate tax expense.     The following table presents impaired loans in the portfolio by class, segregated by those for which a specific allowance was required and those for which a specific allowance was not necessary, as of March 31, 2022 and September 30, 2021:

	Impaired Loans with Specific Allowance				Impaired Loans with No Specific Allowance		Total Impaired Loans
	Recorded Investment		Related Allowance		Recorded Investment		Recorded Investment		Unpaid Principal Balance
	(In thousands)
March 31, 2022
Residential mortgage	$	482	$	58	$	2,394	$	2,876	$	2,876
Commercial:
Commercial real estate		-		-		13,840		13,840		13,840
Farmland		2,232		180		-		2,232		2,232
Commercial and industrial		625		5		356		981		981
Consumer:
Home equity lines of credit		-		-		21		21		21
Second mortgages		-		-		253		253		253
Total impaired loans	$	3,339	$	243	$	16,864	$	20,203	$	20,203
September 30, 2021
Residential mortgage	$	-	$	-	$	2,594	$	2,594	$	2,766
Commercial:
Commercial real estate		286		18		33,543		33,829		33,368
Farmland						2,254		2,254		2,254
Commercial and industrial		2,517		1,488		630		3,147		3,584
Consumer:
Home equity lines of credit		-		-		23		23		28
Second mortgages		102		38		696		798		874
Total impaired loans	$	2,905	$	1,544	$	39,740	$	42,645	$	42,874

Schedule of average recorded investment in impaired loans and related interest income recognized

The following table presents the average recorded investment in impaired loans in the loan portfolio and related interest income recognized for the three and six months ended March 31, 2022 and 2021:

	Three Months Ended March 31, 2022				Six Months Ended March 31, 2022
	Average Impaired Loans		Interest Income Recognized on Impaired Loans		Average Impaired Loans		Interest Income Recognized on Impaired Loans
	(In thousands)
Residential mortgage	$	2,610	$	25	$	1,727	$	47
Commercial:
Commercial real estate		12,757		7		8,626		9
Farmland		2,236		20		1,494		40
Commercial and industrial		1,476		5		1,381		10
Consumer:
Home equity lines of credit		22		-		10		-
Second mortgages		685		-		528		-
Total	$	19,786	$	57	$	13,766	$	106

	Three Months Ended March 31, 2021				Six Months Ended March 31, 2021
	Average Impaired Loans		Interest Income Recognized on Impaired Loans		Average Impaired Loans		Interest Income Recognized on Impaired Loans
	(In thousands)
Residential mortgage	$	3,383	$	19	$	3,434	$	34
Commercial:
Commercial real estate		34,226		145		29,930		250
Farmland		2,278		19		1,516		19
Commercial and industrial		549		5		365		7
Consumer:
Home equity lines of credit		56		-		65		-
Second mortgages		658		2		679		3
Total	$	41,150	$	190	$	35,989	$	313

Schedule of classes of loan portfolio

No additional funds are committed to be advanced in connection with impaired loans.]

The following table presents the classes of the loan portfolio categorized as pass, special mention, substandard and doubtful within the Company’s internal risk rating system as of March 31, 2022 and September 30, 2021:

	Pass		Special Mention		Substandard		Doubtful		Total
	(In thousands)
March 31, 2022:
Residential mortgage	$	174,594	$	-	$	3,075	$	-	$	177,669
Construction and Development:
Residential and commercial		25,558		-		-		-		25,558
Land		4,603		-		-		-		4,603
Commercial:
Commercial real estate		357,298		42,972		704		-		400,974
Farmland		13,392		-		2,232		-		15,624
Multi-family		54,789		-		-		-		54,789
Commercial and industrial		95,347		-		6,007		-		101,354
Other		7,977		-		-		-		7,977
Consumer:
Home equity lines of credit		12,107		-		176		-		12,283
Second mortgages		4,560		63		346		-		4,969
Other		2,234		-		3		-		2,237
Total	$	752,459	$	43,035	$	12,543	$	-	$	808,037

	Pass		Special Mention		Substandard		Doubtful		Total
	(In thousands)
September 30, 2021:
Residential mortgage	$	195,658	$	-	$	3,052	$	-	$	198,710
Construction and Development:
Residential and commercial		61,492		-		-		-		61,492
Land		2,204		-		-		-		2,204
Commercial:
Commercial real estate		376,721		48,705		1,489		-		426,915
Farmland		8,043		-		2,254		-		10,297
Multi-family		57,052		9,280		-		-		66,332
Commercial and industrial		106,910		-		8,336		-		115,246
Other		10,954		-		-		-		10,954
Consumer:
Home equity lines of credit		13,390		-		101		-		13,491
Second mortgages		4,908		68		908		-		5,884
Other		2,299		-		-		-		2,299
Total	$	839,631	$	58,053	$	16,140	$	-	$	913,824

Schedule of loans that are no longer accruing interest by portfolio class

The following table presents loans that are no longer accruing interest as of March 31, 2022 and September 30, 2021, by portfolio class:

	March 31, 2022		September 30, 2021
	(In thousands)
Non-accrual loans:
Residential mortgage	$	610	$	879
Commercial:
Commercial and industrial		285		2,517
Consumer:
Home equity lines of credit		22		23
Second mortgages		184		278
Total non-accrual loans	$	1,101	$	3,697

Schedule of classes of loan portfolio summarized by aging categories

The following table presents the classes of the loan portfolio categorized by the following aging categories as of March 31, 2022 and September 30, 2021:

	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days and More Past Due		Total Past Due		Total Loans Receivable		Loans Receivable > 90 Days and Accruing
	(In thousands)
March 31, 2022:
Residential mortgage	$	176,171	$	1,311	$	-	$	187	$	1,498	$	177,669	$	-
Construction and Development:
Residential and commercial		25,558		-		-		-		-		25,558		-
Land		4,603		-		-		-		-		4,603		-
Commercial:
Commercial real estate		400,471		503		-		-		503		400,974		-
Farmland		15,624		-		-		-		-		15,624		-
Multi-family		54,789		-		-		-		-		54,789		-
Commercial and industrial		101,069		285		-		-		285		101,354		-
Other		7,977		-		-		-		-		7,977		-
Consumer:								-
Home equity lines of credit		12,206		77		-		-		77		12,283		-
Second mortgages		4,961		-		-		8		8		4,969		-
Other		2,234		-		-		3		3		2,237		-
Total	$	805,663	$	2,176	$	-	$	198	$	2,374	$	808,037	$	-

	Current		30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Total Loans Receivable		Loans Receivable > 90 Days and Accruing
	(In thousands)
September 30, 2021:
Residential mortgage	$	197,062	$	796	$	241	$	611	$	1,648	$	198,710	$	-
Construction and Development:
Residential and commercial		61,492		-		-		-		-		61,492		-
Land		2,204		-		-		-		-		2,204		-
Commercial:
Commercial real estate		426,915		-		-		-		-		426,915		-
Farmland		10,297		-		-		-		-		10,297		-
Multi-family		66,332		-		-		-		-		66,332		-
Commercial and industrial		115,246		-		-		-		-		115,246		-
Other		10,954		-		-		-		-		10,954		-
Consumer:
Home equity lines of credit		13,394		97		-		-		97		13,491		-
Second mortgages		5,697		4		83		100		187		5,884		-
Other		2,296		3		-		-		3		2,299		-
Total	$	911,889	$	900	$	324	$	711	$	1,935	$	913,824	$	-

Schedule of TDR loans

For any residential real estate property collateralizing a consumer mortgage loan, the Company is considered to possess the related collateral only if legal title is obtained upon completion of foreclosure, or the borrower conveys all interest in the residential real estate property to the Company through completion of a deed in lieu of foreclosure or similar legal agreement. Excluding OREO, the Company had zero and $185,000 of residential real estate properties in the process of foreclosure at March 31, 2022 and September 30, 2021, respectively. The following table presents total TDRs as of December 31, 2021 and September 30, 2021:

	Total Troubled Debt Restructurings				Troubled Debt Restructured Loans That Have Defaulted on Modified Terms Within The Past 12 Months
	Number of Loans		Recorded Investment		Number of Loans		Recorded Investment
	(Dollars in thousands)
December 31, 2021:
Residential mortgage		14	$	2,689		-	$	-
Commercial:
Commercial real estate		3		595		2		504
Farmland		1		2,232		-		-
Commercial and industrial		1		625		-		-
Consumer:
Second mortgages		3		69		-		-
Total		22	$	6,210		2	$	504
September 30, 2021:
Residential mortgage		16	$	3,180		4	$	640
Commercial:								-
Commercial real estate		5		12,180		-		-
Farmland		1		2,254		-		-
Commercial and industrial		1		549		-		-
Consumer:
Second mortgages		3		78		-		-
Total		26	$	18,241		4	$	640

Schedule of performing status of TDR loans

The following table reports the performing status of all TDR loans. The performing status is determined by a loan’s compliance with the modified terms:

	March 31, 2022				September 30, 2021
	Performing		Non-Performing		Performing		Non-Performing
	(In thousands)
Residential mortgage	$	2,266	$	423	$	2,540	$	640
Commercial:
Commercial real estate		595		-		12,180		-
Farmland		2,232		-		2,254		-
Commercial and industrial		625		-		549		-
Consumer:
Second mortgages		69		-		78		-
Total	$	5,787	$	423	$	17,601	$	640

Schedule of new TDR's

There were two new TDRs for the six months ended March 31, 2022.

The following tables show the new TDRs for the three and six months ended March 31, 2022 compared to the three and six months ended March 31, 2021:

	For the Three Months Ended March 31,
	2022						2021
	Number of Contracts		Pre- Modifications Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Number of Contracts		Pre- Modifications Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
	(In thousands)
Troubled Debt Restructurings:
Residential mortgage		-	$	-	$	-		-	$	-	$	-
Commercial:
Commercial real estate		-	$	-	$	-		-	$	-	$	-
Farmland		-	$	-	$	-		1	$	2,287	$	2,287
Commercial and industrial		-	$	-	$	-		1	$	549	$	549
Consumer:
Second mortgages		-	$	-	$	-		-	$	-	$	-
Total troubled debt restructurings		-	$	-	$	-		2	$	2,836	$	2,836

	For the Six Months Ended March 31,
	2022						2021
	Number of Contracts		Pre- Modifications Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Number of Contracts		Pre- Modifications Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
	(Dollars in thousands)
Troubled Debt Restructurings:
Residential mortgage		1	$	482	$	482		-	$	-	$	-
Commercial:
Commercial real estate		-	$	-	$	-		-	$	-	$	-
Farmland		-	$	-	$	-		1	$	2,287	$	2,287
Commercial and industrial		1	$	504	$	504		1	$	549	$	549
Total troubled debt restructurings		2	$	986	$	986		2	$	2,836	$	2,836

Schedule of composition of loans by loan segment

The following tables set forth the composition of these loans by loan segments as of March 31, 2022 and September 30, 2021:

	March 31 ,2022
	Number of Loans		Loan Modified Exposure		Gross Loans March 31 ,2022		Percentage of Gross Loans on Modified
			(Dollars in thousands)
Residential mortgage		-	$	-	$	177,669		0.00	%
Construction and Development:
Residential and commercial		-		-		25,558		0.00	%
Land loans		-		-		4,603		0.00	%
Total Construction and Development		-		-		30,161		0.00	%
Commercial:
Commercial real estate		4		42,321		400,974		5.24	%
Farmland		-		-		15,624		0.00	%
Multi-family		-		-		54,789		0.00	%
Commercial and industrial		-		-		101,354		0.00	%
Other		-		-		7,977		0.00	%
Total Commercial		4		42,321		580,718		5.24	%
Consumer:
Home equity lines of credit		-		-		12,283		0.00	%
Second mortgages		-		-		4,969		0.00	%
Other		-		-		2,237		0.00	%
Total Consumer		-		-		19,489		0.00	%
Total loans		4	$	42,321	$	808,037		5.24	%
	September 30, 2021
	Number of Loans		Loan Modified Exposure		Gross Loans September 30, 2021		Percentage of Gross Loans on Modified
			(Dollars in thousands)
Residential mortgage		2	$	667	$	198,710		0.07	%
Construction and Development:
Residential and commercial		-		-		61,492		0.00	%
Land loans		-		-		2,204		0.00	%
Total Construction and Development		-		-		63,696		0.00	%
Commercial:
Commercial real estate		6		60,567		426,915		6.63	%
Farmland		-		-		10,297		0.00	%
Multi-family		-		-		66,332		0.00	%
Commercial and industrial		-		-		115,246		0.00	%
Other		-		-		10,954		0.00	%
Total Commercial		6		60,567		629,744		6.63	%
Consumer:
Home equity lines of credit		-		-		13,491		0.00	%
Second mortgages		-		-		5,884		0.00	%
Other		-		-		2,299		0.00	%
Total Consumer		-		-		21,674		0.00	%
Total loans		8	$	61,234	$	913,824		6.70	%