Borrowed Funds |
6 Months Ended |
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Mar. 31, 2025 | |
Debt Disclosure [Abstract] | |
Borrowed Funds | BORROWED FUNDS FHLB Borrowings and Interest Rate Swaps - As of March 31, 2025 and September 30, 2024, the Bank held interest rate swap agreements with a total notional amount of $200.0 million in order to hedge the variable cash flows associated with $200.0 million of adjustable-rate FHLB advances. At March 31, 2025 and September 30, 2024, the interest rate swap agreements had an average remaining term to maturity of 1.8 years and 2.3 years, respectively. The interest rate swaps were designated as cash flow hedges and involved the receipt of variable amounts from a counterparty in exchange for the Bank making fixed-rate payments over the life of the interest rate swap agreements. At March 31, 2025 and September 30, 2024, the interest rate swaps were in a gain position with a total fair value of $2.7 million and $2.1 million, respectively, which was reported in on the consolidated balance sheet. During the three and six months ended March 31, 2025, $554 thousand and $1.3 million, respectively, was reclassified from AOCI as a decrease to interest expense. During the three and six months ended March 31, 2024, $1.7 million and $3.6 million, respectively, was reclassified from AOCI as a decrease to interest expense. At March 31, 2025, the Company estimated that $1.5 million of interest expense associated with the interest rate swaps would be reclassified from AOCI as a decrease to interest expense on FHLB borrowings during the next 12 months. The Bank has minimum collateral posting thresholds with its derivative counterparties and posts collateral on a daily basis. The Bank held cash collateral of $3.0 million and $2.1 million at March 31, 2025 and September 30, 2024, respectively. In April 2025, the Bank prepaid fixed-rate FHLB advances totaling $200.0 million with a weighted average contractual interest rate of 4.70% and a weighted average remaining term of 0.6 years, and replaced these advances with fixed-rate FHLB advances totaling $200.0 million with a weighted average contractual interest rate of 3.83% and a weighted average term of 2.5 years. The Bank paid penalties of $547 thousand to FHLB as a result of prepaying these advances. The prepayment penalties will be recognized in interest expense over the life of the new FHLB advances. The weighted average effective interest rate of the new advances was 3.93%.
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