v3.25.2
Fair Value
 9 Months Ended
Jun. 30, 2025
Fair Value Disclosures [Abstract]  
Fair Value FAIR VALUE
Under U.S. GAAP, fair value is defined as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date under current market conditions. A fair value framework is established whereby assets and liabilities measured at fair value are grouped into three levels of a fair value hierarchy, based on the transparency of inputs and the reliability of assumptions used to estimate fair value.
Presented below is a discussion of the methods and significant assumptions used by the Company to estimate fair value.
Investment Securities Available for Sale—Investment securities available for sale are recorded at fair value on a recurring basis. At June 30, 2025 and September 30, 2024, this includes $525,212 and $526,251, respectively, of investments in U.S. government and agency obligations including U.S. Treasury notes and investments in highly liquid collateralized mortgage obligations, that can include items issued by Fannie Mae, Freddie Mac and Ginnie Mae, measured using the market approach. The fair values of investment securities represent unadjusted price estimates obtained from independent third-party nationally recognized pricing services using pricing models or quoted prices of securities with similar characteristics and are included in Level 2 of the hierarchy. Third-party pricing is reviewed on a monthly basis for reasonableness based on the market knowledge and experience of company personnel that interact daily with the markets for these types of securities.
Mortgage Loans Held for Sale—The fair value of mortgage loans held for sale is estimated on an aggregate basis using a market approach based on quoted secondary market pricing for loan portfolios with similar characteristics. Loans held for sale are carried at the lower of cost or fair value with the exception of mortgage loans held for sale subject to pending agency contracts to securitize and sell loans. The Company elects the fair value measurement option for mortgage loans held for sale subject to pending agency contracts to securitize and sell loans, as permitted under the fair value guidance in U.S. GAAP. This election is expected to reduce volatility in earnings related to market fluctuations between the contract trade and settlement dates. At June 30, 2025 and September 30, 2024, there were $29,303 and $10,713 of loans held for sale subject to pending agency contracts measured at fair value, respectively, with unpaid principal balances of $28,734 and $10,336. For the three and nine months ended June 30, 2025, net gain (loss) on the sale of loans included $289 and $22, respectively, compared to $94 and $162 for the three and nine months ended June 30, 2024, related to gains or losses during the period due to changes in the fair value of loans held for sale subject to pending agency contracts. At June 30, 2025 and September 30, 2024, there were $1,675 and $7,061 of loans held for sale carried at cost, respectively. Loans held for sale are included in Level 2 of the hierarchy. Interest income on mortgage loans held for sale is recorded in interest income on loans.
Collateral-Dependent Loans—Collateral-dependent loans represent certain loans held for investment that are subject to a fair value measurement under U.S. GAAP because they are individually evaluated using a fair value measurement, such as the fair value of the underlying collateral. Credit loss is measured using a market approach based on the fair value of the collateral, less estimated costs to dispose, for loans the Company considers to be collateral-dependent due to a delinquency status or other adverse condition severe enough to indicate that the borrower can no longer be relied upon as the continued source of repayment. These conditions are described more fully in Note 4. LOANS AND ALLOWANCES FOR CREDIT LOSSES. To calculate the credit loss of collateral-dependent loans, the fair market values of the collateral, estimated using third-party appraisals in the majority of instances, are reduced by calculated estimated costs to dispose, derived from historical experience and recent market conditions. Any indicated credit loss is recognized by a charge to the allowance for credit losses. Subsequent increases in collateral values or principal pay downs on loans with recognized credit loss could result in a collateral-dependent loan being carried below its fair value. When no credit loss is indicated, the carrying amount is considered to approximate the fair value of that loan to the Company because contractually that is the maximum recovery the Company can expect. The amortized cost of loans individually evaluated for credit loss based on the fair value of the collateral are included in Level 3 of the hierarchy with assets measured at fair value on a non-recurring basis. The range and weighted average impact of estimated costs to dispose on fair values is determined at the time of credit loss or when additional credit loss is recognized and is included in quantitative information about significant unobservable inputs later in this note.
Real Estate Owned—Real estate owned includes real estate acquired as a result of foreclosure or by deed in lieu of foreclosure and is carried at the lower of the cost basis or fair value, less estimated costs to dispose. The carrying amounts of real estate owned at June 30, 2025 and September 30, 2024, were $1,240 and $174, respectively. Fair value is estimated under the market approach using independent third party appraisals. As these properties are actively marketed, estimated fair values may be adjusted by management to reflect current economic and market conditions. At June 30, 2025 and September 30, 2024, these adjustments were not significant to reported fair values. At June 30, 2025 and September 30, 2024, $1,570 and $220, respectively, of real estate owned is included in Level 3 of the hierarchy with assets measured at fair value on a non-recurring basis, where the cost basis equals or exceeds the estimated fair values, less estimated costs to dispose, of $330 and $46, respectively. There were no real estate owned carried at their original or adjusted cost basis at June 30, 2025 and September 30, 2024.
Derivatives—Derivative instruments include interest rate lock commitments on loans being originated or acquired for the held for sale portfolio, forward commitments on contracts to deliver mortgage loans and interest rate swaps designated as cash flow hedges. Derivatives not designated as cash flow hedges are reported at fair value in Other assets or Other liabilities on the CONSOLIDATED STATEMENTS OF CONDITION with changes in value recorded in current earnings. Derivatives qualifying as cash flow hedges are settled daily, bringing the fair value to $0. Refer to Note 13. DERIVATIVE INSTRUMENTS for additional information on cash flow hedges and other derivative instruments. Interest rate lock commitments are commitments to lend at interest rates and amounts defined prior to funding. The fair value of interest rate lock commitments is adjusted by a closure rate based on the estimated percentage of commitments that will result in closed loans. The range and weighted average impact of the closure rate is included in quantitative information about significant unobservable inputs later in this note. A
significant change in the closure rate may result in a significant change in the ending fair value measurement of these derivatives relative to their total fair value. Because the closure rate is a significantly unobservable assumption, interest rate lock commitments are included in Level 3 of the hierarchy. Forward commitments on contracts to deliver mortgage loans are included in Level 2 of the hierarchy.
Assets and liabilities carried at fair value on a recurring basis in the CONSOLIDATED STATEMENTS OF CONDITION at June 30, 2025 and September 30, 2024, are summarized below.
  Recurring Fair Value Measurements at Reporting Date Using
 June 30,
2025		Quoted Prices in
Active Markets for
Identical Assets		Significant Other
Observable Inputs		Significant
Unobservable
Inputs
(Level 1)(Level 2)(Level 3)
Assets
Investment securities available for sale:
REMICs$459,937 $— $459,937 $— 
Fannie Mae certificates2,739 — 2,739 — 
Freddie Mac securities8,533 — 8,533 — 
U.S. government and agency obligations54,003 — 54,003 — 
Mortgage loans held for sale29,303 — 29,303 — 
Derivatives:
Interest rate lock commitments597 — — 597 
Total$555,112 $— $554,515 $597 
Liabilities
Derivatives:
Forward commitments for the sale of mortgage loans$160 $— $160 $— 
Total$160 $— $160 $— 
  Recurring Fair Value Measurements at Reporting Date Using
 September 30,
2024		Quoted Prices in
Active Markets for
Identical Assets		Significant Other
Observable Inputs		Significant
Unobservable
Inputs
(Level 1)(Level 2)(Level 3)
Assets
Investment securities available for sale:
REMICs$449,401 $— $449,401 $— 
Fannie Mae certificates2,945 — 2,945 — 
Freddie Mac certificates1,129 — 1,129 — 
U.S. government and agency obligations72,776 — 72,776 — 
Mortgage loans held for sale10,713 — 10,713 — 
Derivatives:
Interest rate lock commitments395 — — 395 
Total$537,359 $— $536,964 $395 
Liabilities
Derivatives:
Forward commitments for the sale of mortgage loans$72 $— $72 $— 
Total$72 $— $72 $— 
The table below presents a reconciliation of the beginning and ending balances and the location within the CONSOLIDATED STATEMENTS OF INCOME where gains (losses) due to changes in fair value are recognized on interest rate lock commitments which are measured at fair value on a recurring basis using significant unobservable inputs (Level 3).
Three Months Ended June 30, Nine Months Ended June 30,
2025202420252024
Beginning balance$318 $358 $395 $(1)
Gain during the period due to changes in fair value:
Included in other non-interest income279 154 202 513 
Ending balance$597 $512 $597 $512 
Change in unrealized gains for the period included in earnings for assets held at end of the reporting date$597 $512 $597 $512 
Summarized in the tables below are those assets measured at fair value on a nonrecurring basis.
  Nonrecurring Fair Value Measurements at Reporting Date Using
 June 30,
2025		Quoted Prices in
Active Markets for
Identical Assets		 Significant Other
Observable Inputs		Significant
Unobservable
Inputs
(Level 1)(Level 2)(Level 3)
Collateral-dependent loans, net of allowance$43,411 $— $— $43,411 
Real estate owned(1)
1,570 — — 1,570 
Total$44,981 $— $— $44,981 

  Nonrecurring Fair Value Measurements at Reporting Date Using
 September 30,
2024		Quoted Prices in
Active Markets for
Identical Assets		Significant Other
Observable Inputs		Significant
Unobservable
Inputs
(Level 1)(Level 2)(Level 3)
Collateral-dependent loans, net of allowance$39,577 $— $— $39,577 
Real estate owned(1)
220 — — 220 
Total$39,797 $— $— $39,797 
(1)Amounts represent fair value measurements of properties before deducting estimated costs to dispose.
The following provides quantitative information about significant unobservable inputs categorized within Level 3 of the Fair Value Hierarchy.
Fair Value
June 30, 2025Valuation Technique(s)Unobservable InputRangeWeighted Average
Collateral-dependent loans, net of allowance$43,411Market comparables of collateral discounted to estimated net proceedsDiscount appraised value to estimated net proceeds based on historical experience:
• Residential Properties0-28%3.7%
Interest rate lock commitments$597Quoted Secondary Market pricingClosure rate0-100%90.0%
Fair Value
September 30, 2024Valuation Technique(s)Unobservable InputRangeWeighted Average
Collateral-dependent loans, net of allowance$39,577Market comparables of collateral discounted to estimated net proceedsDiscount appraised value to estimated net proceeds based on historical experience:
• Residential Properties0-28%4.0%
Interest rate lock commitments$395Quoted Secondary Market pricingClosure rate0-100%90.1%
The following tables present the estimated fair value of the Company’s financial instruments and their carrying amounts as reported in the CONSOLIDATED STATEMENTS OF CONDITION.
June 30, 2025
CarryingFairLevel 1Level 2Level 3
AmountValue
Assets:
Cash and due from banks$28,788 $28,788 $28,788 $— $— 
Interest-earning cash equivalents423,793 423,793 423,793 — — 
Investment securities available for sale525,212 525,212 — 525,212 — 
Mortgage loans held for sale30,977 31,010 — 31,010 — 
Loans, net:
Mortgage loans held for investment15,588,252 14,350,575 — — 14,350,575 
Other loans7,745 7,745 — — 7,745 
Federal Home Loan Bank stock232,538 232,538 N/A— — 
Accrued interest receivable60,434 60,434 — 60,434 — 
Cash collateral received from or held by counterparty5,977 5,977 5,977 — — 
Derivatives597 597 — — 597 
Liabilities:
Checking and savings accounts
$2,055,056 $2,055,056 $— $2,055,056 $— 
Certificates of deposit8,286,443 8,289,923 — 8,289,923 — 
Borrowed funds4,882,993 4,903,129 — 4,903,129 — 
Borrowers’ advances for insurance and taxes117,899 117,899 — 117,899 — 
Principal, interest and escrow owed on loans serviced30,237 30,237 — 30,237 — 
Derivatives160 160 — 160 — 
September 30, 2024
CarryingFairLevel 1Level 2Level 3
AmountValue
Assets:
Cash and due from banks$26,287 $26,287 $26,287 $— $— 
Interest-earning cash equivalents437,431 437,431 437,431 — — 
Investment securities available for sale526,251 526,251 — 526,251 — 
Mortgage loans held for sale17,775 17,986 — 17,986 — 
Loans, net:
Mortgage loans held for investment15,316,354 13,922,944 — — 13,922,944 
Other loans5,705 5,705 — — 5,705 
Federal Home Loan Bank stock228,494 228,494 N/A— — 
Accrued interest receivable59,398 59,398 — 59,398 — 
Cash collateral received from or held by counterparty7,844 7,844 7,844 — — 
Derivatives395 395 — — 395 
Liabilities:
Checking and savings accounts
$2,150,770 $2,150,770 $— $2,150,770 $— 
Certificates of deposit8,044,309 7,989,992 — 7,989,992 — 
Borrowed funds4,792,847 4,819,873 — 4,819,873 — 
Borrowers’ advances for insurance and taxes113,637 113,637 — 113,637 — 
Principal, interest and escrow owed on loans serviced28,753 28,753 — 28,753 — 
Derivatives72 72 — 72 —