SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2026 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Principles of Consolidation | Principles of Consolidation The consolidated financial statements of the Company include the accounts of Bancorp and its wholly-owned subsidiary, the Bank, and the Bank’s wholly-owned subsidiary, GS&L Municipal Bank. At June 30, 2026, GS&L Municipal Bank held $15.9 million of the Bank’s $35.2 million investment securities portfolio and $16.0 million of the Bank’s deposits. All significant intercompany accounts and transactions have been eliminated in consolidation. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Use of Estimates in Preparation of Financial Statements | Use of Estimates in Preparation of Financial Statements The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for credit losses. In connection with the determination of the estimated allowance for credit losses, management obtains independent appraisals for significant properties that act as collateral for portfolio loans. The Company’s loans are generally secured by specific items of collateral including real property, consumer assets, and business assets. Although the Company has a diversified portfolio, a substantial portion of its debtors’ ability to honor their contracts is dependent on local economic conditions. While management uses available information to recognize credit losses on loans and foreclosed assets, further reductions in the carrying amounts of loans and foreclosed assets may be necessary, based on changes in local economic conditions. In addition, regulatory agencies, as an integral part of their examination process, periodically review the estimated losses on loans and foreclosed assets. Such agencies may require the Company to recognize additional losses based on their judgments about information available to them at the time of their examination. Because of these factors, it is reasonably possible that the estimated credit losses on loans and foreclosed assets may change materially in the near term. However, the amount of the change that is reasonably possible cannot be estimated. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Recent Accounting Pronouncements | Recent Accounting Pronouncements The Company’s significant accounting policies followed in the preparation of the unaudited consolidated financial statements are disclosed in Note 2 of the audited financial statements and notes for the year ended September 30, 2025 and are contained in the Company’s Annual Report on Form 10-K for the year ended September 30, 2025. There have been no significant changes to the application of significant accounting policies since September 30, 2025. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Allowance for Credit Losses - Available-for-Sale Securities | Allowance for Credit Losses – Available-for-Sale Securities For available for sale securities, management evaluates all investments in an unrealized loss position on a quarterly basis, and more frequently when economic or market conditions warrant such evaluation. If the Company has the intent to sell the security or it is more likely than not that the Company will be required to sell the security, the security is written down to fair value and the entire loss is recorded in earnings. If either of the above criteria is not met, the Company evaluates whether the decline in fair value is the result of credit losses or other factors. In making the assessment, the Company may consider various factors including the extent to which fair value is less than amortized cost, performance on any underlying collateral, downgrades in the ratings of the security by a rating agency, the failure of the issuer to make scheduled interest or principal payments and adverse conditions specifically related to the security. If the assessment indicates that a credit loss exists, the present value of cash flows expected to be collected are compared to the amortized cost basis of the security and any excess is recorded as an allowance for credit loss, limited by the amount that the fair value is less that the amortized cost basis. Any amount of unrealized loss that has not been recorded through an allowance for credit loss is recognized in other comprehensive income. Changes in the allowance for credit loss are recorded as provision for (benefit from) credit loss expense on the accompanying consolidated statements of earnings. Losses are charged against the allowance for credit loss when management believes an available-for-sale security is confirmed to be uncollectible or when either of the criteria regarding intent or requirement to sell is met. At June 30, 2026 and September 30, 2025 there was no allowance for credit loss related to the available-for-sale securities portfolio. Accrued interest receivable on available-for-sale debt securities totaled $178,000 and $214,000 at June 30, 2026 and September 30, 2025, respectively, and was excluded from the estimate of credit losses. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans | Loans Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at amortized cost. Amortized cost is the principal balance outstanding, net of any purchase premiums and discounts and deferred fees and costs. Accrued interest receivable related to loans totaled $430,000 and $415,000 at June 30, 2026 and September 30, 2025, respectively, and is included as a component of accrued interest receivable and other assets on the accompanying consolidated statements of financial condition. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized in interest income using methods that approximate a level yield without anticipating prepayments. The accrual of interest is generally discontinued when a loan becomes 90 days past due and is not well collateralized and in the process of collection, or when management believes, after considering economic and business conditions and collection efforts, that the principal or interest will not be collectible in the normal course of business. Past due status is based on contractual terms of the loan. A loan is considered to be past due when a scheduled payment has not been received within 30 days after the contractual due date. All accrued interest is reversed against interest income when a loan is placed on nonaccrual status. Interest received on such loans is accounted for using the cost-recovery method, until qualifying for return to accrual. Under the cost-recovery method, interest income is not recognized until the past due loan balance is reduced to zero. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current, there is a sustained period of repayment performance (generally six consecutive months), and future payments are reasonably assured. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Allowance for Credit Losses - Loans | Allowance for Credit Losses – Loans The allowance for credit losses on loans is a valuation account that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on the loans. Loans are charged off against the allowance for credit losses when management believes the uncollectibility of a loan balance is confirmed. Expected recoveries do not exceed the aggregate of amounts previously charged-off and expected to be charged-off. The allowance for credit losses on loans represents management’s estimate of lifetime credit losses inherent in loans as of the balance sheet date. The allowance for credit losses on loans is estimated by management using relevant available information, from both internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. The Company uses a probability of default/loss given default model to determine the allowance for credit losses. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Collectively Evaluated Loans | Collectively Evaluated Loans Management measures expected credit losses for loans on a pooled basis when similar risk characteristics exist. Management has identified the following portfolio segments and calculates the allowance for credit losses for each using a discounted cash flow and remaining life methodology. The segments using a discounted cash flow methodology are as follows: Residential Real Estate
Commercial Real Estate
Commercial Secured
Commercial Unsecured
Consumer
The discounted cash flow method calculates the expected cash flows to be received over the life of each individual loan in a pool. The segments using a remaining life methodology are as follows: Commercial Unsecured
Consumer
The remaining life methodology uses average annual charge-off rates and the remaining life of the loan to estimate the allowance for credit losses. The average annual charge-off rate is applied to the amortization adjusted remaining life of the loan to determine the unadjusted lifetime historical charge-off rate. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Individually Evaluated Loans | Individually Evaluated Loans Individually evaluated loans are evaluated and valued at the time the loan is identified as not having risk characteristics common with other loans within its pool. In these instances, credit loss is measured on a case by case basis. The fair value of the loan is determined using either present value of the expected future cash flows discounted at the loan’s effective interest rate or, for collateral dependent loans, the fair value of the collateral less the selling, administrative costs, and other expenses necessary to liquidate the collateral. Collateral may be real estate and/or business assets including equipment, inventory and/or accounts receivable. Loans that do not share risk characteristics are evaluated on an individual basis and are excluded from the pooled loan analysis. When management determines that foreclosure is probable and the borrower is experiencing financial difficulty, the expected credit losses are based on the fair value of the related collateral at the reporting dated unadjusted for selling costs as appropriate. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Qualitative Adjustments to Historical Loss Rates | Qualitative Adjustments to Historical Loss Rates Additionally, the allowance for credit losses calculation includes subjective adjustments for qualitative risk factors that are likely to cause estimated credit losses to differ from historical experience. These qualitative adjustments may increase or reduce reserve levels and include adjustments for lending management experience and risk tolerance, asset quality and portfolio trends, loan review and audit results, loan portfolio growth, industry concentrations, trends in underlying collateral, external factors and economic conditions not already captured. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Allowance for Credit Losses - Unfunded Commitments | Allowance for Credit Losses – Unfunded Commitments Financial instruments include off-balance sheet credit instruments, such as commitments to make loans and commercial letters of credit issued to meet customer financing needs. The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for off—balance sheet loan commitments is represented by the contractual amount of those instruments. Such financial instruments are recorded when they are funded. The Company records an allowance for credit losses for off-balance sheet credit exposures, unless the commitments to extend credit are unconditionally cancelable, through a charge to provision for credit loss on unfunded commitments in the Company’s statements of earnings. The allowance for credit losses for off-balance sheet credit exposures is estimated by loan segment at each balance sheet date in accordance with ASC 326, Financial Instruments – Credit Losses, using the same methodologies as portfolio loans, taking into consideration the likelihood that funding will occur as well as any third-party guarantees. The allowance for credit losses on unfunded commitments is included as a component of accrued interest payable and other liabilities on the Company’s consolidated statements of financial condition. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenue Recognition | Revenue Recognition The majority of the Company’s revenue is generated from interest income on loans which are outside the scope of ASC 606, Revenue from Contracts with Customers.
The Company’s sources of income that fall within the scope of ASC 606 include service charges on deposits, interchange fees and gains and losses on sales of other real estate, all of which are presented as components of noninterest income on the accompanying statements of earnings. Below is a summary of the revenue streams that fall within the scope of ASC 606.
Service charges on deposits, ATM, and interchange fees – Fees from these services are either transaction-based, for which the performance obligations are satisfied at a point in time when the individual transaction is processed, or set periodic service charges, for which the performance obligations are satisfied over the period the service is provided. Transaction-based fees are recognized as revenue at a point in time when the transaction is processed, and periodic service charges are recognized as revenue over a period of time equivalent to the service period and as performance obligations are met. Gains and losses on sales of foreclosed assets – The Company records a gain or loss from the sale of foreclosed assets at a point in time when control of the property transfers to the buyer, which generally occurs at the time of the executed deed. When the Company finances the sale of foreclosed assets to the buyer, the Company assesses whether the buyer is committed to perform their obligations under the contract and whether collectability of the transaction price is probable. Once these criteria are met, the foreclosed asset is derecognized and the gain or loss on sale is recorded upon the transfer of control of the property to the buyer. |