SECURITIES AND EXCHANGE COMMISSION 100 F Street NE Washington, D.C. 20549 FORM 10-K ☒ Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Fiscal Year Ended September 30, 2023 or ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to Commission File No. 001-33384 ESSA Bancorp, Inc. (Exact name of registrant as specified in its charter) Pennsylvania 20-8023072 (State or other jurisdiction of incorpor ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended June 30, 2023 OR ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to __________ Commission File No. 001-33384 ESSA Bancorp, Inc. (Exact name of registrant as specified in its charter) Pennsylvania 20-8023072 (State or other jurisdiction ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 2023 OR ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to __________ Commission File No. 001-33384 ESSA Bancorp, Inc. (Exact name of registrant as specified in its charter) Pennsylvania 20-8023072 (State or other jurisdictio ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to Commission File No. 001-33384 ESSA Bancorp, Inc. (Exact name of registrant as specified in its charter) Washington, D.C. 20549 FORM 10-Q ☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended December 31, 2022 OR Pennsylvania 20-8023072 (State or other jurisdiction of inc ...

SECURITIES AND EXCHANGE COMMISSION 100 F Street NE Washington, D.C. 20549 FORM 10-K ☒ Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Fiscal Year Ended September 30, 2022 or ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to | --- | --- | |--------------------------------------------------------------------------------------------------------|------------------------------------------------ ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended June 30, 2022 OR ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to Commission File No. 001-33384 ESSA Bancorp, Inc. (Exact name of registrant as specified in its charter) Pennsylvania 20-8023072 (State or other jurisdiction of incorpo ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 2022 OR ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to Commission File No. 001-33384 ESSA Bancorp, Inc. (Exact name of registrant as specified in its charter) Pennsylvania 20-8023072 (State or other jurisdiction of incorp ...

[Part I. Financial Information](index=3&type=section&id=Part%20I.%20Financial%20Information) [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents ESSA Bancorp, Inc.'s unaudited consolidated financial statements for December 31, 2021, showing a net income increase to $4.6 million driven by higher net interest income and reduced loan loss provisions [Consolidated Balance Sheet](index=3&type=section&id=Consolidated%20Balance%20Sheet) Total assets slightly increased to $1.87 billion, driven by cash and cash equivalents, while stockholders' equity grew to $207.6 million Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | Dec 31, 2021 | Sep 30, 2021 | Change (%) | | :--- | :--- | :--- | :--- | | **Total Assets** | **$1,868,346** | **$1,861,436** | **+0.4%** | | Total Cash and Cash Equivalents | $198,421 | $158,946 | +24.8% | | Loans Receivable, Net | $1,339,301 | $1,340,853 | -0.1% | | Total Deposits | $1,634,734 | $1,636,115 | -0.1% | | **Total Liabilities** | **$1,660,727** | **$1,659,614** | **+0.1%** | | **Total Stockholders' Equity** | **$207,619** | **$201,822** | **+2.9%** | [Consolidated Statement of Operations](index=4&type=section&id=Consolidated%20Statement%20of%20Operations) Net income for the quarter increased 11.6% to $4.6 million, driven by a 5.0% rise in net interest income and the absence of loan loss provisions Quarterly Operating Results (in thousands, except per share data) | Metric | Three Months Ended Dec 31, 2021 | Three Months Ended Dec 31, 2020 | Change (%) | | :--- | :--- | :--- | :--- | | Net Interest Income | $13,562 | $12,912 | +5.0% | | Provision for Loan Losses | $0 | $900 | -100.0% | | Noninterest Income | $2,328 | $3,135 | -25.7% | | Noninterest Expense | $10,304 | $10,178 | +1.2% | | **Net Income** | **$4,613** | **$4,135** | **+11.6%** | | **Diluted EPS** | **$0.47** | **$0.41** | **+14.6%** | [Consolidated Statement of Cash Flows](index=7&type=section&id=Consolidated%20Statement%20of%20Cash%20Flows) Net cash increased by $39.5 million for the quarter, primarily from investing activities and positive contributions from operating and financing activities Cash Flow Summary (in thousands) | Activity | Three Months Ended Dec 31, 2021 | Three Months Ended Dec 31, 2020 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $3,634 | $3,928 | | Net Cash from Investing Activities | $34,561 | $83,497 | | Net Cash from Financing Activities | $1,280 | $(26,128) | | **Net Increase in Cash** | **$39,475** | **$61,297** | [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Detailed notes disclose accounting policies, loan portfolio composition, allowance for loan losses, investment securities, derivatives, and contingent litigation liabilities - The company is evaluating the impact of ASU 2016-13 (CECL) on financial asset impairment, effective for fiscal years beginning after December 15, 2022[37](index=37&type=chunk) - As of December 31, 2021, **eight commercial clients** had loan payment deferrals or interest-only payments totaling **$19.2 million** due to the COVID-19 pandemic[82](index=82&type=chunk) - The company is a defendant in **two class-action lawsuits** alleging unearned fees and kickbacks in violation of the Real Estate Settlement Procedures Act, with potential exposure currently not estimable[124](index=124&type=chunk)[125](index=125&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=35&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial condition and operating results, highlighting a 0.4% asset increase and an 11.6% net income rise, alongside changes in loans, deposits, and non-performing assets [Comparison of Financial Condition](index=35&type=section&id=Comparison%20of%20Financial%20Condition) Total assets increased by $6.9 million to $1.87 billion, driven by cash and cash equivalents, while net loans decreased and stockholders' equity rose by $5.8 million - Total assets increased by **$6.9 million (0.4%)** to **$1.87 billion** at December 31, 2021[146](index=146&type=chunk) - Net loans decreased by **$1.6 million**, with **$9.4 million** in PPP loan repayment and forgiveness impacting the commercial loan portfolio[149](index=149&type=chunk) - Deposits slightly decreased by **$1.4 million**, as a **$15.0 million** decline in brokered CDs was offset by growth in money market and non-interest-bearing demand accounts[152](index=152&type=chunk) [Comparison of Operating Results](index=38&type=section&id=Comparison%20of%20Operating%20Results) Net income increased by $478,000 (11.6%) to $4.6 million, driven by higher net interest income and no loan loss provision, despite a 25.7% decrease in non-interest income - Net interest income increased by **5.0%** to **$13.6 million**, benefiting from a significant drop in interest expense from **$2.0 million** to **$846,000**[159](index=159&type=chunk)[161](index=161&type=chunk) - No provision for loan losses was recorded for the quarter, compared to a **$900,000** provision in the prior-year quarter[162](index=162&type=chunk) - Noninterest income decreased by **25.7%** to **$2.3 million**, primarily due to a **$599,000** reduction in gains on sales of residential mortgages[163](index=163&type=chunk) [Non-performing Assets](index=39&type=section&id=Non-performing%20Assets) Total non-performing assets increased to $19.1 million, raising the non-performing loan ratio to 1.39%, primarily due to a new $3.9 million commercial loan relationship Non-performing Assets (in thousands) | Metric | Dec 31, 2021 | Sep 30, 2021 | | :--- | :--- | :--- | | Total non-performing loans | $18,924 | $15,867 | | Foreclosed real estate | $193 | $461 | | **Total non-performing assets** | **$19,117** | **$16,328** | | Ratio of non-performing loans to total loans | 1.39% | 1.17% | - The increase in non-performing assets was mainly driven by **one non-performing commercial loan relationship of $3.9 million**[168](index=168&type=chunk) [Critical Accounting Policies](index=40&type=section&id=Critical%20Accounting%20Policies) Management identifies critical accounting policies requiring significant judgment and estimation, including Allowance for Loan Losses, Goodwill, Derivatives, Fair Value, Investment Impairment, and Deferred Income Taxes - The Allowance for Loan Losses methodology is a critical policy due to its high judgment, subjective assumptions, and sensitivity to economic changes[178](index=178&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=42&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate risk, managed by its asset/liability committee, with no material changes reported since September 30, 2021 - The company's primary market risk is **interest rate risk** due to the nature of its assets and liabilities[194](index=194&type=chunk) - No material changes in the company's interest rate risk profile occurred since September 30, 2021[195](index=195&type=chunk) [Item 4. Controls and Procedures](index=42&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of December 31, 2021, with no material changes to internal controls during the quarter - The Principal Executive Officer and Principal Financial Officer concluded that disclosure controls and procedures were effective as of the end of the reporting period[196](index=196&type=chunk) [Part II. Other Information](index=43&type=section&id=Part%20II.%20Other%20Information) [Item 1. Legal Proceedings](index=43&type=section&id=Item%201.%20Legal%20Proceedings) The company is defending two class-action lawsuits alleging unearned fees and kickbacks from a previously acquired bank, with potential financial exposure currently not estimable - The Bank is a defendant in a class action lawsuit commenced in December 2016 alleging violations of the Real Estate Settlement Procedures Act[200](index=200&type=chunk) - A second, similar class action lawsuit commenced in May 2020 alleges unearned fees and kickbacks from a different title company[201](index=201&type=chunk) [Item 1A. Risk Factors](index=43&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended September 30, 2021, were reported - No material changes in risk factors were reported for the quarter[201](index=201&type=chunk) [Other Part II Items](index=43&type=section&id=Other%20Part%20II%20Items) Items 2, 3, 4, and 5 of Part II were reported as not applicable for this period - Items 2, 3, 4, and 5 are not applicable[202](index=202&type=chunk)[203](index=203&type=chunk)[204](index=204&type=chunk)[205](index=205&type=chunk) [Item 6. Exhibits](index=44&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and interactive data files - Exhibits filed include CEO and CFO certifications under Sections 302 and 906 of the Sarbanes-Oxley Act[207](index=207&type=chunk)

SECURITIES AND EXCHANGE COMMISSION 100 F Street NE Washington, D.C. 20549 FORM 10-K ☒ Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Fiscal Year Ended September 30, 2021 or ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to Commission File No. 001-33384 ESSA Bancorp, Inc. (Exact name of registrant as specified in its charter) Pennsylvania 20-8023072 (State or other jurisdiction of incorpor ...

[Part I. Financial Information](index=3&type=section&id=Part%20I.%20Financial%20Information) [Item 1. Financial Statements (unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) Presents the company's unaudited consolidated balance sheet, statements of operations, and cash flows [Consolidated Balance Sheet](index=3&type=section&id=Consolidated%20Balance%20Sheet) **Consolidated Balance Sheet Highlights (in thousands):** | Metric | June 30, 2021 | September 30, 2020 | | :----- | :------------ | :----------------- | | Total Assets | $1,822,209 | $1,893,515 | | Total Liabilities | $1,622,957 | $1,702,118 | | Total Stockholders' Equity | $199,252 | $191,397 | | Cash and due from banks | $170,623 | $101,447 | | Total cash and cash equivalents | $185,400 | $155,917 | | Investment securities available for sale | $148,170 | $212,484 | | Loans receivable (net) | $1,368,616 | $1,417,974 | | Deposits | $1,590,072 | $1,543,696 | | Short-term borrowings | $0 | $111,713 | | Other borrowings | $0 | $14,164 | - Total assets **decreased by $71.3 million, or 3.8%**, from September 30, 2020, primarily due to decreases in interest-bearing deposits with other institutions, investment securities available for sale, and loans receivable, partially offset by an increase in cash and due from banks[7](index=7&type=chunk)[165](index=165&type=chunk) - Total liabilities **decreased by $79.16 million, or 4.65%**, from September 30, 2020, mainly driven by the elimination of short-term and other borrowings[7](index=7&type=chunk) [Consolidated Statement of Operations](index=4&type=section&id=Consolidated%20Statement%20of%20Operations) **Consolidated Statement of Operations Highlights (in thousands, except per share data):** | Metric | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Nine Months Ended June 30, 2021 | Nine Months Ended June 30, 2020 | | :----- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Total interest income | $14,403 | $15,853 | $43,978 | $48,710 | | Total interest expense | $1,251 | $3,653 | $4,883 | $12,952 | | Net interest income | $13,152 | $12,200 | $39,095 | $35,758 | | Provision for loan losses | $600 | $1,300 | $2,400 | $2,175 | | Total noninterest income | $2,293 | $2,883 | $8,943 | $8,014 | | Total noninterest expense | $10,018 | $9,130 | $30,631 | $28,717 | | Net income | $4,026 | $3,777 | $12,501 | $10,594 | | Basic EPS | $0.41 | $0.37 | $1.25 | $1.02 | | Diluted EPS | $0.41 | $0.37 | $1.25 | $1.02 | | Dividends per share | $0.12 | $0.11 | $0.35 | $0.33 | - Net income **increased by $250,000 (6.6%)** for the three months ended June 30, 2021, and by **$1.9 million (18.0%)** for the nine months ended June 30, 2021, compared to the respective prior-year periods[11](index=11&type=chunk)[181](index=181&type=chunk)[190](index=190&type=chunk) - Net interest income **increased by $952,000 (7.8%)** for the three months and **$3.3 million (9.3%)** for the nine months ended June 30, 2021, driven by a significant decline in interest expense[11](index=11&type=chunk)[182](index=182&type=chunk)[191](index=191&type=chunk) [Consolidated Statement of Comprehensive Income](index=5&type=section&id=Consolidated%20Statement%20of%20Comprehensive%20Income) **Consolidated Statement of Comprehensive Income (in thousands):** | Metric | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Nine Months Ended June 30, 2021 | Nine Months Ended June 30, 2020 | | :----- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net income | $4,026 | $3,777 | $12,501 | $10,594 | | Total other comprehensive income (loss) | $141 | $(911) | $3,419 | $1,365 | | Comprehensive income | $4,167 | $2,866 | $15,920 | $11,959 | - Total other comprehensive income (loss) significantly improved, moving from a **loss of $911,000** in the three months ended June 30, 2020, to an **income of $141,000** in the same period of 2021, primarily due to changes in derivative and hedging activities[14](index=14&type=chunk) [Consolidated Statement of Changes in Stockholders' Equity](index=6&type=section&id=Consolidated%20Statement%20of%20Changes%20in%20Stockholders'%20Equity) **Changes in Stockholders' Equity (in thousands):** | Metric | Balance, September 30, 2020 | Balance, June 30, 2021 | | :----- | :-------------------------- | :--------------------- | | Common Stock | $181 | $181 | | Additional Paid In Capital | $181,487 | $181,500 | | Unallocated Common Stock Held by the ESOP | $(7,350) | $(7,019) | | Retained Earnings | $112,612 | $121,603 | | Treasury Stock, at cost | $(91,477) | $(96,376) | | Accumulated Other Comprehensive Loss | $(4,056) | $(637) | | Total Stockholders' Equity | $191,397 | $199,252 | - Total stockholders' equity **increased by $7.9 million, or 3.8%**, to $199.3 million at June 30, 2021, from $191.4 million at September 30, 2020[19](index=19&type=chunk)[173](index=173&type=chunk) - This increase was primarily driven by **net income of $12.5 million**, partially offset by an increase in treasury stock due to common stock repurchases and cash dividends[19](index=19&type=chunk)[173](index=173&type=chunk) [Consolidated Statement of Cash Flows](index=8&type=section&id=Consolidated%20Statement%20of%20Cash%20Flows) **Consolidated Statement of Cash Flows (in thousands):** | Activity | Nine Months Ended June 30, 2021 | Nine Months Ended June 30, 2020 | | :------- | :------------------------------ | :------------------------------ | | Net cash provided by operating activities | $14,080 | $17,115 | | Net cash provided by (used for) investing activities | $96,819 | $(81,316) | | Net cash (used for) provided by financing activities | $(81,416) | $182,803 | | Increase in cash and cash equivalents | $29,483 | $118,602 | | Cash and cash equivalents at end of year | $185,400 | $170,844 | - Net cash provided by investing activities **significantly increased to $96.8 million** for the nine months ended June 30, 2021, compared to a net cash outflow of $81.3 million in the prior year, primarily reflecting changes in investment securities and loans receivable[21](index=21&type=chunk)[209](index=209&type=chunk) - Net cash used for financing activities was **$81.4 million** for the nine months ended June 30, 2021, a substantial shift from **$182.8 million provided** in the prior year, mainly due to a decrease in short-term and other borrowings[21](index=21&type=chunk)[209](index=209&type=chunk) [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) [1. Nature of Operations and Basis of Presentation](index=9&type=section&id=1.%20Nature%20of%20Operations%20and%20Basis%20of%20Presentation) - ESSA Bancorp, Inc operates as a holding company for ESSA Bank & Trust and its wholly-owned subsidiaries, primarily engaged in taking deposits and granting loans in various Pennsylvania counties[24](index=24&type=chunk) - Subsidiaries include ESSACOR Inc (inactive property purchases), Pocono Investments Company (investment management), ESSA Advisory Services, LLC (full-service insurance benefits consulting), Integrated Financial Corporation (inactive investment advisory), and Integrated Abstract Incorporated (inactive title insurance)[25](index=25&type=chunk) [2. Earnings per Share](index=9&type=section&id=2.%20Earnings%20per%20Share) **Weighted-Average Common Shares for EPS Calculation:** | Metric | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Nine Months Ended June 30, 2021 | Nine Months Ended June 30, 2020 | | :----- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Weighted-average common shares for basic EPS | 9,905,725 | 10,260,495 | 10,006,041 | 10,406,357 | | Weighted-average common shares for diluted EPS | 9,907,788 | 10,260,729 | 10,008,729 | 10,406,614 | - Nonvested stock of **23,312 shares** at June 30, 2021, and **42,520 shares** at June 30, 2020, were excluded from diluted EPS computation as they were anti-dilutive[28](index=28&type=chunk) [3. Use of Estimates in the Preparation of Financial Statements](index=10&type=section&id=3.%20Use%20of%20Estimates%20in%20the%20Preparation%20of%20Financial%20Statements) - The consolidated financial statements are prepared in accordance with U.S GAAP, requiring management to make estimates and assumptions that affect reported asset and liability amounts and related revenues and expenses[30](index=30&type=chunk) [4. Accounting Pronouncements](index=10&type=section&id=4.%20Accounting%20Pronouncements) - The Company is evaluating the impact of ASU 2016-13 (CECL) on its financial statements, with an expected one-time cumulative effect adjustment to the allowance for loan losses upon adoption after December 15, 2022[31](index=31&type=chunk) - Several other ASUs, including those related to retirement benefits, financial instruments, income taxes, reference rate reform, and leases, are **not expected to have a significant impact** on the Company's financial statements[32](index=32&type=chunk)[34](index=34&type=chunk)[35](index=35&type=chunk)[36](index=36&type=chunk)[37](index=37&type=chunk)[38](index=38&type=chunk)[40](index=40&type=chunk)[41](index=41&type=chunk)[42](index=42&type=chunk)[43](index=43&type=chunk)[44](index=44&type=chunk)[46](index=46&type=chunk)[47](index=47&type=chunk)[48](index=48&type=chunk)[49](index=49&type=chunk)[50](index=50&type=chunk) [5. Investment Securities](index=14&type=section&id=5.%20Investment%20Securities) **Investment Securities Available for Sale (in thousands):** | Metric | June 30, 2021 | September 30, 2020 | | :----- | :------------ | :----------------- | | Amortized Cost | $145,058 | $208,473 | | Gross Unrealized Gains | $3,628 | $4,871 | | Gross Unrealized Losses | $(516) | $(860) | | Fair Value | $148,170 | $212,484 | **Investment Securities Held to Maturity (in thousands):** | Metric | June 30, 2021 | September 30, 2020 | | :----- | :------------ | :----------------- | | Amortized Cost | $17,982 | $0 | | Fair Value | $18,012 | $0 | - The Company realized **gross gains of $90,000** and **gross losses of $48,000** on sales of investment securities for the three months ended June 30, 2021[55](index=55&type=chunk) - Management asserts that declines in investment security values are **temporary** and primarily due to interest rate changes, not expected to result in non-collection of principal and interest[58](index=58&type=chunk)[59](index=59&type=chunk) [6. Loans Receivable, Net and Allowance for Loan Losses](index=16&type=section&id=6.%20Loans%20Receivable,%20Net%20and%20Allowance%20for%20Loan%20Losses) **Loans Receivable (in thousands):** | Loan Type | June 30, 2021 | September 30, 2020 | | :-------- | :------------ | :----------------- | | Residential Real Estate | $584,368 | $610,172 | | Commercial Real Estate | $578,506 | $509,628 | | Commercial | $95,153 | $139,603 | | Total Loans Receivable | $1,386,309 | $1,433,374 | | Less: Allowance for Loan Losses | $17,693 | $15,400 | | Net Loans | $1,368,616 | $1,417,974 | - PPP loans included in commercial loans **decreased from $76.8 million** at September 30, 2020, to **$44.2 million** at June 30, 2021, with $2.4 million in fees received for processing[61](index=61&type=chunk)[62](index=62&type=chunk) **Allowance for Loan Losses (ALL) (in thousands):** | Metric | June 30, 2021 | September 30, 2020 | | :----- | :------------ | :----------------- | | ALL balance | $17,693 | $15,400 | | Provision for loan losses (9 months) | $2,400 | $2,175 | | Charge-offs (9 months) | $(597) | $(924) | | Recoveries (9 months) | $490 | $449 | - Impaired loans totaled **$19.3 million** at June 30, 2021, compared to **$17.2 million** at September 30, 2020[69](index=69&type=chunk)[70](index=70&type=chunk)[201](index=201&type=chunk) - Troubled Debt Restructurings (TDRs) **increased to $8.6 million** at June 30, 2021, from **$2.7 million** at September 30, 2020[69](index=69&type=chunk)[70](index=70&type=chunk)[201](index=201&type=chunk) - As of June 30, 2021, approximately **$30.3 million in commercial loans** and **$1.1 million in mortgage loans** had requested payment deferrals or interest-only payments due to COVID-19, which are not considered TDRs under interagency guidance[86](index=86&type=chunk)[93](index=93&type=chunk) [7. Deposits](index=27&type=section&id=7.%20Deposits) **Deposits by Classification (in thousands):** | Deposit Type | June 30, 2021 | September 30, 2020 | | :----------- | :------------ | :----------------- | | Non-interest bearing demand accounts | $277,814 | $242,642 | | Interest bearing demand accounts | $473,119 | $274,722 | | Money market accounts | $410,310 | $401,863 | | Savings and club accounts | $187,573 | $160,975 | | Certificates of deposit | $241,256 | $463,494 | | Total Deposits | $1,590,072 | $1,543,696 | - Total deposits **increased by $46.4 million, or 3.0%**, to $1.59 billion at June 30, 2021, primarily due to increases in interest-bearing demand accounts ($198.4 million) and non-interest bearing demand accounts ($35.2 million), offset by a $222.2 million decrease in certificates of deposit[96](index=96&type=chunk)[171](index=171&type=chunk) [8. Net Periodic Benefit Cost-Defined Benefit Plan](index=27&type=section&id=8.%20Net%20Periodic%20Benefit%20Cost-Defined%20Benefit%20Plan) **Net Periodic Benefit Cost (in thousands):** | Metric | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Nine Months Ended June 30, 2021 | Nine Months Ended June 30, 2020 | | :----- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net periodic benefit cost | $(121) | $(147) | $(363) | $(443) | - The Defined Benefit Plan was **frozen effective February 28, 2017**, meaning no new participants, additional years of service, or compensation earned after this date will be credited[97](index=97&type=chunk) [9. Equity Incentive Plan](index=27&type=section&id=9.%20Equity%20Incentive%20Plan) **Share-Based Compensation Expense (in thousands):** | Period | 2021 | 2020 | | :----- | :--- | :--- | | Three Months Ended June 30 | $95 | $82 | | Nine Months Ended June 30 | $421 | $415 | - The Company replaced its 2007 Equity Incentive Plan with the 2016 Equity Incentive Plan, which provides for **250,000 shares** of common stock for awards[99](index=99&type=chunk) - Expected future compensation expense related to restricted shares outstanding at June 30, 2021, is **$679,000** over a remaining vesting period of **3.25 years**[103](index=103&type=chunk) [10. Fair Value](index=28&type=section&id=10.%20Fair%20Value) **Fair Value of Recurring Assets (in thousands) at June 30, 2021:** | Asset Type | Level I | Level II | Level III | Total | | :--------- | :------ | :------- | :-------- | :---- | | Total debt securities | $0 | $134,890 | $13,280 | $148,170 | | Equity securities | $32 | $0 | $0 | $32 | | Derivatives and hedging activities | $0 | $2,358 | $0 | $2,358 | **Fair Value of Recurring Liabilities (in thousands) at June 30, 2021:** | Liability Type | Level I | Level II | Level III | Total | | :------------- | :------ | :------- | :-------- | :---- | | Derivatives and hedging activities | $0 | $1,763 | $0 | $1,763 | **Fair Value of Non-Recurring Assets (in thousands) at June 30, 2021:** | Asset Type | Level I | Level II | Level III | Total | | :--------- | :------ | :------- | :-------- | :---- | | Foreclosed real estate | $0 | $0 | $373 | $373 | | Impaired loans | $0 | $0 | $18,430 | $18,430 | - The Company uses a three-level hierarchy for fair value measurements, with **Level 2 inputs** (observable data from independent pricing services) being the most common for available-for-sale securities[111](index=111&type=chunk)[112](index=112&type=chunk) [11. Accumulated Other Comprehensive Income (Loss)](index=33&type=section&id=11.%20Accumulated%20Other%20Comprehensive%20Income%20(Loss)) **Accumulated Other Comprehensive Income (Loss) (in thousands):** | Component | Balance at September 30, 2020 | Balance at June 30, 2021 | | :-------- | :---------------------------- | :----------------------- | | Defined Benefit Pension Plan | $(3,432) | $(3,563) | | Unrealized Gains (Losses) on Securities Available for Sale | $3,167 | $2,459 | | Derivatives | $(3,791) | $467 | | Total | $(4,056) | $(637) | - The total accumulated other comprehensive loss **improved significantly from $(4,056) thousand** at September 30, 2020, to **$(637) thousand** at June 30, 2021, primarily driven by a positive change in derivatives[124](index=124&type=chunk) [12. Derivatives and Hedging Activities](index=34&type=section&id=12.%20Derivatives%20and%20Hedging%20Activities) **Fair Values of Derivative Instruments (in thousands):** | Type | June 30, 2021 Fair Value | September 30, 2020 Fair Value | | :--- | :----------------------- | :---------------------------- | | Asset Derivatives | $2,358 | $2,192 | | Liability Derivatives | $1,763 | $7,002 | - The Company uses interest rate swaps as cash flow hedges to manage interest rate risk, with a notional principal amount of **$245 million** for brokered certificates and **$173 million** for commercial loans as of June 30, 2021[134](index=134&type=chunk) - As of June 30, 2021, the Company had derivatives in a net liability position and was required to post **$1.2 million in collateral**, a decrease from **$7.5 million** at September 30, 2020[142](index=142&type=chunk) [13. Contingent Liabilities](index=36&type=section&id=13.%20Contingent%20Liabilities) - The Bank is a defendant in **two class action lawsuits** alleging unearned fees and kickbacks related to previously acquired banks, with the amount of exposure currently not estimable[144](index=144&type=chunk)[146](index=146&type=chunk) [14. Revenue Recognition](index=37&type=section&id=14.%20Revenue%20Recognition) - Noninterest income sources within the scope of Topic 606 include Trust and Investment Fees, Service Charges on Deposit Accounts, Fees, Exchange, and Other Service Charges, and Insurance Commissions[148](index=148&type=chunk)[149](index=149&type=chunk)[150](index=150&type=chunk)[151](index=151&type=chunk) [15. Leases](index=38&type=section&id=15.%20Leases) **Lease Right-of-Use Assets and Liabilities (in thousands):** | Metric | June 30, 2021 | September 30, 2020 | | :----- | :------------ | :----------------- | | Operating lease right-of-use assets | $6,446 | $7,082 | | Operating lease Liabilities | $6,580 | $7,161 | - The weighted-average remaining lease term for operating leases is **13.3 years**, with a weighted-average discount rate of **2.42%** as of June 30, 2021[157](index=157&type=chunk) **Net Lease Cost (in thousands):** | Period | 2021 | 2020 | | :----- | :--- | :--- | | Three Months Ended June 30 | $334 | $320 | | Nine Months Ended June 30 | $1,004 | $951 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=39&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Provides management's analysis of financial condition, operating results, liquidity, and capital resources [Forward Looking Statements](index=40&type=section&id=Forward%20Looking%20Statements) - The report contains forward-looking statements regarding goals, expectations, business plans, asset quality, and future costs/benefits, which are subject to risks and uncertainties[161](index=161&type=chunk)[162](index=162&type=chunk) - The **COVID-19 pandemic** is identified as an ongoing and dynamic risk that could impact operations and financial results, potentially leading to reduced demand, increased loan delinquencies, and operational disruptions[163](index=163&type=chunk) [Comparison of Financial Condition at June 30, 2021 and September 30, 2020](index=40&type=section&id=Comparison%20of%20Financial%20Condition%20at%20June%2030,%202021%20and%20September%2030,%202020) **Key Financial Condition Changes (in thousands):** | Metric | June 30, 2021 | September 30, 2020 | Change ($) | Change (%) | | :----- | :------------ | :----------------- | :--------- | :--------- | | Total Assets | $1,822,209 | $1,893,515 | $(71,306) | (3.8%) | | Total Cash and Cash Equivalents | $185,400 | $155,917 | $29,483 | 18.9% | | Net Loans | $1,368,616 | $1,417,974 | $(49,358) | (3.5%) | | Investment Securities Available for Sale | $148,170 | $212,484 | $(64,314) | (30.3%) | | Investment Securities Held to Maturity | $18,012 | $0 | $18,012 | N/A | | Deposits | $1,590,072 | $1,543,696 | $46,376 | 3.0% | | Borrowed Funds | $0 | $125,877 | $(125,877) | (100.0%) | | Stockholders' Equity | $199,252 | $191,397 | $7,855 | 4.1% | - The Company maintained a **strong liquidity position** by increasing cash and cash equivalents and limiting investment purchases, while significantly reducing borrowed funds to zero[166](index=166&type=chunk)[169](index=169&type=chunk)[172](index=172&type=chunk) - Net loans decreased primarily due to repayments and forgiveness of PPP loans and the discontinuation of indirect auto lending, partially offset by an increase in commercial real estate loans[168](index=168&type=chunk) [Average Balance Sheets for the Three and Nine Months Ended June 30, 2021 and 2020](index=42&type=section&id=Average%20Balance%20Sheets%20for%20the%20Three%20and%20Nine%20Months%20Ended%20June%2030,%202021%20and%202020) **Average Balance Sheet and Yield/Cost (Three Months Ended June 30):** | Metric | 2021 Average Balance (k) | 2021 Yield/Cost (%) | 2020 Average Balance (k) | 2020 Yield/Cost (%) | | :----- | :----------------------- | :------------------ | :----------------------- | :------------------ | | Total interest-earning assets | $1,814,203 | 3.19% | $1,896,702 | 3.36% | | Total interest-bearing liabilities | $1,398,762 | 0.36% | $1,554,526 | 0.94% | | Net interest income | N/A | N/A | N/A | N/A | | Interest rate spread | N/A | 2.83% | N/A | 2.42% | | Net interest margin | N/A | 2.91% | N/A | 2.58% | **Average Balance Sheet and Yield/Cost (Nine Months Ended June 30):** | Metric | 2021 Average Balance (k) | 2021 Yield/Cost (%) | 2020 Average Balance (k) | 2020 Yield/Cost (%) | | :----- | :----------------------- | :------------------ | :----------------------- | :------------------ | | Total interest-earning assets | $1,802,703 | 3.25% | $1,770,061 | 3.67% | | Total interest-bearing liabilities | $1,413,908 | 0.46% | $1,457,723 | 1.18% | | Net interest income | N/A | N/A | N/A | N/A | | Interest rate spread | N/A | 2.79% | N/A | 2.49% | | Net interest margin | N/A | 2.89% | N/A | 2.69% | - The **net interest margin improved** for both the three-month (**2.91% vs 2.58%**) and nine-month (**2.89% vs 2.69%**) periods ended June 30, 2021, primarily due to a significant reduction in the cost of interest-bearing liabilities[176](index=176&type=chunk)[178](index=178&type=chunk)[184](index=184&type=chunk)[193](index=193&type=chunk) [Comparison of Operating Results for the Three Months Ended June 30, 2021 and June 30, 2020](index=44&type=section&id=Comparison%20of%20Operating%20Results%20for%20the%20Three%20Months%20Ended%20June%2030,%202021%20and%20June%2030,%202020) **Operating Results (Three Months Ended June 30, in thousands):** | Metric | 2021 | 2020 | Change ($) | Change (%) | | :----- | :--- | :--- | :--------- | :--------- | | Net Income | $4,026 | $3,777 | $249 | 6.6% | | Net Interest Income | $13,152 | $12,200 | $952 | 7.8% | | Interest Income | $14,403 | $15,853 | $(1,450) | (9.1%) | | Interest Expense | $1,251 | $3,653 | $(2,402) | (65.8%) | | Provision for Loan Losses | $600 | $1,300 | $(700) | (53.8%) | | Non-interest Income | $2,293 | $2,883 | $(590) | (20.5%) | | Non-interest Expense | $10,018 | $9,130 | $888 | 9.7% | | Income Taxes | $801 | $876 | $(75) | (8.6%) | | Effective Tax Rate | 16.6% | 18.8% | N/A | N/A | - The decline in non-interest income was primarily due to decreases in loan swap fees (**$626,000**) and gains on sales of residential mortgages (**$397,000**)[186](index=186&type=chunk) - Non-interest expense increased due to higher compensation and employee benefits, and Federal Deposit Insurance Corporation premiums[187](index=187&type=chunk) [Comparison of Operating Results for the Nine Months Ended June 30, 2021 and June 30, 2020](index=45&type=section&id=Comparison%20of%20Operating%20Results%20for%20the%20Nine%20Months%20Ended%20June%2030,%202021%20and%20June%2030,%202020) **Operating Results (Nine Months Ended June 30, in thousands):** | Metric | 2021 | 2020 | Change ($) | Change (%) | | :----- | :--- | :--- | :--------- | :--------- | | Net Income | $12,501 | $10,594 | $1,907 | 18.0% | | Net Interest Income | $39,095 | $35,758 | $3,337 | 9.3% | | Interest Income | $43,978 | $48,710 | $(4,732) | (9.7%) | | Interest Expense | $4,883 | $12,952 | $(8,069) | (62.3%) | | Provision for Loan Losses | $2,400 | $2,175 | $225 | 10.3% | | Non-interest Income | $8,943 | $8,014 | $929 | 11.6% | | Non-interest Expense | $30,631 | $28,717 | $1,914 | 6.7% | | Income Taxes | $2,506 | $2,286 | $220 | 9.6% | | Effective Tax Rate | 16.7% | 17.7% | N/A | N/A | - Non-interest income increased due to **$1.7 million in gains** on sales of residential mortgages and **$120,000 in earnings** on bank-owned life insurance[195](index=195&type=chunk) **Non-Performing Assets (in thousands):** | Metric | June 30, 2021 | September 30, 2020 | | :----- | :------------ | :----------------- | | Non-accruing loans | $20,875 | $19,541 | | Non-accruing purchased credit impaired loans | $653 | $789 | | Total non-performing loans | $21,528 | $20,330 | | Foreclosed real estate | $373 | $269 | | Total non-performing assets | $21,901 | $20,599 | | Ratio of non-performing loans to total loans | 1.55% | 1.42% | | Ratio of non-performing assets to total assets | 1.20% | 1.09% | | Ratio of allowance for loan losses to total loans | 1.27% | 1.07% | - Non-performing assets **increased by $1.3 million**, primarily due to the addition of a **$5.6 million** non-performing commercial loan relationship[200](index=200&type=chunk) [Liquidity and Capital Resources](index=46&type=section&id=Liquidity%20and%20Capital%20Resources) - The Company maintains adequate liquid assets, with primary sources including deposits, loan repayments, investment maturities, earnings, and access to FHLB advances (up to **$706.6 million**)[204](index=204&type=chunk)[205](index=205&type=chunk)[207](index=207&type=chunk) - As of June 30, 2021, cash and cash equivalents totaled **$185.4 million**, and loan commitments outstanding were **$331.3 million**[207](index=207&type=chunk)[208](index=208&type=chunk) - Certificates of deposit due within one year totaled **$179.3 million**, representing **74.3%** of total certificates of deposit, requiring the Company to manage retention or seek alternative funding[208](index=208&type=chunk) [Critical Accounting Policies](index=47&type=section&id=Critical%20Accounting%20Policies) - The **Allowance for Loan Losses** is a critical accounting policy due to the significant judgment and subjectivity involved in estimating credit losses, which are influenced by economic conditions and collateral valuations[210](index=210&type=chunk)[211](index=211&type=chunk)[212](index=212&type=chunk) - Goodwill and intangible assets are tested for impairment, with **no impairment recorded** in 2021 or 2020[216](index=216&type=chunk)[217](index=217&type=chunk) - Fair value measurements for assets and liabilities are categorized into three levels based on the observability of inputs, with management maximizing observable inputs[219](index=219&type=chunk)[220](index=220&type=chunk)[221](index=221&type=chunk) [Off-Balance Sheet Arrangements](index=49&type=section&id=Off-Balance%20Sheet%20Arrangements) - The Company does not have any off-balance sheet arrangements that are reasonably likely to have a current or future material effect on its financial condition, results of operations, liquidity, capital expenditures, or capital resources[226](index=226&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=49&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Addresses the company's exposure to market risks, primarily interest rate risk, and the strategies employed to manage it - The Company's most significant market risk is **interest rate risk**, managed through asset/liability management and derivative financial instruments[227](index=227&type=chunk) - There have been **no material changes** in the Company's interest rate risk since September 30, 2020[228](index=228&type=chunk) [Item 4. Controls and Procedures](index=49&type=section&id=Item%204.%20Controls%20and%20Procedures) Confirms the effectiveness of disclosure controls and reports no material changes in internal controls - The Principal Executive Officer and Principal Financial Officer concluded that the Company's disclosure controls and procedures were **effective** as of the end of the reporting period[229](index=229&type=chunk) - **No material changes** occurred in the Company's internal controls over financial reporting during the period covered by this Quarterly Report[230](index=230&type=chunk) [Part II. Other Information](index=50&type=section&id=Part%20II.%20Other%20Information) [Item 1. Legal Proceedings](index=50&type=section&id=Item%201.%20Legal%20Proceedings) Details outstanding legal proceedings, including two class action lawsuits against the company - The Bank is a defendant in **two class action lawsuits** alleging violations of the Real Estate Settlement Procedures Act and the Sherman Act, with the potential exposure currently not estimable[234](index=234&type=chunk)[235](index=235&type=chunk) - Management believes the resolution of these legal actions is **not expected to have a material adverse effect** on the Company's results of operations[233](index=233&type=chunk) [Item 1A. Risk Factors](index=50&type=section&id=Item%201A.Risk%20Factors) Confirms no material changes to risk factors disclosed in the company's latest Annual Report on Form 10-K - **No material changes** have occurred in the 'Risk Factors' as disclosed in the Company's Annual Report on Form 10-K for the year ended September 30, 2020[235](index=235&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=50&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Provides details on the Company's common stock repurchase activities during the quarter ended June 30, 2021 **Company Purchases of Common Stock (Quarter Ended June 30, 2021):** | Month Ending | Total Shares Purchased | Average Price Paid per Share ($) | Shares Purchased under Publicly Announced Plans | Shares Remaining under Plans | | :----------- | :--------------------- | :------------------------------- | :---------------------------------------------- | :--------------------------- | | April 30, 2021 | 63,834 | 16.14 | 63,834 | 196,650 | | May 31, 2021 | 9,316 | 15.67 | 9,316 | 187,334 | | June 30, 2021 | 87,549 | 16.14 | 87,549 | 99,785 | | Total | 160,699 | 16.11 | 160,699 | N/A | - The Company repurchased **160,699 shares** of its common stock at an average price of **$16.11 per share** during the quarter ended June 30, 2021, under an authorized program[237](index=237&type=chunk) [Item 3. Defaults Upon Senior Securities](index=51&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) States that there are no defaults upon senior securities to report - This item is **not applicable**, indicating no defaults upon senior securities[239](index=239&type=chunk) [Item 4. Mine Safety Disclosures](index=51&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) States that there are no mine safety disclosures to report - This item is **not applicable**, indicating no mine safety disclosures[239](index=239&type=chunk) [Item 5. Other Information](index=51&type=section&id=Item%205.%20Other%20Information) States that there is no other information to report - This item is **not applicable**, indicating no other information to report[239](index=239&type=chunk) [Item 6. Exhibits](index=51&type=section&id=Item%206.%20Exhibits) Lists the exhibits filed as part of the report, including certifications and interactive data files - Exhibits include Articles of Incorporation, Bylaws, Common Stock Certificate, CEO and CFO certifications (Sections 302 and 906 of Sarbanes-Oxley Act), and Interactive Data Files (Inline XBRL)[241](index=241&type=chunk)[242](index=242&type=chunk) [Signature Page](index=53&type=section&id=Signature%20Page) Contains the official signatures of the Company's executive officers certifying the report - The report is duly signed by Gary S Olson, President and Chief Executive Officer, and Allan A Muto, Executive Vice President and Chief Financial Officer, on August 5, 2021[246](index=246&type=chunk)[247](index=247&type=chunk)