First Savings Financial (FSFG) - 2025 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements, including the balance sheets, statements of income, comprehensive income, changes in stockholders' equity, and cash flows, along with detailed notes explaining accounting policies, investment securities, loans, deposits, fair value measurements, stock compensation, regulatory capital, and segment reporting Condensed Consolidated Balance Sheets Total assets decreased from $2,450,368 thousand to $2,376,230 thousand, driven by reductions in cash, debt securities, and loans, while liabilities also decreased due to lower deposits, and stockholders' equity slightly increased Balance Sheet Summary | Metric | March 31, 2025 (in thousands) | September 30, 2024 (in thousands) | Change (in thousands) | | :----------------------------- | :----------------------------- | :-------------------------------- | :-------------------- | | Total Assets | $2,376,230 | $2,450,368 | $(74,138) | | Total Liabilities | $2,197,041 | $2,273,253 | $(76,212) | | Total Stockholders' Equity | $179,189 | $177,115 | $2,074 | | Cash and due from banks | $20,154 | $39,393 | $(19,239) | | Total cash and cash equivalents| $28,683 | $52,142 | $(23,459) | | Loans, net | $1,880,176 | $1,963,852 | $(83,676) | | Total deposits | $1,789,181 | $1,880,881 | $(91,700) | Condensed Consolidated Statements of Income Net income increased for both the three-month and six-month periods ended March 31, 2025, driven by higher net interest income and a credit for credit losses, despite changes in noninterest income and expense Income Statement Summary | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Six Months Ended March 31, 2025 (in thousands) | Six Months Ended March 31, 2024 (in thousands) | | :----------------------------------- | :----------------------------------------------- | :----------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Net Income | $5,499 | $4,927 | $11,724 | $5,847 | | Net interest income | $15,991 | $14,338 | $31,453 | $28,451 | | Total provision (credit) for credit losses | $(235) | $477 | $(686) | $889 | | Total noninterest income | $3,560 | $3,710 | $9,663 | $6,492 | | Total noninterest expense | $13,698 | $11,778 | $28,641 | $27,817 | | Basic Net income per share | $0.80 | $0.72 | $1.71 | $0.86 | | Diluted Net income per share | $0.79 | $0.72 | $1.68 | $0.85 | | Dividends per share | $0.16 | $0.15 | $0.31 | $0.29 | Condensed Consolidated Statements of Comprehensive Income Comprehensive income significantly decreased for the six-month period ended March 31, 2025, primarily due to substantial unrealized holding losses on available-for-sale securities Comprehensive Income Summary | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Six Months Ended March 31, 2025 (in thousands) | Six Months Ended March 31, 2024 (in thousands) | | :------------------------------------------------- | :----------------------------------------------- | :----------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Net Income | $5,499 | $4,927 | $11,724 | $5,847 | | Unrealized holding gains (losses) on securities available for sale, net of tax | $(1,595) | $(3,556) | $(8,185) | $12,425 | | Comprehensive Income | $3,903 | $1,389 | $3,534 | $18,290 | Condensed Consolidated Statements of Changes in Stockholders' Equity Stockholders' equity increased from October 1, 2024, to March 31, 2025, primarily due to net income, partially offset by other comprehensive loss and common stock dividends Stockholders' Equity Changes | Metric | October 1, 2024 (in thousands) | March 31, 2025 (in thousands) | | :----------------------------- | :----------------------------- | :---------------------------- | | Total Stockholders' Equity | $177,115 | $179,189 | | Net income (6 months) | N/A | $11,724 | | Other comprehensive loss (6 months) | N/A | $(8,190) | | Common stock dividends (6 months) | N/A | $(2,143) | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities for the six months ended March 31, 2025, was $32.6 million, a significant change from net cash provided by operating activities in the prior year, leading to an overall decrease in cash and cash equivalents Cash Flow Summary | Metric | Six Months Ended March 31, 2025 (in thousands) | Six Months Ended March 31, 2024 (in thousands) | | :------------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | | Net Cash Provided by (Used in) Operating Activities | $(32,630) | $90,634 | | Net Cash Provided by (Used In) Investing Activities | $79,073 | $(113,784) |\ | Net Cash Provided by (Used In) Financing Activities | $(69,902) | $55,274 | | Net Increase (Decrease) in Cash and Cash Equivalents | $(23,459) | $32,124 | | Cash and Cash Equivalents at End of Period | $28,683 | $62,969 | Notes to Condensed Consolidated Financial Statements The notes provide detailed explanations of the Company's financial statements, covering its business structure, accounting policies for various financial instruments, and disclosures on investment securities, loans, deposits, fair value measurements, stock compensation, regulatory capital, recent accounting pronouncements, and segment reporting Note 1. Presentation of Interim Information This note outlines the Company's structure as a financial holding company with its primary subsidiary, First Savings Bank, offering various banking services, and details accounting policies for loans and allowance for credit losses - First Savings Financial Group, Inc. is a financial holding company, parent of First Savings Bank, an Indiana-chartered commercial bank[16] - The Bank's wholly-owned subsidiaries include Q2 Business Capital, LLC (SBA loans) and First Savings Investments, Inc. (securities portfolio)[17] - The Company ceased its national originate-to-sell mortgage banking operation during the three-month period ended December 31, 2023, but continues local residential mortgage and first-lien home equity lines of credit originations[19] - The Allowance for Credit Losses (ACL) methodology considers forward-looking information, reverts to long-term historical averages, and adjusts for qualitative factors such as changes in lending policy, economic conditions, and portfolio characteristics[30][31] Note 2. Investment Securities The Company's investment securities are classified as available for sale (AFS) or held to maturity (HTM), with AFS securities experiencing significant gross unrealized losses, though the Company does not intend to sell them before recovery of amortized cost Investment Securities Data | Metric | March 31, 2025 (in thousands) | September 30, 2024 (in thousands) | | :----------------------------------- | :----------------------------- | :-------------------------------- | | Total debt securities available for sale | $243,174 | $248,679 | | Total debt securities held to maturity | $910 | $1,040 | | Gross Unrealized Losses on AFS Securities | $24,729 | $15,247 | | Allowance for Credit Losses on AFS Securities | $14 | $21 | - The Company recorded a $1 thousand credit for credit losses on investment securities for the three months ended March 31, 2025, and a $7 thousand credit for the six months ended March 31, 2025[61] - At March 31, 2025, 92% of total debt securities available for sale were in loss positions, primarily due to changes in current interest rates[71] - The Company does not intend to sell, and it is not more likely than not that the Company will be required to sell, debt securities in an unrealized loss position prior to maturity or recovery of the recorded value[61][74] Note 3. Loans and Allowance for Credit Losses Total loans decreased by $84.3 million, primarily in residential real estate and construction loans, while the allowance for credit losses also decreased, and nonaccrual loans saw a reduction Loans and ACL Summary | Metric | March 31, 2025 (in thousands) | September 30, 2024 (in thousands) | | :----------------------------- | :----------------------------- | :-------------------------------- | | Total loans | $1,899,787 | $1,984,101 | | Allowance for credit losses | $20,484 | $21,294 | | Nonaccrual Loans | $12,720 | $16,942 | | Total Past Due Loans | $15,749 | $11,958 | Credit Loss Activity | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Six Months Ended March 31, 2025 (in thousands) | Six Months Ended March 31, 2024 (in thousands) | | :----------------------------------- | :----------------------------------------------- | :----------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Provision (Credit) for Credit Losses - Loans | $(357) | $713 | $(848) | $1,183 | | Net Recoveries (Charge-Offs) | $156 | $(110) | $38 | $(119) | - No new Financial Difficulty Modifications (FDMs) were made or modified during the three- and six-month periods ended March 31, 2025 and 2024[99] SBA Loan Servicing Rights | Metric | March 31, 2025 (in thousands) | September 30, 2024 (in thousands) | | :----------------------------- | :----------------------------- | :-------------------------------- | | SBA loan servicing rights balance | $2,686 | $2,687 | | Net servicing income (3 months) | $450 | $458 | | Net servicing income (6 months) | $891 | $922 | Note 4. Deposits Total deposits decreased by $91.7 million from September 30, 2024, to March 31, 2025, primarily due to a significant reduction in brokered certificates of deposit, partially offset by increases in money market and NOW accounts Deposit Breakdown | Deposit Type | March 31, 2025 (in thousands) | September 30, 2024 (in thousands) | Change (in thousands) | | :-------------------------- | :----------------------------- | :-------------------------------- | :-------------------- | | Total deposits | $1,789,181 | $1,880,881 | $(91,700) | | Brokered certificates of deposit | $396,770 | $509,157 | $(112,387) | | Money market accounts | $430,857 | $393,214 | $37,643 | | NOW accounts | $351,121 | $332,388 | $18,733 | Note 5. Supplemental Disclosure for Net Income Per Share Basic and diluted net income per common share increased for both the three-month and six-month periods ended March 31, 2025, compared to the prior year, with calculations including the dilutive effect of outstanding options and restricted stock Net Income Per Share Details | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Six Months Ended March 31, 2025 | Six Months Ended March 31, 2024 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | :------------------------------ | :------------------------------ | | Basic Net income per common share | $0.80 | $0.72 | $1.71 | $0.86 | | Diluted Net income per common share | $0.79 | $0.72 | $1.68 | $0.85 | | Weighted average common shares outstanding, diluted | 6,960,020 | 6,859,611 | 6,961,829 | 6,849,928 | Note 6. Fair Value Measurements and Disclosures about Fair Value of Financial Instruments This note details the fair value hierarchy (Level 1, 2, 3) for financial assets and liabilities, with securities available for sale primarily Level 1 and Level 2, and collateral-dependent loans classified as Level 3 due to unobservable inputs Fair Value Hierarchy of Assets | Asset Type | March 31, 2025 (in thousands) | Level 1 (in thousands) | Level 2 (in thousands) | Level 3 (in thousands) | | :----------------------------- | :----------------------------- | :--------------------- | :--------------------- | :--------------------- | | Total securities available for sale | $243,174 | $26,248 | $214,684 | $2,242 | | Total collateral dependent loans | $4,392 | $— | $— | $4,392 | - Significant unobservable inputs for collateral dependent loans at March 31, 2025, included a discount from appraised value (weighted average 16.25%) and estimated costs to sell (weighted average 8.94%)[131] - At September 30, 2024, SBA loan servicing rights were valued at $2,687 thousand (Level 3), with significant unobservable inputs including a discount rate (weighted average 11.75%) and prepayment speed (weighted average 19.06%)[123][132] - The Company had no derivative financial instruments as of March 31, 2025, or September 30, 2024, due to the wind-down of its national mortgage banking operation[154] Note 7. Employee Stock Ownership Plan The Company's ESOP, established in 2008, had its loan repaid in full by December 2015, and all shares have been allocated, with no compensation expense recognized for the periods ended March 31, 2025 and 2024 - The ESOP loan was repaid in full during the quarter ended December 31, 2015, and all shares have been allocated to participants[142] - No compensation expense was recognized for the three- and six-month periods ended March 31, 2025 and 2024, related to the ESOP[142] - The ESOP trust held 250,956 shares of Company common stock at March 31, 2025[142] Note 8. Stock Based Compensation Plans The Company maintains equity incentive plans for stock options and restricted stock, with the 2025 Plan approved for 138,000 shares and 55,895 restricted shares granted in April 2025, and compensation expense recognized for both - The 2025 Equity Incentive Plan was approved in February 2025, with 138,000 shares available for issuance[143] - In April 2025, 55,895 restricted shares were granted to officers and key employees, vesting over a five-year period[143] Stock-Based Compensation Expense | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Six Months Ended March 31, 2025 (in thousands) | Six Months Ended March 31, 2024 (in thousands) | | :----------------------------------- | :----------------------------------------------- | :----------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Stock option compensation expense | $92 | $78 | $176 | $153 | | Restricted stock compensation expense | $111 | $98 | $216 | $195 | - At March 31, 2025, unrecognized compensation expense for nonvested stock options was $712 thousand (expected over 2.86 years) and for nonvested restricted shares was $862 thousand (expected over 2.79 years)[147][151] Note 9. Derivative Financial Instruments Due to the wind-down of the national mortgage banking operation, the Company had no derivative financial instruments as of March 31, 2025, or September 30, 2024 - As of March 31, 2025, and September 30, 2024, the Company had no derivative financial instruments[154] - This is due to the wind-down of the national mortgage banking operation[154] Note 10. Regulatory Capital The Bank met all "well-capitalized" regulatory capital requirements as of March 31, 2025, and September 30, 2024, with capital ratios exceeding minimum thresholds, while the Company also discloses its capital amounts and ratios - The Bank was categorized as "well capitalized" under the regulatory framework for prompt corrective action as of March 31, 2025, and September 30, 2024[158][193] Bank Regulatory Capital Ratios | Capital Ratio | Bank Actual (March 31, 2025) | Minimum for Well Capitalized | | :------------------------------------ | :--------------------------- | :--------------------------- | | Total capital (to risk-weighted assets) | 12.36% | 10.00% | | Tier 1 capital (to risk-weighted assets) | 11.29% | 8.00% | | Common equity Tier 1 capital (to risk-weighted assets) | 11.29% | 6.50% | | Tier 1 capital (to average adjusted total assets) | 9.08% | 5.00% | Note 11. Recent Accounting Pronouncements This note summarizes several recently issued FASB ASUs, including those on Fair Value Measurements, Investments in Tax Credit Structures, Segment Reporting, Income Tax Disclosures, and Expense Disaggregation Disclosures, with most not expected to have a material impact - ASU No. 2022-03 (Fair Value Measurements) clarifies that contractual sale restrictions on equity securities are not considered part of fair value measurement; adoption had no material impact[162] - ASU 2023-02 (Investments – Equity Method and Joint Ventures) allows the proportional amortization method for qualifying tax credit structures; early adopted October 1, 2023, with no material impact[163] - ASU 2023-07 (Segment Reporting) requires disclosure of significant segment expenses and CODM information; not expected to have a material impact[164] - ASU 2023-09 (Income Taxes) establishes new income tax disclosure requirements; not expected to have a material impact[165] - ASU 2024-03 (Income Statement – Expense Disaggregation Disclosures) requires specified information about certain costs and expenses; not expected to have a material impact[166] Note 12. Segment Reporting The Company operates in two primary segments: core banking and SBA lending, with the mortgage banking segment wound down, and both core banking and SBA lending showing increased profitability - The Company's primary segments are core banking and SBA lending; the mortgage banking segment has been wound down[168] Segment Profitability | Segment | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Six Months Ended March 31, 2025 (in thousands) | Six Months Ended March 31, 2024 (in thousands) | | :---------------- | :----------------------------------------------- | :----------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Core Banking Profit | $5,069 | $4,512 | $11,438 | $5,901 | | SBA Lending Profit | $430 | $415 | $286 | $(54) | Note 13. Revenue from Contracts with Customers This note details the Company's noninterest income streams under ASC 606, primarily within the core banking segment, including service charges, ATM and interchange fees, and commission income, recognized based on transaction execution or service provision Revenue from Contracts with Customers Breakdown | Revenue Type | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Six Months Ended March 31, 2025 (in thousands) | Six Months Ended March 31, 2024 (in thousands) | | :-------------------------------- | :----------------------------------------------- | :----------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Revenue from contracts with customers | $1,458 | $1,223 | $2,926 | $2,392 | | Service charges on deposit accounts | $541 | $387 | $1,108 | $860 | | ATM and interchange fees | $632 | $585 | $1,297 | $1,034 | | Commission income | $255 | $220 | $465 | $442 | - Revenue recognition for service charges on deposit accounts, ATM and interchange fees, commission income, and other income is based on transaction execution or satisfaction of performance obligations over time[177][178][179][180] Note 14. Mortgage Banking Income Mortgage banking income increased for both the three-month and six-month periods ended March 31, 2025, primarily due to improved origination and sale of mortgage loans and provisions for loan repurchases, despite the wind-down of the national mortgage banking operation Mortgage Banking Income Summary | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Six Months Ended March 31, 2025 (in thousands) | Six Months Ended March 31, 2024 (in thousands) | | :----------------------------------- | :----------------------------------------------- | :----------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Total mortgage banking income | $104 | $53 | $182 | $142 | | Origination and sale of mortgage loans | $44 | $(991) | $59 | $(1,202) | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the Company's financial performance and condition, including a safe harbor statement, critical accounting policies, a comparison of financial condition, and a detailed analysis of results of operations, liquidity, capital resources, and off-balance sheet arrangements Safe Harbor Statement for Forward-Looking Statements This section provides a safe harbor statement, indicating that the report contains forward-looking statements based on current expectations, which are subject to various risks and uncertainties that could cause actual results to differ materially - Forward-looking statements are not guarantees of future performance and are subject to numerous risks and uncertainties[184] - Factors that may cause differences include general economic conditions, changes in market interest rates, legislative and regulatory changes, loan and investment portfolio quality, loan demand, deposit flows, competition, and changes in accounting principles[184] Critical Accounting Policies; Critical Accounting Estimates No significant changes in the Company's critical accounting policies or their application were reported during the six-month period ended March 31, 2025, compared to the prior fiscal year - There was no significant change in the Company's critical accounting policies or the application of critical accounting policies during the six-month period ended March 31, 2025[185] Comparison of Financial Condition at March 31, 2025 and September 30, 2024 The Company's financial condition at March 31, 2025, showed a decrease in total assets, primarily due to reduced cash and cash equivalents, net loans, and available-for-sale securities, while total deposits also decreased, and FHLB borrowings increased - Cash and cash equivalents decreased by $23.5 million to $28.7 million, primarily used to pay down brokered deposits[186] - Net loans receivable decreased by $83.7 million to $1.88 billion, mainly due to an $87.2 million bulk sale of residential real estate home equity line of credit loans[187] - Securities available for sale decreased by $5.5 million to $243.2 million, driven by net decreases in fair value of $10.4 million, partially offset by purchases[189] - Total deposits decreased by $91.7 million to $1.79 billion, primarily due to a $112.4 million decrease in brokered deposits, partially offset by increases in money market and interest-bearing demand deposit accounts[190] - FHLB borrowings increased by $23.7 million to $325.3 million, utilized in place of brokered deposits[192] - Stockholders' equity increased by $2.1 million to $179.2 million, primarily due to a $9.6 million increase in retained net income, partially offset by an $8.2 million increase in accumulated other comprehensive loss[193] Results of Operations for the Three Months Ended March 31, 2025 and 2024 Net income increased by $0.6 million to $5.5 million for the three months ended March 31, 2025, driven by an 11.6% increase in net interest income and a credit for credit losses, despite changes in noninterest income and expense, with the net interest margin improving to 2.93% Key Financial Metrics | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Change (in thousands) | | :-------------------------- | :----------------------------------------------- | :----------------------------------------------- | :-------------------- | | Net Income | $5,499 | $4,927 | $572 | | Net Interest Income | $15,991 | $14,338 | $1,653 | | Tax-Equivalent Net Interest Margin | 2.93% | 2.66% | 0.27% pts | | Total Interest Income | $30,823 | $30,016 | $807 | | Total Interest Expense | $14,832 | $15,678 | $(846) | | Total provision (credit) for credit losses | $(235) | $477 | $(712) | | Noninterest Income | $3,560 | $3,710 | $(150) | | Noninterest Expense | $13,698 | $11,778 | $1,920 | | Income Tax Expense | $589 | $866 | $(277) | | Effective Tax Rate | 9.7% | 14.9% | (5.2)% pts | - The credit for credit losses for loans during the 2025 period was primarily due to a decrease in qualitative reserve[204] - The decrease in other noninterest income was primarily due to a $492 thousand gain on the sale of mortgage servicing rights in 2024 with no corresponding amount in 2025[206] - The increase in noninterest expense was primarily due to increases in compensation and benefits ($940 thousand) and other operating expenses ($948 thousand)[208] Results of Operations for the Six Months Ended March 31, 2025 and 2024 Net income significantly increased by $5.9 million to $11.7 million for the six months ended March 31, 2025, driven by a 10.6% increase in net interest income, a credit for credit losses, and a substantial increase in noninterest income, despite increased noninterest expense and income tax expense Key Financial Metrics | Metric | Six Months Ended March 31, 2025 (in thousands) | Six Months Ended March 31, 2024 (in thousands) | Change (in thousands) | | :-------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | | Net Income | $11,724 | $5,847 | $5,877 | | Net Interest Income | $31,453 | $28,451 | $3,002 | | Tax-Equivalent Net Interest Margin | 2.84% | 2.67% | 0.17% pts | | Total Interest Income | $63,272 | $58,671 | $4,601 | | Total Interest Expense | $31,819 | $30,220 | $1,599 | | Total provision (credit) for credit losses | $(686) | $889 | $(1,575) | | Noninterest Income | $9,663 | $6,492 | $3,171 | | Noninterest Expense | $28,641 | $27,817 | $824 | | Income Tax Expense | $1,437 | $390 | $1,047 | | Effective Tax Rate | 10.9% | 6.3% | 4.6% pts | - Nonperforming loans decreased by $4.2 million from $16.9 million at September 30, 2024, to $12.7 million at March 31, 2025[220] - The increase in noninterest income was primarily due to a $2.5 million net gain on the bulk sale of home equity lines of credit and $403 thousand in net gains on the sale of equity securities, with no corresponding gains in 2024[222] - The increase in noninterest expense was primarily due to increases in other operating expenses ($962 thousand) and compensation and benefits ($453 thousand), partially offset by decreases in professional fees and occupancy and equipment due to the cessation of national mortgage banking operations[223][226] Liquidity and Capital Resources The Bank maintains liquidity through customer deposits, loan repayments, maturing securities, and FHLB borrowings, with significant additional borrowing capacity, and remains "well-capitalized" with capital ratios exceeding regulatory minimums - At March 31, 2025, the Bank had $28.7 million in cash and cash equivalents and $133.6 million in unpledged securities available-for-sale[228] - The Bank had additional borrowing capacity of $800.0 million from the FHLB (with $325.3 million outstanding), federal funds lines of credit, and $52.7 million from the Federal Reserve Discount Window[228] - Uninsured deposits were estimated at $568.9 million (31.8% of total deposits) or $270.3 million (15.1% excluding Indiana public funds) as of March 31, 2025[230] - The Company (unconsolidated basis) had liquid assets of $20.8 million at March 31, 2025, with its primary source of income being dividends from the Bank[231] - The Bank was in compliance with all regulatory capital requirements and considered "well-capitalized" as of March 31, 2025[233] Off-Balance Sheet Arrangements The Company engages in off-balance sheet transactions, primarily loan commitments and letters of credit, which involve credit, interest rate, and liquidity risk, with no material off-balance sheet transactions occurring during the six-month period ended March 31, 2025 - Off-balance sheet arrangements primarily take the form of loan commitments and letters of credit[234] - No off-balance sheet transactions were reasonably likely to have a material effect on the Company's consolidated financial condition, results of operations, or cash flows for the six-month period ended March 31, 2025[235] Item 3. Quantitative and Qualitative Disclosures About Market Risk The Company manages market risk, primarily interest rate risk, to achieve long-term profitability and maintain adequate funding, with simulation modeling indicating that an immediate 1.00% increase in interest rates would decrease net interest income by 2.57% over one year, while a 1.00% decrease would increase it by 3.25% - The Company's principal financial objective is to achieve long-term profitability while reducing exposure to fluctuating market interest rates[239] - Strategies include managing the mismatch between asset and liability maturities, emphasizing short-term residential and commercial loans, and relying on retail deposits as a stable funding source[239] Net Interest Income Sensitivity | Immediate Change in Interest Rates | One Year Horizon Dollar Change (in thousands) | One Year Horizon Percent Change | | :--------------------------------- | :------------------------------------------ | :------------------------------ | | +300bp | $(4,886) | (6.63)% | | +200bp | $(3,455) | (4.69)% | | +100bp | $(1,898) | (2.57)% | | -100bp | $2,400 | 3.25% | | -200bp | $4,820 | 6.54% | - All estimated changes in net interest income from interest rate simulations are within policy guidelines approved by the Company's Board of Directors[244] Item 4. Controls and Procedures The Company's management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes in internal control over financial reporting during the three months ended March 31, 2025 - The Company's disclosure controls and procedures were effective as of March 31, 2025[247] - No changes in internal control over financial reporting occurred during the three months ended March 31, 2025, that materially affected or are reasonably likely to materially affect internal control[248] PART II - OTHER INFORMATION Item 1. Legal Proceedings As of March 31, 2025, the Company is not a party to any legal proceedings that are believed to require disclosure, warrant a loss contingency accrual, or would have a material adverse effect on its financial condition, results of operations, or cash flow - The Company is not a party to any legal proceedings that require disclosure, warrant a loss contingency accrual, or would have a material adverse effect on its financial condition, results of operations, or cash flow as of March 31, 2025[251] Item 1A. Risk Factors No material changes to the risk factors described in the Annual Report on Form 10-K for the year ended September 30, 2024, were identified, though additional unknown or immaterial risks may still adversely affect the business - There have been no material changes to the risk factors described in the Annual Report on Form 10-K for the year ended September 30, 2024[252] Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, And Issuer Purchases of Equity Securities The Company repurchased 1,437 shares of common stock at an average price of $25.09 per share during March 2025 under its publicly announced stock repurchase program, with 10,086 shares remaining available Common Stock Repurchases | Period | Total shares purchased | Average price paid per share | | :----------------------------- | :--------------------- | :--------------------------- | | March 1, 2025 through March 31, 2025 | 1,437 | $25.09 | - As of March 31, 2025, 10,086 shares may yet be purchased under the publicly announced stock repurchase program[255] - The stock repurchase program, authorized on August 16, 2021, allows for the acquisition of up to 356,220 shares[255] Item 3. Defaults Upon Senior Securities This item is not applicable to the Company - Not applicable[256] Item 4. Mine Safety Disclosures This item is not applicable to the Company - Not applicable[257] Item 5. Other Information No directors or executive officers adopted or terminated any Rule 10b5-1 trading arrangements during the three months ended March 31, 2025 - None of the Company's directors or executive officers adopted or terminated any Rule 10b5-1 trading arrangement during the three months ended March 31, 2025[258] Item 6. Exhibits This section lists the exhibits filed with the 10-Q report, including certifications from the CEO and CFO, XBRL financial statements, and the interactive data file - Exhibits include Rule 13a-14(a)/15d-14(a) Certifications of the Chief Executive Officer and Chief Financial Officer[261] - Section 1350 Certifications of the Chief Executive Officer and Chief Financial Officer are included[261] - The financial statements and related notes are formatted in XBRL (Extensible Business Reporting Language)[261] SIGNATURES Signatures The report is signed by Larry W. Myers, President and Chief Executive Officer, and Anthony A. Schoen, Chief Financial Officer, on May 7, 2025, certifying compliance with Securities Exchange Act requirements - The report was signed by Larry W. Myers, President and Chief Executive Officer, and Anthony A. Schoen, Chief Financial Officer[263] - The signing date for the report was May 7, 2025[263]