What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2020-08-07 compared with 2020-05-08 · 341 added, 165 removed, 622 unchanged (45% of the section changed)

4 unchanged sentences

(Dollars in thousands, except per share amounts)

September 30,

June 30, September 30,

Cash and cash equivalents (includes interest-earning deposits of $ 381,946 and $ 198,809 )

$ 396,219 $ 220,370

Available-for-sale ("AFS") securities, at estimated fair value 1,220,054 1,204,863

Loans receivable, net (allowance for credit losses ("ACL") of $ 31,215 and $ 9,226 )

7,388,090 7,416,747

Federal Home Loan Bank Topeka ("FHLB") stock, at cost 102,782 98,456

1 unchanged sentence

Income taxes receivable, net 1,655 2

Other assets 351,061 302,796

TOTAL ASSETS $ 9,558,814 $ 9,340,018

Deposits $ 6,069,684 $ 5,581,867

Borrowings 1,989,089 2,239,989

Advance payments by borrowers for taxes and insurance 39,125 65,686

7 unchanged sentences

1,400,000,000 shares authorized, 141,511,716 and 141,440,030

shares issued and outstanding as of March 31, 2020 and September 30, 2019, respectively

shares issued and outstanding as of June 30, 2020 and September 30, 2019, respectively 1,415 1,414

Additional paid-in capital 1,211,653 1,210,226

9 unchanged sentences

(Dollars in thousands, except per share amounts)

For the Three Months Ended

For the Six Months Ended

For the Three Months Ended For the Nine Months Ended

June 30, June 30,

2020 2019 2020 2019

INTEREST AND DIVIDEND INCOME:

1 unchanged sentence

Mortgage-backed securities ("MBS") 5,616 6,613 17,584 19,437

FHLB stock 1,207 1,865 4,747 5,667

Investment securities 847 1,835 3,736 4,781

2 unchanged sentences

INTEREST EXPENSE:

Deposits 16,533 16,909 52,299 48,730

Borrowings 11,561 13,621 37,421 41,360

Total interest expense 28,094 30,530 89,720 90,090

12 unchanged sentences

Occupancy, net 3,556 3,224 10,212 9,768

Advertising and promotional

Regulatory and outside services 1,548 1,425 4,188 4,247

Advertising and promotional 1,004 1,447 3,773 3,597

Deposit and loan transaction costs 697 681 2,086 1,882

5 unchanged sentences

INCOME TAX EXPENSE 5,088 6,317 10,877 19,780

NET INCOME $ 19,474 $ 22,897 $ 46,261 $ 71,834

Basic earnings per share ("EPS") $ 0.14 $ 0.17 $ 0.34 $ 0.52

Diluted EPS $ 0.14 $ 0.17 $ 0.34 $ 0.52

Basic weighted average common shares 138,018,052 137,720,480 137,961,231 137,635,099

5 unchanged sentences

(Dollars in thousands)

For the Three Months Ended

For the Six Months Ended

For the Three Months Ended For the Nine Months Ended

June 30, June 30,

2020 2019 2020 2019

Net income $ 19,474 $ 22,897 $ 46,261 $ 71,834

Other comprehensive income (loss), net of tax:

1 unchanged sentence

net of taxes of $( 1,775 ), $( 1,317 ), $( 4,962 ) and $( 3,432 )

5,533 4,102 15,459 10,690

Changes in unrealized gains (losses) on cash flow hedges,

net of taxes of $ 367 , $ 3,601 , $ 5,826 and $ 8,847

( 1,146 ) ( 11,218 ) ( 18,151 ) ( 27,562 )

Comprehensive (loss) income $ 23,861 $ 15,781 $ 43,569 $ 54,962

4 unchanged sentences

(Dollars in thousands, except per share amounts)

For the Six Months Ended March 31, 2020

Stockholders'

For the Nine Months Ended June 30, 2020

Additional Unearned Total

Common Paid-In Compensation Retained Stockholders'

Stock Capital ESOP Earnings AOCI Equity

Balance at September 30, 2019 $ 1,414 $ 1,210,226 $ ( 34,692 ) $ 174,277 $ ( 14,899 ) $ 1,336,326

Other comprehensive income, net of tax

Cumulative effect of adopting Accounting Standards Update ("ASU") 2016-02 88 88

Net income 22,511 22,511

Other comprehensive income, net of tax 4,972 4,972

ESOP activity 169 413 582

3 unchanged sentences

Cash dividends to stockholders ($ 0.425 per share)

( 58,663 ) ( 58,663 )

Balance at December 31, 2019 $ 1,415 $ 1,211,172 $ ( 34,279 ) $ 138,213 $ ( 9,927 ) $ 1,306,594

Net income 4,276 4,276

Other comprehensive loss, net of tax ( 12,051 ) ( 12,051 )

3 unchanged sentences

Cash dividends to stockholders ($ 0.085 per share)

( 11,733 ) ( 11,733 )

Balance at March 31, 2020 1,415 1,211,466 ( 33,866 ) 130,756 ( 21,978 ) 1,287,793

For the Six Months Ended March 31, 2019

Stockholders'

Net income 19,474 19,474

Other comprehensive income, net of tax 4,387 4,387

ESOP activity 61 413 474

Restricted stock activity, net ( 6 ) ( 6 )

Stock-based compensation 132 132

Cash dividends to stockholders ($ 0.085 per share)

( 11,734 ) ( 11,734 )

Balance at June 30, 2020 $ 1,415 $ 1,211,653 $ ( 33,453 ) $ 138,496 $ ( 17,591 ) $ 1,300,520

For the Nine Months Ended June 30, 2019

Additional Unearned Total

Common Paid-In Compensation Retained Stockholders'

Stock Capital ESOP Earnings AOCI Equity

Balance at September 30, 2018 $ 1,412 $ 1,207,644 $ ( 36,343 ) $ 214,569 $ 4,340 $ 1,391,622

Other comprehensive loss, net of tax

Cumulative effect of adopting ASU 2014-09 394 394

Net income 24,383 24,383

Other comprehensive loss, net of tax ( 6,217 ) ( 6,217 )

ESOP activity 118 413 531

2 unchanged sentences

Cash dividends to stockholders ($ 0.475 per share)

( 65,362 ) ( 65,362 )

Balance at December 31, 2018 $ 1,413 $ 1,208,323 $ ( 35,930 ) $ 173,984 $ ( 1,877 ) $ 1,345,913

Net income 24,554 24,554

Other comprehensive loss, net of tax ( 3,539 ) ( 3,539 )

3 unchanged sentences

Cash dividends to stockholders ($ 0.085 per share)

( 11,700 ) ( 11,700 )

Balance at March 31, 2019 1,413 1,208,665 ( 35,517 ) 186,838 ( 5,416 ) 1,355,983

Net income 22,897 22,897

Other comprehensive loss, net of tax ( 7,116 ) ( 7,116 )

ESOP activity 147 413 560

Stock-based compensation 167 167

Stock options exercised 1 761 762

Cash dividends to stockholders ($ 0.335 per share)

( 46,154 ) ( 46,154 )

Balance at June 30, 2019 $ 1,414 $ 1,209,740 $ ( 35,104 ) $ 163,581 $ ( 12,532 ) $ 1,327,099

See accompanying notes to consolidated financial statements.

3 unchanged sentences

(Dollars in thousands)

For the Six Months Ended

For the Nine Months Ended

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income $ 46,261 $ 71,834

Adjustments to reconcile net income to net cash provided by operating activities:

23 unchanged sentences

Proceeds from bank-owned life insurance ("BOLI") death benefit 490 —

Net cash (used in) provided by investing activities

Net cash provided by investing activities 2,833 90,439

CAPITOL FEDERAL FINANCIAL, INC.

2 unchanged sentences

(Dollars in thousands)

For the Six Months Ended

For the Nine Months Ended

CASH FLOWS FROM FINANCING ACTIVITIES:

6 unchanged sentences

Stock options exercised 638 1,347

Net cash (used in) provided by financing activities

NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH EQUIVALENTS

Net cash provided by (used in) financing activities 128,549 ( 214,899 )

NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH EQUIVALENTS 200,519 ( 68,934 )

CASH, CASH EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH EQUIVALENTS:

20 unchanged sentences

Interim results are not necessarily indicative of results for a full year.

Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents - Cash, cash equivalents, restricted cash and restricted cash equivalents reported in the statement of cash flows include cash and cash equivalents of $ 118.4 million and $ 220.4 million at March 31, 2020 and September 30, 2019 , respectively, and restricted cash and cash equivalents of $ 56.3 million and $ 33.3 million at March 31, 2020 at September 30, 2019 , respectively, which was included in other assets on the consolidated balance sheet.

Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents - Cash, cash equivalents, restricted cash and restricted cash equivalents reported in the statement of cash flows include cash and cash equivalents of $ 396.2 million and $ 220.4 million at June 30, 2020 and September 30, 2019, respectively, and restricted cash and cash equivalents of $ 58.0 million and $ 33.3 million at June 30, 2020 and September 30, 2019, respectively, which was included in other assets on the consolidated balance sheet.

The restricted cash and cash equivalents relate to the collateral postings to/from the Bank's derivative counterparties associated with the Bank's interest rate swaps.

3 unchanged sentences

Cash flows related to these advances are reported on a net basis in the consolidated statements of cash flows.

There was no FHLB advance activity reported on a net basis in the consolidated statements of cash flows during the six months ended March 31, 2020 and 2019 .

There was no FHLB advance activity reported on a net basis in the consolidated statements of cash flows during the nine months ended June 30, 2020 and 2019.

Leases - The Company leases real estate property for branches, ATMs, and certain equipment.

45 unchanged sentences

The ASU will become effective for the Company on October 1, 2020.

The Company continues to work with a software provider on the application and implementation of the new accounting guidance, which includes assistance with historical data analysis, loan segmentation, model development, and documentation.

The integration of the Company's data with the software provider is complete, along with an analysis of the historical data entered into the software.

Management is currently working with the software provider on loan portfolio segmentations and model development, including incorporating economic forecasting into the models.

While we are currently unable to reasonably estimate the impact of adopting this ASU, we expect the impact of adoption will be influenced by the composition of our loan and securities portfolios as well as the economic conditions and forecasts at the time of adoption.

Upon adoption, a cumulative-effect adjustment for the change in the allowance for credit losses and reserves on unfunded commitments will be recognized in retained earnings.

The Company has been working with a software provider on the application and implementation of the new accounting guidance.

The Company has determined its loan segmentation and the methodologies that will be utilized for each loan segment.

Management is in the process of reviewing and selecting several assumptions including a reasonable and supportable forecast time period, a reversion methodology, prepayment and curtailment speeds, among others.

Management is also in the process of preparing supporting documentation and developing internal controls, policies, and procedures.

During the remainder of fiscal year 2020, the Company is planning more processing runs, as well as analyzing model sensitivity to various assumptions.

At June 30, 2020, the Company ran the model using various assumptions and forecast scenarios.

Preliminary results indicate that our ACL and reserves on unfunded commitments would be between $ 20 million and our current level of approximately $ 32 million.

The ACL calculated under the new methodology could be lower than that under the existing incurred loss methodology due to having the ability to forecast improvement in economic conditions over a loan's contractual life rather than only being able to consider current conditions as is allowed under the incurred loss methodology.

The preliminary results will likely change at adoption due to factors including, but not limited to, changes in current economic conditions, forecasted economic conditions, the Company's credit quality trends, and further refinement of model assumptions.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement:

4 unchanged sentences

Entities are allowed to elect early adoption of the eliminated or modified disclosure requirements and delay adoption of the new disclosure requirements until their effective date.

Since this ASU only requires disclosure changes, it will not have a significant impact on the Company's consolidated financial condition and results of operations.

Since this ASU only requires disclosure changes, it is not expected to have a significant impact on the Company's consolidated financial condition and results of operations.

In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software:

4 unchanged sentences

In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments.

This ASU makes clarifications and corrections to the application of the guidance contained in each of the amended topics.

This ASU makes clarifications and corrections to the

application of the guidance contained in each of the amended topics.

According to the provisions of the ASU, entities that have not adopted ASU 2017-12 prior to the issuance of ASU 2019-04 shall adopt the provisions of both ASUs at the same time.

5 unchanged sentences

The two-class method is an earnings allocation that determines EPS for each class of common stock and participating security.

For the Three Months Ended

For the Six Months Ended

For the Three Months Ended For the Nine Months Ended

June 30, June 30,

2020 2019 2020 2019

(Dollars in thousands, except per share amounts)

Net income $ 19,474 $ 22,897 $ 46,261 $ 71,834

Income allocated to participating securities ( 16 ) ( 16 ) ( 38 ) ( 35 )

5 unchanged sentences

Total diluted average common shares outstanding 138,018,052 137,787,528 137,992,978 137,690,434

Basic $ 0.14 $ 0.17 $ 0.34 $ 0.52

Diluted $ 0.14 $ 0.17 $ 0.34 $ 0.52

Antidilutive stock options, excluded from the diluted average

2 unchanged sentences

The majority of the MBS and investment securities portfolios are composed of securities issued by United States government-sponsored enterprises ("GSEs").

March 31, 2020

June 30, 2020

Gross Gross Estimated

Amortized Unrealized Unrealized Fair

Cost Gains Losses Value

(Dollars in thousands)

MBS $ 949,348 $ 33,304 $ 65 $ 982,587

GSE debentures 225,020 480 — 225,500

Municipal bonds 11,857 110 — 11,967

$ 1,186,225 $ 33,894 $ 65 $ 1,220,054

September 30, 2019

Gross Gross Estimated

Amortized Unrealized Unrealized Fair

Cost Gains Losses Value

(Dollars in thousands)

MBS $ 923,256 $ 15,571 $ 2,340 $ 936,487

GSE debentures 249,828 304 178 249,954

Municipal bonds 18,371 52 1 18,422

$ 1,191,455 $ 15,927 $ 2,519 $ 1,204,863

The following tables summarize the estimated fair value and gross unrealized losses of those AFS securities on which an unrealized loss at the dates presented was reported and the continuous unrealized loss position for less than 12 months and equal to or greater than 12 months as of the dates presented.

March 31, 2020

Less Than 12 Months

Equal to or Greater Than 12 Months

(Dollars in thousands)

June 30, 2020

Less Than 12 Months Equal to or Greater Than 12 Months

Estimated Unrealized Estimated Unrealized

Fair Value Losses Fair Value Losses

MBS $ 37,115 $ 64 $ 147 $ 1

GSE debentures — — — —

Municipal bonds — — — —

$ 37,115 $ 64 $ 147 $ 1

September 30, 2019

Less Than 12 Months

Equal to or Greater Than 12 Months

(Dollars in thousands)

Less Than 12 Months Equal to or Greater Than 12 Months

Estimated Unrealized Estimated Unrealized

Fair Value Losses Fair Value Losses

MBS $ 111,368 $ 126 $ 199,442 $ 2,214

GSE debentures — — 74,812 178

Municipal bonds 1,755 1 — —

The unrealized losses at March 31, 2020 and September 30, 2019 were a result of an increase in market yields from the time the securities were purchased.

$ 113,123 $ 127 $ 274,254 $ 2,392

The unrealized losses at June 30, 2020 and September 30, 2019 were a result of an increase in market yields from the time the securities were purchased.

In general, as market yields rise, the fair value of securities will decrease;

3 unchanged sentences

The impairment is also considered temporary because scheduled coupon payments have been made, it is anticipated that the entire principal balance will be collected as scheduled, and management neither intends to sell the securities, nor is it more likely than not that the Company will be required to sell the securities, before the recovery of the remaining amortized cost amount, which could be at maturity.

As a result of the analysis, management has concluded that no other-than-temporary impairments existed at March 31, 2020 or September 30, 2019 .

The amortized cost and estimated fair value of AFS debt securities as of March 31, 2020 , by contractual maturity, are shown below.

As a result of the analysis, management has concluded that no other-than-temporary impairments existed at June 30, 2020 or September 30, 2019.

The amortized cost and estimated fair value of AFS debt securities as of June 30, 2020, by contractual maturity, are shown below.

Actual principal repayments may differ from contractual maturities due to prepayment or early call privileges by the issuer.

1 unchanged sentence

For this reason, MBS are not included in the maturity categories.

Amortized Estimated

Cost Fair Value

(Dollars in thousands)

1 unchanged sentence

One year through five years 231,410 231,970

236,877 237,467

MBS 949,348 982,587

$ 1,186,225 $ 1,220,054

The following table presents the taxable and non-taxable components of interest income on investment securities for the periods presented.

For the Three Months Ended

For the Six Months Ended

For the Three Months Ended For the Nine Months Ended

June 30, June 30,

2020 2019 2020 2019

(Dollars in thousands)

Taxable $ 797 $ 1,749 $ 3,556 $ 4,516

Non-taxable 50 86 180 265

$ 847 $ 1,835 $ 3,736 $ 4,781

The following table summarizes the carrying value of securities pledged as collateral for the obligations indicated below as of the dates presented.

March 31, 2020

September 30, 2019

June 30, 2020 September 30, 2019

(Dollars in thousands)

Federal Reserve Bank of Kansas City ("FRB of Kansas City")

Public unit deposits $ 340,751 $ 381,143

Federal Reserve Bank of Kansas City ("FRB of Kansas City") 315,149 6,636

Repurchase agreements 106,625 108,271

$ 762,525 $ 496,050

LOANS RECEIVABLE AND ALLOWANCE FOR CREDIT LOSSES

Loans receivable, net at the dates presented is summarized as follows:

March 31, 2020

September 30, 2019

June 30, 2020 September 30, 2019

(Dollars in thousands)

One- to four-family:

Originated $ 3,955,668 $ 3,873,851

Correspondent purchased 2,268,031 2,349,877

Bulk purchased 217,652 252,347

Construction 36,595 36,758

Total 6,477,946 6,512,833

Commercial real estate 625,106 583,617

Commercial and industrial 99,735 61,094

Construction 87,448 123,159

Total 812,289 767,870

Home equity 107,174 120,587

Other 10,033 11,183

Total 117,207 131,770

Total loans receivable 7,407,442 7,412,473

ACL 31,215 9,226

Discounts/unearned loan fees 30,312 31,058

Premiums/deferred costs ( 42,175 ) ( 44,558 )

$ 7,388,090 $ 7,416,747

Lending Practices and Underwriting Standards - Originating and purchasing one- to four-family loans is the Bank's primary lending business.

11 unchanged sentences

When underwriting a commercial real estate or commercial construction loan, several factors are considered, such as the income producing potential of the property, cash equity provided by the borrower, the financial strength of the borrower, managerial expertise of the borrower or tenant, feasibility studies, lending experience with the borrower and the marketability of the property.

For commercial real estate and commercial construction participation loans, the Bank performs the

same underwriting procedures as if the loan was being originated by the Bank.

At the time of origination, loan-to-value ("LTV") ratios on commercial real estate loans generally do not exceed 85 % of the appraised value of the property securing the loans and the minimum debt service coverage ratio is generally 1.15 .

For commercial real estate and commercial construction participation loans, the Bank performs the same underwriting procedures as if the loan was being originated by the Bank.

At the time of origination, loan-to-value ("LTV")

ratios on commercial real estate loans generally do not exceed 85 % of the appraised value of the property securing the loans and the minimum debt service coverage ratio is generally 1.15 .

For commercial construction loans, LTV ratios generally do not exceed 80 % of the projected appraised value of the property securing the loans and the minimum debt service coverage ratio is generally 1.15 , but it applies to the projected cash flows, and the borrower must have successful experience with the construction and operation of properties similar to the subject property.

21 unchanged sentences

The recorded investment in loans is defined as the unpaid principal balance of a loan, less charge-offs and inclusive of unearned loan fees and deferred costs.

At March 31, 2020 and September 30, 2019 , all loans 90 or more days delinquent were on nonaccrual status.

March 31, 2020

90 or More Days

30 to 89 Days

Delinquent or

in Foreclosure

At June 30, 2020 and September 30, 2019, all loans 90 or more days delinquent were on nonaccrual status.

June 30, 2020

90 or More Days Total Total

30 to 89 Days Delinquent or Delinquent Current Recorded

Delinquent in Foreclosure Loans Loans Investment

(Dollars in thousands)

One- to four-family:

Originated $ 5,058 $ 4,012 $ 9,070 $ 3,969,051 $ 3,978,121

Correspondent purchased 2,963 2,781 5,744 2,291,891 2,297,635

2 unchanged sentences

Commercial and industrial 169 165 334 97,823 98,157

Home equity 393 249 642 106,448 107,090

Other 38 30 68 9,934 10,002

$ 14,573 $ 9,088 $ 23,661 $ 7,395,644 $ 7,419,305

September 30, 2019

90 or More Days

30 to 89 Days

Delinquent or

in Foreclosure

90 or More Days Total Total

30 to 89 Days Delinquent or Delinquent Current Recorded

Delinquent in Foreclosure Loans Loans Investment

(Dollars in thousands)

One- to four-family:

Originated $ 7,187 $ 3,261 $ 10,448 $ 3,885,335 $ 3,895,783

Correspondent purchased 2,762 1,023 3,785 2,377,629 2,381,414

2 unchanged sentences

Commercial and industrial 70 173 243 60,340 60,583

The recorded investment in mortgage loans secured by residential real estate properties for which formal foreclosure proceedings were in process as of March 31, 2020 and September 30, 2019 was $ 1.7 million and $ 1.5 million , respectively, which is included in loans 90 or more days delinquent or in foreclosure in the table above.

The carrying value of residential OREO held as a result of obtaining physical possession upon completion of a foreclosure or through completion of a deed in lieu of foreclosure was $ 187 thousand at March 31, 2020 and $ 745 thousand at September 30, 2019 .

Home equity 446 302 748 119,688 120,436

Other 78 21 99 11,035 11,134

$ 14,929 $ 6,264 $ 21,193 $ 7,404,780 $ 7,425,973

The recorded investment in mortgage loans secured by residential real estate properties for which formal foreclosure proceedings were in process as of June 30, 2020 and September 30, 2019 was $ 2.6 million and $ 1.5 million, respectively, which is included in loans 90 or more days delinquent or in foreclosure in the table above.

The carrying value of residential OREO held as a result of obtaining physical possession upon completion of a foreclosure or through completion of a deed in lieu of foreclosure was $ 183 thousand at June 30, 2020 and $ 745 thousand at September 30, 2019.

The following table presents the recorded investment, by class, in loans classified as nonaccrual at the dates presented.

March 31, 2020

September 30, 2019

June 30, 2020 September 30, 2019

(Dollars in thousands)

One- to four-family:

Originated $ 4,955 $ 4,436

Correspondent purchased 2,971 1,023

2 unchanged sentences

Commercial and industrial 165 173

Home equity 282 337

$ 10,254 $ 7,541

In accordance with the Bank's asset classification policy, management regularly reviews the problem loans in the Bank's portfolio to determine whether any loans require classification.

9 unchanged sentences

At the dates presented, there were no loans classified as doubtful, and all loans classified as loss were fully charged-off.

March 31, 2020

September 30, 2019

Special Mention

June 30, 2020 September 30, 2019

Special Mention Substandard Special Mention Substandard

(Dollars in thousands)

One- to four-family:

Originated $ 10,611 $ 16,401 $ 12,941 $ 15,628

Correspondent purchased 1,667 5,168 2,349 2,785

2 unchanged sentences

Commercial and industrial 1,072 1,931 1,215 3,057

Home equity 318 534 280 696

Other — 30 2 24

$ 64,637 $ 32,358 $ 69,780 $ 29,956

The following table shows the weighted average credit score and weighted average LTV for one- to four-family loans and consumer home equity loans at the dates presented.

Borrower credit scores are intended to provide an indication as to the likelihood that a borrower will repay their debts.

Credit scores are updated at least annually, with the last update in September 2019, from a nationally recognized consumer rating agency.

Credit scores are updated at least annually, with the last update in June 2020, from a nationally recognized consumer rating agency.

The LTV ratios provide an estimate of the extent to which the Bank may incur a loss on any given loan that may go into foreclosure.

2 unchanged sentences

In most cases, the most recent appraisal was obtained at the time of origination.

March 31, 2020

September 30, 2019

June 30, 2020 September 30, 2019

Credit Score LTV Credit Score LTV

One- to four-family - originated 770 62 % 768 62 %

2 unchanged sentences

Consumer - home equity 755 19 754 19

768 62 766 62

Troubled Debt Restructurings ("TDRs") - The following tables present the recorded investment prior to restructuring and immediately after restructuring in all loans restructured during the periods presented.

1 unchanged sentence

Any increase in the recorded investment at the time of the restructuring was generally due to the capitalization of delinquent interest and/or escrow balances.

For the Three Months Ended

For the Six Months Ended

March 31, 2020

For the Three Months Ended For the Nine Months Ended

June 30, 2020 June 30, 2020

Number Pre- Post- Number Pre- Post-

of Restructured Restructured of Restructured Restructured

Contracts Outstanding Outstanding Contracts Outstanding Outstanding

(Dollars in thousands)

One- to four-family:

Originated — $ — $ — 5 $ 241 $ 242

Correspondent purchased — — — 1 192 191

2 unchanged sentences

Commercial and industrial — — — — — —

For the Three Months Ended

For the Six Months Ended

March 31, 2019

Home equity — — — 2 45 44

Other — — — — — —

— $ — $ — 10 $ 1,390 $ 1,448

For the Three Months Ended For the Nine Months Ended

June 30, 2019 June 30, 2019

Number Pre- Post- Number Pre- Post-

of Restructured Restructured of Restructured Restructured

Contracts Outstanding Outstanding Contracts Outstanding Outstanding

(Dollars in thousands)

One- to four-family:

Originated — $ — $ — 1 $ 117 $ 117

Correspondent purchased — — — — — —

2 unchanged sentences

Commercial and industrial — — — — — —

Home equity — — — — — —

Other — — — — — —

1 $ 69 $ 69 3 $ 494 $ 494

The following table provides information on TDRs that became delinquent during the periods presented within 12 months after being restructured.

For the Three Months Ended

For the Six Months Ended

March 31, 2020

March 31, 2019

March 31, 2020

March 31, 2019

For the Three Months Ended For the Nine Months Ended

June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019

Number of Recorded Number of Recorded Number of Recorded Number of Recorded

Contracts Investment Contracts Investment Contracts Investment Contracts Investment

(Dollars in thousands)

One- to four-family:

Originated — $ — — $ — 1 $ 38 1 $ 45

Correspondent purchased — — — — — — — —

2 unchanged sentences

Commercial and industrial — — — — — — — —

Home equity — — — — 1 9 — —

Other — — — — — — — —

— $ — — $ — 3 $ 181 1 $ 45

In late March 2020, the Bank announced loan modification programs to support and provide relief for its borrowers during the Coronavirus Disease 2019 ("COVID-19") pandemic.

Generally, loan modifications under these programs ("COVID-19 loan modifications") for one- to four-family loans and consumer loans consist of a three-month payment forbearance, with the deferred principal, interest, and escrow added to the loan payoff amount.

COVID-19 loan modifications of commercial loans mainly consist of up to a six-month interest-only payment period.

The COVID-19 loan modifications are not considered troubled debt restructurings per current GAAP, nor are the loans with payment forbearance reported as past due or placed on non-accrual status during the forbearance time period.

Generally, loan modifications under these programs ("COVID-19 loan modifications") for one- to four-family loans and consumer loans consist of a three-month payment forbearance of principal, interest, and in some cases, escrow.

COVID-19 loan modifications of commercial loans mainly consist of up to a six-month interest-only payment period, but an option for a three- to six-month forbearance of principal and interest was also available to our borrowers.

The COVID-19 loan modification programs are consistent with the Coronavirus Aid, Relief, and Economic Security ("CARES") Act or interagency guidance from the federal banking agencies on such programs, and the Company has followed such guidance when determining if a borrower's modification is subject to TDR classification.

If it is determined that the modification is not short-term, not related to financial hardship resulting from COVID-19, or the customer does not meet the criteria under the guidance to be excluded from TDR classification, the Company evaluates the loan modifications under its existing TDR framework.

Loans subject to forbearance under the COVID-19 loan modification program are not reported as past due or placed on nonaccrual status during the forbearance time period.

Impaired loans - The following information pertains to impaired loans, by class, as of the dates presented.

March 31, 2020

September 30, 2019

June 30, 2020 September 30, 2019

Unpaid Unpaid

Recorded Principal Related Recorded Principal Related

Investment Balance ACL Investment Balance ACL

(Dollars in thousands)

1 unchanged sentence

One- to four-family:

Originated $ 13,306 $ 13,781 $ — $ 14,683 $ 15,241 $ —

Correspondent purchased 1,951 2,054 — 1,763 1,868 —

2 unchanged sentences

Commercial and industrial 103 248 — 60 184 —

Home equity 289 393 — 345 462 —

Other — 35 — — 29 —

21,955 23,864 — 21,794 23,445 —

With an allowance recorded

One- to four-family:

Originated — — — — — —

Correspondent purchased — — — — — —

2 unchanged sentences

Commercial and industrial 1,771 1,770 240 — — —

Home equity — — — — — —

Other — — — — — —

1,771 1,770 240 — — —

One- to four-family:

Originated 13,306 13,781 — 14,683 15,241 —

Correspondent purchased 1,951 2,054 — 1,763 1,868 —

2 unchanged sentences

Commercial and industrial 1,874 2,018 240 60 184 —

Home equity 289 393 — 345 462 —

Other — 35 — — 29 —

$ 23,726 $ 25,634 $ 240 $ 21,794 $ 23,445 $ —

The following information pertains to impaired loans, by class, for the periods presented.

For the Three Months Ended

For the Six Months Ended

March 31, 2020

March 31, 2019

March 31, 2020

March 31, 2019

For the Three Months Ended For the Nine Months Ended

June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019

Average Interest Average Interest Average Interest Average Interest

Recorded Income Recorded Income Recorded Income Recorded Income

Investment Recognized Investment Recognized Investment Recognized Investment Recognized

(Dollars in thousands)

1 unchanged sentence

One- to four-family:

Originated $ 13,865 $ 150 $ 15,235 $ 163 $ 14,273 $ 472 $ 16,450 $ 515

Correspondent purchased 1,949 19 2,007 20 1,855 56 2,162 65

2 unchanged sentences

Commercial and industrial 26 — — — 24 — — —

Home equity 319 4 381 6 329 15 435 22

Other 1 — — — — — — —

21,791 224 22,737 237 21,885 700 24,397 736

With an allowance recorded

One- to four-family:

Originated — — — — — — — —

Correspondent purchased — — — — — — — —

2 unchanged sentences

Commercial and industrial 1,875 24 — — 1,440 78 — —

Home equity — — — — — — — —

Other — — — — — — — —

1,875 24 — — 1,440 78 — —

One- to four-family:

Originated 13,865 150 15,235 163 14,273 472 16,450 515

Correspondent purchased 1,949 19 2,007 20 1,855 56 2,162 65

2 unchanged sentences

Commercial and industrial 1,901 24 — — 1,464 78 — —

Allowance for Credit Losses - Management maintains an ACL to absorb inherent losses in the loan portfolio based on quarterly assessments of the loan portfolio.

Home equity 319 4 381 6 329 15 435 22

Other 1 — — — — — — —

$ 23,666 $ 248 $ 22,737 $ 237 $ 23,325 $ 778 $ 24,397 $ 736

Allowance for Credit Losses - The Bank maintains an ACL to absorb inherent losses in the loan portfolio based on quarterly assessments of the loan portfolio.

Each quarter a formula analysis model is prepared which segregates the loan portfolio into categories based on certain risk characteristics.

1 unchanged sentence

The factors are reviewed by management quarterly to assess whether the factors adequately cover probable and estimable losses inherent in the loan portfolio.

Due to the deterioration of economic conditions as a result of the COVID-19 pandemic, management increased some of the historical loss factors and qualitative factors in the formula analysis model to account for the increase in the estimated inherent losses in the loan portfolio at March 31, 2020 which accounts for the majority of the increase in the ACL during the current quarter.

If economic conditions continue to worsen and/or the current and future government programs do not provide adequate relief to borrowers, it is possible the Bank's ACL will need to increase in future periods.

The significant deterioration of economic conditions at March 31, 2020 due to the COVID-19 pandemic carried into the June 30, 2020 quarter.

The increase in the historical loss factors and qualitative factors due to the deterioration of economic conditions accounts for the majority of the increase in the ACL during the current fiscal year.

Management will continue to closely monitor economic conditions and will work with borrowers as necessary to assist them through this challenging economic climate.

If economic conditions worsen or do not improve in the near term, and if future government programs, if any, do not provide adequate relief to borrowers, it is possible the Bank's ACL will need to increase in future periods.

The following is a summary of ACL activity, by loan portfolio segment, for the periods presented, and the ending balance of ACL based on the Company's impairment methodology.

For the Three Months Ended March 31, 2020

For the Three Months Ended June 30, 2020

One- to Four-Family

Correspondent

Correspondent Bulk

Originated Purchased Purchased Total Commercial Consumer Total

(Dollars in thousands)

Beginning balance $ 6,467 $ 3,355 $ 557 $ 10,379 $ 20,328 $ 489 $ 31,196

Charge-offs — — — — — ( 5 ) ( 5 )

Recoveries — — — — 17 7 24

Provision for credit losses ( 121 ) ( 166 ) ( 51 ) ( 338 ) 359 ( 21 ) —

Ending balance $ 6,346 $ 3,189 $ 506 $ 10,041 $ 20,704 $ 470 $ 31,215

For the Six Months Ended March 31, 2020

For the Nine Months Ended June 30, 2020

One- to Four-Family

Correspondent

Correspondent Bulk

Originated Purchased Purchased Total Commercial Consumer Total

(Dollars in thousands)

Beginning balance $ 2,000 $ 1,203 $ 687 $ 3,890 $ 5,171 $ 165 $ 9,226

Charge-offs ( 64 ) — — ( 64 ) ( 349 ) ( 15 ) ( 428 )

Recoveries 3 — — 3 98 16 117

Provision for credit losses 4,407 1,986 ( 181 ) 6,212 15,784 304 22,300

Ending balance $ 6,346 $ 3,189 $ 506 $ 10,041 $ 20,704 $ 470 $ 31,215

For the Three Months Ended March 31, 2019

For the Three Months Ended June 30, 2019

One- to Four-Family

Correspondent

Correspondent Bulk

Originated Purchased Purchased Total Commercial Consumer Total

(Dollars in thousands)

Beginning balance $ 2,173 $ 1,392 $ 802 $ 4,367 $ 4,088 $ 164 $ 8,619

Charge-offs ( 45 ) — — ( 45 ) — ( 16 ) ( 61 )

Recoveries 3 — — 3 17 8 28

Provision for credit losses ( 95 ) ( 117 ) ( 60 ) ( 272 ) 727 ( 5 ) 450

Ending balance $ 2,036 $ 1,275 $ 742 $ 4,053 $ 4,832 $ 151 $ 9,036

For the Six Months Ended March 31, 2019

For the Nine Months Ended June 30, 2019

One- to Four-Family

Correspondent

Correspondent Bulk

Originated Purchased Purchased Total Commercial Consumer Total

(Dollars in thousands)

Beginning balance $ 2,953 $ 1,861 $ 925 $ 5,739 $ 2,556 $ 168 $ 8,463

Charge-offs ( 75 ) — ( 26 ) ( 101 ) — ( 28 ) ( 129 )

Recoveries 8 — 106 114 44 94 252

Provision for credit losses ( 850 ) ( 586 ) ( 263 ) ( 1,699 ) 2,232 ( 83 ) 450

1 unchanged sentence

The following is a summary of the loan portfolio and related ACL balances, at the dates presented, by loan portfolio segment disaggregated by the Company's impairment method.

March 31, 2020

June 30, 2020

One- to Four-Family

Correspondent

Correspondent Bulk

Originated Purchased Purchased Total Commercial Consumer Total

(Dollars in thousands)

2 unchanged sentences

Individually evaluated for impairment 13,306 1,951 4,573 19,830 3,607 289 23,726

$ 3,978,121 $ 2,297,635 $ 218,637 $ 6,494,393 $ 807,820 $ 117,092 $ 7,419,305

ACL for loans:

1 unchanged sentence

Individually evaluated for impairment — — — — 240 — 240

$ 6,346 $ 3,189 $ 506 $ 10,041 $ 20,704 $ 470 $ 31,215

September 30, 2019

One- to Four-Family

Correspondent

Correspondent Bulk

Originated Purchased Purchased Total Commercial Consumer Total

(Dollars in thousands)

2 unchanged sentences

Individually evaluated for impairment 14,683 1,763 4,943 21,389 60 345 21,794

$ 3,895,783 $ 2,381,414 $ 253,484 $ 6,530,681 $ 763,722 $ 131,570 $ 7,425,973

ACL for loans:

1 unchanged sentence

Individually evaluated for impairment — — — — — — —

$ 2,000 $ 1,203 $ 687 $ 3,890 $ 5,171 $ 165 $ 9,226

BORROWED FUNDS

FHLB Borrowings and Interest Rate Swaps - At March 31, 2020 and September 30, 2019 , the Bank had entered into interest rate swap agreements with a total notional amount of $ 640.0 million in order to hedge the variable cash flows associated with $ 640.0 million of adjustable-rate FHLB advances.

At March 31, 2020 and September 30, 2019 , the interest rate swap agreements had an average remaining term to maturity of 4.0 years and 4.5 years , respectively.

FHLB Borrowings and Interest Rate Swaps - At June 30, 2020 and September 30, 2019, the Bank had entered into interest rate swap agreements with a total notional amount of $ 640.0 million in order to hedge the variable cash flows associated with $ 640.0 million of adjustable-rate FHLB advances.

At June 30, 2020 and September 30, 2019, the interest rate swap agreements had an average remaining term to maturity of 3.8 years and 4.5 years, respectively.

The interest rate swaps were designated as cash flow hedges and involve the receipt of variable amounts from a counterparty in exchange for the Bank making fixed-rate payments over the life of the interest rate swap agreements.

At March 31, 2020 and September 30, 2019 , the interest rate swaps were in a loss position with a total fair value of $ 55.6 million and $ 33.1 million , respectively, which was reported in accounts payable and accrued expenses on the consolidated balance sheet.

During the three and six months ended March 31, 2020 , $ 983 thousand and $ 1.7 million , respectively, was reclassified from AOCI as an increase to interest expense.

During the three months ended March 31, 2019 , $ 100 thousand was reclassified from AOCI as a decrease to interest expense.

During the six months ended March 31, 2019 , $ 51 thousand was reclassified from AOCI as an increase to interest expense.

There was no hedge ineffectiveness recognized in the consolidated statements of income during any of these periods.

At March 31, 2020 , the Company estimated that $ 13.0 million of interest expense associated with the interest rate swaps will be reclassified from AOCI as an increase to interest expense on FHLB borrowings during the next 12 months.

At June 30, 2020 and September 30, 2019, the interest rate swaps were in a loss position with a total fair value of $ 57.1 million and $ 33.1 million, respectively, which was reported in accounts payable and accrued expenses on the consolidated balance sheet.

During the three and nine months ended June 30, 2020, $ 1.7 million and $ 3.4 million, respectively, was reclassified from AOCI as an increase to interest expense.

During the three and nine months ended June 30, 2019, $ 55 thousand and $ 106 thousand, respectively, was reclassified from AOCI as an increase to interest expense.

At June 30, 2020, the Company estimated that $ 15.4 million of interest expense associated with the interest rate swaps will be reclassified from AOCI as an increase to interest expense on FHLB borrowings during the next 12 months.

The Bank has minimum collateral posting thresholds with its derivative counterparties and posts collateral on a daily basis.

The Bank posted cash collateral of $ 56.3 million at March 31, 2020 and $ 33.3 million at September 30, 2019 .

During the current quarter, the Bank prepaid fixed-rate FHLB advances totaling $ 350.0 million with a weighted average contractual interest rate of 2.42 % and a weighted average remaining term of 1.0 years , and replaced these advances with $ 350.0 million of fixed-rate FHLB advances with a weighted average contractual interest rate of 1.43 % and a weighted average term of 4.7 years .

The Bank posted cash collateral of $ 58.0 million at June 30, 2020 and $ 33.3 million at September 30, 2019.

During the current nine month period, the Bank prepaid fixed-rate FHLB advances totaling $ 350.0 million with a weighted average contractual interest rate of 2.42 % and a weighted average remaining term of 1.0 years, and replaced these advances with $ 350.0 million of fixed-rate FHLB advances with a weighted average contractual interest rate of 1.43 % and a weighted average term of 4.7 years.

The Bank paid penalties totaling $ 4.2 million to FHLB as a result of prepaying the FHLB advances.

21 unchanged sentences

If the price provided by the independent source varies by more than a predetermined percentage from the price received from the third party pricing service, then the variance is researched by management.

The Company did not have to adjust prices obtained from the third party pricing service when determining the fair value of its securities during the six months ended March 31, 2020 or during fiscal year 2019.

The Company did not have to adjust prices obtained from the third party pricing service when determining the fair value of its securities during the nine months ended June 30, 2020 or during fiscal year 2019.

The Company's major security types, based on the nature and risks of the securities, are:

9 unchanged sentences

On a quarterly basis, management corroborates the estimated fair values by internally calculating the estimated fair value using a discounted cash flow analysis with independent observable market-based inputs from a third party.

No adjustments were made to the estimated fair values during the six months ended March 31, 2020 or during fiscal year 2019.

No adjustments were made to the estimated fair values during the nine months ended June 30, 2020 or during fiscal year 2019.

The following tables provide the level of valuation assumption used to determine the carrying value of the Company's financial instruments measured at fair value on a recurring basis at the dates presented.

The Company did not have any Level 3 financial instruments measured at fair value on a recurring basis at March 31, 2020 or September 30, 2019 .

March 31, 2020

Quoted Prices

in Active Markets

Other Observable

for Identical Assets

The Company did no t have any Level 3 financial instruments measured at fair value on a recurring basis at June 30, 2020 or September 30, 2019.

June 30, 2020

Quoted Prices Significant Significant

in Active Markets Other Observable Unobservable

Carrying for Identical Assets Inputs Inputs

Value (Level 1) (Level 2) (Level 3)

(Dollars in thousands)

AFS Securities:

MBS $ 982,587 $ — $ 982,587 $ —

GSE debentures 225,500 — 225,500 —

Municipal bonds 11,967 — 11,967 —

$ 1,220,054 $ — $ 1,220,054 $ —

Interest rate swaps $ 57,067 $ — $ 57,067 $ —

September 30, 2019

Quoted Prices

in Active Markets

Other Observable

for Identical Assets

Quoted Prices Significant Significant

in Active Markets Other Observable Unobservable

Carrying for Identical Assets Inputs Inputs

Value (Level 1) (Level 2) (Level 3)

(Dollars in thousands)

AFS Securities:

MBS $ 936,487 $ — $ 936,487 $ —

GSE debentures 249,954 — 249,954 —

Municipal bonds 18,422 — 18,422 —

$ 1,204,863 $ — $ 1,204,863 $ —

Interest rate swaps $ 33,090 $ — $ 33,090 $ —

The following is a description of valuation methodologies used for significant financial instruments measured at fair value on a non-recurring basis.

Loans Receivable - The fair value of impaired loans individually evaluated for impairment on a non-recurring basis during the six months ended March 31, 2020 and 2019 that were still held in the portfolio as of March 31, 2020 and 2019 was $ 4.9 million and $ 2.8 million , respectively.

Loans Receivable - The fair value of impaired loans individually evaluated for impairment on a non-recurring basis during the nine months ended June 30, 2020 and 2019 that were still held in the portfolio as of June 30, 2020 and 2019 was $ 6.0 million and $ 4.6 million, respectively.

The one- to four-family loans included in this amount were individually evaluated to determine if the carrying value of the loan was in excess of the fair value of the collateral, less estimated selling costs of 10 %.

1 unchanged sentence

Management does not adjust or apply a discount to the appraised value of one- to four-family loans, except for the estimated sales cost noted above, and the primary unobservable input for these loans was the appraisal.

For commercial loans, if the most recent appraisal or book value of the collateral does not reflect the current market conditions due to the passage of time and/or other factors, management will make adjustments to the existing appraised or book value based on knowledge of local market conditions, recent transactions, and estimated selling costs, if applicable.

For commercial loans, if the most recent appraisal or book value of the collateral does not reflect current market conditions due to the passage of time and/or other factors, management will make adjustments to the existing appraised or book value based on knowledge of local market conditions, recent transactions, and estimated selling costs, if applicable.

Adjustments to appraised or book values are generally based on assumptions not observable in the marketplace.

The primary significant unobservable inputs for

impaired commercial loans individually evaluated for impairment during the six months ended March 31, 2020 were downward adjustments to the book value of the collateral for lack of marketability.

The primary significant unobservable inputs for impaired

commercial loans individually evaluated for impairment during the nine months ended June 30, 2020 were downward adjustments to the book value of the collateral for lack of marketability.

The adjustments ranged from 4 % to 50 %, with a weighted average of 17 %.

There were no impaired commercial loans individually evaluated during the six months ended March 31, 2019 .

There were no impaired commercial loans individually evaluated during the nine months ended June 30, 2019.

Fair values of impaired loans individually evaluated for impairment cannot be determined with precision and may not be realized in an actual sale or immediate settlement of the loan and, as such, are classified as Level 3.

4 unchanged sentences

Fair values of foreclosed property cannot be determined with precision and may not be realized in an actual sale of the property and, as such, are classified as Level 3.

The fair value of OREO measured on a non-recurring basis during the six months ended March 31, 2020 and 2019 that was still held in the portfolio as of March 31, 2020 and 2019 was $ 183 thousand and $ 582 thousand , respectively.

The carrying value of the properties equaled the fair value of the properties at March 31, 2020 and 2019 .

Fair Value Disclosures - The Company determined estimated fair value amounts using available market information and a variety of valuation methodologies as of the dates presented.

The fair value of OREO measured on a non-recurring basis during the nine months ended June 30, 2020 and 2019 that was still held in the portfolio as of June 30, 2020 and 2019 was $ 183 thousand and $ 333 thousand, respectively.

The carrying value of the properties equaled the fair value of the properties at June 30, 2020 and 2019.

Fair Value Disclosures - The Company estimated fair value amounts using available market information and a variety of valuation methodologies as of the dates presented.

Considerable judgment is required to interpret market data to develop the estimates of fair value.

1 unchanged sentence

The carrying amounts and estimated fair values of the Company's financial instruments by fair value hierarchy, at the dates presented, were as follows:

March 31, 2020

Estimated Fair Value

June 30, 2020

Carrying Estimated Fair Value

Amount Total Level 1 Level 2 Level 3

(Dollars in thousands)

2 unchanged sentences

Loans receivable 7,388,090 7,845,259 — — 7,845,259

FHLB stock 102,782 102,782 102,782 — —

Deposits 6,069,684 6,155,296 3,036,524 3,118,772 —

Borrowings 1,989,089 2,042,101 — 2,042,101 —

Interest rate swaps 57,067 57,067 — 57,067 —

September 30, 2019

Estimated Fair Value

Carrying Estimated Fair Value

Amount Total Level 1 Level 2 Level 3

(Dollars in thousands)

2 unchanged sentences

Loans receivable 7,416,747 7,654,586 — — 7,654,586

FHLB stock 98,456 98,456 98,456 — —

Deposits 5,581,867 5,614,895 2,594,242 3,020,653 —

Borrowings 2,239,989 2,253,353 100,001 2,153,352 —

Interest rate swaps 33,090 33,090 — 33,090 —

1 unchanged sentence

The following tables present the changes in the components of AOCI, net of tax, for the periods indicated.

For the Three Months Ended March 31, 2020

Gains (Losses)

For the Three Months Ended June 30, 2020

Unrealized Unrealized

Gains (Losses) Gains (Losses)

on AFS on Cash Flow Total

Securities Hedges AOCI

(Dollars in thousands)

4 unchanged sentences

Ending balance $ 25,609 $ ( 43,200 ) $ ( 17,591 )

For the Six Months Ended March 31, 2020

Gains (Losses)

For the Nine Months Ended June 30, 2020

Unrealized Unrealized

Gains (Losses) Gains (Losses)

on AFS on Cash Flow Total

Securities Hedges AOCI

(Dollars in thousands)

4 unchanged sentences

Ending balance $ 25,609 $ ( 43,200 ) $ ( 17,591 )

For the Three Months Ended March 31, 2019

Gains (Losses)

For the Three Months Ended June 30, 2019

Unrealized Unrealized

Gains (Losses) Gains (Losses)

on AFS on Cash Flow Total

Securities Hedges AOCI

(Dollars in thousands)

4 unchanged sentences

Ending balance $ 7,700 $ ( 20,232 ) $ ( 12,532 )

For the Six Months Ended March 31, 2019

Gains (Losses)

For the Nine Months Ended June 30, 2019

Unrealized Unrealized

Gains (Losses) Gains (Losses)

on AFS on Cash Flow Total

Securities Hedges AOCI

(Dollars in thousands)

6 unchanged sentences

Details of the Company's primary types of non-interest income revenue streams by financial statement line item reported in the consolidated statements of income that are within the scope of ASC Topic 606 are below.

During the six months ended March 31, 2020 and 2019 , revenue from contracts with customers totaled $ 7.5 million and $ 8.1 million , respectively.

During the nine months ended June 30, 2020 and 2019, revenue from contracts with customers totaled $ 10.9 million and $ 12.4 million, respectively.

Deposit Service Fees

4 unchanged sentences

therefore, interchange transaction fee income is reported net of interchange network charges.

Interchange network charges totaled $ 1.6 million and $ 1.7 million for the six months ended March 31, 2020 and 2019 , respectively.

Interchange network charges totaled $ 2.4 million and $ 2.5 million for the nine months ended June 30, 2020 and 2019, respectively.

Service Charges on Deposit Accounts - Service charges on deposit accounts consist of account maintenance and transaction-based fees such as overdrafts, insufficient funds, wire transfers and the use of out-of-network ATMs.

13 unchanged sentences

These leases have remaining terms that range from one year to 47 years, some of which include the exercising of renewal options that the Company considers to be reasonably certain.

As of March 31, 2020 , a right-of-use asset of $ 15.1 million was included in other assets and a lease liability of $ 15.1 million was included in accounts payable and accrued expenses on the consolidated balance sheets.

As of March 31, 2020 , for the Company's operating leases, the weighted average remaining lease term was 23.3 years and the weighted average discount rate was 2.70 % .

The Company did not enter into any new lease obligations during the six months ended March 31, 2020 .

The following tables presents lease expenses and supplemental cash flow information related to the Company's leases for the periods presented.

For the Three Months Ended

For the Six Months Ended

March 31, 2020

As of June 30, 2020, a right-of-use asset of $ 15.5 million was included in other assets and a lease liability of $ 15.5 million was included in accounts payable and accrued expenses on the consolidated balance sheets.

As of June 30, 2020, for the Company's operating leases, the weighted average remaining lease term was 22.0 years and the weighted average discount rate was 2.59 %.

The following table presents lease expenses and supplemental cash flow information related to the Company's leases for the periods presented.

For the Three Months Ended For the Nine Months Ended

June 30, 2020 June 30, 2020

(Dollars in thousands)

3 unchanged sentences

Cash paid for amounts included in the measurement of lease liabilities 345 1,028

The following table presents future minimum payments, rounded to the nearest thousand, for operating leases with initial or remaining terms in excess of one year as of March 31, 2020 :

The following table presents future minimum payments, rounded to the nearest thousand, for operating leases with initial or remaining terms in excess of one year as of June 30, 2020:

Remainder of fiscal year 2020 $ 231

4 unchanged sentences

Fiscal year 2025 858

Thereafter 16,135

Total future minimum lease payments 22,179

4 unchanged sentences

As of September 30, 2019, future minimum rental commitments, rounded to the nearest thousand, required under operating leases that had initial or remaining non-cancelable lease terms in excess of one year were as follows:

Thereafter 1,115

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements