49 unchanged sentences
The following summary should be read in conjunction with the Management's Discussion and Analysis of Financial Condition and Results of Operations section in its entirety.
−Removed: Impact on Market Interest Rates as a Result of the COVID-19 Pandemic and the Company's Response
−Removed: The FRB, in response to economic risk resulting from the COVID-19 pandemic, returned to a zero-interest rate policy in March 2020.
−Removed: This was after most of the broader market interest rates decreased significantly in response to evolving news about the COVID-19 pandemic.
−Removed: Many areas of consumer spending have rebounded in recent months, but some segments, such as travel and entertainment, are lagging.
−Removed: We continue to work with both our retail and commercial customers to help them manage their debt during this period of economic uncertainty.
−Removed: There is uncertainty about the longer lasting impact on local business, as well as the travel and entertainment industries, resulting from the COVID-19 pandemic.
−Removed: This could cause a longer recovery time for some sectors of the economy and could make it challenging for sectors that have had better recoveries to maintain that recovery in the long run.
−Removed: Since the onset of the COVID-19 pandemic, the Bank has lowered its rates offered on all deposit products except retail checking and savings accounts.
−Removed: The impact of reducing rates offered on our certificate of deposit products has been to lower the cost of deposits as certificates of deposit reprice to a lower rate when they mature and as new accounts are opened.
−Removed: Additionally, certain borrowings were repaid or restructured over the past year using funds obtained through deposit growth, which reduced interest expense on borrowings.
−Removed: Over this time, we lowered rates for our loan products.
−Removed: In late February 2021, as market interest rates began to increase, we began to increase our offered loan rates in our market areas.
−Removed: Despite this recent increase, the yield on the loan portfolio will likely continue to decrease in the near term due to the high levels of prepayments, refinances and endorsements, but not at the same magnitude as the past year.
−Removed: With significant cash inflows realized due to investment securities being called and prepayments on loans and MBS over the past year and the current yields on reinvested funds into new securities being lower than existing portfolio yields, the yield on our investments has been reduced significantly.
−Removed: Summary of Results of Operation and Financial Condition
−Removed: During the six month period ended March 31, 2021, the Bank completed three unique transactions that impacted operating results.
−Removed: • Sold all its Visa Class B shares and recognized a gain of $7.4 million.
−Removed: • Terminated $200.0 million of fixed-pay interest rate swaps with an average cost at termination of 2.62% and realized a loss of $4.8 million.
−Removed: The estimated earn-back period of the loss is approximately 15 months.
−Removed: • Wrote down the value of a branch, which management intends to sell, by $1.2 million.
−Removed: The Company recognized net income of $39.3 million, or $0.29 per share, for the six month period ended March 31, 2021 compared to net income of $26.8 million, or $0.19 per share, for the six month period ended March 31, 2020.
+Added: The Company recognized net income of $57.5 million, or $0.42 per share, for the nine month period ended June 30, 2021 compared to net income of $46.3 million, or $0.34 per share, for the nine month period ended June 30, 2020.
The increase in net income was due primarily to recording a $22.3 million provision for credit losses during the prior year period compared to recording a negative provision for credit losses of $7.2 million in the current year period, partially offset by a decrease in net interest income and an increase in income tax expense.
Net interest income decreased $14.2 million, or 9.9%, from the prior year period to $129.5 million for the current year period.
−Removed: The net interest margin decreased 29 basis points, from 2.19% for the prior year period to 1.90% for the current year period.
+Added: Net interest margin decreased 27 basis points, from 2.15% for the prior year period to 1.88% for the current year period.
The decrease in net interest income and net interest margin was due mainly to a decrease in asset yields, along with a change in asset mix as cash flows from the loan portfolio have been used to purchase lower yielding securities, partially offset by a decrease in the cost of deposits and borrowings.
−Removed: Our net interest margin could continue to decrease if our interest-earning assets
−Removed: continue to reprice to lower market rates at a faster pace than our deposits and borrowings, and if we continue investing in lower yielding securities rather than reinvesting cash flows into the loan portfolio.
−Removed: Total assets at March 31, 2021 were $9.70 billion, an increase of $210.8 million, or 2.2% from September 30, 2020, due mainly to an increase in securities, partially offset by a decrease in loans receivable.
+Added: Total assets were $9.65 billion at June 30, 2021, an increase of $162.4 million, or 1.7% from September 30, 2020, due mainly to an increase in securities, partially offset by decreases in loans receivable and cash and cash equivalents.
Securities were purchased with cash flows from the loan portfolio and growth in the deposit portfolio that was not used to pay down maturing borrowings.
−Removed: Total securities increased $535.0 million, or 34.3%, from $1.56 billion at September 30, 2020 to $2.10 billion at March 31, 2021, including a $369.1 million increase in MBS and a $165.9 million increase in investment securities.
−Removed: Total loans at March 31, 2021 were $6.97 billion, a decrease of $229.3 million from September 30, 2020.
−Removed: The decrease was primarily in the one- to four-family correspondent loan portfolio as payoffs exceeded purchases.
−Removed: During the current year six month period, the Bank originated and refinanced $649.4 million of one- to four-family and consumer loans with a weighted average rate of 2.71% and purchased $269.1 million of one- to four-family loans from correspondent lenders with a weighted average rate of 2.70%.
+Added: Total securities increased $454.7 million, or 29.1%, from September 30, 2020 to June 30, 2021, including a $338.2 million increase in MBS and a $116.5 million increase in investment securities.
+Added: Total loans were $7.03 billion at June 30, 2021, a decrease of $169.0 million from September 30, 2020.
+Added: The decrease was primarily in the one- to four-family correspondent loan portfolio.
+Added: During the current year nine month period, the Bank originated and refinanced $948.6 million of one- to four-family and consumer loans with a weighted average rate of 2.75% and purchased $505.0 million of one- to four-family loans from correspondent lenders with a weighted average rate of 2.63%.
The Bank also originated $208.5 million of commercial loans with a weighted average rate of 3.30% and entered into commercial loan participations of $115.1 million at a weighted average rate of 4.17%.
−Removed: The commercial loan portfolio totaled $795.0 million at March 31, 2021 and was composed of 83% commercial real estate loans, 10% commercial and industrial loans, and 7% commercial construction loans.
−Removed: Total commercial real estate and commercial construction potential exposure, including undisbursed amounts and outstanding commitments totaling $258.2 million, was $976.0 million at March 31, 2021.
−Removed: Total commercial and industrial potential exposure, including undisbursed amounts and outstanding commitments of $23.1 million, was $100.3 million at March 31, 2021, of which $25.3 million related to PPP loans.
−Removed: Total deposits were $6.65 billion at March 31, 2021, an increase of $459.5 million, or 7.4%, from September 30, 2020.
−Removed: The increase was in non-maturity deposits, which increased $501.7 million, including a $241.1 million increase in checking accounts, a $183.4 million increase in money market accounts, and a $77.2 million increase in savings accounts.
−Removed: Retail/business certificates of deposit and public unit certificates of deposit decreased $36.1 million and $6.1 million, respectively, during the current year period.
−Removed: Total borrowings were $1.58 billion at March 31, 2021, a decrease of $207.4 million, or 11.6%, from September 30, 2020.
+Added: The commercial loan portfolio totaled $815.0 million at June 30, 2021 and was composed of 84% commercial real estate loans, 9% commercial and industrial loans, and 7% commercial construction loans.
+Added: Total commercial real estate and commercial construction potential exposure, including undisbursed amounts and outstanding commitments totaling $267.0 million, was $1.01 billion at June 30, 2021.
+Added: Total commercial and industrial potential exposure, including undisbursed amounts and outstanding commitments of $23.7 million, was $97.4 million at June 30, 2021, of which $18.3 million related to PPP loans.
+Added: Total deposits were $6.64 billion at June 30, 2021, an increase of $446.9 million, or 7.2%, from September 30, 2020.
+Added: The increase was primarily in non-maturity deposits, which increased $586.6 million, along with a $71.8 million increase in commercial certificates of deposit, partially offset by a $210.5 million decrease in retail certificates of deposit.
+Added: Total borrowings at June 30, 2021 were $1.58 billion, a decrease of $206.9 million, or 11.6%, from September 30, 2020.
The decrease was due to not renewing borrowings that matured during the current year period.
−Removed: Cash flows from the increase in the deposit portfolio were used to pay off maturing borrowings.
−Removed: Stockholders' equity was $1.28 billion at both March 31, 2021 and September 30, 2020.
−Removed: During the current year six month period, the Company paid cash dividends totaling $40.6 million and repurchased common stock totaling $1.5 million, partially offset by net income of $39.3 million.
−Removed: The cash dividends paid during the current year six month period totaled $0.30 per share and consisted of a $0.13 per share cash true-up dividend related to fiscal year 2020 earnings and two regular quarterly cash dividends of $0.085 per share.
−Removed: On April 20, 2021, the Company announced a regular quarterly cash dividend of $0.085 per share, or approximately $11.5 million, payable on May 21, 2021 to stockholders of record as of the close of business on May 7, 2021.
+Added: Cash flows from deposit growth were used to pay off maturing borrowings.
+Added: Stockholders' equity at June 30, 2021 was $1.24 billion, a decrease of $47.2 million, or 3.7%, from September 30, 2020.
+Added: During the current year nine month period, the Company paid cash dividends totaling $106.4 million and repurchased common stock totaling $1.5 million, partially offset by net income of $57.5 million.
+Added: The cash dividends paid during the current year nine month period totaled
+Added: $0.785 per share and consisted of a $0.40 per share True Blue Capitol cash dividend, a $0.13 per share cash true-up dividend related to fiscal year 2020 earnings and three regular quarterly cash dividends of $0.085 per share.
+Added: On July 20, 2021, the Company announced a regular quarterly cash dividend of $0.085 per share, or approximately $11.5 million, payable on August 20, 2021 to stockholders of record as of the close of business on August 6, 2021.
In the long run, management considers the Bank's equity to total assets ratio of at least 9% an appropriate level of capital.
−Removed: At March 31, 2021, this ratio was 12.0%.
−Removed: Transition from London Interbank Offered Rates ("LIBOR")
−Removed: LIBOR is used extensively in the United States as a reference rate for various financial contracts, including adjustable-rate loans, asset-backed securities, and interest rate swaps.
−Removed: In July 2017, the United Kingdom's Financial Conduct Authority, which regulates LIBOR, announced that it intends to stop persuading or compelling banks to submit LIBOR rates.
−Removed: The availability of three-month, six-month and one-year LIBOR rates is currently expected to cease in June 2023.
−Removed: As of March 31, 2021, the Company has identified $375.6 million of adjustable-rate one- to four-family loans in its portfolio for which the repricing index was tied to six-month or one-year LIBOR and the loan maturity date is after June 30, 2023.
−Removed: Our one- to four-family loan agreements generally allow the Bank to choose a new alternative reference rate based upon comparable information if the current index is no longer available.
−Removed: During the June 30, 2019 quarter, the Bank discontinued the use of LIBOR for the origination of adjustable-rate one- to four-family loans and no longer purchases correspondent one- to four-family loans that use LIBOR.
−Removed: The Bank began using the one-year Constant Maturity Treasury ("CMT") index for newly originated and correspondent purchased one- to four-family adjustable-rate loans, and currently plans to replace LIBOR with the one-year CMT index for existing loans when LIBOR is no longer available.
−Removed: At March 31, 2021, none of the Bank's consumer or commercial loans use a repricing index tied to LIBOR.
−Removed: The Bank has interest rate swaps with a notional amount of $440.0 million at March 31, 2021 that are tied to three-month LIBOR.
−Removed: The related FHLB advances for which the adjustable-rate cash flows are being hedged by these interest rate swaps are also tied to the three-month LIBOR.
−Removed: All of the advances tied to the interest rate swaps mature during calendar year 2021.
−Removed: The Bank intends to replace the advances at maturity with advances tied to the Secured Overnight Finance Rate ("SOFR").
−Removed: Additionally, the Bank intends to work with the interest rate swap counterparties to replace LIBOR with SOFR at the same time.
+Added: At June 30, 2021, this ratio was 11.5%.
Available Information
44 unchanged sentences
Changes in the fair value of the interest rate swaps are recorded, net of tax, as AOCI in stockholders' equity.
−Removed: The Company did not have any other financial instruments that were measured at fair value on a recurring basis at March 31, 2021 and September 30, 2020.
+Added: The Company did not have any other financial instruments that were measured at fair value on a recurring basis at June 30, 2021 or September 30, 2020.
Financial Condition
The following table presents selected balance sheet information as of the dates indicated.
−Removed: March 31, December 31, September 30, June 30, March 31,
+Added: June 30, March 31, December 31, September 30, June 30,
2021 2021 2020 2020 2020
9 unchanged sentences
Equity to total assets at end of period 12.8 % 13.2 % 13.3 % 13.5 % 13.6 %
−Removed: Total assets were $9.70 billion at March 31, 2021, an increase of $91.1 million, or 0.9%, from December 31, 2020, due to an increase in securities, partially offset by a decrease in loans receivable and cash and cash equivalents.
−Removed: Excess operating cash and cash flows from the loan portfolio and funds from deposit growth were generally used to purchase securities during the current quarter.
−Removed: Total loans were $6.97 billion at March 31, 2021, a decrease of $30.6 million, or 0.4%, from December 31, 2020.
−Removed: The decrease was mainly in the one- to four-family correspondent loan portfolio as payoffs exceeded purchases during the current quarter.
+Added: Total assets were $9.65 billion at June 30, 2021, a decrease of $48.4 million, or 0.5%, from March 31, 2021, due primarily to decreases in securities and cash, partially offset by an increase in loans receivable.
+Added: The Company paid $65.7 million in dividends during the current quarter which reduced excess operating cash.
+Added: Cash flows from the securities portfolio were generally used to fund loan growth during the current quarter.
+Added: Total loans were $7.03 billion at June 30, 2021, an increase of $60.3 million, or 0.9%, from March 31, 2021.
+Added: The increase was mainly in the one- to four-family correspondent loan portfolio and commercial real estate portfolio.
During the current quarter, the Bank originated and refinanced $299.2 million of one- to four-family and consumer loans with a weighted average rate of 2.85% and purchased $235.8 million of one- to four-family loans from correspondent lenders with a weighted average rate of 2.54%.
−Removed: The Bank also originated $119.2 million of commercial loans with a weighted average rate of 3.07% and entered into commercial loan participations of $38.1 million at a weighted rate of 3.62%.
−Removed: The Bank endorsed $285.2 million of loans during the December 31, 2020 quarter, reducing the average rate on those loans by 87 basis points, and $242.3 million of loans during the March 31, 2021 quarter, reducing the average rate on those loans by 96 basis points.
−Removed: Total deposits were $6.65 billion at March 31, 2021, an increase of $240.0 million, or 3.7%, from December 31, 2020.
−Removed: The increase was primarily in non-maturity deposits, including a $113.8 million increase in money market accounts and a $110.0 million increase in checking accounts.
−Removed: Between mid-March 2021 and March 31, 2021, the Bank processed approximately $113 million of Economic Impact Payments, the majority of which were retained by the Bank as of March 31, 2021.
−Removed: Retail/business certificates of deposit decreased $47.6 million from December 31, 2020.
−Removed: Customers moved some of the funds from maturing certificates to more liquid investment options such as the Bank's retail money market accounts.
−Removed: Total borrowings decreased $152.3 million, or 8.8%, from December 31, 2020 to March 31, 2021.
−Removed: The decrease was due to not renewing borrowings that matured during the current quarter.
−Removed: Cash flows from the increase in the deposit portfolio were used to pay off maturing borrowings.
−Removed: Stockholders' equity was $1.28 billion at both March 31, 2021 and December 31, 2020.
−Removed: During the current quarter, net income totaled $20.4 million, offset by the payment of cash dividends totaling $11.5 million and a decrease in AOCI of $7.6 million.
+Added: The Bank also originated $51.2 million of commercial loans with a weighted average rate of 3.48% and entered into commercial loan participations of $17.0 million at a weighted average rate of 6.00%.
+Added: Total deposits were $6.64 billion at June 30, 2021, a decrease of $12.6 million, or 0.2%, from March 31, 2021.
+Added: The decrease was due primarily to a $100.0 million decrease in retail certificates of deposit, partially offset by an $85.8 million increase in money market accounts, as customers moved some of the funds from maturing certificates to more liquid investment options such as the Bank's retail money market accounts.
Loans Receivable.
The following table presents the balance and weighted average rate of our loan portfolio as of the dates indicated.
−Removed: March 31, 2021 December 31, 2020 September 30, 2020
+Added: June 30, 2021 March 31, 2021 September 30, 2020
Amount Rate Amount Rate Amount Rate
23 unchanged sentences
The endorsed balance and rate are included in the ending loan portfolio balance and rate.
−Removed: During the current year-to-date period, the Bank endorsed $527.5 million of one- to four-family loans, reducing the average rate on those loans by 91 basis points ($285.2 million were endorsed during the December 31, 2020 quarter, reducing the average rate on those loans by 87 basis points, and $242.3 million were endorsed during the March 31, 2021 quarter, reducing the average rate on those loans by 96 basis points).
+Added: During the current year-to-date period, the Bank endorsed $699.2 million of one- to four-family loans, reducing the average rate on those loans by 93 basis points ($285.2 million were endorsed during the December 31, 2020 quarter, reducing the average rate on those loans by 87 basis points, $242.3 million were endorsed during the March 31, 2021 quarter, reducing the average rate on those loans by 96 basis points, and $171.7 million were endorsed during the June 30, 2021 quarter, reducing the average rate on those loans by 98 basis points).
Commercial loan renewals are not included in the activity in the following table unless new funds are disbursed at the time of renewal.
1 unchanged sentence
For the Three Months Ended
−Removed: March 31, 2021 December 31, 2020 September 30, 2020 June 30, 2020
+Added: June 30, 2021 March 31, 2021 December 31, 2020 September 30, 2020
Amount Rate Amount Rate Amount Rate Amount Rate
9 unchanged sentences
Repayments (511,222) (606,937) (664,052) (572,536)
−Removed: Principal (charge-offs)/recoveries, net (70) (464) 312 19
+Added: Principal recoveries/(charge-offs), net 52 (70) (464) 312
+Added: Other (72) — — —
Ending balance $ 7,051,625 3.26 $ 6,993,159 3.34 $ 7,023,626 3.46 $ 7,224,996 3.55
−Removed: For the Six Months Ended
−Removed: March 31, 2021 March 31, 2020
+Added: For the Nine Months Ended
+Added: June 30, 2021 June 30, 2020
Amount Rate Amount Rate
16 unchanged sentences
For the Three Months Ended
−Removed: March 31, 2021 March 31, 2020
+Added: June 30, 2021 June 30, 2020
Amount Rate % of Total Amount Rate % of Total
31 unchanged sentences
Total purchased/participation loans $ 252,834 2.77 $ 194,249 3.44
−Removed: For the Six Months Ended
−Removed: March 31, 2021 March 31, 2020
+Added: For the Nine Months Ended
+Added: June 30, 2021 June 30, 2020
Amount Rate % of Total Amount Rate % of Total
37 unchanged sentences
In most cases, the most recent appraisal was obtained at the time of origination.
−Removed: March 31, 2021 September 30, 2020
+Added: June 30, 2021 September 30, 2020
% of Credit Average % of Credit Average
7 unchanged sentences
Included in the "Refinanced by Bank customers" line item are correspondent loans that were refinanced with the Bank.
−Removed: Of the loans originated during the current year six-month period, $209.3 million were refinanced from other lenders.
+Added: Of the loans originated during the current year nine month period, $287.8 million were refinanced from other lenders.
For the Three Months Ended
−Removed: March 31, 2021 March 31, 2020
+Added: June 30, 2021 June 30, 2020
Credit Credit
5 unchanged sentences
$ 516,993 70 769 $ 385,071 71 766
−Removed: For the Six Months Ended
−Removed: March 31, 2021 March 31, 2020
+Added: For the Nine Months Ended
+Added: June 30, 2021 June 30, 2020
Credit Credit
6 unchanged sentences
The following table presents the amount, percent of total, and weighted average rate, by state, of one- to four-family loan originations and correspondent purchases where originations and purchases in the state exceeded five percent of the total amount originated and purchased during the current year period.
−Removed: For the Three Months Ended For the Six Months Ended
−Removed: March 31, 2021 March 31, 2021
+Added: For the Three Months Ended For the Nine Months Ended
+Added: June 30, 2021 June 30, 2021
State Amount % of Total Rate Amount % of Total Rate
3 unchanged sentences
Texas 54,766 10.6 2.50 105,370 7.5 2.61
−Removed: Tennessee 32,066 6.8 2.64 48,929 5.5 2.73
Pennsylvania 44,959 8.7 2.50 89,420 6.4 2.54
+Added: Tennessee 29,063 5.6 2.53 77,992 5.5 2.65
Other states 71,137 13.8 2.53 129,550 9.2 2.61
$ 516,993 100.0 % 2.65 $ 1,406,441 100.0 % 2.65
−Removed: As of March 31, 2021, there were $7.8 million of one- to-four family loans with COVID-19 loan modifications that were still in their deferral period.
−Removed: There were $208.9 million of one- to four-family loans with COVID-19 loan modifications that were out of their deferral period by March 31, 2021.
+Added: As of June 30, 2021, there were $5.3 million of one- to-four family loans with COVID-19 loan modifications that were still in their deferral period.
+Added: There were $195.5 million of one- to four-family loans with COVID-19 loan modifications that were out of their deferral period by June 30, 2021.
See "Asset Quality" below for additional information regarding the performance of loans that have exited the deferral period.
−Removed: One- to Four-Family Loan Commitments - The following table summarizes our one- to four-family loan origination and refinance commitments and one- to four-family correspondent loan purchase commitments as of March 31, 2021, along with associated weighted average rates.
+Added: One- to Four-Family Loan Commitments - The following table summarizes our one- to four-family loan origination and refinance commitments and one- to four-family correspondent loan purchase commitments as of June 30, 2021, along with associated weighted average rates.
Loan commitments generally have fixed expiration dates or other termination clauses and may require the payment of a rate lock fee.
7 unchanged sentences
Rate 2.25 % 2.82 % 2.52 %
−Removed: Commercial Loans - During the current year six month period, the Bank originated $157.3 million of commercial loans, including $19.5 million of PPP loans, and entered into commercial loan participations totaling $98.1 million.
+Added: Commercial Loans - During the current year nine-month period, the Bank originated $208.5 million of commercial loans, including $22.8 million of PPP loans, and entered into commercial loan participations totaling $115.1 million.
The Bank also processed commercial loan disbursements, excluding lines of credit, of approximately $208.7 million at a weighted average rate of 3.45%.
−Removed: Additionally, during the current year, $39.0 million of PPP loans were paid off, primarily by the U.S.
+Added: Additionally, during the current year nine-month period, $48.3 million of PPP loans were paid off, primarily by the U.S.
Small Business Administration ("SBA") following completion of the loan forgiveness process.
−Removed: The following table presents the Bank's commercial real estate and commercial construction loans and loan commitments by type of primary collateral, as of March 31, 2021.
+Added: The following table presents the Bank's commercial real estate and commercial construction loans and loan commitments by type of primary collateral, as of June 30, 2021.
Because the commitments to pay out undisbursed funds are not cancellable by the Bank, unless the loan is in default, we generally anticipate fully funding the related projects.
3 unchanged sentences
Senior housing 34 $ 221,351 $ 43,271 $ 264,622 $ 2,200 $ 266,822 26.5 %
−Removed: Retail building 133 133,738 44,808 178,546 18,868 197,414 20.2
Hotel 10 135,255 59,887 195,142 — 195,142 19.3
+Added: Retail building 130 149,313 43,123 192,436 750 193,186 19.2
Office building 95 51,200 60,462 111,662 520 112,182 11.1
−Removed: One- to four-family property 367 58,613 5,170 63,783 250 64,033 6.6
Multi-family 42 52,642 13,431 66,073 14,583 80,656 8.0
+Added: One- to four-family property 379 58,298 7,587 65,885 618 66,503 6.6
Single use building 23 42,383 4,927 47,310 9,005 56,315 5.6
2 unchanged sentences
Weighted average rate 4.00 % 4.03 % 4.01 % 4.15 % 4.01 %
−Removed: The following table summarizes the Bank's commercial real estate and commercial construction loans and loan commitments by state as of March 31, 2021.
+Added: The following table summarizes the Bank's commercial real estate and commercial construction loans and loan commitments by state as of June 30, 2021.
Unpaid Undisbursed Gross Loan Outstanding % of
9 unchanged sentences
813 $ 741,278 $ 236,598 $ 977,876 $ 30,353 $ 1,008,229 100.0 %
−Removed: The following table presents the Bank's commercial and industrial loans and loan commitments by business purpose, as of March 31, 2021.
−Removed: Included in the working capital loan category are $25.3 million of PPP loans.
+Added: The following table presents the Bank's commercial and industrial loans and loan commitments by business purpose, as of June 30, 2021.
+Added: Included in the working capital line item are $18.3 million of PPP loans.
Unpaid Undisbursed Gross Loan Outstanding % of
2 unchanged sentences
Working capital 529 $ 29,483 $ 17,140 $ 46,623 $ — $ 46,623 47.9 %
−Removed: Equipment 118 13,815 245 14,060 1,882 15,942 15.9
Purchase/lease autos 249 17,153 49 17,202 — 17,202 17.6
+Added: Equipment 116 13,161 406 13,567 1,424 14,991 15.4
Business investment 57 7,350 214 7,564 450 8,014 8.2
1 unchanged sentence
977 $ 73,713 $ 21,826 $ 95,539 $ 1,874 $ 97,413 100.0 %
−Removed: The following table presents the Bank's commercial loan portfolio and outstanding loan commitments, categorized by gross loan amount (unpaid principal plus undisbursed amounts) or outstanding loan commitment amount, as of March 31, 2021.
+Added: The following table presents the Bank's commercial loan portfolio and outstanding loan commitments, categorized by gross loan amount (unpaid principal plus undisbursed amounts) or outstanding loan commitment amount, as of June 30, 2021.
(Dollars in thousands)
6 unchanged sentences
1,790 $ 1,105,642
−Removed: The Bank's commercial lending team continues to proactively work with our commercial customers as the COVID-19 pandemic continues to present challenging operating conditions.
−Removed: As of March 31, 2021, there were commercial loans with a gross balance, including undisbursed amounts, totaling $134.0 million with COVID-19 loan modifications that were still in their deferral period.
−Removed: There were $270.7 million of commercial loans with COVID-19 loan modifications that were out of their deferral period by March 31, 2021.
+Added: As of June 30, 2021, there were commercial loans with an aggregate gross balance, including undisbursed amounts, of $133.9 million with COVID-19 loan modifications that were still in their deferral period and making interest-only payments.
+Added: There were $261.9 million of commercial loans with COVID-19 loan modifications that were out of their deferral period by June 30, 2021.
See "Asset Quality" below for additional information regarding the performance of loans that have exited the deferral period.
7 unchanged sentences
Business - Lending Practices and Underwriting Standards" in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2020.
−Removed: Delinquent and non-performing loans and OREO - Of the one- to four-family COVID-19 loan modifications that had completed the deferral period by March 31, 2021, $2.3 million were 30 to 89 days delinquent and $1.8 million were 90 or more days delinquent as of March 31, 2021.
−Removed: Of the commercial COVID-19 loan modifications that had completed the deferral period by March 31, 2021, one loan for $150 thousand was 30 to 89 days delinquent and none were 90 or more days delinquent as of March 31, 2021.
+Added: Delinquent and non-performing loans and OREO - Of the one- to four-family COVID-19 loan modifications that had completed the deferral period by June 30, 2021, $4.4 million were 30 to 89 days delinquent and $2.1 million were 90 or more days delinquent as of June 30, 2021.
+Added: None of the commercial COVID-19 loan modifications that had completed the deferral period by June 30, 2021 were delinquent as of June 30, 2021.
The following table presents the Company's 30 to 89 day delinquent loans at the dates indicated.
Loans subject to payment forbearance under the Bank's COVID-19 loan modification program are not reported as delinquent during the forbearance time period.
−Removed: The amounts in the table represent the unpaid principal balance of the loans less related charge-offs.
−Removed: Of the loans 30 to 89 days delinquent at March 31, 2021, approximately 74% were 59 days or less delinquent.
+Added: The amounts in the table represent the unpaid principal balance of the loans less related charge-offs, if any.
+Added: Of the loans 30 to 89 days delinquent at June 30, 2021, approximately 78% were 59 days or less delinquent.
Loans Delinquent for 30 to 89 Days at:
−Removed: March 31, December 31, September 30, June 30, March 31,
+Added: June 30, March 31, December 31, September 30, June 30,
2021 2021 2020 2020 2020
11 unchanged sentences
The following table presents the Company's non-performing loans and OREO at the dates indicated.
−Removed: The amounts in the table represent the unpaid principal balance of the loans less related charge-offs.
+Added: The amounts in the table represent the unpaid principal balance of the loans less related charge-offs, if any.
Non-performing loans are loans that are 90 or more days delinquent or in foreclosure and other loans required to be reported as nonaccrual pursuant to accounting and/or regulatory reporting requirements and/or internal policies, even if the loans are current.
3 unchanged sentences
In late March 2020, the Bank suspended the initiation of foreclosure proceedings for owner-occupied one- to four-family loans.
−Removed: At March 31, 2021, there were approximately $8.8 million of non-performing one- to four-family loans for which foreclosure proceedings either had been initiated prior to the foreclosure suspension or may have been initiated if the foreclosure suspension had not been in place.
+Added: At June 30, 2021, there were $7.8 million of non-performing one- to four-family loans for which foreclosure proceedings either had been initiated prior to the foreclosure suspension or would have been initiated if the foreclosure suspension were not in place.
Non-Performing Loans and OREO at:
−Removed: March 31, December 31, September 30, June 30, March 31,
+Added: June 30, March 31, December 31, September 30, June 30,
2021 2021 2020 2020 2020
28 unchanged sentences
(2) Real estate-related consumer loans where we also hold the first mortgage are included in the one- to four-family category as the underlying collateral is one- to four-family property.
−Removed: The following table presents the states where the properties securing five percent or more of the total amount of our one- to four-family loans are located and the corresponding balance of loans 30 to 89 days delinquent, 90 or more days delinquent or in foreclosure, and weighted average LTV ratios for loans 90 or more days delinquent or in foreclosure at March 31, 2021.
+Added: The following table presents the states where the properties securing five percent or more of the total amount of our one- to four-family loans are located and the corresponding balance of loans 30 to 89 days delinquent, 90 or more days delinquent or in foreclosure, and weighted average LTV ratios for loans 90 or more days delinquent or in foreclosure at June 30, 2021.
The LTV ratios were based on the current loan balance and either the lesser of the purchase price or original appraisal, or the most recent Bank appraisal, if available.
−Removed: At March 31, 2021, potential losses, after taking into consideration anticipated private mortgage insurance proceeds and estimated selling costs, have been charged-off.
+Added: At June 30, 2021, potential losses, after taking into consideration anticipated private mortgage insurance proceeds and estimated selling costs, have been charged-off.
Loans 30 to 89 Loans 90 or More Days Delinquent
8 unchanged sentences
Classified loans - The following table presents loans classified as special mention or substandard at the dates presented.
−Removed: The increase in commercial special mention loans at March 31, 2021 compared to September 30, 2020 was due mainly to the addition of two commercial loans totaling $50.7 million for which the borrowers have been impacted by the COVID-19 pandemic.
+Added: The amounts in the table represent the unpaid principal balance of the loans less related charge-offs, if any.
+Added: The increase in commercial special mention loans at June 30, 2021 compared to September 30, 2020 was due mainly to the addition of two commercial loans totaling $50.0 million for which the borrowers have been impacted by the COVID-19 pandemic.
Both of these loans were subject to COVID-19 loan modifications during fiscal year 2020 and have since resumed full payments.
−Removed: There are underlying economic conditions that management is monitoring in association with these loans resulting in the special mention classification.
−Removed: March 31, 2021 September 30, 2020 March 31, 2020
+Added: There are underlying economic considerations that management is monitoring in association with these loans resulting in the special mention classification.
+Added: June 30, 2021 September 30, 2020 June 30, 2020
Special Mention Substandard Special Mention Substandard Special Mention Substandard
10 unchanged sentences
The Bank is utilizing a discounted cash flow approach for estimating expected credit losses for pooled loans and loan commitments.
−Removed: The credit loss estimate for off-balance sheet credit exposures also takes into consideration the likelihood that the commitment will fund.
+Added: The credit loss estimate for off-balance sheet credit exposures also takes into consideration the likelihood that the commitment will be funded.
The economic indices used for the reasonable and supportable forecasted time period are the national unemployment rate, changes in commercial real estate price index, changes in home values, and changes in the United States gross domestic product.
−Removed: Management considers several economic forecast scenarios provided by a third party and selects the scenario believed to be the most appropriate considering the facts and circumstances at quarter end.
+Added: Management considers several economic forecast scenarios provided by a third party and selects the scenario(s) believed to be the most appropriate considering the facts and circumstances at quarter end.
Management also considers several qualitative factors.
1 unchanged sentence
Any changes to the ACL and reserves on off-balance sheet credit exposures are recorded through increases/decreases in the provision for credit losses on the consolidated statements of income.
−Removed: The economic forecast scenario selected by management improved at March 31, 2021 compared to December 31, 2020 which resulted in a reduction in the ACL and reserve for off-balance sheet credit exposures calculated by the model.
−Removed: Management applied qualitative factors to account for the continued economic uncertainties, along with the balance and trending of large-dollar special mention
−Removed: commercial loans.
−Removed: These qualitative factors partially offset the reduction in the ACL related to the improvement in the economic forecast.
−Removed: The economic uncertainties related to (1) the job market, specifically the unemployment rate, labor participation rate and the effectiveness of the latest federal stimulus package to the unemployed and the economic stimulus payments to qualifying households, (2) the unevenness of the recovery in certain industries, and (3) the impact to the housing market as a result of the foreclosure moratorium and how the housing market may react when the foreclosure moratorium is eventually lifted.
−Removed: Management will continue to closely monitor economic conditions and will work with borrowers as necessary to assist them through this challenging economic climate.
−Removed: The following table presents a summary of changes in ACL and reserve for off-balance sheet credit exposures occurring during the quarter ended March 31, 2021.
+Added: The economic forecast scenarios selected by management improved at June 30, 2021 compared to March 31, 2021 which resulted in a reduction in the ACL calculated by the model.
+Added: Management applied qualitative factors at both June 30, 2021 and March 31, 2021 to account for the continued economic uncertainties, along with the balance and trending of large-dollar special mention commercial
+Added: The total ACL amount assigned to these qualitative factors also decreased at June 30, 2021 compared to March 31, 2021.
+Added: The economic uncertainties were related to (1) the job market, specifically the unemployment rate, labor participation rate and the effectiveness of the latest federal stimulus package to the unemployed and the economic stimulus payments to qualifying households, (2) the impact to the housing market as a result of the foreclosure moratorium and how the housing market may react when the foreclosure moratorium is eventually lifted, and (3) the unevenness of the recovery in certain industries.
+Added: The following table presents a summary of changes in ACL and reserve for off-balance sheet credit exposures occurring during the quarter ended June 30, 2021.
ACL Reserve for off-balance sheet credit exposures ACL and Reserve for off-balance sheet credit exposures
(Dollars in thousands)
−Removed: Balance at December 31, 2020 $ 26,125 $ 6,433 $ 32,558
+Added: Balance at March 31, 2021 $ 23,397 $ 6,127 $ 29,524
Charge-offs (19) — (19)
2 unchanged sentences
Provision for credit losses (2,725) 34 (2,691)
−Removed: Balance at March 31, 2021 $ 23,397 $ 6,127 $ 29,524
−Removed: The negative provision for credit losses was due primarily to a reduction in commercial loan ACL and reserves for off-balance sheet credit exposures as a result of improvements in the economic forecast used in the model, partially offset by an increase in qualitative factors, primarily the economic uncertainty qualitative factor, as discussed above.
−Removed: The gross balance of off-balance sheet credit exposures was $907.2 million as of March 31, 2021 and $688.0 million as of October 1, 2020.
+Added: Balance at June 30, 2021 $ 20,724 $ 6,161 $ 26,885
+Added: The negative provision for credit losses in the current quarter was due primarily to a reduction in the commercial loan ACL related to a decrease in the commercial loan economic uncertainty qualitative factor due to improved economic conditions compared to March 31, 2021.
The following tables present ACL activity and related ratios at the dates and for the periods indicated.
1 unchanged sentence
For the Three Months Ended
−Removed: March 31, 2021 December 31, 2020 September 30, 2020 June 30, 2020 March 31, 2020
+Added: June 30, 2021 March 31, 2021 December 31, 2020 September 30, 2020 June 30, 2020
(Dollars in thousands)
11 unchanged sentences
period to average non-performing assets (0.35) 0.47 3.44 (2.70) (0.20)
−Removed: ACL to net charge-offs (annualized) 83.8x 14.1x N/M (1)
−Removed: For the Six Months Ended
−Removed: March 31, 2021 March 31, 2020
+Added: ACL to net charge-offs (annualized) N/M (1)
+Added: 83.8x 14.1x N/M (1)
+Added: For the Nine Months Ended
+Added: June 30, 2021 June 30, 2020
(Dollars in thousands)
13 unchanged sentences
The October 1, 2020 column represents the ACL at the time the Company adopted ASU 2016-13.
−Removed: March 31, December 31, October 1, September 30, June 30, March 31,
+Added: June 30, March 31, December 31, October 1, September 30, June 30,
2021 2021 2020 2020 2020 2020
13 unchanged sentences
The ratio of ACL to loans receivable, by loan type, at the dates indicated is summarized below.
−Removed: March 31, December 31, October 1, September 30, June 30, March 31,
+Added: June 30, March 31, December 31, October 1, September 30, June 30,
2021 2021 2020 2020 2020 2020
14 unchanged sentences
Prior to October 1, 2020, no such reserve had been recorded.
−Removed: March 31, December 31, October 1,
+Added: June 30, March 31, December 31, October 1,
2021 2021 2020 2020
4 unchanged sentences
$ 6,161 $ 6,127 $ 6,433 $ 7,788
−Removed: Securities increased $535.0 million, or 34.3%, from September 30, 2020 to March 31, 2021, including a $369.1 million increase in MBS and a $165.9 million increase in investment securities.
−Removed: The weighted average yield on the securities portfolio decreased 34 basis points, from 1.62% at September 30, 2020 to 1.28% at March 31, 2021, due primarily to purchases at lower market yields.
+Added: Securities increased $454.7 million, or 29.1%, from September 30, 2020, composed of a $338.2 million increase in MBS and a $116.5 million increase in investment securities.
+Added: The weighted average yield on the securities portfolio decreased 38 basis points, from 1.62% at September 30, 2020 to 1.24% at June 30, 2021, due primarily to purchases at lower market yields.
The following table presents the distribution of our securities portfolio, at amortized cost, at the dates indicated.
−Removed: Overall, fixed-rate securities comprised 93% of our securities portfolio at March 31, 2021.
+Added: Overall, fixed-rate securities comprised 93% of our securities portfolio at June 30, 2021.
The weighted average life ("WAL") is the estimated remaining maturity (in years) after three-month historical prepayment speeds and projected call option assumptions have been applied.
Weighted average yields on tax-exempt securities are not calculated on a fully taxable equivalent basis.
−Removed: March 31, 2021 December 31, 2020 September 30, 2020
+Added: June 30, 2021 March 31, 2021 September 30, 2020
Amount Yield WAL Amount Yield WAL Amount Yield WAL
9 unchanged sentences
The following table presents the carrying value of MBS in our portfolio by issuer at the dates presented.
−Removed: March 31, 2021 December 31, 2020 September 30, 2020
+Added: June 30, 2021 March 31, 2021 September 30, 2020
(Dollars in thousands)
4 unchanged sentences
Mortgage-Backed Securities - The balance of MBS, which primarily consists of securities of U.S.
−Removed: GSEs, increased $369.1 million, from $1.18 billion at September 30, 2020, to $1.55 billion at March 31, 2021.
+Added: GSEs, increased $338.2 million, from $1.18 billion at September 30, 2020, to $1.52 billion at June 30, 2021.
The following tables summarize the activity in our portfolio of MBS for the periods presented.
3 unchanged sentences
For the Three Months Ended
−Removed: March 31, 2021 December 31, 2020 September 30, 2020 June 30, 2020
+Added: June 30, 2021 March 31, 2021 December 31, 2020 September 30, 2020
Amount Yield WAL Amount Yield WAL Amount Yield WAL Amount Yield WAL
6 unchanged sentences
Ending balance - carrying value $ 1,519,028 1.45 3.8 $ 1,549,901 1.54 4.0 $ 1,459,300 1.67 4.0 $ 1,180,803 1.94 3.5
−Removed: For the Six Months Ended
−Removed: March 31, 2021 March 31, 2020
+Added: For the Nine Months Ended
+Added: June 30, 2021 June 30, 2020
Amount Yield WAL Amount Yield WAL
7 unchanged sentences
Investment Securities - Investment securities, which consist of U.S.
−Removed: GSE debentures (primarily issued by FNMA, FHLMC, or Federal Home Loan Banks) and municipal investments, increased $165.9 million, from $380.1 million at September 30, 2020, to $546.0 million at March 31, 2021.
−Removed: Municipal investments totaled $5.4 million at March 31, 2021.
+Added: GSE debentures (primarily issued by FNMA, FHLMC, or Federal Home Loan Banks) and municipal investments, increased $116.5 million, from $380.1 million at September 30, 2020, to $496.7 million at June 30, 2021.
+Added: Municipal investments totaled $5.1 million at June 30, 2021.
The following tables summarize the activity of investment securities for the periods presented.
3 unchanged sentences
For the Three Months Ended
−Removed: March 31, 2021 December 31, 2020 September 30, 2020 June 30, 2020
+Added: June 30, 2021 March 31, 2021 December 31, 2020 September 30, 2020
Amount Yield WAL Amount Yield WAL Amount Yield WAL Amount Yield WAL
6 unchanged sentences
Ending balance - carrying value $ 496,677 0.60 3.8 $ 546,023 0.56 3.6 $ 454,566 0.54 1.0 $ 380,147 0.65 1.7
−Removed: For the Six Months Ended
−Removed: March 31, 2021 March 31, 2020
+Added: For the Nine Months Ended
+Added: June 30, 2021 June 30, 2020
Amount Yield WAL Amount Yield WAL
6 unchanged sentences
Ending balance - carrying value $ 496,677 0.60 3.8 $ 237,467 1.23 0.8
−Removed: Deposits - Total deposits increased $459.5 million, or 7.4%, from September 30, 2020 to March 31, 2021.
−Removed: The increase was in non-maturity deposits, which increased $501.7 million, including a $241.1 million increase in checking accounts, a $183.4 million increase in money market accounts, and a $77.2 million increase in savings accounts.
−Removed: Retail/business certificates of deposit and public unit certificates of deposit decreased $36.1 million and $6.1 million, respectively, during the current year period.
+Added: Deposits - Total deposits were $6.64 billion, an increase of $446.9 million, or 7.2%, from September 30, 2020.
+Added: The increase was in non-maturity deposits, which increased $586.6 million, including a $269.2 million increase in money market accounts, a $238.2 million increase in checking accounts, and a $79.2 million increase in savings accounts.
+Added: Retail certificates of deposit decreased $210.5 million from September 30, 2020, which was partially offset by a $71.8 million increase in commercial certificates of deposit.
Customers moved some of the funds from maturing certificates to more liquid investment options such as the Bank's retail money market accounts.
The following table presents the amount, weighted average rate and percent of total for the components of our deposit portfolio at the dates presented.
−Removed: March 31, 2021 December 31, 2020 September 30, 2020
+Added: June 30, 2021 March 31, 2021 September 30, 2020
% of % of % of
5 unchanged sentences
Money market 1,688,337 0.25 25.4 1,602,573 0.24 24.1 1,419,180 0.37 22.9
−Removed: Retail/business certificates of deposit 2,730,354 1.55 41.1 2,777,948 1.68 43.3 2,766,461 1.83 44.7
+Added: Retail certificates of deposit 2,412,806 1.50 36.4 2,512,791 1.62 37.8 2,623,336 1.88 42.4
+Added: Commercial certificates of deposit 214,956 0.71 3.2 217,563 0.77 3.3 143,125 1.05 2.3
Public unit certificates of deposit 253,807 0.36 3.8 248,670 0.45 3.7 254,783 0.74 4.1
$ 6,638,294 0.66 100.0 % $ 6,650,865 0.73 100.0 % $ 6,191,408 0.95 100.0 %
−Removed: The following tables set forth scheduled maturity information for our certificates of deposit, including public unit certificates of deposit, along with associated weighted average rates, as of March 31, 2021.
+Added: The following tables set forth scheduled maturity information for our certificates of deposit, along with associated weighted average rates, as of June 30, 2021.
More than More than
2 unchanged sentences
(Dollars in thousands)
+Added: Retail certificates of deposit:
0.00 – 0.99% $ 550,417 $ 179,058 $ 67,469 $ 84,122 $ 881,066 0.52 %
2 unchanged sentences
3.00 – 3.99% — 256 — — 256 3.00
+Added: Commercial certificates of deposit:
0.00 – 0.99% 172,807 4,795 464 781 178,847 0.54
+Added: 1.00 – 1.99% 19,503 10,104 343 907 30,857 1.41
+Added: 2.00 – 2.99% 2,016 2,401 662 172 5,251 2.31
+Added: Public unit certificates of deposit:
+Added: 0.00 – 0.99% 196,575 25,501 — — 222,076 0.10
+Added: 1.00 – 1.99% 16,096 — — — 16,096 1.69
+Added: 2.00 – 2.99% 15,307 — 329 — 15,636 2.65
+Added: $ 1,563,107 $ 781,758 $ 342,472 $ 194,232 $ 2,881,569 1.34
Percent of total 54.3 % 27.1 % 11.9 % 6.7 %
1 unchanged sentence
Weighted average maturity (in years) 0.5 1.4 2.5 3.8 1.2
−Removed: Weighted average maturity for the retail/business certificate of deposit portfolio (in years) 1.3
+Added: Weighted average maturity for the retail portfolio (in years) 1.3
+Added: Weighted average maturity for the commercial portfolio (in years) 0.6
+Added: Weighted average maturity for the public unit portfolio (in years) 0.4
3 months 3 to 6 6 to 12 Over
1 unchanged sentence
(Dollars in thousands)
−Removed: Retail/business certificates of deposit less than $100,000 $ 193,497 $ 168,680 $ 306,494 $ 793,230 $ 1,461,901
−Removed: Retail/business certificates of deposit of $100,000 or more 177,109 164,749 337,191 589,404 1,268,453
+Added: Retail certificates of deposit less than $100,000 $ 168,367 $ 167,204 $ 326,201 $ 740,425 $ 1,402,197
+Added: Retail certificates of deposit of $100,000 or more 128,925 128,177 221,929 531,578 1,010,609
+Added: Commercial certificates of deposit less than $100,000 2,961 3,025 4,377 4,223 14,586
+Added: Commercial certificates of deposit of $100,000 or more 39,299 78,560 66,105 16,406 200,370
Public unit certificates of deposit of $100,000 or more 98,464 74,062 55,451 25,830 253,807
$ 438,016 $ 451,028 $ 674,063 $ 1,318,462 $ 2,881,569
−Removed: Borrowings - Total borrowings at March 31, 2021 were $1.58 billion, a decrease of $207.4 million, or 11.6%, from September 30, 2020.
+Added: Borrowings - Total borrowings at June 30, 2021 were $1.58 billion, a decrease of $206.9 million, or 11.6%, from September 30, 2020.
The decrease was due to not renewing borrowings that matured during the current year period.
−Removed: Cash flows from the deposit portfolio were used to pay off maturing borrowings.
+Added: Cash flows from deposit growth were used to pay off maturing borrowings.
The following tables present borrowing activity for the periods shown.
6 unchanged sentences
For the Three Months Ended
−Removed: March 31, 2021 December 31, 2020 September 30, 2020 June 30, 2020
+Added: June 30, 2021 March 31, 2021 December 31, 2020 September 30, 2020
Effective Effective Effective Effective
10 unchanged sentences
Ending balance $ 1,590,000 2.00 3.5 $ 1,590,000 1.94 3.3 $ 1,740,000 2.26 3.0 $ 1,790,000 2.31 3.0
−Removed: For the Six Months Ended
−Removed: March 31, 2021 March 31, 2020
+Added: For the Nine Months Ended
+Added: June 30, 2021 June 30, 2020
Effective Effective
11 unchanged sentences
The effective rate and WAM presented include the effect of the interest rate swaps.
−Removed: Maturities - The following table presents the maturity of term borrowings, which consist entirely of FHLB advances, along with associated weighted average contractual and effective rates as of March 31, 2021.
−Removed: As discussed previously, the Bank terminated interest rate swaps with a notional amount of $200.0 million during the quarter ended March 31, 2021.
−Removed: In the table below, the $200.0 million of adjustable-rate FHLB advances previously tied to these terminated interest rate swaps are presented in the FHLB advances column as maturing in fiscal year 2022.
−Removed: Subsequent to March 31, 2021, the Bank prepaid $100.0 million of adjustable-rate FHLB advances that were related to the terminated swaps and replaced them with $100.0 million of fixed-rate FHLB advances with a weighted average rate of 0.69% and a weighted average term of 3.5 years.
+Added: Maturities - The following table presents the maturity of term borrowings, which consist entirely of FHLB advances, along with associated weighted average contractual and effective rates as of June 30, 2021.
Term Borrowings Amount
13 unchanged sentences
These advances are presented based on their contractual maturity dates and will be renewed periodically until the maturity or termination of the interest rate swaps.
−Removed: The expected WAL of the interest rate swaps was 3.9 years at March 31, 2021.
+Added: The expected WAL of the interest rate swaps was 3.6 years at June 30, 2021.
(2) The effective rate includes the impact of interest rate swaps and the amortization of deferred prepayment penalties resulting from FHLB advances previously prepaid.
−Removed: The following table presents the maturity and weighted average repricing rate, which is also the weighted average effective rate, of certificates of deposit, split between retail/business and public unit amounts, and term borrowings for the next four quarters as of March 31, 2021.
−Removed: Retail/ Business Public Unit Term
+Added: The following table presents the maturity and weighted average repricing rate, which is also the weighted average effective rate, of certificates of deposit, split between retail/commercial and public unit amounts, and term borrowings for the next four quarters as of June 30, 2021.
+Added: Retail/Commercial Public Unit Term
Maturity by Certificate Repricing Certificate Repricing Borrowings Repricing Repricing
2 unchanged sentences
(Dollars in thousands)
−Removed: June 30, 2021 $ 370,606 1.41 % $ 86,691 0.31 % $ — — % $ 457,297 1.20 %
September 30, 2021 $ 339,552 1.26 % $ 98,464 0.51 % $ 75,000 2.99 % $ 513,016 1.37 %
1 unchanged sentence
March 31, 2022 299,872 1.24 24,876 0.65 — — 324,748 1.19
+Added: June 30, 2022 318,740 1.15 30,575 0.09 — — 349,315 1.06
$ 1,335,130 1.19 $ 227,977 0.39 $ 75,000 2.99 $ 1,638,107 1.16
(1) The maturity date for FHLB advances tied to interest rate swaps is based on the maturity date of the related interest rate swap.
−Removed: The term borrowings maturing in the December 31, 2021 quarter with a repricing rate of 0.35% are adjustable-rate advances that were previously tied to the terminated interest rate swaps discussed above.
−Removed: Of the $200.0 million maturing in the December 31, 2021 quarter, $100.0 million was prepaid in April 2021 and replaced with $100.0 million of advances with a weighted average rate of 0.69% and a weighted average term of 3.5 years.
−Removed: Management may prepay the remaining $100.0 million during the June 30, 2021 quarter.
Stockholders' Equity.
−Removed: Stockholders' equity was $1.28 billion at both March 31, 2021 and September 30, 2020.
−Removed: During the current year six month period, the Company paid cash dividends totaling $40.6 million and repurchased common stock totaling $1.5 million, partially offset by net income of $39.3 million.
−Removed: The cash dividends paid during the current year six month period totaled $0.30 per share and consisted of a $0.13 per share cash true-up dividend related to fiscal year 2020 earnings and two regular quarterly cash dividends of $0.085 per share.
−Removed: On April 20, 2021, the Company announced a regular quarterly cash dividend of $0.085 per share, or approximately $11.5 million, payable on May 21, 2021 to stockholders of record as of the close of business on May 7, 2021.
+Added: Stockholders' equity at June 30, 2021 was $1.24 billion, a decrease of $47.2 million, or 3.7%, from September 30, 2020.
+Added: During the current year nine month period, the Company paid cash dividends totaling $106.4 million and repurchased common stock totaling $1.5 million, partially offset by net income of $57.5 million.
+Added: The cash dividends paid during the current year nine month period totaled $0.785 per share and consisted of a $0.40 per share True Blue Capitol cash dividend, a $0.13 per share cash true-up dividend related to fiscal year 2020 earnings and three regular quarterly cash dividends of $0.085 per share.
+Added: On July 20, 2021, the Company announced a regular quarterly cash dividend of $0.085 per share, or approximately $11.5 million, payable on August 20, 2021 to stockholders of record as of the close of business on August 6, 2021.
In the long run, management considers the Bank's equity to total assets ratio of at least 9% an appropriate level of capital.
−Removed: At March 31, 2021, this ratio was 12.0%.
−Removed: At March 31, 2021, Capitol Federal Financial, Inc., at the holding company level, had $73.9 million in cash on deposit at the Bank.
+Added: At June 30, 2021, this ratio was 11.5%.
+Added: At June 30, 2021, Capitol Federal Financial, Inc., at the holding company level, had $84.7 million in cash on deposit at the Bank.
For fiscal year 2021, it is the intention of the Board of Directors to continue the payout of 100% of the Company's earnings to the Company's stockholders.
4 unchanged sentences
however, the FRB's existing approval for the Company to repurchase shares extends through August 2021.
+Added: The Company plans to request a further extension of the FRB's approval.
The Company works to find multiple ways to provide stockholder value.
2 unchanged sentences
In order to provide additional stockholder value, the Company paid a True Blue Capitol cash dividend of $0.25 per share in June for six consecutive years ending in 2019.
−Removed: Given the state of economic uncertainty and how that may play out with the credit risk exposure in the Bank's loan portfolio, the Company elected to defer the annual True Blue dividend in June 2020 and did not ask for a regulatory non-objection at that time to move capital from the Bank to the Company to pay that dividend.
−Removed: It is management's intention to ask for a regulatory non-objection at some point in the future to pay some level of this dividend when economic conditions are more certain.
−Removed: The Company paid the True Blue Capitol dividend primarily due to excess capital levels at the Company and Bank.
+Added: Given the state of economic uncertainty, the Company elected to defer the annual True Blue dividend in June 2020.
+Added: In June 2021, the Company paid a True Blue Capitol cash dividend of $0.40 per share.
+Added: The $0.40 per share True Blue Capitol cash dividend represents a $0.20 per share cash dividend from fiscal year 2020 and a $0.20 per share cash dividend for fiscal year 2021.
+Added: The Company has paid the True Blue Capitol dividend primarily due to excess capital levels at the Company and Bank.
The Company considers various business strategies and their impact on capital and asset measures on both a current and future basis, as well as regulatory capital levels and requirements, in determining the amount, if any, and timing of the True Blue dividend.
1 unchanged sentence
The amounts represent cash dividends paid during each period.
−Removed: For the quarter ending June 30, 2021, the amount presented represents the dividend payable on May 21, 2021 to stockholders of record as of the close of business on May 7, 2021.
+Added: For the quarter ending September 30, 2021, the amount presented represents the dividend payable on August 20, 2021 to stockholders of record as of the close of business on August 6, 2021.
Calendar Year
13 unchanged sentences
For the Three Months Ended
−Removed: March 31, December 31, September 30, June 30, March 31,
+Added: June 30, March 31, December 31, September 30, June 30,
2021 2021 2020 2020 2020
22 unchanged sentences
Diluted EPS 0.13 0.15 0.14 0.13 0.14
−Removed: Comparison of Operating Results for the Three Months Ended March 31, 2021 and December 31, 2020
−Removed: For the quarter ended March 31, 2021, the Company recognized net income of $20.4 million, or $0.15 per share, compared to net income of $18.9 million, or $0.14 per share, for the quarter ended December 31, 2020.
−Removed: The increase was due primarily to an increase in non-interest income resulting mainly from the sale of Visa Class B shares, partially offset by an increase in non-interest expense due to the termination of $200.0 million of interest rate swaps.
−Removed: The net interest margin decreased four basis points, from 1.92% for the prior quarter to 1.88% for the current quarter.
−Removed: The decrease in the net interest margin was due mainly to a decrease in the loan portfolio and securities portfolio average yields, along with a change in asset mix as cash flows from the loan portfolio have been invested into lower yielding securities, partially offset by a decrease in the average cost of borrowings and deposits.
+Added: Comparison of Operating Results for the Three Months Ended June 30, 2021 and March 31, 2021
+Added: For the quarter ended June 30, 2021, the Company recognized net income of $18.2 million, or $0.13 per share, compared to net income of $20.4 million, or $0.15 per share, for the quarter ended March 31, 2021.
+Added: The decrease in net income was due primarily to a decrease in non-interest income due mainly to the prior quarter including a $7.4 million gain on the sale of the Bank's Visa Class B shares, partially offset by a decrease in non-interest expense due mainly to a $4.8 million loss in the prior quarter due to the Bank terminating $200.0 million of its interest rate swaps.
+Added: Net interest margin decreased four basis points, from 1.88% for the prior quarter to 1.84% for the current quarter.
+Added: The decrease in net interest margin was due mainly to a decrease in the loan portfolio average yield, partially offset by a decrease in the average cost of deposits and borrowings.
Our net interest margin could continue to decrease if our interest-earning assets continue to reprice to lower market rates at a faster pace than our deposits and borrowings, and if we continue investing in lower yielding securities rather than reinvesting cash flows into the loan portfolio.
1 unchanged sentence
The weighted average yield on total interest-earning assets decreased 15 basis points, from 2.81% for the prior quarter to 2.66% for the current quarter, while the average balance of interest-earning assets increased $125.8 million between the two periods.
+Added: The decrease in the weighted average yield was due primarily to a decrease in the one- to four-family loan portfolio yield.
+Added: The increase in the average balance was due primarily to a $152.1 million increase in the average balance of the MBS and investment securities portfolios and a $38.0 million increase in the average balance of the loans receivable portfolio, partially offset by a $60.7 million decrease in the average balance of cash and cash equivalents.
The following table presents the components of interest and dividend income for the time periods presented, along with the change measured in dollars and percent.
For the Three Months Ended
−Removed: March 31, December 31, Change Expressed in:
+Added: June 30, March 31, Change Expressed in:
2021 2021 Dollars Percent
7 unchanged sentences
Total interest and dividend income $ 61,872 $ 64,334 $ (2,462) (3.8)
−Removed: The decrease in interest income on loans receivable was due to a 14 basis point decrease in the weighted average portfolio yield and a $96.2 million decrease in the average balance.
−Removed: The weighted average yield on the loans receivable portfolio decreased from 3.41% for the prior quarter to 3.27% for the current quarter, due mainly to loans repricing to lower current market rates as a result of endorsements, refinances and adjustable-rate loan rate changes, along with a decrease in commercial loan deferred fee and discount recognition related to PPP loans and other commercial loan activity.
−Removed: One- to four-family correspondent loan payoff activity decreased during the current quarter compared to the prior quarter;
+Added: The decrease in interest income on loans receivable was due to a 16 basis point decrease in the weighted average portfolio yield, partially offset by a $38.0 million increase in the average balance.
+Added: The weighted average yield on the loans receivable portfolio decreased from 3.27% for the prior quarter to 3.11% for the current quarter, due mainly to an increase in one- to four-family correspondent loan endorsement activity, which increased the amount of premium amortization related to these loans, along with a reduction in one- to four-family originated loan endorsement activity, which decreased the amount of deferred fee recognition related to these loans.
+Added: Additionally, the yield decreased due to the origination and purchase of one- to four-family loans at rates lower than the overall portfolio.
+Added: One- to four-family correspondent loan payoff activity in the current quarter was lower than the prior quarter;
thereby reducing the amount of premium amortization and reduction in the loan portfolio yield.
−Removed: Correspondent loan payoff activity remains at elevated levels compared to historical norms which was the primary reason for the decrease in the average balance of the loan portfolio during the current quarter.
−Removed: The decrease in interest income on the MBS portfolio was due to a 25 basis point decrease in the weighted average yield, to 1.50% for the current quarter, due primarily to an increase in the impact of net premium amortization, along with purchases at lower market yields.
−Removed: This was partially offset by a $142.5 million increase in the average balance as a result of purchases, primarily utilizing excess cash flows from the loan portfolio and operating cash, along with funds from growth in the deposit portfolio that were not used to pay down borrowings.
+Added: Correspondent loan payoff activity remains at elevated levels compared to historical norms.
+Added: The yield on the loan portfolio will likely continue to decrease in the near term due to the high levels of prepayments, refinances and endorsements.
+Added: The decrease in interest income on MBS was due to a 10 basis point decrease in the weighted average portfolio yield, which was largely offset by an $85.1 million increase in the average balance of the portfolio.
+Added: The increase in interest income on investment securities was due primarily to a $67.0 million increase in the average balance of the portfolio.
Interest Expense
−Removed: The weighted average rate paid on interest-bearing liabilities decreased 14 basis points, from 1.20% for the prior quarter to 1.06% for the current quarter, while the average balance of interest-bearing liabilities increased $48.1 million between the two periods.
+Added: The weighted average rate paid on interest-bearing liabilities decreased 12 basis points, from 1.06% for the prior quarter to 0.94% for the current quarter, while the average balance of interest-bearing liabilities increased $121.1 million between the two periods due to an increase in the average balance of checking, savings and money market accounts, partially offset by a decrease in the average balance of retail/commercial certificates of deposit and a decrease in the average balance of borrowings.
The following table presents the components of interest expense for the time periods presented, along with the change measured in dollars and percent.
For the Three Months Ended
−Removed: March 31, December 31, Change Expressed in:
+Added: June 30, March 31, Change Expressed in:
2021 2021 Dollars Percent
4 unchanged sentences
Total interest expense $ 19,301 $ 21,261 $ (1,960) (9.2)
−Removed: The decrease in interest expense on deposits was due primarily to a decrease in the weighted average rate paid on the retail/business certificate of deposit portfolio.
−Removed: The weighted average rate on the retail/business certificate of deposit portfolio decreased 15 basis points, to 1.61% for the current quarter.
−Removed: Management has generally reduced deposit offer rates as discussed above.
−Removed: See "Financial Condition - Liabilities" above for additional information on deposits.
−Removed: The decrease in interest expense on borrowings was due primarily to not replacing term borrowings that matured during the current quarter and prior quarter, along with prepaying certain advances and replacing them at lower rates.
−Removed: Cash flows from the deposit portfolio were generally utilized to repay maturing term borrowings during the current and prior quarters.
−Removed: The average balance of borrowings decreased $171.9 million compared to the prior quarter.
+Added: The decrease in interest expense on deposits was due primarily to a decrease in the weighted average rate paid on and a decrease in the average balance of the retail/commercial certificate of deposit portfolio.
+Added: The weighted average rate on the retail/commercial certificate of deposit portfolio decreased 12 basis points, to 1.49% for the current quarter, and the average balance decreased $74.5 million.
+Added: During the prior quarter, the Bank terminated interest rate swaps designated as cash flow hedges with a notional amount of $200.0 million which were tied to variable-rate FHLB advances totaling $200.0 million.
+Added: During the current quarter, the Bank prepaid the aforementioned variable-rate FHLB advances and replaced them with $200.0 million of fixed-rate FHLB advances.
+Added: The decrease in interest expense on borrowings compared to the prior quarter was due primarily to a full quarterly impact of this activity and the related reduction in the effective cost of these borrowings.
Provision for Credit Losses
−Removed: For the quarter ended March 31, 2021, the Bank recorded a negative provision for credit losses of $3.0 million, compared to a negative provision for credit losses of $1.5 million for the prior quarter.
−Removed: The negative provision in the current quarter was composed of a $2.7 million decrease in the ACL for loans and a $305 thousand decrease in reserves for off-balance sheet credit exposures.
−Removed: The $3.0 million negative provision for credit losses was due primarily to continued improvements in the economic forecast used in the model.
−Removed: See "Financial Condition - Asset Quality" above for additional discussion regarding management's evaluation of the adequacy of the Bank's ACL and reserves for off-balance sheet credit exposures at March 31, 2021.
+Added: For the quarter ended June 30, 2021, the Bank recorded a negative provision for credit losses of $2.7 million, compared to a negative provision for credit losses of $3.0 million for the prior quarter.
+Added: The negative provision in the current quarter was composed of a $2.7 million decrease in the ACL for loans, partially offset by a $34 thousand increase in reserves for off-balance sheet credit exposures.
+Added: The $2.7 million negative provision for credit losses in the current quarter was due primarily to more favorable economic conditions at June 30, 2021 compared to March 31, 2021, largely related to commercial loans.
+Added: See "Financial Condition - Asset Quality" above for additional discussion regarding the Bank's ACL and reserves for off-balance sheet credit exposures at June 30, 2021.
Non-Interest Income
1 unchanged sentence
For the Three Months Ended
−Removed: March 31, December 31, Change Expressed in:
+Added: June 30, March 31, Change Expressed in:
2021 2021 Dollars Percent
1 unchanged sentence
NON-INTEREST INCOME:
−Removed: Gain on sale of Visa Class B shares $ 7,386 $ — $ 7,386 N/A
Deposit service fees $ 3,227 $ 2,814 $ 413 14.7 %
+Added: Gain on sale of Visa Class B shares — 7,386 (7,386) (100.0)
Insurance commissions 723 888 (165) (18.6)
1 unchanged sentence
Total non-interest income $ 5,236 $ 12,477 $ (7,241) (58.0)
−Removed: During the current quarter, the Bank sold all of its Visa Class B shares, resulting in a $7.4 million gain.
−Removed: The increase in insurance commissions was due primarily to the receipt of annual contingent insurance commissions which were higher than what was anticipated and accrued.
+Added: The increase in deposit service fees was due primarily to increases in debit card income and service charge income as a result of higher transaction volume in the current quarter.
+Added: During the prior quarter, the Bank sold all of its Visa Class B shares, resulting in a $7.4 million gain.
+Added: The decrease in insurance commissions was due primarily to the receipt of annual contingent insurance commissions during the prior quarter, which were higher than what was anticipated and accrued.
Non-Interest Expense
1 unchanged sentence
For the Three Months Ended
−Removed: March 31, December 31, Change Expressed in:
+Added: June 30, March 31, Change Expressed in:
2021 2021 Dollars Percent
4 unchanged sentences
Occupancy, net 3,504 3,523 (19) (0.5)
−Removed: Loss on interest rate swap termination 4,752 — 4,752 N/A
+Added: Loss on interest rate swap termination — 4,752 (4,752) (100.0)
Regulatory and outside services 1,469 1,234 235 19.0
5 unchanged sentences
Total non-interest expense $ 27,602 $ 32,653 $ (5,051) (15.5)
−Removed: The decrease in salaries and employee benefits was due primarily to non-officer employee bonuses of $313 thousand paid during the prior quarter in appreciation of the hard work and dedication by our non-officer employees during these challenging times, along with a decrease in the number of working days compared to the prior quarter.
−Removed: The increase in information technology and related expense was due primarily to an increase in information technology professional services expense.
−Removed: As discussed previously, during the current quarter, the Bank terminated $200.0 million of interest rate swaps resulting in a loss of $4.8 million.
−Removed: The decrease in regulatory and outside services was due mainly to the timing of external audit expenses.
−Removed: The increase in advertising and promotional expenses was due to the timing of campaigns.
−Removed: The increase in other non-interest expense was due primarily to the write-down of a property that previously served as one of the Bank's branch locations, as management intends to sell the property.
+Added: The increase in salaries and employee benefits was due primarily to merit increases during the current quarter.
+Added: During the prior quarter, the Bank terminated interest rate swaps designated as cash flow hedges with a notional amount of $200.0 million resulting in the reclassification of unrealized losses totaling $4.8 million from AOCI into earnings.
+Added: The increase in regulatory and outside services was due mainly to the timing of external audit expenses.
+Added: The decrease in other non-interest expense was due primarily to the write-down of a property during the prior quarter that previously served as one of the Bank's branch locations, as management intends to sell the property.
+Added: During the current quarter there was a partial reversal of the write-down due to receiving updated pricing information for the property.
The Company's efficiency ratio was 57.73% for the current quarter compared to 58.78% for the prior quarter.
−Removed: The change in the efficiency ratio was due primarily to higher non-interest expense, partially offset by an increase in non-interest income.
+Added: The improvement in the efficiency ratio was due primarily to lower non-interest expense, partially offset by a decrease in non-interest income.
The efficiency ratio is a measure of a financial institution's total non-interest expense as a percentage of the sum of net interest income (pre-provision for credit losses) and non-interest income.
−Removed: A higher value indicates that the financial institution is generating revenue with a proportionally higher level of expense, relative to the net interest margin.
+Added: A lower value indicates that the financial institution is generating revenue with a proportionally lower level of expense, relative to the net interest margin.
Income Tax Expense
1 unchanged sentence
For the Three Months Ended
−Removed: March 31, December 31, Change Expressed in:
+Added: June 30, March 31, Change Expressed in:
2021 2021 Dollars Percent
4 unchanged sentences
Effective Tax Rate 20.6 % 20.9 %
−Removed: The increase in income tax expense was due mainly to a higher effective tax rate compared to the prior quarter, as well as an increase in pretax income.
−Removed: The lower effective tax rate in the prior quarter was due primarily to true-ups related to the preparation of the September 30, 2020 federal and state tax returns.
+Added: The decrease in income tax expense was due mainly to a decrease in pretax income.
+Added: Management anticipates the effective income tax rate for fiscal year 2021 will be approximately 20%.
Average Balance Sheet
4 unchanged sentences
For the Three Months Ended
−Removed: March 31, 2021 December 31, 2020
+Added: June 30, 2021 March 31, 2021
Average Interest Average Interest
4 unchanged sentences
One- to four-family loans:
+Added: Originated $ 3,982,990 $ 33,727 3.39 % $ 3,956,867 $ 34,794 3.52 %
+Added: Correspondent purchased 1,971,209 10,367 2.10 1,981,735 11,826 2.39
+Added: Bulk purchased 185,198 826 1.78 195,925 932 1.90
+Added: Total one- to four-family loans 6,139,397 44,920 2.93 6,134,527 47,552 3.10
Commercial loans 805,721 8,744 4.29 766,972 8,559 4.46
15 unchanged sentences
Money market 1,646,970 998 0.24 1,543,911 1,038 0.27
−Removed: Retail/business certificates 2,753,439 10,917 1.61 2,745,836 12,178 1.76
+Added: Retail/commercial certificates 2,678,914 9,938 1.49 2,753,439 10,917 1.61
Wholesale certificates 251,571 285 0.45 260,712 322 0.50
21 unchanged sentences
(2) AFS securities are adjusted for unamortized purchase premiums or discounts.
−Removed: (3) The average balance of investment securities includes an average balance of nontaxable securities of $7.5 million and $9.1 million for the quarters ended March 31, 2021 and December 31, 2020, respectively.
+Added: (3) The average balance of investment securities includes an average balance of nontaxable securities of $5.1 million and $7.5 million for the quarters ended June 30, 2021 and March 31, 2021, respectively.
(4) The FHLB advance amounts and rates included in this line include the effect of interest rate swaps and are net of deferred prepayment penalties.
6 unchanged sentences
Rate/Volume Analysis
−Removed: The table below presents the dollar amount of changes in interest income and interest expense for major components of interest-earning assets and interest-bearing liabilities, comparing the three months ended March 31, 2021 to the three months ended December 31, 2020.
+Added: The table below presents the dollar amount of changes in interest income and interest expense for major components of interest-earning assets and interest-bearing liabilities, comparing the three months ended June 30, 2021 to the three months ended March 31, 2021.
For each category of interest-earning assets and interest-bearing liabilities, information is provided on changes attributable to (1) changes in volume, which are changes in the average balance multiplied by the previous year's average rate and (2) changes in rate, which are changes in the average rate multiplied by the average balance from the previous year period.
1 unchanged sentence
For the Three Months Ended
−Removed: March 31, 2021 vs.
−Removed: December 31, 2020
+Added: June 30, 2021 vs.
+Added: March 31, 2021
Increase (Decrease) Due to
16 unchanged sentences
Net change in net interest income $ 1,060 $ (1,562) $ (502)
−Removed: Comparison of Operating Results for the Six Months Ended March 31, 2021 and 2020
−Removed: The Company recognized net income of $39.3 million, or $0.29 per share, for the six month period ended March 31, 2021 compared to net income of $26.8 million, or $0.19 per share, for the six month period ended March 31, 2020.
+Added: Comparison of Operating Results for the Nine Months Ended June 30, 2021 and 2020
+Added: The Company recognized net income of $57.5 million, or $0.42 per share, for the nine month period ended June 30, 2021 compared to net income of $46.3 million, or $0.34 per share, for the nine month period ended June 30, 2020.
The increase in net income was due primarily to recording a $22.3 million provision for credit losses during the prior year period compared to recording a negative provision for credit losses of $7.2 million in the current year period, partially offset by a decrease in net interest income and an increase in income tax expense.
Net interest income decreased $14.2 million, or 9.9%, from the prior year period to $129.5 million for the current year period.
−Removed: The net interest margin decreased 29 basis points, from 2.19% for the prior year period to 1.90% for the current year period.
+Added: Net interest margin decreased 27 basis points, from 2.15% for the prior year period to 1.88% for the current year period.
The decrease in net interest income and net interest margin was due mainly to a decrease in asset yields, along with a change in asset mix as cash flows from the loan portfolio have been used to purchase lower yielding securities, partially offset by a decrease in the cost of deposits and borrowings.
1 unchanged sentence
The weighted average yield on total interest-earning assets decreased 66 basis points, from 3.48% for the prior year period to 2.82% for the current year period, while the average balance of interest-earning assets increased $259.3 million.
−Removed: The decrease in the weighted average yield between periods was due primarily to a decrease in the loan portfolio yield and partially the securities portfolio yield, along with a change in asset mix as cash flows from the loan portfolio have been used to purchase lower yielding securities.
The following table presents the components of interest and dividend income for the time periods presented, along with the change measured in dollars and percent.
−Removed: For the Six Months Ended
−Removed: March 31, Change Expressed in:
+Added: For the Nine Months Ended
+Added: June 30, Change Expressed in:
2021 2020 Dollars Percent
7 unchanged sentences
Total interest and dividend income $ 194,413 $ 233,372 $ (38,959) (16.7)
−Removed: The decrease in interest income on loans receivable was due mainly to a 39 basis point decrease in the weighted average yield on the portfolio, from 3.73% for the prior year period to 3.34% for the current year period, primarily on correspondent one- to four-family loans related to higher premium amortization due to increases in payoff and endorsement activity, as well as adjustable-rate loans repricing to lower market rates, endorsements and refinances of one- to four-family originated loans to lower market rates, and the origination of new loans at lower market rates.
+Added: The decrease in interest income on loans receivable was due mainly to a 41 basis point decrease in the weighted average yield on the portfolio, from 3.67% for the prior year period to 3.26% for the current year period, primarily on correspondent one- to four-family loans related to higher premium amortization due to increases in payoff and endorsement activity, as well as endorsements and refinances of one- to four-family originated loans to lower market rates, adjustable-rate loans repricing to lower market rates, and the origination and purchase of new loans at lower market rates.
Additionally, the average balance of the portfolio decreased $420.5 million compared to the prior year period.
2 unchanged sentences
Additionally, after lifting the suspension, there were, and continues to be, historically high levels of prepayments due to refinance activity.
−Removed: The decrease in interest income on the MBS portfolio was due to a 96 basis point decrease in the weighted average yield to 1.62% for the current year period as a result of new purchases at lower market yields and the repricing of existing adjustable-rate MBS to lower market yields, partially offset by a $445.6 million increase in the average balance of the portfolio.
+Added: The decrease in interest income on the MBS portfolio was due to a 98 basis point decrease in the weighted average yield to 1.54% for the current year period as a result of the purchase of MBS at market rates lower than the existing portfolio and an increase in the impact of premium amortization, partially offset by a $495.5 million increase in the average balance of the portfolio.
The decrease in dividend income on FHLB stock was due mainly to a decrease in the dividend rate paid by FHLB, along with a decrease in the average balance of FHLB stock.
1 unchanged sentence
The decrease in interest income on investment securities was due to a 135 basis point decrease in the weighted average yield to 0.58% for the current year period as a result of new purchases at lower market yields, partially offset by a $219.0 million increase in the average balance of the portfolio.
−Removed: The decrease in interest income on cash and cash equivalents was due to a decrease in the yield earned on cash held at the FRB of Kansas City, partially offset by a $46.3 million increase in the average balance.
+Added: The decrease in interest income on cash and cash equivalents was due primarily to a decrease in the yield earned on cash held at the FRB of Kansas City.
Interest Expense
The weighted average rate paid on total interest-bearing liabilities decreased 45 basis points, from 1.52% for the prior year period to 1.07% for the current period, while the average balance of interest-bearing liabilities increased $250.8 million.
−Removed: The increase in the average balance was primarily in money market and checking accounts, partially offset by a decrease in borrowings.
+Added: The increase in the average balance was primarily in money market and checking accounts, partially offset by a decrease in the average balance of borrowings.
The following table presents the components of interest expense for the time periods presented, along with the change measured in dollars and percent.
−Removed: For the Six Months Ended
−Removed: March 31, Change Expressed in:
+Added: For the Nine Months Ended
+Added: June 30, Change Expressed in:
2021 2020 Dollars Percent
4 unchanged sentences
Total interest expense $ 64,956 $ 89,720 $ (24,764) (27.6)
−Removed: The decrease in interest expense on deposits was due mainly to a decrease in the weighted average rate paid on retail/business certificates of deposit, money market accounts, and wholesale certificates of deposit, which decreased by 42 basis points, 38 basis points, and 152 basis points, respectively.
−Removed: Since the onset of the COVID-19 pandemic, retail/business certificates of deposit have been gradually repricing downward as they renew or are replaced at lower offered rates and rates on money market accounts have been lowered.
−Removed: The decrease in interest expense on borrowings was due primarily to a $514.5 million decrease in the average balance, as certain maturing FHLB advances and repurchase agreements were not replaced and the Bank paid down its FHLB line of credit with funds generated from the deposit portfolio.
+Added: The decrease in interest expense on deposits was due mainly to a decrease in the weighted average rate paid on retail/commercial certificates of deposit, money market accounts, and wholesale certificates of deposit, which decreased by 46 basis points, 31 basis points, and 133 basis points, respectively.
+Added: Since the onset of the COVID-19 pandemic, retail/commercial certificates of deposit have been repricing downward as they renew or are replaced at lower offered rates and rates on money market accounts have been lowered.
+Added: The decrease in interest expense on borrowings was due primarily to a $494.1 million decrease in the average balance, as certain maturing FHLB advances and repurchase agreements were not replaced and the Bank paid down its FHLB line of credit with liquidity generated from the deposit portfolio.
Additionally, the decrease in interest expense on borrowings was due to the impact of prepaying certain FHLB advances during the current and prior periods.
1 unchanged sentence
The Bank recorded a negative provision for credit losses during the current year period of $7.2 million, compared to a $22.3 million provision for credit losses during the prior year period.
−Removed: See "Financial Condition - Asset Quality" above for additional discussion regarding management's evaluation of the adequacy of the Bank's ACL and reserves for off-balance sheet credit exposures at March 31, 2021.
+Added: See "Financial Condition - Asset Quality" above for additional discussion regarding the Bank's ACL and reserves for off-balance sheet credit exposures at June 30, 2021.
Non-Interest Income
The following table presents the components of non-interest income for the time periods presented, along with the change measured in dollars and percent.
−Removed: For the Six Months Ended
−Removed: March 31, Change Expressed in:
+Added: For the Nine Months Ended
+Added: June 30, Change Expressed in:
2021 2020 Dollars Percent
1 unchanged sentence
NON-INTEREST INCOME:
−Removed: Gain on sale of Visa Class B shares $ 7,386 $ — $ 7,386 N/A
Deposit service fees $ 8,988 $ 8,384 $ 604 7.2 %
+Added: Gain on sale of Visa Class B shares 7,386 — 7,386 N/A
Insurance commissions 2,249 1,762 487 27.6
1 unchanged sentence
Total non-interest income $ 22,783 $ 14,614 $ 8,169 55.9
+Added: The increase in deposit service fees was due primarily to an increase in debit card income as a result of higher transaction volume.
During the current year period, the Bank sold its Visa Class B Shares, resulting in a $7.4 million gain.
−Removed: The increase in insurance commissions was due primarily to an increase in annual contingent insurance commissions received compared to the prior year period.
−Removed: The decrease in other non-interest income was mainly the result of a decrease in income from BOLI compared to the prior year period due to a reduction in the yield and lower death benefit receipts between the two periods.
+Added: The increase in insurance commissions was due primarily to higher annual contingent insurance commissions received in the current year period compared to the prior year period.
+Added: The decrease in other non-interest income was mainly the result of lower income from BOLI compared to the prior year period due to a reduction in the yield due to lower market rates and lower death benefit receipts between the two periods.
Non-Interest Expense
The following table presents the components of non-interest expense for the time periods presented, along with the change measured in dollars and percent.
−Removed: For the Six Months Ended
−Removed: March 31, Change Expressed in:
+Added: For the Nine Months Ended
+Added: June 30, Change Expressed in:
2021 2020 Dollars Percent
8 unchanged sentences
Deposit and loan transaction costs 2,123 2,086 37 1.8
−Removed: Federal insurance premium 1,255 — 1,255 N/A
+Added: Federal insurance premium 1,888 287 1,601 557.8
Office supplies and related expense 1,289 1,586 (297) (18.7)
1 unchanged sentence
Total non-interest expense $ 87,322 $ 78,828 $ 8,494 10.8
−Removed: The increase in salaries and employee benefits was due primarily to an increase in loan commissions, an increase in full-time equivalent employees, and higher non-officer related bonuses paid in the current year period.
−Removed: The increase in information technology and related expense was due mainly to an increase in information technology professional services expense.
−Removed: During the current year period, the Bank terminated interest rate swaps designated as cash flow hedges with a notional amount of $200.0 million which were tied to FHLB advances totaling $200.0 million.
−Removed: Since it was management's intention to prepay the related FHLB advances, the previously-forecasted transactions subject to the cash flow hedges are no longer expected to occur.
−Removed: Therefore, the termination of the interest rate swaps resulted in the reclassification of unrealized losses totaling $4.8 million from AOCI into earnings.
−Removed: The decrease in advertising and promotional expenses was due mainly to the timing of campaigns.
+Added: The increase in salaries and employee benefits was due primarily to an increase in officer bonus accruals, as well as an increase in loan commissions related to higher loan origination activity.
+Added: The increase in information technology and related expense was due mainly to an increase in software licensing expense and information technology professional services expense.
+Added: As discussed previously, during the current year period, the Bank terminated interest rate swaps designated as cash flow hedges with a notional amount of $200.0 million resulting in the reclassification of unrealized losses totaling $4.8 million from AOCI into earnings.
The increase in the federal insurance premium was due mainly to the Bank utilizing an assessment credit from the Federal Deposit Insurance Corporation ("FDIC") during the prior year period.
The Company's efficiency ratio was 57.36% for the current period compared to 49.81% for the prior year period.
−Removed: The change in the efficiency ratio was due to higher non-interest expense, partially offset by an increase non-interest income in the current year period compared to the prior year period.
+Added: The change in the efficiency ratio was due to higher non-interest expense and lower net interest income, partially offset by an increase in non-interest income in the current year period compared to the prior year period.
Management continues to strive to control operating costs.
−Removed: The increase in the efficiency ratio in the current period was due primarily to the loss on the termination of interest rate swaps, which was a unique transaction during the current period, along with higher federal insurance premium expense as the Bank utilized an assessment credit from the FDIC during the prior year period.
+Added: The increase in the efficiency ratio in the current year period related to higher non-interest expense was due primarily to the loss on the termination of interest rate swaps, which was a unique transaction during the current year period, along with higher federal insurance premium expense as the Bank utilized an assessment credit from the FDIC during the prior year period.
Income Tax Expense
The following table presents pretax income, income tax expense, and net income for the time periods presented, along with the change measured in dollars and percent.
−Removed: For the Six Months Ended
−Removed: March 31, Change Expressed in:
+Added: For the Nine Months Ended
+Added: June 30, Change Expressed in:
2021 2020 Dollars Percent
6 unchanged sentences
The effective tax rate was lower in the prior year period due primarily to a discrete benefit recognized in the prior year period related to certain BOLI policies that were acquired in fiscal year 2018.
−Removed: Management anticipates the effective income tax rate for fiscal year 2021 will be approximately 21%.
Average Balance Sheet
−Removed: The following table presents the average balances of our assets, liabilities, and stockholders' equity, and the related annualized weighted average yields and rates on our interest-earning assets and interest-bearing liabilities for the periods indicated, as well as selected performance ratios and other information, for the periods indicated.
Weighted average yields are derived by dividing annualized income by the average balance of the related assets, and weighted average rates are derived by dividing annualized expense by the average balance of the related liabilities, for the periods shown.
2 unchanged sentences
Weighted average yields on tax-exempt securities are not calculated on a fully taxable equivalent basis.
−Removed: For the Six Months Ended
−Removed: March 31, 2021 March 31, 2020
+Added: For the Nine Months Ended
+Added: June 30, 2021 June 30, 2020
Average Interest Average Interest
4 unchanged sentences
One- to four-family loans:
+Added: Originated $ 3,963,088 $ 104,482 3.52 % $ 3,946,543 $ 113,228 3.83 %
+Added: Correspondent purchased 2,006,257 35,124 2.33 2,386,194 54,780 3.06
+Added: Bulk purchased 195,678 2,870 1.96 235,928 4,837 2.73
+Added: Total one- to four-family loans 6,165,023 142,476 3.08 6,568,665 172,845 3.51
Commercial loans 780,941 26,707 4.51 775,021 28,228 4.79
15 unchanged sentences
Money market 1,554,947 3,220 0.28 1,216,377 5,395 0.59
−Removed: Retail/business certificates 2,749,596 23,094 1.68 2,686,028 28,215 2.10
+Added: Retail/commercial certificates 2,726,035 33,032 1.62 2,702,272 42,096 2.08
Wholesale certificates 254,606 1,022 0.54 287,977 4,036 1.87
21 unchanged sentences
(2) AFS securities are adjusted for unamortized purchase premiums or discounts.
−Removed: (3) The average balance of investment securities includes an average balance of nontaxable securities of $8.3 million and $16.1 million for the six months ended March 31, 2021 and March 31, 2020, respectively.
+Added: (3) The average balance of investment securities includes an average balance of nontaxable securities of $7.2 million and $14.7 million for the nine months ended June 30, 2021 and June 30, 2020, respectively.
(4) The FHLB advance amounts and rates included in this line item include the effect of interest rate swaps and are net of deferred prepayment penalties.
9 unchanged sentences
The net changes attributable to the combined impact of both rate and volume have been allocated proportionately to the changes due to volume and the changes due to rate.
−Removed: For the Six Months Ended
−Removed: March 31, 2021 vs.
−Removed: March 31, 2020
+Added: For the Nine Months Ended
+Added: June 30, 2021 vs.
+Added: June 30, 2020
Increase (Decrease) Due to
16 unchanged sentences
Net change in net interest income $ 2,827 $ (17,022) $ (14,195)
−Removed: Comparison of Operating Results for the Three Months Ended March 31, 2021 and 2020
−Removed: For the quarter ended March 31, 2021, the Company recognized net income of $20.4 million, or $0.15 per share, compared to net income of $4.3 million, or $0.03 per share for the quarter ended March 31, 2020.
−Removed: The increase in net income was due to recording a $22.1 million provision for credit losses during the prior year quarter compared to recording a negative provision for credit losses of $3.0 million in the current quarter, partially offset by a decrease in net interest income and an increase in income tax expense.
−Removed: The net interest margin decreased 31 basis points, from 2.19% for the prior year quarter to 1.88% for the current quarter.
−Removed: The decrease in the net interest margin was due mainly to a decrease in asset yields, along with a change in asset mix as cash flows from the loan portfolio have been used to purchase lower yielding securities, partially offset by a decrease in the cost of deposits and borrowings.
+Added: Comparison of Operating Results for the Three Months Ended June 30, 2021 and 2020
+Added: For the quarter ended June 30, 2021, the Company recognized net income of $18.2 million, or $0.13 per share, compared to net income of $19.5 million, or $0.14 per share for the quarter ended June 30, 2020.
+Added: The decrease in net income was due primarily to a decrease in net interest income, partially offset by a negative provision for credit losses of $2.7 million in the current quarter.
+Added: Net interest margin decreased 23 basis points, from 2.07% for the prior year quarter to 1.84% for the current quarter.
+Added: The decrease in net interest margin was due mainly to a decrease in asset yields, along with a change in asset mix as cash flows from the loan portfolio were used to purchase lower yielding securities, partially offset by a decrease in the cost of deposits and borrowings.
Interest and Dividend Income
2 unchanged sentences
For the Three Months Ended
−Removed: March 31, Change Expressed in:
+Added: June 30, Change Expressed in:
2021 2020 Dollars Percent
8 unchanged sentences
The decrease in interest income on loans receivable was due mainly to a 44 basis point decrease in the weighted average yield, from 3.55% for the prior year quarter to 3.11% for the current quarter, along with a $447.6 million decrease in the average balance.
−Removed: The decrease in the weighted average yield was due primarily to an increase in premium amortization related to correspondent loans as a result of an increase in payoff and endorsement activity.
+Added: The decrease in the weighted average yield was due primarily to endorsements and refinances of one- to four-family originated loans to lower market rates, an increase in premium amortization related to correspondent loans as a result of an increase in payoff and endorsement activity, and the origination and purchase of new loans at lower market rates.
The decrease in the average balance was due primarily to a decrease in the balance of correspondent one- to four-family loans.
−Removed: The decrease in interest income on the MBS portfolio was due primarily to a 105 basis point decrease in the weighted average yield on the portfolio, from 2.55% for the prior year quarter to 1.50% for the current quarter resulting from the purchase of MBS at market rates lower than the existing portfolio and the repricing of existing adjustable-rate MBS to lower market yields, partially offset by a $524.1 million, or 56.9%, increase in the average balance of the portfolio.
−Removed: The decrease in dividend income on FHLB stock was due to a decrease in the dividend rate paid by FHLB, along with a decrease in the average balance of FHLB stock.
+Added: The decrease in interest income on the MBS portfolio was due primarily to a 100 basis point decrease in the weighted average yield on the portfolio, from 2.40% for the prior year quarter to 1.40% for the current quarter resulting from the purchase of MBS at market rates lower than the existing portfolio and an increase in the impact of premium amortization, partially offset by a $595.2 million, or 63.7%, increase in the average balance of the portfolio.
+Added: The decrease in dividend income on FHLB stock was due to a decrease in the average balance of FHLB stock.
The average balance decreased as the Bank did not replace certain maturing FHLB advances between periods, which reduced the amount of FHLB stock owned by the Bank per FHLB requirements.
−Removed: The decrease in interest income on investment securities was due to a 143 basis point decrease in the weighted average yield on the portfolio, from 1.97% for the prior year quarter to 0.54% for the current quarter as a result of new purchases at lower market yields, partially offset by a $185.2 million increase in the average balance of the portfolio.
−Removed: The decrease in interest income on cash and cash equivalents was due mainly to a decrease in the yield on cash held at the FRB of Kansas City, partially offset by an increase in the average balance of operating cash.
Interest Expense
2 unchanged sentences
For the Three Months Ended
−Removed: March 31, Change Expressed in:
+Added: June 30, Change Expressed in:
2021 2020 Dollars Percent
4 unchanged sentences
Total interest expense $ 19,301 $ 28,094 $ (8,793) (31.3)
−Removed: The decrease in interest expense on deposits was due mainly to a decrease in the weighted average rate paid on retail/business certificates of deposit, money market accounts, and wholesale certificates of deposit, which decreased by 50 basis points, 39 basis points, and 148 basis points, respectively.
−Removed: Since the onset of the COVID-19 pandemic, retail/business certificates of deposit have been
−Removed: gradually repricing downward as they renew or are replaced at lower offered rates and rates on money market accounts have been lowered.
−Removed: The decrease in interest expense on borrowings was due primarily to a $572.7 million decrease in the average balance, as certain maturing FHLB advances and repurchase agreements were not replaced and the Bank paid down its FHLB line of credit with funds generated from the deposit portfolio.
−Removed: Additionally, the decrease in interest expense on borrowings was due to the impact of prepaying certain FHLB advances and replacing them at lower rates.
+Added: The decrease in interest expense on deposits was due mainly to a decrease in the weighted average rate paid on retail/commercial certificates of deposit, money market accounts, and wholesale certificates of deposit, which decreased by 55 basis points, 19 basis points, and 98 basis points, respectively.
+Added: Since the onset of the COVID-19 pandemic, retail/commercial certificates of deposit have been repricing downward as they renew or are replaced at lower offered rates and rates on money market accounts have been lowered.
+Added: The decrease in interest expense on borrowings was due primarily to a $452.7 million decrease in the average balance, as certain maturing FHLB advances and repurchase agreements were not replaced.
+Added: Additionally, the decrease in interest expense on borrowings was due to the impact of the termination of interest rate swaps associated with $200.0 million of FHLB advances, as previously discussed.
Provision for Credit Losses
−Removed: The Bank recorded a negative provision for credit losses during the current quarter of $3.0 million, compared to a $22.1 million provision for credit losses during the prior year quarter.
−Removed: See "Financial Condition - Asset Quality" above for additional discussion regarding management's evaluation of the adequacy of the Bank's ACL and reserves for off-balance sheet credit exposures at March 31, 2021.
+Added: The Bank recorded a negative provision for credit losses during the current quarter of $2.7 million, compared to no provision for credit losses during the prior year quarter.
+Added: See "Financial Condition - Asset Quality" above for additional discussion regarding the Bank's ACL and reserves for off-balance sheet credit exposures at June 30, 2021.
Non-Interest Income
1 unchanged sentence
For the Three Months Ended
−Removed: March 31, Change Expressed in:
+Added: June 30, Change Expressed in:
2021 2020 Dollars Percent
1 unchanged sentence
NON-INTEREST INCOME:
−Removed: Gain on sale of Visa Class B shares $ 7,386 $ — $ 7,386 N/A
Deposit service fees $ 3,227 $ 2,539 $ 688 27.1 %
2 unchanged sentences
Total non-interest income $ 5,236 $ 4,439 $ 797 18.0
−Removed: During the current quarter, the Bank sold its Visa Class B Shares, resulting in a $7.4 million gain.
−Removed: The increase in insurance commissions was due primarily to an increase in annual contingent insurance commissions received compared to the prior year quarter.
+Added: The increase in deposit service fees was due primarily to an increase in debit card income as a result of higher transaction volume compared to the prior year quarter.
Non-Interest Expense
1 unchanged sentence
For the Three Months Ended
−Removed: March 31, Change Expressed in:
+Added: June 30, Change Expressed in:
2021 2020 Dollars Percent
4 unchanged sentences
Occupancy, net 3,504 3,556 (52) (1.5)
−Removed: Loss on interest rate swap termination 4,752 — 4,752 N/A
Regulatory and outside services 1,469 1,548 (79) (5.1)
1 unchanged sentence
Deposit and loan transaction costs 693 697 (4) (0.6)
−Removed: Federal insurance premium 634 — 634 N/A
+Added: Federal insurance premium 633 287 346 120.6
Office supplies and related expense 402 475 (73) (15.4)
1 unchanged sentence
Total non-interest expense $ 27,602 $ 26,164 $ 1,438 5.5
−Removed: The increase in information technology and related expense was due mainly to an increase in information technology professional services expense.
−Removed: As discussed previously, during the current quarter, the Bank terminated $200.0 million of interest rate swaps resulting in a loss of $4.8 million.
+Added: The increase in salaries and employee benefits was due primarily to an increase in officer bonus accruals, as well as to merit increases during the current quarter.
+Added: The increase in information technology and related expense was due mainly to an increase in software licensing expense.
+Added: The increase in advertising and promotional expense was due to the timing of campaigns.
The increase in the federal insurance premium was due mainly to the Bank utilizing an assessment credit from the FDIC during the prior year quarter.
−Removed: The increase in other non-interest expense was due primarily to the write-down of a property that previously served as one of the Bank's branch locations, as management intends to sell the property.
+Added: The decrease in other non-interest expense was due primarily to a partial reversal of a write-down of a property that previously served as one of the Bank's branch locations.
The Company's efficiency ratio was 57.73% for the current quarter compared to 51.58% for the prior year quarter.
−Removed: The change in the efficiency ratio was due primarily to higher non-interest expense, partially offset by an increase in non-interest income.
+Added: The change in the efficiency ratio was due primarily to lower net interest income, along with an increase in non-interest expense.
Income Tax Expense
1 unchanged sentence
For the Three Months Ended
−Removed: March 31, Change Expressed in:
+Added: June 30, Change Expressed in:
2021 2020 Dollars Percent
4 unchanged sentences
Effective Tax Rate 20.6 % 20.7 %
−Removed: The increase in income tax expense was due primarily to higher pretax income in the current quarter.
+Added: The decrease in income tax expense was due primarily to lower pretax income in the current quarter.
Average Balance Sheet
4 unchanged sentences
For the Three Months Ended
−Removed: March 31, 2021 March 31, 2020
+Added: June 30, 2021 June 30, 2020
Average Interest Average Interest
4 unchanged sentences
One- to four-family loans:
+Added: Originated $ 3,982,990 $ 33,727 3.39 % $ 3,966,034 $ 37,701 3.80 %
+Added: Correspondent purchased 1,971,209 10,367 2.10 2,376,900 16,436 2.77
+Added: Bulk purchased 185,198 826 1.78 226,011 1,509 2.67
+Added: Total one- to four-family loans 6,139,397 44,920 2.93 6,568,945 55,646 3.39
Commercial loans 805,721 8,744 4.29 799,600 9,576 4.74
15 unchanged sentences
Money market 1,646,970 998 0.24 1,267,535 1,350 0.43
−Removed: Retail/business certificates 2,753,439 10,917 1.61 2,691,029 14,103 2.11
+Added: Retail/commercial certificates 2,678,914 9,938 1.49 2,734,940 13,882 2.04
Wholesale certificates 251,571 285 0.45 291,292 1,033 1.43
21 unchanged sentences
(2) AFS securities are adjusted for unamortized purchase premiums or discounts.
−Removed: (3) The average balance of investment securities includes an average balance of nontaxable securities of $7.5 million and $15.0 million for the three months ended March 31, 2021 and March 31, 2020, respectively.
+Added: (3) The average balance of investment securities includes an average balance of nontaxable securities of $5.1 million and $11.9 million for the three months ended June 30, 2021 and June 30, 2020, respectively.
(4) The FHLB advance amounts and rates included in this line include the effect of interest rate swaps and are net of deferred prepayment penalties.
6 unchanged sentences
Rate/Volume Analysis
−Removed: The table below presents the dollar amount of changes in interest income and interest expense for major components of interest-earning assets and interest-bearing liabilities, comparing the three months ended March 31, 2021 to the three months ended March 31, 2020.
+Added: The table below presents the dollar amount of changes in interest income and interest expense for major components of interest-earning assets and interest-bearing liabilities, comparing the three months ended June 30, 2021 to the three months ended June 30, 2020.
For each category of interest-earning assets and interest-bearing liabilities, information is provided on changes attributable to (1) changes in volume, which are changes in the average balance multiplied by the previous year's average rate and (2) changes in rate, which are changes in the average rate multiplied by the average balance from the previous year period.
The net changes attributable to the combined impact of both rate and volume have been allocated proportionately to the changes due to volume and the changes due to rate.
−Removed: For the Three Months Ended March 31,
+Added: For the Three Months Ended June 30,
Increase (Decrease) Due to
35 unchanged sentences
The Bank's internal policy limits total borrowings to 55% of total assets.
−Removed: At March 31, 2021, the Bank had total borrowings, at par, of $1.59 billion, or approximately 16% of total assets, all of which were FHLB advances.
−Removed: The amount of FHLB borrowings outstanding at March 31, 2021 was $1.59 billion, of which $640.0 million were advances scheduled to mature in the next 12 months, including $440.0 million of one-year floating-rate FHLB advances tied to interest rate swaps.
+Added: At June 30, 2021, the Bank had total borrowings, at par, of $1.59 billion, or approximately 16% of total assets, all of which were FHLB advances.
+Added: The amount of FHLB borrowings outstanding at June 30, 2021 was $1.59 billion, of which $440.0 million were advances scheduled to mature in the next 12 months, all of which were one-year floating-rate FHLB advances tied to interest rate swaps.
All FHLB borrowings are secured by certain qualifying loans pursuant to a blanket collateral agreement with FHLB.
−Removed: At March 31, 2021, the Bank had no repurchase agreements.
+Added: At June 30, 2021, the Bank had no repurchase agreements.
The Bank may enter into repurchase agreements as management deems appropriate, not to exceed 15% of total assets, and subject to the total borrowings internal policy limit of 55% as discussed above.
The Bank could utilize the repayment and maturity of outstanding loans, MBS, and other investments for liquidity needs rather than reinvesting such funds into the related portfolios.
−Removed: At March 31, 2021, the Bank had $1.72 billion of securities that were eligible but unused as collateral for borrowing or other liquidity needs.
+Added: At June 30, 2021, the Bank had $1.64 billion of securities that were eligible but unused as collateral for borrowing or other liquidity needs.
The Bank has access to other sources of funds for liquidity purposes, such as brokered and public unit certificates of deposit.
−Removed: As of March 31, 2021, the Bank's policy allowed for combined brokered and public unit certificates of deposit up to 15% of total deposits.
−Removed: At March 31, 2021, the Bank did not have any brokered certificates of deposit, and public unit certificates of deposit were approximately 4% of total deposits.
−Removed: The Bank had pledged securities with an estimated fair value of $311.5 million as collateral for public unit certificates of deposit at March 31, 2021.
+Added: As of June 30, 2021, the Bank's policy allowed for combined brokered and public unit certificates of deposit up to 15% of total deposits.
+Added: At June 30, 2021, the Bank did not have any brokered certificates of deposit, and public unit certificates of deposit were approximately 4% of total deposits.
+Added: The Bank had pledged securities with an estimated fair value of $303.3 million as collateral for public unit certificates of deposit at June 30, 2021.
The securities pledged as collateral for public unit certificates of deposit are held under joint custody with FHLB and generally will be released upon deposit maturity.
−Removed: At March 31, 2021, $1.59 billion of the Bank's certificate of deposit portfolio was scheduled to mature within the next 12 months, including $241.6 million of public unit certificates of deposit.
+Added: At June 30, 2021, $1.56 billion of the Bank's certificate of deposit portfolio was scheduled to mature within the next 12 months, including $228.0 million of public unit certificates of deposit and $194.3 million of commercial certificates of deposit.
Based on our deposit retention experience and our current pricing strategy, we anticipate the majority of the maturing retail certificates of deposit will renew or transfer to other deposit products of the Bank at prevailing rates, although no assurance can be given in this regard.
+Added: The same is anticipated for our commercial certificates of deposit;
+Added: however, due to the nature of these funds, retention rates are not as predictable as for retail certificates of deposit.
We also anticipate the majority of the maturing public unit certificates of deposit will be replaced with similar wholesale funding products, depending on availability and pricing.
−Removed: While scheduled payments from the amortization of loans and MBS and payments on short-term investments are relatively predictable sources of funds, deposit flows, prepayments on loans and MBS, and calls of investment securities are greatly influenced by general interest rates, economic conditions, and competition, and are less predictable sources of funds.
+Added: While scheduled payments from the amortization of loans and MBS and payments on short-term investments are relatively predictable sources of funds, deposit flows, prepayments on loans and MBS, and calls of investment securities are greatly influenced by general
+Added: interest rates, economic conditions, and competition, and are less predictable sources of funds.
To the extent possible, the Bank manages the cash flows of its loan and deposit portfolios by the rates it offers customers.
−Removed: The following table presents the contractual maturities of our loan, MBS, and investment securities portfolios at March 31, 2021, along with associated weighted average yields.
+Added: The following table presents the contractual maturities of our loan, MBS, and investment securities portfolios at June 30, 2021, along with associated weighted average yields.
Loans and securities which have adjustable interest rates are shown as maturing in the period during which the contract is due.
The table does not reflect the effects of possible prepayments or enforcement of due on sale clauses.
−Removed: As of March 31, 2021, the amortized cost of investment securities in our portfolio which are callable or have pre-refunding dates within one year was $377.0 million.
+Added: As of June 30, 2021, the amortized cost of investment securities in our portfolio which are callable or have pre-refunding dates within one year was $302.0 million.
MBS Investment Securities Total
16 unchanged sentences
Office of the Comptroller of the Currency ("OCC") regulations impose restrictions on savings institutions with respect to their ability to make distributions of capital, which include dividends, stock redemptions or repurchases, cash-out mergers and other transactions charged to the capital account.
−Removed: Under FRB and OCC safe harbor regulations, savings institutions generally may make capital distributions during any calendar year equal to earnings of the previous two calendar years and current year-to-date earnings.
+Added: Under FRB and OCC safe harbor regulations, savings institutions generally may make capital distributions during any calendar year equal to earnings of the previous two calendar years and current year-to-date earnings (to the extent not previously distributed).
A savings institution that is a subsidiary of a savings and loan holding company, such as the Company, that proposes to make a capital distribution must submit written notice to the OCC and FRB 30 days prior to such distribution.
8 unchanged sentences
We anticipate we will continue to have sufficient funds, through repayments and maturities of loans and securities, deposits and borrowings, to meet our current commitments.
−Removed: The maximum balance of short-term FHLB borrowings outstanding at any month-end during the six months ended March 31, 2021 was $840.0 million, and the average balance of short-term FHLB borrowings outstanding during this period was $731.7 million at a weighted average contractual rate of 0.56%.
−Removed: The balance of short-term FHLB borrowings outstanding at March 31, 2021 was $640.0 million, at a weighted average contractual rate of 0.34%.
+Added: The maximum balance of short-term FHLB borrowings outstanding at any month-end during the nine months ended June 30, 2021 was $840.0 million, and the average balance of short-term FHLB borrowings outstanding during this period was $657.0 million at a weighted average contractual rate of 0.50%.
+Added: The balance of short-term FHLB borrowings outstanding at June 30, 2021 was $440.0 million, at a weighted average contractual rate of 0.27%.
Short-term FHLB borrowings for this purpose are defined as those with maturity dates within the next 12 months.
1 unchanged sentence
In the normal course of business, the Company and its subsidiary are named defendants in various lawsuits and counter claims.
−Removed: In the opinion of management, after consultation with legal counsel, none of the currently pending suits had or are expected to have a materially adverse effect on the Company's consolidated financial statements for the quarter ended March 31, 2021, or future periods.
+Added: In the opinion of management, after consultation with legal counsel, none of the currently pending suits had or are expected to have a materially adverse effect on the Company's consolidated financial statements for the quarter ended June 30, 2021, or future periods.
Consistent with our goal to operate a sound and profitable financial organization, we actively seek to maintain a well-capitalized status for the Bank per the regulatory framework for prompt corrective action ("PCA").
Qualifying institutions that elect to use the CBLR framework, such as the Bank and the Company, that maintain the required minimum leverage ratio will be considered to have satisfied the generally applicable risk-based and leverage capital requirements in the regulatory agencies' capital rules, and to have met the capital requirements for the well capitalized category under the agencies' PCA framework.
−Removed: As of March 31, 2021, the Bank's CBLR was 12.2% and the Company's CBLR was 13.4%, which exceeded the minimum requirements.
+Added: As of June 30, 2021, the Bank's CBLR was 11.5% and the Company's CBLR was 12.8%, which exceeded the minimum requirements.
See "Part I, Item 1.
Business - Regulation and Supervision - Regulatory Capital Requirements" in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2020 for additional information related to regulatory capital.
−Removed: The following table presents a reconciliation of equity under GAAP to regulatory capital amounts, as of March 31, 2021, for the Bank and the Company (dollars in thousands):
+Added: The following table presents a reconciliation of equity under GAAP to regulatory capital amounts, as of June 30, 2021, for the Bank and the Company (dollars in thousands):
Total equity as reported under GAAP $ 1,112,326 $ 1,237,624
3 unchanged sentences
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.