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Item 9A. Controls and Procedures

2022-11-22 compared with 2021-11-24 · 333 added, 437 removed, 1666 unchanged (32% of the section changed)

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Changes in Internal Control Over Financial Reporting

No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Management’s Report Regarding Internal Control Over Financial Reporting

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Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Accordingly, absolute assurance cannot be provided that the effectiveness of the internal control systems may not

become inadequate in future periods because of changes in conditions, or because the degree of compliance with the policies or procedures may deteriorate.

Accordingly, absolute assurance cannot be provided that the effectiveness of the internal control systems may not become inadequate in future periods because of changes in conditions, or because the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of September 30, 2022.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of

TFS Financial Corporation

Cleveland, Ohio

To the shareholders and the Board of Directors of TFS Financial Corporation

Opinion on Internal Control over Financial Reporting

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In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 30, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended September 30, 2021, of TFS Financial Corporation and subsidiaries and our report dated November 24, 2021, expressed an unqualified opinion on those financial statements and included an explanatory paragraph regarding the Company’s adoption of Accounting Standards Update No.

2016-13, Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments .

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended September 30, 2022, of the Company and our report dated November 22, 2022, expressed an unqualified opinion on those financial statements.

Basis for Opinion

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The table below sets forth information, as of September 30, 2022, regarding our executive officers other than Mr.

Stefanski, Mr.

Stefanski III and Ms.

Stefanski and Ms.

Name Title Age

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Holmes Chief Retail Officer, the Association 59

Huml Chief Financial Officer 62

Miller Chief Accounting Officer 57

Mulhern Chief Financial Officer 56

Rubino Chief Information Officer, the Association 47

Stefanski Chief Strategy Officer, the Association 34

Stefanski Chief Lending Officer, the Association 34

Zbanek Chief Synergy Officer, the Association 49

Anna Marie P.

Motta retired from her positions as Vice President of the Company and Chief Information Officer of the Association, effective September 30, 2021.

In connection with her retirement, the Board of Directors appointed Andrew J.

Rubino, who is a Vice President of the Company and was the Chief Marketing Officer of the Association, to the position of Chief Information Officer of the Association.

Ben Stefanski III, who is the Secretary of the Company, was also appointed as the Chief Marketing Officer of the Association.

Huml has announced his retirement as Chief Financial Officer of the Company, effective January 14, 2022.

Mulhern, who is a manager of finance for the Association, will become the new Chief Financial Officer of the Company at that time.The executive officers of the Company and the Association are elected annually and hold office until their respective successors are elected or until death, resignation, retirement or removal by the Board of Directors.

On March 28, 2022, Bradley T.

Stefanski was appointed as Chief Strategy Officer of the Association and Gavin B.

Stefanski was appointed Chief Lending Officer of the Association.

Huml retired from his position as Chief Financial Officer of the Company, effective January 14, 2022.

In connection with his retirement, the Board of Directors appointed Mr.

Mulhern, who was a manager of Finance for the Association, to the position of Chief Financial Officer of the Company.

Stefanski III resigned from the Board of Directors of the Association and the Company and from his position as Chief Marketing Officer of the Association in January 2022.

The executive officers of the Company and the Association are elected annually and hold office until their respective successors are elected or until death, resignation, retirement or removal by the Board of Directors.

The Business Background of Our Executive Officers

The business experience for the past five years of each of our executive officers other than Mr.

Stefanski, Mr.

Stefanski III and Ms.

Stefanski and Ms.

Weil is set forth below.

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He holds a BBA in Business Administration from the University of Akron, and received a Distinguished Business Alumni Award in 2009, and a Distinguished Alumni Award from the University’s multicultural department in 2013.

Huml joined the Association as a Vice President in 1998 and was appointed Chief Operating Officer of the Company in 2002, Chief Accounting Officer in 2009 and Chief Financial Officer in 2018.

Prior to joining the Association, Mr.

Huml spent 10 years in the hotel industry, focusing on the areas of finance, real estate development and risk management.

Huml is a certified public accountant in the state of Ohio.

Miller joined the Association in 1998 and was appointed Chief Accounting Officer in 2020.

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Miller holds a BS in Accounting from the University of Akron.

Mulhern was named the Chief Financial Officer in January 2022.

Mulhern joined the Association in 2003 as a project manager where he led key strategic business initiatives including a state loan expansion project, and IT projects to replace the company’s front-end servicing application, and implementation of an updated loan origination system.

Mulhern moved to IT management, then to operations where he managed various departments including Loan Servicing, Default Servicing and Deposit Operations.

He was named the Chief Credit Officer in August 2018, and Director of Internal Audit in June 2019, where he earned his CIA credentials.

Mulhern joined the Finance Department in February 2021.

He holds a Bachelor’s Degree in Accounting from John Carroll University and an MBA from the Weatherhead School of Management at Case Western Reserve University.

Prior to joining Third Federal, Mr.

Mulhern was in public accounting with Coopers & Lybrand where he earned his CPA credentials (no longer active), and more than a decade as a small business owner.

Rubino has been with the Association since 2000, joining the company as a business analyst.

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He holds both a BS in Management Information Systems and an MBA from the University of Akron.

Stefanski has been with the Association since 2014, and was named Chief Strategy Officer in March 2022.

He began his career at Third Federal in the Risk Management Department, working on the development of the company’s Market Risk Management Program, including modeling and testing;

before moving to Loan Production and the branch system, where he spent four years in roles in Underwriting, retail management, and Operations Support project development.

Stefanski then joined the Finance Department in 2021 to help drive strategic initiatives.

He holds a BA in Sociology and Economics from Colgate University.

Stefanski joined the Association in 2018 in the Management Training Program, supporting the company’s branch system in Southern and Northeast Ohio.

Stefanski was named Underwriting Manager in 2019, became Loan Production Manager in 2021, and was named Chief Lending Officer in March 2022.

Prior to Third Federal, he managed multi-billion dollar and strategic clients for ODW Logistics, a national supply chain solutions company in Hamilton, Ohio, where he was responsible for developing and maintaining customized total freight management solutions driving high revenue growth for ODW.

Stefanski holds a BS in Business from the Farmer School of Business at Miami University.

Zbanek joined the Association in 2001 and was named the Chief Marketing Officer in 2013 and the Chief Synergy Officer in 2020, and also serves as the Human Resources Officer for the Association.

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Principal Accounting Fees and Services

Incorporated by reference from the section of the Proxy Statement entitled “Fees Paid to Deloitte & Touche LLP.” Such information will be filed with the SEC no later than 120 days after the end of the fiscal year covered by this report.

Incorporated by reference from the section of the Proxy Statement entitled “Fees Paid to Deloitte & Touche LLP (PCAOB ID No.

34 ).” Such information will be filed with the SEC no later than 120 days after the end of the fiscal year covered by this report.

Exhibits and Financial Statement Schedules

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of

TFS Financial Corporation

Cleveland, Ohio

To the shareholders and the Board of Directors of TFS Financial Corporation

Opinion on the Financial Statements

We have audited the accompanying consolidated statements of condition of TFS Financial Corporation and subsidiaries (the "Company") as of September 30, 2022 and 2021, the related consolidated statements of income, comprehensive income (loss), shareholders' equity, and cash flows, for each of the three years in the period ended September 30, 2022, and the related notes (collectively referred to as the "financial statements").

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended September 30, 2021, in conformity with accounting principles generally accepted in the United States of America.

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended September 30, 2022, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of September 30, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated November 22, 2022, expressed an unqualified opinion on the Company's internal control over financial reporting.

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Allowance for Credit Losses – Refer to Notes 1 and 5 to the financial statements

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The ACL is established using relevant available information, relating to past events, current conditions and reasonable and supportable forecasts.

The Company utilizes loan level regression models with forecasted

economic data to derive the probability of default and loss given default factors.

These factors are used to calculate the loan level credit loss over a 24-month reasonable and supportable period with an immediate reversion to historical mean loss rates for the remaining life of the loans.

The Company utilizes loan level regression models with forecasted economic data to derive the probability of default and loss given default factors.

These factors are used to calculate the loan level credit loss over a 24-month reasonable and supportable period with an immediate reversion to historical mean loss rates

for the remaining life of the loans.

Qualitative adjustments are then made to account for factors that management does not believe are captured in the CECL quantitative models.

The determination of the appropriate level of the allowance for the loan portfolio inherently involves a high degree of subjectivity and requires significant estimates of current credit risks using both quantitative and qualitative analyses.

Auditing certain aspects of the ACL, including the (1) model methodology, (2) model accuracy, (3) model assumptions, (4) selection of relevant risk characteristics (including consideration of COVID-19 extensions), (5) interpretation of the results, and (6) use of qualitative adjustments, involves especially subjective and complex judgment.

Auditing certain aspects of the ACL, including the (1) model methodology, (2) model accuracy, (3) model assumptions, (4) selection of relevant risk characteristics, (5) interpretation of the results, and (6) use of qualitative adjustments, involves especially subjective and complex judgment.

Given the significant judgment in determining the ACL estimate, performing audit procedures to evaluate the reasonableness of management’s estimate of the ACL requires a high degree of auditor judgment and an increased extent of effort, including the need to involve our credit specialists.

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Our audit procedures related to the Allowance for Credit Losses included the following, among others:

• We tested the effectiveness of controls over the Company’s (1) model methodology, (2) model accuracy, (3) model assumptions, (4) selection of relevant risk characteristics (including consideration of COVID-19 extensions), (5) interpretation of the results, and (6) use of qualitative adjustments.

• With the assistance of our credit specialists we evaluated the reasonableness of the (1) model methodology, (2) model accuracy, (3) model assumptions, (4) selection of relevant risk characteristics (including consideration of COVID-19 extensions), and (5) interpretation of the results.

• We tested the effectiveness of controls over the Company’s (1) model methodology, (2) model accuracy, (3) model assumptions, (4) selection of relevant risk characteristics, (5) interpretation of the results, and (6) use of qualitative adjustments.

• With the assistance of our credit specialists, we evaluated the reasonableness of the (1) model methodology, (2) model accuracy, (3) model assumptions, (4) selection of relevant risk characteristics, and (5) interpretation of the results.

• We evaluated trends in the total ACL for consistency with trends in loan portfolio growth and credit performance.

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Investment securities available for sale (amortized cost $ 501,597 and $ 420,542 , respectively)

457,908 421,783

Mortgage loans held for sale ($ 9,661 and $ 0 measured at fair value, respectively)

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51,736,009 and 51,557,451 shares at September 30, 2022 and September 30, 2021, respectively

( 771,986 ) ( 768,035 )

Unallocated ESOP shares ( 31,417 ) ( 35,751 )

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TFS FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For each of the three years in the period ended September 30, 2022

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Total other comprehensive income (loss) 90,950 64,164 ( 62,586 )

Total comprehensive income (loss) $ 145,171 $ 20,731 $ ( 12,364 )

Total comprehensive income $ 165,515 $ 145,171 $ 20,731

See accompanying notes to consolidated financial statements.

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— — — — 83,317 — 83,317

Other comprehensive income (loss), net of tax — — — — — ( 92,601 ) ( 92,601 )

Other comprehensive (loss), net of tax — — — — — ( 62,586 ) ( 62,586 )

ESOP shares allocated or committed to be released — 3,033 — 4,333 — — 7,366

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Purchase of treasury stock ( 20,500 shares)

— — ( 377 ) — — — ( 377 )

Treasury stock allocated to (from) equity incentive plan — 776 ( 2,683 ) — — — ( 1,907 )

Dividends declared to common shareholders ($ 1.11 per common share)

— — — — ( 55,465 ) — ( 55,465 )

Balance at September 30, 2020 3,323 1,742,714 ( 767,649 ) ( 40,084 ) 865,514 ( 131,965 ) 1,671,853

Comprehensive income

Cumulative effect from changes in

accounting principle, net of tax 1

— — — — ( 35,763 ) — ( 35,763 )

Other comprehensive income (loss), net of tax — — — — — ( 62,586 ) ( 62,586 )

— — — — 81,007 — 81,007

Other comprehensive income, net of tax — — — — — 64,164 64,164

ESOP shares allocated or committed to be released — 3,936 — 4,333 — — 8,269

Compensation costs for equity incentive plans — 5,442 — — — — 5,442

Purchase of treasury stock (20,500 shares) — — ( 377 ) — — — ( 377 )

Treasury stock allocated to (from) equity incentive plan — ( 5,205 ) ( 386 ) — — — ( 5,591 )

Dividends declared to common shareholders ($ 1.1225 per common share)

— — — — ( 57,101 ) — ( 57,101 )

Balance at September 30, 2021 3,323 1,746,887 ( 768,035 ) ( 35,751 ) 853,657 ( 67,801 ) 1,732,280

Comprehensive income

Cumulative effect from changes in

accounting principle, net of tax 1

— — — — 74,565 — 74,565

— — — — 81,007 — 81,007

Other comprehensive income (loss), net of tax — — — — — 64,164 64,164

Other comprehensive income, net of tax — — — — — 90,950 90,950

ESOP shares allocated or committed to be released — 2,729 — 4,334 — — 7,063

Compensation costs for equity incentive plans — 3,946 — — — — 3,946

Purchase of treasury stock ( 337,259 shares)

— — ( 5,049 ) — — — ( 5,049 )

Treasury stock allocated to (from) equity incentive plan — ( 2,339 ) 1,098 — — — ( 1,241 )

Dividends declared to common shareholders ($ 1.13 per common share)

— — — — ( 58,175 ) — ( 58,175 )

Balance at September 30, 2022 $ 3,323 $ 1,751,223 $ ( 771,986 ) $ ( 31,417 ) $ 870,047 $ 23,149 $ 1,844,339

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For each of the three years in the period ended September 30, 2022

(In thousands)

2022 2021 2020

CASH FLOWS FROM OPERATING ACTIVITIES:

(In thousands)

Net income $ 74,565 $ 81,007 $ 83,317

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Proceeds from sales of loans held for sale 41,495 63,913 62,398

Loans originated and principal repayments on loans for sale ( 67,024 ) ( 60,256 ) ( 50,992 )

Increase in cash surrender value for bank owned life insurance contracts ( 7,979 ) ( 6,289 ) ( 6,192 )

Net decrease (increase) in interest receivable and other assets 7,697 ( 17,970 ) ( 13,202 )

Net increase (decrease) in accrued expenses and other liabilities 14,904 24,922 ( 280 )

Loans originated and principal repayments on loans held for sale ( 66,162 ) ( 67,024 ) ( 60,256 )

Increase in bank owned life insurance contracts ( 8,432 ) ( 7,979 ) ( 6,289 )

Net (increase) decrease in interest receivable and other assets ( 13,043 ) 7,697 ( 17,970 )

Net (decrease) increase in accrued expenses and other liabilities ( 1,155 ) 14,904 24,922

Net cash provided by operating activities 38,929 83,155 121,798

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Other 1,278 3,178 921

Net cash provided by (used in) investing activities 547,356 147,576 ( 341,982 )

Net cash (used in) provided by investing activities ( 1,875,095 ) 547,356 147,576

CASH FLOWS FROM FINANCING ACTIVITIES:

Net (decrease) increase in deposits ( 72,511 ) ( 231,949 ) 459,170

Net (decrease) increase in borrowers' advances for insurance and taxes ( 1,903 ) 8,208 323

Net increase (decrease) in borrowers' advances for insurance and taxes 7,617 ( 1,903 ) 8,208

Net (decrease) increase in principal and interest owed on loans serviced ( 11,563 ) ( 4,419 ) 12,986

Net (decrease) increase in short-term borrowed funds ( 525,000 ) ( 281,126 ) 326,991

Net increase (decrease) in short-term borrowed funds 875,000 ( 525,000 ) ( 281,126 )

Proceeds from Fed Funds purchased 225,000 — —

Proceeds from long-term borrowed funds 600,000 100,000 250,000

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Cash collateral/settlements received from (provided to) derivative counterparties 162,094 89,970 ( 87,827 )

Purchase of treasury shares — ( 413 ) ( 9,087 )

Acquisition of treasury shares through net settlement ( 5,591 ) ( 1,907 ) ( 1,538 )

Acquisition of treasury shares ( 6,290 ) ( 5,591 ) ( 2,320 )

Dividends paid to common shareholders ( 58,297 ) ( 56,637 ) ( 55,465 )

Net cash used in financing activities ( 640,218 ) ( 46,484 ) 244,349

Net cash provided by (used in) financing activities 1,717,404 ( 640,218 ) ( 46,484 )

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS ( 118,762 ) ( 9,707 ) 222,890

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Cash paid for interest on borrowed funds 37,120 16,043 53,676

Cash paid (received) for interest on interest rate swaps 45,031 18,436 ( 13,368 )

Cash paid for interest on interest rate swaps 29,138 45,031 18,436

Cash paid for income taxes 39,602 25,772 1,673

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Transfer of loans from held for investment to held for sale 86,077 698,917 778,059

Transfer of loans from held for sale to held for investment 22,741 — —

Treasury stock issued for stock benefit plans 2,412 5,310 776

5,310 776 322

See accompanying notes to consolidated financial statements.

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Business —TFS Financial Corporation, a federally chartered stock holding company, conducts its principal activities through its wholly owned subsidiaries.

The principal line of business of the Company is retail consumer banking, including mortgage lending, deposit gathering, and other insignificant financial services.

The principal line of business of the Company is retail consumer banking, including mortgage lending, deposit gathering, and other financial services.

Third Federal Savings and Loan Association of Cleveland, MHC, its federally chartered mutual holding company parent, owned 80.95 % of the outstanding shares of common stock of the Company at September 30, 2022.

The Company’s primary operating subsidiaries include the Association and Third Capital, Inc.

The Association is a federal savings association, which provides retail loan and savings products to its customers in Ohio and Florida, through its 37 full-service branches, seven loan production offices, customer service call center and internet site.

The Association is a federal savings association, which provides retail loan and savings products to its customers in Ohio and Florida, through its 37 full-service branches, five loan production offices, customer service call center and internet site.

The Association also provides savings products, purchase mortgages, first mortgage refinance loans, home equity lines of credit, and home equity loans in states outside of its branch footprint.

The Association also acquires first mortgage loans through a correspondent lending partnership.

Third Capital, Inc.

was formed to hold non-thrift investments and subsidiaries, which included a limited liability company that acquires and manages commercial real estate.

On October 31, 2019, the limited liability company sold the remaining two commercial office buildings it owned, which had a net book value of $ 19,324 at September 30, 2019, which was included in premises, equipment and software, net and other assets.

The Company recorded pre-tax income of $ 4,665 in 2020, representing its share of the gain on sale.

On October 31, 2019, the limited liability company sold the remaining two commercial office buildings it owned, for which the Company recorded pre-tax income of $ 4,665 in 2020, representing its share of the gain on sale.

The accounting and reporting policies of TFS Financial Corporation and its subsidiaries conform to accounting principles generally accepted in the United States of America and to general practices within the thrift industry.

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The following is a description of the significant accounting and reporting policies, which the Company follows in preparing and presenting its consolidated financial statements.

Principles of Consolidation —The consolidated financial statements of the Company include the accounts of TFS Financial Corporation and its wholly owned subsidiaries.

Basis of Consolidation and Reporting —The consolidated financial statements of the Company include the accounts of TFS Financial Corporation and its wholly owned subsidiaries.

Intercompany balances and transactions have been eliminated in consolidation.

Estimates —The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Actual results could differ from these estimates.

Cash and Cash Equivalents —Cash and cash equivalents consist of working cash on hand, and demand and interest bearing deposits at other financial institutions with maturities of three months or less.

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Under these agreements, service fees charged to the Company are waived provided certain average compensating balances are maintained throughout each month.

Investment Securities —Securities are all classified as available for sale.

Securities held as available for sale are reported at fair value, with unrealized gains and losses, net of tax, reported as a component of AOCI.

Management determines the appropriate classification of securities based on the intent and ability at the time of purchase.

Gains and losses on the sale of investment and mortgage-backed securities available for sale are computed on a specific identification basis.

Purchases and sales of securities are accounted for on a trade-date or settlement-date basis, depending on the settlement terms.

Investment Securities —Our fixed-maturity securities are accounted for on an available-for-sale basis.

Securities held as available-for-sale are reported at fair value, with the corresponding unrealized gains and (losses), net of deferred income taxes, reported in accumulated other comprehensive income.

Management determines the appropriate classification of investment securities based on its intent and ability to hold at the time of purchase.

Purchases of securities are accounted for on a trade-date or settlement-date bases, depending on the settlement terms.

Realized gains and (losses) on securities are computed on a specific identification basis.

Realized gains and (losses) also include changes in fair value on derivatives not designated as hedging instruments.

Sales of securities are accounted for on a trade-date or settlement-date basis, depending on the settlement terms.

A decline in the fair value of any available for sale security, below cost, is evaluated for credit loss.

Credit loss is recognized in earnings if management intends, or will more likely than not be required, to sell the security before the recovery of its amortized cost basis.

If the present value of cash flows expected to be collected is less than the amortized cost basis of the security, then a credit loss exists and an allowance would be recognized as a credit loss expense, limited to the difference between fair value and amortized cost.

Non-credit related loss is recognized in other comprehensive income, net of applicable taxes.

To determine whether a credit loss exists, the Company considers, among other things, adverse conditions related to the security, industry, geographic area, the payment schedule of the debt security and likelihood that the issuer will be able to make payments that increase in the future, failure of the issuer to make scheduled payments and all available information relevant to

the securities collectability, changes in ratings assigned by a rating agency, and other credit enhancements that affect the securities expected performance.

between fair value and amortized cost.

Non-credit related loss is recognized in other comprehensive income, net of applicable deferred income taxes.

Investment income consist of interest and accretion (net of amortization).

Interest is recognized on an accrual basis using the level-yield method.

Premiums and discounts are amortized using the level-yield method.

Derivative Instruments —Derivative instruments are carried at fair value in the Company's financial statements.

For derivative instruments that are designated and qualify as cash flow hedges, changes in the fair value of the derivative instrument are reported as a component of other comprehensive income, net of tax, and reclassified into earnings in the same period during which the hedged transaction affects earnings.

The earnings effect of the hedging instrument will be presented in the same income statement line item as the earnings effect of the hedged item.

Accumulated other comprehensive income will be adjusted to a balance that reflects the cumulative change in the fair value of the hedging instrument.

At the inception of a hedge, the Company documents certain items, including the relationship between the hedging instrument and the hedged item, the risk management objective and the nature of the risk being hedged, a description of how effectiveness will be measured, an evaluation of hedge transaction effectiveness and the benchmark interest rate or contractually specified interest rate being hedged.

Hedge accounting is discontinued prospectively when (1) a derivative is no longer highly effective in offsetting changes in the fair value or cash flow of a hedged item, (2) a derivative expires or is sold, (3) a derivative is de-designated as a hedge, because it is unlikely that a forecasted transaction will occur, or (4) it is determined that designation of a derivative as a hedge is no longer appropriate.

When hedge accounting is discontinued, the Company would continue to carry the derivative on the statement of condition at its fair value;

however, changes in its fair value would be recorded in earnings instead of through OCI.

For derivative instruments not designated as hedging instruments, the Company recognizes gains and (losses) on the derivative instrument in current earnings during the period of change.

Mortgage Banking Activity —Mortgage loans originated and intended for sale in the secondary market are carried at the lower of cost or estimated fair value in the aggregate.

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Servicing fee income net of amortization and other loan fees collected on loans serviced for others are included in Fees and service charges, net of amortization on the CONSOLIDATED STATEMENTS OF INCOME .

Derivative Instruments —Derivative instruments are carried at fair value in the Company's financial statements.

The earnings effect of the hedging instrument will be presented in the same income statement line item as the earnings effect of the hedged item.

Accumulated other comprehensive income will be adjusted to a balance that reflects the cumulative change in the fair value of the hedging instrument.

When hedge accounting is discontinued, the Company would continue to carry the derivative on the statement of condition at its fair value;

however, changes in its fair value would be recorded in earnings instead of through OCI.

For derivative instruments not designated as hedging instruments, the Company recognizes gains and losses on the derivative instrument in current earnings during the period of change.

Loans and Related Deferred Loan Expenses, net —Loans originated with the intent to hold into the foreseeable future are carried at unpaid principal balances adjusted for partial charge-offs, the allowance for credit losses and net deferred loan expenses.

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Allowance for Credit Losses —The allowance for credit losses represents the estimate of lifetime losses in our loan portfolio and off-balance sheet commitments.

The allowance for credit losses is assessed on a quarterly basis and provisions

(releases) for credit losses are made accordingly.

The allowance for credit losses is assessed on a quarterly basis and provisions (releases) for credit losses are made accordingly.

The allowance is established using relevant available information, relating to past events, current conditions and supportable economic forecasts.

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The allowance for credit losses is increased by recoveries and decreased by charge-offs.

At September 30, 2021, there remains some uncertainty around the economic impacts related to COVID-19 and how recovery will advance.

This can negatively impact the economic and housing markets and borrower performance within our loan portfolios.

Since this event is unique to historical recessions, with affected borrowers reported as current under their forbearance plans, inherent losses are not fully captured within our historical loan loss experience from which the quantitative portion of our allowance for credit losses is derived.

At September 30, 2021, a qualitative adjustment was made to align economic forecast results with management's view of the future.

Also, qualitative adjustments were made to reflect expected recovery of loan amounts previously charged-off, beyond what the model is able to project.

At September 30, 2021, our allowance for credit losses totaled $ 89,259 , with $ 64,289 allocated to credit losses on loans and $ 24,970 to credit losses on off-balance sheet commitments.

Management believes the allowance is adequate.

For further discussion on the allowance for credit losses, non-accrual, impairment, and TDRs, see Note 5.

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Goodwill is reviewed for impairment on an annual basis as of September 30.

It was also assessed for impairment as of March 31, 2020 due to the economic downturn at the onset of the COVID-19 pandemic with no impairment identified.

No impairment was identified as of September 30, 2022 or 2021.

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Deposits —Interest on deposits is accrued and charged to expense monthly and is paid or credited in accordance with the terms of the accounts.

Treasury Stock— Acquisitions of treasury stock are recorded at cost using the cost method of accounting.

Treasury Stock— Acquisitions of treasury stock through stock repurchases are recorded at cost using the cost method of accounting.

Repurchases may be made through open market purchases, block trades and in negotiated private transactions, subject to the availability of stock, general market conditions, the trading price of the stock, alternative uses for capital, and the Company’s financial performance.

Repurchased shares will be available for general corporate purposes.

Accumulated Other Comprehensive Income (Loss) —Accumulated other comprehensive income (loss) consists of changes in pension obligations and changes in unrealized gains (losses) on securities available for sale and cash flow hedges,

each of which is net of the related income tax effects.

The Company's policy is to release income tax effects from accumulated other comprehensive income only when then entire portfolio to which the underlying transactions relate to is liquidated, sold or extinguished.

Accumulated Other Comprehensive Income (Loss) —AOCI consists of changes in pension obligations, changes in unrealized gains (losses) on securities available for sale and cash flow hedges, each of which is net of the related income tax

The Company's policy is to release income tax effects from AOCI only when the entire portfolio to which the underlying transactions relate to is liquidated, sold or extinguished.

Revenue from Contracts with Customers — The core principle of the guidance requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to receive in exchange for those goods or services.

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Share-Based Compensation —Compensation expense for awards of equity instruments is recognized on a straight-line basis over the requisite service period based on the grant date fair value estimated in accordance with the provisions of FASB ASC 718 “Compensation—Stock Compensation”.

All vested equity instruments are settled in stock.

Forfeitures are recognized as they occur.

4 unchanged sentences

Marketing Costs —Marketing costs are expensed as incurred .

Earnings per Share —Basic earnings per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding.

Earnings per Share —Basic EPS is computed by dividing net income by the weighted-average number of shares of common stock outstanding.

Outstanding shares include shares sold to subscribers, shares held by the Third Federal Foundation, shares of the Employee Stock Ownership Plan which have been allocated or committed to be released for allocation to participants, and shares held by Third Federal Savings, MHC.

1 unchanged sentence

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

Diluted earnings per share is computed using the same method as basic earnings per share, but the weighted-average number of shares reflects the potential dilution, if any, of unexercised stock options, unvested shares of performance share units and unvested shares of restricted stock units that could occur if stock options were exercised and performance share units and restricted stock units were issued and converted into common stock.

Diluted EPS is computed using the same method as basic EPS, but the weighted-average number of shares reflects the potential dilution, if any, of unexercised stock options, unvested shares of performance share units and unvested shares of restricted stock units that could occur if stock options were exercised and performance share units and restricted stock units were issued and converted into common stock.

These potentially dilutive shares would then be included in the number of weighted-average shares outstanding for the period using the treasury stock method.

At September 30, 2022, 2021 and 2020, potentially dilutive shares include stock options, restricted stock units and performance share units issued through share-based compensation plans.

Use of Estimates —The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Actual results could differ from these estimates.

STOCK TRANSACTIONS

2 unchanged sentences

TFS Financial Corporation issued 5,000,000 shares of common stock, or 1.50 % of its post-offering outstanding common stock, to Third Federal Foundation.

Pursuant to the eighth repurchase program for the repurchase of 10,000,000 shares authorized by the Board of Directors in October, 2016, no shares were repurchased during the year ended September 30, 2021, 20,500 shares were repurchased during the year ended September 30, 2020 and 555,400 shares were repurchased during the year ended September 30, 2019.

Pursuant to the eighth repurchase program for the repurchase of 10,000,000 shares authorized by the Board of Directors in October, 2016, 337,259 shares were repurchased during the year ended September 30, 2022, no shares were repurchased during the year ended September 30, 2021 and 20,500 shares were repurchased during the year ended September 30, 2020.

At September 30, 2022, there were 5,553,820 shares remaining to be purchased under the eighth repurchase program.

The Company previously repurchased 51,300,000 shares of the Company’s common stock as part of the previous seven Board of

Directors-approved share repurchase programs.

The Company previously repurchased 51,300,000 shares of the Company’s common stock as part of the previous seven Board of Directors-approved share repurchase programs.

In total, the Company has repurchased 55,746,180 shares of the Company's common stock as of September 30, 2022.

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federal banking regulatory agencies issued a final rule which provides banking organizations that implement CECL during the 2020 calendar year the option to delay for two years an estimate of CECL’s effect on regulatory capital, relative to the incurred loss methodology’s effect on regulatory capital, followed by a three-year transition period, which the Association and Company have adopted.

During the two-year delay, the Association and Company will add back to common equity tier 1 capital (“CET1”) 100% of the initial adoption impact of CECL plus 25% of the cumulative quarterly changes in the allowance for credit losses.

After two years the quarterly transitional amounts along with the initial adoption impact of CECL will be phased out of CET1 capital over the three-year period.

During the two-year delay, the Association and Company added back to common equity tier 1 capital (“CET1”) 100% of the initial adoption impact of CECL plus 25% of the cumulative quarterly changes in the allowance for credit losses.

Subsequent to the two-year delay, the quarterly transitional amounts along with the initial adoption impact of CECL will be phased out of CET1 capital over the three-year period.

At September 30, 2022, the Association exceeded all regulatory capital requirements and is considered “well capitalized” under regulatory guidelines.

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The Association paid dividends of $ 56,000 and $ 55,000 to the Company during the years ended September 30, 2022 and 2021, respectively.

On July 13, 2021, as permitted under interim final rules issued by the FRS on August 12, 2011, a majority of Third Federal Savings, MHC's members eligible to vote approved Third Federal Savings, MHC waiving its right to receive dividends on the Company's stock that Third Federal Savings, MHC owns, up to $ 1.13 per share during the four quarters ending June 30, 2022.

Unless the FRS amends its interim rule, a member vote will be required for Third Federal Savings, MHC to waive its right to receive dividends beyond June 30, 2022.

As permitted under interim final rules issued by the FRS on August 12, 2011, a majority of Third Federal Savings, MHC's members eligible to vote approved Third Federal Savings, MHC waiving dividends aggregating up to $1.13 per share on the common stock of the Company for the 12 month following the special meeting of members held on July 12, 2022.

Unless the FRS amends its interim rule, a member vote will be required for Third Federal Savings, MHC to waive its right to receive dividends beyond July 12, 2023.

INVESTMENT SECURITIES

Investments available for sale are summarized in the tables below.

Available-for-sale securities are summarized in the tables below.

Accrued interest in the periods presented is $ 1,122 and $ 852 as of September 30, 2022 and September 30, 2021, respectively, and is reported in accrued interest receivable on the CONSOLIDATED STATEMENTS OF CONDITION .

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Fannie Mae certificates 1,011 14 ( 4 ) 1,021

Government and agency obligations 4,057 — ( 438 ) 3,619

Total $ 501,597 $ 15 $ ( 43,704 ) $ 457,908

4 unchanged sentences

Total $ 420,542 $ 2,569 $ ( 1,328 ) $ 421,783

The following is a summary of our securities portfolio by remaining period to contractual maturity and yield at September 30, 2022.

Maturities are based on the final contractual payment dates, and do not reflect the impact of prepayments or early redemptions that may occur.

There were no securities with a maturity of one year or less for either year presented.

Weighted average yields are not presented on a tax-equivalent basis and are calculated by multiplying each carry value by its yield and dividing the sum of these results by the total carry values.

We did not hold any tax-free securities.

September 30, 2022 September 30, 2021

Amortized Cost Fair Value Weighted Average Yield Amortized Cost Fair Value Weighted Average Yield

One to five years 15,476 14,775 2.06 % 18,373 18,680 1.83 %

Five to ten years 38,927 37,204 2.30 % 34,904 35,364 1.22 %

Ten years or greater 447,194 405,929 2.25 % 367,265 367,739 0.90 %

Total $ 501,597 $ 457,908 2.25 % $ 420,542 $ 421,783 0.96 %

Gross unrealized losses on available- for- sale securities and the estimated fair value of the related securities, aggregated by the length of time the securities have been in a continuous loss position, at September 30, 2022 and 2021, were as follows:

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REMICs $ 261,795 $ 17,260 $ 190,739 $ 26,002 $ 452,534 $ 43,262

Fannie Mae certificates 217 4 — — 217 4

Government and agency obligations 3,619 438 — — 3,619 438

Total $ 265,631 $ 17,702 $ 190,739 $ 26,002 $ 456,370 $ 43,704

September 30, 2021

7 unchanged sentences

REMICs $ 201,279 $ 1,290 $ 6,261 $ 38 $ 207,540 $ 1,328

The unrealized losses on investment securities were attributable to changes in market interest rates.

The contractual terms of U.S.

government and agency obligations do not permit the issuer to settle the security at a price less than the par value of the investment.

The contractual cash flows of mortgage-backed securities are guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae.

REMICs are issued by or backed by securities issued by these governmental agencies.

It is expected that the securities would not be settled at a price substantially less than the amortized cost of the investment.

The unrealized losses on investment securities were primarily attributable to an increase in interest rates.

The contractual cash flows of REMICs are guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae, and the U.S.

Treasury Department established financing agreements in 2008 to ensure Fannie Mae and Freddie Mac meet their obligations to holders of mortgage-backed securities that they have issued or guaranteed.

Since the decline in value is attributable to changes in market interest rates and not credit quality and because the Company has neither the intent to sell the securities nor is it more likely than not the Company will be required to sell the securities for the time periods necessary to recover the amortized cost, the Company expects to receive all contractual cash

flows from these investments.

Therefore, no allowance for credit losses is recorded with respect to securities as of September 30, 2021.

Since the decline in value is primarily attributable to an increase in interest rates, and the financing agreements established by the U.S.

Treasury Department ensures contractual cash flows obligations will be met, we did not record an allowance for credit losses with respect to securities as of September 30, 2022.

LOANS AND ALLOWANCE FOR CREDIT LOSSES

LOAN PORTFOLIOS

Loans held for investment consist of the following:

September 30,

September 30, September 30,

Real estate loans:

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Loans are carried at amortized cost, which includes outstanding principal balance adjusted for any unamortized premiums or discounts, net of deferred fees and expenses.

Accrued interest on loans is $ 30,255 and $ 35,513 as of September 30, 2021 and September 30, 2020, respectively, and is reported in accrued interest receivable on the CONSOLIDATED STATEMENTS OF CONDITION.

Accrued interest is $ 39,124 and $ 30,255 as of September 30, 2022 and September 30, 2021, respectively, and is reported in accrued interest receivable on the CONSOLIDATED STATEMENTS OF CONDITION.

A large concentration of the Company’s lending is in Ohio and Florida.

As of September 30, 2021 and September 30, 2020, the percentage of aggregate Residential Core, Home Today and Construction loans held in Ohio was 55 % and 56 %, respectively, and the percentage held in Florida was 18 % and 17 %, respectively.

As of September 30, 2021 and September 30, 2020, home equity loans and lines of credit were concentrated in the states of Ohio ( 29 % as of both dates), Florida ( 20 % and 19 %, respectively), and California ( 15 % and 16 %, respectively).

As of September 30, 2022 and September 30, 2021, the percentage of aggregate Residential Core, Home Today and Construction loans secured by properties in Ohio was

56 % and 55 %, respectively, and the percentage of loans secured by properties in Florida was 18 % as of both dates.

As of September 30, 2022 and September 30, 2021, home equity loans and lines of credit were concentrated in the states of Ohio ( 27 % and 29 %, respectively), Florida ( 20 % as of both dates), and California ( 16 % and 15 %, respectively).

Residential Core mortgage loans represent the largest portion of the residential real estate portfolio.

While the Company believes overall credit risk is low based on the nature, composition, collateral, products, lien position and performance of the portfolio, it could be affected by the duration and depth of the impact from COVID-19.

The Company believes overall credit risk is low based on the nature, composition, collateral, products, lien position and performance of the portfolio.

The portfolio does not include loan types or structures that have experienced severe performance problems at other financial institutions (sub-prime, no documentation or pay-option adjustable-rate mortgages).

The portfolio contains "Smart Rate" adjustable-rate mortgage loans whereby the interest rate is locked initially for mainly three or five years then resets annually, subject to various re-lock options available to the borrower.

The portfolio contains "Smart Rate" adjustable-rate mortgage loans whereby the interest rate is locked initially for three or five years then resets annually, subject to periodic rate adjustments caps and various re-lock options available to the borrower.

Although the borrower is qualified for its loan at a higher rate than the initial rate offered, the adjustable-rate feature may impact a borrower's ability to afford the higher payments upon rate reset during periods of rising interest rates while this repayment risk may be reduced in a declining or low rate environment.

1 unchanged sentence

The principal amount of adjustable-rate mortgage loans included in the Residential Core portfolio was $ 4,668,089 and $ 4,646,760 at September 30, 2022 and September 30, 2021, respectively.

Home Today was an affordable housing program targeted to benefit low- and moderate-income home buyers and most loans under the program were originated prior to 2009.

Home Today was an affordable housing program targeted to benefit low- and moderate-income home buyers.

Most loans under the program were originated prior to 2009.

No new loans were originated under the Home Today program after September 30, 2016.

Home Today loans have greater credit risk than traditional residential real estate mortgage loans.

At September 30, 2021 and September 30, 2020, approximately 11 % and 12 %, respectively, of Home Today loans include private mortgage insurance coverage.

The majority of the coverage on these loans was provided by PMI Mortgage Insurance Co.(PMIC), which was seized by the Arizona Department of Insurance in 2011 and currently pays all claim payments at 77.5 %.

Appropriate adjustments have been made to the Company’s affected valuation allowances and charge-offs, and estimated loss severity factors were adjusted accordingly for loans evaluated collectively.

The amount of loans in the Company's owned residential portfolio covered by mortgage insurance provided by PMIC as of September 30, 2021 and September 30, 2020, respectively, was $ 14,697 and $ 20,649 , of which $ 13,818 and $ 19,681 was current.

The amount of loans in the Company's owned residential portfolio covered by mortgage insurance provided by Mortgage Guaranty Insurance Corporation (MGIC) as of September 30, 2021 and September 30, 2020, respectively, was $ 8,192 and $ 12,381 , of which $ 8,010 and $ 12,381 was current.

As of September 30, 2021, MGIC's long-term debt rating, as published by the major credit rating agencies, did not meet

the requirements to qualify as "high credit quality";

however, MGIC continues to make claim payments in accordance with its contractual obligations and the Company has not increased its estimated loss severity factors related to MGIC's claim paying ability.

No other loans were covered by mortgage insurers that were deferring claim payments or which were assessed as being non-investment grade.

Loans held for sale include loans originated within the parameters of programs established by Fannie Mae, for sale to Fannie Mae, and loans originated for the held for investment portfolio that are later identified for sale.

During the years ended September 30, 2021 and September 30, 2020, reclassifications to the held for sale portfolio included loans that were sold during the period, including those in contracts pending settlement at the end of the period, and loans originated for the held for investment portfolio that were later identified for sale.

At September 30, 2021 and September 30, 2020, respectively, mortgage loans held for sale totaled $ 8,848 and $ 36,871 .

During the years ended September 30, 2021 and September 30, 2020, respectively, the principal balance of loans sold was $ 762,332 and $ 844,296 , including $ 0 and $ 34,179 in contracts pending settlement.

Home equity loans and lines of credit, which are comprised primarily of home equity lines of credit, represent a significant portion of the residential real estate portfolio and include monthly principal and interest payments throughout the entire term.

1 unchanged sentence

The full credit exposure on home equity lines of credit is secured by the value of the collateral real estate at the time of origination.

The impact of COVID-19 on employment, the general economy and, potentially, housing prices may adversely affect credit performance within the home equity loans and lines of credit portfolio.

The Company originates construction loans to individuals for the construction of their personal single-family residence by a qualified builder (construction/permanent loans).

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Upon completion of construction, the loan converts to a permanent amortizing loan without the expense of a second closing.

The Company offers construction/permanent loans with fixed or adjustable-rates, and a current maximum loan-to-completed-appraised value ratio of 85 %.

The Company also has one loan outstanding to a non-profit organization for a multi-use building project.

Construction/permanent loans have a fixed or adjustable-rate and a current maximum loan-to-completed-appraised value ratio of 85 %.

Other loans are comprised of loans secured by certificate of deposit accounts, which are fully recoverable in the event of non-payment, and forgivable down payment assistance loans, which are unsecured loans used as down payment assistance to borrowers qualified through partner housing agencies.

The Company records a liability for the loans which are forgiven in equal increments over a pre-determined term, subject to residency requirements.

Regulatory agencies have encouraged financial institutions to work prudently with borrowers who are or may be unable to meet their contractual payment obligations because of the effects of COVID-19, as set forth in the Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus (initially issued on March 22, 2020 and revised on April 7, 2020).

FASB confirmed the foregoing regulatory agencies' view, that such short-term modifications (e.g., six months) made on a good-faith basis to borrowers who were current as of the implementation date of a relief program in response to COVID-19 are not TDRs.

The regulatory agencies stated that performing loans granted payment deferrals due to COVID-19 in accordance with this interagency statement are not generally considered past due or non-accrual.

The revised statement provides that eligible loan modifications related to COVID-19 may also be accounted for under section 4013 of the CARES Act or in accordance with ASC 310-40.

The CARES Act offers temporary relief from TDRs on modifications made as a result of COVID-19 that were not more than 30 days past due as of December 31, 2019.

The Company has elected to apply the temporary suspension of TDR requirements provided by the revised interagency statement for eligible loan modifications.

For loan modifications that are not eligible for the suspension offered by the revised interagency statement, the Company considers the CARES Act to evaluate loan modifications within its scope, or existing TDR evaluation policies if the modification does not fall within the scope of these Acts.

As of September 30, 2021, some of our borrowers have experienced unemployment or reduced income as a result of the COVID-19 global pandemic and have requested some type of loan payment forbearance.

At September 30, 2021 and September 30, 2020, respectively, active forbearance plans offered to borrowers affected by COVID-19 totaled $ 21,784 and $ 165,642 , of which $ 4,971 and $ 15,623 are classified as troubled debt restructurings due to either their classification as a TDR prior to the COVID-19 forbearance or not meeting the criteria to be exempt from TDR classification.

Forbearance plans allow borrowers experiencing temporary financial hardship to defer a limited number of payments to a later time and are initially offered for a three-month period, which may be extended for borrowers that continue to be affected by COVID-19.

The majority of active COVID-19 forbearance plans have been extended to at least 12 months with a weighted average term of 12.9 months.

The following table summarizes, as of September 30, 2021 and September 30, 2020, for each portfolio by geographic location, active forbearance plans by amortized cost and as a percent of total loans.

The majority of our Home Today forbearance portfolio is secured by properties located in Ohio and therefore was not segregated by geographic location.

September 30,

2021 Forbearance plans as % of respective Portfolio September 30,

2020 Forbearance plans as % of respective Portfolio

Real estate loans:

Residential Core

Ohio $ 7,638 $ 45,926

Florida 3,781 38,804

Other 7,326 56,107

Total 18,745 0.18 % 140,837 1.31 %

Total Residential Home Today 701 1.11 % 5,391 7.21 %

Home equity loans and lines of credit

Ohio 329 2,352

Florida 241 6,298

California 840 4,974

Other 928 5,790

Total 2,338 0.10 % 19,414 0.86 %

Total real estate loans in active forbearance plans $ 21,784 0.17 % $ 165,642 1.26 %

The following table summarizes, as of September 30, 2021, the recorded investment of active forbearance plans according to the month during which the payment deferrals are currently scheduled to end.

Forbearance plan term extensions are available upon request.

Month ending Total

October 31, 2021 $ 11,159

November 30, 2021 2,860

December 31, 2021 2,868

January 31, 2022 2,091

February 28, 2022 1,676

March 31, 2022 887

April 30, 2022 243

Total active forbearance plans $ 21,784

A COVID-19 forbearance plan is generally resolved through payment in full at termination of the forbearance;

through a non-TDR repayment plan, where a portion of the forbearance is paid in addition to the original contractual payment over 12 months or less;

or through a non-TDR capitalization, where the total of forborne payments are added to the principal balance of the account, either with or without an extension of the maturity date.

If additional concessions are required beyond resolving the forbearance, the account will be considered for further modification in a troubled debt restructuring.

At September 30, 2021 and September 30, 2020, there were $ 111 and $ 1,725 , respectively, in short-term repayment plans and $ 98,754 and $ 31,467 of residential mortgages and $ 8,852 and $ 0 equity loans and lines of credit, respectively, whose forbearance amounts were capitalized, subsequent to COVID-19 forbearance plans, that did not require TDR classification.

The amortized cost of loan modifications eligible for TDR relief, including non-TDR forbearance plans, subsequent non-TDR repayment plans and non-TDR modifications, including capitalization, was $ 126,494 and $ 194,601 at September 30, 2021 and September 30, 2020, respectively.

At September 30, 2021 and September 30, 2020, forbearance plans that have subsequently required further modification in a troubled debt restructuring total $ 6,101 and $ 1,306 , respectively.

Real estate loans in COVID-19 forbearance plans and those that are subsequently placed in non-TDR short-term repayment plans are reported as current and accruing when they are current in accordance with their revised contractual terms and were less than 30 days past due as of the implementation date of the relief program, March 13, 2020, per the revised interagency statement, or not more than 30 days past due as of December 31, 2019 per the CARES Act.

Otherwise, the

delinquency and resulting accrual status of these loans are determined by the lowest number of days the loan was past due on either the two aforementioned measurement dates (March 13, 2020 or December 31, 2019) or, considering the loan's revised contractual terms, the current reporting date.

The uncertain and potentially tumultuous impact of COVID-19 on the economic and housing markets, as well as the risk profiles of accounts in COVID-19 forbearance plans granted by the Company, were considered in the determination of the allowance for credit losses as of September 30, 2021, as described later in this footnote.

During the years ended September 30, 2022 and September 30, 2021, reclassifications to the held for sale portfolio included loans that were sold during the period, including those in contracts pending settlement at the end of the period, and loans originated for the held for investment portfolio that were later identified for sale.

At September 30, 2022 and September 30, 2021, respectively, mortgage loans held for sale totaled $ 9,661 and $ 8,848 .

During the years ended September 30, 2022 and September 30, 2021, respectively, the principal balance of loans sold was $ 128,118 and $ 762,332 .

During the year ended September 30, 2022, the amortized cost of loans originated as held for sale that were subsequently transferred to the held for investment portfolio was $ 22,741 .

This transfer was due to changes in market pricing, affected by the rise in long-term interest rates, and managements' intent to hold the loans in portfolio until maturity or for the foreseeable future.

During the years ended September 30, 2021 and September 30, 2020, there were no transfers to the held for investment portfolio.

DELINQUENCY and NON-ACCRUAL

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Total $ 5,528 $ 3,524 $ 15,669 $ 24,721 $ 12,548,603 $ 12,573,324

At September 30, 2021, reported delinquencies above include $ 128 , $ 0 and $ 225 of active COVID-19 forbearance plans and subsequent short-term repayment plans in 30-59 days past due, 60-89 days past due, and 90 days or more past due, respectively.

At September 30, 2020, reported delinquencies above include $ 1,125 , $ 353 and $ 1,361 of active COVID-19 forbearance plans and subsequent short-term repayment plans in 30-59 days past due, 60-89 days past due, and 90 days or more past due, respectively.

The remaining balance of active COVID-19 forbearance and subsequent short-term repayment plans are reported as current.

As forbearance plans expire, those borrowers that do not enter subsequent workout plans or repay the deferred amounts in full are reported as 90 days or more past due.

At September 30, 2021 and September 30, 2020, real estate loans include $ 2,296 and $ 6,479 , respectively, of loans that were in the process of foreclosure.

Pursuant to the CARES Act and extensions by the Federal Housing Administration, most foreclosure proceedings have restrictions or are deferred until January 1, 2022 or later.

The Consumer Financial Protection Bureau has amended federal mortgage servicing regulations to help ensure that borrowers have time before foreclosure to explore their options, including loan modifications and selling their homes, to prevent avoidable foreclosures.

Loans are placed in non-accrual status when they are contractually 90 days or more past due.

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Loans with a partial charge-off are placed in non-accrual and will remain in non-accrual status until, at a minimum, the loss is recovered.

Loans restructured in TDRs that were in non-accrual status prior to the restructurings and loans with

forbearance plans that were subsequently restructured are reported in non-accrual status for a minimum of six months after restructuring.

Loans restructured in TDRs that were in non-accrual status prior to the restructurings and loans with forbearance plans that were subsequently modified are reported in non-accrual status for a minimum of six months after restructuring.

Loans restructured in TDRs with a high debt-to-income ratio at the time of modification are placed in non-accrual status for a minimum of 12 months.

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Non-accrual with No ACL Total

Non-accrual Total

Non-accrual Non-accrual with No ACL Total

Real estate loans:

4 unchanged sentences

At September 30, 2022 and September 30, 2021, respectively, the amortized cost in non-accrual loans includes $ 23,159 and $ 28,385 which are performing according to the terms of their agreement, of which $ 13,526 and $ 16,495 are loans in Chapter 7 bankruptcy status, primarily where all borrowers have filed, and have not reaffirmed or been dismissed.

At September 30, 2022 and September 30, 2021, real estate loans include $ 9,833 and $ 2,296 , respectively, of loans that were in the process of foreclosure.

Interest on loans in accrual status is recognized in interest income as it accrues, on a daily basis.

Accrued interest on loans in non-accrual status is reversed by a charge to interest income no later than 90 days past due and income is subsequently recognized only to the extent cash payments are received.

Accrued interest on loans in non-accrual status is reversed by a charge to interest income and income is subsequently recognized only to the extent cash payments are received.

The Company has elected not to measure an allowance for credit losses on accrued interest receivable amounts since amounts are written off timely.

1 unchanged sentence

The amount of interest income recognized on non-accrual loans was $ 740 , and $ 929 for the years ended September 30, 2022 and September 30, 2021, respectively.

At September 30, 2021 and September 30, 2020, the balance of accrued interest receivable includes $ 648 and $ 2,540 of unpaid interest on active COVID-19 forbearance plans, respectively.

Cash payments on loans with a partial charge-off are applied fully to principal, then to recovery of the charged off amount prior to interest income being recognized, except cash payments may be applied to interest capitalized in a restructuring when collection of remaining amounts due is considered probable.

A non-accrual loan is generally returned to accrual status when contractual payments are less than 90 days past due.

However, a loan may remain in non-accrual status when collectability is uncertain, such as a TDR that has not met minimum payment requirements, a loan with a partial charge-off, an equity loan or line of credit with a delinquent first mortgage greater than 90 days past due, or a loan in Chapter 7 bankruptcy status where all borrowers have filed, and have not reaffirmed or been dismissed.

However, a loan may remain in non-accrual status when collectability is uncertain, such as a TDR that has not met minimum payment requirements, a loan with a partial charge-off, a home equity loan or line of credit with a delinquent first mortgage greater than 90 days past due, or a loan in Chapter 7 bankruptcy status where all borrowers have filed, and have not reaffirmed or been dismissed.

ALLOWANCE FOR CREDIT LOSSES

4 unchanged sentences

• For residential mortgage loans, payments are greater than 180 days delinquent;

• For home equity lines of credit, equity loans, and residential loans restructured in a TDR, payments are greater than 90 days delinquent;

• For all classes of loans in a TDR COVID-19 forbearance plan, original payments are greater than 150 days delinquent;

• For home equity loans and lines of credit, and residential loans restructured in a TDR, payments are greater than 90 days delinquent;

• For all classes of loans in a TDR COVID-19 forbearance plan, original contractual payments are greater than 150 days delinquent;

• For all classes of loans restructured in a TDR with a high debt-to-income ratio at time of modification;

4 unchanged sentences

• For all classes of loans, a COVID-19 forbearance plan has been extended greater than 12 months;

• For all classes of loans in a COVID-19 repayment plan, revised payments are greater than 90 days delinquent;

• For all classes of loans in a COVID-19 repayment plan, modified contractual payments are greater than 90 days delinquent;

• For all classes of loans, it becomes evident that a loss is probable.

4 unchanged sentences

A loan in any portfolio that has a partial charge-off will continue to be individually evaluated for credit loss until, at a minimum, the loss has been recovered.

Residential mortgage loans, home equity loans and lines of credit and construction loans restructured in TDRs that are not evaluated based on collateral are separately evaluated for credit losses on a loan by loan basis at the time of restructuring and at each subsequent reporting date for as long as they are reported as TDRs.

Residential mortgage loans, home equity loans and lines of credit and construction loans restructured in TDRs that are not evaluated based on collateral are separately evaluated for credit losses on a loan by loan basis at each reporting date for as long as they are reported as TDRs.

The credit loss evaluation is based on the present value of expected future cash flows discounted at the effective interest rate of the original loan.

2 unchanged sentences

Loans discharged in Chapter 7 bankruptcy are reported as TDRs and also evaluated based on the present value of expected future cash flows unless evaluated based on collateral.

We evaluate these loans using the expected future cash flows because we expect the borrower, not liquidation of the collateral, to be the source of repayment for the loan.

These loans are evaluated using expected future cash flows because the borrower, not liquidation of the collateral, is expected to be the source of repayment for the loan.

Other loans are not considered for restructuring.

At September 30, 2021, individually evaluated loans that required an allowance were comprised only of loans evaluated for credit losses based on the present value of cash flows, such as performing TDRs, and, prior to October 1, 2020, loans with an indication of further deterioration in the fair value of the property not yet supported by a full review and collateral evaluation.

At September 30, 2022 and September 30, 2021, respectively, allowances on individually reviewed TDRs (IVAs), evaluated for credit losses based on the present value of cash flows were $ 10,284 and $ 12,073 .

All other individually evaluated loans received a charge-off, if applicable.

At September 30, 2021 and September 30, 2020, respectively, allowances on individually reviewed loans evaluated for credit losses (IVAs) included those based on the present value of cash flows, such as performing TDRs, were $ 12,073 and $ 12,830 , and quantitative allowances on loans with further deterioration in the fair value of the property not yet supported by a full review were $ 0 and $ 20 .

The Company adopted the CECL allowance methodology as of October 1, 2020 using the modified retrospective approach, replacing the previous incurred loss methodology.

The allowance for credit losses now represents the estimate of lifetime loss in our loan portfolio and unfunded loan commitments.

The allowance for credit losses represents the estimate of lifetime losses in the loan portfolio and unfunded loan commitments.

An allowance is established using relevant available information relating to past events, current conditions and supportable forecasts.

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Qualitative adjustments for expected changes in environmental conditions, such as changes in unemployment rates, property values or other relevant factors, are recognized when forecasted economic data used in the model differs from management's view or contains significant unobservable changes within a short period, particularly when those changes are directionally positive.

Identifiable model limitations may also lead to qualitative adjustments.

For the year ended September 30, 2021, a qualitative adjustment was made to the allowance for credit losses to align forecasted model results with management's view of the future.

The published economic forecasts were more optimistic than management felt was appropriate due to the continued uncertainty in the economy related to the COVID-19 pandemic.

A qualitative adjustment was also made to reflect the expected recovery of

loan amounts previously charged-off, beyond what the model is able to project.

The net qualitative adjustment at September 30, 2021 was a net reduction of $ 3,755 .

Identifiable model limitations may also lead to qualitative adjustments, such as those made to reflect the expected recovery of loan amounts previously charged-off, beyond what the model is able to project.

The qualitative adjustments resulted in a negative ending balance on the allowance for credit losses for the Home Today portfolio, where recoveries are expected to exceed charge-offs over the remaining life of that portfolio.The net qualitative adjustment at September 30, 2022 was a net reduction of $ 7,085 .

Adjustments are evaluated quarterly based on current facts and circumstances.

2 unchanged sentences

For the Year Ended September 30, 2022

Balance Adoption

ASU 2016-13 Provisions (Releases) Charge-offs Recoveries Ending

Balance Provisions (Releases) Charge-offs Recoveries Ending

Real estate loans:

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Total Allowance for Credit Losses $ 89,259 $ 1,000 $ ( 1,450 ) $ 11,107 $ 99,916

(1) Total allowance for unfunded loan commitments is recorded in other liabilities on the CONSOLIDATED STATEMENTS OF CONDITION and primarily relates to undrawn home equity lines of credit.

For the Year Ended September 30, 2021

Balance Provisions (Releases) Charge-offs Recoveries Ending

Balance Adoption of ASU 2016-13 Provisions (Releases) Charge-offs Recoveries Ending

Real estate loans:

5 unchanged sentences

46,937 24,095 ( 11,918 ) ( 5,213 ) 10,388 64,289

For the Year Ended September 30, 2019

Balance Provisions (Releases) Charge-offs Recoveries Ending

Real estate loans:

Residential Core $ 18,288 $ 401 $ ( 1,250 ) $ 2,314 $ 19,753

Residential Home Today 3,204 ( 144 ) ( 761 ) 1,910 4,209

Home equity loans and lines of credit 20,921 ( 10,257 ) ( 2,975 ) 7,257 14,946

Construction 5 — — — 5

Total real estate loans

Total Unfunded Loan Commitments (1)

$ — $ 22,052 $ 2,918 $ — $ — $ 24,970

Total Allowance for Credit Losses $ 46,937 $ 46,147 $ ( 9,000 ) $ ( 5,213 ) $ 10,388 $ 89,259

(1) Total allowance for unfunded loan commitments is recorded in other liabilities on the CONSOLIDATED STATEMENTS OF CONDITION and primarily relates to undrawn home equity lines of credit.

CLASSIFIED LOANS

The following tables provide information about the credit quality of residential loan receivables by an internally assigned grade.

Revolving loans reported at amortized cost include equity lines of credit currently in their draw period.

Revolving loans converted to term are equity lines of credit that are in repayment.

Revolving loans reported at amortized cost include home equity lines of credit currently in their draw period.

Revolving loans converted to term are home equity lines of credit that are in repayment.

Equity loans and bridge loans are segregated by origination year.

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No Home Today loans are classified Special Mention.

No construction loans are classified Substandard.

All construction loans are classified Pass.

Balances are adjusted for deferred loan fees and expenses and any applicable loans-in-process.

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Total Home equity loans and lines of credit 98,904 30,805 9,258 8,056 6,984 11,374 2,403,989 96,762 2,666,132

Pass 26,587 3,890 — — — — — — 30,477

Special Mention 1,120 — — — — — — — 1,120

Total Construction 37,810 10,668 — — — — — — 48,478

5 unchanged sentences

(1) No new originations of Home Today loans since fiscal 2016.

The following table provides the credit risk rating by portfolio as of the date presented.

Mention Substandard Loss Total

Revolving Loans Revolving Loans

By fiscal year of origination Amortized Converted

2021 2020 2019 2018 2017 Prior Cost Basis To Term Total

September 30, 2021

1 unchanged sentence

Residential Core

Pass $ 2,637,782 $ 1,807,652 $ 784,462 $ 860,150 $ 1,016,853 $ 3,042,398 $ — $ — $ 10,149,297

Special Mention 22,711 703 110 709 300 759 — — 25,292

Substandard — 4,029 4,470 4,860 4,813 40,861 — — 59,033

Total Residential Core 2,660,493 1,812,384 789,042 865,719 1,021,966 3,084,018 — — 10,233,622

Residential Home Today (1)

Pass — — — — — 53,076 — — 53,076

Substandard — — — — — 10,333 — — 10,333

Total Residential Home Today — — — — — 63,409 — — 63,409

Home equity loans and lines of credit

Construction 22,436 — — — 22,436

Pass 48,427 14,488 12,325 11,891 10,423 6,478 1,990,195 129,336 2,223,563

Special Mention — — 13 — — 10 1,182 292 1,497

Substandard — — 148 57 304 33 4,746 11,570 16,858

Total Home equity loans and lines of credit 48,427 14,488 12,486 11,948 10,727 6,521 1,996,123 141,198 2,241,918

Pass 26,587 3,890 — — — — — — 30,477

Special Mention 1,120 — — — — — — — 1,120

Total Construction 27,707 3,890 — — — — — — 31,597

Total real estate loans

The home equity lines of credit converted from revolving to term loans during the year ended September 30, 2021 totaled $ 6,088 .

Pass 2,712,796 1,826,030 796,787 872,041 1,027,276 3,101,952 1,990,195 129,336 12,456,413

Special Mention 23,831 703 123 709 300 769 1,182 292 27,909

Substandard — 4,029 4,618 4,917 5,117 51,227 4,746 11,570 86,224

Total real estate loans $ 2,736,627 $ 1,830,762 $ 801,528 $ 877,667 $ 1,032,693 $ 3,153,948 $ 1,996,123 $ 141,198 $ 12,570,546

(1) No new originations of Home Today loans since fiscal 2016.

The home equity lines of credit converted from revolving to term loans during the years ended September 30, 2022 and September 30, 2021 totaled $ 436 and $ 6,088 .

Residential loans are internally assigned a grade that complies with the guidelines outlined in the OCC’s Handbook for Rating Credit Risk.

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At September 30, 2022 and September 30, 2021, respectively, $ 75,904 and $ 83,708 of TDRs individually evaluated for credit loss have adequately performed under the terms of the restructuring and are classified as Pass loans.

At September 30, 2021 and September 30, 2020, respectively, $ 24,042 and $ 0 of loans classified special mention are residential mortgage loans and home equity lines of credit identified, after origination, as being underwritten with inaccurate income documentation, that have not yet demonstrated repayment performance over a minimum period.

At September 30, 2021 and September 30, 2020, respectively, $ 1,878 and $ 3,535 of loans classified special mention are residential mortgage loans purchased which were current and performing at the time of purchase.

These loans are designated special mention due to the absence of mortgage insurance coverage and potentially weaker repayment prospects when compared with the Company's originated residential Core portfolio.

Substandard loans increased between the periods presented primarily due to loans with forbearance plans extended greater than 12 months that are considered collateral dependent and classified substandard, for a minimum of one year, until a sustained period of repayment performance is satisfied.

Loans classified substandard includes $ 28,029 of loans that had their forbearance term extended greater than 12 months regardless of forbearance plan status at September 30, 2021 .

At September 30, 2022 and September 30, 2021, respectively, $ 102 and $ 24,042 of loans classified as Special Mention are residential mortgage loans and home equity lines of credit identified, after origination, as being underwritten with altered income documentation, that have not yet demonstrated repayment performance over a minimum period.

Substandard loans decreased between the periods presented primarily due to loans with forbearance plans extended greater than 12 months that are considered collateral dependent and classified substandard, for a minimum of one year, until a sustained period of repayment performance is satisfied.

Loans classified substandard includes $ 5,381 and $ 28,029 of loans that had their forbearance term extended greater than 12 months regardless of forbearance plan status at September 30, 2022 and September 30, 2021, respectively .

Other loans are internally assigned a grade of non-performing when they become 90 days or more past due.

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For all TDRs restructured during the years ended September 30, 2022 and September 30, 2021 (set forth in the tables below), the pre-restructured outstanding amortized cost was not materially different from the post-restructured outstanding amortized cost.

New TDRs increased during recent periods presented due to forbearance plan extensions that do not qualify for TDR suspension and subsequent modifications on loans with forbearance plans, but were outpaced by paydowns, payoffs and refinances as total TDRs continued to decrease.

New TDRs decreased during recent periods as forbearance plan resolutions and subsequent modifications due to COVID-19 have become insignificant.

The following tables set forth the amortized cost in TDRs restructured during the periods presented.

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Total 12 $ 978 14 $ 1,184 22 $ 2,117

DISCLOSURE FOR PERIODS PRIOR TO ASU 2016-13 ADOPTION

The recorded investment in total real estate loans and an analysis of the allowance for loan losses at September 30, 2020 is summarized in the following table, under previously applicable GAAP.

The table provides details of the recorded balances and the allowance for loan losses according to the method of evaluation used for determining the allowance for loan losses, distinguishing between determinations made by evaluating individual loans and determinations made by evaluating groups of loans collectively.

Balances of recorded investments are adjusted for deferred loan fees and expenses and any applicable loans-in-process.

Other loans are all collectively reviewed and do not require an allowance.

September 30, 2020 Recorded Investment Allowance for Loan Loss

Individually Collectively Total Individually Collectively Total

Real estate loans:

Residential Core $ 79,200 $ 10,711,968 $ 10,791,168 $ 6,963 $ 15,418 22,381

Residential Home Today 34,261 40,553 74,814 2,085 3,569 5,654

Home equity loans and lines of credit 41,756 2,217,244 2,259,000 3,802 15,096 18,898

Construction — 22,436 22,436 — 4 4

Total real estate loans $ 155,217 $ 12,992,201 $ 13,147,418 $ 12,850 $ 34,087 $ 46,937

The recorded investment, unpaid principal balance, related allowance, average recorded investment over the fiscal year and income recognized over the fiscal year for impaired loans, including those reported as TDRs, as of September 30, 2020, are summarized as follows.

Balances of recorded investments are adjusted for deferred loan fees and expenses.

September 30, 2020 Recorded

Investment Unpaid

Balance Related

Allowance Average

Investment (YTD) Interest Income

Recognized (YTD)

With no related IVA recorded:

Residential Core $ 41,164 $ 53,957 $ — $ 42,643 $ 1,405

Residential Home Today 11,963 30,603 — 12,364 204

Home equity loans and lines of credit 13,989 18,617 — 16,259 321

Total $ 67,116 $ 103,177 $ — $ 71,266 $ 1,930

With an IVA recorded:

Residential Core $ 38,036 $ 38,103 $ 6,963 $ 40,492 $ 1,172

Residential Home Today 22,298 22,272 2,085 23,247 1,086

Home equity loans and lines of credit 27,767 27,809 3,802 27,842 663

Total $ 88,101 $ 88,184 $ 12,850 $ 91,581 $ 2,921

Total impaired loans:

Residential Core $ 79,200 $ 92,060 $ 6,963 $ 83,135 $ 2,577

Residential Home Today 34,261 52,875 2,085 35,611 1,290

Home equity loans and lines of credit 41,756 46,426 3,802 44,101 984

Total $ 155,217 $ 191,361 $ 12,850 $ 162,847 $ 4,851

MORTGAGE LOAN SERVICING RIGHTS

64 unchanged sentences

The Company, as lessor, previously leased certain commercial office buildings.

The office buildings and land, which had a net book value of $ 17,680 at September 30, 2019, were sold during the year ended September 30, 2020.

The office buildings and land were sold during the year ended September 30, 2020.

The Company's share of the gain on the sale was $ 4,665 .

During the years ended September 30, 2020 and 2019, rental income was $ 5 and $ 2,180 respectively, and appears in other non-interest income in the accompanying statements.

During the year ended September 30, 2020, rental income was $ 5 , and appears in other non-interest income in the accompanying statements.

Depreciation expense on the buildings during fiscal 2020 was $ 48 .

There was no activity for 2021.

As a lessee, the Company enters into leases of buildings and land.

The Company occupies certain banking branches, loan production and customer service offices and a disaster recovery site through non-cancellable operating leases with remaining terms ranging from less than one year to 15 years.

The Company does not have financing leases.

There was no activity for 2022 and 2021.

As a lessee, the Company enters into operating leases of buildings and land.

Most of the leases have fixed payment terms with annual fixed-escalation clauses.

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Additionally, all variable lease costs that are not based on an index or rate, such as "common area maintenance" costs, are expensed as incurred.

Most of the Company's leases include options to extend for periods that range from five to 10 years.

Most of the Company's leases include options to extend for periods that range from three to 10 years.

The leases do not have early-termination options.

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The incremental borrowing rate utilized for all the Company's leases is the FHLB Advance rate based on the lease term at commencement in determining the present value of lease payments.

Operating lease expense for the year ended September 30, 2021 and 2020, totaled $ 5,351 and $ 5,127 , respectively.

Variable lease expense for the year ended September 30, 2021 and 2020, totaled $ 1,374 and $ 1,258 , respectively.

During the year ended September 30, 2021 and 2020, the Company paid $ 5,354 and $ 5,071 ,respectively, in cash for amounts included in the measurement of lease liabilities.

Operating lease expense for the years ended September 30, 2022 and 2021, totaled $ 5,576 and $ 5,351 , respectively.

Variable lease expense for the years ended September 30, 2022 and 2021, totaled $ 1,479 and $ 1,374 , respectively.

During the years ended September 30, 2022 and 2021, the Company paid $ 5,572 and $ 5,354 , respectively, in cash for amounts included in the measurement of lease liabilities.

As of September 30, 2022 and 2021, the Company has not entered into any material leases that have not yet commenced.

22 unchanged sentences

Checking accounts 0.00 – 1.00 %

$ 1,210,035 13.6 % $ 1,132,910 12.6 %

Savings accounts, excluding money market accounts 0.00 – 1.05

1,364,821 15.3 1,263,309 14.0

Money market accounts 0.00 – 1.05

481,650 5.4 563,931 6.3

Subtotal 3,056,506 34.3 2,960,150 32.9

2 unchanged sentences

1,002,227 11.2 808,105 9.0

1,320,579 14.8 1,574,939 17.5

3.00 and above

381,973 4.3 313,457 3.5

5,862,274 65.7 6,031,603 67.1

Subtotal 8,918,780 100.0 8,991,753 100.0

2 unchanged sentences

At September 30, 2022 and 2021, the weighted average interest rate was 0.81 % and 0.09 % on checking accounts;

0.12 % and 0.14 % on savings accounts, excluding money market accounts;

0.79 % and 0.12 % on savings accounts;

0.95 % and 0.19 % on money market accounts;

1.26 % and 1.71 % on certificates of deposit, respectively;

1.37 % and 1.26 % on certificate of deposit, respectively;

and 1.18 % and 0.89 % on total deposits, respectively.

The aggregate amount of certificates of deposit in denominations of $100 or more totaled approximately $ 3,155,804 and $ 3,414,697 at September 30, 2021 and 2020, respectively.

The aggregate amount of CD's in denominations of $250 or more was $ 733,301 and $ 693,375 at September 30, 2022 and 2021, respectively.

In accordance with the DFA, the maximum amount of deposit insurance is $250 per depositor.

Brokered certificates of deposit (exclusive of acquisition costs and subsequent amortization), which are used as a cost effective funding alternative, totaled $ 491,994 and $ 553,860 at September 30, 2021 and 2020, respectively.

Brokered CD's (exclusive of acquisition costs and subsequent amortization), which are used as an additional funding alternative, totaled $ 575,236 and $ 491,994 at September 30, 2022 and 2021, respectively.

The FDIC places restrictions on banks with regard to issuing brokered deposits based on the bank's capital classification.

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BORROWED FUNDS

Federal Home Loan Bank borrowings at September 30, 2021 are summarized in the table below:

Amount Weighted

At September 30, 2022, the Association had a maximum borrowing capacity of $9,237,184, of which $4,793,221 was outstanding.

Borrowings from the FHLB of Cincinnati are secured by the Association’s investment in the common stock of the FHLB of Cincinnati as well as by a blanket pledge of its mortgage portfolio not otherwise pledged.

The Association also has the ability to purchase Fed Funds through arrangements with other institutions.

Finally, the ability to borrow from the FRB-Cleveland Discount Window is available to the Association and is secured by a pledge of specific loans in the Association’s mortgage portfolio.

Total borrowings at September 30, 2022 are summarized in the table below:

Borrowing Capacity Borrowings Available Borrowings Outstanding

FHLB $ 8,474,183 $ 3,912,447 $ 4,561,736

FRB Cleveland 168,001 168,001 —

Fed Funds Purchased 595,000 370,000 225,000

Subtotal $ 9,237,184 $ 4,450,448 4,786,736

Accrued Interest 6,485

Total Borrowings $ 4,793,221

Maturities of borrowings at September 30, 2022 are summarized in the table below:

Amount Weighted Average Rate

12 months or less $ 2,225,182 2.93 %

5 unchanged sentences

over 60 months 60,765 2.93 %

Total FHLB Advances 3,090,382 0.51 %

Total Advances $ 4,786,736 2.38 %

Accrued interest 6,485

1 unchanged sentence

All borrowings have fixed rates during their term ranging up to 240 months.

Interest is payable monthly for long-term advances and at maturity for FHLB swap based three-month advances.

For the years ended September 30, 2021, 2020 and 2019, net interest expense related to Federal Home Loan Bank short-term borrowings was $ 50,975 , $ 61,058 and $ 61,757 , respectively.

Through the use of interest rate swaps discussed in Note 17.

DERIVATIVE INSTRUMENTS , $2,450,000 of FHLB advances included in the table above as maturing in 12 months or less, have effective maturities, assuming no early terminations of the swap contracts, as shown below:

Effective Maturity:

Amount Swap Adjusted Weighted Average Rate

12 months or less $ 900,000 1.90 %

13 to 24 months 150,000 2.22 %

25 to 36 months 350,000 1.43 %

37 to 48 months 400,000 1.36 %

49 to 60 months 350,000 2.26 %

Over 60 months 300,000 2.47 %

Total FHLB Advances under swap contracts $ 2,450,000 1.88 %

During fiscal year 2020, $ 115,000 of FHLB advances and $ 100,000 of swap contracts related to those advances, with original maturity dates in fiscal 2023, were terminated, resulting in the immediate recognition of $ 8,905 of interest expense and prepayment related fees.

The weighted average interest rate, including the impact of the swap contracts, on those advances repaid was 2.92 %.

The following table sets forth certain information, excluding the impact of swap contracts, relating to Federal Home Loan Bank short-term borrowings at or for the periods indicated.

At or For the Fiscal Years Ended September 30,

2021 2020 2019

Balance at end of year $ 2,450,000 $ 2,975,000 $ 3,250,000

Maximum outstanding at any month-end $ 2,925,000 $ 3,695,000 $ 3,425,000

Average balance during year $ 2,693,533 $ 3,086,314 $ 3,002,307

Average interest rate during the fiscal year 0.23 % 1.14 % 2.43 %

Weighted average interest rate at end of year 0.23 % 0.28 % 2.23 %

Interest expense $ 6,441 $ 36,300 $ 74,742

The Association’s maximum borrowing capacity at the FHLB, under the most restrictive measure, was $ 7,431,135 at September 30, 2021.

Pursuant to collateral agreements with FHLB of Cincinnati, advances are secured by a blanket lien on qualifying first mortgage loans.

The Association’s borrowing capacity at the FRB-Cleveland Discount Window was $ 245,723 at September 30, 2021.

Interest is payable monthly for long-term advances and at maturity for FHLB three-month advances and overnight advances.

The table above reflects the effective maturities and fixed interest rates of the $1,550,000 of short-term FHLB advances that are tied to interest rate swaps discussed in Note 17.

DERIVATIVE INSTRUMENTS.

For the years ended September 30, 2022, 2021 and 2020, net interest expense related to short-term borrowings was $ 49,828 , $ 50,975 and $ 61,058 , respectively.

In March 2021, the Association received a second consecutive “Needs to Improve” rating on its Community Reinvestment Act (CRA) examination covering the period ending December 31, 2019.

5 unchanged sentences

OTHER COMPREHENSIVE INCOME (LOSS)

The change in accumulated other comprehensive income (loss) by component is as follows:

The change in AOCI by component is as follows:

Unrealized Gains (Losses) on Securities Available for Sale Cash Flow Hedges Defined Benefit Plan Total

2 unchanged sentences

Other comprehensive income (loss) before reclassifications, net of tax expense (benefit) of $( 22,316 )

6,859 ( 88,948 ) ( 1,862 ) ( 83,951 )

Amounts reclassified, net of tax expense (benefit) of $ 5,680

— 19,557 1,808 21,365

Other comprehensive income (loss) 6,859 ( 69,391 ) ( 54 ) ( 62,586 )

2 unchanged sentences

Other comprehensive income (loss) before reclassifications, net of tax expense (benefit) of $ 8,656

( 3,733 ) 20,914 9,937 27,118

Amounts reclassified, net of tax expense (benefit) of $ 9,907

— 35,182 1,864 37,046

Other comprehensive income (loss) ( 3,733 ) 56,096 11,801 64,164

2 unchanged sentences

Other comprehensive income (loss) before reclassifications, net of tax expense (benefit) of $ 21,242

( 34,860 ) 109,452 ( 1,665 ) 72,927

Amounts reclassified, net of tax expense (benefit) of $ 5,212

— 17,641 382 18,023

Other comprehensive income (loss) ( 34,860 ) 127,093 ( 1,283 ) 90,950

Balance at September 30, 2022 $ ( 33,899 ) $ 68,883 $ ( 11,835 ) $ 23,149

The following table presents the reclassification adjustment out of accumulated other comprehensive income (loss) included in net income and the corresponding line item on the CONSOLIDATED STATEMENTS OF INCOME for the periods indicated:

Details about Accumulated Other Comprehensive Income Components For the Years Ended September 30, Line Item in the Statement of Income

The following table presents the reclassification adjustment out of AOCI included in net income and the corresponding line item on the CONSOLIDATED STATEMENTS OF INCOME for the periods indicated:

Details about AOCI Components For the Years Ended September 30, Line Item in the Statement of Income

2022 2021 2020

20 unchanged sentences

Income tax provision $ 17,489 $ 19,087 $ 16,928

Reconciliation from tax at the statutory rate to the income tax provision is as follows:

Reconciliation from tax at the federal statutory rate to the income tax provision is as follows:

Year Ended September 30,

7 unchanged sentences

Other, net ( 1.3 ) ( 0.7 ) ( 0.9 )

( 0.7 ) ( 0.9 ) ( 0.6 )

Income tax provision 19.0 % 19.1 % 16.9 %

(1) Amounts related to equity based compensation in prior periods have been reclassified for consistency with current year presentation.

Temporary differences between the financial statement carrying amounts and tax basis of assets and liabilities that gave rise to significant portions of net deferred taxes relate to the following:

3 unchanged sentences

Deferred compensation 4,198 4,159

Pension — 724

Lease liability 3,599 4,227

6 unchanged sentences

Pension 2,119 2,220

Property, equipment and software basis difference — 49

Goodwill 2,132 2,137

25 unchanged sentences

This is offset by an increase in permanent tax benefits from BOLI contracts.

Additionally, there was an increase in excess tax benefits associated with equity compensation as compared to fiscal 2020 and 2019.

The Company and its subsidiaries file income tax returns in the U.S.

1 unchanged sentence

With few exceptions, the Company is no longer subject to income tax examinations in its major jurisdictions for tax years prior to 2019.

The Company makes certain investments in limited partnerships which invest in affordable housing projects that qualify for the Low Income Housing Tax Credit.

The Company acts as a limited partner in these investments and does not exert control

over the operating or financial policies of the partnership.

The Company accounts for its interests in LIHTCs using the

proportional amortization method.

The impact of the Company's investments in tax credit entities on the provision for income

taxes was not material for the years ended September 30, 2021, 2020 and 2019.

The Company makes certain investments in limited partnerships which invest in affordable housing projects that qualify for the Low Income Housing Tax Credit ("LIHTC").

The Company acts as a limited partner in these investments and does not exert control over the operating or financial policies of the partnership.

The Company accounts for its interests in LIHTCs using the proportional amortization method.

The impact of the Company's investments in tax credit entities on the provision for income taxes was not material for the years ended September 30, 2022, 2021 and 2020.

EMPLOYEE BENEFIT PLANS

16 unchanged sentences

The following table reconciles the beginning and ending balances of the fair value of Plan assets and presents the funded status of the Plan recognized in the CONSOLIDATED STATEMENTS OF CONDITION at the September 30 measurement dates.

There were no employer contributions in the years ending September 30, 2022 and 2021.

September 30,

1 unchanged sentence

Actual return on plan assets ( 17,823 ) 15,624

Employer contributions — 5,000

Benefits paid ( 1,814 ) ( 1,816 )

2 unchanged sentences

Funded status of the plan—asset (liability) $ 9,027 $ 9,695

The components of net periodic cost recognized in the CONSOLIDATED STATEMENTS OF INCOME are as follows:

The components of net periodic cost recognized in other non-interest expense in the CONSOLIDATED STATEMENTS OF INCOME are as follows:

Year Ended September 30,

6 unchanged sentences

There were no contributions, required minimum or voluntary, made during the fiscal year ended September 30, 2022.

Plan assets consist of investments in pooled separate accounts that invest in mutual funds, equity securities, debt securities, or real estate investments.

Pooled separate accounts are valued at net asset value per share at the reporting date.

The fair values of the underlying investments used to determine net asset value of the pooled separate accounts are primarily publicly quoted prices or quoted prices for similar assets in active or non-active markets.

In accordance with Subtopic 820-10,

certain investments measured at fair value using the net asset value per share practical expedient are not classified in the fair value hierarchy described in Note 16.

The following table presents the fair value of Plan assets:.

Plan assets consist of investments in mutual funds and pooled separate accounts that invest in fixed securities such as asset backed securities, commercial mortgage backed securities and corporate bonds, in addition to some short-term securities such as commercial paper.

The Plan reallocated some of its investments to long duration fixed income mutual funds as a strategy to reduce risk in the portfolio as funded status remains elevated.

As the mutual funds invested in are traded in active markets with readily available prices, these types of investments are included in level 1 of the fair value hierarchy.

Pooled separate accounts

are valued at net asset value per share at the reporting date.

The fair values of the underlying investments used to determine net asset value of the pooled separate accounts are primarily based on pricing from an independent third party pricing source.

In accordance with Subtopic 820-10, certain investments measured at fair value using the net asset value per share practical expedient are not classified in the fair value hierarchy described in Note 16.

During fiscal years ending 2022 and 2021, the fair value of mutual funds were valued at $ 30,271 and $ 0 , respectively, in level 1 of the fair value hierarchy.

The following tables present the fair value of pooled separate account assets:

September 30,

27 unchanged sentences

401(k) Savings Plan — The Company maintains a 401(k) savings plan that is comprised of three tiers.

The first tier allows eligible employees to contribute up to 75 % of their compensation to the plan, subject to limitations established by the Internal Revenue Service, with the Company matching 100 % of up to 4 % on funds contributed.

The first tier allows eligible employees to contribute up to 75 % of their compensation to the plan, subject to limitations established by the Internal

Revenue Service, with the Company matching 100 % of up to 4 % on funds contributed.

The second tier permits the Company to make a profit-sharing contribution at its discretion.

The first and second tiers cover substantially all employees who have

reached age 21 and have worked 1,000 hours in one year of service.

The first and second tiers cover substantially all employees who have reached age 18 and have worked 1,000 hours in one year of service.

The third tier permits the Company to make discretionary contributions allocable to eligible employees including those eligible employees who are participants, but no longer receiving service credits, under the Company’s defined benefit pension plan.

2 unchanged sentences

Employee (Associate) Stock Ownership Plan — The Company established an ESOP for its employees effective January 1, 2006.

The ESOP is a tax-qualified plan designed to invest primarily in the Company’s common stock and provides employees with an opportunity to receive a funded retirement benefit, based primarily on the value of the Company’s common stock.

The ESOP covers all eligible employees of the Company and its wholly-owned subsidiaries.

26 unchanged sentences

Tax benefit related to share-based compensation expense $ 677 $ 999 $ 824

Restricted stock units vest over a one to ten year service period.

Restricted stock units vest over a one to 10 year service period.

The product of the number of units granted and the grant date market price of the Company’s common stock determines the fair value of restricted stock units under the Equity Plan.

The Company recognizes compensation expense for the fair value of restricted stock units on a straight-line basis over the requisite service period.

Company recognizes compensation expense for the fair value of restricted stock units on a straight-line basis over the requisite service period.

The following is a summary of the status of the Company’s restricted stock units as of September 30, 2022 and changes therein during the year then ended:

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The range of payout is zero to 150 % of the number of share units granted.

For performance stock units, fair value is estimated as the product of the number of performance units granted, adjusted for the probability of achievement, and the grant date market price of the Company’s common stock.

The Company recognizes compensation expense for the fair value of performance share units on a straight-line basis over the requisite service period, based on the performance condition that is probable of achievement.

2 unchanged sentences

The following is a summary of the status of the Company’s performance share units as of September 30, 2022 and changes therein during the year then ended.

No awards were forfeited during the year ended September 30, 2022.

Awarded Weighted

2 unchanged sentences

Released ( 71,692 ) 15.54

Forfeited ( 1,323 ) 17.77

Performance adjustment 6,477 19.76

1 unchanged sentence

The weighted average grant date fair value of performance share units granted during the year ended September 30, 2022, 2021 and 2020 was $ 17.80 , $ 17.77 , and $ 19.76 , respectively.

No performance share units vested during the years ended September 30, 2020 and 2019, There were 872 shares released during the year ended September 30, 2021 to satisfy participant tax withholding requirements.

The total fair value of performance share units vested during the years ended September 30, 2022, 2021 and 2020, respectively, totaled $ 1,112 , $ 14 , and $ 0 .

Expected future compensation expense relating to the non-vested performance share units at September 30, 2022 is $ 1,031 over a weighted average period of 1.83 years.

Stock options have a contractual term of ten years and vest over a one to seven year service period.

Stock options have a contractual term of 10 years and vest over a one to seven year service period.

The Company recognizes compensation expense for the fair values of these awards, which have installment vesting, on a straight-line basis over the requisite service period of the awards.

The following is a summary of the Company’s stock option activity and related information for the Equity Plan for the year ended September 30, 2022.

There were no stock options granted during 2022, 2021 and 2020.

Stock Options Weighted

2 unchanged sentences

Outstanding at September 30, 2021 2,463,300 $ 14.98 4.25 $ 10,095

Granted — $ —

Exercised ( 99,525 ) $ 11.16 $ 551

3 unchanged sentences

Vested or expected to vest, at September 30, 2022 2,361,175 $ 15.14 3.32 $ 429

The fair values of the stock options are estimated on the date of grant using the Black-Scholes option-pricing model.

There were no stock options granted during 2021, 2020 and 2019.

The total intrinsic value of options exercised during the years ended September 30, 2022, 2021 and 2020 was $ 551 , $ 8,605 and $ 3,941 .

There were no non-vested options outstanding as of September 30, 2022.

21 unchanged sentences

Commitment Allowance

Equity lines of credit $ 3,201,025 $ 18,312

Home equity lines of credit $ 4,084,843 $ 22,876

Construction loans 72,273 623

1 unchanged sentence

At September 30, 2022, the unfunded commitment on home equity lines of credit, including commitments for accounts suspended as a result of material default or a decline in equity, is $ 4,105,486 .

At September 30, 2021 and 2020, the Company had $ 0 and $ 36,078 , respectively, in commitments to securitize and sell mortgage loans.

The above commitments are expected to be funded through normal operations.

The Company is undergoing an escheat audit covering Ohio and Kentucky.

Any potential loss that may result from this matter is not reasonably estimable at September 30, 2022.

The Company and its subsidiaries are subject to various legal actions arising in the normal course of business.

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A fair value framework is established whereby assets and liabilities measured at fair value are grouped into three levels of a fair value hierarchy, based on the transparency of inputs and the reliability of assumptions used to estimate fair value.

The three levels of inputs are defined as follows:

quoted prices (unadjusted) for identical assets or liabilities in active markets.

The three levels of

inputs are defined as follows:

Level 1 – quoted prices (unadjusted) for identical assets or liabilities in active markets.

quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets with few transactions, or model-based valuation techniques using assumptions that are observable in the market.

a company’s own assumptions about how market participants would price an asset or liability.

Level 3 – a company’s own assumptions about how market participants would price an asset or liability.

As permitted under the fair value guidance in U.S.

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This election is expected to reduce volatility in earnings related to market fluctuations between the contract trade and settlement dates.

At September 30, 2021 and September 30, 2020, respectively, there were $ 0 and $ 36,078 of loans held for sale, all of which were current, with unpaid principal balances of $ 0 and $ 34,179 , subject to pending agency contracts for which the fair value option was elected.

At September 30, 2022 and September 30, 2021, respectively, there were no pending agency contracts held for sale.

For the years ended September 30, 2022, 2021, and 2020, net gain (loss) on the sale of loans includes $ 0 , $ 134 and $ 2,026 , respectively, related to unrealized gains or losses during the period due to changes in the fair value of loans held for sale subject to pending agency contracts.

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At September 30, 2022 and 2021, respectively, this includes $ 457,908 and $ 421,783 of investments in U.S.

government and agency obligations including highly liquid collateralized mortgage obligations issued by Fannie Mae, Freddie Mac, and Ginnie Mae, measured using the market approach.

government and agency obligations including U.S.

Treasury notes and highly liquid collateralized mortgage obligations issued by Fannie Mae, Freddie Mac, and Ginnie Mae, both measured using the market approach.

The fair values of investment securities represent unadjusted price estimates obtained from third party independent nationally recognized pricing services using pricing models or quoted prices of securities with similar characteristics and are included in Level 2 of the hierarchy.

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LOANS AND ALLOWANCES FOR CREDIT LOSSES .

To calculate the credit loss of collateral-dependent loans, the fair market values of the collateral, estimated using exterior appraisals

in the majority of instances, are reduced by calculated estimated costs to dispose, derived from historical experience and recent market conditions.

To calculate the credit loss of collateral-dependent loans, the fair market values of the collateral, estimated using exterior appraisals in the majority of instances, are reduced by calculated estimated costs to dispose, derived from historical experience and recent market conditions.

Any indicated credit loss is recognized by a charge to the allowance for credit losses.

Subsequent increases in collateral values or principal pay downs on loans with recognized credit loss could result in a collateral-dependent loan being carried below its fair value.

Subsequent increases in collateral values or principal pay downs on loans with recognized credit loss could result in a collateral-dependent loan being

carried below its fair value.

When no credit loss is indicated, the carrying amount is considered to approximate the fair value of that loan to the Company because contractually that is the maximum repayment the Company can expect.

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At September 30, 2022 and 2021, respectively, $ 1,192 and $ 66 of real estate owned is included in Level 3 of the hierarchy with assets measured at fair value on a non-recurring basis where the cost basis equals or exceeds the estimate of fair values less costs to dispose of these properties.

Real estate owned, included in Other assets in the CONSOLIDATED STATEMENTS OF CONDITION , includes estimated costs to dispose of $ 9 and $ 28 related to properties measured at fair value and $ 231 and $ 0 of properties carried at their original or adjusted cost basis at September 30, 2021 and 2020, respectively.

Real estate owned includes estimated costs to dispose of $ 156 and $ 9 related to properties measured at fair value and $ 155 and $ 231 of properties carried at their original or adjusted cost basis at September 30, 2022 and 2021, respectively.

Derivatives — Derivative instruments include interest rate locks on commitments to originate loans for the held for sale portfolio, forward commitments on contracts to deliver mortgage loans, and interest rate swaps designated as cash flow hedges.

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Fannie Mae certificates 1,021 — 1,021 —

government and agency obligations 3,619 $ — 3,619 —

Total $ 457,908 $ — $ 457,908 $ —

Interest rate lock commitments 333 — — 333

11 unchanged sentences

Fannie Mae certificates 5,542 — 5,542 —

Mortgage loans held for sale 36,078 — 36,078 —

Interest rate lock commitments 525 — — 525

Total $ 422,308 $ — $ 421,783 $ 525

Forward commitments for the sale of mortgage loans 134 — 134 —

Total $ 134 $ — $ 134 $ —

The table below presents a reconciliation of the beginning and ending balances and the location within the CONSOLIDATED STATEMENTS OF INCOME where gains (losses) due to changes in fair value are recognized on interest rate lock commitments which are measured at fair value on a recurring basis using significant unobservable inputs (Level 3).

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Collateral-dependent loans, net of allowance $ 47,121 $ — $ — $ 47,121

Mortgage loans held for sale 9,661 — 9,661 —

Real estate owned (1)

1,192 — — 1,192

Total $ 57,974 $ — $ 9,661 $ 48,313

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The following provides quantitative information about significant unobservable inputs categorized within Level 3 of the Fair Value Hierarchy.

The interest rate lock commitments at September 30, 2021 include commitments on both mortgage origination applications and preapprovals.

Preapprovals generally have a much lower closure rate than origination applications which is reflected in the aggregate weighted average closure rates shown below..

The interest rate lock commitments can include commitments on both mortgage origination applications and preapprovals.

Preapprovals generally have a much lower closure rate than origination applications which is reflected in the aggregate weighted average closure rates shown below when applicable.

September 30, 2022 Valuation Technique(s) Unobservable Input Range Weighted Average

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Cash collateral received from or held by counterparty 26,045 26,045 26,045 — —

Derivatives 525 525 — — 525

Checking and passbook accounts $ 3,056,506 $ 3,056,506 $ — $ 3,056,506 $ —

3 unchanged sentences

Principal, interest and escrow owed on loans serviced 29,913 29,913 — 29,913 —

Derivatives 333 333 — 333

September 30, 2021

16 unchanged sentences

Principal, interest and escrow owed on loans serviced 41,476 41,476 — 41,476 —

Derivatives 134 134 — 134 —

Presented below is a discussion of the valuation techniques and inputs used by the Company to estimate fair value.

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These derivatives are used to hedge the forecasted cash outflows associated with the Company's FHLB borrowings.

At September 30, 2021 and 2020, the interest rate swaps used in the Company's asset/liability management strategy have weighted average terms o f 2.5 years and 3.0 years and weighted average fixed-rate interest payments of 1.88 % and 1.76 %, respectively.

At September 30, 2022 and 2021, the interest rate swaps used in the Company's asset/liability management strategy have weighted average terms o f 2.7 years and 2.5 years and weighted average fixed-rate interest payments of 1.88 % for both periods.

Cash flow hedges are initially assessed for effectiveness using regression analysis.

22 unchanged sentences

Other Assets $ — $ — $ 24,826 $ 525

Forward Commitments for the sale of mortgage loans

Other Liabilities 9,170 ( 333 ) — —

13 unchanged sentences

Forward commitments for the sale of mortgage loans Net gain/(loss) on the sale of loans — 134 ( 134 )

The Company estimates that $ 35,700 of the amounts reported in AOCI will be reclassified as a debit to interest expense during the fiscal year ending September 30, 2022.

The Company estimates that $ 35,882 of the amounts reported in AOCI will be reclassified as a credit to interest expense during the fiscal year ending September 30, 2023.

The economic lockdowns precipitated by the COVID-19 pandemic of 2020 caused unprecedented economic conditions resulting in extended low rates across the entire maturity spectrum, in which the Company decided to take advantage of this market condition.

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The fair value of derivative instruments are presented on a gross basis, even when the derivative instruments are subject to master netting arrangements.

As of October 16, 2020, the price alignment interest (PAI) is discounted based on the US Secured Overnight Rate (SOFR), replacing the Federal Funds Rate.

At transition, the Company received three basis swaps which were concurrently sold as part of a mandatory re-hedging process with no material impact to net income.

This change in the price alignment interest discount is part of an initiative to establish a more risk-free rate.

PARENT COMPANY ONLY FINANCIAL STATEMENTS

4 unchanged sentences

Cash and due from banks $ 1,341 $ 5,357

Investment securities - available for sale 3,619 —

Demand loan due from Third Federal Savings and Loan 184,772 185,076

10 unchanged sentences

Accrued expenses and other liabilities 2,532 2,773

Accrued federal and state income taxes 167 —

Total liabilities 10,184 8,609

6 unchanged sentences

51,736,009 and 51,557,451 shares at September 30, 2022 and September 30, 2021, respectively

( 771,986 ) ( 768,035 )

Unallocated ESOP shares ( 31,417 ) ( 35,751 )

38 unchanged sentences

Total other comprehensive income (loss) 90,950 64,164 ( 62,586 )

Total comprehensive income (loss) $ 145,171 $ 20,731 $ ( 12,364 )

Total comprehensive income $ 165,515 $ 145,171 $ 20,731

Years Ended September 30,

13 unchanged sentences

Cash flows from investing activities:

Proceeds from maturity of securities available for sale — — 4,000

Purchase of securities available for sale ( 4,071 ) — —

Increase in balances lent to Third Federal Savings and Loan 304 ( 12,222 ) ( 31,899 )

20 unchanged sentences

At September 30, 2022 and 2021, respectively, the ESOP held 3,141,711 and 3,575,051 shares, respectively that were neither allocated to participants nor committed to be released to participants.

The following is a summary of the Company’s earnings per share calculations.

The following is a summary of the Company’s EPS calculations.

For the Year Ended September 30, 2022

28 unchanged sentences

Income available to common shareholders $ 81,738 277,803,058 $ 0.29

The following is a summary of outstanding stock options and restricted and performance share units that are excluded from the computation of diluted earnings per share because their inclusion would be anti-dilutive.

The following is a summary of outstanding stock options and restricted and performance share units that are excluded from the computation of diluted EPS because their inclusion would be anti-dilutive.

For the Year Ended September 30,

4 unchanged sentences

Adopted in fiscal year ended September 30, 2022

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments.

The amendments in this Update replace the existing incurred loss impairment methodology with a methodology that reflects the expected credit losses for the remaining life of the asset.

The FASB has also issued additional ASU's to clarify the scope and provide additional guidance for ASU 2016-13.

The amendments expand disclosures of credit quality indicators, requiring disaggregation by year of origination (vintage).

Additionally, credit losses on available for sale debt securities will be recognized as an allowance rather than a write-down, with reversals permitted as credit loss estimates decline.

The Company adopted ASU 2016-13 and all related amendments on October 1, 2020 using the modified-retrospective approach.

Results for reporting periods beginning after October 1, 2020 are presented under ASC 326 while prior period amounts continue to be reported in accordance with previously applicable GAAP.

The adoption of the amendments resulted in a cumulative-effect reduction to opening retained earnings of $ 35,763 , net of income taxes, resulting from a pretax increase to the allowance for credit losses on loans, including the liability for unfunded commitments, of $ 46,147 .

A 24-month reasonable and supportable period using economic forecasts is used with immediate reversion to the historical mean loss rates to derive loss estimates on loans and off-balance sheet credit exposures.

ASC 326 also made changes to the accounting for available for sale debt securities, by requiring credit losses be presented as an allowance rather than as a write-down when management does not intend to sell or believe that it is more likely than not they will be required to sell the securities.

The adoption did not have a material impact on available for sale securities, which are composed of agency-backed mortgage securities.

Additionally, the Association elected the option to phase-in, over a five-year period, the initial impact of this standard's update on regulatory capital as permitted by the regulatory transition rules.

Refer to NOTE 5.

LOANS AND ALLOWANCE FOR CREDIT LOSSES , for additional disclosures required by ASC 326.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820), Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement.

The amendments in this Update add, remove and modify the disclosure requirements on fair value measurements in Topic 820.

The amendments in this Update are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019.

Early adoption is permitted upon issuance of this Update.

The Company adopted the amendments effective October 1, 2020.

The Update did not have a material impact on the Company's consolidated financial statements or disclosures.

In August 2018, the FASB issued ASU 2018-15, Internal-Use Software (Subtopic 350-40) - Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract.

GAAP does not specifically address the accounting for implementation costs of a hosting arrangement that is a service contract.

Accordingly, the amendments in this Update improve current U.S.

GAAP because they clarify and align the accounting for implementation costs for hosting arrangements, regardless of whether they convey a license to the hosted software.

The amendments in this Update are effective for public business entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years.

Early adoption of the amendments in this Update is permitted, including adoption in any interim period, for all entities.

The Company adopted the amendments effective October 1, 2020.

The Update did not have a material impact on the Company's consolidated financial statements or disclosures.

In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848) - Scope.

The amendments clarify the scope of Topic 848 so that derivatives affected by the discounting transition are explicitly eligible for certain optional expedients and exceptions in Topic 848.

The Company has elected to apply the amendments on a full retrospective basis as of March 12, 2020, which is when the Company adopted ASU 2020-04, Reference Rate Reform (Topic 848).

The amendments did not have a material impact on the Company's consolidated financial statements or disclosures.

In March of 2022, the FASB issued ASU 2022-01, Derivatives and Hedging (Topic 815), Fair Value Hedging - Portfolio Layer Method.

The amendments in this Update amend the guidance in ASU 2017-12 relating to the "last-of-layer" method and rename the method as the "portfolio layer" method.

It expands the scope of existing guidance so that entities can apply the portfolio layer method to portfolios of all financial assets, including both prepayable and nonprepayable financial assets.

Additionally, the standards expands the current model to explicitly allow entities to designate multiple layers in a single portfolio as individual hedged items.

This allows a larger portion of the interest rate risk associated with such a portfolio to be hedged.

The Update is effective for fiscal years beginning after December 15, 2022, with early adoption permitted in any interim period after its issuance.

The Company early adopted this Update effective April 1, 2022.

This Update did not have a material impact on the Company's consolidated financial condition or results of operations.

Issued but not yet adopted as of September 30, 2022

In November of 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832).

The amendments in this update requires additional disclosures regarding government grants and money contributions.

These disclosures require information on the following three items about these government transactions to be provided:

information on the nature of transactions and related accounting policies used to account for transactions, detail on the line items on the balance sheet and income statement affected by these transactions including amounts applicable to each line, and significant terms and conditions of the transactions including commitments and contingencies.

This update goes into affect for fiscal years beginning after December 15, 2021, with early adoption permitted.

Third Federal plans to adopt this provision as of October 1, 2022.

This update is not expected to have a material impact on the Company's consolidated financial statements or disclosures.

In March 2022, the FASB issued ASU 2022-02, Financial Instruments - Credit Losses (Topic 326).

The amendments in this Update eliminate the accounting guidance for TDR by creditors in Subtopic 310-40, while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when the borrower is experiencing financial difficulty.

This will be done by applying the loan refinancing and restructuring guidance to determine whether a modification results in a new loan or a continuation of an existing loan.

Additionally, this amendment requires that an entity disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases within the scope of Subtopic 326-20.

This update is effective for fiscal years beginning after December 15, 2022, with early adoption permitted.

The Company is currently evaluating the impact that this accounting guidance may have on its consolidated financial condition or results of operations.

The Company plans to adopt this guidance as of October 1, 2023.

The Company has determined that all other recently issued accounting pronouncements will not have a material impact on the Company's consolidated financial statements or do not apply to its operations.

19 unchanged sentences

Exhibit 3 therein)

Amendment to Bylaws of TFS Financial Corporation

Current Report on Form 8-K No.

001-33390 (filed with the SEC on July 1, 2022;

Exhibit 3 therein)

Form of Common Stock Certificate of TFS Financial Corporation

42 unchanged sentences

001-33390 (filed with the SEC on January 9, 2018)

Description of Exhibit If Incorporated by Reference, Documents with

Which Exhibit was Previous Filed with SEC

First Amendment to the Restricted Stock Unit Award Agreement (August 11, 2008 award), dated August 9, 2012

2 unchanged sentences

Exhibit 10.1 therein)

Description of Exhibit If Incorporated by Reference, Documents with

Which Exhibit was Previous Filed with SEC

First Amendment to the Restricted Stock Unit Award Agreement (May 12, 2009 award), dated August 9, 2012

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(Principal Executive Officer)

November 24, 2021 /S/ PAUL J.

November 22, 2022 /S/ TIMOTHY W.

Chief Financial Officer

17 unchanged sentences

Ringenbach, Director

November 24, 2021 /S/ BEN S.

STEFANSKI III

Stefanski III, Director

November 22, 2022 /S/ MEREDITH S.

Weil, Director

November 22, 2022 /S/ DANIEL F.

Weir, Director

November 22, 2022 /S/ ASHLEY H.

1 unchanged sentence

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

What changed 10-K

Item 9A. Controls and Procedures