TFSL filing — read by section

Item 2. Management’s Discussion and Analysis

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 
 
 
 Forward Looking Statements 
 This report contains forward-looking statements, which can be identified by the use of such words as estimate, project, believe, intend, anticipate, plan, seek, expect and similar expressions. These forward-looking statements include, among other things: 
 ● statements of our goals, intentions and expectations; 
 ● statements regarding our business plans and prospects and growth and operating strategies; 
 ● statements concerning trends in our provision for credit losses and charge-offs on loans and off-balance sheet exposures; 
 ● statements regarding the trends in factors affecting our financial condition and results of operations, including credit quality of our loan and investment portfolios; and 
 ● estimates of our risks and future costs and benefits. 
 
 These forward-looking statements are subject to significant risks, assumptions and uncertainties, including, among other things, the following important factors that could affect the actual outcome of future events: 
 ● significantly increased competition among depository and other financial institutions, including with respect to our ability to charge overdraft fees; 
 
 ● inflation and changes in the interest rate environment that reduce our interest margins or reduce the fair value of financial instruments, or our ability to originate loans; 
 
 ● general economic conditions, either globally, nationally or in our market areas, including employment prospects, real estate values and conditions that are worse than expected; 
 
 ● the strength or weakness of the real estate markets and of the consumer and commercial credit sectors and its impact on the credit quality of our loans and other assets, and changes in estimates of the allowance for credit losses; 
 
 ● decreased demand for our products and services and lower revenue and earnings because of a recession or other events; 
 
 ● changes in consumer spending, borrowing and savings habits; 
 ● adverse changes and volatility in the securities markets, credit markets or real estate markets; 
 
 ● our ability to manage market risk, credit risk, liquidity risk, reputational risk, regulatory risk and compliance risk; 
 ● our ability to access cost-effective funding; 
 ● legislative or regulatory changes that adversely affect our business, including changes in regulatory costs and capital requirements and changes related to our ability to pay dividends and the ability of Third Federal Savings, MHC to waive dividends; 
 ● changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board or the Public Company Accounting Oversight Board; 
 ● the adoption of implementing regulations by a number of different regulatory bodies, and uncertainty in the exact nature, extent and timing of such regulations and the impact they will have on us; 
 
 ● our ability to enter new markets successfully and take advantage of growth opportunities; 
 
 ● the continuing governmental efforts to restructure the U.S. financial and regulatory system; 
 ● future adverse developments concerning Fannie Mae or Freddie Mac; 
 ● changes in monetary and fiscal policy of the U.S. Government, including policies of the U.S. Treasury, the Federal Reserve System, Fannie Mae, the OCC, FDIC, and others; 
 
 ● the ability of the U.S. Government to remain open, function properly and manage federal debt limits; 
 
 ● changes in policy and/or assessment rates of taxing authorities that adversely affect us or our customers; 
 ● changes in accounting and tax estimates; 
 
 ● changes in our organization and changes in expense trends, including but not limited to trends affecting non-performing assets, charge-offs and provisions for credit losses; 
 
 ● changes in liquidity, including the size and composition of our deposit portfolio, and the percentage of uninsured deposits in the portfolio; 
 ● the inability of third-party providers to perform their obligations to us; 
 ● our ability to retain key employees; 
 ● the effects of global or national war, conflict or acts of terrorism; 
 ● civil unrest; 
 
 ● cyber-attacks, computer viruses and other technological risks that may breach the security of our websites or other systems to obtain unauthorized access to confidential information, destroy data or disable our systems; and 
 

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 ● the impact of wide-spread pandemic, including COVID-19, and related government action, on our business and the economy. 
 Because of these and other uncertainties, our actual future results may be materially different from the results indicated by any forward-looking statements. Any forward-looking statement made by us in this report speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future developments or otherwise, except as may be required by law. Please see Part II Other Information Item 1A. Risk Factors for a discussion of certain risks related to our business. 
 

 
 Overview 
 The business strategy of TFS Financial Corporation ("we," "us," or "our") is to operate as a well-capitalized and profitable financial institution dedicated to providing exceptional personal service to our customers. 
 Since being organized in 1938, we grew to become, at the time of our initial public offering of stock in 2007, the nation’s largest mutually-owned savings and loan association based on total assets. We credit our success to our continued emphasis on our primary values: “Love, Trust, Respect, and a Commitment to Excellence, along with Having Fun.” Our values are reflected in the design and pricing of our loan and deposit products, as described below. Our values are further reflected in a long-term revitalization program encompassing the three-mile corridor of the Broadway-Slavic Village neighborhood in Cleveland, Ohio where our main office was established and continues to be located, and where the educational programs we have established and/or support are located. We intend to continue to adhere to our primary values and to support our customers and the communities in which we operate as we pursue our mission to help people achieve the dream of home ownership and financial security while creating value for our shareholders, our customers, our communities and our associates. 
 The recent failure of three large domestic regional banks negatively impacted consumer confidence and increased stress across the banking sector. The unprecedented implications of recent monetary and fiscal policy coupled with geopolitics impacting energy markets and supply-chain constraints from global shutdowns culminated into high levels of inflation. The subsequent restrictive monetary policy approach has resulted in a heightened exposure of certain banking industry practices. Taking all of this into consideration, we remain confident that our business model and strategic approach remain appropriate. Specifically, (1) our capital ratios remain a primary source of financial strength; (2) our core deposits remain stable and the majority of our deposit accounts fall within FDIC insurance limits; (3) we maintain ample access to contingent sources of liquidity; and (4) our risk management practices around an array of financial disciplines are robust and commensurate to an institution of our size and complexity. 
 Capital ratios remain a source of financial strength for the Company and the Association as all capital ratios, including the Company's Common Equity Tier 1 Capital ratio of 20.01%, exceed the regulatory requirement to be considered "Well Capitalized". Additional details on our capital ratios are reported in the Liquidity and Capital Resources section of this Item 2. 
 The Company maintains high-quality core deposits characterized by a high level of FDIC insured deposit accounts distributed primarily across our Ohio and Florida branch network in products tailored toward consumers seeking non-transactional savings. As of June 30, 2023, 96.3% of our $8.40 billion retail deposit base consists of accounts structured under the FDIC insured limit of $250,000. The Company has the ability to fund 100% of all uninsured deposit balances through sources described later in this Item 2 under the heading Liquidity and Capital Resources . Approximately 95% of core deposits are domiciled in the states of Ohio and Florida where we operate 37 full-service branches. 
 The Company retains ample and diverse sources of liquidity and funding, beyond deposits. At June 30, 2023, our combined additional borrowing capacity under the Association's blanket pledge arrangements with the FHLB of Cincinnati and the FRB Cleveland along with our ability to purchase Fed Funds through arrangements with other institutions exceeded $4.05 billion. We also hold marketable securities that could be sold and converted to cash. Further details about liquidity and funding are described in the section labelled Maintaining Access to Adequate Liquidity and Diverse Funding Sources to Support our Growth of this Item 2. 
 We operate a multi-disciplined risk management program that emphasizes stress testing and scenario analysis in the realms of interest rate risk, credit risk, market risk and liquidity risk. Key risk indicators are proactively monitored and reported throughout the organization, up to and including the Board of Directors. The program is supported by a multi-line of defense approach in which internal oversight functions of risk management and internal audit grant their fully autonomous opinion of the process with an ability to issue findings for remediation if deemed necessary. The program is also regularly exposed to outside scrutiny in the form of regulatory oversight and from our outside audit firm. Management established the risk management framework with an appropriate level of sophistication such that it fully encapsulates all identified areas of risk, in conjunction with a necessary level of governance, to promote the program’s intention of properly identifying and managing our risk profile. 
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 Management believes that the following matters are those most critical to our success: (1) controlling our interest rate risk exposure; (2) monitoring and limiting our credit risk; (3) maintaining access to adequate liquidity and diverse funding sources to support our growth; and (4) monitoring and controlling our operating expenses. 
 Controlling Our Interest Rate Risk Exposure. Historically, our greatest risk has been our exposure to changes in interest rates. When we hold longer-term, fixed-rate assets, funded by liabilities with shorter-term re-pricing characteristics, we are exposed to potentially adverse impacts from changing interest rates, and most notably rising interest rates. Generally, and particularly over extended periods of time that encompass full economic cycles, interest rates associated with longer-term assets, like fixed-rate mortgages, have been higher than interest rates associated with shorter-term funding sources, like deposits. This difference has been an important component of our net interest income and is fundamental to our operations. 
 A challenge to our business model occurs when there is a rapid and substantial increase in short-term rates or there is an extended inverted yield curve, which have both occurred over recent periods. This economic environment has resulted in a decrease in our net interest income and our net interest margin. 
 To mitigate our interest rate risk in general and to address the current rate environment specifically, we utilize a variety of strategies that include: 
 • Maintaining regulatory capital in excess of levels required to be considered well capitalized 
 • Promoting adjustable-rate loans and shorter-term fixed-rate loans 
 • Marketing home equity lines of credit, which carry an adjustable rate of interest, indexed to the prime rate 
 • Opportunistically extending the duration of our funding sources 
 • Utilizing interest rate swaps to convert short-term FHLB advances and brokered certificates of deposit into long-term, fixed rate borrowings 
 • Selectively selling a portion of our long-term, fixed-rate mortgage loans in the secondary market 
 
 
 Levels of Regulatory Capital 
 At June 30, 2023, the Company’s Tier 1 (leverage) capital totaled $1.83 billion, or 11.18% of net average assets and 20.01% of risk-weighted assets, while the Association’s Tier 1 (leverage) capital totaled $1.62 billion, or 9.93% of net average assets and 17.79% of risk-weighted assets. Each of these measures is in excess of the requirements currently in effect for the Association for designation as “well capitalized” under regulatory prompt corrective action provisions, which set minimum levels of 5.00% of net average assets and 8.00% of risk-weighted assets. Beginning this fiscal year, the Company entered into the final three years of the five-year transitional period, as provided by a final rule, after CECL was adopted in fiscal year 2021. Refer to the Liquidity and Capital Resources section of this Item 2 for additional discussion regarding regulatory capital requirements. 
 Promotion of Adjustable-Rate Loans and Shorter-Term Fixed-Rate Loans 
 We market an adjustable-rate mortgage loan that provides us with improved interest rate risk characteristics when compared to a 30-year, fixed-rate mortgage loan. Our “Smart Rate” adjustable-rate mortgage offers borrowers an interest rate lower than that of a 30-year, fixed-rate loan. The interest rate of the Smart Rate mortgage is locked for three or five years, then resets annually. The Smart Rate mortgage contains a feature to re-lock the rate an unlimited number of times at our then-current interest rate and fee schedule, for another three or five years (which must be the same as the original lock period) without having to complete a full refinance transaction. Re-lock eligibility is subject to a satisfactory payment performance history by the borrower (current at the time of re-lock, and no foreclosures or bankruptcies since the Smart Rate application was taken). In addition to a satisfactory payment history, re-lock eligibility requires that the property continues to be the borrower’s primary residence. The loan term cannot be extended in connection with a re-lock, nor can new funds be advanced. All interest rate caps and floors remain as originated. 
 We also offer a ten-year, fully amortizing fixed-rate, first mortgage loan. The ten-year, fixed-rate loan has a more desirable interest rate risk profile when compared to loans with fixed-rate terms of 15 to 30 years and can help to more effectively manage interest rate risk exposure, yet provides our borrowers with the certainty of a fixed interest rate throughout the life of the obligation. 
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 The following tables set forth our first mortgage loan production and balances segregated by loan structure at origination. 
 
 For the Nine Months Ended June 30, 2023 For the Nine Months Ended June 30, 2022 
 Amount Percent Amount Percent 
 (Dollars in thousands) 
 First Mortgage Loan Originations: 
 ARM (all Smart Rate) production $ 466,963 35.6 % $ 788,047 27.1 % 
 Fixed-rate production: 
 Terms less than or equal to 10 years 27,582 2.1 429,778 14.8 
 Terms greater than 10 years 816,929 62.3 1,691,472 58.1 
 Total fixed-rate production 844,511 64.4 2,121,250 72.9 
 Total First Mortgage Loan Originations $ 1,311,474 100.0 % $ 2,909,297 100.0 % 

 
 June 30, 2023 September 30, 2022 
 Amount Percent Amount Percent 
 (Dollars in thousands) 
 Balance of First Mortgage Loans Held For Investment: 
 ARM (primarily Smart Rate) Loans $ 4,755,783 39.6 % $ 4,668,089 40.3 % 
 Fixed-rate Loans: 
 Terms less than or equal to 10 years 1,152,458 9.6 1,350,436 11.6 
 Terms greater than 10 years 6,083,865 50.8 5,574,589 48.1 
 Total fixed-rate loans 7,236,323 60.4 6,925,025 59.7 
 Total First Mortgage Loans Held For Investment $ 11,992,106 100.0 % $ 11,593,114 100.0 % 

 The following table sets forth the balances as of June 30, 2023 for all ARM loans segregated by the next scheduled interest rate reset date. 
 Current Balance of ARM Loans Scheduled for Interest Rate Reset 
 During the Fiscal Years Ending September 30, (In thousands) 
 2023 $ 769 
 2024 481,100 
 2025 645,801 
 2026 1,492,689 
 2027 1,669,913 
 2028 465,511 
 Total $ 4,755,783 

 At June 30, 2023 and September 30, 2022, mortgage loans held for sale, all of which were long-term, fixed-rate first mortgage loans and all of which were held for sale to Fannie Mae, totaled $0.6 million and $9.7 million, respectively. 
 
 
 
 
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 Loan Portfolio Yield 
 The following tables set forth the balance and interest yield as of June 30, 2023 for the portfolio of loans held for investment, by type of loan, structure and geographic location. 
 
 June 30, 2023 
 Balance Percent Yield 
 (Dollars in thousands) 
 Total Loans: 
 Fixed Rate 
 Terms less than or equal to 10 years $ 1,152,458 7.7 % 2.66 % 
 Terms greater than 10 years 6,083,865 40.8 3.72 
 Total Fixed-Rate loans 7,236,323 48.5 3.55 
 
 ARMs 4,757,698 31.9 3.00 
 Home Equity Loans and Lines of Credit 2,866,204 19.2 7.17 
 Construction and Other Loans 65,985 0.4 4.33 
 Total Loans Receivable $ 14,926,210 100.0 % 4.08 % 
 
 
 

 
 June 30, 2023 
 Balance Percent Yield 
 (Dollars in thousands) 
 Residential Mortgage Loans 
 Ohio $ 6,800,644 45.6 % 3.52 % 
 Florida 2,143,651 14.4 3.21 
 Other 3,049,726 20.3 3.00 
 Total Residential Mortgage Loans 11,994,021 80.4 3.33 
 Home Equity Loans and Lines of Credit 
 Ohio 738,632 4.9 7.11 
 Florida 622,184 4.2 7.08 
 California 489,412 3.3 7.11 
 Other 1,015,976 6.8 7.29 
 Total Home Equity Loans and Lines of Credit 2,866,204 19.2 7.17 
 Construction and Other Loans 65,985 0.4 4.33 
 Total Loans Receivable $ 14,926,210 100.0 % 4.08 % 

 
 
 Marketing of Home Equity Lines of Credit 
 We actively market home equity lines of credit, which carry an adjustable rate of interest indexed to the prime rate which provides interest rate sensitivity to that portion of our assets and is a meaningful strategy to manage our interest rate risk profile. Increasing our investments in loans with variable rates of interest help to better match the maturities and interest rates of our assets and liabilities, thereby reducing the exposure of our net interest income to changes in market interest rates. We strive to grow the home equity line of credit portfolio through offering competitive rates, marketing efforts and by utilizing partners to attract more home equity line of credit customers. At June 30, 2023, the principal balance of home equity lines of credit totaled $2.53 billion. Our home equity lending is discussed in the Lending Activities section of this Item 2 . 
 Extending the Duration of Funding Sources 
 As a complement to our strategies to shorten the duration of our interest-earning assets, as described above, we also seek to lengthen the duration of our interest-bearing funding sources. These efforts include monitoring the relative costs of alternative funding sources such as retail certificates of deposit, brokered certificates of deposit, longer-term (e.g. four to six years) fixed-rate advances from the FHLB of Cincinnati, and shorter-term (e.g. three months) funding, the durations of which 
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 are extended by correlated interest rate exchange contracts ("swap"). All of our swaps are subject to collateral pledges and require specific structural features to qualify for hedge accounting treatment. Hedge accounting treatment directs that periodic mark-to-market adjustments be recorded in other comprehensive income (loss) in the equity section of the balance sheet, rather than being included in operating results of the income statement. The Association's intent is that any swap to which it may be a party will qualify for hedge accounting treatment. 
 The Association is a party to interest rate swap agreements. Each of the Association's swap agreements is registered on the Chicago Mercantile Exchange and involves the exchange of interest payment amounts based on a notional principal balance. No exchange of principal amounts occur and the notional principal amount does not appear on our balance sheet. The Association uses swaps to extend the duration of its funding sources. In each of the Association's agreements, interest paid is based on a fixed rate of interest throughout the term of each agreement while interest received is based on an interest rate that resets and compounds daily over a specified interval (generally three months) throughout the term of each agreement. On the initiation date of the swap, the agreed upon exchange interest rates reflect market conditions at that point in time. Swaps generally require counterparty collateral pledges that ensure the counterparties' ability to comply with the conditions of the agreement. Concurrent with the execution of each swap, the Association enters into a short-term borrowing in an amount equal to the notional amount of the swap and with interest rate resets aligned with the reset interval of the swap. Each individual swap agreement has been designated as a cash flow hedge of interest rate risk associated with either the Company's variable rate borrowings from the FHLB of Cincinnati or brokered CD's. 
 The notional amount of the Association's swap portfolio at June 30, 2023 was $5.22 billion. The swap portfolio's weighted average fixed pay rate was 2.91% and the weighted average remaining term was 4.1 years. As of September 30, 2022, the notional amount of swaps was $1.55 billion with a weighted average fixed pay rate of 1.88% and a weighted average remaining term of 2.7 years. In these challenging economic times with an extended inverted yield curve, the Association has found it financially beneficial to increase the use of swaps to lower our borrowing costs and extend the duration of our liabilities. For more details, refer to Notes 6. BORROWED FUNDS and 13. DERIVATIVE INSTRUMENTS to the unaudited consolidated financial statements. 
 Each funding alternative is monitored and evaluated based on its effective interest payment rate, options exercisable by the creditor (early withdrawal, right to call, etc.), and collateral requirements. Refer to Notes 5. DEPOSITS and 6. BORROWED FUNDS for additional details on balances. The interest payment rate is a function of market influences that are specific to the nuances and market competitiveness/breadth of each funding source. Generally, early withdrawal options, subject to a fee, are available to our retail CD customers but not to holders of brokered CDs; issuer call options are not provided on our advances from the FHLB of Cincinnati; and we are not subject to early termination options with respect to our interest rate exchange contracts. Additionally, collateral pledges are not provided with respect to our retail CDs or our brokered CDs, but are required for our advances from the FHLB of Cincinnati as well as for our interest rate exchange contracts. We will continue to evaluate the structure of our funding sources based on current needs. 
 Selling Fixed Rate Loans into the Secondary Market 
 We also manage interest rate risk by selectively selling a portion of our long-term, fixed-rate mortgage loans in the secondary market. First mortgage loans (primarily fixed-rate, mortgage refinances with terms of 15 years or more, and Home Ready) are originated under Fannie Mae procedures and are eligible for sale to Fannie Mae either as whole loans or within mortgage-backed securities. Currently, certain types of loans (i.e. our Smart Rate adjustable-rate loans, home purchase fixed-rate loans and 10-year fixed-rate loans) are originated under our legacy procedures, which are not eligible for sale to Fannie Mae. We can also manage interest rate risk by selling non-Fannie Mae compliant mortgage loans to private investors, although those transactions may be limited to loans that have established payment histories, strong borrower credit profiles and are supported by adequate collateral. Additionally, sales to private investors are dependent upon favorable market conditions, including motivated buyers, and involve more complicated negotiations and longer settlement timelines. Refer to the Liquidity and Capital Resources section of the Overview for information on loan sales. 
 During the nine months ended June 30, 2023, $58.1 million of agency-compliant, long-term (15 to 30 years), fixed-rate mortgage loans were sold, or committed to be sold, to Fannie Mae on a servicing retained basis. At June 30, 2023, $0.6 million of agency-compliant, long term, fixed-rate residential first mortgage loans were classified as "held for sale". Of the agency-compliant loan sales during the nine months ended June 30, 2023, $8.9 million were sold under Fannie Mae's Home Ready program, and $49.2 million were sold to Fannie Mae. At June 30, 2023, we serviced $1.96 billion of loans we originated and later sold to investors. 
 We continue to consider liquidity and balance sheet management, as well as secondary market pricing, in evaluating the opportunity to sell loans. Additionally, we are expanding our ability to sell certain fixed rate loans to Fannie through the use of more traditional mortgage banking activities, including a proprietary approach to risk-based pricing and loan-level pricing 
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 adjustments. This approach is concentrated in markets outside of Ohio and Florida. Some additional startup and marketing costs have been incurred, but are not expected to significantly impact our financial results in fiscal year 2023. Loan sales are discussed in more detail within the Liquidity and Capital Resources section of Item 2. 
 
 
 Monitoring and Limiting Our Credit Risk. While, historically, we had been successful in limiting our credit risk exposure by generally imposing high credit standards with respect to lending, the memory of the 2008 housing market collapse and financial crisis is a constant reminder to focus on credit risk. In response to the evolving economic landscape, we continuously revise and update our quarterly analysis and evaluation procedures, as needed, for each category of our lending with the objective of identifying and recognizing all appropriate credit losses. At June 30, 2023, 90% of our assets consisted of residential real estate loans (both “held for sale” and “held for investment”) and home equity loans and lines of credit. Our analytic procedures and evaluations include specific reviews of all home equity loans and lines of credit that become 90 or more days past due, as well as specific reviews of all first mortgage loans that become 180 or more days past due. We transfer performing home equity lines of credit subordinate to first mortgages delinquent greater than 90 days to non-accrual status. We also charge-off performing loans to collateral value and classify those loans as non-accrual within 60 days of notification of all borrowers filing Chapter 7 bankruptcy, that have not reaffirmed or been dismissed, regardless of how long the loans have been performing. 
 In an effort to limit our credit risk exposure with the low risk appetite approved by the Board of Directors, the credit eligibility criteria is evaluated to ensure a successful homeowner has the primary source of repayment, followed by a collateral position that allows for a secondary source of repayment, if needed. Products that do not result in an effective mix of repayment ability are not offered. We use stringent, conservative lending standards for underwriting to reduce our credit risk. For first mortgage loans originated during the current quarter, the average credit score was 774 and the average LTV was 71% at origination. The delinquency level related to loan originations prior to 2009, compared to originations in 2009 and after, reflect the higher credit standards to which we have subjected all new originations. As of June 30, 2023, loans originated prior to 2009 had a balance of $291.2 million, of which $7.5 million, or 2.6%, were delinquent, while loans originated in 2009 and after had a balance of $14.67 billion, of which $15.3 million, or 0.1%, were delinquent. 
 One aspect of our credit risk concern relates to high concentrations of our loans that are secured by residential real estate in specific states, particularly Ohio and Florida, where a large portion of our historical lending has occurred. At June 30, 2023, approximately 56.7% and 17.9% of the combined total of our residential Core and construction loans held for investment and approximately 25.8% and 21.7% of our home equity loans and lines of credit were secured by properties in Ohio and Florida, respectively. In an effort to moderate the concentration of our credit risk exposure in individual states, we have utilized direct mail marketing, our internet site and our customer service call center to extend our lending activities to other attractive geographic locations. Currently, in addition to Ohio and Florida, we are actively lending in 23 other states and the District of Columbia, and as a result of that activity, the concentration ratios of the combined total of our residential Core and construction loans held for investment in Ohio and Florida have trended downward from their September 30, 2010 levels when the concentrations were 79.1% in Ohio and 19.0% in Florida. Of the total mortgage loans originated in the nine months ended June 30, 2023, 24.8% are secured by properties in states other than Ohio or Florida. 
 Maintaining Access to Adequate Liquidity and Diverse Funding Sources to Support our Growth. For most insured depositories, customer and community confidence are critical to their ability to maintain access to adequate liquidity and to conduct business in an orderly manner. We believe that a well capitalized institution is one of the most important factors in nurturing customer and community confidence. Accordingly, we have managed the pace of our growth in a manner that reflects our emphasis on high capital levels. At June 30, 2023, the Association’s ratio of Tier 1 (leverage) capital to net average assets (a basic industry measure that deems 5.00% or above to represent a “well capitalized” status) was 9.93%. The Association's Tier 1 (leverage) capital ratio at June 30, 2023 included the negative impact of a $40 million cash dividend payment that the Association made to the Company, its sole shareholder, in December 2022. Because of its intercompany nature, this dividend payment did not impact the Company's consolidated capital ratios which are reported in the Liquidity and Capital Resources section of this Item 2. We expect to continue to remain a well capitalized institution. 
 In managing its level of liquidity, the Company monitors available funding sources, which include attracting new deposits (including brokered CDs and brokered checking accounts), borrowings from others, the conversion of assets to cash and the generation of funds through profitable operations. The Company has traditionally relied on retail deposits as its primary means in meeting its funding needs. To attract deposits, we typically offer rates that are competitive with the rates on similar products offered by other financial institutions. At June 30, 2023, deposits totaled $9.07 billion (including $667.8 million of brokered CDs), while borrowings totaled $5.45 billion and borrowers’ advances and servicing escrows totaled $90.9 million, combined. In evaluating funding sources, we consider many factors, including cost, collateral, duration and optionality, current availability, expected sustainability, impact on operations and capital levels. 
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 We preserve the availability of alternative funding sources through various mechanisms. First, by maintaining high capital levels, we retain the flexibility to increase our balance sheet size without jeopardizing our capital adequacy. Effectively, this permits us to increase the rates that we offer on our deposit products thereby attracting more potential customers. Second, we pledge available real estate mortgage loans with the FHLB of Cincinnati and the FRB-Cleveland. At June 30, 2023, these collateral pledge support arrangements provided the Association with the ability to borrow a maximum of $8.67 billion from the FHLB of Cincinnati and $136.5 million from the FRB-Cleveland Discount Window. From the perspective of collateral value securing FHLB of Cincinnati advances, our capacity for additional borrowings at June 30, 2023 was $3.25 billion. Third, we have the ability to purchase overnight Fed Funds up to $670.0 million through various arrangements with other institutions. Fourth, we invest in high quality marketable securities that exhibit limited market price variability, and to the extent that they are not needed as collateral for borrowings, can be sold in the institutional market and converted to cash. At June 30, 2023, our investment securities portfolio totaled $513.3 million. Finally, cash flows from operating activities have been a regular source of funds. During the nine months ended June 30, 2023 and 2022, cash flows from operations provided $76.9 million and $51.1 million, respectively. 
 Overall, while customer and community confidence can never be assured, the Company believes that its liquidity is adequate and that it has access to adequate alternative funding sources. 
 Monitoring and Controlling Our Operating Expenses. We continue to focus on managing operating expenses. Our ratio of annualized non-interest expense to average assets was 1.34% for the nine months ended June 30, 2023 and 1.38% for the nine months ended June 30, 2022. As of June 30, 2023, our average assets per full-time employee and our average deposits per full-time employee were $16.5 million and $9.0 million, respectively. We believe that each of these measures compares favorably with industry averages. Our relatively high average of deposits (exclusive of brokered CDs) held at our branch offices ($227.1 million per branch office as of June 30, 2023) contributes to our expense management efforts by limiting the overhead costs of serving our customers. We will continue our efforts to control operating expenses as we grow our business. 
 
 
 
 
 Critical Accounting Policies and Estimates 
 Critical accounting policies and estimates are defined as those made in accordance with U.S. GAAP that involve significant judgments, estimates and uncertainties, and could potentially give rise to materially different results under different assumptions and conditions. We believe that the most critical accounting policies and estimates upon which our financial condition and results of operations depend, and which involve the most complex subjective decisions or assessments, are those with respect to our allowance for credit losses, income taxes and pension benefits as described in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2022. 
 
 
 Lending Activities 
 Allowance for Credit Losses 
 We provide for credit losses based on a life of loan methodology. Accordingly, all credit losses are charged to, and all recoveries are credited to, the related allowance. Additions to the allowance for credit losses are provided by charges to income based on various factors which, in our judgment, deserve current recognition in estimating life of loan credit losses. We regularly review the loan portfolio and off-balance sheet exposures and make provisions (or releases) for losses in order to maintain the allowance for credit losses in accordance with U.S. GAAP. Our allowance for credit losses consists of three components: 
 (1) individual valuation allowances (IVAs) established for any loans dependent on cash flows, such as performing TDRs; 
 (2) general valuation allowances (GVAs) for loans, which are comprised of quantitative GVAs, general allowances for credit losses for each loan type based on historical loan loss experience, and qualitative GVAs, which are adjustments to the quantitative GVAs, maintained to cover uncertainties that affect the estimate of expected credit losses for each loan type; and 
 (3) GVAs for off-balance sheet credit exposures, which are comprised of expected lifetime losses on unfunded loan commitments to extend credit where the obligations are not unconditionally cancellable. 
 The qualitative GVAs expand our ability to identify and estimate probable losses and are based on our evaluation of the following factors, some of which are consistent with factors that impact the determination of quantitative GVAs. For example, delinquency statistics (both current and historical) are used in developing the quantitative GVAs while the trending of the delinquency statistics is considered and evaluated in the determination of the qualitative GVAs. Factors impacting the determination of qualitative GVAs include: 
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 • changes in lending policies and procedures including underwriting standards, collection, charge-off or recovery practices; 
 • management's view of changes in national, regional, and local economic and business conditions and trends including treasury yields, housing market factors and trends, such as the status of loans in foreclosure, real estate in judgment and real estate owned, and unemployment statistics and trends and how it aligns with economic modeling forecasts; 
 • changes in the nature and volume of the portfolios including home equity lines of credit nearing the end of the draw period and adjustable-rate mortgage loans nearing a rate reset; 
 • changes in the experience, ability or depth of lending management; 
 • changes in the volume or severity of past due loans, volume of non-accrual loans, or the volume and severity of adversely classified loans including the trending of delinquency statistics (both current and historical), historical loan loss experience and trends, the frequency and magnitude of multiple restructurings of loans previously the subject of TDRs, and uncertainty surrounding borrowers’ ability to recover from temporary hardships for which short-term loan restructurings are granted; 
 • changes in the quality of the loan review system; 
 • changes in the value of the underlying collateral including asset disposition loss statistics (both current and historical) and the trending of those statistics, and additional charge-offs and recoveries on individually reviewed loans; 
 • existence of any concentrations of credit; 
 • effect of other external factors such as competition, market interest rate changes or legal and regulatory requirements including market conditions and regulatory directives that impact the entire financial services industry; and 
 • limitations within our models to predict life of loan net losses. 
 When loan restructurings qualify as TDRs and the loans are performing according to the terms of the restructuring, we record an IVA based on the present value of expected future cash flows, which includes a factor for potential subsequent defaults, discounted at the effective interest rate of the original loan contract. Potential defaults are distinguished from multiple restructurings as borrowers who default are generally not eligible for subsequent restructurings. At June 30, 2023, the balance of such individual valuation allowances were $9.7 million. In instances when loans require multiple restructurings, additional valuation allowances may be required. The new valuation allowance on a loan that has multiple restructurings is calculated based on the present value of the expected cash flows, discounted at the effective interest rate of the original loan contract, considering the new terms of the restructured agreement. The estimated exposure for additional loss related to multiple loan restructurings is included as a component of our qualitative GVA. 
 Home equity loans and lines of credit generally have higher credit risk than traditional residential mortgage loans. These loans and credit lines are usually in a second lien position and when combined with the first mortgage, result in generally higher overall loan-to-value ratios. In a stressed housing market with high delinquencies and decreasing housing prices, these higher loan-to-value ratios represent a greater risk of loss to the Company. A borrower with more equity in the property has a vested interest in keeping the loan current when compared to a borrower with little or no equity in the property. In light of the past weakness in the housing market and uncertainty with respect to future employment levels and economic prospects, we conduct an expanded loan level evaluation of our home equity loans and lines of credit, including bridge loans used to aid borrowers in buying a new home before selling their old one, which are delinquent 90 days or more. This expanded evaluation is in addition to our traditional evaluation procedures. We have established an allowance for our unfunded commitments on this portfolio, which is recorded in other liabilities. Our home equity loans and lines of credit portfolio continues to comprise a significant portion of our gross charge-offs. At June 30, 2023, we had an amortized cost of $2.90 billion in home equity loans and home equity lines of credit outstanding, of which $3.1 million, or 0.11% were delinquent 90 days or more. 
 The allowance for credit losses is evaluated based upon the combined total of the quantitative and qualitative GVAs and IVAs. Periodically, the carrying value of loans and factors impacting our credit loss analysis are evaluated and the allowance is adjusted accordingly. While we use the best information available to make evaluations, future additions to the allowance may be necessary based on unforeseen changes in loan quality and economic conditions. 
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 The following table sets forth activity for credit losses segregated by geographic location for the periods indicated. The majority of our Home Today loan portfolio is secured by properties located in Ohio, and therefore was not segregated by state. 
 For the Three Months Ended June 30, For the Nine Months Ended June 30, 
 2023 2022 2023 2022 
 (Dollars in thousands) 
 Allowance balance for credit losses on loans (beginning of the period) $ 74,138 $ 64,324 $ 72,895 $ 64,289 
 Charge-offs on real estate loans: 
 Residential Core 
 Ohio 35 11 241 168 
 
 Other — 12 — 13 
 Total Residential Core 35 23 241 181 
 
 
 
 
 Total Residential Home Today 34 91 278 197 
 Home equity loans and lines of credit 
 Ohio 4 129 237 546 
 Florida — 41 48 111 
 California — 15 14 29 
 Other 18 6 281 116 
 Total Home equity loans and lines of credit 22 191 580 802 
 
 
 Total charge-offs 91 305 1,099 1,180 
 Recoveries on real estate loans: 
 Residential Core 227 669 831 2,299 
 Residential Home Today 434 592 1,707 2,079 
 Home equity loans and lines of credit 1,194 1,522 3,200 3,946 
 Construction — 175 — 175 
 
 Total recoveries 1,855 2,958 5,738 8,499 
 Net recoveries 1,764 2,653 4,639 7,319 
 Provision (release) for allowance for credit losses on loans (1,099) 2,473 (2,731) (2,158) 
 Allowance balance for loans (end of the period) $ 74,803 $ 69,450 $ 74,803 $ 69,450 
 
 Allowance balance for credit losses on unfunded commitments (beginning of the period) $ 26,653 $ 26,601 $ 27,021 $ 24,970 
 
 Provision for credit losses on unfunded loan commitments 1,099 1,527 731 3,158 
 Allowance balance for unfunded loan commitments (end of the period) 27,752 28,128 27,752 28,128 
 Allowance balance for all credit losses (end of the period) $ 102,555 $ 97,578 $ 102,555 $ 97,578 
 Ratios: 
 
 Allowance for credit losses on loans to non-accrual loans at end of the period 244.28 % 184.28 % 244.28 % 184.28 % 
 Allowance for credit losses on loans to the total amortized cost in loans at end of the period 0.50 % 0.50 % 0.50 % 0.50 % 

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 The following table sets forth additional information with respect to net recoveries (charge-offs) by category for the periods indicated. 
 
 For the Three Months Ended June 30, For the Nine Months Ended June 30, 
 2023 2022 2023 2022 
 Net recoveries (charge-off) as a percentage of average loans outstanding (annualized) 
 Real estate loans: 
 Residential Core 0.01 % 0.02 % 0.01 % 0.03 % 
 Residential Home Today 0.01 0.01 0.01 0.02 
 Home Equity loans and lines of credit 0.03 0.04 0.02 0.03 
 Construction — 0.01 — — 
 Total net recoveries (charge-off) as a percentage of average loans outstanding (annualized) 0.05 % 0.08 % 0.04 % 0.08 % 

 Net recoveries totaled $4.6 million during the nine months ended June 30, 2023 compared to $7.3 million during the nine months ended June 30, 2022. We have reported net recoveries in each quarter for the last four years, primarily due to improvements in the values of collateral properties used to secure loans that were fully or partially charged off after the 2008 collapse of the housing market. Charge-offs are recognized on loans identified as collateral-dependent and subject to individual review when the collateral value does not sufficiently support full repayment of the obligation. Recoveries are recognized on previously charged-off loans as borrowers perform their repayment obligations or as loans with improved collateral positions reach final resolution. 
 Gross charge-offs remained at relatively low levels, during the nine months ended June 30, 2023 and the nine months ended June 30, 2022. Delinquent loans continue to be evaluated for potential losses, and provisions are recorded for the estimate of potential losses of those loans. Subject to changes in the economic environment, we expect a minimal level of charge-offs as delinquent loans are resolved in the future and uncollected balances are charged against the allowance. 
 During the three months ended June 30, 2023, the total allowance for credit losses increased $1.8 million, to $102.6 million from $100.8 million at March 31, 2023, as we recorded no provision expense for the allowance for credit losses and $1.8 million of net recoveries. Refer to the " Activity in the Allowance for Credit Losses " and " Analysis of the Allowance for Credit Losses " tables in Note 4. LOANS AND ALLOWANCES FOR CREDIT LOSSES of the NOTES TO CONSOLIDATED FINANCIAL STATEMENTS for more information. 
 Changes during the three months ended June 30, 2023 in the allowance for credit loss balances of loans are described below. The allowance for credit losses on off-balance sheet exposures increased by $1.1 million primarily related to a slight increase in commitments to originate. Other than the less significant construction and other loans segments, the changes related to the significant loan segments are described as follows: 
 • Residential Core – The amortized cost of this segment increased 1.6%, or $195.0 million, and its total allowance increased 1.4% or $0.8 million as of June 30, 2023 as compared to March 31, 2023. There were net recoveries of $0.2 million recorded for the current quarter and there were net recoveries of $0.6 million for the quarter ended June 30, 2022. Total delinquencies decreased 5.6% to $13.5 million at June 30, 2023 from $14.3 million at March 31, 2023. Delinquencies greater than 90 days decreased by 25.3% to $6.1 million at June 30, 2023 from $8.1 million at March 31, 2023. With some deterioration in the economic forecasts and new growth in the portfolio this quarter, the allowance increased. 
 • Residential Home Today – The amortized cost of this segment decreased 3.2%, or $1.6 million, as we are no longer originating loans under the Home Today program. The expected net recovery position for this segment was $1.1 million at June 30, 2023 and $1.2 million at March 31, 2023. Total delinquencies increased 0.8% to $2.5 million at June 30, 2023 from $2.5 million at March 31, 2023. Delinquencies greater than 90 days remained at $1.0 million for June 30, 2023 and March 31, 2023. There were net recoveries of $0.4 million recorded during the current quarter and net recoveries of $0.5 million during the quarter ended June 30, 2022. Under the CECL methodology, the life of loan concept allows for qualitative adjustments for the expected future recoveries of previously charged-off loans, which is driving the current allowance balance for Home Today loans negative. 
 • Home Equity Loans and Lines of Credit – The amortized cost of this segment increased 5.2%, or $144.2 million, to $2.90 billion at June 30, 2023 from $2.76 billion at March 31, 2023. The total allowance for this segment decreased by 0.5% to $21.1 million from $21.2 million at March 31, 2023. Total delinquencies for this portfolio segment decreased 
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 4.8% to $6.8 million at June 30, 2023 as compared to $7.1 million at March 31, 2023. Delinquencies greater than 90 days increased 6.7% to $3.1 million at June 30, 2023 from $2.9 million at March 31, 2023. There were net recoveries of $1.2 million for this loan segment during the current quarter and net recoveries of $1.3 million during the quarter ended June 30, 2022. Balance increases caused a slight increase in forecasted losses, offset by a reduction due to model adjustments for product mix. 
 
 The following tables set forth the allowance for credit losses allocated by loan category, the percent of allowance in each category to the total allowance on loans, and the percent of loans in each category to total loans at the dates indicated. The allowance for credit losses allocated to each category is not necessarily indicative of future losses in any particular category and does not restrict the use of the allowance to absorb losses in other categories. This table does not include allowances for credit losses on unfunded loan commitments, which are primarily related to undrawn home equity lines of credit. 
 
 June 30, 2023 March 31, 2023 
 Amount Percent of
Allowance
to Total
Allowance Percent of
Loans in
Category to Total 
Loans Amount Percent of
Allowance
to Total
Allowance Percent of
Loans in
Category to Total 
Loans 
 (Dollars in thousands) 
 Real estate loans: 
 Residential Core $ 54,551 72.9% 80.1% $ 53,772 72.5% 80.4% 
 Residential Home Today (1,095) (1.5) 0.3 (1,212) (1.6) 0.3 
 Home equity loans and lines of credit 21,132 28.3 19.2 21,232 28.6 18.6 
 Construction 215 0.3 0.4 346 0.5 0.7 
 
 Allowance for credit losses on loans $ 74,803 100.0% 100.0% $ 74,138 100.0% 100.0% 

 
 
 
 September 30, 2022 June 30, 2022 
 Amount Percent of
Allowance
to Total
Allowance Percent of
Loans in
Category to Total 
Loans Amount Percent of
Allowance
to Total
Allowance Percent of
Loans in
Category to Total 
Loans 
 (Dollars in thousands) 
 Real estate loans: 
 Residential Core $ 53,506 73.4% 80.4% $ 51,452 74.1% 80.8% 
 Residential Home Today (997) (1.4) 0.4 (892) (1.3) 0.4 
 Home equity loans and lines of credit 20,032 27.5 18.4 18,594 26.8 18.0 
 Construction 354 0.5 0.8 296 0.4 0.8 
 
 Allowance for credit losses on loans $ 72,895 100.0% 100.0% $ 69,450 100.0% 100.0% 

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 Loan Portfolio Composition 
 The following table sets forth the composition of the portfolio of loans held for investment, by type of loan segregated by geographic location, at the indicated dates, excluding loans held for sale. The majority of our Home Today loan portfolio is secured by properties located in Ohio and the balances of other loans are immaterial. Therefore, neither was segregated by geographic location. 
 
 June 30, 2023 March 31, 2023 September 30, 2022 June 30, 2022 
 Amount Percent Amount Percent Amount Percent Amount Percent 
 (Dollars in thousands) 
 Real estate loans: 
 Residential Core 
 Ohio $ 6,754,461 $ 6,593,438 $ 6,432,780 $ 6,236,177 
 Florida 2,141,663 2,140,476 2,120,892 2,090,799 
 Other 3,049,657 3,018,360 2,986,187 2,973,224 
 Total Residential Core 11,945,781 80.1 % 11,752,274 80.4 % 11,539,859 80.4 % 11,300,200 80.8 % 
 
 
 
 
 Total Residential Home Today 48,240 0.3 49,795 0.3 53,255 0.4 55,333 0.4 
 Home equity loans and lines of credit 
 Ohio 738,632 712,646 706,641 669,306 
 Florida 622,184 585,563 537,724 501,799 
 California 489,412 463,110 432,540 412,037 
 Other 1,015,976 962,559 956,973 931,090 
 Total Home equity loans and lines of credit 2,866,204 19.2 2,723,878 18.6 2,633,878 18.4 2,514,232 18.0 
 Construction loans 
 Ohio 54,884 78,460 111,098 102,870 
 Florida 7,079 9,859 10,661 9,246 
 Other — — — 51 
 Total Construction 61,963 0.4 88,319 0.7 121,759 0.8 112,167 0.8 
 Other loans 4,022 — 3,868 — 3,263 — 3,255 — 
 Total loans receivable 14,926,210 100.0 % 14,618,134 100.0 % 14,352,014 100.0 % 13,985,187 100.0 % 
 Deferred loan expenses, net 56,780 53,183 50,221 48,669 
 Loans in process (24,507) (33,856) (72,273) (68,578) 
 Allowance for credit losses on loans (74,803) (74,138) (72,895) (69,450) 
 Total loans receivable, net $ 14,883,680 $ 14,563,323 $ 14,257,067 $ 13,895,828 

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 The following table provides an analysis of our residential mortgage loans disaggregated by refreshed FICO score, year of origination and portfolio at June 30, 2023. The Company treats the FICO score information as demonstrating that underwriting guidelines reduce risk rather than as a credit quality indicator utilized in the evaluation of credit risk. Balances are adjusted for deferred loan fees, expenses and any applicable loans-in-process. 
 
 Revolving Loans Amortized Cost Basis Revolving Loans Converted to Term 
 By fiscal year of origination 
 2023 2022 2021 2020 2019 Prior Total 
 (Dollars in thousands) 
 June 30, 2023 
 Real estate loans: 
 Residential Core 
 <680 $ 24,552 $ 94,000 $ 64,354 $ 40,090 $ 23,427 $ 163,218 $ — $ — $ 409,641 
 680-740 242,530 409,847 243,141 165,714 65,505 374,508 — — 1,501,245 
 741+ 966,989 2,693,370 1,769,716 1,157,523 484,466 2,794,837 — — 9,866,901 
 Unknown (1) 
 1,366 23,182 35,309 20,388 7,603 102,308 — — 190,156 
 Total Residential Core 1,235,437 3,220,399 2,112,520 1,383,715 581,001 3,434,871 — — 11,967,943 
 Residential Home Today (2) 
 
 <680 — — — — — 24,025 — — 24,025 
 680-740 — — — — — 9,634 — — 9,634 
 741+ — — — — — 11,188 — — 11,188 
 Unknown (1) 
 — — — — — 2,911 — — 2,911 
 Total Residential Home Today — — — — — 47,758 — — 47,758 
 Home equity loans and lines of credit 
 <680 2,427 2,604 1,485 341 642 1,125 100,751 13,334 122,709 
 680-740 33,484 8,389 3,109 748 802 2,243 478,208 14,304 541,287 
 741+ 97,607 65,672 21,185 6,538 5,084 10,893 1,959,869 40,974 2,207,822 
 Unknown (1) 
 170 244 107 98 54 654 22,255 6,254 29,836 
 Total Home equity loans and lines of credit 133,688 76,909 25,886 7,725 6,582 14,915 2,561,083 74,866 2,901,654 
 Construction 
 <680 — 926 — — — — — — 926 
 680-740 2,244 4,276 — — — — — — 6,520 
 741+ 12,627 16,739 294 — — — — — 29,660 
 
 Total Construction 14,871 21,941 294 — — — — — 37,106 
 Total net real estate loans $ 1,383,996 $ 3,319,249 $ 2,138,700 $ 1,391,440 $ 587,583 $ 3,497,544 $ 2,561,083 $ 74,866 $ 14,954,461 
 
 (1) Data necessary for stratification is not readily available. 
 (2) No new originations of Home Today loans since fiscal 2016. 

 
 
 
 
 
 
 
 
 
 
 
 
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 The following table provides an analysis of our residential mortgage loans by origination LTV, origination year and portfolio at June 30, 2023. LTVs are not updated subsequent to origination except as part of the charge-off process. Balances are adjusted for deferred loan fees, expenses and any applicable loans-in-process. 
 
 Revolving Loans Amortized Cost Basis Revolving Loans Converted to Term 
 By fiscal year of origination 
 2023 2022 2021 2020 2019 Prior Total 
 (Dollars in thousands) 
 June 30, 2023 
 Real estate loans: 
 Residential Core 
 <80% $ 501,538 $ 1,920,702 $ 1,457,683 $ 740,555 $ 265,052 $ 1,942,777 $ — $ — $ 6,828,307 
 80-89.9% 605,090 1,081,252 606,615 583,992 285,493 1,376,922 — — 4,539,364 
 90-100% 128,809 216,808 47,131 58,968 30,196 112,814 — — 594,726 
 >100% — — — — — 747 — — 747 
 Unknown (1) 
 — 1,637 1,091 200 260 1,611 — — 4,799 
 Total Residential Core 1,235,437 3,220,399 2,112,520 1,383,715 581,001 3,434,871 — — 11,967,943 
 Residential Home Today (2) 
 
 <80% — — — — — 9,527 — — 9,527 
 80-89.9% — — — — — 15,368 — — 15,368 
 90-100% — — — — — 22,863 — — 22,863 
 
 
 Total Residential Home Today — — — — — 47,758 — — 47,758 
 Home equity loans and lines of credit 
 <80% 129,729 74,283 25,193 7,688 6,291 11,234 2,388,897 49,866 2,693,181 
 80-89.9% 3,959 2,594 693 37 238 1,447 170,688 22,803 202,459 
 90-100% — — — — — 862 619 254 1,735 
 >100% — 32 — — 53 1,368 471 365 2,289 
 Unknown (1) 
 — — — — — 4 408 1,578 1,990 
 Total Home equity loans and lines of credit 133,688 76,909 25,886 7,725 6,582 14,915 2,561,083 74,866 2,901,654 
 Construction 
 <80% 8,836 10,494 294 — — — — — 19,624 
 80-89.9% 6,035 11,447 — — — — — — 17,482 
 
 
 
 Total Construction 14,871 21,941 294 — — — — — 37,106 
 Total net real estate loans $ 1,383,996 $ 3,319,249 $ 2,138,700 $ 1,391,440 $ 587,583 $ 3,497,544 $ 2,561,083 $ 74,866 $ 14,954,461 
 
 (1) Market data necessary for stratification is not readily available. 
 (2) No new originations of Home Today loans since fiscal 2016. 

 At June 30, 2023, the unpaid principal balance of the home equity loans and lines of credit portfolio consisted of $338.1 million in home equity loans (including $75.0 million of home equity lines of credit, which are in repayment and no longer eligible to be drawn upon, and $10.0 million in bridge loans) and $2.53 billion in home equity lines of credit. 
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 The following table sets forth credit exposure, principal balance, percent delinquent 90 days or more, the mean CLTV percent at the time of origination and the current mean CLTV percent of home equity loans, home equity lines of credit and bridge loans as of June 30, 2023. Home equity lines of credit in the draw period are reported according to geographic distribution. 
 
 Credit
Exposure Principal
Balance Percent
Delinquent
90 Days or More Mean CLTV
Percent at
Origination (2) Current Mean
CLTV Percent (3) 
 (Dollars in thousands) 
 Home equity lines of credit in draw period (by state) 
 Ohio $ 2,123,256 $ 625,284 0.09 % 60 % 33 % 
 Florida 1,314,004 529,968 0.01 55 36 
 California 1,131,080 421,095 0.08 60 50 
 Other (1) 2,561,145 951,786 0.11 63 47 
 Total home equity lines of credit in draw period 7,129,485 2,528,133 0.08 60 40 
 Home equity lines in repayment, home equity loans and bridge loans 338,071 338,071 0.68 57 36 
 Total $ 7,467,556 $ 2,866,204 0.11 % 60 % 40 % 

 _________________ 
 (1) No other individual state has a committed or drawn balance greater than 10% of our total home equity lending portfolio and 5% of total loan balances. 
 (2) Mean CLTV percent at origination for all home equity lines of credit is based on the committed amount. 
 (3) Current Mean CLTV is based on best available first mortgage and property values as of June 30, 2023. Property values are estimated using HPI data published by the FHFA. Current Mean CLTV percent for home equity lines of credit in the draw period is calculated using the committed amount. Current Mean CLTV on home equity lines of credit in the repayment period is calculated using the principal balance. 
 At June 30, 2023, 31.9% of the home equity lending portfolio was either in a first lien position (16.6%), in a subordinate (second) lien position behind a first lien that we held (12.8%) or behind a first lien that was held by a loan that we originated, sold and now serviced for others (2.5%). At June 30, 2023, 12.8% of the home equity line of credit portfolio in the draw period were making only the minimum payment on the outstanding line balance. Minimum payments include both a principal and interest component. 
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 The following table sets forth by calendar year of origination the credit exposure, principal balance, percent delinquent 90 days or more, the mean CLTV percent at the time of origination and the estimated current mean CLTV percent of our home equity loans, home equity lines of credit and bridge loan portfolio as of June 30, 2023. Home equity lines of credit in the draw period are included in the year originated: 
 
 Credit
Exposure Principal
Balance Percent
Delinquent
90 Days or More Mean CLTV
Percent at
Origination (1) Current Mean
CLTV
Percent (2) 
 (Dollars in thousands) 
 Home equity lines of credit in draw period 
 2015 and Prior $ 156,561 $ 31,817 — % 57 % 26 % 
 
 
 
 2016 241,675 63,057 0.01 59 28 
 2017 497,927 149,244 0.12 58 30 
 2018 623,560 217,856 0.06 58 32 
 2019 830,868 329,759 0.11 61 35 
 2020 772,300 251,844 0.15 58 34 
 2021 1,522,066 559,975 0.11 62 42 
 2022 1,730,864 652,676 0.05 61 49 
 2023 753,664 271,905 — 60 55 
 Total home equity lines of credit in draw period 7,129,485 2,528,133 0.08 60 40 
 Home equity lines in repayment, home equity loans and bridge loans 338,071 338,071 0.68 57 36 
 Total $ 7,467,556 $ 2,866,204 0.11 % 60 % 40 % 

 ________________ 
 (1) Mean CLTV percent at origination for all home equity lines of credit is based on the committed amount. 
 (2) Current Mean CLTV is based on best available first mortgage and property values as of June 30, 2023. Property values are estimated using HPI data published by the FHFA. Current Mean CLTV percent for home equity lines of credit in the draw period is calculated using the committed amount. Current Mean CLTV on home equity lines of credit in the repayment period is calculated using the principal balance. 
 The following table sets forth, by fiscal year of the draw period expiration, the principal balance of home equity lines of credit in the draw period as of June 30, 2023, segregated by the estimated current combined LTV range. Home equity lines of credit with an end of draw date in the current fiscal year include accounts with draw privileges that have been temporarily suspended. 
 
 Estimated Current CLTV Category 
 Home equity lines of credit in draw period (by end of draw fiscal year): < 80% 80 - 89.9% 90 - 100% >100% Unknown (1) Total 
 (Dollars in thousands) 
 2023 $ 53,584 $ 356 $ — $ — $ 48 $ 53,988 
 2024 10,674 70 — — 35 10,779 
 2025 19,741 — — — 11 19,752 
 2026 33,639 — — — — 33,639 
 2027 125,171 — — — 120 125,291 
 2028 205,909 — — — — 205,909 
 Post 2028 2,029,521 44,325 — 113 4,816 2,078,775 
 Total $ 2,478,239 $ 44,751 $ — $ 113 $ 5,030 $ 2,528,133 

 _________________ 
 (1) Market data necessary for stratification is not readily available. 
 
 
 
 
 
 
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 Delinquent Loans 
 The following tables set forth the amortized cost in loan delinquencies by type, segregated by geographic location and duration of delinquency as of the dates indicated. The majority of our Home Today loan portfolio is secured by properties located in Ohio, and there are no other loans with delinquent balances. There were no delinquencies in the construction loan portfolio for the dates presented. 
 
 Loans Delinquent for 
 30-89 Days 90 Days or More Total 
 (Dollars in thousands) 
 June 30, 2023 
 Real estate loans: 
 Residential Core 
 Ohio $ 4,579 $ 2,980 $ 7,559 
 Florida 2,112 1,202 3,314 
 Other 741 1,871 2,612 
 Total Residential Core 7,432 6,053 13,485 
 
 
 
 
 Residential Home Today 1,489 1,026 2,515 
 Home equity loans and lines of credit 
 Ohio 802 840 1,642 
 Florida 670 197 867 
 California 868 902 1,770 
 Other 1,362 1,153 2,515 
 Total Home equity loans and lines of credit 3,702 3,092 6,794 
 
 
 Total $ 12,623 $ 10,171 $ 22,794 

 
 Loans Delinquent for 
 30-89 Days 90 Days or More Total 
 (Dollars in thousands) 
 March 31, 2023 
 Real estate loans: 
 Residential Core 
 Ohio $ 3,571 $ 3,031 $ 6,602 
 Florida 2,213 2,749 4,962 
 Other 402 2,320 2,722 
 Total Residential Core 6,186 8,100 14,286 
 
 
 
 
 Residential Home Today 1,492 1,003 2,495 
 Home equity loans and lines of credit 
 Ohio 761 707 1,468 
 Florida 1,107 581 1,688 
 California 1,044 646 1,690 
 Other 1,324 964 2,288 
 Total Home equity loans and lines of credit 4,236 2,898 7,134 
 
 
 Total $ 11,914 $ 12,001 $ 23,915 
 

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 Loans Delinquent for 
 30-89 Days 90 Days or More Total 
 (Dollars in thousands) 
 September 30, 2022 
 Real estate loans: 
 Residential Core 
 Ohio $ 2,862 $ 4,332 $ 7,194 
 Florida 1,009 1,066 2,075 
 Other 345 3,883 4,228 
 Total Residential Core 4,216 9,281 13,497 
 Residential Home Today 2,111 861 2,972 
 Home equity loans and lines of credit 
 Ohio 630 679 1,309 
 Florida 438 694 1,132 
 California 427 444 871 
 Other 900 504 1,404 
 Total Home equity loans and lines of credit 2,395 2,321 4,716 
 
 
 Total $ 8,722 $ 12,463 $ 21,185 

 
 
 
 Loans Delinquent for 
 30-89 Days 90 Days or More Total 
 (Dollars in thousands) 
 June 30, 2022 
 Real estate loans: 
 Residential Core 
 Ohio $ 3,978 $ 4,604 $ 8,582 
 Florida 1,226 650 1,876 
 Other 807 3,666 4,473 
 Total Residential Core 6,011 8,920 14,931 
 
 
 
 
 Residential Home Today 1,283 1,193 2,476 
 Home equity loans and lines of credit 
 Ohio 502 965 1,467 
 Florida 386 457 843 
 California 622 444 1,066 
 Other 840 592 1,432 
 Total Home equity loans and lines of credit 2,350 2,458 4,808 
 
 
 Total $ 9,644 $ 12,571 $ 22,215 

 Total loans seriously delinquent (i.e. delinquent 90 days or more) were 0.07% of total net loans at June 30, 2023, 0.08% at March 31, 2023, and 0.09% at September 30, 2022 and June 30, 2022. Total loans delinquent (i.e. delinquent 30 days or more) were 0.15% of total net loans at June 30, 2023, 0.16% at March 31, 2023, 0.15% at September 30, 2022 and 0.16% at June 30, 2022. 
 Although delinquencies remain at or near historic lows, recent economic trends and rising interest rates have led to increased early stage delinquencies in the home equity loans and lines of credit portfolio. Interest rates on home equity lines of credit are tied to the prime rate of interest which has increased in recent months, resulting in higher and less affordable monthly payments for some borrowers. 
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 Non-Performing Assets and Troubled Debt Restructurings 
 The following table sets forth the amortized costs and categories of our non-performing assets and TDRs as of the dates indicated. There were no construction loans reported as non-accrual for the dates presented. 
 
 June 30,
2023 March 31,
2023 September 30,
2022 June 30,
2022 
 (Dollars in thousands) 
 Non-accrual loans: 
 Real estate loans: 
 Residential Core $ 18,309 $ 20,351 $ 22,644 $ 23,131 
 Residential Home Today 5,290 5,461 6,037 6,723 
 Home equity loans and lines of credit 7,023 6,884 6,925 7,833 
 
 
 Total non-accrual loans (1)(2) 30,622 32,696 35,606 37,687 
 Real estate owned 1,400 1,165 1,191 253 
 
 Total non-performing assets $ 32,022 $ 33,861 $ 36,797 $ 37,940 
 Ratios: 
 Total non-accrual loans to total loans 0.20 % 0.22 % 0.25 % 0.27 % 
 Total non-accrual loans to total assets 0.18 % 0.20 % 0.23 % 0.24 % 
 Total non-performing assets to total assets 0.19 % 0.21 % 0.23 % 0.25 % 
 TDRs: (not included in non-accrual loans above) 
 Real estate loans: 
 Residential Core $ 41,720 $ 43,192 $ 43,101 $ 44,016 
 Residential Home Today 17,307 17,672 18,380 18,683 
 Home equity loans and lines of credit 20,667 20,914 22,060 22,605 
 
 
 Total $ 79,694 $ 81,778 $ 83,541 $ 85,304 

 _________________ 
 (1) At June 30, 2023, March 31, 2023, September 30, 2022, and June 30, 2022, the totals include $19.4 million, $19.7 million, $21.9 million and $23.6 million, respectively, in TDRs that are less than 90 days past due but included with non-accrual loans for a minimum period of six months from the restructuring date due to their non-accrual status or forbearance plan prior to restructuring, because of a prior partial charge-off or because all borrowers have filed Chapter 7 bankruptcy and have not been reaffirmed or dismissed. 
 (2) At June 30, 2023, March 31, 2023, September 30, 2022, and June 30, 2022, the totals include $3.2 million, $3.4 million, $3.6 million and $4.3 million in TDRs that are 90 days or more past due, respectively. 
 Non-accrual loans continue to decline primarily due to a decrease in the population of TDRs, in general, and those moved to accruing after a sufficient period of demonstrated payment performance and, to a lesser extent, a decrease in loans 90 days or more past due. Since many of the accounts exiting the non-accrual population are TDRs paying as agreed or paid in full and closed, we do not expect any material impact to interest income or the allowance once the non-accrual population stabilizes. 
 The amortized cost of collateral-dependent loans includes accruing TDRs and loans that are returned to accrual status when contractual payments are less than 90 days past due. These loans continue to be individually evaluated based on collateral until, at a minimum, contractual payments are less than 30 days past due. Also, the amortized cost of non-accrual loans includes loans that are not included in the amortized cost of collateral-dependent loans because they are included in loans collectively evaluated for credit losses. 
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 The table below sets forth a reconciliation of the amortized costs and categories between non-accrual loans and collateral-dependent loans at the dates indicated. The decrease in other accruing collateral-dependent loans at June 30, 2023 from June 30, 2022 was primarily related to forbearance plans that had been extended past 12 months that are now performing with no charge-off and are no longer collateral-dependent. 
 
 June 30,
2023 March 31,
2023 September 30,
2022 June 30,
2022 
 (Dollars in thousands) 
 Non-Accrual Loans $ 30,622 $ 32,696 $ 35,606 $ 37,687 
 Accruing Collateral-Dependent TDRs 5,534 6,317 7,279 7,246 
 Other Accruing Collateral-Dependent Loans 6,100 5,529 6,426 10,783 
 Less: Loans Collectively Evaluated (3,175) (4,228) (2,190) (3,068) 
 Total Collateral-Dependent loans $ 39,081 $ 40,314 $ 47,121 $ 52,648 

 
 
 
 
 
 
 
 

 In response to the economic challenges facing many borrowers, we continue to restructure loans. Loan restructuring is a method used to help families keep their homes and to preserve neighborhoods. This involves making changes to the borrowers' loan terms through interest rate reductions, either for a specific period or for the remaining term of the loan; term extensions including those beyond the original agreement; capitalization of delinquent payments in special situations; or some combination of the aforementioned. Loans discharged through Chapter 7 bankruptcy are also reported as TDRs per OCC interpretive guidance. For discussion on TDR measurement, see Note 4. LOANS AND ALLOWANCES FOR CREDIT LOSSES of the NOTES TO CONSOLIDATED FINANCIAL STATEMENTS . We had $102.3 million of TDRs (accrual and non-accrual) recorded at June 30, 2023. This was a decrease in the amortized cost of TDRs of $2.5 million, $6.7 million, and $10.9 million from March 31, 2023, September 30, 2022 and June 30, 2022, respectively. 
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 The following table sets forth the amortized cost in accrual and non-accrual TDRs, by the types of concessions granted, as of June 30, 2023. Initial concessions granted by loans restructured as TDRs can include reduction of interest rate, extension of amortization period, forbearance or other actions. Some TDRs have experienced a combination of concessions. TDRs also can occur as a result of bankruptcy proceedings. Loans discharged in Chapter 7 bankruptcy are classified as multiple restructurings if the loan's original terms had also been restructured by the Company. 
 
 Initial Restructurings Multiple
Restructurings Bankruptcy Total 
 (In thousands) 
 Accrual 
 Residential Core $ 27,024 $ 10,484 $ 4,212 $ 41,720 
 Residential Home Today 9,014 7,479 814 17,307 
 Home equity loans and lines of credit 19,447 932 288 20,667 
 
 Total $ 55,485 $ 18,895 $ 5,314 $ 79,694 
 Non-Accrual, Performing 
 Residential Core $ 1,391 $ 5,206 $ 5,239 $ 11,836 
 Residential Home Today 507 2,645 888 4,040 
 Home equity loans and lines of credit 1,512 1,310 686 3,508 
 
 Total $ 3,410 $ 9,161 $ 6,813 $ 19,384 
 Non-Accrual, Non-Performing 
 Residential Core $ 868 $ 491 $ 233 $ 1,592 
 Residential Home Today 226 317 60 603 
 Home equity loans and lines of credit 750 231 — 981 
 
 Total $ 1,844 $ 1,039 $ 293 $ 3,176 
 Total TDRs 
 Residential Core $ 29,283 $ 16,181 $ 9,684 $ 55,148 
 Residential Home Today 9,747 10,441 1,762 21,950 
 Home equity loans and lines of credit 21,709 2,473 974 25,156 
 
 Total $ 60,739 $ 29,095 $ 12,420 $ 102,254 

 TDRs in accrual status are loans accruing interest and performing according to the terms of the restructuring. To be performing, a loan must be less than 90 days past due as of the report date. Non-accrual, performing status indicates that a loan was not accruing interest or in a forbearance plan at the time of restructuring, continues to not accrue interest, and is performing according to the terms of the restructuring; but it has not been current for at least six consecutive months since its restructuring, has a partial charge-off, or is being classified as non-accrual per the OCC guidance on loans in Chapter 7 bankruptcy status, where all borrowers have filed and have not reaffirmed or been dismissed. Non-accrual, non-performing status includes loans that are not accruing interest because they are greater than 90 days past due and therefore not performing according to the terms of the restructuring. 
 
 
 
 
 Comparison of Financial Condition at June 30, 2023 and September 30, 2022 
 Total assets increased $805.1 million, or 5.1%, to $16.59 billion at June 30, 2023 from $15.79 billion at September 30, 2022. This increase was mainly the result of new loan origination levels exceeding the total of loan sales and principal repayments. 
 Cash and cash equivalents increased $66.6 million, or 18.0%, to $436.2 million at June 30, 2023 from $369.6 million at September 30, 2022. Cash is managed to maintain the level of liquidity described later in the Liquidity and Capital Resources section. 
 Investment securities, all of which are classified as available for sale, increased $55.4 million to $513.3 million at June 30, 2023 from $457.9 million at September 30, 2022. Investment securities increased as $124.2 million in purchases, which included a $59.5 million treasury note that was pledged as collateral on centrally cleared interest rate swap contracts, exceeded the combined effect of $62.6 million in principal repayments, a $5.2 million increase in unrealized losses and $1.0 million of premium amortization that occurred in the mortgage-backed securities portfolio during the nine months ended June 30, 2023. There were no sales of investment securities during the nine months ended June 30, 2023. 
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 Mortgage loans held for sale decreased $9.1 million, or 93.8%, to $0.6 million at June 30, 2023 from $9.7 million at September 30, 2022. The decrease is related to a reduction in loans originated for sale due to a higher interest rate environment. 
 Loans held for investment, net of deferred loan fees and allowance for credit losses, increased $626.6 million, or 4.4%, to $14.88 billion at June 30, 2023 from $14.26 billion at September 30, 2022, as new originations and additional draws on existing accounts exceeded loan sales and repayments. This increase included a $400.9 million, or 3.5%, increase in residential mortgage loans to $11.99 billion at June 30, 2023 from $11.59 billion at September 30, 2022. In addition, there was a $232.3 million increase in the balance of home equity loans and lines of credit during the nine months ended June 30, 2023. During the nine months ended June 30, 2023, $467.0 million of three- and five-year “Smart Rate” loans were originated while $844.5 million of fixed-rate first mortgage loans were originated. Between September 30, 2022 and June 30, 2023, the total fixed-rate portion of the first mortgage loan portfolio increased $311.3 million. During the nine months ended June 30, 2023, $58.1 million of first mortgage loans were sold or committed to sell to Fannie Mae. 
 Commitments originated for home equity loans and lines of credit, and bridge loans were $1.24 billion for the nine months ended June 30, 2023 compared to $1.60 billion for the nine months months ended June 30, 2022. At June 30, 2023, pending commitments to originate new home equity lines of credit were $64.2 million and equity loans and bridge loans were $78.0 million. Refer to the Controlling Our Interest Rate Risk Exposure section of the Overview for additional information. 
 The allowance for credit losses was $102.6 million, or 0.69% of total loans receivable, at June 30, 2023, including a $27.8 million liability for unfunded commitments. The allowance for credit losses was $99.9 million, or 0.70% of total loans receivable, at September 30, 2022, including a $27.0 million liability for unfunded commitments. Refer to Note 4. LOANS AND ALLOWANCES FOR CREDIT LOSSES of the NOTES TO CONSOLIDATED FINANCIAL STATEMENTS for additional discussion. 
 The amount of FHLB stock owned increased $34.8 million or 16.4% to $247.1 million at June 30, 2023 from $212.3 million at September 30, 2022. Collateral requirements on funds borrowed from the FHLB dictate the amount of stock owned at any given time. 
 Total bank owned life insurance contracts increased $6.5 million, to $310.5 million at June 30, 2023, from $304.0 million at September 30, 2022, primarily due to changes in cash surrender value. 
 Other assets, including prepaid expenses, increased $14.5 million to $109.9 million at June 30, 2023 from $95.4 million at September 30, 2022. The increase was primarily due to a $22.1 million increase in receivables on swap contracts, which included a $14.5 million increase in interest receivable and a $7.6 million increase in margin receivable, partially offset by an $8.0 million decrease in net deferred taxes. 
 Deposits increased $148.1 million, or 1.7%, to $9.07 billion at June 30, 2023 from $8.92 billion at September 30, 2022. The increase in deposits resulted primarily from a $224.0 million increase in CDs, inclusive of brokered CDs, as the current market rates have increased customers' desires to maintain longer-term CDs, a $150.9 million increase in savings accounts, excluding money market accounts, a $2.4 million increase in accrued interest, offset by a $70.3 million decrease in money market accounts, and a $158.9 million decrease in checking accounts. The balance of brokered CDs included in total deposits at June 30, 2023 increased by $92.5 million to $667.8 million compared to a balance of $575.2 million at September 30, 2022. Based on FDIC insurance limits by ownership structure, the total uninsured deposits were $311.3 million and $366.7 million at June 30, 2023 and September 30, 2022, respectively. 
 Borrowed funds increased $659.0 million, or 13.7%, to $5.45 billion at June 30, 2023 from $4.79 billion at September 30, 2022. The increase was primarily used to fund loan growth. The total balance of borrowed funds at June 30, 2023, all from the FHLB, included $243.0 million of overnight advances, $1.59 billion of term advances with a weighted average maturity of approximately 2.3 years and $3.60 billion of short-term advances, aligned with interest rate swap contracts, with a remaining weighted average effective maturity of approximately 4.1 years. Interest rate swaps have been used to extend the duration of short-term borrowings, at inception, by paying a fixed rate of interest and receiving the variable rate. Refer to the Extending the Duration of Funding Sources section of the Overview for additional discussion regarding short-term borrowings and interest-rate swaps. 
 Borrowers' advances for insurance and taxes decreased by $42.9 million to $74.4 million at June 30, 2023 from $117.3 million at September 30, 2022. This change primarily reflects the cyclical nature of real estate tax payments that have been collected from borrowers and are in the process of being remitted to various taxing agencies. 
 Accrued expenses and other liabilities increased by $12.6 million to $96.7 million at June 30, 2023 from $84.1 million at September 30, 2022. The increase is primarily due to a $7.1 million increases in accrued interest on interest rate swap contracts 
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 and a $4.9 million increase in real estate tax payments remitted on behalf of borrowers, that remained outstanding at June 30, 2023. 
 Total shareholders’ equity increased $41.8 million, or 2.3%, to $1.89 billion at June 30, 2023 from $1.84 billion at September 30, 2022. Activity reflects $55.7 million of net income in the current year reduced by dividends of $43.7 million, and $5.0 million of repurchases of outstanding common stock. Other changes include $27.8 million of positive change in accumulated other comprehensive income, primarily related to changes in market values due to fluctuations in market interest rates and maturities of swap contracts, and a $7.0 million net positive impact related to activity in the Company's stock compensation and employee stock ownership plans. During the three months ended June 30, 2023, we did not repurchase shares of our common stock. The Company's eighth stock repurchase program allows for a total of 10,000,000 shares to be repurchased, with 5,191,951 shares remaining to be repurchased at June 30, 2023. As a result of a mutual member vote, Third Federal Savings and Loan Association of Cleveland, MHC (the "MHC"), the mutual holding company that owns approximately 81.0% of the outstanding stock of the Company, was able to waive its receipt of its share of the dividend paid. Refer to Part II, Item 2. Unregistered Sales of Equity Securities and Use of Proceeds for additional details regarding the repurchase of shares of common stock and the dividend waiver. 
 
 
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 Comparison of Operating Results for the Three Months Ended June 30, 2023 and 2022 
 Average balances and yields . The following table sets forth average balances, average yields and costs, and certain other information for the periods indicated. No tax-equivalent yield adjustments were made, as the effects thereof were not material. Average balances are derived from daily average balances. Non-accrual loans are included in the computation of loan average balances, but only cash payments received on those loans during the period presented are reflected in the yield. The yields set forth below include the effect of deferred fees, deferred expenses, discounts and premiums that are amortized or accreted to interest income or interest expense. 
 
 Three Months Ended Three Months Ended 
 June 30, 2023 June 30, 2022 
 Average
Balance Interest
Income/
Expense Yield/
Cost (1) Average
Balance Interest
Income/
Expense Yield/
Cost (1) 
 (Dollars in thousands) 
 Interest-earning assets: 
 Interest-earning cash
 equivalents $ 350,574 $ 4,481 5.11 % $ 337,551 $ 709 0.84 % 
 Investment securities 24,046 320 5.32 3,836 12 1.25 
 Mortgage-backed securities 470,457 3,392 2.88 444,972 1,270 1.14 
 Loans (2) 14,676,829 144,347 3.93 13,497,362 99,576 2.95 
 Federal Home Loan Bank stock 235,177 4,117 7.00 170,155 1,204 2.83 
 Total interest-earning assets 15,757,083 156,657 3.98 % 14,453,876 102,771 2.84 % 
 Noninterest-earning assets 543,310 467,329 
 Total assets $ 16,300,393 $ 14,921,205 
 Interest-bearing liabilities: 
 Checking accounts $ 1,064,738 1,317 0.49 % $ 1,475,586 958 0.26 % 
 Savings accounts 1,890,427 8,087 1.71 1,882,881 931 0.20 
 Certificates of deposit 6,042,798 39,501 2.61 5,711,412 15,325 1.07 
 Borrowed funds 5,175,982 38,973 3.01 3,774,204 14,255 1.51 
 Total interest-bearing liabilities 14,173,945 87,878 2.48 % 12,844,083 31,469 0.98 % 
 Noninterest-bearing liabilities 264,952 250,437 
 Total liabilities 14,438,897 13,094,520 
 Shareholders’ equity 1,861,496 1,826,685 
 Total liabilities and shareholders’ equity $ 16,300,393 $ 14,921,205 
 Net interest income $ 68,779 $ 71,302 
 Interest rate spread (1)(3) 1.50 % 1.86 % 
 Net interest-earning assets (4) $ 1,583,138 $ 1,609,793 
 Net interest margin (1)(5) 1.75 % 1.97 % 
 Average interest-earning assets to average interest-bearing liabilities 111.17 % 112.53 % 
 Selected performance ratios: 
 Return on average assets (1) 0.43 % 0.46 % 
 Return on average equity (1) 3.78 % 3.75 % 
 Average equity to average assets 11.42 % 12.24 % 

 _________________ 
 (1) Annualized. 
 (2) Loans include both mortgage loans held for sale and loans held for investment. 
 (3) Interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities. 
 (4) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities. 
 (5) Net interest margin represents net interest income divided by total interest-earning assets. 
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 General . Net income increased $0.5 million, or 3%, to $17.6 million for the quarter ended June 30, 2023 from $17.1 million for the quarter ended June 30, 2022. The increase in net income was attributable primarily to a decrease in the provision for credit losses, partially offset by a decrease in net interest income and an increase in non-interest expense. 
 Interest and Dividend Income. Interest and dividend income increased $53.9 million, or 52%, to $156.7 million during the current quarter compared to $102.8 million during the same quarter in the prior year. The increase in interest and dividend income was primarily the result of an increase in interest income on loans, as well as increases to income earned on mortgage-backed securities, FHLB stock, and other interest-bearing cash equivalents. 
 Interest income on loans increased $44.7 million, or 45%, to $144.3 million during the current quarter compared to $99.6 million during the same quarter in the prior year. This change was primarily attributed to a 98 basis point increase in the average yield on loans for the quarter ended June 30, 2023 to 3.93%, compared to 2.95% the same quarter last year. It was also attributed to a 9%, or $1.18 billion, increase in the average balance of loans to $14.68 billion for the quarter ended June 30, 2023 compared to $13.50 billion during the same quarter last year as new loan production exceeded principal repayments and loan sales during the current quarter. 
 Interest Expense . Interest expense increased $56.4 million, or 179%, to $87.9 million during the current quarter compared to $31.5 million during the quarter ended June 30, 2022. The increase resulted from higher costs of certificates of deposit and borrowed funds. 
 Interest expense on CDs increased $24.2 million, or 158%, to $39.5 million during the current quarter compared to $15.3 million during the quarter ended June 30, 2022. The increase was attributed to a 154 basis point increase in the average rate paid on CDs to 2.61% for the current quarter from 1.07% for the same quarter last year. Additionally, there was a $331.4 million, or 5.8%, increase in the average balance of CDs to $6.04 billion during the current quarter from $5.71 billion during the same quarter of the prior year. Interest rates were increased on deposits in response to increases in market interest rates, as well as the higher rates paid by our competition. 
 Interest expense on borrowed funds increased $24.7 million, or 173%, to $39.0 million during the current quarter compared to $14.3 million during the quarter ended June 30, 2022. This increase was mainly attributed to a 150 basis point increase in the average rate paid on these funds, to 3.01% for the current quarter from 1.51% for the same quarter last year. In addition, the average balance of borrowed funds increased $1.40 billion, or 37%, to $5.18 billion during the current quarter from an average balance of $3.77 billion during the same quarter of the prior year. Refer to the Extending the Duration of Funding Sources section of the Overview and Comparison of Financial Condition for further discussion. 
 Net Interest Income. Net interest income decreased $2.5 million to $68.8 million during the current quarter when compared to $71.3 million for the three months ended June 30, 2022. Average interest-earning assets during the current quarter increased $1.30 billion, or 9%, when compared to the quarter ended June 30, 2022. The increase in average interest-earning assets was attributed primarily to an increase in the average balances of loans. In addition to the increase in average interest-earning assets, the yield on those assets increased 114 basis point to 3.98% from 2.84%, as a result of market interest rate increases. The interest rate spread decreased 36 basis points to 1.50% compared to 1.86% during the same quarter last year. The net interest margin decreased twenty-two basis points to 1.75% in the current quarter compared to 1.97% for the same quarter last year. The decrease in our interest rate spread and net interest margin is primarily due to the impact of a prolonged period of historically low interest rate environment followed by a rapid and meaningful rise in interest rates, that started in March 2022, along with an extended period of yield curve inversion. Refer to Controlling Our Interest Rate Risk Exposure of the Overview section for further discussion. 
 Provision (Release) for Credit Losses. We recorded no provision of the allowance for credit losses on loans and off-balance sheet exposures during the quarter ended June 30, 2023, compared to a $4.0 million provision of allowance for credit losses during the quarter ended June 30, 2022. As delinquencies in the portfolio have been resolved through pay-offs, short sale or foreclosure, or management determines the collateral is not sufficient to satisfy the loan balance, uncollected balances have been charged against the allowance for credit losses previously provided. Recoveries of amounts charged against the allowance for credit losses occur when collateral values increase and homes are sold or when borrowers repay the amounts previously charged-off. In the current quarter, we recorded net recoveries of $1.8 million compared to net recoveries of $2.7 million in the quarter ended June 30, 2022. Credit loss provisions (releases) are recorded with the objective of aligning our allowance for credit loss balances with our current estimates of loss in the portfolio. Refer to the Lending Activities section of Item 2. and Note 4. LOANS AND ALLOWANCES FOR CREDIT LOSSES of the NOTES TO CONSOLIDATED FINANCIAL STATEMENTS for further discussion. 
 Non-Interest Income. Non-interest income increased $0.1 million, or 2%, to $5.8 million during the current quarter compared to $5.7 million during the quarter ended June 30, 2022, mainly as a result of a $0.7 million increase in the cash surrender value and death benefits from bank owned life insurance, to $2.8 million during the quarter ended June 30, 2023 from 
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 $2.1 million during the quarter ended June 30, 2022. Additionally, there was a decrease of $0.8 million in loan fees and service charges. 
 Non-Interest Expense. Non-interest expense increased $1.1 million, or 2%, to $52.9 million during the current quarter compared to $51.8 million during the quarter ended June 30, 2022. The increase primarily consisted of a $2.2 million increase in marketing, a $1.2 million increase in FDIC premiums, and a $0.6 million increase in other operating expenses, partially offset by a $3.5 million decrease in salaries and employee benefits, related to higher wage and health insurance costs. FDIC premiums increased due to deposit growth and a two basis point increase in the assessment rate that went into effect on January 1, 2023. 
 Income Tax Expense. The provision for income taxes was $4.1 million for both the current quarter and the quarter ended June 30, 2022. The provision for the current quarter included $3.9 million of federal income tax provision and $0.2 million of state income tax expense. The provision for the quarter ended June 30, 2022 included $3.9 million of federal income tax provision and $0.1 million of state income tax expense. Our effective federal tax rate was 18.8% during the current quarter and 18.6% during the quarter ended June 30, 2022. 
 
 
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 Comparison of Operating Results for the Nine Months Ended June 30, 2023 and 2022 
 Average balances and yields . The following table sets forth average balances, average yields and costs, and certain other information for the periods indicated. No tax-equivalent yield adjustments were made, as the effects thereof were not material. Average balances are derived from daily average balances. Non-accrual loans are included in the computation of loan average balances, but only cash payments received on those loans during the period presented are reflected in the yield. The yields set forth below include the effect of deferred fees, deferred expenses, discounts and premiums that are amortized or accreted to interest income or interest expense. 
 
 Nine Months Ended Nine Months Ended 
 June 30, 2023 June 30, 2022 
 Average
Balance Interest
Income/
Expense Yield/
Cost (1) Average
Balance Interest
Income/
Expense Yield/
Cost (1) 
 (Dollars in thousands) 
 Interest-earning assets: 
 Interest-earning cash equivalents $ 351,742 $ 11,677 4.43 % $ 389,884 $ 1,060 0.36 % 
 Investment securities 10,438 342 4.37 3,604 32 1.18 
 Mortgage-backed securities 470,108 9,887 2.80 432,781 3,565 1.10 
 Loans (2) 14,530,428 410,847 3.77 12,975,292 280,820 2.89 
 Federal Home Loan Bank stock 228,318 10,426 6.09 165,240 2,845 2.30 
 Total interest-earning assets 15,591,034 443,179 3.79 % 13,966,801 288,322 2.75 % 
 Noninterest-earning assets 518,875 485,123 
 Total assets $ 16,109,909 $ 14,451,924 
 Interest-bearing liabilities: 
 Checking accounts $ 1,126,064 5,956 0.71 % $ 1,306,720 1,516 0.15 % 
 Savings accounts 1,774,965 16,822 1.26 1,862,449 1,973 0.14 
 Certificates of deposit 6,042,061 95,858 2.12 5,814,710 49,872 1.14 
 Borrowed funds 5,053,965 111,339 2.94 3,410,751 43,074 1.68 
 Total interest-bearing liabilities 13,997,055 229,975 2.19 % 12,394,630 96,435 1.04 % 
 Noninterest-bearing liabilities 243,823 267,142 
 Total liabilities 14,240,878 12,661,772 
 Shareholders’ equity 1,869,031 1,790,152 
 Total liabilities and shareholders’ equity $ 16,109,909 $ 14,451,924 
 Net interest income $ 213,204 $ 191,887 
 Interest rate spread (1)(3) 1.60 % 1.71 % 
 Net interest-earning assets (4) $ 1,593,979 $ 1,572,171 
 Net interest margin (1)(5) 1.82 % 1.83 % 
 Average interest-earning assets to average interest-bearing liabilities 111.39 % 112.68 % 
 Selected performance ratios: 
 Return on average assets (1) 0.46 % 0.45 % 
 Return on average equity (1) 3.97 % 3.66 % 
 Average equity to average assets 11.60 % 12.39 % 

 _________________ 
 (1) Annualized. 
 (2) Loans include both mortgage loans held for sale and loans held for investment. 
 (3) Interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities. 
 (4) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities. 
 (5) Net interest margin represents net interest income divided by total interest-earning assets. 
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 General. Net income increased $6.6 million to $55.7 million for the nine months ended June 30, 2023 compared to $49.1 million for the nine months ended June 30, 2022. The increase in net income was primarily driven by an increase in net interest income, partially offset by an increase in non-interest expense and decrease in non-interest income. 
 Interest and Dividend Income. Interest and dividend income increased $154.9 million, or 54%, to $443.2 million during the nine months ended June 30, 2023 compared to $288.3 million during the same nine months in the prior year. The increase in interest and dividend income resulted mainly from an increase in interest income on loans and mortgage-backed securities, as well as increases in income earned on FHLB stock and other interest-bearing cash equivalents. 
 Interest income on loans increased $130.0 million, or 46%, to $410.8 million for the nine months ended June 30, 2023 compared to $280.8 million for the nine months ended June 30, 2022. This increase was attributed mainly to an 88 basis point increase in the average yield on loans to 3.77% for the nine months ended June 30, 2023 from 2.89% for the same nine months in the prior fiscal year. Adding to the increase was a $1.56 billion increase in the average balance of loans to $14.53 billion for the current nine months compared to $12.98 billion for the prior fiscal year period as new loan production exceeded repayments and loan sales during the current fiscal year. 
 Interest Expense. Interest expense increased $133.6 million, or 139%, to $230.0 million during the current nine months compared to $96.4 million during the nine months ended June 30, 2022. This increase mainly resulted from an increase in yields and average volume of borrowed funds. 
 Interest expense on CDs increased $46.0 million, or 92%, to $95.9 million during the nine months ended June 30, 2023 compared to $49.9 million during the nine months ended June 30, 2022. The increase was attributed primarily to a 98 basis point increase in the average rate paid on CDs to 2.12% during the current nine months from 1.14% during the same nine months last fiscal year. In addition, there was a $227.4 million, or 4%, increase in the average balance of CDs to $6.04 billion from $5.81 billion during the same nine months of the prior fiscal year. Interest expense on savings accounts increased $14.8 million to $16.8 million during the nine months ended June 30, 2023, compared to interest expense of $2.0 million for the nine-month period ended June 30, 2023. Interest expense on checking accounts increased $4.5 million to $6.0 million during the nine months ended June 30, 2023, compared to interest expense of $1.5 million for the nine-month period ended June 30, 2022. Rates were increased for deposits in response to increases in market interest rates, as well as increases in the rates paid by our competitors. 
 Interest expense on borrowed funds, as impacted by related interest rate swap contracts, increased $68.2 million, or 158%, to $111.3 million during the nine months ended June 30, 2023 from $43.1 million during the nine months ended June 30, 2022. The increase was primarily the result of higher average interest rates for the nine months ended June 30, 2023. There was a 126 basis point increase in the average rate paid for these funds to 2.94% from 1.68% for the nine months ended June 30, 2023 and June 30, 2022, respectively. The average balance of borrowed funds increased $1.64 billion, or 48%, to $5.05 billion during the current nine months from $3.41 billion during the same nine months of the prior fiscal year. Refer to the Extending the Duration of Funding Sources section of the Overview and Comparison of Financial Condition for further discussion. 
 Net Interest Income. Net interest income increased $21.3 million, or 11%, to $213.2 million during the nine months ended June 30, 2023 from $191.9 million during the nine months ended June 30, 2022. The net increase consisted of a $154.9 million increase in interest income and a $133.6 million increase in interest expense. 
 Average interest-earning assets increased during the current nine months by $1.62 billion, or 12%, to $15.59 billion when compared to the nine months ended June 30, 2022. The increase in average assets was attributed primarily to a $1.56 billion increase in the average balance of our loans and a $63.1 million increase in FHLB stock, partially offset by a $38.2 million decrease in cash and cash equivalents. The yield on average interest-earning assets increased 104 basis points to 3.79% for the nine months ended June 30, 2023 from 2.75% for the nine months ended June 30, 2022. Average interest-bearing liabilities increased $1.60 billion to $14.00 billion for the nine months ended June 30, 2023 compared to $12.39 billion for the nine months ended June 30, 2022. Average interest-bearing liabilities experienced a 115 basis point increase in cost and the interest rate spread decreased 11 basis points to 1.60% compared to 1.71% during the same nine months last fiscal year. The net interest margin was 1.82% for the current nine months and 1.83% for the same nine months in the prior fiscal year period. 
 Provision (Release) for Credit Losses . We recorded a release of the allowance for credit losses on loans and off-balance sheet exposures of $2.0 million during the nine months ended June 30, 2023 compared to a $1.0 million provision of allowance for credit losses for the nine months ended June 30, 2022. In the current nine months, we recorded net recoveries of $4.6 million, as compared to net recoveries of $7.3 million for the nine months ended June 30, 2022. Credit loss provisions (releases) are recorded with the objective of aligning our allowance for credit loss balances with our current estimates of loss in the portfolio. As delinquencies in the portfolio have been resolved through pay-off, short sale or foreclosure, or management determines the collateral is not sufficient to satisfy the loan balance, uncollected balances have been charged against the allowance for credit losses previously provided. Refer to the Lending Activities section of the Overview and Note 4. LOANS 
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 AND ALLOWANCES FOR CREDIT LOSSES of the NOTES TO CONSOLIDATED FINANCIAL STATEMENTS for further discussion. 
 Non-Interest Income. Non-interest income decreased $3.1 million, or 16%, to $16.3 million during the nine months ended June 30, 2023 compared to $19.4 million during the nine months ended June 30, 2022. The decrease in non-interest income was primarily due to a $1.6 million decrease in the net gain on sale of loans and a $1.9 million decrease in loan fees and service charges. The decrease in net gain on the sale of loans was generally attributable to both lower volumes of sales as well as less favorable market pricing on loan delivery contracts settled during the current period. There were loan sales of $58.1 million during the nine months ended June 30, 2023, compared to loan sales of $104.3 million during the nine months ended June 30, 2022. 
 Non-Interest Expense. Non-interest expense increased $12.2 million, or 8%, to $161.6 million during the nine months ended June 30, 2023 compared to $149.4 million during the nine months ended June 30, 2022. This increase was driven by a $2.0 million increase in salaries and employee benefits, a $4.4 million increase in marketing expenses, a $3.2 million increase in federal insurance premiums and a $2.0 million increase in other operating expenses. 
 Income Tax Expense. The provision for income taxes increased $2.4 million to $14.2 million during the nine months ended June 30, 2023 from $11.8 million for the nine months ended June 30, 2022 reflecting the higher level of pre-tax income during the more recent period. The provision for the current nine months included $12.8 million of federal income tax provision and $1.4 million of state income tax provision. The provision for the nine months ended June 30, 2022 included $11.1 million of federal income tax provision and $0.7 million of state income tax provision. Our effective federal tax rate was 18.7% during the nine months ended June 30, 2023 and 18.4% during the nine months ended June 30, 2022. 
 
 
 
 Liquidity and Capital Resources 
 Liquidity is the ability to meet current and future financial obligations of a short-term nature. Our primary sources of funds consist of deposit inflows, loan repayments, advances from the FHLB of Cincinnati, borrowings from the FRB-Cleveland Discount Window, overnight Fed Funds through various arrangements with other institutions, proceeds from brokered CD transactions, principal repayments and maturities of securities, and sales of loans. 
 In addition to the primary sources of funds described above, we have the ability to obtain funds through the use of collateralized borrowings in the wholesale markets, and from sales of securities. Also, debt issuance by the Company and access to the equity capital markets via a supplemental minority stock offering or a full conversion (second-step) transaction remain as other potential sources of liquidity, although these channels generally require up to nine months of lead time. 
 While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and mortgage prepayments are greatly influenced by interest rates, economic conditions and competition. The Association’s Asset/Liability Management Committee is responsible for establishing and monitoring our liquidity targets and strategies in order to ensure that sufficient liquidity exists for meeting the borrowing needs and deposit withdrawals of our customers as well as unanticipated contingencies. We generally seek to maintain a minimum liquidity ratio of 5% (which we compute as the sum of cash and cash equivalents plus unencumbered investment securities for which ready markets exist, divided by total assets). For the three months ended June 30, 2023, our liquidity ratio averaged 5.51%. We believe that we had sufficient sources of liquidity to satisfy our short- and long-term liquidity needs as of June 30, 2023. 
 We regularly adjust our investments in liquid assets based upon our assessment of expected loan demand, expected deposit flows, yields available on interest-earning deposits and securities, scheduled liability maturities and the objectives of our asset/liability management program. Excess liquid assets are generally invested in interest-earning deposits and short- and intermediate-term securities. 
 Our most liquid assets are cash and cash equivalents. The levels of these assets are dependent on our operating, financing, lending and investing activities during any given period. At June 30, 2023, cash and cash equivalents totaled $436.2 million, which represented an increase of 18% from $369.6 million at September 30, 2022. 
 Investment securities classified as available-for-sale, which provide additional sources of liquidity, totaled $513.3 million at June 30, 2023. 
 During the nine-month period ended June 30, 2023, loan sales, including commitments to sell, totaled $58.1 million, which included sales to Fannie Mae, consisting of $49.2 million of long-term, fixed-rate, agency-compliant, non-Home Ready first mortgage loans and $8.9 million of loans that qualified under Fannie Mae's Home Ready initiative. At June 30, 2023, $0.6 million of long-term, fixed-rate residential first mortgage loans are classified as “held for sale". 
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 Our cash flows are derived from operating activities, investing activities and financing activities as reported in our CONSOLIDATED STATEMENTS OF CASH FLOWS . 
 At June 30, 2023, we had $441.9 million in outstanding commitments to originate loans. In addition to commitments to originate loans, we had $4.60 billion in unfunded home equity lines of credit to borrowers. CDs due within one year of June 30, 2023 totaled $2.83 billion, or 31.3% of total deposits. If these deposits do not remain with us, we will be required to seek other sources of funds, including loan sales, sales of investment securities, other deposit products, including new CDs, brokered CDs, FHLB advances, borrowings from the FRB-Cleveland Discount Window or other collateralized borrowings. Depending on market conditions, we may be required to pay higher rates on such deposits or other borrowings than we currently pay on the CDs due on or before June 30, 2024. We believe, however, based on past experience, that a significant portion of such deposits will remain with us. Generally, we have the ability to attract and retain deposits by adjusting the interest rates offered. Our cost of insuring deposits is likely to increase due to special assessments related to losses incurred by the FDIC's Deposit Insurance Fund under the systemic risk exception recently exercised by the FDIC to protect the uninsured depositors of three recently failed large domestic regional banks. By law, the FDIC is required to recover such losses by special assessment on member banks, but has not yet announced the amount or timeline of any special assessments. 
 Our primary investing activities are originating residential mortgage loans, home equity loans and lines of credit and purchasing investments. During the nine months ended June 30, 2023, we originated $1.31 billion of residential mortgage loans, and $1.24 billion of commitments for home equity loans and lines of credit, while during the nine months ended June 30, 2022, we originated $2.91 billion of residential mortgage loans and $1.60 billion of commitments for home equity loans and lines of credit. We purchased $124.2 million of securities during the nine months ended June 30, 2023, and $197.3 million during the nine months ended June 30, 2022. Also, during the nine months ended June 30, 2023, we purchased $133.9 million of long-term, fixed-rate first mortgage loans. 
 Financing activities consist primarily of changes in deposit accounts, changes in the balances of principal and interest owed on loans serviced for others, FHLB advances, including any collateral requirements related to interest rate swap agreements and borrowings from the FRB-Cleveland Discount Window. We experienced a net increase in total deposits of $145.1 million during the nine months ended June 30, 2023, which reflected the active management of the offered rates on maturing CDs, compared to a net increase of $164.9 million during the nine months ended June 30, 2022. Deposit flows are affected by the overall level of interest rates, the interest rates and products offered by us and our local competitors, and by other factors. During the nine months ended June 30, 2023, there was a $92.5 million increase in the balance of brokered CDs (exclusive of acquisition costs and subsequent amortization), which had a balance of $667.8 million at June 30, 2023. At June 30, 2022 the balance of brokered CDs was $489.8 million. Principal and interest owed on loans serviced for others experienced a net decrease of $13.4 million to $16.5 million during the nine months ended June 30, 2023 compared to a net decrease of $22.8 million to $18.7 million during the nine months ended June 30, 2022. During the nine months ended June 30, 2023 we increased our total borrowings by $659.0 million as we funded: new loan originations, our capital initiatives, and actively managed our liquidity ratio. During the nine months ended June 30, 2022, our total borrowings increased by $1.15 billion. 
 Liquidity management is both a daily and long-term function of business management. If we require funds beyond our ability to generate them internally, borrowing agreements exist with the FHLB of Cincinnati and the FRB-Cleveland Discount Window, and arrangements with other institutions to purchase overnight Fed Funds, each of which provides an additional source of funds. Also, in evaluating funding alternatives, we may participate in the brokered deposit market. In March 2023, as a result of two recent bank failures, the Federal Reserve created the Bank Term Funding Program (BTFP) as an additional source of liquidity. The program offers loans up to one year in length against pledges of high-quality securities, such as U.S. Treasuries, agency debt and mortgage-backed securities, owned as of March 21, 2023. The BTFP is currently scheduled to end on March 11, 2024. 
 At June 30, 2023 we had $5.43 billion of FHLB of Cincinnati advances, no outstanding borrowings from the FRB-Cleveland Discount Window and no outstanding borrowings in the form of Fed Funds. During the nine months ended June 30, 2023, we had average outstanding advances from the FHLB of Cincinnati of $5.05 billion, as compared to average outstanding advances of $3.41 billion during the nine months ended June 30, 2022. Refer to the Extending the Duration of Funding Sources section of the Overview for further discussion. 
 The Association and the Company are subject to various regulatory capital requirements, including a risk-based capital measure. The Basel III capital framework ("Basel III Rules") includes both a revised definition of capital and guidelines for calculating risk-weighted assets by assigning balance sheet assets and off-balance sheet items to broad risk categories. 
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 In 2019, a final rule adopted by the federal banking agencies provided banking organizations with the option to phase in, over a three-year period, the adverse day-one regulatory capital effects of the adoption of the CECL accounting standard. In 2020, as part of its response to the impact of COVID-19, U.S. 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 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. Beginning this quarter the cumulative transitional amounts became fixed and will be phased out of CET1 capital over the subsequent three-year period. 
 The Association is subject to the "capital conservation buffer" requirement level of 2.5%. The requirement limits capital distributions and certain discretionary bonus payments to management if the institution does not hold a "capital conservation buffer" in addition to the minimum capital requirements. At June 30, 2023, the Association exceeded the regulatory requirement for the "capital conservation buffer". 
 As of June 30, 2023, the Association exceeded all regulatory requirements to be considered “Well Capitalized” as presented in the table below (dollar amounts in thousands). 
 
 Actual Well Capitalized Levels 
 Amount Ratio Amount Ratio 
 Total Capital to Risk-Weighted Assets $ 1,687,974 18.52 % $ 911,480 10.00 % 
 Tier 1 (Leverage) Capital to Net Average Assets 1,621,310 9.93 % 816,079 5.00 % 
 Tier 1 Capital to Risk-Weighted Assets 1,621,310 17.79 % 729,184 8.00 % 
 Common Equity Tier 1 Capital to Risk-Weighted Assets 1,621,310 17.79 % 592,462 6.50 % 

 The capital ratios of the Company as of June 30, 2023 are presented in the table below (dollar amounts in thousands). 
 
 Actual 
 Amount Ratio 
 Total Capital to Risk-Weighted Assets $ 1,891,806 20.75 % 
 Tier 1 (Leverage) Capital to Net Average Assets 1,825,142 11.18 % 
 Tier 1 Capital to Risk-Weighted Assets 1,825,142 20.01 % 
 Common Equity Tier 1 Capital to Risk-Weighted Assets 1,825,142 20.01 % 

 In addition to the operational liquidity considerations described above, which are primarily those of the Association, the Company, as a separate legal entity, also monitors and manages its own, parent company-only liquidity, which provides the source of funds necessary to support all of the parent company's stand-alone operations, including its capital distribution strategies which encompass its share repurchase and dividend payment programs. The Company's primary source of liquidity is dividends received from the Association. The amount of dividends that the Association may declare and pay to the Company in any calendar year, without the receipt of prior approval from the OCC but with prior notice to the FRB-Cleveland, cannot exceed net income for the current calendar year-to-date period plus retained net income (as defined) for the preceding two calendar years, reduced by prior dividend payments made during those periods. In December 2022, the Company received a $40 million cash dividend from the Association. Because of its intercompany nature, this dividend payment had no impact on the Company's capital ratios or its CONSOLIDATED STATEMENTS OF CONDITION but reduced the Association's reported capital ratios. At June 30, 2023, the Company had, in the form of cash and a demand loan from the Association, $200.9 million of funds readily available to support its stand-alone operations. 
 The Company’s eighth stock repurchase program, which authorized the repurchase of up to 10,000,000 shares of the Company’s outstanding common stock was approved by the Board of Directors on October 27, 2016 and repurchases began on January 6, 2017. There were 4,808,049 shares repurchased under that program between its start date and June 30, 2023. During the nine months ended June 30, 2023, the Company repurchased $5.0 million of its common stock. 
 On July 11, 2023, Third Federal Savings, MHC received the approval of its members with respect to the waiver of dividends on the Company’s common stock the MHC owns, up to a total of $1.13 per share, to be declared on the Company’s common stock during the 12 months subsequent to the members’ approval ( i.e ., through July 11, 2024). The members approved the waiver by casting 60% of the eligible votes, with 97% of the votes cast, voting in favor of the waiver. Third Federal Savings, MHC is the 81% majority shareholder of the Company. Following the receipt of the members’ approval at the July 11, 2023 special meeting, the MHC filed a notice with, and a request for non-objection from, the Federal Reserve Bank of 
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 Cleveland for the proposed dividend waiver. Both the non-objection from the FRB-Cleveland and the timing of the non-objection are unknown as of the filing date of this quarterly report. 
 Following the receipt of the members' approval at the July 12, 2022 meeting, Third Federal Savings, MHC filed a notice with, and received the non-objection from the FRB-Cleveland for the proposed dividend waivers. Third Federal Savings, MHC waived its right to receive $0.2825 per share dividend payments on September 20, 2022, December 13, 2022, March 21, 2023, and June 13, 2023. 
 The payment of dividends, support of asset growth and strategic stock repurchases are planned to continue in the future as the focus for future capital deployment activities.
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.
TFS Financial CORP 10-Q

Item 2. Management’s Discussion and Analysis
