What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2023-11-21 compared with 2022-11-22 · 299 added, 254 removed, 1745 unchanged (24% of the section changed)

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Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms.

Based upon that

evaluation, our principal executive officer and principal financial officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms.

Changes in Internal Control Over Financial Reporting

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Management assessed the effectiveness of the Company’s internal control over financial reporting as of September 30, 2023.

In making this assessment, the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (2013) was utilized.

In making this assessment, the criteria set forth by the COSO in Internal Control-Integrated Framework (2013) was utilized.

Management concluded that the Company's internal control over financial reporting was effective as of September 30, 2023, based on those criteria.

The effectiveness of the Company's internal control over financial reporting as of September 30, 2022 has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report which appears therein.

The effectiveness of the Company's internal control over financial reporting as of September 30, 2023 has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report which appears herein.

The Sarbanes-Oxley Act Section 302 Certifications have been filed as Exhibit 31.1 and Exhibit 31.2 to this Annual Report on Form 10-K.

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Other Information

Securities Trading Plans of Directors and Executive Officers

Transactions in our securities by our executive officers are required to be made in accordance with our Insider Trading Policy and Guidelines with Respect to Certain Transactions in Company Securities, which, among other things, requires that the transaction be in accordance with applicable U.S.

federal securities laws that prohibit trading while in the possession of material nonpublic information.

Rule 10b5-1 under the Securities Exchange Act of 1934 provides an affirmative defense that enables prearranged transactions in securities in a manner that avoids concerns about initiating transactions at a future date while possibly in possession of material nonpublic information.

During this quarter, Marc A.

Stefanski, Chairman, CEO, and President of the Company, completed the transactions that were contemplated in the Trading Plan adopted on June 14, 2023 that was intended to satisfy the affirmative defense conditions of the Exchange Act Rule 10b5-1(c) and authorized a designated option for 286,500 shares of common stock be exercised, after a 90-day cooling off period, in the event that the Company's stock equals or exceeds a predetermined share amount.

On September 18, 2023, Daniel F.

Weir, Director of the Company, adopted a Trading Plan that is intended to satisfy the affirmative defense conditions of the Exchange Act Rule 10b5-1(c) and authorizes a sale of a total of 100,000 shares of common stock on designated days, each for designated amount of shares, to be exercised, after a 90-day cooling off period, without regard to a predetermined share trading value.

The Trading Plan expires upon the earlier of (1) February 08, 2024, (2) the execution of all of the orders relating to such trades as specified in the plan, (3) the date Broker receives notice of liquidation, dissolution, bankruptcy, or insolvency of the client, (4) the date the Broker receives notice of the Client's death, or (5) the termination of the Trading Plan in accordance with Section 9(b) or Section 16.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

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Election of Directors,” “Executive Compensation,” “Delinquent Section 16(a) Reports” and “Corporate Governance.” Such information will be filed with the SEC no later than 120 days after the end of the fiscal year covered by this report.

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

Stefanski and Ms.

The table below sets forth information, as of September 30, 2023, regarding our executive officers other than Marc A.

Stefanski and Meredith S.

Name Title Age

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Stefanski Chief Strategy Officer, the Association 35

Stefanski Chief Lending Officer, the Association 34

Stefanski Chief Experience Officer, the Association

Zbanek Chief Synergy Officer, the Association 50

On March 28, 2022, Bradley T.

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

Stefanski was appointed Chief Lending Officer of the Association.

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

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

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

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

(1) On October 26, 2023, the Board of Directors appointed Mr.

Mulhern to the role of Chief Innovation Officer of the Association and appointed Ms.

Weil as Chief Financial Officer effective January 1, 2024.

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

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Holmes joined Third Federal from Key Bank where he served as SVP District Retail Leader for Eastern Ohio.

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

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

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

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Prior to joining Third Federal, Mr.

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

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

He was named Chief Marketing Officer in 2020 and served in that role until being named Chief Information Officer on September 30, 2021.

Rubino has held a variety of leadership positions throughout the company, including manager of loan production, customer service, internet services, and operations support.

Additionally, he served as Information Security Officer.

Rubino joined the marketing department in 2016, presiding over strategic initiatives and continued expansion of service areas and product offerings.

Mulhern was in public accounting with Coopers & Lybrand where he earned his CPA credentials, and more than a decade as a small business owner.

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

He was named Chief Information Officer in 2021.

Rubino has held a variety of leadership positions throughout the company, serving as Information Security Officer and managing several strategic areas of the company, including:

Loan Production, Customer Care, Internet Services, Operations Support and Marketing, most recently serving as Chief Marketing Officer.

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

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

Stefanski is the son of our Chairman of the Board, Chief Executive Officer and President, Marc A.

Stefanski, and brother of our Vice Chairman of the Board, Ashley H.

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

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

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

He was named Chief Experience Officer in May 2023.

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

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

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

Prior to her current role, she directed several key strategic business projects as well as systems design and development.

She also managed several departments, including Customer Service.

Stefanski is the nephew of our Chairman of the Board, Chief Executive Officer and President, Marc A.

Stefanski, and cousin of our Vice Chairman of the Board, Ashley H.

Zbanek joined the Association in 2001, and was named Chief Synergy Officer in 2020.

In her role, Ms.

Zbanek is responsible for fostering the internal synergy of the organization as well as customer engagement.

She most recently served as Chief Marketing and Human Resources Officer since 2013.

Prior to her roles on the executive team, Ms.

Zbanek directed several of the company’s key strategic business projects as well as systems design and development.

She also managed several Third Federal departments, including Customer Service and Marketing.

Before joining the Association, Ms.

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Her experience also includes working with the consulting group, Price Waterhouse Coopers.

She holds a BA in Economics and Psychology from the University of Pennsylvania .

The Company has adopted a policy statement entitled CODE OF ETHICS FOR SENIOR FINANCIAL OFFICERS that applies to our chief executive officer and our senior financial officers.

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We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of September 30, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated November 21, 2023, expressed an unqualified opinion on the Company's internal control over financial reporting.

Change in Accounting Principle

As discussed in Note 1 to the financial statements, the Company has changed its method of accounting for credit losses in 2021 due to the adoption of Accounting Standards Update No.

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

Measurement of Credit Losses on Financial Instruments.

Basis for Opinion

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The allowance for credit losses (“ACL”) is management’s estimate of expected credit losses in the loan portfolio, including off-balance sheet commitments.

As of September 30, 2022, the Company’s loan portfolio totaled $14.3 billion, and the related ACL was $72.9 million.

The Company’s off-balance sheet commitments totaled $4.7 billion, and the related ACL was $27.0 million.

As described in Note 1 of the consolidated financial statements, as of October 1, 2020, the Company adopted Accounting Standards Update (ASU) 2016-13, Financial Instruments – Credit Losses (Topic 326) , which introduces a forward-looking expected loss model (the “Current Expected Credit Losses (CECL)” model) to estimate credit losses over the remaining expected life of the Company’s loan portfolio.

As discussed in Notes 1 and 5 of the consolidated financial statements, the ACL is an amount which represents management’s best estimate of expected credit losses over the contractual life of the Company’s loan portfolio as of the balance sheet date.

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

We have identified the general valuation allowance ("GVA"), which is a component of ACL, for both the loan portfolio and off-balance sheet commitments, as a critical audit matter.

GVA for the loan portfolio is comprised of quantitative general valuation allowances for credit losses based on historical loan loss, and qualitative adjustments to the quantitative general valuation allowances to cover uncertainties that affect the estimate of expected credit losses.

GVA for off-balance sheet commitments is comprised of expected lifetime losses on unfunded loan commitments to extend credit where the obligations are not unconditionally cancellable.

As of September 30, 2023, the Company's loan portfolio totaled $15.2 billion, and the related ACL was $77.3 million, including $67.8 million GVA.

The Company's off-balance sheet commitments totaled $5.1 billion, and the related GVA was $27.5 million.

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

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

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

for the remaining life of the loans.

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

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

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

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

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

Qualitative adjustments are then made to account for factors that management does not believe are captured in the Current Expected Credit Losses ("CECL") quantitative models.

The determination of the appropriate level of the allowance for

the loan portfolio inherently involves a high degree of subjectivity and requires significant estimates of current credit risks using both quantitative and qualitative analyses.

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

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

How the Critical Audit Matter Was Addressed in the Audit

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

Our audit procedures related to the GVA included the following, among others:

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

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

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

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

• We tested the accuracy and completeness of key risk characteristics input into the model by agreeing to source information.

• We assessed the Company's method for determining the qualitative factor adjustments and the effect of those factors on the ACL compared with relevant credit risk factors and credit trends.

• We assessed the Company's method for determining the qualitative factor adjustments and the effect of those factors on the GVA compared with relevant credit risk factors and credit trends.

/s/ Deloitte & Touche LLP

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508,324 457,908

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

Mortgage loans held for sale

Loans held for investment, net:

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Retained earnings—substantially restricted 886,984 870,047

Accumulated other comprehensive income (loss) 23,149 ( 67,801 )

Accumulated other comprehensive income

85,212 23,149

Total shareholders’ equity 1,927,361 1,844,339

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Comprehensive income

Cumulative effect from changes in accounting principle, net of tax 1

— — — — ( 35,763 ) — ( 35,763 )

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

— — — — 81,007 — 81,007

Other comprehensive income net of tax

— — — — — 64,164 64,164

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

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

Purchase of treasury stock ( 20,500 shares)

— — ( 377 ) — — — ( 377 )

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

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Comprehensive income

Cumulative effect from changes in

accounting principle, net of tax 1

— — — — 74,565 — 74,565

— — — — 81,007 — 81,007

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

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

Purchase of treasury stock ( 337,259 shares)

— — ( 5,049 ) — — — ( 5,049 )

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

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Net (increase) decrease in interest receivable and other assets ( 39,360 ) ( 13,043 ) 7,697

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

Net increase (decrease) in accrued expenses and other liabilities 36,495 ( 1,155 ) 14,904

Net cash provided by operating activities 90,722 38,929 83,155

CASH FLOWS FROM INVESTING ACTIVITIES:

Loans originated ( 5,273,730 ) ( 4,874,761 ) ( 4,255,580 )

Loans originated or purchased

( 3,549,306 ) ( 5,273,730 ) ( 4,874,761 )

Principal repayments on loans 2,605,262 3,447,529 4,756,761

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CASH FLOWS FROM FINANCING ACTIVITIES:

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

Net increase (decrease) in deposits 520,029 ( 72,511 ) ( 231,949 )

Net increase (decrease) in borrowers' advances for insurance and taxes 7,167 7,617 ( 1,903 )

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

Net decrease in principal and interest owed on loans serviced ( 101 ) ( 11,563 ) ( 4,419 )

Net increase (decrease) in short-term borrowed funds 417,000 875,000 ( 525,000 )

Proceeds from Fed Funds purchased 225,000 — —

Proceeds/(Repayments) from Fed Funds purchased ( 225,000 ) 225,000 —

Proceeds from long-term borrowed funds 350,000 600,000 100,000

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Net cash provided by (used in) financing activities 1,015,091 1,717,404 ( 640,218 )

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

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 97,182 ( 118,762 ) ( 9,707 )

CASH AND CASH EQUIVALENTS—Beginning of year 369,564 488,326 498,033

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Cash paid for interest on borrowed funds 194,601 37,120 16,043

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

Cash (received)/ paid for interest on interest rate swaps

( 50,416 ) 29,138 45,031

Cash paid for income taxes 21,776 39,602 25,772

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

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

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

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

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Third Capital, Inc.

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

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

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

was formed to hold non-thrift investments and subsidiaries.

No material subsequent events have occurred requiring recognition in the consolidated financial statements or disclosure in the notes to the consolidated financial statements.

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

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

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

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

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

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

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

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

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

between fair value and amortized cost.

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

To determine whether a credit loss exists, the Company considers, among other things, adverse conditions related to the security, industry, geographic area, the payment schedule of the debt security and likelihood that the issuer will be able to make payments that increase in the future, failure of the issuer to make scheduled payments and all available information relevant to the securities collectability, changes in ratings assigned by a rating agency, and other credit enhancements that affect the securities expected performance.

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

payments that increase in the future, failure of the issuer to make scheduled payments and all available information relevant to the securities collectability, changes in ratings assigned by a rating agency, and other credit enhancements that affect the securities expected performance.

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

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

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

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

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

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

AOCI will be adjusted to a balance that reflects the cumulative change in the fair value of the hedging instrument.

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

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

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

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

Mortgage loans included in pending agency contracts to sell and securitize loans are carried at fair value.

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

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

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

Interest on loans is accrued and credited to income as earned.

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

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

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

LOANS AND ALLOWANCE FOR CREDIT LOSSES .

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Repurchased shares will be available for general corporate purposes.

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

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

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

Three of the Company's revenue streams within scope of Topic 606 are the sales of REO, interchange income and deposit account and other transaction-based service fee income.

Three of the Company's revenue streams within scope of Topic

606 are the sales of REO, interchange income, and deposit account and other transaction-based service fee income.

Those streams are immaterial and therefore quantitative information regarding these streams is not disclosed.

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

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

Pursuant to the eighth repurchase program for the repurchase of 10,000,000 shares authorized by the Board of Directors in October, 2016, 361,869 shares were repurchased during the year ended September 30, 2023, 337,259 shares were repurchased during the year ended September 30, 2022, and no shares were repurchased during the year ended September 30, 2021.

At September 30, 2023, there were 5,191,951 shares remaining to be purchased under the eighth repurchase program.

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Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the financial statements of the Association.

Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Association must meet specific capital guidelines that involve quantitative measures of its assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices.

Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Association must meet specific capital

guidelines that involve quantitative measures of its assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices.

The capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

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

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

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

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

During the two-year delay, the Association and Company added back to CET1 100% of the initial adoption impact of CECL plus 25% of the cumulative quarterly changes in the allowance for credit losses.

Beginning this fiscal year, the cumulative transitional amounts became fixed and will be phased out of CET1 capital over the subsequent three-year period.

At September 30, 2023, the Association exceeded all regulatory capital requirements and is considered “well capita lized” under regulatory guidelines.

The Association operates under the capital requirements for the standardized approach of the Basel III capital framework for U.S.

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1,614,615 18.25 % 398,130 4.50 % 575,077 6.50 %

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

The Association paid dividends of $ 40,000 and $ 56,000 to the Company during the fiscal years ended September 30, 2023 and 2022, respectively.

As permitted under interim final rules issued by the FRS on August 12, 2011, a majority of Third Federal Savings, MHC's members eligible to vote approved Third Federal Savings, MHC waiving dividends aggregating up to $1.13 per share on the common stock of the Company for the 12 month following the special meeting of members held on July 11 2023.

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

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

September 30, 2023

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Fannie Mae certificates 834 1 ( 21 ) 814

Freddie Mac certificates 1,141 — ( 97 ) 1,044

Government and agency obligations 63,866 — ( 407 ) 63,459

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

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

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

At September 30, 2023, and September 30, 2022, investment securities included $ 59,813 and $ 0 , respectively, of U.S.

government obligations pledged as collateral on our open swap positions to meet requirements established by the clearing organization.

Accrued interest on investment securities is $ 1,907 and $ 1,122 at September 30, 2023, and September 30, 2022, respectively, and is reported in accrued interest receivable on the CONSOLIDATED STATEMENTS OF CONDITION .

The following is a summary of our securities portfolio by remaining period to contractual maturity and yield at September 30, 2023.

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

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

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

2 unchanged sentences

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

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

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

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

Due in one year or less $ 59,948 $ 59,936 5.13 % $ — $ — — %

Due after one to five years 10,529 9,929 2.00 % 15,476 14,775 2.06 %

Due after five to 10 years

31,372 29,381 2.42 % 38,927 37,204 2.30 %

10 years or greater

459,866 409,078 2.82 % 447,194 405,929 2.25 %

Total $ 561,715 $ 508,324 3.03 % $ 501,597 $ 457,908 2.25 %

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

Gross unrealized losses on available- for- sale securities and the estimated fair value of the related securities, aggregated by the length of time the securities have been in a continuous unrealized loss position, at September 30, 2023 and 2022, were as follows:

September 30, 2023

8 unchanged sentences

Fannie Mae certificates 578 21 — — 578 21

Freddie Mac certificates 1,045 97 — — 1,045 97

Government and agency obligations 59,813 11 3,646 396 63,459 407

9 unchanged sentences

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

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

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

Fannie Mae certificates 217 4 — — 217 4

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

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

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

The investment portfolio is comprised entirely of securities issued by U.S.

government entities and agencies, which support the expectation of zero, other than temporary, loss estimates since principal and interest payments due on these securities carry the full faith and credit guaranty of the U.S.

In addition, the U.S.

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

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

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

Since the decline in value is primarily attributable to an increase in market interest rates and not credit quality and because the Company has neither the intent to sell the securities nor is it more likely than not the Company will be required to sell the securities prior to recovery of the amortized cost, the Company did not record an allowance for credit losses as of September 30, 2023.

LOANS AND ALLOWANCE FOR CREDIT LOSSES

17 unchanged sentences

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

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

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

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

As of September 30, 2023, and September 30, 2022, the percentage of aggregate Residential Core, Home Today and Construction loans secured by properties in Ohio was 57 % and 56 %, respectively, and the percentage of loans secured by properties in Florida was 18 % as of both dates.

As of September 30, 2023 and September 30, 2022, home equity loans and lines of credit were concentrated in the states of Ohio ( 26 % and 27 %, respectively), Florida ( 22 % and 20 %, respectively), and California ( 17 % and 16 %, respectively).

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

15 unchanged sentences

During the construction phase, the borrower only pays interest on the drawn balance.

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

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

Upon completion of construction, the loan converts to a permanent

amortizing loan without the expense of a second closing.

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

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

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

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

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

Loans held for sale include loans originated with the intent to sell which are generally priced in alignment with secondary market pricing and may be subject to loan level pricing adjustments.

Additionally, loans originated or purchased for the held for investment portfolio may later be identified for sale and transferred to the held for sale portfolio, which may include loans originated or purchased within the parameters of programs established by Fannie Mae.

During the years ended September 30, 2023 and September 30, 2022, reclassifications to the held for sale portfolio included loans that were sold during the period, including those in contracts pending settlement at the end of the period, and loans originated for the held for investment portfolio that were later identified for sale.

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

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

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

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

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

At September 30, 2023 and September 30, 2022, mortgage loans held for sale totaled $ 3,260 and $ 9,661 , respectively.

During the years ended September 30, 2023 and September 30, 2022, the principal balance of loans sold was $ 77,205 and $ 128,118 , respectively.

During the years ended September 30, 2023 and September 30, 2022, the amortized cost of loans classified as held for sale that were subsequently transferred to the held for investment portfolio was $ 8,433 and $ 22,741 , respectively.

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

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

DELINQUENCY and NON-ACCRUAL

46 unchanged sentences

Total non-accrual loans $ 27,237 $ 31,914 $ 33,416 $ 35,606

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

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

At September 30, 2023 and September 30, 2022, the amortized cost in non-accrual loans includes $ 18,915 and $ 23,159 , respectively, which are performing according to the terms of their agreement, of which $ 11,508 and $ 13,526 , respectively, are loans in Chapter 7 bankruptcy status, primarily where all borrowers have filed, and have not reaffirmed or been dismissed.

At September 30, 2023 and September 30, 2022, real estate loans include $ 9,144 and $ 9,833 , respectively, of loans that are in the process of foreclosure.

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

13 unchanged sentences

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

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

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

3 unchanged sentences

• For all classes of loans, a borrower obligated on a loan has filed bankruptcy and the loan is greater than 30 days delinquent;

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

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

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

11 unchanged sentences

Other loans are not considered for restructuring.

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

At September 30, 2023 and September 30, 2022, allowances on individually reviewed TDRs (IVAs), evaluated for credit losses based on the present value of cash flows were $ 9,546 and $ 10,284 , respectively.

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

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

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

The allowance is estimated at each reporting date using relevant available information relating to past events, current conditions and supportable forecasts.

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

4 unchanged sentences

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

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

Adjustments are evaluated quarterly based on current facts and circumstances.

14 unchanged sentences

For the Year Ended September 30, 2022

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

Balance Provisions (Releases) Charge-offs Recoveries Ending

Real estate loans:

10 unchanged sentences

CLASSIFIED LOANS

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

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

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

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

Equity loans and bridge loans are segregated by origination year.

Home equity loans and bridge loans are segregated by origination year.

Loans, or the portions of loans, classified as loss are fully charged-off in the period in which they are determined to be uncollectible;

therefore they are not included in the following table.

No Home Today loans are classified Special Mention.

All construction loans are classified Pass.

No Home Today loans are classified Special Mention and all construction loans are classified Pass for both periods presented.

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

44 unchanged sentences

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

Pass 26,587 3,890 — — — — — — 30,477

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

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

5 unchanged sentences

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

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

The home equity lines of credit converted from revolving to term loans during the years ended September 30, 2023 and September 30, 2022, totaled $ 2,492 and $ 436 , respectively.

The amount of conversions to term loans is expected to remain low for several years since the length of the draw period on new originations changed from five to 10 years in 2016.

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

4 unchanged sentences

Loss loans are considered uncollectible and are charged-off when identified.

Loss loans are of such little value that their continuance as bankable assets is not warranted even though partial recovery may be affected in the future.

Loss loans are of such little value that their continuance as bankable assets is not warranted even though partial recovery may be effected in the future.

At September 30, 2023 and September 30, 2022, respectively, $ 73,172 and $ 75,904 of TDRs individually evaluated for credit loss have adequately performed under the terms of the restructuring and are classified as Pass loans.

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

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

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

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

1 unchanged sentence

TROUBLED DEBT RESTRUCTURINGS

Initial concessions granted for loans restructured as TDRs may include reduction of interest rate, extension of amortization period, forbearance or other actions.

Initial concessions granted for loans restructured as TDRs may include reduction of interest rate, extension of amortization period, capitalization of delinquent amounts, forbearance or other actions.

Some TDRs have experienced a combination of concessions.

20 unchanged sentences

For all TDRs restructured during the years ended September 30, 2023 and September 30, 2022 (set forth in the tables below), the pre-restructured outstanding amortized cost was not materially different from the post-restructured outstanding amortized cost.

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

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

69 unchanged sentences

Servicing rights are evaluated periodically for impairment based on the fair value of those rights.

Twenty-two risk tranches are used in evaluating servicing rights for impairment, segregated primarily by interest rate stratum within original term to maturity categories with additional strata for less uniform account types.

Twenty-one risk tranches are used in evaluating servicing rights for impairment, segregated primarily by interest rate stratum within original term to maturity categories with additional strata for less uniform account types.

Activity in mortgage servicing rights is summarized as follows:

8 unchanged sentences

Fair value of capitalized amounts $ 15,916 $ 15,288 $ 17,454

(1) Year ended September 30, 2021 and 2020 amounts include $ 199 and $ 1,063 respectively, related to the repurchase of loans previously sold and serviced by the Company.

(1) Year ended September 30, 2021, amounts include $ 199 related to the repurchase of loans previously sold and serviced by the Company.

The Company receives annual servicing fees ranging from 0.02 % to 0.84 % of the outstanding loan balances.

14 unchanged sentences

During the years ended September 30, 2023, 2022 and 2021, depreciation and amortization expense on premises, equipment, and software was $ 4,921 , $ 5,393 and $ 5,422 , respectively.

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

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

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

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

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

There was no activity for 2022 and 2021.

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

4 unchanged sentences

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

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

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

The leases do not have early-termination options.

39 unchanged sentences

941,842 10.0 1,320,579 14.8

1,173,211 12.4 378,587 4.2

1,346,720 14.3 3,386 0.1

5.00 and above

7 unchanged sentences

2.62 % and 0.95 % on money market accounts;

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

3.47 % and 1.37 % on certificates of deposit, respectively;

and 2.77 % and 1.18 % on total deposits, respectively.

20 unchanged sentences

Savings and money market accounts

24,686 4,553 2,992

Total $ 174,201 $ 76,943 $ 97,319

9 unchanged sentences

Fed Funds purchased

585,000 585,000 —

Subtotal $ 7,344,253 $ 2,093,393 5,250,860

11 unchanged sentences

Total advances

$ 5,250,860 3.06 %

Accrued interest 22,777

5 unchanged sentences

For the years ended September 30, 2023, 2022 and 2021, net interest expense related to short-term borrowings was $ 115,329 , $ 49,828 and $ 50,975 , respectively.

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

The FHFA practice is to place member institutions in this situation on restriction.

When this restriction is established, the Association will not have access to FHLB long-term advances (maturities greater than one year) until the rating improves.

However, the Association has not received the notice of this restriction as of November 22, 2022.

Existing advances and future advances with less than a one year term, including 90 day advances used to facilitate longer term interest rate swap agreements, will not be affected.

The Association does not expect any impact to its ability to access funding.

OTHER COMPREHENSIVE INCOME (LOSS)

55 unchanged sentences

Equity based compensation 0.2 ( 0.1 ) ( 1.3 )

NOL carryback claim rate benefit under CARES Act — — ( 3.6 )

Employee (Associate) Stock Ownership Plan

( 1.5 ) ( 1.2 ) ( 0.8 )

Other, net 0.1 ( 0.1 ) 0.1

15 unchanged sentences

Lease ROU asset 4,160 3,514

Fair value adjustment

Deferred loan costs, net of fees 15,005 13,371

1 unchanged sentence

Total deferred tax liabilities 54,112 29,923

Net deferred tax asset $ 9,166 $ 8,745

In the accompanying CONSOLIDATED STATEMENTS OF CONDITION the net deferred tax asset is included in Other assets.

Net deferred tax asset (liability)

$ ( 13,182 ) $ 9,166

In the accompanying CONSOLIDATED STATEMENTS OF CONDITION the net deferred tax asset or liability is included in Accrued expenses and other liabilities, and Other assets for September 30, 2023 and 2022, respectively.

A valuation allowance is established to reduce deferred tax assets if it is more likely than not that the related tax benefits will not be realized.

3 unchanged sentences

This amount represents allocations of income during years prior to 1988 to bad debt deductions for tax purposes only.

These qualifying and nonqualifying base year reserves and supplemental reserves will be recaptured into income in the event of certain distributions and redemptions.

These qualifying and non-qualifying base year reserves and supplemental reserves will be recaptured into income in the event of certain distributions and redemptions.

Such recapture would create income for tax purposes only, which would be subject to the then current corporate income tax rate.

However, recapture would not occur upon the reorganization, merger, or acquisition of the Association, nor if the Association is merged or liquidated tax-free into a bank or undergoes a charter change.

If the Association fails to qualify as a bank or merges into a nonbank entity, these reserves will be recaptured into income.

If the Association fails to qualify as a bank or merges into a non-bank entity, these reserves will be recaptured into income.

The provisions of Accounting for Uncertainty in Income Taxes, codified within FASB ASC 740 “Income Taxes,” prescribe a recognition threshold and measurement attribute for the financial statement recognition and measurement for a tax position taken or expected to be taken in a tax return.

4 unchanged sentences

The Company recognizes interest and penalties on income tax assessments or income tax refunds, where applicable, in the financial statements as a component of its provision for income taxes.

The Company recognized $ 0 , $ 9 , and $ 0 interest expense or penalties on income tax assessments, and $ 34 , $ 116 , and $ 0 of interest on income tax refunds related to net operating loss carrybacks during the years ended September 30, 2022, 2021 and 2020, respectively.

The Company recognized $ 0 , $ 0 , and $ 9 of interest expense or penalties on income tax assessments, and $ 0 , $ 34 , and $ 116 of interest on income tax refunds related to net operating loss carrybacks during the years ended September 30, 2023, 2022 and 2021, respectively.

There was no interest related to income tax assessments accrued at September 30, 2023 or 2022.

The Company’s effective income tax rate was 19.4 %, 19.0 % and 19.1 % for the years ended September 30, 2023, 2022 and 2021, respectively.

The increase in the effective rate for the year ended September 30, 2021 compared to the same period during fiscal 2020 is primarily due to the impact of a CARES Act provision, which permitted a carry back of net tax operating losses to years taxed at higher rates, and resulted in a tax benefit of $ 3,607 during the year ended September 30, 2020.

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

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

1 unchanged sentence

With few exceptions, the Company is no longer subject to income tax examinations in its major jurisdictions for tax years prior to 2020.

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

The Company makes certain investments in limited partnerships which invest in affordable housing projects that qualify for the LIHTC.

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

9 unchanged sentences

federal and other governmental laws and regulations.

During the fiscal years ending 2022 and 2021, a settlement adjustment was recognized as a result of lump sum payments exceeding the interest costs for the year.

During fiscal year 2022, a settlement adjustment was recognized as a result of lump sum payments exceeding the interest costs for the year.

There were no settlement adjustments made during fiscal year 2023.

The following table sets forth the change in projected benefit obligation for the defined benefit plan:

24 unchanged sentences

There were no contributions, required minimum or voluntary, made during the fiscal year ended September 30, 2023.

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

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

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

Pooled separate accounts

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

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

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

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

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

September 30,

(in thousands) Unfunded Commitments Redemption Frequency

(if currently eligible) Redemption Notice Period Fair Value

(in thousands) Unfunded Commitments Redemption Frequency

(if currently eligible) Redemption Notice Period

Pooled Separate Accounts $ 43,771 N/A Daily 7 days $ 97,971 N/A Daily 7 days

As of September 30, 2023, the Plan had $ 0 invested in pooled separate accounts due to the Plan moving to an LDI strategy.

The LDI strategy derisks the Plan by allocating more to long-duration, fixed income assets.

The Plan's target asset allocation is now 80 % in LDI fixed income and 20 % in equity.

At September 30, 2022, $ 43.8 million were invested in pooled separate accounts with a redemption notice of 7 days.

The following table summarizes Plan assets measured at fair value on a recurring basis as of September 30, 2023 and 2022.

FAIR VALUE for more information on how our fair value hierarchy is evaluated:

Recurring Fair Value Measurements at Reporting Date Using

September 30, 2023 Total Fair Value Quoted Prices in

Active Markets for

Identical Assets

(Level 1) Significant Other

Observable Inputs

(Level 2) Significant

Cash equivalents

$ 1,001 $ 1,001 $ — $ —

Fixed income:

government obligations

2,550 2,550 — —

Corporate debt securities

42,573 — 42,573 —

Government strips

8,617 — 8,617 —

Total fixed income

53,740 2,550 51,190 —

Mutual equity funds

15,791 15,791 — —

$ 70,532 $ 19,342 $ 51,190 $ —

(1) Plan assets measured at fair value on a recurring basis excludes approximately $ 1,851 of unsettled security transactions.

Recurring Fair Value Measurements at Reporting Date Using

September 30, 2022 Total Fair Value Quoted Prices in

Active Markets for

Identical Assets

(Level 1) Significant Other

Observable Inputs

(Level 2) Significant

Mutual equity funds $ 30,271 $ 30,271 $ — $ —

Total $ 30,271 $ 30,271 $ — $ —

There are no redemption restrictions on Plan assets at September 30, 2023.

13 unchanged sentences

If warranted, the assumption is modified.

The following table provides estimates of expected future benefit payments during each of the next five fiscal years, as well as in the aggregate for years six through ten.

The following table provides estimates of expected future benefit payments during each of the next five fiscal years, as well as in the aggregate for years six through 10.

Additionally, the table includes the minimum employer contributions expected during the next fiscal year:

5 unchanged sentences

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

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

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

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

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

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

The first and second tiers cover substantially all employees who have reached age 18 and have worked 30 days of service in one year of service.

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

22 unchanged sentences

The amended and restated plan is substantially similar to the previous plan, except that the number of future shares eligible to be granted has been reduced to 8,450,000 shares, of which 7,138,688 shares remain available for future award, and the term to grant shares has been extended to February 21, 2028.

The Company recorded excess tax benefits of $ 109 , $ 1,331 , and $ 485 related to share-based compensation awards for the years ended September 30, 2022, 2021 and 2020, respectively.

The Company recorded excess tax benefits (expense) of $( 224 ), $ 109 , and $ 1,331 related to share-based compensation awards for the years ended September 2023, 2022 and 2021, respectively.

The following table presents share-based compensation expense and the related tax benefit recognized during the periods presented:

8 unchanged sentences

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

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

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

The following is a summary of the status of the Company’s restricted stock units as of September 30, 2023, and changes therein during the year then ended:

10 unchanged sentences

Performance share units vest in the form of Company common stock issued at the end of a three -year period, based on the pro-rata achievement of performance based metrics over a two -year period.

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

The range of payout is 0 % to 150 % of the number of share units granted.

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

11 unchanged sentences

The weighted average grant date fair value of performance share units granted during the year ended September 30, 2023, 2022 and 2021 was $ 13.69 , $ 17.80 , and $ 17.77 , respectively.

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

The total fair value of performance share units vested during the years ended September 30, 2023, 2022 and 2021, totaled $ 1,152 , $ 1,112 , and $ 14 , respectively.

Expected future compensation expense relating to the non-vested performance share units at September 30, 2023, is $ 1,196 over a weighted average period of 1.81 years.

8 unchanged sentences

Exercised ( 315,200 ) $ 11.64 $ 820

Forfeited ( 2,600 ) $ 15.82 $ —

Forfeited or expired

( 54,000 ) $ 14.94 $ —

Outstanding at September 30, 2023 1,991,975 $ 15.69 2.66 $ —

1 unchanged sentence

Vested or expected to vest, at September 30, 2023 1,991,975 $ 15.69 2.66 $ —

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

The total intrinsic value of options exercised during the years ended September 30, 2023, 2022 and 2021 was $ 820 , $ 551 and $ 8,605 , respectively.

There were no non-vested options outstanding as of September 30, 2023.

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Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract.

Commitments to originate loans generally have fixed expiration dates of 60 to 360 days or other termination clauses and may require payment of a fee.

Commitments to originate or purchase loans generally have fixed expiration dates of 60 to 360 days or other termination clauses and may require payment of a fee.

Unfunded commitments related to home equity lines of credit generally expire from five to 10 years following the date that the line of credit was established, subject to various conditions including compliance with payment obligation, adequacy of collateral securing the line and maintenance of a satisfactory credit profile by the borrower.

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Refer to Note 5.

LOANS AND ALLOWANCES FOR CREDIT LOSSES for discussion on credit loss methodology.

LOANS AND ALLOWANCES FOR CREDIT LOSSES for discussion on

credit loss methodology.

Interest rate risk on commitments to extend credit results from the possibility that interest rates may have moved unfavorably from the position of the Company since the time the commitment was made.

At September 30, 2022, the Company had commitments to originate loans and related allowances as follows:

At September 30, 2023, the Company had commitments to originate or purchase loans and related allowances as follows:

Commitment Allowance

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Adjustable-rate mortgage loans

Equity loans and lines of credit 157,465 1,977

Home equity loans and lines of credit

174,942 2,547

Total $ 349,424 $ 3,452

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At September 30, 2023, the unfunded commitment on home equity lines of credit, including commitments for accounts suspended as a result of material default or a decline in equity, is $ 4,728,215 .

At September 30, 2023 and September 30, 2022, the Company had $ 2,094 and $ 0 , respectively, in commitments to sell mortgage loans.

At September 30, 2023 and September 30, 2022, the Company had $ 51,275 and $ 0 , respectively, in commitments to purchase mortgage loans, which are included in mortgage loan commitments above.

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

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

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

Any potential loss that may result from this matter is not reasonably estimable at September 30, 2023.

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

The three levels of

inputs are defined as follows:

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

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

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

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

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

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

At September 30, 2023 and September 30, 2022, there were no pending agency contracts held for sale.

For the years ended September 30, 2023, 2022, and 2021, net gain (loss) on the sale of loans includes $ 0 , $ 0 and $ 134 , respectively, related to unrealized gains or losses during the period due to changes in the fair value of loans held for sale subject to pending agency contracts.

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Investment Securities Available for Sale — Investment securities available for sale are recorded at fair value on a recurring basis.

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

At September 30, 2023 and 2022, this includes $ 508,324 and $ 457,908 , respectively, of investments in U.S.

government and agency obligations including U.S.

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

Treasury notes and investments in highly liquid collateralized mortgage obligations, that can include items issued by Fannie Mae, Freddie Mac, and Ginnie Mae, measured using the market approach.

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

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Loans held for sale are included in Level 2 of the hierarchy.

At September 30, 2022 and 2021, there were $ 9,661 and $ 0 , respectively, of loans held for sale measured at fair value and $ 0 and $ 8,848 , respectively, of loans held for sale carried at cost.

At September 30, 2023 and 2022, there were $ 3,260 and $ 9,661 , respectively, of loans held for sale measured at fair value.

At September 30, 2023 and 2022 there were no loans held for sale carried at cost.

Interest income on mortgage loans held for sale is recorded in interest income on loans.

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LOANS AND ALLOWANCES FOR CREDIT LOSSES .

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

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

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

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

carried below its fair value.

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

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

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Loans held for investment that have been restructured in TDRs, are performing according to the restructured terms of the loan agreement and are not evaluated based on collateral, are individually evaluated for credit loss using the present value of future cash flows based on the loan’s effective interest rate, which is not a fair value measurement.

At September 30, 2022 and 2021, respectively, this included $ 76,692 and $ 84,594 in amortized costs of TDRs with related allowances for loss of $ 10,284 and $ 12,073 .

At September 30, 2023 and 2022, this included $ 74,691 and $ 76,692 , respectively, in amortized costs of TDRs with related allowances for loss of $ 9,546 and $ 10,284 .

Real Estate Owned — Real estate owned includes real estate acquired as a result of foreclosure, or by deed in lieu of foreclosure, and is carried at the lower of the cost basis or fair value, less estimated costs to dispose.

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At September 30, 2023 and 2022, these adjustments were not significant to reported fair values.

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

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

At September 30, 2023 and 2022, respectively, $ 1,413 and $ 1,192 of real estate owned is included in Level 3 of the hierarchy with assets measured at fair value on a non-recurring basis where the cost basis equals or exceeds the estimated fair values, less estimated costs to dispose, of $ 163 and $ 156 , respectively.

Real estate owned includes $ 194 and $ 155 of properties carried at their original or adjusted cost basis at September 30, 2023 and 2022, respectively.

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

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Refer to Note 17.

DERIVATIVE INSTRUMENTS for additional information on cash flow hedges.

DERIVATIVE INSTRUMENTS for additional information on cash flow hedges and other derivative instruments.

The fair value of interest rate lock commitments is adjusted by a closure rate based on the estimated percentage of commitments that will result in closed loans.

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Assets and liabilities carried at fair value on a recurring basis in the CONSOLIDATED STATEMENTS OF CONDITION at September 30, 2023 and 2022 are summarized below.

There are no liabilities carried at fair value at September 30, 2021.

Recurring Fair Value Measurements at Reporting Date Using

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Fannie Mae certificates 814 — 814 —

Freddie Mac certificates

1,044 — 1,044 —

government and agency obligations 63,459 — 63,459 —

Forward commitments for the sale of mortgage loans

Total $ 508,335 $ — $ 508,335 $ —

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Fannie Mae certificates 1,021 — 1,021 —

government and agency obligations

3,619 — 3,619 —

$ 457,908 $ — $ 457,908 $ —

Interest rate lock commitments 333 — — 333

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

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

Real estate owned (1)

1,192 — — 1,192

Total $ 57,974 $ — $ 9,661 $ 48,313

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

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

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

The interest rate lock commitments include mortgage origination applications.

September 30, 2023 Valuation Technique(s) Unobservable Input Range Weighted Average

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Cash collateral received from or held by counterparty 24,887 24,887 24,887 — —

Derivatives 11 11 — 11 —

Checking and passbook accounts $ 2,790,476 $ 2,790,476 $ — $ 2,790,476 $ —

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

Derivatives 525 525 — — 525

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

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

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

Cash and Due from Banks, Interest Earning Cash Equivalents, Cash Collateral Received from or Held by Counterparty — The carrying amount is a reasonable estimate of fair value.

Investment Securities Available for Sale — Estimated fair value for investment and mortgage-backed securities is based on quoted market prices, when available.

If quoted prices are not available, management will use as part of their estimation process fair values which are obtained from third party independent nationally recognized pricing services using pricing models, quoted prices of securities with similar characteristics, or discounted cash flows.

Mortgage Loans Held for Sale — Fair value of mortgage loans held for sale is based on quoted secondary market pricing for loan portfolios with similar characteristics.

Loans — For mortgage loans held for investment and other loans, fair value is estimated by discounting contractual cash flows adjusted for prepayment estimates using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining term.

The use of current rates to discount cash flows reflects current market expectations with respect to credit exposure.

Collateral-dependent loans are measured at the lower of cost or fair value as described earlier in this footnote.

Federal Home Loan Bank Stock — It is not practical to estimate the fair value of FHLB stock due to restrictions on its transferability.

The fair value is estimated to be the carrying value, which is par.

All transactions in capital stock of the FHLB Cincinnati are executed at par.

Deposits — The fair value of demand deposit accounts is estimated as the amount payable on demand at the reporting date.

The fair value of fixed-maturity certificates of deposit is estimated using discounted cash flows and rates currently offered for deposits of similar remaining maturities.

Borrowed Funds — Fair value for borrowed funds is estimated using discounted cash flows and rates currently charged for borrowings of similar remaining maturities.

Accrued Interest Receivable, Borrowers’ Advances for Insurance and Taxes, and Principal, Interest and Related Escrow Owed on Loans Serviced — The carrying amount is a reasonable estimate of fair value.

Derivatives — Fair value is estimated based on the valuation techniques and inputs described earlier in this footnote.

Derivatives 333 333 — — 333

DERIVATIVE INSTRUMENTS

The Company enters into interest rate swaps to add stability to interest expense and manage exposure to interest rate movements as part of an overall risk management strategy.

For hedges of the Company's borrowing program, interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed payments.

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

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

For hedges of the Company's borrowing and deposit program, interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed payments.

These derivatives are used to hedge the forecasted cash outflows associated with the Company's FHLB borrowings and brokered certificates of deposit.

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

Changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in OCI and is subsequently reclassified into earnings during the period in which the hedged forecasted transaction affects earnings.

Quarterly, a qualitative analysis is preformed to monitor the ongoing effectiveness of the hedging instrument.

Quarterly, a quantitative analysis is preformed to monitor the ongoing effectiveness of the hedging instrument.

All derivative positions were initially, and continue to be, highly effective at September 30, 2023.

The Company enters into forward commitments for the sale of mortgage loans principally to protect against the risk of lost revenue from adverse interest rate movements on net income.

The Company enters into forward commitments for the sale of mortgage loans primarily to protect against the risk of lost revenue from adverse interest rate movements on net income.

The Company recognizes the fair value of such contracts when the characteristics of those contracts meet the definition of a derivative.

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therefore, gains and losses are recognized immediately in the CONSOLIDATED STATEMENTS OF INCOME .

In accordance with the reference rate reform, for every LIBOR referenced interest rate swap with a reset date after the LIBOR cessation date, counterparties received a LIBOR referenced instrument maturing on the first reset date after the LIBOR cessation date, and a forward starting SOFR instrument.

At September 30, 2023, all previous LIBOR referenced swaps have transitioned to a SOFR-based rate.

Additionally, under previously adopted ASU 2020-04, Reference Rate Reform (Topic 848), the Company has elected and applied certain optional expedients for eligible hedging relationships impacted by the LIBOR cessation.

The following tables provide the locations within the CONSOLIDATED STATEMENTS OF CONDITION , notional values and fair values, at the reporting dates, for all derivative instruments.

September 30, 2022 September 30, 2021

Notional Value Fair Value Notional Value Fair Value

September 30, 2023

Weighted Average

Notional Value Fair Value Term (years) Fixed-Rate Payments

Derivatives designated as hedging instruments

1 unchanged sentence

Interest rate swaps

Other Assets $ 1,550,000 $ — $ 250,000 $ —

Other Liabilities — — 2,200,000 —

$ 3,815,000 — 3.7 2.91 %

Total cash flow hedges:

Interest rate swaps

$ 3,815,000 $ — 3.7 2.91 %

September 30, 2022

Weighted Average

Notional Value Fair Value Term (years) Fixed-Rate Payments

Cash flow hedges:

Interest rate swaps

$ 1,550,000 $ — 2.7 1.88 %

Total cash flow hedges:

Interest rate swaps $ 1,550,000 $ — 2.7 1.88 %

September 30, 2023 September 30, 2022

Notional Value Fair Value Notional Value Fair Value

Derivatives not designated as hedging instruments

Interest rate lock commitments

Other Assets $ — $ — $ 24,826 $ 525

Other Liabilities $ 1,830 $ ( 1 ) $ 9,170 $ ( 333 )

Forward Commitments for the sale of mortgage loans

Other Assets 2,094 11 — —

Total derivatives not designated as hedging instruments $ 3,924 $ 10 $ 9,170 $ ( 333 )

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Amount of gain/(loss) reclassified from AOCI Interest expense:

Borrowed funds ( 22,740 ) ( 44,534 ) (16,982)

Amount of gain/(loss) reclassified from AOCI-Due to discontinuance of cash flow hedge Interest expense:

Borrowed funds — — ( 7,775 )

Borrowed funds and Deposits

59,821 ( 22,740 ) ( 44,534 )

Derivatives not designated as hedging instruments

1 unchanged sentence

Forward commitments for the sale of mortgage loans Net gain/(loss) on the sale of loans 11 — 134

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

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

In the 2020 fiscal year the Company terminated four high cost interest rate swaps prior to their maturity.

For the early termination of these swaps, the Company incurred $ 7,775 in additional interest rate expense and $ 48 in prepayment penalties.

This additional interest rate expense is loss reclassified from AOCI during the year ended September 30, 2020 as a result of the discontinuance of the cash flow hedges because it was probable that the original forecasted transactions would not occur.

These selected swaps were deemed beneficial to terminate as the Company would lower interest rate expense for future periods.

The Company estimates that $ 90,257 of the amounts reported in AOCI will be reclassified as a reduction to interest expense during the fiscal year ending September 30, 2024.

Derivatives contain an element of credit risk which arises from the possibility that the Company will incur a loss because a counterparty fails to meet its contractual obligations.

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The clearing organization establishes daily cash and upfront cash or securities margin requirements to cover potential exposure in the event of default.

This process shifts the risk away from the counterparty, since the clearing organization acts as the middleman on each cleared transaction.

At September 30, 2022 and 2021, there was $ 26,045 and $ 24,236 , respectively, included in other assets related to initial margin requirements held by the central clearing organization.

This process shifts the risk away from the counterparty, since the clearing organization acts as an intermediary on each cleared transaction.

At September 30, 2023 and 2022, there was $ 24,887 and $ 26,045 , respectively, of cash collateral included in other assets, and $ 59,813 and $ 0 , respectively, included in investment securities related to initial margin requirements that are held by the central clearing organization.

For derivative transactions cleared through certain clearing parties, variation margin payments are recognized as settlements on a daily basis.

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Retained earnings—substantially restricted 886,984 870,047

Accumulated other comprehensive income (loss) 23,149 ( 67,801 )

Accumulated other comprehensive income

85,212 23,149

Total shareholders’ equity 1,927,361 1,844,339

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Dividend from Third Federal Savings and Loan 40,000 56,000 55,000

Dividend from non-thrift subsidiary — — 16,000

Total other income 40,030 56,030 55,085

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

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

Repayment of capital contributions from non-thrift subsidiaries — — 69,000

(Increase) decrease in balances lent to Third Federal Savings and Loan 12,465 304 ( 12,222 )

Net cash provided by (used in) investing activities 12,465 ( 3,767 ) ( 12,222 )

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Performance share units, determined to be contingently issuable and not participating securities, are excluded from the calculation of basic EPS.

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

At September 30, 2023 and 2022, the ESOP held 2,708,371 and 3,141,711 shares, respectively, that were neither allocated to participants nor committed to be released to participants.

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

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Adopted in fiscal year ended September 30, 2023

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

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

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

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

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

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

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

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

In December of 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848):

Deferral of the Sunset Date of Topic 848 .

This ASU deferred the period of time entities can utilize the reference rate reform relief guidance from ASU 2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effect of Reference Rate Reform on Financial Reporting , to December 31, 2024 instead of the original December 31, 2022.

This amendment is a result of the expectation that the LIBOR would cease to be published as of June 30, 2023.

The FASB Board decided that this amendment would be effective for all entities upon issuance of ASU 2022-06.

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

In March 2023, the FASB issued ASU 2023-02, Investments - Equity Method and Joint Ventures (Topic 323) .

The amendments in this update expand the proportional amortization method, by election, to account for all investments made primarily for the purpose of receiving income tax credits or other tax benefits.

Previously, this accounting method was only allowed for low-income housing tax credit investments.

This update is effective for fiscal years beginning after December 15, 2023, with early adoption permitted in any interim period.

The Company adopted this update effective April 1, 2023 and will consider the provisions on future tax credit investments, should they occur.

This update did not have an immediate impact on our consolidated financial condition or results of operations.

Issued but not yet adopted as of September 30, 2023

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

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

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

The Company plans to adopt this guidance as of October 1, 2023 and apply the modified retrospective transition method that will evaluate loans previously identified as TDRs for credit loss under the Company’s current ACL policy.

We expect to recognize an increase to opening retained earnings of $7,898, net of income taxes resulting from a pretax decrease to the allowance for credit losses on loans and unfunded commitments of $10,262 upon adoption.

The enhanced disclosure requirements provided for by the ASU will be adopted on a prospective basis.

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

RELATED PARTY TRANSACTIONS

The Company has made loans and extensions of credit, in the ordinary course of business, to certain directors and executive officers.

The Company has periodically made loans and extensions of credit, in the ordinary course of business, to certain directors and executive officers.

These loans were originated with normal credit terms, including interest rate and collateralization, and do not represent more than the normal risk of collection.

The aggregate amount of loans to such related parties at September 30, 2022 and 2021 was $ 0 and $ 64 , respectively .

The aggregate amount of loans to such related parties at both September 30, 2023 and 2022 was $ 0 .

FORM 10-K EXHIBIT INDEX

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14 Code of Ethics Available on our website, www.thirdfederal.com

Subsidiaries of Registrant

Insider trading policies and procedures

Filed herewith

Subsidiaries of the registrant

Registration Statement on Form S-1 No.

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Filed herewith

P olicy relating to recovery of erroneously awar ded compensation

Filed herewith

100 XBRL related documents The following financial statements from TFS Financial Corporation’s Annual Report on Form 10-K for the year ended September 30, 2023 filed on November 21, 2023 formatted in Inline XBRL (Extensible Business Reporting Language) includes:

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

What changed 10-K

Item 9A. Controls and Procedures