What changed in this filing

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Item 1. Financial Statements

2024-05-09 compared with 2024-02-08 · 330 added, 160 removed, 867 unchanged (36% of the section changed)

35 unchanged sentences

332,318,750 shares issued;

280,710,854 and 280,359,173 outstanding at December 31, 2023 and September 30, 2023, respectively

280,710,854 and 280,359,173 outstanding at March 31, 2024 and September 30, 2023, respectively

Paid-in capital 1,751,960 1,755,027

Treasury stock, at cost;

51,607,896 and 51,959,577 shares at December 31, 2023 and September 30, 2023, respectively

51,607,896 and 51,959,577 shares at March 31, 2024 and September 30, 2023, respectively

( 772,195 ) ( 776,101 )

8 unchanged sentences

(In thousands, except share and per share data)

For the Three Months Ended

For the Three Months Ended For the Six Months Ended

March 31, March 31,

2024 2023 2024 2023

INTEREST AND DIVIDEND INCOME:

14 unchanged sentences

Net gain on the sale of loans

442 579 923 596

Increase in and death benefits from bank owned life insurance contracts 2,193 2,123 5,384 4,361

20 unchanged sentences

(In thousands)

For the Three Months Ended

For the Three Months Ended For the Six Months Ended

March 31, March 31,

2024 2023 2024 2023

Net income $ 20,713 $ 15,908 $ 41,420 $ 38,101

12 unchanged sentences

(In thousands, except share and per share data)

For the Three Months Ended December 31, 2022

For the Three Months Ended March 31, 2023

stock Paid-in

6 unchanged sentences

shareholders’

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

Balance at December 31, 2022 $ 3,323 $ 1,751,020 $ ( 775,154 ) $ ( 30,334 ) $ 877,713 $ 23,021 $ 1,849,589

Net income — — — — 15,908 — 15,908

8 unchanged sentences

— — — — ( 14,575 ) — ( 14,575 )

Balance at March 31, 2023 $ 3,323 $ 1,752,508 $ ( 775,852 ) $ ( 29,250 ) $ 879,046 $ 4,701 $ 1,834,476

For the Three Months Ended March 31, 2024

stock Paid-in

capital Treasury

stock Unallocated

held by ESOP Retained

earnings Accumulated other

comprehensive

income (loss) Total

shareholders’

Balance at December 31, 2023 $ 3,323 $ 1,750,440 $ ( 772,195 ) $ ( 26,000 ) $ 900,973 $ 10,186 $ 1,866,727

For the Three Months Ended December 31, 2023

Net income — — — — 20,713 — 20,713

Other comprehensive income, net of tax — — — — — 32,232 32,232

ESOP shares allocated or committed to be released — 349 — 1,083 — — 1,432

Compensation costs for equity incentive plans — 1,171 — — — — 1,171

Dividends declared to common shareholders ($ 0.2825 per common share)

— — — — ( 14,778 ) — ( 14,778 )

Balance at March 31, 2024 $ 3,323 $ 1,751,960 $ ( 772,195 ) $ ( 24,917 ) $ 906,908 $ 42,418 $ 1,907,497

For the Six Months Ended March 31, 2023

stock Paid-in

7 unchanged sentences

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

Net income — — — — 38,101 — 38,101

Other comprehensive income (loss), net of tax

— — — — — ( 18,448 ) ( 18,448 )

ESOP shares allocated or committed to be released — 832 — 2,167 — — 2,999

Compensation costs for equity incentive plans — 2,219 — — — — 2,219

Purchase of treasury stock ( 361,869 shares)

— — ( 5,000 ) — — — ( 5,000 )

Treasury stock allocated to equity incentive plan — ( 1,766 ) 1,134 — — — ( 632 )

Dividends declared to common shareholders ($ 0.5650 per common share)

— — — — ( 29,102 ) — ( 29,102 )

Balance at March 31, 2023 $ 3,323 $ 1,752,508 $ ( 775,852 ) $ ( 29,250 ) $ 879,046 $ 4,701 $ 1,834,476

For the Six Months Ended March 31, 2024

stock Paid-in

capital Treasury

stock Unallocated

held by ESOP Retained

earnings Accumulated other

comprehensive

income (loss) Total

shareholders’

Balance at September 30, 2023 $ 3,323 $ 1,755,027 $ ( 776,101 ) $ ( 27,084 ) $ 886,984 $ 85,212 $ 1,927,361

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

8 unchanged sentences

— — — — ( 29,394 ) — ( 29,394 )

Balance at December 31, 2023 $ 3,323 $ 1,750,440 $ ( 772,195 ) $ ( 26,000 ) $ 900,973 $ 10,186 $ 1,866,727

Balance at March 31, 2024 $ 3,323 $ 1,751,960 $ ( 772,195 ) $ ( 24,917 ) $ 906,908 $ 42,418 $ 1,907,497

1 Related to ASU 2022-02 adopted October 1, 2023.

2 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (In thousands)

For the Three Months Ended December 31,

For the Six Months Ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

21 unchanged sentences

Real estate owned 983 253

FHLB stock 41,248 —

Purchases of:

3 unchanged sentences

Other 3,295 88

Net cash used in investing activities ( 41,837 ) ( 248,833 )

Net cash provided by (used in) investing activities 30,133 ( 346,929 )

CASH FLOWS FROM FINANCING ACTIVITIES:

21 unchanged sentences

Transfer of loans from held for investment to held for sale 100,594 17,466

Transfer of loans from held for sale to held for investment — 8,433

Treasury stock issued for stock benefit plans 5,824 1,765

6 unchanged sentences

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

As of December 31, 2023, approximately 80.9 % of the Company’s outstanding shares were owned by the federally chartered mutual holding company, Third Federal Savings and Loan Association of Cleveland, MHC.

As of March 31, 2024, approximately 80.9 % of the Company’s outstanding shares were owned by the federally chartered mutual holding company, Third Federal Savings and Loan Association of Cleveland, MHC.

The thrift subsidiary of TFS Financial Corporation is Third Federal Savings and Loan Association of Cleveland.

5 unchanged sentences

The allowance for credit losses, the valuation of deferred tax assets, and the determination of pension obligations are particularly subject to change.

The unaudited interim consolidated financial statements reflect all adjustments of a normal recurring nature which, in the opinion of management, are necessary to present fairly the consolidated financial condition of the Company at December 31, 2023, and its consolidated results of operations and cash flows for the periods presented.

The unaudited interim consolidated financial statements reflect all adjustments of a normal recurring nature which, in the opinion of management, are necessary to present fairly the consolidated financial condition of the Company at March 31, 2024, and its consolidated results of operations and cash flows for the periods presented.

Such adjustments are the only adjustments reflected in the unaudited interim financial statements.

17 unchanged sentences

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

At December 31, 2023 and 2022, the ESOP held 2,600,036 and 3,033,376 shares, respectively, that were neither allocated to participants nor committed to be released to participants.

At March 31, 2024 and 2023, the ESOP held 2,491,701 and 2,925,041 shares, respectively, that were neither allocated to participants nor committed to be released to participants.

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

For the Three Months Ended December 31,

For the Three Months Ended March 31,

Income Shares Per share

8 unchanged sentences

Income available to common shareholders $ 20,371 279,046,837 $ 0.07 $ 15,523 278,499,145 $ 0.06

For the Six Months Ended March 31,

Income Shares Per share

amount Income Shares Per share

(Dollars in thousands, except per share data)

Net income $ 41,420 $ 38,101

income allocated to restricted stock units 747 775

Basic earnings per share:

Income available to common shareholders 40,673 278,011,351 $ 0.15 37,326 277,340,877 $ 0.13

Diluted earnings per share:

Effect of dilutive potential common shares 1,008,117 1,131,828

Income available to common shareholders $ 40,673 279,019,468 $ 0.15 $ 37,326 278,472,705 $ 0.13

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

For the Three Months Ended December 31,

For the Three Months Ended March 31, For the Six Months Ended March 31,

2024 2023 2024 2023

Options to purchase shares 2,231,475 2,043,575 2,231,475 2,043,944

2 unchanged sentences

Investments available for sale are summarized in the tables below.

December 31, 2023

March 31, 2024

Unrealized Fair

11 unchanged sentences

Total $ 561,715 $ 1 $ ( 53,392 ) $ 508,324

At December 31, 2023 and September 30, 2023, investment securities included $ 68,257 and $ 59,813 , respectively, of U.S.

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

clearing organization.

Accrued interest on investment securities is $ 1,730 and $ 1,907 at December 31, 2023 and September 30, 2023, respectively, and is reported in accrued interest receivable on the CONSOLIDATED STATEMENTS OF CONDITION .

The following is a summary of our securities portfolio by the period remaining until contractual maturity and yield at December 31, 2023.

At March 31, 2024 and September 30, 2023, investment securities included $ 68,335 and $ 59,813 , respectively, of U.S.

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

Accrued interest on investment securities is $ 2,355 and $ 1,907 at March 31, 2024 and September 30, 2023, respectively, and is reported in accrued interest receivable on the CONSOLIDATED STATEMENTS OF CONDITION .

The following is a summary of our securities portfolio by the period remaining until contractual maturity and yield at March 31, 2024.

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

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

We did not hold any tax-exempt securities.

December 31, 2023 September 30, 2023

We did not hold any tax-exempt securities at March 31, 2024 or September 30, 2023.

March 31, 2024 September 30, 2023

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

4 unchanged sentences

Total $ 561,806 $ 520,172 3.28 % $ 561,715 $ 508,324 3.03 %

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 December 31, 2023 and September 30, 2023, were as follows:

December 31, 2023

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 March 31, 2024 and September 30, 2023, were as follows:

March 31, 2024

Less Than 12 Months 12 Months or More Total

1 unchanged sentence

Available for sale—

REMICs $ 19,159 $ 95 $ 375,143 $ 38,803 $ 394,302 $ 38,898

$ 64,786 $ 430 $ 362,410 $ 41,061 $ 427,196 $ 41,491

Fannie Mae certificates

— — 104 6 104 6

Freddie Mac certificates — — 1,090 49 1,090 49

government and agency obligations

— — 3,728 307 3,728 307

Total $ 64,786 $ 430 $ 367,332 $ 41,423 $ 432,118 $ 41,853

3 unchanged sentences

Available for sale—

REMICs $ 80,452 $ 1,749 $ 362,555 $ 51,118 $ 443,007 $ 52,867

$ 80,452 $ 1,749 $ 362,555 $ 51,118 $ 443,007 $ 52,867

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

Total $ 141,888 $ 1,878 $ 366,201 $ 51,514 $ 508,089 $ 53,392

4 unchanged sentences

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.

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 December 31, 2023 .

Since the decline in value is primarily attributable to an increase in market interest rates and not credit quality deterioration 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 March 31, 2024 or September 30, 2023 .

LOANS AND ALLOWANCE FOR CREDIT LOSSES

15 unchanged sentences

Loans held for investment are carried at amortized cost, which includes outstanding principal balance adjusted for any unamortized premiums or discounts, net of deferred fees and expenses and any applicable loans-in-process.

Accrued interest is $ 53,878 and $ 51,989 as of December 31, 2023 and September 30, 2023, respectively, and is reported in accrued interest receivable on the CONSOLIDATED STATEMENTS OF CONDITION.

Accrued interest is $ 54,514 and $ 51,989 as of March 31, 2024 and September 30, 2023, respectively, and is reported in accrued interest receivable on the CONSOLIDATED STATEMENTS OF CONDITION.

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

As of December 31, 2023 and September 30, 2023, the percentage of aggregate Residential Core, Home Today and Construction loans secured by properties in Ohio was 58 % and 57 %, respectively, and the percentage of loans secured by properties in Florida was 18 % as of both dates.

As of December 31, 2023 and September 30, 2023, home equity loans and lines of credit were concentrated in Ohio ( 25 % and 26 %, respectively), Florida ( 23 % and 22 %, respectively), and California ( 17 % as of both dates).

As of March 31, 2024 and September 30, 2023, the percentage of aggregate Residential Core, Home Today and Construction loans secured by properties in Ohio was 58 % and 57 %, respectively, and the percentage of loans secured by properties in Florida was 18 % as of both dates.

As of March 31, 2024 and September 30, 2023, home equity loans and lines of credit were concentrated in Ohio ( 25 % and 26 %, respectively), Florida ( 23 % and 22 %, respectively), and California ( 17 % as of both dates).

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

4 unchanged sentences

With limited historical loss experience compared to other types of loans in the portfolio, judgment is required by management in assessing the allowance required on adjustable-rate mortgage loans.

The principal amount of adjustable-rate mortgage loans included in the Residential Core portfolio was $ 4,706,373 and $ 4,760,843 at December 31, 2023 and September 30, 2023, respectively.

The principal amount of adjustable-rate mortgage loans included in the Residential Core portfolio was $ 4,621,146 and $ 4,760,843 at March 31, 2024 and September 30, 2023, respectively.

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

14 unchanged sentences

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 three months ended December 31, 2023 and December 31, 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 December 31, 2023 and September 30, 2023, mortgage loans held for sale totaled $ 1,095 and $ 3,260 , respectively.

During the three months ended December 31, 2023, the principal balance of loans sold was $ 87,843 compared to $ 19,182 during the three months ended December 31, 2022.

During the three months ended December 31, 2023 and December 31, 2022, there were no transfers to the held for investment portfolio.

During the three and six months ended March 31, 2024 and March 31, 2023, 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 March 31, 2024 and September 30, 2023, mortgage loans held for sale totaled $ 9,698 and $ 3,260 , respectively.

During the three and six months ended March 31, 2024, the principal balance of loans sold was $ 33,477 and $ 121,320 (including loans in contracts pending settlement) compared to $ 15,381 and $ 34,563 (including contracts pending settlement) during the three and six months ended March 31, 2023.

During the three and six months ended March 31, 2024, the amortized cost of loans originated as held for sale that were subsequently transferred to the held for investment portfolio was $ 0 , compared to $ 8,433 during the three and six months ended March 31, 2023.

DELINQUENCY and NON-ACCRUAL

An aging analysis of the amortized cost in loan receivables that are past due at December 31, 2023 and September 30, 2023 is summarized in the following tables.

An aging analysis of the amortized cost in loan receivables that are past due at March 31, 2024 and September 30, 2023 is summarized in the following tables.

When a loan is more than one month past due on its scheduled payments, the loan is considered 30 days or more past due, regardless of the number of days in each month.

3 unchanged sentences

Due Current Total

December 31, 2023

March 31, 2024

Real estate loans:

28 unchanged sentences

Balances are adjusted for deferred loan fees and expenses.

There are no loans 90 or more days past due and still accruing at December 31, 2023 or September 30, 2023.

December 31, 2023 September 30, 2023

There are no loans 90 or more days past due and still accruing at March 31, 2024 or September 30, 2023.

March 31, 2024 September 30, 2023

Non-accrual with No ACL

5 unchanged sentences

Total non-accrual loans $ 30,372 $ 35,253 $ 27,237 $ 31,914

At December 31, 2023 and September 30, 2023, respectively, the amortized cost in non-accrual loans includes $ 18,633 and $ 18,915 which are performing according to the terms of their agreement, of which $ 11,611 and $ 11,508 are loans in Chapter 7 bankruptcy status, primarily where all borrowers have filed, and have not reaffirmed or been dismissed.

At December 31, 2023 and September 30, 2023, real estate loans include $ 10,041 and $ 9,144 , respectively, of loans that were in the process of foreclosure.

At March 31, 2024 and September 30, 2023, respectively, the amortized cost in non-accrual loans includes $ 21,028 and $ 18,915 which are performing according to the terms of their agreement, of which $ 11,610 and $ 11,508 are loans in Chapter 7 bankruptcy status, primarily where all borrowers have filed, and have not reaffirmed or been dismissed.

At March 31, 2024 and September 30, 2023, real estate loans include $ 10,483 and $ 9,144 , respectively, of loans that were in the process of foreclosure.

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

2 unchanged sentences

Cash payments on loans in non-accrual status are applied to the oldest scheduled, unpaid payment first.

The amount of interest income recognized on non-accrual loans was $ 162 for both the three months ended December 31, 2023 and December 31, 2022.

The amount of interest income recognized on non-accrual loans was $ 162 and $ 324 for the three and six months ended March 31, 2024, and $ 196 and $ 359 for the three and six months ended March 31, 2023.

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

2 unchanged sentences

ALLOWANCE FOR CREDIT LOSSES

For all classes of loans, a loan is considered collateral-dependent when, based on current information and events, the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the sale of the collateral or foreclosure is probable.

Factors considered in determining that a loan is collateral-dependent may include the deteriorating financial condition of the borrower indicated by missed or delinquent payments, a pending legal action, such as bankruptcy or foreclosure, or the absence of adequate security for the loan.

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

The allowance is estimated at each reporting date 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 period with an immediate reversion to historical mean loss rates for the remaining life of the loans.

The Company adopted ASU 2022-02 on October 1, 2023, which eliminated the accounting for TDRs.

As such, at March 31, 2024, there was no allowance for individually reviewed TDRs (IVAs), based on the present value of cash flows, as compared to September 30, 2023, when there was $ 9,546 .

Effective with this adoption, losses on loans with modifications to borrowers experiencing financial difficulties, previously identified as TDRs, will be estimated as described above, in the same manner as loans that have not been subject to such modifications.

Historical credit loss experience provides the basis for the estimation of expected credit losses.

Qualitative adjustments to historical loss information are made for differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, delinquency status or likely recovery of previous loan charge-offs.

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

Identifiable model limitations may also lead to qualitative adjustments, 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 March 31, 2024, was a reduction to the allowance for

credit losses of $ 6,598 , compared to a reduction of $ 13,425 at September 30, 2023.

During the fiscal year, a portion of the loss estimate that had previously been measured qualitatively was reclassified to the model-driven quantitative estimate due to enhancements in the accessibility of certain data.

Adjustments are evaluated quarterly based on current facts and circumstances.

Partial or full charge-offs are recognized for the amount of credit losses on loans when the borrower is experiencing financial difficulty as described by meeting the conditions below.

8 unchanged sentences

Charge-offs on residential mortgage loans, home equity loans and lines of credit, and construction loans are also recognized when triggering events, such as foreclosure actions, short sales, or deeds accepted in lieu of repayment, result in less than full repayment of the amortized cost in the loans.

Collateral-dependent residential mortgage loans and construction loans are charged-off to the extent the amortized cost in the loan, net of anticipated mortgage insurance claims, exceeds the fair value, less estimated costs to dispose of the underlying property.

3 unchanged sentences

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

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

The allowance is estimated at each reporting date 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 period with an immediate reversion to historical mean loss rates for the remaining life of the loans.

The Company adopted ASU 2022-02 on October 1, 2023, which eliminated the accounting for TDRs.

As such, at December 31, 2023, there was no allowance for individually reviewed TDRs (IVAs), based on the present value of cash flows, as compared to September 30, 2023, when there was $ 9,546 .

Historical credit loss experience provides the basis for the estimation of expected credit losses.

The net qualitative adjustment at December 31, 2023, was a reduction to the allowance for credit losses of $ 7,419 compared to a reduction of $13,425 at September 30, 2023.

During the quarter, a portion of the loss estimate that had previously been measured qualitatively was reclassed to the model-driven quantitative estimate due to enhancements in the accessibility of certain data.

Adjustments are evaluated quarterly based on current facts and circumstances.

Activity in the allowance for credit losses by portfolio segment is summarized as follows.

LOAN COMMITMENTS AND CONTINGENT LIABILITIES for further details on the allowance for unfunded commitments.

For the Three Months Ended December 31, 2023

For the Three Months Ended March 31, 2024

Balance Provisions (Releases) Charge-offs Recoveries Ending

Real estate loans:

Residential Core $ 49,389 $ ( 1,851 ) $ ( 37 ) $ 213 $ 47,714

Residential Home Today ( 2,814 ) ( 303 ) — 493 ( 2,624 )

Home equity loans and lines of credit 22,436 ( 20 ) ( 204 ) 786 22,998

Construction 73 8 — — 81

Total real estate loans $ 69,084 $ ( 2,166 ) $ ( 241 ) $ 1,492 $ 68,169

Total Unfunded Loan Commitments (1)

$ 25,491 $ 1,166 $ — $ — $ 26,657

Total Allowance for Credit Losses $ 94,575 $ ( 1,000 ) $ ( 241 ) $ 1,492 $ 94,826

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

For the Three Months Ended March 31, 2023

Balance Provisions (Releases) Charge-offs Recoveries Ending

Real estate loans:

Residential Core $ 54,498 $ ( 924 ) $ ( 92 ) $ 290 $ 53,772

Residential Home Today ( 985 ) ( 738 ) ( 71 ) 582 ( 1,212 )

Home equity loans and lines of credit 20,583 154 ( 431 ) 926 21,232

Construction 381 ( 35 ) — — 346

Total real estate loans $ 74,477 $ ( 1,543 ) $ ( 594 ) $ 1,798 $ 74,138

Total Unfunded Loan Commitments (1)

$ 26,110 $ 543 $ — $ — $ 26,653

Total Allowance for Credit Losses $ 100,587 $ ( 1,000 ) $ ( 594 ) $ 1,798 $ 100,791

For the Six Months Ended March 31, 2024

Balance Adoption of ASU 2022-02

9 unchanged sentences

Total Allowance for Credit Losses $ 104,830 $ ( 10,262 ) $ ( 2,000 ) $ ( 751 ) $ 3,009 $ 94,826

For the Three Months Ended December 31, 2022

For the Six Months Ended March 31, 2023

Balance Provisions (Releases) Charge-offs Recoveries Ending

20 unchanged sentences

2024 2023 2022 2021 2020 Prior Total

December 31, 2023

March 31, 2024

Real estate loans:

47 unchanged sentences

The following table provides information on the gross charge-offs of residential loan receivables for the period presented.

There were no gross charge-offs in the construction loan portfolio for the period presented and t here were no gross charge-offs in the non-revolving portfolios with origination years between 2020 and 2024 for the period presented .

For the Three Months Ended December 31, 2023

Origination year prior to fiscal 2020

Revolving Loans Amortized Cost Basis Revolving Loans Converted to Term Loans

There were no gross charge-offs in the construction loan portfolio for the period presented.

For the Six Months Ended March 31, 2024

Revolving Loans Amortized Cost Basis Revolving Loans Converted to Term

By fiscal year of origination

2024 2023 2022 2021 2020 Prior Total

Real estate loans:

2 unchanged sentences

Residential Home Today (1)

— — — — — 30 — — 30

Home equity loans and lines of credit

2 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 three months ended December 31, 2023 and December 31, 2022 totaled $ 1,135 and $ 396 , 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 ten years in 2016.

The home equity lines of credit converted from revolving to term loans during the three and six months ended March 31, 2024 totaled $ 1,208 and $ 2,294 and during the three and six months ended March 31, 2023, totaled $ 562 and $ 938 , respectively.

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

2 unchanged sentences

Substandard loans are inadequately protected by the current payment capacity of the borrower or the collateral pledged with a defined weakness that jeopardizes the liquidation of the debt.

Also included in Substandard are performing home equity loans and lines of credit where the customer has a severely delinquent first mortgage to which the performing home equity loan or line of credit is subordinate and all loans in Chapter 7 bankruptcy status where all borrowers have filed,

and have not reaffirmed or been dismissed.

Also included in Substandard are performing home equity loans and lines of credit where the customer has a severely delinquent first mortgage to which the performing

home equity loan or line of credit is subordinate and all loans in Chapter 7 bankruptcy status where all borrowers have filed, and have not reaffirmed or been dismissed.

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

1 unchanged sentence

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

At December 31, 2023 and September 30, 2023, no other loans were graded as non-performing.

At March 31, 2024 and September 30, 2023, no other loans were graded as non-performing.

MODIFICATIONS TO BORROWERS EXPERIENCING FINANCIAL DIFFICULTY

3 unchanged sentences

To mitigate losses, the Company works with borrowers who are experiencing financial difficulty to identify solutions the borrowers can afford by entering into agreements to modify their loans.

These efforts often result in modifications to the payment terms of the loan, which vary by situation and may include interest rate reductions, term extensions, significant payment delays, other, or a combination thereof.

These efforts often result in modifications to the payment terms of the loan, which vary by situation and may include interest rate reductions, term extensions (generally including capitalization of delinquent amounts), significant payment delays, other, or a combination thereof.

The Company does not generally offer principal forgiveness as a type of modification.

The Other category includes loans that were modified multiple times during the period with different concessions.

If a borrower is experiencing an income curtailment that temporarily has reduced their capacity to repay, such as loss of employment, reduction of work hours, non-paid leave or short-term disability, a temporary modification is considered.

3 unchanged sentences

In evaluating the need for a subsequent modification, the borrower’s ability to repay is generally assessed utilizing a debt-to-income and cash flow analysis.

The following table represents the amortized cost of modifications by type during the period presented.

For the three months ended December 31, 2023, there were no modifications made on construction loans.

For the Three Months Ended December 31, 2023

The following table represents the amortized cost of modifications by type during the periods presented.

For the three and six months ended March 31, 2024, there were no modifications made on construction loans.

For the Three Months Ended March 31, 2024

Interest Rate Reduction

7 unchanged sentences

Total $ — $ 253 $ 2,785 $ 807 $ 502 $ 4,347 0.03 %

The following table presents the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty for the three months ended December 31, 2023.

For the Three Months Ended December 31, 2023

For the Six Months Ended March 31, 2024

Interest Rate Reduction

Term Extension

Weighted-Average Contractual Interest Rate

Significant Payment Delay

Combination-Rate Reduction & Term Extension

% of Total Class

Residential Core $ — $ 349 $ 2,390 $ 826 $ 477 $ 4,042 0.03 %

Residential Home Today — 48 196 187 — 431 1.00

Home equity loans and lines of credit — 18 731 135 25 909 0.03

Total $ — $ 415 $ 3,317 $ 1,148 $ 502 $ 5,382 0.04 %

The following table presents the financial effects of the loan modifications presented above to borrowers experiencing financial difficulty for the three and six months ended March 31, 2024.

For the Three Months Ended March 31, 2024

Interest Rate Reduction

Term Extension

Weighted-Average Contractual

Interest Rate

Weighted-Average Years Added to Life

2 unchanged sentences

Home equity loans and lines of credit 7.49 % 2.00 % 3.8

For the Six Months Ended March 31, 2024

Interest Rate Reduction

Term Extension

Weighted-Average Contractual

Interest Rate

Weighted-Average Years Added to Life

Residential Core 3.97 % 2.07 % 11.7

Residential Home Today 3.58 % 2.00 % 16.6

Home equity loans and lines of credit 5.36 % 2.95 % 11.7

The performance of loans made to borrowers experiencing financial difficulty in which modifications were made is closely monitored by the Company to understand the effectiveness of modification efforts.

Modifications made to borrowers experiencing financial difficulty that become 90 days or more past due under the modified terms are considered subsequently defaulted.

There were no modifications that had subsequently defaulted for the three months ending December 31, 2023.

The following table presents the performance by loan type for loans modified to borrowers experiencing financial difficulty, on or after October 1, 2023, the date of which the Company adopted ASU 2022-02, through December 31, 2023.

The loans in delinquency status consisted of only significant payment delays, which are still reported delinquent even after modification.

December 31, 2023 30-59

The table below summarizes information about modifications that had subsequently defaulted for the three and six months ending March 31, 2024.

No Residential Core or Home Today loans modified since October 1, 2023, the date of which the Company adopted ASU 2022-02, have subsequently defaulted during the periods presented.

For the Three Months Ended March 31, 2024

Interest Rate Reduction

Term Extension

Significant Payment Delay

Other Capitalize and Extend Combination-Rate Reduction & Term Extension

Home equity loans and lines of credit $ — $ — $ 208 $ — $ — $ — $ 208

Total $ — $ — $ 208 $ — $ — $ — $ 208

For the Six Months Ended March 31, 2024

Interest Rate Reduction

Term Extension

Significant Payment Delay

Other Capitalize and Extend Combination-Rate Reduction & Term Extension Total

Home equity loans and lines of credit $ — $ — $ 208 $ — $ — $ — $ 208

Total $ — $ — $ 208 $ — $ — $ — $ 208

The loans in delinquency status primarily consisted of significant payment delays, which are still reported delinquent even after modification.

March 31, 2024 30-59

Past Due 60-89

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TROUBLED DEBT RESTRUCTURINGS PRIOR TO THE ADOPTION OF ASU 2022-02

Prior to the adoption of ASU 2022-02, initial concessions granted for loans restructured as TDRs include reduction of interest rate, extension of amortization period, capitalization of delinquent amounts, forbearance or other actions.

Prior to the adoption of ASU 2022-02 on October 1, 2023, initial concessions granted for loans restructured as TDRs 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.

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The following table sets forth the amortized cost in TDRs restructured during the period presented.

For all loans modified during the three months ended December 31, 2022, the pre-modified outstanding amortized cost was not materially different from the post-modified outstanding amortized cost.

For the Three Months Ended December 31, 2022

For all loans modified during the three and six months ended March 31, 2023, the pre-modified outstanding amortized cost was not materially different from the post-modified outstanding amortized cost.

For the Three Months Ended March 31, 2023

Initial Restructuring Multiple

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Total $ 846 $ 799 $ 293 $ 1,938

For the Six Months Ended March 31, 2023

Initial Restructuring Multiple

Restructurings Bankruptcy Total

Residential Core $ 2,030 $ 981 $ 626 $ 3,637

Residential Home Today 182 365 29 576

Home equity loans and lines of credit 406 74 — 480

Total $ 2,618 $ 1,420 $ 655 $ 4,693

The table below summarizes information about TDRs restructured within 12 months of the period presented for which there was a subsequent payment default, at least 30 days past due on one scheduled payment, during the period presented.

For the Three Months Ended December 31, 2022

For the Three Months Ended March 31, 2023

TDRs That Subsequently Defaulted Number of Contracts

4 unchanged sentences

Total 6 $ 345

For the Six Months Ended March 31, 2023

TDRs That Subsequently Defaulted Number of Contracts

Amortized Cost

Residential Core 2 $ 214

Residential Home Today 4 100

Home equity loans and lines of credit 1 58

Total 7 $ 372

Deposit account balances are summarized as follows:

7 unchanged sentences

Total deposits $ 9,935,631 $ 9,449,820

The aggregate amount of CDs in denominations of more than $250 was $ 975,375 and $ 845,375 at December 31, 2023, and September 30, 2023, respectively.

The aggregate amount of CDs in denominations of more than $250 was $ 1,106,203 and $ 845,375 at March 31, 2024 and September 30, 2023, respectively.

In accordance with the DFA, the maximum amount of federal deposit insurance is $250 per depositor for each account ownership category.

Brokered CDs (exclusive of acquisition costs and subsequent amortization), which are used as a cost effective funding alternative, totaled $ 1,485,226 and $ 1,162,601 at December 31, 2023 and September 30, 2023, respectively, of which $875,000 and $665,000 were aligned with interest rate swaps discussed in Note 13.

Brokered CDs (exclusive of acquisition costs and subsequent amortization), which are used as a cost effective funding alternative, totaled $ 1,261,663 and $ 1,162,601 at March 31, 2024 and September 30, 2023, respectively, of which $725,000 and $665,000 were aligned with interest rate swaps discussed in Note 13.

DERIVATIVE INSTRUMENTS .

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

As a well-capitalized institution at December 31, 2023 and September 30, 2023, the Association may accept brokered deposits without FDIC restrictions.

As a well capitalized institution at March 31, 2024 and September 30, 2023, the Association may accept brokered deposits without FDIC restrictions.

BORROWED FUNDS

At December 31, 2023, the Association had a maximum borrowing capacity of $8,041,072, of which $5,030,561 was outstanding.

At March 31, 2024, the Association had a maximum borrowing capacity of $8,085,306, of which $4,955,438 was outstanding.

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

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

Total borrowings at December 31, 2023 are summarized in the table below:

Total borrowings at March 31, 2024, are summarized in the table below:

Borrowing Capacity Borrowings Available Borrowings Outstanding

5 unchanged sentences

Total Borrowings $ 4,955,438

Maturities of borrowings at December 31, 2023 are summarized in the table below.

Maturities of borrowings at March 31, 2024, are summarized in the table below:

Amount Weighted

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

For the three month periods ended December 31, 2023 and December 31, 2022, net interest expense related to short-term borrowings was $ 32,973 and $ 38,636 , respectively.

For the three and six months ended March 31, 2024 and March 31, 2023, net interest expense related to short-term borrowings was $ 23,067 and $ 56,040 , and $ 28,677 and $ 53,275 , respectively.

OTHER COMPREHENSIVE INCOME (LOSS)

1 unchanged sentence

For the Three Months Ended For the Three Months Ended

December 31, 2023 December 31, 2022

March 31, 2024 March 31, 2023

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

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Balance at end of period $ ( 32,107 ) $ 83,044 $ ( 8,519 ) $ 42,418 $ ( 31,687 ) $ 47,831 $ ( 11,443 ) $ 4,701

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

For the Six Months Ended For the Six Months Ended

March 31, 2024 March 31, 2023

Balance at beginning of period $ ( 41,173 ) $ 135,532 $ ( 9,147 ) $ 85,212 $ ( 33,899 ) $ 68,883 $ ( 11,835 ) $ 23,149

Other comprehensive income (loss) before reclassifications, net of tax expense (benefit) of $( 2,286 ) and $( 1,020 )

9,066 ( 17,188 ) 418 ( 7,704 ) 2,212 ( 6,217 ) — ( 4,005 )

Amounts reclassified, net of tax expense (benefit) of $( 10,419 ) and $( 4,222 )

— ( 35,300 ) 210 ( 35,090 ) — ( 14,835 ) 392 ( 14,443 )

Other comprehensive income (loss) 9,066 ( 52,488 ) 628 ( 42,794 ) 2,212 ( 21,052 ) 392 ( 18,448 )

Balance at end of period $ ( 32,107 ) $ 83,044 $ ( 8,519 ) $ 42,418 $ ( 31,687 ) $ 47,831 $ ( 11,443 ) $ 4,701

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

Amounts Reclassified from Accumulated

Other Comprehensive Income Amounts Reclassified from Accumulated

Other Comprehensive Income

Details about Accumulated Other Comprehensive Income Components For the Three Months Ended December 31, Line Item in the Consolidated Statements of Income

Details about Accumulated Other Comprehensive Income Components For the Three Months Ended March 31, For the Six Months Ended March 31, Line Item in the Consolidated Statements of Income

2024 2023 2024 2023

Cash flow hedges:

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federal jurisdiction and in various state and city jurisdictions.

The Company’s combined federal and state effective income tax rate was 20.8 % and 21.1 % for the three months ended December 31, 2023 and December 31, 2022, respectively.

The Company is no longer subject to income tax examinations in its major jurisdictions for tax years prior to 2020.

The Company’s combined federal and state effective income tax rate was 20.4 % and 20.9 % for the six months ended March 31, 2024 and March 31, 2023, respectively.

The Company is no longer subject to income tax examinations in its major jurisdictions for tax years ended prior to 2020.

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

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

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

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

over the operating or financial policies of the partnership.

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

The impact of the Company's investments in tax credit entities on the provision for income taxes was not material during the three months ended December 31, 2023 and December 31, 2022.

The impact of the Company's investments in tax credit entities on the provision for income taxes was not material during the six months ended March 31, 2024 and March 31, 2023.

DEFINED BENEFIT PLAN

7 unchanged sentences

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

For the Three Months Ended

For the Three Months Ended For the Six Months Ended

March 31, March 31,

2024 2023 2024 2023

Interest cost $ 826 $ 831 $ 1,653 $ 1,662

2 unchanged sentences

Net periodic (benefit) cost $ ( 32 ) $ 118 $ ( 64 ) $ 236

There were no required minimum employer contributions during the three months ended December 31, 2023.

There were no required minimum employer contributions during the six months ended March 31, 2024.

There are no required minimum employer contributions expected during the remainder of the fiscal year ending September 30, 2024.

EQUITY INCENTIVE PLAN

During the three months ended December 31, 2023, performance share units granted in December 2021 were reduced by 2,655 units, according to the targeted performance formula.

During the quarter ended March 31, 2024, 231,750 restricted stock units, 61,000 performance share units, and 247,200 stock options were granted to directors, officers and certain managers of the Company.

During the six months ended March 31, 2024, performance share units granted in December 2021 were reduced by 2,655 units, according to the targeted performance formula.

The awards were made pursuant to the Amended and Restated 2008 Equity Incentive Plan, which was approved at the annual meeting of shareholders held on February 22, 2018.

The following table presents share-based compensation expense recognized during the periods presented:

There was no stock option expense for either period presented.

For the Three Months Ended

For the Three Months Ended For the Six Months Ended

March 31, March 31,

2024 2023 2024 2023

Stock option expense $ 23 $ — $ 23 $ —

Restricted stock units expense 963 807 1,632 1,748

1 unchanged sentence

Total stock-based compensation expense $ 1,171 $ 1,068 $ 2,086 $ 2,219

At December 31, 2023, 1,991,975 shares were subject to vested options, with a weighted average exercise price of $ 15.69 per share and a weighted average grant date fair value of $ 2.42 per share.

At December 31, 2023, 142,770 restricted stock units and 152,445 performance share units with a weighted average grant date fair value of $ 15.09 and $ 15.05 per unit, respectively, are unvested.

Expected future compensation expense, relating to the 908,518 restricted stock units and 152,445 performance share units outstanding as of December 31, 2023, is $ 1,937 over a weighted average period of 2.7 years and $ 1,009 over a weighted average period of 1.7 years, respectively.

At March 31, 2024, 2,231,475 shares were subject to options, with a weighted average exercise price of $ 15.39 per share and a weighted average grant date fair value of $ 2.29 per share.

Expected future expense, relating to the 247,200 non-vested options outstanding as of March 31, 2024, is $ 279 over a weighted average period of 2.6 years.

At March 31, 2024, 374,491 restricted stock units and 213,445 performance share units with a weighted average grant date fair value of $ 13.78 and $ 14.45 per unit, respectively, are unvested.

Expected future compensation expense, relating to the 1,140,239 restricted stock units and 213,445 performance share units, outstanding as of March 31, 2024, is $ 3,979 over a weighted average period of 2.3 years and $ 1,455 over a weighted average period of 2.0 years, respectively.

Each unit is equivalent to one share of common stock.

3 unchanged sentences

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 obligations, adequacy of collateral securing the line and maintenance of a satisfactory credit profile by the borrower.

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

Since some of the commitments may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.

6 unchanged sentences

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

At December 31, 2023, the Company had commitments to originate or purchase loans and related allowances as follows:

At March 31, 2024, the Company had commitments to originate or purchase loans and related allowances as follows:

Commitment Allowance

3 unchanged sentences

Total $ 277,725 $ 3,104

At December 31, 2023, the Company had unfunded commitments outstanding and related allowances as follows:

At March 31, 2024, the Company had unfunded commitments outstanding and related allowances as follows:

Commitment Allowance

2 unchanged sentences

Total $ 4,928,693 $ 23,553

At December 31, 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, was $ 4,785,036 .

At December 31, 2023 and September 30, 2023, the Company had $ 5,991 and $ 2,094 , respectively, in commitments to sell mortgage loans.

At December 31, 2023 and September 30, 2023, the Company had $ 6,357 and $ 51,275 , respectively, in commitments to purchase mortgage loans, which are included in mortgage loan commitments above.

At March 31, 2024, 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, was $ 4,944,702 .

At March 31, 2024 and September 30, 2023, the Company had $ 49,352 and $ 2,094 , respectively, in commitments to sell mortgage loans.

At March 31, 2024 and September 30, 2023, the Company had $ 10,183 and $ 51,275 , 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 the states of Ohio, Kentucky and Florida.

Any potential loss, or range of loss, that may result from this matter is not reasonably estimable at December 31, 2023.

Any potential loss, or range of loss, that may result from this matter is not reasonably estimable at March 31, 2024.

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

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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 December 31, 2023 and September 30, 2023, there were no pending agency contracts held for sale.

During the three months ended December 31, 2023 and December 31, 2022, there was no change in fair value related to loans held for sale that were subject to pending agency contracts.

At March 31, 2024 and September 30, 2023, there were $ 6,038 and $ 0 loans held for sale, respectively, with unpaid principal balances of $ 5,917 and $ 0 , in pending agency contracts for which the fair value was elected.

Changes in fair value on loans held for sale subject to pending agency contracts are included in the net gain on sale of loans, which included a net gain of $ 68 and $ 0 for both three and six months ended March 31, 2024 and March 31, 2023.

Presented below is a discussion of the methods and significant assumptions used by the Company to estimate fair value.

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

At December 31, 2023 and September 30, 2023, this includes $ 525,175 and $ 508,324 , respectively, of investments in U.S.

At March 31, 2024 and September 30, 2023, this includes $ 520,172 and $ 508,324 , respectively, of investments in U.S.

government and agency obligations including U.S.

3 unchanged sentences

Mortgage Loans Held for Sale— The fair value of mortgage loans held for sale is estimated on an aggregate basis using a market approach based on quoted secondary market pricing for loan portfolios with similar characteristics.

Loans held for sale

are carried at the lower of cost or fair value except, as described above, the Company elects the fair value measurement option for mortgage loans held for sale subject to pending agency contracts to securitize and sell loans.

Loans held for sale are carried at the lower of cost or fair value except, as described above, the Company elects the fair value measurement option for mortgage loans held for sale subject to pending agency contracts to securitize and sell loans.

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

At December 31, 2023 and September 30, 2023, there were $ 0 and $ 3,260 , respectively, of loans held for sale measured at fair value.

At December 31, 2023 and September 30, 2023, there were $ 1,095 and $ 0 , respectively, of loans held for sale carried at cost.

At March 31, 2024 and September 30, 2023, there were $ 9,698 and $ 3,260 , respectively, of loans held for sale measured at fair value.

At March 31, 2024 and September 30, 2023, there were $ 0 of 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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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.

The carrying amounts of real estate owned at December 31, 2023 and September 30, 2023, were $ 1,070 and $ 1,444 , respectively.

The carrying amounts of real estate owned at March 31, 2024 and September 30, 2023, were $ 230 and $ 1,444 , respectively.

Fair value is estimated under the market approach using independent third party appraisals.

As these properties are actively marketed, estimated fair values may be adjusted by management to reflect current economic and market conditions.

At December 31, 2023 and September 30, 2023, these adjustments were not significant to reported fair values.

At December 31, 2023 and September 30, 2023, $ 795 and $ 1,413 , respectively, 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 $ 64 and $ 163 , respectively.

Real estate owned includes $ 339 and $ 194 of properties carried at their original or adjusted cost basis at December 31, 2023 and September 30, 2023, 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.

At March 31, 2024 and September 30, 2023, these adjustments were not significant to reported fair values.

At March 31, 2024 and September 30, 2023, $ 250 and $ 1,413 , respectively, 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 $ 20 and

$ 163 , respectively.

Real estate owned includes $ 0 and $ 194 of properties carried at their original or adjusted cost basis at March 31, 2024 and September 30, 2023, respectively.

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

Derivatives not designated as cash flow hedges are reported at fair value in Other assets or Other liabilities on the CONSOLIDATED STATEMENTS OF CONDITION with changes in value recorded in current earnings.

7 unchanged sentences

Forward commitments on contracts to deliver mortgage loans are included in Level 2 of the hierarchy.

Assets and liabilities carried at fair value on a recurring basis in the CONSOLIDATED STATEMENTS OF CONDITION at December 31, 2023 and September 30, 2023, are summarized below.

Assets and liabilities carried at fair value on a recurring basis in the CONSOLIDATED STATEMENTS OF CONDITION at March 31, 2024 and September 30, 2023, are summarized below.

Recurring Fair Value Measurements at Reporting Date Using

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Investment securities available for sale:

REMICs $ 451,088 $ — $ 451,088 $ —

$ 446,150 $ — $ 446,150 $ —

Fannie Mae certificates

Freddie Mac securities

1,090 — 1,090 —

government and agency obligations

72,063 — 72,063 —

Mortgage loans held for sale 6,038 — 6,038 —

Interest rate lock commitments 358 — — 358

Total $ 525,230 $ — $ 525,175 $ 55

$ 526,568 $ — $ 526,210 $ 358

Forward commitments for the sale of mortgage loans 140 — 140 —

Total $ 115 $ — $ 115 $ —

$ 140 $ — $ 140 $ —

Recurring Fair Value Measurements at Reporting Date Using

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

Three Months Ended December 31,

Three Months Ended March 31, Six Months Ended March 31,

2024 2023 2024 2023

Beginning balance $ 55 $ ( 29 ) $ ( 1 ) $ ( 333 )

11 unchanged sentences

Collateral-dependent loans, net of allowance $ 39,109 $ — $ — $ 39,109

Mortgage loans held for sale 3,661 — 3,661 —

Real estate owned (1)

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The interest rate lock commitments include mortgage origination applications.

December 31, 2023 Valuation Technique(s) Unobservable Input Range Weighted Average

March 31, 2024 Valuation Technique(s) Unobservable Input Range Weighted Average

Collateral-dependent loans, net of allowance $ 39,109 Market comparables of collateral discounted to estimated net proceeds Discount appraised value to estimated net proceeds based on historical experience:

6 unchanged sentences

The following tables present the estimated fair value of the Company’s financial instruments and their carrying amounts as reported in the CONSOLIDATED STATEMENTS OF CONDITION .

December 31, 2023

March 31, 2024

Carrying Fair Level 1 Level 2 Level 3

Cash and due from banks

$ 27,381 $ 27,381 $ 27,381 $ — $ —

Interest-earning cash equivalents

566,953 566,953 566,953 — —

Investment securities available for sale 520,172 520,172 — 520,172 —

Mortgage loans held for sale

9,698 9,698 — 9,698 —

Mortgage loans held for investment 15,144,910 13,819,240 — — 13,819,240

Other loans 4,709 4,709 — — 4,709

Federal Home Loan Bank stock 254,700 254,700 N/A — —

Federal Home Loan Bank stock

240,365 240,365 N/A — —

Accrued interest receivable

56,887 56,887 — 56,887 —

Cash collateral received from or held by counterparty 6,656 6,656 6,656 — —

1 unchanged sentence

Checking and passbook accounts

$ 2,397,359 $ 2,397,359 $ — $ 2,397,359 $ —

Certificates of deposit

7,538,272 7,434,048 — 7,434,048 —

Borrowed funds

4,955,438 4,959,926 — 4,959,926 —

Borrowers’ advances for insurance and taxes

99,492 99,492 — 99,492 —

Principal, interest and escrow owed on loans serviced 25,946 25,946 — 25,946 —

3 unchanged sentences

Cash and due from banks

$ 29,134 $ 29,134 $ 29,134 $ — $ —

Interest-earning cash equivalents

437,612 437,612 437,612 — —

Investment securities available for sale 508,324 508,324 — 508,324 —

Mortgage loans held for sale

3,260 3,260 — 3,260 —

Mortgage loans held for investment 15,161,336 13,262,711 — — 13,262,711

Other loans 4,411 4,411 — — 4,411

Federal Home Loan Bank stock 247,098 247,098 N/A — —

Federal Home Loan Bank stock

247,098 247,098 N/A — —

Accrued interest receivable

53,910 53,910 — 53,910 —

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

1 unchanged sentence

Checking and passbook accounts

$ 2,790,476 $ 2,790,476 $ — $ 2,790,476 $ —

Certificates of deposit

6,659,344 6,571,674 — 6,571,674 —

Borrowed funds

5,273,637 5,256,278 — 5,256,278 —

Borrowers’ advances for insurance and taxes

124,417 124,417 — 124,417 —

Principal, interest and escrow owed on loans serviced 29,811 29,811 — 29,811 —

7 unchanged sentences

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

All derivative positions were initially, and continue to be, highly effective at December 31, 2023.

All derivative positions were initially, and continue to be, highly effective at March 31, 2024.

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.

2 unchanged sentences

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

In addition, the Company is party to derivative instruments when it enters into interest rate lock commitments to originate a portion of its loans, which when funded, are classified as held for sale.

In addition, the Company is party to derivative instruments when it enters into interest rate lock commitments to originate or purchase a portion of its loans, which when funded, are classified as held for sale.

Such commitments are not designated in a hedging relationship;

1 unchanged sentence

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.

December 31, 2023

March 31, 2024

Weighted Average

16 unchanged sentences

Interest rate swaps $ 3,815,000 $ — 3.7 2.91 %

December 31, 2023 September 30, 2023

March 31, 2024 September 30, 2023

Notional Value Fair Value Notional Value Fair Value

8 unchanged sentences

The following tables present the net gains and losses recorded within the CONSOLIDATED STATEMENTS OF INCOME and the CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME relating to derivative instruments.

Three Months Ended

Location of Gain or (Loss) December 31,

Three Months Ended Six Months Ended

Location of Gain or (Loss) March 31, March 31,

Recognized in Income 2024 2023 2024 2023

3 unchanged sentences

Borrowed funds and Deposits

23,435 12,551 45,783 19,175

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 ( 25 ) ( 76 ) ( 151 ) ( 76 )

The Company estimates that $ 66,228 of the amounts reported in AOCI will be reclassified as a reduction to interest expense during the twelve months ending December 31, 2024.

The Company estimates that $ 66,586 of the amounts reported in AOCI will be reclassified as a reduction to interest expense during the twelve months ending March 31, 2025.

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.

The Company's exposure is limited to the replacement value of the

contracts rather than the notional or principal amounts.

The Company's exposure is limited to the replacement value of the contracts rather than the notional or principal amounts.

Credit risk is minimized through counterparty margin payments, transaction limits and monitoring procedures.

2 unchanged sentences

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

At December 31, 2023 and September 30, 2023, there was $ 9,595 and $ 24,887 , respectively, of cash collateral included in other assets, and $ 68,257 and $ 59,813 , respectively, included in investment securities related to initial margin requirements that are held by the central clearing organization.

At March 31, 2024 and September 30, 2023, there was $ 6,656 and $ 24,887 , respectively, of cash collateral included in other assets, and $ 68,335 and $ 59,813 , 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.

1 unchanged sentence

RECENT ACCOUNTING PRONOUNCEMENTS

Adopted as of December 31, 2023

Adopted as of March 31, 2024

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

7 unchanged sentences

LOANS AND ALLOWANCES FOR CREDIT LOSSES .

Issued but not yet adopted as of December 31, 2023

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280) .

The amendments in this update improve disclosures about a public entity's reportable segments and addresses request from investors and other allocators of capital for additional information about a reportable segment's expenses.

While the Company only has one reportable segment, the update requires public entities with a single segment to provide all segment disclosures under ASC 280.

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

Retrospective application is required for all prior periods presented in the financial statements.

We are currently evaluating this ASU to determine its impact on the Company’s disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) .

The ASU requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income tax paid.

The update is effective for fiscal years beginning after December 15, 2024.

We are currently evaluating the impact of the ASU on our income tax disclosures within the consolidated financial statements.

Issued but not yet adopted as of March 31, 2024

The Company has determined that the accounting pronouncements issued since the last filing for the quarter ended December 31, 2023, will not have a material impact on the Company's consolidated financial statements or do not apply to its operations.

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

What changed 10-Q

Item 1. Financial Statements