49 unchanged sentences
“Love, Trust, Respect, and a Commitment to Excellence, along with Having Fun.” Our values are reflected in the design and pricing of our loan and deposit products, as described below.
−Removed: Our values are further reflected in a long-term revitalization program encompassing the three-mile corridor of the Broadway-Slavic Village neighborhood in Cleveland, Ohio where our main office was established and continues to be located and where the educational programs we have established and/or support are located.
+Added: Our values are further reflected in a long-term revitalization program encompassing the three-mile corridor of the Broadway-Slavic Village neighborhood in Cleveland, Ohio where our main office was established and continues to be located and where the educational programs we have established
+Added: and/or support are located.
We intend to continue to adhere to our primary values and to support our customers and the communities in which we operate as we pursue our mission to help people achieve the dream of home ownership and financial security while creating value for our customers, our communities, our associates and our shareholders.
9 unchanged sentences
Additional details on our capital ratios are reported in the Liquidity and Capital Resources section of this Item 2.
−Removed: The Company maintains high-quality core deposits characterized by a high level of FDIC insured deposit accounts distributed primarily across our Ohio and Florida branch network in products tailored toward consumers seeking non-transactional savings.
−Removed: As of March 31, 2024, 96.1% of our $8.68 billion retail deposit base consists of accounts structured under the FDIC insured limit of $250,000.
+Added: The Company maintains high-quality core deposits distributed primarily across our Ohio and Florida branch network in products tailored toward consumers seeking non-transactional savings.
+Added: As of June 30, 2024, 96.2% of our $8.81 billion retail deposit base consists of accounts structured under the FDIC insured limit of $250,000.
The Company has the ability to fund 100% of all uninsured deposit balances through sources described later in this Item 2 under the heading Liquidity and Capital Resources .
The Company retains ample and diverse sources of liquidity and funding, beyond deposits.
−Removed: At March 31, 2024, our combined additional borrowing capacity under the Association's blanket pledge arrangements with the FHLB of Cincinnati and the FRB Cleveland along with our ability to purchase Fed Funds through arrangements with other institutions exceeded $3.15 billion.
+Added: At June 30, 2024, our combined additional borrowing capacity under the Association's blanket pledge arrangements with the FHLB of Cincinnati and the FRB Cleveland along with our ability to purchase Fed Funds through arrangements with other institutions totaled $3.77 billion.
We also hold marketable securities that could be sold and converted to cash.
3 unchanged sentences
The program is supported by a multi-line of defense approach in which internal oversight functions of risk management and internal audit grant their fully autonomous opinion of the process with an ability to issue findings for remediation if deemed necessary.
−Removed: The program is also regularly exposed to outside scrutiny in the form of regulatory oversight and from our outside audit firm.
−Removed: Management established the risk
−Removed: management framework with an appropriate level of sophistication such that it fully encapsulates all identified areas of risk, in conjunction with a necessary level of governance, to promote the program’s intention of properly identifying and managing our risk profile.
+Added: The program is also regularly exposed to additional scrutiny in the form of regulatory oversight and from our external audit firm.
+Added: Management established the risk management framework with an appropriate level of sophistication such that it fully encapsulates all identified areas of risk, in conjunction with a necessary level of governance, to promote the program’s intention of properly identifying and managing our risk profile.
Management believes that the following matters are those most critical to our success:
4 unchanged sentences
Controlling Our Interest Rate Risk Exposure.
−Removed: Historically, our greatest risk has been our exposure to changes in interest rates.
+Added: Historically, our greatest risk has been our exposure to changes in market interest rates.
When we hold longer-term, fixed-rate assets, funded by liabilities with shorter-term re-pricing characteristics, we are exposed to potentially adverse impacts from changing interest rates, and most notably rising interest rates.
1 unchanged sentence
This difference has been an important component of our net interest income and is fundamental to our operations.
−Removed: A challenge to our business model occurs when there is a rapid and substantial increase in short-term rates or there is an extended inverted yield curve, which have both occurred over recent periods.
−Removed: This economic environment has resulted in decreases in our net interest income and our net interest margin.
+Added: A challenge to our business model occurs when there is a rapid and substantial increase in short-term rates or there is an extended inverted yield curve where short-term rates exceed long-term rates, both of which have occurred over recent periods.
+Added: Conversely, rapid and substantial decreases in short-term rates can also pose a challenge when interest rates on our ELOC portfolio, indexed to the prime rate, reprice more quickly than interest rates on borrowings and certificate of deposit accounts which generally reprice at maturity.
+Added: These economic environments may result in decreases in our net interest income and our net interest margin.
To mitigate our interest rate risk in general and to address the current rate environment specifically, we utilize a variety of strategies that include:
6 unchanged sentences
Levels of Regulatory Capital
−Removed: At March 31, 2024, the Company’s Tier 1 (leverage) capital totaled $1.84 billion, or 10.72% of net average assets and 19.05% of risk-weighted assets, while the Association’s Tier 1 (leverage) capital totaled $1.68 billion, or 9.79% of net average assets and 17.40% of risk-weighted assets.
−Removed: Each of these measures is in excess of the requirements in effect for the Association at March 31, 2024, for designation as “well capitalized” under regulatory prompt corrective action provisions.
+Added: At June 30, 2024, the Company’s Tier 1 (leverage) capital totaled $1.85 billion, or 10.82%, of net average assets and 18.82% of risk-weighted assets, while the Association’s Tier 1 (leverage) capital totaled $1.70 billion, or 9.96%, of net average assets and 17.33% of risk-weighted assets.
+Added: Each of these measures is in excess of the requirements in effect for the Association at June 30, 2024, for designation as “well capitalized” under regulatory prompt corrective action provisions.
Beginning this fiscal year, the Company entered into the final two years of the five-year transitional period, as provided by a final rule, after CECL was adopted in fiscal year 2021.
12 unchanged sentences
The following tables set forth our first mortgage loan production and balances segregated by loan structure at origination:
−Removed: For the Six Months Ended March 31, 2024 For the Six Months Ended March 31, 2023
+Added: For the Nine Months Ended June 30, 2024 For the Nine Months Ended June 30, 2023
Amount Percent Amount Percent
4 unchanged sentences
Terms less than or equal to 10 years 5,166 0.9 27,582 2.1
−Removed: 3,729 0.9 19,695 2.4
Terms greater than 10 years 464,808 77.6 816,929 62.3
−Removed: 305,335 74.7 496,477 60.4
Total fixed-rate production 469,974 78.5 844,511 64.4
−Removed: 309,064 75.6 516,172 62.8
Total First Mortgage Loan Originations and Purchases $ 598,726 100.0 % $ 1,311,474 100.0 %
−Removed: $ 408,842 100.0 % $ 821,854 100.0 %
−Removed: March 31, 2024 September 30, 2023
+Added: June 30, 2024 September 30, 2023
Amount Percent Amount Percent
4 unchanged sentences
Terms less than or equal to 10 years 898,679 7.8 1,088,048 9.0
−Removed: 960,293 8.1 1,088,048 9.0
Terms greater than 10 years 6,191,479 53.4 6,275,775 51.8
−Removed: 6,232,998 52.8 6,275,775 51.8
Total fixed-rate loans 7,090,158 61.2 7,363,823 60.8
−Removed: 7,193,291 60.9 7,363,823 60.8
Total First Mortgage Loans Held For Investment $ 11,587,911 100.0 % $ 12,124,666 100.0 %
−Removed: The following table sets forth the balances as of March 31, 2024, for all ARM loans segregated by the next scheduled interest rate reset date:
+Added: The following table sets forth the balances as of June 30, 2024, for all ARM loans segregated by the next scheduled interest rate reset date:
Current Balance of ARM Loans Scheduled for Interest Rate Reset
4 unchanged sentences
Total $ 4,497,753
−Removed: At March 31, 2024 and September 30, 2023, mortgage loans held for sale, all of which were long-term, fixed-rate first mortgage loans and all of which were held for sale to Fannie Mae, totaled $9.7 million and $3.3 million, respectively.
+Added: At June 30, 2024 and September 30, 2023, mortgage loans held for sale, all of which were long-term, fixed-rate first mortgage loans and all of which were held for sale to Fannie Mae, totaled $30.4 million and $3.3 million, respectively.
Loan Portfolio Yield
−Removed: The following tables set forth the principal balance and interest yield as of March 31, 2024, for the portfolio of loans held for investment, by type of loan, structure and geographic location:
−Removed: March 31, 2024
+Added: The following tables set forth the principal balance and interest yield as of June 30, 2024, for the portfolio of loans held for investment, by type of loan, structure and geographic location:
+Added: June 30, 2024
Balance Percent Yield
8 unchanged sentences
Total Loans Receivable $ 15,208,831 100.0 % 4.52 %
−Removed: March 31, 2024
+Added: June 30, 2024
Balance Fixed Rate Balance Fixed Rate Percent
17 unchanged sentences
We strive to grow the home equity line of credit portfolio through offering competitive rates, marketing efforts and by utilizing partners to attract more home equity line of credit customers.
−Removed: At March 31, 2024, the principal balance of home equity lines of credit (including those in repayment) that are structured to reset with each prime rate adjustment totaled $2.90 billion.
+Added: At June 30, 2024, the principal balance of home equity lines of credit (including those in repayment) that are structured to reset with each prime rate adjustment totaled $3.11 billion.
Our home equity lending is discussed in the Lending Activities section of this Item 2.
1 unchanged sentence
As a complement to our strategies to shorten the duration of our interest-earning assets, as described above, we also seek to lengthen the duration of our interest-bearing funding sources.
−Removed: These efforts include monitoring the relative costs of alternative funding sources such as retail certificates of deposit, brokered certificates of deposit, and shorter-term (e.g.
−Removed: three months) funding, the durations of which are extended by correlated interest rate exchange contracts ("swap").
−Removed: Funding sources
−Removed: are discussed in more detail within this Item 2 in the sections entitled Maintaining Access to Adequate Liquidity and Diverse Funding Sources to Support our Growth and Liquidity and Capital Resources.
+Added: These efforts include monitoring the relative costs of alternative funding sources such as retail certificates of deposit, brokered certificates of deposit, longer-term (e.g.
+Added: four to six years) fixed-rate advances from the FHLB of Cincinnati, and shorter-term (e.g.
+Added: one or three months) funding, the durations of which are extended by correlated interest rate exchange contracts ("swap").
+Added: Funding sources are discussed in more detail within this Item 2 in the sections entitled Maintaining Access to Adequate Liquidity and Diverse Funding Sources to Support our Growth and Liquidity and Capital Resources.
All of our swaps are subject to collateral pledges and require specific structural features to qualify for hedge accounting treatment.
22 unchanged sentences
Additionally, collateral pledges are not provided with respect to our retail CDs or our brokered CDs, but are required for our advances from the FHLB of Cincinnati as well as for our interest rate exchange contracts.
−Removed: We will continue to evaluate the structure of our funding sources based on current needs.
+Added: We will continue to evaluate the structure of our funding sources balancing the need to extend duration and manage cost.
Selling Fixed Rate Loans in the Secondary Market
We also manage interest rate risk by selectively selling a portion of our long-term, fixed-rate mortgage loans in the secondary market.
−Removed: First mortgage loans (primarily fixed-rate mortgages with terms of 15 years or more, Home Ready and some loans purchased through our correspondent lending partner) are originated under Fannie Mae procedures and are eligible for sale to Fannie Mae either as whole loans or within mortgage-backed securities.
+Added: First mortgage loans (primarily fixed-rate mortgages with terms of 15 years or more, Home Ready and some loans purchased through our correspondent lending partner) are originated under Fannie Mae guidelines and are eligible for sale to Fannie Mae either as whole loans or within mortgage-backed securities.
Currently, certain types of loans (i.e.
−Removed: our Smart Rate adjustable-rate loans, 10-year fixed-rate loans, and first mortgage loans secured by certain property types) are originated under our legacy procedures, which are not eligible for sale to Fannie Mae.
+Added: our Smart Rate adjustable-rate loans, 10-year fixed-rate loans, and first mortgage loans secured by certain property types) are originated under our internally derived underwriting standards, which are not eligible for sale to Fannie Mae.
We can also manage interest rate risk by selling non-Fannie Mae compliant mortgage loans to private investors, although those transactions may be limited to loans that have established payment histories, strong borrower credit profiles and are supported by adequate collateral.
Additionally, sales to private investors are dependent upon favorable market conditions, including motivated buyers, and involve more complicated negotiations and longer settlement timelines.
−Removed: During the six months ended March 31, 2024, $121.3 million of agency-compliant, long-term (15 to 30 years), fixed-rate mortgage loans were sold, or committed to be sold, to Fannie Mae on a servicing retained basis.
+Added: During the nine months ended June 30, 2024, $190.7 million of agency-compliant, long-term (15 to 30 years), fixed-rate mortgage loans were sold, or committed to be sold, to Fannie Mae on a servicing retained basis.
Of these sold loans, $5.3 million were originated through our traditional mortgage banking brand, known as "Mortgage Passport", and $185.4 million were originated or purchased as other agency-compliant first mortgage loans.
−Removed: At March 31, 2024, loans classified as held for sale totaled $9.7 million.
−Removed: At March 31, 2024, we serviced $1.95 billion of loans we originated and later sold to investors.
+Added: At June 30, 2024, loans classified as held for sale totaled $30.4 million.
+Added: At June 30, 2024, we serviced $1.96 billion of loans we originated and later sold to investors.
We continue to consider liquidity and balance sheet management, as well as secondary market pricing, in evaluating the opportunity to sell loans.
−Removed: Additionally, we've expanded our ability to sell certain fixed-rate loans to Fannie through the use of more traditional mortgage banking activities, including a proprietary approach to risk-based pricing and loan-level pricing adjustments in markets outside of Ohio and Florida.
+Added: Additionally, we've expanded our ability to sell certain fixed-rate loans to Fannie Mae through the use of more traditional mortgage banking activities, including a proprietary approach to risk-based pricing and loan-level pricing adjustments in markets outside of Ohio and Florida.
This approach is not expected to significantly impact our financial results in fiscal year 2024.
1 unchanged sentence
Monitoring and Limiting Our Credit Risk.
−Removed: While, historically, we had been successful in limiting our credit risk exposure by generally imposing high credit standards with respect to lending, the memory of the 2008 housing market collapse
−Removed: and financial crisis is a constant reminder to focus on credit risk.
+Added: While, historically, we had been successful in limiting our credit risk exposure by generally imposing high credit standards with respect to lending, the memory of the 2008 housing market collapse and financial crisis is a constant reminder to focus on credit risk.
In response to the evolving economic landscape, we continuously revise and update our quarterly analysis and evaluation procedures, as needed, for each category of our lending with the objective of identifying and recognizing all appropriate credit losses.
−Removed: At March 31, 2024, 89% of our assets consisted of residential real estate loans (both “held for sale” and “held for investment”) and home equity loans and lines of credit.
+Added: At June 30, 2024, 89% of our assets consisted of residential real estate loans (both “held for sale” and “held for investment”) and home equity loans and lines of credit.
Our analytic procedures and evaluations include specific reviews of all home equity loans and lines of credit that become 90 or more days past due, as well as specific reviews of all first mortgage loans that become 180 or more days past due.
6 unchanged sentences
Our current delinquency levels reflect the higher credit standards to which we subject all new originations.
−Removed: As of March 31, 2024, loans originated or purchased had a balance of $15.23 billion, of which $28.3 million, or 0.2%, were delinquent.
+Added: As of June 30, 2024, loans originated or purchased had a balance of $15.29 billion, of which $28.5 million, or 0.2%, were delinquent.
One aspect of our credit risk concern relates to high concentrations of our loans that are secured by residential real estate in specific states, particularly Ohio and Florida, where a large portion of our historical lending has occurred.
−Removed: At March 31, 2024, approximately 57.6% and 17.6% of the combined total of our residential Core and construction loans held for investment and approximately 24.8% and 22.9% of our home equity loans and lines of credit were secured by properties in Ohio and Florida, respectively.
+Added: At June 30, 2024,
+Added: approximately 57.9% and 17.4% of the combined total of our residential Core and construction loans held for investment and approximately 24.1% and 22.8% of our home equity loans and lines of credit were secured by properties in Ohio and Florida, respectively.
In an effort to moderate the concentration of our credit risk exposure in individual states, we have utilized direct mail marketing, our internet site and our customer service call center to extend our lending activities to other attractive geographic locations.
Currently, in addition to Ohio and Florida, we are actively lending in 24 other states and the District of Columbia, and as a result of that activity, the concentration ratios of the combined total of our residential Core and construction loans held for investment in Ohio and Florida have trended downward from their September 30, 2010, levels when the concentrations were 79.1% in Ohio and 19.0% in Florida.
−Removed: Of the total mortgage loans originated in the six months ended March 31, 2024, 22.0% are secured by properties in states other than Ohio or Florida.
+Added: Of the total mortgage loans originated in the nine months ended June 30, 2024, 20.4% are secured by properties in states other than Ohio or Florida.
Maintaining Access to Adequate Liquidity and Diverse Funding Sources to Support our Growth.
1 unchanged sentence
We believe that a well capitalized institution is one of the most important factors in nurturing customer and community confidence.
−Removed: At March 31, 2024, the Association’s ratio of Tier 1 (leverage) capital to net average assets (a basic industry measure that deems 5.00% or above to represent a “well capitalized” status) was 9.79%.
+Added: At June 30, 2024, the Association’s ratio of Tier 1 (leverage) capital to net average assets (a basic industry measure that deems 5.00% or above to represent a “well capitalized” status) was 9.96%.
We expect to continue to remain a well capitalized institution.
2 unchanged sentences
To attract deposits, we typically offer rates that are competitive with the rates on similar products offered by other financial institutions.
−Removed: At March 31, 2024, deposits totaled $9.94 billion (including $1.26 billion of brokered CDs), while borrowings totaled $4.96 billion and borrowers’ advances and servicing escrows totaled $125.4 million, combined.
+Added: At June 30, 2024, deposits totaled $10.03 billion (including $1.22 billion of brokered CDs), while borrowings totaled $4.83 billion and borrowers’ advances and servicing escrows totaled $83.6 million, combined.
In evaluating funding sources, we consider many factors, including cost, collateral, duration and optionality, current availability, expected sustainability, impact on operations and capital levels.
−Removed: We preserve the availability of alternative funding sources through various mechanisms.
−Removed: Effectively, this permits us to increase the rates that we offer on our deposit products thereby attracting more potential customers.
+Added: While our retail deposit customers provide our primary source of funding, we maintain many alternative funding sources.
First, we pledge available real estate mortgage loans with the FHLB of Cincinnati and the FRB-Cleveland.
−Removed: At March 31, 2024, the Association had the ability to borrow a maximum of $6.82 billion from the FHLB of Cincinnati and $693.2 million from the FRB-Cleveland Discount Window.
−Removed: As of March 31, 2024, our capacity for additional borrowing from the FHLB of Cincinnati was $1.88 billion.
+Added: At June 30, 2024, the Association had the ability to borrow a maximum of $7.48 billion from the FHLB of Cincinnati and $646.0 million from the FRB-Cleveland Discount Window.
+Added: As of June 30, 2024, our capacity for additional borrowing from the FHLB of Cincinnati was $2.68 billion.
Second, we have the ability to purchase overnight Fed Funds up to $445.0 million through various arrangements with other institutions.
Third, we invest in high quality marketable securities that exhibit limited market price variability and, to the extent that they are not needed as collateral for borrowings, can be sold in the institutional market and converted to cash.
−Removed: At March 31, 2024, our investment securities portfolio totaled $520.2 million.
+Added: At June 30, 2024, our investment securities portfolio totaled $523.0 million.
Finally, cash flows from operating activities have been a regular source of funds.
−Removed: During the six months ended March 31, 2024 and 2023, cash flows from operations provided $50.5 million and $43.1 million, respectively.
+Added: During the nine months ended June 30, 2024 and 2023, cash flows from operations provided $147.3 million and $76.9 million, respectively.
Overall, while customer and community confidence can never be assured, the Company believes that its liquidity is adequate and that it has access to adequate alternative funding sources.
1 unchanged sentence
We continue to focus on managing operating expenses.
−Removed: We've successfully been able to reduce our operating expenses to offset the pressure of margin compression resulting from the extended inverted yield curve.
−Removed: Our ratio of annualized non-interest expense to average assets was 1.20% for the six months ended March 31, 2024, and 1.36% for the six months ended March 31, 2023.
−Removed: As of March 31, 2024, our average assets per full-time employee and our average deposits per full-time employee were $18.1 million and $10.6 million, respectively.
+Added: We have successfully been able to reduce our operating expenses to offset the pressure of margin compression resulting from the extended inverted yield curve.
+Added: Our ratio of annualized non-interest expense to average assets was 1.20% for the nine months ended June 30, 2024, and 1.34% for the nine months ended June 30, 2023.
+Added: As of June 30, 2024, our average assets per full-time employee and our average deposits per full-time employee were $18.5 million and $10.9 million, respectively.
We believe that each of these measures compares favorably with industry averages.
−Removed: Our relatively high average deposits (exclusive of brokered CDs) held at our branch offices ($234.4 million per branch office as of March 31, 2024) contributes to our expense management efforts by limiting the overhead costs of serving our customers.
+Added: Our relatively high average deposits (exclusive of brokered CDs) held at our branch offices ($238.1 million per branch office as of June 30, 2024) contributes to our expense management efforts by limiting the overhead costs of serving our customers.
We will continue our efforts to control operating expenses to help safeguard against margin compression.
17 unchanged sentences
For example, delinquency statistics (both current and historical) are used in developing the quantitative GVAs while the trending of the delinquency statistics is considered and evaluated in the determination of the qualitative GVAs.
−Removed: Factors impacting the determination of qualitative GVAs include:
+Added: Factors impacting the determination of qualitative GVAs include, among other:
• changes in lending policies and procedures including underwriting standards, collection, charge-off or recovery practices;
16 unchanged sentences
In general, a considerable portion of our gross charge-offs originate from our home equity loans and lines of credit portfolios.
−Removed: At March 31, 2024, we had an amortized cost of $3.36 billion in home equity loans and home equity lines of credit outstanding, of which $4.5 million, or 0.13% were delinquent 90 days or more.
+Added: At June 30, 2024, we had an amortized cost of $3.63 billion in home equity loans and home equity lines of credit outstanding, of which $4.4 million, or 0.12%, were delinquent 90 days or more.
The allowance for credit losses is evaluated based upon the combined total of the quantitative and qualitative GVAs.
3 unchanged sentences
The majority of our Residential Core and Home Today loan portfolios are secured by properties located in Ohio, and therefore were not segregated by state.
−Removed: For the Three Months Ended March 31, For the Six Months Ended March 31,
+Added: For the Three Months Ended June 30, For the Nine Months Ended June 30,
2024 2023 2024 2023
18 unchanged sentences
Home equity loans and lines of credit 487 1,194 1,943 3,200
+Added: Construction 20 — 20 —
Total recoveries 1,629 1,855 4,638 5,738
4 unchanged sentences
Allowance balance for credit losses on unfunded commitments (beginning of the period) $ 26,657 $ 26,653 $ 27,515 $ 27,021
−Removed: Provision (release) for credit losses on unfunded loan commitments
+Added: Provision for credit losses on unfunded loan commitments
1,506 1,099 648 731
4 unchanged sentences
The following table sets forth additional information with respect to net recoveries by category for the periods indicated.
−Removed: For the Three Months Ended March 31, For the Six Months Ended March 31,
+Added: Net recoveries on Construction loans were immaterial and therefore were not included in the table below.
+Added: For the Three Months Ended June 30, For the Nine Months Ended June 30,
2024 2023 2024 2023
11 unchanged sentences
Recoveries are recognized on previously charged-off loans as borrowers perform their repayment obligations or as loans with improved collateral positions reach final resolution.
−Removed: During the six months ended March 31, 2024 and March 31, 2023, recoveries exceeded loan charge-offs by $2.3 million and $2.9 million, respectively.
−Removed: During the six months ended March 31, 2024, total gross charge-offs decreased slightly compared to the six months ended March 31, 2023.
+Added: During the nine months ended June 30, 2024 and June 30, 2023, recoveries exceeded loan charge-offs by $3.6 million and $4.6 million, respectively.
+Added: During the nine months ended June 30, 2024, total gross charge-offs decreased slightly compared to the nine months ended June 30, 2023.
Delinquent loans continue to be evaluated for potential losses and provisions are recorded for the estimate of potential losses of those loans.
Subject to changes in the economic environment, a moderate level of charge-offs are expected as delinquent loans are resolved in the future and uncollected balances are charged against the allowance.
−Removed: During the three months ended March 31, 2024, the total allowance for credit losses increased to $94.8 million, from $94.6 million at December 31, 2023.
+Added: During the three months ended June 30, 2024, the total allowance for credit losses increased to $95.7 million, from $94.8 million at March 31, 2024.
The total allowance for credit losses is comprised of the asset portion, which is applied to the loan portfolio and the liability portion, which is applied to off-balance sheet exposures, primarily related to undrawn equity exposures.
−Removed: During the three months ended March 31, 2024, the asset portion of the total allowance decreased to $68.2 million from $69.1 million, and the liability portion of the total allowance increased to $26.7 million from $25.5 million.
+Added: During the three months ended June 30, 2024, the asset portion of the total allowance decreased to $67.5 million from $68.2 million, and the liability portion of the total allowance increased to $28.2 million from $26.7 million.
We recorded a $0.5 million net release of allowance for credit losses for the period, consisting of a $2.0 million release of provision on loans and a $1.5 million provision for unfunded commitments.
Because many variables are considered in determining the appropriate level of general valuation allowances, directional changes in individual considerations do not always align with the directional change in the balance of a particular component of the general valuation allowance.
−Removed: Changes in the allowance for credit losses on loan balances during the three months ended March 31, 2024, were primarily related to new growth in the home equity loans and lines of credit portfolio, partially offset by a decrease in the residential Core portfolio balance primarily due to aging.
−Removed: The amortized cost of the residential Core portfolio decreased 1.5%, or $179.4 million, and its total allowance decreased 3.4% or $1.7 million as of March 31, 2024, compared to December 31, 2023.
−Removed: The amortized cost of the home equity loans and lines of credit portfolio increased 3.8%, or $122.6 million, and its total allowance increased 2.5% to $23.0 million from $22.4 million at December 31, 2023.
−Removed: As we are no longer originating loans under our Home Today program, there is an expected net recovery position for this portfolio which was $2.6 million at March 31, 2024, and $2.8 million at December 31, 2023.
+Added: Changes in the allowance for credit losses on loan balances during the three months ended June 30, 2024, were related to a decrease in the residential Core portfolio balance primarily due to aging and decreases in qualitative factors, partially offset by new growth in the home equity loans and lines of credit portfolio.
+Added: The amortized cost of the residential Core portfolio decreased 1.9%, or $225.8 million, and its total allowance decreased 5.2%, or $2.5 million, as of June 30, 2024, compared to March 31, 2024.
+Added: The amortized cost of the home equity loans and lines of credit portfolio increased 8.1%, or $271.2 million, and its total allowance increased 10.3% to $25.4 million, from $23.0 million at March 31, 2024.
+Added: As we are no longer originating loans under our Home Today program, there is an expected net recovery position for this portfolio which was $3.1 million at June 30, 2024, and $2.6 million at March 31, 2024.
Under the CECL methodology, the life of loan concept allows for qualitative adjustments for the expected future recoveries of previously charged-off loans, which is driving the allowance balance for the Home Today loans to be negative.
4 unchanged sentences
The tables do not include allowances for credit losses on unfunded loan commitments, which are primarily related to undrawn home equity lines of credit.
−Removed: March 31, 2024 September 30, 2023
+Added: June 30, 2024 September 30, 2023
Amount Percent of
15 unchanged sentences
Therefore, neither was segregated by geographic location.
−Removed: March 31, 2024 September 30, 2023
+Added: June 30, 2024 September 30, 2023
Amount Percent Amount Percent
23 unchanged sentences
Total loans receivable, net $ 15,189,962 $ 15,165,747
−Removed: The following table provides the amortized cost and an analysis of our residential mortgage loans disaggregated by refreshed FICO score, year of origination and portfolio at March 31, 2024.
+Added: The following table provides the amortized cost and an analysis of our residential mortgage loans disaggregated by refreshed FICO score, year of origination and portfolio at June 30, 2024.
The Company treats the FICO score information as demonstrating that underwriting guidelines reduce risk rather than as a credit quality indicator utilized in the evaluation of credit risk.
3 unchanged sentences
(Dollars in thousands)
−Removed: March 31, 2024
+Added: June 30, 2024
Real estate loans:
23 unchanged sentences
(1) Data necessary for stratification is not readily available.
−Removed: (2) No new originations of Home Today loans since fiscal 2016.
−Removed: The following table provides amortized cost and an analysis of our residential mortgage loans by origination LTV, origination year and portfolio at March 31, 2024.
−Removed: LTVs are not updated subsequent to origination except as part of the charge-off process.
+Added: (2) No new originations of Home Today loans since fiscal year 2016.
+Added: The following table provides amortized cost and an analysis of our residential mortgage loans by origination LTV, origination year and portfolio at June 30, 2024.
+Added: Subsequent to origination, LTVs are only updated for our home equity loans and lines of credit and for residential mortgage loans collaterally reviewed.
Revolving Loans Amortized Cost Basis Revolving Loans Converted to Term
2 unchanged sentences
(Dollars in thousands)
−Removed: March 31, 2024
+Added: June 30, 2024
Real estate loans:
23 unchanged sentences
(1) Market data necessary for stratification is not readily available.
−Removed: (2) No new originations of Home Today loans since fiscal 2016.
−Removed: At March 31, 2024, the unpaid principal balance of the home equity loans and lines of credit portfolio consisted of $478.6 million in home equity loans (including $60.8 million of home equity lines of credit, which are in repayment and no longer eligible to be drawn upon, and $12.4 million in bridge loans) and $2.84 billion in home equity lines of credit.
−Removed: The following table sets forth credit exposure, principal balance, percent delinquent 90 days or more, the mean CLTV percent at the time of origination and the current mean CLTV percent of home equity loans, home equity lines of credit and bridge loan portfolio as of March 31, 2024.
+Added: (2) No new originations of Home Today loans since fiscal year 2016.
+Added: At June 30, 2024, the unpaid principal balance of the home equity loans and lines of credit portfolio consisted of $537.5 million in home equity loans (including $59.9 million of home equity lines of credit, which are in repayment and no longer eligible to be drawn upon, and $11.3 million in bridge loans) and $3.05 billion in home equity lines of credit.
+Added: The following table sets forth credit exposure, principal balance, percent delinquent 90 days or more, the mean CLTV percent at the time of origination and the current mean CLTV percent of home equity loans, home equity lines of credit and bridge loan portfolio as of June 30, 2024.
Home equity lines of credit in the draw period are reported according to geographic distribution.
16 unchanged sentences
(2) Mean CLTV percent at origination for all home equity lines of credit is based on the committed amount.
−Removed: (3) Current Mean CLTV is based on best available first mortgage and property values as of March 31, 2024.
+Added: (3) Current Mean CLTV is based on best available first mortgage and property values as of June 30, 2024.
Property values are estimated using HPI data published by the FHFA.
1 unchanged sentence
Current Mean CLTV on home equity lines of credit in the repayment period is calculated using the principal balance.
−Removed: The principal balance of home equity lines of credit in the draw period that have a current mean CLTV over 80% or unknown is $25.4 million, or 0.9% at March 31, 2024 .
+Added: The principal balance of home equity lines of credit in the draw period that have a current mean CLTV over 80% or unknown is $16.4 million, or 0.5%, at June 30, 2024 .
In recognition of the previous past weakness in the housing market, we continue to conduct an expanded loan level evaluation of our home equity lines of credit which are delinquent 90 days or more.
−Removed: At March 31, 2024, 28.5% of the home equity lending portfolio was either in a first lien position (14.7%), in a subordinate (second) lien position behind a first lien that we held (11.5%) or behind a first lien that was held by a loan that we originated, sold and now serviced for others (2.3%).
−Removed: At March 31, 2024, 12.6% of the home equity line of credit portfolio in the draw period were making only the minimum payment on the outstanding line balance.
+Added: At June 30, 2024, 26.8% of the home equity lending portfolio was either in a first lien position (13.8%), in a subordinate (second) lien position behind a first lien that we held (10.8%) or behind a first lien that was held by a loan that we originated, sold and now serviced for others (2.2%).
+Added: At June 30, 2024, 12.5% of the home equity line of credit portfolio in the draw period were making only the minimum payment on the outstanding line balance.
Minimum payments include both a principal and interest component.
4 unchanged sentences
Loans Delinquent for
−Removed: March 31, 2024 30-89 Days 90 Days or More Total
+Added: June 30, 2024 30-89 Days 90 Days or More Total
Real estate loans:
31 unchanged sentences
Total loans seriously delinquent (i.e.
−Removed: delinquent 90 days or more) were 0.09% of total net loans at March 31, 2024 and at September 30, 2023.
−Removed: The percentage of loans seriously delinquent to total net loans increased in the residential Core portfolio to 0.06% at March 31, 2024, from 0.05% at September 30, 2023.
+Added: delinquent 90 days or more) were 0.10% of total net loans at June 30, 2024, and 0.09% at September 30, 2023.
+Added: The percentage of loans seriously delinquent to total net loans increased in the residential Core portfolio to 0.06% at June 30, 2024, from 0.05% at September 30, 2023.
Such loans in the residential Home Today portfolio remained at 0.01% for both periods.
−Removed: Serious delinquencies in the home equity loans and lines of credit portfolio remained at 0.03% at March 31, 2024 from September 30, 2023.
+Added: Serious delinquencies in the home equity loans and lines of credit portfolio remained at 0.03% for both periods.
Although delinquencies remain at or near historic lows, recent economic trends and rising interest rates have led to increased delinquencies in all portfolios.
2 unchanged sentences
The following table sets forth the amortized costs and categories of our non-performing assets at the dates indicated.
−Removed: There were no construction loans reported as non-accrual for the dates presented.
−Removed: 2024 September 30,
+Added: There were no construction loans reported as non-accrual at the dates presented.
+Added: June 30, 2024 September 30, 2023
(Dollars in thousands)
15 unchanged sentences
The table below sets forth a reconciliation of the amortized costs and categories between non-accrual loans and collateral-dependent loans at the dates indicated.
−Removed: 2024 September 30,
+Added: June 30, 2024 September 30, 2023
(Dollars in thousands)
7 unchanged sentences
LOANS AND ALLOWANCES FOR CREDIT LOSSES .
−Removed: Comparison of Financial Condition at March 31, 2024 and September 30, 2023
−Removed: Total assets increased $99.2 million, or 0.6%, to $17.02 billion at March 31, 2024, from $16.92 billion at September 30, 2023.
−Removed: This increase was mainly the result of an increase in cash and cash equivalents, partially offset by a decreases in loans held for investment, and prepaid expenses and other assets.
−Removed: Cash and cash equivalents increased $127.6 million, or 27.3%, to $594.3 million at March 31, 2024, from $466.7 million at September 30, 2023.
+Added: Comparison of Financial Condition at June 30, 2024 and September 30, 2023
+Added: Total assets increased $117.0 million, or 0.7%, to $17.03 billion at June 30, 2024, from $16.92 billion at September 30, 2023.
+Added: This increase was mainly the result of an increase in cash and cash equivalents and mortgage loans, partially offset by decreases in prepaid expenses and other assets.
+Added: Cash and cash equivalents increased $93.7 million, or 20.1%, to $560.4 million at June 30, 2024, from $466.7 million at September 30, 2023.
Cash is managed to maintain the level of liquidity described later in the Liquidity and Capital Resources section.
−Removed: Investment securities, all of which are classified as available for sale, increased $11.9 million to $520.2 million at March 31, 2024, from $508.3 million at September 30, 2023.
+Added: Investment securities, all of which are classified as available for sale, increased $14.7 million to $523.0 million at June 30, 2024, from $508.3 million at September 30, 2023.
The increase was the result of a $5.8 million increase in the mortgage-backed securities portfolio, and an $8.9 million increase in the balance of U.S.
−Removed: government and agency obligations during the six months ended March 31, 2024.
−Removed: There were no sales of investment securities during the six months ended March 31, 2024.
−Removed: Loans held for investment, net of deferred loan fees and allowance for credit losses, decreased $16.1 million, or less than 1%, to $15.15 billion at March 31, 2024, from $15.17 billion at September 30, 2023, as repayments and sales of mortgage loans held for investment outpaced originations and additional draws on existing accounts.
−Removed: This decrease included a $310.2 million, or 2.6%, decrease in residential mortgage loans to $11.81 billion at March 31, 2024, from $12.12 billion at September 30, 2023.
−Removed: In addition, there was a $289.1 million increase in the balance of home equity loans and lines of credit during the six months ended March 31, 2024.
−Removed: During the six months ended March 31, 2024, $99.8 million of three- and five-year “Smart Rate” loans were originated while $309.1 million of fixed-rate first mortgage loans were originated.
−Removed: Between September 30, 2023 and March 31, 2024, the total fixed-rate portion of the first mortgage loan portfolio decreased $170.5 million.
−Removed: During the six months ended March 31, 2024, $121.3 million of first mortgage loans were sold or committed to sell to Fannie Mae.
−Removed: Commitments originated for home equity loans, lines of credit, and bridge loans were $915.4 million for the six months ended March 31, 2024, compared to $720.0 million for the six months months ended March 31, 2023.
−Removed: At March 31, 2024, pending commitments to originate new equity loans and lines of credit were $202.9 million.
+Added: government and agency obligations during the nine months ended June 30, 2024.
+Added: There were no sales of investment securities during the nine months ended June 30, 2024.
+Added: Loans held for sale increased $27.1 million, or 821%, to $30.4 million at June 30, 2024 from $3.3 million at September 30, 2023 due to an increase in both loans committed to forward sales and loans identified for future sale.
+Added: Loans held for investment, net of deferred loan fees and allowance for credit losses, increased $24.2 million, or less than 1%, to $15.19 billion at June 30, 2024, from $15.17 billion at September 30, 2023, as loans originated and purchased and additional draws on existing home equity lines of credit accounts outpaced repayments and sales of mortgage loans held for investment.
+Added: There was a $558.3 million increase in home equity loans and lines of credit during the nine months ended June 30, 2024.
+Added: In addition, there was a $536.8 million, or 4.4%, decrease in residential mortgage loans to $11.59 billion at June 30, 2024, from $12.12 billion at September 30, 2023.
+Added: During the nine months ended June 30, 2024, $128.8 million of three- and five-year “Smart Rate” loans were originated, while $470.0 million of fixed-rate first mortgage loans were originated.
+Added: Between September 30, 2023 and June 30, 2024, the total fixed-rate portion of the first mortgage loan portfolio decreased $273.6 million.
+Added: During the nine months ended June 30, 2024, the principal balance of first mortgage loans sold or committed for sale to Fannie Mae was $190.7 million.
+Added: Commitments originated for home equity loans, lines of credit, and bridge loans were $1.62 billion for the nine months ended June 30, 2024, compared to $1.24 billion for the nine months ended June 30, 2023.
+Added: At June 30, 2024, pending commitments to originate new home equity loans and lines of credit were $207.4 million.
Refer to the Controlling Our Interest Rate Risk Exposure section of the Overview for additional information.
−Removed: The allowance for credit losses was $94.8 million, or 0.63% of total loans receivable, at March 31, 2024, including a $26.7 million liability for unfunded commitments.
+Added: The allowance for credit losses was $95.7 million, or 0.63% of total loans receivable, at June 30, 2024, including a $28.2 million liability for unfunded commitments.
The allowance for credit losses was $104.8 million, or 0.69% of total loans receivable, at September 30, 2023, including a $27.5 million liability for unfunded commitments.
1 unchanged sentence
LOANS AND ALLOWANCES FOR CREDIT LOSSES of the NOTES TO CONSOLIDATED FINANCIAL STATEMENTS for additional discussion.
−Removed: The amount of FHLB stock owned decreased $6.7 million or 2.7% to $240.4 million at March 31, 2024, from $247.1 million at September 30, 2023.
−Removed: The decrease is a result of stock redemptions by the FHLB.
+Added: FHLB stock owned decreased $15.0 million, or 6.1%, to $232.1 million at June 30, 2024, from $247.1 million at September 30, 2023.
+Added: The decrease is a result of stock redemptions by the FHLB related to a decrease in the balance of FHLB advances, partially offset by stock acquired during the first quarter of fiscal year 2024.
FHLB collateral requirements on funds borrowed dictate the minimum amount of stock owned at any given time.
−Removed: Total bank owned life insurance contracts increased $1.4 million, to $313.5 million at March 31, 2024, from $312.1 million at September 30, 2023, due to changes in cash surrender value, offset by death benefits received.
−Removed: Other assets, including prepaid expenses, decreased $26.3 million to $91.0 million at March 31, 2024, from $117.3 million at September 30, 2023.
+Added: Total bank owned life insurance contracts increased $3.6 million, to $315.7 million at June 30, 2024, from $312.1 million at September 30, 2023, due to changes in cash surrender value, offset by death benefits received.
+Added: Other assets, including prepaid expenses, decreased $34.2 million to $83.1 million at June 30, 2024, from $117.3 million at September 30, 2023.
The decrease was primarily due to a $28.9 million decline in swap margin receivable.
−Removed: Deposits increased $485.8 million, or 5.1%, to $9.94 billion at March 31, 2024, from $9.45 billion at September 30, 2023.
−Removed: The increase in deposits resulted primarily from a $868.4 million increase in CDs, inclusive of brokered CDs, as current market interest rates, product development and marketing have attracted additional balances and new customers to our CDs.
−Removed: The change also included a $10.5 million increase in accrued interest payable.
+Added: Deposits increased $576.2 million, or 6.1%, to $10.03 billion at June 30, 2024, from $9.45 billion at September 30, 2023.
+Added: The increase in deposits resulted primarily from a $1.09 billion increase in CDs, inclusive of brokered CDs, as current market interest rates, product development and marketing have attracted additional balances and new CD customers.
+Added: The increase also included an $11.4 million increase in accrued interest payable.
The increase was partially offset by a $274.0 million decrease in savings accounts, a $138.1 million decrease in money market accounts, and a $118.0 million decrease in checking accounts.
−Removed: The balance of brokered CDs included in total deposits at March 31, 2024, increased by $99.1 million to $1.26 billion compared to a balance of $1.16 billion at September 30, 2023.
−Removed: Based on FDIC insurance limits by ownership structure, the total uninsured deposits were $335.9 million and $322.5 million at March 31, 2024 and September 30, 2023, respectively.
−Removed: Borrowed funds decreased $318.2 million, or 6.0%, to $4.96 billion at March 31, 2024, from $5.27 billion at September 30, 2023.
+Added: Brokered CDs, included in total deposits at June 30, 2024, increased $52.7 million to $1.21 billion, compared to a balance of $1.16 billion at September 30, 2023.
+Added: Based on FDIC insurance limits by ownership structure, uninsured deposits were $330.8 million and $322.5 million at June 30, 2024 and September 30, 2023, respectively.
+Added: Borrowed funds decreased $444.3 million, or 8.4%, to $4.83 billion at June 30, 2024, from $5.27 billion at September 30, 2023.
The decrease was primarily due to borrowings being replaced at maturity, when needed, by retail deposits.
−Removed: The total balance of borrowed funds at March 31, 2024, all from the FHLB, included $1.83 billion of term advances with a weighted average maturity of 2.2 years and $3.10 billion of short-term advances aligned with interest rate swap contracts.
+Added: The total balance of borrowed funds at June 30, 2024, all from the FHLB, included $1.81 billion of term advances with a weighted average maturity of 2.0 years and $3.00 billion of short-term advances aligned with interest rate swap contracts.
Interest rate swaps have been used to extend the duration of short-term borrowings, at inception, by paying a fixed rate of interest and receiving the variable rate.
Refer to the Extending the Duration of Funding Sources section of the Overview for additional discussion regarding short-term borrowings and interest-rate swaps.
−Removed: Borrowers' advances for insurance and taxes decreased by $24.9 million to $99.5 million at March 31, 2024, from $124.4 million at September 30, 2023.
+Added: Borrowers' advances for insurance and taxes decreased by $57.7 million to $66.8 million at June 30, 2024, from $124.4 million at September 30, 2023.
This change primarily reflects the cyclical nature of real estate tax payments that have been collected from borrowers and are in the process of being remitted to various taxing agencies.
−Removed: Accrued expenses and other liabilities decreased by $19.8 million to $93.1 million at March 31, 2024, from $112.9 million at September 30, 2023.
−Removed: The decrease is primarily due to a $10.8 million decrease in deferred income taxes, a $1.7 million decrease in bonus accruals, and a $4.1 million decrease in real estate tax payments remitted on behalf of borrowers.
−Removed: Total shareholders’ equity decreased $19.9 million, or 1.0%, to $1.91 billion at March 31, 2024, from $1.93 billion at September 30, 2023.
−Removed: Activity reflects $41.4 million of net income in the current year reduced by dividends of $29.4 million.
−Removed: Other changes include $42.8 million of net negative change in accumulated other comprehensive income, primarily related to changes in market values due to fluctuations in market interest rates and maturities of swap contracts, and a $7.9 increase related to a change in accounting principle, ASU 2022-02, net of tax.
−Removed: During the six months ended March 31, 2024, we did not
−Removed: repurchase shares of our common stock.
−Removed: The Company's eighth stock repurchase program allows for a total of 10,000,000 shares to be repurchased, with 5,191,951 shares remaining to be repurchased at March 31, 2024.
+Added: Accrued expenses and other liabilities increased by $68.0 million to $180.9 million at June 30, 2024, from $112.9 million at September 30, 2023.
+Added: The increase is primarily due to a $78.4 million increase in outstanding payables, primarily real estate tax payments, that had not yet cleared at the reporting date, partially offset by a $10.5 million decrease in net deferred income tax liability.
+Added: Total shareholders’ equity decreased $12.3 million, or 0.6%, to $1.92 billion at June 30, 2024, from $1.93 billion at September 30, 2023.
+Added: The decrease primarily reflects $61.4 million of net income in the current year reduced by dividends of $44.2 million.
+Added: Other changes include $42.6 million of net negative change in accumulated other comprehensive income,
+Added: primarily related to changes in market values due to fluctuations in market interest rates and maturities of swap contracts, and a $7.9 million increase related to a change in accounting principle, ASU 2022-02, net of tax.
+Added: During the nine months ended June 30, 2024, we did not repurchase shares of our common stock.
+Added: The Company's eighth stock repurchase program allows for a total of 10,000,000 shares to be repurchased, with 5,191,951 shares remaining to be repurchased at June 30, 2024.
As a result of a mutual member vote, Third Federal Savings and Loan Association of Cleveland, MHC (the "MHC"), the mutual holding company that owns approximately 80.9% of the outstanding stock of the Company, was able to waive its receipt of its share of the dividend paid.
1 unchanged sentence
Unregistered Sales of Equity Securities and Use of Proceeds for additional details regarding the repurchase of shares of common stock and the dividend waiver.
−Removed: Comparison of Operating Results for the Three Months Ended March 31, 2024 and 2023
+Added: Comparison of Operating Results for the Three Months Ended June 30, 2024 and 2023
Average Balances and Yields .
5 unchanged sentences
Three Months Ended Three Months Ended
−Removed: March 31, 2024 March 31, 2023
+Added: June 30, 2024 June 30, 2023
Balance Interest
46 unchanged sentences
(5) Net interest margin represents net interest income divided by total interest-earning assets.
−Removed: Net income increased $4.8 million, or 30%, to $20.7 million for the quarter ended March 31, 2024, from $15.9 million for the quarter ended March 31, 2023.
−Removed: The increase in net income was attributable primarily to an increase in net interest income and decreases related to compensation and marketing expenses.
+Added: Net income increased $2.4 million, or 14%, to $20.0 million for the quarter ended June 30, 2024, from $17.6 million for the quarter ended June 30, 2023.
+Added: The increase in net income was attributable primarily due to an increase in net interest income and decreases related to marketing and other operating expenses.
Interest and Dividend Income.
1 unchanged sentence
The increase in interest and dividend income was primarily the result of an increase in interest income on loans, as well as increases to income earned on mortgage-backed securities, FHLB stock, and other interest-bearing cash equivalents.
−Removed: Interest income on loans increased $26.2 million, or 19%, to $163.0 million during the current quarter compared to $136.8 million during the same quarter in the prior year.
−Removed: This change was primarily attributed to a 53 basis point increase in the average yield on loans for the quarter ended March 31, 2024, to 4.30%, compared to 3.77% the same quarter last year.
−Removed: It was also attributed to a 4%, or $645.4 million, increase in the average balance of loans to $15.16 billion for the quarter ended March 31, 2024, compared to $14.52 billion during the same quarter last year as new loan production exceeded principal repayments and loan sales over the past year.
+Added: Interest income on loans increased $22.0 million, or 15%, to $166.3 million during the current quarter, compared to $144.3 million for the same quarter in the prior year.
+Added: This change was primarily attributed to a 45 basis point increase in the average yield on loans for the quarter ended June 30, 2024, to 4.38%, compared to 3.93% the same quarter last year.
+Added: It was also attributed to a 3%, or $498.7 million, increase in the average balance of loans to $15.18 billion for the quarter ended June 30, 2024, compared to $14.68 billion during the same quarter last year as new loan production exceeded principal repayments and loan sales over the past year.
Interest Expense .
−Removed: Interest expense increased $33.8 million, or 43%, to $112.1 million during the current quarter compared to $78.3 million during the quarter ended March 31, 2023.
+Added: Interest expense increased $27.7 million, or 32%, to $115.6 million during the current quarter, compared to $87.9 million for the quarter ended June 30, 2023.
The increase primarily resulted from higher costs of certificates of deposit and borrowed funds.
−Removed: Interest expense on CDs, net of related interest rate swap contracts, increased $34.4 million, or 105%, to $67.0 million during the current quarter compared to $32.6 million during the quarter ended March 31, 2023.
+Added: Interest expense on CDs, net of related interest rate swap contracts, increased $31.0 million, or 78%, to $70.5 million during the current quarter, compared to $39.5 million for the quarter ended June 30, 2023.
The increase was attributed to a 107 basis point increase in the average rate paid on CDs to 3.68% for the current quarter, from 2.61% for the same quarter last year.
1 unchanged sentence
Interest rates on deposits generally increased in response to increases in market interest rates, as well as the higher rates paid by our competition.
−Removed: Interest expense on borrowed funds, net of related interest rate swap contracts, increased $1.0 million, or 3%, to $39.4 million during the current quarter compared to $38.4 million during the quarter ended March 31, 2023.
−Removed: This increase was mainly attributed to a 13 basis point increase in the average rate paid on these funds, to 3.13% for the current quarter from 3.00% for the same quarter last year.
+Added: Interest expense on borrowed funds, net of related interest rate swap contracts, increased $1.1 million, or 3%, to $40.1 million during the current quarter, compared to $39.0 million for the quarter ended June 30, 2023.
+Added: This increase was mainly attributed to a 27 basis point increase in the average rate paid on these funds to 3.28% for the current quarter, from 3.01% for the same period last year.
In addition, the average balance of borrowed funds decreased $283.4 million, or 5%, to $4.89 billion during the current quarter from an average balance of $5.18 billion during the same quarter of the prior year.
1 unchanged sentence
Net Interest Income.
−Removed: Net interest income increased $2.1 million to $71.4 million during the current quarter when compared to $69.3 million for the three months ended March 31, 2023.
+Added: Net interest income increased $0.5 million to $69.3 million during the current quarter, compared to $68.8 million for the quarter ended June 30, 2023.
Both the average balance and the yield of interest earning assets increased when compared to the same period last year.
And to a lesser extent, there was also an increase in the cost of interest-bearing liabilities when compared to the same period last year.
−Removed: Average interest-earning assets during the current quarter increased $1.07 billion, or 7%, when compared to the quarter ended March 31, 2023.
+Added: Average interest-earning assets during the current quarter increased $797.6 million, or 5%, when compared to the quarter ended June 30, 2023.
The increase in average interest-earning assets was attributed primarily to an increase in the average balances of loans.
1 unchanged sentence
The interest rate spread decreased 14 basis points to 1.36% compared to 1.50% during the same quarter last year.
−Removed: The net interest margin decreased seven basis points to 1.71% in the current quarter compared to 1.78% for the same quarter last year.
+Added: The net interest margin decreased eight basis points to 1.67% in the current quarter compared to 1.75% for the same quarter last year.
The decrease in our interest rate spread and net interest margin is primarily due to the impact of a prolonged period of historically low interest rates followed by a rapid and substantial rise in interest rates, that started in March 2022, along with an extended period of yield curve inversion.
1 unchanged sentence
Provision (Release) for Credit Losses.
−Removed: We recorded a release of the allowance for credit losses of $1.0 million on loans and off-balance sheet exposures during each of the quarters ended March 31, 2024 and March 31, 2023.
−Removed: As delinquencies in the portfolio have been resolved through pay-offs, short sale or foreclosure, or management determines the collateral is not sufficient to satisfy the loan balance, uncollected balances have been charged against the allowance for credit losses previously provided.
+Added: We recorded a release of the allowance for credit losses on loans and off-balance sheet exposures of $0.5 million during the quarter ended June 30, 2024, compared to no provision or release during the quarter ended June 30, 2023.
+Added: As delinquencies in the portfolio have been resolved through pay-offs, short sale or foreclosure, or management determines the collateral is not sufficient to satisfy the loan balance, uncollected balances have been charged
+Added: against the allowance for credit losses previously provided.
Recoveries of amounts charged against the allowance for credit losses occur when collateral values increase and homes are sold or when borrowers repay the amounts previously charged-off.
−Removed: In the current quarter, we recorded net recoveries of $1.3 million compared to net recoveries of $1.2 million in the quarter ended March 31, 2023.
−Removed: Credit loss provisions (releases) are recorded with the objective of aligning our allowance for credit loss balances with our current estimates of loss in
−Removed: the portfolio.
+Added: In the current quarter, we recorded net recoveries of $1.4 million compared to net recoveries of $1.8 million for the quarter ended June 30, 2023.
+Added: Credit loss provisions (releases) are recorded with the objective of aligning our allowance for credit loss balances with our current estimates of loss in the portfolio.
Refer to the Lending Activities section of Item 2.
1 unchanged sentence
Non-Interest Income.
−Removed: Non-interest income increased $0.4 million, or 8%, to $5.7 million during the current quarter compared to $5.3 million during the quarter ended March 31, 2023.
+Added: Non-interest income increased $0.4 million, or 7%, to $6.2 million during the current quarter compared to $5.8 million for the quarter ended June 30, 2023.
Non-Interest Expense.
−Removed: Non-interest expense decreased $3.4 million, or 6%, to $52.2 million during the current quarter compared to $55.6 million during the quarter ended March 31, 2023.
−Removed: The decrease primarily consisted of a $1.6 million decrease in marketing expenses, and a $2.9 million decrease in salaries and employee benefits, partially offset by a $0.5 million increase in FDIC premiums.
+Added: Non-interest expense decreased $2.1 million, or 4%, to $50.8 million during the current quarter compared to $52.9 million for the quarter ended June 30, 2023.
+Added: The decrease primarily consisted of a $2.1 million decrease in marketing expense and a $0.9 million decrease in other operating expense, partially offset by a $1.5 million increase in salaries and employee benefits.
Income Tax Expense.
−Removed: The provision for income taxes increased $1.1 million to $5.2 million during the current quarter compared to $4.1 million during the quarter ended March 31, 2023.
+Added: The provision for income taxes increased $1.2 million to $5.3 million during the current quarter, compared to $4.1 million for the quarter ended June 30, 2023.
The provision for the current quarter included $4.7 million of federal income tax provision and $0.6 million of state income tax expense.
−Removed: The provision for the quarter ended March 31, 2023, included $3.7 million of federal income tax provision and $0.4 million of state income tax expense.
−Removed: Our effective federal tax rate was 18.4% and 19.3% during the quarters ended March 31, 2024 and March 31, 2023, respectively.
−Removed: Comparison of Operating Results for the Six Months Ended March 31, 2024 and 2023
+Added: The provision for the quarter ended June 30, 2023, included $3.9 million of federal income tax provision and $0.2 million of state income tax expense.
+Added: Our effective federal tax rate was 18.7% and 18.8% during the quarters ended June 30, 2024 and June 30, 2023, respectively.
+Added: Comparison of Operating Results for the Nine Months Ended June 30, 2024 and 2023
Average balances and yields .
4 unchanged sentences
The yields set forth below include the effect of deferred fees, deferred expenses, discounts and premiums that are amortized or accreted to interest income or interest expense.
−Removed: Six Months Ended Six Months Ended
−Removed: March 31, 2024 March 31, 2023
+Added: Nine Months Ended Nine Months Ended
+Added: June 30, 2024 June 30, 2023
Balance Interest
45 unchanged sentences
(5) Net interest margin represents net interest income divided by total interest-earning assets.
−Removed: Net income increased $3.3 million to $41.4 million for the six months ended March 31, 2024, compared to $38.1 million for the six months ended March 31, 2023.
−Removed: The increase in net income was primarily driven by an increase in non-interest income and decreases in compensation and marketing expenses, partially offset by a decrease in net interest income income.
+Added: Net income increased $5.7 million to $61.4 million for the nine months ended June 30, 2024, compared to $55.7 million for the nine months ended June 30, 2023.
+Added: The increase in net income was primarily driven by decreases in non-interest expense and an increase in the release of provision for credit losses, partially offset by a decrease in net interest income.
Interest and Dividend Income.
−Removed: Interest and dividend income increased $74.2 million, or 26%, to $360.7 million during the six months ended March 31, 2024, compared to $286.5 million during the same six months in the prior year.
+Added: Interest and dividend income increased $102.4 million, or 23%, to $545.6 million during the nine months ended June 30, 2024, compared to $443.2 million during the same nine months in the prior year.
The increase in interest and dividend income resulted mainly from an increase in interest income on loans, other interest earning assets, as well as increases in income earned on FHLB stock.
−Removed: Interest income on loans increased $58.5 million, or 22%, to $325.0 million for the six months ended March 31, 2024, compared to $266.5 million for the six months ended March 31, 2023.
−Removed: This increase was attributed mainly to an 59 basis point increase in the average yield on loans to 4.28% for the six months ended March 31, 2024, from 3.69% for the same six months in the prior fiscal year.
−Removed: Adding to the increase was a $740.5 million increase in the average balance of loans to $15.20 billion for the current six months compared to $14.46 billion for the prior fiscal year period as new loan production exceeded repayments and loan sales during the current fiscal year.
+Added: Interest income on loans increased $80.5 million, or 20%, to $491.3 million for the nine months ended June 30, 2024, compared to $410.8 million for the nine months ended June 30, 2023.
+Added: This increase was attributed mainly to an 54 basis point increase in the average yield on loans to 4.31% for the nine months ended June 30, 2024, from 3.77% for the same nine months in the prior fiscal year.
+Added: Adding to the increase was a $659.9 million increase in the average balance of loans to $15.19 billion for the current nine months compared to $14.53 billion for the prior fiscal year period as new loan production exceeded repayments and loan sales during the current fiscal year.
Interest Expense.
−Removed: Interest expense increased $78.1 million, or 55%, to $220.2 million during the current six months compared to $142.1 million during the six months ended March 31, 2023.
+Added: Interest expense increased $105.8 million, or 46%, to $335.8 million during the current nine months compared to $230.0 million during the nine months ended June 30, 2023.
This increase mainly resulted from an increase in yields and average volume of deposits and borrowed funds.
−Removed: Interest expense on CDs, net of related interest rate swap contracts, increased $67.9 million, or 120%, to $124.3 million during the six months ended March 31, 2024, compared to $56.4 million during the six months ended March 31, 2023.
−Removed: The increase was attributed primarily to a 158 basis point increase in the average rate paid on CDs to 3.45% during the current six months from 1.87% during the same six months last fiscal year.
−Removed: In addition, there was a $1.16 billion, or 19%, increase in the average balance of CDs to $7.20 billion from $6.04 billion during the same six months of the prior fiscal year.
−Removed: Interest expense on savings accounts increased $3.8 million to $12.5 million during the six months ended March 31, 2024, compared to interest expense of $8.7 million for the six-month period ended March 31, 2023.
−Removed: Interest expense on checking accounts decreased $4.4 million to $0.2 million during the six months ended March 31, 2024, compared to interest expense of $4.6 million for the six-month period ended March 31, 2023.
−Removed: Rates were increased for deposits in response to increases in market interest rates, as well as increases in the rates paid by our competitors.
−Removed: Interest expense on borrowed funds, net of related interest rate swap contracts, increased $10.8 million, or 15%, to $83.2 million during the six months ended March 31, 2024, from $72.4 million during the six months ended March 31, 2023.
−Removed: The increase was primarily the result of higher average interest rates for the six months ended March 31, 2024.
−Removed: There was a 34 basis point increase in the average rate paid for these funds to 3.24% from 2.90% for the six months ended March 31, 2024 and March 31, 2023, respectively.
−Removed: The average balance of borrowed funds increased $137.8 million, or 3%, to $5.13 billion during the current six months from $4.99 billion during the same six months of the prior fiscal year.
+Added: Interest expense on CDs, net of related interest rate swap contracts, increased $98.8 million, or 103%, to $194.7 million during the nine months ended June 30, 2024, compared to $95.9 million during the nine months ended June 30, 2023.
+Added: The increase was attributed primarily to a 141 basis point increase in the average rate paid on CDs to 3.53% during the current nine months from 2.12% during the same nine months last fiscal year.
+Added: In addition, there was a $1.31 billion, or 22%, increase in the average balance of CDs to $7.35 billion, from $6.04 billion during the same nine months of the prior fiscal year.
+Added: Interest expense on savings accounts increased $0.7 million to $17.5 million during the nine months ended June 30, 2024, compared to interest expense of $16.8 million for the nine-month period ended June 30, 2023.
+Added: Interest expense on checking accounts decreased $5.7 million to $0.3 million during the nine months ended June 30, 2024, compared to interest expense of $6.0 million for the nine-month period ended June 30, 2023.
+Added: Overall, rates increased for deposits in response to increases in market interest rates, as well as increases in the rates paid by our competitors.
+Added: Interest expense on borrowed funds, net of related interest rate swap contracts, increased $12.0 million, or 11%, to $123.3 million during the nine months ended June 30, 2024, from $111.3 million during the nine months ended June 30, 2023.
+Added: The increase was primarily the result of higher average interest rates for the nine months ended June 30, 2024.
+Added: There was a 31 basis point increase in the average rate paid for these funds to 3.25%, from 2.94% for the nine months ended June 30, 2024 and June 30, 2023, respectively.
+Added: The average balance of borrowed funds decreased $2.6 million, or less than 1%, to $5.05 billion for the nine months ended June 30, 2024 when compared to the same period of the prior fiscal year.
Refer to the Extending the Duration of Funding Sources section of the Overview and Comparison of Financial Condition for further discussion.
Net Interest Income.
−Removed: Net interest income decreased $3.9 million, or 3%, to $140.5 million during the six months ended March 31, 2024, from $144.4 million during the six months ended March 31, 2023.
+Added: Net interest income decreased $3.5 million, or 2%, to $209.7 million during the nine months ended June 30, 2024, from $213.2 million during the nine months ended June 30, 2023.
The net decrease consisted of a $102.4 million increase in interest income offset by a $105.8 million increase in interest expense.
−Removed: Average interest-earning assets increased during the current six months by $1.02 billion, or 7%, to $16.53 billion when compared to the six months ended March 31, 2023.
+Added: Average interest-earning assets increased during the current nine months by $947.1 million, or 6%, to $16.54 billion when compared to the nine months ended June 30, 2023.
The increase in average assets was attributed primarily to a $659.9 million increase in the average balance of our loans, a $22.0 million increase in FHLB stock and a $227.7 million increase in interest-bearing cash equivalents.
−Removed: The yield on average interest-earning assets increased 66 basis points to 4.36% for the six months ended March 31, 2024, from 3.70% for the six months ended March 31, 2023.
−Removed: Average interest-bearing liabilities increased $974.1 million to $14.88 billion for the six months ended March 31, 2024, compared to $13.91 billion for the six months ended March 31, 2023.
−Removed: Average interest-bearing liabilities experienced a 92 basis point increase in cost and the interest rate spread decreased 26 basis points to 1.40% compared to 1.66% during the same six months last fiscal year.
−Removed: The net interest margin was 1.70% for the current six months and 1.86% for the same six months in the prior fiscal year period.
+Added: The yield on average interest-earning assets increased 61 basis points to 4.40% for the nine months ended June 30, 2024, from 3.79% for the nine months ended June 30, 2023.
+Added: Average interest-bearing liabilities increased $875.0 million to $14.87 billion for the nine months ended June 30, 2024, compared to $14.00 billion for the nine months ended June 30, 2023.
+Added: Average interest-bearing liabilities experienced an 82 basis point increase in cost for the nine months ended June 30, 2024 and the interest rate spread decreased 21 basis points to 1.39% when compared to 1.60% during the same nine months of the prior fiscal year period.
+Added: The net interest margin was 1.69% for the current nine months and 1.82% for the same nine months in the prior fiscal year period.
Provision (Release) for Credit Losses .
−Removed: We recorded a release of the allowance for credit losses on loans and off-balance sheet exposures of $2.0 million during the six months ended March 31, 2024, and March 31, 2023.
−Removed: In the current six months, we recorded net recoveries of $2.3 million, as compared to net recoveries of $2.9 million for the six months ended March 31, 2023.
+Added: We recorded a release of the allowance for credit losses on loans and off-balance sheet exposures of $2.5 million during the nine months ended June 30, 2024, and $2.0 million at June 30, 2023.
+Added: In the current nine months, we recorded net recoveries of $3.6 million, as compared to net recoveries of $4.6 million for the nine months ended June 30, 2023.
Credit loss provisions (releases) are recorded with the objective of aligning our allowance for credit loss balances with our current estimates of loss in the portfolio.
As delinquencies in the portfolio have been resolved through pay-off, short sale or foreclosure, or management determines the collateral is not sufficient to satisfy the loan balance, uncollected balances have been charged against the allowance for credit losses previously provided.
−Removed: Refer to the Lending Activities section of the
−Removed: Overview and Note 4.
+Added: Refer to the Lending Activities section
+Added: of the Overview and Note 4.
LOANS AND ALLOWANCES FOR CREDIT LOSSES of the NOTES TO CONSOLIDATED FINANCIAL STATEMENTS for further discussion.
Non-Interest Income.
−Removed: Non-interest income increased $1.5 million, or 14%, to $12.0 million during the six months ended March 31, 2024, compared to $10.5 million during the six months ended March 31, 2023.
−Removed: The increase in non-interest income was primarily due to a $1.0 million increase in cash surrender value and death benefits from bank owned life insurance, a $0.3 million increase in the net gain on sale of loans, offset by a $0.3 million decrease in loan fees and service charges.
−Removed: There were loan sales of $121.3 million during the six months ended March 31, 2024, compared to loan sales of $34.6 million during the six months ended March 31, 2023.
+Added: Non-interest income increased $2.0 million, or 12%, to $18.3 million during the nine months ended June 30, 2024, compared to $16.3 million during the nine months ended June 30, 2023.
+Added: The increase in non-interest income was primarily due to a $1.0 million increase in the net gain on sale of loans and a $0.5 million increase in cash surrender value and death benefits from bank owned life insurance.
+Added: There were loan sales of $190.7 million during the nine months ended June 30, 2024, compared to loan sales of $58.1 million during the nine months ended June 30, 2023.
Non-Interest Expense.
−Removed: Non-interest expense decreased $6.3 million, or 6%, to $102.5 million during the six months ended March 31, 2024 compared to $108.8 million during the six months ended March 31, 2023.
−Removed: This decrease was driven by a $4.2 million decrease in salaries and employee benefits, a $4.9 million decrease in marketing expenses, partially offset by a $1.6 million increase in federal insurance premiums and a $0.7 million increase in other operating expenses.
+Added: Non-interest expense decreased $8.3 million, or 5%, to $153.3 million during the nine months ended June 30, 2024, compared to $161.6 million during the nine months ended June 30, 2023.
+Added: This decrease was driven by a $7.0 million decrease in marketing expenses and a $2.6 million decrease in salaries and employee benefits, partially offset by a $1.2 million increase in federal insurance premiums.
Income Tax Expense.
−Removed: The provision for income taxes increased $0.6 million to $10.6 million during the six months ended March 31, 2024 from $10.0 million for the six months ended March 31, 2023 reflecting the higher level of pre-tax income during the more recent period.
−Removed: The provision for the current six months included $9.8 million of federal income tax provision and $0.8 million of state income tax provision.
−Removed: The provision for the six months ended March 31, 2023 included $9.0 million of federal income tax provision and $1.1 million of state income tax provision.
−Removed: Our effective federal tax rate was 19.1% during the six months ended March 31, 2024 and 19.0% during the six months ended March 31, 2023.
+Added: The provision for income taxes increased $1.7 million to $15.9 million during the nine months ended June 30, 2024, from $14.2 million for the nine months ended June 30, 2023, reflecting the higher level of pre-tax income during the more recent period.
+Added: The provision for the current nine months included $14.5 million of federal income tax provision and $1.4 million of state income tax provision.
+Added: The provision for the nine months ended June 30, 2023 included $12.8 million of federal income tax provision and $1.4 million of state income tax provision.
+Added: Our effective federal tax rate was 19.1% during the nine months ended June 30, 2024, and 18.7% during the nine months ended June 30, 2023.
Liquidity and Capital Resources
6 unchanged sentences
We generally seek to maintain a minimum liquidity ratio of 5% (which we compute as the sum of the average cash and cash equivalents plus unencumbered investment securities for which ready markets exist, divided by total average assets).
−Removed: For the three months ended March 31, 2024, our liquidity ratio averaged 6.44%.
−Removed: We believe that we had sufficient sources of liquidity to satisfy our short- and long-term liquidity needs as of March 31, 2024.
+Added: For the three months ended June 30, 2024, our liquidity ratio averaged 6.19%.
+Added: We believe that we had sufficient sources of liquidity to satisfy our short- and long-term liquidity needs as of June 30, 2024.
We regularly adjust our investments in liquid assets based upon our assessment of expected loan demand, expected deposit flows, yields available on interest-earning deposits and securities, scheduled liability maturities and the objectives of our asset/liability management program.
2 unchanged sentences
The levels of these assets are dependent on our operating, financing, lending and investing activities during any given period.
−Removed: At March 31, 2024, cash and cash equivalents totaled $594.3 million, which represented an increase of 27% from $466.7 million at September 30, 2023.
−Removed: Investment securities classified as available-for-sale, which provide additional sources of liquidity, totaled $520.2 million at March 31, 2024.
−Removed: During the six-month period ended March 31, 2024, loan sales, including commitments to sell, totaled $121.3 million, which included sales to Fannie Mae, consisting of $105.3 million of long-term, fixed-rate, agency-compliant, non-Home Ready first mortgage loans and $16.0 million of loans that qualified under Fannie Mae's Home Ready initiative.
−Removed: At March 31, 2024, $9.7 million of long-term, fixed-rate residential first mortgage loans were classified as “held for sale".
+Added: At June 30, 2024, cash and cash equivalents totaled $560.4 million, which represented an increase of 20% from $466.7 million at September 30, 2023.
+Added: Investment securities classified as available-for-sale, which provide additional sources of liquidity, totaled $523.0 million at June 30, 2024.
+Added: During the nine-month period ended June 30, 2024, loan sales, including commitments to sell, totaled $190.7 million, which included sales to Fannie Mae, consisting of $168.7 million of long-term, fixed-rate, agency-compliant, non-Home Ready first mortgage loans and $22.0 million of loans that qualified under Fannie Mae's Home Ready initiative.
+Added: At June 30, 2024, $30.4 million of long-term, fixed-rate residential first mortgage loans were classified as “held for sale".
Our cash flows are derived from operating activities, investing activities and financing activities as reported in our CONSOLIDATED STATEMENTS OF CASH FLOWS .
−Removed: At March 31, 2024, we had $277.7 million in outstanding commitments to originate loans.
+Added: At June 30, 2024, we had $348.8 million in outstanding commitments to originate loans.
In addition to commitments to originate loans, we had $5.11 billion in unfunded home equity lines of credit to borrowers.
−Removed: CDs due within one year of March 31, 2024, totaled $4.41 billion, or 44.4% of total deposits.
+Added: CDs due within one year of June 30, 2024, totaled $4.73 billion, or 47.2% of total deposits.
If these deposits do not remain with us, we will be required to seek other sources of funds, including loan sales, sales of investment securities, other deposit products, including new CDs, brokered CDs, FHLB advances, borrowings from the FRB-Cleveland Discount Window or other collateralized borrowings.
−Removed: Depending on market conditions, we may be required to pay higher rates on such deposits or other borrowings than we currently pay on the CDs due on or before March 31, 2025.
+Added: Depending on market conditions, we may be required to pay higher rates on such deposits or other borrowings than we currently pay on the CDs due on or before June 30, 2025.
We believe, however, based on past experience, that a significant portion of such deposits will remain with us.
1 unchanged sentence
Our primary investing activities are originating residential mortgage loans, home equity loans and lines of credit and purchasing investment securities.
−Removed: During the six months ended March 31, 2024, we originated $408.8 million of residential mortgage loans, and $915.4 million of commitments for home equity loans and lines of credit, while during the six months ended March 31, 2023, we originated $821.9 million of residential mortgage loans and $720.0 million of commitments for home equity loans and lines of credit.
−Removed: We purchased $96.7 million of securities during the six months ended March 31, 2024, and $63.7 million during the six months ended March 31, 2023.
−Removed: Also, during the six months ended March 31, 2024, we purchased $85.8 million of long-term, fixed-rate first mortgage loans.
+Added: During the nine months ended June 30, 2024, we originated $598.7 million of residential mortgage loans, and $1.62 billion of commitments for home equity loans and lines of credit, while during the nine months ended June 30, 2023, we originated $1.31 billion of residential mortgage loans and $1.24 billion of commitments for home equity loans and lines of credit.
+Added: We purchased $121.1 million of securities during the nine months ended June 30, 2024, and $124.2 million during the nine months ended June 30, 2023.
+Added: Also, during the nine months ended June 30, 2024 and June 30, 2023, we purchased $121.0 million and $133.9 million of long-term, first mortgage loans, respectively.
Financing activities consist primarily of changes in deposit accounts, changes in the balances of principal and interest owed on loans serviced for others, FHLB advances, including any collateral requirements related to interest rate swap agreements and borrowings from the FRB-Cleveland Discount Window.
−Removed: We experienced a net increase in total deposits of $485.8 million during the six months ended March 31, 2024, which reflected the active management of the offered rates on maturing CDs, compared to a net increase of $78.2 million during the six months ended March 31, 2023.
+Added: We experienced a net increase in total deposits of $576.2 million during the nine months ended June 30, 2024, which reflected the active management of the offered rates on maturing CDs, compared to a net increase of $145.1 million during the nine months ended June 30, 2023.
Deposit flows are affected by the overall level of interest rates, the interest rates and products offered by us and our local competitors, and by other factors.
−Removed: During the six months ended March 31, 2024, there was a $99.1 million increase in the balance of brokered CDs (exclusive of acquisition costs and subsequent amortization), which had a balance of $1.26 billion at March 31, 2024.
−Removed: At March 31, 2023, the balance of brokered CDs was $556.8 million.
−Removed: Principal and interest owed on loans serviced for others experienced a net decrease of $3.9 million to $25.9 million during the six months ended March 31, 2024, compared to a net decrease of $2.7 million to $27.2 million during the six months ended March 31, 2023.
−Removed: During the six months ended March 31, 2024, we decreased our total borrowings by $318.2 million as we funded:
−Removed: new loan originations, our capital initiatives, and actively managed our liquidity ratio.
−Removed: During the six months ended March 31, 2023, our total borrowings increased by $411.7 million.
+Added: During the nine months ended June 30, 2024, there was a $52.7 million increase in the balance of brokered CDs (exclusive of acquisition costs and subsequent amortization), which had a balance of $1.22 billion at June 30, 2024.
+Added: At June 30, 2023, the balance of brokered CDs was $667.8 million.
+Added: Principal and interest owed on loans serviced for others experienced a net decrease of $12.9 million to $16.9 million during the nine months ended June 30, 2024, compared to a net decrease of $13.4 million to $16.5 million during the nine months ended June 30, 2023.
+Added: During the nine months ended June 30, 2024, we decreased our total borrowings by $444.3 million as we managed our growth, capital initiatives, and liquidity ratio.
+Added: During the nine months ended June 30, 2023, our total borrowings increased by $659.0 million.
Liquidity management is both a daily and long-term function of business management.
2 unchanged sentences
The exception requires the Association to maintain compliance with certain credit and regulatory criteria.
−Removed: In order to ensure adequate borrowing capacity with the FHLB, the Company has started replacing a portion of its 90-day FHLB advances with like-term brokered deposits.
−Removed: In March 2023, as a result of two recent bank failures, the Federal Reserve created the BTFP as an additional source of liquidity.
−Removed: The program offers loans up to one year in length against pledges of high-quality securities, such as U.S.
−Removed: Treasuries, agency debt and mortgage-backed securities, owned as of March 21, 2023.
−Removed: The BTFP ceased extending new loans on March 11, 2024.
−Removed: In December 2023, the Association received notice from the FHLB of Cincinnati that, effective January 19, 2024, the Association will be placed on restriction by the FHFA due to a second consecutive "Needs Improvement" rating, received on our CRA exam covering the period ended December 31, 2019.
−Removed: During the period of restriction, the Association will not have access to long-term advances (advances with a term greater than one year) from the FHLB of Cincinnati and will not be eligible for participation in the Bank's Affordable Housing Program or other Community Investment Cash Advance programs.
−Removed: With certain exceptions, the restriction will remain in place until the Association receives a "Satisfactory" or better rating on a CRA exam and otherwise complies with standards established by the FHFA's Community Support Regulation.
−Removed: Existing advances and future advances with a term of one year or less, including 90 day advances used to facilitate longer term interest rate swap agreements, will not be affected.
−Removed: In addition to interest rate swap agreements, we have the ability to obtain funding with terms greater than one year through retail and brokered CDs, generally at market rates of interest similar to other long-term funding alternatives.
−Removed: Therefore, we expect our ability to access long-term funding to continue, and our funding alternatives will not have a material impact to our funding costs, interest margin and spreads.
−Removed: At March 31, 2024, we had $4.93 billion of FHLB of Cincinnati advances, no outstanding borrowings from the FRB-Cleveland Discount Window and no outstanding borrowings in the form of Fed Funds.
−Removed: During the six months ended March 31, 2024, we had average outstanding advances from the FHLB of Cincinnati of $5.13 billion, as compared to average outstanding advances of $4.99 billion during the six months ended March 31, 2023.
+Added: In an effort to manage our available borrowing capacity with the FHLB, the Company has replaced a portion of its 90-day FHLB advances with like-term brokered deposits.
+Added: On July 8, 2024, the Association received a rating of "Satisfactory" on its CRA exam covering the period ended December 31, 2022.
+Added: As a result, on July 22, 2024, the Association was notified that it is now compliant with the FHFA's Community Support Regulation, has regained access to long-term advances (advances with a term greater than one year) from the FHLB of Cincinnati and is eligible for participation in the FHLB's Affordable Housing Program or other Community Investment Cash Advance programs.
+Added: At June 30, 2024, we had $4.81 billion of FHLB of Cincinnati advances, no outstanding borrowings from the FRB-Cleveland Discount Window and no outstanding borrowings in the form of Fed Funds.
+Added: During the nine months ended June 30, 2024, we had average outstanding advances from the FHLB of Cincinnati of $5.05 billion, as compared to average outstanding advances of $5.05 billion during the nine months ended June 30, 2023.
Refer to the Extending the Duration of Funding Sources section of the Overview for further discussion.
8 unchanged sentences
The requirement limits capital distributions and certain discretionary bonus payments to management if the institution does not hold a "capital conservation buffer" in addition to the standard minimum capital requirements.
−Removed: At March 31, 2024, the Association exceeded the regulatory requirement for the "capital conservation buffer".
−Removed: As of March 31, 2024, the Association exceeded all regulatory requirements to be considered “Well Capitalized” as presented in the table below (dollar amounts in thousands).
+Added: At June 30, 2024, the Association exceeded the regulatory requirement for the "capital conservation buffer".
+Added: As of June 30, 2024, the Association exceeded all regulatory requirements to be considered “Well Capitalized” as presented in the table below (dollar amounts in thousands).
Capital remains a source of financial strength for the Association and the Company.
7 unchanged sentences
Common Equity Tier 1 Capital to Risk-Weighted Assets 1,702,488 17.33 % 638,702 6.50 %
−Removed: The capital ratios of the Company as of March 31, 2024, are presented in the table below (dollar amounts in thousands).
+Added: The capital ratios of the Company as of June 30, 2024, are presented in the table below (dollar amounts in thousands).
Total Capital to Risk-Weighted Assets $ 1,921,603 19.55 %
5 unchanged sentences
The amount of dividends that the Association may declare and pay to the Company in any calendar year, without the receipt of prior approval from the OCC but with prior notice to the FRB-Cleveland, cannot exceed net income for the current calendar year-to-date period plus retained net income (as defined) for the preceding two calendar years, reduced by prior dividend payments made during those periods.
−Removed: At March 31, 2024, the Company had, in the
−Removed: form of cash and a demand loan from the Association, $152.6 million of funds readily available to support its stand-alone operations.
−Removed: The Company’s eighth stock repurchase program, which authorized the repurchase of up to 10,000,000 shares of the Company’s outstanding common stock, was approved by the Board of Directors on October 27, 2016, and repurchases began on January 6, 2017.
−Removed: There were 4,808,049 shares repurchased under that program between its start date and March 31, 2024.
−Removed: During the six months ended March 31, 2024, the Company did not repurchase any shares of its common stock.
−Removed: On July 11, 2023, Third Federal Savings, MHC received the approval of its members with respect to the waiver of dividends on the Company’s common stock the MHC owns, up to a total of $1.13 per share, to be declared on the Company’s common stock during the 12 months subsequent to the members’ approval (i.e., through July 11, 2024).
−Removed: The members approved the waiver by casting 60% of the eligible votes, with 97% of the votes cast, voting in favor of the waiver.
−Removed: Third Federal Savings, MHC is the 81% majority shareholder of the Company.
−Removed: Following the receipt of the members' approval at the July 11, 2023, meeting, Third Federal Savings, MHC filed a notice with, and received the non-objection from the FRB-Cleveland for the proposed dividend waivers.
−Removed: Third Federal Savings, MHC waived its right to receive $0.2825 per share dividend payments on September 26, 2023, December 13, 2023, and March 21, 2024.
+Added: At June 30, 2024, the Company had, in the form of cash and a demand loan from the Association, $140.2 million of funds readily available to support its stand-alone operations.
The payment of dividends, support of asset growth and strategic stock repurchases are planned to continue in the future as the focus for future capital deployment activities.
+Added: See Part II Other Information Item 2.
+Added: Unregistered Sales of Equity Securities and Use of Proceeds for details on stock repurchase programs, dividends paid and dividend waivers.
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.