What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-08 compared with 2025-02-06 · 288 added, 207 removed, 669 unchanged (43% of the section changed)

27 unchanged sentences

Government, including policies of the U.S.

Treasury, the Federal Reserve System, Fannie Mae, the OCC, FDIC, and others;

Treasury, the Federal Reserve System, Fannie Mae, the OCC, FDIC, and others, and the effects of tariffs;

● the ability of the U.S.

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We credit our success to our continued emphasis on our primary values:

“Love, Trust, Respect, and a Commitment to Excellence, along with Having Fun.” Our values are reflected in the design and pricing of our loan and deposit products, as described below.

“Love, Trust, Respect, and a Commitment to Excellence, along with Having Fun.”

Our values are reflected in the design and pricing of our loan and deposit products, as described below.

Our values are further reflected in a long-term revitalization program encompassing the three-mile corridor of the Broadway-Slavic Village neighborhood in Cleveland, Ohio where our main office was established and continues to be located and where we've been the developer of a community of 40 homes, intended to serve the low- to moderate income home owner.

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.

The unprecedented implications of the prolonged period of inversion in the yield curve, influenced by the FRS's restrictive monetary policy resulted in a heightened exposure of certain risks inherent in the banking industry.

The yield curve is currently positive, normalizing in mid-September just prior to the FRS's 100 basis point rate cuts between September and December 2024.

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.

Consumers, businesses, and governments alike are navigating an elevated level of economic uncertainty as a new perspective on global trade policy is being deliberated by the markets.

For their part, the Federal Reserve has maintained interest rates near 20-year highs in the hope that inflation continues its lower trajectory.

The yield curve is currently positive, after a prolonged period of inversion, normalizing just prior to the FRS's 100 basis point rate cuts between September and December 2024.

There is some probability that the easing cycle will continue in the back half of 2025, however, uncertainty can lead to volatility in interest rates and spreads, creating a challenging operating environment for us.

Taking all of this into consideration, we remain committed to our mission, business model, and strategic approach.

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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.

As of December 31, 2024, 95.9% of our $9.11 billion retail deposit base consists of accounts structured under the FDIC insured limit of $250,000.

As of March 31, 2025, 96.0% of our $9.37 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.

At December 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 totaled $3.12 billion.

At March 31, 2025, 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 $3.06 billion.

We also hold marketable securities that could be sold and converted to cash.

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This difference has been an important component of our net interest income and is fundamental to our operations.

A challenge to our business model occurs when there is a rapid and substantial increase in short-term rates or there is an extended inverted yield curve where short-term rates exceed long-term rates, both of which occurred in the past two years.

Although the yield curve became positive in early September 2024, rapid and substantial decreases in short-term rates can also pose a challenge when interest rates on our home equity line of credit portfolio, indexed to the prime rate, reprice more quickly than interest rates on borrowings and certificate of deposit accounts which generally reprice at maturity.

than interest rates on borrowings and certificate of deposit accounts which generally reprice at maturity.

These economic environments may result in decreases in our net interest income and our net interest margin.

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Levels of Regulatory Capital

At December 31, 2024, the Company’s Tier 1 (leverage) capital totaled $1.85 billion, or 10.89%, of net average assets and 18.32% of risk-weighted assets, while the Association’s Tier 1 (leverage) capital totaled $1.70 billion, or 9.96%, of net average assets and 16.74% of risk-weighted assets.

Each of these measures is in excess of the requirements in effect for the Association at December 31, 2024, for designation as “well capitalized” under regulatory prompt corrective action provisions.

At March 31, 2025, the Company’s Tier 1 (leverage) capital totaled $1.86 billion, or 10.89%, of net average assets and 18.13% of risk-weighted assets, while the Association’s Tier 1 (leverage) capital totaled $1.71 billion, or 10.04%, of net average assets and 16.72% of risk-weighted assets.

Each of these measures is in excess of the requirements in effect for the Association at March 31, 2025, for designation as “well capitalized” under regulatory prompt corrective action provisions.

Beginning this fiscal year, the Company entered into the final year of the five-year transitional period, as provided by a final rule, after CECL was adopted in fiscal year 2021.

Refer to the Liquidity and Capital Resources section of this Item 2 for additional discussion regarding regulatory capital requirements.

Promotion of Adjustable-Rate Loans and Shorter-Term Fixed-Rate Loans

Adjustable-Rate Loans and Shorter-Term Fixed-Rate Loans

We offer our "Smart Rate" adjustable-rate mortgage loan, which provides us with improved interest rate risk characteristics when compared to a 30-year, fixed-rate mortgage loan.

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The following tables set forth our first mortgage loan production and period end balances segregated by loan structure at origination:

For the Three Months Ended December 31, 2024 For the Three Months Ended December 31, 2023

For the Six Months Ended March 31, 2025 For the Six Months Ended March 31, 2024

Amount Percent Amount Percent

(Dollars in thousands)

First Mortgage Loan Originations and Purchases:

First Mortgage Loan Originations and Acquired Loans:

ARM (all Smart Rate) production $ 46,164 12.3 % $ 99,778 24.4 %

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Total fixed-rate production 329,843 87.7 309,064 75.6

Total First Mortgage Loan Originations and Purchases $ 176,492 100.0 % $ 272,953 100.0 %

December 31, 2024 September 30, 2024

Total First Mortgage Loan Originations and Acquired Loans

$ 376,007 100.0 % $ 408,842 100.0 %

March 31, 2025 September 30, 2024

Amount Percent Amount Percent

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Total First Mortgage Loans Held For Investment $ 11,033,556 100.0 % $ 11,426,080 100.0 %

The following table sets forth the balances and yields as of December 31, 2024, for all ARM loans segregated by the next scheduled interest rate reset date:

The following table sets forth the balances and yields as of March 31, 2025, for all ARM loans segregated by the next scheduled interest rate reset date:

Current Balance of ARM Loans Scheduled for Interest Rate Reset Yield

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2030 57,977 6.78 %

$ 4,278,412 3.45 %

At December 31, 2024 and September 30, 2024, mortgage loans held for sale, all of which were long-term, fixed-rate first mortgage loans and all of which were held for sale to Fannie Mae, totaled $0.8 million and $17.8 million, respectively.

Total $ 4,164,902 3.51 %

At March 31, 2025 and September 30, 2024, 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 $5.8 million and $17.8 million, respectively.

Loan Portfolio Yield

The following tables set forth the principal balance and interest yield as of December 31, 2024, for the portfolio of loans held for investment, by type of loan, structure and geographic location.

Weighted average yields are based on principal balances as of December 31, 2024.

December 31, 2024

The following tables set forth the principal balance and interest yield as of March 31, 2025, for the portfolio of loans held for investment, by type of loan, structure and geographic location.

Weighted average yields are based on principal balances as of March 31, 2025.

March 31, 2025

Balance Percent Yield

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Terms less than or equal to 10 years $ 724,379 4.7 % 2.67 %

$ 778,705 5.1 % 2.68 %

Terms greater than 10 years 6,144,275 40.0 4.10

6,153,409 40.1 4.06

Total Fixed-Rate Residential Mortgage loans 6,868,654 44.7 3.95

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Home Equity Lines of Credit 3,671,405 23.8 6.63

3,513,094 22.8 6.60

Home Equity Loans 643,864 4.2 6.95

608,454 4.0 6.88

Construction and Other Loans 23,857 0.2 6.53

Total Loans Receivable $ 15,372,682 100.0 % 4.60 %

December 31, 2024

March 31, 2025

Balance Fixed Rate Balance Fixed Rate Percent Yield

5 unchanged sentences

Total Residential Mortgage Loans 11,033,556 6,868,654 62.3 3.79

11,210,526 6,932,114 61.8 3.73

Home Equity Lines of Credit

4 unchanged sentences

Total Home Equity Lines of Credit 3,671,405 19,101 0.5 6.63

3,513,094 19,383 0.6 6.60

Home Equity Loans

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Total Home Equity Loans 643,864 499,373 77.6 6.95

608,454 466,694 76.7 6.88

Construction and Other Loans 23,857 23,857 100.0 6.53

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We strive to grow the home equity line of credit portfolio through offering competitive rates, marketing efforts and by utilizing partners to attract more home equity line of credit customers.

At December 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 $3.51 billion.

At March 31, 2025, the principal balance of home equity lines of credit (including those in repayment) that are structured to reset with each prime rate adjustment totaled $3.67 billion.

Our home equity lending is discussed in the Lending Activities section of this Item 2.

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We also manage interest rate risk by selectively selling a portion of our long-term, fixed-rate mortgage loans in the secondary market.

First mortgage loans (primarily fixed-rate mortgages with terms of 15 years or more, Home Ready and certain 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.

First mortgage loans (primarily fixed-rate mortgages with terms of 15 years or more, Home Ready and certain loans acquired 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.

Certain types of loans (i.e.

our Smart Rate adjustable-rate loans, 10-year fixed-rate loans, and first mortgage loans secured by certain property types) are originated under our proprietary underwriting and closing process and are not eligible for sale to Fannie Mae.

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Additionally, sales to private investors are dependent upon favorable market conditions, including motivated buyers, and involve more complicated negotiations and longer settlement timelines.

During the three months ended December 31, 2024, $72.0 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 or committed loans, $56.6 million were originated as agency-compliant first mortgage loans, $4.5 million were purchased through a correspondent lending partnership, $10.3 million were originated under Fannie Mae's Home Ready initiative, and $0.6 million were originated through our mortgage banking brand, known as "Mortgage Passport." At December 31, 2024, loans classified as held for sale totaled $0.8 million.

At December 31, 2024, we serviced $1.99 billion of loans we originated and later sold to investors.

During the six months ended March 31, 2025, $147.2 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 or committed loans, $119.3 million were originated as agency-compliant first mortgage loans, $11.0 million were acquired through a correspondent lending partnership, and $16.9 million were originated under Fannie Mae's Home Ready initiative.

At March 31, 2025, loans classified as held for sale totaled $5.8 million.

At March 31, 2025, we serviced $2.01 billion of loans we originated and later sold to investors.

We continue to consider liquidity and balance sheet management, as well as secondary market pricing, in evaluating the opportunity to sell loans.

Additionally, we are using a proprietary approach to loan-level price adjustments in markets outside of Ohio and Florida using our "Mortgage Passport" brand to expand our ability to sell certain fixed-rate loans to Fannie Mae.

Loan sales are discussed in more detail within the Liquidity and Capital Resources section of this Item 2.

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In response to the evolving economic landscape, we continuously revise and update our quarterly analysis and evaluation procedures, as needed, for each category of our lending with the objective of identifying and recognizing all appropriate credit losses.

At December 31, 2024, 90% of our assets consisted of residential real estate loans (both “held for sale” and “held for investment”) and home equity loans and lines of credit.

At March 31, 2025, 90% of our assets consisted of residential real estate loans (both “held for sale” and “held for investment”) and home equity loans and lines of credit.

Our analytic procedures and evaluations include specific reviews of all home equity loans and lines of credit that become 90 or more days past due, as well as specific reviews of all first mortgage loans that are at least 150 days past due, but not later than 180 days past due.

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In an effort to limit our credit risk exposure and keep it consistent with the low risk appetite approved by the Board of Directors, the credit eligibility criteria is evaluated to ensure a successful homeowner has the primary source of repayment, followed by a collateral position that allows for a secondary source of repayment, if needed.

Products that do not result in an effective mix of repayment ability are not offered.

We use stringent, conservative lending standards for underwriting to reduce our credit risk.

Products that do not result in an

effective mix of repayment ability are not offered.

We believe we use stringent, conservative lending standards for underwriting to reduce our credit risk.

For first mortgage loans originated during the current quarter, the average credit score was 777 and the average LTV was 68% at origination.

Our current delinquency levels reflect the higher credit standards to which we subject all new originations.

As of December 31, 2024, loans originated or purchased had a balance of $15.41 billion, of which $36.2 million, or 0.2%, were delinquent.

As of March 31, 2025, loans originated or acquired had a balance of $15.44 billion, of which $31.6 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.

At December 31, 2024, approximately 58.2% and 17.3% of the combined total of our residential Core and construction loans were held for investment, and approximately 23.1% and 22.3% of our home equity loans and lines of credit were secured by properties in Ohio and Florida, respectively.

At March 31, 2025, approximately 58.3% and 17.1% of the combined total of our residential Core and construction loans were held for investment, and approximately 22.5% and 22.3% 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 25 other states and the District of Columbia, and as a result of that activity, the concentration ratios of the combined total of our residential Core and construction loans held for investment in Ohio and Florida have trended downward from their September 30, 2010, levels when the concentrations were 79.1% in Ohio and 19.0% in Florida.

Of the total mortgage loans originated in the three months ended December 31, 2024, 20.2% are secured by properties in states other than Ohio or Florida.

Of the total mortgage loans originated in the six months ended March 31, 2025, 26.0% are secured by properties in states other than Ohio or Florida.

Maintaining Access to Adequate Liquidity and Diverse Funding Sources to Support our Growth.

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We believe that a well capitalized institution is one of the most important factors in nurturing customer and community confidence.

At December 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 9.96%.

The Association's Tier 1 (leverage) capital ratio at December 31, 2024 included the negative impact of a $40 million cash dividend payment that the Association made to the Company, its sole shareholder, in December 2024.

At March 31, 2025, 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 10.04%.

The Association's Tier 1 (leverage) capital ratio at March 31, 2025 included the negative impact of a $40 million cash dividend payment that the Association made to the Company, its sole shareholder, in December 2024.

Because of its intercompany nature, this dividend payment did not impact the Company's consolidated capital ratios which are reported in the Liquidity and Capital Resources section of this Item 2.

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To attract deposits, we typically offer rates that are competitive with the rates on similar products offered by other financial institutions.

At December 31, 2024, deposits totaled $10.21 billion (including $1.10 billion of brokered CDs), while borrowings totaled $4.66 billion and borrowers’ advances and servicing escrows totaled $179.4 million, combined.

At March 31, 2025, deposits totaled $10.40 billion (including $1.03 billion of brokered CDs), while borrowings totaled $4.59 billion and borrowers’ advances and servicing escrows totaled $127.5 million, combined.

In evaluating funding sources, we consider many factors, including cost, collateral, duration and optionality, current availability, expected sustainability, impact on operations and capital levels.

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First, we pledge available real estate mortgage loans with the FHLB of Cincinnati and the FRB-Cleveland.

At December 31, 2024, the Association had the ability to borrow a maximum of $6.77 billion from the FHLB of Cincinnati and $594.0 million from the FRB-Cleveland Discount Window.

As of December 31, 2024, our capacity for additional borrowing from the FHLB of Cincinnati was $2.13 billion.

At March 31, 2025, the Association had the ability to borrow a maximum of $6.67 billion from the FHLB of Cincinnati and $565.0 million from the FRB-Cleveland Discount Window.

As of March 31, 2025, our capacity for additional borrowing from the FHLB of Cincinnati was $2.10 billion.

Second, we have the ability to purchase overnight Fed Funds up to $395.0 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.

At December 31, 2024, our investment securities portfolio totaled $507.7 million.

At March 31, 2025, our investment securities portfolio totaled $533.9 million.

Fourth, selling loans in the secondary market is a regular source of liquidity.

During the three months ended December 31, 2024, we sold, or committed to sell $72.0 million in loans to Fannie Mae.

During the six months ended March 31, 2025, we sold, or committed to sell $147.2 million in loans to Fannie Mae.

Finally, cash flows from operating activities have been a regular source of funds.

During the three months ended December 31, 2024 and 2023, cash flows from operations provided $45.5 million and $36.3 million, respectively.

During the six months ended March 31, 2025 and 2024, cash flows from operations provided $66.8 million and $50.5 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.

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We continue to focus on managing operating expenses.

We have successfully been able to reduce our operating expenses to help offset the pressure of margin compression resulting from until recently, the prolonged inverted yield curve.

Our ratio of annualized non-interest expense to average assets was 1.13% for the three months ended December 31, 2024, and 1.19% for the three months ended December 31, 2023.

As of December 31, 2024,

our average assets per full-time employee and our average deposits per full-time employee were $18.4 million and $11.0 million, respectively.

We have successfully been able to reduce our operating expenses to help offset the pressure of margin compression resulting from the immediate impact of substantial decreases in short-term rates and, until recently, the prolonged inverted yield curve.

Our ratio of annualized non-interest expense to average assets was 1.16% for the six months ended March 31, 2025, and 1.20% for the six months ended March 31, 2024.

As of March 31, 2025, our average assets per full-time employee and our average deposits per full-time employee were $18.2 million and $11.1 million, respectively.

We believe that each of these measures compares favorably with industry averages.

Our relatively high average deposits (exclusive of brokered CDs) held at our branch offices ($246.2 million per branch office as of December 31, 2024) contributes to our expense management efforts by limiting the overhead costs of serving our customers.

Our relatively high average deposits (exclusive of brokered CDs) held at our branch offices

($253.1 million per branch office as of March 31, 2025) 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 offset margin compression.

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GAAP that involve significant judgments, estimates and uncertainties, and could potentially give rise to materially different results under different assumptions and conditions.

We believe that the most critical accounting policies and estimates upon which our financial condition and results of operations depend, and which involve the most complex subjective decisions or assessments, are those with respect to our allowance for credit losses, income taxes and pension benefits as described in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2024.

Lending Activities

We believe that the most critical accounting policies and estimates upon which our financial condition and results of operations depend, and which involve the most complex subjective decisions or assessments, are those with respect to our allowance for credit losses, as described in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2024.

Allowance for Credit Losses

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Home equity loans and lines of credit generally have higher credit risk than traditional residential mortgage loans.

These loans and credit lines are usually in a second lien position and when combined with the first mortgage, result in generally higher overall loan-to-value ratios.

These loans and credit lines are usually in a second lien position and when combined with the first mortgage, result in generally higher

overall loan-to-value ratios.

In a stressed housing market with high delinquencies and decreasing housing prices, these higher loan-to-value ratios represent a greater risk of loss to the Company.

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Our home equity loans and lines of credit portfolio continues to comprise a significant portion of our gross charge-offs.

At December 31, 2024, we had an amortized cost of $3.55 billion in home equity lines of credit and $613.7 million in home equity loans outstanding, of which $5.1 million, or 0.12%, were delinquent 90 days or more.

At March 31, 2025, we had an amortized cost of $3.71 billion in home equity lines of credit and $649.3 million in home equity loans outstanding, of which $5.5 million, or 0.13%, were delinquent 90 days or more.

The allowance for credit losses is evaluated based upon the combined total of the quantitative and qualitative GVAs.

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The majority of our Residential Core and Home Today loan portfolios is secured by properties located in Ohio, and therefore were not segregated by state.

There were no charge-offs in the Home equity loan portfolio for the periods indicated.

For the Three Months Ended December 31,

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

2025 2024 2025 2024

(Dollars in thousands)

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Home equity lines of credit

Ohio 114 124 313 242

Florida 30 19 60 39

California — — 18 96

Other 94 45 163 141

Total home equity lines of credit 238 188 554 518

Home equity loans

Ohio 17 — 17 —

Florida — 16 — 16

California — — — —

Other — — — —

Total home equity loans 17 16 17 16

Total charge-offs 280 241 597 751

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Net recoveries 665 1,251 2,113 2,258

Provision (release) for credit losses on loans

Release of allowance for credit losses on loans

(678) (2,166) (1,569) (1,142)

Allowance balance for loans (end of the period) $ 70,546 $ 68,169 $ 70,546 $ 68,169

Allowance balance for credit losses on unfunded commitments (beginning of the period) $ 27,202 $ 25,491 $ 27,811 $ 27,515

Release of allowance for credit losses on unfunded loan commitments

Provision (release) of allowance for credit losses on unfunded loan commitments

2,178 1,166 1,569 (858)

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The following table sets forth additional information with respect to net recoveries by category for the periods indicated rounded to the nearest tenth of a percent.

For the Three Months Ended December 31,

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

2025 2024 2025 2024

Net recoveries to average loans outstanding (annualized)

1 unchanged sentence

Residential Core 0.01 % 0.00 % 0.01 % 0.01 %

0.01 % 0.01 %

Residential Home Today 0.01 0.01 0.01 0.01

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Total net recoveries to average loans outstanding (annualized) 0.02 % 0.03 % 0.03 % 0.03 %

0.03 % 0.03 %

We continue to evaluate loans becoming delinquent for potential losses and record provisions for the estimate of those losses.

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Recoveries are recognized on previously charged-off loans as borrowers perform their repayment obligations or as loans with improved collateral positions reach final resolution.

During the three months ended December 31, 2024 and December 31, 2023, recoveries exceeded loan charge-offs by $1.4 million and $1.0 million, respectively, and gross charge-offs decreased slightly.

During the three months ended March 31, 2025 and March 31, 2024, recoveries exceeded loan charge-offs by $0.7 million and $1.3 million, respectively, and gross charge-offs increased slightly.

Delinquent loans continue to be evaluated for potential losses and provisions are recorded for the estimate of potential losses of those loans.

During the three months ended December 31, 2024 and September 30, 2024, the total allowance for credit losses remained at $97.8 million.

During the three months ended March 31, 2025, the total allowance for credit losses increased to $99.9 million, from $97.8 million at December 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.

During the three months ended December 31, 2024, the asset portion of the total allowance increased to $70.6 million from $70.0 million, and the liability portion of the total allowance decreased to $27.2 million from $27.8 million.

We recorded a $1.5 million net release of allowance for credit losses for the period, consisting of a $0.9 million release of provision on loans and a $0.6 million reclassification to credit losses on off-balance sheet exposures.

During the three months ended March 31, 2025, the asset portion of the total allowance decreased to $70.5 million from $70.6 million, and the liability portion of the total allowance increased to $29.4 million from $27.2 million.

We recorded a $1.5 million net provision for credit losses for the period, consisting of a $0.7 million release of provision on loans and a $2.2 million provision for credit losses on off-balance sheet exposures.

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.

While the allowance for credit losses on loan balances remained consistent during the three months ended December 31, 2024, the home equity loans and line of credit portfolios increased primarily due to new growth.

This was offset by decreases in the Core portfolio balances primarily due to aging.

The amortized cost of the residential Core portfolio decreased 1.9%, or $214.0 million, and its total allowance decreased 4.3%, or $1.9 million, as of December 31, 2024, compared to September 30, 2024.

The amortized cost of the home equity lines of credit portfolio increased 5.7%, or $190.0 million, and its total allowance increased 9.7% to $18.2 million, from $16.6 million at September 30, 2024.

The amortized cost of the home equity loans increased 8.3%, or $46.8 million, and its total allowance increased 6.3% to $12.4 million, from $11.6 million at September 30, 2024.

As we are no longer originating loans under our Home Today program, there is an expected net recovery position for this portfolio which was $2.5 million at December 31, 2024, and $2.7 million at September 30, 2024.

The decrease in the allowance for credit losses applied to the loan portfolio during the three months ended March 31, 2025, was primarily related to a lower net recovery forecast for total qualitative factors.

This was offset by the net impact of increases in the home equity loan and line of credit portfolios and a slight increase in the mortgage loss dollars related to changes in macroeconomic factors considered in the loss analysis.

The portion of the allowance for credit losses applied to off-balance sheet exposures increased due to an increase in those exposures, including both the undrawn portion of equity lines of credit and commitments to originate or acquire loans.

The amortized cost of the residential Core portfolio decreased 1.6%, or $175.3 million, and its total allowance decreased 4.3%, or $1.8 million, as of March 31, 2025, compared to December 31, 2024.

The amortized cost of the home equity lines of credit portfolio increased 4.5%, or $158.8 million, and its total allowance increased 7.0% to $19.5 million, from $18.2 million at December 31, 2024.

The amortized cost of the home equity loans increased 5.8%, or $35.6 million, and its total allowance increased 3.7% to $12.8 million, from $12.4 million at December 31, 2024.

As we are no longer originating loans under our Home Today program, there is an expected net recovery position for this portfolio which was $2.4 million at March 31, 2025, and $2.5 million at December 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.

December 31, 2024 September 30, 2024

March 31, 2025 September 30, 2024

Amount Percent of

14 unchanged sentences

Allowance for credit losses on loans $ 70,546 100.0% 100.0% $ 70,002 100.0% 100.0%

Lending Activities

Loan Portfolio Composition

2 unchanged sentences

Therefore, neither was segregated by geographic location.

December 31, 2024 September 30, 2024

March 31, 2025 September 30, 2024

Amount Percent Amount Percent

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Total home equity lines of credit 3,671,405 23.8 3,323,381 21.7

3,513,094 22.8 3,323,381 21.7

Home equity loans

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Total home equity loans 643,864 4.2 561,926 3.6

608,454 4.0 561,926 3.6

Construction loans

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Total construction 16,865 0.1 21,701 0.2

18,225 0.1 21,701 0.2

Other loans 6,992 — 5,705 —

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Total loans receivable, net $ 15,360,143 $ 15,322,059

The following table provides the amortized cost and an analysis of our real estate loans held for investment disaggregated by refreshed FICO score, year of origination and portfolio at December 31, 2024.

FICO scores are updated quarterly as available.

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.

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

Revolving loans reported at amortized cost include home equity lines of credit currently in their draw period, therefore not by year of origination.

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

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(Dollars in thousands)

December 31, 2024

March 31, 2025

Real estate loans:

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Total Home equity lines of credit — — — — — — 3,651,163 57,794 3,708,957

— — — — — — 3,491,974 58,201 3,550,175

Home equity loans

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741+ 1,884 5,606 — — — — — — 7,490

103 252 — — — — — — 355

290 6,864 1,178 — — — — — 8,332

Total Construction 2,046 5,606 — — — — — — 7,652

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

The following table provides amortized cost and an analysis of our real estate loans held for investment by origination LTV, origination year and portfolio at December 31, 2024.

The following table provides amortized cost and an analysis of our real estate loans held for investment by origination LTV, origination year and portfolio at March 31, 2025.

Subsequent to origination, LTVs are only updated for our home equity loans and lines of credit and for collateral-dependent residential mortgage loans.

3 unchanged sentences

(Dollars in thousands)

December 31, 2024

March 31, 2025

Real estate loans:

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Total Home equity lines of credit — — — — — — 3,651,163 57,794 3,708,957

— — — — — — 3,491,974 58,201 3,550,175

Home equity loans

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80-89.9% 352 2,286 — — — — — — 2,638

80-89.9% 26 2,661 — — — — — — 2,687

Total Construction 2,046 5,606 — — — — — — 7,652

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

At December 31, 2024, the unpaid principal balance of the home equity loans and lines of credit portfolio consisted of $608.5 million in home equity loans (which included $11.6 million in bridge loans) and $3.51 billion in home equity lines of credit (which included $58.0 million of home equity lines of credit which are in repayment and no longer eligible to be drawn upon).

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 portfolios as of December 31, 2024.

At March 31, 2025, the unpaid principal balance of the home equity loans and lines of credit portfolio consisted of $643.9 million in home equity loans (which included $12.1 million in bridge loans) and $3.67 billion in home equity lines of credit (which included $57.6 million of home equity lines of credit which are in repayment and no longer eligible to be drawn upon).

Home equity lines of credit in the draw period are reported according to geographic distribution.

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Total home equity lines of credit in draw period

Home equity lines in repayment

9,043,580 3,613,818 0.12 60 46

Home equity lines in repayment 57,587 57,587 1.53 60 29

Home equity loans and bridge loans 643,864 643,864 0.04 57 50

608,454 608,454 0.07 57 50

Total $ 9,745,031 $ 4,315,269 0.13 % 59 % 48 %

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(2) Mean CLTV percent at origination for all home equity lines of credit is based on the committed amount.

(3) Current Mean CLTV is based on best available first mortgage and property values as of December 31, 2024.

(3) Current Mean CLTV is based on best available first mortgage and property values as of March 31, 2025.

Property values are estimated using HPI data published by the FHFA.

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Current Mean CLTV on home equity lines of credit in the repayment period is calculated using the principal balance.

The principal balance of home equity lines of credit in the draw period that have a current mean CLTV over 80% or unknown is $21.3 million, or 0.6%, at December 31, 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.

At December 31, 2024, 24.0% of the home equity lending portfolio was either in a first lien position (12.1%), in a subordinate (second) lien position behind a first lien that we held (9.9%) or behind a first lien that was held by a loan that we originated, sold and now serviced for others (2.0%).

At December 31, 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.

The principal balance of home equity lines of credit in the draw period that have a current mean CLTV over 80% or unknown is $17.5 million, or 0.5%, at March 31, 2025 .

In recognition of the 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.

At March 31, 2025, 23.8% of the home equity lending portfolio was either in a first lien position (12.3%), in a subordinate (second) lien position behind a first lien that we held (9.5%) or behind a first lien that was held by a loan that we originated, sold and now serviced for others (2.0%).

At March 31, 2025, 12.3% of the home equity line of credit portfolio in the draw period were making only the minimum payment on the outstanding line balance.

Minimum payments include both a principal and interest component.

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The following tables set forth the amortized cost in loan delinquencies by type, segregated by geographic location and duration of delinquency as of the dates indicated.

The majority of our Home Today loan portfolio is secured by properties located in Ohio and there are no other loans with delinquent balances.

The majority of our Home Today loan portfolio is secured by properties located in Ohio, and therefore not segregated by state.

There were no other loans with delinquent balances.

There were no delinquencies in the construction loan portfolio as of the dates presented.

Loans Delinquent for

December 31, 2024 30-89 Days 90 Days or More Total

March 31, 2025 30-89 Days 90 Days or More Total

Real estate loans:

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Total Home equity lines of credit 5,354 5,238 10,592

5,834 4,643 10,477

Home equity loans

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Total Home equity lines of credit 4,570 4,078 8,648

4,570 4,078 8,648

Home equity loans

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Total loans seriously delinquent (i.e.

delinquent 90 days or more) were 0.10% of total net loans at December 31, 2024, and 0.09% at September 30, 2024.

The percentage of loans seriously delinquent to total net loans increased in the residential

Core portfolio to 0.07% at December 31, 2024, from 0.06% at September 30, 2024.

delinquent 90 days or more) were 0.10% of total net loans at March 31, 2025, and 0.09% at September 30, 2024.

The percentage of loans seriously delinquent to total net loans decreased in the residential Core

portfolio to 0.05% at March 31, 2025, from 0.06% at September 30, 2024.

Serious delinquencies in the home equity lines of credit portfolio remained at 0.03% for both periods.

Serious delinquencies in the Home Today and home equity loans portfolios at December 31, 2024 and September 30, 2024, respectively, are immaterial due to the low level of seriously delinquent loans as compared to the total net loans at each period.

Although delinquencies remain at or near historic lows, recent economic trends and elevated interest rates on home equity lines of credit have led to increased total delinquencies.

Serious delinquencies in the Home Today and home equity loans portfolios at March 31, 2025 and September 30, 2024, respectively, are immaterial due to the low level of seriously delinquent loans as compared to the total net loans at each period.

Although delinquencies in most portfolios remain at or near historic lows, recent economic trends and elevated interest rates on home equity lines of credit led to an upward trend in delinquencies in that portfolio.

Interest rates on home equity lines of credit are tied to the prime rate of interest which remains elevated, resulting in higher and less affordable monthly payments for some borrowers.

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There were no construction loans reported as non-accrual at the dates presented.

December 31, 2024 September 30, 2024

March 31, 2025 September 30, 2024

(Dollars in thousands)

6 unchanged sentences

Total non-accrual loans 37,011 33,610

36,515 33,610

Real estate owned — 174

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The table below sets forth a reconciliation of the amortized costs and categories between non-accrual loans and collateral-dependent loans at the dates indicated.

December 31, 2024 September 30, 2024

March 31, 2025 September 30, 2024

(Dollars in thousands)

3 unchanged sentences

Total Collateral-Dependent loans $ 42,047 $ 39,577

Comparison of Financial Condition at December 31, 2024 and September 30, 2024

Total assets decreased $33.2 million, or less than 1%, to $17.06 billion at December 31, 2024, from $17.09 billion at September 30, 2024.

This decrease was mainly the result of decreases in investment securities available for sale and mortgage loans held for sale.

Cash and cash equivalents increased $2.2 million, or less than 1%, to $465.9 million at December 31, 2024, from $463.7 million at September 30, 2024.

Comparison of Financial Condition at March 31, 2025 and September 30, 2024

Total assets increased $20.9 million, or less than 1%, to $17.11 billion at March 31, 2025, from $17.09 billion at September 30, 2024.

This increase was mainly the result of an increase in loans held for investment partially offset by a decrease in loans held for sale.

Cash and cash equivalents decreased $0.1 million, or less than 1%, to $463.6 million at March 31, 2025, from $463.7 million at September 30, 2024.

Cash is managed to maintain the level of liquidity described later in the Liquidity and Capital Resources section.

Investment securities available for sale decreased $18.6 million, or 4%, to $507.7 million at December 31, 2024, from $526.3 million at September 30, 2024.

The decrease was due to the combined effect of cash flow from security repayments and maturities exceeding purchases during the three months ended December 31, 2024 as well as a decline in fair values, the result of interest rate changes between the periods compared.

There were no sales of investment securities during the three months ended December 31, 2024.

Mortgage loans held for sale decreased by $17.0 million, or 96%, to $0.8 million at December 31, 2024, from $17.8 million at September 30, 2024 due to a decrease in both loans committed to forward sales and loans identified for future sale.

Loans held for investment, net of deferred loan fees and allowance for credit losses, increased $20.9 million, or less than 1%, to $15.34 billion at December 31, 2024, from $15.32 billion at September 30, 2024.

During the three months ended December 31, 2024, the home equity loans and lines of credit portfolio increased $236.2 million and residential core mortgage loans decreased $214.4 million.

The changes in loans held for sale and loans held for investment were affected by the volume of loans originated, purchased and sold.

During the three months ended December 31, 2024, total first mortgage loan originations were $176.5 million compared to $255.5 million for the three months ended September 30, 2024 and $273.0 million for the three months ended December 31, 2023.

Investment securities available for sale increased $7.6 million, or 1%, to $533.9 million at March 31, 2025, from $526.3 million at September 30, 2024.

The increase was due to the combined effect of purchases exceeding cash flow from security repayments and maturities during the six months ended March 31, 2025 as well as an increase in fair values, the result of market interest rate decreases between the periods compared.

There were no sales of investment securities during the six months ended March 31, 2025.

Mortgage loans held for sale decreased by $12.0 million, or 67%, to $5.8 million at March 31, 2025, from $17.8 million at September 30, 2024 due to a decrease in both loans committed to forward sales and loans identified for future sale.

Loans held for investment, net of deferred loan fees and allowance for credit losses, increased $38.1 million, or less than 1%, to $15.36 billion at March 31, 2025, from $15.32 billion at September 30, 2024.

During the six months ended March 31, 2025, the home equity loans and lines of credit portfolio increased $430.0 million and residential core mortgage loans decreased $390.3 million.

The changes in loans held for sale and loans held for investment were affected by the volume of loans originated, acquired and sold.

During the six months ended March 31, 2025, total first mortgage loan originations were $376.0 million compared to $408.8 million for the six months ended March 31, 2024.

Of total residential mortgage loans originated during the current period, $328.3 million (87%) were purchase transactions and $46.2 million (12%) were adjustable rate loans.

Commitments originated for home equity loans and lines of credit were $559.0 million for the three months ended December 31, 2024, compared to $655.4 million for the three months ended September 30, 2024 and $436.1 million for the three months ended December 31, 2023.

Commitments originated for home equity loans and lines of credit were $1.20 billion for the six months ended March 31, 2025, compared to $915.4 million for the six months ended March 31, 2024.

Refer to the Controlling Our Interest Rate Risk Exposure section of the Overview for additional information.

Other assets, including prepaid expenses, decreased $15.8 million, or 14%, to $98.3 million at December 31, 2024, from $114.1 million at September 30, 2024.

The decrease was primarily the result of a $12.6 million decrease in current and deferred income tax assets, which were liabilities at December 31, 2024, and a $2.2 million decrease in accounts receivable related to funds held by the benefit plan administrator for the employee stock ownership plan.

Deposits increased $12.2 million, or less than 1%, to $10.21 billion at December 31, 2024, from $10.20 billion at September 30, 2024.

The increase in deposits included a $14.2 million increase in checking accounts and a $13.2 million increase in savings accounts, partially offset by a $15.5 million decrease in money market accounts.

Based on FDIC insurance limits by ownership structure, uninsured deposits were $377.4 million and $349.3 million at December 31, 2024 and September 30, 2024, respectively.

Borrowed funds decreased $136.5 million, or 3%, to $4.66 billion at December 31, 2024, from $4.79 billion at September 30, 2024.

The total balance of borrowed funds at December 31, 2024, all from the FHLB, included $1.63 billion of long-term advances with a weighted average maturity of 2.0 years, $2.93 billion of short-term advances aligned with interest rate swap contracts and $81.0 million in overnight borrowings.

Other assets, including prepaid expenses, decreased $10.2 million, or 9%, to $103.9 million at March 31, 2025, from $114.1 million at September 30, 2024.

The decrease was primarily the result of a $4.9 million decrease in current and deferred income tax assets, as well as, a $4.9 million decrease in interest receivable from swaps.

Deposits increased $202.6 million, or 2.0%, to $10.40 billion at March 31, 2025, from $10.20 billion at September 30, 2024.

The increase in deposits included a $230.1 million increase in certificates of deposit and a $12.1 million increase in savings accounts, partially offset by a $33.3 million decrease in money market accounts and a a $2.4 million decrease in checking accounts.

Based on FDIC insurance limits by ownership structure, uninsured deposits were $370.0 million and $349.3 million at March 31, 2025 and September 30, 2024, respectively.

Borrowed funds decreased $205.5 million, or 4%, to $4.59 billion at March 31, 2025, from $4.79 billion at September 30, 2024.

The total balance of borrowed funds at March 31, 2025, all from the FHLB, included $1.56 billion of long-term advances with a weighted average maturity of 1.8 years, $2.88 billion of short-term advances aligned with interest rate swap contracts and $139.0 million in overnight borrowings.

Interest rate swaps have been used to extend the duration of short-term borrowings, at inception, by paying a fixed rate of interest and receiving the variable rate.

Refer to the Extending the Duration of Funding Sources section of the Overview for additional discussion regarding short-term borrowings and interest-rate swaps.

Borrowers' advances for insurance and taxes increased by $26.4 million to $140.0 million at December 31, 2024, from $113.6 million at September 30, 2024.

Borrowers' advances for insurance and taxes decreased by $13.4 million to $100.3 million at March 31, 2025, from $113.6 million at September 30, 2024.

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.

Total shareholders’ equity increased $51.7 million, or 3%, to $1.91 billion at December 31, 2024, from $1.86 billion at September 30, 2024.

Total shareholders’ equity increased $34.0 million, or 2%, to $1.90 billion at March 31, 2025, from $1.86 billion at September 30, 2024.

The increase reflects $43.4 million of net income in the current year reduced by dividends of $29.7 million.

Other changes include $42.4 million of net increase in accumulated other comprehensive income, primarily related to changes in market values due to fluctuations in market interest rates of our swap contracts.

During the three months ended December 31, 2024, we did not repurchase shares of our common stock.

The Company's eighth stock repurchase program allows for a total of 10,000,000 shares to be repurchased, with 5,191,951 shares remaining to be repurchased at December 31, 2024.

Other changes include $16.4 million of net increase in accumulated other comprehensive income, primarily related to a net increase in unrealized gains on swap contracts.

During the six months ended March 31, 2025, we did not repurchase shares of our common stock.

The Company's eighth stock repurchase program allows for a total of 10,000,000 shares to be repurchased, with 5,191,951 shares remaining to be repurchased at March 31, 2025.

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.

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Unregistered Sales of Equity Securities and Use of Proceeds for additional details regarding the repurchase of shares of common stock and the dividend waiver.

Comparison of Operating Results for the Three Months Ended December 31, 2024 and 2023

Comparison of Operating Results for the Three Months Ended March 31, 2025 and 2024

Average Balances and Yields .

5 unchanged sentences

Three Months Ended Three Months Ended

December 31, 2024 December 31, 2023

March 31, 2025 March 31, 2024

Balance Interest

6 unchanged sentences

Interest-earning cash equivalents $ 416,911 $ 4,578 4.39 % $ 720,657 $ 9,919 5.51 %

$ 424,111 $ 4,949 4.67 % $ 398,506 $ 5,124 5.14 %

Investment securities 54,105 552 4.08 72,091 907 5.03

60,183 674 4.48 64,778 850 5.25

Mortgage-backed securities 466,617 4,203 3.60 448,653 3,569 3.18

454,332 3,781 3.33 444,411 3,545 3.19

15,326,120 172,152 4.49 15,232,349 162,035 4.26

Loans (2) 15,351,040 171,506 4.47 15,163,185 162,970 4.30

Federal Home Loan Bank stock 219,813 5,113 9.30 244,560 6,128 10.02

225,977 5,212 9.23 270,540 5,605 8.29

Total interest-earning assets 16,508,486 185,952 4.51 16,649,146 183,493 4.41

3 unchanged sentences

Checking accounts $ 822,059 89 0.04 $ 887,584 98 0.04

$ 826,383 90 0.04 $ 937,817 118 0.05

Savings accounts 1,219,188 2,722 0.89 1,561,331 5,598 1.43

1,289,788 3,353 1.04 1,721,466 6,912 1.61

Certificates of deposit 8,292,210 72,568 3.50 7,548,314 66,989 3.55

8,058,740 74,499 3.70 6,847,482 57,296 3.35

Borrowed funds 4,542,318 38,524 3.39 5,033,253 39,430 3.13

4,653,328 40,498 3.48 5,228,239 43,741 3.35

Total interest-bearing liabilities 14,875,775 113,903 3.06 15,030,482 112,115 2.98

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(5) Net interest margin represents net interest income divided by total interest-earning assets.

Net income increased $1.7 million, or 8%, to $22.4 million for the quarter ended December 31, 2024, from $20.7 million for the quarter ended December 31, 2023.

The increase in net income was primarily attributable to a decline in non-interest expense, offset by a slight decrease in net interest income.

Net income increased $0.3 million, or 1%, to $21.0 million for the quarter ended March 31, 2025, from $20.7 million for the quarter ended March 31, 2024.

The increase in net income was primarily attributable to an increase in net interest income and non-interest income, a decrease in non-interest expense, partially offset by an increase in the provision for credit losses.

Interest and Dividend Income.

Interest and dividend income increased $2.5 million, or 1%, to $186.0 million during the current quarter, compared to $183.5 million during the same quarter in the prior year.

The increase in interest and dividend income was primarily the result of an increase in interest income on loans, offset by a decrease in income earned on FHLB stock.

The increase in interest and dividend income was primarily the result of an increase in interest income on loans, offset by decreases in income earned on FHLB stock and other interest-bearing cash equivalents.

Interest income on loans increased $8.5 million, or 5%, to $171.5 million during the current quarter, compared to $163.0 million for the same quarter in the prior year.

This change was primarily attributed to a 23 basis point increase in the average yield on loans for the quarter ended December 31, 2024, to 4.49%, compared to 4.26% the same quarter last year.

It was also attributed to a 1%, or $93.8 million, increase in the average balance of loans to $15.33 billion for the quarter ended December 31, 2024, compared to $15.23 billion during the same quarter last year as new loan production exceeded principal repayments and loan sales over the past year.

This change was primarily attributed to a 17 basis point increase in the average yield on loans for the quarter ended March 31, 2025, to 4.47%, compared to 4.30% the same quarter last year.

It was also attributed to a 1%, or $187.9 million, increase in the average balance of loans to $15.35 billion for the quarter ended March 31, 2025, compared to $15.16 billion during the same quarter last year as new loan production exceeded principal repayments and loan sales.

Interest Expense .

Interest expense increased $10.3 million, or 10%, to $118.4 million during the current quarter, compared to $108.1 million for the quarter ended December 31, 2023.

Interest expense increased $1.8 million, or 2%, to $113.9 million during the current quarter, compared to $112.1 million for the quarter ended March 31, 2024.

The increase primarily resulted from an increase in interest expense on certificate of deposits, offset by decreases in interest expense on borrowed funds and savings deposits.

Interest expense on CDs, net of related interest rate swap contracts, increased $17.2 million, or 30%, to $74.5 million during the current quarter, compared to $57.3 million for the quarter ended December 31, 2023.

The increase was attributed to a 35 basis point increase in the average rate paid on CDs to 3.70% for the current quarter, from 3.35% for the same quarter last year.

Between the periods compared, maturing CDs were replaced by CDs at higher rates of interest, the majority with terms less than one year, that subsequently began maturing and repricing lower after the FRS's three rate cuts totaling 100 basis points between September and December 2024.

Additionally, there was a $1.21 billion, or 17.7%, increase in the average balance of CDs to $8.06 billion during the current quarter, from $6.85 billion during the same quarter of the prior year.

Interest expense on borrowed funds, net of related interest rate swap contracts, decreased $3.2 million, or 7%, to $40.5 million during the current quarter, compared to $43.7 million for the quarter ended December 31, 2023.

Interest expense on CDs, net of related interest rate swap contracts, increased $5.6 million, or 8%, to $72.6 million during the current quarter, compared to $67.0 million for the quarter ended March 31, 2024.

The increase was primarily attributed to a $743.9 million, or 9.9%, increase in the average balance of CDs to $8.29 billion during the current quarter, from $7.55 billion during the same quarter of the prior year, partially offset by a 5 basis point decrease in the average rate paid on CDs, to 3.50% for the current quarter, from 3.55% for the same quarter last year.

Interest expense on borrowed funds, net of related interest rate swap contracts, decreased $0.9 million, or 2%, to $38.5 million during the current quarter, compared to $39.4 million for the quarter ended March 31, 2024.

This decrease was mainly attributed to a decrease in the average balance of borrowed funds of $490.9 million, or 10%, to $4.54 billion during the current quarter from an average balance of $5.03 billion during the same quarter of the prior year.

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Net Interest Income.

Net interest income decreased $0.8 million to $68.3 million during the current quarter, compared to $69.1 million for the quarter ended December 31, 2023.

The decrease was primarily due to an increase in the weighted average rate paid on interest-bearing liabilities, partially offset by an increase in the weighted average rate paid on interest-earning assets.

Average interest-earning assets during the current quarter increased $80.1 million, or less than 1%, when compared to the quarter ended December 31, 2023.

The increase in average interest-earning assets was attributed primarily to an increase in the average balances of loans, offset by decrease in the average balance of FHLB stock.

In addition to the increase in average interest-earning assets, the yield on those assets increased 21 basis points to 4.53% from 4.32%, as a result of the weighted average increase in mortgage rates offsetting the weighted average decrease in home equity rates.

The average balance and cost of interest-bearing liabilities increased $93.2 million and 26 basis points, respectively, mainly due to an increase in the average balance of CDs and higher pricing of CDs maturing between the periods compared.

The interest rate spread decreased five basis points to 1.34% compared to 1.39% during the same quarter last year.

The net interest margin decreased two basis points to 1.66% in the current quarter compared to 1.68% for the same quarter last year.

The decrease in our interest rate spread and net interest margin was primarily due to increases in the average balances and cost of CDs described above.

Net interest income increased $0.6 million to $72.0 million during the current quarter, compared to $71.4 million for the quarter ended March 31, 2024.

The increase was primarily due to an increase in the yield of interest-earning assets, partially offset by a slight increase in the weighted average rate paid on interest-bearing liabilities.

Average interest-earning assets during the current quarter decreased $140.7 million, or less than 1%, when compared to the quarter ended March 31, 2024.

The decrease in average interest-earning assets was attributed primarily to a decrease in the average balance of other interest-bearing cash equivalents and a decrease in the average balance of FHLB stock, offset by an increase in the average balances of loans.

The yield on interest-earning assets increased 10 basis points to 4.51% from 4.41%.

The average balance of interest-bearing liabilities decreased $154.7 million, primarily due to decreases in the average balance of borrowed funds and savings accounts, offset by an increase in the average balance of CDs.

The interest rate spread increased two basis points to 1.45% compared to 1.43% during the same quarter last year.

The net interest margin increased four basis points to 1.75% in the current quarter compared to 1.71% for the same quarter last year.

Refer to Controlling Our Interest Rate Risk Exposure of the Overview section for further discussion.

Provision (Release) for Credit Losses.

We recorded a release of the allowance for credit losses on loans and off-balance sheet exposures of $1.5 million during the quarter ended December 31, 2024, compared to a release of $1.0 million during the quarter ended December 31, 2023.

We recorded a provision of the allowance for credit losses on loans and off-balance sheet exposures of $1.5 million during the quarter ended March 31, 2025, compared to a release of $1.0 million during the quarter ended March 31, 2024.

As delinquencies in the portfolio have been resolved through pay-offs, short sale or foreclosure, or management determines the collateral is not sufficient to satisfy the loan balance, uncollected balances have been charged against the allowance for credit losses previously provided.

Recoveries of amounts charged against the allowance for credit losses occur when collateral values increase and homes are sold or when borrowers repay the amounts previously charged-off.

In the current quarter, we recorded net recoveries of $1.4 million compared to net recoveries of $1.0 million for the quarter ended December 31, 2023.

In the current quarter, we recorded net recoveries of $0.7 million compared to net recoveries of $1.3 million for the quarter ended March 31, 2024.

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.

2 unchanged sentences

Non-Interest Income.

Non-interest income increased $0.2 million, or 3%, to $6.5 million during the current quarter, compared to $6.3 million for the quarter ended December 31, 2023, primarily due to an increase in net gain on the sale of loans.

Non-interest income increased $1.4 million, or 24%, to $7.1 million during the current quarter, compared to $5.7 million for the quarter ended March 31, 2024, primarily due to increases of $0.8 million in net gain on the sale of loans and $0.5 million in cash surrender value increases and death benefits from bank owned life insurance contracts.

Non-Interest Expense.

Non-interest expense decreased $2.4 million, or 5%, to $47.9 million during the current quarter, compared to $50.3 million for the quarter ended December 31, 2023.

The decrease primarily consisted of a $0.7 million decrease in marketing expense, a $0.7 million decrease in other operating expenses and a $0.5 million decrease in salaries and employee benefits.

The decrease in other operating expenses was mainly due to a decrease in telecommunications expense and an increased benefit from actuarial calculations on the defined benefit plan.

Non-interest expense decreased $1.1 million, or 2%, to $51.1 million during the current quarter, compared to $52.2 million for the quarter ended March 31, 2024.

The decrease primarily consisted of a $0.5 million decrease in marketing expense and a $0.7 million decrease in other operating expenses.

Income Tax Expense.

The provision for income taxes increased $0.6 million to $6.0 million during the current quarter, compared to $5.4 million for the quarter ended December 31, 2023.

The provision for income taxes increased $0.3 million to $5.5 million during the current quarter, compared to $5.2 million for the quarter ended March 31, 2024.

The provision for the current quarter included $4.9 million of federal income tax provision and $0.6 million of state income tax expense.

The provision for the quarter ended December 31, 2023 included $5.1 million of federal income tax provision and $0.3 million of state income tax expense.

Our effective federal tax rate was 19.8% during the quarters ended December 31, 2024 and December 31, 2023.

The provision for the quarter ended March 31, 2024 included $4.7 million of federal income tax provision and $0.5 million of state income tax expense.

Our effective federal tax rate was 19.0% and 18.4% during the quarters ended March 31, 2025 and March 31, 2024.

Comparison of Operating Results for the Six Months Ended March 31, 2025 and 2024

Average balances and yields .

The following table sets forth average balances, average yields and costs, and certain other information for the periods indicated.

No tax-equivalent yield adjustments were made, as the effects thereof were not material.

Average balances are derived from daily average balances.

Non-accrual loans are included in the computation of loan average balances, but only cash payments received on those loans during the period presented are reflected in the yield.

The yields set forth below include the effect of deferred fees, deferred expenses, discounts and premiums that are amortized or accreted to interest income or interest expense.

Six Months Ended Six Months Ended

March 31, 2025 March 31, 2024

Balance Interest

Expense Yield/

Cost (1) Average

Balance Interest

Expense Yield/

(Dollars in thousands)

Interest-earning assets:

Interest-earning cash equivalents $ 420,511 $ 9,527 4.53 % $ 559,581 $ 15,043 5.38 %

Investment securities 57,144 1,226 4.29 68,435 1,757 5.13

Mortgage-backed securities 460,475 7,984 3.47 446,532 7,114 3.19

Loans (2) 15,338,580 343,658 4.48 15,197,767 325,005 4.28

Federal Home Loan Bank stock 222,895 10,325 9.26 257,550 11,733 9.11

Total interest-earning assets 16,499,605 372,720 4.52 16,529,865 360,652 4.36

Noninterest-earning assets 529,459 529,303

Total assets $ 17,029,064 $ 17,059,168

Interest-bearing liabilities:

Checking accounts $ 824,221 179 0.04 $ 912,701 216 0.05

Savings accounts 1,254,488 6,075 0.97 1,641,398 12,510 1.52

Certificates of deposit 8,175,475 147,067 3.60 7,197,898 124,285 3.45

Borrowed funds 4,597,823 79,022 3.44 5,130,746 83,171 3.24

Total interest-bearing liabilities 14,852,007 232,343 3.13 14,882,743 220,182 2.96

Noninterest-bearing liabilities 253,621 245,503

Total liabilities 15,105,628 15,128,246

Shareholders’ equity 1,923,436 1,930,922

Total liabilities and shareholders’ equity $ 17,029,064 $ 17,059,168

Net interest income $ 140,377 $ 140,470

Interest rate spread (1)(3) 1.39 % 1.40 %

Net interest-earning assets (4) $ 1,647,598 $ 1,647,122

Net interest margin (1)(5) 1.70 % 1.70 %

Average interest-earning assets to average interest-bearing liabilities 111.09 % 111.07 %

Selected performance ratios:

Return on average assets (1) 0.51 % 0.49 %

Return on average equity (1) 4.52 % 4.29 %

Average equity to average assets 11.30 % 11.32 %

_________________

(1) Annualized.

(2) Loans include both mortgage loans held for sale and loans held for investment.

(3) Interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.

(4) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

(5) Net interest margin represents net interest income divided by total interest-earning assets.

Net income increased $2.0 million to $43.4 million for the six months ended March 31, 2025, compared to $41.4 million for the six months ended March 31, 2024.

The increase in net income was primarily driven by an increase in non-interest income and a decrease in non-interest expense, partially offset by an increase in the provision for credit losses.

Interest and Dividend Income.

Interest and dividend income increased $12.0 million, or 3%, to $372.7 million during the six months ended March 31, 2025, compared to $360.7 million during the same six months in the prior year.

The increase in interest and dividend income resulted mainly from an increase in interest income on loans, partially offset by decreases in income earned on FHLB stock and other interest-bearing cash equivalents.

Interest income on loans increased $18.7 million, or 6%, to $343.7 million for the six months ended March 31, 2025, compared to $325.0 million for the six months ended March 31, 2024.

This increase was attributed mainly to a 20 basis point increase in the average yield on loans to 4.48% for the six months ended March 31, 2025, from 4.28% for the same six months in the prior fiscal year.

Adding to the increase was a $140.8 million increase in the average balance of loans to $15.34 billion for the current six months compared to $15.20 billion for the prior fiscal year period as new loan production exceeded repayments and loan sales during the current fiscal year.

Interest Expense.

Interest expense increased $12.1 million, or 5%, to $232.3 million during the current six months compared to $220.2 million during the six months ended March 31, 2024.

This increase mainly resulted from an increase in interest expense and average volume of deposits and borrowed funds.

Interest expense on CDs, net of related interest rate swap contracts, increased $22.8 million, or 18%, to $147.1 million during the six months ended March 31, 2025, compared to $124.3 million during the six months ended March 31, 2024.

The increase was attributed primarily to a 15 basis point increase in the average rate paid on CDs to 3.60% during the current six months from 3.45% during the same six months last fiscal year.

In addition, there was a $977.6 million, or 14%, increase in the average balance of CDs to $8.18 billion, from $7.20 billion during the same six months of the prior fiscal year.

Interest expense on savings accounts decreased $6.4 million to $6.1 million during the six months ended March 31, 2025, compared to interest expense of $12.5 million for the six-month period ended March 31, 2024.

Interest expense on borrowed funds, net of related interest rate swap contracts, decreased $4.2 million, or 5%, to $79.0 million during the six months ended March 31, 2025, from $83.2 million during the six months ended March 31, 2024.

The decrease was primarily the result of a decrease of $532.9 million in the average balance of borrowed funds to $4.60 billion for the six months ended March 31, 2025 compared to $5.13 billion for the same period of the prior fiscal year.

There was a 20 basis point increase in the average rate paid for these funds to 3.44%, from 3.24% for the six months ended March 31, 2025 and March 31, 2024, respectively.

Refer to the Extending the Duration of Funding Sources section of the Overview and Comparison of Financial Condition for further discussion.

Net Interest Income.

Net interest income decreased $0.1 million, or less than 1%, to $140.4 million during the six months ended March 31, 2025, from $140.5 million during the six months ended March 31, 2024.

The net decrease consisted of a $12.0 million decrease in interest income offset by a $12.1 million decrease in interest expense.

Average interest-earning assets decreased during the current six months by $30.3 million to $16.50 billion when compared to the six months ended March 31, 2024.

The decrease in average assets was attributed primarily to a $34.7 million decrease in FHLB stock and a $139.1 million decrease in interest-bearing cash equivalents, offset by a $140.8 million increase in the average balance of our loans.

The yield on average interest-earning assets increased 16 basis points to 4.52% for the six months ended March 31, 2025, from 4.36% for the six months ended March 31, 2024.

Average interest-bearing liabilities decreased $30.7 million to $14.85 billion for the six months ended March 31, 2025, compared to $14.88 billion for the six months ended March 31, 2024.

Average interest-bearing liabilities experienced an 17 basis point increase in cost for the six months ended March 31, 2025 and the interest rate spread decreased 1 basis point to 1.39% when compared to 1.40% during the same six months of the prior fiscal year period.

The net interest margin was 1.70% for both the six months ended March 31, 2025, the six months ended March 31, 2024.

Provision (Release) for Credit Losses .

There was no provision for credit losses on loans and off-balance sheet exposures during the six months ended March 31, 2025, and a $2.0 million release of provision for credit losses at March 31, 2024.

In the current six months, we recorded net recoveries of $2.1 million, as compared to net recoveries of $2.3 million for the six months ended March 31, 2024.

Credit loss provisions (releases) are recorded with the objective of aligning our allowance for credit loss balances with our current estimates of loss in the portfolio.

As delinquencies in the portfolio have been resolved through pay-off, short sale or foreclosure, or management determines the collateral is not sufficient to satisfy the loan balance, uncollected balances have been charged against the allowance for credit losses previously provided.

Refer to the Lending Activities section of the Overview and Note 4.

LOANS AND ALLOWANCES FOR CREDIT LOSSES of the NOTES TO CONSOLIDATED FINANCIAL STATEMENTS for further discussion.

Non-Interest Income.

Non-interest income increased $1.6 million, or 13%, to $13.6 million during the six months ended March 31, 2025, compared to $12.0 million during the six months ended March 31, 2024.

The increase in non-interest income was primarily due to a $1.4 million increase in the net gain on sale of loans and a $0.8 million increase in loan fees and service charges, partially offset by a $0.7 million decrease in other expenses.

There were loan sales of $147.2 million during the six months ended March 31, 2025, compared to loan sales of $121.3 million during the six months ended March 31, 2024.

Non-Interest Expense.

Non-interest expense decreased $3.5 million, or 3%, to $99.0 million during the six months ended March 31, 2025, compared to $102.5 million during the six months ended March 31, 2024.

This decrease was driven by a $1.5 million decrease in other operating expenses, a $1.2 million decrease in marketing expenses, a $0.5 million decrease in federal insurance premiums and a $0.3 million decrease in salaries and employee benefits.

Income Tax Expense.

The provision for income taxes increased $0.9 million to $11.5 million during the six months ended March 31, 2025, from $10.6 million for the six months ended March 31, 2024, reflecting the higher level of pre-tax income during the more recent period.

The provision for the current six months included $10.5 million of federal income tax provision and $1.0 million of state income tax provision.

The provision for the six months ended March 31, 2024 included $9.8 million of federal income tax provision and $0.8 million of state income tax provision.

Our effective federal tax rate was 19.4% during the six months ended March 31, 2025, and 19.1% during the six months ended March 31, 2024.

Liquidity and Capital Resources

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In addition to the primary sources of funds described above, we have the ability to obtain funds through the use of collateralized borrowings in the wholesale markets, and from sales of securities.

Also, debt issuance by the Company and access to the equity capital markets via a supplemental minority stock offering or a full conversion (second-step) transaction remain as other potential sources of liquidity, although these channels generally require up to nine months of lead time.

While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and mortgage prepayments are greatly influenced by interest rates, economic conditions and competition.

The Association’s Asset/Liability Management Committee is responsible for establishing and monitoring our liquidity targets and strategies in order to ensure that sufficient liquidity exists for meeting the borrowing needs and deposit withdrawals of our customers as well as unanticipated contingencies.

We generally seek to maintain a minimum liquidity ratio of 5% (which we compute as the sum of the average cash and cash equivalents plus unencumbered investment securities for which ready markets exist, divided by total average assets).

For the three months ended December 31, 2024, our liquidity ratio averaged 5.44%.

We had sufficient sources of liquidity to satisfy our short- and long-term liquidity needs as of December 31, 2024.

For the three months ended March 31, 2025, our liquidity ratio averaged 5.60%.

We had sufficient sources of liquidity to satisfy our short- and long-term liquidity needs as of March 31, 2025.

We regularly adjust our investments in liquid assets based upon our assessment of expected loan demand, expected deposit flows, yields available on interest-earning deposits and securities, scheduled liability maturities and the objectives of our asset/liability management program.

Excess liquid assets are generally invested in interest-earning deposits and short- and intermediate-term securities.

Excess liquidity is generally invested in interest-earning deposits and short- and intermediate-term securities.

Our most liquid assets are cash and cash equivalents.

The levels of these assets are dependent on our operating, financing, lending and investing activities during any given period.

At December 31, 2024, cash and cash equivalents totaled $465.9 million, which represented an increase of less than 1% from $463.7 million at September 30, 2024.

Investment securities classified as available-for-sale, which provide additional sources of liquidity, totaled $507.7 million at December 31, 2024.

During the three-month period ended December 31, 2024, we settled $81.6 million of loan sales and had commitments to sell $1.6 million of mortgage loans to Fannie Mae at December 31, 2024.

At March 31, 2025, cash and cash equivalents totaled $463.6 million, which represented a decrease of less than 1% from $463.7 million at September 30, 2024.

Investment securities classified as available-for-sale, all of which are government guaranteed, provide additional sources of liquidity, totaled $533.9 million at March 31, 2025.

During the six-month period ended March 31, 2025, we settled $152.9 million of loan sales and had commitments to sell $15.7 million of mortgage loans to Fannie Mae at March 31, 2025.

Our cash flows are derived from operating activities, investing activities and financing activities as reported in our CONSOLIDATED STATEMENTS OF CASH FLOWS .

At December 31, 2024, we had $268.5 million in outstanding commitments to originate loans.

At March 31, 2025, we had $375.1 million in outstanding commitments to originate loans.

In addition to commitments to originate loans, we had $5.43 billion in unfunded home equity lines of credit to borrowers.

CDs due within one year of December 31, 2024, totaled $5.15 billion, or 50.5% of total deposits.

If these deposits do not remain with us, we will be required to seek other sources of funds, including loan sales, sales of investment securities, other deposit products, including new CDs, brokered CDs, FHLB advances, borrowings from the FRB-Cleveland Discount Window or other collateralized borrowings.

Depending on market conditions, we may be required to pay higher rates on such deposits or other borrowings than

we currently pay on the CDs due on or before December 31, 2025.

CDs due within one year of March 31, 2025, totaled $5.39 billion, or 51.8% of total deposits.

If these deposits do not remain with us, we will be required to seek other sources of funds, including loan sales, sales of investment securities, other deposit products, including new CDs,

brokered CDs, FHLB advances, borrowings from the FRB-Cleveland Discount Window or other collateralized borrowings.

Depending on market conditions, we may be required to pay higher rates on such deposits or other borrowings than we currently pay on the CDs due on or before March 31, 2026.

We believe, however, based on past experience, that a significant portion of such deposits will remain with us.

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Our primary investing activities are originating residential mortgage loans, home equity loans and lines of credit and purchasing investment securities.

During the three months ended December 31, 2024, we originated $176.5 million of residential mortgage loans, and $559.0 million of commitments for home equity loans and lines of credit, while during the three months ended December 31, 2023, we originated $273.0 million of residential mortgage loans and $436.1 million of commitments for home equity loans and lines of credit.

We purchased $86.1 million of securities during the three months ended December 31, 2024, and $80.8 million during the three months ended December 31, 2023.

Also, during the three months ended December 31, 2024 and December 31, 2023, we purchased $40.8 million and $31.7 million of long-term, residential mortgage loans, respectively.

During the six months ended March 31, 2025, we originated $376.0 million of residential mortgage loans, and $1.20 billion of commitments for home equity loans and lines of credit, while 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.

We purchased $127.2 million of securities during the six months ended March 31, 2025, and $96.7 million during the six months ended March 31, 2024.

Also, during the six months ended March 31, 2025 and March 31, 2024, we acquired $127.6 million and $85.8 million of long-term, residential 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.

We experienced a net increase in total deposits of $12.2 million during the three months ended December 31, 2024, which reflected the active management of the offered rates on maturing CDs, compared to a net increase of $471.2 million during the three months ended December 31, 2023.

We experienced a net increase in total deposits of $202.6 million during the six months ended March 31, 2025, which reflected the active management of the offered rates on maturing CDs, compared to a net increase of $485.8 million during the six months ended March 31, 2024.

Deposit flows are affected by the overall level of interest rates, the interest rates and products offered by us and our local competitors, and by other factors.

During the three months ended December 31, 2024, there was a $119.8 million decrease in the balance of brokered CDs (exclusive of acquisition costs and subsequent amortization), which had a balance of $1.10 billion at December 31, 2024.

At December 31, 2023, the balance of brokered CDs was $1.49 billion.

Principal and interest owed on loans serviced for others experienced a net increase of $10.7 million to $39.4 million during the three months ended December 31, 2024, compared to a net decrease of $0.6 million to $29.2 million during the three months ended December 31, 2023.

During the three months ended December 31, 2024, we decreased our total borrowings by $136.5 million as we managed our growth, capital initiatives, and liquidity ratio.

During the three months ended December 31, 2023, our total borrowings decreased by $243.1 million.

During the six months ended March 31, 2025, there was a $185.3 million decrease in the balance of brokered CDs (exclusive of acquisition costs and subsequent amortization), which had a balance of $1.03 billion at March 31, 2025.

At March 31, 2024, the balance of brokered CDs was $1.26 billion.

Principal and interest owed on loans serviced for others experienced a net decrease of $1.5 million to $27.2 million during the six months ended March 31, 2025, compared to a net decrease of $3.9 million to $25.9 million during the six months ended March 31, 2024.

During the six months ended March 31, 2025, we decreased our total borrowings by $205.5 million as we managed our growth, capital initiatives, and liquidity ratio.

During the six months ended March 31, 2024, our total borrowings decreased by $318.2 million.

Liquidity management is both a daily and long-term function of business management.

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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.

At December 31, 2024, we had $4.64 billion of FHLB of Cincinnati advances, no outstanding borrowings from the FRB-Cleveland Discount Window and no outstanding borrowings in the form of Fed Funds.

During the three months ended December 31, 2024, we had average outstanding advances from the FHLB of Cincinnati of $4.65 billion, as compared to average outstanding advances of $5.23 billion during the three months ended December 31, 2023.

At March 31, 2025, we had $4.57 billion of FHLB of Cincinnati advances, no outstanding borrowings from the FRB-Cleveland Discount Window and no outstanding borrowings in the form of Fed Funds.

During the six months ended March 31, 2025, we had average outstanding advances from the FHLB of Cincinnati of $4.60 billion, as compared to average outstanding advances of $5.13 billion during the six months ended March 31, 2024.

Refer to the Extending the Duration of Funding Sources section of the Overview for further discussion.

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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.

At December 31, 2024, the Association exceeded the regulatory requirement for the "capital conservation buffer".

As of December 31, 2024, the Association exceeded all regulatory requirements to be considered “Well Capitalized” as presented in the table below (dollar amounts in thousands).

At March 31, 2025, the Association exceeded the regulatory requirement for the "capital conservation buffer".

As of March 31, 2025, 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.

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Common Equity Tier 1 Capital to Risk-Weighted Assets 1,712,453 16.72 % 665,588 6.50 %

The capital ratios of the Company as of December 31, 2024, are presented in the table below (dollar amounts in thousands).

The capital ratios of the Company as of March 31, 2025, are presented in the table below (dollar amounts in thousands).

Total Capital to Risk-Weighted Assets $ 1,945,402 18.99 %

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Because of its intercompany nature, this dividend payment had no impact on the Company's capital ratios or its CONSOLIDATED STATEMENTS OF CONDITION but reduced the Association's reported capital ratios.

At December 31, 2024, the Company had, in the form of cash and a demand loan from the Association, $158.8 million of funds readily available to support its stand-alone operations.

At March 31, 2025, the Company had, in the form of cash and a demand loan from the Association, $143.9 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.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis