TFS Financial CORP 10-Q

Item 1. Financial Statements TFS FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CONDITION (unaudited) (In thousands, except share data) March 31, 2025 September 30, 2024 ASSETS Cash and due from banks $ 36,429 $ 26,287 Other interest-earning cash equivalents 427,154 437,431 Cash and cash equivalents 463,583 463,718 Investment securities available for sale (amortized cost $ 561,535 and $ 553,559 , respectively) 533,923 526,251 Mortgage loans held for sale ($ 4,745 and $ 10,713 measured at fair value, respectively) 5,803 17,775 Loans held for investment, net: Mortgage loans 15,356,569 15,321,400 Other loans 6,992 5,705 Deferred loan expenses, net 67,128 64,956 Allowance for credit loss on loans ( 70,546 ) ( 70,002 ) Loans, net 15,360,143 15,322,059 Mortgage loan servicing rights, net 7,833 7,627 Federal Home Loan Bank stock, at cost 219,231 228,494 Real estate owned, net — 174 Premises, equipment, and software, net 38,500 33,187 Accrued interest receivable 58,050 59,398 Bank owned life insurance contracts 320,728 317,977 Other assets 103,926 114,125 TOTAL ASSETS $ 17,111,720 $ 17,090,785 LIABILITIES AND SHAREHOLDERS’ EQUITY Deposits $ 10,397,645 $ 10,195,079 Borrowed funds 4,587,327 4,792,847 Borrowers’ advances for insurance and taxes 100,263 113,637 Principal, interest, and related escrow owed on loans serviced 27,249 28,753 Accrued expenses and other liabilities 102,579 97,845 Total liabilities 15,215,063 15,228,161 Commitments and contingent liabilities Preferred stock, $ 0.01 par value, 100,000,000 shares authorized, none issued and outstanding — — Common stock, $ 0.01 par value, 700,000,000 shares authorized; 332,318,750 shares issued; 280,836,948 and 280,710,854 outstanding at March 31, 2025 and September 30, 2024, respectively 3,323 3,323 Paid-in capital 1,755,054 1,754,365 Treasury stock, at cost; 51,481,802 and 51,607,896 shares at March 31, 2025 and September 30, 2024, respectively ( 771,123 ) ( 772,195 ) Unallocated ESOP shares ( 20,584 ) ( 22,750 ) Retained earnings—substantially restricted 929,195 915,489 Accumulated other comprehensive income (loss) 792 ( 15,608 ) Total shareholders’ equity 1,896,657 1,862,624 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 17,111,720 $ 17,090,785 See accompanying notes to unaudited interim consolidated financial statements. 4 Table of Contents TFS FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (unaudited) (In thousands, except share and per share data) For the Three Months Ended For the Six Months Ended March 31, March 31, 2025 2024 2025 2024 INTEREST AND DIVIDEND INCOME: Loans, including fees $ 171,506 $ 162,970 $ 343,658 $ 325,005 Investment securities available for sale 4,755 4,476 9,210 8,871 Other interest and dividend earning assets 9,691 16,047 19,852 26,776 Total interest and dividend income 185,952 183,493 372,720 360,652 INTEREST EXPENSE: Deposits 75,379 72,685 153,321 137,011 Borrowed funds 38,524 39,430 79,022 83,171 Total interest expense 113,903 112,115 232,343 220,182 NET INTEREST INCOME 72,049 71,378 140,377 140,470 PROVISION (RELEASE) FOR CREDIT LOSSES 1,500 ( 1,000 ) — ( 2,000 ) NET INTEREST INCOME AFTER PROVISION (RELEASE) FOR CREDIT LOSSES 70,549 72,378 140,377 142,470 NON-INTEREST INCOME: Fees and service charges, net of amortization 2,221 1,845 4,445 3,593 Net gain on the sale of loans 1,187 442 2,302 923 Increase in and death benefits from bank owned life insurance contracts 2,680 2,193 5,362 5,384 Other 980 1,242 1,462 2,137 Total non-interest income 7,068 5,722 13,571 12,037 NON-INTEREST EXPENSE: Salaries and employee benefits 27,666 27,501 54,272 54,617 Marketing services 4,632 5,099 8,286 9,530 Office property, equipment and software 7,617 7,303 14,461 14,148 Federal insurance premium and assessments 3,673 4,013 7,258 7,791 State franchise tax 1,199 1,238 2,246 2,414 Other expenses 6,301 7,044 12,506 13,975 Total non-interest expense 51,088 52,198 99,029 102,475 INCOME BEFORE INCOME TAXES 26,529 25,902 54,919 52,032 INCOME TAX EXPENSE 5,508 5,189 11,472 10,612 NET INCOME $ 21,021 $ 20,713 $ 43,447 $ 41,420 Earnings per share—basic and diluted $ 0.07 $ 0.07 $ 0.15 $ 0.15 Weighted average shares outstanding Basic 278,729,388 278,183,041 278,632,698 278,011,351 Diluted 279,719,382 279,046,837 279,644,307 279,019,468 See accompanying notes to unaudited interim consolidated financial statements. 5 Table of Contents TFS FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (unaudited) (In thousands) For the Three Months Ended For the Six Months Ended March 31, March 31, 2025 2024 2025 2024 Net income $ 21,021 $ 20,713 $ 43,447 $ 41,420 Other comprehensive income (loss), net of tax: Net change in unrealized gain (loss) on securities available for sale 5,271 ( 2,589 ) ( 232 ) 9,066 Net change in cash flow hedges ( 31,292 ) 34,717 16,632 ( 52,488 ) Net change in defined benefit plan obligation — 104 — 628 Total other comprehensive income (loss) ( 26,021 ) 32,232 16,400 ( 42,794 ) Total comprehensive income (loss) $ ( 5,000 ) $ 52,945 $ 59,847 $ ( 1,374 ) See accompanying notes to unaudited interim consolidated financial statements. 6 Table of Contents TFS FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (unaudited) (In thousands, except share and per share data) For the Three Months Ended March 31, 2024 Common Stock Paid-in capital Treasury stock Unallocated common stock held by ESOP Retained earnings Accumulated other comprehensive income (loss) Total shareholders' equity Balance at December 31, 2023 $ 3,323 $ 1,750,440 $ ( 772,195 ) $ ( 26,000 ) $ 900,973 $ 10,186 $ 1,866,727 Net Income — — — — 20,713 — $ 20,713 Other comprehensive income, net of tax — — — — — 32,232 $ 32,232 ESOP shares allocated or committed to be released — 349 — 1,083 — — $ 1,432 Compensation costs for equity incentive plans — 1,171 — — — — $ 1,171 Dividends declared to common shareholders ($ 0.2825 per common share) — — — — ( 14,778 ) — $ ( 14,778 ) Balance at March 31, 2024 $ 3,323 $ 1,751,960 $ ( 772,195 ) $ ( 24,917 ) $ 906,908 $ 42,418 $ 1,907,497 For the Three Months Ended March 31, 2025 Common Stock Paid-in capital Treasury stock Unallocated common stock held by ESOP Retained earnings Accumulated other comprehensive income (loss) Total shareholders' equity Balance at December 31, 2024 $ 3,323 $ 1,754,241 $ ( 771,572 ) $ ( 21,667 ) $ 923,139 $ 26,813 $ 1,914,277 Net Income — — — — 21,021 — 21,021 Other comprehensive income (loss), net of tax — — — — — ( 26,021 ) ( 26,021 ) ESOP shares allocated or committed to be released — 312 — 1,083 — — 1,395 Compensation costs for equity incentive plans — 950 — — — — 950 Treasury stock allocated to equity incentive plans — ( 449 ) 449 — — — — Dividends declared to common shareholders ($ 0.2825 per common share) — — — — ( 14,965 ) — ( 14,965 ) Balance at March 31, 2025 $ 3,323 $ 1,755,054 $ ( 771,123 ) $ ( 20,584 ) $ 929,195 $ 792 $ 1,896,657 7 Table of Contents For the Six Months Ended March 31, 2024 Common stock Paid-in capital Treasury stock Unallocated common stock held by ESOP Retained earnings Accumulated other comprehensive income (loss) Total shareholders’ equity Balance at September 30, 2023 $ 3,323 $ 1,755,027 $ ( 776,101 ) $ ( 27,084 ) $ 886,984 $ 85,212 $ 1,927,361 Cumulative effect from changes in accounting principle, net of tax 1 — — — — 7,898 — 7,898 Net income — — — — 41,420 — 41,420 Other comprehensive income (loss), net of tax — — — — — ( 42,794 ) ( 42,794 ) ESOP shares allocated or committed to be released — 671 — 2,167 — — 2,838 Compensation costs for equity incentive plans — 2,086 — — — — 2,086 Treasury stock allocated to equity incentive plan — ( 5,824 ) 3,906 — — — ( 1,918 ) Dividends declared to common shareholders ($ 0.5650 per common share) — — — — ( 29,394 ) — ( 29,394 ) Balance at March 31, 2024 $ 3,323 $ 1,751,960 $ ( 772,195 ) $ ( 24,917 ) $ 906,908 $ 42,418 $ 1,907,497 For the Six Months Ended March 31, 2025 Common stock Paid-in capital Treasury stock Unallocated common stock held by ESOP Retained earnings Accumulated other comprehensive income (loss) Total shareholders’ equity Balance at September 30, 2024 $ 3,323 $ 1,754,365 $ ( 772,195 ) $ ( 22,750 ) $ 915,489 $ ( 15,608 ) $ 1,862,624 Net income — — — — 43,447 — 43,447 Other comprehensive income (loss), net of tax — — — — — 16,400 16,400 ESOP shares allocated or committed to be released — 673 — 2,166 — — 2,839 Compensation costs for equity incentive plans — 1,855 — — — — 1,855 Treasury stock allocated to equity incentive plan — ( 1,839 ) 1,072 — — — ( 767 ) Dividends declared to common shareholders ($ 0.5650 per common share) — — — — ( 29,741 ) — ( 29,741 ) Balance at March 31, 2025 $ 3,323 $ 1,755,054 $ ( 771,123 ) $ ( 20,584 ) $ 929,195 $ 792 $ 1,896,657 1 Related to ASU 2022-02 adopted November 2, 2023, based on September 30, 2023 data. See accompanying notes to unaudited interim consolidated financial statements. 8 Table of Contents TFS FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (In thousands) For the Six Months Ended March 31, 2025 2024 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 43,447 $ 41,420 Adjustments to reconcile net income to net cash provided by operating activities: ESOP and stock-based compensation expense 4,694 4,924 Depreciation and amortization 10,863 9,096 Deferred income taxes 20 ( 118 ) Provision (release) for credit losses — ( 2,000 ) Net gain on the sale of loans ( 2,302 ) ( 923 ) Other net (gains) losses ( 19 ) 230 Proceeds from sales of loans held for sale 43,565 17,326 Loans originated and principal repayments on loans for sale ( 32,537 ) ( 22,791 ) Increase in bank owned life insurance contracts ( 5,373 ) ( 5,384 ) Net decrease in interest receivable and other assets 8,602 2,614 Net (decrease) increase in accrued expenses and other liabilities ( 4,190 ) 6,143 Net cash provided by operating activities 66,770 50,537 CASH FLOWS FROM INVESTING ACTIVITIES: Loans originated ( 1,619,810 ) ( 1,351,348 ) Principal repayments on loans 1,467,592 1,271,878 Proceeds from sales, principal repayments and maturities of: Securities available for sale 118,618 96,689 Proceeds from sale of: Loans 110,738 100,151 Real estate owned 193 983 FHLB stock 12,175 41,248 Purchases of: FHLB stock ( 2,912 ) ( 34,515 ) Securities available for sale ( 127,231 ) ( 96,733 ) Premises and equipment ( 7,584 ) ( 1,515 ) Other 1,896 3,295 Net cash (used in) provided by investing activities ( 46,325 ) 30,133 CASH FLOWS FROM FINANCING ACTIVITIES: Net increase in deposits 206,636 475,297 Net decrease in borrowers' advances for insurance and taxes ( 13,374 ) ( 24,925 ) Net decrease in principal and interest owed on loans serviced ( 1,504 ) ( 3,865 ) Net increase (decrease) in short-term borrowed funds 74,000 ( 642,000 ) Proceeds from long-term borrowed funds — 575,000 Repayment of long-term borrowed funds ( 276,130 ) ( 251,328 ) Cash collateral/settlements received from (provided to) derivative counterparties 20,354 ( 49,844 ) Acquisition or net settlement of treasury shares ( 767 ) ( 1,918 ) Dividends paid to common shareholders ( 29,795 ) ( 29,499 ) Net cash (used in) provided by financing activities ( 20,580 ) 46,918 NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS ( 135 ) 127,588 CASH AND CASH EQUIVALENTS—Beginning of period 463,718 466,746 CASH AND CASH EQUIVALENTS—End of period $ 463,583 $ 594,334 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid for interest on deposits $ 161,949 $ 134,833 Cash paid for interest on borrowed funds 103,700 120,489 Cash paid (received) for interest on interest rate swaps ( 30,630 ) ( 45,595 ) Cash paid for income taxes 7,144 10,635 SUPPLEMENTAL SCHEDULES OF NONCASH INVESTING AND FINANCING ACTIVITIES: Transfer of loans from held for investment to held for sale 109,519 100,594 Transfer of loans from held for sale to held for investment 1,327 — Treasury stock issued for stock benefit plans 1,839 5,824 See accompanying notes to unaudited interim consolidated financial statements. 9 Table of Contents TFS FINANCIAL CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands unless otherwise indicated) 1. BASIS OF PRESENTATION TFS Financial Corporation, a federally chartered stock holding company, conducts its principal activities through its wholly owned subsidiaries. The principal line of business of the Company is retail consumer banking, including mortgage lending, deposit gathering, and other financial services. As of March 31, 2025, approximately 80.9 % of the Company’s outstanding shares were owned by the federally chartered mutual holding company, Third Federal Savings and Loan Association of Cleveland, MHC. The thrift subsidiary of TFS Financial Corporation is Third Federal Savings and Loan Association of Cleveland. The accounting and financial reporting policies followed by the Company conform in all material respects to U.S. GAAP and to general practices in the financial services industry. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. The allowance for credit losses, the valuation of deferred tax assets, and the determination of pension obligations are particularly subject to change. The unaudited interim consolidated financial statements reflect all adjustments of a normal recurring nature which, in the opinion of management, are necessary to present fairly the consolidated financial condition of the Company at March 31, 2025, and its consolidated results of operations and cash flows for the periods presented. Such adjustments are the only adjustments reflected in the unaudited interim financial statements. In accordance with SEC Regulation S-X for interim financial information, these financial statements do not include certain information and footnote disclosures required for complete audited financial statements. The Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2024, contains audited consolidated financial statements and related notes, which should be read in conjunction with the accompanying interim consolidated financial statements. The results of operations for the interim periods disclosed herein are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2025, or for any other period. Per ASC 606, Revenue from Contracts with Customers , an entity is required to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration the entity expects to receive in exchange for those goods or services. Three of the Company's revenue streams within scope of Topic 606 are the sales of REO, interchange income, and deposit account and other transaction-based service fee income. Those streams are not material to the Company's consolidated financial statements and therefore quantitative information regarding these streams is not disclosed. 2. EARNINGS PER SHARE Basic earnings per share is the amount of earnings available to each share of common stock outstanding during the reporting period. Diluted earnings per share is the amount of earnings available to each share of common stock outstanding during the reporting period adjusted to include the effect of potentially dilutive common shares. For purposes of computing earnings per share amounts, outstanding shares include shares held by the public, shares held by the ESOP that have been allocated to participants or committed to be released for allocation to participants, and the 227,119,132 shares held by Third Federal Savings, MHC. For purposes of computing dilutive earnings per share, stock options and restricted and performance share units with a dilutive impact are added to the outstanding shares used in the basic earnings per share calculation. Unvested shares awarded pursuant to the Company's restricted stock plans are treated as participating securities in the computation of EPS pursuant to the two-class method as they contain nonforfeitable rights to dividends. The two-class method is an earnings allocation that determines EPS for each class of common stock and participating security. Performance share units, determined to be contingently issuable and not participating securities, are excluded from the calculation of basic EPS. At March 31, 2025 and 2024, the ESOP held 2,058,361 and 2,491,701 shares, respectively, that were neither allocated to participants nor committed to be released to participants. 10 Table of Contents The following is a summary of the Company's earnings per share calculations. For the Three Months Ended March 31, 2025 2024 Income Shares Per share amount Income Shares Per share amount (Dollars in thousands, except per share data) Net income $ 21,021 $ 20,713 Less: income allocated to restricted stock units 360 342 Basic earnings per share: Income available to common shareholders 20,661 278,729,388 $ 0.07 20,371 278,183,041 $ 0.07 Diluted earnings per share: Effect of dilutive potential common shares 989,994 863,796 Income available to common shareholders $ 20,661 279,719,382 $ 0.07 $ 20,371 279,046,837 $ 0.07 For the Six Months Ended March 31, 2025 2024 Income Shares Per share amount Income Shares Per share amount (Dollars in thousands, except per share data) Net income $ 43,447 $ 41,420 Less: income allocated to restricted stock units 713 747 Basic earnings per share: Income available to common shareholders 42,734 278,632,698 $ 0.15 40,673 278,011,351 $ 0.15 Diluted earnings per share: Effect of dilutive potential common shares 1,011,609 1,008,117 Income available to common shareholders $ 42,734 279,644,307 $ 0.15 $ 40,673 279,019,468 $ 0.15 The following is a summary of outstanding stock options and restricted and performance share units that are excluded from the computation of diluted earnings per share because their inclusion would be anti-dilutive. For the Three Months Ended March 31, For the Six Months Ended March 31, 2025 2024 2025 2024 Options to purchase shares 1,447,975 2,231,475 1,432,975 2,231,475 Restricted and performance stock units 54,000 38,835 20,000 30,000 3. INVESTMENT SECURITIES Investments available for sale are summarized in the tables below. March 31, 2025 Amortized Cost Gross Unrealized Fair Value Gains Losses REMICs $ 496,117 $ 1,685 $ ( 29,215 ) $ 468,587 Fannie Mae certificates 2,722 69 ( 5 ) 2,786 Freddie Mac certificates 8,481 — ( 35 ) 8,446 U.S. government and agency obligations 54,215 42 ( 153 ) 54,104 Total $ 561,535 $ 1,796 $ ( 29,408 ) $ 533,923 11 Table of Contents September 30, 2024 Amortized Cost Gross Unrealized Fair Value Gains Losses REMICs $ 476,680 $ 1,202 $ ( 28,481 ) $ 449,401 Fannie Mae certificates 2,810 137 ( 2 ) 2,945 Freddie Mac certificates 1,138 — ( 9 ) 1,129 U.S. government and agency obligations 72,931 29 ( 184 ) 72,776 Total $ 553,559 $ 1,368 $ ( 28,676 ) $ 526,251 At March 31, 2025 and September 30, 2024, investment securities included $ 50,236 and $ 68,932 , respectively, of U.S. government obligations pledged as collateral on our open swap positions to meet margin requirements established by the clearing organization. Accrued interest on investment securities is $ 2,599 and $ 2,399 at March 31, 2025 and September 30, 2024, respectively, and is reported in accrued interest receivable on the CONSOLIDATED STATEMENTS OF CONDITION . The following is a summary of our securities portfolio by the period remaining until contractual maturity and by weighted average yield at March 31, 2025 and September 30, 2024. Maturities are based on the final contractual payment dates, and do not reflect the impact of prepayments or early redemptions that may occur. Weighted average yields are not presented on a tax-equivalent basis and are calculated by multiplying each carry value by its yield and dividing the sum of these results by the total carry values. We did not hold any tax-exempt securities at March 31, 2025 or September 30, 2024. March 31, 2025 September 30, 2024 Amortized Cost Fair Value Weighted Average Yield Amortized Cost Fair Value Weighted Average Yield Due in one year or less $ 50,300 $ 50,341 4.32 % $ 69,192 $ 69,219 5.25 % Due after one to five years 5,593 5,432 1.66 7,551 7,332 1.87 Due after five to ten years 26,694 25,916 3.14 27,639 27,162 3.22 Ten years or greater 478,948 452,234 3.48 449,177 422,538 3.16 Total $ 561,535 $ 533,923 3.52 % $ 553,559 $ 526,251 3.40 % Gross unrealized losses on available for sale securities and the estimated fair value of the related securities, aggregated by the length of time the securities have been in a continuous loss position, at March 31, 2025 and September 30, 2024, were as follows: March 31, 2025 Less Than 12 Months 12 Months or More Total Estimated Fair Value Unrealized Loss Estimated Fair Value Unrealized Loss Estimated Fair Value Unrealized Loss Available for sale— REMICs $ 20,549 $ 35 $ 296,680 $ 29,180 $ 317,229 $ 29,215 Fannie Mae certificates — — 247 5 247 5 Freddie Mac certificates — — 1,101 35 1,101 35 U.S. government and agency obligations — — 3,868 153 3,868 153 Total $ 20,549 $ 35 $ 301,896 $ 29,373 $ 322,445 $ 29,408 12 Table of Contents September 30, 2024 Less Than 12 Months 12 Months or More Total Estimated Fair Value Unrealized Loss Estimated Fair Value Unrealized Loss Estimated Fair Value Unrealized Loss Available for sale— REMICs $ 9,393 $ 9 $ 325,660 $ 28,472 $ 335,053 $ 28,481 Fannie Mae certificates — — 101 2 101 2 Freddie Mac certificates — — 1,129 9 1,129 9 U.S. government and agency obligations — — 3,844 184 3,844 184 Total $ 9,393 $ 9 $ 330,734 $ 28,667 $ 340,127 $ 28,676 The unrealized losses on investment securities were attributable to an increase in market interest rates. The investment portfolio is comprised entirely of securities issued by U.S. government entities and agencies, which supports an expectation of no credit loss estimates since principal and interest payments due on these securities carry the full faith and credit guaranty of the U.S. government. In addition, the U.S. Treasury Department has established financing agreements to ensure Fannie Mae and Freddie Mac meet their obligations to holders of mortgage-backed securities that they have issued or guaranteed. Since the decline in value is primarily attributable to an increase in market interest rates and not credit quality deterioration, and because there is no intent to sell the securities and it is unlikely that the Company will be required to sell the securities prior to recovery of the amortized cost, the Company did not record an allowance for credit losses on investment securities as of March 31, 2025 or September 30, 2024 . 4. LOANS AND ALLOWANCE FOR CREDIT LOSSES LOAN PORTFOLIOS Loans held for investment consist of the following: March 31, 2025 September 30, 2024 Real estate loans: Residential Core $ 10,994,882 $ 11,385,142 Residential Home Today 38,674 40,936 Home equity lines of credit (1) 3,671,405 3,323,381 Home equity loans (1) 643,864 561,926 Construction 16,865 21,701 Real estate loans 15,365,690 15,333,086 Other loans 6,992 5,705 Add (deduct): Deferred loan expenses, net 67,128 64,956 Loans in process ( 9,121 ) ( 11,686 ) Allowance for credit losses on loans ( 70,546 ) ( 70,002 ) Loans held for investment, net $ 15,360,143 $ 15,322,059 (1) At and for the six months ended March 31, 2025, balances of and activity related to home equity lines of credit and home equity loans are reported as separate line items. Prior periods have been reclassified to conform to the current presentation. Loans held for investment are carried at amortized cost, which includes outstanding principal balance adjusted for any unamortized premiums or discounts, net of deferred fees and expenses and any applicable loans-in-process. Accrued interest is $ 55,433 and $ 56,982 as of March 31, 2025 and September 30, 2024, respectively, and is reported in accrued interest receivable on the CONSOLIDATED STATEMENTS OF CONDITION. A large concentration of the Company’s lending is in Ohio and Florida. At March 31, 2025 and September 30, 2024, the percentage of aggregate Residential Core, Residential Home Today and Construction loans secured by properties in Ohio was 58 % at both dates, and the percentage of those loans secured by properties in Florida was 17 % at both dates. As of March 31, 13 Table of Contents 2025 and September 30, 2024, home equity lines of credit were concentrated in Ohio ( 22 % and 23 %, respectively), Florida ( 22 % at both dates), and California ( 17 % and 16 %, respectively), and home equity loans were concentrated in Ohio ( 24 % and 26 %, respectively), Florida ( 23 % and 25 %, respectively), and California ( 19 % at both dates). Residential Core mortgage loans represent the largest portion of the residential real estate portfolio. The Company believes overall credit risk is low based on the nature, composition, collateral, products, lien position and historical performance of the portfolio. The portfolio does not include loan types or structures that have experienced severe performance problems at other financial institutions (sub-prime, no documentation or pay-option adjustable-rate mortgages). The portfolio contains "Smart Rate" adjustable-rate mortgage loans whereby the interest rate is locked initially for three or five years then resets annually, subject to periodic rate adjustments caps and various re-lock options available to the borrower. Although the borrower is qualified for its loan at a higher rate than the initial rate offered, the adjustable-rate feature may impact a borrower's ability to afford the higher payments upon rate reset during periods of rising interest rates while this repayment risk may be reduced in a declining or low rate environment. With limited historical loss experience compared to other types of loans in the portfolio, judgment is required by management in assessing the allowance required on adjustable-rate mortgage loans. The principal amount of adjustable-rate mortgage loans included in the Residential Core portfolio was $ 4,164,902 and $ 4,379,132 at March 31, 2025 and September 30, 2024, respectively. Home Today was an affordable housing program targeted to benefit low- and moderate-income home buyers. Most loans under the program were originated prior to 2009. No new loans were originated under the Home Today program after 2016. Home Today loans have greater credit risk than traditional residential real estate mortgage loans. The Company originates construction loans to individuals for the construction of their personal single-family residence by a qualified builder (construction/permanent loans). The Company’s construction/permanent loans generally provide for disbursements to the builder or sub-contractors during the construction phase as work progresses. During the construction phase, the borrower only pays interest on the drawn balance. Upon completion of construction, the loan converts to a permanent amortizing loan without the expense of a second closing. The Company offers construction/permanent loans with fixed or adjustable-rates, and a current maximum loan-to-completed-appraised value ratio of 85 %. Other loans are comprised of loans secured by certificate of deposit accounts, which are fully secured and recoverable in the event of non-payment, and forgivable down payment assistance loans, which are unsecured loans used as down payment assistance to borrowers qualified through partner housing agencies. The Company records a liability for the down payment assistance loans which are forgiven in equal increments over a pre-determined term, subject to residency requirements. Loans held for sale include loans originated or acquired with the intent to sell which are generally priced in alignment with secondary market pricing and may be subject to loan level pricing adjustments. Additionally, loans originated or acquired for the held for investment portfolio may later be identified for sale and transferred to the held for sale portfolio, which may include loans originated or acquired within the parameters of programs established by Fannie Mae. During the three and six months ended March 31, 2025 and March 31, 2024, reclassifications to the held for sale portfolio included loans that were sold during the period, including those in contracts pending settlement at the end of the period, and loans originated for the held for investment portfolio that were later identified for sale. At March 31, 2025 and September 30, 2024, mortgage loans held for sale totaled $ 5,803 and $ 17,775 , respectively. During the three and six months ended March 31, 2025, the principal balance of loans sold, according to trade date, was $ 75,159 and $ 147,190 (including loans in contracts pending settlement) compared to $ 33,477 and $ 121,320 (including loans in contracts pending settlement) during the three and six months ended March 31, 2024. During the three and six months ended March 31, 2025, the amortized cost of loans originated as held for sale that were subsequently transferred to the held for investment portfolio was $ 0 and $ 1,327 , respectively, compared to none during the three and six months ended March 31, 2024. 14 Table of Contents DELINQUENCY and NON-ACCRUAL An aging analysis of the amortized cost in loan receivables that are past due at March 31, 2025 and September 30, 2024, is summarized in the following tables. When a loan is more than one month past due on its scheduled payments, the loan is considered 30 days or more past due, regardless of the number of days in each month. 30-59 Days Past Due 60-89 Days Past Due 90 Days or More Past Due Total Past Due Current Total March 31, 2025 Real estate loans: Residential Core $ 7,045 $ 2,585 $ 8,426 $ 18,056 $ 11,001,512 $ 11,019,568 Residential Home Today 927 — 929 1,856 36,353 38,209 Home equity lines of credit 3,839 1,515 5,238 10,592 3,698,365 3,708,957 Home equity loans 553 240 285 1,078 648,233 649,311 Construction — — — — 7,652 7,652 Total real estate loans 12,364 4,340 14,878 31,582 15,392,115 15,423,697 Other loans — — — — 6,992 6,992 Total $ 12,364 $ 4,340 $ 14,878 $ 31,582 $ 15,399,107 $ 15,430,689 30-59 Days Past Due 60-89 Days Past Due 90 Days or More Past Due Total Past Due Current Total September 30, 2024 Real estate loans: Residential Core $ 7,554 $ 4,024 $ 8,881 $ 20,459 $ 11,388,395 $ 11,408,854 Residential Home Today 814 307 693 1,814 38,657 40,471 Home equity lines of credit 3,556 1,014 4,078 8,648 3,351,495 3,360,143 Home equity loans 578 107 282 967 565,906 566,873 Construction — — — — 10,015 10,015 Total real estate loans 12,502 5,452 13,934 31,888 15,354,468 15,386,356 Other loans — — — — 5,705 5,705 Total $ 12,502 $ 5,452 $ 13,934 $ 31,888 $ 15,360,173 $ 15,392,061 Loans are placed in non-accrual status when they are contractually 90 days or more past due. The number of days past due is determined by the number of scheduled payments that remain unpaid, assuming a period of 30 days between each scheduled payment. Loans with a partial charge-off are placed in non-accrual and will remain in non-accrual status until, at a minimum, the loss is recovered. Loans modified that were in non-accrual status prior to modification and loans with forbearance plans that were subsequently modified, are reported in non-accrual status for a minimum of six months after modification. Loans modified with a high debt-to-income ratio, per the Company's modification policy, at the time of modification are placed in non-accrual status for a minimum of 12 months. Additionally, home equity loans and lines of credit where the customer has a severely delinquent first mortgage loan (greater than 90 days past due) and loans in Chapter 7 bankruptcy status where all borrowers have filed, and not reaffirmed or been dismissed, are placed in non-accrual status. 15 Table of Contents The amortized cost of loan receivables in non-accrual status is summarized in the following table. Non-accrual with no ACL describes non-accrual loans which have no quantitative allowance, primarily because they have already been subject to collateral review and any required charge-offs have been taken, but may be included in consideration of qualitative allowance factors. There are no loans 90 or more days past due and still accruing at March 31, 2025 or September 30, 2024. March 31, 2025 September 30, 2024 Non-accrual with No ACL Total Non-accrual Non-accrual with No ACL Total Non-accrual Real estate loans: Residential Core $ 19,076 $ 22,278 $ 18,937 $ 21,058 Residential Home Today 3,153 3,579 3,506 3,672 Home equity lines of credit 8,445 10,405 7,610 8,361 Home equity loans 749 749 460 519 Total non-accrual loans $ 31,423 $ 37,011 $ 30,513 $ 33,610 At March 31, 2025 and September 30, 2024, the amortized cost in non-accrual loans includes $ 22,148 and $ 19,704 , respectively, which are performing according to the terms of their agreement, of which $ 13,253 and $ 11,532 , respectively, are loans in Chapter 7 bankruptcy status, primarily where all borrowers have filed, and have not reaffirmed or been dismissed. At March 31, 2025 and September 30, 2024, real estate loans include $ 11,183 and $ 10,527 , respectively, of loans that were in the process of foreclosure. Interest on loans in accrual status is recognized in interest income as it accrues on a daily basis. Accrued interest on loans in non-accrual status is written off by a charge to interest income and income is subsequently recognized only to the extent cash payments are received. The Company has elected not to measure an allowance for credit losses on accrued interest receivable amounts since amounts are written off timely. Cash payments on loans in non-accrual status are applied to the oldest scheduled, unpaid payment first. The amount of interest income recognized on non-accrual loans was $ 243 and $ 479 for the three and six months ended March 31, 2025, and $ 162 and $ 324 for the three and six months ended March 31, 2024, respectively. Cash payments on loans with a partial charge-off are applied fully to principal, then to recovery of the charged off amount prior to interest income being recognized, except cash payments may be applied to interest capitalized in a modification when collection of remaining amounts due is considered probable. A non-accrual loan is generally returned to accrual status when contractual payments are less than 90 days past due. However, a loan may remain in non-accrual status when collectability is uncertain, such as a modification that has not met minimum payment requirements, a loan with a partial charge-off, a home equity loan or line of credit with a delinquent first mortgage greater than 90 days past due, or a loan in Chapter 7 bankruptcy status where all borrowers have filed, and have not reaffirmed or been dismissed. ALLOWANCE FOR CREDIT LOSSES The allowance for credit losses represents the estimate of lifetime losses in the loan portfolio and unfunded loan commitments. The allowance is estimated at each reporting date using relevant available information relating to past events, current conditions and reasonable and supportable forecasts. The Company utilizes loan level regression models with forecasted economic data to derive the probability of default and loss given default factors. These factors are used to calculate the loan level credit loss over a 24-month period with an immediate reversion to historical mean loss rates for the remaining life of the loans. Historical credit loss experience provides the basis for the estimation of expected credit losses. Qualitative adjustments to historical loss information are made for differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, delinquency status or likely recovery of previous loan charge-offs. Qualitative adjustments for expected changes in environmental conditions, such as changes in unemployment rates, property values or other relevant factors, are recognized when forecasted economic data used in the model differs from management's view or contains a significant level of uncertainty. Identifiable model limitations may also lead to qualitative adjustments, such as those made to reflect the expected recovery of loan amounts previously charged-off, beyond what the model is able to project. The qualitative adjustments resulted in a negative ending balance on the allowance for credit losses for the Home Today portfolio, where recoveries are expected to exceed charge-offs over the remaining life of that portfolio. The net qualitative adjustment at March 31, 2025, was a reduction to the allowance for credit losses of $ 3,122 , compared to a reduction of $ 5,519 at September 30, 2024. Qualitative adjustments are evaluated quarterly, at a minimum, based on current facts and circumstances. Partial or full charge-offs are recognized for the amount of credit losses on loans when the borrower is experiencing financial difficulty. Charge-offs are taken when: 16 Table of Contents • For residential mortgage loans, payments are at least 150 days delinquent, but no later than 180 days delinquent; • For home equity loans and lines of credit, and modified residential loans, payments are greater than 90 days delinquent; • For all classes of loan modifications with a high debt-to-income ratio at time of modification; • For all classes of loans, a sheriff sale is scheduled within 60 days to sell the collateral securing the loan; • For all classes of loans, all borrowers have been discharged of their obligation through a Chapter 7 bankruptcy; • For all classes of loans, within 60 days of notification, all borrowers obligated on the loan have filed Chapter 7 bankruptcy and have not reaffirmed or been dismissed; • For all classes of loans, a borrower obligated on a loan has filed bankruptcy and the loan is greater than 30 days delinquent; and • For all classes of loans, it becomes evident that a loss is probable. Charge-offs on residential mortgage loans, home equity loans and lines of credit, and construction loans are also recognized when triggering events, such as foreclosure actions, short sales, or deeds accepted in lieu of repayment, result in less than full repayment of the amortized cost in the loans. For all classes of loans, a loan is considered collateral-dependent when, based on current information and events, the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the sale of the collateral or foreclosure is probable. Factors considered in determining that a loan is collateral-dependent may include the deteriorating financial condition of the borrower indicated by missed or delinquent payments, or a pending legal action, such as bankruptcy or foreclosure. Collateral-dependent residential mortgage loans and construction loans are charged-off to the extent the amortized cost in the loan, net of anticipated mortgage insurance claims, exceeds the fair value, less estimated costs to dispose of the underlying property. Management can determine if the loan is uncollectible for reasons such as foreclosures exceeding a reasonable time frame and recommend a full charge-off. Home equity loans or lines of credit are charged-off to the extent the amortized cost in the loan plus the balance of any senior liens exceeds the fair value, less estimated costs to dispose of the underlying property, or management determines the collateral is not sufficient to satisfy the loan. A loan in any portfolio identified as collateral-dependent will continue to be reported as such until it is no longer considered collateral-dependent, is less than 30 days past due and does not have a prior charge-off. A loan in any portfolio that has a partial charge-off will continue to be individually evaluated for credit loss until, at a minimum, the loss has been recovered. Activity in the allowance for credit losses by portfolio segment is summarized as follows. See Note 11. LOAN COMMITMENTS AND CONTINGENT LIABILITIES for further details on the allowance for unfunded commitments. For the Three Months Ended March 31, 2025 Beginning Balance Provisions (Releases) Charge-offs Recoveries Ending Balance Real estate loans: Residential Core $ 42,476 $ ( 1,926 ) $ ( 17 ) $ 132 $ 40,665 Residential Home Today ( 2,529 ) ( 283 ) ( 8 ) 380 ( 2,440 ) Home equity lines of credit 18,194 1,083 ( 238 ) 423 19,462 Home equity loans 12,375 464 ( 17 ) 10 12,832 Construction 43 ( 16 ) — — 27 Total real estate loans $ 70,559 $ ( 678 ) $ ( 280 ) $ 945 $ 70,546 Total Unfunded Loan Commitments (1) $ 27,202 $ 2,178 $ — $ — $ 29,380 Total Allowance for Credit Losses $ 97,761 $ 1,500 $ ( 280 ) $ 945 $ 99,926 (1) For all periods presented, the total allowance for unfunded loan commitments is recognized in accrued expenses and other liabilities on the CONSOLIDATED STATEMENTS OF CONDITION and primarily relates to undrawn home equity lines of credit. 17 Table of Contents For the Three Months Ended March 31, 2024 Beginning Balance Provisions (Releases) Charge-offs Recoveries Ending Balance Real estate loans: Residential Core $ 49,389 $ ( 1,851 ) $ ( 37 ) $ 213 $ 47,714 Residential Home Today ( 2,814 ) ( 303 ) — 493 ( 2,624 ) Home equity lines of credit 14,082 ( 290 ) ( 188 ) 772 14,376 Home equity loans 8,354 270 ( 16 ) 14 8,622 Construction 73 8 — — 81 Total real estate loans $ 69,084 $ ( 2,166 ) $ ( 241 ) $ 1,492 $ 68,169 Total Unfunded Loan Commitments (1) $ 25,491 $ 1,166 $ — $ — $ 26,657 Total Allowance for Credit Losses $ 94,575 $ ( 1,000 ) $ ( 241 ) $ 1,492 $ 94,826 (1) For all periods presented, the total allowance for unfunded loan commitments is recognized in accrued expenses and other liabilities on the CONSOLIDATED STATEMENTS OF CONDITION and primarily relates to undrawn home equity lines of credit. For the Six Months Ended March 31, 2025 Beginning Balance Provisions (Releases) Charge-offs Recoveries Ending Balance Real estate loans: Residential Core $ 44,402 $ ( 4,370 ) $ ( 18 ) $ 651 $ 40,665 Residential Home Today ( 2,672 ) ( 619 ) ( 8 ) 859 ( 2,440 ) Home equity lines of credit 16,590 2,245 ( 554 ) 1,181 19,462 Home equity loans 11,642 1,188 ( 17 ) 19 12,832 Construction 40 ( 13 ) — — 27 Total real estate loans $ 70,002 $ ( 1,569 ) $ ( 597 ) $ 2,710 $ 70,546 Total Unfunded Loan Commitments (1) $ 27,811 $ 1,569 $ — $ — $ 29,380 Total Allowance for Credit Losses $ 97,813 $ — $ ( 597 ) $ 2,710 $ 99,926 (1) For all periods presented, the total allowance for unfunded loan commitments is recognized in accrued expenses and other liabilities on the CONSOLIDATED STATEMENTS OF CONDITION and primarily relates to undrawn home equity lines of credit. For the Six Months Ended March 31, 2024 Beginning Balance Adoption of ASU 2022-02 2 Provisions (Releases) Charge-offs Recoveries Ending Balance Real estate loans: Residential Core $ 55,375 $ ( 5,896 ) $ ( 2,152 ) $ ( 187 ) $ 574 $ 47,714 Residential Home Today ( 1,236 ) ( 1,896 ) ( 441 ) ( 30 ) 979 ( 2,624 ) Home equity lines of credit 16,086 ( 2,468 ) ( 151 ) ( 518 ) 1,427 14,376 Home equity loans 6,961 ( 2 ) 1,650 ( 16 ) 29 8,622 Construction 129 — ( 48 ) — — 81 Total real estate loans $ 77,315 $ ( 10,262 ) $ ( 1,142 ) $ ( 751 ) $ 3,009 $ 68,169 Total Unfunded Loan Commitments (1) $ 27,515 $ — $ ( 858 ) $ — $ — $ 26,657 Total Allowance for Credit Losses $ 104,830 $ ( 10,262 ) $ ( 2,000 ) $ ( 751 ) $ 3,009 $ 94,826 (1) For all periods presented, the total allowance for unfunded loan commitments is recognized in accrued expenses and other liabilities on the CONSOLIDATED STATEMENTS OF CONDITION and primarily relates to undrawn home equity lines of credit. (2) The Company adopted ASU 2022-02 on October 1, 2023, which eliminated the accounting for TDRs, and changed the allowance methodology, as reflected above, from using the present value of cash flows. Instead, losses on loans with modifications to borrowers experiencing financial difficulties, previously identified as TDRs, will be estimated as described above, in the same manner as loans that have not been subject to such modifications. 18 Table of Contents CLASSIFIED LOANS The following tables provide the amortized cost and information about the credit quality of residential loan receivables by an internally assigned grade as of the dates presented. Revolving loans reported at amortized cost include home equity lines of credit currently in their draw period. Revolving loans converted to term are home equity lines of credit that are in repayment. Loans, or the portions of loans, classified as loss are fully charged-off in the period in which they are determined to be uncollectible; therefore they are not included in the following tables. No Home Today loans are classified Special Mention and all construction loans are classified Pass for both periods presented. Revolving Loans Amortized Cost Basis Revolving Loans Converted to Term By fiscal year of origination 2025 2024 2023 2022 2021 Prior Total March 31, 2025 Real estate loans: Residential Core Pass $ 272,079 $ 490,405 $ 1,444,884 $ 2,804,904 $ 1,743,159 $ 4,234,892 $ — $ — $ 10,990,323 Special Mention — — — — — 846 — — 846 Substandard — 438 1,784 3,012 2,505 20,660 — — 28,399 Total Residential Core 272,079 490,843 1,446,668 2,807,916 1,745,664 4,256,398 — — 11,019,568 Residential Home Today (1) Pass — — — — — 34,059 — — 34,059 Substandard — — — — — 4,150 — — 4,150 Total Residential Home Today — — — — — 38,209 — — 38,209 Home equity lines of credit Pass — — — — — — 3,637,641 52,453 3,690,094 Special Mention — — — — — — 4,707 275 4,982 Substandard — — — — — — 8,815 5,066 13,881 Total Home equity lines of credit — — — — — — 3,651,163 57,794 3,708,957 Home equity loans Pass 148,352 269,846 144,897 51,191 16,084 16,727 — — 647,097 Special Mention — 563 362 8 — — — — 933 Substandard — 82 714 171 114 200 — — 1,281 Total Home equity loans 148,352 270,491 145,973 51,370 16,198 16,927 — — 649,311 Total Construction 2,046 5,606 — — — — — — 7,652 Total real estate loans Pass 422,477 765,857 1,589,781 2,856,095 1,759,243 4,285,678 3,637,641 52,453 15,369,225 Special Mention — 563 362 8 — 846 4,707 275 6,761 Substandard — 520 2,498 3,183 2,619 25,010 8,815 5,066 47,711 Total real estate loans $ 422,477 $ 766,940 $ 1,592,641 $ 2,859,286 $ 1,761,862 $ 4,311,534 $ 3,651,163 $ 57,794 $ 15,423,697 (1) No new originations of Home Today loans since fiscal year 2016. 19 Table of Contents Revolving Loans Amortized Cost Basis Revolving Loans Converted To Term By fiscal year of origination 2024 2023 2022 2021 2020 Prior Total September 30, 2024 Real estate loans: Residential Core Pass $ 573,935 $ 1,500,928 $ 2,934,968 $ 1,841,516 $ 1,205,702 $ 3,323,146 $ — $ — $ 11,380,195 Special Mention — — — 1,050 — 795 — — 1,845 Substandard 178 1,629 2,416 1,157 1,814 19,620 — — 26,814 Total Residential Core 574,113 1,502,557 2,937,384 1,843,723 1,207,516 3,343,561 — — 11,408,854 Residential Home Today (1) Pass — — — — — 36,116 — — 36,116 Substandard — — — — — 4,355 — — 4,355 Total Residential Home Today — — — — — 40,471 — — 40,471 Home equity lines of credit Pass — — — — — — 3,290,851 54,190 3,345,041 Special Mention — — — — — — 3,735 607 4,342 Substandard — — — — — — 5,880 4,880 10,760 Total Home equity lines of credit — — — — — — 3,300,466 59,677 3,360,143 Home equity loans Pass 305,870 163,969 57,254 18,461 5,147 14,621 — — 565,322 Special Mention 111 613 101 — — 51 — — 876 Substandard — 196 151 141 43 144 — — 675 Total Home equity loans 305,981 164,778 57,506 18,602 5,190 14,816 — — 566,873 Total Construction 7,932 2,083 — — — — — — 10,015 Total real estate loans Pass 887,737 1,666,980 2,992,222 1,859,977 1,210,849 3,373,883 3,290,851 54,190 15,336,689 Special Mention 111 613 101 1,050 — 846 3,735 607 7,063 Substandard 178 1,825 2,567 1,298 1,857 24,119 5,880 4,880 42,604 Total real estate loans $ 888,026 $ 1,669,418 $ 2,994,890 $ 1,862,325 $ 1,212,706 $ 3,398,848 $ 3,300,466 $ 59,677 $ 15,386,356 (1) No new originations of Home Today loans since fiscal year 2016. The following table presents gross charge-offs of residential loan receivables recorded during the fiscal year-to-date periods presented. There were no gross charge-offs in the construction loan portfolios for the periods presented. For the Six Months Ended March 31, 2025 By fiscal year of origination Revolving Loans Amortized Cost Basis Revolving Loans Converted to Term 2025 2024 2023 2022 2021 Prior Total Real estate loans: Residential Core $ — $ — $ — $ — $ — $ 18 $ — $ — $ 18 Residential Home Today — — — — — 8 — — 8 Home equity lines of credit — — — — — — 273 281 554 Home equity loans — — — — 17 — — — 17 Total real estate loans $ — $ — $ — $ — $ 17 $ 26 $ 273 $ 281 $ 597 20 Table of Contents For the Six Months Ended March 31, 2024 By fiscal year of origination Revolving Loans Amortized Cost Basis Revolving Loans Converted to Term 2024 2023 2022 2021 2020 Prior Total Real estate loans: Residential Core $ — $ — $ 10 $ — $ — $ 177 $ — $ — $ 187 Residential Home Today — — — — — 30 — — 30 Home equity lines of credit — — — — — — 333 185 518 Home equity loans — — 16 — — — — — 16 Total real estate loans $ — $ — $ 26 $ — $ — $ 207 $ 333 $ 185 $ 751 The home equity lines of credit that converted from revolving to term loans during the three and six months ended March 31, 2025, totaled $ 3,872 and $ 6,814 , respectively, and during the three and six months ended March 31, 2024, totaled $ 1,208 and $ 2,294 , respectively. The amount of conversions to term loans is expected to remain relatively low for several years since the length of the draw period on new originations changed from five to 10 years in 2016. Residential loans are internally assigned a grade that complies with the guidelines outlined in the OCC’s Handbook for Rating Credit Risk. Pass loans are assets well protected by the current paying capacity of the borrower. Special Mention loans have a potential weakness, as evaluated based on delinquency status or nature of the product, that the Company deems to deserve management’s attention and may result in further deterioration in their repayment prospects and/or the Company’s credit position. Substandard loans are inadequately protected by the current payment capacity of the borrower or the collateral pledged with a defined weakness that jeopardizes the liquidation of the debt. Also included in Substandard are performing home equity loans and lines of credit where the customer has a severely delinquent first mortgage to which the performing home equity loan or line of credit is subordinate and all loans in Chapter 7 bankruptcy status where all borrowers have filed, and have not reaffirmed or been dismissed. Loss loans are considered uncollectible and are charged-off when identified. Loss loans are of such little value that their continuance as bankable assets is not warranted even though partial recovery may be effected in the future. Other loans are internally assigned a grade of non-performing when they become 90 days or more past due. At March 31, 2025 and September 30, 2024, no other loans were graded as non-performing. MODIFICATIONS TO BORROWERS EXPERIENCING FINANCIAL DIFFICULTY To mitigate losses, the Company works with borrowers who are experiencing financial difficulty to identify solutions the borrowers can afford by entering into agreements to modify their loans. These efforts often result in modifications to the payment terms of the loan, which vary by situation and may include interest rate reductions, term extensions (generally including capitalization of delinquent amounts), significant payment delays (including forbearance, partial payments and repayment of delinquent amounts), other, or a combination thereof. The Company does not generally offer principal forgiveness as a type of modification. The Other category includes loans that were modified multiple times during the period with different concessions. If a borrower is experiencing an income curtailment that temporarily has reduced their capacity to repay, such as loss of employment, reduction of work hours, non-paid leave or short-term disability, a temporary modification is considered. If a borrower lacks the capacity to repay the loan at the current terms due to a permanent condition, a permanent modification is considered. Loans may be modified more than once. Among other requirements, a subsequent modification may be available for a borrower upon the expiration of temporary modified terms if the borrower is unable to resume contractually scheduled loan payments. In evaluating the need for a subsequent modification, the borrower’s ability to repay is generally assessed utilizing a debt-to-income and cash flow analysis . 21 Table of Contents The following tables present the amortized cost of modifications by type executed during the periods presented for borrowers experiencing financial difficulty. For the three and six months ended March 31, 2025 and March 31, 2024, there were no modifications made on construction loans. For the Three Months Ended March 31, 2025 Interest Rate Reduction Term Extension Significant Payment Delay Combination-Rate Reduction & Term Extension Other Total % of Total Class Residential Core $ — $ 477 $ 125 $ 395 $ 337 $ 1,334 0.01 % Residential Home Today — 1 182 — 4 187 0.49 Home equity lines of credit — — 207 24 — 231 0.01 Home equity loans — — — — — — — Total $ — $ 478 $ 514 $ 419 $ 341 $ 1,752 0.01 % For the Three Months Ended March 31, 2024 Interest Rate Reduction Term Extension Significant Payment Delay Combination-Rate Reduction & Term Extension Other Total % of Total Class Residential Core $ — $ 235 $ 2,271 $ 704 $ 477 $ 3,687 0.03 % Residential Home Today — — 171 56 — 227 0.53 Home equity lines of credit — — 343 47 25 415 0.01 Home equity loans — 18 — — — 18 — Total $ — $ 253 $ 2,785 $ 807 $ 502 $ 4,347 0.03 % For the Six Months Ended March 31, 2025 Interest Rate Reduction Term Extension Significant Payment Delay Combination-Rate Reduction & Term Extension Other Total % of Total Class Residential Core $ — $ 688 $ 1,113 $ 572 $ 337 $ 2,710 0.02 % Residential Home Today — 27 321 — 4 352 0.92 Home equity lines of credit — 46 237 171 — 454 0.01 Home equity loans — — — — — — — Total $ — $ 761 $ 1,671 $ 743 $ 341 $ 3,516 0.02 % For the Six Months Ended March 31, 2024 Interest Rate Reduction Term Extension Significant Payment Delay Combination-Rate Reduction & Term Extension Other Total % of Total Class Residential Core $ — $ 349 $ 2,390 $ 826 $ 477 $ 4,042 0.03 % Residential Home Today — 48 196 187 — 431 1.00 Home equity lines of credit — — 683 135 25 843 0.03 Home equity loans — 18 48 — — 66 0.02 Total $ — $ 415 $ 3,317 $ 1,148 $ 502 $ 5,382 0.04 % 22 Table of Contents The following tables present the financial effects of the loan modifications presented above based on the type of modification. For the Three Months Ended March 31, 2025 For the Three Months Ended March 31, 2024 Interest Rate Reduction Term Extension Interest Rate Reduction Term Extension Weighted-Average Contractual Interest Rate Weighted-Average Years Added to Life Weighted-Average Contractual Interest Rate Weighted-Average Years Added to Life From To From To Residential Core 5.43 % 3.50 % 12.5 3.61 % 2.08 % 11.3 Residential Home Today — % — % 0.8 2.03 % 2.00 % 16.3 Home equity lines of credit 7.24 % 3.50 % 2.5 7.49 % 2.00 % 3.1 Home equity loans — % — % 0.0 — % — % 2.5 For the Six Months Ended March 31, 2025 For the Six Months Ended March 31, 2024 Interest Rate Reduction Term Extension Interest Rate Reduction Term Extension Weighted-Average Contractual Interest Rate Weighted-Average Years Added to Life Weighted-Average Contractual Interest Rate Weighted-Average Years Added to Life From To From To Residential Core 5.52 % 3.50 % 12.9 3.97 % 2.07 % 11.7 Residential Home Today — % — % 9.6 3.58 % 2.00 % 16.6 Home equity lines of credit 7.03 % 3.50 % 1.4 5.36 % 2.95 % 12.9 Home equity loans — % — % 0.0 — % — % 2.5 The performance of loans modified for borrowers experiencing financial difficulty is closely monitored by the Company to evaluate the effectiveness of modification efforts. Modifications made to borrowers experiencing financial difficulty that subsequently become 90 days or more past due under the modified terms are considered subsequently defaulted. The following table provides information, by type of modification, about loans that were modified within the last 12 months and subsequently defaulted during the three and six months ended March 31, 2025 and March 31, 2024. There were no home equity loans that subsequently defaulted for the three and six months ended March 31, 2025 and March 31, 2024. For the Three Months Ended March 31, 2025 Interest Rate Reduction Term Extension Significant Payment Delay Combination-Rate Reduction & Term Extension Other Total Residential Core $ — $ — $ 257 $ — $ — $ 257 Residential Home Today — — 115 — — 115 Home equity lines of credit — — 30 98 — 128 Total $ — $ — $ 402 $ 98 $ — $ 500 For the Three Months Ended March 31, 2024 Interest Rate Reduction Term Extension Significant Payment Delay Combination-Rate Reduction & Term Extension Other Total Residential Core $ — $ — $ — $ — $ — $ — Residential Home Today — — — — — — Home equity lines of credit — — 208 — — 208 Total 1 $ — $ — $ 208 $ — $ — $ 208 (1) The Company adopted ASU 2022-02 - Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures effective October 1, 2023, therefore, the March 31, 2024 presentation only includes loans modified since adoption. 23 For the Six Months Ended March 31, 2025 Interest Rate Reduction Term Extension Significant Payment Delay Combination-Rate Reduction & Term Extension Other Total Residential Core $ — $ — $ 257 $ — $ — $ 257 Residential Home Today — — 153 — — 153 Home equity lines of credit — — 230 98 — 328 Total $ — $ — $ 640 $ 98 $ — $ 738 For the Six Months Ended March 31, 2024 Interest Rate Reduction Term Extension Significant Payment Delay Combination-Rate Reduction & Term Extension Other Total Residential Core $ — $ — $ — $ — $ — $ — Residential Home Today — — — — — — Home equity lines of credit — — 208 — — 208 Total 1 $ — $ — $ 208 $ — $ — $ 208 (1) The Company adopted ASU 2022-02 - Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures effective October 1, 2023, therefore, the March 31, 2024 presentation only includes loans modified since adoption. The following tables present performance by loan type as of March 31, 2025 and March 31, 2024, on loans modified during the previous 12 months for borrowers experiencing financial difficulty. The loans in delinquency status primarily consisted of loans with significant payment delays prior to modification, which continue to be reported delinquent based on their original contractual terms. March 31, 2025 30-59 Days Past Due 60-89 Days Past Due 90 Days or More Past Due Total Past Due Current Total Residential Core $ 282 $ 172 $ 1,056 $ 1,510 $ 2,746 $ 4,256 Residential Home Today 42 — 374 416 158 574 Home equity lines of credit — 129 373 502 419 921 Home equity loans — — — — 89 89 Total $ 324 $ 301 $ 1,803 $ 2,428 $ 3,412 $ 5,840 March 31, 2024 30-59 Days Past Due 60-89 Days Past Due 90 Days or More Past Due Total Past Due Current Total Residential Core $ 75 $ 158 $ 785 $ 1,018 $ 3,024 $ 4,042 Residential Home Today — 1 185 186 245 431 Home equity lines of credit — — 639 639 204 843 Home equity loans — — 48 48 18 66 Total 1 $ 75 $ 159 $ 1,657 $ 1,891 $ 3,491 $ 5,382 (1) The Company adopted ASU 2022-02 - Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures effective October 1, 2023, therefore, the March 31, 2024 presentation only includes loans modified since adoption. 24 Table of Contents 5. DEPOSITS Deposit account balances are summarized as follows: March 31, 2025 September 30, 2024 Checking accounts $ 827,550 $ 829,924 Savings accounts, excluding money market accounts 1,139,845 1,127,772 Money market accounts 159,783 193,074 Certificates of deposit 8,251,225 8,021,123 10,378,403 10,171,893 Accrued interest 19,242 23,186 Total deposits $ 10,397,645 $ 10,195,079 The aggregate amount of CDs in denominations of more than $250 was $ 1,448,876 and $ 1,283,719 at March 31, 2025 and September 30, 2024, respectively. In accordance with the DFA, the maximum amount of federal deposit insurance is $250 per depositor for each account ownership category. Brokered CDs (exclusive of acquisition costs and subsequent amortization), which are used as a cost effective funding alternative, totaled $ 1,031,999 and $ 1,217,303 at March 31, 2025 and September 30, 2024, respectively, of which $675,000 and $725,000 were aligned with interest rate swaps as discussed in Note 13. DERIVATIVE INSTRUMENTS . The FDIC places restrictions on banks with regard to issuing brokered deposits based on the bank's capital classification. As a well-capitalized institution at March 31, 2025 and September 30, 2024, the Association may accept brokered deposits without FDIC restrictions. 6. BORROWED FUNDS At March 31, 2025, the Association had a maximum borrowing capacity of $7,633,810, of which $4,587,327 was outstanding. Borrowings from the FHLB of Cincinnati are secured by the Association’s investment in the common stock of the FHLB of Cincinnati, as well as by a blanket pledge of its mortgage portfolio not otherwise pledged. The Association also has the ability to purchase Fed Funds through arrangements with other institutions. Additionally, the ability to borrow from the FRB-Cleveland Discount Window is available to the Association and is secured by a pledge of specific loans in the Association’s mortgage portfolio. Total borrowings at March 31, 2025 are summarized in the table below: Borrowing Capacity Borrowings Available Borrowings Outstanding FHLB $ 6,673,818 $ 2,104,410 $ 4,569,408 FRB Cleveland 564,992 564,992 — Fed Funds Purchased 395,000 395,000 — Subtotal $ 7,633,810 $ 3,064,402 4,569,408 Accrued Interest 17,919 Total Borrowings $ 4,587,327 25 Table of Contents Maturities of borrowings at March 31, 2025 are summarized in the table below: Amount Weighted Average Rate Maturing in: 12 months or less $ 1,039,000 3.01 % 13 to 24 months 1,050,223 3.21 25 to 36 months 901,284 3.74 37 to 48 months 450,926 3.53 49 to 60 months 1,001,151 3.46 Over 60 months 126,824 3.31 Total Advances 4,569,408 3.36 Accrued interest 17,919 Total $ 4,587,327 All borrowings have fixed rates during their term ranging up to 240 months. The table above reflects the effective maturities and fixed interest rates of the $ 2,875,000 of short-term FHLB advances that are tied to interest rate swaps discussed in Note 13. DERIVATIVE INSTRUMENTS. Interest is payable monthly for long-term FHLB advances and generally at maturity for FHLB advances with terms of three months or less. For the three and six months ended March 31, 2025, and March 31, 2024, net interest expense related to short-term borrowings was $ 24,227 and $ 49,426 , and $ 23,067 and $ 56,040 , respectively. 7. OTHER COMPREHENSIVE INCOME (LOSS) The change in accumulated other comprehensive income (loss), net of tax and the related tax expense (benefit) by component is as follows: For the Three Months Ended For the Three Months Ended March 31, 2025 March 31, 2024 Unrealized Gains (Losses) on Securities Available for Sale Cash Flow Hedges Defined Benefit Plan Total Unrealized Gains (Losses) on Securities Available for Sale Cash Flow Hedges Defined Benefit Plan Total Balance at beginning of period $ ( 26,562 ) $ 56,810 $ ( 3,435 ) $ 26,813 $ ( 29,518 ) $ 48,327 $ ( 8,623 ) $ 10,186 Other comprehensive income (loss) before reclassifications 5,271 ( 22,686 ) — ( 17,415 ) ( 2,589 ) 52,786 — 50,197 Amounts reclassified — ( 8,606 ) — ( 8,606 ) — ( 18,069 ) 104 ( 17,965 ) Other comprehensive income (loss), net of tax 5,271 ( 31,292 ) — ( 26,021 ) ( 2,589 ) 34,717 104 32,232 Balance at end of period $ ( 21,291 ) $ 25,518 $ ( 3,435 ) $ 792 $ ( 32,107 ) $ 83,044 $ ( 8,519 ) $ 42,418 Tax expense (benefit) netted in other comprehensive income or loss $ 1,563 $ ( 9,292 ) $ — $ ( 7,729 ) $ ( 769 ) $ 10,310 $ 33 $ 9,574 26 Table of Contents For the Six Months Ended For the Six Months Ended March 31, 2025 March 31, 2024 Unrealized Gains (Losses) on Securities Available for Sale Cash Flow Hedges Defined Benefit Plan Total Unrealized Gains (Losses) on Securities Available for Sale Cash Flow Hedges Defined Benefit Plan Total Balance at beginning of period $ ( 21,059 ) $ 8,886 $ ( 3,435 ) $ ( 15,608 ) $ ( 41,173 ) $ 135,532 $ ( 9,147 ) $ 85,212 Other comprehensive income (loss) before reclassifications ( 232 ) 36,658 — 36,426 9,066 ( 17,188 ) 418 ( 7,704 ) Amounts reclassified — ( 20,026 ) — ( 20,026 ) — ( 35,300 ) 210 ( 35,090 ) Other comprehensive income (loss), net of tax ( 232 ) 16,632 — 16,400 9,066 ( 52,488 ) 628 ( 42,794 ) Balance at end of period $ ( 21,291 ) $ 25,518 $ ( 3,435 ) $ 792 $ ( 32,107 ) $ 83,044 $ ( 8,519 ) $ 42,418 Tax expense (benefit) netted in other comprehensive income or loss $ ( 71 ) $ 4,939 $ — $ 4,868 $ 2,691 $ ( 15,586 ) $ 190 $ ( 12,705 ) The following table presents the reclassification adjustments out of accumulated other comprehensive income (loss) included in net income and the corresponding line item on the CONSOLIDATED STATEMENTS OF INCOME for the periods indicated: Amounts Reclassified from Accumulated Other Comprehensive Income Amounts Reclassified from Accumulated Other Comprehensive Income Details about Accumulated Other Comprehensive Income Components For the Three Months Ended March 31, For the Six Months Ended March 31, Line Item in the Consolidated Statements of Income 2025 2024 2025 2024 Cash flow hedges: Interest (income) expense $ ( 11,161 ) $ ( 23,435 ) $ ( 25,973 ) $ ( 45,783 ) Interest expense Net income tax effect 2,555 5,366 5,947 10,483 Income tax expense Net of income tax expense ( 8,606 ) ( 18,069 ) ( 20,026 ) ( 35,300 ) Amortization of defined benefit plan: Actuarial loss — 137 — 274 (a) Net income tax effect — ( 33 ) — ( 64 ) Income tax expense Net of income tax expense — 104 — 210 Total reclassifications for the period $ ( 8,606 ) $ ( 17,965 ) $ ( 20,026 ) $ ( 35,090 ) (a) This item is included in the computation of net periodic pension cost. See Note 9. DEFINED BENEFIT PLAN for additional disclosure. 8. INCOME TAXES The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and in various state and city jurisdictions. The Company’s combined federal and state effective income tax rate was 20.9 % and 20.4 % for the six months ended March 31, 2025 and March 31, 2024, respectively. The Company is no longer subject to income tax examinations in its major jurisdictions for tax years ended prior to 2021. The Company recognizes interest and penalties on income tax assessments or income tax refunds, where applicable, in the consolidated financial statements as a component of its provision for income taxes. The Company makes certain investments in limited partnerships, which invest in affordable housing projects that qualify for the LIHTC. The Company acts as a limited partner in these investments and does not exert control over the operating or financial policies of the partnership. The Company accounts for its interests in LIHTCs using the proportional amortization method. The impact of the Company's investments in tax credit entities on the provision for income taxes was not material during the six months ended March 31, 2025 and March 31, 2024. 27 Table of Contents 9. DEFINED BENEFIT PLAN The Third Federal Savings Retirement Plan (the “Plan”) is a defined benefit pension plan. Effective December 31, 2002, the Plan was amended to limit participation to employees who met the Plan’s eligibility requirements on that date. Effective December 31, 2011, the Plan was amended to freeze future benefit accruals for participants in the Plan. After December 31, 2002, employees not participating in the Plan, upon meeting the applicable eligibility requirements, and those eligible participants who no longer receive service credits under the Plan, participate in a separate tier of the Company’s defined contribution 401(k) Savings Plan. Benefits under the Plan are based on years of service and the employee’s average annual compensation (as defined in the Plan) through December 31, 2011. The funding policy of the Plan is consistent with the funding requirements of U.S. federal and other governmental laws and regulations. The components of net periodic cost recognized in other non-interest expense in the CONSOLIDATED STATEMENTS OF INCOME are as follows: For the Three Months Ended For the Six Months Ended March 31, March 31, 2025 2024 2025 2024 Interest cost $ 740 $ 826 $ 1,480 $ 1,653 Expected return on plan assets ( 1,197 ) ( 995 ) ( 2,393 ) ( 1,991 ) Amortization of net loss — 137 — 274 Net periodic (benefit) cost $ ( 457 ) $ ( 32 ) $ ( 913 ) $ ( 64 ) There were no required minimum employer contributions during the six months ended March 31, 2025. There are no required minimum employer contributions expected during the remainder of the fiscal year ending September 30, 2025. 10. EQUITY INCENTIVE PLAN During the six months ended March 31, 2025, 178,700 restricted stock units, 135,300 performance share units, and 12,000 stock options were granted to directors, executive officers and certain managers of the Company. During the six months ended March 31, 2025, performance share units granted in December 2022 were reduced by 10,200 units, according to the targeted performance formula. The awards were made pursuant to the Amended and Restated 2008 Equity Incentive Plan, which was approved at the annual meeting of shareholders held on February 22, 2018. The following table presents share-based compensation expense recognized during the periods presented: For the Three Months Ended For the Six Months Ended March 31, March 31, 2025 2024 2025 2024 Stock option expense $ 29 $ 23 $ 56 $ 23 Restricted stock units expense 659 963 1,319 1,632 Performance share units expense 262 185 480 431 Total stock-based compensation expense $ 950 $ 1,171 $ 1,855 $ 2,086 At March 31, 2025, 1,447,975 shares were subject to options, with a weighted average exercise price of $ 15.66 per share and a weighted average grant date fair value of $ 2.10 per share. Expected future expense, relating to the 259,200 non-vested options outstanding as of March 31, 2025, is $ 183 over a weighted average period of 1.6 years. At March 31, 2025, 422,435 restricted stock units and 288,100 performance share units with a weighted average grant date fair value of $ 13.13 and $ 13.01 per unit, respectively, are unvested. Expected future compensation expense, relating to the 1,188,183 restricted stock units and 288,100 performance share units outstanding as of March 31, 2025, is $ 3,746 over a weighted average period of 2.0 years and $ 1,780 over a weighted average period of 2.1 years, respectively. Each unit is equivalent to one share of common stock. 11. COMMITMENTS AND CONTINGENT LIABILITIES In the normal course of business, the Company enters into commitments with off-balance sheet risk to meet the financing needs of its customers. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of 28 Table of Contents any condition established in the contract. Commitments to originate or acquire loans generally have fixed expiration dates of 60 to 360 days or other termination clauses and may require payment of a fee. Unfunded commitments related to home equity lines of credit generally expire 10 years following the date that the line of credit was established, subject to various conditions, including compliance with payment obligations, adequacy of collateral securing the line and maintenance of a satisfactory credit profile by the borrower. Since some of the commitments may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Off-balance sheet commitments to extend credit involve elements of credit risk and interest rate risk in excess of the amount recognized in assets on the CONSOLIDATED STATEMENTS OF CONDITION . The Company’s exposure to credit loss in the event of nonperformance by the other party to the commitment is represented by the contractual amount of the commitment. The Company generally uses the same credit policies in making commitments as it does for on-balance sheet instruments. The allowance related to off-balance sheet commitments is recorded in other liabilities in the CONSOLIDATED STATEMENTS OF CONDITION. Refer to Note 4. LOANS AND ALLOWANCES FOR CREDIT LOSSES for discussion on credit loss methodology . Interest rate risk on commitments to extend credit results from the possibility that interest rates may move unfavorably from the position of the Company since the time the commitment was made. At March 31, 2025, the Company had commitments to originate or acquire loans and related allowances as follows: Commitment Allowance Fixed-rate mortgage loans $ 122,863 $ 608 Adjustable-rate mortgage loans 12,457 65 Home equity lines of credit 168,122 1,703 Home equity loans 71,622 1,496 Total $ 375,064 $ 3,872 At March 31, 2025, the Company had unfunded commitments outstanding and related allowances as follows: Commitment Allowance Home equity lines of credit $ 5,429,762 $ 25,456 Construction loans 9,121 52 Total $ 5,438,883 $ 25,508 At March 31, 2025, the unfunded commitment on home equity lines of credit, including commitments for accounts suspended as a result of material default or a decline in equity, was $ 5,470,889 . At March 31, 2025 and September 30, 2024, the Company had $ 15,721 and $ 17,411 , respectively, in commitments to sell mortgage loans. At March 31, 2025 and September 30, 2024, the Company had $ 79,990 and $ 15,891 , respectively, in commitments to acquire mortgage loans, which are included in mortgage loan commitments above. The above commitments are expected to be funded through normal operations. The Company is undergoing an escheat audit covering the states of Ohio, Kentucky and Florida. Any potential loss, or range of potential loss, that may result from this matter is not reasonably estimable at March 31, 2025. The Company and its subsidiaries are subject to various legal actions arising in the normal course of business. In the opinion of management, the resolution of these legal actions is not expected to have a material adverse effect on the Company’s consolidated financial condition, results of operation, or statements of cash flows. 12. FAIR VALUE Under U.S. GAAP, fair value is defined as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date under current market conditions. A fair value framework is established whereby assets and liabilities measured at fair value are grouped into three levels of a fair value hierarchy, based on the transparency of inputs and the reliability of assumptions used to estimate fair value. Presented below is a discussion of the methods and significant assumptions used by the Company to estimate fair value. 29 Table of Contents Investment Securities Available for Sale— Investment securities available for sale are recorded at fair value on a recurring basis. At March 31, 2025 and September 30, 2024, this includes $ 533,923 and $ 526,251 , respectively, of investments in U.S. government and agency obligations including U.S. Treasury notes and investments in highly liquid collateralized mortgage obligations, that can include items issued by Fannie Mae, Freddie Mac and Ginnie Mae, measured using the market approach. The fair values of investment securities represent unadjusted price estimates obtained from independent third-party nationally recognized pricing services using pricing models or quoted prices of securities with similar characteristics and are included in Level 2 of the hierarchy. Third-party pricing is reviewed on a monthly basis for reasonableness based on the market knowledge and experience of company personnel that interact daily with the markets for these types of securities. Mortgage Loans Held for Sale— The fair value of mortgage loans held for sale is estimated on an aggregate basis using a market approach based on quoted secondary market pricing for loan portfolios with similar characteristics. Loans held for sale are carried at the lower of cost or fair value with the exception of mortgage loans held for sale subject to pending agency contracts to securitize and sell loans. The Company elects the fair value measurement option for mortgage loans held for sale subject to pending agency contracts to securitize and sell loans, as permitted under the fair value guidance in U.S. GAAP. This election is expected to reduce volatility in earnings related to market fluctuations between the contract trade and settlement dates. At March 31, 2025 and September 30, 2024, there were $ 4,745 and $ 10,713 of loans held for sale subject to pending agency contracts measured at fair value, respectively, with unpaid principal balances of $ 4,634 and $ 10,336 . For the three and six months ended March 31, 2025, net gain (loss) on the sale of loans included $ 60 and $( 267 ), respectively, compared to $ 68 for the three and six months ended March 31, 2024, related to gains or losses during the period due to changes in the fair value of loans held for sale subject to pending agency contracts. At March 31, 2025 and September 30, 2024, there were $ 1,059 and $ 7,061 of loans held for sale carried at cost, respectively. Loans held for sale are included in Level 2 of the hierarchy. Interest income on mortgage loans held for sale is recorded in interest income on loans. Collateral-Dependent Loans — Collateral-dependent loans represent certain loans held for investment that are subject to a fair value measurement under U.S. GAAP because they are individually evaluated using a fair value measurement, such as the fair value of the underlying collateral. Credit loss is measured using a market approach based on the fair value of the collateral, less estimated costs to dispose, for loans the Company considers to be collateral-dependent due to a delinquency status or other adverse condition severe enough to indicate that the borrower can no longer be relied upon as the continued source of repayment. These conditions are described more fully in Note 4. LOANS AND ALLOWANCES FOR CREDIT LOSSES . To calculate the credit loss of collateral-dependent loans, the fair market values of the collateral, estimated using third-party appraisals in the majority of instances, are reduced by calculated estimated costs to dispose, derived from historical experience and recent market conditions. Any indicated credit loss is recognized by a charge to the allowance for credit losses. Subsequent increases in collateral values or principal pay downs on loans with recognized credit loss could result in a collateral-dependent loan being carried below its fair value. When no credit loss is indicated, the carrying amount is considered to approximate the fair value of that loan to the Company because contractually that is the maximum recovery the Company can expect. The amortized cost of loans individually evaluated for credit loss based on the fair value of the collateral are included in Level 3 of the hierarchy with assets measured at fair value on a non-recurring basis. The range and weighted average impact of estimated costs to dispose on fair values is determined at the time of credit loss or when additional credit loss is recognized and is included in quantitative information about significant unobservable inputs later in this note. Real Estate Owned— Real estate owned includes real estate acquired as a result of foreclosure or by deed in lieu of foreclosure and is carried at the lower of the cost basis or fair value, less estimated costs to dispose. The carrying amounts of real estate owned at March 31, 2025 and September 30, 2024, were $ 0 and $ 174 , respectively. Fair value is estimated under the market approach using independent third party appraisals. As these properties are actively marketed, estimated fair values may be adjusted by management to reflect current economic and market conditions. At March 31, 2025 and September 30, 2024, these adjustments were not significant to reported fair values. At March 31, 2025 and September 30, 2024, $ 0 and $ 220 , respectively, of real estate owned is included in Level 3 of the hierarchy with assets measured at fair value on a non-recurring basis, where the cost basis equals or exceeds the estimated fair values, less estimated costs to dispose, of $ 0 and $ 46 , respectively. There were no real estate owned carried at their original or adjusted cost basis at March 31, 2025 and September 30, 2024. Derivatives— Derivative instruments include interest rate lock commitments on loans being originated or acquired for the held for sale portfolio, forward commitments on contracts to deliver mortgage loans and interest rate swaps designated as cash flow hedges. Derivatives not designated as cash flow hedges are reported at fair value in Other assets or Other liabilities on the CONSOLIDATED STATEMENTS OF CONDITION with changes in value recorded in current earnings. Derivatives qualifying as cash flow hedges are settled daily , bringing the fair value to $ 0 . Refer to Note 13. DERIVATIVE INSTRUMENTS for additional information on cash flow hedges and other derivative instruments. Interest rate lock commitments are commitments to lend at interest rates and amounts defined prior to funding. The fair value of interest rate lock commitments is adjusted by a closure rate based on the estimated percentage of commitments that will result in closed loans. The range and weighted average impact of the closure rate is included in quantitative information about significant unobservable inputs later in this note. A 30 Table of Contents significant change in the closure rate may result in a significant change in the ending fair value measurement of these derivatives relative to their total fair value. Because the closure rate is a significantly unobservable assumption, interest rate lock commitments are included in Level 3 of the hierarchy. Forward commitments on contracts to deliver mortgage loans are included in Level 2 of the hierarchy. Assets and liabilities carried at fair value on a recurring basis in the CONSOLIDATED STATEMENTS OF CONDITION at March 31, 2025 and September 30, 2024, are summarized below. Recurring Fair Value Measurements at Reporting Date Using March 31, 2025 Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs (Level 1) (Level 2) (Level 3) Assets Investment securities available for sale: REMICs $ 468,587 $ — $ 468,587 $ — Fannie Mae certificates 2,786 — 2,786 — Freddie Mac securities 8,446 — 8,446 — U.S. government and agency obligations 54,104 — 54,104 — Mortgage loans held for sale 4,745 — 4,745 — Derivatives: Interest rate lock commitments 318 — — 318 Total $ 538,986 $ — $ 538,668 $ 318 Liabilities Derivatives: Forward commitments for the sale of mortgage loans $ 21 $ — $ 21 $ — Total $ 21 $ — $ 21 $ — Recurring Fair Value Measurements at Reporting Date Using September 30, 2024 Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs (Level 1) (Level 2) (Level 3) Assets Investment securities available for sale: REMICs $ 449,401 $ — $ 449,401 $ — Fannie Mae certificates 2,945 — 2,945 — Freddie Mac certificates 1,129 — 1,129 — U.S. government and agency obligations 72,776 — 72,776 — Mortgage loans held for sale 10,713 — 10,713 — Derivatives: Interest rate lock commitments 395 — — 395 Total $ 537,359 $ — $ 536,964 $ 395 Liabilities Derivatives: Forward commitments for the sale of mortgage loans $ 72 $ — $ 72 $ — Total $ 72 $ — $ 72 $ — 31 Table of Contents The table below presents a reconciliation of the beginning and ending balances and the location within the CONSOLIDATED STATEMENTS OF INCOME where gains (losses) due to changes in fair value are recognized on interest rate lock commitments which are measured at fair value on a recurring basis using significant unobservable inputs (Level 3). Three Months Ended March 31, Six Months Ended March 31, 2025 2024 2025 2024 Beginning balance $ 26 $ 55 $ 395 $ ( 1 ) (Loss)/Gain during the period due to changes in fair value: Included in other non-interest income 292 303 ( 77 ) 359 Ending balance $ 318 $ 358 $ 318 $ 358 Change in unrealized gains for the period included in earnings for assets held at end of the reporting date $ 318 $ 358 $ 318 $ 358 Summarized in the tables below are those assets measured at fair value on a nonrecurring basis. Nonrecurring Fair Value Measurements at Reporting Date Using March 31, 2025 Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs (Level 1) (Level 2) (Level 3) Collateral-dependent loans, net of allowance $ 42,047 $ — $ — $ 42,047 Total $ 42,047 $ — $ — $ 42,047 Nonrecurring Fair Value Measurements at Reporting Date Using September 30, 2024 Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs (Level 1) (Level 2) (Level 3) Collateral-dependent loans, net of allowance $ 39,577 $ — $ — $ 39,577 Real estate owned (1) 220 — — 220 Total $ 39,797 $ — $ — $ 39,797 (1) Amounts represent fair value measurements of properties before deducting estimated costs to dispose. The following provides quantitative information about significant unobservable inputs categorized within Level 3 of the Fair Value Hierarchy. Fair Value March 31, 2025 Valuation Technique(s) Unobservable Input Range Weighted Average Collateral-dependent loans, net of allowance $ 42,047 Market comparables of collateral discounted to estimated net proceeds Discount appraised value to estimated net proceeds based on historical experience: • Residential Properties 0 - 28 % 3.8 % Interest rate lock commitments $ 318 Quoted Secondary Market pricing Closure rate 0 - 100 % 95.5 % 32 Table of Contents Fair Value September 30, 2024 Valuation Technique(s) Unobservable Input Range Weighted Average Collateral-dependent loans, net of allowance $ 39,577 Market comparables of collateral discounted to estimated net proceeds Discount appraised value to estimated net proceeds based on historical experience: • Residential Properties 0 - 28 % 4.0 % Interest rate lock commitments $ 395 Quoted Secondary Market pricing Closure rate 0 - 100 % 90.1 % The following tables present the estimated fair value of the Company’s financial instruments and their carrying amounts as reported in the CONSOLIDATED STATEMENTS OF CONDITION . March 31, 2025 Carrying Fair Level 1 Level 2 Level 3 Amount Value Assets: Cash and due from banks $ 36,429 $ 36,429 $ 36,429 $ — $ — Interest-earning cash equivalents 427,154 427,154 427,154 — — Investment securities available for sale 533,923 533,923 — 533,923 — Mortgage loans held for sale 5,803 5,816 — 5,816 — Loans, net: Mortgage loans held for investment 15,353,151 13,956,412 — — 13,956,412 Other loans 6,992 6,992 — — 6,992 Federal Home Loan Bank stock 219,231 219,231 N/A — — Accrued interest receivable 58,050 58,050 — 58,050 — Cash collateral received from or held by counterparty 9,060 9,060 9,060 — — Derivatives 318 318 — — 318 Liabilities: Checking and savings accounts $ 2,127,178 $ 2,127,178 $ — $ 2,127,178 $ — Certificates of deposit 8,270,467 8,262,851 — 8,262,851 — Borrowed funds 4,587,327 4,602,252 — 4,602,252 — Borrowers’ advances for insurance and taxes 100,263 100,263 — 100,263 — Principal, interest and escrow owed on loans serviced 27,249 27,249 — 27,249 — Derivatives 21 21 — 21 — 33 Table of Contents September 30, 2024 Carrying Fair Level 1 Level 2 Level 3 Amount Value Assets: Cash and due from banks $ 26,287 $ 26,287 $ 26,287 $ — $ — Interest-earning cash equivalents 437,431 437,431 437,431 — — Investment securities available for sale 526,251 526,251 — 526,251 — Mortgage loans held for sale 17,775 17,986 — 17,986 — Loans, net: Mortgage loans held for investment 15,316,354 13,922,944 — — 13,922,944 Other loans 5,705 5,705 — — 5,705 Federal Home Loan Bank stock 228,494 228,494 N/A — — Accrued interest receivable 59,398 59,398 — 59,398 — Cash collateral received from or held by counterparty 7,844 7,844 7,844 — — Derivatives 395 395 — — 395 Liabilities: Checking and savings accounts $ 2,150,770 $ 2,150,770 $ — $ 2,150,770 $ — Certificates of deposit 8,044,309 7,989,992 — 7,989,992 — Borrowed funds 4,792,847 4,819,873 — 4,819,873 — Borrowers’ advances for insurance and taxes 113,637 113,637 — 113,637 — Principal, interest and escrow owed on loans serviced 28,753 28,753 — 28,753 — Derivatives 72 72 — 72 — 13. DERIVATIVE INSTRUMENTS The Company enters into interest rate swaps to add stability to interest expense and manage exposure to interest rate movements as part of an overall risk management strategy. For hedges of the Company's borrowing and deposit program, interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed payments. These derivatives are used to hedge the forecasted cash outflows associated with the Company's FHLB borrowings and brokered certificates of deposit. Cash flows from derivatives used to manage interest rate risks are classified as operating activities in the cash flow statement. The Company classifies both the earnings and cash flow impact from these derivatives consistent with the underlying hedged item. Cash flow hedges are initially assessed for effectiveness using regression analysis. Changes in the fair value of derivatives designated and that qualify as cash flow hedges, are recorded in OCI and are subsequently reclassified into earnings during the period in which the hedged forecasted transaction affects earnings. Derivatives qualifying as cash flow hedges are settled daily, bringing their fair value to $ 0 . Quarterly, a quantitative analysis is performed to monitor the ongoing effectiveness of the hedging instrument. All derivative positions continue to be highly effective as of March 31, 2025. The Company enters into forward commitments for the sale of mortgage loans primarily to protect against the risk of lost revenue from adverse interest rate movements on net income. The Company recognizes the fair value of such contracts when the characteristics of those contracts meet the definition of a derivative. These derivatives are not designated in a hedging relationship; therefore, gains and losses are recognized immediately in the CONSOLIDATED STATEMENTS OF INCOME . In addition, the Company is party to derivative instruments when it enters into interest rate lock commitments to originate or acquire a portion of its loans, which when funded, are classified as held for sale. Such commitments are not designated in a hedging relationship; therefore, gains and losses are recognized immediately in the CONSOLIDATED STATEMENTS OF INCOME. 34 Table of Contents The following tables provide the locations within the CONSOLIDATED STATEMENTS OF CONDITION for fair values of derivative instruments at the reporting dates and their related notional values. March 31, 2025 September 30, 2024 Weighted Average Weighted Average Notional Value Term (years) Fixed-Rate Payments Notional Value Term (years) Fixed-Rate Payments Derivatives designated as hedging instruments Cash flow hedges: Interest rate swaps Other Assets $ 2,990,000 2.8 3.05 % $ 2,075,000 2.3 2.68 % Other Liabilities 560,000 2.8 4.02 1,575,000 4.1 3.67 Total cash flow hedges: Interest rate swaps $ 3,550,000 2.8 3.20 % $ 3,650,000 3.1 3.10 % March 31, 2025 September 30, 2024 Notional Value Fair Value Notional Value Fair Value Derivatives not designated as hedging instruments Interest rate lock commitments Other Assets $ 12,372 $ 318 $ 11,467 $ 395 Forward Commitments for the sale of mortgage loans Other Liabilities 8,595 ( 21 ) 17,411 ( 72 ) Total derivatives not designated as hedging instruments $ 20,967 $ 297 $ 28,878 $ 323 The following tables present the net gains and losses recorded within the CONSOLIDATED STATEMENTS OF INCOME and the CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME relating to derivative instruments. Three Months Ended Six Months Ended Location of Gain or (Loss) March 31, March 31, Recognized in Income 2025 2024 2025 2024 Cash flow hedges Amount of gain/(loss) recognized Other comprehensive income $ ( 29,423 ) $ 68,462 $ 47,544 $ ( 22,291 ) Amount of gain reclassified from AOCI Interest expense: Borrowed funds and Deposits 11,161 23,435 25,973 45,783 Derivatives not designated as hedging instruments Interest rate lock commitments Other non-interest income $ 292 $ 303 $ ( 77 ) $ 359 Forward commitments for the sale of mortgage loans Net gain/(loss) on the sale of loans ( 19 ) ( 25 ) 51 ( 151 ) The Company estimates that $ 22,789 of the amounts reported in AOCI will be reclassified as a reduction to interest expense during the twelve months ending March 31, 2026. Derivatives contain an element of credit risk which arises from the possibility that the Company will incur a loss because a counterparty fails to meet its contractual obligations. The Company's exposure is limited to the replacement value of the contracts, rather than the notional or principal amounts. Credit risk is minimized through counterparty margin payments, transaction limits and monitoring procedures. All of the Company's swap transactions are cleared through a registered clearing broker to a central clearing organization. The clearing organization establishes daily cash and upfront cash or securities margin requirements to cover potential exposure in the event of default. This process shifts the risk away from the counterparty, since the clearing organization acts as an intermediary on each cleared transaction. At March 31, 2025 and September 30, 2024, there was $ 9,060 and $ 7,844 , respectively, of cash collateral included in other assets, and $ 50,236 and $ 68,932 , respectively, included in investment securities related to initial margin requirements that are held by the central clearing organization. For derivative transactions cleared through certain clearing parties, variation margin payments are recognized as settlements on a 35 Table of Contents daily basis. The fair value of derivative instruments are presented on a gross basis, even when the derivative instruments are subject to master netting arrangements. 14. RECENT ACCOUNTING PRONOUNCEMENTS Adopted during the six months ended March 31, 2025 In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280) – Improvements to Reportable Segment Disclosures.” The amendments in this update improve disclosures about a public entity's reportable segments and addresses requests from investors and other allocators of capital for additional information about a reportable segment's expenses. While the Company only has one reportable segment, the update requires public entities with a single segment to provide all segment disclosures under ASC 280. The amendments in this update are effective for fiscal years beginning after December 15, 2023, or the Company's Form 10-K for the fiscal year ending September 30, 2025, and interim periods within fiscal years beginning after December 15, 2024, or the Company's fiscal year ending September 30, 2026, beginning with the Form 10-Q for the quarter ending December 31, 2025. Retrospective application is required for all prior periods presented in the financial statements. The adoption does not have a material effect on the Company's consolidated financial statements or disclosures. Issued but not yet adopted as of March 31, 2025 In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740) – Improvements to Income Tax Disclosures". The ASU requires disaggregated information about a reporting entity’s effective tax rate reconciliation, as well as information on income tax paid. The update is effective for fiscal years beginning after December 15, 2024, or the Company's fiscal year ending September 30, 2026. Prospective and retrospective application to prior periods presented in the financials is permitted, as well as early adoption. The Company is currently assessing the impact of the requirements on its consolidated financial statement disclosures. In November 2024, the FASB issued ASU 2024-03,“Income Statement (Subtopic 220-40) – Reporting Comprehensive Income – Expense Disaggregation Disclosures”. The amendments in this update improve the disclosures about a public business entity's expenses and address requests from investors for more detailed information about the types of expenses in commonly presented expense captions. The new guidance is effective for public business entities for annual periods beginning after December 15, 2026, or the Company's fiscal year ending September 30, 2028, and interim periods beginning after December 15, 2027, or the Company's fiscal year ending September 30, 2029. Early adoption is permitted and is effective on either a prospective or retrospective basis. The Company is currently assessing the impact of this guidance on its consolidated financial statement disclosures. The Company has determined that all other recently issued accounting pronouncements will not have a material impact on the Company's consolidated financial statements or do not apply to its operations.