What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-07 compared with 2025-05-08 · 209 added, 201 removed, 756 unchanged (35% of the section changed)

27 unchanged sentences

Government, including policies of the U.S.

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

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

● the ability of the U.S.

23 unchanged sentences

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

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

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

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

The Federal Reserve has maintained interest rates near 20-year highs.

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

It is possible that the easing cycle will continue in the second half of 2025, however, uncertainty can lead to volatility in interest rates and spreads, creating a challenging operating environment.

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

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The Company maintains high-quality core deposits distributed primarily across our Ohio and Florida branch network in products tailored toward consumers seeking non-transactional savings.

As of March 31, 2025, 96.0% of our $9.37 billion retail deposit base consists of accounts structured under the FDIC insured limit of $250,000.

As of June 30, 2025, 95.9% of our $9.36 billion retail deposit base consists of accounts structured under the FDIC insured limit of $250,000.

The Company has the ability to fund 100% of all uninsured deposit balances through sources described later in this Item 2 under the heading Liquidity and Capital Resources .

The Company retains ample and diverse sources of liquidity and funding, beyond deposits.

At March 31, 2025, our combined additional borrowing capacity under the Association's blanket pledge arrangements with the FHLB of Cincinnati and the FRB Cleveland along with our ability to purchase Fed Funds through arrangements with other institutions totaled $3.06 billion.

At June 30, 2025, our combined additional borrowing capacity under the Association's blanket pledge arrangements with the FHLB of Cincinnati and the FRB Cleveland along with our ability to purchase Fed Funds through arrangements with other institutions totaled $2.75 billion.

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

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• Maintaining adjustable-rate loans and shorter-term fixed-rate loans;

• Marketing home equity lines of credit, which carry an adjustable rate of interest, indexed to the prime rate;

• Maintaining and growing home equity line of credit balances, which carry an adjustable rate of interest, indexed to the prime rate;

• Opportunistically extending the duration of our funding sources;

2 unchanged sentences

Levels of Regulatory Capital

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

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

At June 30, 2025, the Company’s Tier 1 (leverage) capital totaled $1.86 billion, or 10.86%, of net average assets and 17.75% of risk-weighted assets, while the Association’s Tier 1 (leverage) capital totaled $1.73 billion, or 10.10%, of net average assets and 16.51% of risk-weighted assets.

Each of these measures is in excess of the requirements in effect at June 30, 2025, for designation as “well capitalized” under regulatory prompt corrective action provisions.

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

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The 10-year, fixed-rate loan has a more desirable interest rate risk profile when compared to loans with fixed-rate terms of 15 to 30 years and can help to more effectively manage interest rate risk exposure, yet provides our borrowers with the certainty of a fixed interest rate throughout the life of the obligation.

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

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

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

For the Nine Months Ended June 30, 2025 For the Nine Months Ended June 30, 2024

Amount Percent Amount Percent

7 unchanged sentences

Total First Mortgage Loan Originations and Acquired Loans $ 760,197 100.0 % $ 598,726 100.0 %

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

March 31, 2025 September 30, 2024

June 30, 2025 September 30, 2024

Amount Percent Amount Percent

7 unchanged sentences

Total First Mortgage Loans Held For Investment $ 11,007,404 100.0 % $ 11,426,080 100.0 %

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

The following table sets forth the principal balances and yields as of June 30, 2025, for all ARM loans segregated by the next scheduled interest rate reset date:

Current Balance of ARM Loans Scheduled for Interest Rate Reset Yield

7 unchanged sentences

Total $ 4,056,491 3.63 %

At March 31, 2025 and September 30, 2024, mortgage loans held for sale, all of which were long-term, fixed-rate first mortgage loans and all of which were held for sale to Fannie Mae, totaled $5.8 million and $17.8 million, respectively.

At June 30, 2025 and September 30, 2024, mortgage loans held for sale, all of which were long-term, fixed-rate first mortgage loans and substantially all of which were held for sale to Fannie Mae, totaled $31.0 million and $17.8 million, respectively.

Loan Portfolio Yield

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

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

March 31, 2025

The following tables set forth the principal balance and interest yield as of June 30, 2025, for the portfolio of loans held for investment, by type of loan, structure and geographic location.

Weighted average yields are based on principal balances as of June 30, 2025.

June 30, 2025

Balance Percent Yield

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Total Loans Receivable $ 15,605,791 100.0 % 4.73 %

March 31, 2025

June 30, 2025

Balance Fixed Rate Balance Fixed Rate Percent Yield

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

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

At June 30, 2025, the principal balance of home equity lines of credit (including those in repayment) that are structured to reset with each prime rate adjustment totaled $3.88 billion.

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

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In each of the Association's agreements, interest paid is based on a fixed rate of interest throughout the term of each agreement while interest received is based on an interest rate that resets and compounds daily over a specified interval

(generally three months) throughout the term of each agreement.

(generally one to three months) throughout the term of each agreement.

On the initiation date of the swap, the agreed upon exchange interest rates reflect market conditions at that point in time.

Swaps generally require counterparty collateral pledges that ensure the counterparties' ability to comply with the conditions of the agreement.

Concurrent with the execution of each swap, the Association enters into a short-term borrowing in an amount equal to the notional amount of the swap and with interest rate resets aligned with the reset interval of the swap.

Concurrent with the execution of each swap, the Association enters into a short-term borrowing or issues brokered CDs in an amount equal to the notional amount of the swap and with interest rate resets aligned with the reset interval of the swap.

Each individual swap agreement has been designated as a cash flow hedge of interest rate risk associated with either the Company's variable rate borrowings from the FHLB of Cincinnati or brokered CDs.

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

During the six months ended March 31, 2025, $147.2 million of agency-compliant, long-term (15 to 30 years), fixed-rate mortgage loans were sold, or committed to be sold, to Fannie Mae on a servicing retained basis.

Of these sold or committed loans, $119.3 million were originated as agency-compliant first mortgage loans, $11.0 million were acquired through a correspondent lending partnership, and $16.9 million were originated under Fannie Mae's Home Ready initiative.

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

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

During the nine months ended June 30, 2025, $210.6 million of agency-compliant, long-term (15 to 30 years), fixed-rate mortgage loans were sold, or committed to be sold, primarily to Fannie Mae.

Of these sold or committed loans, $20.8 million were originated under Fannie Mae's Home Ready initiative, $23.0 million were acquired through a correspondent lending partnership and $166.8 million were originated as agency-compliant first mortgage loans or to the same "Qualified Mortgage" underwriting standards.

At June 30, 2025, loans classified as held for sale totaled $31.0 million.

At June 30, 2025, we serviced $1.99 billion of loans we originated and later sold to investors.

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

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

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

At June 30, 2025, 90% of our assets consisted of residential real estate loans (both “held for sale” and “held for investment”) and home equity loans and lines of credit.

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

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

As of March 31, 2025, loans originated or acquired had a balance of $15.44 billion, of which $31.6 million, or 0.2%, were delinquent.

As of June 30, 2025, loans originated or acquired had a balance of $15.70 billion, of which $34.3 million, or 0.2%, were delinquent.

One aspect of our credit risk concern relates to high concentrations of our loans that are secured by residential real estate in specific states, particularly Ohio and Florida, where a large portion of our historical lending has occurred.

At March 31, 2025, approximately 58.3% and 17.1% of the combined total of our residential Core and construction loans were held for investment, and approximately 22.5% and 22.3% of our home equity loans and lines of credit were secured by properties in Ohio and Florida, respectively.

At June 30, 2025, approximately 58.4% and 16.8% of the combined total of our residential Core and construction loans were held for investment, and approximately 22.4% and 21.8% of our home equity loans and lines of credit were secured by properties in Ohio and Florida, respectively.

In an effort to moderate the concentration of our credit risk exposure in individual states, we have utilized direct mail marketing, our internet site and our customer service call center to extend our lending activities to other attractive geographic locations.

Currently, in addition to Ohio and Florida, we are actively lending in 25 other states and the District of Columbia, and as a result of that activity, the concentration ratios of the combined total of our residential Core and construction loans held for investment in Ohio and Florida have trended downward from their September 30, 2010, levels when the concentrations were 79.1% in Ohio and 19.0% in Florida.

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

Of the total mortgage loans originated in the nine months ended June 30, 2025, 29.2% are secured by properties in states other than Ohio or Florida.

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

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

At March 31, 2025, the Association’s ratio of Tier 1 (leverage) capital to net average assets (a basic industry measure that deems 5.00% or above to represent a “well capitalized” status) was 10.04%.

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

At June 30, 2025, the Association’s ratio of Tier 1 (leverage) capital to net average assets (a basic industry measure that deems 5.00% or above to represent a “well capitalized” status) was 10.10%.

The Association's Tier 1 (leverage) capital ratio at June 30, 2025 included the negative impact of a $40 million cash dividend payment that the Association made to the Company, its sole shareholder, in December 2024.

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

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

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

At June 30, 2025, deposits totaled $10.34 billion (including $977.5 million of brokered CDs), while borrowings totaled $4.88 billion and borrowers’ advances and servicing escrows totaled $148.1 million, combined.

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

1 unchanged sentence

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

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

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

At June 30, 2025, the Association had the ability to borrow a maximum of $6.63 billion from the FHLB of Cincinnati and $530.8 million from the FRB-Cleveland Discount Window.

As of June 30, 2025, our capacity for additional borrowing from the FHLB of Cincinnati was $1.77 billion.

Second, we have the ability to purchase overnight Fed Funds up to $455.0 million through various arrangements with other institutions.

Third, we invest in high quality marketable securities that exhibit limited market price variability and, to the extent that they are not needed as collateral for borrowings, can be sold in the institutional market and converted to cash.

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

At June 30, 2025, our investment securities portfolio totaled $525.2 million.

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

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

During the nine months ended June 30, 2025, we sold, or committed to sell $210.6 million in loans primarily to Fannie Mae.

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

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

During the nine months ended June 30, 2025 and 2024, cash flows from operations provided $93.5 million and $147.3 million, respectively.

Overall, while customer and community confidence can never be assured, the Company believes that its liquidity is adequate and that it has access to adequate alternative funding sources.

1 unchanged sentence

We continue to focus on managing operating expenses.

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

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

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

We have successfully been able to reduce our operating expenses to help offset the pressure of margin compression resulting from our liabilities repricing at elevated interest rates and sooner than most of our longer-term fixed rate assets reprice.

Our ratio of annualized non-interest expense to average assets was 1.19% for the nine months ended June 30, 2025, and 1.20% for the nine months ended June 30, 2024.

As of June 30, 2025, our average assets per full-time employee and our average deposits per full-time employee were $18.2 million and $10.9 million, respectively.

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

Our relatively high average deposits (exclusive of brokered CDs) held at our branch offices ($253.1

($253.1 million per branch office as of March 31, 2025) contributes to our expense management efforts by limiting the overhead costs of serving our customers.

million per branch office as of June 30, 2025) contributes to our expense management efforts by limiting the overhead costs of serving our customers.

We will continue our efforts to control operating expenses to help offset margin compression.

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

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

overall loan-to-value ratios.

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

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

In a stressed housing market with high delinquencies and decreasing housing prices, these higher

loan-to-value ratios represent a greater risk of loss to the Company.

A borrower with more equity in the property has a vested interest in keeping the loan current when compared to a borrower with little or no equity in the property.

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

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

At June 30, 2025, we had an amortized cost of $3.92 billion in home equity lines of credit and $700.7 million in home equity loans outstanding, of which $5.2 million, or 0.11%, were delinquent 90 days or more.

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

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

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

For the Three Months Ended June 30, For the Nine Months Ended June 30,

2025 2024 2025 2024

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Home equity loans 11 34 30 63

Construction — 20 — 20

Total recoveries 1,165 1,629 3,875 4,638

Net recoveries 945 1,366 3,058 3,624

Release of allowance for credit losses on loans

Provision (release) of allowance for credit losses on loans

1,049 (2,006) (520) (3,148)

1 unchanged sentence

Allowance balance for credit losses on unfunded commitments (beginning of the period) $ 29,380 $ 26,657 $ 27,811 $ 27,515

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

Provision for credit losses on unfunded loan commitments

451 1,506 2,020 648

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

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

For the Three Months Ended June 30, For the Nine Months Ended June 30,

2025 2024 2025 2024

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

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

During the three months ended June 30, 2025 and June 30, 2024, recoveries exceeded loan charge-offs by $0.9 million and $1.4 million, respectively.

During the three months ended June 30, 2025 and June 30, 2024, gross charge-offs were $0.2 million and $0.3 million, respectively.

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

During the three months ended March 31, 2025, the total allowance for credit losses increased to $99.9 million, from $97.8 million at December 31, 2024.

During the three months ended June 30, 2025, the total allowance for credit losses increased to $102.4 million, from $99.9 million at March 31, 2025.

The total allowance for credit losses is comprised of the asset portion, which is applied to the loan portfolio and the liability portion, which is applied to off-balance sheet exposures, primarily related to undrawn equity exposures.

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

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

During the three months ended June 30, 2025, the asset portion of the total allowance increased to $72.5 million from $70.5 million, and the liability portion of the total allowance increased to $29.8 million from $29.4 million.

We recorded a $1.5 million net provision for credit losses for the period, consisting of a $1.0 million provision on loans and a $0.5 million provision for credit losses on off-balance sheet exposures.

Because many variables are considered in determining the appropriate level of general valuation allowances, directional changes in individual considerations do not always align with the directional change in the balance of a particular component of the general valuation allowance.

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

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

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

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

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

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

As we are no longer originating loans under our Home Today program, there is an expected net recovery position for this portfolio which was $2.4 million at March 31, 2025, and $2.5 million at December 31, 2024.

The increase in the allowance for credit losses applied to the loan portfolio during the three months ended June 30, 2025, was primarily related to the net impact of increases in the home equity loan and line of credit portfolios and an increase in the mortgage loss dollars due to a higher origination rate and a widening in the treasury spread and unfavorable unemployment and home price projections.

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

The amortized cost of the residential Core portfolio decreased 0.2%, or $23.1 million, and its total allowance increased 0.8%, or $0.3 million, as of June 30, 2025, compared to March 31, 2025.

The amortized cost of the home equity lines of credit portfolio increased 5.7%, or $210.1 million, and its total allowance increased 6.8% to $20.8 million, from $19.5 million at March 31, 2025.

The amortized cost of the home equity loans increased 7.9%, or $51.4 million, and its total allowance increased 6.5% to $13.7 million, from $12.8 million at March 31, 2025.

As we are no longer originating loans under our Home Today program, there is an expected net recovery position for this portfolio which was $2.9 million at June 30, 2025, and $2.4 million at March 31, 2025.

Under the CECL methodology, the life of loan concept allows for qualitative adjustments for the expected future recoveries of previously charged-off loans, which is driving the allowance balance for the Home Today loans to be negative.

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The tables do not include allowances for credit losses on unfunded loan commitments, which are primarily related to undrawn home equity lines of credit.

March 31, 2025 September 30, 2024

June 30, 2025 September 30, 2024

Amount Percent of

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Home equity lines of credit 20,788 28.7 24.9 16,590 23.7 21.7

19,462 27.6 23.8 16,590 23.7 21.7

Home equity loans 13,666 18.8 4.5 11,642 16.6 3.6

12,832 18.2 4.2 11,642 16.6 3.6

Construction 29 — 0.1 40 0.1 0.2

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Therefore, neither was segregated by geographic location.

March 31, 2025 September 30, 2024

June 30, 2025 September 30, 2024

Amount Percent Amount Percent

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Total loans receivable, net $ 15,595,997 $ 15,322,059

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

The following table provides the amortized cost and an analysis of our real estate loans held for investment disaggregated by refreshed FICO score, year of origination and portfolio at June 30, 2025.

FICO scores are updated quarterly as available.

6 unchanged sentences

(Dollars in thousands)

March 31, 2025

June 30, 2025

Real estate loans:

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741+ 4,673 2,978 — — — — — — 7,651

741+ 1,884 5,606 — — — — — — 7,490

Total Construction 4,673 2,978 — — — — — — 7,651

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

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

The following table provides amortized cost and an analysis of our real estate loans held for investment by origination LTV, origination year and portfolio at June 30, 2025.

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

3 unchanged sentences

(Dollars in thousands)

March 31, 2025

June 30, 2025

Real estate loans:

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

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

The following table sets forth credit exposure, principal balance, percent delinquent 90 days or more, the mean CLTV percent at the time of origination and the current mean CLTV percent of home equity loans, home equity lines of credit and bridge loan portfolios as of March 31, 2025.

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

At June 30, 2025, the unpaid principal balance of the home equity loans and lines of credit portfolio consisted of $695.0 million in home equity loans (which included $17.3 million in bridge loans) and $3.88 billion in home equity lines of credit (which included $58.4 million of home equity lines of credit which are in repayment and no longer eligible to be drawn upon).

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

11 unchanged sentences

Total home equity lines of credit in draw period 9,337,769 3,822,758 0.10 59 47

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

Home equity lines in repayment 58,374 58,374 1.19 59 29

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

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

(3) Current Mean CLTV is based on best available first mortgage and property values as of June 30, 2025.

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

1 unchanged sentence

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

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

The principal balance of home equity lines of credit in the draw period that have a current CLTV over 80% or unknown, based on drawn amount, is $31.3 million, or 0.8% of the total, at June 30, 2025 .

In recognition of the past weakness in the housing market, we continue to conduct an expanded loan level evaluation of our home equity lines of credit which are delinquent 90 days or more.

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

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

At June 30, 2025, 23.1% of the home equity lending portfolio was either in a first lien position (12.0%), in a subordinate (second) lien position behind a first lien that we held (9.2%) or behind a first lien that was held by a loan that we originated, sold and now serviced for others (1.9%).

At June 30, 2025, 12.3% of the home equity line of credit portfolio in the draw period were making only the minimum payment on the outstanding line balance.

Minimum payments include both a principal and interest component.

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Loans Delinquent for

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

June 30, 2025 30-89 Days 90 Days or More Total

Real estate loans:

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Total loans seriously delinquent (i.e.

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

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

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

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

The percentage of loans seriously delinquent in the residential Core portfolio remained at 0.06%

for both periods.

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

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

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

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

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

March 31, 2025 September 30, 2024

June 30, 2025 September 30, 2024

(Dollars in thousands)

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

March 31, 2025 September 30, 2024

June 30, 2025 September 30, 2024

(Dollars in thousands)

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Total Collateral-Dependent loans $ 43,411 $ 39,577

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

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

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

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

Comparison of Financial Condition at June 30, 2025 and September 30, 2024

Total assets increased $284.9 million, or 1.7%, to $17.38 billion at June 30, 2025, from $17.09 billion at September 30, 2024.

This increase was mainly the result of an increase in loans held for investment.

Cash and cash equivalents decreased $11.1 million, or 2.4%, to $452.6 million at June 30, 2025, from $463.7 million at September 30, 2024.

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

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

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

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

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

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

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

Investment securities available for sale decreased $1.1 million, or less than 1%, to $525.2 million at June 30, 2025, from $526.3 million at September 30, 2024.

There were no sales of investment securities during the nine months ended June 30, 2025.

Mortgage loans held for sale increased by $13.2 million, or 74.2%, to $31.0 million at June 30, 2025, from $17.8 million at September 30, 2024 due to an increase in loans committed to forward sales.

Loans held for investment, net of deferred loan fees and allowance for credit losses, increased $273.9 million, or 1.8%, to $15.60 billion at June 30, 2025, from $15.32 billion at September 30, 2024.

During the nine months ended June 30, 2025, the home equity loans and lines of credit portfolio increased $690.8 million and residential core mortgage loans decreased $415.2 million.

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

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

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

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

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

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

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

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

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

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

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

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

During the nine months ended June 30, 2025, total first mortgage loan originations were $760.2 million compared to $598.7 million for the nine months ended June 30, 2024.

Of total residential mortgage loans originated and acquired during the current period, $673.3 million (88.6%) were purchase transactions and $98.7 million (13.0%) were adjustable rate loans.

Commitments originated for home equity loans and lines of credit were $1.87 billion for the nine months ended June 30, 2025, compared to $1.62 billion for the nine months ended June 30, 2024.

Refer to Note 4.

LOANS AND ALLOWANCES FOR CREDIT LOSSES of the NOTES TO CONSOLIDATED FINANCIAL STATEMENTS for additional information.

Premises, equipment and software, net increased by $5.9 million, or 17.8%, to $39.1 million at June 30, 2025 from $33.2 million at September 30, 2024 due to increased software acquisitions.

Other assets, including prepaid expenses, decreased $6.8 million, or 6.0%, to $107.3 million at June 30, 2025, from $114.1 million at September 30, 2024.

The decrease was primarily the result of a $4.9 million decrease in interest receivable from swaps and a $2.6 million increase in unapplied wire transfer receipts, primarily loan repayments.

Deposits increased $146.4 million, or 1.4%, to $10.34 billion at June 30, 2025, from $10.20 billion at September 30, 2024.

The increase in deposits included a $250.5 million increase in certificates of deposit partially offset by a $26.7 million decrease in savings accounts, a $49.7 million decrease in money market accounts and a $19.3 million decrease in checking accounts.

Based on FDIC insurance limits by ownership structure, uninsured deposits were $381.2 million and $349.3 million at June 30, 2025 and September 30, 2024, respectively.

Borrowed funds increased $90.1 million, or 1.9%, to $4.88 billion at June 30, 2025, from $4.79 billion at September 30, 2024.

The total balance of borrowed funds at June 30, 2025, all from the FHLB, included $1.51 billion of long-term advances with a weighted average maturity of 1.8 years, $2.93 billion of short-term advances aligned with interest rate swap contracts, with a remaining weighted average effective maturity of approximately 2.7 years, and $435.0 million in overnight advances.

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

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

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

Borrowers' advances for insurance and taxes increased by $4.3 million to $117.9 million at June 30, 2025, from $113.6 million at September 30, 2024.

This change primarily reflects the cyclical nature of real estate tax payments that have been collected from borrowers and are in the process of being remitted to various taxing agencies.

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

Accrued expenses and other liabilities increased $17.2 million, or 16.8% to $115.0 million at June 30, 2025 from $97.8 million at September 30, 2024.

The increase was primarily related to a $10.9 million increase in payables due to real estate tax payments in process.

There was also a $3.6 million increase in accrued compensation expense and a $1.7 million increase in provision for off-balance sheet credit losses.

The increase in accrued compensation was due to the timing of pay dates and an increase in the accrual for discretionary incentive payments.

Total shareholders’ equity increased $25.4 million, or 1.4%, to $1.89 billion at June 30, 2025, from $1.86 billion at September 30, 2024.

The increase reflects $65.0 million of net income in the current year reduced by dividends of $44.7 million.

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

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

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

As a result of a mutual member vote, Third Federal Savings and Loan Association of Cleveland, MHC (the "MHC"), the mutual holding company that owns approximately 80.9% of the outstanding stock of the Company, was able to waive its receipt of its share of the dividend paid.

Other changes include $0.4 million of net decrease in accumulated other comprehensive income, primarily related to a net decrease in unrealized gains on swap contracts and net positive adjustments of $6.3 million related to our stock compensation and employee stock ownership plans.

During the nine months ended June 30, 2025, a total of 57,500 shares of our common stock were repurchased for $0.7 million, or an average cost of $12.87 per share.

The Company's eighth stock

repurchase program allows for a total of 10,000,000 shares to be repurchased, with 5,134,451 shares remaining to be repurchased at June 30, 2025.

As a result of a mutual member vote, Third Federal Savings, MHC, the mutual holding company that owns approximately 80.9% of the outstanding stock of the Company, was able to waive the receipt of its share of the dividend paid.

Refer to Part II, Item 2.

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

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

Comparison of Operating Results for the Three Months Ended June 30, 2025 and 2024

Average Balances and Yields .

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Three Months Ended Three Months Ended

March 31, 2025 March 31, 2024

June 30, 2025 June 30, 2024

Balance Interest

38 unchanged sentences

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

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

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

Net income increased $1.5 million, or 7.5%, to $21.5 million for the quarter ended June 30, 2025, from $20.0 million for the quarter ended June 30, 2024.

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

Interest and Dividend Income.

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Interest income on loans increased $11.2 million, or 6.7%, to $177.5 million during the current quarter, compared to $166.3 million for the same quarter in the prior year.

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

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

This change was primarily attributed to a 21 basis point increase in the average yield on loans for the quarter ended June 30, 2025, to 4.59%, compared to 4.38% the same quarter last year.

It was also attributed to a 2.0%, or $300.8 million, increase in the average balance of loans to $15.48 billion for the quarter ended June 30, 2025, compared to $15.18 billion during the same quarter last year as new loan production exceeded principal repayments and loan sales.

Interest Expense .

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

Interest expense increased $0.8 million, or 0.7%, to $116.4 million during the current quarter, compared to $115.6 million for the quarter ended June 30, 2024.

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

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

Interest expense on CDs, net of related interest rate swap contracts, increased $2.8 million, or 4.0%, to $73.3 million during the current quarter, compared to $70.5 million for the quarter ended June 30, 2024.

The increase was primarily attributed to a $657.0 million, or 8.6%, increase in the average balance of CDs to $8.31 billion during the current quarter, from $7.65 billion during the same quarter of the prior year, partially offset by a 15 basis point decrease in the average rate paid on CDs, to 3.53% for the current quarter, from 3.68% for the same quarter last year.

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

Interest expense on savings accounts decreased $1.6 million to $3.4 million during the quarter ended June 30, 2025, compared to $5.0 million for the quarter ended June 30, 2024.

The decrease was attributed to a $177.3 million, or 12.3%, decrease in the average balance of savings accounts and a 31 basis point decrease in the average rate paid on savings accounts, to 1.07% during the current quarter, when compared to the prior quarter ended June 30, 2024.

Interest expense on borrowed funds, net of related interest rate swap contracts, decreased $0.5 million, or 1.2%, to $39.6 million during the current quarter, compared to $40.1 million for the quarter ended June 30, 2024.

This decrease was mainly attributed to a decrease in the average balance of borrowed funds of $296.8 million, or 6.1%, to $4.60 billion during the current quarter from an average balance of $4.89 billion during the same quarter of the prior year.

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Net Interest Income.

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

Net interest income increased $5.7 million to $75.0 million during the current quarter, compared to $69.3 million for the quarter ended June 30, 2024.

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

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

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

Average interest-earning assets during the current quarter increased $60.4 million, or less than 1%, when compared to the quarter ended June 30, 2024.

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

The yield on interest-earning assets increased 14 basis points to 4.61% from 4.47%.

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

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

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

The average balance of interest-bearing liabilities increased $127.3 million, primarily due to an increase in the average balance of CDs, offset by decreases in the average balances of borrowed funds and savings accounts.

The interest rate spread increased fourteen basis points to 1.50% compared to 1.36% during the same quarter last year.

The net interest margin increased fourteen basis points to 1.81% in the current quarter compared to 1.67% for the same quarter last year.

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

Provision (Release) for Credit Losses.

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

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

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

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

We recorded a provision of the allowance for credit losses on loans and off-balance sheet exposures of $1.5 million during the quarter ended June 30, 2025, compared to a release of $0.5 million during the quarter ended June 30, 2024.

The increase in provision expense was primarily related to growth in the equity loan and line of credit portfolios.

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

Refer to the Lending Activities section of Item 2.

During the quarter ended June 30, 2025, we recorded net recoveries of $0.9 million compared to net recoveries of $1.4 million for the quarter ended June 30, 2024.

Refer to the Lending Activities

section of Item 2.

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

Non-Interest Income.

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

Non-interest income increased $0.8 million, or 12.8%, to $7.0 million during the current quarter, compared to $6.2 million for the quarter ended June 30, 2024, primarily due to increases of $0.4 million in loan fees and service charges and $0.5 million in cash surrender value increases and death benefits from bank owned life insurance contracts.

Non-Interest Expense.

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

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

Non-interest expense increased $2.4 million, or 4.7%, to $53.2 million during the current quarter, compared to $50.8 million for the quarter ended June 30, 2024.

The increase primarily consisted of a $0.9 million increase in marketing expense, a $0.9 million increase in salaries and employee benefits and a $0.2 million increase in FDIC premiums.

Income Tax Expense.

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

The provision for income taxes increased $0.5 million to $5.8 million during the current quarter, compared to $5.3 million for the quarter ended June 30, 2024.

The provision for the current quarter included $5.2 million of federal income tax provision and $0.6 million of state income tax expense.

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

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

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

The provision for the quarter ended June 30, 2024 included $4.7 million of federal income tax provision and $0.6 million of state income tax expense.

Our effective federal tax rate was 19.6% and 18.7% during the quarters ended June 30, 2025 and June 30, 2024, respectively.

Comparison of Operating Results for the Nine Months Ended June 30, 2025 and 2024

Average balances and yields .

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

Six Months Ended Six Months Ended

March 31, 2025 March 31, 2024

Nine Months Ended Nine Months Ended

June 30, 2025 June 30, 2024

Balance Interest

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

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

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

Net income increased $3.6 million to $65.0 million for the nine months ended June 30, 2025, compared to $61.4 million for the nine months ended June 30, 2024.

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

Interest and Dividend Income.

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

Interest and dividend income increased $18.5 million, or 3.4%, to $564.1 million during the nine months ended June 30, 2025, compared to $545.6 million during the same nine months in the prior year.

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

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

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

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

Interest income on loans increased $29.9 million, or 6.1%, to $521.2 million for the nine months ended June 30, 2025, compared to $491.3 million for the nine months ended June 30, 2024.

This increase was attributed mainly to a 21 basis point increase in the average yield on loans to 4.52% for the nine months ended June 30, 2025, from 4.31% for the same nine months in the prior fiscal year.

Adding to the increase was a $194.2 million increase in the average balance of loans to $15.38 billion for the current nine months compared to $15.19 billion for the prior fiscal year period as new loan production exceeded repayments and loan sales during the current fiscal year.

Interest Expense.

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

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

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

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

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

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

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

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

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

Interest expense increased $13.0 million, or 3.9%, to $348.8 million during the current nine months compared to $335.8 million during the nine months ended June 30, 2024.

This increase mainly resulted from an increase in average volume of deposits.

Interest expense on CDs, net of related interest rate swap contracts, increased $25.7 million, or 13.2%, to $220.4 million during the nine months ended June 30, 2025, compared to $194.7 million during the nine months ended June 30, 2024.

The increase was attributed primarily to a $870.7 million, or 11.8%, increase in the average balance of CDs to $8.22 billion, from $7.35 billion during the same nine months of the prior fiscal year.

In addition, there was a 4 basis point increase in the average rate paid on CDs to 3.57% during the current nine months from 3.53% during the same nine months last fiscal year.

Interest expense on savings accounts decreased $8.1 million to $9.4 million during the nine months ended June 30, 2025, compared to interest expense of $17.5 million for the nine-month period ended June 30, 2024.

The decrease was attributed primarily to a $317.1 million, or 20.15%, decrease in the average balance of savings accounts.

In addition, there was a 48 basis point decrease in the average rate paid on savings accounts to 1.00% during the current nine months from 1.48% during the prior nine months ended June 30, 2024.

Interest expense on borrowed funds, net of related interest rate swap contracts, decreased $4.7 million, or 3.8%, to $118.6 million during the nine months ended June 30, 2025, from $123.3 million during the nine months ended June 30, 2024.

The decrease was primarily the result of a decrease of $454.2 million in the average balance of borrowed funds to $4.60 billion for the nine months ended June 30, 2025 compared to $5.05 billion for the same period of the prior fiscal year.

There was a 19 basis point increase in the average rate paid for these funds to 3.44%, from 3.25% for the nine months ended June 30, 2025 and June 30, 2024, respectively.

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

Net Interest Income.

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

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

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

Net interest income increased $5.7 million, or 2.7%, to $215.4 million during the nine months ended June 30, 2025, from $209.7 million during the nine months ended June 30, 2024.

The net increase consisted of a $18.5 million increase in interest income offset by a $13.0 million increase in interest expense.

Average interest-earning assets decreased during the current nine months by less than $0.1 million to $16.54 billion when compared to the nine months ended June 30, 2024.

The decrease in average assets was attributed primarily to a $27.8 million decrease in FHLB stock and a $169.5 million decrease in interest-bearing cash equivalents, offset by a $194.2 million increase in the average balance of our loans.

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

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

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

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

The yield on average interest-earning assets increased 15 basis points to 4.55% for the nine months ended June 30, 2025, from 4.40% for the nine months ended June 30, 2024.

Average interest-bearing liabilities increased $21.9 million to $14.89 billion for the nine months ended June 30, 2025, compared to $14.87 billion for the nine months ended June 30, 2024.

Average interest-bearing liabilities experienced an 11 basis point increase in cost for the nine months ended June 30, 2025 and the interest rate spread increased 4 basis point to 1.43% when compared to 1.39% during the same nine months of the prior fiscal year period.

The net interest margin was 1.74% for the nine months ended June 30, 2025, and 1.69% for the nine months ended June 30, 2024.

Provision (Release) for Credit Losses .

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

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

We recorded a provision for credit losses on loans and off-balance sheet exposures of $1.5 million during the nine months ended June 30, 2025, and a $2.5 million release of provision for credit losses at June 30, 2024.

In the current nine months, we recorded net recoveries of $3.1 million, as compared to net recoveries of $3.6 million for the nine months ended June 30, 2024.

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

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

As delinquencies in the portfolio have been resolved

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

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

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Non-Interest Income.

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

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

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

Non-interest income increased $2.3 million, or 12.6%, to $20.6 million during the nine months ended June 30, 2025, compared to $18.3 million during the nine months ended June 30, 2024.

The increase in non-interest income was primarily due to a $1.4 million increase in the net gain on sale of loans and a $1.2 million increase in loan fees and service charges.

There were loan sales of $210.6 million during the nine months ended June 30, 2025, compared to loan sales of $190.7 million during the nine months ended June 30, 2024.

Non-Interest Expense.

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

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

Non-interest expense decreased $1.1 million, or 0.7%, to $152.2 million during the nine months ended June 30, 2025, compared to $153.3 million during the nine months ended June 30, 2024.

This decrease was driven by a $1.6 million decrease in other operating expenses, a $0.3 million decrease in marketing expenses and a $0.2 million decrease in federal insurance premiums, partially offset by a $0.4 million increase in salaries and employee benefits.

The decrease in other operating expenses was primarily due to a $1.3 million benefit related to actuarial calculations on the defined benefit plan.

Income Tax Expense.

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

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

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

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

The provision for income taxes increased $1.4 million to $17.3 million during the nine months ended June 30, 2025, from $15.9 million for the nine months ended June 30, 2024, reflecting the higher level of pre-tax income during the more recent period.

The provision for the current nine months included $15.7 million of federal income tax provision and $1.6 million of state income tax provision.

The provision for the nine months ended June 30, 2024, included $14.5 million of federal income tax provision and $1.4 million of state income tax provision.

Our effective federal tax rate was 19.5% during the nine months ended June 30, 2025, and 19.1% during the nine months ended June 30, 2024.

Liquidity and Capital Resources

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

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

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

For the three months ended June 30, 2025, our liquidity ratio averaged 5.50%.

We had sufficient sources of liquidity to satisfy our short- and long-term liquidity needs as of June 30, 2025.

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

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Our most liquid assets are cash and cash equivalents.

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

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

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

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

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

At June 30, 2025, cash and cash equivalents totaled $452.6 million, which represented a decrease of 2.4% from $463.7 million at September 30, 2024.

Investment securities classified as available-for-sale, all of which are government guaranteed, provide additional sources of liquidity, totaled $525.2 million at June 30, 2025.

During the nine-month period ended June 30, 2025, we settled $192.2 million of loan sales and had commitments to sell $73.3 million of mortgage loans primarily to Fannie Mae at June 30, 2025.

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

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

At June 30, 2025, we had $426.4 million in outstanding commitments to originate loans.

In addition to commitments to originate loans, we had $5.52 billion in unfunded home equity lines of credit to borrowers.

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

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

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

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

CDs due within one year of June 30, 2025, totaled $5.54 billion, or 53.6% of total deposits.

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

Depending on market conditions, we may be required to pay higher rates on such deposits or other borrowings than we currently pay on the CDs due on or before June 30, 2026.

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

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

During the six months ended March 31, 2025, we originated $376.0 million of residential mortgage loans, and $1.20 billion of commitments for home equity loans and lines of credit, while during the six months ended March 31, 2024, we originated $408.8 million of residential mortgage loans and $915.4 million of commitments for home equity loans and lines of credit.

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

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

During the nine months ended June 30, 2025, we originated $760.2 million of residential mortgage loans and $1.87 billion of commitments for home equity loans and lines of credit, while during the nine months ended June 30, 2024, we originated $598.7 million of residential mortgage loans and $1.62 billion of commitments for home equity loans and lines of credit.

We purchased $141.7 million of securities during the nine months ended June 30, 2025, and $121.1 million during the nine months ended June 30, 2024.

Also, during the nine months ended June 30, 2025 and June 30, 2024, we acquired $282.5 million and $121.0 million of long-term, residential mortgage loans, respectively.

Financing activities consist primarily of changes in deposit accounts, changes in the balances of principal and interest owed on loans serviced for others, FHLB advances, including any collateral requirements related to interest rate swap agreements and borrowings from the FRB-Cleveland Discount Window.

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

We experienced a net increase in total deposits of $146.4 million during the nine months ended June 30, 2025, which reflected the active management of the offered rates on maturing CDs, compared to a net increase of $576.2 million during the nine months ended June 30, 2024.

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

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

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

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

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

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

During the nine months ended June 30, 2025, there was a $239.8 million decrease in the balance of brokered CDs (exclusive of acquisition costs and subsequent amortization), which had a balance of $977.5 million at June 30, 2025.

At June 30, 2024, the balance of brokered CDs was $1.22 billion.

Principal and interest owed on loans serviced for others experienced a net increase of $1.5 million to $30.2 million during the nine months ended June 30, 2025, compared to a net decrease of $12.9 million to $16.9 million during the nine months ended June 30, 2024.

During the nine months ended June 30, 2025, we increased our total borrowings by $90.1 million primarily to fund loan growth.

During the nine months ended June 30, 2024, our total borrowings decreased by $444.3 million.

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

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In an effort to manage our available borrowing capacity with the FHLB, the Company has replaced a portion of its 90-day FHLB advances with like-term brokered deposits.

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

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

At June 30, 2025, we had $4.87 billion of FHLB of Cincinnati advances, no outstanding borrowings from the FRB-Cleveland Discount Window and no outstanding borrowings in the form of Fed Funds.

During the nine months ended June 30, 2025, we had average outstanding advances from the FHLB of Cincinnati of $4.60 billion, as compared to average outstanding advances of $5.05 billion during the nine months ended June 30, 2024.

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

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The requirement limits capital distributions and certain discretionary bonus payments to management if the institution does not hold a "capital conservation buffer" in addition to the standard minimum capital requirements.

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

As of March 31, 2025, the Association exceeded all regulatory requirements to be considered “Well Capitalized” as presented in the table below (dollar amounts in thousands).

At June 30, 2025, the Association exceeded the regulatory requirement for the "capital conservation buffer".

As of June 30, 2025, the Association exceeded all regulatory requirements to be considered “Well Capitalized” as presented in the table below (dollar amounts in thousands).

Capital remains a source of financial strength for the Association and the Company.

Preserving capital to levels in excess of regulatory minimums is a priority for the Association, especially given the pressures in the economic environment.

Preserving capital to levels in excess of regulatory minimums is a priority for the Association and the Company, especially given the uncertainty and pressures of the current economic environment.

The Association intends to maintain minimum capital ratios to exceed total capital to risk-weighted assets of 13.0%, tier 1 (leverage) capital to net average assets of 9.0%, and tier 1 capital to risk-weighted assets of 11.0%.

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Common Equity Tier 1 Capital to Risk-Weighted Assets 1,734,345 16.51 % 682,740 6.50 %

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

The capital ratios of the Company as of June 30, 2025, are presented in the table below (dollar amounts in thousands).

Total Capital to Risk-Weighted Assets $ 1,955,245 18.61 %

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

At March 31, 2025, the Company had, in the form of cash and a demand loan from the Association, $143.9 million of funds readily available to support its stand-alone operations.

At June 30, 2025, the Company had, in the form of cash and a demand loan from the Association, $129.2 million of funds readily available to support its stand-alone operations.

The payment of dividends, support of asset growth and strategic stock repurchases are planned to continue in the future as the focus for future capital deployment activities.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis