Capitol Federal Financial, Inc. (the “Company”), and its wholly-owned subsidiaries, Capitol Federal Financial, Inc.  and Capitol Federal Savings Bank (“Capitol Federal Savings” or the “Bank”), may from time to time make written or oral “forward-looking statements”, including statements contained in the Company’s filings with the Securities and Exchange Commission (“SEC”).  These forward-looking statements may be included in this Annual Report on Form 10-K and the exhibits attached to it, in the Company’s reports to stockholders and in other communications by the Company, which are made in good faith by us pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995.

These forward-looking statements include statements about our beliefs, plans, objectives, goals, expectations, anticipations, estimates and intentions, that are subject to significant risks and uncertainties, and are subject to change based on various factors, some of which are beyond our control.  The words “may”, “could”, “should”, “would”, “believe”, “anticipate”, “estimate”, “expect”, “intend”,“may,” “could,” “should,” “would,” “believe,” “anticipate,” “estimate,” “expect,” “intend,” “plan” and similar expressions are intended to identify forward-looking statements. The following factors, among others, could cause our future results to differ materially from the plans, objectives, goals, expectations, anticipations, estimates and intentions expressed in the forward-looking statements:

This list of important factors is not all inclusive.  We do not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of the Company or the Bank.

As used in this Form 10-K, unless we specify otherwise, “the Company,” “we,” “us,” and “our” refer to Capitol Federal Financial, Inc. a United StatesMaryland corporation. “Capitol Federal Savings,” and “the Bank,” refer to Capitol Federal Savings Bank, a federal savings bank and the wholly-owned subsidiary of Capitol Federal Financial. “MHC” refers to Capitol Federal Savings Bank MHC, a mutual holding company and majority-owner of Capitol Federal Financial.Financial, Inc.

The Company is a federally chartered mid-tier mutual holding company incorporated in March 1999.  Capitol Federal Financial, Inc. is a wholly-owned subsidiary of the Company.  Capitol Federal Financial, Inc. is a Maryland corporation that was incorporated in April 2010 to be the successor corporation to the Company upon completion of the mutual-to-stock conversion of MHC.Capitol Federal Savings Bank MHC (“MHC”).  The Bank is a wholly-owned subsidiary of the Company, which is majority-owned by MHC, a federally chartered mutual holding company.Company.  The Company’s common stock is traded on the Global Select tier of the NASDAQ Stock Market under the symbol “CFFN.”

The Boards of Directors of MHC, the Company and the Bank adoptedIn December 2010, Capitol Federal Financial completed its conversion from a Plan of Conversion and Reorganization (“the Plan”) on May 5, 2010. Pursuant to the Plan, MHC intends to convert from the mutual holding company form of organization to a stock form of organization.  MHC will be merged intoCapitol Federal Financial, which owned 100% of the Company, and MHC will no longer exist.Bank, was succeeded by Capitol Federal Financial, Inc.  As part of the conversion,corporate reorganization, MHC’s ownership interest of the Company is being offered for saleCapitol Federal Financial was sold in a public stock offering.  Capitol Federal Financial, Inc. sold 118,150,000 shares of common stock at $10.00 per share in the stock offering.  The existing publicly held shares of the Company, which represent the remaining ownership interest in the Company, will beCapitol Federal Financial were exchanged for new shares of common stock of Capitol Federal Financial, Inc.  WhenThe exchange ratio was 2.2637 and ensured that immediately after the conversion andcorporate reorganization the public offering are completed, allstockholders of the outstanding capital stock of the Bank will be owned by Capitol Federal Financial Inc. and a ll of(meaning those stockholders other than MHC) owned the outstanding capital stocksame aggregate percentage of Capitol Federal Financial, Inc. will becommon stock that they owned of Capitol Federal Financial common stock immediately prior to that time.  In lieu of fractional shares, Capitol Federal Financial stockholders were paid in cash.  Gross proceeds from the offering were $1.18 billion and related offering expenses were $46.7 million, of which $6.0 million were incurred and deferred in fiscal year 2010.  The net proceeds from the stock offering were $1.13 billion, of which 50%, or $567.4 million, was contributed to the Bank as a capital contribution, as required by Office of the public.Comptroller of the Currency (“OCC”) regulations.  The other 50%, or $567.4 million, remained at Capitol Federal Financial, Inc., of which $40.0 million was contributed to the Bank’s charitable foundation, Capitol Federal Foundation (“Foundation”), and $47.3 million was loaned to the Employee Stock Ownership Plan (“ESOP”) for its purchase of Capitol Federal Financial, Inc. shares in the stock offering.  In April 2011, the Company redeemed the outstanding Junior Subordinated Deferrable Interest Debentures (the “Debentures”) of $53.6 million using a portion of the offering proceeds from the corporate reorganization.

We have been, and intend to continue to be, a community-oriented financial institution offering a variety of financial services to meet the needs of the communities we serve.  We generally attract retail deposits from the general public and invest those funds primarily in permanent loans secured by first mortgages on owner-occupied, one- to four-family residences.  To a much lesser extent, we also originate consumer loans, loans secured by first mortgages on non-owner-occupied one- to four-family residences, multi-family and commercial real estate loans, and construction loans.  While our primary business is the origination of one- to four-family mortgage loans funded through retail deposits, we also purchase whole one- to four-family mortgage loans from correspondent lenders located within our market areas and select m arket areas in Missouri and from nationwide lenders, and invest in certain investment securities and mortgage-backed securities (“MBS”) funded through retail deposits, advances from Federal Home Loan Bank Topeka (“FHLB,”FHLB”), and repurchase agreements.  We occasionally originate loans outsideThe Company is significantly affected by prevailing economic conditions including federal monetary and fiscal policies and federal regulation of financial institutions.  Retail deposit balances are influenced by a number of factors including interest rates paid on competing personal investment products, the level of personal income, and the personal rate of savings within our market areas,areas.  Lending activities are influenced by the demand for housing and the majorityother loans, internal and external changes in loan underwriting guidelines, as well as interest rate pricing competition from other lending institutions.  The primary sources of the whole loans we purchasefunds for lending activities include deposits, loan repayments, investment income, borrowings, and funds provided from nationwide lenders are secured by properties located outside of our market areas.operations.

Our revenues are derived principally from interest on loans, MBS and investment securities.  Our primary sources of funds are retail deposits, borrowings, repayments on and maturities of loans and MBS, calls and maturities of investment securities, and funds generated by operations.

We offer a variety of deposit accounts having a wide range of interest rates and terms, which generally include savings accounts, money market accounts, interest-bearing and non-interest-bearing checking accounts, and certificates of deposit with terms ranging from 91 days to 96 months.

Our executive offices are located at 700 South Kansas Avenue, Topeka, Kansas 66603, and our telephone number at that address is (785) 235-1341.

Our corporate office is located in Topeka, Kansas.  We currently have a network of 4645 branches located in nine counties throughout the state of Kansas and two counties in Missouri.  We primarily serve the metropolitan areas of Topeka, Wichita, Lawrence, Manhattan, Emporia and Salina, Kansas and a portion of the metropolitan area of greater Kansas City.  In addition to providing full service banking offices, we also provide our customers telephone and internet banking capabilities.

The Bank ranked second in deposit market share, at 7.66%, in the state of Kansas as reported in the FDIC “Summary of Deposits - Market Share Report” dated June 30, 2010.2011, which is consistent with our ranking at June 30, 2010 with a deposit market share of 7.60%.  Deposit market share is measured by total deposits, without consideration for type of deposit. We do not offer commercial deposit accounts, while many of our competitors have both commercial and retail deposits in their total deposit base. Some of our competitors also offer products and services that we do not, such as trust services and private banking, that add to their total deposits.  In recent years, although our overall deposit basethere has grown, the Bank has experienced a slight decrease in market share due to thebeen an entrance of new sources for deposit services in our market areas, such as credit unions, newly chartered banks (de novo institutions), and additionalthe addition of banking locatio nslocations by established financial institutions which historically have not had locations in Kansas.   Consumers also have the ability to utilize online financial institutions and investment brokerages that are not confined to any specific market area.  Management considers our well-established retail banking network together with our reputation for financial strength and customer service to be major factors in our success at attracting and retaining customers in our market areas. 

The Bank is consistently one of the top one- to four-family lenders with regard to loan origination volume in the state of Kansas.  Through our strong relationships with real estate agents and marketing efforts which reflect our reputation and pricing, we attract mortgage loan business from walk-in customers, customers that apply online, and existing customers.   Competition in originating one- to four-family mortgage loans primarily comes from other savings institutions, commercial banks, credit unions, and mortgage bankers.  Other savings institutions, commercial banks, credit unions, and finance companies provide vigorous competition in consumer lending.

We purchase one-Currently, the Bank has two branches scheduled to four-family conventional mortgage loans from correspondent lenders located within our market areas and select market areasopen in Missouri, and from nationwide lenders.  At September 30, 2010 loans purchased from nationwide lenders represented 11% of our total loan portfolio and were secured by properties located in 47 of the continental United States. At September 30, 2010, purchases from nationwide lenders in the following states comprised greater than 5% of nationwide purchased loans:  Illinois 11%; Texas 8%; Florida 7%; and New York 7%.

Loans over $500 thousand must be underwritten by two of our highest class of underwriters.  Any loan greater than $750 thousand must be approved by the Asset and Liability Management Committee (“ALCO”) and loans over $1.5 million must be approved by the Board of Directors.  For loans requiring ALCO and/or Board of Directors’ approval, lending management is responsible for presenting to ALCO and/or the Board of Directors information about the creditworthiness of the borrower and the value of the subject property.  Information pertaining to the creditworthiness of the borrower generally consists of a summary of the borrower’s credit history, employment stability, sources of income, assets, net worth, and debt ratios.  The value of the property must be supported by an independen tindependent appraisal report prepared in accordance with our appraisal policy.  Loans over $500 thousand are priced above the standard mortgage rate.

Under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, the maximum amount which we could have loaned to any one borrower and the borrower’s related entities at September 30, 20102011 was $125.3$207.1 million.  Our largest lending relationship to a single borrower or a group of related borrowers at September 30, 20102011 consisted of 1512 multi-family real estate projects located in Kansas, one single-family home located in Colorado and fourone single-family loan located in Kansas, and five commercial real estate projects with twothree located in Kansas, one located in Colorado, and one located in Texas.  Total commitments and loans outstanding to this group of related borrowers was $42.9$40.2 million as of September 30, 2010.  Most of the multi-family real estate loans qualify for the low income housing tax credit program.2011.  We have over 30 ye arsyears of experience with this group of borrowers, who usually build and manage their own properties.borrowers.  Each of the loans to this group of borrowers was current and performing in accordance with the original/refinancetheir repayment terms at September 30, 2010.2011, but changes in the loan agreement in fiscal year 2010 for a portion of the loans with a principal balance of $7.1 million prompted management to classify this portion of the loans as “Special Mention.”  See additional information under the heading “Multi-family and Commercial Real Estate Lending.”

The second largest lending relationship at September 30, 2010,2011, consisted of nine10 loans totaling $11.2$10.7 million.  Five loans are secured by multi-family real estate units and fourfive are secured by one- to four-family real estate.  We have over 30 years of experience with the borrowers.  All units were built and are presently being managed by the borrowers.  Each of the loans to this group of borrowers was current and performing in accordance with the original repayment terms at September 30, 2010.2011.

The Bank’s one- to four-family loans are primarily fully amortizing fixed-rate or ARM loans with contractual maturities of up to 30 years, except for interest-only ARM loans, which require only the payment of interest during the interest-only period, all with payments due monthly.  Our one- to four-family loans are generally not assumable and do not contain prepayment penalties.  A “due on sale” clause, allowing the Bank to declare the unpaid principal balance due and payable upon the sale of the secured property, is generally included in the security instrument.

Our pricing strategy for first mortgage loan products includes setting interest rates based on secondary market prices and competitor pricing within our local lending markets.  ARM loans are offered with either a three-year, five-year, or seven-year term to the initial repricing date.  After the initial period, the interest rate for each ARM loan generally adjusts annually for the remainder of the term of the loan.  A number ofSeveral different indices are used to reprice our ARM loans.

Current adjustable-rate one- to four-family conventional mortgage loans originated by the Bank generally provide for a specified rate limit or cap on the periodic adjustment to the interest rate, as well as a specified maximum lifetime cap and minimum rate, or floor.  As a consequence of using caps, the interest rates on these loans may not be as rate sensitive as our cost of funds.  Negative amortization of principal is not allowed.  For three, five, or seven year ARM loans, borrowers are qualified based on the principal, interest, taxes and insurance payments at either the initial rate or the fully indexed accrual rate, whichever is greater.  After the initial three, five, or seven year period, the interest rate is repriced annually and the new principal and interest payment is based on the new in terestinterest rate, remaining unpaid principal balance, and term of the ARM loan.  Our ARM loans are not automatically convertible into fixed-rate loans; however, we do allow borrowers to pay a modificationan endorsement fee to convert an ARM loan to a fixed-rate loan.  ARM loans can pose different credit risks than fixed-rate loans, primarily because as interest rates rise, the borrower’s payment also rises, increasing the potential for default.  This specific risk type is known as repricing risk.

During 2008, the Bank discontinued offering an interest-only ARM product.  The Bank does, however, still hold in its portfolio originated and purchased interest-only ARM loans.  The interest-only ARM product was discontinued to reduce future credit risk exposure.  Additionally, the Bank has not purchased any interest-only ARM loans since fiscal year 2006 that were not in their amortization period.  At the time of origination, these loans did not require principal payments for a period of up to ten years.  Borrowers were qualified based on a fully amortizing payment at the initial loan rate.  The Bank was more restrictive on debt-to-income ratios and credit scores on interest-only ARM loans than on other ARM loans to offset the potential risk of payment shock at the time the loan rate adjustsreprices and/or the principal and interest payments begin.  At September 30, 2010, $121.62011, $85.7 million, or approximately 3%2% of our one- to four-family loan portfolio, consisted of non-amortizing interest-only ARM loans.  The majority of these loans were purchased from nationwide lenders during fiscal year 2005.  These loans had an initial interest-only term of either five or ten years, with approximately equal distribution between the two terms.

One- to four-family loans are underwritten manually or by an internal automated underwriting system developed by a third party.system.  The system’s components closely resemble the Bank’s manual underwriting standards which are generally in accordance with Federal Home Loan Mortgage Corporation (“FHLMC”) and Federal National Mortgage Association (“FNMA”) manual underwriting guidelines.  The automated underwriting system analyzes the applicant’s data, with emphasis on credit history, employment and income history, qualifying ratios reflecting the applicant’s ability to repay, asset reserves, and LTVloan-to-value (“LTV”) ratio.  Full documentation to support the applicant’s credit, income, and sufficient funds to cover all applicable fees and reserves at closing are required on all loans.  Loans that do not meet the automated underwriting standards are referred to a staff underwriter for manual underwriting.  Properties securing one- to four-family loans are appraised by either staff appraisers or fee appraisers, both of which are independent of the loan origination function and have been approved by the Board of Directors.

For a conventional mortgage with an LTV ratio in excess of 80% at the time of origination, private mortgage insurance (“PMI”) is required in order to reduce the Bank’s loss exposure to less than 80% of either the appraised value or the purchase price of the property, whichever is less.  The Bank will lend up to 97% of the lesser of the appraised value or purchase price for conventional one- to four-family loans, provided PMI is obtained. Management continuously monitors the claim-paying ability of our PMI counterparties.  At this time, we believe that our PMI counterparties have the ability to meet potential claim obligations we may file in the foreseeable future.

FHA loans have mortgage insurance provided by the federal government.  The loans are up to 96.5% LTV, prior to including the FHA insuring premium, which is calculated using the lesser of the appraised value or purchase price.  The loans are originated and underwritten manually according to private investor and FHA guidelines.  The Bank began offering FHA loans in late September 2009 to accommodate customers who may not qualify for a conventional mortgage loan.  FHA loans are originated by the Bank with the intention of selling the loans on a flow basis to a private investor, with servicing released.  The Bank began selling FHA loans in fiscal year 2010.  The Bank originated $12.1 million and sold $10.5$8.1 million of FHA loans during fiscal year 2010.2011.

The Bank purchases approved conventional one- to four-family loans and the related servicing rights, on a loan-by-loan basis, from correspondent lenders.lenders located in our market areas and generally in the central United States.  At September 30, 2011, the Bank had 18 correspondent lending relationships.  The loan products offered by our correspondent lenders are underwritten by the Bank’s underwriters to standards that are at least as restrictive as the Bank’s underwriting standards.  During the 2010 and 2009 fiscal years 2011 and 2010, the Bank purchased $67.3$92.8 million and $141.6$67.3 million, respectively, of one- to four-family loans from correspondent lenders.  These loans generally have an interest rate 0.125% higher than loans we originate; however,originate, for which we pay a premium of 0.50% of the loan balance.  We pay an additional 1.0% of the loan balance forto purchase the servicing of these loans.

The underwriting ofDuring fiscal year 2011, the Bank entered into 11 new correspondent lending relationships in our local market areas and in states outside our local market areas.  Additionally, during fiscal year 2011, the Bank entered into an agreement with a mortgage sub-servicer to provide loan servicing for loans purchased throughoriginated by the Bank’s correspondent lenders is generally performed by our underwriters, using our underwriting standards.  Lenders are located withinin certain states.  The sub-servicer has experience servicing loans in the metropolitan Kansas City market area and select market areas in Missouri.  The products offered by our correspondents are underwrittenwhich we intend to standards that are at least as restrictive aspurchase loans and will service the loans according to the Bank’s own internal productsservicing standards, which is intended to allow the Bank greater control over servicing and underwriting standards.  The Bank requires fully documentedhelp maintain a standard of loan files.  Our underwriting standards do not permit loans with no documentation, stated income, or stated assets.  Lenders are required to fully document all data sources for each application.  Management believes these requirements reduce the credit risk associated with these loans.  The Bank has not requested an y correspondent lender to repurchase loans during fiscal year 2010.performance. 

The Bank also purchases conventional one- to four-family loans from nationwide lenders in bulk.  The servicing rights are generally retained by the lender.lender/seller; however, it is the Bank’s intention for our sub-servicer to service bulk loan packages purchased from other lenders/sellers when economically feasible.  The servicing with nationwide lenders is governed by a servicing agreement, which outlines collection policies and procedures, as well as oversight requirements, such as servicer certifications attesting to and providing proof of compliance with the servicing agreement.  The underwriting standards are generally similar to the Bank’s internal underwriting standards.  The Bank requires fully documentedEach loan files.  The Bank does not permit loans that were originated with no documentation, stated income, or stated assets.  Lenders are required to fully document all data sources for each application.  Management believes these requiremen ts reduce the credit risk associated with these loans.  Before committing to purchasein a pool of loans from a lender, the Bank’s Chief Lending Officer or Secondary Marketing Manager reviews specificnationwide loan package is evaluated on criteria such as loan amount, credit scores, LTV ratios, geographic location, and debt ratios, and is required to be comparable to loans originated according to the Bank’s internal underwriting standards.  Before committing to purchase a pool of loans from a lender/seller, the Bank’s Chief Lending Officer or Secondary Marketing Manager reviews specific underwriting criteria of each loan in the pool.  If the specific criteria dopool, and if a loan does not meet the Bank’s underwriting standards andwithout sufficient compensating factors, are not sufficient, then a loanit will be removed from the pool.  Once the review of the specific criteria is complete and loans not meeting the Bank’s standards are removed from the pool, changes are sent back to the lenderlender/seller for acceptance and pricing.  Before the pool is funded, an internal Bank underwriter or a third party reviews at least 25% of the loan files to confirm loan terms, credit scores, debt service ratios, property appraisals, and other underwriting relatedunderwriting-related documentation.  Our standard contractual agreement with the lender includes recours erecourse options for any breach of representation or warranty with respect to the loans purchased.  The Bank hasdid not requestedrequest any nationwide lenders to repurchase loans for breach of representation during fiscal year 2010.  2011.

During fiscal years 2010 and 2009,year 2011, the Bank purchased $44.1completed bulk nationwide purchases of $89.2 million and $191.8 million, respectively, of one- to four-family loans, compared to $44.1 million of bulk nationwide purchases in fiscal year 2010.  Bulk nationwide purchases enable the Bank to attain some geographic diversification in the loan portfolio.  We have experienced some performance issues and losses on some of the loans purchased from nationwide lenders.lenders prior to fiscal year 2008, the majority of which were originated between calendar years 2004 and 2006.  These loans met our underwriting standards at the time of purchase; however, as a result of the continued elevated levels of unemployment and the declines in real estate values, we have experienced an increase in non-performing purchased loans and charge-offs/losses related to those loans.  See additional discussion regarding non-performing purchased loans in “Asset Quality – Loans and Real Estate Owned.”

In an effort to offset the impact of repayments and to retain our customers, the Bank offers existing one- to four-family loan customers whose loans have not been sold to third parties and who have not been currentdelinquent on their contractual loan payments forduring the previous 12 months the opportunity, for a fee, to modify their original or existing loan rate and/or termterms to a newcurrent loan rate and/or term generally consistent with those currentlyterms being offered.  Through our modification program a borrower can modify the rate and/or term of their loan in less time than it takes to process a refinance, and for a cost that is less than a refinance.  The Bank does not solicit customers for this program, but considers it a valuable opportunity to retain customers who, due to our conservative initial underwriting criteria, could likely obtain similar financing elsewhere.  ;DuringDuring fiscal years 2011 and 2010, and 2009, we modifiedendorsed $965.1 million and $545.1 million and $1.14 billion, respectively of our originated loans. loans, respectively.

Conventional one- to four-family loans may be sold on a bulk basis for portfolio restructuring or on a flow basis as loans are originated to reduce interest rate risk and/or maintain a certain liquidity position.  The Bank generally retains the servicing on these loans.  ALCO determines the criteria upon which conventional one- to four-family loans are to be originated as held for saleheld-for-sale or held for investment.held-for-investment.  Conventional one- to four-family loans originated as held for saleheld-for-sale are to be sold in accordance with policies set forth by ALCO.  Conventional one- to four-family loans originated as held for investmentheld-for-investment are generally not eligible for sale unless a specific segment of the portfolio is identified for asset restructuring purposes.  Generally, the Bank will continue to service these loans.  The Bank sold $34.7$5.1 million and $96.9$34.7 million of conventional one- to four-family loans during fiscal years 20102011 and 2009,2010, respectively.  As a result of our traditional underwriting guidelines requiring complete documentationApril 2011, we are no longer originating conventional loans for originatedsale under the program that we sold loans the Bank was required to repurchase only one sold loanunder during fiscal yearyears 2011 and 2010.

The Bank’s one- to four-family construction-to-permanent loan program combines the construction loan and the permanent loan into one loan allowing the borrower to secure the same interest rate throughout the construction period and the permanent loan.  The interest rate and loan products offered on the one- to four-family construction-to-permanent loan program are the same as what is offered for non-construction-to-permanent one- to four-family loans.  The loan term is longer than the non-construction one- to four-family loans due to consideration for the construction period, which is generally between 12 and 18 months.

Construction draw requests and the supporting documentation are reviewed and approved by management.management prior to funding.  The Bank also performs regular documented inspections of the construction project to ensure the funds are being used for the intended purpose and the project is being completed according to the plans and specifications provided.  The Bank charges a 1% fee at closing, based on the loan amount, for these administrative requirements.  Interest is billed and collected monthly based on the amount of funds disbursed.  Once the construction period is complete, the payment method is modifiedchanged from interest-only to an amortized principal and interest payment for the remaining term of the loan.

The majority of the consumer loan portfolio is comprised of home equity lines of credit, which have interest rates that can adjust monthly based upon changes in the Prime rate, to a maximum of 18%.  Home equity loans originated after June 2010 may be originated in amounts, together with the existing first mortgage, of up to 90% of the value of the property.  Home equity loans originated prior to June 2010 may have been originated in amounts, together with the amount of the existing first mortgage, of up to 100% of the value of the property securing the loan.  Closed endClosed-end equity home loans may be originated up to 95% of the value of the property securing the loans, taking into consideration the existing first mortgage.  In order to minimize risk of loss, home equity loans that are greater than 80% of the value of the property, when combined with the first mortgage, require PMI.  The term-to-maturity of closed-end home equity and home improvement loans may be up to 20 years.  Home equity lines of credit originated after June 2010 have a seven year draw period with a ten year repayment term.  The majority of home equity lines of credit loans originated prior to June 2010 have no stated term-to-maturity.  All home equity lines of creditterm and generally require a payment of 1.5% of the outstanding loan balance per month during the draw period, with an amortizing payment during the repayment period.  The majority of home equity lines of credit loans originated prior to June 2010 generally require a payment of 1.5% of the outstanding loan balance per month, but have no stated term-to-maturity and no repayment period. Interest-only home equity lines of credit have a maximum term of 12 months, monthly payments of accrued interest, and a balloon payment at maturity.  Repaid principal may be re-advanced at any time, not to exceed the original credit limit of the loan.  Other consumer loan terms vary according to the type of collateral and the length of the contract. 0;   Home equity loans, including lines of credit and home improvement loans, comprised 3.6%approximately 95% of our totalconsumer loan portfolio, or $186.3$164.5 million, at September 30, 2010.2011.  As of September 30, 2010, 74.5%2011, 76.5% of the home equity loan portfolio was adjustable-rate.

The underwriting standards for consumer loans include a determination of the applicant’s paymentcredit history on other debts and an assessment of their ability to meet existing obligations and payments on the proposed loan. Although creditworthiness of the applicant is a primary consideration, the underwriting process also includes a comparison of the value of the security in relation to the proposed loan amount.

Consumer loans generally have shorter terms to maturity or reprice more frequently, which reduces our exposure to changes in interest rates, and usually carry higher rates of interest than do one- to four-family loans.  However, consumer loans may entail greater risk than do one- to four-family loans, particularly in the case of consumer loans that are secured by rapidly depreciable assets, such as automobiles.  In addition, consumer loan collections are dependent on the borrower’s continuing financial stability, and thus are likely to be affected by adverse personal circumstances.  Furthermore, the application of various federal and state laws, including bankruptcy and state insolvency laws, may limit the amount which can be collected on these loans.  Management believes that offering consumer loan products helps to expand and create stronger ties to our existing customer base by increasing the number of customer relationships and providing cross-marketing opportunities.

We generally do not maintain a tax or insurance escrow account for multi-family or commercial real estate loans.  In order to monitor the adequacy of cash flows on income-producing properties with a principal balance of $1.5 million or more, the borrower is notified annually to provide financial information including rental rates and income, maintenance costs and an update of real estate property tax payments, as well as personal financial information.

Our multi-family and commercial real estate loans are generally large dollar loans and involve a greater degree of credit risk than one- to four-family loans.  Such loans typically involve large balances to single borrowers or groups of related borrowers.  Because payments on multi-family and commercial real estate loans are often dependent on the successful operation or management of the properties, repayment of such loans may be subject to adverse conditions in the real estate market or the economy.  If the cash flow from the project is reduced, or if leases are not obtained or renewed, the borrower’s ability to repay the loan may be impaired.

The Bank is a participant with four other banking institutions on a $42.5 million commercial construction loan secured by a retail shopping center in Kansas.  TheAt September 30, 2011, the Bank’s original participant share was $15.0portion of the project had an aggregate outstanding principal balance of $7.1 million which was to be disbursed as the improvements were completed.  The loan was converted from a construction loan to a permanent loan in April 2009, but still had funds to advanceand an outstanding commitment of $160 thousand for remaining tenant finish.  Due to economic factors,92% of the lead bank and the borrower requested to restructure the project and reduce the overall commitment to $31.0 million, which reduced the Bank’s commitment to $10.9 million as of August 2009.  The overall commitment was reduced further to $23.1 million in December 2009, which reduced the Bank’s commitment to $8.2 million at December 31, 2009.  The chang e in commitment involved completing the tenant finish for retail space that was already started, of which 88%shopping center was tenant leased as of September 30, 2010, and postponing the development of additional retail space.  The loan matured in April 2010 and was refinanced into two loans with a 12 month term to maturity.  The Bank’s total commitment was further reduced to $8.0 million at that time.  One loan represents the retail portion of the project and the other loan represents the land portion of the project.  At September 30, 2010, the loans had an aggregate outstanding principal balance of $7.6 million and an outstanding commitment of $290 thousand.  These loans are2011.  This participation is part of our largest lending relationship to a single borrower or a group of related borrowers at September 30, 2010.2011.  Although the loans have performed per the terms of the agreement, thea change in the agreement hasin fiscal year 2010 prompted management to classify the loans as “Special Mention&# 8221;Mention”.  The loans remain classified as such at September 30, 2010.2011.  See “Asset Quality - Loans and Real Estate Owned – Classified Assets.”

The following table presents the contractual maturity of our loan portfolio at September 30, 2010.2011.  Loans which have adjustable or renegotiable interest rates are shown as maturing in the period during which the contract is due.  The table does not reflect the effects of possible prepayments or enforcement of due on sale clauses.

The following table presents, as of September 30, 2010,2011, the amount of loans due after September 30, 2011,2012, and whether these loans have fixed or adjustable interest rates.

The following table shows our loan originations and refinances, loan purchases and participations, transfers, and repayment activity for the periods indicated.  Purchased loans include loans purchased from correspondent and nationwide lenders.  The table below does not include $965.1 million, $545.1 million, and $1.14 billion of originated loans that were modifiedendorsed during fiscal years 2011, 2010, and 2009, respectively.

The Bank’s traditional underwriting guidelines historically have provided the Bank with loans of high quality and generally low delinquencies andresulted in low levels of delinquencies and non-performing assets compared to national levels.  Of particular importance is the complete and full documentation required for each loan the Bank originates and purchases.  This allows the Bank to make an informed credit decision based upon a thorough assessment of the borrower’s ability to repay the loan, as of the time of origination, compared to underwriting methodologies that do not require full documentation.

In the following asset quality discussion, loans purchased from correspondent lenders are included with originated loans and loans purchased from nationwide lenders are reported as purchased loans.

For one- to four-family originated and correspondent loans and home equity loans, when a borrower fails to make a loan payment 15 days after the due date, a late charge is assessed and a notice is mailed.  Collection personnel review all delinquent loan balances more than 16 days past due.  Attempts to contact the borrower occur by personal letter and, if no response is received, by telephone, with the purpose of establishing repayment arrangements for the borrower to bring the loan current.  Repayment arrangements must be approved by a designated bank officer.  Once a loan becomes 90 days delinquent, a demand letter is issued requiring the loan to be brought current or foreclosure procedures will be implemented.  Generally, when a loan becomes 120 days delinquent, and an acceptable repayment plan has not been establis hed,established, the loan is forwarded to legal counsel to initiate foreclosure.  We also monitor whether mortgagors who filed for bankruptcy are meeting their obligation to pay the mortgage debt in accordance with the terms of the bankruptcy petition.

We monitor delinquencies on our purchased loan portfolio with reports we receive from the servicers.  We monitor these servicer reports to ensure that the servicer is upholding the terms of the servicing agreement.  The reports generally provide total principal and interest due and length of delinquency, and are used to prepare monthly management reports and perform delinquent loan trend analysis.  Management also utilizes information from the servicers to monitor property valuations and identify the need to record specific valuation allowances.allowances (“SVAs”).  The servicers handle collection efforts per the terms of the servicing agreement.

In April 2011, banking regulators reported enforcement actions against 14 banking organizations to address a pattern of misconduct and negligence in mortgage loan servicing and foreclosure processing.  The Bank was not one of the banking organizations noted in the enforcement actions.  As a result of recent industry-wide issues relatedthe enforcement actions, significant changes in residential mortgage loan servicing and foreclosure processes were required at the 14 banking organizations.  Of the 14 banking organizations, there are three organizations that service loans we purchased from nationwide lenders.  During the time period under review (2009 and 2010), the Bank had 93 loans go into foreclosure with the servicers noted in the enforcement actions.  Management cannot currently estimate the cost, if any, to the foreclosure practices, the Bank evaluated its foreclosure procedures and guidelines and management believes the Bank is handling foreclosuresif deficiencies are detected in an appropriate manner.  Additionally, the servicersany of our nationwide purchased loans, except for one,those loans.  We have not reportedbeen notified that any issuesdeficiencies have been detected.  The OCC and the government-sponsored enterprises (“GSEs”) have issued guidance with respect to their foreclosure processes.  At September 30, 2010, we had no loansprocedures for servicers, effective in foreclosure with2011.  Management is currently reviewing and implementing procedures in response to the one servicer who has reported issues with their foreclosure processes.

The following table presents the weighted average percentage of one- to four-family loans, by principal balance, that entered the 30 to 89 days delinquent category during the 12 months ended September 30, 2010 that paid off, returned to performing status, stayed 30 to 89 days delinquent, or progressed to the non-performing or REO categories.