UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(Mark One)
þ☒      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 20172022
                                                                                 or
¨☐        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __ to __ 
Commission file number: 001-34814
________________
Capitol Federal Financial, Inc.
(Exact name of registrant as specified in its charter)

Maryland27-2631712
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
700 South Kansas Avenue, Topeka, KansasTopeka,Kansas66603
(Address of principal executive offices)(Zip Code)


Registrant's telephone number, including area code:
(785) 235-1341
Securities registered pursuant to Section 12(b) of the Act:

SecuritiesTitle of each class
Trading Symbol(s)Name of each exchange on which registered pursuant to Section 12(b) of the Act:
Common Stock, par value $0.01 per shareCFFNThe NASDAQ Stock Market LLC
(Title of Class)

(Name of Each Exchange on Which Registered)
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes þ☒      No ¨☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨☐     No þ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ☒     No ¨☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ☒     No ¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒Accelerated filer ☐Non-accelerated filer ☐
Large accelerated filer þ
Accelerated filer ¨
Non-accelerated filer ¨ (Do not check if a smaller reporting company)
Smaller Reporting Company ¨
Emerging Growth Company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Smaller reporting company ☐Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨☐ No þ☒
The aggregate market value of the voting and non-voting common stock held by non-affiliates of the registrant, computed by reference to the average of the closing bid and asked price of such stock on the NASDAQ Stock Market as of March 31, 2017,2022, was $1.99$1.45 billion.
As of November 22, 2017,17, 2022, there were issued and outstanding 138,230,735137,494,579 shares of the Registrant's common stock.
DOCUMENTS INCORPORATED BY REFERENCE
Part III of Form 10-K - Portions of the proxy statement for the Annual Meeting of Stockholders for the year ended September 30, 2017.2022.


Page No.
PART IItem 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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PART IIPage No.
PART IItem 1.5.
2
Item 1A.
Risk Factors
32
Item 1B.
Unresolved Staff Comments
37
Item 2.
Properties
37
Item 3.
Legal Proceedings
37
Item 4.
Mine Safety Disclosures
37
PART IIItem 5.
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
3815
Item 6.
4016
Item 7.
4217
Item 7A.
7748
Item 8.
8453
Item 9.
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Item 9A.
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Item 9B.
129101
Item 9C.
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PART IIIItem 10.
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Item 11.
130102
Item 12.
130102
Item 13.
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Item 14.
131103
PART IVItem 15.
131103
Item 16.
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132104
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Private Securities Litigation Reform Act-Safe Harbor Statement


Capitol Federal Financial, Inc. (the "Company"), 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 documents filed or furnished by the Company 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, in the Company's press releases, 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-lookingstatements include statements about our beliefs, plans, objectives, goals, expectations, anticipations, estimates and intentions, which 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," "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 beliefs, plans, objectives, goals, expectations, anticipations, estimates and intentions expressed in the forward-looking statements:


•our ability to maintain overhead costs at reasonable levels;
•our ability to originate and purchase a sufficient volume of one- to four-family loans in order to maintain the balance of that portfolio at a level desired by management;
•our ability to invest funds in wholesale or secondary markets at favorable yields compared to the related funding source;
•our ability to access cost-effective funding;
•the expected synergies and other benefits from our acquisition activities;
•our ability to extend our commercial banking and trust asset management expertise;
•fluctuations in deposit flows;
•the future earnings and capital levels of the Bank and the continued non-objection by our primary federal banking regulators, to the extent required, to distribute capital from the Bank to the Company, which could affect the ability of the Company to pay dividends in accordance with its dividend policy;
•the strength of the U.S. economy in general and the strength and/or the availability of labor in the local economies in which we conduct operations, including areas where we have purchased large amounts of correspondent loans;loans, originated commercial loans, and entered into commercial loan participations;
•changes in real estate values, unemployment levels, and the level and direction of loan delinquencies and charge-offs may require changes in the estimates of the adequacy of the allowance for credit losses ("ACL"), which may adversely affect our business;
•increases in classified and/or non-performing assets, which may require the Bank to increase the ACL, charge-off loans and incur elevated collection and carrying costs related to such non-performing assets;
•results of examinations of the Bank and the Company by their respective primary federal banking regulators, including the possibility that the regulators may, among other things, require us to increase our ACL;
•changes in accounting principles, policies, or guidelines;
•the effects of, and changes in, monetary and interest rate policies of the Board of Governors of the Federal Reserve System ("FRB");
•the effects of, and changes in, trade and fiscal policies and laws of the United States government;
•the effects of, and changes in, foreign and military policies of the United States government;
•inflation, interest rate, market, monetary, currency fluctuations and currency fluctuations;the effects of a potential economic recession or slower economic growth;
•the timely development and acceptance of new products and services and the perceived overall value of these products and services by users, including the features, pricing, and quality compared to competitors' products and services;
•the willingness of users to substitute competitors' products and services for our products and services;
•our success in gaining regulatory approval of our products and services and branching locations, when required;
•the impact of interpretations of, and changes in, financial services laws and regulations, including laws concerning taxes, banking, securities, consumer protection, trust and insurance and the impact of other governmental initiatives affecting the financial services industry;
•implementing business initiatives may be more difficult or expensive than anticipated;
•significant litigation;
•technological changes;
acquisitions
1
•our ability to maintain the security of our financial, accounting, technology, and dispositions;other operating systems and facilities, including the ability to withstand cyber-attacks;
•changes in consumer spending, borrowing and saving habits; and
•our success at managing the risks involved in our business.



This list of important factors is not all inclusive. See "Part I, Item 1A. Risk Factors" for a discussion of risks and uncertainties related to our business that could adversely impact our operations and/or financial results. 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.


PART I
As used in this Form 10-K, unless we specify or the context indicates otherwise, "the Company," "we," "us," and "our" refer to Capitol Federal Financial, Inc. a Maryland corporation.corporation, and its subsidiaries. "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, Inc.


Item 1. Business

General

The Company is a Maryland corporation that was incorporated in April 2010. The Company'swith its common stock is traded on the Global Select tier of the NASDAQ Stock Market under the symbol "CFFN."

Market. The Bank is a wholly-owned subsidiary of the Company and is a federally chartered and insured savings bank headquartered in Topeka, Kansas. The Bank is examined and regulated by the Office of the Comptroller of the Currency (the "OCC"), its primary regulator, and its deposits are insured up to applicable limits by the Deposit Insurance Fund ("DIF"), which is administered by the Federal Deposit Insurance Corporation ("FDIC"). The Company, as a savings and loan holding company, is examined and regulated by the FRB.

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 attract retail deposits primarily from the general public and from businesses, and invest those funds primarily in permanent loans secured by first mortgages on owner-occupied, one- to four-family residences.residences and in commercial loans, either secured by real estate or for commercial and industrial purposes. We also participate with other lenders in commercial loans,originate consumer loans primarily secured by mortgages on one- to four-family residences, originate and participate in loans with other lenders that are secured by commercial real estate,and invest in certain investment securities and mortgage-backed securities ("MBS") using funding from retail deposits public unit deposits, repurchase agreements, and Federal Home Loan Bank Topeka ("FHLB") borrowings. 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 96120 months. Our primary revenues

The Company's results of operations are derived fromprimarily dependent on net interest income, which is the difference between the interest earned on loans, MBS, investment securities, and dividendscash, and the interest paid on FHLB stock.deposits and borrowings. On a weekly basis, management reviews deposit flows, loan demand, cash levels, and changes in several market interest rates to assess all pricing strategies. The Bank's pricing strategy for first mortgage loan products includes setting interest rates based on secondary market prices and competitor pricing for our local lending markets, and secondary market prices and competitor pricing for our correspondent lending markets. Pricing for commercial loans is generally based on competitor pricing and the credit risk of the borrower with consideration given to the overall relationship of the borrower. Generally, deposit pricing is based upon a survey of competitors in the Bank's market areas, and the need to attract funding and retain maturing deposits.


The Company is significantly affected by prevailing economic conditions, including federal monetary and fiscal policies and federal regulation of financial institutions. Retail depositDeposit balances are influenced by a number of factors, including interest rates paid on competing investment products, the level of personal income, and the personal rate of savings within our market areas. Lending activities are influenced by the demand for housing and other loans,business activity levels, our loan underwriting guidelines compared to those of our competitors, as well as interest rate pricing competition from other lending institutions.

2
Management Strategy

We seek to provide qualified borrowers the broadest possible access to home ownership through our mortgage lending programs and to offer a complete set of personal and commercial banking products and services to our customers.  We strive to enhance stockholder value while maintaining a strong capital position.  To achieve these goals, we focus on the following strategies:

•Lending. We are one of the leading originators of one- to four-family loans in the state of Kansas. We originate these loans primarily for our own portfolio, and we service the loans we originate. We also purchase one- to four-family loans from correspondent lenders. In addition, we offer several commercial lending options and participate in commercial loans with other lenders, both locally and outside our market areas. We offer both fixed- and adjustable-rate products with various terms to maturity and pricing options.  We maintain strong relationships with local real estate agents to attract loan business. We rely on our marketing efforts and customer service reputation to attract business from walk-in customers, customers that apply online, and existing customers. Our business development efforts help to bring new business relationships to the Bank.
•Deposit Services. We offer a wide array of retail and business deposit products and services. These products include checking, savings, money market, certificates of deposit, and retirement accounts. Our deposit services are provided through our network of traditional branches and retail in-store locations, our call center which operates on extended hours, mobile banking, telephone banking, and online banking and bill payment services.
•Cost Control. We generally are very effective at controlling our costs of operations. We centralize our loan servicing and deposit support functions for efficient processing.  We serve a broad range of customers through relatively few branch locations.  Our average deposit base per traditional branch at September 30, 2022 was approximately $126.3 million.  This large average deposit base per branch helps to control costs.  Our one- to four-family lending strategy and our effective management of credit risk allows us to service a large portfolio of loans at efficient levels because it costs less to service a portfolio of performing loans. We recognize it is more expensive to offer a full suite of commercial products and services, but we will continue our efforts to control those costs. The Bank continues to invest in its infrastructure, which can increase costs. Following the pandemic and with high rates of inflation, there is also pressure to increase compensation for the Bank's staff.
•Asset Quality. We utilize underwriting standards for all of our lending products, including the loans we purchase and participate in, that are designed to limit our exposure to credit risk.  We require complete documentation for both originated and purchased loans, and make credit decisions based on our assessment of the borrower's ability to repay the loan in accordance with its terms. Additionally, we monitor the asset quality of existing loans and strive to work proactively with customers who face challenging financial conditions.
•Capital Position. Our policy has always been to protect the safety and soundness of the Bank through credit and operational risk management, balance sheet strength, and sound operations. The end result of these activities has been capital ratios that meet or exceed the well-capitalized standards set by the Office of the Comptroller of the Currency (the "OCC"). We believe that maintaining a strong capital position safeguards the long-term interests of the Bank, the Company, and our stockholders.
•Stockholder Value. We strive to provide stockholder value while maintaining a strong capital position.  We continue to generate returns to stockholders through dividend payments.  Total dividends declared and paid during fiscal year 2022 were $103.1 million, including a $0.20 per share, or $27.1 million, True Blue® Capitol Dividend paid in June 2022. The Company's cash dividend payout policy is reviewed quarterly by management and the Board of Directors, and the ability to pay dividends under the policy depends upon a number of factors, including the Company's financial condition and results of operations, anticipated growth opportunities and market and economic conditions, regulatory capital requirements, regulatory limitations on the Bank's ability to make capital distributions to the Company, and the amount of cash at the holding company level. For fiscal year 2023, it is the current intention of the Board of Directors to continue the payout of 100% of the Company's earnings to its stockholders through regular quarterly dividends and a true-up dividend.  Stockholder value has also been enhanced through stock repurchases.
•Interest Rate Risk Management. Changes in interest rates are our primary market risk as our balance sheet is almost entirely comprised of interest-earning assets and interest-bearing liabilities.  As such, fluctuations in interest rates have a significant impact not only upon our net income but also upon the cash flows related to those assets and liabilities and the market value of our assets and liabilities.  In order to maintain what we believe to be acceptable levels of net interest income in varying interest rate environments, we actively manage our interest rate risk and assume a moderate amount of interest rate risk consistent with board policies.
3
Market Area and Competition

Our executive offices arecorporate office is located in Topeka, Kansas. We currently have a network of 54 branches (45 traditional branches and nine in-store branches) located in nine counties throughout Kansas and three 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.

The Bank ranked second in deposit market share, at 700 South6.4%, in the state of Kansas Avenue, Topeka, Kansas 66603,as reported in the June 30, 2022 Federal Deposit Insurance Corporation ("FDIC") "Summary of Deposits - Market Share Report." Management considers our well-established 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 consistently has been one of the top one- to four-family lenders with regard to mortgage loan origination volume in the state of Kansas. This has been achieved through strong relationships with real estate agents and our telephone number at that address is (785) 235-1341.other marketing efforts, which are based on our reputation and competitive pricing. Competition in originating one- to four-family loans primarily comes from other savings institutions, commercial banks, credit unions, and mortgage bankers.


Available Information

Our Internet website address is www.capfed.com. Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports can be obtained free of charge from our website. These reports are available on our website as soon as reasonably practicable after they are electronically filed with or furnished to the SEC. These reports are also available on the SEC's website at http://www.sec.gov.



Market Area and Competition
Our corporate office is located in Topeka, Kansas. We currently have a network of 47 branches (37 traditional branches and 10 in-store branches) located in nine counties throughout Kansas and three 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 provide services through our call center which operates on extended hours, mobile banking, telephone banking, and online banking and bill payment services.

The Bank ranked second in deposit market share, at 7.29%, in the state of Kansas as reported in the June 30, 2017 FDIC "Summary of Deposits - Market Share Report." 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, which may add to their total deposits. 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 consistently has been one of the top one- to four-family lenders with regard to mortgage 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 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.
Lending Practices and Underwriting Standards
General. Originating and purchasing loans secured by one- to four-family residential properties is the Bank's primary lending business, resulting in a loan concentration in residential first mortgage loans located in Kansas and Missouri. The Bank also originates consumer loans and construction loans secured by residential properties, and originates and participates in commercial real estate loans.

One- to Four-Family Residential Real Estate Lending. The Bank originates and services one- to four-family loans that are not guaranteed or insured by the federal government, and purchases one- to four-family loans, on a loan-by-loan basis, from a select group of correspondent lenders.

Originated Loans
While the Bank originates both fixed- and adjustable-rate loans, our origination volume is dependent upon customer demand for loans in our market areas. Demand is affected by the local housing market, competition, and the interest rate environment. During fiscal years 2017 and 2016, the Bank originated and refinanced $619.0 million and $663.3 million of one- to four-family loans, respectively.

Correspondent Purchased Loans
The Bank purchases one- to four-family loans, on a loan-by-loan basis, from a select group of correspondent lenders. Loan purchases enable the Bank to attain geographic diversification in the loan portfolio. At September 30, 2017, the Bank had correspondent lending relationships in 28 states and the District of Columbia.During fiscal years 2017 and 2016, the Bank purchased $563.2 million and $662.8 million, respectively, of one- to four-family loans from correspondent lenders. We generally pay a premium of 0.50% to 1.0% of the loan balance to purchase these loans, and we pay 1.0% of the loan balance to purchase the servicing of these loans.

The Bank has an agreement with a third-party mortgage sub-servicer to provide loan servicing for loans originated by the Bank's correspondent lenders in certain states. The sub-servicer has experience servicing loans in the market areas in which the Bank purchases loans and services the loans according to the Bank's servicing standards, which is intended to allow the Bank greater control over servicing and reporting and help maintain a standard of loan performance. 


Bulk Purchased Loans
In the past, the Bank has also purchased one- to four-family loans from correspondent and nationwide lenders in bulk loan packages. The last bulk loan package purchased by the Bank was in August 2012. The Bank no longer purchases bulk loan packages. See "Part I, Item 1A. Risk Factors" for additional information regarding why the Bank no longer purchases bulk loan packages.

The servicing rights associated with bulk purchased loans were generally retained by the lender/seller for the loans purchased from nationwide lenders. The servicing by 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.

At September 30, 2017, $214.5 million, or 61% of the Bank's bulk purchased loan portfolio, are loans guaranteed by one seller. Based on the historical performance of these loans and the seller, the Bank believes the seller has the financial ability to repurchase or replace loans if any loans were to become delinquent. The Bank has not experienced any losses with this group of loans since the loan package was purchased in August 2012.

Underwriting
Full documentation to support an applicant's credit and income, and sufficient funds to cover all applicable fees and reserves at closing, are required on all loans. Generally, loans are currently underwritten according to the "ability to repay" and "qualified mortgage" standards, as issued by the Consumer Financial Protection Bureau ("CFPB"), with total debt-to-income ratios not exceeding 43% of a borrower's verified income. 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 subject property must be supported by an appraisal report prepared in accordance with our appraisal policy by either a staff appraiser or a fee appraiser, both of which are independent of the loan origination function and who are approved by our Board of Directors.

Loans over $500 thousand must be underwritten by two senior underwriters. Loans over $750 thousand must be approved by our Asset and Liability Management Committee ("ALCO"), while loans over $3.0 million must be approved by our 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 market value of the subject property.

The underwriting standards for loans purchased from correspondent and nationwide lenders are generally similar to the Bank's internal underwriting standards. The underwriting of correspondent loans is performed by the Bank's underwriters. Our standard contractual agreement with the lender/seller includes recourse options for any breach of representation or warranty with respect to the loans purchased. The Bank did not request any lenders/sellers to repurchase loans for breach of representation during fiscal year 2017.

Adjustable-rate Mortgage ("ARM") Loans
ARM loans are offered with 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 adjusts annually for the remainder of the term of the loan. Currently, the repricing index for loan originations and correspondent purchases is tied to London Interbank Offered Rates ("LIBOR"); however, other indices have been used in the past. Current adjustable-rate one- to four-family 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- and five-year ARM loans, borrowers are qualified based on the principal, interest, tax, and insurance payments at the initial interest rate plus the life of loan cap and the initial interest rate plus the first period cap, respectively. For seven-year ARM loans, borrowers are qualified based on the principal, interest, tax, and insurance payments at the initial rate. After the initial three-, five-, or seven-year period, the interest rate resets annually and the new principal and interest payment is based on the new interest rate, remaining unpaid principal balance, and remaining term of the ARM loan. Our ARM loans are not automatically convertible into fixed-rate loans; however, we do allow borrowers to pay an endorsement fee to convert an ARM loan to a fixed-rate loan. ARM loans can pose greater 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 type of risk is known as repricing risk.


Pricing
Our pricing strategy for one- to four-family loan products includes setting interest rates based on secondary market prices and local competitor pricing for our local lending markets, and secondary market prices and national competitor pricing for our correspondent markets.

Mortgage Insurance
For a one- to four-family loan with a loan-to-value ("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. The Bank will lend up to 97% of the lesser of the appraised value or purchase price for one- to four-family loans,provided PMI is obtained.Management continuously monitors the claim-paying ability of our PMI counterparties. We believe our PMI counterparties have the ability to meet potential claim obligations we may file in the foreseeable future.

Repayment
The Bank's one- to four-family loans are primarily fully amortizing fixed-rate or ARM loans. The contractual maturities for fixed-rate loans and ARM loans can be up to 30 years; however, there are certain bulk purchased ARM loans that had original contractual maturities of 40 years. 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.

Construction Lending
The Bank originates construction-to-permanent loans secured by one- to four-family residential real estate. The majority of these loans are secured by property located within the Bank's Kansas City market area. At September 30, 2017, we had $30.6 million in construction-to-permanent one- to four-family loans outstanding representing 0.4% of our total loan portfolio.

Construction loans are obtained by homeowners who will occupy the property when construction is complete. The Bank does not originate construction loans to builders for speculative purposes. The application process includes submission of complete plans, specifications, and costs of the project to be constructed. All construction loans are manually underwritten using the Bank's internal underwriting standards. 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.

Construction draw requests and the supporting documentation are reviewed and approved by authorized management or experienced construction loan personnel. The Bank also performs regular documented inspections of the construction project to ensure the funds are being used for the intended purpose. The Bank charges a 1% fee at closing, based on the loan amount, for these administrative requirements. Interest is not capitalized during the construction period; it is billed and collected monthly based on the amount of funds disbursed. Once the construction period is complete, the payment method is changed from interest-only to an amortized principal and interest payment for the remaining term of the loan.

Loan Endorsement Program
In an effort to offset the impact of repayments and to retain our customers, existing loan customers, including customers whose loans were purchased from a correspondent lender, have the opportunity, for a cash fee, to endorse their original loan terms to current loan terms being offered. Customers whose loans have been sold to third parties, or have been delinquent on their contractual loan payments during the previous 12 months, or are currently in bankruptcy, are not eligible to participate in this program. The Bank does not solicit customers for this program, but considers it a valuable opportunity to retain customers who, based on our initial underwriting criteria, could likely obtain similar financing elsewhere. During fiscal years 2017 and 2016, the Bank endorsed $53.1 million and $160.0 million of one- to four-family loans, respectively.


Loan Sales
One- to four-family loans may be sold on a bulk basis or on a flow basis as loans are originated. Loans originated by the Bank and purchased from correspondent lenders are generally eligible for sale in the secondary market. Loans are generally sold for portfolio restructuring purposes, to reduce interest rate risk and/or to maintain a certain liquidity position. The Bank generally retains the servicing on these loans. ALCO determines the criteria upon which one- to four-family loans are to be classified as held-for-sale or held-for-investment. One- to four-family loans classified as held-for-sale are to be sold in accordance with policies set forth by ALCO. The Bank sold $6.7 million of one- to four-family loans during fiscal year 2017 and did not sell any one- to four-family loans during fiscal year 2016.

Consumer Lending. The Bank offers a variety of secured consumer loans, including home equity loans and lines of credit, home improvement loans, auto loans, and loans secured by savings deposits. The Bank also originates a very limited amount of unsecured loans. The Bank does not originate any consumer loans on an indirect basis, such as contracts purchased from retailers of goods or services which have extended credit to their customers. All consumer loans are originated in the Bank's market areas. At September 30, 2017, our consumer loan portfolio totaled $125.9 million, or approximately 2% of our total loan portfolio.

The majority of our 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, up to a maximum of 18%. For a majority of the home equity lines of credit, the Bank has the first mortgage or the Bank is in the first lien position. Home equity lines of credit may be originated up to 90% of the value of the property securing the loan if no first mortgage exists, or up to 90% of the value of the property securing the loans if taking into consideration an existing first mortgage. Approximately 40%, or $42.9 million, of our home equity lines at September 30, 2017 require a payment of 1.5% of the outstanding loan balance per month, but have no stated term-to-maturity and no repayment period. Repaid principal may be re-advanced at any time, not to exceed the credit limit of the loan. Approximately 59%, or $62.2 million, of our home equity lines at September 30, 2017 have a 7-year draw period, a 10-year repayment term, and typically a payment requirement of 1.5% of the outstanding loan balance per month during the draw period, with an amortizing payment during the repayment period.  Repaid principal may be re-advanced at any time during the draw period, not to exceed the original credit limit of the loan.

We also offer interest-only home equity lines of credit. These loans have a maximum term of 12 months and require monthly payments of accrued interest, and a balloon payment of unpaid principal at maturity. At September 30, 2017, approximately 1%, or $1.2 million, of our home equity lines were interest-only. Closed-end home equity loans, which totaled $15.7 million at September 30, 2017, may be originated up to 95% of the value of the property securing the loans if taking into consideration an existing first mortgage, or the lesser of up to $40 thousand or 25% of the value of the property securing the loan if no first mortgage exists. The term-to-maturity for closed-end home equity loans in the first lien position may be up to 10 years, or may be up to 20 years for loans in the second lien position. Generally, loan terms are more limiting and rates are higher for a loan in the second lien position. Home equity loans, including lines of credit and closed-end loans, comprised approximately 97% of our consumer loan portfolio, or $122.1 million, at September 30, 2017; of that amount, 87% were adjustable-rate.

The underwriting standards for consumer loans include a determination of the applicant's payment history on other debts and an assessment of the applicant's 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, usually without periodic caps, which reduces our exposure to credit risk and changes in interest rates, and usually carry higher rates of interest than do one- to four-family loans. However, consumer loans may entail greater credit 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. 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.

Commercial Real Estate Lending. At September 30, 2017, the Bank's commercial real estate loans totaled $270.0 million, or approximately 4% of our total loan portfolio. Of this amount, $217.8 million were participation loans. Total undisbursed loan amounts related to commercial real estate loans were $105.9 million, resulting in a total commercial real estate loan concentration of $375.9 million at September 30, 2017.

During fiscal year 2017 and 2016, the Bank entered into commercial real estate loan participations of $67.7 million and $201.1 million, respectively. The Bank intends to continue to grow its commercial real estate loan portfolio through participations with correspondent lenders and other select lead banks.

Our commercial real estate loans include a variety of property types, including hotels, office and retail buildings, senior housing facilities, and multi-family dwellings located in Texas, Missouri, Kansas, Nebraska, Colorado, Arkansas, California, and Montana. Our largest commercial real estate loan was $50.0 million at September 30, 2017, of which $35.9 million had been disbursed at September 30, 2017. This loan was current according to its terms at September 30, 2017.

Underwriting
The Bank performs more extensive due diligence in underwriting commercial real estate loans than loans secured by one- to four-family residential properties due to the larger loan amounts, the more complex sources of repayment and the riskier nature of such loans. When participating in a commercial real estate loan, the Bank performs the same underwriting procedures as if the loan was being originated by the Bank. The primary source of repayment is funds from the operation of the subject property. For secondary sources of repayment, the Bank generally requires personal guarantees and also evaluates the real estate collateral.

When underwriting a commercial real estate loan, several factors are considered, such as the income producing potential of the property to support the debt service, cash equity provided by the borrower, the financial strength of the borrower, tenant and/or guarantor(s), managerial expertise of the borrower or tenant, feasibility studies from the borrower or an independent third party, the marketability of the property and our lending experience with the borrower. For non-owner occupied properties, the Bank has a pre-lease requirement, depending on the property type, and overall strength of the credit. Loans over $750 thousand must be approved by our ALCO while loans over $5.0 million must be approved by our Board of Directors.

For non-construction properties, the historical net operating income, which is the income derived from the operation of the property less all operating expenses, generally must be at least 1.25 times the required payments related to the outstanding debt (debt service coverage ratio) at the time of origination. For construction projects, the minimum debt service coverage ratio requirement of 1.25 applies to the projected cash flows, and the borrower must have successful experience with the construction and operation of properties similar to the subject property. As part of the underwriting process, the historical or projected cash flows are stressed under various scenarios to measure the viability of the project given adverse conditions.

Generally, our maximum LTV ratios conform to supervisory limits, including 65% for raw land, 75% for land development and 80% for commercial real estate loans. Full appraisals on properties securing these loans are performed by independent state certified fee appraisers. Additionally, the Bank has an independent third-party perform a review of each appraisal. The Bank generally requires at least 15% cash equity from the borrower for land acquisition, land development, and commercial real estate construction loans. For non-acquisition, development or construction loans, the equity may be from a combination of cash and the appraised value of the secured property.

Loan Terms
Commercial real estate loans generally have amortization terms of 15 to 30 years and maturities ranging from three to 20 years, which generally requires balloon payments of the remaining principal balance. The Bank has participated in a limited number of short-term loans with a maturity of three years or less. These loans are generally construction-only loans or land development loans that require interest-only payments for the entire term of the loan.

Commercial real estate loans have either fixed or adjustable interest rates based on prevailing market rates. The interest rate on ARM loans is based on a variety of indices, but is generally determined through negotiation with the borrower or determined by the lead bank in the case of a loan participation. Generally, the Bank allows interest-only payments during the construction phase of a project and for a stabilization period of 6 to 12 months after occupancy. The Bank requires amortizing payments at the conclusion of the stabilization period.

Additionally, the Bank may include covenants in the loan agreement that allow the Bank to take action when deterioration in the financial strength of the project is detected to potentially prevent the credit from becoming impaired. The covenants are specific to each loan agreement, based on factors such as the purpose of funds, the collateral type, and the financial strength of the project, the borrower and the guarantor, among other factors.

Monitoring of Risk
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 required to provide financial information annually, including borrower financial statements, subject property rental rates and income, maintenance costs, an update of real estate property tax and insurance payments, and personal financial information for the guarantor(s). The annual review process for loans with a principal balance of $1.5 million or more allows the Bank to monitor compliance with loan covenants and review the borrower's performance, including cash flows from operations, debt service coverage, and comparison of performance to projections and year-over-year performance trending. Additionally, the Bank performs a site visit, schedules a drive-by site visit or obtains an update from the lead bank to obtain information regarding the maintenance of the property and surrounding area. Depending on the financial strength of the project and/or the complexity of the borrower's financials, the Bank may also perform a global analysis of cash flows to account for all other properties owned by the borrower or guarantor. If signs of weakness are identified, the Bank may begin performing more frequent financial and/or collateral reviews or will initiate contact with the borrower, or the lead bank will contact the borrower if the loan is a participation loan, to ensure cash flows from operations are maintained at a satisfactory level to meet the debt requirements. Both macro-level and loan-level stress-test scenarios based on existing and forecasted market conditions are part of the on-going portfolio management process for the commercial real estate portfolio.

Commercial real estate construction lending generally involves a greater degree of risk than commercial real estate lending. Repayment of a construction loan is, to a great degree, dependent upon the successful and timely completion of the construction of the subject property. Construction delays, slower than anticipated stabilization or the financial impairment of the builder may negatively affect the borrower's ability to repay the loan. The Bank takes these risks into consideration during the underwriting process including the requirement of personal guarantees. The Bank mitigates the risk of commercial real estate construction lending during the construction period by monitoring inspection reports from an independent third-party, project budget, percentage of completion, on-site inspections and percentage of advanced funds.

Our commercial real estate loans are generally large dollar loans and involve a greater degree of credit risk than one- to four-family loans. Because payments on these 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 economy or the real estate market. 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 become impaired. The Bank regularly monitors the level of risk in the portfolio, including concentrations in such factors as geographic locations, property types, tenant brand name, borrowing relationships, and lending relationships in the case of participation loans, among other factors.



Loan Portfolio. The following table presents the composition of our loan portfolio as of the dates indicated.
 September 30,
 2017 2016 2015 2014 2013
 Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent
 (Dollars in thousands)
Real estate loans:                   
One- to four-family:                   
Originated$3,959,232
 55.1% $4,005,615
 57.6% $4,010,424
 60.6% $3,978,342
 63.8% $4,054,395
 67.9%
Correspondent purchased2,445,311
 34.0
 2,206,072
 31.7
 1,846,210
 27.9
 1,431,745
 23.0
 1,044,127
 17.5
Bulk purchased351,705
 4.9
 416,653
 6.0
 485,682
 7.3
 561,890
 9.0
 644,484
 10.8
Construction30,647
 0.4
 39,430
 0.6
 29,552
 0.4
 33,378
 0.5
 27,649
 0.5
Total6,786,895
 94.4
 6,667,770
 95.9
 6,371,868
 96.2
 6,005,355
 96.3
 5,770,655
 96.7
Commercial:                   
Permanent183,030
 2.6
 110,768
 1.6
 109,314
 1.6
 75,677
 1.2
 50,358
 0.8
Construction86,952
 1.2
 43,375
 0.6
 11,523
 0.2
 21,465
 0.3
 7,328
 0.1
Total269,982
 3.8
 154,143
 2.2
 120,837
 1.8
 97,142
 1.5
 57,686
 0.9
Total real estate loans7,056,877
 98.2
 6,821,913
 98.1
 6,492,705
 98.0
 6,102,497
 97.8
 5,828,341
 97.6
                    
Consumer loans:                   
Home equity122,066
 1.7
 123,345
 1.8
 125,844
 1.9
 130,484
 2.1
 135,028
 2.3
Other3,808
 0.1
 4,264
 0.1
 4,179
 0.1
 4,537
 0.1
 5,623
 0.1
Total consumer loans125,874
 1.8
 127,609
 1.9
 130,023
 2.0
 135,021
 2.2
 140,651
 2.4
Total loans receivable7,182,751
 100.0% 6,949,522
 100.0% 6,622,728
 100.0% 6,237,518
 100.0% 5,968,992
 100.0%
                    
Less:                   
ACL8,398
   8,540
   9,443
   9,227
   8,822
  
Discounts/unearned loan fees24,962
   24,933
   24,213
   23,687
   23,057
  
Premiums/deferred costs(45,680)   (41,975)   (35,955)   (28,566)   (21,755)  
Total loans receivable, net$7,195,071
   $6,958,024
   $6,625,027
   $6,233,170
   $5,958,868
  


The following table presents the contractual maturity of our loan portfolio, along with associated weighted average yields, at September 30, 2017. Loans which have adjustable 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.
 Real Estate Consumer    
 One- to Four-Family Commercial 
Construction(2)
 
Home Equity(3)
 Other Total
 Amount Yield Amount Yield Amount Yield Amount Yield Amount Yield Amount Yield
 (Dollars in thousands)
Amounts due:                       
Within one year(1)
$2,888
��4.63% $10,541
 3.26% $42,352
 3.61% $2,404
 6.29% $406
 3.77% $58,591
 3.71%
                        
After one year:                       
Over one to two5,296
 4.63
 2,969
 5.25
 73,837
 3.93
 188
 6.12
 460
 6.55
 82,750
 4.04
Over two to three6,439
 4.28
 4,802
 3.53
 1,410
 4.27
 668
 6.51
 1,029
 3.81
 14,348
 4.10
Over three to five25,062
 4.11
 11,950
 4.49
 —
 —
 1,368
 5.49
 1,887
 3.61
 40,267
 4.25
Over five to ten489,718
 3.62
 60,468
 4.17
 —
 —
 10,149
 5.96
 26
 4.86
 560,361
 3.73
Over ten to fifteen1,294,619
 3.17
 43,981
 4.51
 —
 —
 46,485
 5.36
 —
 —
 1,385,085
 3.28
After fifteen years4,932,226
 3.62
 48,319
 4.40
 —
 —
 60,804
 5.26
 —
 —
 5,041,349
 3.64
Total due after one year6,753,360
 3.53
 172,489
 4.34
 75,247
 3.94
 119,662
 5.37
 3,402
 4.08
 7,124,160
 3.59
                        
Totals loans$6,756,248
 3.53
 $183,030
 4.28
 $117,599
 3.82
 $122,066
 5.39
 $3,808
 4.04
 7,182,751
 3.59
                        
Less:                       
ACL                    8,398
  
Discounts/unearned loan fees                   24,962
  
Premiums/deferred costs                    (45,680)  
Total loans receivable, net                    $7,195,071
  


(1)Includes demand loans, loans having no stated maturity, and overdraft loans.
(2)Construction loans are presented based upon the estimated term to complete construction. See "One- to Four-Family Residential Real Estate Lending - Construction Lending" above for more information regarding our construction-to-permanent loan program.
(3)For home equity loans, the maturity date calculated assumes the customer always makes the required minimum payment. The majority of interest-only home equity lines of credit assume a balloon payment of unpaid principal at 120 months. All other home equity lines of credit generally assume a term of 240 months.


The following table presents, as of September 30, 2017, the amount of loans due after September 30, 2018, and whether these loans have fixed or adjustable interest rates.

 Fixed Adjustable Total
 (Dollars in thousands)
Real estate loans:     
One- to four-family$5,636,563
 $1,116,797
 $6,753,360
Commercial127,795
 44,694
 172,489
Construction74,708
 539
 75,247
Consumer loans:     
Home equity15,340
 104,322
 119,662
Other741
 2,661
 3,402
Total$5,855,147
 $1,269,013
 $7,124,160


Asset Quality
The Bank's traditional underwriting guidelines have provided the Bank with generally low delinquencies and low levels of non-performing assets compared to national levels. Of particular importance is the complete and full documentation required for each loan the Bank originates, participates in or purchases. Generally, one- to four-family owner occupied loans are currently underwritten according to the "ability to repay" and "qualified mortgage" standards, as issued by the CFPB, with total debt-to-income ratios not exceeding 43% of the borrower's verified income. This allows the Bank to make an informed credit decision based upon a thorough assessment of the borrower's ability to repay the loan.

For one- to four-family loans and consumer loans, when a borrower fails to make a loan payment within 15 days after the due date, a late charge is assessed and a notice is mailed. Collection personnel review all delinquent loan accounts 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 employee. For residential mortgage loans serviced by the Bank, beginning at approximately the 31st day of delinquency, and again at approximately the 50th day of delinquency, information notices are mailed to borrowers to inform them of the availability of payment assistance programs. Borrowers are encouraged to contact the Bank to initiate the process of reviewing such opportunities. Once a loan becomes 90 days delinquent, assuming a loss mitigation solution is not actively in process, a demand letter is issued requiring the loan be brought current or foreclosure procedures will be implemented. Generally, when a loan becomes 120 days delinquent, and an acceptable repayment plan or loss mitigation solution has neither been established nor is in the process of being negotiated, the loan is forwarded to legal counsel to initiate foreclosure. We also monitor whether borrowers who have filed for bankruptcy are meeting their obligation to pay the mortgage debt in accordance with the terms of the bankruptcy petition.

For purchased loans serviced by a third party, we monitor delinquencies using reports received from the servicers. 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. The information from the sub-servicer of our correspondent loans is generally received during the first week of the month while the information from the servicers of our bulk loans is received later in the month. Management also utilizes information from the servicers to monitor property valuations and identify the need to charge-off loan balances.


For commercial real estate loans originated by the Bank, when a borrower fails to make a loan payment within 15 days after the due date, a late notice is mailed. If the loan becomes 30 days or more past due, the Bank begins collection efforts including sending legal notices for payment collection and contacting the borrower by telephone. The primary purpose of such contact is to notify the borrower of the past due payment in case the loan payment was misplaced or lost and to identify any changes in the project's income flow that may affect future loan performance. If it is determined that future loan performance may be adversely affected, the Bank initiates discussions with the borrower regarding plans to ensure cash flow from operations is sufficient to satisfy the debt requirements and meet the loan covenants. Generally, once a loan becomes 90 days delinquent, foreclosure procedures are initiated. For participation loans, the lead bank is responsible for all collection efforts and contact with the borrower. However, if the Bank does not receive an expected payment on a participation loan, the Bank contacts the lead bank to determine the cause of the late payment and to initiate discussions with the lead bank of collection efforts, as necessary. See "Lending Practices and Underwriting Standards – Commercial Real Estate Lending – Monitoring of Risk" for additional information.

Delinquent and non-performing loans and other real estate owned ("OREO")
The following table presents the Company's 30 to 89 day delinquent loans at the dates indicated. Of the loans 30 to 89 days delinquent at September 30, 2017, 2016, and 2015, approximately 67%, 75%, and 75%, respectively, were 59 days or less delinquent.
 Loans Delinquent for 30 to 89 Days at September 30,
 2017 2016 2015
 Number Amount Number Amount Number Amount
 (Dollars in thousands)
One- to four-family:           
Originated129 $13,257
 143 $13,593
 158 $16,955
Correspondent purchased8 1,827
 9 3,329
 8 2,344
Bulk purchased22 3,194
 21 5,008
 32 7,259
Consumer:           
Home equity30 467
 36 635
 32 703
Other5 33
 5 62
 11 17
 194 $18,778
 214 $22,627
 241 $27,278
            
Loans 30 to 89 days delinquent           
to total loans receivable, net  0.26%   0.33%   0.41%


The table below presents the Company's non-performing loans and OREO at the dates indicated. Non-performing loans are loans that are 90 or more days delinquent or in foreclosure and other loans required to be reported as nonaccrual pursuant to regulatory reporting requirements, even if the loans are current. At all dates presented, there were no loans 90 or more days delinquent that were still accruing interest. Non-performing assets include non-performing loans and OREO. OREO primarily includes assets acquired in settlement of loans. Over the past 12 months, OREO properties acquired in settlement of loans were owned by the Bank, on average, for approximately seven months before the properties were sold.
 September 30,
 2017 2016 2015 2014 2013
 Number Amount Number Amount Number Amount Number Amount Number Amount
 (Dollars in thousands)
Loans 90 or More Days Delinquent or in Foreclosure:                
One- to four-family:                   
Originated67
 $5,515
 73
 $8,190
 66
 $6,728
 82
 $7,880
 101
 $8,579
Correspondent purchased1
 91
 3
 985
 1
 394
 2
 709
 5
 812
Bulk purchased13
 3,371
 28
 7,323
 36
 8,898
 28
 7,120
 34
 9,608
Consumer:                   
Home equity21
 406
 26
 520
 24
 497
 25
 397
 29
 485
Other1
 4
 5
 9
 4
 12
 4
 13
 4
 5
 103
 9,387
 135
 17,027
 131
 16,529
 141
 16,119
 173
 19,489
                    
Loans 90 or more days delinquent or in foreclosure                  
 as a percentage of total loans  0.13%   0.24%   0.25%   0.26%   0.33%
                    
Nonaccrual loans less than 90 Days Delinquent:(1)
                
One- to four-family:                   
Originated50
 $4,567
 70
 $8,956
 77
 $9,004
 67
 $7,473
 57
 $5,833
Correspondent purchased8
 1,690
 9
 2,786
 1
 25
 4
 553
 2
 740
Bulk purchased4
 846
 1
 31
 1
 82
 5
 724
 2
 280
Consumer:                   
Home equity7
 113
 12
 328
 12
 295
 2
 45
 6
 101
Other—
 —
 —
 —
 —
 —
 —
 —
 —
 —
 69
 7,216
 92
 12,101
 91
 9,406
 78
 8,795
 67
 6,954
Total non-performing loans172
 16,603
 227
 29,128
 222
 25,935
 219
 24,914
 240
 26,443
                    
Non-performing loans as a percentage of total loans 0.23%   0.42%   0.39%   0.40%   0.44%
                    

 September 30,
 2017 2016 2015 2014 2013
 Number Amount Number Amount Number Amount Number Amount Number Amount
 (Dollars in thousands)
OREO:                   
One- to four-family:                   
Originated(2)
4
 $58
 12
 $692
 29
 $1,752
 25
 $2,040
 28
 $2,074
Correspondent purchased—
 —
 1
 499
 1
 499
 1
 179
 2
 71
Bulk purchased5
 1,279
 4
 1,265
 2
 796
 2
 575
 4
 380
Consumer:                   
Home equity1
 67
 —
 —
 1
 8
 —
 —
 2
 57
Other(3)
—
 —
 1
 1,278
 1
 1,278
 1
 1,300
 1
 1,300
 10
 1,404
 18
 3,734
 34
 4,333
 29
 4,094
 37
 3,882
Total non-performing assets182
 $18,007
 245
 $32,862
 256
 $30,268
 248
 $29,008
 277
 $30,325
                    
Non-performing assets as a percentage of total assets0.20%   0.35%   0.31%   0.29%   0.33%

(1)Represents loans required to be reported as nonaccrual pursuant to regulatory reporting requirements, even if the loans are current. The decrease in the balance of these loans at September 30, 2017 compared to September 30, 2016 was due to fewer loans being classified as troubled debt restructurings ("TDRs") as a result of management refining its methodology for assessing whether a loan modification qualifies as a TDR. At September 30, 2017, 2016, 2015, 2014, and 2013, this amount was comprised of $1.8 million, $2.3 million, $2.2 million, $1.1 million, and $1.1 million, respectively, of loans that were 30 to 89 days delinquent and were reported as such, and $5.4 million, $9.8 million, $7.2 million, $7.7 million, and $5.9 million, respectively, of loans that were current.
(2)Real estate-related consumer loans where we also hold the first mortgage are included in the one- to four-family category as the underlying collateral is one- to four-family property.
(3)Represents a single property the Bank purchased for a potential branch site. The Bank sold the property during fiscal year 2017.

The amount of interest income on nonaccrual loans and TDRs as of September 30, 2017 included in interest income was $1.6 million for the year ended September 30, 2017.  The amount of additional interest income that would have been recorded on nonaccrual loans and TDRs as of September 30, 2017, if they had performed in accordance with their original terms, was $165 thousand for the year ended September 30, 2017.


The following table presents the states where the properties securing one percent or more of the total amount of our one- to four-family loans are located and the corresponding balance of loans 30 to 89 days delinquent, 90 or more days delinquent or in foreclosure, and weighted average LTV ratios for loans 90 or more days delinquent or in foreclosure at September 30, 2017. The LTV ratios were based on the current loan balance and either the lesser of the purchase price or original appraisal, or the most recent Bank appraisal, if available. At September 30, 2017, potential losses, after taking into consideration anticipated PMI proceeds and estimated selling costs, have been charged-off.
      Loans 30 to 89 Loans 90 or More Days Delinquent
  One- to Four-Family Days Delinquent or in Foreclosure
State Amount % of Total Amount % of Total Amount % of Total LTV
  (Dollars in thousands)
Kansas $3,670,347
 54.3% $10,673
 58.4% $5,297
 59.0% 66%
Missouri 1,242,818
 18.4
 3,721
 20.4
 827
 9.2
 51
Texas 671,460
 9.9
 1,134
 6.2
 —
 —
 n/a
Tennessee 217,594
 3.2
 —
 —
 —
 —
 n/a
California 216,558
 3.2
 —
 —
 —
 —
 n/a
Alabama 105,854
 1.6
 155
 0.8
 —
 —
 n/a
Pennsylvania 100,587
 1.5
 —
 —
 —
 —
 n/a
Georgia 88,710
 1.3
 409
 2.2
 —
 —
 n/a
Oklahoma 67,462
 1.0
 —
 —
 —
 —
 n/a
North Carolina 66,515
 1.0
 37
 0.2
 122
 1.4
 87
Other states 308,343
 4.6
 2,149
 11.8
 2,731
 30.4
 65
  $6,756,248
 100.0% $18,278
 100.0% $8,977
 100.0% 65

Troubled Debt Restructurings. For borrowers experiencing financial difficulties, the Bank may grant a concession to the borrower, resulting in a TDR. Such concessions generally involve extensions of loan maturity dates, the granting of periods during which the payment of only interest and escrow is required, reductions in interest rates, and loans that have been discharged under Chapter 7 bankruptcy proceedings where the borrower has not reaffirmed the debt. The Bank does not forgive principal or interest, nor does it commit to lend additional funds, except for situations generally involving the capitalization of delinquent interest and/or escrow not to exceed the original loan balance, to these borrowers. See "Part II, Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 1. Summary of Significant Accounting Policies and Note 4. Loans Receivable and Allowance for Credit Losses" for additional information related to TDRs.

The following table presents the Company's TDRs, based on accrual status, at the dates indicated.
 September 30,
 2017
 2016
 2015
 2014
 2013
 (Dollars in thousands)
Accruing TDRs$27,383
 $23,177
 $24,331
 $24,636
 $37,074
Nonaccrual TDRs(1)
11,742
 18,725
 15,511
 13,370
 12,426
Total TDRs$39,125
 $41,902
 $39,842
 $38,006
 $49,500

(1)Nonaccrual TDRs are included in the non-performing loan table above.

Impaired Loans.A loan is considered impaired when, based on current information and events, it is probable that the Bank will be unable to collect all amounts due, including principal and interest, according to the original contractual terms of the loan agreement. Interest income on impaired loans is recognized in the period collected unless the ultimate collection of principal is considered doubtful. The unpaid principal balance of loans reported as impaired at September 30, 2017, 2016, and 2015 was $44.4 million, $58.9 million, and $57.2 million, respectively. See "Part II, Item 8. Financial Statements and

Supplementary Data – Notes to Consolidated Financial Statements – Note 1. Summary of Significant Accounting Policies and Note 4. Loans Receivable and Allowance for Credit Losses" for additional information related to impaired loans.

Classified Assets. In accordance with the Bank's asset classification policy, management regularly reviews the problem assets in the Bank's portfolio to determine whether any assets require classification. See "Part II, Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 4. Loans Receivable and Allowance for Credit Losses" for asset classification definitions.

The following table sets forth the recorded investment in assets, classified as either special mention or substandard, as of September 30, 2017. See "Part II, Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 4. Loans Receivable and Allowance for Credit Losses" for information regarding asset classification definitions. At September 30, 2017, there were no loans classified as doubtful, and all loans classified as loss were fully charged-off.

 Special Mention Substandard
 Number Amount Number Amount
 (Dollars in thousands)
One- to four-family:       
Originated50
 $7,031
 314
 $30,059
Correspondent purchased2
 261
 19
 3,800
Bulk purchased—
 —
 33
 8,005
Consumer Loans:       
Home equity2
 9
 62
 1,032
Other—
 —
 1
 4
Total loans54
 7,301
 429
 42,900
        
OREO:       
Originated—
 —
 5
 125
Correspondent purchased—
 —
 —
 —
Bulk purchased—
 —
 5
 1,279
Other—
 —
 —
 —
Total OREO—
 —
 10
 1,404
        
Trust preferred securities ("TRUPs")—
 —
 1
 2,051
Total classified assets54
 $7,301
 440
 $46,355

Allowance for credit losses and Provision for credit losses.Management maintains an ACL to absorb inherent losses in the loan portfolio based on ongoing quarterly assessments of the loan portfolio. The ACL is maintained through provisions for credit losses which are either charged to or credited to income. Our ACL methodology considers a number of factors including the trend and composition of delinquent loans, trends in foreclosed property and short sale transactions and charge-off activity, the current status and trends of local and national employment levels, trends and current conditions in the real estate and housing markets, loan portfolio growth and concentrations, industry and peer charge-off information, and certain ACL ratios. For our commercial real estate portfolio, we also consider qualitative factors such as geographic locations, property types, tenant brand name, borrowing relationships, and lending relationships in the case of participation loans, among other factors. See "Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies – Allowance for Credit Losses" and "Part II, Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 1. Summary of Significant Accounting Policies" for a full discussion of our ACL methodology. See "Part II, Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 4. Loans Receivable and Allowance for Credit Losses" for additional information on the ACL.


The Bank did not record a provision for credit losses during the current fiscal year, compared to a negative provision for credit losses of $750 thousand during the prior fiscal year. Based on management's assessment of the ACL formula analysis model and several other factors, management determined that no provision for credit losses was necessary in the current fiscal year. Net charge-offs were $142 thousand during the current fiscal year and $153 thousand during the prior fiscal year. At September 30, 2017, loans 30 to 89 days delinquent were 0.26% of total loans and loans 90 or more days delinquent or in foreclosure were 0.13% of total loans.

The following table presents ACL activity and related ratios at the dates and for the periods indicated. Using the Bank's annualized net historical loan losses from the Bank's ACL formula analysis model over the past five years, the Bank would have approximately 12 years of net loan loss coverage based on the ACL balance at September 30, 2017.
 Year Ended September 30,
 2017
 2016
 2015
 2014
 2013
 (Dollars in thousands)
Balance at beginning of period$8,540
 $9,443
 $9,227
 $8,822
 $11,100
Charge-offs:         
One- to four-family:         
Originated(72) (200) (424) (284) (624)
Correspondent—
 —
 (11) (96) (13)
Bulk purchased(216) (342) (228) (653) (761)
Total(288) (542) (663) (1,033) (1,398)
Consumer:         
Home equity(51) (83) (29) (103) (252)
Other(9) (5) (43) (6) (7)
Total(60) (88) (72) (109) (259)
Total charge-offs(348) (630) (735) (1,142) (1,657)
Recoveries:         
One- to four-family:         
Originated4
 77
 56
 1
 14
Correspondent—
 —
 —
 —
 —
Bulk purchased165
 374
 58
 64
 398
Total169
 451
 114
 65
 412
Consumer:         
Home equity26
 25
 64
 72
 33
Other11
 1
 2
 1
 1
Total37
 26
 66
 73
 34
Total recoveries206
 477
 180
 138
 446
Net charge-offs(142) (153) (555) (1,004) (1,211)
Provision for credit losses—
 (750) 771
 1,409
 (1,067)
Balance at end of period$8,398
 $8,540
 $9,443
 $9,227
 $8,822
          
Ratio of net charge-offs during the period to         
average loans outstanding during the period—% —% 0.01% 0.02% 0.02%
          
Ratio of net charge-offs during the period to         
average non-performing assets0.56
 0.48
 1.87
 3.38
 3.45
          
ACL to non-performing loans at end of period50.58
 29.32
 36.41
 37.04
 33.36
          
ACL to loans receivable, net at end of period0.12
 0.12
 0.14
 0.15
 0.15
          
ACL to net charge-offs58.9x
 55.8x
 17.0x
 9.2x
 7.3x

The distribution of our ACL at the dates indicated is summarized below. Included in bulk purchased loans are $214.5 million of loans, or 61% of the total bulk purchased loan portfolio, at September 30, 2017, for which the seller of the loans has guaranteed to repurchase or replace any delinquent loans. The Bank has not experienced any losses on loans acquired from this seller as all delinquent loans have been repurchased by this seller since the loan package was purchased in fiscal year 2012. For the $137.2 million of bulk purchased loans at September 30, 2017 that do not have the above noted guarantee, the Bank has continued to experience a reduction in loan losses due to an improvement in collateral values. A large portion of these loans were originally interest-only loans with interest-only terms up to 10 years. All of the interest-only loans are now fully amortizing loans. Our correspondent purchased loans are purchased on a loan-by-loan basis from a select group of correspondent lenders and are underwritten by the Bank's underwriters based on underwriting standards that are generally the same as for our originated loans. The decrease in one- to four-family ACL from September 30, 2016 was due to improvements in collateral value and historical loss factors within our ACL formula analysis model, as well as to the continued low level of net loan charge-offs and delinquent loan ratios. The increase in the commercial real estate ACL was due primarily to growth in the loan portfolio during the current fiscal year.

 September 30,
 2017 2016 2015 2014 2013
   % of   % of   % of   % of   % of
 Amount Loans to Amount Loans to Amount Loans to Amount Loans to Amount Loans to
 of ACL Total Loans of ACL Total Loans of ACL Total Loans of ACL Total Loans of ACL Total Loans
 (Dollars in thousands)
Real estate loans:                   
One- to four-family:                   
Originated$3,149
 55.1% $3,892
 57.6% $4,833
 60.6% $6,228
 86.0% $5,748
 84.8%
Correspondent purchased(1)
1,922
 34.0
 2,102
 31.7
 2,115
 27.9
 N/A
 N/A
 N/A
 N/A
Bulk purchased1,000
 4.9
 1,065
 6.0
 1,434
 7.3
 2,323
 8.9
 2,486
 10.7
Construction24
 0.4
 36
 0.6
 32
 0.4
 35
 1.1
 23
 1.1
Total6,095
 94.4
 7,095
 95.9
 8,414
 96.2
 8,586
 96.0
 8,257
 96.6
Commercial:                   
Permanent1,242
 2.6
 774
 1.6
 604
 1.6
 312
 1.2
 172
 0.8
Construction870
 1.2
 434
 0.6
 138
 0.2
 88
 0.6
 13
 0.2
Total2,112
 3.8
 1,208
 2.2
 742
 1.8
 400
 1.8
 185
 1.0
Total real estate loans8,207
 98.2
 8,303
 98.1
 9,156
 98.0
 8,986
 97.8
 8,442
 97.6
Consumer loans:                   
Home equity159
 1.7
 187
 1.8
 222
 1.9
 211
 2.1
 342
 2.3
Other consumer32
 0.1
 50
 0.1
 65
 0.1
 30
 0.1
 38
 0.1
Total consumer loans191
 1.8
 237
 1.9
 287
 2.0
 241
 2.2
 380
 2.4
 $8,398
 100.0% $8,540
 100.0% $9,443
 100.0% $9,227
 100.0% $8,822
 100.0%

(1)The disaggregation of data related to correspondent purchased loans is not available for years prior to fiscal year 2015. For these years, correspondent purchased amounts were combined with originated loans in the ACL formula analysis model.

Investment Activities

Federally chartered savings institutions have the authority to invest in various types of liquid assets, including U.S. Treasury obligations; securities of various federal agencies; government-sponsored enterprises ("GSEs"), including callable agency securities; municipal bonds; certain certificates of deposit of insured banks and savings institutions; certain bankers' acceptances; repurchase agreements; and federal funds. Subject to various restrictions, federally chartered savings institutions may also invest their assets in investment grade commercial paper, corporate debt securities, and mutual funds whose assets conform to the investments that a federally chartered savings institution is otherwise authorized to make directly. As a member of FHLB, the Bank is required to maintain a specified investment in FHLB stock. See "Regulation and Supervision – Federal Home Loan Bank System" and "Office of the Comptroller of the Currency" for a discussion of additional restrictions on our investment activities.

ALCO considers various factors when making investment decisions, including the liquidity, credit, interest rate risk, and tax consequences of the proposed investment options. The composition of the investment portfolio will be affected by various market conditions, including the slope of the yield curve, the level of interest rates, the impact on the Bank's interest rate risk, the trend of net deposit flows, the volume of loan sales, repayments of borrowings, and loan originations and purchases.

The general objectives of the Bank's investment portfolio are to provide liquidity when loan demand is high, to assist in maintaining earnings when loan demand is low, and to maximize earnings while satisfactorily managing liquidity risk, interest rate risk, reinvestment risk, and credit risk. Liquidity may increase or decrease depending upon the availability of funds and comparative yields on investments in relation to the return on loans. Cash flow projections are reviewed regularly and updated to ensure that adequate liquidity is maintained.

We classify securities as either trading, available-for-sale ("AFS"), or held-to-maturity ("HTM") at the date of purchase. Securities that are purchased and held principally for resale in the near future are classified as trading securities and are reported at fair value with unrealized gains and losses reported in the consolidated statements of income. AFS securities are reported at fair value with unrealized gains and losses reported as a component of accumulated other comprehensive income (loss) ("AOCI") within stockholders' equity, net of deferred income taxes. HTM securities are reported at cost, adjusted for amortization of premium and accretion of discount. We have both the ability and intent to hold our HTM securities to maturity.

On a quarterly basis, management conducts a formal review of securities for the presence of an other-than-temporary impairment. The process involves monitoring market events and other items that could impact issuers. See "Part II, Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 1. Summary of Significant Accounting Policies" for additional information. Management does not believe any other-than-temporary impairments existed at September 30, 2017.

Investment Securities. Our investment securities portfolio consists primarily of debentures issued by GSEs (primarily Federal National Mortgage Association ("FNMA"), Federal Home Loan Mortgage Corporation ("FHLMC") and the Federal Home Loan Banks) and non-taxable municipal bonds. At September 30, 2017, our investment securities portfolio totaled $301.1 million. The portfolio consisted of securities classified as either HTM or AFS. See "Part II, Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 3. Securities" and "Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations – Financial Condition – Investment Securities" for additional information.

Mortgage-Backed Securities. At September 30, 2017, our MBS portfolio totaled $942.4 million. The portfolio consisted of securities classified as either HTM or AFS and were primarily issued by GSEs. The principal and interest payments of MBS issued by GSEs are collateralized by the underlying mortgage assets with principal and interest payments guaranteed by the GSEs. The underlying mortgage assets are conforming mortgages that comply with FNMA and FHLMC underwriting guidelines, as applicable, and are therefore not considered subprime. See "Part II, Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 3. Securities" and "Management's Discussion and Analysis of Financial Condition and Results of Operations – Financial Condition – Mortgage-Backed Securities" for additional information.


MBS generally yield less than the loans that underlie such securities because of the servicing fee retained by the servicer and the cost of payment guarantees or credit enhancements retained by the GSEs that reduce credit risk. However, MBS are generally more liquid than individual mortgage loans and may be used to collateralize certain borrowings and public unit deposits of the Bank. In general, MBS issued or guaranteed by FNMA and FHLMC are weighted at no more than 20% for risk-based capital purposes compared to the 50% risk-weighting assigned to most non-securitized one- to four-family loans.

When securities are purchased for a price other than par value, the difference between the price paid and par is accreted to or amortized against the interest earned over the life of the security, depending on whether a discount or premium to par was paid. Movements in interest rates affect prepayment rates which, in turn, affect the average lives of MBS and the speed at which the discount or premium is accreted to or amortized against earnings.

At September 30, 2017, the MBS portfolio included $133.8 million of collateralized mortgage obligations ("CMOs"). CMOs are special types of MBS in which the stream of principal and interest payments on the underlying mortgages or MBS are used to create investment classes with different maturities and, in some cases, different amortization schedules, as well as a residual interest, with each such class possessing different risk characteristics. We do not purchase residual interest bonds.

While MBS issued by FNMA and FHLMC carry a reduced credit risk compared to whole mortgage loans, these securities remain subject to the risk that a fluctuating interest rate environment, along with other factors such as the geographic distribution of the underlying mortgage loans, may alter the prepayment rate of the underlying mortgage loans and consequently affect both the prepayment speed and value of the securities. As noted above, the Bank, on some transactions, pays a premium over par value on MBS purchased. Large premiums could cause significant negative yield adjustments due to accelerated prepayments on the underlying mortgages. The balance of net premiums on our portfolio of MBS at September 30, 2017 was $9.0 million.


The following table sets forth the composition of our investment and MBS portfolios as of the dates indicated.At September 30, 2017, our investment securities portfolio did not contain securities of any issuer with an aggregate book value in excess of 10% of our stockholders' equity, excluding those issued by GSEs.

 September 30,
 2017 2016 2015
 Carrying % of Fair Carrying % of Fair Carrying % of Fair
 Value Total Value Value Total Value Value Total Value
 (Dollars in thousands)
AFS:                 
GSE debentures$270,729
 65.1% $270,729
 $347,038
 65.8% $347,038
 $526,620
 69.4% $526,620
MBS141,516
 34.0
 141,516
 178,507
 33.9
 178,507
 229,491
 30.3
 229,491
TRUPs2,051
 0.5
 2,051
 1,756
 0.3
 1,756
 1,916
 0.3
 1,916
Municipal bonds1,535
 0.4
 1,535
 —
 —
 —
 144
 —
 144
 415,831
 100.0% 415,831
 527,301
 100.0% 527,301
 758,171
 100.0% 758,171
                  
HTM:                 
MBS800,931
 96.8% 806,096
 1,067,571
 97.0% 1,089,214
 1,233,048
 97.0% 1,256,783
Municipal bonds26,807
 3.2
 26,913
 33,303
 3.0
 33,653
 38,074
 3.0
 38,491
 827,738
 100.0% 833,009
 1,100,874
 100.0% 1,122,867
 1,271,122
 100.0% 1,295,274
 $1,243,569
   $1,248,840
 $1,628,175
   $1,650,168
 $2,029,293
   $2,053,445

The composition and maturities of the investment and MBS portfolio at September 30, 2017 are indicated in the following table by remaining contractual maturity, without consideration of call features or pre-refunding dates, along with associated weighted average yields. Yields on tax-exempt investments are not calculated on a fully taxable equivalent basis.
 1 year or less More than 1 to 5 years More than 5 to 10 years Over 10 years Total Securities
 Carrying   Carrying   Carrying   Carrying   Carrying   Fair
 Value Yield Value Yield Value Yield Value Yield Value Yield Value
 (Dollars in thousands)
AFS:                     
GSE debentures$121,253
 1.13% $149,476
 1.41% $—
 —% $—
 —% $270,729
 1.29% $270,729
MBS175
 3.75
 17,413
 4.79
 21,079
 3.15
 102,849
 3.22
 141,516
 3.40
 141,516
TRUPs—
 —
 —
 —
 —
 —
 2,051
 2.58
 2,051
 2.58
 2,051
Municipal bonds—
 —
 1,535
 1.30
 —
 —
 —
 —
 1,535
 1.30
 1,535
 121,428
 1.13
 168,424
 1.76
 21,079
 3.15
 104,900
 3.20
 415,831
 1.99
 415,831
                      
HTM:                     
MBS2,709
 3.93
 41,355
 2.42
 426,341
 2.01
 330,526
 2.12
 800,931
 2.09
 806,096
Municipal bonds6,141
 2.22
 20,448
 1.50
 218
 2.00
 —
 —
 26,807
 1.67
 26,913
 8,850
 2.74
 61,803
 2.12
 426,559
 2.01
 330,526
 2.12
 827,738
 2.07
 833,009
 $130,278
 1.24
 $230,227
 1.86
 $447,638
 2.07
 $435,426
 2.38
 $1,243,569
 2.05
 $1,248,840


Sources of Funds
General. Our primary sources of funds are deposits, FHLB borrowings, repurchase agreements, repayments and maturities of outstanding loans and MBS and other short-term investments, and funds provided by operations.

Deposits. We offer a variety of retail deposit accounts having a wide range of interest rates and terms. Our deposits consist of savings accounts, money market deposit accounts, interest-bearing and non-interest-bearing checking accounts, and certificates of deposit. We rely primarily upon competitive pricing policies, marketing, and customer service to attract and retain deposits. The flow of deposits is influenced significantly by general economic conditions, changes in money market and prevailing interest rates, and competition. The variety of deposit accounts we offer has allowed us to utilize strategic pricing to obtain funds and to respond with flexibility to changes in consumer demand. We seek to manage the pricing of our deposits in keeping with our asset and liability management, liquidity, and profitability objectives. Based on our experience, we believe that our deposits are stable sources of funds. Despite this stability, our ability to attract and maintain these deposits and the rates paid on them has been, and will continue to be, significantly affected by market conditions.

The Board of Directors has authorized the utilization of brokers to obtain deposits as a source of funds. Depending on market conditions, the Bank may use brokered deposits to fund asset growth and gather deposits that may help to manage interest rate risk. No brokered deposits were acquired during fiscal year 2017 and there were no brokered deposits outstanding at September 30, 2017 or 2016.

The Board of Directors also has authorized the utilization of public unit deposits as a source of funds. In order to qualify to obtain such deposits, the Bank must have a branch in each county in which it collects public unit deposits and, by law, must pledge securities as collateral for all such balances in excess of the FDIC insurance limits. At September 30, 2017 and 2016, the balance of public unit deposits was $460.0 million and $370.0 million, respectively.

As of September 30, 2017, the Bank's policy allows for combined brokered and public unit deposits up to 15% of total deposits. At September 30, 2017, that amount was approximately 9% of total deposits.

Borrowings. We utilize borrowings when we desire additional capacity to fund loan demand or when they help us meet our asset and liability management objectives. Historically, our term borrowings have consisted primarily of FHLB advances. FHLB advances may be made pursuant to several different credit programs, each of which has its own interest rate, maturity, repayment, and embedded options, if any. At September 30, 2017, $1.98 billion of our FHLB advances were fixed-rate advances with no embedded options and $200.0 million of our FHLB advances were variable-rate, also with no embedded options. The Bank supplements FHLB borrowings with repurchase agreements, wherein the Bank enters into agreements with Board approved counterparties to sell securities under agreements to repurchase them. These agreements are recorded as financing transactions as the Bank maintains effective control over the transferred securities. Repurchase agreements are made at mutually agreed upon terms between counterparties and the Bank. The use of repurchase agreements allows for the diversification of funding sources and the use of securities that were not being leveraged as collateral. The Bank's internal policy limits total borrowings to 55% of total assets.

During fiscal year 2017, the Bank continued to utilize a leverage strategy (the "leverage strategy") to increase earnings. The leverage strategy during the current fiscal year involved borrowing up to $2.10 billion either on the Bank's FHLB line of credit or by entering into short-term FHLB advances, depending on the rates offered by FHLB. The borrowings were repaid prior to each quarter end for regulatory purposes. The proceeds of the borrowings, net of the required FHLB stock holdings, were deposited at the Federal Reserve Bank of Kansas City ("FRB of Kansas City"). Management can discontinue the use of the leverage strategy at any point in time.

At September 30, 2017, we had $2.18 billion of FHLB advances, at par, outstanding. Total FHLB borrowings are secured by certain qualifying loans pursuant to a blanket collateral agreement with FHLB. Per FHLB's lending guidelines, total FHLB borrowings cannot exceed 40% of Bank Call Report total assets without the pre-approval of FHLB senior management. In July 2017, the president of the FHLB renewed the approval of the increase in the Bank's borrowing limit to 55% of Bank Call Report total assets through July 2018. This approval was also in place throughout fiscal year 2017 as FHLB borrowings were in excess of 40% of Call Report total assets at certain points in time during the period due to the leverage strategy.


At September 30, 2017, repurchase agreements totaled $200.0 million, or approximately 2% of total assets. The Bank may enter into additional repurchase agreements as management deems appropriate, not to exceed 15% of total assets and subject to the internal policy limit on total borrowings of 55%. The securities underlying the agreements continue to be reported in the Bank's securities portfolio. At September 30, 2017, we had securities with a fair value of $218.5 million pledged as collateral on repurchase agreements.

The following table sets forth certain information relating to the category of borrowings for which the average short-term balance outstanding during the period was at least 30% of stockholders' equity at the end of each period shown. The maximum balance, average balance, and weighted average contractual interest rate during the fiscal years shown reflect borrowings that were scheduled to mature within one year at any month-end during those years.
 2017
 2016
 2015
  (Dollars in thousands)
FHLB Borrowings:     
Balance at end of period$475,000
 $500,000
 $1,100,000
Maximum balance outstanding at any month-end during the period2,675,000
 2,600,000
 2,700,000
Average balance2,520,217
 2,436,749
 2,558,676
Weighted average contractual interest rate during the period1.27% 0.70% 0.60%
Weighted average contractual interest rate at end of period1.91
 2.69
 0.69

Subsidiary Activities

At September 30, 2017, the Company had one wholly-owned subsidiary, the Bank. The Bank provides a full range of retail banking services through 47 banking offices serving primarily the metropolitan areas of Topeka, Wichita, Lawrence, Manhattan, Emporia and Salina, Kansas and portions of the metropolitan area of greater Kansas City. At September 30, 2017, the Bank had one wholly-owned subsidiary, Capitol Funds, Inc. At September 30, 2017, Capitol Funds, Inc. had one wholly-owned subsidiary, Capitol Federal Mortgage Reinsurance Company ("CFMRC"), which serves as a reinsurance company for certain PMI companies the Bank uses in its normal course of operations. CFMRC stopped writing new business for the Bank in January 2010. Each wholly-owned subsidiary is reported on a consolidated basis.

Regulation and Supervision


The Bank is examined and regulated by the OCC, its primary regulator, and its deposits are insured up to applicable limits by the Deposit Insurance Fund ("DIF"), which is administered by the FDIC. The Company, as a savings and loan holding company, is examined and regulated by the FRB.

Set forth below is a description of certain laws and regulations that are applicable to Capitol Federal Financial, Inc. and the Bank. This description is intended as a brief summary of selected features of such laws and regulations and is qualified in its entirety by references to the laws and regulations applicable to the Company and the Bank.


General. The Bank, as a federally chartered savings bank, is subject to regulation and oversight by the OCC extending to all aspects of its operations. This regulation of the Bank is intended for the protection of depositors and other customers and not for the purpose of protecting the Company's stockholders. The investment and lending authority of the Bank is prescribed by federal laws and regulations and the Bank is prohibited from engaging in any activities not permitted by such laws and regulations. The Bank and Company are required to maintain minimum levels of regulatory capital and the Bank is subject to some limitations on capital distributions to the Company. The Bank also is subject to regulation and examination by the FDIC, which insures the deposits of the Bank to the maximum extent permitted by law.


The Company is a unitary savings and loan holding company within the meaning of the Home Owners' Loan Act ("HOLA"). As such, the Company is registered with the FRB and subject to the FRB regulations, examinations, supervision, and reporting requirements. In addition, the FRB has enforcement authority over the Company. Among other things, this authority permits the FRB to restrict or prohibit activities that are determined to be a serious risk to the Bank.



The OCC and FRB enforcement authority includes, among other things, the ability to assess civil monetary penalties, to issue cease-and-desist or removal orders, and to initiate injunctive actions. In general, these enforcement actions may be initiated for violations of laws and regulations and unsafe or unsound practices. Other actions or inactions may provide the basis for enforcement action, including misleading or untimely reports filed.filed reports. Except under certain circumstances, public disclosure of final enforcement actions by the OCC or the FRB is required by law.

Office of the Comptroller of the Currency. The investment and lending authority of the Bank is prescribed by federal laws and regulations and the Bank is prohibited from engaging in any activities not permitted by such laws and regulations.


As a federally chartered savings bank, the Bank is required to meet a Qualified Thrift Lender ("QTL") test. This test requires the Bank to have at least 65% of its portfolio assets, as defined by statute, in qualified thrift investments at month-end for 9 out of every 12 months on a rolling basis. Under an alternative test, the Bank's business must consist primarily of acquiring the savings of the public and investing in loans, while maintaining 60% of its assets in those assets specified in Section 7701(a)(19) of the Internal Revenue Code. Under either test, the Bank is required to maintain a significant portion of its assets in residential housing relatedhousing-related loans and investments. An institution that fails to qualify as a QTL based upon one of these testsdo so is immediately subject to certain restrictions on its operations, including a prohibition against capital distributions, except with the prior approval of both the OCC and the FRB, as necessary to meet the obligations of a company controlling the institution. If the Bank fails the QTL test and does not regain QTL status within one year, or fails the test for a second time, the Company must immediately register as, and become subject to, the restrictions applicable to a bank holding company. The activities authorized for a bank holding company are more limited than are the activities authorized for a savings and loan holding company. Three years after failing the test, an institution must divest all investments and cease all activities not permissible for both a national bank and a savings association. FRB.
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Failure to meet the QTL testthis qualification is a statutory violation subject to enforcement action. As of September 30, 2017,2022, the Bank met the QTL test.qualification.

The Bank is subject to a 35% of total assets limit on non-real estate consumer loans, commercial paper and corporate debt securities, and a 20% limit on commercial non-mortgage loans. At September 30, 2017, the Bank had less than 1% of its assets in non-real estate consumer loans, commercial paper, corporate debt securities and commercial non-mortgage loans.


The Bank's relationship with its depositors and borrowers is regulated to a great extent by federal laws and regulations, especially in such matters as the ownership of savings accounts and the form and content of mortgage requirements. In addition, the branching authority of the Bank is regulated by the OCC. The Bank is generally authorized to branch nationwide.


The Bank is subject to a statutory lending limit on aggregate loans to one person or a group of persons combined because of certain common interests. Thatrelated persons. The general limit is equal to 15% of our unimpaired capital and surplus, plus an additional 10% for loans fully secured by readily marketable collateral. At September 30, 2017,2022, the Bank's lending limit under this restriction was $181.5$166.7 million. The Bank has no loans or loan relationships in excess of its lending limit. Total loan commitments and loans outstanding to the Bank's largest borrowing relationship totaled $50.0was $124.4 million at September 30, 2017,2022, all of which was current according to its terms.

The Bank is subject to periodic examinations by the OCC. During these examinations, the examiners may require the Bank to increase its ACL and/or recognize additional charge-offs based on their judgments, which can impact our capital and earnings. As a federally chartered savings bank, the Bank is subject to a semi-annual assessment, based upon its total assets, to fund the operations of the OCC.



The OCC has adopted guidelines establishing safety and soundness standards on such matters as loan underwriting and documentation, asset quality, earnings standards, internal controls and audit systems, interest rate risk exposure, and compensation and other employee benefits. Any institution regulatedThe Bank is subject to periodic examinations by the OCC that fails to comply withregarding these standards must submit a compliance plan.

Insurance of Accounts and Regulation byrelated matters. During these examinations, the FDIC. The DIF of the FDIC insures deposit accounts inexaminers may require the Bank up to applicable limits. The Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act") permanently increasedincrease its ACL, change the maximum amountclassification of deposit insurance for banks, savings institutions, and credit unions to $250 thousand per depositor.

Effective July 1, 2016, the assessment rates for established small institutions, such as the Bank, areloans, and/or recognize additional charge-offs based on an institution's weighted average CAMELS component ratings and certain financial ratios. Total base assessment rates range from 1.5 to 16 basis points based on Call Report total assets for institutions with CAMELS composite ratings of 1 or 2, 3 to 30 basis points for those with a CAMELS composite score of 3, and 11 to 30 basis points for those with CAMELS composite scores of 4 or 5, subject to certain adjustments. For the fiscal year ended September 30, 2017, the Bank paid $3.0 million in FDIC premiums.
An institution that has reported on its Call Reports total assets at the end of the quarter of $10 billion or more for at least four consecutive quarters is considered a large institution and is assessed under a complex scorecard method employing many factors, including weighted average CAMELS ratings; a performance score; leverage ratio; ability to withstand asset-related stress; certain measures of concentration, core earnings, core deposits, credit quality, and liquidity; and a loss severity score and loss severity measure. Total base assessment rates for these institutions currently range from 1.5 to 40 basis points, subject to certain adjustments. For all institutions, the base assessment rates will decrease when the reserve ratio increases to specified thresholds of 2% and 2.5%.

The Dodd-Frank Act requires large institutions to bear the burden of raising the reserve ratio from 1.15% to 1.35%. To implement this mandate, large and highly complex institutions must pay an annual surcharge of 4.5 basis points on their assessment base beginning July 1, 2016. If the DIF reserve ratio has not reached 1.35% by December 31, 2018, the FDIC plans to impose a shortfall assessment on large institutions on March 31, 2019. The FDIC may increase or decrease its rates by 2 basis points without further rule-making. In an emergency, the FDIC may also impose a special assessment.
Since established small institutions will be contributing to the DIF while the reserve ratio remains between 1.15% and 1.35% and the large institutions are paying a surcharge, the FDIC will provide assessment credits to the established small institutions for the portion of their assessments that contribute to the increase. When the reserve ratio reaches 1.38%, the FDIC will automatically apply an established small institution's assessment credit to reduce its regular deposit insurance assessments.

FDIC-insured institutions are required to pay additional quarterly assessments called the FICO assessments in order to fund the interest on bonds issued to resolve thrift failures in the 1980s. The rate for these assessments is adjusted quarterly and is applied to the same base as used for the deposit insurance assessment. These assessments are expected to continue until the bonds mature in the years 2017 through 2019. For the fiscal year ended September 30, 2017, the Bank paid $546 thousand in FICO assessments.

Transactions with Affiliates. Transactions between the Bank and its affiliates are required to be on terms as favorable to the institution as transactions with non-affiliates, and certain of these transactions are restricted to a percentage of the Bank'sjudgments, which can impact our capital and in the case of loans, require eligible collateral in specified amounts. In addition, the Bank may not lend to any affiliate engaged in activities not permissible for a bank holding company or purchase or invest in the securities of affiliates.earnings.



Regulatory Capital Requirements. The Bank and Company are required to maintain specified levels of regulatory capital under regulations of the OCC and FRB, respectively. The current regulatory capital rules, sometimes referred to as the Basel III rules, became effective for the Company and Bank in January 2016, with some rules being transitioned into full effectiveness over two-to-four years.
Under the Basel III rules, the minimum capital ratios are as follows:
4.5% Common Equity Tier 1 ("CET1") to risk-weighted assets.
6.0% Tier 1 capital to risk-weighted assets.
8.0% Total capital to risk-weighted assets.
4.0% Tier 1 capital to average consolidated assets as reported on consolidated financial statements (known as the "leverage ratio").

CET1 capital and Tier 1 capital for the Company and the Bank consists of common stock plus related surplus and retained earnings. Tier 2 capital for the Company and the Bank includes the balance of ACL; however, the amount of includable ACL in Tier 2 capital may be limited if the amount exceeds 1.25% of risk-weighted assets. At September 30, 2017, the Bank had $8.4 million of ACL, which was less than the 1.25% risk-weighted assets limit; therefore, the entire amount of ACL was includable in Tier 2 and total risk-based capital. Total capital for the Company and the Bank consists of common stock, plus related surplus and retained earnings (Tier 1 capital) plus the amount of includable ACL (Tier 2 capital).

Basel III requires the Company and the Bank to maintain a capital conservation buffer above certain minimum capital ratios for capital adequacy purposes in order to avoid certain restrictions on capital distributions and other payments including dividends, share repurchases, and certain compensation. This requirement became effective January 1, 2016, and is being phased in over a four year period by increasing the required buffer amount by 0.625% each year. The capital conservation buffer was 0.625% at September 30, 2016 and 1.25% at September 30, 2017. At September 30, 2017 and 2016, the Bank and Company had capital greater than necessary to meet the capital conservation buffer requirement. Once fully phased-in, which will be January 1, 2019 for the Bank and Company, the organization must maintain a balance of capital that exceeds by more than 2.5% each of the minimum risk-based capital ratios in order to satisfy the requirement. This translates into the following for the risk-based capital ratios when the capital conservation buffer is fully phased in: (1) CET1 capital ratio of more than 7.0%, (2) Tier 1 capital ratio of more than 8.5%, and (3) Total capital (Tier 1 plus Tier 2) ratio of more than 10.5%.

With respect to the Bank, the Basel III rules revised the "prompt corrective action" regulations, by (1) introducing a CET1 ratio requirement at each level (other than critically under-capitalized), with the required CET1 ratio being 6.5% for well-capitalized status; (2) increasing the minimum Tier 1 capital ratio requirement for each category, with the minimum Tier 1 capital ratio for well-capitalized status being 8% (compared to the previous 6%); and (3) eliminating the provision that a bank with a composite supervisory rating of 1 may have a 3% leverage ratio and still be adequately capitalized.

Under the Basel III rules, an institution that is not an advanced approaches institution, such as the Company and the Bank, was allowed to make a one-time permanent election to continue to exclude certain AOCI items for the purpose of determining regulatory capital ratios. Management made this election in order to remove any volatility related to AOCI from the Company's and Bank's capital ratios.At September 30, 2017, the Bank had $2.9 million of AOCI.

Regulatory risk-weighted capital guidelines assign a certain risk weighting to every asset. Certain off-balance sheet items, such as binding loan commitments, are multiplied by credit conversion factors to translate the amounts into balance sheet equivalents before assigning them specific risk weightings. The risk weights for the Bank's and Company's assets and off-balance sheet items generally range from 0% to 150%. At September 30, 2017, the Bank and the Company each had risk-weighted assets of $4.43 billion.

For the quarter ended September 30, 2017, the Bank reported in its Call Report quarterly average assets of $11.12 billion and the Company reported to the FRB quarterly average assets of $11.12 billion. These average asset amounts are significantly higher than total assets at September 30, 2017 due the leverage strategy being in place during the quarter but not at September 30, 2017.

At September 30, 2017, the Bank was considered well capitalized under OCC regulations. See "Part II, Item 8. Financial Statements and Supplementary Data –- Notes to Consolidated Financial Statements –- Note 12.13. Regulatory Capital Requirements" and "Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources" for additional regulatory capital information.information, including the Bank's and Company's Community Bank Leverage Ratio (CBLR) as of September 30, 2022.


The OCC has the ability to establish an individual minimum capital requirementrequirements for a particular institution which variesvary from the capital levels that would otherwise be required under the applicable capital regulations based on such factors as concentrations of credit risk, levels of interest rate risk, and the risks of non-traditional activities, as well as others.and other circumstances. The OCC has not imposed any such requirementrequirements on the Bank.


The OCC is authorized and, under certain circumstances, required to take certain actions against federal savings banks that are not adequately capitalized because they fail to meet the minimum ratios for an adequately capitalized institution.requirements associated with their elected capital framework. Any such institution must submit a capital restoration plan for OCC approval and until such plan is approved by the OCC, may not increasebe restricted in, among other things, increasing its assets, acquireacquiring another institution, establishestablishing a branch or engageengaging in any new activities, and generally may not make capital distributions. As of September 30, 2022, the Bank and the Company met all capital adequacy requirements to which they are subject.

Limitations on Dividends and Other Capital Distributions. OCC regulations impose restrictions on savings institutions with respect to their ability to make distributions of capital, which include dividends, stock redemptions or repurchases, cash-out mergers and other transactions charged to the capital account. Under FRB and OCC safe harbor regulations, savings institutions generally may make capital distributions during any calendar year equal to earnings of the previous two calendar years and current year-to-date earnings (to the extent not previously distributed). A savings institution that is a subsidiary of a savings and loan holding company, such as the Company, that proposes to make a capital distribution must submit written notice to the OCC and FRB 30 days prior to such distribution. The planOCC and FRB may object to the distribution during that 30-day period based on safety and soundness or other concerns. Savings institutions that desire to make a larger capital distribution, are under special restrictions, or are not, or would not be, sufficiently capitalized following a proposed capital distribution must includeobtain regulatory non-objection prior to making such a guarantydistribution.

The long-term ability of the Company to pay dividends to its stockholders is based primarily upon the ability of the Bank to make capital distributions to the Company.  So long as the Bank remains well capitalized after each capital distribution, and operates in a safe and sound manner, it is management's belief that the OCC and FRB will continue to allow the Bank to distribute its earnings to the Company, although no assurance can be given in this regard.
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Insurance of Accounts and Regulation by the institution's holding company limitedFDIC. The Bank also is subject to regulation and examination by the FDIC, which insures the deposits of the Bank to the lesser of 5%maximum extent permitted by law. The DIF of the institution's assets when it became undercapitalized,FDIC insures deposit accounts in the Bank up to applicable limits, with a maximum amount of deposit insurance for banks, savings institutions, and credit unions of $250 thousand per separately insured deposit ownership right or the amount necessary to restore thecategory.

The FDIC assesses deposit insurance premiums on all FDIC-insured institutions quarterly based on annualized rates. Under these rules, assessment rates for an institution to adequately capitalized status.

Federal regulations state that any institution that fails to comply with its capital plan or has a CET1 risk-based capital ratio of less than 4.0%, a Tier 1 risk-based capital ratio of less than 4.0%, a total risk-based capital ratio of less than 6.0%, or a leverage ratio of less than 3.0% is considered significantly undercapitalized and must be made subject to one or more additional specified actions and operating restrictions that may cover all aspects of its operations and may include a forced merger or acquisition of the institution. An institution with tangible equity to total assets of less than 2.0% is critically undercapitalized$10 billion are determined by weighted average capital adequacy, asset quality, management, earnings, liquidity, and becomessensitivity (CAMELS) composite ratings and certain financial ratios, and range from 1.5 to 30.0 basis points, subject to further mandatory restrictionscertain adjustments. For the fiscal year ended September 30, 2022, the Bank paid $3.0 million in FDIC premiums. Assessment rates are applied to an institution's assessment base, which is its average consolidated total assets minus its average tangible equity during the assessment period.
The FDIC has authority to increase insurance assessments, and any significant increases would have an adverse effect on its operations. The OCC generally is authorizedthe operating expenses and results of operations of the Company. Management cannot predict what assessment rates will be in the future. In a banking industry emergency, the FDIC may also impose a special assessment. In October 2022, the FDIC announced that the assessment rate will be increasing from three basis points to reclassifyfive basis points beginning in January 2023.

Insurance of deposits may be terminated by the FDIC upon a finding that an institution into a lower capital category and impose the restrictions applicable to such category if the institution ishas engaged in unsafe or unsound practices, or is in an unsafe or unsound condition. The impositioncondition to continue operations or has violated any applicable law, regulation, rule, order or condition imposed by the OCCFDIC. We do not currently know of any practice, condition, or violation that may lead to termination of these measures on the Bank may have a substantial adverse effect on its operations and profitability. In general, the FDIC must be appointed receiver for a critically undercapitalized institution whose capital is not restored within the time provided. When the FDIC as receiver liquidates an institution, the claims of depositors and the FDIC as their successor (for deposits covered by FDIC insurance) have priority over other unsecured claims against the institution.our deposit insurance.


Community Reinvestment and Consumer Protection Laws. In connection with its lending activities, the Bank is subject to a number of federal laws designed to protect borrowers and promote lending to various sectors of the economy and population. These include the Equal Credit Opportunity Act, the Truth-in-Lending Act, the Home Mortgage Disclosure Act, the Real Estate Settlement Procedures Act, the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 ("SAFE Act"), and the Community Reinvestment Act ("CRA"). In addition, federal banking regulators pursuant to the Gramm-Leach-Bliley Act, have enacted regulations limiting the ability of banks and other financial institutions to disclose nonpublic consumer information to non-affiliated third parties. The regulations require disclosure of privacy policies and allow consumers to prevent certain personal information from being shared with non-affiliated third parties. With respect to federal consumer protection laws, regulations are generally promulgated by the Consumer Financial Protection Bureau ("CFPB"), but the OCC examines the Bank for compliance with such laws.


The CRA requires the appropriate federal banking agency, in connection with its examination of an FDIC-insured institution, to assess its record in meeting the credit needs of the communities served by the bank,institution, including low and moderate income neighborhoods. The federal banking regulators take into account the institution's record of performance under the CRA when considering applications for mergers, acquisitions, and branches. Under the CRA, institutions are assigned a rating of outstanding, satisfactory, needs to improve, or substantial non-compliance. The Bank received a satisfactory rating in its most recently completed CRA evaluation five years ago.evaluation.


Bank Secrecy Act /Anti-Money Laundering Laws. The Bank is subject to the Bank Secrecy Act and other anti-money laundering laws, and regulations, including the USA PATRIOT Act of 2001.2001 and regulations thereunder. These laws and regulations require the Bank to implement policies, procedures, and controls to detect, prevent, and report money laundering and terrorist financing and to verify the identity and source of deposits and wealth of its customers. Violations of these requirementslaws and regulations can result in substantial civil and criminal sanctions. In addition, provisions of the USA PATRIOT Act require the federal financial institution regulatory agencies to consider the effectiveness of a financial institution's anti-money laundering activities when reviewing mergers and acquisitions.

Stress Testing. As required by the Dodd-Frank Act and the regulations of the FRB and the OCC, FDIC-insured institutions and their holding companies with average total consolidated assets greater than $10 billion must conduct annual, company-run stress tests under the baseline, adverse and severely adverse scenarios provided by the federal banking regulators. The Company and the Bank are not subject to this requirement as their average total consolidated assets for this purpose are not greater than $10 billion.


Federal Securities Law. The common stock of the Company is registered with the SEC under the Securities Exchange Act of 1934, as amended. The Company is subject to the information, proxy solicitation, insider trading restrictions and other requirements of the SEC under the Securities Exchange Act of 1934.

The Company stock held by persons who are affiliates of the Company may not be resold without registration or unless sold in accordance with certain resale restrictions. For this purpose, affiliates are generally considered to be executive officers, directors and principal stockholders. If the Company meets specified current public information requirements, each affiliate of the Company will be able to sell in the public market, without registration, a limited number of shares in any three-month period.

Federal Reserve System. The FRB requires all depository institutions to maintain reserves at specified levels against their transaction accounts, primarily checking accounts. In response to the Coronavirus Disease 2019 ("COVID-19") pandemic, the FRB reduced reserve requirement ratios to zero percent effective on March 26, 2020, to support lending to households and businesses. At September 30, 2017,2022, the Bankreserve requirement of zero percent was still in compliance with these reserve requirements. place.

The Bank is authorized to borrow from the Federal Reserve Bank "discount window." An eligible institution need not exhaust other sources of funds before going to the discount window, nor are there restrictions on the purposes for which the borrower
6
institution can use primary credit. At September 30, 2017,2022, the Bank had no outstanding borrowings from the discount window.

Federal Home Loan Bank System. The Bank is a member of FHLB Topeka, which is one of 11 regional Federal Home Loan Banks. Each FHLBBanks, each of which serves as a reserve, or central bank, for its members within its assigned region and is funded primarily from proceeds derived from the sale of consolidated obligations of the FHLBFederal Home Loan Bank System. It makesThe Federal Home Loan Banks make loans, called advances, to members and providesprovide access to a line of credit in accordance with policies and procedures established by the Board of Directors of FHLB, which are subject to the oversight of the Federal Housing Finance Agency ("FHFA").Agency.


As a member, the Bank is required to purchase and maintain capital stock in FHLB. The minimum required FHLB stock amount is generally 4.5% of the Bank's FHLB advances and outstanding balance against the FHLB line of credit, and 2% of the outstanding principal balance of loans sold into the Mortgage Partnership Finance program.Program. At September 30, 2017,2022, the Bank had a balance of $101.0$100.6 million in FHLB stock, which was in compliance with thisthe FHLB's stock requirement. In past years, the Bank has received dividends on its FHLB stock, although no assurance can be given that these dividends will continue. On a quarterly basis, management conducts a reviewSee "Part II, Item 8. Financial Statements and Supplementary Data – Notes to Financial Statements – Note 1. Summary of Significant Accounting Policies" for additional information regarding FHLB to determine whether an other-than-temporary impairment of the FHLB stock is present. At September 30, 2017, management concluded there was no such impairment.stock.


Federal Savings and Loan Holding Company Regulation. The purpose and powers of the Company are to pursue any or all of the lawful objectives of a savings and loan holding company and to exercise any of the powers accorded to a savings and loan holding company.

The HOLA prohibits a savings and loan holding company (directly or indirectly, or through one or more subsidiaries) from acquiring another savings association, or holding company thereof, without prior written approval from the FRB; acquiring or retaining, with certain exceptions, more than 5% of a non-subsidiary savings association, a non-subsidiary holding company, or a non-subsidiary company engaged in activities other than those permitted by the HOLA; or acquiring or retaining control of a depository institution that is not federally insured. In evaluating applications by savings and loan holding companies to acquire savings associations, the FRB must consider the financial and managerial resources and future prospects of the company and institution involved, the effect of the acquisition on the risk to the insurance funds, the convenience and needs of the community, competitive factors, and other factors.


The Dodd-Frank Act extended to savings and loan holding companies the FRB's "source of strength" doctrine, which has long applied to bank holding companies.  The FRB has promulgatedlong set forth in its regulations implementing theits "source of strength" policy, which requires bank holding companies to act as a source of strength to their subsidiary depository institutions by providing capital, liquidity and other support in times of financial stress.  This policy now also applies to savings and loan holding companies.



Transactions with Affiliates. Transactions between the Bank and its affiliates are required to be on terms as favorable to the institution as transactions with non-affiliates, and certain of these transactions are restricted to a percentage of the Bank's capital, and, in the case of loans, require eligible collateral in specified amounts. In addition, the Bank may not lend to any affiliate engaged in activities not permissible for a bank holding company or purchase or invest in the securities of affiliates.

Taxation

Federal Taxation
General
Taxation. The Company and the Bank are subject to federal income taxation in the same general manner as other corporations, with some exceptions discussed below.corporations. The Company files a consolidated federal income tax return. The Company is no longer subject to federal income tax examination for fiscal years prior to 2014.

Method of Accounting
2019. For federal income tax purposes, the Bank currently reports its income and expenses on the accrual method of accounting and uses a fiscal year ending on September 30 for filing its federal income tax return.

Minimum Tax
The Internal Revenue Code imposes an alternative minimum tax at a rate of 20% on a base of regular taxable income plus certain tax preferences, called alternative minimum taxable income. The alternative minimum tax is payable Changes to the extent such alternative minimum taxable income is in excess of the regular tax. Certain payments of alternative minimum tax may be used as credits against regular tax liabilities in future years.

Net Operating Loss Carryovers
Forcorporate federal income tax purposes, a financial institution may carryback net operating lossesrate would result in changes to the preceding two taxable yearsCompany's effective income tax rate and forward to the succeeding 20 taxable years. As of September 30, 2017,would require the Company had no net operating loss carryovers.to remeasure its deferred tax assets and liabilities based on the tax rate in the years in which those temporary differences are expected to be recovered or settled.


State Taxation

Taxation. The earnings/losses of Capitol Federal Financial, Inc., Capitol Funds, Inc. and Capitol Funds,Capital City Investments, Inc. are combined for purposes of filing a consolidated Kansas corporate tax return.  The Kansas corporate tax rate is 4.0%, plus a surcharge of 3.0% on earnings greater than $50 thousand.


The Bank files a Kansas privilege tax return.  For Kansas privilege tax purposes, the minimum tax rate is 4.5% of earnings, which is calculated based on federal taxable income, subject to certain adjustments. The Bank has not received notification from the state of any potential tax liability for any years still subject to audit.


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Additionally, the Bank files state tax returns in various other states where it has significant purchased loans and/or foreclosure activities. In these states, the Bank has either established nexus under an economic nexus theory or has exceeded enumerated nexus thresholds based on the amount of interest derived from sources within the state.

Employees and Human Capital Resources

At September 30, 2017,2022, we had a total of 708733 employees, including 12691 part-time employees. The full-time equivalent of our total employees at September 30, 20172022 was 666.707. Our employees are not represented by any collective bargaining group. Management considers its employee relations to be good. We believe our ability to attract and retain employees is a key to our success. Accordingly, we strive to offer competitive salaries and employee benefits to all employees and monitor salaries in our market areas. Physical well-being is supported by the Company's health, dental, vision, life and various other insurances, and a wellness program that incentivizes employees to live a healthy and balanced lifestyle. Volunteer opportunities are provided and encouraged for all employees. Capitol Federal employees recorded over 5,150 hours in volunteer time for local organizations and charities during fiscal year 2022.


Executive OfficersOur Company respects, values and encourages diversity in our employees and customers. We seek to recognize and develop the unique contributions which each individual brings to our Company, and we are fully committed to supporting a culture of diversity as a pillar of our values and our success. These efforts are supported by our Board of Directors. Since 1977, at least one woman has served as a director of the Registrant
John B. Dicus. Age 56 years. Mr. Dicus is Chairman ofBank and, since its inception in 1999, at least one woman has served on the Board of Directors Chief Executive Officer, and President of the Bank and the Company. HeIn addition, since 2012, at least one underrepresented minority has served as Chairman since January 2009 and Chief Executive Officer since January 2003. He has served as President of the Bank since 1996 anda director of the Company since its inception in March 1999. Prior to accepting the responsibilities of Chief Executive Officer, he served as Chief Operating Officer of the Bank and the Company. PriorBank. The Board of Directors annually reviews the Company's diversity recruitment efforts and employment statistics.

To assist in expanding diversity, the Company recruits employees through sources and organizations targeted at diverse communities. The Company also provides multiple opportunities for professional development and growth, including continuing education when applicable and specialty education within banking. Leadership development is supported through our Leadership Forum services, on a biannual basis, for mid-level leaders within the organization. Education for this program is provided by Washburn University's Center for Leadership. Annual employee educational requirements include targeted diversity, equity and inclusion training for all managers. All employees receive annual training on providing fair service, which is targeted at addressing implicit bias in providing customer service.

The Company actively participates in initiatives to that, he served as the Executive Vice President of Corporate Services for the Bank for four years. He has beenpromote diversity and inclusion both internally and externally. Our employees, together with the BankCapitol Federal Foundation, contribute to programs that promote educational opportunities in various other positions since 1985.all communities as well as housing in low-and-moderate income communities, including scholarships specifically for diverse candidates.


Kent G. Townsend. Age 56 years. Mr. Townsend serves as Executive Vice President and Chief Financial Officer of the Bank, its subsidiary, and the Company. Mr. Townsend also serves as Treasurer for the Company, Capitol Funds, Inc. and CFMRC. Mr. Townsend was promoted to Executive Vice President, Chief Financial Officer and Treasurer on September 1, 2005. Prior to that, he served as Senior Vice President, a position he held since April 1999, and Controller of the Company, a position he held since March 1999. He has served in similar positions with the Bank since September 1995. He served as the Financial Planning and Analysis Officer with the Bank for three years and other financial related positions since joining the Bank in 1984.

Rick C. Jackson. Age 52 years. Mr. Jackson serves as Executive Vice President, Chief Lending Officer and Community Development Director of the Bank and the Company.  He also serves as the President of Capitol Funds, Inc., a subsidiary of the Bank and President of CFMRC.  He has been with the Bank since 1993 and has held the position of Community Development Director since that time. He has held the position of Chief Lending Officer since February 2010.

Natalie G. Haag. Age 58 years.  Ms. Haag serves as Executive Vice President and General Counsel of the Bank and the Company.  Prior to joining the Bank in August of 2012, Ms. Haag was 2nd Vice President, Director of Governmental Affairs and Assistant General Counsel for Security Benefit Corporation and Security Benefit Life Insurance Company in Topeka, Kansas. Security Benefit provides retirement products and services, including annuities and mutual funds.  Ms. Haag was employed by Security Benefit since 2003.  The Security Benefit companies are not parents, subsidiaries or affiliates of the Bank or the Company.

Carlton A. Ricketts. Age 60 years.  Mr. Ricketts serves as Executive Vice President, Chief Corporate Services Officer of the Bank and the Company.  Prior to accepting those responsibilities in 2012, he served as Chief Strategic Planning Officer of the Bank, a position held since 2007.

Daniel L. Lehman. Age 52 years. Mr. Lehman serves as Executive Vice President, Chief Retail Operations Officer of the Bank and Company. Prior to accepting those responsibilities in 2016, he served as First Vice President and Accounting Director, a position held since 2003 and Controller, a position held since 2005.

Tara D. Van Houweling. Age 44 years. Ms. Van Houweling serves as First Vice President, Principal Accounting Officer and Reporting Director. She has been with the Bank and Company since 2003, has held the position of First Vice President and Reporting Director since 2003, and Principal Accounting Officer since 2005.

Item 1A. Risk Factors
There are risks inherent in the Bank's and Company's business. The following is a summary of material risks and uncertainties relating to the operations of the Bank and the Company. Adverse experiences with these could have a material impact on the Company's financial condition and results of operations. Some of these risks and uncertainties are interrelated, and the occurrence of one or more of them may exacerbate the effect of others. These material risks and uncertainties are not necessarily presented in order of significance. In addition to the risks set forth below and the other risks described in this Annual Report, there may also be additional risks and uncertainties that are not currently known to us or that we currently deem to be immaterial that could materially and adversely affect our business, financial condition or operating results.


Risks Related to Macroeconomic Conditions

Changes in interest rates could have an adverse impact on our results of operations and financial condition.
Our results of operations are primarily dependent on net interest income, which is the difference between the interest earned on loans, securities, cash at the Federal Reserve Bank and dividends received on FHLB stock, and the interest paid on deposits and borrowings. Changes in interest rates could have an adverse impact on our results of operations and financial condition because the majority of our interest-earning assets are long-term, fixed-rate loans, while the majority of our interest-bearing liabilities are shorter term, and therefore subject to a greater degree of interest rate fluctuations. This type of risk is known as interest rate risk and is affected by prevailing economic and competitive conditions, including inflationary trends and/or monetary policies of the FRB and fiscal policies of the United States federal government.

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The impact of changes in interest rates is generally observed on the income statement. The magnitude of the impact will be determined by the difference between the amount of interest-earning assets and interest-bearing liabilities, both of which either reprice or mature within a given period of time. This difference provides an indication of the extent to which our net interest rate spread will be impacted by changes in interest rates. In addition, changes in interest rates will impact the expected level of repricing of the Bank's mortgage-related assets and callable debt securities. Generally, as interest rates decline, the amount of interest-earning assets expected to reprice will increase as borrowers have an economic incentive to reduce the cost of their mortgage or debt, which would negatively impact the Bank's interest income. Conversely, as interest rates rise, the amount of interest-earning assets expected to reprice will decline as the economic incentive to refinance the mortgage or debt is diminished. As this occurs, the amount of interest-earning assets repricing could diminish to the point where interest-bearing liabilities reprice to a higher interest rate at a faster pace than interest-earning assets, thus negatively impacting the Bank's net interest income. For additional information about the interest-rate risk we face, see "Part II, Item 7A. Quantitative and Qualitative Disclosures about Market Risk."


Changes in interest rates can also have an adverse effect on our financial condition as AFSavailable-for-sale ("AFS") securities are reported at estimated fair value. We increase or decrease our stockholders'Stockholders' equity, specifically AOCIaccumulated other comprehensive income (loss) ("AOCI"), is increased or decreased by the amount of change in the estimated fair value of our AFS securities, net of deferred income taxes. Increases in interest rates generally decrease the fair value of AFS securities. Decreases in the fair valuesecurities, which adversely impacts stockholders' equity. For additional information, see "Part II, Item 7. Management's Discussion and Analysis of AFS securities would, therefore, adversely impact stockholders' equity.Financial Condition and Results of Operations - Stockholders' Equity" and "Part II, Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 15. Accumulated Other Comprehensive Income."


Changes in interest rates, as they relate to customers, can also have an adverse impact on our financial condition and results of operations. In times of rising interest rates, default risk may increase among borrowers with ARMadjustable-rate loans as the rates on their loans adjust upward and their payments increase. Fluctuations in interest rates also affect customer demand for deposit products. Local competitionCompetition from other financial institutions and/or brokerage firms could affect our ability to attract and retain deposits orand could result in us paying more than competitors for deposits.

As was announced in July 2017, LIBOR is anticipated to be phased out and replaced by a new index by the end of 2021. As of September 30, 2017, the Bank's loan portfolio included $812.8 million of ARM loans for which the repricing index was tied to LIBOR. Additionally, the Bank has interest rate swaps with a notional amount of $200.0 million tied to LIBOR. Our loan agreements generally allow the Bank to choose a new index based upon comparable information if the current index is no longer available. The use of a new index could reduce our interest income and therefore have an adverse effect on our results of operations. Management continues to monitor the status and discussions regarding LIBOR.


In addition to general changes in interest rates, changes that affect the shape of the yield curve could negatively impact the Bank. The Bank's interest-bearing liabilities are generally priced based on short-term interest rates while the majority of the Bank's interest-earning assets are priced based on long-term interest rates. Income for the Bank is primarily driven by the spread between these rates. As a result, a steeper yield curve, meaning long-term interest rates are significantly higher than short-term interest rates, would provide the Bank with a better opportunity to increase net interest income. When the yield curve is flat, meaning long-term interest rates and short-term interest rates are essentially the same, or when the yield curve is inverted, meaning long-term interest rates are lower than short-term interest rates, the yield between interest-earning assets

and interest-bearing liabilities that reprice is compressed or diminished and would likely negatively impact the Bank's net interest income. See "Part II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk" for additional information about the Bank's interest rate risk management.


An economic downturn, especially one affecting our geographic market areas and certain regions of the country where we have correspondent loans secured by one- to four-family properties or commercial real estate participation loans, could have an adverse impact on our business and financial results.
Our primary lending emphasis is the origination and purchase of one- to four-family first mortgage loans secured by residential properties. As we have grown our commercial real estate lending portfolio, we have continued to maintain relationships not only in our local markets but in geographically diverse markets. As a result, we are particularly exposed to downturns in regional housing and commercial real estate markets and, to a lesser extent, the U.S. housing and commercial real estate markets, along with changes in the levels of unemployment or underemployment. We monitor the current status and trends of local and national employment levels and trends and current conditions in the real estate and housing markets, as well as commercial real estate markets, in our local market areas and certain areas where we have correspondent loans and commercial real estate participation loans. Decreases in local real estate values could adversely affect the value of the property used as collateral for our loans, which could cause us to realize a loss in the event of a foreclosure. Adverse conditions in our local economies and in certain areas where we have correspondent loans and commercial real estate participation loans, such as inflation, unemployment, supply chain disruptions, recession, natural disasters or pandemics, or other factors beyond our control, could impact the ability of our borrowers to repay their loans. Any one or a combination of these events may have an adverse impact on borrowers' ability to repay their loans, which could result in increased delinquencies, non-performing assets, loan losses, and future loan loss provisions.
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The Company may not be able to attract and retain skilled employees.
The Company's success depends, in large part, on its ability to attract and retain key people. Competition for the best people can be intense, and the Company spends considerable time and resources attracting and hiring qualified people for its operations. The unexpected loss of the services of one or more of the Company's key personnel could have an adverse impact on the Company's business because of their skills, knowledge of the Company's market, and years of industry experience, as well as the difficulty of promptly finding qualified replacement personnel.

Risks Related to Lending Activities

The increase in commercial loans in our loan portfolio exposes us to increased lending and credit risks, which could adversely impact our financial condition and results of operations.
A growing portion of our loan portfolio consists of commercial loans.  These loan types tend to be larger than and in different geographic regions from most of our existing loan portfolio and are generally considered to have different and greater risks than one- to four-family residential real estate loans and may involve multiple loans to groups of related borrowers. A growing commercial loan portfolio also subjects us to greater regulatory scrutiny. Furthermore, these loan types can expose us to a greater risk of delinquencies, non-performing assets, loan losses, and future loan loss provisions than one- to four-family residential real estate loans because repayment of such loans often depends on the successful operation of a business or of the underlying property.  Repayment of such loans may be affected by factors outside the borrower's control, such as adverse conditions in the real estate market, the economy, environmental factors, natural disasters or pandemics, and/or changes in government regulation. Also, there are risks inherent in commercial real estate construction lending as the value of the project is uncertain prior to the completion of construction and subsequent lease-up. A sudden downturn in the economy, labor and/or supply chain issues, or other unforeseen events could result in stalled projects or collateral shortfalls, thus exposing us to increased credit risk.

Commercial and industrial loans are primarily made based on the identified cash flow of the borrower and secondarily on the collateral underlying the loans. The borrowers' cash flow may prove to be unpredictable, and collateral securing these loans may fluctuate in value. Most often, this collateral consists of accounts receivable, inventory and equipment. Significant adverse changes in a borrower's industries and businesses could cause rapid declines in values of, and collectability associated with, those business assets, which could result in inadequate collateral coverage for our commercial and industrial loans and expose us to future losses. In the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its clients. Inventory and equipment may depreciate over time, may be difficult to appraise, may be illiquid and may fluctuate in value based on the success of the business. If the cash flow from business operations is reduced, the borrower's ability to repay the loan may be impaired. An increase in valuation allowances and charge-offs related to our commercial and industrial loan portfolio could have an adverse effect on our business, financial condition, results of operations and future prospects.

Risks Related to Cybersecurity, Third Parties, and Technology

The occurrence of any information system failure or interruption, breach of security or cyber-attack, at the Company, at its third-party service providers or counterparties may have an adverse effect on our business, reputation, financial condition orand results of operations.
Information systems are essential to the conduct of our business, as we use such systems to manage our customer relationships, our general ledger, our deposits and our loans. In the normal course of our business, we collect, process, retain and transmit (by email and other electronic means) sensitive and confidential information regarding our customers, employees and others. We also outsource certain aspects of our data processing, data processing operations, remote network monitoring, engineering and managed security services to third-party service providers. In addition to confidential information regarding our customers, employees and others, we, and in some cases a third party, compile, process, transmit and store proprietary, non-public information concerning our business, operations, plans and strategies.


Information security risks for financial institutions continue to increase in part because of evolving technologies, the use of the Internet and telecommunications technologies (including mobile devices) to conduct financial and other business transactions and the increased sophistication and activities of organized crime, perpetrators of fraud, hackers, terrorists and others. Cyber criminals use a variety of tactics, such as ransomware, denial of service, and theft of sensitive business and customer information to extort payment or other concessions from victims. In some cases, these attacks have caused
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significant impacts on other businesses' access to data and ability to provide services. We are not able to anticipate or implement effective preventive measures against all incidents of these types, especially because the techniques used change frequently and because attacks can originate from a wide variety of sources.sources, including attacks on third party vendors and their applications and products used by the Bank.


We use a variety of physical, procedural and technological safeguards to prevent or limit the impact of system failures, interruptions and security breaches and to protect confidential information from mishandling, misuse or loss, including detection and response mechanisms designed to contain and mitigate security incidents. However, there can be no assurance that such events will not occur or that they will be promptly detected and adequately addressed if they do, and early detection of security breaches may be thwarted by sophisticated attacks and malware designed to avoid detection. If there is a failure in or breach of our information systems, or those of a third-party service provider, the confidential and other information processed and stored in, and transmitted through, such information systems could potentially be jeopardized, or could otherwise cause interruptions or malfunctions in our operations or the operations of our customers, employees, or others.


Our business and operations depend on the secure processing, storage and transmission of confidential and other information in our information systems and those of our third-party service providers. Although we devote significant resources and management focus to ensuring the integrity of our information systems through information security measures, risk management practices, relationships with threat intelligence providers and business continuity planning, our facilities, computer systems, software and networks, and those of our third-party service providers, may be vulnerable to external or internal security breaches, acts of vandalism, unauthorized access, misuse, computer viruses or other malicious code and cyber attackscyber-attacks that could have a security impact. In addition, breaches of security may occur through intentional or unintentional acts by those having authorized or unauthorized access to our confidential or other information or the confidential or other information of our customers, employees or others. While we regularly conduct security and risk assessments on our systems and those of our third-party service providers, there can be no assurance that their information security protocols are sufficient to withstand a cyber-attack or other security breach.

Across our industry, the cost of minimizing these risks and investigating incidents has continued to increase with the frequency and sophistication of these threats. To date, the Company has no knowledge of a material information security breach affecting its systems.
The occurrence of any of the foregoing could subject us to litigation or regulatory scrutiny, cause us significant reputational damage or erode confidence in the security of our information systems, products and services, cause us to lose customers or have greater difficulty in attracting new customers, have an adverse effect on the value of our common stock or subject us to financial losses that may not be covered by insurance, any of which could have a materialan adverse effect on our business, financial condition orand results of operations. As information security risks and cyber threats continue to evolve, we may be required to expend significant additional resources to further enhance or modify our information security measures and/or to investigate and remediate any information security vulnerabilities or other exposures arising from operational and security risks.



Furthermore, there has recently beencontinues to be heightened legislative and regulatory focus on privacy, data protection and information security. New or revised laws and regulations may significantly impact our current and planned privacy, data protection and information security-related practices, the collection, use, sharing, retention and safeguarding of consumer and employee information, and current or planned business activities. Compliance with current or future privacy, data protection and information security laws could result in higher compliance and technology costs and could restrict our ability to provide certain products and services, which could have a materialan adverse effect on our business, financial condition orand results of operations.


Our customers are also the targettargets of cyber-attacks and identity theft. There have been several recentcontinues to be instances involving financial services and consumer-based companies reporting the unauthorized disclosure of client or customer information or the destruction or theft of corporate data. Large scale identity theft could result in customers' accounts being compromised and fraudulent activities being performed in their name. We have implemented certain safeguards against these types of activities but they may not fully protect us from fraudulent financial losses. The occurrence of a breach of security involving our customers' information, regardless of its origin, could damage our reputation and result in a loss of customers and business and subject us to additional regulatory scrutiny, and could expose us to litigation and possible financial liability. Any of these events could have a materialan adverse effect on our financial condition and results of operations.


An economic downturn, especially one affecting our geographic market area
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Third party vendors subject the Company to potential business, reputation and financial risks.
Third party vendors are sources of operational and information security risk to the Company, including risks associated with operations errors, information system interruptions or breaches, and unauthorized disclosures of sensitive or confidential customer information. The Company requires third party vendors to maintain certain regionslevels of the country whereinformation security; however, vendors may remain vulnerable to breaches, unauthorized access, misuse, computer viruses, and/or other malicious attacks that could ultimately compromise sensitive information. We have developed procedures and processes for selecting and monitoring third party vendors, but ultimately are dependent on these third party vendors to secure their information. If these vendors encounter any of these types of issues, or if we have correspondent loans,difficulty communicating with them, we could adversely impactbe exposed to disruption of operations, loss of service or connectivity to customers, reputational damage, and litigation risk that could have an adverse effect on our business, financial condition and results of operations.

The failure of an external vendor to perform in accordance with the contracted arrangements under service level agreements, because of changes in the vendor's organizational structure, financial condition, support for existing products and services or strategic focus or for any other reason, could be disruptive to our operations, which could have an adverse effect on our business and, in turn, our financial results.condition and results of operations. Additionally, replacing certain third party vendors could also entail significant delay and expense.
Our primary lending emphasis is the origination and purchase of one- to four-family first mortgage loans on residential properties; therefore, we are particularly exposed to downturns in regional housing markets and, to a lesser extent, the U.S. housing market, along with changes in the levels of unemployment or underemployment. We monitor the current status and trends of local and national employment levels and trends and current conditions in the real estate and housing markets in our local market areas and certain areas where we have correspondent loans. Adverse conditions in our local economies and in certain areas where we have correspondent loans, such as inflation, unemployment, recession, natural disasters, or other factors beyond our control, could impact the ability of our borrowers to repay their loans. Any one or a combination of these events may have an adverse impact on borrowers' ability to repay their loans, which could result in increased delinquencies, non-performing assets, loan losses, and future loan loss provisions. Decreases in local real estate values could adversely affect the value of the property used as collateral for our loans, which could cause us to realize a loss in the event of a foreclosure.

The increase in commercial real estate loans in our loan portfolio exposes us to increased lending and credit risks.
A growing portion of our loan portfolio consists of commercial real estate loans.  These loan types tend to be larger than and in different geographic regions from most of our existing loan portfolio and are generally considered to have different and greater risks than one- to four-family residential real estate loans. Furthermore, these loan types can expose us to a greater risk of delinquencies, non-performing assets, loan losses, and future loan loss provisions than one- to four-family residential real estate loans because repayment of such loans often depends on the successful operations of a business or of the underlying property.  Repayment of such loans may be affected by factors outside the borrower's control, such as adverse conditions in the real estate market, the economy, environmental factors, natural disasters, and/or changes in government regulation. Also, there are risks inherent in commercial real estate construction lending as the value of the project is uncertain prior to the completion of construction and subsequent lease-up. A sudden downturn in the economy or other unforeseen events could result in stalled projects or collateral shortfalls, thus exposing us to increased credit risk. Additionally, a large portion of our commercial real estate loans were originated/participated in during the past four fiscal years, which makes it difficult to assess the future performance of these loans because of the borrowers' relatively limited income history and loan payment history.

Our commercial real estate loans generally have significantly larger average loan balances compared to one- to four-family residential real estate loans and may involve multiple loans to groups of related borrowers. Our largest commercial real estate loan was $50.0 million at September 30, 2017, of which $35.9 million had been disbursed at September 30, 2017.

A growing commercial real estate loan portfolio subjects us to greater regulatory scrutiny. Regulatory agencies have observed that many commercial markets are experiencing substantial growth, and as a result, concentration levels of commercial loans have been rising at some institutions.


We regularly monitor the risks in our commercial real estate loan portfolio, including concentrations in such factors as geographic locations, property types, tenant brand name, borrowing relationships, and lending relationships in the case of participation loans, among other factors. We continually strive to maintain high underwriting standards, including selecting borrowers and guarantors that are financially sound and experienced in the industry, and selecting projects that meet the Bank's lending policies and risk appetite. The properties securing our commercial real estate portfolio are diverse in terms of type and geographic location. This diversity helps reduce our exposure to adverse economic events, environmental factors and natural disasters that may affect any single market or industry. For additional information regarding our commercial real estate underwriting and monitoring of risk, see "Part 1, Item 1. Business - Lending Practices and Underwriting Standards - Commercial Real Estate Lending."


We are heavily reliant on technology, and a failure to effectively implement technology initiatives or anticipate future technology needs or demands could adversely affect our business or performance.
Like most financial institutions, the Bank significantly depends on technology to deliver its products and other services and to otherwise conduct business. To remain technologically competitive and operationally efficient, the Bank invests in system upgrades, new technological solutions, and other technology initiatives. Many of these solutions and initiatives have a significant duration, are tied to critical information systems, and require substantial resources. Although the Bank takes steps to mitigate the risks and uncertainties associated with these solutions and initiatives, there is no guarantee that they will be implemented on time, within budget, or without negative operational or customer impact. The Bank also may not succeed in anticipating its future technology needs, the technology demands of its customers, or the competitive landscape for technology. If the Bank were to falter in any of these areas, it could have an adverse effect on our business, financial condition orand results of operations.


We may be required to provide remedial consideration to borrowers whose loans we purchase from correspondentThere are operational and nationwide lenders if it is discovered that the originating company did not properly comply with lending regulations during the origination process.
We purchase whole one- to four-family loans from correspondent and nationwide lenders. While loans purchased on a loan-by-loan basis from correspondent lenders are underwritten by the Bank's underwriters and loans purchased in bulk packages from correspondent and nationwide lenders are evaluated on a certain set of criteria before being purchased, we are still subject to somereputation risks associated with the loan originationplanned digital transformation.
Management is in the process itself. By law, loan originators are required to comply with lending regulations at all times during the origination process. Even thoughof implementing a new core processing system ("digital transformation") for the Bank, which is expected to be operational by September 2023. The digital transformation is expected to better position the Bank for the future and allow for the introduction of new products and services to enhance customer experiences. This project may subject the Company to operational risks, such as disruptions in technology systems impacting customers. The Company will work to remediate any such disruptions, if they occur, but no assurance can contractually pursue the originating company, certain compliance related risks associated with the origination process itself may shiftbe given that a potential adverse development will be quickly or completely remediated. If an adverse development arising from the originating companydigital transformation is not sufficiently remediated or is not remediated in a timely fashion, the Company's reputation could be significantly impacted which could result in loss of customer business, subject the Company to regulatory scrutiny, or expose the Bank once the Bank purchases the loan. Should it be discovered, atCompany to possible litigation, any point, that an instance of noncompliance occurred by the originating company during the origination process, the Bank may still be held responsible and required to remedy the issue for the loans it purchased from the originator. Remedial actions can include refunding interest paid to the borrower and adjusting the contractual interest ratewhich could have a material impact on the loanCompany's financial condition and results of operations.

Risks Related to the current market rate if advantageous to the borrower. The Bank no longer purchases loans in bulk from nationwide lenders due primarily to these risks.Competition


Strong competition may limit growth and profitability.
While we are one of the largest mortgage loan originators in the state of Kansas, we compete in the same market areas as local, regional, and national banks, credit unions, mortgage brokerage firms, investment banking firms, investment brokerage firms, and savings institutions. We must also compete with online investment and mortgage brokerages and online banks that are not confined to any specific market area.  Many of these competitors operate on a national or regional level, are a conglomerate of various financial services providers housed under one corporation, or otherwise have substantially greater financial or technological resources than the Bank. We compete primarily on the basis of the interest rates offered to depositors, the terms of loans offered to borrowers, and the benefits afforded to customers as a local institution and portfolio lender. Our pricing strategy for loan and deposit products includes setting interest rates based on secondary market prices and local competitor pricing for our local markets, and secondary market prices and national competitor pricing for our correspondent lending markets. Should we face competitive pressure to increase deposit rates or decrease loan rates, our net interest income could be adversely affected. Additionally, our competitors may offer products and services that we do not or cannot provide, as certain deposit and loan products fall outside of our accepted level of risk.  Our profitability depends upon our ability to compete in our local market areas.



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Risks Related to Regulation

We operate in a highly regulated environment which limits the manner and scope of our business activities, and we may be adversely affected by new and/or changes in laws and regulations or interpretation of existing laws and regulations.
We are subject to extensive regulation, supervision, and examination by the OCC, the FRB, and the FDIC. These regulatory authorities exercise broad discretion in connection with their supervisory and enforcement activities, including the ability to impose restrictions on a bank's operations, reclassify assets, determine the adequacy of a bank's ACL, and determine the level of deposit insurance premiums assessed. The Dodd-Frank Act created the CFPB withhas broad powers to supervise and enforce consumer protection laws, including a wide range of consumer protection laws that apply to all banks and savings institutions, like the authority to prohibit "unfair, deceptive or abusive" acts and practices. The CFPB also has examination and enforcement authority over all banks with regulatory assets exceeding $10 billion at four consecutive quarter-ends. The Bank has not exceeded $10 billion in regulatory assets at four consecutive quarter-ends, but it may at some point in the future. Smaller banks, like the Bank, will continue to be examined for compliance with the consumer laws and regulations of the CFPB by their primary bank regulators (the OCC, in the case of the Bank). The Dodd-Frank Act also weakens the federal preemption rules that have been applicable for national banks and federal savings associations and gives state attorneys general the ability to enforce federal consumer protection laws.


Any change in such regulation and oversight, whether in the form of regulatory policy, regulations, legislation, interpretation or application, could have a materialan adverse impact on our operations. Moreover, bank regulatory agencies have been active in responding to concerns and trends identified in examinations and have issued many formal enforcement orders requiring capital ratios in excess of regulatory requirements and/or assessing monetary penalties. Bank regulatory agencies, such as the OCC, the FRB and the FDIC, govern the activities in which we may engage, primarily for the protection of depositors, and not for the protection or benefit of investors. The CFPB enforces consumer protection laws and regulations for the benefit of the consumer and not the protection or benefit of investors. In addition, new laws and regulations, including those related to environmental, social, and governance initiatives, may continue to increase our costs of regulatory compliance and of doing business, and otherwise affect our operations. New laws and regulations may significantly affect the markets in which we do business, the markets for and value of our loans and securities, the products we offer, the fees we can charge and our ongoing operations, costs, and profitability.


The Company is also directly subject to the requirements of entities that set and interpret the accounting standards such as the Financial Accounting Standards Board, and indirectly subject to the actions and interpretations of the Public Company Accounting Oversight Board, which establishes auditing and related professional practice standards for registered public accounting firms and inspects registered firms to assess their compliance with certain laws, rules, and professional standards in public company audits. These regulations, along with the currently existing tax, accounting, securities, and monetary laws, regulations, rules, standards, policies and interpretations, control the methods by which financial institutions and their holding companies conduct business, engage in strategic and tax planning, implement strategic initiatives, and govern financial reporting.

The Company's failure to comply with laws, regulations or policies could result in civil or criminal sanctions and money penalties by state and federal agencies, and/or reputation damage, which could have a materialan adverse effect on the Company's business, financial condition and results of operations. See "Part I, Item 1. Business - Regulation and Supervision" for more information about the regulations to which the Company is subject.


Other Risks

The Company's ability to pay dividends is subject to the ability of the Bank to make capital distributions to the Company. 
The long-term ability of the Company to pay dividends to its stockholders is based primarily upon the ability of the Bank to make capital distributions to the Company, and also on the availability of cash at the holding company level in the event earnings are not sufficient to pay dividends. Under certain circumstances, capital distributions from the Bank to the Company may be subject to regulatory approvals. See "Part II, Item 7. Management's Discussion"Item 1. Business – Regulation and Analysis of Financial Condition and Results of Operations – Limitations on Dividends and Other Capital Distributions"Supervision" for additional information.



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Our risk-managementrisk management and compliance programs and functions may not be effective in mitigating risk and loss.
We maintain an enterprise risk management program that is designed to identify, quantify, monitor, report, and control the risks that we face. These risks include: interest-rate, credit, liquidity, operations, reputation, compliance and litigation. We also maintain a compliance program to identify, measure, assess, and report on our adherence to applicable laws, policies and procedures. While we assess and improve these programs on an ongoing basis, there can be no assurance that our risk management or compliance programs, along with other related controls, will effectively mitigate all risk and limit losses in our business. If conditions or circumstances arise that expose flaws or gaps in our risk management or compliance programs, or if our controls do not function as designed, the performance and value of our business could be adversely affected.


The Company may not attract and retain skilled employees.
The Company's success depends, in large part, on its ability to attract and retain key people. Competition for the best people can be intense, and the Company spends considerable time and resources attracting and hiring qualified people for its operations. The unexpected loss of the services of one or more of the Company's key personnel could have a material adverse impact on the Company's business because of their skills, knowledge of the Company's market, and years of industry experience, as well as the difficulty of promptly finding qualified replacement personnel.


Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
At September 30, 2017,2022, we had 3745 traditional branch offices and 10nine in-store branch offices. The Bank owns the office building and related land in which its home office and executive offices are located, and 2835 of its other branch offices. The remaining 18 branches are either leased or partially owned. There are four of the Bank's in-store branch offices for which the leases will not be renewed at the time of their upcoming expiration in January 2023.


For additional information regarding our lease obligations, see "Part II, Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 5. Premises, Equipment and Equipment, net.Leases."


Management believes that our current facilities are adequate to meet our present and immediately foreseeable needs. However, we will continue to monitor customer growth and expand our branching network, if necessary, to serve our customers' needs.

Item 3. Legal Proceedings
TheIn the normal course of business, the Company and the Bank are involved as plaintiff or defendantnamed defendants in various legal actions arising inlawsuits and counterclaims. In the normal courseopinion of business. In our opinion,management, after consultation with legal counsel, we believe it unlikely that suchnone of the currently pending legal actions willsuits are expected to have a materialmaterially adverse effect on ourthe Company's consolidated financial condition, resultsstatements.

On November 2, 2022, the Bank was served with a putative class action complaint alleging it improperly charged overdraft fees on (1) debit card transactions that were authorized for payment on sufficient funds but later settled against a negative account balance (commonly known as "authorize positive purportedly settle negative" or "APPSN" transactions) and (2) merchant re-presentments of operationspreviously rejected payment requests. The complaint asserts a breach of contract claim (including breach of an implied covenant of good faith and fair dealing) for each practice. The Bank believes that this lawsuit is without merit and intends to vigorously defend against the asserted claims.

The Company assesses the liabilities and loss contingencies in connection with pending or liquidity.threatened legal and regulatory proceedings on at least a quarterly basis and establishes accruals when it is believed to be probable that a loss may be incurred and that the amount of such loss can be reasonably estimated.

Item 4. Mine Safety Disclosures
None.Not applicable.


14
PART II

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities


Stock Listing
Capitol Federal Financial, Inc. common stock is traded on the Global Select tier of the NASDAQ Stock Market under the symbol "CFFN". At November 22, 2017,17, 2022, there were approximately 9,6247,790 Capitol Federal Financial, Inc. stockholders of record.

Price Range of Common Stock
The high and low sales prices for the common stock as reported on the NASDAQ Stock Market, as well as dividends declared per share, are reflected in the table below.
FISCAL YEAR 2017 HIGH LOW DIVIDENDS
First Quarter $17.04
 $13.82
 $0.375
Second Quarter 16.98
 14.17
 0.085
Third Quarter 15.07
 13.55
 0.335
Fourth Quarter 14.94
 13.21
 0.085
       
FISCAL YEAR 2016 HIGH LOW DIVIDENDS
First Quarter $13.36
 $11.82
 $0.335
Second Quarter 13.47
 11.39
 0.085
Third Quarter 13.95
 12.70
 0.335
Fourth Quarter 14.49
 13.52
 0.085


Share Repurchases
On October 28, 2015,As of September 30, 2022, there was $44.7 million of common stock that could be repurchased under the Company announced aCompany's existing stock repurchase plan, which was approved in October 2015 for up to $70.0 million of common stock. Themillion. This plan does not have anhas no expiration date. Sincedate; however, the Federal Reserve Bank's approval for the Company completed itsto repurchase shares extends through August 2023. From the completion of the Company's second-step conversion in December 2010 $368.0through September 30, 2022, $393.4 million worth of shares have beencommon stock was repurchased.


The following table summarizes our share repurchase activity during the three months ended September 30, 20172022 and additional information regarding our share repurchase program.
Total Number ofApproximate Dollar
TotalShares Purchased asValue of Shares
Number ofAveragePart of Publiclythat May Yet Be
SharesPrice PaidAnnounced PlansPurchased Under the
Purchasedper Shareor ProgramsPlans or Programs
July 1, 2022 through
July 31, 2022— $— — $44,665,205 
August 1, 2022 through
August 31, 2022— — — 44,665,205 
September 1, 2022 through
September 30, 2022— — — 44,665,205 
Total— — — 44,665,205 
       Approximate
 Total   Total Number of Dollar Value of
 Number of Average Shares Purchased as Shares that May
 Shares Price Paid Part of Publicly Yet Be Purchased
 Purchased per Share Announced Plans Under the Plan
July 1, 2017 through       
July 31, 2017—
 $—
 —
 $70,000,000
August 1, 2017 through       
  August 31, 2017—
 —
 —
 70,000,000
September 1, 2017 through       
   September 30, 2017—
 —
 —
 70,000,000
Total—
 —
 —
 70,000,000


Stockholders and General Inquiries
Copies of our Annual Report on Form 10-K for the fiscal year ended September 30, 20172022 are available to stockholders at no charge in the Investor Relations section of our website, www.capfed.com.


15
Stockholder Return Performance Presentation
The information presented below assumes $100 invested on September 30, 20122017 in the Company's common stock and in each of the indices, and assumes the reinvestment of all dividends. Historical stock price performance is not necessarily indicative of future stock price performance.
cffn-20220930_g1.jpg

Period EndingPeriod Ending
Index9/30/2012
9/30/2013
9/30/2014
9/30/2015
9/30/2016
9/30/2017
Index9/30/20179/30/20189/30/20199/30/20209/30/20219/30/2022
Capitol Federal Financial, Inc.100.00
113.03
116.48
127.84
158.20
175.20
Capitol Federal Financial, Inc.100.00 92.67 108.03 76.51 101.82 78.95 
NASDAQ Composite Index100.00
122.77
148.08
153.99
179.29
221.75
NASDAQ Composite Index100.00 125.17 125.82 177.36 231.03 170.38 
SNL U.S. Bank & Thrift Index100.00
130.10
153.33
156.54
161.85
227.64
S&P U.S. BMI Banks IndexS&P U.S. BMI Banks Index100.00 108.42 108.77 79.86 145.30 111.62 
Source: S&P Global Market Intelligence


Restrictions on the Payments of Dividends
The Company's ability to pay dividends is dependent, in part, upon its ability to obtain capital distributions from the Bank. The dividend policy of the Company is subject to the discretion of the Board of Directors and will depend upon a number of factors, including the Company's financial condition and results of operations, regulatory capital requirements, regulatory limitations on the Bank's ability to make capital distributions to the Company, and the amount of cash at the holding company level. See "Part II,

Item 6. [Reserved]
16
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations – Limitations on Dividends and Other Capital Distributions" for additional information regarding the Company's ability to pay dividends.

Item 6. Selected Financial Data
The summary information presented below under "Selected Balance Sheet Data" and "Selected Operations Data" for, and as of the end of, each of the years ended September 30 is derived from our audited consolidated financial statements. The following information is only a summary and should be read in conjunction with our consolidated financial statements.
 September 30,
 2017
 2016
 2015
 2014
 2013
 (Dollars in thousands)
Selected Balance Sheet Data:         
Total assets$9,192,916
 $9,267,247
 $9,844,161
 $9,865,028
 $9,186,449
Loans receivable, net7,195,071
 6,958,024
 6,625,027
 6,233,170
 5,958,868
Securities:         
AFS415,831
 527,301
 758,171
 840,790
 1,069,967
HTM827,738
 1,100,874
 1,271,122
 1,552,699
 1,718,023
FHLB stock100,954
 109,970
 150,543
 213,054
 128,530
Deposits5,309,868
 5,164,018
 4,832,520
 4,655,272
 4,611,446
FHLB borrowings2,173,808
 2,372,389
 3,270,521
 3,369,677
 2,513,538
Repurchase agreements200,000
 200,000
 200,000
 220,000
 320,000
Stockholders' equity1,368,313
 1,392,964
 1,416,226
 1,492,882
 1,632,126
 For the Year Ended September 30,
 2017
 2016
 2015
 2014
 2013
 (Dollars and counts in thousands, except per share amounts)
Selected Operations Data:         
Total interest and dividend income$313,186
 $301,113
 $297,362
 $290,246
 $298,554
Total interest expense117,804
 108,931
 107,594
 106,103
 120,394
Net interest and dividend income195,382
 192,182
 189,768
 184,143
 178,160
Provision for credit losses—
 (750) 771
 1,409
 (1,067)
Net interest and dividend income after         
provision for credit losses195,382
 192,932
 188,997
 182,734
 179,227
Retail fees and charges15,053
 14,835
 14,897
 14,937
 15,342
Other non-interest income7,143
 8,477
 6,243
 8,018
 7,947
Total non-interest income22,196
 23,312
 21,140
 22,955
 23,289
Salaries and employee benefits43,437
 42,378
 43,309
 43,757
 49,152
Other non-interest expense46,221
 51,927
 51,060
 46,780
 47,795
Total non-interest expense89,658
 94,305
 94,369
 90,537
 96,947
Income before income tax expense127,920
 121,939
 115,768
 115,152
 105,569
Income tax expense43,783
 38,445
 37,675
 37,458
 36,229
Net income$84,137
 $83,494
 $78,093
 $77,694
 $69,340
          
Basic earnings per share$0.63
 $0.63
 $0.58
 $0.56
 $0.48
Average basic shares outstanding134,082
 133,045
 135,384
 139,440
 144,847
Diluted earnings per share$0.63
 $0.63
 $0.58
 $0.56
 $0.48
Average diluted shares outstanding134,244
 133,176
 135,409
 139,442
 144,848

 2017
 2016
 2015
 2014
 2013
Performance Ratios:         
Return on average assets0.75%
(1) 
0.74%
(1) 
0.70%
(1) 
0.82%
(1) 
0.75%
Return on average equity6.09
(1) 
5.95
(1) 
5.32
(1) 
5.00
(1) 
4.14
Dividends paid per share$0.88
 $0.84
 $0.84
 $0.98
 $1.00
Dividend payout ratio140.20% 133.86% 146.19% 177.84% 211.75%
Operating expense ratio0.80
 0.84
 0.84
 0.96
 1.05
Efficiency ratio41.21
 43.76
 44.74
 43.72
 48.13
Ratio of average interest-earning assets         
to average interest-bearing liabilities1.12x
 1.13x
 1.14x
 1.18x
 1.21x
Net interest margin1.79%
(1) 
1.75%
(1) 
1.73%
(1) 
2.00%
(1) 
1.97%
          
Interest rate spread information:         
Average during period1.66
(1) 
1.63
(1) 
1.59
(1) 
1.79
(1) 
1.70
End of period2.04
 1.92
 1.85
 1.84
 1.72
          
Asset Quality Ratios:         
Non-performing assets to total assets0.20
 0.35
 0.31
 0.29
 0.33
Non-performing loans to total loans0.23
 0.42
 0.39
 0.40
 0.44
ACL to non-performing loans50.58
 29.32
 36.41
 37.04
 33.36
ACL to loans receivable, net0.12
 0.12
 0.14
 0.15
 0.15
          
Capital Ratios:         
Equity to total assets at end of period14.9
 15.0
 14.4
 15.1
 17.8
Average equity to average assets12.4
 12.4
 13.1
 16.4
 18.1
Company Tier 1 leverage ratio12.3
 12.3
 12.6
 N/A
 N/A
Bank Tier 1 leverage ratio(2)
10.8
 10.9
 11.3
 13.2
 14.8
          
Other Data:         
Number of traditional offices37
 37
 37
 37
 36
Number of in-store offices10
 10
 10
 10
 10

(1)The table below provides a reconciliation between certain performance ratios presented in accordance with accounting principles generally accepted in the United States of America ("GAAP") and the performance ratios excluding the effects of the leverage strategy, which are not presented in accordance with GAAP. Management believes it is important for comparability purposes to provide the performance ratios without the leverage strategy because of its unique nature. The leverage strategy reduces some of our performance ratios due to the amount of earnings associated with the transaction in comparison to the size of the transaction, while increasing our net income. Management can discontinue the leverage strategy at any point in time.
 For the Year Ended September 30,
 2017 2016
 Actual Leverage Adjusted Actual Leverage Adjusted
 (GAAP) Strategy (Non-GAAP) (GAAP) Strategy (Non-GAAP)
Return on average assets0.75% (0.14)% 0.89% 0.74% (0.14)% 0.88%
Return on average equity6.09
 0.21
 5.88
 5.95
 0.17
 5.78
Net interest margin1.79
 (0.36) 2.15
 1.75
 (0.35) 2.10
Average interest rate spread1.66
 (0.32) 1.98
 1.63
 (0.30) 1.93
 For the Year Ended September 30,
 2015 2014
 Actual Leverage Adjusted Actual Leverage Adjusted
 (GAAP) Strategy (Non-GAAP) (GAAP) Strategy (Non-GAAP)
Return on average assets0.70% (0.13)% 0.83% 0.82% (0.03)% 0.85%
Return on average equity5.32
 0.19
 5.13
 5.00
 0.03
 4.97
Net interest margin1.73
 (0.34) 2.07
 2.00
 (0.07) 2.07
Average interest rate spread1.59
 (0.28) 1.87
 1.79
 (0.05) 1.84

(2)In periods prior to September 30, 2015, this ratio was calculated using end-of-period total assets in the denominator in accordance with regulatory capital requirements at that point in time. Beginning September 30, 2015, this ratio is calculated using current quarter average assets in the denominator in accordance with current regulatory capital requirements.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis is intended to assist in understanding the financial condition, results of operations, liquidity, and capital resources of the Company. The Bank comprises almost all of the consolidated assets and liabilities of the Company and the Company is dependent primarily upon the performance of the Bank for the results of its operations. Because of this relationship, references to management actions, strategies and results of actions apply to both the Bank and the Company.Company except where the context indicates otherwise.


Executive Summary
The following summary should be read in conjunction with the Management's Discussion and Analysis of Financial Condition and Results of Operations section in its entirety.


The Company provides a full range of retail banking services through the Bank, which is a wholly-owned subsidiary of the Company, headquartered in Topeka Kansas. The Bank has 37 traditional and 10 in-store banking offices serving primarily the metropolitan areas of Topeka, Wichita, Lawrence, Manhattan, Emporia and Salina, Kansas and portions of the metropolitan area of greater Kansas City. 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.

The Company's results of operations are primarily dependent on net interest income, which is the difference between the interest earned on loans, securities, and cash, and the interest paid on deposits and borrowings. On a weekly basis, management reviews deposit flows, loan demand, cash levels, and changes in several market rates to assess all pricing strategies. The Bank's pricing strategy for first mortgage loan products includes setting interest rates based on secondary market prices and competitor pricing for our local lending markets, and secondary market prices and competitor pricing for our correspondent lending markets. Generally, deposit pricing is based upon a survey of competitors in the Bank's market areas, and the need to attract funding and retain maturing deposits. The majority of our loans are fixed-rate products with maturities up to 30 years, while the majority of our retail deposits have stated maturities or repricing dates of less than two years.

The 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 investment products, the level of personal income, and the personal rate of savings within our market areas. Lending activities are influenced by the demand for housing and other loans, our loan underwriting guidelines compared to those of our competitors, as well as interest rate pricing competition from other lending institutions.

Local economic conditions have a significant impact on the ability of borrowers to repay loans and the value of the collateral securing these loans. The industries in the Bank's local market areas, where the properties securing approximately 67% of the Bank's one- to four-family loans are located, are diversified, especially in the Kansas City metropolitan statistical area, which comprises the largest segment of our loan portfolio and deposit base. As of October 2017, the unemployment rate was 3.6% for Kansas and 3.5% for Missouri, compared to the national average of 4.1% based on information from the Bureau of Labor Statistics. The Kansas City market area has an average household income of approximately $80 thousand per annum, based on 2017 estimates from Claritas Pop-Facts Premier. The average household income in our combined local market areas is approximately $76 thousand per annum, with 91% of the population at or above the poverty level, also based on the 2017 estimates from Claritas Pop-Facts Premier. The FHFA price index for Kansas and Missouri continues to indicate relative stability in property values in our local market areas. Management also monitors broad industry and economic indicators and trends in the states and/or metropolitan statistical areas with the highest concentrations of correspondent purchased loans.

For fiscal year 2017, the Company recognized net income of $84.1$84.5 million, or $0.63$0.62 per share, for fiscal year 2022 compared to net income of $83.5$76.1 million, or $0.63$0.56 per share, for the prior fiscal year 2016.year. The $8.4 million, or 11.0%, increase in net income was due primarily to a $3.2 millionan increase in net interest income, partially offset by higher income tax expense and a $1.1 million decrease in non-interest income. Additionally, no provision for credit losses was recorded in fiscal year 2017, compared to alower negative provision for credit losseslosses. The net interest margin was 1.79% for the current year compared to 1.90% for the prior year. When the leverage strategy discussed below is in place, it reduces the net interest margin due to the amount of $750 thousandearnings from the transaction in fiscalcomparison to the size of the transaction. Excluding the effects of the leverage strategy, the net interest margin would have been 2.04% in the current year, 2016.a 14 basis point increase from the prior year. The increase in net interest margin excluding the effects of the leverage strategy was due mainly to a reduction in the weighted average cost of retail certificates of deposit. During the latter portion of the current year, as market interest rates increased, the Bank's cost of borrowings and deposits began increasing at a faster pace than the yield on assets. Management anticipates this may continue in the near term.



During fiscal year 2017,At times, the Bank continued to utilizehas utilized a leverage strategy to increase earnings. The leverage strategy during the current fiscal year involved borrowing up to $2.10$2.60 billion either on the Bank's FHLB line of credit or by entering into short-term FHLB advances, depending on the rates offered by FHLB.advances. The borrowings were repaid prior to each quarter end for regulatory purposes.end. The proceeds from the borrowings, net of the required FHLB stock holdings which yielded approximately 6.4%6.75% during the current fiscal year, were deposited at the Federal Reserve Bank of Kansas City ("FRB of Kansas City.City"). Net income attributable to the leverage strategy is largely derived from the dividends received on FHLB stock holdings, plus the net of the interest rate spread between the yield on the cash deposited at the FRB of Kansas City and the rate paid on the related FHLB borrowings, less applicable federal insurance premiums and estimated taxes. Net income attributable to the leverage strategy was $2.8$3.1 million during the current fiscal year, compared to $2.3 million foryear. Management continuously monitors the prior fiscal year. The increase was due primarily to a more positivenet interest rate spread betweenand overall profitability of the yield earned on the cash held at the FRB of Kansas City and the rate paid on the related FHLB borrowings than in the prior fiscal year, as well as to a decrease in federal insurance premiums attributed tostrategy. It is expected that the strategy will be utilized as long as it remains profitable and/or the borrowing capacity and an increase in the yield on the FHLB stock attributedavailable capital does not need to the strategy. Management expects to continue this strategy in fiscal year 2018.be used for other operational purposes.

The net interest margin increased four basis points, from 1.75% for the prior fiscal year to 1.79% for the current fiscal year. Excluding the effects of the leverage strategy, the net interest margin would have increased five basis points, from 2.10% for the prior fiscal year to 2.15% for the current fiscal year. The increase in the net interest margin was due mainly to a shift in the mix of interest-earning assets from relatively lower yielding securities to higher yielding loans, partially offset by a decrease in the weighted average yield on loans. The positive impact of the decrease in interest expense on borrowings not related to the leverage strategy was offset by an increase in interest expense on deposits.


Total assets were $9.19$9.62 billion at September 30, 2017 compared2022, a decrease of $6.3 million from September 30, 2021. Loans receivable increased $383.1 million, or 5.4%, during the current year to $9.27$7.46 billion at September 30, 2016.2022. The $74.3 million decreaseloan growth was due primarily to a $384.6 million decrease in the securities portfolio, partially offsetone-to four-family correspondent and commercial loan portfolios. This growth was funded by an increase in the loan portfolio.

The loans receivable portfolio, net, increased $237.0 million to $7.20 billion at September 30, 2017, from $6.96 billion at September 30, 2016. During the current fiscal year, the Bank originated and refinanced $698.5 million of loans with a weighted average rate of 3.68% and purchased $563.2 million of one- to four-family loans from correspondent lenders with a weighted average rate of 3.60%. The Bank also entered into participations of $67.7 million of commercial real estate loans with a weighted average rate of 3.98%, of which $43.2 million had not yet been funded as of September 30, 2017.

Loan activity in the current fiscal year decreased compared to the prior fiscal year due to the Bank managing the size of the loan portfolio as it manages its liquidity levels.  Loan volume has primarily been maintained through the rates offered to correspondent lenders.  Generally, over the past couple years, cash flows from the securities portfolio have been used primarily to purchase loans and in part to pay down FHLB advances. By moving cash from lower yielding assets to higher yielding assets and repaying higher cost liabilities, we have been able to maintain our net interest margin.  In addition to the repayment of securities, the Bank has emphasized growth in theborrowings. The deposit portfolio in partdecreased $402.5 million during the current year, to pay down FHLB advances. The ratio of securities and cash to total assets was 17.4% at September 30, 2017, and we will be managing this ratio to approximately 15%. In the long run, management considers a ten percent ratio of stockholders' equity to total assets at the Bank as an appropriate level of capital. At September 30, 2017, this ratio was 13.1%.

Total liabilities were $7.82$6.19 billion at September 30, 2017 compared2022. The decrease was primarily in the certificate of deposit portfolio, partially offset by increases in the retail checking, savings and money market accounts. During the third quarter of fiscal year 2022, management began increasing offered rates on certificates of deposit, which slowed the runoff in this portfolio. Due to $7.87deposit outflows and loan growth, the Bank entered into additional FHLB borrowings during the second half of the current fiscal year. FHLB borrowings increased $549.3 million during the year, to $2.13 billion at September 30, 2016.2022. If deposit outflows continue, the Bank will likely increase FHLB borrowings decreased $198.6 million,borrowings. If that occurs, the leverage strategy transaction amount may decrease due to $2.17borrowing, collateral capacity and capital levels. Stockholder's equity was $1.10 billion at September 30, 2017, as certain maturing FHLB advances were not replaced. Deposits increased $145.92022, a decrease of $145.8 million to $5.31 billion atfrom September 30, 2017, due mainly to increases in wholesale certificates and non-maturity retail deposits.

Stockholders' equity was $1.37 billion at September 30, 2017 compared to $1.39 billion at September 30, 2016.2021. The $24.7 million decrease was due primarilyalmost entirely to a reduction in AOCI as a result of changes in the paymentfair value of $118.0AFS securities due to an increase in market interest rates during the year. The unrealized losses on AFS securities increased $211.3 million, resulting in cash dividends, partially offset bya $159.8 million reduction in AOCI, net income of $84.1 million. tax.

The cash dividends paidBank's asset quality continued to remain strong during the current fiscal year, totaled $0.88 per sharereflected in low delinquency and consistedcharge-off ratios. At September 30, 2022, loans 30 to 89 days delinquent were 0.09% of total loans receivable, net, and loans 90 or more days delinquent or in foreclosure were 0.12% of total loans receivable, net. The ratio of net charge-offs (recoveries) ("NCOs") during the current year to average loans outstanding during the current year was 0.00%.

17
At September 30, 2022, the Bank had a $0.29 per share cash true-up dividendone-year gap position of $(1.14) billion, or (11.9)% of total assets, meaning the amount of interest-bearing liabilities exceeds the amount of interest-earning assets maturing or repricing during the same period. See additional discussion in "Part II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk."

Management is in the process of implementing a new core processing system ("digital transformation") for the Bank, which is expected to be operational by September 2023. We expect the new platform will allow us to introduce new products and services quickly to drive better efficiencies and provide a more personalized experience for our customers. Our customers will experience a more modern internet banking experience, including both desktop and mobile. Internet banking will deliver real-time alerts and provide our customers the ability to manage their own debit cards. Our customers will also have multiple options for real-time payments, which positions the Bank for faster payment channels in the future. Management anticipates information technology and related toexpenses will increase in fiscal year 2016 earnings per2023 in conjunction with the Company's dividend policy, a $0.25 per share True Blue Capitol dividend,digital transformation. See additional discussion in the "Comparison of Operating Results for the Years Ended September 30, 2022 and four regular quarterly cash dividends totaling $0.34 per share.2021" section below.



Critical Accounting PoliciesEstimates

Our most critical accounting policiesestimates are the methodologies used to determine the ACL and reserve for off-balance sheet credit exposures and fair value measurements.  These policiesestimates are important to the presentation of our financial condition and results of operations, involve a high degree of complexity, and require management to make difficult and subjective judgments that may require assumptions or estimates about highly uncertain matters.  The use of different judgments, assumptions, and estimates could causeaffect reported results to differ materially.  These critical accounting policiesestimates and their application are reviewed at least annually by our audit committee. The following is a description of our critical accounting policiesestimates and an explanation of the methods and assumptions underlying their application.


Allowance for Credit Losses. The Company maintains an ACL to absorb inherent losses in the loan portfolio based upon ongoing quarterly assessments of the loan portfolio. Losses and Reserve for Off-Balance Sheet Credit Exposures. The ACL is maintained through provisions fora valuation amount that is deducted from the amortized cost basis of loans and represents management's estimate of lifetime credit losses which are either charged or credited to income.  The methodology for determiningexpected on the ACL is considered a critical accounting policy by management because of the high degree of judgment involved, the subjectivity of the assumptions used, and the potential for changes in economic conditions that could result in changes to the amount of the recorded ACL. Additionally, bank regulators review the ACL and could have a differing view from management regarding the ACL balance, which could result in an increase in the ACL and/or the recognition of additional charge-offs. Although management believes that the Bank has established and maintained the ACL at appropriate levels, additions may be necessary if economic and other conditions worsen substantially from the current operating environment, and/or if bank regulators have a differing view from management regarding the ACL balance.

Our primary lending emphasis is the origination and purchase of one- to four-family loans and, to a lesser extent, consumer loans secured by one- to four-family residential properties, resulting in a loan concentration in residential mortgage loans.  We believe the primary risks inherent in our one- to four-family and consumer loan portfolios are a decline in economic conditions, elevated levels of unemployment or underemployment, and declines in residential real estate values.  Changes in any one or a combination of these events may adversely affect borrowers' ability to repay their loans, resulting in increased delinquencies, non-performing assets, loan losses, and future loan loss provisions. Although the commercial real estate loan portfolio is subject to the same risk of declines in economic conditions, the primary risk characteristics inherent in this portfolio include the ability of the borrower to sustain sufficient cash flows from leases and to control expenses to satisfy their contractual debt payments, and/or the ability to utilize personal and/or business resources to pay their contractual debt payments if the cash flows are not sufficient. Additionally, if the Bank were to repossess the secured collateral of a commercial real estate loan, the pool of potential buyers is limited more than that for a residential property. Therefore, the Bank could hold the property for an extended period of time and/or potentially be forced to sell at a discounted price, resulting in additional losses.
Each quarter, we prepare a formula analysis model which segregates our loan portfolio into categories based on certain risk characteristics such as loan type (one- to four-family, commercial real estate, etc.), interest payments (fixed-rate and adjustable-rate), loan source (originated, correspondent purchased, or bulk purchased), LTV ratios, borrower's credit score and payment status (i.e. current or number of days delinquent). Consumer loans, such as second mortgages and home equity lines of credit, with the same underlying collateral as a one- to four-family loan are combined with the one- to four-family loan in the formula analysis model to calculate a combined LTV ratio.  

Historical loss factors are applied to each loan category in the formula analysis model. Additionally, qualitative loss factors that management believes impact the collectability of theCompany's loan portfolio as of the evaluationbalance sheet date. The reserve for off-balance sheet credit exposures represents expected credit losses on unfunded portions of existing loans and commitments to originate or purchase loans that are not unconditionally cancellable by the Company.

Management estimates the ACL by projecting future loss rates which are dependent upon forecasted economic indices and applying qualitative factors when deemed appropriate by management. The key assumptions used in projecting future loss rates include the economic forecast, the forecast and reversion to mean time periods, and prepayment and curtailment assumptions. The assumptions are used to calculate and aggregate estimated cash flows for the time period that remains in each loan's contractual life. The cash flows are discounted back to the balance sheet date are appliedusing each loan's effective yield, to eacharrive at a present value of future cash flows, which is compared to the amortized cost basis of the loan category.  Qualitative losspool to determine the amount of ACL required by the calculation. Management then considers qualitative factors increase as loans are classified or become delinquent.when assessing the overall level of ACL. See "Allowance for Credit Losses on Loans Receivable" and "Reserve for Off-Balance Sheet Credit Exposures" within "Part II, Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 1. Summary of Significant Accounting Policies" for additional informationinformation.

One of the most significant judgments used in projecting loss rates when estimating the ACL and reserves for off-balance sheet credit exposures is the macro-economic forecast provided by a third party. The economic indices sourced from the macro-economic forecast and used in projecting loss rates are the national unemployment rate, changes in commercial real estate prices, changes in home values, and changes in the United States gross domestic product. The economic index used in the calculation to which the calculation is most sensitive is the national unemployment rate. Each reporting period, several macro-economic forecast scenarios are considered by management. Management selects the macro-economic forecast(s) that is/are most reflective of expectations at that point in time. Changes in the macro-economic forecast, especially for the national unemployment rate, could significantly impact the calculated estimated credit losses between reporting periods.

Other key assumptions in the calculation of the ACL and reserve for off-balance sheet credit exposures estimates include the forecast and reversion to mean time periods and prepayment and curtailment assumptions. The calculation is less sensitive to these assumptions than the macro-economic forecasts. The macro-economic forecast is applied for a reasonable and supportable time period before reverting to long-term historical averages for each economic index. The forecast and reversion to mean time period used for each economic index at September 30, 2022 was four quarters. Prepayment and
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curtailment assumptions are based on the Company's historical experience and are adjusted by management as deemed necessary. The prepayment and curtailment assumptions vary based on loan product type.

The ACL and reserves for off-balance sheet credit exposures may be materially affected by qualitative factors, especially during periods of economic uncertainty, for items not reflected in the economic forecast and/or discounted cash flow model, but which are deemed appropriate by management's current assessment of the risks related to the lossloan portfolio and/or external factors. Such qualitative factors utilizedmay include changes in the formula analysis model.

Bank's loan portfolio composition and credit concentrations, changes in the balances and/or trends in asset quality and/or loan credit performance, changes in lending underwriting standards, the effect of other external factors such as significant unique events or conditions, and actual and/or expected changes in economic conditions, real estate values, and/or other economic developments. The lossqualitative factors applied by management at September 30, 2022 were (1) economic uncertainty that may not be adequately captured in the formula analysis model are reviewed quarterly bythird party economic forecast scenarios and (2) other management considerations related to assess whether the factors adequately cover probable and estimable losses inherentcommercial loans to account for credit risks not fully reflected in the loan portfolio.  Our ACL methodology permits modifications todiscounted cash flow model. The qualitative factors applied at September 30, 2022, and the formula analysis model in the event that, in management's judgment, significant factors which affect the collectabilityimportance and levels of the portfolio or any categoryqualitative factors applied, may change in future periods depending on the level of changes to items such as the uncertainty of economic conditions and management's assessment of the level of credit risk within the loan portfolio as a result of such changes, compared to the evaluation date, have changed fromamount of ACL calculated by the current formula analysis model. Management'sThe evaluation of qualitative factors is inherently imprecise and requires significant management judgment. See "Part II, Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 4. Loans Receivable and Allowance for Credit Losses - Allowance for Credit Losses" for additional information regarding the qualitative factors with respectapplied at September 30, 2022.

The ACL and the reserves for off-balance sheet credit exposures was $16.4 million and $4.8 million, respectively at September 30, 2022, compared to these conditions is subject$19.8 million and $5.7 million, respectively, at September 30, 2021. The $3.5 million decrease in the ACL and $992 thousand decrease in the reserves for off-balance sheet credit exposures was primarily attributable to a higher degreereduction in commercial loan qualitative factors, partially offset by an increase related to (1) growth in the loan portfolio and an increase in the balance of uncertainty because they are not identified withoff-balance sheet credit exposures and (2) a specific problem loan or portfolio segment.less favorable economic forecast compared to the prior year. See "Part II, Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 4. Loans Receivable and Allowance for Credit Losses - Allowance for Credit Losses" for additional information regarding the assumptions used in the Company's September 30, 2022 estimate of ACL.



ManagementWhile management utilizes the formula analysis model, along with analyzingits best judgment and considering several other relevant internal and external data elements, when evaluatinginformation available, the adequacy of the ACL. Such data elements includeACL and reserve for off-balance sheet credit exposures is determined by certain factors outside of the trend and compositionCompany's control, such as the performance of delinquent and non-performing loans, trends in foreclosed property and short sale transactions and charge-off activity, the current status and trends of local and national employment levels, trends and current conditionsour portfolios, changes in the housing markets, loan growtheconomic environment including economic uncertainty, changes in interest rates, and concentrations, industry and peer charge-off and ACL information, and certain ACL ratios such as ACL to loans receivable, net and annualized historical losses. Since our loan portfolio is primarily concentrated in one- to four-family real estate, management monitors residential real estate market value trends in the Bank's local market areas and geographic sectionsview of the U.S. by reference to various industryregulatory authorities toward classification of assets and market reports, economic releases and surveys, and management's general and specific knowledge of the real estate markets in which we lend, in order to determine what impact, if any, such trends may have on the level of ACL. Reviewing these data elements assists management in evaluatingACL and reserves for off-balance sheet credit exposures. Additionally, the overalllevel of ACL and reserves for off-balance sheet credit qualityexposures may fluctuate based on the balance and mix of the loan portfolio and the reasonableness of theoff-balance sheet credit exposures. If actual results differ significantly from our assumptions, our ACL on an ongoing basis, and whether changes needreserve for off-balance sheet credit exposures may not be sufficient to be madecover inherent losses in our loan portfolio, resulting in additions to our ACL methodology. In addition,and an increase in the adequacy of the Company's ACL is reviewed during bank regulatory examinations. We consider any comments from our regulators when assessing the appropriateness of our ACL. We seek to apply ACL methodology in a consistent manner; however, the methodology can be modified in response to changing conditions.provision for credit losses.


Fair Value Measurements.  The Company uses fair value measurements to record fair value adjustments to certain financial instruments and to determine fair value disclosures in accordance with Accounting StandardStandards Codification ("ASC") 820 and ASC 825. The Company groups its financial instruments at fair value in three levels based on the markets in which the instruments are traded and the reliability of the assumptions used to determine fair value, with Level 1 (quoted prices for identical assets in an active market) being considered the most reliable, and Level 3 having the most unobservable inputs and therefore being considered the least reliable.  The Company bases its fair values on the price that would be received from the sale of an asset in an orderly transaction between market participants at the measurement date.  The Company maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value.


The Company's AFS securities are measured at fair value on a recurring basis.  Changes in the fair value of AFS securities, not related to credit loss, are recorded, net of tax, as AOCI in stockholders' equity.  The Company primarily uses prices obtained from third partythird-party pricing services to determine the fair value of its AFS securities. Various modeling techniques are used to determine pricing for the Company's securities, including option pricing, discounted cash flow models, and similar techniques. The inputs to these models may include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, benchmark securities, bids, offers and reference data.  There is one security, with a balance of $2.1 million at September 30, 2017, in the AFS portfolio that has significant unobservable inputs requiring the independent pricing services to use some judgment in pricing the related securities.  This AFS security is classified as Level 3.  All other AFS securities are classified as Level 2.


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The Company's interest rate swaps are measured at fair value on a recurring basis. The Company usesestimated fair values of the interest rate swaps are obtained from the counterparty and are determined by a discounted cash flow analysis using observable market-based inputs to determine the fair value of is interest rate swaps.inputs. Changes in the fair value of the interest rate swaps are recorded, net of tax, as AOCI in stockholders' equity. The Company did not have any other liabilitiesfinancial instruments that were measured at fair value on a recurring basis at September 30, 2017.

Loans individually evaluated for impairment and OREO are measured at fair value on a non-recurring basis. These non-recurring fair value adjustments involve the application of lower-of-cost-or-fair value accounting or write-downs of individual assets.  Fair values of loans individually evaluated for impairment are estimated through current appraisals. OREO fair values are estimated using current appraisals or listing prices. Fair values may be adjusted by management to reflect current economic and market conditions and, as such, are classified as Level 3.

2022.
Recent Accounting Pronouncements
For a discussion of Recent Accounting Pronouncements, see "Part II, Item 8. Financial Statements and Supplementary Data – Notes to Financial Statements – Note 1. Summary of Significant Accounting Policies."



Management Strategy
FinancialCondition

The following table summarizes the Company's financial condition at the dates indicated.
September 30,Change expressed in:
20222021DollarsPercent
(Dollars and shares in thousands)
Total assets$9,624,897 $9,631,246 $(6,349)(0.1)%
AFS securities1,563,307 2,014,608 (451,301)(22.4)
Loans receivable, net7,464,208 7,081,142 383,066 5.4 
Deposits6,194,866 6,597,396 (402,530)(6.1)
Borrowings2,132,154 1,582,850 549,304 34.7 
Stockholders' equity1,096,499 1,242,273 (145,774)(11.7)
Equity to total assets at end of period11.4 %12.9 %
Average number of basic shares outstanding135,700 135,481 219 0.2 
Average number of diluted shares outstanding135,700 135,496 204 0.2 


Loans Receivable. Total loans, net at September 30, 2022 was $7.46 billion, an increase of $383.1 million from September 30, 2021. The increase was primarily due to growth in the one- to four-family correspondent loan portfolio and commercial real estate and construction loan portfolio, along with a slow down in one- to four-family prepayment speeds due to higher market interest rates.

Originating and purchasing loans secured by one- to four-family residential properties is the Bank's primary lending business, resulting in a concentration in residential first mortgage loans secured by properties located in Kansas and Missouri. The Bank also originates and participates in commercial loans, and originates consumer loans and construction loans.

The Bank purchases one- to four-family loans, on a loan-by-loan basis, from a select group of correspondent lenders ("correspondent purchased"). Loan purchases enable the Bank to attain geographic diversification in the one- to four-family loan portfolio. We aregenerally pay a community-oriented financial institution dedicatedpremium of 0.50% to serving the needs of customers in our market areas. Our commitment is to provide qualified borrowers the broadest possible access to home ownership through our mortgage lending programs and to offer a complete set of personal banking products and services to our customers.  We strive to enhance stockholder value while maintaining a strong capital position.  To achieve these goals, we focus on the following strategies:

Residential Portfolio Lending. We are one1.0% of the leading originatorsloan balance to purchase these loans, and 1.0% of the loan balance to purchase the servicing of these loans. The premium paid is amortized against the interest earned over the life of the loan, which reduces the loan yield. If a loan pays off before the scheduled maturity date, the remaining premium is recognized as reduction in interest income. During fiscal year 2021, the Bank recognized a significant amount of premium amortization due to prepayment and endorsement activity. Prepayment and endorsement activity slowed significantly during the last half of the current fiscal year due to the increase in market interest rates.

In the past, the Bank has also purchased one- to four-family loans from correspondent and nationwide lenders in bulk loan packages ("bulk purchased"). The majority of the Bank's bulk purchased loans were guaranteed by one seller. The Bank has not experienced any losses with this group of loans since the loan package was purchased in August 2012.

The Bank originates owner-occupied construction-to-permanent loans secured by one- to four-family residential real estate. The majority of these loans are secured by property located within the Bank's Kansas City market area. The Bank's owner-occupied construction-to-permanent loan program combines the construction loan and the permanent loan into one loan,
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allowing the borrower to secure the same interest rate structure throughout the construction period and the permanent loan term.

As of September 30, 2022, there were $178.0 million of adjustable-rate one- to four-family loans in the stateportfolio for which the repricing index was tied to LIBOR, which is being discontinued and will no longer be available after June 30, 2023. The Bank's one- to four-family loan agreements allow the Bank to choose a new alternative reference rate based upon comparable information if the current index is no longer available. During the June 30, 2019 quarter, the Bank discontinued the use of Kansas.  We originate these loans primarilyLIBOR for our own portfolio, and we service the loans we originate. We also purchaseorigination of adjustable-rate one- to four-family loans fromand no longer purchases correspondent lenders. We offer both fixed- and adjustable-rate products with various terms to maturity and pricing options.  We maintain strong relationships with local real estate agents to attract mortgage loan business. We rely on our marketing efforts and customer service reputation to attract mortgage business from walk-in customers, customers that apply online, and existing customers.  
Retail Financial Services. We offer a wide array of deposit products and retail services. These products include checking, savings, money market, certificates of deposit, and retirement accounts. They are provided through a branch network of 47 locations, including traditional branches and retail in-store locations, our call center which operates on extended hours, mobile banking, telephone banking, and online banking and bill payment services.
Cost Control. We generally are very effective at controlling our costs of operations. By using technology, we are able to centralize our loan servicing and deposit support functions for efficient processing.  We have located our branches to serve a broad range of customers through relatively few branch locations.  Our average deposit base per traditional branch at September 30, 2017 was approximately $123.1 million.  This large average deposit base per branch helps to control costs.  Our one- to four-family lending strategyloans that use LIBOR.

The Bank offers a variety of secured consumer loans, including home equity loans and our effective managementlines of credit, risk allows us to servicehome improvement loans, vehicle loans, and loans secured by savings deposits. The Bank also originates a largevery limited amount of unsecured loans. Generally, consumer loans are originated in the Bank's market areas. The majority of our consumer loan portfolio is comprised of home equity lines of credit, which have adjustable interest rates. For a majority of the home equity lines of credit, the Bank has the first mortgage or the Bank is in the first lien position.

The Bank's commercial loan portfolio is composed of commercial real estate loans, commercial construction loans and commercial and industrial loans. Our commercial real estate loans include a variety of property types, including hotels, office and retail buildings, senior housing facilities, and multi-family dwellings located in Kansas, Missouri, and 11 other states. The Bank's commercial and industrial loan portfolio consists largely of loans at efficient levels because itsecured by accounts receivable, inventory and equipment.

Commercial borrowers are generally required to provide financial information annually, including borrower financial statements, subject property rental rates and income, maintenance costs, lessupdated real estate property tax and insurance payments, and personal financial information for the guarantor(s). This allows the Bank to monitor compliance with loan covenants and review the borrower's performance, including cash flows from operations, debt service a portfoliocoverage, and comparison of performing loans.
Asset Quality. We utilize underwriting standards for our lending products that are designedperformance to limit our exposureprojections and year-over-year performance trending. Additionally, the Bank monitors and performs site visits, or in the case of participation loans, obtains updates from the lead bank as needed to credit risk.  We require complete documentation for both originated and purchased loans, and make credit decisions baseddetermine the condition of the collateral securing the loan. Depending on our assessmentthe financial strength of the project and/or the complexity of the borrower's abilityfinancials, the Bank may also perform a global analysis of cash flows to repayaccount for all other properties owned by the borrower or guarantor. If signs of weakness are identified, the Bank may begin performing more frequent financial and/or collateral reviews or will initiate contact with the borrower, or the lead bank will contact the borrower if the loan in accordance with its terms.
Capital Position. Our policy has always beenis a participation loan, to protectensure cash flows from operations are maintained at a satisfactory level to meet the safetydebt requirements. Both macro-level and soundnessloan-level stress-test scenarios based on existing and forecasted market conditions are part of the Bank through credit and operational riskon-going portfolio management balance sheet strength, and sound operations. The end result of these activities has been a capital ratio in excess of the well-capitalized standards set by the OCC. We believe that maintaining a strong capital position safeguards the long-term interests of the Bank, the Company, and our stockholders.
Stockholder Value. We strive to enhance stockholder value while maintaining a strong capital position.  One way that we continue to provide returns to stockholders is through our dividend payments.  Total dividends declared and paid during fiscal year 2017 were $118.0 million, including a $0.25 per share, or $33.6 million, True Blue® Capitol Dividend paid in June 2017.  The Company's cash dividend payout policy is reviewed quarterly by management and the Board of Directors, and the ability to pay dividends under the policy depends upon a number of factors, including the Company's financial condition and results of operations, regulatory capital requirements, regulatory limitations on the Bank's ability to make capital distributions to the Company, and the amount of cash at the holding company level. For fiscal year 2018, it is the intent of the Board of Directors and management to continue with the payout of 100% of the Company's earnings to its stockholders through regular quarterly dividends and a true-up dividend. 
Interest Rate Risk Management. Changes in interest rates are our primary market risk as our balance sheet is almost entirely comprised of interest-earning assets and interest-bearing liabilities.  As such, fluctuations in interest rates have a significant impact not only upon our net income but also upon the cash flows related to those assets and liabilities and the market value of our assets and liabilities.  In order to maintain what we believe to be acceptable levels of net interest income in varying interest rate environments, we actively manage our interest rate risk and assume a moderate amount of interest rate risk consistent with board policies.


FinancialCondition
Assets. Total assets were $9.19 billion at September 30, 2017 compared to $9.27 billion at September 30, 2016. The $74.3 million decrease was due primarily to a $384.6 million decrease in the securities portfolio, partially offset by an increase in the loan portfolio.

Loans Receivable. Loans receivable, net, increased $237.0 million to $7.20 billion at September 30, 2017 from $6.96 billion at September 30, 2016. The one- to four-family loan portfolio increased $119.1 million andprocess for the commercial real estate portfolio. The Bank mitigates the risk of commercial real estate construction lending during the construction period by monitoring inspection reports from an independent third-party, project budget, percentage of completion, on-site inspections and percentage of advanced funds. Commercial and industrial loans are monitored through a review of borrower performance as indicated by borrower financial statements, borrowing base reports, accounts receivable aging reports, and inventory aging reports. These reports are required to be provided by the borrowers monthly, quarterly, or annually depending on the nature of the borrowing relationship. The Bank regularly monitors the level of risk in the entire commercial loan portfolio, increased $115.8 million. including concentrations in such factors as geographic locations, collateral types, tenant brand name, borrowing relationships, and lending relationships in the case of participation loans, among other factors.


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The following table presents the balance and weighted average rate of our loan portfolio as of the dates indicated. WithinTotal loans receivable increased $375.6 million, or 5.3%, during the one-current year. The rate on the portfolio increased 12 basis points during the current year due primarily to four-familyupward repricing of existing loans as a result of an increase in market interest rates, as well as originations and purchases at interest rates higher than the overall portfolio rate.
September 30, 2022September 30, 2021
AmountRateAmountRate
(Dollars in thousands)
One- to four-family:
Originated$3,988,469 3.20 %$3,956,064 3.18 %
Correspondent purchased2,201,886 3.10 2,003,477 3.02 
Bulk purchased147,939 1.24 173,662 1.65 
Construction66,164 2.90 39,142 2.82 
Total6,404,458 3.12 6,172,345 3.09 
Commercial:
Commercial real estate745,301 4.30 676,908 4.00 
Commercial and industrial79,981 4.30 66,497 3.83 
Construction141,062 5.34 85,963 4.03 
Total966,344 4.45 829,368 3.99 
Consumer loans:
Home equity92,203 6.28 86,274 4.60 
Other8,665 4.21 8,086 4.19 
Total100,868 6.10 94,360 4.57 
Total loans receivable7,471,670 3.33 7,096,073 3.21 
Less:
ACL16,371 19,823 
Deferred loan fees/discounts29,736 29,556 
Premiums/deferred costs(38,645)(34,448)
Total loans receivable, net$7,464,208 $7,081,142 
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The following table presents the contractual maturity of our loan portfolio, along with associated weighted average yields, at September 30, 2017, 58%2022. Loans that have adjustable interest rates are shown as maturing in the period during which the contract is due. The table does not reflect the effects of this amount hadpossible prepayments or enforcement of due on sale clauses.
One year or less(1)
Over one year to five yearsOver five years to 15 yearsOver 15 yearsTotal
AmountYieldAmountYieldAmountYieldAmountYieldAmountYield
(Dollars in thousands)
One- to four-family:
Originated$1,015 4.09 %$70,518 3.60 %$1,330,747 2.88 %$2,586,189 3.43 %$3,988,469 3.25 %
Correspondent purchased258 4.39 9,008 3.04 495,250 2.43 1,697,370 3.13 2,201,886 2.97 
Bulk purchased26 4.24 88 3.92 27,683 2.84 120,142 0.81 147,939 1.19 
Construction(2)
— — — — 3,872 2.54 62,292 2.92 66,164 2.90 
Total1,299 4.15 79,614 3.53 1,857,552 2.76 4,465,993 3.24 6,404,458 3.10 
Commercial:
Commercial real estate83,792 5.69 190,307 4.24 358,310 4.16 112,892 4.50 745,301 4.40 
Commercial and industrial14,470 5.85 27,787 3.84 33,189 4.07 4,535 4.05 79,981 4.31 
Construction(2)
7,514 5.87 58,085 3.91 25,506 6.23 49,957 6.46 141,062 5.34 
Total105,776 5.72 276,179 4.13 417,005 4.28 167,384 5.07 966,344 4.53 
Consumer:
Home equity(3)
1,663 7.44 2,000 6.26 45,063 6.28 43,477 6.21 92,203 6.27 
Other1,141 3.74 6,900 4.17 624 6.15 — — 8,665 4.25 
Total2,804 5.93 8,900 4.64 45,687 6.28 43,477 6.21 100,868 6.09 
Total loans receivable$109,879 5.71 $364,693 4.01 $2,320,244 3.10 $4,676,854 3.33 7,471,670 3.33 
Less:
ACL16,371 
Deferred loan fees/discounts29,736 
Premiums/deferred costs(38,645)
Total loans receivable, net$7,464,208 

(1)Includes demand loans, loans having no stated maturity, and overdraft loans.
(2)Construction loans are presented based upon the contractual maturity date, which includes the permanent financing period for construction-to-permanent loans.
(3)For home equity loans, including those that do not have a balance at originationstated maturity date, the maturity date calculated assumes the borrower always makes the required minimum payment. The majority of less than $424 thousand.home equity loans assume a maximum term of 240 months.

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 September 30, 2017 September 30, 2016
 Amount Rate Amount Rate
 (Dollars in thousands)
Real estate loans:       
One- to four-family:       
Originated$3,959,232
 3.70% $4,005,615
 3.74%
Correspondent purchased2,445,311
 3.53
 2,206,072
 3.50
Bulk purchased351,705
 2.29
 416,653
 2.23
Construction30,647
 3.45
 39,430
 3.45
Total6,786,895
 3.56
 6,667,770
 3.56
Commercial:       
Permanent183,030
 4.24
 110,768
 4.16
Construction86,952
 3.80
 43,375
 4.13
Total269,982
 4.10
 154,143
 4.15
Total real estate loans7,056,877
 3.58
 6,821,913
 3.58
        
Consumer loans:       
Home equity122,066
 5.40
 123,345
 5.01
Other3,808
 4.05
 4,264
 4.21
Total consumer loans125,874
 5.36
 127,609
 4.99
Total loans receivable7,182,751
 3.61
 6,949,522
 3.60
        
Less:       
ACL8,398
   8,540
  
Discounts/unearned loan fees24,962
   24,933
  
Premiums/deferred costs(45,680)   (41,975)  
Total loans receivable, net$7,195,071
   $6,958,024
  

The following table presents, as of September 30, 2022, the amount of loans due after September 30, 2023, and whether these loans have fixed or adjustable interest rates.
FixedAdjustableTotal
(Dollars in thousands)
One- to four-family:
Originated$3,703,838 $283,616 $3,987,454 
Correspondent purchased1,965,671 235,957 2,201,628 
Bulk purchased4,585 143,328 147,913 
Construction61,435 4,729 66,164 
Total5,735,529 667,630 6,403,159 
Commercial:
Commercial real estate303,228 358,281 661,509 
Commercial and industrial39,447 26,064 65,511 
Construction40,335 93,213 133,548 
Total383,010 477,558 860,568 
Consumer:
Home equity14,330 76,210 90,540 
Other5,336 2,188 7,524 
Total19,666 78,398 98,064 
Total loans receivable$6,138,205 $1,223,586 $7,361,791 

Loan Activity - The following tables summarizetable summarizes activity in the loan portfolio, along with weighted average rates where applicable, for the periods indicated, excluding changes in ACL, discounts/unearneddeferred loan fees,fees/discounts, and premiums/deferred costs. Loans that were paid-offpaid off as a result of refinances are included in repayments. Loan endorsements are not included in the activity in the following tablestable because a new loan is not generated at the time of the endorsement. The endorsed balance and rate are included in the ending loan portfolio balance and rate. DuringCommercial loan renewals are not included in the fiscal years ended September 30, 2017activity in the following table unless new funds are disbursed at the time of renewal. The renewal balance and 2016,rate are included in the Bank endorsed $53.1 millionending loan portfolio balance and $160.0 million of one- to four-family loans, respectively, reducing the average rate on those loans by 71 and 91 basis points, respectively.rate.
For the Year Ended
September 30, 2022September 30, 2021
AmountRateAmountRate
(Dollars in thousands)
Beginning balance$7,096,073 3.21 %$7,224,996 3.55 %
Originated and refinanced1,065,373 3.74 1,437,454 2.89 
Purchased and participations701,674 3.46 824,241 2.89 
Change in undisbursed loan funds(53,811)(174,416)
Repayments(1,337,034)(2,215,585)
Principal recoveries/(charge-offs), net186 (478)
Other(791)(139)
Ending balance$7,471,670 3.33 $7,096,073 3.21 

24
 For the Three Months Ended
 September 30, 2017 June 30, 2017 March 31, 2017 December 31, 2016
 Amount Rate Amount Rate Amount Rate Amount Rate
 (Dollars in thousands)
Beginning balance$7,228,425
 3.60% $7,182,346
 3.59% $7,061,557
 3.58% $6,949,522
 3.60%
Originated and refinanced:               
Fixed102,687
 3.82
 116,422
 3.94
 115,560
 3.66
 176,554
 3.26
Adjustable44,900
 4.10
 59,372
 3.87
 36,417
 3.82
 46,566
 3.54
Purchased and participations:               
Fixed76,906
 3.92
 135,041
 3.97
 143,852
 3.69
 187,674
 3.52
Adjustable17,046
 3.33
 17,930
 3.24
 27,158
 2.98
 25,262
 2.73
Change in undisbursed loan funds21,823
   13,648
   37,862
   3,696
  
Repayments(307,909)   (295,988)   (239,072)   (326,839)  
Principal recoveries (charge-offs), net(88)   39
   (74)   (19)  
Other(1,039)   (385)   (914)   (859)  
Ending balance$7,182,751
 3.61
 $7,228,425
 3.60
 $7,182,346
 3.59
 $7,061,557
 3.58
 For the Year Ended September 30,
 2017 2016
 Amount Rate Amount Rate
 (Dollars in thousands)
Beginning balance$6,949,522
 3.60% $6,622,728
 3.66%
Originations and refinances:       
Fixed511,223
 3.62
 606,365
 3.52
Adjustable187,255
 3.83
 166,539
 3.65
Purchases and participations:       
Fixed543,473
 3.73
 720,253
 3.64
Adjustable87,396
 3.03
 143,679
 3.36
Change in undisbursed loan funds77,029
   (142,027)  
Repayments(1,169,808)   (1,164,000)  
Principal charge-offs, net(142)   (153)  
Other(3,197)   (3,862)  
Ending balance$7,182,751
 3.61
 $6,949,522
 3.60

The following tables presenttable presents loan origination, refinance, and purchase activity for the periods indicated, excluding endorsement activity, along with associated weighted average rates and percent of total. During the current fiscal year, the Bank endorsed $52.7 million of one- to four-family loans, reducing the average rate on those loans by 75 basis points. Commercial loan renewals are not included in the activity in the following table except to the extent new funds are disbursed at the time of renewal. Loan originations, purchases, and refinances are reported together. The fixed-rate one- to four-family loans less than or equal to 15 years have an original maturity at origination of less than or equal to 15 years, while fixed-rate one- to four-family loans greater than 15 years have an original maturity at origination of greater than 15 years. The adjustable-rate one- to four-family loans less than or equal to 36 months have a term to first reset of less than or equal to 36 months at origination and adjustable-rate one- to four-family loans greater than 36 months have a term to first reset of greater than 36 months at origination.
For the Year Ended
September 30, 2022September 30, 2021
AmountRate% of TotalAmountRate% of Total
(Dollars in thousands)
Fixed-rate:
One- to four-family$926,274 3.41 %52.5 %$1,615,165 2.66 %71.4 %
One- to four-family construction120,615 3.19 6.8 125,309 2.77 5.5 
Commercial:
Real estate50,620 4.08 2.9 28,944 3.85 1.3 
Commercial and industrial23,846 4.14 1.3 49,857 2.45 2.2 
Construction86,023 3.47 4.9 42,505 3.65 1.9 
Home equity6,771 5.76 0.4 3,491 5.42 0.2 
Other3,923 5.66 0.2 2,994 5.48 0.1 
Total fixed-rate1,218,072 3.45 69.0 1,868,265 2.71 82.6 
Adjustable-rate:
One- to four-family230,640 3.51 13.0 59,813 2.52 2.6 
One- to four-family construction26,080 3.31 1.5 11,069 2.64 0.5 
Commercial:
Real estate137,150 4.21 7.8 120,202 3.70 5.3 
Commercial and industrial32,430 3.87 1.8 18,581 3.97 0.8 
Construction58,080 4.94 3.3 126,155 4.08 5.6 
Home equity62,832 4.97 3.5 55,740 4.42 2.5 
Other1,763 3.03 0.1 1,870 3.34 0.1 
Total adjustable-rate548,975 4.01 31.0 393,430 3.73 17.4 
Total originated, refinanced and purchased$1,767,047 3.63 100.0 %$2,261,695 2.89 100.0 %
Purchased and participation loans included above:
Fixed-rate:
Correspondent purchased - one- to four-family$452,093 3.35 $671,077 2.65 
Purchases and participations - commercial87,365 3.47 40,314 3.66 
Total fixed-rate purchased/participations539,458 3.37 711,391 2.70 
Adjustable-rate:
Correspondent purchased - one- to four-family129,216 3.49 18,450 2.45 
Purchases and participations - commercial33,000 4.87 94,400 4.36 
Total adjustable-rate purchased/participations162,216 3.77 112,850 4.05 
Total purchased/participation loans$701,674 3.46 $824,241 2.89 

25
 For the Year Ended
 September 30, 2017 September 30, 2016
 Amount Rate % of Total Amount Rate % of Total
 (Dollars in thousands)
Fixed-rate:           
One- to four-family:           
<= 15 years$212,477
 3.04% 16.0% $265,721
 2.97% 16.2%
> 15 years772,549
 3.81
 58.1
 871,669
 3.67
 53.3
Commercial real estate65,696
 4.03
 4.9
 184,153
 4.01
 11.2
Home equity3,510
 5.87
 0.3
 4,247
 5.71
 0.3
Other464
 9.87
 —
 828
 8.73
 0.1
Total fixed-rate1,054,696
 3.68
 79.3
 1,326,618
 3.59
 81.1
            
Adjustable-rate:           
One- to four-family:           
<= 36 months7,554
 2.88
 0.6
 4,980
 2.58
 0.3
> 36 months189,576
 3.06
 14.3
 183,697
 2.90
 11.2
Commercial real estate2,992
 3.25
 0.2
 47,876
 4.29
 2.9
Home equity72,245
 5.03
 5.4
 71,013
 4.65
 4.3
Other2,284
 3.40
 0.2
 2,652
 3.36
 0.2
Total adjustable-rate274,651
 3.58
 20.7
 310,218
 3.52
 18.9
            
Total originated, refinanced and purchased$1,329,347
 3.66
 100.0% $1,636,836
 3.57
 100.0%
            
Purchased and participation loans included above:          
Fixed-rate:           
Correspondent - one- to four-family$478,772
 3.70
   $567,014
 3.56
  
Participations - commercial real estate64,701
 4.01
   153,239
 3.94
  
Total fixed-rate purchased/participations543,473
 3.73
   720,253
 3.64
  
            
Adjustable-rate:           
Correspondent - one- to four-family84,404
 3.02
   95,803
 2.90
  
Participations - commercial real estate2,992
 3.25
   47,876
 4.29
  
Total adjustable-rate purchased/participations87,396
 3.03
   143,679
 3.36
  
Total purchased/participation loans$630,869
 3.64
   $863,932
 3.60
  



One- to Four-Family Loans - The following table presents, for our portfolio of one- to four-family loans, the amount, percent of total, weighted average rate, weighted average credit score, weighted average LTVloan-to-value ("LTV") ratio, and the average balance per loan as of the dates presented.September 30, 2022. Credit scores are updated at least semiannually,annually, with the latest update in September 2017,2022, from a nationally recognized consumer rating agency. The LTV ratios were based on the current loan balance and either the lesser of the purchase price or original appraisal, or the most recent Bank appraisal, if available. In most cases, the most recent appraisal was obtained at the time of origination.
% ofCreditAverage
AmountTotalRateScoreLTVBalance
(Dollars in thousands)
Originated$3,988,469 62.9 %3.20 %771 61 %$158 
Correspondent purchased2,201,886 34.8 3.10 766 64 416 
Bulk purchased147,939 2.3 1.24 770 57 287 
$6,338,294 100.0 %3.12 770 62 205 
 September 30, 2017
   % of Credit   Average
 Amount Total Score LTV Balance
 (Dollars in thousands)
Originated$3,959,232
 58.6% 767
 63% $135
Correspondent purchased2,445,311
 36.2
 764
 68
 375
Bulk purchased351,705
 5.2
 757
 63
 305
 $6,756,248
 100.0% 765
 65
 182
          
 September 30, 2016
   % of Credit   Average
 Amount Total Score LTV Balance
 (Dollars in thousands)
Originated$4,005,615
 60.4% 766
 63% $132
Correspondent purchased2,206,072
 33.3
 764
 68
 360
Bulk purchased416,653
 6.3
 753
 64
 308
 $6,628,340
 100.0% 765
 65
 175


The following table presents originated refinanced, and correspondent purchased activity in our one- to four-family loan portfolio, excluding endorsement activity, along with associated weighted average rates, weighted average LTVs and weighted average credit scores for the periods indicated. Of the loans originated during the current year, $115.4 million were refinanced from another lender. Of the loans originated and refinanced during the current year, 72% had loan values of $424 thousand or less. Of the correspondent loans purchased during the current year, 12% had loan values of $424 thousand or less.fiscal year.
Credit
AmountRateLTVScore
(Dollars in thousands)
Originated$722,300 3.42 %72 %766 
Correspondent purchased581,309 3.38 74 769 
$1,303,609 3.40 73 767 
 For the Year Ended
 September 30, 2017 September 30, 2016
     Credit     Credit
 Amount LTV Score Amount LTV Score
 (Dollars in thousands)
Originated$498,145
 77% 766
 $515,395
 78% 770
Refinanced by Bank customers120,835
 66
 760
 147,855
 66
 765
Correspondent purchased563,176
 74
 765
 662,817
 74
 763
 $1,182,156
 74
 765
 $1,326,067
 75
 766



The following table presents the amount, percent of total, and weighted average rate, by state, of one- to four-family loan originations and correspondent purchases where originations and purchases in the state exceeded five percent of the total amount originated and purchased during the year ended September 30, 2017.
State Amount % of Total Rate
  (Dollars in thousands)
Kansas $554,282
 46.9% 3.51%
Texas 223,289
 18.9
 3.58
Missouri 180,426
 15.3
 3.59
Other states 224,159
 18.9
 3.58
  $1,182,156
 100.0% 3.55

One- to Four-Family Loan Commitments - The following table summarizes our one- to four-family loan origination and refinance commitments and one- to four-family correspondent loan purchase commitments as of September 30, 2017,2022, along with associated weighted average rates. Loan commitments generally have fixed expiration dates or other termination clauses and may require the payment of a rate lock fee. It is expected that some of the loan commitments will expire unfunded, so the amounts reflected in the table below are not necessarily indicative of our future cash needs.

AmountRate
(Dollars in thousands)
Originate/refinance$135,765 4.51 %
Correspondent85,576 4.39 
$221,341 4.46 

 Fixed-Rate      
 15 years More than Adjustable- Total
 or less 15 years Rate Amount Rate
 (Dollars in thousands)
Originate/refinance$9,185
 $27,814
 $9,790
 $46,789
 3.58%
Correspondent5,555
 68,930
 7,100
 81,585
 3.88
 $14,740
 $96,744
 $16,890
 $128,374
 3.77
          
Rate3.21% 3.94% 3.28%    

Commercial Real Estate Loans - During the current fiscal year 2022, the Bank originated $267.8 million of commercial loans and entered into commercial real estate loan participations totaling $120.4 million. The Bank processed commercial loan disbursements, excluding lines of $67.7credit, of approximately $342.7 million which included $54.0 millionat a weighted average rate of commercial real estate construction loans. The majority of the $54.0 million of commercial real estate construction loans had not yet been funded as of September 30, 2017. 4.26%.

As of September 30, 2017, $87.0 million of2022 and September 30, 2021, the Bank's $270.0commercial and industrial gross loan amounts (unpaid principal plus undisbursed amounts) totaled $100.4 million outstanding commercial real estate portfolio were construction loans, with an additional $105.9and $90.7 million, of undisbursed amounts. The Bank intends to continue to grow its commercial real estate loan portfolio through participations with correspondent lendersrespectively, and other select lead banks.commitments totaled $458 thousand and $16.9 million, respectively.



26

The following table presents the Bank's commercial real estate and commercial construction loans and loan commitments by industry classification,type of primary collateral as defined byof the North American Industry Classification System, asdates indicated. As of September 30, 2017. Included in2022, the table are fixed-rate loansBank had 25 commercial real estate and commercial construction loan commitments totaling $294.8$98.7 million, at a weighted average rate of 4.05% and adjustable-rate loans totaling $128.4 million at a weighted average rate of 4.46%. The weighted average rate of fixed-rate loans is lower than that of adjustable-rate loans due to the majority of the fixed-rate loans4.78%, which are not included in the portfolio at September 30, 2017 having shorter terms. Based ontable below. Because the terms ofcommitments to pay out undisbursed funds are not cancellable by the construction loansBank, unless the loan is in default, we generally anticipate fully funding the related projects. Of the total commercial undisbursed amounts and commitments outstanding as of September 30, 2017, of the $105.92022, management anticipates approximately $90 million of undisbursed amounts in the table, approximately $31.0 million is projected to be disbursed by December 31, 2017, and an additional $55.7 million is projected to be disbursed by September 30, 2018. It is possible that not all of the funds will be disbursed due tofunded during the nature ofDecember 2022 quarter, $60 million during the funding of construction projects. For outstanding commitments, in certain cases,March 2023 quarter, $50 million during the weighted average rate presented represents our best estimate.June 2023 quarter, and $46 million during the September 2023 quarter.
September 30, 2022September 30, 2021
UnpaidUndisbursedGross LoanGross Loan
CountPrincipalAmountAmountAmount
(Dollars in thousands)
Senior housing35 $255,075 $73,184 $328,259 $265,284 
Retail building138 199,223 30,930 230,153 208,539 
Hotel10 152,332 29,214 181,546 194,665 
Multi-family36 80,538 42,197 122,735 66,199 
Office building84 68,114 41,539 109,653 109,987 
One- to four-family property368 62,072 6,835 68,907 69,174 
Single use building24 21,272 20,636 41,908 47,028 
Other103 47,737 5,317 53,054 36,167 
798 $886,363 $249,852 $1,136,215 $997,043 
Weighted average rate4.46 %4.90 %4.56 %4.01 %
 Unpaid Undisbursed Gross Loan Outstanding   % of
 Principal Amount Amount Commitments Total Total
 (Dollars in thousands)
Accommodation and food services$123,839
 $16,664
 $140,503
 $24,700
 $165,203
 39.0%
Health care and social assistance38,273
 49,563
 87,836
 —
 87,836
 20.8
Real estate rental and leasing23,420
 37,835
 61,255
 1,650
 62,905
 14.9
Arts, entertainment, and recreation33,944
 —
 33,944
 —
 33,944
 8.0
Multi-family10,322
 —
 10,322
 20,950
 31,272
 7.4
Retail trade25,480
 1,822
 27,302
 —
 27,302
 6.4
Other14,704
 —
 14,704
 —
 14,704
 3.5
 $269,982
 $105,884
 $375,866
 $47,300
 $423,166
 100.0%
            
Weighted average rate4.10% 4.34% 4.17% 4.22% 4.17%  


The following table summarizes the Bank's commercial real estate and commercial construction loans by state as of September 30, 2017.the dates indicated.
September 30, 2022September 30, 2021
UnpaidUndisbursedGross LoanGross Loan
CountPrincipalAmountAmountAmount
(Dollars in thousands)
Kansas602 $368,816 $54,981 $423,797 $348,835 
Missouri160 232,655 63,788 296,443 232,041 
Texas12 180,278 100,562 280,840 273,124 
Colorado6 20,867 13,510 34,377 36,099 
Arkansas3 21,796 11,618 33,414 33,763 
Nebraska6 32,988 4 32,992 33,468 
Other9 28,963 5,389 34,352 39,713 
798 $886,363 $249,852 $1,136,215 $997,043 

27
 Unpaid Undisbursed Gross Loan Outstanding   % of
 Principal Amount Amount Commitments Total Total
 (Dollars in thousands)
Texas$89,647
 $54,280
 $143,927
 $24,700
 $168,627
 39.8%
Missouri74,297
 50,104
 124,401
 —
 124,401
 29.4
Kansas75,381
 —
 75,381
 —
 75,381
 17.8
Nebraska—
 —
 —
 20,950
 20,950
 5.0
Colorado14,731
 —
 14,731
 1,650
 16,381
 3.9
Arkansas8,006
 —
 8,006
 —
 8,006
 1.9
California6,471
 —
 6,471
 —
 6,471
 1.5
Montana1,449
 1,500
 2,949
 —
 2,949
 0.7
 $269,982
 $105,884
 $375,866
 $47,300
 $423,166
 100.0%


The following table presents the Bank's commercial real estate loan portfolio and outstanding loan commitments, categorized by gross loan amount (unpaid principal plus undisbursed amounts) or outstanding loan commitment amount, as of September 30, 2017.2022.
CountAmount
(Dollars in thousands)
Greater than $30 million6 $245,873 
>$15 to $30 million19 398,089 
>$10 to $15 million8 97,141 
>$5 to $10 million21 146,359 
$1 to $5 million115 259,906 
Less than $1 million1,241 188,419 
1,410 $1,335,787 


Asset Quality

Delinquent and nonaccrual loans and other real estate owned ("OREO"). The following table presents the Company's 30 to 89 day delinquent loans at the dates indicated. The amounts in the table represent the unpaid principal balance of the loans less related charge-offs, if any. Of the loans 30 to 89 days delinquent at September 30, 2022 and 2021, approximately 73% and 61%, respectively, were 59 days or less delinquent.
Loans Delinquent for 30 to 89 Days at September 30,
20222021
NumberAmountNumberAmount
(Dollars in thousands)
One- to four-family:
Originated48 $4,134 48 $4,156 
Correspondent purchased7 1,104 7 2,590 
Bulk purchased3 913 4 541 
Commercial— — 2 37 
Consumer24 345 25 498 
82 $6,496 86 $7,822 
Loans 30 to 89 days delinquent
to total loans receivable, net0.09 %0.11 %

28
 Count Amount
 (Dollars in thousands)
Greater than $30 million4
 $157,180
>$15 to $30 million6
 142,530
>$10 to $15 million2
 25,855
>$5 to $10 million3
 24,350
$1 to $5 million23
 66,119
Less than $1 million16
 7,132
 54
 $423,166
The following table presents the Company's nonaccrual loans and OREO at the dates indicated. The amounts in the table represent the unpaid principal balance of the loans less related charge-offs, if any. Nonaccrual loans are loans that are 90 or more days delinquent or in foreclosure and other loans required to be reported as nonaccrual pursuant to accounting and/or regulatory reporting requirements and/or internal policies, even if the loans are current. At all dates presented, there were no loans 90 or more days delinquent that were still accruing interest. Non-performing assets include nonaccrual loans and OREO.

September 30,
20222021
NumberAmountNumberAmount
(Dollars in thousands)
Loans 90 or More Days Delinquent or in Foreclosure:
One- to four-family:
Originated29 $2,919 50 $3,693 
Correspondent purchased12 3,737 10 3,210 
Bulk purchased3 1,148 9 2,974 
Commercial8 1,167 6 1,214 
Consumer9 154 21 498 
61 9,125 96 11,589 
Loans 90 or more days delinquent or in foreclosure
 as a percentage of total loans0.12 %0.16 %
Nonaccrual loans less than 90 Days Delinquent:(1)
One- to four-family:
Originated3 $222 7 $1,288 
Correspondent purchased— — — — 
Bulk purchased— — 1 131 
Commercial1 77 4 419 
Consumer1 19 1 9 
5 318 13 1,847 
Total nonaccrual loans66 9,443 109 13,436 
Nonaccrual loans as a percentage of total loans0.13 %0.19 %
OREO:
One- to four-family:
Originated(2)
4 $307 3 $170 
Consumer1 21 — — 
5 328 3 170 
Total non-performing assets71 $9,771 112 $13,606 
Non-performing assets as a percentage of total assets0.10 %0.14 %
(1)Includes loans required to be reported as nonaccrual pursuant to accounting and/or regulatory reporting requirements and/or internal policies, even if the loans are current.
(2)Real estate-related consumer loans where we also hold the first mortgage are included in the one- to four-family category as the underlying collateral is one- to four-family property.

29
The following table presents the states where the properties securing five percent or more of the total amount of our one- to four-family loans are located and the corresponding balance of loans 30 to 89 days delinquent, 90 or more days delinquent or in foreclosure, and weighted average LTV ratios for loans 90 or more days delinquent or in foreclosure at September 30, 2022. The LTV ratios were based on the current loan balance and either the lesser of the purchase price or original appraisal, or the most recent Bank appraisal, if available. At September 30, 2022, potential losses, after taking into consideration anticipated private mortgage insurance proceeds and estimated selling costs, have been charged-off.
Loans 30 to 89Loans 90 or More Days Delinquent
One- to Four-FamilyDays Delinquentor in Foreclosure
StateAmount% of TotalAmount% of TotalAmount% of TotalLTV
(Dollars in thousands)
Kansas$3,560,887 56.2 %$4,340 70.6 %$2,382 30.5 %48 %
Missouri1,081,666 17.1 898 14.6 1,641 21.0 62 
Texas576,213 9.1 — — 1,746 22.4 37 
Other states1,119,528 17.6 913 14.8 2,035 26.1 53 
$6,338,294 100.0 %$6,151 100.0 %$7,804 100.0 %50 

Classified Assets. In accordance with the Bank's asset classification policy, management regularly reviews the problem assets in the Bank's portfolio to determine whether any assets require classification. See "Part II, Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 4. Loans Receivable and Allowance for Credit Losses" for asset classification definitions.

The following table presents loans classified as special mention or substandard at the dates presented. The amounts in the table represent the unpaid principal balance of the loans less related charge-offs, if any. The decrease in commercial special mention loans at September 30, 2022 compared to September 30, 2021 was due mainly to three commercial loans moving to the pass classification during the year as the underlying economic conditions being monitored by management improved to levels deemed appropriate by the Company.
September 30, 2022September 30, 2021
Special MentionSubstandardSpecial MentionSubstandard
(Dollars in thousands)
One- to four-family$12,950 $19,953 $14,332 $23,458 
Commercial565 2,733 99,729 3,259 
Consumer306 354 135 718 
$13,821 $23,040 $114,196 $27,435 

30
Allowance for Credit Losses.The distribution of our ACL at the dates indicated is summarized below.
September 30, 2022September 30, 2021
% of% of
AmountLoans toAmountLoans to
of ACLTotal Loansof ACLTotal Loans
(Dollars in thousands)
One- to four-family:
Originated$2,012 53.4 %$1,590 55.8 %
Correspondent purchased2,734 29.5 2,062 28.2 
Bulk purchased206 2.0 304 2.4 
Construction54 0.9 22 0.6 
Total5,006 85.8 3,978 87.0 
Commercial:
Real estate8,729 10.0 13,706 9.6 
Commercial and industrial490 1.0 344 0.9 
Construction1,901 1.9 1,602 1.2 
Total11,120 12.9 15,652 11.7 
Consumer loans:
Home equity136 1.2 126 1.2 
Other consumer109 0.1 67 0.1 
Total consumer loans245 1.3 193 1.3 
$16,371 100.0 %$19,823 100.0 %

The ratio of ACL to loans receivable, by loan type, at the dates indicated is summarized below. The reduction in the ratio of ACL to loans receivable for commercial real estate loans and commercial construction loans from September 30, 2021 to September 30, 2022 was due to a reduction in commercial loan qualitative factors.
September 30,September 30,
20222021
One- to four-family:
Originated0.05 %0.04 %
Correspondent purchased0.12 0.10 
Bulk purchased0.14 0.18 
Construction0.08 0.06 
Total0.08 0.06 
Commercial:
Commercial real estate1.17 2.02 
Commercial and industrial0.61 0.52 
Construction1.35 1.86 
Total1.15 1.89 
Consumer0.24 0.20 
Total0.22 0.28 

See "Part II, Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 1. Summary of Significant Accounting Policies and Note 4. Loans Receivable and Allowance for Credit Losses” for additional information regarding the Bank's ACL.

31
The following tables present ACL activity and related ratios at the dates and for the periods indicated. On October 1, 2020, the Bank adopted ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments ("CECL"). The current year net recovery was due primarily to recoveries on one- to four-family originated loans and commercial real estate loans. The ratio of NCOs during the current year to average non-performing assets was lower than the prior year due to a net recovery in the current year compared to a net charge-off in the prior year. The ratio of ACL to nonaccrual loans was higher in the current year compared to the prior year due mainly to a lower balance of nonaccrual loans compared to the prior year period, partially offset by lower ACL at September 30, 2022. The ratio of ACL to loans receivable, net was lower in the current year compared to the prior year due primarily to a reduction in ACL.
At or For the Year Ended September 30,
202220212020
(Dollars in thousands)
Balance at beginning of period$19,823 $31,527 $9,226 
Adoption of CECL— (4,761)— 
Charge-offs(70)(715)(443)
Recoveries256 237 444 
Net recoveries (charge-offs)186 (478)1 
Provision for credit losses(3,638)(6,465)22,300 
Balance at end of period$16,371 $19,823 $31,527 
Ratio of NCOs during the period
to average non-performing assets(1.59)%3.63 %(0.01)%
ACL to nonaccrual loans at end of period173.37 147.54 252.42 
ACL to loans receivable, net at end of period0.22 0.28 0.44 
ACL to NCOs
N/M(1)
41.5x
N/M(1)

(1)This ratio is not presented for the time periods noted due to loan recoveries exceeding loan charge-offs during the periods.

32
The following table presents NCOs, average loans, and NCOs as a percentage of average loans, by loan type, for the periods indicated.
For the Year Ended September 30,
202220212020
NCOsAverage Loans% of Average LoansNCOsAverage Loans% of Average LoansNCOsAverage Loans% of Average Loans
(Dollars in thousands)
One- to four-family:
Originated$(129)$3,937,188 — %$20 $3,936,166 — %$23 $3,916,716 — %
Correspondent— 2,072,677 — — 2,010,823 — — 2,348,120 — 
Bulk purchased— 159,152 — 21 191,029 0.01 (265)230,720 (0.11)
Construction— 48,079 — — 29,893 — — 33,709 — 
Total(129)6,217,096 — 41 6,167,911 — (242)6,529,265 — 
Commercial:
Real estate(101)692,115 (0.01)465 637,712 0.07 215 602,482 0.04 
Commercial and industrial40 74,133 0.05 — 75,219 — 24 76,473 0.03 
Construction— 117,878 — — 75,771 — — 106,172 — 
Total(61)884,126 (0.01)465 788,702 0.06 239 785,127 0.03 
Consumer:
Home equity1 85,514 — (26)92,495 (0.03)(13)112,939 (0.01)
Other3 8,030 0.04 (2)8,782 (0.02)15 10,395 0.14 
Total4 93,544 — (28)101,277 (0.03)2 123,334 — 
$(186)$7,194,766 — $478 $7,057,890 0.01 $(1)$7,437,726 — 

Securities. The following table presents the distribution of our securities portfolio, at amortized cost, at the dates indicated. Overall, fixed-rate securities comprised 75%95% of our securities portfolio at September 30, 2017. 2022. Weighted average yields on tax-exempt securities are not calculated on a fully tax-equivalent basis. The balance of securities decreased during the current fiscal year as cash flows from the securities portfolio were generally used to fund loan portfolio growth. The increase in the yield during the current year was due to purchases at yields higher than the overall portfolio and upward repricing of the adjustable-rate portion of the portfolio as a result of higher market interest rates. The increase in the WAL in the current year was also due primarily to higher market interest rates which lengthened the life of the securities by decreasing the amount of prepayments.
September 30, 2022September 30, 2021
AmountYield
WAL(1)
AmountYield
WAL(1)
(Dollars in thousands)
MBS$1,243,270 1.57 %4.7 $1,484,211 1.35 %3.5 
Government-sponsored enterprises ("GSE") debentures519,977 0.61 2.9 519,971 0.61 3.7 
Corporate bonds4,000 5.12 9.6 — — — 
Municipal bonds1,243 2.63 6.5 4,274 1.81 0.3 
$1,768,490 1.29 4.2 $2,008,456 1.16 3.5 

(1)The weighted average life ("WAL") is the estimated remaining maturity (in years) after three-month historical prepayment speeds and projected call option assumptions have been applied.Weighted

33
The composition and maturities of the securities portfolio at September 30, 2022 is indicated in the following table by remaining contractual maturity, without consideration of call features or pre-refunding dates, along with associated weighted average yields. The weighted average yields were calculated by multiplying each carrying value by its yield and dividing the sum of these results by the total carrying values.Yields on tax-exempt securitiesinvestments are not calculated on a fully taxabletax equivalent basis.basis.
1 year or lessMore than 1 to 5 yearsMore than 5 to 10 yearsOver 10 yearsTotal Securities
CarryingCarryingCarryingCarryingCarrying
ValueYieldValueYieldValueYieldValueYieldValueYield
(Dollars in thousands)
MBS$2,374 1.75 %$51,691 2.38 %$218,963 1.81 %$815,596 1.46 %$1,088,624 1.57 %
GSE debentures— — 469,827 0.61 — — — — 469,827 0.61 
Corporate bonds— — — — 3,695 5.12 — — 3,695 5.12 
Municipal bonds210 3.00 — — 951 2.55 — — 1,161 2.63 
$2,584 1.85 $521,518 0.78 $223,609 1.86 $815,596 1.46 $1,563,307 1.29 
 September 30, 2017 September 30, 2016
 Amount Yield WAL Amount Yield WAL
 (Dollars in thousands)
Fixed-rate securities:           
MBS$632,422
 2.14% 2.9
 $836,852
 2.16% 2.9
GSE debentures271,300
 1.29
 1.3
 346,226
 1.15
 0.9
Municipal bonds28,337
 1.65
 2.0
 33,303
 1.69
 2.4
Total fixed-rate securities932,059
 1.88
 2.4
 1,216,381
 1.86
 2.3
            
Adjustable-rate securities:           
MBS304,153
 2.55
 4.6
 400,161
 2.25
 4.7
TRUPs2,067
 2.58
 19.7
 2,123
 2.11
 20.7
Total adjustable-rate securities306,220
 2.55
 4.7
 402,284
 2.24
 4.8
Total securities portfolio$1,238,279
 2.05
 3.0
 $1,618,665
 1.95
 2.9


The following table presents the carrying value of MBS in our portfolio by issuer at the dates presented.
 At September 30,
 2017
 2016
 (Dollars in thousands)
FNMA$575,142
 $752,141
FHLMC306,196
 413,458
Government National Mortgage Association61,109
 80,479
 $942,447
 $1,246,078

Mortgage-Backed Securities -The balance of MBS, which primarily consists of securities of U.S. GSEs, decreased $303.6 million from $1.25 billion at September 30, 2016 to $942.4 million at September 30, 2017. The following tables summarizesummarizes the activity in our securities portfolio of MBS for the periods presented. The weighted average yields and WALs for purchases are presented as recorded at the time of purchase. The weighted average yields for the beginning balances are as of the last day of the period previous to the period presented and the weighted average yields for the ending balances are as of the first and last daydays of the periodperiods presented and are generally derived from recent prepayment activity on the securities in the portfolio as of the dates presented. The beginning and ending WAL is the estimated remaining principal repayment term (in years) after three-month historical prepayment speeds have been applied.

 For the Three Months Ended
 September 30, 2017 June 30, 2017 March 31, 2017 December 31, 2016
 Amount Yield WAL Amount Yield WAL Amount Yield WAL Amount Yield WAL
 (Dollars in thousands)
Beginning balance - carrying value$1,017,145
 2.26% 3.6
 $1,090,870
 2.25% 3.9
 $1,166,326
 2.18% 3.5
 $1,246,078
 2.19% 3.5
Maturities and repayments(72,966)     (71,763)     (73,801)     (88,564)    
Net amortization of (premiums)/discounts(937)     (992)     (1,015)     (1,290)    
Purchases:                       
Fixed—
 —
 —
 —
 —
 —
 —
 —
 —
 10,890
 1.99
 3.8
Adjustable—
 —
 —
 —
 —
 —
 —
 —
 —
 —
 —
 —
Change in valuation on AFS securities(795)     (970)     (640)     (788)    
Ending balance - carrying value$942,447
 2.28
 3.5
 $1,017,145
 2.26
 3.6
 $1,090,870
 2.25
 3.9
 $1,166,326
 2.18
 3.5

 For the Year Ended September 30,
 2017 2016
 Amount Yield WAL Amount Yield WAL
 (Dollars in thousands)
Beginning balance - carrying value$1,246,078
 2.19% 3.5
 $1,462,539
 2.24% 3.8
Maturities and repayments(307,094)     (350,990)    
Net amortization of (premiums)/discounts(4,234)     (5,011)    
Purchases:           
Fixed10,890
 1.99
 3.8
 42,827
 1.83
 4.1
Adjustable—
 —
 —
 100,133
 2.02
 5.4
Change in valuation on AFS securities(3,193)     (3,420)    
Ending balance - carrying value$942,447
 2.28
 3.5
 $1,246,078
 2.19
 3.5

Investment Securities -Investment securities, which consist of U.S. GSE debentures (primarily issued by FNMA, FHLMC, or Federal Home Loan Banks) and municipal investments, decreased $81.0 million, from $382.1 million at September 30, 2016 to $301.1 million at September 30, 2017. The following tables summarize the activity of investment securities for the periods presented. The weighted average yields and WALs for purchases are presented as recorded at the time of purchase. The weighted average yields for the beginning balances are as of the last day of the period previous to the period presented and the weighted average yields for the ending balances are as of the last day of the period presented.portfolio. The beginning and ending WALs representare the estimated remaining principal repayment terms (in years) of the securities after three-month historical prepayment speeds and projected call datesoption assumptions have been considered, based upon market rates at each date presented.applied.
For the Year Ended
September 30, 2022September 30, 2021
AmountYieldWALAmountYieldWAL
(Dollars in thousands)
Beginning balance - carrying value$2,014,608 1.16 %3.5 $1,560,950 1.63 %3.1 
Maturities and repayments(323,025)(594,294)
Net amortization of (premiums)/discounts(4,967)(6,206)
Purchases88,026 2.56 4.3 1,079,351 1.01 5.0 
Change in valuation on AFS securities(211,335)(25,193)
Ending balance - carrying value$1,563,307 1.29 4.2 $2,014,608 1.16 3.5 

34
 For the Three Months Ended
 September 30, 2017 June 30, 2017 March 31, 2017 December 31, 2016
 Amount Yield WAL Amount Yield WAL Amount Yield WAL Amount Yield WAL
 (Dollars in thousands)
Beginning balance - carrying value$326,786
 1.29% 1.6
 $328,323
 1.29% 1.9
 $355,681
 1.27% 2.0
 $382,097
 1.20% 1.2
Maturities and calls(25,818)     (1,538)     (28,863)     (50,019)    
Net amortization of (premiums)/discounts(55)     (57)     (61)     (72)    
Purchases:                       
Fixed—
 —
 —
 —
 —
 —
 1,535
 1.30
 3.4
 25,000
 1.70
 4.0
Change in valuation on AFS securities209
     58
     31
     (1,325)    
Ending balance - carrying value$301,122
 1.33
 1.5
 $326,786
 1.29
 1.6
 $328,323
 1.29
 1.9
 $355,681
 1.27
 2.0

 For the Year Ended September 30,
 2017 2016
 Amount Yield WAL Amount Yield WAL
 (Dollars in thousands)
Beginning balance - carrying value$382,097
 1.20% 1.2
 $566,754
 1.19% 1.8
Maturities and calls(106,238)     (285,152)    
Net amortization of (premiums)/discounts(245)     (331)    
Purchases:           
Fixed26,535
 1.68
 4.0
 101,359
 1.09
 0.8
Change in valuation on AFS securities(1,027)     (533)    
Ending balance - carrying value$301,122
 1.33
 1.5
 $382,097
 1.20
 1.2


Liabilities. Total liabilities were $7.82$8.53 billion at September 30, 20172022, compared to $7.87$8.39 billion at September 30, 2016.2021. The decreaseincrease in total liabilities between September 30, 2021 and September 30, 2022 was due primarily to not replacing certain maturing FHLB advances, partially offset by an increase in deposits.FHLB borrowings to fund deposit outflows and loan growth.


Deposits -Deposits were $5.31 billion at September 30, 2017 compared to $5.16 billion at September 30, 2016. The increase was due mainly to increases in wholesale certificates and non-maturity retail deposits. We continue to be competitive on deposit rates and, in some cases, our offer rates for longer-term certificates of deposit have been higher than peers. Offering competitive rates on longer-term certificates of deposit has been an on-going balance sheet strategy by management in anticipation of higher interest rates. If short-term interest rates continue to rise, our customers may move funds from their checking, savings and money market accounts to higher yielding deposit products within the Bank or withdraw their funds from these accounts, including certificates of deposit, to invest in higher yielding investments outside of the Bank.

Deposits.The following table presents the amount, weighted average rate and percent of total for the components of our deposit portfolio at the dates presented.
At September 30,
20222021
% of% of
AmountRate TotalAmountRate Total
(Dollars in thousands)
Non-interest-bearing checking$591,387 — %9.5 %$543,849 — %8.2 %
Interest-bearing checking1,027,222 0.07 16.6 1,037,362 0.07 15.7 
Savings552,743 0.06 8.9 519,069 0.05 7.9 
Money market1,819,761 0.47 29.4 1,753,525 0.19 26.6 
Retail certificates of deposit2,073,542 1.34 33.5 2,341,531 1.41 35.5 
Commercial certificates of deposit36,275 0.97 0.6 190,215 0.66 2.9 
Public unit certificates of deposit93,936 1.61 1.5 211,845 0.21 3.2 
$6,194,866 0.63 100.0 %$6,597,396 0.59 100.0 %
 At September 30,
 2017 2016
     % of     % of
 Amount Rate  Total Amount Rate  Total
 (Dollars in thousands)
Non-interest-bearing checking$243,670
 —% 4.6% $217,009
 —% 4.2%
Interest-bearing checking615,615
 0.05
 11.6
 597,319
 0.05
 11.6
Savings349,977
 0.24
 6.6
 335,426
 0.17
 6.5
Money market1,190,185
 0.24
 22.4
 1,186,132
 0.24
 23.0
Retail certificates of deposit2,450,418
 1.52
 46.1
 2,458,160
 1.43
 47.6
Public units460,003
 1.28
 8.7
 369,972
 0.70
 7.1
 $5,309,868
 0.89
 100.0% $5,164,018
 0.80
 100.0%


Deposits decreased $402.5 million during the current year. The decrease was primarily in the certificate of deposit portfolio, partially offset by an increase in retail checking, savings and money market accounts. Retail certificates of deposit decreased $268.0 million, with the decrease occurring in the medium-term and long-term categories. Commercial certificates of deposit decreased $153.9 million, which was primarily related to one commercial customer for which the reduction in the current year was anticipated.

During the third quarter of the current year, the Bank began increasing rates offered on retail certificates of deposit and money market accounts. Even with the increase in offered rates, management anticipates continued retail deposit outflows in future periods, primarily in transaction accounts, due to strong consumer spending, along with competition from other financial institutions and/or brokerage firms that may offer alternative higher yielding investment options.

As of September 30, 2022 and 2021, approximately $721.8 million and $866.0 million, respectively, of our deposit portfolio was uninsured. The uninsured amounts are estimates based on the methodologies and assumptions used for the Bank's regulatory reporting requirements.

The following tables settable sets forth scheduledthe portion of the Bank's time deposits, by account, that are in excess of the FDIC insurance limit, by remaining time until maturity, information for our certificatesas of September 30, 2022 (dollars in thousands).
3 months or less$93,136 
Over 3 through 6 months48,776 
Over 6 through 12 months66,990 
Over 12 months125,350 
$334,252 

Borrowings. Total borrowings at September 30, 2022 were $2.13 billion, an increase of $549.3 million from September 30, 2021. The $2.13 billion was composed of $1.70 billion in fixed-rate FHLB advances, $365.0 million in variable-rate advances tied to interest rate swaps, and $75.0 million on the FHLB line of credit. The increase in borrowings was a result of deposit including public units,outflows, loan growth and a slow-down in loan prepayment speeds due to an increase in market interest rates. If deposit outflows continue, the Bank will likely enter into additional FHLB borrowings.

During the current year, the Bank reimplemented the leverage strategy, as discussed in the "Executive Summary" section above. These borrowings were repaid prior to September 30, 2022. If the Bank enters into additional FHLB borrowings
35
during fiscal year 2023 to provide sufficient liquidity for operations, the amount of the leverage strategy transaction may decrease compared to the fiscal year 2022 amount due to borrowing and collateral capacity levels.

The Bank primarily uses long-term fixed-rate borrowings with no embedded options to lengthen the average life of the Bank's liabilities. The fixed-rate characteristics of these borrowings lock-in the cost until maturity and thus decrease the amount of liabilities repricing as interest rates move higher compared to funding with lower-cost short-term borrowings. These borrowings are laddered in order to prevent large amounts of liabilities repricing in any one period.

The following table presents the maturity of non-amortizing term borrowings, which consist entirely of FHLB advances, along with associated weighted average contractual and effective rates as of September 30, 2022. In addition to the borrowings in the table below, there were two straight-line amortizing FHLB advances outstanding at September 30, 2017.2022, including a $47.5 million advance at a rate of 3.50% with quarterly payments of $2.5 million through June 2027 and a $100.0 million advance at a rate of 4.45% with quarterly payments of $4.9 million through October 2027.
Maturity byContractualEffective
Fiscal YearAmountRate
Rate(1)
(Dollars in thousands)
2023$300,000 1.70 %1.81 %
2024490,000 3.10 2.85 
2025450,000 2.21 2.24 
2026375,000 1.86 2.07 
2027200,000 1.56 1.80 
2028100,000 3.47 3.42 
$1,915,000 2.29 2.31 
  Amount Due    
    More than More than      
  1 year 1 year to 2 years to 3 More than Total
Rate range or less 2 years years 3 years Amount Rate
  (Dollars in thousands)  
  0.00 – 0.99% $469,691
 $78,910
 $84
 $—
 $548,685
 0.74%
  1.00 – 1.99% 645,723
 619,783
 478,619
 422,071
 2,166,196
 1.60
  2.00 – 2.99% 1,001
 49,844
 113,263
 31,432
 195,540
 2.24
  $1,116,415
 $748,537
 $591,966
 $453,503
 $2,910,421
 1.48
             
Percent of total 38.4% 25.7% 20.3% 15.6%    
Weighted average rate 1.08
 1.52
 1.86
 1.93
    
Weighted average maturity (in years) 0.4
 1.5
 2.5
 3.9
 1.7
  
Weighted average maturity for the retail certificate of deposit portfolio (in years)   1.8
  


(1)The effective rate includes the impact of interest rate swaps and the amortization of deferred prepayment penalties resulting from FHLB advances previously prepaid.


 Amount Due  
   Over Over    
 3 months 3 to 6 6 to 12 Over  
 or less months months 12 months Total
 (Dollars in thousands)
Retail certificates of deposit less than $100,000$173,572
 $151,496
 $244,242
 $942,200
 $1,511,510
Retail certificates of deposit of $100,000 or more77,341
 66,645
 114,642
 680,280
 938,908
Public unit deposits of $100,000 or more149,081
 82,462
 56,934
 171,526
 460,003
 $399,994
 $300,603
 $415,818
 $1,794,006
 $2,910,421

Borrowings - The following tables presenttable presents borrowing activity for the periods shown. The borrowings presented in the table have original contractual terms of one year or longer or are tied to interest rate swaps with original contractual terms of one year or longer. FHLB advances are presented at par. The effective rate is shown as a weighted average effective rateand includes the impact of interest rate swaps and the amortization of deferred prepayment penalties resulting from FHLB advances previously prepaid. The weighted average maturity ("WAM") is the remaining weighted average contractual term in years. The beginning and ending WAMs represent the remaining maturity at each date presented. For new borrowings, the WAMs presented are as of the date of issue.
For the Year Ended September 30,
20222021
EffectiveEffective
AmountRateWAMAmountRateWAM
(Dollars in thousands)
Beginning balance$1,590,000 1.88 %3.3 $1,790,000 2.31 %3.0 
Maturities and prepayments(177,500)1.94 — (1,305,000)2.18 — 
New FHLB borrowings650,000 3.68 3.7 1,105,000 1.96 3.7 
Ending balance$2,062,500 2.44 2.5 $1,590,000 1.88 3.3 


36
 For the Three Months Ended
 September 30, 2017 June 30, 2017 March 31, 2017 December 31, 2016
   Effective     Effective     Effective     Effective  
 Amount Rate WAM Amount Rate WAM Amount Rate WAM Amount Rate WAM
 (Dollars in thousands)
Beginning balance$2,175,000
 2.23% 2.5
 $2,475,000
 2.35% 2.5
 $2,475,000
 2.35% 2.7
 $2,575,000
 2.29% 2.9
Maturities:                       
FHLB advances(100,000) 3.12
   (300,000) 3.24
   —
 —
   (100,000) 0.78
  
New FHLB borrowings:                      
Fixed-rate100,000
 1.85
 3.0
 —
 —
 —
 —
 —
 —
 —
 —
 —
Interest rate swaps(1)
200,000
 2.05
 6.0
 —
 —
 —
 —
 —
 —
 —
 —
 —
Ending balance$2,375,000
 2.16
 2.7
 $2,175,000
 2.23
 2.5
 $2,475,000
 2.35
 2.5
 $2,475,000
 2.35
 2.7
 For the Year Ended September 30,
 2017 2016
   Effective     Effective  
 Amount Rate WAM Amount Rate WAM
 (Dollars in thousands)
Beginning balance$2,575,000
 2.29% 2.9
 $2,775,000
 2.29% 3.3
Maturities:          
FHLB advances(500,000) 2.72
   (400,000) 1.97
  
New FHLB borrowings:          
Fixed-rate100,000
 1.85
 3.0
 200,000
 1.64
 5.0
Interest rate swaps(1)
200,000
 2.05
 6.0
 —
 —
 —
Ending balance$2,375,000
 2.16
 2.7
 $2,575,000
 2.29
 2.9

(1)Represents adjustable-rate FHLB advances for which the Bank has entered into interest rate swaps with a notional amount of $200.0 million to hedge the variability in cash flows associated with the advances. The effective rate and WAM presented include the effect of the interest rate swaps. Excluding the effect of the interest rate swaps, the weighted average effective rate of the adjustable-rate FHLB advances was 1.30% and the WAM as of the date of issue was one year.

Maturities -The following table presents the maturity of term borrowings (including FHLB advances, at par, and repurchase agreements), along with associated weighted average contractual and effective rates as of September 30, 2017. During the current fiscal year, the Bank entered into interest rate swaps with a notional amount of $200.0 million in order to hedge the variability of cash flows associated with 12-month adjustable-rate FHLB advances. The combination of the swaps with the advances creates synthetic long-term liabilities with an expected WAL of approximately six years at September 30, 2017. The 12-month adjustable-rate FHLB advances are presented in the table below based on the contractual maturity date of the advance.
  FHLB Repurchase      
Maturity by Advances Agreements Total Contractual Effective
Fiscal Year Amount Amount Amount Rate 
Rate(1)
  (Dollars in thousands)
2018 $475,000
 $100,000
 $575,000
 2.16% 2.55%
2019 500,000
 —
 500,000
 1.56
 1.69
2020 350,000
 100,000
 450,000
 2.11
 2.11
2021 550,000
 —
 550,000
 2.27
 2.27
2022 200,000
 —
 200,000
 2.23
 2.23
2023 100,000
 —
 100,000
 1.82
 1.82
  $2,175,000
 $200,000
 $2,375,000
 2.04
 2.16

(1)The effective rate includes the impact of interest rate swaps and the amortization of deferred prepayment penalties resulting from FHLB advances previously prepaid.

Interest-Bearing Liabilities.The following table presents the maturity and weighted average repricing rate, which is also the weighted average effective rate, of certificates of deposit, split between retailretail/commercial and public unit amounts, and non-amortizing term borrowings for the next four quarters as of September 30, 2017.2022.
December 31,March 31,June 30,September 30,
2022202320232023Total
(Dollars in thousands)
Retail/Commercial Certificates:
Amount$364,431 $265,239 $196,763 $282,207 $1,108,640 
Repricing Rate1.11 %1.22 %0.82 %1.44 %1.17 %
Public Unit Certificates:
Amount$46,907 $17,519 $3,674 $10,002 $78,102 
Repricing Rate1.82 %0.77 %0.27 %1.04 %1.41 %
Term Borrowings:
Amount$— $100,000 $100,000 $100,000 $300,000 
Repricing Rate— %1.46 %1.82 %2.14 %1.81 %
Total
Amount$411,338 $382,758 $300,437 $392,209 $1,486,742 
Repricing Rate1.19 %1.26 %1.15 %1.61 %1.31 %

The following table sets forth the WAM information for our certificates of deposit, in years, as of September 30, 2022.
Retail certificates of deposit1.4 
Commercial certificates of deposit0.9 
Public unit certificates of deposit0.5 
Total certificates of deposit1.4 

  Retail   Public Unit   Term      
Maturity by Certificate Repricing Deposit Repricing Borrowings Repricing   Repricing
Quarter End Amount Rate Amount Rate Amount Rate Total Rate
  (Dollars in thousands)
December 31, 2017 $250,913
 1.01% $149,081
 1.11% $200,000
 2.94% $599,994
 1.68%
March 31, 2018 218,141
 1.09
 82,462
 1.19
 —
 —
 300,603
 1.12
June 30, 2018 208,676
 1.04
 35,721
 1.24
 100,000
 2.82
 344,397
 1.57
September 30, 2018 150,208
 1.09
 21,213
 1.22
 275,000
 2.17
 446,421
 1.76
  $827,938
 1.05
 $288,477
 1.16
 $575,000
 2.55
 $1,691,415
 1.58


Stockholders' Equity. Stockholders' Total stockholders' equity was $1.37 billion at September 30, 2017 compared to $1.392022 was $1.10 billion, ata $145.8 million decrease from September 30, 2016.2021. The $24.7 million decrease was almost entirely related to a reduction in AOCI as a result of unrealized losses on AFS securities due primarily to an increase in market interest rates.

During the payment of $118.0 million incurrent year, the Company paid cash dividends partially offset by net income of $84.1totaling $103.1 million. TheThese cash dividends paid during the current fiscal year totaled $0.88$0.76 per share and consisted of a $0.29$0.20 per share True Blue Capitol cash dividend, a $0.22 per share cash true-up dividend related to fiscal year 20162021 earnings, per the Company's dividend policy, a $0.25 per share True Blue Capitol dividend, and four regular quarterly cash dividends of $0.085 per share, totaling $0.34 per share. In the long run, management considers the Bank's equity to total assets ratio of at least 9% an appropriate level of capital. At September 30, 2022, this ratio was 9.9%. The increase in unrealized losses on AFS securities and the related impact on AOCI reduced the Bank's ratio of equity to total assets by approximately 150 basis points. For additional information, see "Part II, Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 15. Accumulated Other Comprehensive Income."


On October 18, 2017,25, 2022, the Company announced a regular quarterly cash dividend of $0.085 per share, or approximately $11.4$11.6 million, payable on November 17, 201718, 2022 to stockholders of record as of the close of business on November 3, 2017.4, 2022. On October 27, 2017,26, 2022, the Company announced a fiscal year 20172022 cash true-up dividend of $0.29$0.28 per share, or approximately $39.0$38.0 million, related to fiscal year 20172022 earnings. The $0.29$0.28 per share cash true-up dividend was determined by taking the difference between total earnings for fiscal year 20172022 and total regular quarterly cash dividends paid during fiscal year 2017,2022, divided by the number of shares outstanding as of October 24, 2017.outstanding. The cash true-up dividend is payable on December 1, 20172, 2022 to stockholders of record as of the close of business on November 17, 2017,18, 2022, and is the result of the Board of Directors' commitment to distribute to stockholders 100% of the annual earnings of Capitol Federal Financial, Inc.the Company for fiscal year 2017.2022.


37
At September 30, 2017,2022, Capitol Federal Financial, Inc., at the holding company level, had $120.8$104.0 million in cash on deposit at the Bank. For fiscal year 2018,2023, it is the intentintention of the Board of Directors and management to continue with the payout of 100% of the Company's earnings to itsthe Company's stockholders. The payout is expected to be in the form of regular quarterly cash dividends of $0.085 per share, totaling $0.34 for the year, and a cash true-up dividend equal to fiscal year 20182023 earnings in excess of the amount paid as regular quarterly cash dividends during fiscal year 2018.2023. It is anticipated that the fiscal year 20182023 cash true-up dividend will be paid in December 2018.2023. Dividend payments depend upon a number of factors including the Company's financial condition and results of operations, regulatory capital requirements, regulatory limitations on the Bank's ability to make capital distributions to the Company, and the amount of cash at the holding company.company level.


Capitol Federal Financial, Inc.As of September 30, 2022, there was $44.7 million authorized under an existing stock repurchase plan for purchases of the Company's common stock. This plan has no expiration date; however, the FRB's existing approval for the Company to repurchase shares extends through August 2023. On October 27, 2022, the Company announced its intention to resume repurchasing shares under the existing plan. The amount and timing of the stock repurchases is dependent on the market price of the Company's common stock. Subsequent to September 30, 2022 and through November 17, 2022, the Company repurchased 1,368,805 shares at an average price of $8.09 per share.

The Company works to find multiple ways to provide stockholder value. Primarily thisThis has primarily been through stock buybacks and the payment of cash dividends.dividends and stock repurchases. The Company has maintained a dividend policy of paying out 100% of its earnings to stockholders in the form of quarterly cash dividends and an annual cash true-up dividend in December of each year. In addition,order to provide additional stockholder value, the Company paid a True Blue Capitol cash dividend of $0.25 per share in June for six consecutive years ending in 2019. Given the state of economic uncertainty in 2020, the Company elected to defer the True Blue dividend originally planned for June 2020. In June 2021, the Company paid a True Blue Capitol cash dividend of $0.40 per share. This cash dividend represented a $0.20 per share cash dividend from fiscal year 2020 and a $0.20 per share cash dividend from fiscal year 2021. In June 2022, the Company paid a True Blue Capitol cash dividend of $0.20 per share. The Company has paid the True Blue Capitol dividend primarily due to the excess capital levels at the Company and the Bank, the Company has paid out a True Blue dividend of $0.25 cash per share in June of each of the past four years and in December prior to that.Bank. The Company considers various business strategies and their impact on capital and asset measures on both a current and future basis, as well as regulatory considerations, including capital levels and requirements, in determining the amount, if any, and timing of the True Blue Capitol dividend.


The following table presents regular quarterly cash dividends and special cash dividends paid in calendar years 2017, 2016,2022, 2021, and 2015.2020. The amounts represent cash dividends paid during each period. The 20172022 true-up dividend amount presented represents the dividend payable on December 1, 20172, 2022 to stockholders of record as of November 17, 2017.18, 2022.
Calendar Year
202220212020
AmountPer ShareAmountPer ShareAmountPer Share
(Dollars in thousands, except per share amounts)
Regular quarterly dividends paid
Quarter ended March 31$11,535 $0.085 $11,518 $0.085 $11,733 $0.085 
Quarter ended June 3011,534 0.085 11,516 0.085 11,733 0.085 
Quarter ended September 3011,534 0.085 11,518 0.085 11,733 0.085 
Quarter ended December 3111,508 0.085 11,535 0.085 11,514 0.085 
True-up dividends paid37,701 0.280 29,850 0.220 17,614 0.130 
True Blue Capitol dividends paid27,143 0.200 54,210 0.400 — — 
Calendar year-to-date dividends paid$110,955 $0.820 $130,147 $0.960 $64,327 $0.470 

38
 Calendar Year
 2017 2016 2015
 Amount Per Share Amount Per Share Amount Per Share
 (Dollars in thousands, except per share amounts)
Regular quarterly dividends paid           
Quarter ended March 31$11,386
 $0.085
 $11,305
 $0.085
 $11,592
 $0.085
Quarter ended June 3011,409
 0.085
 11,314
 0.085
 11,585
 0.085
Quarter ended September 3011,411
 0.085
 11,323
 0.085
 11,385
 0.085
Quarter ended December 3111,427
 0.085
 11,363
 0.085
 11,303
 0.085
True-up dividends paid38,985
 0.290
 38,835
 0.290
 33,248
 0.250
True Blue dividends paid33,559
 0.250
 33,274
 0.250
 33,924
 0.250
Calendar year-to-date dividends paid$118,177
 $0.880
 $117,414
 $0.880
 $113,037
 $0.840

In October 2015,Rate/Volume Analysis. The table below presents the Company announced a stock repurchase plandollar amount of changes in interest income and interest expense for upmajor components of interest-earning assets and interest-bearing liabilities, comparing fiscal years 2022 to $70.0 million2021. For the comparison of common stock. Itfiscal years 2021 to 2020, see "Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2021. For each category of interest-earning assets and interest-bearing liabilities, information is anticipated that shares will be purchasedprovided on changes attributable to (1) changes in volume, which are changes in the average balance multiplied by the previous year's average rate, and (2) changes in rate, which are changes in the average rate multiplied by the average balance from timethe previous year. The net changes attributable to time based upon market conditionsthe combined impact of both rate and available liquidity. There is no expiration for this repurchase plan and no sharesvolume have been repurchased under this repurchase plan.

Weighted Average Yields and Rates. The following table presentsallocated proportionately to the weighted average yields on interest-earning assets, the weighted average rates paid on interest-bearing liabilities,changes due to volume and the resultant interest rate spreads at the dates indicated. As previously discussed,changes due to rate.
For the Year Ended September 30,
2022 vs. 2021
Increase (Decrease) Due to
Volume(1)
RateTotal
(Dollars in thousands)
Interest-earning assets:
Loans receivable$5,333 $(6,699)$(1,366)
MBS(1,338)(655)(1,993)
Investment securities246 197 443 
FHLB stock4,530 1,585 6,115 
Cash and cash equivalents9,569 8,591 18,160 
Total interest-earning assets18,340 3,019 21,359 
Interest-bearing liabilities:
Checking63 (82)(19)
Savings31 (11)20 
Money market606 (156)450 
Certificates of deposit(6,461)(7,940)(14,401)
Borrowings19,856 (2,140)17,716 
Total interest-bearing liabilities14,095 (10,329)3,766 
Net change in net interest income$4,245 $13,348 $17,593 

(1)The increases attributable to changes in volume related to FHLB stock, cash and cash equivalents, and borrowings were due primarily to the leverage strategy wasbeing utilized during the current year and not in place at September 30, 2017 and 2016, sobeing utilized during the end of period yields/rates presented at September 30, 2017 and 2016 in the table below do not reflect the effects of this strategy. At September 30, 2015, $700.0 million of the leverage strategy was in place. The weighted average yields and rates include amortization of fees, costs, premiums and discounts, which are considered adjustments to yields/rates. The weighted average rate on FHLB borrowings includes the impact of interest rate swaps. Weighted average yields on tax-exempt securities are not calculated on a fully taxable equivalent basis.prior year.
39
 At September 30,
 2017
 2016
 2015
Yield on:     
Loans receivable3.59% 3.58% 3.65%
MBS2.28
 2.19
 2.24
Investment securities1.33
 1.20
 1.19
FHLB stock6.47
 5.98
 5.98
Cash and cash equivalents1.25
 0.49
 0.25
Combined yield on interest-earning assets3.32
 3.22
 3.06
      
Rate paid on:     
Checking deposits0.04
 0.04
 0.04
Savings deposits0.24
 0.17
 0.16
Money market deposits0.24
 0.24
 0.23
Retail certificates1.52
 1.43
 1.29
Wholesale certificates1.28
 0.70
 0.40
Total deposits0.89
 0.80
 0.72
FHLB borrowings2.09
 2.24
 1.82
Repurchase agreements2.94
 2.94
 2.94
Total borrowings2.16
 2.29
 1.89
Combined rate paid on interest-bearing liabilities1.28
 1.30
 1.21
      
Net interest rate spread2.04
 1.92
 1.85

Average Balance Sheets. The following table presents the average balances of our assets, liabilities, and stockholders' equity, and the related weighted average yields and rates on our interest-earning assets and interest-bearing liabilities for the periods indicated. For fiscal year 2020 information, see "Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2021. Weighted average yields are derived by dividing annual income by the average balance of the related assets, and weighted average rates are derived by dividing annual expense by the average balance of the related liabilities, for the periods shown. Average outstanding balances are derived from average daily balances. The weighted average yields and rates include amortization of fees, costs, premiums and discounts, which are considered adjustments to yields/rates. Weighted average yields on tax-exempt securities are not calculated on a fully taxable equivalent basis.

For the Year Ended September 30,
20222021
AverageInterestAverageInterest
OutstandingEarned/Yield/OutstandingEarned/Yield/
AmountPaidRateAmountPaidRate
Assets:(Dollars in thousands)
Interest-earning assets:
One- to four-family loans:
Originated$3,985,267 $129,392 3.25 %$3,966,059 $137,461 3.47 %
Correspondent purchased2,072,677 55,227 2.66 2,010,823 48,066 2.39 
Bulk purchased159,152 2,053 1.29 191,029 3,601 1.89 
Total one- to four-family loans6,217,096 186,672 3.00 6,167,911 189,128 3.07 
Commercial loans884,126 37,223 4.15 788,702 36,085 4.51 
Consumer loans93,544 4,636 4.96 101,277 4,684 4.63 
Total loans receivable(1)
7,194,766 228,531 3.17 7,057,890 229,897 3.25 
MBS(2)
1,354,080 19,406 1.43 1,446,466 21,399 1.48 
Investment securities(2)(3)
523,170 3,268 0.62 482,641 2,825 0.59 
FHLB stock(4)
149,236 10,031 6.72 77,250 3,916 5.07 
Cash and cash equivalents(5)
1,562,274 18,304 1.16 131,798 144 0.11 
Total interest-earning assets10,783,526 279,540 2.59 9,196,045 258,181 2.80 
Other non-interest-earning assets343,311 443,724 
Total assets$11,126,837 $9,639,769 
Liabilities and stockholders' equity:
Interest-bearing liabilities:
Checking$1,056,303 752 0.07 $972,920 772 0.08 
Savings543,609 299 0.06 487,146 280 0.06 
Money market1,840,898 4,578 0.25 1,598,838 4,128 0.26 
Retail certificates2,203,452 27,664 1.26 2,491,427 40,475 1.62 
Commercial certificates103,865 666 0.64 197,384 1,559 0.79 
Wholesale certificates150,689 497 0.33 252,623 1,192 0.47 
Total deposits5,898,816 34,456 0.58 6,000,338 48,406 0.81 
Borrowings(6)
3,288,348 52,490 1.58 1,636,399 34,774 2.11 
Total interest-bearing liabilities9,187,164 86,946 0.94 7,636,737 83,180 1.09 
Non-interest-bearing deposits573,954 509,778 
Other non-interest-bearing liabilities178,526 219,328 
Stockholders' equity1,187,193 1,273,926 
Total liabilities and stockholders' equity$11,126,837 $9,639,769 
Net interest income(7)
$192,594 $175,001 
Net interest-earning assets$1,596,362 $1,559,308 
Net interest margin(8)(9)
1.79 1.90 
Ratio of interest-earning assets to interest-bearing liabilities1.17x1.20x


40
 For the Year Ended September 30,
 2017 2016 2015
 Average Interest   Average Interest   Average Interest  
 Outstanding Earned/ Yield/ Outstanding Earned/ Yield/ Outstanding Earned/ Yield/
 Amount Paid Rate Amount Paid Rate Amount Paid Rate
Assets:(Dollars in thousands)
Interest-earning assets:                 
Loans receivable(1)
$7,150,686
 $253,393
 3.54% $6,766,317
 $243,311
 3.60% $6,389,964
 $235,500
 3.69%
MBS(2)
1,088,495
 23,809
 2.19
 1,366,605
 29,794
 2.18
 1,632,117
 36,647
 2.25
Investment securities(2)(3)
341,149
 4,362
 1.28
 481,223
 5,925
 1.23
 604,999
 7,182
 1.19
FHLB stock192,896
 12,233
 6.34
 204,894
 12,252
 5.98
 209,743
 12,556
 5.99
Cash and cash equivalents(4)
2,114,722
 19,389
 0.90
 2,168,896
 9,831
 0.45
 2,125,693
 5,477
 0.25
Total interest-earning assets(1)(2)
10,887,948
 313,186
 2.87
 10,987,935
 301,113
 2.74
 10,962,516
 297,362
 2.71
Other non-interest-earning assets299,338
     293,692
     232,234
    
Total assets$11,187,286
     $11,281,627
     $11,194,750
    
                  
Liabilities and stockholders' equity:                 
Interest-bearing liabilities:                 
Checking$827,677
 302
 0.04
 $784,303
 291
 0.04
 $727,533
 274
 0.04
Savings346,495
 783
 0.23
 326,744
 603
 0.18
 306,456
 462
 0.15
Money market1,210,644
 2,868
 0.24
 1,173,983
 2,762
 0.24
 1,149,203
 2,679
 0.23
Retail certificates2,434,470
 35,449
 1.46
 2,370,286
 32,181
 1.36
 2,259,645
 28,085
 1.24
Wholesale certificates391,902
 3,566
 0.91
 370,707
 2,022
 0.55
 312,857
 1,619
 0.52
Total deposits5,211,188
 42,968
 0.82
 5,026,023
 37,859
 0.75
 4,755,694
 33,119
 0.70
FHLB borrowings(5)
4,269,494
 68,871
 1.61
 4,530,835
 65,091
 1.43
 4,646,782
 67,797
 1.46
Repurchase agreements200,000
 5,965
 2.94
 200,000
 5,981
 2.94
 215,835
 6,678
 3.05
Total borrowings4,469,494
 74,836
 1.67
 4,730,835
 71,072
 1.50
 4,862,617
 74,475
 1.53
Total interest-bearing liabilities9,680,682
 117,804
 1.21
 9,756,858
 108,931
 1.11
 9,618,311
 107,594
 1.12
Other non-interest-bearing liabilities124,443
     120,636
     108,522
    
Stockholders' equity1,382,161
     1,404,133
     1,467,917
    
Total liabilities and stockholders' equity$11,187,286
     $11,281,627
     $11,194,750
    
                  
Net interest income(6)
  $195,382
     $192,182
     $189,768
  
Net interest rate spread(7)(8)
    1.66
     1.63
     1.59
Net interest-earning assets$1,207,266
     $1,231,077
     $1,344,205
    
Net interest margin(8)(9)
    1.79
     1.75
     1.73
Ratio of interest-earning assets to interest-bearing liabilities 1.12x
     1.13x
     1.14x


(1)Calculated net of(1)Balances are adjusted for unearned loan fees and deferred costs. Loans that are 90 or more days delinquent are included in the loans receivable average balance with a yield of zero percent.
(2)AFS securities are adjusted for unamortized purchase premiums or discounts.
(3)The average balance of investment securities includes an average balance of nontaxable securities of $1.7 million and $6.6 million for the years ended September 30, 2022 and 2021, respectively.
(4)Included in this line, for the year ended September 30, 2022, is FHLB stock related to the leverage strategy with an average outstanding balance $71.0 million and dividend income of $4.8 million at a weighted average yield of 6.75%, and FHLB stock not related to the leverage strategy with an average outstanding balance of $78.2 million and dividend income of $5.2 million at a weighted average yield of 6.69%. There was no FHLB stock related to the leverage strategy during the year ended September 30, 2021.
(5)The average balance of cash and cash equivalents includes an average balance of cash related to the leverage strategy of $1.51 billion during the year ended September 30, 2022. There were no cash and cash equivalents related to the leverage strategy during the year ended September 30, 2021.
(6)Included in this line, for the year ended September 30, 2022, are FHLB borrowings related to the leverage strategy with an average outstanding balance of $1.58 billion and interest paid of $18.5 million, at a weighted average rate of 1.15%, and FHLB borrowings not related to the leverage strategy with an average outstanding balance of $1.71 billion and interest paid of $34.0 million, at a weighted average rate of 1.98%. There were no FHLB borrowings related to the leverage strategy during the year ended September 30, 2021. The FHLB advance amounts and rates included in this line item include the effect of interest rate swaps and are net of deferred prepayment penalties.
(7)Net interest income represents the difference between interest income earned on interest-earning assets and interest paid on interest-bearing liabilities. Net interest income depends on the average balance with a yield of zero percent. Balances include loans receivable held-for-sale.
(2)MBS and investment securities classified as AFS are stated at amortized cost, adjusted for unamortized purchase premiums or discounts.
(3)The average balance of investment securities includes an average balance of nontaxable securities of $30.7 million, $37.0 million, and $37.2 million for the years ended September 30, 2017, 2016, and 2015, respectively.
(4)The average balance of cash and cash equivalents includes an average balance of cash related to the leverage strategy of $1.93 billion, $1.97 billion, and $1.98 billion for the years ended September 30, 2017, 2016, and 2015, respectively.
(5)Included in this line are FHLB borrowings related to the leverage strategy with an average outstanding amount of $2.02 billion, $2.06 billion, and $2.08 billion, interest paid of $18.5 million, $10.1 million, and $5.4 million, at a rate of 0.91%, 0.48%, and 0.25% for the years ended September 30, 2017, 2016, and 2015, respectively. The FHLB advance amounts and rates included in this line include the effect of interest rate swaps and are net of deferred prepayment penalties.
(6)Net interest income represents the difference between interest income earned on interest-earning assets and interest paid on interest-bearing liabilities. Net interest income depends on the balance of interest-earning assets and interest-bearing liabilities, and the interest rates earned or paid on them.
(7)Net interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.
(8)The table below provides a reconciliation between certain performance ratios presented in accordance with GAAP and the performance ratios excluding the effects of the leverage strategy, which are not presented in accordance with GAAP. Management believes it is important for comparability purposes to provide the performance ratios without the leverage strategy because of the unique nature of the leverage strategy. The leverage strategy reduces some of our performance ratios due to the amount of earnings associated with the transaction in comparison to the size of the transaction, while increasing our net income.
  For the Year Ended September 30,
  2017 2016 2015
  Actual Leverage Adjusted Actual Leverage Adjusted Actual Leverage Adjusted
  (GAAP) Strategy (Non-GAAP) (GAAP) Strategy (Non-GAAP) (GAAP) Strategy (Non-GAAP)
Net interest margin 1.79% (0.36)% 2.15% 1.75% (0.35)% 2.10% 1.73% (0.34)% 2.07%
Net interest rate spread 1.66
 (0.32) 1.98
 1.63
 (0.30) 1.93
 1.59
 (0.28) 1.87
(9)Net interest margin represents net interest income as a percentage of average interest-earning assets.

Rate/Volume Analysis. The table below presents the amount of changes in interest income and interest expense for major components of interest-earning assets and interest-bearing liabilities, comparing fiscal years 2017 to 2016 and fiscal years 2016 to 2015. For each categorythe interest rates earned or paid on them.
(8)Net interest margin represents net interest income as a percentage of average interest-earning assetsassets.
(9)The table below provides a reconciliation between certain performance ratios presented in accordance with accounting principles generally accepted in the United States of America ("GAAP") and interest-bearing liabilities, information is provided on changes attributable to (1) changes in volume,the performance ratios excluding the effects of the leverage strategy, which are changesnot presented in accordance with GAAP. Management believes it is important for comparability purposes to provide the average balance multiplied byperformance ratios without the previous year's average rate, and (2) changes in rate, which are changes inleverage strategy because of the average rate multiplied byunique nature of the average balance from the previous year.leverage strategy. The net changes attributableleverage strategy reduces some of our performance ratios due to the combined impactamount of both rate and volume have been allocated proportionatelyearnings associated with the transaction in comparison to the changes due to volume andsize of the changes due to rate.transaction, while increasing our net income. The pre-tax yield on the leverage strategy was 0.25% for the year ended September 30, 2022.
For the Year Ended September 30,
20222021
ActualLeverageAdjustedActualLeverageAdjusted
(GAAP)Strategy(Non-GAAP)(GAAP)Strategy(Non-GAAP)
Yield on interest-earning assets2.59 %(0.19)%2.78 %2.80 %— %2.80 %
Cost of interest-bearing liabilities0.94 0.04 0.90 1.09 — 1.09 
Net interest margin1.79 (0.25)2.04 1.90 — 1.90 

41
 For the Year Ended September 30,
 2017 vs. 2016 2016 vs. 2015
 Increase (Decrease) Due to Increase (Decrease) Due to
 Volume Rate Total Volume Rate Total
 (Dollars in thousands)
Interest-earning assets:           
Loans receivable$13,480
 $(3,398) $10,082
 $13,496
 $(5,685) $7,811
MBS(6,083) 98
 (5,985) (5,815) (1,038) (6,853)
Investment securities(1,783) 220
 (1,563) (1,515) 258
 (1,257)
FHLB stock(753) 734
 (19) (261) (43) (304)
Cash and cash equivalents(252) 9,810
 9,558
 114
 4,240
 4,354
Total interest-earning assets4,609
 7,464
 12,073
 6,019
 (2,268) 3,751
            
Interest-bearing liabilities:           
Checking15
 (5) 10
 22
 (4) 18
Savings38
 143
 181
 33
 108
 141
Money market81
 25
 106
 64
 18
 82
Certificates of deposit1,067
 3,745
 4,812
 2,057
 2,442
 4,499
FHLB borrowings(5,262) 9,042
 3,780
 (2,280) (426) (2,706)
Repurchase agreements(8) (8) (16) (467) (230) (697)
Total interest-bearing liabilities(4,069) 12,942
 8,873
 (571) 1,908
 1,337
            
Net change in net interest income$8,678
 $(5,478) $3,200
 $6,590
 $(4,176) $2,414

Comparison of Operating Results for the Years Ended September 30, 20172022 and 20162021
For fiscal year 2017, theThe Company recognized net income of $84.1$84.5 million, or $0.63$0.62 per share, for the current year compared to net income of $83.5$76.1 million, or $0.63$0.56 per share, for fiscal year 2016.the prior year. The increase in net income was due primarily to a $3.2 millionan increase in net interest income, partially offset by higher income tax expense and a $1.1 million decrease in non-interest income. Partially offsetting this increase, no provision for credit losses was recorded in fiscal year 2017, compared to alower negative provision for credit losses of $750 thousand in fiscal year 2016.

losses. The net interest margin increased fourdecreased 11 basis points, from 1.75%1.90% for the prior fiscal year to 1.79% for the current fiscal year. Excluding the effects of the leverage strategy, the net interest margin would have increased five14 basis points, from 2.10%1.90% for the prior fiscal year to 2.15%2.04% for the current fiscal year. The increase in the net interest margin excluding the effects of the leverage strategy was due mainly to a shift in the mix of interest-earning assets from relatively lower yielding securities to higher yielding loans, partially offset by a decreasereduction in the weighted average yield on loans. The positive impactcost of the decrease in interest expense on borrowings not related to the leverage strategy was offset by an increase in interest expense on deposits.retail certificates of deposit.


Interest and Dividend Income
The weighted average yield on total interest-earning assets increased 13 basis points, from 2.74% for the prior fiscal year to 2.87% for the current fiscal year, while the average balance of interest-earning assets decreased $100.0 million from the prior fiscal year. Absent the impact of the leverage strategy, the weighted average yield on total interest-earning assets would have increased six basis points, from 3.21% for the prior fiscal year to 3.27% for the current fiscal year, while the average balance would have decreased $59.6 million. The following table presents the components of interest and dividend income for the time periods presented, along with the change measured in dollars and percent.
For the Year Ended
September 30,Change Expressed in:
20222021DollarsPercent
(Dollars in thousands)
INTEREST AND DIVIDEND INCOME:
Loans receivable$228,531 $229,897 $(1,366)(0.6)%
MBS19,406 21,399 (1,993)(9.3)
Cash and cash equivalents18,304 144 18,160 12,611.1 
FHLB stock10,031 3,916 6,115 156.2 
Investment securities3,268 2,825 443 15.7 
Total interest and dividend income$279,540 $258,181 $21,359 8.3 
 For the Year Ended    
 September 30, Change Expressed in:
 2017
 2016
 Dollars Percent
 (Dollars in thousands)  
INTEREST AND DIVIDEND INCOME:       
Loans receivable$253,393
 $243,311
 $10,082
 4.1 %
MBS23,809
 29,794
 (5,985) (20.1)
Cash and cash equivalents19,389
 9,831
 9,558
 97.2
FHLB Stock12,233
 12,252
 (19) (0.2)
Investment securities4,362
 5,925
 (1,563) (26.4)
Total interest and dividend income$313,186
 $301,113
 $12,073
 4.0


The increasedecrease in interest income on loans receivable was due to a $384.4 millionlower weighted average rate on the originated and correspondent one- to four-family loan portfolio during the current year, mostly offset by an increase in the average balance of the portfolio, partially offset by a six basis point decreaseloan portfolio. The lower weighted average rate was due to endorsements, refinances, originations and purchases at lower market rates at the time of the transactions in the weighted average yield onprior fiscal year, which are being fully reflected in the current year. Premium amortization related to the one- to four-family correspondent loan portfolio decreased significantly compared to 3.54% forthe prior year due to the slow-down in prepayments and endorsements resulting from the increase in market interest rates during the last half of the current fiscal year. Loan growth was funded through cash flows fromyear, partially offsetting the securities portfolio. The decreasereduction in theinterest income related to a lower weighted average yield was due primarilyrate on the one- to endorsements and refinances repricing loans to lower market rates, the origination and purchase of loans at rates lower than the overall loanfour-family portfolio rate at certain points during each year, and an increase in the amortization of premiums related to correspondent loans.

mentioned above.
The decrease in interest income on the MBS portfolio was due primarily to a $278.1 million decrease in the average balance of the portfolio, as cash flows not reinvestedrepayments were primarily used primarily to fund loan growth and pay off maturing FHLB borrowings. The weighted average yield on the MBS portfolio increased one basis point, from 2.18% during the prior fiscal year to 2.19% for the current fiscal year. Net premium amortization of $4.2 million during the current fiscal year decreased the weighted average yield on the portfolio by 39 basis points. During the prior fiscal year, $5.0 million of net premiums were amortized, which decreased the weighted average yield on the portfolio by 37 basis points. As of September 30, 2017, the remaining net balance of premiums on our portfolio of MBS was $9.0 million.growth.


The increase in interest income on cash and cash equivalents was due to a 45 basis pointand the increase in dividend income on FHLB stock were due mainly to the weighted average yieldleverage strategy being utilized during the current year and not being utilized during the prior year. Additionally, market interest rates increased during the year resulting fromin an increase in the yield earned on balances held atcash, and FHLB increased the FRB of Kansas City.dividend rate paid during the year.



The decreaseincrease in interest income on investment securities was due to a $140.1 million decrease in the average balance. Cash flows not reinvested in the portfolio were used primarily to fund loan growth and pay off maturing FHLB borrowings.

Interest Expense
The weighted average rate paid on total interest-bearing liabilities increased 10 basis points, from 1.11% for the prior fiscal year to 1.21% for the current fiscal year, whilean increase in the average balance of interest-bearing liabilities decreased $76.2 million from the prior year fiscal year. Absentportfolio, along with an increase in the impact of the leverage strategy, the weighted average rate paid on total interest-bearing liabilities would have increased one basis point, from 1.28% for the prior fiscal yearyield due to 1.29% forpurchases at higher market yields during the current fiscal year, while the average balance of interest-bearing liabilities would have decreased $35.8 million. year.

42
Interest Expense
The following table presents the components of interest expense for the time periods presented, along with the change measured in dollars and percent.
For the Year Ended
September 30,Change Expressed in:
20222021DollarsPercent
(Dollars in thousands)
INTEREST EXPENSE:
Borrowings$52,490 $34,774 $17,716 50.9 %
Deposits34,456 48,406 (13,950)(28.8)
Total interest expense$86,946 $83,180 $3,766 4.5 
 For the Year Ended    
 September 30, Change Expressed in:
 2017
 2016
 Dollars Percent
 (Dollars in thousands)  
INTEREST EXPENSE:       
FHLB borrowings$68,871
 $65,091
 $3,780
 5.8 %
Deposits42,968
 37,859
 5,109
 13.5
Repurchase agreements5,965
 5,981
 (16) (0.3)
Total interest expense$117,804
 $108,931
 $8,873
 8.1

The table above includes interest expense on FHLB borrowings both associated and not associated with the leverage strategy. Interest expense on FHLB borrowings not related to the leverage strategy decreased $4.6 million from the prior fiscal year due to a $221.0 million decrease in the average balance of the portfolio as a result of not replacing all of the advances that matured between periods. Funds generated from deposit growth were primarily used to pay off the maturing advances, along with some cash flows from the securities portfolio. The weighted average rate paid on FHLB borrowings not related to the leverage strategy increased one basis point, to 2.24% for the current fiscal year. Interest expense on FHLB borrowings associated with the leverage strategy increased $8.4 million from the prior fiscal year due to a 43 basis point increase in the weighted average rate paid as a result of an increase in interest rates between periods.


The increase in interest expense on borrowings was due to the leverage strategy being utilized during a portion of the current year and not being utilized during the prior year. Interest expense on borrowings associated with the leverage strategy totaled $18.5 million during the current year. Interest expense on FHLB borrowings not associated with the leverage strategy was lower in the current year due to terminating or not renewing certain interest rate swap agreements, not replacing some maturing FHLB advances and prepaying certain advances during fiscal year 2021, partially offset by an increase in the average balance due to an increase in FHLB borrowings to fund operational needs during the latter portion of the current year.

The decrease in interest expense on deposits was due primarilymainly to a seven basis point increasedecrease in the weighted average rate to 0.82% forpaid and the current fiscal year, along with growth in the portfolio. The increase in the weighted average rate was primarily related tobalance of the retail certificate of deposit portfolio, which increased 10 basis points to 1.46% forportfolio. Retail certificates of deposit repriced downward during the prior year and first half of the current fiscal year. The average balanceyear as they were renewed or were replaced at lower offered rates at the time of the renewal, along with some certificates of deposit portfolio increased $185.2 million duringnot renewing. During the currentthird quarter of fiscal year with2022, management began to increase rates offered on retail certificates of deposit and money market accounts to help reduce the majority of the increase in retail deposits.outflow from these portfolios.


Provision for Credit Losses
The Bank did not recordrecorded a negative provision for credit losses during the current fiscal year of $4.6 million, compared to a negative provision for credit losses of $750 thousand$8.5 million during the prior fiscal year. Based on management's assessmentThe negative provision in the current year was comprised of a $3.6 million decrease in the ACL formula analysis modelfor loans and several other factors, it was determined that noa $992 thousand decrease in reserves for off-balance sheet credit exposures. The negative provision for credit losses was necessary forassociated with the ACL in the current fiscal year. Netyear was due primarily to a reduction in commercial loan charge-offs were $142 thousandqualitative factors, partially offset by an increase in ACL related to loan growth during the current fiscal year and a less favorable economic forecast compared to $153 thousandthe prior year. The negative provision for credit losses associated with the reserve for off-balance sheet credit exposures in the prior fiscal year. Atcurrent year was due primarily to a reduction in commercial loan qualitative factors, partially offset by growth in commercial construction exposures. See additional discussion regarding the Bank's ACL and reserve for off-balance sheet credit exposures at September 30, 2017, loans 30 to 89 days delinquent were 0.26% of total loans2022 in the "Asset Quality" section and loans 90 or more days delinquent or in foreclosure were 0.13% of total loans.the "Critical Accounting Estimates - Allowance for Credit Losses and Reserve for Off-Balance Sheet Credit Exposures" section above.


43
Non-Interest Income
The following table presents the components of non-interest income for the time periods presented, along with the change measured in dollars and percent.
For the Year Ended
September 30,Change Expressed in:
20222021DollarsPercent
(Dollars in thousands)
NON-INTEREST INCOME:
Deposit service fees$13,798 $12,282 $1,516 12.3 %
Insurance commissions2,947 3,030 (83)(2.7)
Gain on sale of Visa Class B shares— 7,386 (7,386)(100.0)
Other non-interest income6,085 5,388 697 12.9 
Total non-interest income$22,830 $28,086 $(5,256)(18.7)
 For the Year Ended    
 September 30, Change Expressed in:
 2017
 2016
 Dollars Percent
 (Dollars in thousands)  
NON-INTEREST INCOME:       
Retail fees and charges$15,053
 $14,835
 $218
 1.5 %
Income from bank-owned life insurance ("BOLI")2,233
 3,420
 (1,187) (34.7)
Other non-interest income4,910
 5,057
 (147) (2.9)
Total non-interest income$22,196
 $23,312
 $(1,116) (4.8)


The decreaseincrease in income from BOLIdeposit service fees was due mainlyprimarily to an increase in debit card income and service charges as a result of higher transaction and settlement volume, in addition to an increase in the receipt ofaverage transaction amount. During the prior year, the Bank sold its Visa Class B shares, resulting in a death benefit$7.4 million gain, with no similar transaction during the prior fiscal year with no such death benefitcurrent year. The increase in the current fiscal year.other non-interest income was due primarily to a gain on a loan-related financial derivative agreement.


Non-Interest Expense
The following table presents the components of non-interest expense for the time periods presented, along with the change measured in dollars and percent.
For the Year Ended
September 30,Change Expressed in:
20222021DollarsPercent
(Dollars in thousands)
NON-INTEREST EXPENSE:
Salaries and employee benefits$56,600 $56,002 $598 1.1 %
Information technology and related expense18,311 17,922 389 2.2 
Occupancy, net14,370 14,045 325 2.3 
Regulatory and outside services6,192 5,764 428 7.4 
Advertising and promotional5,178 5,133 45 0.9 
Federal insurance premium3,020 2,545 475 18.7
Deposit and loan transaction costs2,797 2,761 36 1.3 
Office supplies and related expense1,951 1,715 236 13.8 
Loss on interest rate swap termination— 4,752 (4,752)(100.0)
Other non-interest expense4,432 4,930 (498)(10.1)
Total non-interest expense$112,851 $115,569 $(2,718)(2.4)
 For the Year Ended    
 September 30, Change Expressed in:
 2017
 2016
 Dollars Percent
 (Dollars in thousands)  
NON-INTEREST EXPENSE:       
Salaries and employee benefits$43,437
 $42,378
 $1,059
 2.5 %
Information technology and communications11,282
 10,540
 742
 7.0
Occupancy, net10,814
 10,576
 238
 2.3
Regulatory and outside services5,821
 5,645
 176
 3.1
Deposit and loan transaction costs5,284
 5,585
 (301) (5.4)
Advertising and promotional4,673
 4,609
 64
 1.4
Federal insurance premium3,539
 5,076
 (1,537) (30.3)
Office supplies and related expense1,981
 2,640
 (659) (25.0)
Low income housing partnerships—
 3,872
 (3,872) (100.0)
Other non-interest expense2,827
 3,384
 (557) (16.5)
Total non-interest expense$89,658
 $94,305
 $(4,647) (4.9)


The increase in salaries and employee benefits was due primarily to merit increases and higher benefits expense, partially offset by a lower employee count during the current year. The increase in regulatory and outside services was due to higher consulting expenses related to the Bank's upcoming digital transformation project. The increase in federal insurance premium expense was due mainly to an increase in employee health care costs. The increaseaverage assets as a result of the leverage strategy being utilized during the current year. During the prior year, the Bank terminated $200.0 million of interest rate swaps, resulting in information technology and communications was due largely to software licensing expenses, website hosting expenses, and communication network expenses. The decrease in federal insurance premiums was due primarily to a decreaseloss of $4.8 million, with no similar transaction in the FDIC base assessment rate effective July 1, 2016. The decrease in office supplies and related expense was due primarily to lower debit card expenses compared to the priorcurrent fiscal year, during which time the Bank began issuing debit cards enabled with chip card technology. The decrease in low income housing partnerships expense was due to a change in the Bank's method of accounting for those investments. The Bank had been accounting for these partnerships using the equity method of accounting as two of the Bank's officers were involved in the operational management of the low income housing partnership investment group. Effective September 30, 2016, those two Bank officers discontinued their involvement in the operational management of the investment group. On October 1, 2016, the Bank began using the proportional method of accounting for those investments rather than the equity method. As a result, the Bank no longer reports low income housing partnership expenses in non-interest expense; rather, the pretax operating losses and related tax benefits from the investments

are reported as a component of income tax expense.year. The decrease in other non-interest expense was due mainlyprimarily to the write-down during the prior year of a decrease in OREO operations expense, along with lower deposit account charge-offs related toproperty that had previously served as one of the Bank's branch locations, partially offset by higher debit card fraud losses in the current fiscal year.


44
The Company's efficiency ratio was 41.21%52.39% for the current fiscal year compared to 43.76%56.91% for the prior fiscal year. The improvement in the efficiency ratio was due primarily to lower non-interesthigher net interest income.

Management anticipates information technology and related expenses will be approximately $6 million higher in fiscal year 2023 due to the digital transformation. In addition, it is expected there will be approximately $1 million more of information technology and related expenses in fiscal year 2023 associated with projects outside of the digital transformation and due to general cost increases. Overall, it is anticipated information technology and related expenses will be approximately $7 million higher in fiscal year 2023, or approximately $25 million for the year. Salaries and employee benefits is expected to be approximately $3.5 million higher in fiscal year 2023 due primarily to merit increases and salary adjustments. Federal insurance premium expense is anticipated to be approximately $2 million higher in fiscal year 2023, due to the increase in the currentassessment rate beginning in January 2023, and reflecting the anticipation that leverage strategy utilization in fiscal year compared2023 will be lower than fiscal year 2022.

In fiscal year 2024, information technology and related expense is expected to the priordecrease approximately $3 million from fiscal year period. The efficiency ratio is2023 levels due to a measure of a financial institution's total non-interest expense as a percentage of the sum of net interest income (pre-provision for credit losses) and non-interest income. A lower value indicates that the financial institution is generating revenue with a proportionally lower level of expense.reduction in professional service costs.


Income Tax Expense
Income tax expense was $43.8 million for the current fiscal year compared to $38.4 million for the prior year fiscal year. The effective tax rate for the current fiscal year was 34.2% compared to 31.5% for the prior year fiscal year. The increase in effective tax rate was due mainly to the change in accounting method for low income housing partnerships as previously discussed. Management anticipates the effective tax rate for fiscal year 2018 will be approximately 34%. Congress is considering legislation that would reduce the effective corporate tax rate. No prediction can be made as to whether or when any such legislation may be enacted or the estimated impact on the Company.

Comparison of Operating Results for the Years Ended September 30, 2016 and 2015
For fiscal year 2016, the Company recognized net income of $83.5 million, or $0.63 per share, compared to net income of $78.1 million, or $0.58 per share, for fiscal year 2015. The $5.4 million, or 6.9%, increase in net income was due primarily to a $2.4 million increase in net interest income and a $2.2 million increase in non-interest income. The $2.4 million, or 1.3%, increase in net interest income from fiscal year 2015 was due primarily to an $8.2 million decrease in interest expense on term borrowings, partially offset by a $4.7 million increase in interest expense on deposits.

Net income attributable to the leverage strategy was $2.3 million during fiscal year 2016, compared to $2.8 million for fiscal year 2015. The decrease was due to the average borrowings rate on the FHLB line of credit increasing more than the average yield earned on the cash balances held at the Federal Reserve Bank.

The net interest margin increased two basis points, from 1.73% for fiscal year 2015 to 1.75% for fiscal year 2016. Excluding the effects of the leverage strategy, the net interest margin would have increased three basis points, from 2.07% for fiscal year 2015 to 2.10% for fiscal year 2016. The increase in the net interest margin was due mainly to a decrease in interest expense on term borrowings, partially offset by an increase in interest expense on deposits. The positive impact on the net interest margin resulting from the shift in the mix of interest-earning assets from relatively lower yielding securities to higher yielding loans was offset by a decrease in the loan portfolio yield.

The Company's efficiency ratio was 43.76% for fiscal year 2016 compared to 44.74% for fiscal year 2015. The change in the efficiency ratio was due primarily to an increase in both net interest income and non-interest income.

Interest and Dividend Income
The weighted average yield on total interest-earning assets increased three basis points, from 2.71% for fiscal year 2015 to 2.74% for fiscal year 2016, and the average balance of interest-earning assets increased $25.4 million from fiscal year 2015. Absent the impact of the leverage strategy, the weighted average yield on total interest-earning assets would have decreased one basis point, from 3.22% for fiscal year 2015 to 3.21% for fiscal year 2016, while the average balance would have increased $40.5 million. The following table presents the components of interestpretax income, income tax expense, and dividendnet income for the time periods presented, along with the change measured in dollars and percent.percent and effective tax rate.
For the Year Ended
September 30,Change Expressed in:
20222021DollarsPercent
(Dollars in thousands)
Income before income tax expense$107,203 $96,028 $11,175 11.6 %
Income tax expense22,750 19,946 2,804 14.1 
Net income$84,453 $76,082 $8,371 11.0 
Effective Tax Rate21.2 %20.8 %
 For the Year Ended    
 September 30, Change Expressed in:
 2016
 2015
 Dollars Percent
 (Dollars in thousands)  
INTEREST AND DIVIDEND INCOME:       
Loans receivable$243,311
 $235,500
 $7,811
 3.3 %
MBS29,794
 36,647
 (6,853) (18.7)
FHLB stock12,252
 12,556
 (304) (2.4)
Cash and cash equivalents9,831
 5,477
 4,354
 79.5
Investment securities5,925
 7,182
 (1,257) (17.5)
Total interest and dividend income$301,113
 $297,362
 $3,751
 1.3

The increase in interest income on loans receivable was due to a $376.4 million increase in the average balance of the portfolio, partially offset by a nine basis point decrease in the weighted average yield on the portfolio, to 3.60% for fiscal year 2016. Loan growth was primarily funded through cash flows from the MBS and investment securities portfolios. The decrease in the weighted average yield was due primarily to loans repricing to lower market rates and the origination and purchase of loans between periods at rates less than the existing portfolio rate, along with an increase in the amortization of premiums paid for correspondent loans.

The decrease in interest income on the MBS portfolio was due primarily to a $265.5 million decrease in the average balance of the portfolio as cash flows not reinvested were used to fund loan growth. Additionally, the weighted average yield on the MBS portfolio decreased seven basis points, from 2.25% during fiscal year 2015 to 2.18% for fiscal year 2016. The decrease in the weighted average yield was due primarily to an increase in the impact of net premium amortization. Net premium amortization of $5.0 million during fiscal year 2016 decreased the weighted average yield on the portfolio by 37 basis points. During fiscal year 2015, $5.4 million of net premiums were amortized, which decreased the weighted average yield on the portfolio by 32 basis points. As of September 30, 2016, the remaining net balance of premiums on our portfolio of MBS was $13.0 million.

The increase in interest income on cash and cash equivalents was due primarily to a 20 basis point increase in the weighted average yield resulting from an increase in the yield earned on balances held at the Federal Reserve Bank.

The decrease in interest income on investment securities was due primarily to a $123.8 million decrease in the average balance, partially offset by a four basis point increase in the weighted average yield on the portfolio. Cash flows not reinvested in the portfolio were used to fund loan growth.


Interest Expense
The weighted average rate paid on total interest-bearing liabilities decreased one basis point, from 1.12% for fiscal year 2015 to 1.11% for fiscal year 2016, while the average balance of interest-bearing liabilities increased $138.5 million from fiscal year 2015. Absent the impact of the leverage strategy, the weighted average rate paid on total interest-bearing liabilities would have decreased seven basis points from fiscal year 2015, to 1.28% for fiscal year 2016, due primarily to a decrease in the cost of term borrowings, while the average balance of interest-bearing liabilities would have increased $154.1 million due primarily to growth in deposits. The following table presents the components of interest expense for the time periods presented, along with the change measured in dollars and percent.
 For the Year Ended    
 September 30, Change Expressed in:
 2016
 2015
 Dollars Percent
 (Dollars in thousands)  
INTEREST EXPENSE:       
FHLB borrowings$65,091
 $67,797
 $(2,706) (4.0)%
Deposits37,859
 33,119
 4,740
 14.3
Repurchase agreements5,981
 6,678
 (697) (10.4)
Total interest expense$108,931
 $107,594
 $1,337
 1.2

The table above includes interest expense on FHLB borrowings both associated and not associated with the leverage strategy. Interest expense on FHLB borrowings not related to the leverage strategy decreased $7.5 million from fiscal year 2015 due mainly to a 20 basis point decrease in the weighted average rate paid on the portfolio, to 2.23% for fiscal year 2016, along with a $102.4 million decrease in the average balance due to not replacing all of the FHLB advances that matured during fiscal year 2016 as a result of growth in the deposit portfolio. The decrease in the weighted average rate paid was due primarily to the prepayment of a $175.0 million advance late in fiscal year 2015 with an effective rate of 5.08%, which was replaced with a $175.0 million advance with an effective rate of 2.18%. Interest expense on FHLB borrowings associated with the leverage strategy increased $4.8 million from fiscal year 2015 due primarily to a 23 basis point increase in the weighted average rate paid on the borrowings.

The increase in interest expense on deposits was due primarily to a five basis point increase in the weighted average rate, to 0.75% for fiscal year 2016, along with growth in the portfolio. The increase in weighted average rate was primarily in the retail certificate of deposit portfolio. The average balance of the deposit portfolio increased $270.3 million for fiscal year 2016, with the majority of the increase in the retail deposit portfolio, specifically the certificate of deposit and checking portfolios. The decrease in interest expense on repurchase agreements was due to the maturity late in fiscal year 2015 of a $20.0 million repurchase agreement at a rate of 4.45% that was not replaced.

Provision for Credit Losses
The Bank recorded a negative provision for credit losses during fiscal year 2016 of $750 thousand, compared to a provision for credit losses during the prior year fiscal year of $771 thousand. The negative provision for credit losses during fiscal year 2016 was due to the continued low level of net loan charge-offs, due partially to improving real estate values, along with improving delinquent loan ratios. The collateral value and historical loss factors within our ACL formula analysis model decreased during fiscal year 2016 due to the improvement in real estate values and reduction in net loan charge-offs. Net loan charge-offs were $153 thousand for fiscal year 2016, composed of charge-offs totaling $630 thousand, partially offset by recoveries of $477 thousand. Net loan charge-offs were $555 thousand for fiscal year 2015. At September 30, 2016, loans 30 to 89 days delinquent were 0.33% of total loans and loans 90 or more days delinquent or in foreclosure were 0.24% of total loans. At September 30, 2015, loans 30 to 89 days delinquent were 0.41% of total loans and loans 90 or more days delinquent or in foreclosure were 0.25% of total loans.


Non-Interest Income
The following table presents the components of non-interest income for the time periods presented, along with the change measured in dollars and percent.
 For the Year Ended    
 September 30, Change Expressed in:
 2016
 2015
 Dollars Percent
 (Dollars in thousands)  
NON-INTEREST INCOME:       
Retail fees and charges$14,835
 $14,897
 $(62) (0.4)%
Income from BOLI3,420
 1,150
 2,270
 197.4
Other non-interest income5,057
 5,093
 (36) (0.7)
Total non-interest income$23,312
 $21,140
 $2,172
 10.3


The increase in income from BOLI was due mainly to the purchase of a new BOLI investment late in fiscal year 2015, as well as to the receipt of death benefits in fiscal year 2016 and no such proceeds in fiscal year 2015.

Non-Interest Expense
The following table presents the components of non-interest expense for the time periods presented, along with the change measured in dollars and percent.
 For the Year Ended    
 September 30, Change Expressed in:
 2016
 2015
 Dollars Percent
 (Dollars in thousands)  
NON-INTEREST EXPENSE:       
Salaries and employee benefits$42,378
 $43,309
 $(931) (2.1)%
Occupancy, net10,576
 9,944
 632
 6.4
Information technology and communications10,540
 10,360
 180
 1.7
Federal insurance premium5,076
 5,495
 (419) (7.6)
Deposit and loan transaction costs5,585
 5,417
 168
 3.1
Regulatory and outside services5,645
 5,347
 298
 5.6
Advertising and promotional4,609
 4,547
 62
 1.4
Low income housing partnerships3,872
 4,572
 (700) (15.3)
Office supplies and related expense2,640
 2,088
 552
 26.4
Other non-interest expense3,384
 3,290
 94
 2.9
Total non-interest expense$94,305
 $94,369
 $(64) (0.1)

The decrease in salaries and employee benefits was due primarily to a decrease in stock compensation resulting from the final vesting of a large stock grant in the second quarter of fiscal year 2016 and a decrease in employee benefit expenses. The increase in occupancy, net expense was due mainly to non-capitalizable costs and depreciation associated with the remodel of the Bank's Kansas City market area operations center. The decrease in federal insurance premiums was due primarily to a decrease in the FDIC base assessment rate. The decrease in the FDIC base assessment rate was effective July 1, 2016 and was the result of the FDIC DIF reaching 1.15% of total estimated insured deposits of the banking system on June 30, 2016. The decrease in low income housing partnershipstax expense was due primarily to lower impairmentshigher pretax income in fiscal year 2016 as compared to fiscal year 2015. The increase in office supplies and related expense was due primarily to the purchase of cards enabled with chip card technology.


Income Tax Expense
Income tax expense was $38.4 million for fiscal year 2016 compared to $37.7 million for fiscal year 2015. Thecurrent year. Management anticipates the effective tax rate for fiscal year 2016 was 31.5% compared2023 will be approximately 20% to 32.5%21%.

Comparison of Operating Results for the Years Ended September 30, 2021 and 2020
For this discussion, see "Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Comparison of Operating Results for the Years Ended September 30, 2021 and 2020" in the Company's Annual Report on Form 10-K for the fiscal year 2015. The decrease in the effective tax rate was due primarily to an increase in nontaxable income related to BOLI and higher low income housing tax credits in fiscal year 2016.ended September 30, 2021.


45
Liquidity and Capital Resources

Liquidity refers to our ability to generate sufficient cash to fund ongoing operations, to repay maturing certificates of deposit and other deposit withdrawals, to repay maturing borrowings, and to fund loan commitments. Liquidity management is both a daily and long-term function of our business management. The Company's most available liquid assets are represented by cash and cash equivalents, AFS securities, and short-term investment securities. The Bank's primary sources of funds are deposits, FHLB borrowings, repurchase agreements, repayments and maturities of outstanding loans and MBS and other short-term investments, and funds provided by operations. The Bank's long-term borrowings primarily have been used to manage long-term liquidity needs and the Bank's interest rate risk with the intentintention to improve the earnings of the Bank while maintaining capital ratios in excess ofthat meet the regulatory standards for well-capitalized financial institutions. In addition, the Bank's focus on managing risk has provided additional liquidity capacity by maintaining a balance of MBS and investment securities available as collateral for borrowings.


We generally intend to manage cash reserves sufficient to meet short-term liquidity needs, which are routinely forecasted for 10, 30, and 365 days. Additionally, on a monthly basis, we perform a liquidity stress test in accordance with the Interagency Policy Statement on Funding and Liquidity Risk Management. The liquidity stress test incorporates both short-term and long-term liquidity scenarios in order to identify and to quantify liquidity risk. Management also monitors key liquidity statistics related to items such as wholesale funding gaps, borrowings capacity, and available unpledged collateral, as well as various liquidity ratios.


In the event short-term liquidity needs exceed available cash, the Bank has access to a line of credit at FHLB and the FRB of Kansas City's discount window. Per FHLB's lending guidelines, total FHLB borrowings cannot exceed 40% of regulatoryBank Call Report total assets without the pre-approval of FHLB senior management. In July 2017, the president ofThe Bank's FHLB approved an increase, through July 2018, in the Bank's borrowing limit to 55%was 50% of Bank Call Report total assets.assets as of September 30, 2022, as approved by the president of FHLB. When the leverage strategy is in place, the Bank maintains the resulting excess cash reserves from the FHLB borrowings at the FRB of Kansas City, which can be used to meet any short-term liquidity needs. Additionally, FHLB borrowings may exceed 40% of Bank Call Report total assets as long as the Bank continues its leverage strategy and FHLB senior management continues to approve the Bank's borrowing limit being in excess of 40% of Call Report total assets. All or a portion of the short-term FHLB borrowings in conjunction with the leverage strategy can be repaid at maturity, if necessary or desired. The amount that can be borrowed from the FRB of Kansas City's discount window is based upon the fair value of securities pledged as collateral and certain other characteristics of those securities, and is used only when other sources of short-term liquidity are unavailable.securities. Management tests the Bank's access to the FRB of Kansas City's discount window annually with a nominal, overnight borrowing.


If management observes a trendunusual trends in the amount and frequency of line of credit utilization and/or short-term borrowings that is not in conjunction with a planned strategy, such as the leverage strategy, the Bank will likely utilize long-term wholesale borrowing sources such as FHLB advances and/or repurchase agreements to provide long-term, fixed-rate funding. The maturities of these long-term borrowings are generally staggered in order to mitigate the risk of a highly negative cash flow position at maturity. The Bank's internal policy limits total borrowings to 55% of total assets. At September 30, 2017,2022, the Bank had total borrowings, at par, of $2.38$2.14 billion, or approximately 26%22% of total assets.

The amount of FHLB advances outstanding at September 30, 2017 was $2.18 billion,assets, all of which $475.0were FHLB borrowings. Of this amount, $329.7 million waswere advances scheduled to mature in the next 12 months. All FHLB borrowings are secured bycertain qualifying loans pursuant to a blanket collateral agreement with FHLB. AtAdditionally, the Bank had pledged securities with an estimated fair value of $572.9 million as collateral for FHLB borrowings at September 30, 2017, the Bank's ratio of the par value of FHLB borrowings to Call Report total assets was 24%. When the full leverage strategy is in place, FHLB borrowings are in excess of 40% of the Bank's Call Report total assets, and are expected to be in excess of 40% as long as the Bank continues its leverage strategy and FHLB senior management continue to approve the Bank's borrowing limit being in excess of 40% of Call Report total assets. All or a portion of the FHLB borrowings in conjunction with the leverage strategy could be repaid at any point in time while the strategy is in effect, if necessary.2022.



At September 30, 2017,2022, the Bank had no repurchase agreements of $200.0 million, or approximately 2% of total assets, of which $100.0 million was scheduled to mature in the next 12 months.agreements. The Bank may enter into additional repurchase agreements as management deems appropriate, not to exceed 15% of total assets, and subject to the total borrowings internal policy limit of 55% as discussed above. The Bank had pledged securities with an estimated fair value of $218.5 million as collateral for repurchase agreements as of September 30, 2017. The securities pledged for the repurchase agreements will be delivered back to the Bank when the repurchase agreements mature.


The Bank could utilize the repayment and maturity of outstanding loans, MBS, and other investments for liquidity needs rather than reinvesting such funds into the related portfolios. At September 30, 2017,2022, the Bank had $430.7$863.0 million of securities that were eligible but unused as collateral for borrowing or other liquidity needs. 


The Bank has access to other sources of funds for liquidity purposes, such as brokered and public unit deposits.certificates of deposit. As of September 30, 2017,2022, the Bank's policy allowed for combined brokered and public unit depositscertificates of deposit up to 15% of total deposits. At September 30, 2017,2022, the Bank haddid not have any brokered certificates of deposit and public unit deposits totaling $460.0 million, which had an average remaining term to maturitycertificates of 10 months, ordeposit were approximately 9%2% of total deposits, and no brokered deposits. Management continuously monitors the wholesale deposit market for opportunities to obtain funds at attractive rates. The Bank had pledged securities with an estimated fair value
46
of $500.7$125.5 million as collateral for public unit depositscertificates of deposit at September 30, 2017.2022. The securities pledged as collateral for public unit depositscertificates of deposit are held under joint custody with FHLB and generally will be released upon deposit maturity.


At September 30, 2017, $1.122022, $1.19 billion of the Bank's certificate of deposit portfolio was scheduled to mature within one year,the next 12 months, including $288.5$78.1 million of public unit deposits.certificates of deposit and $27.0 million of commercial certificates of deposit. Based on our deposit retention experience and our current pricing strategy, we anticipate the majority of the maturing retail certificates of deposit will renew or transfer to other deposit products of the Bank at the prevailing rate,rates, although no assurance can be given in this regard.  We also anticipateDue to the majoritynature of commercial certificates of deposit, retention rates are not as predictable as for retail certificates of deposit.

The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of customers. These financial instruments consist primarily of commitments to originate, purchase, or participate in loans or fund lines of credit. Additionally, the Company has investments in several low income housing partnerships and, under the terms of the maturing public unit depositsagreements, the Company has a commitment to fund a specified amount that will be replaced with similar wholesale funding products.due in installments over the life of the agreements. See "Part II, Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 6. Low Income Housing Partnerships and Note 12. Commitments and Contingencies" for additional information regarding these commitments.


While scheduled payments from the amortization of loans and MBS and payments on short-term investments are relatively predictable sources of funds, deposit flows, prepayments on loans and MBS, and calls of investment securities are greatly influenced by general interest rates, economic conditions, and competition, and are less predictable sources of funds. To the extent possible, the Bank manages the cash flows of its loan and deposit portfolios by the rates it offers customers.




The following table presents the contractual maturities of our loan, MBS, and investment securities portfolios at September 30, 2017, along with associated weighted average yields. Loans and securities which have adjustable 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. As of September 30, 2017, the amortized cost of investment securities in our portfolio which are callable or have pre-refunding dates within one year was $126.6 million.
 
Loans(1)
 MBS Investment Securities Total
 Amount Yield Amount Yield Amount Yield Amount Yield
 (Dollars in thousands)
Amounts due:               
Within one year$58,591
 3.71% $2,884
 3.92% $127,394
 1.18% $188,869
 2.01%
                
After one year:               
Over one to two years82,750
 4.04
 6,156
 4.29
 54,123
 1.24
 143,029
 2.99
Over two to three years14,348
 4.10
 3,168
 4.69
 57,196
 1.52
 74,712
 2.15
Over three to five years40,267
 4.25
 49,444
 2.85
 60,140
 1.50
 149,851
 2.68
Over five to ten years560,361
 3.73
 447,420
 2.07
 218
 2.00
 1,007,999
 2.99
Over ten to fifteen years1,385,085
 3.28
 124,498
 1.83
 —
 —
 1,509,583
 3.16
After fifteen years5,041,349
 3.64
 308,877
 2.59
 2,051
 2.58
 5,352,277
 3.58
Total due after one year7,124,160
 3.59
 939,563
 2.27
 173,728
 1.44
 8,237,451
 3.39
                
 $7,182,751
 3.59
 $942,447
 2.28
 $301,122
 1.33
 $8,426,320
 3.36

(1)Demand loans, loans having no stated maturity, and overdraft loans are included in the amounts due within one year. Construction loans are presented based on the estimated term to complete construction. The maturity date for home equity loans assumes the customer always makes the required minimum payment.


Limitations on Dividends and Other Capital Distributions

OCC regulations impose restrictions on savings institutions with respect to their ability to make distributions of capital, which include dividends, stock redemptions or repurchases, cash-out mergers and other transactions charged to the capital account. Under FRB and OCC safe harbor regulations, savings institutions generally may make capital distributions during any calendar year equal to earnings of the previous two calendar years and current year-to-date earnings. Savings institutions must also maintain an applicable capital conservation buffer above minimum risk-based capital requirements in order to avoid restrictions on capital distributions, including dividends. A savings institution that is a subsidiary of a savings and loan holding company, such as the Company, that proposes to make a capital distribution must submit written notice to the OCC and FRB 30 days prior to such distribution. The OCC and FRB may object to the distribution during that 30-day period based on safety and soundness or other concerns. Savings institutions that desire to make a larger capital distribution, are under special restrictions, or are not, or would not be, sufficiently capitalized following a proposed capital distribution must obtain regulatory non-objection prior to making such a distribution.
The long-term ability of the Company to pay dividends to its stockholders is based primarily upon the ability of the Bank to make capital distributions to the Company.  So long as the Bank remains well capitalized after each capital distribution, operates in a safe and sound manner, and maintains an applicable capital conservation buffer above its minimum risk-based capital requirements, it is management's belief that the OCC and FRB will continue to allow the Bank to distribute its earnings to the Company, although no assurance can be given in this regard.

Capital

Consistent with our goal to operate a sound and profitable financial organization, we actively seek to maintain a well-capitalized status for the Bank per the regulatory framework for prompt corrective action. As of September 30, 2017, the Bank and Company exceeded all regulatory capital requirements. See "Part II, Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 12. Regulatory Capital Requirements" for additional information related to regulatory capital.

The following table presents a reconciliation of equity under GAAP to regulatory capital amounts, as of September 30, 2017, for the Bank and the Company (dollars in thousands):

 Bank Company
Total equity as reported under GAAP$1,204,781
 $1,368,313
AOCI-related adjustments(2,918) (2,918)
Total tier 1 capital1,201,863
 1,365,395
ACL8,398
 8,398
Total capital$1,210,261
 $1,373,793

Off-Balance Sheet Arrangements, Commitments and Contractual Obligations

The Company, in the normal course of business, makes commitments to buy or sell assets, extend credit, or to incur or fund liabilities. Such commitments may include, but are not limited to:

the origination, purchase, participation, or sale of loans;
the purchase or sale of securities;
extensions of credit on home equity loans, construction loans, and commercial loans;
terms and conditions of operating leases; and
funding withdrawals of deposit accounts at maturity.




The following table summarizes our contractual obligations and other material commitments, along with associated weighted average contractual rates as of September 30, 2017.
   Maturity Range
   Less than  1 to 3  3 to 5 More than
 Total 1 year years years 5 years
 (Dollars in thousands)
Operating leases$6,272
 $1,170
 $1,870
 $1,326
 $1,906
          
Certificates of deposit$2,910,421
 $1,116,415
 $1,340,503
 $452,113
 $1,390
Rate1.48% 1.08% 1.67% 1.93% 1.98%
          
FHLB advances$2,175,000
 $475,000
 $850,000
 $750,000
 $100,000
Rate1.96% 1.91% 1.73% 2.26% 1.82%
          
Repurchase agreements$200,000
 $100,000
 $100,000
 $—
 $—
Rate2.94% 3.35% 2.53% —% —%
          
Commitments to originate and         
purchase/participate in loans$169,946
 $169,946
 $—
 $—
 $—
Rate3.92% 3.92% —% —% —%
          
Commitments to fund unused         
home equity lines of credit$239,950
 $239,950
 $—
 $—
 $—
Rate5.05% 5.05% —% —% —%

It is expected that some of the commitments to originate and purchase/participate in loans will expire unfunded; therefore, the amounts reflected in the table above are not necessarily indicative of future liquidity requirements. Additionally, the Bank is not obligated to honor commitments to fund unused home equity lines of credit if a customer is delinquent or otherwise in violation of the loan agreement.

We anticipate we will continue to have sufficient funds, through the repayments and maturities of loans and securities, deposits and borrowings, to meet our current commitments.


Contingencies


In the normal course of business, the Company and its subsidiary are named defendants in various lawsuits and counter claims. In the opinion of management, after consultation with legal counsel, none of the currently pending suits are expected to have a materially adverse effect on the Company's consolidated financial statements for the year ended September 30, 2017, or future periods.
47




Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Asset and Liability Management and Market Risk


Risk associated with changes in interest rates on the earnings of the Bank and the market value of its financial assets and liabilities is known as interest rate risk. The rates of interest the Bank earns on its assets and pays on its liabilities are generally established contractually for a period of time. Fluctuations in interest rates have a significant impact not only upon our net income, but also upon the cash flows and market values of our assets and liabilities. Our results of operations, like those of other financial institutions, are impacted by changes in interest rates and the interest rate sensitivity of our interest-earning assets and interest-bearing liabilities. Risk associated with changes in interest rates on the earnings of the Bank and the market value of its financial assets and liabilities is known as interest rate risk. Interest rate risk is our most significant market risk, and our ability to adapt to changes in interest rates is known as interest rate risk management.


The general objective of our interest rate risk management program is to determine and manage an appropriate level of interest rate risk while maximizing net interest income in a manner consistent with our policy to manage, to the extent practicable, the exposure of net interest income to changes in market interest rates. The Board of Directors and ALCOAsset and Liability Management Committee ("ALCO") regularly review the Bank's interest rate risk exposure by forecasting the impact of hypothetical, alternative interest rate environments on net interest income and the market value of portfolio equity ("MVPE") at various dates. The MVPE is defined as the net of the present value of cash flows from existing assets, liabilities, and off-balance sheet instruments. The present values are determined based upon market conditions as of the date of the analysis, as well as in alternative interest rate environments providing potential changes in the MVPE under those alternative interest rate environments. Net interest income is projected in the same alternative interest rate environments with both a static balance sheet and management strategies considered. The MVPE and net interest income analysisanalyses are also conducted to estimate our sensitivity to rates for future time horizons based upon market conditions as of the date of the analysis. In addition to the interest rate environments presented below, management also reviews the impact of non-parallel rate shock scenarios on a quarterly basis. These scenarios consist of flattening and steepening the yield curve by changing short-term and long-term interest rates independent of each other, and simulating cash flows and determining valuations as a result of these hypothetical changes in interest rates to identify rate environments that pose the greatest risk to the Bank. This analysis helps management quantify the Bank's exposure to changes in the shape of the yield curve.

The ability to maximize net interest income is dependent largely upon the achievement of a positive interest rate spread that can be sustained despite fluctuations in prevailing interest rates. The asset and liability repricing gap is a measure of the difference between the amount of interest-earning assets and interest-bearing liabilities which either reprice or mature within a given period of time. The difference provides an indication of the extent to which an institution's interest rate spread will be affected by changes in interest rates. A gap is considered positive when the amount of interest-earning assets exceeds the amount of interest-bearing liabilities maturing or repricing during the same period. A gap is considered negative when the amount of interest-bearing liabilities exceeds the amount of interest-earning assets maturing or repricing during the same period. Generally, during a period of rising interest rates, a negative gap within shorter repricing periods adversely affects net interest income, while a positive gap within shorter repricing periods positively affects net interest income. During a period of falling interest rates, the opposite would generally be true.

The shape of the yield curve also has an impact on our net interest income and, therefore, the Bank's net interest margin. Historically, the Bank has benefited from a steeper yield curve as the Bank's mortgage loans are generally priced off of long-term rates while deposits are priced off of short-term rates. A steeper yield curve (one with a greater difference between short-term rates and long-term rates) allows the Bank to receive a higher rate of interest on its new mortgage-related assets relative to the rate paid for the funding of those assets, which generally results in a higher net interest margin. As the yield curve flattens, the spread between rates received on assets and paid on liabilities becomes compressed, which generally leads to a decrease in net interest margin.


General assumptions used by management to evaluate the sensitivity of our financial performance to changes in interest rates presented in the tables below are utilized in, and set forth under, the gap table and related notes. Although management finds these assumptions reasonable, the interest rate sensitivity of our assets and liabilities and the estimated effects of changes in interest rates on our net interest income and MVPE indicated in the below tables could vary substantially if different assumptions were used or actual experience differs from these assumptions. To illustrate this point, the projected cumulative excess (deficiency) of interest-earning assets over interest-bearing liabilities within the next 12 months as a percent of total assets ("one-year gap") is also provided for an up 200 basis point scenario, as of September 30, 2017.2022.


Qualitative Disclosure about Market Risk
At September 30, 2017, the Bank's gap between the amount of interest-earning assets and interest-bearing liabilities projected to reprice within one year was $641.6 million, or 6.98% of total assets, compared to $1.07 billion, or 11.54% of total assets, at September 30, 2016. The decrease in the one-year gap amount from September 30, 2016 to September 30, 2017 was due to lower projected cash flows on mortgage-related assets. Market rates of interest increased between September 30, 2016 and September 30, 2017. As interest rates rise, borrowers have less economic incentive to refinance their mortgages and agency debt issuers have less economic incentive or opportunity to exercise their call options in order to issue new debt at lower interest rates. This increase in interest rates resulted in lower projected cash flows on these assets over the next year compared to September 30, 2016.

The majority of interest-earning assets anticipated to reprice in the coming year are repayments and prepayments on mortgage loans and MBS, both of which include the option to prepay without a fee being paid by the contract holder. The amount of interest-bearing liabilities expected to reprice in a given period is not typically impacted significantly by changes in interest rates because the Bank's borrowings and certificate of deposit portfolios have contractual maturities and generally cannot be terminated early without a prepayment penalty. If interest rates were to increase 200 basis points, as of September 30, 2017, the Bank's one-year gap is projected to be $81.3 million, or 0.88% of total assets. This compares to a one-year gap of $208.7 million, or 2.25% of total assets, if interest rates were to have increased 200 basis points as of September 30, 2016.

During the current fiscal year, loan repayments totaled $1.17 billion and cash flows from the securities portfolio totaled $413.3 million. The asset cash flows of $1.58 billion were reinvested into new assets at current market interest rates. Total cash flows from fixed-rate liabilities that matured or repriced during the current fiscal year were approximately $2.19 billion, including $500.0 million of FHLB advances that were renewed. These offsetting cash flows allow the Bank to manage its interest rate risk and gap position more precisely than if the Bank did not have offsetting cash flows due to its mix of assets or maturity structure of liabilities.

Other strategies include managing the Bank's wholesale assets and liabilities. The Bank primarily uses long-term fixed-rate borrowings with no embedded options to lengthen the average life of the Bank's liabilities. The fixed-rate characteristics of these borrowings lock-in the cost until maturity and thus decrease the amount of liabilities repricing as interest rates move higher compared to funding with lower-cost short-term borrowings. These borrowings are laddered in order to prevent large amounts of liabilities repricing in any one period. The WAL of the Bank's term borrowings as of September 30, 2017 was 2.3 years. However, including the impact of interest rate swaps related to $200.0 million of adjustable-rate FHLB advances, the WAL of the Bank's term borrowings as of September 30, 2017 was 2.7 years. The interest rate swaps effectively convert the adjustable-rate borrowings into long-term, fixed-rate liabilities.

The Bank uses the securities portfolio to shorten the average life of the Bank's assets. Purchases in the securities portfolio over the past couple of years have primarily been focused on callable agency debentures with maturities no longer than five years, shorter duration MBS, and adjustable-rate MBS. These securities have a shorter average life and provide a steady source of cash flow that can be reinvested as interest rates rise or used to purchase higher-yielding assets. The WAL of the Bank's securities portfolio as of September 30, 2017 was 2.5 years.

In addition to the wholesale strategies, the Bank has sought to increase core deposits and long-term certificates of deposit. Core deposits are expected to reduce the risk of higher interest rates because their interest rates are not expected to increase significantly as market interest rates rise and because customers with these accounts tend to be less sensitive to changes in rates, maintaining their accounts for long periods of time. Specifically, checking accounts and savings accounts have had minimal interest rate fluctuations throughout historical interest rate cycles, though no assurance can be given that this will be the case in future interest rate cycles. The balances and rates of these accounts have historically tended to remain very stable over time, giving them the characteristic of long-term liabilities. The Bank uses historical data pertaining to these accounts to estimate their future balances. At September 30, 2017 the WAL of the Bank's non-maturity deposits was 13.5 years, compared to 8.3 years at September 30, 2016. The increase in the WAL of the Bank's non-maturity deposits was due to a change in the deposit model during the fourth quarter of fiscal year 2017. The Bank uses a deposit model that was developed from the results of a Bank-specific deposit study. The deposit study analyzed the historical behavior of the Bank's non-maturity deposits to predict the future balances of these accounts. The change was made due to model validation testing which indicated that the model was not predicting deposit behavior as well as management expected. The change resulted in

an increase in the WAL of these liabilities, which resulted in our MVPE measure of interest rate risk sensitivity not being materially lower than results with the previous model.

Over the last couple years, the Bank has priced long-term certificates of deposit more aggressively than short-term certificates of deposit with the goal of giving customers incentive to move funds into longer-term certificates of deposit when interest rates were lower. The balance of our retail certificates of deposit with terms of 36 months or longer increased $288.6 million, or 20%, since September 30, 2015. Long-term certificates of deposit reduce the amount of liabilities repricing as interest rates rise in a given time period.

Because of the on-balance sheet strategies implemented over the past several years, management believes the Bank is well-positioned to move into a market rate environment where interest rates are higher.

Gap Table. The following gap table summarizes the anticipated maturities or repricing periods of the Bank's interest-earning assets and interest-bearing liabilities based on the information and assumptions set forth in the notes below. Cash flow projections for mortgage-related assets are calculated based in part on prepayment assumptions at current and projected interest rates. Prepayment projections are subjective in nature, involve uncertainties and assumptions and, therefore, cannot be determined with a high degree of accuracy. Although certain assets and liabilities may have similar maturities or periods to repricing, they may react differently to changes in market interest rates. Assumptions may not reflect how actual yields and costs respond to market interest rate changes. The interest rates on certain types of assets and liabilities may fluctuate in advance of changes in market interest rates, while interest rates on other types of assets and liabilities may lag behind changes in market interest rates. Certain assets, such as ARMadjustable-rate loans, have features that restrict changes in interest rates on a short-term basis and over the life of the asset. In the event of a change in interest rates, prepayment and early withdrawal levels would likely deviate significantly from those assumed in calculating the gap table below. A positive gap indicatesgenerally means more cash flows from assets are expected to reprice than cash flows from liabilities and would indicate,suggests in a rising rate environment, that earnings should increase. A negative gap indicatesgenerally means more cash flows from liabilities are expected to reprice than cash flows from assets and would indicate,suggests, in a rising rate environment, that earnings should decrease. For additional
48
information regarding the impact of changes in interest rates, see the following Change in Net Interest Income and Change in MVPE discussions and tables.

More ThanMore Than
WithinOne Year toThree YearsOver
One YearThree Yearsto Five YearsFive YearsTotal
Interest-earning assets:(Dollars in thousands)
Loans receivable(1)
$1,343,380 $1,592,317 $1,317,900 $3,217,807 $7,471,404 
Securities(2)
308,433 651,405 408,640 400,012 1,768,490 
Other interest-earning assets27,280 — — — 27,280 
Total interest-earning assets1,679,093 2,243,722 1,726,540 3,617,819 9,267,174 
Interest-bearing liabilities:
Non-maturity deposits(3)
1,230,019 418,354 361,496 2,085,221 4,095,090 
Certificates of deposit1,186,743 677,678 338,809 523 2,203,753 
Borrowings(4)
406,166 1,002,478 635,185 129,438 2,173,267 
Total interest-bearing liabilities2,822,928 2,098,510 1,335,490 2,215,182 8,472,110 
Excess (deficiency) of interest-earning assets over
interest-bearing liabilities$(1,143,835)$145,212 $391,050 $1,402,637 $795,064 
Cumulative excess (deficiency) of interest-earning assets over
interest-bearing liabilities$(1,143,835)$(998,623)$(607,573)$795,064 
Cumulative excess (deficiency) of interest-earning assets over interest-bearing
liabilities as a percent of total Bank assets at:
September 30, 2022(11.9)%(10.4)%(6.3)%8.3 %
September 30, 2021(6.9)
Cumulative one-year gap - interest rates +200 bps at:
September 30, 2022(12.1)
September 30, 2021(13.4)

(1)Adjustable-rate loans are included in the period in which the rate is next scheduled to adjust or in the period in which repayments are expected to occur, or prepayments are expected to be received, prior to their next rate adjustment, rather than in the period in which the loans are due. Fixed-rate loans are included in the periods in which they are scheduled to be repaid, based on scheduled amortization and prepayment assumptions. Balances are net of undisbursed amounts and deferred fees and exclude loans 90 or more days delinquent or in foreclosure.
(2)MBS reflect projected prepayments at amortized cost. All other securities are presented based on contractual maturities, term to call dates or pre-refunding dates as of September 30, 2022, at amortized cost.
(3)Although the Bank's checking, savings, and money market accounts are subject to immediate withdrawal, management considers a substantial amount of these accounts to be core deposits having significantly longer effective maturities. The decay rates (the assumed rates at which the balances of existing accounts decline) used on these accounts is based on assumptions developed from our actual experiences with these accounts. If all of the Bank's checking, savings, and money market accounts had been assumed to be subject to repricing within one year, interest-bearing liabilities which were estimated to mature or reprice within one year would have exceeded interest-earning assets with comparable characteristics by $4.01 billion, for a cumulative one-year gap of (41.7)% of total assets.
(4)Borrowings exclude deferred prepayment penalty costs. Included in this line item are $365.0 million of FHLB adjustable-rate advances tied to interest rate swaps. The repricing for these liabilities is projected to occur at the maturity date of each interest rate swap.

At September 30, 2022, the Bank's gap between the amount of interest-earning assets and interest-bearing liabilities projected to reprice within one year was $(1.14) billion, or (11.89)% of total assets, compared to $(664.1) million, or (6.9)% of total assets, at September 30, 2021. The change in the one-year gap amount was due primarily to a decrease in the amount of assets projected to reprice as higher interest rates resulted in lower prepayment projections on the Bank's mortgage-related assets.

49
   More Than More Than    
 Within One Year to Three Years Over  
 One Year Three Years to Five Years Five Years Total
Interest-earning assets:(Dollars in thousands)
Loans receivable(1)
$1,800,294
 $1,883,720
 $1,110,248
 $2,379,102
 $7,173,364
Securities(2)
576,389
 379,421
 174,270
 108,199
 1,238,279
Other interest-earning assets334,985
 —
 —
 —
 334,985
Total interest-earning assets2,711,668
 2,263,141
 1,284,518
 2,487,301
 8,746,628
          
Interest-bearing liabilities:         
Non-maturity deposits(3)
265,483
 309,445
 241,396
 1,703,908
 2,520,232
Certificates of deposit1,129,543
 1,328,294
 451,238
 1,346
 2,910,421
Borrowings(4)
675,000
 850,000
 750,000
 142,557
 2,417,557
Total interest-bearing liabilities2,070,026
 2,487,739
 1,442,634
 1,847,811
 7,848,210
          
Excess (deficiency) of interest-earning assets over        
interest-bearing liabilities$641,642
 $(224,598) $(158,116) $639,490
 $898,418
          
Cumulative excess of interest-earning assets over        
interest-bearing liabilities$641,642
 $417,044
 $258,928
 $898,418
  
          
Cumulative excess of interest-earning assets over interest-bearing      
liabilities as a percent of total Bank assets at:        
September 30, 20176.98% 4.54% 2.82% 9.77%  
September 30, 201611.54
        
          
Cumulative one-year gap - interest rates +200 bps at:        
September 30, 20170.88
        
September 30, 20162.25
        
The majority of interest-earning assets anticipated to reprice in the coming year are repayments and prepayments on one- to four-family loans and MBS, both of which include the option to prepay without a fee being paid by the contract holder. The amount of interest-bearing liabilities expected to reprice in a given period is not typically impacted significantly by changes in interest rates, because the Bank's borrowings and certificate of deposit portfolios have contractual maturities and generally cannot be terminated early without a prepayment penalty. If interest rates were to increase 200 basis points, as of September 30, 2022, the Bank's one-year gap is projected to be $(1.17) billion, or (12.1)% of total assets. The change in the gap compared to when there is no change in rates is due to lower anticipated net cash flows primarily due to lower repayments on mortgage-related assets in the higher interest rate environment. This compares to a one-year gap of $(1.29) billion, or (13.4)% of total assets, if interest rates were to have increased 200 basis points as of September 30, 2021.

(1)ARM loans are included in the period in which the rate is next scheduled to adjust or in the period in which repayments are expected to occur, or prepayments are expected to be received, prior to their next rate adjustment, rather than in the period in which the loans are due. Fixed-rate loans are included in the periods in which they are scheduled to be repaid, based on scheduled amortization and prepayment assumptions. Balances are net of undisbursed amounts and deferred fees and exclude loans 90 or more days delinquent or in foreclosure.
(2)MBS reflect projected prepayments at amortized cost. Investment securities are presented based on contractual maturities, term to call dates or pre-refunding dates as of September 30, 2017, at amortized cost.
(3)Although the Bank's checking, savings, and money market accounts are subject to immediate withdrawal, management considers a substantial amount of these accounts to be core deposits having significantly longer effective maturities. The decay rates (the assumed rates at which the balances of existing accounts decline) used on these accounts is based on assumptions developed from our actual experiences with these accounts. If all of the Bank's checking, savings, and money market accounts had been assumed to be subject to repricing within one year, interest-bearing liabilities which were estimated to mature or reprice within one year would have exceeded interest-earning assets with comparable characteristics by $1.61 billion, for a cumulative one-year gap of (17.5)% of total assets.
(4)Borrowings exclude deferred prepayment penalty costs.



Change in Net Interest Income. The Bank's net interest income projections are a reflection of the response to interest rates of the assets and liabilities that are expected to mature or reprice over the next year. Repricing occurs as a result of cash flows that are received or paid on assets or due on liabilities which would be replaced at then current market interest rates.rates or on adjustable-rate products that reset during the next year. The Bank's borrowings and certificate of deposit portfolios have stated maturities and the cash flows related to the Bank's liabilities do not generally fluctuate as a result of changes in interest rates. Cash flows from mortgage-related assets and callable agency debentures can vary significantly as a result of changes in interest rates. As interest rates decrease, borrowers have an economic incentive to lower their cost of debt by refinancing or endorsing their mortgage to a lower interest rate. Similarly, agency debt issuers are more likely to exercise embedded call options for agency securities and issue new securities at a lower interest rate.


For each date presented in the following table, the estimated change in the Bank's net interest income is based on the indicated instantaneous, parallel and permanent change in interest rates is presented.rates. The change in each interest rate environment represents the difference between estimated net interest income in the 0 basis point interest rate environment ("base case," assumes the forward market and product interest rates implied by the yield curve are realized) and the estimated net interest income in each alternative interest rate environment (assumes market and product interest rates have a parallel shift in rates across all maturities by the indicated change in rates). Projected cash flows for each scenario are based upon varying prepayment assumptions to model likely customer behavior changes as market rates change. At all dates presented,September 30, 2021, multiple yields along the three-month Treasury bill yield wascurve were less than one percent, so the -100 basis points scenario wasand -200 basis points scenarios were not applicable. Estimations of net interest income used in preparing the table below were based upon the assumptions that the total composition of interest-earning assets and interest-bearing liabilities does not change materially and that any repricing of assets or liabilities occurs at anticipated product and market rates for the alternative rate environments as of the dates presented. The estimation of net interest income does not include any projected gains or losses related to the sale of loans or securities, or income derived from non-interest income sources, but does include the use of different prepayment assumptions in the alternative interest rate environments. It is important to consider that estimated changes in net interest income are for a cumulative four-quarter period. These do not reflect the earnings expectations of management.
ChangeNet Interest Income At September 30,
(in Basis Points)20222021
in Interest Rates(1)
Amount ($)Change ($)Change (%)Amount ($)Change ($)Change (%)
(Dollars in thousands)
 -200 bp$182,458 $(775)(0.4)%N/AN/AN/A
 -100 bp183,363 130 0.1 N/AN/AN/A
  000 bp183,233 — — $185,285 $— — %
+100 bp182,737 (496)(0.3)190,060 4,775 2.6 
+200 bp182,081 (1,152)(0.6)191,998 6,713 3.6 
+300 bp181,394 (1,839)(1.0)192,590 7,305 3.9 
Change Net Interest Income At September 30,
(in Basis Points) 2017 2016
in Interest Rates(1)
 Amount ($) Change ($) Change (%) Amount ($) Change ($) Change (%)
  (Dollars in thousands)
 -100 bp N/A
 N/A
 N/A
 N/A
 N/A
 N/A
  000 bp $187,823
 $—
 — % $188,696
 $—
 —%
+100 bp 189,259
 1,436
 0.76
 192,921
 4,225
 2.24
+200 bp 188,508
 685
 0.36
 194,919
 6,223
 3.30
+300 bp 186,299
 (1,524) (0.81) 195,187
 6,491
 3.44


(1)Assumes an instantaneous, parallel, and permanent change in interest rates at all maturities.
(1)Assumes an instantaneous, parallel, and permanent change in interest rates at all maturities.


The Bank's projected net interest income is more adversely impactedprojection was lower in the base case scenario at September 30, 2022 compared to September 30, 2021 due to higher interest expense projections on the Bank's liabilities than interest income projections on the Bank's assets as a result of higher interest rates at September 30, 2022. This was driven primarily by a faster increase in the cost of liabilities during fiscal year 2022 compared to the rate of increase in asset yields. In the rising interest rate scenarios, the cost of liabilities is projected to continue to increase at a faster pace than asset yields, resulting in a projected decrease in net
50
interest income in these interest rate scenarios. This was not the case at September 30, 2021, as interest rates were lower than at September 30, 2022, resulting in more mortgage-related cash flows projected to reprice as interest rates increased.

In the decreasing interest rate scenarios at September 30, 2017 than at September 30, 2016. The Bank's one-year gap amount was positive for both periods. Therefore, as market interest rates rise,2022, the Bank's assets are projected to reprice higher at a faster pace than liabilities. The net interest income projections were negativeprojection remained relatively flat as the projected increase in the +300 basis point scenario at September 30, 2017 comparedmortgage-related assets repricing to being positive at September 30, 2016. This change was due primarily to higher marketlower interest rates at September 30, 2017, which resulted in a decrease in the Bank's one-year gap. Aswas largely offset by liability cash flows repricing to lower interest rates rise, the one-year gap eventually becomes negative due to a reduction in cash flows from the Bank's mortgage-related assets and callable agency debentures. See below for additional discussion of the reasons for this result. At September 30, 2017, modeled in the +300 basis point scenario, liabilities would reprice to higher interest rates at a faster pace than assets and have a negative impact on the Bank's net interest income projection.as well.



Change in MVPE. Changes in the estimated market values of our financial assets and liabilities drive changes in estimates of MVPE. The market value of an asset or liability reflects the present value of all the projected cash flows over its remaining life, discounted at current market interest rates. As interest rates rise, generally the market value for both financial assets and liabilities decrease. The opposite is generally true as interest rates fall. The MVPE represents the theoretical market value of capital that is calculated by netting the market value of assets, liabilities, and off-balance sheet instruments. If the market values of financial assets increase at a faster pace than the market values of financial liabilities, or if the market values of financial liabilities decrease at a faster pace than the market values of financial assets, the MVPE will increase. The market value of shorter term-to-maturity financial instruments is less sensitive to changes in interest rates than are longer term-to-maturity financial instruments. Because of this, the market values of our certificates of deposit (which generally have relatively shorter average lives) tend to display less sensitivity to changes in interest rates than do our mortgage-related assets (which generally have relatively longer average lives). The average life expected on our mortgage-related assets varies under different interest rate environments because borrowers have the ability to prepay their mortgage loans. Therefore, as interest rates decrease, the WAL of mortgage-related assets decrease as well. As interest rates increase, the WAL would be expected to increase, as well as increasing the sensitivity of these assets in higher rate environments.


The following table sets forth the estimated change in the MVPE for each date presented based on the indicated instantaneous, parallel, and permanent change in interest rates. The change in each interest rate environment represents the difference between the MVPE in the base case (assumes the forward market interest rates implied by the yield curve are realized) and the MVPE in each alternative interest rate environment (assumes market interest rates have a parallel shift in rates). At the dates presented, the three-month Treasury bill yield was less than one percent, so the -100 basis points scenario was not applicable. Projected cash flows for each scenario are based upon varying prepayment assumptions to model likely customer behavior changes as market rates change. At September 30, 2021, multiple yields along the yield curve were less than one percent, so the -100 basis points and -200 basis points scenarios were not applicable. The estimations of the MVPE used in preparing the table below were based upon the assumptions that the total composition of interest-earning assets and interest-bearing liabilities does not change, that any repricing of assets or liabilities occurs at current product or market rates for the alternative rate environments as of the dates presented, and that different prepayment rates were used in each alternative interest rate environment. The estimated MVPE results from the valuation of cash flows from financial assets and liabilities over the anticipated lives of each for each interest rate environment. The table below presents the effects of the changes in interest rates on our assets and liabilities as they mature, repay, or reprice, as shown by the change in the MVPE for alternative interest rates.
ChangeMarket Value of Portfolio Equity At September 30,
(in Basis Points)20222021
in Interest Rates(1)
Amount ($)Change ($)Change (%)Amount ($)Change ($)Change (%)
(Dollars in thousands)
 -200 bp$1,299,340 $404,353 45.2 %N/AN/AN/A
 -100 bp1,024,167 129,180 14.4 N/AN/AN/A
  000 bp894,987 — — $1,451,795 $— — %
+100 bp759,165 (135,822)(15.2)1,354,766 (97,029)(6.7)
+200 bp625,864 (269,123)(30.1)1,170,646 (281,149)(19.4)
+300 bp500,730 (394,257)(44.1)968,543 (483,252)(33.3)
Change Market Value of Portfolio Equity At September 30,
(in Basis Points) 2017 2016
in Interest Rates(1)
 Amount ($) Change ($) Change (%) Amount ($) Change ($) Change (%)
  (Dollars in thousands)
 -100 bp N/A
 N/A
 N/A
 N/A
 N/A
 N/A
  000 bp $1,460,428
 $—
 — % $1,448,758
 $—
 — %
+100 bp 1,352,558
 (107,870) (7.39) 1,364,879
 (83,879) (5.79)
+200 bp 1,173,891
 (286,537) (19.62) 1,208,130
 (240,628) (16.61)
+300 bp 969,747
 (490,681) (33.60) 1,014,446
 (434,312) (29.98)


(1)Assumes an instantaneous, parallel, and permanent change in interest rates at all maturities.
(1)Assumes an instantaneous, parallel, and permanent change in interest rates at all maturities.


The percentage change in the Bank's MVPE at September 30, 20172022 and September 30, 2021 was more adversely impactednegative in the increasingall rising interest rate scenarios thanscenarios. The negative impact to the Bank's MVPE was greater at September 30, 20162022 compared to September 30, 2021 due primarily to market interest rates being higheran increase in the duration of the Bank's mortgage-related assets at September 30, 2017.2022 compared to September 30, 2021. This was a result of higher interest rates at September 30, 2022. As interest rates increase, borrowers
51
have less economic incentive to refinance their mortgages and agency debt issuers have less economic incentive or opportunity to exercise their call options in order to issue new debt at lower interest rates, resulting in lower projected cash flows on these assets. As interest rates increase in the rising interest rate scenarios, repayments on mortgage-related assets are more likely to decrease and only be realized through significant changes in borrowers' lives such as divorce, death, job-related relocations, or other events as there is less economic incentive for borrowers to prepay their debt. This resultsdebt, resulting in an increase in the average life of mortgage-related assets. Similarly, call projections for the Bank's callable agency debentures decrease as interest rates rise, which results in cash flows related to these assets moving closer to the contractual maturity dates. The higher expected average lives of these assets relative to the assumptions in the base case interest rate environment, increases the sensitivity of their market value to changes in interest rates. As

In the decreasing interest rate scenarios at September 30, 2022, the Bank's MVPE increased due to a result, the projected decreaselarger increase in the market value of the Bank's financial assets was more significant than the projected decreaseBank's liabilities. This is because the Bank's mortgage-related assets continue to have a higher duration in the market value of its financial liabilities, which resulted in a projected decrease in MVPE in all of the risingthese interest rate scenarios presented. The impact of higherwhich results in greater sensitivity in market value as interest rates at September 30, 2017 was partially offset by the changes in the deposit model discussed above.change.



The following table presents the weighted average yields/rates and WALs (in years), after applying prepayment, call assumptions, and decay rates for our interest-earning assets and interest-bearing liabilities as of September 30, 2017.2022. Yields presented for interest-earning assets include the amortization of fees, costs, premiums and discounts, which are considered adjustments to the yield. The interest rate presented for term borrowings is the effective rate, which includes the impact of interest rate swaps and the amortization of deferred prepayment penalties resulting from FHLB advances previously prepaid. The WAL presented for term borrowings includes the effect of interest rate swaps. The maturity and repricing terms presented for one- to four-family loans represent the contractual terms of the loan.
AmountYield/RateWAL% of Category% of Total
(Dollars in thousands)
Securities$1,563,307 1.29 %4.3 17.0 %
Loans receivable:
Fixed-rate one- to four-family5,675,341 3.15 6.7 76.0 %61.8 
Fixed-rate commercial420,266 4.12 3.8 5.6 4.6 
All other fixed-rate loans82,027 3.56 7.2 1.1 0.9 
Total fixed-rate loans6,177,634 3.22 6.5 82.7 67.3 
Adjustable-rate one- to four-family662,953 2.74 4.2 8.9 7.2 
Adjustable-rate commercial546,078 4.85 7.7 7.3 5.9 
All other adjustable-rate loans85,005 6.05 2.9 1.1 0.9 
Total adjustable-rate loans1,294,036 3.85 5.6 17.3 14.0 
Total loans receivable7,471,670 3.33 6.4 100.0 %81.3 
FHLB stock100,624 7.72 2.7 1.1 
Cash and cash equivalents49,194 1.75 — 0.6 
Total interest-earning assets$9,184,795 3.02 5.9 100.0 %
Non-maturity deposits$3,399,726 0.28 5.9 60.7 %43.9 %
Retail certificates of deposit2,073,542 1.34 1.4 37.0 26.8 
Commercial certificates of deposit36,275 0.97 0.9 0.6 0.5 
Public unit certificates of deposit93,936 1.61 0.5 1.7 1.2 
Total interest-bearing deposits5,603,479 0.70 4.1 100.0 %72.4 
Term borrowings2,062,500 2.44 2.5 96.5 %26.6 
Line of credit borrowings75,000 3.15 — 3.5 1.0 
Total borrowings2,137,500 2.47 2.4 100.0 %27.6 
Total interest-bearing liabilities$7,740,979 1.19 3.7 100.0 %
52
 Amount Yield/Rate WAL % of Category % of Total
 (Dollars in thousands)
Investment securities$301,122
 1.33% 1.5
 24.2% 3.4%
MBS - fixed633,874
 2.14
 2.9
 51.0
 7.1
MBS - adjustable308,573
 2.55
 4.6
 24.8
 3.5
Total securities1,243,569
 2.05
 3.0
 100.0% 14.0
Loans receivable:         
Fixed-rate one- to four-family:         
<= 15 years1,211,167
 3.09
 4.0
 16.9% 13.6
> 15 years4,428,085
 3.85
 6.0
 61.6
 49.9
All other fixed-rate loans268,472
 4.20
 4.0
 3.7
 3.0
Total fixed-rate loans5,907,724
 3.71
 5.5
 82.2
 66.5
Adjustable-rate one- to four-family:         
<= 36 months264,387
 1.77
 3.2
 3.7
 3.0
> 36 months852,609
 3.09
 2.7
 11.9
 9.6
All other adjustable-rate loans158,031
 4.92
 3.1
 2.2
 1.8
Total adjustable-rate loans1,275,027
 3.04
 2.8
 17.8
 14.4
Total loans receivable7,182,751
 3.59
 5.0
 100.0% 80.9
FHLB stock100,954
 6.47
 2.3
   1.1
Cash and cash equivalents351,659
 1.25
 —
   4.0
Total interest-earning assets$8,878,933
 3.32
 4.5
   100.0%
          
Non-maturity deposits$2,399,447
 0.17
 13.5
 45.2% 31.2%
Retail certificates of deposit2,450,418
 1.52
 1.8
 46.1
 31.9
Public units460,003
 1.28
 0.8
 8.7
 6.0
Total deposits5,309,868
 0.89
 7.0
 100.0% 69.1
Term borrowings2,375,000
 2.16
 2.7
   30.9
Total interest-bearing liabilities$7,684,868
 1.28
 5.7
   100.0%

Item 8. Financial Statements and Supplementary Data


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
Capitol Federal Financial, Inc. and subsidiary
Topeka, Kansas

We have audited the internal control over financial reporting of Capitol Federal Financial, Inc. and subsidiary (the "Company") as of September 30, 2017, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Controls over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing similar functions, and effected by the company's board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 30, 2017, based on the criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements as of and for the year ended September 30, 2017 of the Company and our report dated November 29, 2017 expressed an unqualified opinion on those consolidated financial statements.
Kansas City, Missouri
November 29, 2017

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the stockholders and the Board of Directors and Stockholders of Capitol Federal Financial, Inc.

Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Capitol Federal Financial, Inc. and subsidiary (the "Company") as of September 30, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 30, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.
Topeka, Kansas

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended September 30, 2022, of the Company and our report dated November 23, 2022, expressed an unqualified opinion on those financial statements.

Basis for Opinion
The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting
A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.


/s/ Deloitte & Touche LLP

Kansas City, Missouri
November 23, 2022
53
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the stockholders and the Board of Directors of Capitol Federal Financial, Inc.

Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Capitol Federal Financial, Inc. and subsidiary (the "Company") as of September 30, 20172022 and 2016, and2021, the related consolidated statements of income, comprehensive income, stockholders' equity, and cash flows, for each of the three years in the period ended September 30, 2017. 2022, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended September 30, 2022, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of September 30, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated November 23, 2022, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on thesethe Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.


We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includesmisstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence supportingregarding the amounts and disclosures in the financial statements. An auditOur audits also includes assessingincluded evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statement presentation.statements. We believe that our audits provide a reasonable basis for our opinion.


InCritical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion such consolidatedon the financial statements, present fairly, in all material respects,taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Allowance for Credit Losses — Refer to Notes 1 and 4 to the financial positionstatements

Critical Audit Matter Description

The allowance for credit losses (ACL) is a valuation amount that is deducted from the amortized cost basis of Capitol Federal Financial, Inc. and subsidiaryloans which represents management's current expectations of total expected credit losses included in the Company's loan portfolio as of September 30, 2017the balance sheet date. In management's ACL model, average historical loss rates on loan pools with similar risk characteristics are compared to historical data and 2016, anda correlation is estimated using regression analysis. Each quarter, the Company's ACL model pairs the results of the regression analysis with a third party provided economic forecast in order to project future loss rates for a reasonable and supportable time period before reverting back to long-term historical averages for each economic index. The forecast-adjusted loss rate is applied to the loans over their operationsremaining contractual lives, adjusted for prepayments and theircurtailments. The ACL model generates aggregated estimated cash flows for the time period that remains in each loan's contractual life which are discounted back to the reporting date using each loan's effective yield, to arrive at a present value of future cash flows which is compared to the amortized cost basis of the three yearsloan pool to determine
54
the amount of ACL necessary. Management evaluates qualitative factors not included in historical loss rates, macroeconomic forecasts, or other model inputs and/or other ACL processes, considering risks related to loan portfolio attributes and external factors and adjusts the modeled ACL as deemed appropriate based upon the assessment.

We identified the allowance for credit losses as a critical audit matter because of the significant estimates and assumptions required by management in determining the ACL, including the third party provided economic forecast used and qualitative factor adjustments. This required a high degree of auditor judgment and an increased extent of effort, including the need to involve our credit specialists, when performing audit procedures to evaluate the reasonableness of management's significant estimates and assumptions.

How the Critical Audit Matter Was Addressed in the period ended September 30, 2017, in conformity with accounting principles generally acceptedAudit

Our audit procedures related to the ACL model included the following, among others:
•We tested the effectiveness of controls over the Company's ACL model including those over the determination of the qualitative adjustments and management's review of the adequacy of the ACL.
•With the assistance of our credit specialists, we evaluated the appropriateness of the ACL model, data elements utilized in the United States of America.

We have also audited, in accordance with the standardsACL model such as portfolio segmentation into loan pools, forecast and reversion to mean time periods, and economic forecasts, and evaluated reasonableness of the Public Company Accounting Oversight Board (United States),use of qualitative factor adjustments to the Company's internal control over financial reporting as of September 30, 2017, based on the criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizationsoutputs of the Treadway Commission,modeled ACL.
•We evaluated the weighted economic forecast used including reasonableness and our report dated November 29, 2017 expressed an unqualified opinion onbasis for the Company'sselected economic forecast by comparing to internal control over financial reporting.and external sources.
•We evaluated the qualitative factor adjustments including reasonableness and basis for the adjustments which include market and economic conditions and/or portfolio performance metrics.
•We evaluated the appropriateness and relevance of the data elements by comparing to relevant internal and external sources.
•We evaluated the magnitude and proportion of the overall allowance, including the directional consistency and magnitude of the qualitative adjustments.
•We reviewed independent economic statistics such as common macroeconomic indicators, as well as industry peers, and we used data analytics to identify changes in the loan portfolio to assess the completeness of management's qualitative adjustments.


/s/ Deloitte & Touche LLP

Kansas City, Missouri
November 29, 201723, 2022



We have served as the Company's auditor since 1974.


55

CAPITOL FEDERAL FINANCIAL, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2017 and 2016 (Dollars in thousands, except per share amounts)
    
 2017
 2016
ASSETS:   
Cash and cash equivalents (includes interest-earning deposits of $340,748 and $267,829)$351,659
 $281,764
Securities:   
Available-for-sale ("AFS"), at estimated fair value (amortized cost of $410,541 and $517,791)415,831
 527,301
Held-to-maturity ("HTM"), at amortized cost (estimated fair value of $833,009   
and $1,122,867)827,738
 1,100,874
Loans receivable, net (allowance for credit losses ("ACL") of $8,398 and $8,540)7,195,071
 6,958,024
Federal Home Loan Bank Topeka ("FHLB") stock, at cost100,954
 109,970
Premises and equipment, net84,818
 83,221
Other assets216,845
 206,093
TOTAL ASSETS$9,192,916
 $9,267,247
    
LIABILITIES:   
Deposits$5,309,868
 $5,164,018
FHLB borrowings2,173,808
 2,372,389
Repurchase agreements200,000
 200,000
Advance payments by borrowers for taxes and insurance63,749
 62,643
Income taxes payable, net530
 310
Deferred income tax liabilities, net24,458
 25,374
Accounts payable and accrued expenses52,190
 49,549
Total liabilities7,824,603
 7,874,283
    
STOCKHOLDERS' EQUITY:   
Preferred stock, $.01 par value; 100,000,000 shares authorized, no shares issued or outstanding—
 —
Common stock, $.01 par value; 1,400,000,000 shares authorized, 138,223,835 and 137,486,172   
shares issued and outstanding as of September 30, 2017 and 2016, respectively1,382
 1,375
Additional paid-in capital1,167,368
 1,156,855
Unearned compensation, Employee Stock Ownership Plan ("ESOP")(37,995) (39,647)
Retained earnings234,640
 268,466
Accumulated other comprehensive income ("AOCI"), net of tax2,918
 5,915
Total stockholders' equity1,368,313
 1,392,964
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$9,192,916
 $9,267,247
    
    
See accompanying notes to consolidated financial statements.   



CAPITOL FEDERAL FINANCIAL, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2022 and 2021 (Dollars in thousands, except per share amounts)
20222021
ASSETS:
Cash and cash equivalents (includes interest-earning deposits of $27,467 and $24,289)$49,194 $42,262 
Available-for-sale ("AFS") securities, at estimated fair value (amortized cost of $1,768,490 and $2,008,456)1,563,307 2,014,608 
Loans receivable, net (allowance for credit losses ("ACL") of $16,371 and $19,823)7,464,208 7,081,142 
Federal Home Loan Bank Topeka ("FHLB") stock, at cost100,624 73,421 
Premises and equipment, net94,820 99,127 
Income taxes receivable, net1,266 — 
Deferred income tax assets, net33,884 — 
Other assets317,594 320,686 
TOTAL ASSETS$9,624,897 $9,631,246 
LIABILITIES:
Deposits$6,194,866 $6,597,396 
Borrowings2,132,154 1,582,850 
Advances by borrowers80,067 72,729 
Income taxes payable, net— 918 
Deferred income tax liabilities, net— 5,810 
Other liabilities121,311 129,270 
Total liabilities8,528,398 8,388,973 
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value; 100,000,000 shares authorized, no shares issued or outstanding— — 
Common stock, $.01 par value; 1,400,000,000 shares authorized, 138,858,884 and 138,832,284 shares issued and outstanding as of September 30, 2022 and 2021, respectively1,388 1,388 
Additional paid-in capital1,190,213 1,189,633 
Unearned compensation, Employee Stock Ownership Plan ("ESOP")(29,735)(31,387)
Retained earnings80,266 98,944 
Accumulated other comprehensive (loss) income ("AOCI"), net of tax(145,633)(16,305)
Total stockholders' equity1,096,499 1,242,273 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$9,624,897 $9,631,246 
See accompanying notes to consolidated financial statements.

56
CAPITOL FEDERAL FINANCIAL, INC. AND SUBSIDIARYCAPITOL FEDERAL FINANCIAL, INC. AND SUBSIDIARYCAPITOL FEDERAL FINANCIAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOMECONSOLIDATED STATEMENTS OF INCOMECONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED SEPTEMBER 30, 2017, 2016, and 2015 (Dollars in thousands, except per share amounts)
YEARS ENDED SEPTEMBER 30, 2022, 2021, and 2020 (Dollars in thousands, except per share amounts)YEARS ENDED SEPTEMBER 30, 2022, 2021, and 2020 (Dollars in thousands, except per share amounts)
     
2017
 2016
 2015
202220212020
INTEREST AND DIVIDEND INCOME:     INTEREST AND DIVIDEND INCOME:
Loans receivable$253,393
 $243,311
 $235,500
Loans receivable$228,531 $229,897 $270,494 
Mortgage-backed securities ("MBS")23,809
 29,794
 36,647
Mortgage-backed securities ("MBS")19,406 21,399 23,009 
Cash and cash equivalents19,389
 9,831
 5,477
Cash and cash equivalents18,304 144 1,181 
FHLB stock12,233
 12,252
 12,556
FHLB stock10,031 3,916 5,827 
Investment securities4,362
 5,925
 7,182
Investment securities3,268 2,825 4,467 
Total interest and dividend income313,186
 301,113
 297,362
Total interest and dividend income279,540 258,181 304,978 
INTEREST EXPENSE:     INTEREST EXPENSE:
FHLB borrowings68,871
 65,091
 67,797
BorrowingsBorrowings52,490 34,774 48,045 
Deposits42,968
 37,859
 33,119
Deposits34,456 48,406 67,598 
Repurchase agreements5,965
 5,981
 6,678
Total interest expense117,804
 108,931
 107,594
Total interest expense86,946 83,180 115,643 
NET INTEREST INCOME195,382
 192,182
 189,768
NET INTEREST INCOME192,594 175,001 189,335 
PROVISION FOR CREDIT LOSSES—
 (750) 771
PROVISION FOR CREDIT LOSSES(4,630)(8,510)22,300 
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES195,382
 192,932
 188,997
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES197,224 183,511 167,035 
NON-INTEREST INCOME:     NON-INTEREST INCOME:
Retail fees and charges15,053
 14,835
 14,897
Income from bank-owned life insurance ("BOLI")2,233
 3,420
 1,150
Deposit service feesDeposit service fees13,798 12,282 11,285 
Insurance commissionsInsurance commissions2,947 3,030 2,487 
Gain on sale of Visa Class B sharesGain on sale of Visa Class B shares— 7,386 — 
Other non-interest income4,910
 5,057
 5,093
Other non-interest income6,085 5,388 5,827 
Total non-interest income22,196
 23,312
 21,140
Total non-interest income22,830 28,086 19,599 
NON-INTEREST EXPENSE:     NON-INTEREST EXPENSE:
Salaries and employee benefits43,437
 42,378
 43,309
Salaries and employee benefits56,600 56,002 52,996 
Information technology and communications11,282
 10,540
 10,360
Information technology and related expenseInformation technology and related expense18,311 17,922 16,974 
Occupancy, net10,814
 10,576
 9,944
Occupancy, net14,370 14,045 13,870 
Regulatory and outside services5,821
 5,645
 5,347
Regulatory and outside services6,192 5,764 5,762 
Deposit and loan transaction costs5,284
 5,585
 5,417
Advertising and promotional4,673
 4,609
 4,547
Advertising and promotional5,178 5,133 4,889 
Federal insurance premium3,539
 5,076
 5,495
Federal insurance premium3,020 2,545 914 
Deposit and loan transaction costsDeposit and loan transaction costs2,797 2,761 2,890 
Office supplies and related expense1,981
 2,640
 2,088
Office supplies and related expense1,951 1,715 2,195 
Low income housing partnerships—
 3,872
 4,572
Loss on interest rate swap terminationLoss on interest rate swap termination— 4,752 — 
Other non-interest expense2,827
 3,384
 3,290
Other non-interest expense4,432 4,930 5,514 
Total non-interest expense89,658
 94,305
 94,369
Total non-interest expense112,851 115,569 106,004 
INCOME BEFORE INCOME TAX EXPENSE127,920
 121,939
 115,768
INCOME BEFORE INCOME TAX EXPENSE107,203 96,028 80,630 
INCOME TAX EXPENSE43,783
 38,445
 37,675
INCOME TAX EXPENSE22,750 19,946 16,090 
NET INCOME$84,137
 $83,494
 $78,093
NET INCOME$84,453 $76,082 $64,540 
     
Basic earnings per share ("EPS")$0.63
 $0.63
 $0.58
Basic earnings per share ("EPS")$0.62 $0.56 $0.47 
Diluted EPS$0.63
 $0.63
 $0.58
Diluted EPS$0.62 $0.56 $0.47 
Dividends declared per share$0.88
 $0.84
 $0.84
     
See accompanying notes to consolidated financial statements.     See accompanying notes to consolidated financial statements.

57
CAPITOL FEDERAL FINANCIAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
YEARS ENDED SEPTEMBER 30, 2017, 2016, and 2015 (Dollars in thousands)
      
 2017
 2016
 2015
Net income$84,137
 $83,494
 $78,093
Other comprehensive income (loss), net of tax:     
Changes in unrealized gains (losses) on AFS securities,     
net of taxes of $1,595, $1,494, and $(843)(2,625) (2,459) 1,388
Changes in unrealized losses on cash flow hedges,     
net of taxes of $226, $0, and $0(372) —
 —
Comprehensive income$81,140
 $81,035
 $79,481
      
See accompanying notes to consolidated financial statements.     
CAPITOL FEDERAL FINANCIAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
YEARS ENDED SEPTEMBER 30, 2022, 2021, and 2020 (Dollars in thousands)
202220212020
Net income$84,453 $76,082 $64,540 
Other comprehensive income (loss), net of tax:
Changes in unrealized gains/losses on AFS securities, net of taxes of $51,565, $6,116, and $(4,359)(159,770)(19,077)13,578 
Changes in unrealized gains/losses on cash flow hedges, net of taxes of $(9,824), $(6,153), and $4,87530,442 19,277 (15,184)
Comprehensive (loss) income$(44,875)$76,282 $62,934 
See accompanying notes to consolidated financial statements.



58
CAPITOL FEDERAL FINANCIAL, INC. AND SUBSIDIARYCAPITOL FEDERAL FINANCIAL, INC. AND SUBSIDIARYCAPITOL FEDERAL FINANCIAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITYCONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITYCONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED SEPTEMBER 30, 2017, 2016, and 2015 (Dollars in thousands, except per share amounts)
YEARS ENDED SEPTEMBER 30, 2022, 2021, and 2020 (Dollars in thousands, except per share amounts)YEARS ENDED SEPTEMBER 30, 2022, 2021, and 2020 (Dollars in thousands, except per share amounts)
           
  Additional Unearned     TotalAdditionalUnearnedTotal
Common Paid-In Compensation Retained   Stockholders'CommonPaid-InCompensationRetainedStockholders'
Stock Capital ESOP Earnings AOCI EquityStockCapitalESOPEarningsAOCIEquity
Balance at October 1, 2014$1,410
 $1,180,732
 $(42,951) $346,705
 $6,986
 $1,492,882
Net income, fiscal year 2015      78,093
   78,093
Other comprehensive income, net of tax        1,388
 1,388
ESOP activity, net  384
 1,652
     2,036
Balance at September 30, 2019Balance at September 30, 2019$1,414 $1,210,226 $(34,692)$174,277 $(14,899)$1,336,326 
Net income, fiscal year 2020Net income, fiscal year 202064,540 64,540 
Cumulative effect of adopting Accounting Standards Update ("ASU") 2016-02Cumulative effect of adopting Accounting Standards Update ("ASU") 2016-0288 88 
Other comprehensive loss, net of taxOther comprehensive loss, net of tax(1,606)(1,606)
ESOP activityESOP activity336 1,652 1,988 
Restricted stock activity, net  85
       85
Restricted stock activity, net(19)(19)
Stock-based compensation  2,086
       2,086
Stock-based compensation570 570 
Repurchase of common stock(39) (32,513)   (13,897)   (46,449)Repurchase of common stock(26)(21,897)(1,881)(23,804)
Stock options exercised
 267
       267
Stock options exercised1 637 638 
Cash dividends to stockholders ($0.84 per share)     (114,162)   (114,162)
Balance at September 30, 20151,371
 1,151,041
 (41,299) 296,739
 8,374
 1,416,226
Cash dividends to stockholders ($0.68 per share)Cash dividends to stockholders ($0.68 per share)(93,862)(93,862)
Balance at September 30, 2020Balance at September 30, 20201,389 1,189,853 (33,040)143,162 (16,505)1,284,859 
           
Net income, fiscal year 2016      83,494
   83,494
Other comprehensive loss, net of tax        (2,459) (2,459)
ESOP activity, net  522
 1,652
     2,174
Cumulative effect of adopting ASU 2016-13Cumulative effect of adopting ASU 2016-13(2,288)(2,288)
Net income, fiscal year 2021Net income, fiscal year 202176,082 76,082 
Other comprehensive income, net of taxOther comprehensive income, net of tax200 200 
ESOP activityESOP activity383 1,653 2,036 
Restricted stock activity, net1
 48
       49
Restricted stock activity, net(16)(16)
Stock-based compensation  1,121
       1,121
Stock-based compensation496 496 
Repurchase of common stockRepurchase of common stock(1)(1,407)(122)(1,530)
Stock options exercised3
 4,123
       4,126
Stock options exercised324 324 
Cash dividends to stockholders ($0.84 per share)     (111,767)   (111,767)
Balance at September 30, 20161,375
 1,156,855
 (39,647) 268,466
 5,915
 1,392,964
Cash dividends to stockholders ($0.87 per share)Cash dividends to stockholders ($0.87 per share)(117,890)(117,890)
Balance at September 30, 2021Balance at September 30, 20211,388 1,189,633 (31,387)98,944 (16,305)1,242,273 
           
Net income, fiscal year 2017      84,137
   84,137
Net income, fiscal year 2022Net income, fiscal year 202284,453 84,453 
Other comprehensive loss, net of tax        (2,997) (2,997)Other comprehensive loss, net of tax(129,328)(129,328)
ESOP activity, net  784
 1,652
     2,436
ESOP activityESOP activity88 1,652 1,740 
Restricted stock activity, net  57
       57
Restricted stock activity, net(6)(6)
Stock-based compensation  506
       506
Stock-based compensation498 498 
Stock options exercised7
 9,166
       9,173
Cash dividends to stockholders ($0.88 per share)     (117,963)   (117,963)
Balance at September 30, 2017$1,382
 $1,167,368
 $(37,995) $234,640
 $2,918
 $1,368,313
Cash dividends to stockholders ($0.76 per share)Cash dividends to stockholders ($0.76 per share)(103,131)(103,131)
Balance at September 30, 2022Balance at September 30, 2022$1,388 $1,190,213 $(29,735)$80,266 $(145,633)$1,096,499 
           
           
See accompanying notes to consolidated financial statements.See accompanying notes to consolidated financial statements.        See accompanying notes to consolidated financial statements.

59

CAPITOL FEDERAL FINANCIAL, INC. AND SUBSIDIARYCAPITOL FEDERAL FINANCIAL, INC. AND SUBSIDIARYCAPITOL FEDERAL FINANCIAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWSCONSOLIDATED STATEMENTS OF CASH FLOWSCONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED SEPTEMBER 30, 2017, 2016, and 2015 (Dollars in thousands)
YEARS ENDED SEPTEMBER 30, 2022, 2021, and 2020 (Dollars in thousands)YEARS ENDED SEPTEMBER 30, 2022, 2021, and 2020 (Dollars in thousands)
     
2017
 2016
 2015
202220212020
CASH FLOWS FROM OPERATING ACTIVITIES:     CASH FLOWS FROM OPERATING ACTIVITIES:
Net income$84,137
 $83,494
 $78,093
Net income$84,453 $76,082 $64,540 
Adjustments to reconcile net income to net cash provided by operating activities:Adjustments to reconcile net income to net cash provided by operating activities:    Adjustments to reconcile net income to net cash provided by operating activities:
FHLB stock dividends(12,233) (12,252) (12,556)FHLB stock dividends(10,031)(3,916)(5,827)
Provision for credit losses—
 (750) 771
Provision for credit losses(4,630)(8,510)22,300 
Proceeds from sales of loans receivable held-for-sale6,816
 —
 —
Originations of loans receivable held-for-sale ("LHFS")Originations of loans receivable held-for-sale ("LHFS")(1,088)(1,780)— 
Proceeds from sales of LHFSProceeds from sales of LHFS1,113 1,825 — 
Amortization and accretion of premiums and discounts on securities4,479
 5,342
 5,649
Amortization and accretion of premiums and discounts on securities4,967 6,206 1,661 
Depreciation and amortization of premises and equipment7,796
 7,141
 6,844
Depreciation and amortization of premises and equipment9,365 9,372 9,133 
Amortization of intangible assetsAmortization of intangible assets1,372 1,578 1,964 
Amortization of deferred amounts related to FHLB advances, net1,419
 1,868
 4,196
Amortization of deferred amounts related to FHLB advances, net1,804 1,582 539 
Common stock committed to be released for allocation - ESOP2,436
 2,174
 2,036
Common stock committed to be released for allocation - ESOP1,740 2,036 1,988 
Stock-based compensation506
 1,121
 2,086
Stock-based compensation498 496 570 
Provision for deferred income taxes922
 470
 3,201
Provision for deferred income taxes2,047 (1,668)(5,588)
Gain on the sale of Visa Class B sharesGain on the sale of Visa Class B shares— (7,386)— 
Changes in:     Changes in:
Unrestricted cash collateral received from derivative counterparties, netUnrestricted cash collateral received from derivative counterparties, net12,050 — — 
Other assets, net(680) 1,807
 3,878
Other assets, net6,661 12,751 9,105 
Income taxes payable/receivable590
 1,381
 (1,374)
Accounts payable and accrued expenses(10,743) (6,840) (6,215)
Income taxes payable/receivable, netIncome taxes payable/receivable, net(2,197)105 774 
Other liabilitiesOther liabilities(10,823)(14,306)(8,231)
Net cash provided by operating activities85,445
 84,956
 86,609
Net cash provided by operating activities97,301 74,467 92,928 
     
CASH FLOWS FROM INVESTING ACTIVITIES:     CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of AFS securities(37,425) (99,927) (149,937)Purchase of AFS securities(88,026)(1,079,351)(1,007,763)
Purchase of HTM securities—
 (144,392) (54,133)
Proceeds from calls, maturities and principal reductions of AFS securities144,643
 326,814
 234,794
Proceeds from calls, maturities and principal reductions of AFS securities323,025 594,294 667,952 
Proceeds from calls, maturities and principal reductions of HTM securities268,689
 309,328
 330,054
Proceeds from the redemption of FHLB stock386,900
 382,450
 265,929
Proceeds from the redemption of FHLB stock302,243 25,386 10,421 
Purchase of FHLB stock(365,651) (329,625) (190,862)Purchase of FHLB stock(319,415)(1,029)— 
Net increase in loans receivable(246,882) (336,056) (398,307)
Net change in loans receivableNet change in loans receivable(381,561)132,800 191,359 
Purchase of premises and equipment(9,128) (14,854) (12,022)Purchase of premises and equipment(5,557)(9,410)(14,742)
Proceeds from sale of other real estate owned ("OREO")5,138
 4,973
 5,987
Proceeds from sale of other real estate owned ("OREO")692 194 993 
Purchase of BOLI—
 —
 (50,000)
Proceeds from BOLI death benefit—
 783
 —
Net cash provided by (used in) investing activities146,284
 99,494
 (18,497)
Proceeds from the sale of Visa Class B sharesProceeds from the sale of Visa Class B shares— 7,386 — 
Proceeds from sale of assets held-for-saleProceeds from sale of assets held-for-sale— 2,619 — 
Proceeds from bank-owned life insurance ("BOLI") death benefitProceeds from bank-owned life insurance ("BOLI") death benefit1,023 443 490 
Net cash used in investing activitiesNet cash used in investing activities(167,576)(326,668)(151,290)
     
     (Continued)
    (Continued)

60
CAPITOL FEDERAL FINANCIAL, INC. AND SUBSIDIARYCAPITOL FEDERAL FINANCIAL, INC. AND SUBSIDIARYCAPITOL FEDERAL FINANCIAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWSCONSOLIDATED STATEMENTS OF CASH FLOWSCONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED SEPTEMBER 30, 2017, 2016, and 2015 (Dollars in thousands)
YEARS ENDED SEPTEMBER 30, 2022, 2021, and 2020 (Dollars in thousands)YEARS ENDED SEPTEMBER 30, 2022, 2021, and 2020 (Dollars in thousands)
     
2017
 2016
 2015
202220212020
CASH FLOWS FROM FINANCING ACTIVITIES:     CASH FLOWS FROM FINANCING ACTIVITIES:
Cash dividends paid(117,963) (111,767) (114,162)Cash dividends paid(103,131)(117,890)(93,862)
Net change in deposits145,850
 331,498
 177,248
Net change in deposits(402,530)405,988 609,541 
Proceeds from borrowings2,700,100
 8,000,100
 7,575,100
Proceeds from borrowings1,454,402 1,143,800 1,665,600 
Repayments on borrowings(2,900,100) (8,900,100) (7,695,100)Repayments on borrowings(906,902)(1,346,800)(2,112,600)
Change in advance payments by borrowers for taxes and insurance1,106
 825
 3,713
Change in advances by borrowersChange in advances by borrowers7,338 7,008 35 
Payment of FHLB prepayment penalties—
 —
 (3,352)Payment of FHLB prepayment penalties— (5,077)(4,215)
Repurchase of common stock—
 —
 (50,034)Repurchase of common stock— (4,568)(20,767)
Stock options exercised8,843
 4,070
 267
Stock options exercised— 324 638 
Excess tax benefits from stock options330
 56
 —
Net cash used in financing activities(161,834) (675,318) (106,320)
     
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS69,895
 (490,868) (38,208)
Net cash provided by financing activitiesNet cash provided by financing activities49,177 82,785 44,370 
     
CASH AND CASH EQUIVALENTS:     
NET DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASHNET DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH(21,098)(169,416)(13,992)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH:CASH, CASH EQUIVALENTS AND RESTRICTED CASH:
Beginning of year281,764
 772,632
 810,840
Beginning of year70,292 239,708 253,700 
End of year$351,659
 $281,764
 $772,632
End of year$49,194 $70,292 $239,708 
     
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:     SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Income tax payments$37,875
 $36,483
 $35,849
Income tax payments$13,559 $13,057 $13,045 
Interest payments$117,308
 $106,182
 $103,784
Interest payments$83,833 $83,646 $118,610 
     
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Operating lease right-of-use assets obtainedOperating lease right-of-use assets obtained$— $— $16,841 
Operating lease liabilities obtainedOperating lease liabilities obtained$— $— $16,726 
     
See accompanying notes to consolidated financial statements.    (Concluded)
See accompanying notes to consolidated financial statements.(Concluded)

61

CAPITOL FEDERAL FINANCIAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2017, 2016,2022, 2021, and 20152020                                                                                                        


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of Business - Capitol Federal Financial, Inc. (the "Company") provides a full range of retail banking services through its wholly-owned subsidiary, Capitol Federal Savings Bank (the "Bank"), a federal savings bank, which has 3745 traditional and 10nine in-store banking offices serving primarily the metropolitan areas of Topeka, Wichita, Lawrence, Manhattan, Emporia and Salina, Kansas and portions of the Kansas City metropolitan area of greater Kansas City.area. The Bank emphasizes mortgage lending, primarily originating and purchasing one- to four-family loans, and providing personal retail financial services. The Bank is subject to competition from other financial institutionsservices, along with offering commercial banking and other companies that provide financial services.lending products.


Basis of Presentation - The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, the Bank. The Bank has atwo wholly owned subsidiary,subsidiaries, Capitol Funds, Inc. and Capital City Investments, Inc.  Capitol Funds, Inc. has a wholly-owned subsidiary, Capitol Federal Mortgage Reinsurance Company ("CFMRC").Company.  Capital City Investments, Inc. is a real estate and investment holding company. All intercompany accounts and transactions have been eliminated in consolidation.  TheseThe consolidated financial statements have been prepared in conformityaccordance with accounting principles generally accepted in the United States of America ("GAAP")(GAAP), and require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from these estimates and assumptions.


The Bank has an expense sharing agreement with the Company that covers the reimbursement of certain expenses that are allocable to the Company. These expenses include compensation, rent for leased office space, and general overhead expenses.

The Company, the Bank, Capitol Funds, Inc. and CFMRC have a tax allocation agreement. The Bank is the paying agent to the taxing authorities for the group for all periods presented. Each entity is liable for taxes as if separate tax returns were filed and reimburses the Bank for its pro rata share of the tax liability. If any entity has a tax benefit, the Bank reimburses the entity for its tax benefit.

Cash, and Cash Equivalents and Restricted Cash - Cash, cash equivalents, and restricted cash reported in the statement of cash flows included cash and cash equivalents include cash on handof $49.2 million and amounts due from banks. Regulations of the Board of Governors of the Federal Reserve System ("FRB") require federally chartered savings banks to maintain cash reserves against their transaction accounts. Required reserves must be maintained in the form of vault cash, an account$42.3 million at a Federal Reserve Bank, or a pass-through account as defined by the FRB. The amount of interest-earning deposits held at the Federal Reserve Bank of Kansas City ("FRB of Kansas City") as of September 30, 20172022 and 20162021, respectively, and included restricted cash of $28.0 million at September 30, 2021 which was $337.5 million and $264.4 million, respectively.included in other assets on the consolidated balance sheet. There was no restricted cash at September 30, 2022. The Bank is in compliancerestricted cash relates to the collateral postings to/from the Bank's derivative counterparties associated with the FRB requirements. ForBank's interest rate swaps.  See additional discussion regarding the years ended September 30, 2017interest rate swaps in "Note 8. Deposits and 2016, the average daily balance of required reserves at the FRB of Kansas City was $9.1 million and $8.8 million, respectively.Borrowed Funds."


Net Presentation of Cash Flows Related to Borrowings - During the current fiscal year,At times, the Bank enteredenters into certain FHLB advances with contractual maturities of 90 days or less. Cash flows related to these advances are reported on a net basis in the consolidated statements of cash flows.


Securities - Securities include MBS and agency debentures issued primarily by United States Government-Sponsored Enterprises ("GSE"GSEs"), including Federal National Mortgage Association (FNMA), Federal Home Loan Mortgage Corporation (FHLMC) and the Federal Home Loan Banks, United States Government agencies, including Government National Mortgage Association (GNMA), corporate bonds, and municipal bonds. Securities are classified as HTM,held-to-maturity ("HTM"), AFS, or trading based on management's intention for holding the securities on the date of purchase. Generally, classifications are made in response to liquidity needs, asset/liability management strategies, and the market interest rate environment at the time of purchase.


Accrued interest receivable for all securities is reported in other assets on the consolidated balance sheet and totaled $4.2 million and $2.9 million at September 30, 2022 and 2021, respectively. The Company excludes accrued interest from the amortized cost of securities and does not measure ACL for accrued interest. Interest accrued but not received is reversed against interest income.

Securities that management has the intentintention and ability to hold to maturity are classified as HTM and reported at amortized cost. Such securities are adjusted for the amortization of premiums and discounts which are recognized as adjustments to interest income over the life of the securities using the level-yield method. At September 30, 2022 and 2021, the portfolio did not contain any securities classified as HTM.


Securities that management may sell if necessary for liquidity or asset management purposes are classified as AFS and reported at fair value, with unrealized gains and non-credit losses reported as a component of AOCI within stockholders' equity, net of deferred income taxes. The amortization of premiums and discounts are recognized as adjustments to interest
62
income over the life of the securities using the level-yield method. Gains or losses on the disposition of AFS securities are recognized using the specific identification method. The Company primarily uses prices obtained from third partythird-party pricing services to determine the fair value of securities. See additional discussion of fair value of AFS securities in "Note 13.14. Fair Value of Financial Instruments."


Securities that are purchased and held principally for resale in the near future are classified as trading securities and are reported at fair value, with unrealized gains and losses included in non-interest income in the consolidated statements of income. During the fiscal years ended September 30, 20172022 and 2016,2021, neither the Company nor the Bank maintained a trading securities portfolio.


Allowance for Credit Losses on AFS Debt Securities - Management monitors AFS debt securities in the investment portfolio for impairment on an ongoing basis and performs a formal review quarterly. The process involves monitoring market events and other items that could impact issuers. The evaluation includes, butIf an AFS debt security is not limited to, such factors as:in an unrealized loss position at the naturetime of the investment,quarterly review, the length of timeCompany first assesses whether it intends to sell, or if it is more likely than not that it will be required to sell the security has had abefore recovery of its amortized cost. If either condition is met, the entire loss in fair value less thanis recognized in current earnings. If neither condition is met, and the Company does not expect to recover the amortized cost basis, the Company determines whether the decline in fair value resulted from credit losses or other factors. In making this assessment, management considers the security structure, the cause(s) and severity of the loss, expectationexpectations of an anticipated recovery period,future performance including recent events specific to the issuer or industry including the issuer's financial condition and current ability to make future payments in a timely manner, and external credit ratings and recent downgrades in such ratings, management's intentratings. Management's assessment involves a high degree of subjectivity and judgment that is based on information available at a point in time. If the assessment indicates that a credit loss exists, the present value of cash flows expected to sell and whether itbe collected is more likely than not management would be requiredcompared to sell prior to recovery for debt securities. Management determines whether other-than-temporary losses should be recognized for impaired securities by assessing all known facts and circumstances surrounding the securities. If management intends to sell an impaired security or if it is more likely than not that management will be required to sell an impaired security before recovery of its amortized cost basis an other-than-temporary impairmentof the security. If the present value of the cash flows expected to be collected is less than the amortized cost basis, a credit loss has occurred, and an ACL is recorded. The ACL is limited by the difference betweenamount that the fair value is less than the amortized cost basis.

Changes in the ACL on AFS debt securities are recorded as an increase or decrease in the provision for credit losses on the consolidated statements of income. Losses are charged against the ACL on securities when management believes the collectability of an AFS security is in doubt or when either of the conditions regarding intent or requirement to sell is met. Interest accrued on AFS debt securities but not received is also reversed against interest income. As of September 30, 2022 and fair value will be recognized2021, the Company did not identify any credit losses related to the Company's AFS debt securities so there was no ACL on AFS debt securities as a loss in earnings and the security will be written down to fair value.of those dates.


Loans Receivable - Loans receivable that management has the intentintention and ability to hold for the foreseeable future are carried at amortized cost, excluding accrued interest. Amortized cost is the amount of unpaid principal, net of ACL, undisbursed loan funds, unamortized premiums and discounts, and deferred loan origination fees and costs. Net loan origination fees and costs, and premiums and discounts are amortized as yield adjustments to interest income using the level-yield method. Loans are presented on the consolidated balance sheet net of the related ACL.

Interest on loans receivable is creditedaccrued based on the principal amount outstanding. Accrued interest receivable for loans is reported in other assets on the consolidated balance sheet and totaled $19.4 million and $18.7 million at September 30, 2022 and 2021, respectively. The Company does not calculate ACL for accrued interest. Interest accrued but not received is reversed against interest income.

Loan endorsements - Certain existing one- to four- family loan customers, including customers whose loans were purchased from a correspondent lender, have the opportunity, for a fee, to endorse their original loan terms to current loan terms being offered by the Bank, without being required to complete the standard application and underwriting process. The fee received for each endorsement is deferred and amortized as an adjustment to interest income as earnedover the life of the loan.  If the change in loan terms resulting from the endorsement is deemed to be more than minor, all existing unamortized deferred loan origination fees and accrued only ifcosts are recognized at the time of endorsement.  If the change in loan terms is deemed collectible.to be minor, the fee received for the endorsement is added to the net remaining unamortized deferred fee or deferred cost balance.

Troubled debt restructurings ("TDRs") - For borrowers experiencing financial difficulties, the Bank may grant a concession to the borrower, resulting in a TDR.borrower.  Such concessions generally involve extensions of loan maturity dates, the granting of periods during which thereduced payment of only interest and escrow isamounts are required, and/or reductions in interest rates, and loans that have been discharged under Chapter 7 bankruptcy proceedings where the borrower has not reaffirmed the debt.rates.  The Bank does not forgive principal or interest, nor does it commit to lend additional funds to these borrowers, except for situations generally involving the capitalization of
63
delinquent interest and/or escrow on one- to four-family loans and consumer loans, not to exceed the original loan balance,amount. In the case of commercial loans, the Bank generally does not forgive principal or interest or commit to these borrowers.lend additional funds unless the borrower provides additional collateral or other enhancements to improve the credit quality.


Delinquent loans - A loan is considered delinquent when payment has not been received within 30 days of its contractual due date. The number of days delinquent is determined by the number of scheduled payments that remain unpaid, assuming a period of 30 days between each scheduled payment.


Nonaccrual loans - The accrual of income on loans is generally discontinued when interest or principal payments are 90 days in arrears. We also report certain TDRtroubled debt restructuring ("TDR") loans as nonaccrual loans that are required to be reported as such pursuant to regulatory reporting requirements. Loans on which the accrual of income has been discontinued are designated as nonaccrual and outstanding interest previously creditedaccrued beyond 90 days delinquent is reversed, except in the case of commercial loans in which all delinquent accrued interest is reversed. A nonaccrual one- to four-family or consumer loan is returned to accrual status once the contractual payments have been made to bring the loan less than 90 days past due or, in the case of a TDR loan, the borrower has made the required consecutive loan payments.

Impaired loans - A nonaccrual commercial loan is considered impaired when, based onreturned to accrual status once the loan has been current information and events, it is probable that the Bank will be unable to collectfor a minimum of six months, all amounts due, including principalfees and interest according to the original contractual terms ofare paid current, the loan agreement. Interest income on impaired loanshas a sufficient debt service coverage ratio, and the loan is recognized in the period collected unless the ultimate collection of principal is considered doubtful. Loans reported as impaired loans include loans partially charged-offwell secured and TDRs.within policy.


Allowance for Credit Losses on Loans Receivable - The ACL is a valuation amount that is deducted from the amortized cost basis of loans. It represents management's best estimatecurrent expectations of the amount of inherenttotal expected credit losses included in the Company's loan portfolio as of the balance sheet date. It involvesdate and is determined using relevant information about past events, including historical credit loss experience on loans with similar risk characteristics, current conditions, and reasonable and supportable forecasts, along with the application of qualitative factors when necessary. The ACL is recorded upon origination or purchase of a high degree of complexityloan and requires management to make difficult and subjective judgments and assumptions about highly uncertain matters. Management's methodology for assessing the appropriateness ofis updated at subsequent reporting dates. Changes in the ACL consists of a formula analysis model, along with analyzing and considering several other relevant internal and external data elements. The use of different judgments and assumptions could cause reported resultsare recorded through increases or decreases to differ significantly. Management maintains the ACL through provisionsprovision for credit losses in the consolidated statements of income. The ACL is an estimate that requires significant judgment including projections of the macroeconomic environment as of a point in time. The macroeconomic environment continuously changes, which can cause fluctuations in estimated expected losses.

The Bank's ACL is measured on a collective ("pool") basis, with loans aggregated into pools based on similar risk characteristics such as collateral type, historical loss experience, loan-to-value ("LTV") for one- to four-family loans, and payment sources for commercial loans. Loans that do not share similar risk characteristics are either charged or credited to income.evaluated on an individual basis. Charge-offs against the related ACL amounts for any loan type may be recorded at any time if the Bank has knowledge of the existence of a probable loss.


One- to four-family loans includingand consumer home equity loans are deemed to be collateral dependent and individually evaluated for loss when the loan is generally 180 days delinquent, and any identified losses are charged-off.charged-off at that time. Losses are based on new collateral values obtained through appraisals, less estimated costs to sell. Anticipated private mortgage insurance proceeds are taken into consideration when calculating the loss amount. An updated appraisal is requested, at a minimum, every 12 months thereafter if the loan is 180 days or more delinquent or in foreclosure. If the Bank holds the first and second mortgage, both loans are combined when evaluating whether there is a potential loss on the loan. For commercial real estate loans, losses are charged-off when the collection of such amounts is determined to be unlikely. When a non-real estate secured loan, which includes consumer loans - other,loan is 120 days delinquent, any identified losses are charged-off. Charge-offsFor commercial loans, loans are individually evaluated for loss if management determines they exhibit unique risk characteristics. Specific allocations of ACL are established and/or losses are charged-off prior to a loan becoming 120 days delinquent when it is determined, through the analysis of any available current financial information regarding the borrower, that the borrower is not able to service the debt and there is little or no prospect for near term improvement. In the case of secured loans, the loan type may also occur at any time ifis deemed to be collateral dependent when this occurs, and the Bank has knowledgespecific allocation of ACL and/or charge-off amount is based on a comparison of the existenceamounts due from the borrower and calculated current fair value of a potential loss.the collateral after consideration of estimated costs to sell.


The primary credit risk characteristics inherent in the one- to four-family and consumer loan portfolios are a decline in economic conditions, such as elevated levels of unemployment or underemployment, and declines in residential real estate values. Any one or a combination of these events may adversely affect borrowers'the ability of borrowers to repay their loans, resulting in increased delinquencies, non-performing assets, loan losses,charge-offs, and future loan loss provisions.provisions for credit losses. Although the commercial real estate loan portfolio is subject to the same risk of declines in economic conditions, the primary risk characteristics inherent in this portfolio include the ability of the borrower to sustain sufficient cash flows from leases and business operations, the ability to control operational or business expenses to satisfy their contractual debt payments, and/orand the ability to utilize personal and/or
64
business resources to pay their contractual debt payments if the cash flows are not sufficient. Additionally, if the Bank were to repossess the secured collateral of a commercial real estate loan, the pool of potential buyers is typicallymore limited more than that for a residential property. This increases the risk thatTherefore, the Bank could hold the property for an extended period of time, and/or potentially be forced to sell at a discounted price, resulting in additional losses.

Each quarter end, a formula analysis is prepared Our commercial and industrial loans are primarily secured by accounts receivable, inventory and equipment, which segregates the loan portfolio into categoriesmay be difficult to appraise, may be illiquid and may fluctuate in value based on certain risk characteristics.the success of the business.

For loans evaluated for credit losses on a pool basis, average historical loss rates are calculated for each pool using the Company's historical charge-offs, or peer data when the Company's own historical loss rates are not reflective of future loss expectations, and outstanding loan balances during a historical time period. The categories includehistorical time periods can be different based on the following: one-individual pool and represent management's credit expectations for the pool of loans over the remaining contractual life. Generally, the historical time periods are at least one economic cycle. These historical loss rates are compared to four-family loans;historical data related to economic variables including national unemployment rate, changes in commercial real estate loans; consumerprice index, changes in home equity loans;values, and other consumer loans. Home equity loans withchanges in the United States gross domestic product during the same underlying collateraltime periods over which the historical loss rates were calculated, and a correlation is estimated using regression analysis. Each quarter, the Company's model pairs the results of the regression analysis with an economic forecast of these same macroeconomic variables, which is provided by a third party, in order to project future loss rates. The forecast is applied for a reasonable and supportable time period, as a one- to four-family loan are combined with the one- to four-family loan in the formula analysis model to calculate a combined loan-to-value ("LTV") ratio. The one- to four-family loan portfolio and related home equity loans are segregated into additional categories based on the following risk characteristics: loan source (originated, correspondent purchased, or bulk purchased), interest payments (fixed-rate and adjustable-rate), LTV ratios, borrower's credit scores, and certain geographic locations. The categories were deriveddetermined by management, based on reviewingbefore reverting back to long-term historical averages at the historical performancemacroeconomic variable level using a straight-line method. The forecast-adjusted loss rate is applied to the loans over their remaining contractual lives, adjusted for expected prepayments and curtailments. The contractual term excludes expected extensions, renewals and modifications unless there is a reasonable expectation that a TDR will be executed. In the case of revolving lines of credit, since the rate of principal reduction is generally at the discretion of the one-borrower, remaining contractual lives are calculated by estimating future cash flows expected to four-familybe received from the borrower until the outstanding balance has been reduced to zero.

Using all of these inputs, the model generates aggregated estimated cash flows for the time period that remains in each loan's contractual life. These cash flows are discounted back to the reporting date using each loan's effective yield, to arrive at a present value of future cash flows. Each loan portfolio and taking into consideration current economic conditions, such as trends in residential real estate values in certain areaspool's ACL is equal to the aggregate shortage, if any, of the U.S. and unemployment rates. Impaired loanspresent value of future cash flows compared to the amortized cost basis of the loan pool.

Additionally, qualitative factors are considered for items not included in the formula analysis as they are individually evaluated for loss.

Historical loss factors are applied to each loan category in the formula analysis model. Each quarter end, management reviews historical losses over a look-back time period and utilizes the historical loss time periods believedrates, macroeconomic forecasts, or other model inputs and/or other ACL processes, as deemed appropriate by management's current assessment of risks related to be the most appropriate considering the current economic conditions. The historical loss time period is then adjusted for a loss emergence time period, which represents the estimated time period from the date of a loss event to the date we recognize a charge-off/loss. Qualitative loss factors are utilized in the formula analysis model to reflect risks inherent in each loan category that are not captured by the historical loss factors. The qualitative loss factors for one- to four-family and consumer loan portfolios take into consideration such items as: unemployment rate trends, residential real estate value trends, credit score trends, delinquent loan trends, and industry and peer charge-off information. The qualitative loss factors for the commercial real estate loan portfolio take into consideration the composition of the portfolio along with industry and peer charge-off information and certain ACL ratios. As loans are classified or become delinquent, the qualitative loss factors increase for each respective loan category. The qualitative loss factors were derived by management based on a review of the historical performance of the respective loan portfolios and industry and peer information for those loan portfolios with no or limited historical loss experience, along with consideration of current economic conditions and the likely impact such conditions might have to the performance of the loan portfolio.

Management utilizes the formula analysis model, along with analyzing and considering several other relevant internalattributes and external data elements when evaluating the adequacy of the ACL.factors. Such data elementsqualitative factor considerations include the trend and composition of delinquent loans and non-performing loans, trendschanges in foreclosed property and short sale transactions and charge-off activity, the current status and trends of local and national employment levels, trends and current conditions in the housing markets, loan growth and concentrations, industry and peer charge-off and ACL information, and certain ACL ratios such as ACL to loans receivable, net and annualized historical losses. Since the Bank's loan portfolio is primarily concentratedcomposition and credit concentrations, changes in one- to four-familythe balances and/or trends in asset quality and/or loan credit performance, changes in lending underwriting standards, the effect of other external factors such as significant unique events or conditions, and actual and/or expected changes in economic conditions, real estate management monitors residential real estate market value trends in the Bank's local market areas and geographic sections of the U.S. by reference to various industry and market reports,values, and/or other economic releases and surveys, and management's general and specific knowledge of the real estate marketsdevelopments in which the Bank lends,operates. Management assesses the potential impact of such items and adjusts the modeled ACL as deemed appropriate based upon the assessment.

Reserve for Off-Balance Sheet Credit Exposures - The Company's off-balance sheet credit exposures are comprised of unfunded portions of existing loans, such as lines of credit and construction loans, and commitments to originate or purchase loans that are not unconditionally cancellable by the Company. Expected credit losses on these amounts are calculated using the same methodology that is applied in order to determine what impact, if any, such trends may havethe ACL model; however, the estimate of credit risk for off-balance sheet credit exposures also takes into consideration the likelihood that funding of the unfunded amount/commitment will occur. The reserve for these off-balance sheet credit exposures is recorded as a liability and is presented in other liabilities on the level of ACL. Reviewing these data elements assists management in evaluating the overall credit quality of the loan portfolio and the reasonableness of the ACL on an ongoing basis, and whether changes need to be madeconsolidated balance sheet. Changes to the Bank's ACL methodology. Management seeksreserve on off-balance sheet credit exposures are recorded through increases or decreases to apply the ACL methodology in a consistent manner; however,provision for credit losses on the methodology can be modified in response to changing conditions. Although management believes the ACL was at a level adequate to absorb inherent losses in the loan portfolio at September 30, 2017, the levelconsolidated statements of the ACL remains an estimate that is subject to significant judgment and short-term changes.income.


Federal Home Loan Bank Stock - As a member of FHLB, Topeka, the Bank is required to acquire and hold shares of FHLB stock. The Bank's holding requirement varies based on the Bank's activities, primarily the Bank's outstanding borrowings, with FHLB. FHLB stock is carried at cost and is considered a restricted asset because it cannot be pledged as collateral or bought or sold on the open market and it also has certain redemption restrictions. Management conducts a quarterly evaluation to determine if any FHLB stock impairment exists. The quarterly impairment evaluation focuses primarily on the capital adequacy and liquidity of FHLB, while also considering the impact that legislative and regulatory developments may have on
65
FHLB. Stock and cash dividends received on FHLB stock are reflected as dividend income in the consolidated statements of income.


Premises, Equipment, and EquipmentLeases - Land is carried at cost. Buildings, leasehold improvements, and furniture, fixtures and equipment are carried at cost less accumulated depreciation and leasehold amortization. Buildings, furniture, fixtures and equipment are depreciated over their estimated useful lives using the straight-line method. Buildings have an estimated useful life of 39 years. Structural components of the buildings generally have an estimated life of 15 years. Furniture, fixtures and equipment have an estimated useful life of three to seven years. Leasehold improvements are amortized over the shorter of their estimated useful lives or the term of the respective leases, which is generally three to 15 years.leases. The costs for major improvements and renovations are capitalized, while maintenance, repairs and minor improvements are charged to operating expenses as incurred. Gains and losses on dispositions are recorded as non-interest income or non-interest expense as incurred.


Income Taxes - The Company utilizes the assetleases real estate property for branches, ATMs, and liability method of accounting for income taxes. Under this method, deferred income tax assets and liabilities are recognized for the tax consequences of temporary differences between the financial statement carrying amounts and the tax basis of existing assets and liabilities. Deferred income tax expense (benefit) represents the change in deferred income tax assets and liabilities excluding the tax effectscertain equipment. All of the changeleases in net unrealized gain (loss) on AFS securities, interest rate swapswhich the Company is the lessee are classified as operating leases. The Company determines if an arrangement is a lease at inception and changesif the lease is an operating lease or a finance lease.

Operating lease right-of-use assets represent the Company's right to use an underlying asset during the lease term and operating lease liabilities represent the Company's obligation to make lease payments arising from the lease. The right-of-use assets associated with operating leases are recorded in other assets in the market value of restricted stock between the grant date and vesting date. Income tax related penalties and interestCompany's consolidated balance sheets. The lease liabilities associated with operating leases are included in income tax expense in the consolidated statements of income.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Certain tax benefits attributable to stock options and restricted stock are credited to additional paid-in capital. To the extent that management considers it more likely than not that a deferred tax asset will not be recovered, a valuation allowance is recorded. All positive and negative evidence is reviewed in determining how much of a valuation allowance is recognized on a quarterly basis.

Certain accounting literature prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of an uncertain tax position taken, or expected to be taken, in a tax return. Interest and penalties related to unrecognized tax benefits are recognized in income tax expense in the consolidated statements of income. Accrued interest and penalties related to unrecognized tax benefits are included within the related tax liabilities line in the consolidated balance sheet.

Employee Stock Ownership Plan - The funds borrowed by the ESOP from the Company to purchase the Company's common stock are being repaid from dividends paid on unallocated ESOP shares and, if necessary, contributions by the Bank. The shares pledged as collateral are reported as a reduction of stockholders' equity at cost. As ESOP shares are committed to be released from collateral each quarter, the Company records compensation expense based on the average market price of the Company's stock during the quarter. Additionally, the shares become outstanding for EPS computations once they are committed to be released. The eligibility criteria for participation in the Company's ESOP is a minimum of one year of service, at least age 21, and at least 1,000 hours of employment in each plan year.

Stock-based Compensation - The Company has share-based plans under which stock options and restricted stock awards have been granted. Compensation expense is recognized over the service period of the share-based payment award. The Company utilizes a fair-value-based measurement method in accounting for the share-based payment transactions with employees, except for equity instruments held by the ESOP. The Company applies the modified prospective method in which compensation cost is recognized over the service period for all awards granted.

Borrowed Funds - The Bank has entered into repurchase agreements, which are sales of securities under agreements to repurchase, with approved counterparties. These agreements are recorded as financing transactions, and thereby reported asother liabilities on the consolidated balance sheet,sheets. The period over which the right-of-use asset is amortized is generally the lesser of the expected remaining term or the remaining useful life of the leased asset. The lease liability is decreased as periodic lease payments are made. The Company performs impairment assessments for right-of-use assets when events or changes in circumstances indicate that their carrying values may not be recoverable.

The calculated amounts of the right-of-use assets and lease liabilities are impacted by the length of the lease term and the discount rate used to calculate the present value of the minimum remaining lease payments. The Company's lease agreements often include one or more options to renew at the Company's discretion. If, at lease inception, the Company considers the exercising of a renewal option to be reasonably certain, the Company includes the extended term in the calculation of the right-of-use asset and lease liability. Generally, the Company cannot practically determine the interest rate implicit in the lease so the Company's incremental borrowing rate is used as the Bank maintains effective controldiscount rate for the lease. The Company uses FHLB advance interest rates, which have been deemed as the Company's incremental borrowing rate, at lease inception based upon the term of the lease. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Lease expense, variable lease expense and short-term lease expense are included in occupancy expense in the Company's consolidated statements of income. For facility-related leases, the Company elected, by lease class, to not separate lease and non-lease components. Lease expense is recognized on a straight-line basis over the transferred securitieslease term. Variable lease expense primarily represents payments such as common area maintenance, real estate taxes, and utilities and are recognized as expense in the securities continueperiod when those payments are incurred. Short-term lease expense relates to leases with an initial term of 12 months or less. The Company has elected to not record a right-of-use asset or lease liability for short-term leases.

Low Income Housing Partnerships - As part of the Bank's community reinvestment initiatives, the Bank invests in affordable housing limited partnerships ("low income housing partnerships") that make equity investments in affordable housing properties.  The Bank is a limited partner in each partnership in which it invests.  A separate, unrelated third party is the general partner.  The Bank receives affordable housing tax credits and other tax benefits for these investments.

Other Assets - Included in other assets on the consolidated balance sheet are the Company's intangible assets, which consist of goodwill, deposit intangibles and other intangibles. 

Goodwill is assessed for impairment on an annual basis, or more frequently in certain circumstances. The test for impairment is performed by comparing the fair value of the reporting unit with its carrying amount.  If the fair value is determined to be carried inless than the Bank's securities portfolio.carrying amount, an impairment is recorded.


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The Bank has obtained borrowings from FHLB inCompany's intangible assets primarily relate to core deposits. These intangible assets are amortized based upon the formexpected economic benefit over an estimated life determined at the time of advancesacquisition and a line of credit. Total FHLB borrowings are secured by certain qualifying loans pursuant to a blanket collateral agreement with FHLB and certain securities, as necessary. Additionally, the Bank is authorized to borrow from the Federal Reserve Bank's "discount window."tested for impairment whenever events or circumstances change.


Interest Rate Swaps - The Company uses interest rate swaps as part of its interest rate risk management strategy to hedge the variable cash outflows associated with certain borrowings. Interest rate swaps are carried at fair value in the Company's consolidated financial statements. For interest rate swaps that are designated and qualify as cash flow hedges, the effective portion of changes in the fair value of such agreements are recorded in AOCI and are subsequently reclassified into interest expense in the period that interest on the borrowings affects earnings. The ineffective portion of the change in fair value of the interest rate swap is recognized directly in earnings. Effectiveness is assessed using regression analysis. At the inception of a hedge, the Company documents certain items, including the relationship between the hedging instrument and the hedged item, the risk management objective and the nature of the risk being hedged, a description of how effectiveness will be measured and an evaluation of hedged transaction effectiveness.


Income Taxes - The Company utilizes the asset and liability method of accounting for income taxes. Under this method, deferred income tax assets and liabilities are recognized for the tax consequences of temporary differences between the financial statement carrying amounts and the tax basis of existing assets and liabilities. Deferred income tax expense (benefit) represents the change in deferred income tax assets and liabilities excluding the tax effects of the change in net unrealized gain (loss) on AFS securities and interest rate swaps. Income tax related penalties and interest, if any, are included in income tax expense in the consolidated statements of income.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. To the extent that management considers it more likely than not that a deferred tax asset will not be recovered, a valuation allowance is recorded. All positive and negative evidence is reviewed in determining how much of a valuation allowance is recognized on a quarterly basis.

Accounting Standards Codification ("ASC") Topic 740 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of an uncertain tax position taken, or expected to be taken, in a tax return. Interest and penalties related to unrecognized tax benefits are recognized in income tax expense in the consolidated statements of income. Accrued interest and penalties related to unrecognized tax benefits are included within the related tax liabilities line in the consolidated balance sheet.
Employee Stock Ownership Plan - The funds borrowed by the ESOP from the Company to purchase the Company's common stock are being repaid from dividends paid on unallocated ESOP shares and, if necessary, contributions by the Bank. The ESOP shares pledged as collateral are reported as a reduction of stockholders' equity at cost. As ESOP shares are committed to be released from collateral each quarter, the Company records compensation expense based on the average market price of the Company's stock during the quarter. Additionally, the ESOP shares become outstanding for EPS computations once they are committed to be released.

Stock-based Compensation - The Company has share-based plans under which stock options and restricted stock awards have been granted. Compensation expense is recognized over the service period of the share-based payment award. The Company utilizes a fair-value-based measurement method in accounting for the share-based payment transactions. The Company applies the modified prospective method in which compensation cost is recognized over the service period for all awards granted.

Trust Asset Management - Assets (other than cash deposits with the Bank) held in fiduciary or agency capacities for customers are not included in the accompanying consolidated balance sheets, since such items are not assets of the Company or its subsidiaries.

Revenue Recognition - Non-interest income within the scope of ASC Topic 606 is recognized by the Company when performance obligations, under the terms of the contract, are satisfied. This income is measured as the amount of consideration expected to be received in exchange for the providing of services. The majority of the Company's applicable non-interest income continues to be recognized at the time when services are provided to its customers. See "Note 16. Revenue Recognition" for additional information.
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Segment Information - As a community-oriented financial institution, substantially all of the Bank's operations involve the delivery of loan and deposit products to customers. Management makes operating decisions and assesses performance based on an ongoing review of these community banking operations, which constitute the Company's only operating segment for financial reporting purposes.


Low Income Housing Partnerships - As part of the Bank's community reinvestment initiatives, the Bank invests in affordable housing limited partnerships ("low income housing partnerships") that make equity investments in affordable housing properties.  The Bank is a limited partner in each partnership in which it invests.  A separate, unrelated third party is the general partner.  The Bank receives affordable housing tax credits and other tax benefits for these investments. Previously, the Bank accounted for low income housing partnerships using the equity method of accounting as two of the Bank's officers were involved in the operational management of the low income housing partnership investment group.  Effective September 30, 2016, those two Bank officers discontinued their involvement in the operational management of the investment group.  The Bank started using the proportional method of accounting for its low income housing partnership investments on October 1, 2016. See "Note 6. Low Income Housing Partnerships" for additional information.

Earnings Per Share - Basic EPS is computed by dividing income available to common stockholders by the weighted average number of shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock (such as stock options) were exercised or resulted in the issuance of common stock. These potentially dilutive shares would then be included in the weighted average number of shares outstanding for the period using the treasury stock method. Shares issued and shares reacquired during any period are weighted for the portion of the period that they were outstanding.



In computing both basic and diluted EPS, the weighted average number of common shares outstanding includes the ESOP shares previously allocated to participants and shares committed to be released for allocation to participants and shares of restricted stock shares which have vested or have been allocated to participants.vested. ESOP shares that have not been committed to be released are excluded from the computation of basic and diluted EPS. Unvested restricted stock awards contain nonforfeitable rights to dividends and are treated as participating securities in the computation of EPS pursuant to the two-class method.


Comprehensive Income - Comprehensive income consists of net income and other comprehensive income. Other comprehensive income includes unrealized gains and losses on AFS securities and changes in the accumulated gains/losses on effective cash flow hedging instruments, net of taxes.

Recent Accounting Pronouncements - In May 2014,March 2022, the Financial Accounting Standards Board ("FASB")(FASB) issued Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers. The ASU as amended, implements2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. This ASU eliminates the accounting guidance for TDRs by creditors, while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a common revenue standard that clarifies the principles for recognizing revenue. The core principle of the amended guidanceborrower is experiencing financial difficulty. Additionally, this ASU requires that an entity should recognize revenue to depictdisclose current-period gross write-offs by year of origination for financing receivables within the transferscope of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Additionally, the amended guidance identifies specific steps an entity should apply in order to achieve this principle. The amended guidance requires entities to disclose both quantitative and qualitative information regarding contracts with customers. ASC 326-20, Financial Instruments-Credit Losses-Measured at Amortized Cost. This ASU 2014-09 will becomeis effective for the Company on October 1, 2018. The majority2023. While the adoption of the Company's revenuethis ASU is composed of interest income from loans and securities which are explicitly excluded from the amended ASU; therefore the amended ASU will likely not have a material impactexpected to the Company's consolidated financial condition and results of operations, but it will likely result in expanded disclosures. The Company's evaluation ofenhanced disclosures, the amended ASU and its impact on components of non-interest income is ongoing.

In January 2016,Company does not expect the FASB issued ASU 2016-01, Financial Instruments, Recognition and Measurement of Financial Assets and Liabilities. The ASU supersedes certain accounting guidance related to equity securities with readily determinable fair values and the related impairment assessment. An entity's equity investments that are accounted for under the equity method of accounting or result in consolidation of an investee are not included within the scopeadoption of this ASU. The ASU requires public business entities to utilize the exit price notation in determining fair value for financial instruments measured at amortized cost on the balance sheet. The ASU requires additional reporting in other comprehensive income for financial liabilities measured at fair value in accordance with the fair value option. The ASU also requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balances or in the notes to the financial statements. ASU 2016-01 will become effective for the Company on October 1, 2018. The Company is currently evaluating the impact that this ASU may have on the Company's consolidated financial condition, results of operations and disclosures.

In February 2016, the FASB issued ASU 2016-02, Leases. The ASU amends lease accounting guidance by requiring that lessees recognize the assets and liabilities arising from leases on the balance sheet. Additionally, the ASU requires entities to disclose both quantitative and qualitative information regarding their leasing activities. ASU 2016-02 will become effective for the Company on October 1, 2019. The Company is currently in the process of accumulating lease data and developing an inventory of leases. The Company expects to recognize right-of-use assets and lease liabilities for substantially all of its operating lease commitments based on the present value of unpaid lease payments as of the date of adoption. The Company is continuing to evaluate the impact this ASU may have on the Company's consolidated financial condition, results of operations and disclosures.

In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation: Improvements to Employee Share-Based Payment Accounting. The ASU simplifies several aspects of the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, along with simplifying the classification in the statement of cash flows. The ASU became effective for the Company on October 1, 2017. Upon adoption, the Company elected to account for forfeitures of stock-based compensation awards when they occur. The Company will recognize excess tax benefits and tax deficiencies in income tax expense on the consolidated statements of income and present them within operating activities on the consolidated statements of cash flows. This ASU did not have a material impact on the Company's consolidated financial condition orand results of operations at the time of adoption. However, the impact of tax benefits and the timing of their recognition within income tax expense is unpredictable, as these benefits are recognized primarily as a result of stock options being exercised.operations.


In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments. The ASU replaces the incurred loss impairment methodology in current GAAP, which requires credit losses to be recognized when it is probable that a loss has incurred, with a new impairment methodology. The new impairment methodology requires an entity to measure, at each reporting date, the expected credit losses of financial assets not measured at fair value, such as loans, HTM debt securities, and loan commitments, over their contractual lives. Under the new impairment methodology, expected credit losses will be measured at each reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Additionally, the ASU amends the current credit loss measurements for AFS debt securities. Credit losses related to AFS debt securities will be recorded through the ACL rather than as a direct write-down as per current GAAP. The ASU also requires enhanced disclosures related to credit quality and significant estimates and judgments used by management when estimating credit losses. The ASU will become effective for the Company on October 1, 2020. The Company has developed an implementation plan and is in the process of reviewing and assessing its processes and systems and identifying the necessary data to implement the ASU.

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging: Target Improvements to Accounting for Hedging Activities. The ASU amends the hedge accounting recognition and presentation requirements in current GAAP. The purpose of the ASU was to improve transparency of hedging relationships in the financial statements and to reduce the complexity of applying hedge accounting for preparers. The ASU will become effective for the Company on October 1, 2019. The Company is currently evaluating the effect of the ASU on the Company's consolidated financial condition, results of operations and disclosures.

2.EARNINGS PER SHARE
Shares acquired by the ESOP are not consideredincluded in the basic average shares outstanding until the shares are committed for allocation or vested to an employee's individual account. Unvested shares awarded pursuant to the Company's restricted stock benefit plans are treated as participating securities in the computation of EPS pursuant to the two-class method as they contain nonforfeitable rights to dividends. The two-class method is an earnings allocation that determines EPS for each class of common stock and participating security.
For the Year Ended September 30,
202220212020
(Dollars in thousands, except per share amounts)
Net income$84,453 $76,082 $64,540 
Income allocated to participating securities(45)(50)(52)
Net income available to common stockholders$84,408 $76,032 $64,488 
Total basic average common shares outstanding135,700,447 135,481,232 137,896,704 
Effect of dilutive stock options— 14,363 4,484 
Total diluted average common shares outstanding135,700,447 135,495,595 137,901,188 
Net EPS:
Basic$0.62 $0.56 $0.47 
Diluted$0.62 $0.56 $0.47 
Antidilutive stock options, excluded from the diluted average
common shares outstanding calculation516,603 206,284 437,731 
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 For the Year Ended September 30,
 2017
 2016
 2015
 (Dollars in thousands, except per share amounts)
Net income$84,137
 $83,494
 $78,093
Income allocated to participating securities(44) (66) (116)
Net income available to common stockholders$84,093
 $83,428
 $77,977
      
Average common shares outstanding134,019,962
 132,982,815
 135,321,235
Average committed ESOP shares outstanding62,458
 62,400
 62,458
Total basic average common shares outstanding134,082,420
 133,045,215
 135,383,693
      
Effect of dilutive stock options161,442
 131,161
 24,810
      
Total diluted average common shares outstanding134,243,862
 133,176,376
 135,408,503
      
Net EPS:     
Basic$0.63
 $0.63
 $0.58
Diluted$0.63
 $0.63
 $0.58
      
Antidilutive stock options, excluded from the diluted average  
common shares outstanding calculation200,800
 886,417
 1,248,744

3.SECURITIES
The following tables reflect the amortized cost, estimated fair value, and gross unrealized gains and losses of AFS and HTM securities at the dates presented. The majority of the MBS and investment securities portfolios are composed of securities issued by GSEs.
September 30, 2022
GrossGrossEstimated
AmortizedUnrealizedUnrealizedFair
CostGainsLossesValue
(Dollars in thousands)
MBS$1,243,270 $365 $155,011 $1,088,624 
GSE debentures519,977 — 50,150 469,827 
Corporate bonds4,000 — 305 3,695 
Municipal bonds1,243 — 82 1,161 
$1,768,490 $365 $205,548 $1,563,307 
 September 30, 2017
   Gross Gross Estimated
 Amortized Unrealized Unrealized Fair
 Cost Gains Losses Value
 (Dollars in thousands)
AFS:       
GSE debentures$271,300
 $16
 $587
 $270,729
MBS135,644
 5,923
 51
 141,516
Trust preferred securities2,067
 —
 16
 2,051
Municipal bonds1,530
 5
 —
 1,535
 $410,541
 $5,944
 $654
 $415,831
HTM:       
MBS$800,931
 $10,460
 $5,295
 $806,096
Municipal bonds26,807
 119
 13
 26,913
 $827,738
 $10,579
 $5,308
 $833,009

September 30, 2021
GrossGrossEstimated
AmortizedUnrealizedUnrealizedFair
CostGainsLossesValue
(Dollars in thousands)
MBS$1,484,211 $18,690 $8,908 $1,493,993 
GSE debentures519,971 — 3,645 516,326 
Municipal bonds4,274 15 — 4,289 
$2,008,456 $18,705 $12,553 $2,014,608 
 September 30, 2016
   Gross Gross Estimated
 Amortized Unrealized Unrealized Fair
 Cost Gains Losses Value
 (Dollars in thousands)
AFS:       
GSE debentures$346,226
 $815
 $3
 $347,038
MBS169,442
 9,069
 4
 178,507
Trust preferred securities2,123
 —
 367
 1,756
 $517,791
 $9,884
 $374
 $527,301
HTM:       
MBS$1,067,571
 $22,862
 $1,219
 $1,089,214
Municipal bonds33,303
 357
 7
 33,653
 $1,100,874
 $23,219
 $1,226
 $1,122,867




The following tables summarize the estimated fair value and gross unrealized losses of those AFS securities on which an unrealized loss at the dates presented was reported and the continuous unrealized loss position for less than 12 months and equal to or greater than 12 months as of the dates presented.
September 30, 2022
Less Than 12 MonthsEqual to or Greater Than 12 Months
EstimatedUnrealizedEstimatedUnrealized
Fair ValueLossesFair ValueLosses
(Dollars in thousands)
MBS$338,013 $22,563 $715,281 $132,448 
GSE debentures— — 469,827 50,150 
Corporate bonds3,695 305 — — 
Municipal bonds1,161 82 — — 
$342,869 $22,950 $1,185,108 $182,598 
 September 30, 2017
 Less Than 12 Months Equal to or Greater Than 12 Months
 Estimated Unrealized Estimated Unrealized
 Fair Value Losses Fair Value Losses
 (Dollars in thousands)
AFS:       
GSE debentures$224,421
 $539
 $24,952
 $48
MBS9,648
 46
 673
 5
Trust preferred securities—
 —
 2,051
 16
 $234,069
 $585
 $27,676
 $69
        
        
HTM:       
MBS$259,200
 $1,582
 $201,094
 $3,713
Municipal bonds5,638
 8
 1,460
 5
 $264,838
 $1,590
 $202,554
 $3,718

September 30, 2021
Less Than 12 MonthsEqual to or Greater Than 12 Months
EstimatedUnrealizedEstimatedUnrealized
Fair ValueLossesFair ValueLosses
(Dollars in thousands)
MBS$881,975 $8,843 $10,612 $65 
GSE debentures516,325 3,645 — — 
Municipal bonds— — — — 
$1,398,300 $12,488 $10,612 $65 

69
 September 30, 2016
 Less Than 12 Months Equal to or Greater Than 12 Months
 Estimated Unrealized Estimated Unrealized
 Fair Value Losses Fair Value Losses
 (Dollars in thousands)
AFS:       
GSE debentures$24,997
 $3
 $—
 $—
MBS—
 —
 654
 4
Trust preferred securities—
 —
 1,756
 367
 $24,997
 $3
 $2,410
 $371
        
        
HTM:       
MBS$147,930
 $538
 $66,646
 $681
Municipal bonds4,771
 6
 391
 1
 $152,701
 $544
 $67,037
 $682

The unrealized losses at September 30, 2017 and 20162022 were primarily a result of an increase in market yields from the time the securities were purchased. In general, as market yields rise, the fair value of securities will decrease; as market yields fall, the fair value of securities will increase. Management generally views changesdid not record an ACL on securities in fair value caused by changes in interest rates as temporary; therefore, these securities have not been classified as other-than-temporarily impaired. The impairment is also considered temporaryan unrealized loss position at September 30, 2022 because scheduled coupon payments have been made, it is anticipatedmanagement anticipates that the entire principal balance will be collected as scheduled, and management neither intendsdoes the Company intend to sell the securities, nor is it more likely than not that the Company will be required to sell the securities before the recovery of the remaining amortized cost amount, which could be at maturity. As a result of the analysis, management has concluded that no other-than-temporary impairments existed at September 30, 2017 or 2016. See "Note 1. Summary of Significant Accounting Policies - Securities" for additional information regarding our impairment review and classification process for securities.


The amortized cost and estimated fair value of AFS debt securities as of September 30, 2017,2022, by contractual maturity, are shown below.  Actual principal repayments may differ from contractual maturities due to prepayment or early call privileges by the issuer. In the case of MBS, borrowers on the underlying loans generally have the right to prepay their loans without prepayment penalty. For this reason, MBS are not included in the maturity categories.
AmortizedEstimated
CostFair Value
(Dollars in thousands)
One year or less$210 $210 
One year through five years519,978 469,827 
Five years through ten years5,032 4,646 
525,220 474,683 
MBS1,243,270 1,088,624 
$1,768,490 $1,563,307 
 AFS HTM
 Amortized Estimated Amortized Estimated
 Cost Fair Value Cost Fair Value
 (Dollars in thousands)
One year or less$121,340
 $121,253
 $6,141
 $6,156
One year through five years151,490
 151,011
 20,448
 20,534
Five years through ten years—
 —
 218
 223
Ten years and thereafter2,067
 2,051
 —
 —
 274,897
 274,315
 26,807
 26,913
MBS135,644
 141,516
 800,931
 806,096
 $410,541
 $415,831
 $827,738
 $833,009


The following table presents the taxable and non-taxable components of interest income on investment securities for the periods presented.
For the Year Ended September 30,
202220212020
(Dollars in thousands)
Taxable$3,234 $2,710 $4,242 
Non-taxable34 115 225 
$3,268 $2,825 $4,467 
 For the Year Ended September 30,
 2017
 2016
 2015
 (Dollars in thousands)
Taxable$3,847
 $5,255
 $6,431
Non-taxable515
 670
 751
 $4,362
 $5,925
 $7,182


The following table summarizes the carrying value of securities pledged as collateral for the obligations indicated below as of the dates presented.
September 30,
20222021
(Dollars in thousands)
FHLB advances$572,913 $— 
Public unit deposits125,496 264,885 
Federal Reserve Bank of Kansas City ("FRB of Kansas City") borrowings46,283 64,707 
Commercial deposits— 66,256 
$744,692 $395,848 
 September 30,
 2017
 2016
 (Dollars in thousands)
Public unit deposits$499,993
 $419,282
Repurchase agreements214,298
 217,374
FRB of Kansas City11,769
 15,938
 $726,060
 $652,594


During fiscal year 2021, the Company sold its Visa Class B shares. The proceeds and realized gain related to the sale of the Visa Class B shares were each $7.4 million. All other dispositions of securities during fiscal years 2017, 2016,2022, 2021, and 20152020 were the result of principal repayments, calls, or maturities.

70
4. LOANS RECEIVABLE AND ALLOWANCE FOR CREDIT LOSSES

Loans receivable, net at September 30, 20172022 and 20162021 is summarized as follows:
20222021
(Dollars in thousands)
One- to four-family:
Originated$3,988,469 $3,956,064 
Correspondent purchased2,201,886 2,003,477 
Bulk purchased147,939 173,662 
Construction66,164 39,142 
Total6,404,458 6,172,345 
Commercial:
Commercial real estate745,301 676,908 
Commercial and industrial79,981 66,497 
Construction141,062 85,963 
Total966,344 829,368 
Consumer:
Home equity92,203 86,274 
Other8,665 8,086 
Total100,868 94,360 
Total loans receivable7,471,670 7,096,073 
Less:
ACL16,371 19,823 
Deferred loan fees/discounts29,736 29,556 
Premiums/deferred costs(38,645)(34,448)
$7,464,208 $7,081,142 
 2017
 2016
 (Dollars in thousands)
Real estate loans:   
One- to four-family:   
Originated$3,959,232
 $4,005,615
Correspondent purchased2,445,311
 2,206,072
Bulk purchased351,705
 416,653
Construction30,647
 39,430
Total6,786,895
 6,667,770
Commercial:   
Permanent183,030
 110,768
Construction86,952
 43,375
Total269,982
 154,143
Total real estate loans7,056,877
 6,821,913
    
Consumer loans:   
Home equity122,066
 123,345
Other3,808
 4,264
Total consumer loans125,874
 127,609
    
Total loans receivable7,182,751
 6,949,522
    
Less:   
ACL8,398
 8,540
Discounts/unearned loan fees24,962
 24,933
Premiums/deferred costs(45,680) (41,975)
 $7,195,071
 $6,958,024


As of September 30, 20172022 and 2016,2021, the Bank serviced loans for others aggregating approximately $101.2$49.8 million and $120.0$63.4 million, respectively. Such loans are not included in the accompanying consolidated balance sheets. Servicing loans for others generally consists of collecting mortgage payments, maintaining escrow accounts, disbursing payments to investors and foreclosure processing. Loan servicing income includes servicing fees withheld from investors and certain charges collected from borrowers, such as late payment fees. The Bank held borrowers' escrow balances on loans serviced for others of $2.1$1.1 million and $2.4$1.4 million as of September 30, 20172022 and 2016,2021, respectively.


Lending Practices and Underwriting Standards - Originating and purchasing one- to four-family loans is the Bank's primary lending business, resulting in a loan concentration in residential first mortgage loans. The Bank purchases one- to four-family loans, on a loan-by-loan basis, from a select group of correspondent lenders.business. The Bank also originates consumer loans primarily secured by one- to four-family residential properties and originates and participates in commercial real estate loans. AsThe Bank has a result of ourloan concentration in one- to four-family lending activities, the Bank hasloans and a geographic concentration of these loans secured by real property located in Kansas, Missouri, and Missouri.Texas.



One- to four-family loans - Full documentation to support an applicant's credit and income, and sufficient funds to cover all applicable fees and reserves at closing, are required on all loans. Generally, loans are currently underwritten according to the "ability to repay" and "qualified mortgage" standards, as issued by the Consumer Financial Protection Bureau. 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 approved by our Board of Directors.function.


The underwriting standards for loans purchased from correspondent and nationwide lenders are generally similar to the Bank's internal underwriting standards. The underwriting of loans purchased from correspondent lenders on a loan-by-loan basis is performed by the Bank's underwriters.


The Bank also originates owner-occupied construction-to-permanent loans secured by one- to four-family residential real estate. Construction loans are obtained by homeowners who will occupy the property when construction is complete. The Bank does not originate construction loans to builders for speculative purposes. Construction draw requests and the supporting documentation are reviewed and approved by designated personnel. 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.

71
Commercial real estate loans - The Bank's commercial real estate and commercial construction loans are originated by the Bank or are in participation with a lead bank. When underwriting a commercial real estate or commercial construction loan, several factors are considered, such as the income producing potential of the property, cash equity provided by the borrower, the financial strength of the borrower, managerial expertise of the borrower or tenant, feasibility studies, lending experience with the borrower and the marketability of the property. For commercial real estate and commercial construction participation loans, the Bank performs the same underwriting procedures as if the loan was being originated by the Bank. At the time of origination, LTV ratios on commercial real estate loans generally do not exceed 80%85% of the appraised value of the property securing the loans and the minimum debt service coverage ratio is generally 1.25.1.15. For commercial construction loans, LTV ratios generally do not exceed 80% of the projected appraised value of the property securing the loans and the minimum debt service coverage ratio is generally 1.15, but it applies to the projected cash flows, and the borrower must have successful experience with the construction and operation of properties similar to the subject property. Appraisals on properties securing these loans are performed by independent state certified fee appraisers.


The Bank's commercial and industrial loans are generally made in the Bank's market areas and are underwritten on the basis of the borrower's ability to service the debt from income. Working capital loans are primarily collateralized by short-term assets whereas term loans are primarily collateralized by long-term assets. In general, commercial and industrial loans involve more credit risk than commercial real estate loans due to the type of collateral securing commercial and industrial loans. As a result of these additional complexities, variables and risks, commercial and industrial loans require more thorough underwriting and servicing than other types of loans.

Consumer loans - The Bank offers a variety of secured consumer loans, includingthe majority of which are home equity loans and lines of credit, home improvement loans, auto loans, and loans secured by savings deposits. The Bank also originates a very limited amount of unsecured loans. The Bank does not originate any consumer loans on an indirect basis, such as contracts purchased from retailers of goods or services which have extended credit to their customers. The majority of the consumer loan portfolio is comprised of home equity lines of credit for which the Bank also has the first mortgage or the home equity line of credit is in the first lien position.

The underwriting standards for consumer loans include a determination of an applicant's payment history on other debts and an assessment of an applicant's ability to meet existing obligations and payments on the proposed loan. Although creditworthiness of an 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.


Credit Quality Indicators - Based on the Bank's lending emphasis and underwriting standards, management has segmented the loan portfolio into three segments: (1) one- to four-family; (2) consumer; and (3) commercial real estate. The one- to four-family and consumercommercial. See discussion regarding the credit risks for these loan portfoliossegments in "Note 1. Summary of Significant Accounting Policies - Allowance for Credit Losses on Loans Receivable." These segments are further segmenteddivided into classes for purposes of providing disaggregated information about the credit quality ofinformation about the loan portfolio. The classes are: one- to four-family - originated, one- to four-family - correspondent purchased, one- to four-family - bulk purchased, consumer - home equity, and consumer - other. The one-other, commercial - commercial real estate, and commercial - commercial and industrial. One- to four-family - correspondent purchased class was segregated fromconstruction loans are included in the one- to four-family originated class in the current fiscal year due to the size of the portfolio along with the loan product composition, geographic locations and inherent credit risks within the portfolio. The prior period information presented within this note has been conformed to the new loan class presentation.

The Bank's primary credit quality indicators for the one- to four-family and consumer - home equity loan portfolioscommercial construction loans are delinquency status, asset classifications, LTV ratios, and borrower credit scores. The Bank's primary credit quality indicators forincluded in the commercial real estate class. As part of the on-going monitoring of the credit quality of the Company's loan portfolio, management tracks certain credit quality indicators including trends related to loan classification and consumerdelinquency status.

Loan Classification - other loan portfolios are delinquency status and asset classifications.


The following tables present the recorded investment, by class, in loans 30 to 89 days delinquent, loans 90 or more days delinquent or in foreclosure, total delinquent loans, current loans, and total recorded investment at the dates presented. The recorded investment in loans is defined as the unpaid principal balance of a loan, less charge-offs and inclusive of unearned loan fees and deferred costs. At September 30, 2017 and 2016, all loans 90 or more days delinquent were on nonaccrual status.
 September 30, 2017
   90 or More Days Total   Total
 30 to 89 Days Delinquent or Delinquent Current Recorded
 Delinquent in Foreclosure Loans Loans Investment
 (Dollars in thousands)
One- to four-family - originated$13,216
 $5,500
 $18,716
 $3,956,598
 $3,975,314
One- to four-family - correspondent1,855
 92
 1,947
 2,477,916
 2,479,863
One- to four-family - bulk purchased3,233
 3,399
 6,632
 346,807
 353,439
Commercial real estate—
 —
 —
 268,979
 268,979
Consumer - home equity467
 406
 873
 121,193
 122,066
Consumer - other33
 4
 37
 3,771
 3,808
 $18,804
 $9,401
 $28,205
 $7,175,264
 $7,203,469
 September 30, 2016
   90 or More Days Total   Total
 30 to 89 Days Delinquent or Delinquent Current Recorded
 Delinquent in Foreclosure Loans Loans Investment
 (Dollars in thousands)
One- to four-family - originated$13,545
 $8,153
 $21,698
 $4,007,012
 $4,028,710
One- to four-family - correspondent3,389
 992
 4,381
 2,233,941
 2,238,322
One- to four-family - bulk purchased5,082
 7,380
 12,462
 406,379
 418,841
Commercial real estate—
 —
 —
 153,082
 153,082
Consumer - home equity635
 520
 1,155
 122,190
 123,345
Consumer - other62
 9
 71
 4,193
 4,264
 $22,713
 $17,054
 $39,767
 $6,926,797
 $6,966,564

The recorded investment of mortgage loans secured by residential real estate properties for which formal foreclosure proceedings were in process as of September 30, 2017 and 2016 was $4.3 million and $5.7 million, respectively, which is included in loans 90 or more days delinquent or in foreclosure in the table above.   The carrying value of residential OREO held as a result of obtaining physical possession upon completion of a foreclosure or through completion of a deed in lieu of foreclosure was $1.4 million at September 30, 2017 and $2.5 million at September 30, 2016. 


The following table presents the recorded investment, by class, in loans classified as nonaccrual at the dates presented. The decrease in nonaccrual loans at September 30, 2017 compared to the prior year was due mainly to a decrease in loans 90 or more days delinquent, along with a decrease in loans reported as nonaccrual pursuant to regulatory reporting requirements.
 September 30,
 2017
 2016
 (Dollars in thousands)
One- to four-family - originated$10,054
 $17,086
One- to four-family - correspondent1,804
 3,788
One- to four-family - bulk purchased4,264
 7,411
Commercial real estate—
 —
Consumer - home equity519
 848
Consumer - other4
 10
 $16,645
 $29,143

In accordance with the Bank's asset classification policy, management regularly reviews the problem loans in the Bank's portfolio to determine whether any loans require classification. Loan classifications are defined as follows:

•Special mention - These loans are performing loans on which known information about the collateral pledged or the possible credit problems of the borrower(s) have caused management to have doubts as to the ability of the borrower(s) to comply with present loan repayment terms and which may result in the future inclusion of such loans in the non-performingnonaccrual loan categories.
•Substandard - A loan is considered substandard if it is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Substandard loans include those characterized by the distinct possibility the Bank will sustain some loss if the deficiencies are not corrected.
•Doubtful - Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses present make collection or liquidation in full on the basis of currently existing facts and conditions and values highly questionable and improbable.
•Loss - Loans classified as loss are considered uncollectible and of such little value that their continuance as assets on the books is not warranted.


72
The following table sets forth, as of the recorded investment indates indicated, the amortized cost of loans classified as special mention or substandard, by class at the dates presented. Special mentionof financing receivable, year of origination or most recent credit decision, and substandard loansloan classification. All revolving lines of credit are included in the ACL formula analysis model if the loans are not individually evaluated for loss.presented separately, regardless of origination year. Loans classified as doubtful or loss are individually evaluated for loss. At the dates presented,September 30, 2022 and September 30, 2021, there were no loans classified as doubtful, and all loans classified as loss were fully charged-off.
September 30, 2022
CurrentFiscalFiscalFiscalFiscalRevolving
FiscalYearYearYearYearPriorLine of
Year2021202020192018YearsCreditTotal
(Dollars in thousands)
One- to four-family:
Originated
Pass$563,460 $930,019 $624,274 $281,342 $212,037 $1,406,444 $— $4,017,576 
Special Mention47 457 1,111 518 428 7,641 — 10,202 
Substandard158 — 278 1,106 256 8,968 — 10,766 
Correspondent purchased
Pass494,854 651,363 273,626 69,752 104,150 627,390 — 2,221,135 
Special Mention— — — 355 1,186 1,197 — 2,738 
Substandard— — — 168 513 4,783 — 5,464 
Bulk purchased
Pass— — — — — 144,840 — 144,840 
Special Mention— — — — — — — — 
Substandard— — — — — 3,637 — 3,637 
1,058,519 1,581,839 899,289 353,241 318,570 2,204,900 — 6,416,358 
Commercial:
Commercial real estate
Pass366,794 221,001 111,689 86,456 41,322 46,383 7,436 881,081 
Special Mention565 — — — — — — 565 
Substandard436 — 594 221 239 30 — 1,520 
Commercial and industrial
Pass38,442 17,453 5,708 4,212 919 630 11,413 78,777 
Special Mention— — — — — — — — 
Substandard— — 78 — 73 10 1,052 1,213 
406,237 238,454 118,069 90,889 42,553 47,053 19,901 963,156 
Consumer:
Home equity
Pass6,447 2,375 1,486 982 992 2,020 77,448 91,750 
Special Mention— 66 — — — — 233 299 
Substandard— — — 18 — 3 331 352 
Other
Pass4,207 1,977 843 408 651 201 369 8,656 
Special Mention— — 7 — — — — 7 
Substandard1 — — — — — — 1 
10,655 4,418 2,336 1,408 1,643 2,224 78,381 101,065 
Total$1,475,411 $1,824,711 $1,019,694 $445,538 $362,766 $2,254,177 $98,282 $7,480,579 
73
 September 30,
 2017 2016
 Special Mention Substandard Special Mention Substandard
 (Dollars in thousands)
One- to four-family - originated$7,031
 $30,059
 $10,242
 $27,818
One- to four-family - correspondent261
 3,800
 2,496
 5,168
One- to four-family - bulk purchased—
 8,005
 1,156
 11,480
Commercial real estate—
 —
 —
 —
Consumer - home equity9
 1,032
 54
 1,431
Consumer - other—
 4
 8
 16
 $7,301
 $42,900
 $13,956
 $45,913


The following table shows the weighted average credit score and weighted average LTV for one- to four-family loans and consumer home equity loans at the dates presented. Borrower credit scores are intended to provide an indication as to the likelihood that a borrower will repay their debts. Credit scores are updated at least semiannually, with the last update in September 2017, from a nationally recognized consumer rating agency. The LTV ratios provide an estimate of the extent to which the Bank may incur a loss on any given loan that may go into foreclosure. The consumer - home equity LTV does not take into account the first lien position, if applicable. The LTV ratios were based on the current loan balance and either the lesser of the purchase price or original appraisal, or the most recent Bank appraisal, if available. In most cases, the most recent appraisal was obtained at the time of origination.
 September 30,
 2017 2016
 Credit Score LTV Credit Score LTV
One- to four-family - originated767 63% 766 63%
One- to four-family - correspondent764 68
 764 68
One- to four-family - bulk purchased757 63
 753 64
Consumer - home equity755 19
 755 20
 765 64
 764 64
In the table below, certain commercial loans are presented in the "Fiscal Year 2021" column and are reported as special mention or substandard. These loans were generally first originated in prior years but were renewed or modified in fiscal year 2021.

September 30, 2021
FiscalFiscalFiscalFiscalFiscalRevolving
YearYearYearYearYearPriorLine of
20212020201920182017YearsCreditTotal
(Dollars in thousands)
One- to four-family:
Originated
Pass$958,080 $705,561 $326,156 $250,846 $281,104 $1,434,455 $— $3,956,202 
Special Mention402 443 501 678 237 7,805 — 10,066 
Substandard— 966 867 51 192 11,192 — 13,268 
Correspondent purchased
Pass630,977 334,042 88,057 136,572 162,938 664,530 — 2,017,116 
Special Mention760 — 356 — — 3,160 — 4,276 
Substandard— — 169 504 — 4,527 — 5,200 
Bulk purchased
Pass— — — — — 169,519 — 169,519 
Special Mention— — — — — — — — 
Substandard— — — — — 4,848 — 4,848 
1,590,219 1,041,012 416,106 388,651 444,471 2,300,036 — 6,180,495 
Commercial:
Commercial real estate
Pass272,329 149,244 94,972 61,214 38,962 35,591 5,231 657,543 
Special Mention50,352 — — — — 49,369 — 99,721 
Substandard810 627 225 669 — 34 — 2,365 
Commercial and industrial
Pass32,651 10,168 6,988 2,213 1,155 595 11,709 65,479 
Special Mention— — — — — — — — 
Substandard— — — 86 48 — 765 899 
356,142 160,039 102,185 64,182 40,165 85,589 17,705 826,007 
Consumer:
Home equity
Pass3,295 2,218 1,428 1,563 536 2,473 74,036 85,549 
Special Mention— — 37 12 — — 82 131 
Substandard— 60 — — — 9 636 705 
Other
Pass3,491 1,631 1,086 944 465 105 339 8,061 
Special Mention— — 4 — — — — 4 
Substandard— 3 6 1 3 — — 13 
6,786 3,912 2,561 2,520 1,004 2,587 75,093 94,463 
Total$1,953,147 $1,204,963 $520,852 $455,353 $485,640 $2,388,212 $92,798 $7,100,965 
TDRs

74
Delinquency Status - The following tables set forth, as of the dates indicated, the amortized cost of current loans, loans 30 to 89 days delinquent, and loans 90 or more days delinquent or in foreclosure ("90+/FC"), by class of financing receivable and year of origination or most recent credit decision as of the dates indicated. All revolving lines of credit are presented separately, regardless of origination year.
September 30, 2022
CurrentFiscalFiscalFiscalFiscalRevolving
FiscalYearYearYearYearPriorLine of
Year2021202020192018YearsCreditTotal
(Dollars in thousands)
One- to four-family:
Originated
Current$563,507 $930,476 $625,110 $282,598 $212,549 $1,417,268 $— $4,031,508 
30-89— — 553 — 64 3,506 — 4,123 
90+/FC158 — — 368 108 2,279 — 2,913 
Correspondent purchased
Current494,854 651,363 273,626 70,107 105,336 629,150 — 2,224,436 
30-89— — — — — 1,117 — 1,117 
90+/FC— — — 168 513 3,103 — 3,784 
Bulk purchased
Current— — — — — 146,399 — 146,399 
30-89— — — — — 921 — 921 
90+/FC— — — — — 1,157 — 1,157 
1,058,519 1,581,839 899,289 353,241 318,570 2,204,900 — 6,416,358 
Commercial:
Commercial real estate
Current367,795 221,001 111,689 86,456 41,322 46,383 7,436 882,082 
30-89— — — — — — — — 
90+/FC— — 594 221 239 30 — 1,084 
Commercial and industrial
Current38,442 17,453 5,786 4,212 919 630 12,465 79,907 
30-89— — — — — — — — 
90+/FC— — — — 73 10 — 83 
406,237 238,454 118,069 90,889 42,553 47,053 19,901 963,156 
Consumer:
Home equity
Current6,447 2,441 1,429 1,000 980 1,999 77,633 91,929 
30-89— — 57 — 12 24 226 319 
90+/FC— — — — — — 153 153 
Other
Current4,205 1,964 844 404 651 201 368 8,637 
30-892 13 6 4 — — 1 26 
90+/FC1 — — — — — — 1 
10,655 4,418 2,336 1,408 1,643 2,224 78,381 101,065 
Total$1,475,411 $1,824,711 $1,019,694 $445,538 $362,766 $2,254,177 $98,282 $7,480,579 

75
September 30, 2021
FiscalFiscalFiscalFiscalFiscalRevolving
YearYearYearYearYearPriorLine of
20212020201920182017YearsCreditTotal
(Dollars in thousands)
One- to four-family:
Originated
Current$958,482 $706,970 $327,408 $251,524 $281,341 $1,445,992 $— $3,971,717 
30-89— — — 51 — 4,091 — 4,142 
90+/FC— — 116 — 192 3,369 — 3,677 
Correspondent purchased
Current630,977 334,042 88,413 136,572 162,017 668,685 — 2,020,706 
30-89760 — — — 921 948 — 2,629 
90+/FC— — 169 504 — 2,584 — 3,257 
Bulk purchased
Current— — — — — 170,809 — 170,809 
30-89— — — — — 555 — 555 
90+/FC— — — — — 3,003 — 3,003 
1,590,219 1,041,012 416,106 388,651 444,471 2,300,036 — 6,180,495 
Commercial:
Commercial real estate
Current323,491 149,244 94,972 61,651 38,962 84,957 5,231 758,508 
30-89— — — — — 37 — 37 
90+/FC— 627 225 232 — — — 1,084 
Commercial and industrial
Current32,651 10,168 6,988 2,212 1,155 595 12,474 66,243 
30-89— — — — — — — — 
90+/FC— — — 87 48 — — 135 
356,142 160,039 102,185 64,182 40,165 85,589 17,705 826,007 
Consumer:
Home equity
Current3,295 2,218 1,465 1,575 536 2,357 73,958 85,404 
30-89— — — — — 121 375 496 
90+/FC— 60 — — — 4 421 485 
Other
Current3,491 1,631 1,088 944 465 105 339 8,063 
30-89— — 2 — — — — 2 
90+/FC— 3 6 1 3 — — 13 
6,786 3,912 2,561 2,520 1,004 2,587 75,093 94,463 
Total$1,953,147 $1,204,963 $520,852 $455,353 $485,640 $2,388,212 $92,798 $7,100,965 


76
Delinquent and Nonaccrual Loans - The following tables present the amortized cost, at the dates indicated, by class, of loans 30 to 89 days delinquent, loans 90 or more days delinquent or in foreclosure, total delinquent loans, current loans, and total loans. At September 30, 2022 and 2021, all loans 90 or more days delinquent were on nonaccrual status.
September 30, 2022
90 or More DaysTotalTotal
30 to 89 DaysDelinquent orDelinquentCurrentAmortized
Delinquentin ForeclosureLoansLoansCost
(Dollars in thousands)
One- to four-family:
Originated$4,123 $2,913 $7,036 $4,031,508 $4,038,544 
Correspondent purchased1,117 3,784 4,901 2,224,436 2,229,337 
Bulk purchased921 1,157 2,078 146,399 148,477 
Commercial:
Commercial real estate— 1,084 1,084 882,082 883,166 
Commercial and industrial— 83 83 79,907 79,990 
Consumer:
Home equity319 153 472 91,929 92,401 
Other26 1 27 8,637 8,664 
$6,506 $9,175 $15,681 $7,464,898 $7,480,579 

September 30, 2021
90 or More DaysTotalTotal
30 to 89 DaysDelinquent orDelinquentCurrentAmortized
Delinquentin ForeclosureLoansLoansCost
(Dollars in thousands)
One- to four-family:
Originated$4,142 $3,677 $7,819 $3,971,717 $3,979,536 
Correspondent purchased2,629 3,257 5,886 2,020,706 2,026,592 
Bulk purchased555 3,003 3,558 170,809 174,367 
Commercial:
Commercial real estate37 1,084 1,121 758,508 759,629 
Commercial and industrial— 135 135 66,243 66,378 
Consumer:
Home equity496 485 981 85,404 86,385 
Other2 13 15 8,063 8,078 
$7,861 $11,654 $19,515 $7,081,450 $7,100,965 

The amortized cost of mortgage loans secured by residential real estate properties for which formal foreclosure proceedings were in process as of September 30, 2022 and 2021 was $2.0 million and $799 thousand, respectively, which is included in loans 90 or more days delinquent or in foreclosure in the tables above.   The carrying value of residential OREO held as a result of obtaining physical possession upon completion of a foreclosure or through completion of a deed in lieu of foreclosure was $328 thousand at September 30, 2022 and $170 thousand at September 30, 2021. 
77
The following table presents the amortized cost at September 30, 2022 and September 30, 2021, by class, of loans classified as nonaccrual. Additionally, the amortized cost of nonaccrual loans that had no related ACL is presented all of which were individually evaluated for loss and any identified losses have been charged off.
20222021
Nonaccrual LoansNonaccrual Loans with No ACLNonaccrual LoansNonaccrual Loans with No ACL
(Dollars in thousands)
One- to four-family:
Originated$3,135 $1,018 $4,965 $2,237 
Correspondent purchased3,784 304 3,257 307 
Bulk purchased1,157 630 3,134 1,564 
Commercial:
Commercial real estate1,084 449 1,496 485 
Commercial and industrial161 161 134 86 
Consumer:
Home equity172 19 494 84 
Other1 — 13 — 
$9,494 $2,581 $13,493 $4,763 

TDRs - The following tables present the amortized cost for the years ended September 30, 2022 and 2021 and the recorded investment for the year ended September 30, 2020, which was prior to the adoption of ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments ("CECL"), prior to restructuring and immediately after restructuring in all loans restructured during the periodsyears presented. These tables do not reflect the recorded investmentamortized cost at the end of the periods indicated. Any increase in the recorded investmentamortized cost at the time of the restructuring was generally due to the capitalization of delinquent interest and/or escrow balances. During the fourth quarter of fiscal year 2017, management refined its methodology for assessing whether a loan modification qualifies as a TDR which, though not being material, resulted in fewer loans being classified as TDRs.
For the Year Ended September 30, 2022
NumberPre-Post-
ofRestructuredRestructured
ContractsOutstandingOutstanding
(Dollars in thousands)
One- to four-family:
Originated3 $156 $156 
Correspondent purchased— — — 
Bulk purchased— — — 
Commercial:
Commercial real estate— — — 
Commercial and industrial2 124 124 
Consumer:
Home equity1 19 19 
Other— — — 
6 $299 $299 

78
 For the Year Ended September 30, 2017
 Number Pre- Post-
 of Restructured Restructured
 Contracts Outstanding Outstanding
 (Dollars in thousands)
One- to four-family - originated112
 $11,940
 $12,402
One- to four-family - correspondent12
 2,443
 2,459
One- to four-family - bulk purchased3
 1,031
 1,048
Commercial real estate—
 —
 —
Consumer - home equity17
 368
 380
Consumer - other—
 —
 —
 144
 $15,782
 $16,289
For the Year Ended September 30, 2021
NumberPre-Post-
ofRestructuredRestructured
ContractsOutstandingOutstanding
(Dollars in thousands)
One- to four-family:
Originated7 $1,685 $1,576 
Correspondent purchased— — — 
Bulk purchased— — — 
Commercial:
Commercial real estate— — — 
Commercial and industrial— — — 
Consumer:
Home equity— — — 
Other— — — 
7 $1,685 $1,576 

For the Year Ended September 30, 2020
NumberPre-Post-
ofRestructuredRestructured
ContractsOutstandingOutstanding
(Dollars in thousands)
One- to four-family:
Originated5 $241 $242 
Correspondent purchased1 192 191 
Bulk purchased1 75 134 
Commercial:
Commercial real estate1 837 837 
Commercial and industrial1 1,683 1,709 
Consumer:
Home equity2 45 44 
Other— — — 
11 $3,073 $3,157 

 For the Year Ended September 30, 2016
 Number Pre- Post-
 of Restructured Restructured
 Contracts Outstanding Outstanding
 (Dollars in thousands)
One- to four-family - originated122
 $17,201
 $17,557
One- to four-family - correspondent12
 2,592
 2,619
One- to four-family - bulk purchased3
 596
 594
Commercial real estate—
 —
 —
Consumer - home equity19
 427
 433
Consumer - other1
 8
 8
 157
 $20,824
 $21,211

 For the Year Ended September 30, 2015
 Number Pre- Post-
 of Restructured Restructured
 Contracts Outstanding Outstanding
 (Dollars in thousands)
One- to four-family - originated141
 $17,265
 $17,468
One- to four-family - correspondent2
 546
 542
One- to four-family - bulk purchased4
 1,140
 1,144
Commercial real estate—
 —
 —
Consumer - home equity22
 479
 485
Consumer - other3
 12
 12
 172
 $19,442
 $19,651


The following table provides information on TDRs that became delinquent during the periods presented within 12 months after being restructured.
For the Years Ended
September 30, 2022September 30, 2021September 30, 2020
Number ofAmortizedNumber ofAmortizedNumber ofRecorded
ContractsCostContractsCostContractsInvestment
(Dollars in thousands)
One- to four-family:
Originated2 $697 — $— 1 $38 
Correspondent purchased— — — — — — 
Bulk purchased— — — — 1 134 
Commercial:
Commercial real estate— — — — — — 
Commercial and industrial— — — — — — 
Consumer:
Home equity1 19 — — 1 9 
Other— — — — — — 
3 $716 — $— 3 $181 
79
 For the Years Ended
 September 30, 2017 September 30, 2016 September 30, 2015
 Number of Recorded Number of Recorded Number of Recorded
 Contracts Investment Contracts Investment Contracts Investment
 (Dollars in thousands)
One- to four-family - originated46
 $4,561
 48
 $5,330
 49
 $5,311
One- to four-family - correspondent2
 148
 3
 548
 3
 432
One- to four-family - bulk purchased2
 698
 —
 —
 4
 890
Commercial real estate—
 —
 —
 —
 —
 —
Consumer - home equity16
 440
 6
 174
 4
 33
Consumer - other—
 —
 —
 —
 1
 5
 66
 $5,847
 57
 $6,052
 61
 $6,671


Impaired loans Loans -The following information pertains to impaired loans, by class, asfor the year ended September 30, 2020 (prior to the adoption of CECL). Prior to the adoption of CECL, a loan was considered impaired when, based on current information and events, it was probable that the Bank would be unable to collect all amounts due, including principal and interest, according to the original contractual terms of the dates presented. During the fourth quarter of fiscal year 2017, management refined its methodology for classifying loans as impaired. The change resulting from this refinement was immaterial. Impaired loans include loans partially charged-off and TDRs. All impaired loans are individually evaluated for loss and all losses are charged-off, resulting in no related ACL for these loans.loan agreement.
With no related allowance recordedWith an allowance recordedTotal
AverageInterestAverageInterestAverageInterest
RecordedIncomeRecordedIncomeRecordedIncome
InvestmentRecognizedInvestmentRecognizedInvestmentRecognized
(Dollars in thousands)
One- to four-family:
Originated$13,918 $606 $— $— $13,918 $606 
Correspondent purchased1,878 73 — — 1,878 73 
Bulk purchased4,720 179 — — 4,720 179 
Commercial:
Commercial real estate725 15 51 — 776 15 
Commercial and industrial41 — 1,413 91 1,454 91 
Consumer:
Home equity318 20 — — 318 20 
Other— — — — — — 
$21,600 $893 $1,464 $91 $23,064 $984 
 September 30, 2017 September 30, 2016
   Unpaid     Unpaid  
 Recorded Principal Related Recorded Principal Related
 Investment Balance ACL Investment Balance ACL
 (Dollars in thousands)
With no related allowance recorded           
One- to four-family - originated$30,251
 $30,953
 $—
 $22,982
 $23,640
 $—
One- to four-family - correspondent3,800
 3,771
 —
 2,963
 2,950
 —
One- to four-family - bulk purchased7,403
 8,606
 —
 10,985
 12,684
 —
Commercial real estate—
 —
 —
 —
 —
 —
Consumer - home equity775
 997
 —
 1,014
 1,230
 —
Consumer - other—
 24
 —
 10
 42
 —
 42,229
 44,351
 —
 37,954
 40,546
 —
With an allowance recorded           
One- to four-family - originated—
 —
 —
 13,430
 13,476
 125
One- to four-family - correspondent—
 —
 —
 2,662
 2,664
 4
One- to four-family - bulk purchased—
 —
 —
 1,650
 1,627
 49
Commercial real estate—
 —
 —
 —
 —
 —
Consumer - home equity—
 —
 —
 548
 548
 38
Consumer - other—
 —
 —
 6
 6
 1
 —
 —
 —
 18,296
 18,321
 217
Total           
One- to four-family - originated30,251
 30,953
 —
 36,412
 37,116
 125
One- to four-family - correspondent3,800
 3,771
 —
 5,625
 5,614
 4
One- to four-family - bulk purchased7,403
 8,606
 —
 12,635
 14,311
 49
Commercial real estate—
 —
 —
 —
 —
 —
Consumer - home equity775
 997
 —
 1,562
 1,778
 38
Consumer - other—
 24
 —
 16
 48
 1
 $42,229
 $44,351
 $—
 $56,250
 $58,867
 $217


 For the Years Ended
 September 30, 2017 September 30, 2016 September 30, 2015
 Average Interest Average Interest Average Interest
 Recorded Income Recorded Income Recorded Income
 Investment Recognized Investment Recognized Investment Recognized
 (Dollars in thousands)
With no related allowance recorded           
One- to four-family - originated$24,122
 $917
 $12,063
 $470
 $11,744
 $451
One- to four-family - correspondent3,346
 118
 495
 18
 471
 10
One- to four-family - bulk purchased9,852
 194
 11,022
 196
 11,153
 196
Commercial real estate—
 —
 —
 —
 —
 —
Consumer - home equity988
 86
 628
 93
 485
 29
Consumer - other7
 —
 13
 1
 12
 —
 38,315
 1,315
 24,221
 778
 23,865
 686
With an allowance recorded           
One- to four-family - originated11,469
 434
 24,199
 983
 25,465
 1,026
One- to four-family - correspondent2,018
 65
 2,669
 50
 1,759
 53
One- to four-family - bulk purchased1,160
 20
 2,219
 27
 2,960
 40
Commercial real estate—
 —
 —
 —
 —
 —
Consumer - home equity457
 36
 895
 64
 795
 34
Consumer - other10
 1
 13
 1
 15
 2
 15,114
 556
 29,995
 1,125
 30,994
 1,155
Total           
One- to four-family - originated35,591
 1,351
 36,262
 1,453
 37,209
 1,477
One- to four-family - correspondent5,364
 183
 3,164
 68
 2,230
 63
One- to four-family - bulk purchased11,012
 214
 13,241
 223
 14,113
 236
Commercial real estate—
 —
 —
 —
 —
 —
Consumer - home equity1,445
 122
 1,523
 157
 1,280
 63
Consumer - other17
 1
 26
 2
 27
 2
 $53,429
 $1,871
 $54,216
 $1,903
 $54,859
 $1,841



Allowance for Credit Losses - The following is a summary of ACL activity, by loan portfolio segment, for the periods presented,presented. Activity during fiscal year 2020 occurred prior to the adoption of CECL.
For the Year Ended September 30, 2022
One- to Four-Family
CorrespondentBulk
OriginatedPurchasedPurchasedTotalCommercialConsumerTotal
(Dollars in thousands)
Beginning balance$1,612 $2,062 $304 $3,978 $15,652 $193 $19,823 
Charge-offs(9)— — (9)(40)(21)(70)
Recoveries138 — — 138 101 17 256 
Provision for credit losses325 672 (98)899 (4,593)56 (3,638)
Ending balance$2,066 $2,734 $206 $5,006 $11,120 $245 $16,371 

The decrease in ACL during the current year was primarily a result of a negative provision for credit losses due to a reduction in commercial loan qualitative factors, partially offset by an increase in ACL related to loan growth and a less favorable economic forecast compared to the prior year.
80
For the Year Ended September 30, 2021
One- to Four-Family
CorrespondentBulk
OriginatedPurchasedPurchasedTotalCommercialConsumerTotal
(Dollars in thousands)
Beginning balance$6,085 $2,691 $467 $9,243 $21,800 $484 $31,527 
Adoption of CECL(4,452)(367)436 (4,383)(193)(185)(4,761)
Balance at October 1, 20201,633 2,324 903 4,860 21,607 299 26,766 
Charge-offs(164)— (21)(185)(515)(15)(715)
Recoveries144 — — 144 50 43 237 
Provision for credit losses(1)(262)(578)(841)(5,490)(134)(6,465)
Ending balance$1,612 $2,062 $304 $3,978 $15,652 $193 $19,823 

For the Year Ended September 30, 2020
One- to Four-Family
CorrespondentBulk
OriginatedPurchasedPurchasedTotalCommercialConsumerTotal
(Dollars in thousands)
Beginning balance$2,000 $1,203 $687 $3,890 $5,171 $165 $9,226 
Charge-offs(64)— — (64)(349)(30)(443)
Recoveries41 — 265 306 110 28 444 
Provision for credit losses4,108 1,488 (485)5,111 16,868 321 22,300 
Ending balance$6,085 $2,691 $467 $9,243 $21,800 $484 $31,527 


81
The key assumptions in the Company's ACL model at September 30, 2022 include the economic forecast, the forecast and reversion to mean time periods, and prepayment and curtailment assumptions. Management also considered certain qualitative factors when evaluating the adequacy of the ACL at September 30, 2022. The key assumptions utilized in estimating the Company's ACL at September 30, 2022 are discussed below.
•Economic Forecast - Management considered several economic forecasts provided by a third party and selected a weighted economic forecast that was the most appropriate considering the facts and circumstances at September 30, 2022. The forecasted economic indices applied to the model at September 30, 2022 were the national unemployment rate, changes in commercial real estate price index, changes in home values, and changes in the U.S. gross domestic product. The economic index most impactful to all loan pools within the model at September 30, 2022 was the national unemployment rate. The forecasted national unemployment rate in the economic scenario selected by management at September 30, 2022 had the national unemployment rate gradually increasing to 4.7% at September 30, 2023 which was the end of our four quarter forecast time period.
•Forecast and reversion to mean time periods - The forecasted time period and the ending balancereversion to mean time period were each four quarters for all of ACLthe economic indices at September 30, 2022.
•Prepayment and curtailment assumptions - The assumptions used at September 30, 2022 were generally based on actual historical prepayment and curtailment speeds for each respective loan pool in the Company's impairment methodology.model.

•Qualitative factors - The qualitative factors applied by management at September 30, 2022 included the following:
◦The economic uncertainties related to the unemployment rate, the labor force composition, and the labor participation rate that are not captured in the economic forecasts; and
 For the Year Ended September 30, 2017
 One- to Four-Family      
   Correspondent Bulk   Commercial    
 Originated Purchased Purchased Total Real Estate Consumer Total
 (Dollars in thousands)
Beginning balance$3,928
 $2,102
 $1,065
 $7,095
 $1,208
 $237
 $8,540
Charge-offs(72) —
 (216) (288) —
 (60) (348)
Recoveries4
 —
 165
 169
 —
 37
 206
Provision for credit losses(687) (180) (14) (881) 904
 (23) —
Ending balance$3,173
 $1,922
 $1,000
 $6,095
 $2,112
 $191
 $8,398
◦Other management considerations related to commercial real estate loans that were not captured via the model.

 For the Year Ended September 30, 2016
 One- to Four-Family      
 
 Correspondent Bulk 
 Commercial    
 Originated Purchased Purchased Total Real Estate Consumer Total
 (Dollars in thousands)
Beginning balance$4,865
 $2,115
 $1,434
 $8,414
 $742
 $287
 $9,443
Charge-offs(200) —
 (342) (542) —
 (88) (630)
Recoveries77
 —
 374
 451
 —
 26
 477
Provision for credit losses(814) (13) (401) (1,228) 466
 12
 (750)
Ending balance$3,928
 $2,102
 $1,065
 $7,095
 $1,208
 $237
 $8,540

 For the Year Ended September 30, 2015
 One- to Four-Family      
 
 Correspondent Bulk 
 Commercial    
 Originated Purchased Purchased Total Real Estate Consumer Total
 (Dollars in thousands)
Beginning balance$4,460
 $1,803
 $2,323
 $8,586
 $400
 $241
 $9,227
Charge-offs(424) (11) (228) (663) —
 (72) (735)
Recoveries56
 —
 58
 114
 —
 66
 180
Provision for credit losses773
 323
 (719) 377
 342
 52
 771
Ending balance$4,865
 $2,115
 $1,434
 $8,414
 $742
 $287
 $9,443


Reserve for Off-Balance Sheet Credit Exposures -The following is a summary of the changes in reserve for off-balance sheet credit exposures during the periods indicated. At September 30, 2022 and 2021, the Bank's off-balance sheet credit exposures totaled $992.6 million and $883.8 million, respectively. The negative provision for credit losses in the current year was due primarily to a reduction in the commercial loan portfolio and related ACL balances, at the dates presented,qualitative factors, partially offset by loan portfolio segment disaggregated by the Company's impairment method. There was no ACL for loans individually evaluated for impairment at either date as all losses were charged-off.growth in commercial construction exposures.

For the Year EndedFor the Year Ended
September 30, 2022September 30, 2021
(Dollars in thousands)
Beginning balance$5,743 Beginning balance$— 
Provision for credit losses(992)Adoption of CECL7,788 
Ending balance$4,751 Balance at October 1, 20207,788 
Provision for credit losses(2,045)
Ending balance$5,743 

82
 September 30, 2017
 One- to Four-Family      
 
 Correspondent Bulk 
 Commercial    
 Originated Purchased Purchased Total Real Estate Consumer Total
 (Dollars in thousands)
Recorded investment in loans             
collectively evaluated for impairment$3,945,063
 $2,476,063
 $346,035
 $6,767,161
 $268,979
 $125,100
 $7,161,240
   
          
Recorded investment in loans  
          
individually evaluated for impairment30,251
 3,800
 7,404
 41,455
 —
 774
 42,229
 $3,975,314
 $2,479,863
 $353,439
 $6,808,616
 $268,979
 $125,874
 $7,203,469
              
ACL for loans collectively             
evaluated for impairment$3,173
 $1,922
 $1,000
 $6,095
 $2,112
 $191
 $8,398

 September 30, 2016
 One- to Four-Family      
 
 Correspondent Bulk 
 Commercial    
 Originated Purchased Purchased Total Real Estate Consumer Total
 (Dollars in thousands)
Recorded investment in loans             
collectively evaluated for impairment$4,003,750
 $2,233,347
 $407,833
 $6,644,930
 $153,082
 $126,504
 $6,924,516
              
Recorded investment in loans  
          
individually evaluated for impairment24,960
 4,975
 11,008
 40,943
 —
 1,105
 42,048
 $4,028,710
 $2,238,322
 $418,841
 $6,685,873
 $153,082
 $127,609
 $6,966,564
              
ACL for loans collectively             
evaluated for impairment$3,928
 $2,102
 $1,065
 $7,095
 $1,208
 $237
 $8,540



5.PREMISES, EQUIPMENT AND EQUIPMENTLEASES
A summary of the net carrying value of premises and equipment at September 30, 20172022 and 20162021 was as follows:
20222021
(Dollars in thousands)
Land$16,222 $15,706 
Building and improvements122,196 120,065 
Furniture, fixtures and equipment49,795 57,129 
Total premises and equipment188,213 192,900 
Less accumulated depreciation93,393 93,773 
Premises and equipment, net$94,820 $99,127 
 2017
 2016
 (Dollars in thousands)
Land$11,670
 $11,065
Building and improvements96,401
 91,700
Furniture, fixtures and equipment43,410
 42,590
 151,481
 145,355
Less accumulated depreciation66,663
 62,134
 $84,818
 $83,221


During fiscal year 2021, management decided to relocate one of the Bank's branches. As a result, the Company classified as held-for-sale and subsequently sold the property where the branch was previously located. The sale of this property resulted in a loss of $940 thousand, which was included in other non-interest expense on the consolidated statements of income.

The Bank has entered into non-cancelable operating lease agreements with respectCompany leases real estate for branches, ATMs, and certain equipment. These leases have remaining terms that range from five months to banking premises and equipment. It is expected45 years, some of which include exercising renewal options that many agreements willthe Company considers to be renewed at expiration in the normal course of business. Rental expense was $1.1 million, $1.2 million, and $1.1 million for the years ended September 30, 2017, 2016, and 2015, respectively.

reasonably certain. As of September 30, 2017,2022, a right-of-use asset of $11.6 million was included in other assets and a lease liability of $11.8 million was included in other liabilities on the consolidated balance sheets. As of September 30, 2022, for the Company's operating leases, the weighted average remaining lease term was 24.7 years and the weighted average discount rate was 2.54%.

The following table presents lease expenses and supplemental cash flow information related to the Company's leases for the years indicated.
For the Year Ended September 30,
202220212020
(Dollars in thousands)
Operating lease expense$1,397 $1,404 $1,511 
Variable lease expense164 176 201 
Short-term lease expense2 2 17 
Cash paid for amounts included in the measurement of lease liabilities1,312 1,301 1,357 

The following table presents future minimum rental commitments,payments, rounded to the nearest thousand, required underfor operating leases that havewith initial or remaining non-cancelable lease terms in excess of one year were as follows:of September 30, 2022 (dollars in thousands):
Fiscal year 2023$1,113 
Fiscal year 2024993 
Fiscal year 2025759 
Fiscal year 2026711 
Fiscal year 2027667 
Thereafter12,809 
Total future minimum lease payments17,052 
Amounts representing interest(5,239)
Present value of net future minimum lease payments$11,813 

83
2018$1,170
20191,057
2020813
2021703
2022623
Thereafter1,906
 $6,272

6. LOW INCOME HOUSING PARTNERSHIPS
The Bank's investment in low income housing partnerships, which is included in other assets in the consolidated balance sheets, was $66.1$111.9 million and $58.0$101.2 million at September 30, 20172022 and 2016,2021, respectively.  The Bank's obligations related to unfunded commitments, which are included in accounts payable and accrued expensesother liabilities in the consolidated balance sheets, were $29.4$57.9 million and $27.2$51.6 million at September 30, 20172022 and 2016,2021, respectively. The majority of the commitments at September 30, 20172022 are projected to be funded through the end of calendar year 2020.2025.


For fiscal year 2017,2022, the net income tax benefit associated with these investments, which consists of proportional amortization expense and affordable housing tax credits and other related tax benefits, was reported in income tax expense in the consolidated statements of income. The amount of proportional amortization expense recognized during fiscal year 2017years 2022, 2021 and 2020 was $4.4$9.3 million, $8.4 million and $7.9 million, respectively, and the amount of affordable housing tax credits and other related tax benefits was $6.9$11.6 million, $10.5 million and $9.8 million, respectively, resulting in a net income tax benefit of $2.5 million. For fiscal years 2016 and 2015, the expenses were reported in the low income housing partnerships line of the consolidated statements of income, and the amount of affordable housing tax credits and other related tax benefits was $6.0$2.3 million, $2.1 million and $5.3$1.9 million, respectively. There were no impairment losses during fiscal years 2017, 2016,2022, 2021, or 20152020 resulting from the forfeiture or ineligibility of tax credits or other circumstances.



7.INTANGIBLE ASSETS
Changes in the carrying amount of the Company's intangible assets associated with an acquisition in 2018, which are included in other assets on the consolidated balance sheet, are presented in the following table.
Core Deposit and
 Goodwill Other Intangibles
 (Dollars in thousands)
Balance at September 30, 2019$9,324  $7,503 
Less: Amortization— (1,964)
Balance at September 30, 20209,324  5,539 
Less: Amortization—  (1,578)
Balance at September 30, 20219,324  3,961 
Less: Amortization— (1,372)
Balance at September 30, 2022$9,324 $2,589 

As of September 30, 2022, there was no impairment recorded on goodwill or other intangible assets.

The estimated amortization expense for the next five years related to the core deposit and other intangible assets as of September 30, 2022 is presented in the following table (dollars in thousands):
2023$1,069 
2024774 
2025523 
2026223 
2027— 
84
8. DEPOSITS AND BORROWED FUNDS
Deposits - Non-interest-bearing deposits totaled $243.7$591.4 million and $217.0$543.8 million as of September 30, 20172022 and 2016,2021, respectively. Certificates of deposit with a minimum denomination of $250 thousand were $676.1$334.3 million and $576.4$597.4 million as of September 30, 20172022 and 2016,2021, respectively. Deposits in excess of $250 thousand may not be fully insured by the Federal Deposit Insurance Corporation.


FHLB Borrowings - FHLB borrowings at September 30, 20172022 consisted of $2.17$2.06 billion in FHLB advances, of which $1.98$1.70 billion were fixed-rate advances and $200.0$365.0 million were variable-rate advances.advances, and $75.0 million was borrowed against the variable-rate FHLB line of credit. FHLB borrowings at September 30, 20162021 consisted of $2.37$1.58 billion in FHLB advances, of which $1.23 billion were fixed-rate FHLB advances. Thereadvances and $365.0 million were variable-rate advances, and no borrowings against the variable-rate FHLB line of credit at September 30, 2017 and 2016. The line of creditcredit. Additionally, the Bank is setauthorized to expire on November 16, 2018, at which time it is expected to be renewed automatically by FHLB for a one year period.borrow from the Federal Reserve Bank's "discount window."


FHLB advances at September 30, 20172022 and 20162021 were comprised of the following:
20222021
(Dollars in thousands)
FHLB advances$2,062,500 $1,590,000 
Deferred prepayment penalty(5,346)(7,150)
$2,057,154 $1,582,850 
Weighted average contractual interest rate on FHLB advances2.42 %1.18 %
Weighted average effective interest rate on FHLB advances(1)
2.44 1.88 
 2017
 2016
 (Dollars in thousands)
FHLB advances$2,175,000
 $2,375,000
Deferred prepayment penalty(1,192) (2,611)
 $2,173,808
 $2,372,389
    
Weighted average contractual interest rate on FHLB advances1.96% 2.17%
Weighted average effective interest rate on FHLB advances(1)
2.09
 2.24


(1)The effective interest rate includes the net impact of deferred amounts and interest rate swaps related to the variable-rate FHLB advances.

(1)The effective interest rate includes the net impact of deferred amounts and interest rate swaps related to the adjustable-rate FHLB advances.
During fiscal years 2017, 2016
At both September 30, 2022 and 2015,2021, the Bank utilized a leverage strategy (the "leverage strategy") to increase earnings. The leverage strategy involves borrowing up to $2.10 billion either on the Bank's FHLB line of credit or by entering into short-term FHLB advances, depending on the rates offered by FHLB, with all of the balance being paid down at each quarter end. The proceeds of the borrowings, net of the required FHLB stock holdings, are deposited at the FRB of Kansas City. Management can discontinue the use of the leverage strategy at any point in time.

During fiscal year 2017, the Bankhad entered into interest rate swap agreements with a total notional amount of $200.0$365.0 million in order to hedge the variable cash flows associated with the $200.0$365.0 million of variable-rateadjustable-rate FHLB advances. At September 30, 2017,2022 and 2021, the interest rate swap agreements had an average remaining term to maturity of 5.9 years.3.1 years and 4.1 years, respectively. The interest rate swaps were designated as cash flow hedges and involveinvolved the receipt of variable amounts from a counterparty in exchange for the Bank making fixed-rate payments over the life of the interest rate swap agreements. At September 30, 2017,2022, the interest rate swaps were in a gain position with a total fair value of $12.5 million which was reported in other assets on the consolidated balance sheet. At September 30, 2021, the interest rate swaps was $598 thousand andwere in a loss position with a total fair value of $27.7 million which was reported in accounts payable and accrued expensesother liabilities on the consolidated balance sheet. During fiscal year 2017, $134 thousand2022, $5.1 million was reclassified from AOCI to interest expense and no hedge ineffectiveness was recognized in the consolidated statements of income. During the next 12 months, the Company estimates that $1.1 million will be reclassified as an increase to interest expense. During fiscal year 2021, $13.6 million was reclassified from AOCI. Of this amount, $10.0 million was recognized as an increase to interest expense and $3.6 million, net of tax, was reclassified as a result of the termination of the related interest rate swaps, as discussed below, and reported in the loss on interest rate swap termination line item within the consolidated statements of operations. At September 30, 2022, the Company estimated that $5.8 million of interest expense associated with the interest rate swaps would be reclassified from AOCI as a decrease to interest expense on FHLB borrowings during the next 12 months. The Bank has minimum collateral posting thresholds with its derivative counterpartycounterparties and posts collateral on a daily basis. The Bank held cash collateral of $12.1 million at September 30, 2022 and posted cash collateral of $731 thousand$28.0 million at September 30, 2017.2021.


During fiscalthe current year, 2015,the Bank utilized a leverage strategy (the "leverage strategy") to increase earnings. The leverage strategy involved borrowing up to $2.60 billion by entering into short-term FHLB advances, with all of the balance being paid down at each quarter end, or earlier if the strategy is not profitable. The proceeds of the borrowings, net of the required FHLB stock holdings, were deposited at the FRB of Kansas City.

During the prior year, the Bank terminated interest rate swaps with a notional amount of $200.0 million which were tied to FHLB advances totaling $200.0 million. The interest rate swaps were designated as cash flow hedges and involved the receipt of variable amounts from a counterparty in exchange for the Bank making fixed-rate payments over the life of the
85
interest rate swap agreements. Since it was management's intention to prepay the related FHLB advances, it was no longer probable that the original forecasted transactions subject to the cash flow hedges would occur. Therefore, the termination of the interest rate swaps resulted in the reclassification of unrealized losses, net of tax, totaling $3.6 million ($4.8 million pretax) from AOCI into earnings.
During the prior year, the Bank prepaid $325.0 million of fixed-rate FHLB advances totaling $400.0 million with a weighted average contractual interest rate of 2.61%1.29% and a weighted average remaining term to maturity of approximately four months. The prepaid0.9 years, and replaced these advances with fixed-rate FHLB advances were replaced with $325.0totaling $400.0 million of fixed-rate FHLB advances with a weighted average contractual interest rate of 1.66%0.80% and a weighted average term of 53 months.5.0 years. The Bank paid $3.4penalties of $5.1 million in prepayment penalties to FHLB as a result of prepaying thethese FHLB advances. The present value of the cash flows under the termsweighted average effective interest rate of the new FHLB advances was not more than 10% different from the present value1.03%. The majority of the cash flow under the terms of the prepaid FHLB advances (including the prepayment penalties) and there were no embedded conversion options in the prepaid advances or in the new FHLB advances. The prepayment penalties effectively increased the weighted average interest rate on the new advances by 42 basis points at the time of the transactions. The deferred prepayment penalties are being recognized in interest expense over the liveslife of the new FHLB advances.


FHLB borrowings are secured by certain qualifying loans pursuant to a blanket collateral agreement with FHLB and certain securities, when necessary. Per FHLB's lending guidelines, total FHLB borrowings cannot exceed 40% of a borrowing institution's regulatory total assets without the pre-approval of FHLB senior management. In July 2017,2022, the president of FHLB approved an increase, through July 2018,2023, in the Bank's FHLB borrowing limit to 55%50% of Bank Call Report total assets. At September 30, 2017,2022, the ratio of the par value of the Bank's FHLB borrowings to the Bank's Call Report total assets was 24%22%. During fiscal year 2017, the Bank's FHLB borrowings to the Bank's Call Report total assets was in excess of 40% due to the leverage strategy.


Repurchase Agreements -At September 30, 2017 and 2016, the Company had repurchase agreements outstanding in the amount of $200.0 million, with a weighted average contractual rate of 2.94%. All of the Company's repurchase agreements at September 30, 2017 and 2016 were fixed-rate. See Note 3 for information regarding the amount of securities pledged as collateral in conjunction with repurchase agreements. Securities are delivered to the party with whom each transaction is executed and the party agrees to resell the same securities to the Bank at the maturity of the agreement. The Bank retains the right to substitute similar or like securities throughout the terms of the agreements. The repurchase agreements and collateral are subject to valuation at current market levels and the Bank may ask for the return of excess collateral or be required to post additional collateral due to changes in the market values of these items. The Bank may also be required to post additional collateral as a result of principal payments received on the securities pledged.

MaturityScheduled Repayment of Borrowed Funds and Maturity of Certificates of Deposit - The following table presents the scheduled maturityrepayment of FHLB advances, at par, repurchase agreements, and the maturity of certificates of deposit as of September 30, 2017:2022. Excluded from the table is $75.0 million borrowed against the FHLB line of credit at September 30, 2022, which does not have a scheduled repayment date. With the exception of amortizing advances, FHLB advances are payable at maturity. At September 30, 2022, the Bank's FHLB advances had maturities ranging from March 2023 to June 2028.
FHLBCertificates
Advancesof Deposit
AmountAmount
(Dollars in thousands)
2023$329,672 $1,186,742 
2024519,672 469,700 
2025479,672 207,145 
2026404,672 297,133 
2027227,172 42,395 
Thereafter101,640 638 
$2,062,500 $2,203,753 

86
 FHLB Repurchase Certificates
 Advances Agreements of Deposit
 Amount Amount Amount
 (Dollars in thousands)
2018$475,000
 $100,000
 $1,116,415
2019500,000
 —
 748,537
2020350,000
 100,000
 591,966
2021550,000
 —
 274,805
2022200,000
 —
 177,308
Thereafter100,000
 —
 1,390
 $2,175,000
 $200,000
 $2,910,421

8.9. INCOME TAXES
Income tax expense for the years ended September 30, 2017, 2016,2022, 2021, and 20152020 consisted of the following:
202220212020
(Dollars in thousands)
Current:
Federal$17,105 $17,586 $17,610 
State3,598 4,028 4,068 
20,703 21,614 21,678 
Deferred:
Federal1,632 (1,405)(4,857)
State415 (263)(731)
2,047 (1,668)(5,588)
$22,750 $19,946 $16,090 
 2017
 2016
 2015
 (Dollars in thousands)
Current:     
Federal$38,127
 $33,298
 $30,079
State4,734
 4,677
 4,395
 42,861
 37,975
 34,474
Deferred:     
Federal712
 286
 2,869
State210
 184
 332
 922
 470
 3,201
 $43,783
 $38,445
 $37,675



The Company's effective tax rates were 34.2%21.2%, 31.5%20.8%, and 32.5%20.0% for the years ended September 30, 2017, 2016,2022, 2021, and 2015,2020, respectively. The increase in the effective tax rate for the year ended September 30, 2017 was due primarily to the accounting method change for low income housing partnership investments. See "Note 1. Summary of Significant Accounting Policies" for further discussion regarding the accounting method change and "Note 6. Low Income Housing Partnerships" for additional information regarding the income tax expense components of the low income housing partnership investments. The differences between such effective rates and the statutory Federal income tax rate computed on income before income tax expense resulted from the following:
202220212020
Amount%Amount%Amount%
(Dollars in thousands)
Federal income tax expense
computed at statutory Federal rate$22,513 21.0 %$20,166 21.0 %$16,932 21.0 %
Increases (decreases) in taxes resulting from:
State taxes, net of Federal tax effect3,399 3.2 3,102 3.2 2,626 3.3 
Low income housing tax credits, net(2,238)(2.1)(2,085)(2.1)(1,897)(2.4)
ESOP related expenses, net(641)(0.6)(662)(0.7)(525)(0.6)
Acquired BOLI policies— — — — (636)(0.8)
Other(283)(0.3)(575)(0.6)(410)(0.5)
$22,750 21.2 %$19,946 20.8 %$16,090 20.0 %
 2017 2016 2015
 Amount % Amount % Amount %
 (Dollars in thousands)
Federal income tax expense           
computed at statutory Federal rate$44,772
 35.0 % $42,679
 35.0 % $40,519
 35.0 %
Increases (decreases) in taxes resulting from:           
State taxes, net of Federal tax effect3,452
 2.7
 3,308
 2.7
 3,257
 2.8
Low income housing tax credits, presented net of proportional amortization in 2017(2,468) (2.0) (4,815) (4.0) (4,316) (3.7)
ESOP related expenses, net(1,052) (0.8) (1,127) (0.9) (1,222) (1.1)
Other(921) (0.7) (1,600) (1.3) (563) (0.5)
 $43,783
 34.2 % $38,445
 31.5 % $37,675
 32.5 %
Deferred income tax expense represents the change in deferred income tax assets and liabilities excluding the tax effects of the change in net unrealized gain (loss) on AFS securities, interest rate swaps and changes in the market value of restricted stock between the grant date and vesting date. The sources of these differences and the tax effect of each as of September 30, 2017, 2016, and 2015 were as follows:
87
 2017
 2016
 2015
 (Dollars in thousands)
Salaries, deferred compensation and employee benefits$437
 $(143) $(12)
Low income housing partnerships285
 (318) (763)
ACL185
 480
 (75)
Premises and equipment14
 1,593
 (129)
FHLB stock dividends4
 (1,357) 4,083
Capitol Federal Foundation contribution—
 —
 418
Other, net(3) 215
 (321)
 $922
 $470
 $3,201


The components of the net deferred income tax liabilitiesassets (liabilities) as of September 30, 20172022 and 20162021 were as follows:
20222021
(Dollars in thousands)
Deferred income tax assets:
Unrealized loss on AFS securities$50,064 $— 
ACL3,438 4,163 
Lease liabilities2,883 3,129 
Salaries, deferred compensation and employee benefits2,044 2,017 
ESOP compensation1,472 1,422 
Reserve for off-balance sheet credit exposures1,159 1,402 
Low income housing partnerships337 522 
Net purchase discounts related to acquired loans102 287 
Unrealized loss on interest rate swaps— 6,763 
Other891 417 
Gross deferred income tax assets62,390 20,122 
Valuation allowance(80)(72)
Gross deferred income tax asset, net of valuation allowance62,310 20,050 
Deferred income tax liabilities:
FHLB stock dividends14,590 12,563 
Premises and equipment3,614 4,256 
ACL3,145 2,892 
Unrealized gain on interest rate swaps3,061 — 
Lease right-of-use assets2,821 3,088 
Deposit intangible692 1,047 
Unrealized gain on AFS securities— 1,501 
Other503 513 
Gross deferred income tax liabilities28,426 25,860 
Net deferred tax assets (liabilities)$33,884 $(5,810)
 2017
 2016
 (Dollars in thousands)
Deferred income tax assets:   
Salaries, deferred compensation and employee benefits$2,583
 $3,020
Low income housing partnerships1,478
 1,763
ESOP compensation1,724
 1,566
ACL711
 896
Other2,621
 2,528
Gross deferred income tax assets9,117
 9,773
    
Valuation allowance(1,795) (1,804)
Gross deferred income tax asset, net of valuation allowance7,322
 7,969
    
Deferred income tax liabilities:   
FHLB stock dividends23,242
 23,238
Premises and equipment6,105
 6,091
Unrealized gain on AFS securities2,000
 3,595
Other433
 419
Gross deferred income tax liabilities31,780
 33,343
    
Net deferred tax liabilities$24,458
 $25,374


The State of Kansas allows for a bad debt deduction on savings and loan institutions' privilege tax returns of up to 5% of Kansas taxable income.  Due to the low level of net loan charge-offs experienced by the Bank historically, at times, the Bank's bad debt deduction on the Kansas privilege tax return has been in excess of actual net charge-offs, resulting in a state deferred tax liability, which is presented separately from the federal deferred tax asset related to ACL.

The Company assesses the available positive and negative evidence surrounding the recoverability of its deferred tax assets and applies its judgment in estimating the amount of valuation allowance necessary under the circumstances.  At both September 30, 20172022 and 2016,2021, the Company had a valuation allowance of $1.8 million$80 thousand and $72 thousand, respectively, related to the net operating losses generated by the Company's consolidated Kansas corporate income tax return. The companies included in the consolidated Kansas corporate income tax return are the holding company and Capitol Funds, Inc., as the Bank files a Kansas privilege tax return. Based on the nature of the operations of the holding company and Capitol Funds, Inc., management believes there will not be sufficient taxable income to fully utilize thethese deferred tax assets noted above; therefore,assets. For this reason, a valuation allowance has beenwas recorded for the related amounts at September 30, 20172022 and 2016.2021. No additional valuation allowances were recorded for the Company's other deferred tax assets as management believes it is more likely than not that these amounts will be realized through the reversal of the Company's existing taxable temporary differences and projected future taxable income.


Accounting Standard Codification ("ASC")ASC 740 Income Taxes prescribes a process by which a tax position taken, or expected to be taken, on an income tax return is determined based upon the technical merits of the position, along with whether the tax position meets a more-likely-than-not-recognition threshold, to determine the amount, if any, of unrecognized tax benefits to recognize in the financial statements. Estimated penalties and interest related to unrecognized tax benefits are included in income tax expense in the consolidated statements of income. For the yearyears ended September 30, 20172022, 2021, and 2016,2020 the Company had no unrecognized tax benefits. For the year ended September 30, 2015, the Company's unrecognized tax benefits, estimated penalties and interest, and related activities were insignificant.

88
The Company files income tax returns in the U.S. federal jurisdiction and the state of Kansas, as well as other states where it has either established nexus under an economic nexus theory or has exceeded enumerated nexus thresholds based on the amount of interest income derived from sources within a given state. With few exceptions, the Company is no longer subject to U.S. federal and state examinations by tax authorities for fiscal years ending before 2014.2019.



9.
10. EMPLOYEE STOCK OWNERSHIP PLAN
The ESOP trust acquired 3,024,574 shares (6,846,728 shares post-corporate reorganization) of common stock in the Company's initial public offering and 4,726,000 shares of common stock in the Company's corporate reorganization in December of 2010. Both acquisitions of common stock were made with proceeds from loans from the Company, secured by shares of the Company's stock purchased in each offering. The Bank has agreed to make cash contributions to the ESOP trust on an annual basis sufficient to enable the ESOP trust to make the required annual loan payments to the Company on September 30 of each year. The loan for the shares acquired in the initial public offering matured on September 30, 2013. The loan for the shares acquired in the corporate reorganization matures on September 30, 2040.


As annual loan payments are made on each September 30,30th, shares are released from collateral and allocated to qualified employees based on the proportion of their qualifying compensation to total qualifying compensation. On September 30, 2017,2022, 165,198 shares were released from collateral.  On September 30, 2018,2023, 165,198 shares will be released from collateral. As ESOP shares are committed to be released from collateral, the Company records compensation expense.  Dividends on unallocated ESOP shares are applied to the debt service payments of the loan secured by the unallocated shares. Dividends on unallocated ESOP shares in excess of the debt service payment are recorded as compensation expense and distributed to participants or participants' ESOP accounts.  Compensation expense related to the ESOP was $3.3$1.7 million for the year ended September 30, 2017, $3.02022, $2.3 million for the year ended September 30, 2016,2021, and $3.0$2.0 million for the year ended September 30, 2015.2020.  Of these amounts, $784$88 thousand, $522$383 thousand, and $384$336 thousand related to the difference between the market price of the Company's stock when the shares were acquired by the ESOP trust and the average market price of the Company's stock during the years ended September 30, 2017, 2016,2022, 2021, and 2015,2020, respectively. The amount included inThere was no compensation expense for dividends on unallocated ESOP shares in excess of the debt service payments was $833 thousand, $813 thousand, and $952 thousand for the years ended September 30, 2017, 2016, and 2015, respectively.2022 or 2020; for the year ended September 30, 2021, the amount of dividends on unallocated ESOP shares in excess of the debt service payments was $219 thousand.


Shares may be withdrawn from the ESOP trust due to retirement, termination, or death of the participant. Additionally, adiversification (a participant may begin to diversify at least 25% of their ESOP shares at age 50.50), retirement, termination, or death of the participant. The following is a summary of shares held in the ESOP trust as of September 30, 20172022 and 2016:2021:
20222021
(Dollars in thousands)
Allocated ESOP shares4,276,467 4,168,102 
Unreleased ESOP shares2,973,564 3,138,762 
Total ESOP shares7,250,031 7,306,864 
Fair value of unreleased ESOP shares$24,681 $36,064 

89
 2017
 2016
 (Dollars in thousands)
Allocated ESOP shares4,369,840
 4,392,371
Unreleased ESOP shares3,799,554
 3,964,752
Total ESOP shares8,169,394
 8,357,123
    
Fair value of unreleased ESOP shares$55,853
 $55,784


10.11. STOCK-BASED COMPENSATION
The Company has a Stock Option Plan, a Restricted Stock Plan, and an Equity Incentive Plan, all of which are considered share-based plans. The Stock Option Plan and Restricted Stock Plan expired in April 2015. No additional grants can be made from these two plans; however, awards granted under these two plans remain outstanding until they are individually vested, forfeited or expire. The objectives of the Equity Incentive Plan are to provide additional compensation to certain officers, directors and key employees by facilitating their acquisition of stockan equity interest in the Company and enable the Company to retain personnel of experience and ability in key positions of responsibility.


Stock Option Plans – There are currently 508,71961,565 stock options outstanding as a result of grants awarded from the Stock Option Plan. The Equity Incentive Plan had 5,907,500 stock options originally eligible to be granted and, as of September 30, 2017,2022, the Company had 4,184,3164,378,029 stock options still available for future grants under this plan. This planThe Equity Incentive Plan will expire inon January 24, 2027 and no additional grants may be made after expiration, but awards granted under this plan remain outstanding until they are individually vested, forfeited, or expire.


The Company may issue incentive and nonqualified stock options under the Equity Incentive Plan. The Company may also award stock appreciation rights, although no stock appreciation rights have been awarded to date. The incentive stock options expire no later than 10 years from the date of grant, and the nonqualified stock options expire no later than 15 years from the date of grant. The vesting period of the stock options under the Equity Incentive Plan generally has ranged from three3 years to five5 years. The stock option exercise price cannot be less than the market value at the date of the grant as defined by each plan. The fair value of stock option grants is estimated on the date of the grant using the Black-Scholes option pricing model.


At September 30, 2017,2022, the Company had 1,236,798381,374 stock options outstanding with a weighted average exercise price of $13.31$12.51 per option and a weighted average contractual life of 5.33.3 years, and 1,144,798 options exercisable with a weighted average exercise priceall of $13.38 per option and a weighted average contractual life of 5.1 years.which were exercisable. The exercise price may be paid in cash, shares of common stock, or a combination of both. New shares are issued by the Company upon the exercise of stock options.


Compensation expense attributable to stock option awards during the years ended September 30, 2017, 2016, and 2015 totaled $118 thousand, $335 thousand, and $618 thousand, respectively. The fair value of stock options vested during the years ended September 30, 2017, 2016, and 2015 was $174 thousand, $652 thousand, and $615 thousand, respectively. As of September 30, 2017, the total future compensation cost related to non-vested stock options not yet recognized in the consolidated statements of income was $128 thousand, net of estimated forfeitures, and the weighted average period over which these awards are expected to be recognized was 2.0 years.

Restricted Stock Plans – The Equity Incentive Plan had 2,363,000 shares originally eligible to be granted as restricted stock and, as of September 30, 2017,2022, the Company had 1,757,6501,585,719 shares available for future grants of restricted stock under this plan. This plan will expire inon January 24, 2027 and no additional grants may be made after expiration, but awards granted under this plan remain outstanding until they are individually vested or forfeited. The vesting period of the restricted stock awards under the Equity Incentive Plan has generally ranged from three3 years to five5 years. At September 30, 2017,2022, the Company had 56,60069,950 unvested shares of restricted stock shares with a weighted average grant date fair value of $13.38$12.26 per share.


Compensation expense is calculated based on the fair market value of the common stock at the date of the grant, as defined by the plan, and is recognized over the vesting time period. Compensation expense attributable to restricted stock awards during the years ended September 30, 2017, 2016,2022, 2021, and 20152020 totaled $388$492 thousand, $787$480 thousand, and $1.5 million,$540 thousand, respectively. The fair value of restricted stock that vested during the years ended September 30, 2017, 2016,2022, 2021, and 20152020 totaled $563$408 thousand, $1.6 million,$441 thousand, and $1.5 million,$535 thousand, respectively. As of September 30, 20172022, there was $635$541 thousand of unrecognized compensation cost related to unvested restricted stock to be recognized over a weighted average period of 2.72.5 years.



11.
12. COMMITMENTS AND CONTINGENCIES
The following table summarizes the Bank's loan commitments as of September 30, 20172022 and 2016:2021:
20222021
(Dollars in thousands)
Originate fixed-rate$103,618 $85,492 
Originate adjustable-rate73,749 52,288 
Purchase/participate fixed-rate74,490 124,128 
Purchase/participate adjustable-rate73,461 6,767 
$325,318 $268,675 

90
 2017
 2016
 (Dollars in thousands)
Originate fixed-rate$33,528
 $68,047
Originate adjustable-rate9,861
 12,257
Purchase/participate fixed-rate74,104
 138,792
Purchase/participate adjustable-rate52,453
 18,653
 $169,946
 $237,749

Commitments to originate loans are commitments to lend to a customer. Commitments to purchase/participate in loans represent commitments to purchase loans from correspondent lenders on a loan-by-loan basis or participate in commercial real estate loans with a lead bank. The Bank evaluates each borrower's creditworthiness on a case-by-case basis. Commitments generally have expiration dates or other termination clauses, and one-toone- to four-family loan commitments may require the payment of a rate lock fee. Some of the commitments are expected to expire without being fully drawn upon; therefore, the amount of total commitments disclosed in the table above does not necessarily represent future cash requirements. As of September 30, 20172022 and 2016,2021, there were no significant loan-related commitments that met the definition of derivatives or commitments to sell mortgage loans. As of September 30, 20172022 and 2016,2021, the Bank had approved but unadvanced home equity lines of credit of $240.0$282.4 million and $262.8$287.9 million, respectively.


In the normal course of business, the Company and its subsidiarythe Bank are named defendants in various lawsuits and counterclaims. In the opinion of management, after consultation with legal counsel, none of the currently pending suits are expected to have a materially adverse effect on the Company's consolidated financial statements for the year ended September 30, 2017,2022, or future periods.

12.
13. REGULATORY CAPITAL REQUIREMENTS
The Bank and the Company are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and, possibly additional discretionary, actions by regulators that, if undertaken, could have a material adverse effect on the Company's financial statements. Under regulatory capital adequacy guidelines, the Company and Bank must meet specific capital guidelines that involve quantitative measures of the Company's and Bank's assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. Additionally, the Bank must meet specific capital guidelines to be considered well capitalized per the regulatory framework for prompt corrective action. The Company's and Bank's capital amounts and classifications are also subject to qualitative judgments by regulators about components, risk weightings, and other factors.


The Bank and the Company must maintain certain minimum capital ratios as set forth in the table below for capital adequacy purposes. Effective January 1, 2020, the regulatory agencies, including the Office of the Comptroller of Currency and the Board of Governors of the Federal Reserve System ("FRB"), created a community bank leverage ratio ("CBLR") for institutions with total consolidated assets of less than $10 billion and that meet other qualifying criteria. Qualifying institutions that elect to use the CBLR framework and that maintain a leverage ratio of greater than 9% will be considered to have satisfied the generally applicable risk-based and leverage capital requirements in the regulatory agencies' capital rules and to have met the well-capitalized ratio requirements. Management elected to use the CBLR framework for the Bank and Company as of the effective date. In April 2020, as directed by Section 4012 of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the regulatory agencies introduced temporary changes to the CBLR. These changes, which subsequently were adopted as a final rule, temporarily reduced the CBLR requirement to 8% through the end of calendar year 2020. Beginning in calendar year 2021, the CBLR requirement increased to 8.5%, and the requirement returned to 9% in calendar year 2022.

Management believes, as of September 30, 2022, that the Bank and Company meet all capital adequacy requirements to which they are subject and there were no conditions or events subsequent to September 30, 2022 that would change the Bank's or Company's category.
For Capital
Actual Adequacy Purposes
AmountRatioAmountRatio
(Dollars in thousands)
As of September 30, 2022
Bank$1,090,222 9.0 %$1,090,015 9.0 %
Company1,230,851 10.2 1,089,869 9.0 
As of September 30, 2021
Bank1,114,325 11.5 822,194 8.5 
Company1,246,259 12.9 822,053 8.5 

91
Generally, savings institutions, such as the Bank, may make capital distributions during any calendar year equal to the earnings of the previous two calendar years and current year-to-date earnings.  It is generally required that the Bank remain well capitalized before and after the proposed distribution.  The Company's ability to pay dividends is dependent, in part, upon its ability to obtain capital distributions from the Bank. So long as the Bank continues to remain well capitalized after each capital distribution and operates in a safe and sound manner, it is management's belief that the regulators will continue to allow the Bank to distribute its net income to the Company, although no assurance can be given in this regard.


In conjunction with the Company's corporate reorganization in December 2010, a "liquidation account" was established for the benefit of certain depositors of the Bank in an amount equal to Capitol Federal Savings Bank MHC's ownership interest in the retained earnings of Capitol Federal Financial as of June 30, 2010. As of September 30, 2017,2022, the balance of this liquidation account was $167.2$92.5 million. Under applicable federal banking regulations, neither the Company nor the Bank is permitted to pay dividends on its capital stock to its stockholders if stockholders' equity would be reduced below the amount of the liquidation account at that time.



The Bank and the Company must maintain certain minimum capital ratios as set forth in the table below for capital adequacy purposes. Effective January 1, 2016, the Company and Bank were required to maintain a capital conservation buffer above certain minimum capital ratios for capital adequacy purposes in order to avoid certain restrictions on capital distributions and other payments including dividends, share repurchases, and certain compensation. The required capital conservation buffer is being phased in over a four year period by increasing the required buffer amount by 0.625% each year. The capital conservation buffer was 0.625% at September 30, 2016 and 1.25% at September 30, 2017. At September 30, 2017 and 2016, the Bank and Company exceeded the capital conservation buffer requirement. Once fully phased-in, which will be on January 1, 2019 for the Company and Bank, the organization must maintain a balance of capital that exceeds by more than 2.5% each of the minimum risk-based capital ratios in order to satisfy the requirement. Management believes, as of September 30, 2017, that the Bank and Company meet all capital adequacy requirements to which they are subject and there were no conditions or events subsequent to September 30, 2017 that would change the Bank's or Company's category.
         To Be Well
         Capitalized
         Under Prompt
     For Capital Corrective Action
 Actual  Adequacy Purposes Provisions
 Amount Ratio Amount Ratio Amount Ratio
 (Dollars in thousands)
Bank           
As of September 30, 2017           
Tier 1 leverage ratio$1,201,863
 10.8% $444,877
 4.0% $556,097
 5.0%
Common Equity Tier 1 ("CET1") capital ratio1,201,863
 27.2
 199,181
 4.5
 287,706
 6.5
Tier 1 capital ratio1,201,863
 27.2
 265,575
 6.0
 354,100
 8.0
Total capital ratio1,210,261
 27.3
 354,100
 8.0
 442,625
 10.0
            
As of September 30, 2016           
Tier 1 leverage ratio1,234,912
 10.9
 452,339
 4.0
 565,424
 5.0
CET1 capital ratio1,234,912
 28.5
 195,080
 4.5
 281,783
 6.5
Tier 1 capital ratio1,234,912
 28.5
 260,107
 6.0
 346,809
 8.0
Total capital ratio1,243,452
 28.7
 346,809
 8.0
 433,512
 10.0
            
Company           
As of September 30, 2017           
Tier 1 leverage ratio1,365,395
 12.3
 444,785
 4.0
 N/A
 N/A
CET1 capital ratio1,365,395
 30.8
 199,195
 4.5
 N/A
 N/A
Tier 1 capital ratio1,365,395
 30.8
 265,594
 6.0
 N/A
 N/A
Total capital ratio1,373,793
 31.0
 354,125
 8.0
 N/A
 N/A
            
As of September 30, 2016                         
Tier 1 leverage ratio1,387,049
 12.3
 452,248
 4.0
 N/A
 N/A
CET1 capital ratio1,387,049
 32.0
 195,094
 4.5
 N/A
 N/A
Tier 1 capital ratio1,387,049
 32.0
 260,126
 6.0
 N/A
 N/A
Total capital ratio1,395,589
 32.2
 346,835
 8.0
 N/A
 N/A



13.14. FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair Value Measurements – The Company uses fair value measurements to record fair value adjustments to certain financial instruments and to determine fair value disclosures in accordance with ASC 820 and ASC 825. The Company's AFS securities and interest rate swaps are recorded at fair value on a recurring basis. Additionally, from time to time, the Company may be required to record at fair value other financial instruments on a non-recurring basis, such as OREO and loans individually evaluated for impairment. These non-recurring fair value adjustments involve the application of lower of cost or fair value accounting or write-downs of individual financial instruments.


The Company groups its financial instruments at fair value in three levels based on the markets in which the financial instruments are traded and the reliability of the assumptions used to determine fair value. These levels are:

•Level 1 - Valuation is based upon quoted prices for identical instruments traded in active markets.
•Level 2 - Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.
•Level 3 - Valuation is generated from model-based techniques that use significant assumptions not observable in the market. These unobservable assumptions reflect the Company's own estimates of assumptions that market participants would use in pricing the financial instrument. Valuation techniques include the use of option pricing models, discounted cash flow models, and similar techniques. The results cannot be determined with precision and may not be realized in an actual sale or immediate settlement of the financial instrument.


The Company bases the fair value of its fair valuesfinancial instruments on the price that would be received from the sale of a financialan instrument in an orderly transaction between market participants at the measurement date under current market conditions. The Company maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value.


The following is a description of valuation methodologies used for financial instruments measured at fair value on a recurring basis.


AFS Securities - The Company's AFS securities portfolio is carried at estimated fair value, with any unrealized gains and losses, net of taxes, reported as AOCI in stockholders' equity.value. The majority of the securities within the AFS portfolio were issued by GSEs. The Company primarily uses prices obtained from third party pricing services to determine the fair value of its securities. On a quarterly basis, management corroborates a sample of prices obtained from the third party pricing service for Level 2 securities by comparing them to an independent source. If the price provided by the independent source varies by more than a predetermined percentage from the price received from the third party pricing service, then the variance is researched by management. The Company did not have to adjust prices obtained from the third partythird-party pricing service when determining the fair value of its securities during the years ended September 30, 20172022 and 2016.2021. The Company's major security types, based on the nature and risks of the securities, are:

•GSE Debentures - Estimated fair values are based on a discounted cash flow method. Cash flows are determined by taking any embedded options into consideration and are discounted using current market yields for similar securities. (Level 2)
92
•MBS - Estimated fair values are based on a discounted cash flow method. Cash flows are determined based on prepayment projections of the underlying mortgages and are discounted using current market yields for benchmark securities. (Level 2)
•Corporate Bonds and Municipal Bonds - Estimated fair values are based on a discounted cash flow method. Cash flows are determined by taking any embedded options into consideration and are discounted using current market yields for securities with similar credit profiles. (Level 2)
Trust Preferred Securities - Estimated fair values are based on a discounted cash flow method. Cash flows are determined by taking prepayment and underlying credit considerations into account. The discount rates are derived from secondary trades and bid/offer prices. (Level 3)


Interest Rate Swaps - The Company's interest rate swaps are designated as cash flow hedges and are reported at fair value in accounts payable and accrued expensesother assets on the consolidated balance sheet if in a gain position, and in other liabilities if in a loss position, with any unrealized gains and losses, net of taxes, reported as AOCI in stockholders' equity. See "Note 7.8. Deposits and Borrowed Funds" for additional information. The estimated fair valuevalues of the interest rates swaps are obtained from a third partythe counterparty and are determined usingby a discounted cash flow analysis using observable market-based inputs. On a quarterly basis, management corroborates the estimated fair values obtained from the third party by internally calculating the estimated fair value using a discounted cash flow analysis usingwith independent observable market-based inputs. The Company did not make anyinputs from a third party. No adjustments were made to the estimated fair value receivedvalues obtained from the third partycounterparty during the yearyears ended September 30, 2017.2022 and 2021. (Level 2)


The following tables provide the level of valuation assumption used to determine the carrying value of the Company's financial instruments measured at fair value on a recurring basis at the dates presented. The Company did not have any liabilities that wereLevel 3 financial instruments measured at fair value on a recurring basis at September 30, 2016.2022 or 2021.
September 30, 2022
Quoted PricesSignificantSignificant
in Active MarketsOther ObservableUnobservable
Carryingfor Identical Assets InputsInputs
Value(Level 1)(Level 2)(Level 3)
(Dollars in thousands)
Assets:
AFS Securities:
MBS$1,088,624 $— $1,088,624 $— 
GSE debentures469,827 — 469,827 — 
Corporate bonds3,695 — 3,695 — 
Municipal bonds1,161 — 1,161 — 
1,563,307 — 1,563,307 — 
Interest rate swaps12,547 — 12,547 — 
$1,575,854 $— $1,575,854 $— 
September 30, 2021
Quoted PricesSignificantSignificant
in Active MarketsOther ObservableUnobservable
Carryingfor Identical Assets InputsInputs
Value(Level 1)(Level 2)(Level 3)
(Dollars in thousands)
Assets:
AFS Securities:
MBS$1,493,993 $— $1,493,993 $— 
GSE debentures516,326 — 516,326 — 
Municipal bonds4,289 — 4,289 — 
$2,014,608 $— $2,014,608 $— 
Liabilities:
Interest rate swaps$27,719 $— $27,719 $— 

93
 September 30, 2017
   Quoted Prices Significant Significant
   in Active Markets Other Observable Unobservable
 Carrying for Identical Assets  Inputs Inputs
 Value (Level 1) (Level 2) (Level 3)
 (Dollars in thousands)
Assets:       
AFS Securities:       
GSE debentures$270,729
 $—
 $270,729
 $—
MBS141,516
 —
 141,516
 —
Municipal bonds1,535
 —
 1,535
 —
Trust preferred securities2,051
 —
 —
 2,051
 $415,831
 $—
 $413,780
 $2,051
        
Liabilities:       
Interest Rate Swaps$598
 $—
 $598
 $—
 September 30, 2016
   Quoted Prices Significant Significant
   in Active Markets Other Observable Unobservable
 Carrying for Identical Assets  Inputs Inputs
 Value (Level 1) (Level 2) (Level 3)
 (Dollars in thousands)
Assets:       
AFS Securities:       
GSE debentures$347,038
 $—
 $347,038
 $—
MBS178,507
 —
 178,507
 —
Trust preferred securities1,756
 —
 —
 1,756
 $527,301
 $—
 $525,545
 $1,756

The Company's Level 3 AFS securities had no activity during fiscal years 2017, 2016, and 2015 except for principal repayments of $88 thousand, $97 thousand, and $400 thousand, respectively, and (decreases)/increases in net unrealized losses included in other comprehensive income of $(218) thousand, $61 thousand, and $45 thousand, respectively.


The following is a description of valuation methodologies used for significant financial instruments measured at fair value on a non-recurring basis. The significant unobservable inputs used in the determination of the fair value of assets classified as Level 3 have an inherent measurement uncertainty that, if changed, could result in higher or lower fair value measurements of these assets as of the reporting date.


Loans Receivable – Collateral dependent assets are assets evaluated on an individual basis. Those collateral dependent assets that are evaluated on an individual basis are considered financial assets measured at fair value on a non-recurring basis. The balancefair value of collateral dependent loans/loans individually evaluated for impairment atloss on a non-recurring basis during fiscal years 2022 and 2021 that were still held in the portfolio as of September 30, 20172022 and 20162021 was $18.4$4.7 million and $42.0$7.4 million, respectively. AllFair values of these collateral dependent loans/loans were secured by residential real estateindividually evaluated for loss cannot be determined with precision and may not be realized in an actual sale or immediate settlement of the loan and, as such, are classified as Level 3.

The one- to four-family loans included in this amount were individually evaluated to determine if the carrying value of the loan was in excess of the fair value of the collateral, less estimated selling costs of 10%. Fair values were estimated through current appraisals or current Federal Housing Finance Agency ("FHFA") housing price indices, which is a broad based measure of the movement of single-family house prices and is a weighted, repeat-sales index.appraisals. Management does not adjust or apply a discount to the appraised value or FHFA housing price indices,of one- to four-family loans, except for the estimated sales cost noted above.above, and the primary unobservable input for these loans was the appraisal.

For commercial loans, if the most recent appraisal or book value of the collateral does not reflect current market conditions due to the passage of time and/or other factors, management will adjust the existing appraised or book value based on knowledge of local market conditions, recent transactions, and estimated selling costs, if applicable. Adjustments to appraised or book values are generally based on assumptions not observable in the marketplace. The primary significant unobservable inputinputs for commercial loans individually evaluated during the year ended September 30, 2022 were downward adjustments to the book value of the collateral for impairment using appraisalslack of marketability. During fiscal year 2022, the adjustments ranged from 8% to determine100%, with a weighted average of 21%. During fiscal year 2021, the estimated fair valueadjustments ranged from 7% to 50%, with a weighted average of 21%. The basis utilized in calculating the weighted averages for these adjustments was the appraisal. Fair valuesoriginal unadjusted value of loans individually evaluated for impairment cannot be determined with precision and may not be realized in an actual sale or immediate settlement of the loan, and, as such are classified as Level 3. Based on this evaluation, the Bank charged-off all loss amounts as of September 30, 2017 and 2016; therefore, the fair value was equal to the carrying value and there was no ACL related to these loans.each collateral item.


OREO – OREO primarily represents real estate acquired as a result of foreclosure or by deed in lieu of foreclosure and is carried at lower of cost or fair value. FairThe fair value for OREO is estimated through current appraisals or listing prices, less estimated selling costs of 10%. Management does not adjust or apply a discount to the appraised value or listing price, except for the estimated sales costs noted above. The primary significant unobservable input for OREO was the appraisal or listing price. Fair values of foreclosed property cannot be determined with precision and may not be realized in an actual sale of the property and, as such, are classified as Level 3. The fair value of OREO measured on a non-recurring basis during fiscal years 2022 and 2021 that was equal tostill held in the portfolio as of September 30, 2022 and 2021 was $328 thousand and $170 thousand, respectively. The carrying value of the properties equaled the fair value of the properties at September 30, 20172022 and 2016 and was $1.4 million and $3.7 million, respectively.2021.


94
Fair Value Disclosures – The Company determined estimated fair value amounts using available market information and a variety of valuation methodologies as of the dates presented. Considerable judgment is required to interpret market data to develop the estimates of fair value. The estimates presented are not necessarily indicative of amounts the Company would realize from a current market exchange at subsequent dates.


The carrying amounts and estimated fair values of the Company's financial instruments by fair value hierarchy, at the dates presented, were as follows:
2022
CarryingEstimated Fair Value
AmountTotalLevel 1Level 2Level 3
(Dollars in thousands)
Assets:
Cash and cash equivalents$49,194 $49,194 $49,194 $— $— 
AFS securities1,563,307 1,563,307 — 1,563,307 — 
Loans receivable7,464,208 6,889,211 — — 6,889,211 
FHLB stock100,624 100,624 100,624 — — 
Interest rate swaps12,547 12,547 — 12,547 — 
Liabilities:
Deposits6,194,866 6,124,835 3,991,114 2,133,721 — 
Borrowings2,132,154 1,910,779 75,000 1,835,779 — 
2021
CarryingEstimated Fair Value
AmountTotalLevel 1Level 2Level 3
(Dollars in thousands)
Assets:
Cash and cash equivalents$42,262 $42,262 $42,262 $— $— 
AFS securities2,014,608 2,014,608 — 2,014,608 — 
Loans receivable7,081,142 7,534,278 — — 7,534,278 
FHLB stock73,421 73,421 73,421 — — 
Liabilities:
Deposits6,597,396 6,649,954 3,838,656 2,811,298 — 
Borrowings1,582,850 1,611,414 — 1,611,414 — 
Interest rate swaps27,719 27,719 — 27,719 — 
95
 2017 2016
   Estimated   Estimated
 Carrying Fair Carrying Fair
 Amount Value Amount Value
 (Dollars in thousands)
Assets:       
Cash and cash equivalents$351,659
 $351,659
 $281,764
 $281,764
AFS securities415,831
 415,831
 527,301
 527,301
HTM securities827,738
 833,009
 1,100,874
 1,122,867
Loans receivable7,195,071
 7,354,100
 6,958,024
 7,292,971
FHLB stock100,954
 100,954
 109,970
 109,970
Liabilities:       
Deposits5,309,868
 5,318,249
 5,164,018
 5,204,251
FHLB borrowings2,173,808
 2,182,841
 2,372,389
 2,434,151
Repurchase agreements200,000
 202,004
 200,000
 207,303
Interest rate swaps598
 598
 —
 —



The following methods and assumptions were used to estimate the fair value of the financial instruments:

Cash and cash equivalents - The carrying amounts of cash and cash equivalents are considered to approximate their fair value due to the nature of the financial assets. (Level 1)

HTM securities - Estimated fair values of securities are based on one of three methods: (1) quoted market prices where available; (2) quoted market prices for similar instruments if quoted market prices are not available; (3) unobservable data that represents the Bank's assumptions about items that market participants would consider in determining fair value where no market data is available. HTM securities are carried at amortized cost. (Level 2)

Loans receivable - The fair value of one- to four-family loans and home equity loans are generally estimated using the present value of expected future cash flows, assuming future prepayments and using discount factors determined by prices obtained from securitization markets, less a discount for the cost of servicing and lack of liquidity. The estimated fair value of the Bank's commercial and consumer loans are based on the expected future cash flows assuming future prepayments and discount factors based on current offering rates. (Level 3)

FHLB stock - The carrying value and estimated fair value of FHLB stock equals cost, which is based on redemption at par value. (Level 1)

Deposits - The estimated fair value of demand deposits, savings, and money market accounts is the amount payable on demand at the reporting date. The estimated fair value of these deposits at September 30, 2017 and 2016 was $2.40 billion and $2.34 billion, respectively. (Level 1) The fair value of certificates of deposit is estimated by discounting future cash flows using current London Interbank Offered Rates ("LIBOR"). The estimated fair value of certificates of deposit at September 30, 2017 and 2016 was $2.92 billion and $2.87 billion, respectively. (Level 2)

FHLB borrowings and repurchase agreements - The fair value of fixed-maturity borrowed funds is estimated by discounting estimated future cash flows using current offer rates. (Level 2)
Interest rate swaps - The fair value of the interest rate swaps was determined using discounted cash flow analysis using observable market-based inputs. (Level 2)
14.15. ACCUMULATED OTHER COMPREHENSIVE INCOME
The following table presentstables present the changes in the components of AOCI, net of tax, for the year ended September 30, 2017. During the years ended September 30, 2016 and 2015, the only changes in AOCI, net of tax, were related to unrealized gains (losses) on AFS securities and there were nopresented. The amounts reclassified from AOCI.AOCI related to the Bank's cash flow hedges are reported as increases in interest expense within the consolidated statements of operations for each year presented, except for $3.6 million in fiscal year 2021, which was reported in the loss on interest rate swap termination line item within the consolidated statements of operations. See "Note 8. Deposits and Borrowed Funds" for additional information regarding reclassifications from AOCI related to the Bank's cash flow hedges.
 For the Year Ended September 30, 2022
 Unrealized Unrealized 
Gains (Losses)Gains (Losses)
on AFSon Cash FlowTotal
SecuritiesHedgesAOCI
(Dollars in thousands)
Beginning balance$4,651 $(20,956)$(16,305)
Other comprehensive income (loss), before reclassifications(159,770)25,339 (134,431)
Amount reclassified from AOCI, net of taxes of $(1,647)— 5,103 5,103 
Other comprehensive income (loss)(159,770)30,442 (129,328)
Ending balance$(155,119)$9,486 $(145,633)

For the Year Ended September 30, 2021
 Unrealized Unrealized 
Gains (Losses)Gains (Losses)
on AFSon Cash FlowTotal
SecuritiesHedgesAOCI
(Dollars in thousands)
Beginning balance$23,728 $(40,233)$(16,505)
Other comprehensive income (loss), before reclassifications(19,077)5,712 (13,365)
Amount reclassified from AOCI, net of taxes of $(4,378)— 13,565 13,565 
Other comprehensive income (loss)(19,077)19,277 200 
Ending balance$4,651 $(20,956)$(16,305)

For the Year Ended September 30, 2020
 Unrealized Unrealized 
Gains (Losses)Gains (Losses)
on AFSon Cash FlowTotal
SecuritiesHedgesAOCI
(Dollars in thousands)
Beginning balance$10,150 $(25,049)$(14,899)
Other comprehensive income (loss), before reclassifications13,578 (21,458)(7,880)
Amount reclassified from AOCI, net of taxes of $(2,014)— 6,274 6,274 
Other comprehensive income (loss)13,578 (15,184)(1,606)
Ending balance$23,728 $(40,233)$(16,505)


96
 For the Year Ended September 30, 2017
 Unrealized Unrealized  
 Gains (Losses) Gains (Losses)  
 on AFS on Cash Flow Total
 Securities Hedges AOCI
 (dollars in thousands)
Balance at October 1, 2016$5,915
 $—
 $5,915
Other comprehensive income (loss), before reclassifications(2,625) (506) (3,131)
Amount reclassified from AOCI—
 134
 134
Other comprehensive income (loss)(2,625) (372) (2,997)
Balance at September 30, 2017$3,290
 $(372) $2,918
16. REVENUE RECOGNITION


Details of the Company's primary types of non-interest income revenue streams by financial statement line item reported in the consolidated statements of income that are within the scope of ASC Topic 606 are below. During fiscal years 2022, 2021 and 2020, revenue from contracts with customers totaled $18.1 million, $16.5 million and $14.8 million, respectively.
15. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
Deposit Service Fees
Interchange Transaction Fees - Interchange transaction fee income primarily consists of interchange fees earned on a transactional basis through card payment networks. The following table presents summarized quarterly dataperformance obligation for these types of transactions is satisfied as services are rendered for each transaction and revenue is recognized daily concurrently with the transaction processing services provided to the cardholder.

In order to participate in the card payment networks, the Company must pay various transaction related costs established by the networks ("interchange network charges"), including membership fees and a per unit charge for each transaction. The Company is acting as an agent for its debit card customers when they are utilizing the card payment networks; therefore interchange transaction fee income is reported net of interchange network charges. Interchange network charges totaled $3.6 million, $3.6 million and $3.2 million for fiscal years 2022, 2021 and 2020, respectively.

Service Charges on Deposit Accounts - Service charges on deposit accounts consist of account maintenance and transaction-based fees such as overdrafts, insufficient funds, wire transfers and the use of out-of-network ATMs. The Company's performance obligation is satisfied over a period of time, generally a month, for account maintenance and at the time of service for transaction-based fees. Revenue is recognized after the performance obligation is satisfied. Payments are typically collected from the customer's deposit account at the time the transaction is processed and/or at the end of the years indicatedcustomer's statement cycle (typically monthly).

Insurance Commissions
Commissions are received on insurance product sales. The Company acts in the capacity of an agent between the Company's customer and the insurance carrier. The Company's performance obligation is satisfied when the terms of the policy have been agreed upon and the insurance policy becomes effective. Additionally, the Company earns performance-based incentives ("contingent insurance commissions") based on certain criteria established by the insurance carriers. Contingent insurance commissions are accrued based upon management's expectations.

Other Non-Interest Income
Trust Asset Management Income - The Company provides trust asset management services to customers. The Company primarily earns fees for these services over time as the Company.services are provided and the Company assesses fees at each month end. Fees are charged based on a tiered scale of the market value of the individual trust asset accounts at the end of the month.

97
 First Second Third Fourth  
 Quarter Quarter Quarter Quarter Total
 (Dollars and counts in thousands, except per share amounts)
2017         
Total interest and dividend income$75,322
 $77,660
 $79,630
 $80,574
 $313,186
Net interest and dividend income47,306
 49,054
 49,364
 49,658
 195,382
Provision for credit losses—
 —
 —
 —
 —
Net income20,578
 21,587
 21,370
 20,602
 84,137
Basic EPS0.15
 0.16
 0.16
 0.15
 0.63
Diluted EPS0.15
 0.16
 0.16
 0.15
 0.63
Dividends declared per share0.375
 0.085
 0.335
 0.085
 0.88
Average number of basic shares outstanding133,697
 134,066
 134,254
 134,314
 134,082
Average number of diluted shares outstanding133,950
 134,259
 134,360
 134,404
 134,244
2016         
Total interest and dividend income$74,359
 $75,632
 $75,527
 $75,595
 $301,113
Net interest and dividend income47,982
 48,538
 47,930
 47,732
 192,182
Provision for credit losses—
 —
 —
 (750) (750)
Net income20,718
 21,527
 20,551
 20,698
 83,494
Basic EPS0.16
 0.16
 0.15
 0.16
 0.63
Diluted EPS0.16
 0.16
 0.15
 0.16
 0.63
Dividends declared per share0.335
 0.085
 0.335
 0.085
 0.84
Average number of basic shares outstanding132,822
 132,960
 133,102
 133,296
 133,045
Average number of diluted shares outstanding132,911
 133,031
 133,251
 133,493
 133,176

16.17. PARENT COMPANY FINANCIAL INFORMATION (PARENT COMPANY ONLY)
The Company serves as the holding company for the Bank (see "Note 1. Summary of Significant Accounting Policies"). The Company's (parent company only) balance sheets at the dates presented, and the related statements of income and cash flows for each of the years presented are as follows:
BALANCE SHEETS
SEPTEMBER 30, 2022 and 2021
(Dollars in thousands, except per share amounts)
20222021
ASSETS:
Cash and cash equivalents$103,977 $75,553 
Investment in the Bank955,871 1,110,339 
Note receivable - ESOP35,767 37,213 
Receivable from the Bank— 18,158 
Income taxes receivable, net454 467 
Other assets583 625 
TOTAL ASSETS$1,096,652 $1,242,355 
LIABILITIES:
Deferred income tax liabilities, net$72 $82 
Payable to the Bank81 — 
Total liabilities153 82 
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value; 100,000,000 shares authorized, no shares issued or outstanding— — 
Common stock, $.01 par value; 1,400,000,000 shares authorized, 138,858,884 and 138,832,284 shares issued and outstanding as of September 30, 2022 and 2021, respectively1,388 1,388 
Additional paid-in capital1,190,213 1,189,633 
Unearned compensation - ESOP(29,735)(31,387)
Retained earnings80,266 98,944 
AOCI, net of tax(145,633)(16,305)
Total stockholders' equity1,096,499 1,242,273 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$1,096,652 $1,242,355 

98
BALANCE SHEETS
SEPTEMBER 30, 2017 and 2016
(Dollars in thousands, except per share amounts)
    
 2017
 2016
ASSETS:   
Cash and cash equivalents$120,785
 $108,197
Investment in the Bank1,204,781
 1,240,827
Note receivable - ESOP42,557
 43,790
Other assets365
 389
TOTAL ASSETS$1,368,488
 $1,393,203
    
LIABILITIES:   
Income taxes payable, net$88
 $128
Accounts payable and accrued expenses52
 74
Deferred income tax liabilities, net35
 37
Total liabilities175
 239
    
STOCKHOLDERS' EQUITY:   
Preferred stock, $.01 par value; 100,000,000 shares authorized, no shares issued or outstanding—
 —
Common stock, $.01 par value; 1,400,000,000 shares authorized, 138,223,835 and 137,486,172   
shares issued and outstanding as of September 30, 2017 and 2016, respectively1,382
 1,375
Additional paid-in capital1,167,368
 1,156,855
Unearned compensation - ESOP(37,995) (39,647)
Retained earnings234,640
 268,466
AOCI, net of tax2,918
 5,915
Total stockholders' equity1,368,313
 1,392,964
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$1,368,488
 $1,393,203


STATEMENTS OF INCOMESTATEMENTS OF INCOMESTATEMENTS OF INCOME
YEARS ENDED SEPTEMBER 30, 2017, 2016, and 2015
YEARS ENDED SEPTEMBER 30, 2022, 2021, and 2020YEARS ENDED SEPTEMBER 30, 2022, 2021, and 2020
(Dollars in thousands)(Dollars in thousands)(Dollars in thousands)
     202220212020
2017
 2016
 2015
INTEREST AND DIVIDEND INCOME:     INTEREST AND DIVIDEND INCOME:
Dividend income from the Bank$120,215
 $117,513
 $115,359
Dividend income from the Bank$111,745 $132,063 $68,329 
Interest income from other investments1,715
 1,725
 1,835
Interest income from other investments1,484 1,509 2,036 
Total interest and dividend income121,930
 119,238
 117,194
Total interest and dividend income113,229 133,572 70,365 
NON-INTEREST EXPENSE:     NON-INTEREST EXPENSE:
Salaries and employee benefits896
 827
 835
Salaries and employee benefits843 908 988 
Regulatory and outside services247
 261
 243
Regulatory and outside services259 287 292 
Other non-interest expense561
 558
 517
Other non-interest expense614 608 622 
Total non-interest expense1,704
 1,646
 1,595
Total non-interest expense1,716 1,803 1,902 
INCOME BEFORE INCOME TAX EXPENSE AND EQUITY IN     INCOME BEFORE INCOME TAX EXPENSE AND EQUITY IN
EXCESS OF DISTRIBUTION OVER EARNINGS OF SUBSIDIARY120,226
 117,592
 115,599
EXCESS OF DISTRIBUTION OVER EARNINGS OF SUBSIDIARY111,513 131,769 68,463 
INCOME TAX EXPENSE4
 28
 84
INCOME TAX (BENEFIT) EXPENSEINCOME TAX (BENEFIT) EXPENSE(49)(62)28 
INCOME BEFORE EQUITY IN EXCESS OF     INCOME BEFORE EQUITY IN EXCESS OF
DISTRIBUTION OVER EARNINGS OF SUBSIDIARY120,222
 117,564
 115,515
DISTRIBUTION OVER EARNINGS OF SUBSIDIARY111,562 131,831 68,435 
EQUITY IN EXCESS OF DISTRIBUTION OVER EARNINGS OF SUBSIDIARY(36,085) (34,070) (37,422)EQUITY IN EXCESS OF DISTRIBUTION OVER EARNINGS OF SUBSIDIARY(27,109)(55,749)(3,895)
NET INCOME$84,137
 $83,494
 $78,093
NET INCOME$84,453 $76,082 $64,540 



99
STATEMENTS OF CASH FLOWSSTATEMENTS OF CASH FLOWSSTATEMENTS OF CASH FLOWS
YEARS ENDED SEPTEMBER 30, 2017, 2016, and 2015
YEARS ENDED SEPTEMBER 30, 2022, 2021, and 2020YEARS ENDED SEPTEMBER 30, 2022, 2021, and 2020
(Dollars in thousands)(Dollars in thousands)(Dollars in thousands)
     
2017
 2016
 2015
202220212020
CASH FLOWS FROM OPERATING ACTIVITIES:     CASH FLOWS FROM OPERATING ACTIVITIES:
Net income$84,137
 $83,494
 $78,093
Net income$84,453 $76,082 $64,540 
Adjustments to reconcile net income to net cash provided by     
operating activities:     
Adjustments to reconcile net income to net cash provided by operating activities:Adjustments to reconcile net income to net cash provided by operating activities:
Equity in excess of distribution over earnings of subsidiary36,085
 34,070
 37,422
Equity in excess of distribution over earnings of subsidiary27,109 55,749 3,895 
Depreciation of equipment29
 30
 30
Depreciation of equipment46 45 45 
Provision for deferred income taxes(2) 2
 428
Provision for deferred income taxes(10)(9)91 
Changes in:     Changes in:
Receivable from/payable to the BankReceivable from/payable to the Bank18,239 (18,257)— 
Income taxes receivable/payableIncome taxes receivable/payable13 25 (63)
Other assets(5) 1
 35
Other assets(10)21 (60)
Income taxes receivable/payable(40) 445
 3,300
Accounts payable and accrued expenses(22) 14
 1
Net cash flows provided by operating activities120,182
 118,056
 119,309
Other liabilitiesOther liabilities— (5)13 
Net cash provided by operating activitiesNet cash provided by operating activities129,840 113,651 68,461 
     
CASH FLOWS FROM INVESTING ACTIVITIES:     CASH FLOWS FROM INVESTING ACTIVITIES:
Principal collected on notes receivable from ESOP1,233
 1,194
 1,156
Net cash flows provided by investing activities1,233
 1,194
 1,156
Principal collected on note receivable from ESOPPrincipal collected on note receivable from ESOP1,446 1,401 1,357 
Net cash provided by investing activitiesNet cash provided by investing activities1,446 1,401 1,357 
     
CASH FLOWS FROM FINANCING ACTIVITIES:     CASH FLOWS FROM FINANCING ACTIVITIES:
Net payment from subsidiary related to restricted stock awards293
 473
 95
Net payment from subsidiary related to restricted stock awards269 169 319 
Dividends paid(117,963) (111,767) (114,162)
Cash dividends paidCash dividends paid(103,131)(117,890)(93,862)
Repurchase of common stock—
 —
 (50,034)Repurchase of common stock— (4,568)(20,767)
Stock options exercised8,843
 4,070
 267
Stock options exercised— 324 638 
Net cash flows used in financing activities(108,827) (107,224) (163,834)
Net cash used in financing activitiesNet cash used in financing activities(102,862)(121,965)(113,672)
     
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS12,588
 12,026
 (43,369)NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS28,424 (6,913)(43,854)
     
CASH AND CASH EQUIVALENTS:     CASH AND CASH EQUIVALENTS:
Beginning of year108,197
 96,171
 139,540
Beginning of year75,553 82,466 126,320 
End of year$120,785
 $108,197
 $96,171
End of year$103,977 $75,553 $82,466 



100
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
None.


Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the Company's disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, the "Act") as of September 30, 2017.2022.  Based upon this evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that, as of September 30, 2017,2022, such disclosure controls and procedures were effective to ensure that information required to be disclosed by the Company in the reports it files or submits under the Act is accumulated and communicated to the Company's management (including the Chief Executive Officer and Chief Financial Officer) to allow timely decisions regarding required disclosure, and is recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms.


Management's Report on Internal Control Over Financial Reporting
Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Act). The Company's internal control system is a process designed to provide reasonable assurance to the Company's management and Board of Directors regarding the preparation and fair presentation of published financial statements.


The Company's internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets; provide reasonable assurances that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures are being made only in accordance with authorizations of management and the directors of the Company; and provide reasonable assurance regarding prevention or untimely detection of unauthorized acquisition, use, or disposition of the Company's assets that could have a material effect on the Company's financial statements.


All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial reporting. Further, because of changes in conditions, the effectiveness of any system of internal control may vary over time. The design of any internal control system also factors in resource constraints and consideration for the benefit of the control relative to the cost of implementing the control. Because of these inherent limitations in any system of internal control, management cannot provide absolute assurance that all control issues and instances of fraud within the Company have been detected.


Management assessed the effectiveness of the Company's internal control over financial reporting as of September 30, 2017.2022. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control - Integrated Framework (2013). Management has concluded that the Company maintained an effective system of internal control over financial reporting based on these criteria as of September 30, 2017.2022.


The Company's independent registered public accounting firm, Deloitte & Touche LLP, Kansas City, Missouri (Auditor Firm ID: 34), who audited the consolidated financial statements included in the Company'sItem 8 of this annual report, has issued an audit report on the Company's internal control over financial reporting as of September 30, 20172022 and it is included in Item 8.


Changes in Internal Control Over Financial Reporting
There have been no changes in the Company's internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Act) that occurred during the Company's quarter ended September 30, 20172022 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.
Item 9B. Other Information
None.



Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
101
PART III
Item 10. Directors, Executive Officers and Corporate Governance

Information required by this item concerning the Company's directors and compliance withexecutive officers and any delinquent reports under Section 16(a) of the Act is incorporated herein by reference from the Company's definitive proxy statement for theits Annual Meeting of Stockholders to be held in January 2018,2023, a copy of which will be filed not later than 120 days after the close of the fiscal year. Pursuant to General Instruction G(3), information concerning executive officers of the Company is included in Part I, under the caption "Executive Officers of the Registrant" of this Form 10-K.


Information required by this item regarding the audit committee of the Company's Board of Directors, including information regarding the audit committee financial experts serving on the committee, is incorporated herein by reference from the Company's definitive proxy statement for theits Annual Meeting of Stockholders to be held in January 2018,2023, a copy of which will be filed not later than 120 days after the close of the fiscal year.


Code of Ethics
We have adopted a written code of ethics within the meaning of Item 406 of SEC Regulation S-K that applies to our principal executive officer and senior financial officers, and to all of our other employees and our directors, a copy of which is available free of charge in the Investor Relations section of our website, www.capfed.com.


Item 11.  Executive Compensation

Information required by this item concerning compensation is incorporated herein by reference from the Company's definitive proxy statement for theits Annual Meeting of Stockholders to be held in January 2018,2023, a copy of which will be filed not later than 120 days after the close of the fiscal year.


Item 12.  Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Information required by this item concerning security ownership of certain beneficial owners and management is incorporated herein by reference from the Company's definitive proxy statement for theits Annual Meeting of Stockholders to be held in January 2018,2023, a copy of which will be filed not later than 120 days after the close of the fiscal year.


The following table sets forth information as of September 30, 20172022 with respect to compensation plans under which shares of our common stock may be issued.
Equity Compensation Plan Information
Number of Shares
Remaining Available
for Future Issuance
Number of SharesUnder Equity
to be issued uponWeighted AverageCompensation Plans
Exercise ofExercise Price of(Excluding Shares
Outstanding Options,Outstanding Options,Reflected in the
Plan CategoryWarrants and RightsWarrants and RightsFirst Column)
Equity compensation plans
approved by stockholders381,374 $12.51 5,963,748 (1)
Equity compensation plans not
approved by stockholdersN/AN/AN/A
381,374 $12.51 5,963,748 

(1)This amount includes 1,585,719 shares available for future grants of restricted stock under the Equity Incentive Plan. 


102
Equity Compensation Plan Information
      Number of Shares 
      Remaining Available 
      for Future Issuance 
  Number of Shares   Under Equity 
  to be issued upon Weighted Average Compensation Plans 
  Exercise of Exercise Price of (Excluding Shares 
  Outstanding Options, Outstanding Options, Reflected in the 
Plan Category Warrants and Rights Warrants and Rights First Column) 
Equity compensation plans       
approved by stockholders 1,236,798
 $13.31
 5,941,966
(1) 
Equity compensation plans not       
approved by stockholders N/A
 N/A
 N/A
 
  1,236,798
 $13.31
 5,941,966
 


(1)This amount includes 1,757,650 shares available for future grants of restricted stock under the Equity Incentive Plan. 


Item 13. Certain Relationships and Related Transactions, and Director Independence

Information required by this item concerning certain relationships, related transactions and director independence is incorporated herein by reference from the Company's definitive proxy statement for theits Annual Meeting of Stockholders to be held in January 20182023, a copy of which will be filed not later than 120 days after the close of the fiscal year.


Item 14. Principal AccountingAccountant Fees and Services
Information required by this item concerning principal accountingaccountant fees and services is incorporated herein by reference from the Company's definitive proxy statement for theits Annual Meeting of Stockholders to be held in January 2018,2023, a copy of which will be filed not later than 120 days after the close of the fiscal year.


PART IV
Item 15. Exhibits and Financial Statement Schedules
(a)The following is a list of documents filed as part of this report:

(1)Financial Statements:
The following financial statements are included under Part II, Item 8 of this Form 10-K:
1.Reports of Independent Registered Public Accounting Firm.
2.Consolidated Balance Sheets as of September 30, 2017 and 2016.
3.Consolidated Statements of Income for the Years Ended September 30, 2017, 2016, and 2015.
4.Consolidated Statements of Comprehensive Income for the Years Ended September 30, 2017, 2016, and 2015.
5.Consolidated Statements of Stockholders' Equity for the Years Ended September 30, 2017, 2016, and 2015.
6.Consolidated Statements of Cash Flows for the Years Ended September 30, 2017, 2016, and 2015.
7.Notes to Consolidated Financial Statements for the Years Ended September 30, 2017, 2016, and 2015.

1.Reports of Independent Registered Public Accounting Firm.
2.Consolidated Balance Sheets as of September 30, 2022 and 2021.
3.Consolidated Statements of Income for the Years Ended September 30, 2022, 2021, and 2020.
4.Consolidated Statements of Comprehensive Income for the Years Ended September 30, 2022, 2021, and 2020.
5.Consolidated Statements of Stockholders' Equity for the Years Ended September 30, 2022, 2021, and 2020.
6.Consolidated Statements of Cash Flows for the Years Ended September 30, 2022, 2021, and 2020.
7.Notes to Consolidated Financial Statements for the Years Ended September 30, 2022, 2021, and 2020.

(2)Financial Statement Schedules:

Schedules:
All financial statement schedules have been omitted as the information is not required under the related instructions or is not applicable.


(3)Exhibits:
See "Index to Exhibits."



Item 16. Form 10-K Summary
None
103

INDEX TO EXHIBITS
Exhibit

Number
Document
Charter of Capitol Federal Financial, Inc., as filed on May 6, 2010, as Exhibit 3(i) to Capitol Federal Financial, Inc.'s Registration Statement on Form S-1 (File No. 333-166578) and incorporated herein by reference
Bylaws of Capitol Federal Financial, Inc., as amended, filed on SeptemberMarch 30, 2016,2020, as Exhibit 3.2 to Form 8-K for Capitol Federal Financial Inc. and incorporated herein by reference
Capitol Federal Financial, Inc.'s Employee Stock Ownership Plan,Description of the Registrant's Securities, as amended, filed on May 10, 2011November 27, 2019, as Exhibit 10.1(ii)4 to the March 31, 2011Registrant's Annual Report on Form 10-Q for Capitol Federal Financial, Inc.,10-K and incorporated herein by reference
Form of Change of Control Agreement with each of John B. Dicus, Kent G. Townsend, and Rick C. Jackson filed on January 20, 2011 as Exhibit 10.1 to the Registrant's Current Report on Form 8-K and incorporated herein by referencereference*
Form of Change of Control Agreement with each of Natalie G. Haag and Carlton A. Ricketts filed on November 29, 2012 as Exhibit 10.1(iv) to the Registrant's Annual Report on Form 10-K and incorporated herein by referencereference*
Form of Change of Control Agreement with Daniel L. Lehman filed on November 29, 2016 as Exhibit 10.1(v) to the Registrant's Annual Report on Form 10-K and incorporated herein by referencereference*
Form of Change of Control Agreement with Robert D. Kobbeman filed on November 29, 2018 as Exhibit 10.1(iv) to the Registrant's Annual Report on Form 10-K and incorporated herein by reference*
Form of Change of Control Agreement with Anthony S. Barry filed on May 10, 2019 as Exhibit 10.1(vi) to the Registrant's March 31, 2019 Form 10-Q and incorporated herein by reference*
Capitol Federal Financial's 2000 Stock Option and Incentive Plan (the "Stock Option Plan") filed on April 13, 2000 as Appendix A to Capitol Federal Financial's Revised Proxy Statement (File No. 000-25391) and incorporated herein by referencereference*
Capitol Federal Financial Deferred Incentive Bonus Plan, as amended, filed on May 5, 20098, 2020 as Exhibit 10.410.3 to the Registrant's March 31, 20092020 Form 10-Q for Capitol Federal Financial and incorporated herein by referencereference*
Form of Incentive Stock Option Agreement under the Stock Option Plan filed on February 4, 2005 as Exhibit 10.5 to the December 31, 2004 Form 10-Q for Capitol Federal Financial and incorporated herein by referencereference*
Form of Non-Qualified Stock Option Agreement under the Stock Option Plan filed on February 4, 2005 as Exhibit 10.6 to the December 31, 2004 Form 10-Q for Capitol Federal Financial and incorporated herein by referencereference*
Description of Director Fee ArrangementsArrangements*
Short-term Performance Plan, as amended, filed on August 1, 2014May 8, 2020 as Exhibit 10.910.7 to the Registrant's June 30, 2014March 31, 2020 Form 10-Q and incorporated herein by referencereference*
Short-term Performance Plan filed on August 4, 2015 as Exhibit 10.10 to the Registrant's June 30, 2015 Form 10-Q and incorporated herein by reference
10.8
Capitol Federal Financial, Inc. 2012 Equity Incentive Plan (the "Equity Incentive Plan") filed on December 22, 2011 as Appendix A to Capitol Federal Financial, Inc.'s Proxy Statement (File No. 001-34814) and incorporated herein by referencereference*
Form of Incentive Stock Option Agreement under the Equity Incentive Plan filed on February 6, 2012 as Exhibit 10.12 to the Registrant's December 31, 2011 Form 10-Q and incorporated herein by referencereference*
Form of Non-Qualified Stock Option Agreement under the Equity Incentive Plan filed on February 6, 2012 as Exhibit 10.13 to the Registrant's December 31, 2011 Form 10-Q and incorporated herein by referencereference*
Form of Stock Appreciation Right Agreement under the Equity Incentive Plan filed on February 6, 2012 as Exhibit 10.14 to the Registrant's December 31, 2011 Form 10-Q and incorporated herein by referencereference*
Form of Restricted Stock Agreement under the Equity Incentive Plan filed on February 6, 2012 as Exhibit 10.15 to the Registrant's December 31, 2011 Form 10-Q and incorporated herein by referencereference*
14Code of Ethics**
Calculations of Basic and Diluted Earnings Per Share (See "Part II, Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 2. Earnings Per Share")
14Code of Ethics*
21
Subsidiaries of the Registrant
Consent of Independent Registered Public Accounting Firm
Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002 made by John B. Dicus, Chairman, President and Chief Executive Officer

Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002 made by Kent G. Townsend, Executive Vice President, Chief Financial Officer and Treasurer


Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 made by John B. Dicus, Chairman, President and Chief Executive Officer, and Kent G. Townsend, Executive Vice President, Chief Financial Officer and Treasurer
101
The following information from the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2017,2022, filed with the SEC on November 29, 2017,23, 2022, has been formatted in Inline eXtensible Business Reporting Language:Language ("XBRL"): (i) Consolidated Balance Sheets at September 30, 20172022 and 2016,2021, (ii) Consolidated Statements of Income for the fiscal years ended September 30, 2017, 2016,2022, 2021, and 2015,2020, (iii) Consolidated Statements of Comprehensive Income for the fiscal years ended September 30, 2017, 2016,2022, 2021, and 2015,2020, (iv) Consolidated Statement of Stockholders' Equity for the fiscal years ended September 30, 2017, 2016,2022, 2021, and 2015,2020, (v) Consolidated Statements of Cash Flows for the fiscal years ended September 30, 2017, 2016,2022, 2021, and 2015,2020, and (vi) Notes to the Consolidated Financial Statements

104Cover Page Interactive Data File, formatted in Inline XBRL and included in Exhibit 101


* Management contract or compensatory plan or arrangement.
**May be obtained free of charge in the Investor Relations section of our website, www.capfed.com.



SIGNATURES




Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrantregistrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



CAPITOL FEDERAL FINANCIAL, INC.
CAPITOL FEDERAL FINANCIAL, INC.
Date: November 29, 201723, 2022By:/s/ John B. Dicus
John B. Dicus, Chairman, President and
Chief Executive Officer
(Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrantregistrant and in the capacities and on the date indicated.
By:/s/ John B. DicusBy:/s/ Reginald L. Robinson
John B. Dicus, Chairman, PresidentReginald L. Robinson, Director
and Chief Executive OfficerDate: November 29, 2017
(Principal Executive Officer)
Date: November 29, 2017By:/s/ Michael T. McCoy, M.D.
John B. Dicus, Chairman, PresidentMichael T. McCoy, M.D., Director
By:and Chief Executive OfficerDate: November 23, 2022
(Principal Executive Officer)
Date: November 23, 2022By:/s/ James G. Morris
James G. Morris, Director
By:/s/ Kent G. TownsendDate: November 29, 201723, 2022
Kent G. Townsend, Executive Vice President,
Chief Financial Officer and TreasurerBy:/s/ James G. MorrisMichel' P. Cole
(Principal Financial Officer)James G. Morris,Michel' P. Cole, Director
Date: November 29, 201723, 2022Date: November 29, 201723, 2022
By:/s/ Jeffrey R. ThompsonBy:/s/ Michel' P. ColeCarlton A. Ricketts
Jeffrey R. Thompson, DirectorMichel' P. Cole,Carlton A. Ricketts, Director
Date: November 29, 201723, 2022Date: November 29, 201723, 2022
By:/s/ Jeffrey M. JohnsonBy:/s/ Tara D. Van Houweling
Jeffrey M. Johnson, DirectorTara D. Van Houweling, First Vice President
Date: November 29, 201723, 2022and Reporting Director
(Principal Accounting Officer)
By:/s/ Morris J. Huey IIDate: November 29, 201723, 2022
Morris J. Huey II, Director
Date: November 29, 201723, 2022